After Rick Wagoner “woke up” to the news that Toyota had replaced General Motors as the world’s largest automaker, GM’s CEO fired-off a post-Empire email to his execs. Rabid Rick admonished The General’s generals to stay focused on “further reducing our still huge health care cost disadvantage versus Toyota and other non-U.S. based manufacturers.” So Mr. Wagoner’s major dodos must sell the union on a “huge” health care cutback at the same time that regulatory filings reveal that the boss pulled down $10.2m in fiscal ’06 and just received a $370k increase to his base pay for '07 (regardless of results). Good luck with that.
You might’ve thought the prospect of life or death contract talks with the United Auto Workers (UAW) at both GM and Delphi would have convinced GM’s Board of Bystanders that austerity begins at home. Nope. They rubber stamped a CEO compensation package that makes a mockery of any reasonable concept of performance-related pay and insures the continuation of management – union conflict. If you need proof that it’s [lack of] business as usual at GM, well, there’s more.
In the same email, Wagoner was quick to assure his execs of that his “steady as she goes” management of GM’s decline continues apace. “Our sales and marketing strategy requires patience," Rabid Rick explained. "But it's working, and we need to stick with it.”
Putting aside the fact that only the most optimistic analyst could stretch the definition of the word “working” to cover GM’s ongoing financial losses, cash burn and inexorable market share slide, this forbearance-requiring strategy has taken a few knocks as of late.
We’ve already covered GM’s start – stop – start – stop Zeta platform program. Any hope that GM would carve itself a niche as a provider of large, comfortable, reasonably fuel efficient rear-wheel drive sedans (a.k.a. traditional American cars) is now in the automotive equivalent of cryogenic suspension. More worrying, the much-need refresh of GM’s small car platform is now stalled amidst union strife at their Lordstown factory.
On Friday, GM stopped tooling and other preparations for their Delta update. The move supposedly came after the UAW decided to dig in its heels over changes designed to make Lordstown more like a modern manufacturing facility and less like a feudal fiefdom. According to an unnamed Automotive News source, local negotiations to remove janitorial and truck unloading jobs from union control and limit overtime fell apart when the national union stepped in and said “No.”
For their part, the UAW claims they pulled the plug on the agreement after learning that GM had decided to postpone development of the new Delta vehicles. The dispute has widened to include GM’s Fairfax facility, tipped to produce the new Epsilon 2-based mid-sized Malibu— another vehicle upon which GM’s passenger car hopes depend. Same deal: contract talks suspended, tooling stopped, or vice versa.
Either way, on the face of it, this is old school stuff. In the run-up to national contract talks, GM threatens to take work away from the UAW. The UAW threatens to strike. GM execs blink, pay off the union and call their stock brokers with the glad tidings.
There’s not a shred of doubt in my mind that GM and the UAW will resolve this dispute in the traditional manner– save minor window dressing spun as “Historic Union Givebacks II." If Rabid Rick had the balls to stand up to the UAW or the charm to seduce them, he would have– should have– done it by now.
It’s almost inconceivable; GM’s playing what the British call “silly buggers” with the UAW and critical future vehicles when they’re hemorrhaging market share, depleting their remaining cash hoard and just passed a psychological watershed that set off alarm bells in every nook and cranny of GM’s bloated Byzantine bureaucracy. I’m sorry; the Toyota tipping point SHOULD have called GM’s multitude of minions to battle stations, but didn’t.
When will GM’s Management and its Board of Bystanders develop what longtime GM watcher Mary Ann Keller called a “sense of urgency?” In case you’ve forgotten, Ms. Keller sounded the alarm back in November 2005, when Toyota first passed GM in the U.S. market (if you remove fleet sales from the equation). At the time, Keller was convinced GM would act to address its flawed fundamentals because, well, it had to.
One wonders what Ms. Keller made of GM Car Czar Bob Lutz’ reaction to the Toyota coup. When a reporter confronted Maximum Bob with the news that GM's global reign was over, the well-paid and pensioned executive issued a terse response: “So what?”
And then Lutz, Wagoner and the rest of GM’s management went back to work, implementing a turnaround strategy devoid of stated targets or a deadline for a return to profit. If the definition of insanity is doing the same thing over and over again expecting a different result, then that's just plain nuts.
The legacy costs that GM has to tackle are practically insurmountable.
1) Health care and pensions costs that run into the tens of billions.
2) Overstretched brands and dealer networks that no longer have relevance for the North America market.
3) Fiefdoms within dozens of internal divisions and external partners (UAW and Delphi are the two largest organizations) that inhibit GM’s ability to compete.
However, even with all that I do see a lot of potential for the General AFTER the nightmare that will be the next several years. GM is still the best SUV/truck company in the world, their decision to bring in foreign subsidiaries to support the lower ends of the market is very smart (NA is no longer a subcompact oriented market), and the acknowledgement that it’s smarter to build ‘world cars’ that compete across continents are all leaps in the right direction. By the way, the decision to nix the Zeta platform was primarily based on the need to do this.
The irony for now is that GM’s future is highly dependent on what happens to Chrysler, America’s least competitive ‘legacy’ manufacturer, over these next 18 months.
I’m rooting for all of them. If you take a look at how big of a footprint the 2.5 have in the American economy, it’s hard not to.
However, even with all that I do see a lot of potential for the General AFTER the nightmare that will be the next several years. That nightmare ends with a "b." Whether or not GM can find the leadership it needs to become a smaller and more nimble producer is an open question. Meanwhile, this current cast of corporate characters will float away on their golden parachutes.
I, too, am hoping- against hope- that something will bring these men to co-operate. But, what they must address is the ridiculous lack of a national single-payer health care plan.
Since Wagoner makes about a third of Mulally’s salary, is this a form of restraint?
I refuse to root for the big 2.2. They had their chance. I’ve had a GM vehicle in the past, and they didn’t take care of me. Meanwhile my Toyota has been great. I just wish Tesla or someone would take their place.
Accountability?
In the reality I live in if you screw up and ruin a company, the Board of Directors fires the CEO, and most, if not all the execs get canned. But I guess that only really happens in small business, where reality IS reality.
In the Bizarro World of Big Business, when you screw up you get a raise. Not only a raise, but raises and benefits worth multiple millions of dollars. This just doesn’t make sense. These guys have seen the writing on the wall for almost a full decade… trucks and SUVs cannot be your entire product line. Toyota is kicking GM’s ass up one side and down the other by building CARS. Yes, reasonably sized, economical to own, reliable, functional automobiles. Meanwhile GM is building monster trucks, gas-guzzling SUVs, and the rental-fleet quality four-wheeled crap. Unless General Motors wants to become a niche player making just utility vehicles (ala International Harvester or John Deere) I strongly suggest the leadership undo their recto-cranial inversion and build some CARS. Starting about 6 years ago.
But no… they’ll just collect their $millions, and keep their jobs, holding the helm on the greatest disaster since the Titanic. Don’t count on them to go down with the ship though. Opulent, gold-plated, jet-powered lifeboats await, no doubt.
Like I said before, this isn’t a Death Watch, it is a zombie watch. GM (& Ford, & Chrysler) are already dead, they just don’t know it yet. The corpses may stagger on a decade or three, but for all intents and purposes… there is no life there.
Obviously no sign of brain activity!
–chuck
Exactly, there really doesn’t seem to be any sense or urgency; it appears it’s just a matter of getting into the golden parachutes.
I wonder what GM Shareholders think about this. Then again, much of the market is made of institutional investors who dumped the stock a long, long time ago and are never coming back.
In a rational world GM would go into receivership since it’s liabilities exceed it’s assets by a large margin. Buyers would then buy the useful assets at market prices and the useless ones for scrap at pennies on the dollar. Think of the final days of Woolworths. Useful assets include the Chevy/GMC truck line, Daewoo and GM’s share of the chinese joint venture. Partly useful assets are Opel/Vauxhaul and Holden. In a rational world the useful assets would be bought by one or more buyers who can make a go of them and the rest would simply close and be scrapped. The union contracts would all go up in a cloud of smoke along with the stockholder’s equity.
Countering this is the ever strong status quo. In any field the status quo is the toughest adversary to reason because of the network of entrenched interests and power it represents. When the status quo fails it does so after a long rear guard action and in a most dramatic fashion. Rick Wagoner is a classic defender of the status quo. Born and bred for the job by the GM machine and feeling every bit as entitled to power as the union bosses.
Finally, it is downright strange how much Rick’s strategic talk sounds like President Bush’s. Steady as she goes, my way is working, don’t press me for timetables or details and my critics are wrong and/or mean spirited. According to their public biographical details, Wagoneer received his MBA from Harvard Business School in 1977, George W. Bush got the same degree from the same school in 1975. Weird, eh?
RF
Yahoo! a death watch I can agree with.GM wants us to give and give and give some more.
But executive perks and the obscene pay raise,to say nothing of the layers and layers of do nothing management.
OH NO! thats sacred we in the blue collar world [and to be fair some of the lower end salary]we have taken the brunt of the of GMs fall from the top.
In Canada [and the health care system does suck believe me I know]any way our CAW local gave up cleaners, yard maintenance,shunt drivers and heaven only knows what else.For what? the CAMARO? That should buy us 6 mnths production maybe.Then what?
Kudos to the brothers and sisters in Ohio for telling the General where to put “the revised agreement”
In my lowly position I got to read the “stay focused “b.s. also.
I wonder what the top management at Toyota make?
Whatever it is a least thay earned it They knocked GM of a perch they been sitting on for 76 years.
If I screwed up my lowly job at GM as bad as the top management has srewed up thier job.There would be no raise for me.Union or no union I would be on the out side looking in.
Robert your best death watch yet.and thats from one of your biggest critics
Michael
My question: If Lutz can’t show a little concern for losing the top spot of the global automobile pyramid,…then just WHAT can he show a little concern FOR?!?!
That flippant “So what” remark speaks VOLUMES!
So what if your market share is tanking? So what if our operations are bleeding cash? So what if our competitors build a better product? So what if American consumers helped elevate Toyota’s status as “The World’s Largest Automaker” buy purchasing their products in droves? So what if GM is shutting down 12 manufacturing plants while foreigners from Germany, Japan, and S. Korea are building them in droves within the Continental Unites States? So what if we promise…hype beyond Hype of a bright electric future, only to backpedal on our promise 6 months later (Volt)? So what if 30,000 people no longer work for GM? So what if gas is above $3/gallon…and so what if we keep building gas hog SUVs? So what if we…in year 2007…STILL can’t build a competitive small or midsize car in America? So what if Detroit is reeking like a rotten carcass due to the unemployment? So what about the families who once depended upon GM for their livelihoods? So what about the retirees who have already served their 20+ years of employment?…
…and furthermore, SO WHAT IF WE LOOK LIKE A BUNCH OF ROYAL INCOMPETENT JACKASSES FOR THE ENTIRE WORLD TO SEE!
So WHAT, INDEED!!!
(And you have the NERVE to play upon people’s “Patriotism”…give me a BREAK!!)
I gotta agree on this D.W. If the UAW-international makes concessions in regards to healthcare and give in to G.M’s wish of letting non-union folks holding or preforming work traditionally done by unionized folks,it begs the question,for what??
It shaves the price off of all vehicles,especially mid-size and compacts.Right where it needs to.Why produce a vehicle to sell and lose cash on the transaction?Makes since to agree that changes must be made to become competitive.
But then what???G.M. gets to shave off contractual obligations,actually make money on mid-size & compacts.Sounds damn good.Unless you work for them!There moronic approach toward product development will continue to let models languish until they are no-longer pertainent in their class.Start-stop or whatever on new RWD or some new platform of vehicle.Import the bulk of compacts into the U.S.–this rant could go on and on.
I think maybe the International got pissed & said no intially regarding the “Lordstown” deal a.k.a. True North,because accountability is at an all time high.Its expected of the workforce to adapt to flexable work rules but when examining the ” upper echlon” of management its as R.F. put it,”steady as she goes.”
That in itself is a joke and redundent in regards to this out-dated mode of managorial thinking.
Corporate big wigs want to appoach daily manufacturing with flexibility and lean,on time proformance.Kinda like Toyota.So if the workforce at G.M. does this that should mean that management adopt the same mentality! Sadly,I have little faith in those trully in charge of making decisions and could wager a fair amount of money that these people calling the shots would have had their “enhancement packages-prefomance bonus” takin away.In the case of G.M. they should have been givin an altimatium.Pay back your salary or get to cleaning out you’re desk.
Once you know the Real meaning of “So What”, then it all becomes clear:
“So What if all the above, and more, is true?
I’ve got mine!!! :)”
Ahhh, NOW it all becomes clear!
Go rent Roger and Me….SO WHAT *REALLY* becomes quite clear. And yes, I do NOT consider myself a Democrat whatsoever. I actually believe in putting in an honest-day’s work!
It’s just SO EASY to say “SO WHAT”!!!
That’s the downfall of not only this once-great automobile company… but this attitude, if it persists, will be the downfall of this once-great nation. Trust me my fellow Americans.
Byzantine bureaucracy.
nice comparison R.F.I’ve got 10 years in @ G.M. and I really feel as though I’m standing inside the gates of Constantinople.Looking through gaping holes in the walls that keep the mauraders at bay.It begins with apprehension but as the walls continue to fall in disrepair,it leaves a person simple stunned.
Here’s to a turn-around.God knows I need it.
Well said, Mr. F. It made me ask “Why does this all sound so familiar?” And then I remembered Bush 43. Still, as an unabashed lover of ‘Murrikan kars, it saddens me that the General is going to go the way of Pierce, Packard, Nash, Hudson and Studebaker (et al.)…and for the same reason. Inability to wake up, see reality, and make necessary changes. Do I think that GM can only survive if it maintains its #1 moniker? No. The Germans have shown, you don’t have to build the most cars. Just the best. Silly me, I always thought they taught this at business school.
Do you really think GM is much different than any other large American corporation? Corporate America stopped being about building the best products decades ago. Corporate America is now all about boosting stock prices as much as possible, and skimming as much money as possible out of the company, and into the hands of executives and board members.
Don’t blame GM as much as the modern American business model – it is doing what most Fortune 500 companies do
taxman100, I hope you don’t have kids. If you do, it’s their future which is being “sold out”.
But then again, you are supposed to blindly follow and say “So What!!”. Afterall, if that’s what American stands for…it will not “stand” much longer. It can’t possibly.
You WILL note when they brought the “GM” badges back from the grave, they were conspicuously missing “Mark of Excellence”.
That was no mistake.
It’s always good to hear Mikey’s perspective from the shop floor. Yes, management greed is a factor in the UAW’s refusal to grant further concessions. It reminds me of a notice sometimes furtively posted on office bulletin boards: “The floggings will continue until morale improves!” And there’s little reason to think GM would prosper if labor takes, say, a 20% cut in total compensation.
Here’s the heart of the matter: cash flow statements suggest that both GM and Ford are now selling their low/mid-price vehicles at a loss! No wonder Cobalts and Foci stagnate, and the 2.5 hope desparately for revived sales of $35K+ pickups and $40K+ SUVs.
The UAW’s super-deluxe health coverage worsens the financial plight, but the touted “single payer health care” would not change the fundamentals. Someone’s gotta pay. People with good incomes (the 2.5’s workers) will foot the bill — a bill which will shock those accustomed to “free” coverage. They’d demand a raise to offset the new (as they’d see it) expense.
GM management and hourly labor seem to be stuck in the 50’s. Back then, each fall it would announce car prices that would yield a satisfactory return after expenses. Then Ford and Chrysler would raise or lower their prices to fall in line. What a cozy environment. Pan Am, Eastern, Braniff, etc., would have liked it, too.
@taxman
Sadly, you’re touching the truth of the matter. The combination of executive options and shareholder greed is devastating to the competitiveness of US companies. Yes, Toyota also keeps an eye on stock prices, but management compensation is nowhere near the predatory levels now common in US companies — and Toyota’s planning is seriously long term, and not quarter to quarter.
I read an investment analysis the other day which held that it was about time that Ford was showing some positive development, as it was unlikely Mulally would get much more than next quarter to start showing results before analysts would turn on him!
Amazing idiocy. I’ll never forget Jim Press on Toyota’s planning horizon: They have both long term and short term, and short term is “in our lifetime”.
Then you can really get things done.
Rastus,
I agree – our future is being sold out by American corporations. Or should I say, corporations currently run by Americans – most have absolutely no loyalty to any political entity.
I am not excusing it, only saying that pretty much every company is run the same way – I could go into details about for whom I work, but suffice to say it is not even a Fortune 500 company, and the “bonuses” executives pay themselves for a flat, stagnant year is a joke. Heck, I’m a highly experienced techical/professional/middle managment kind of guy, and all my peers know how American business is really run.
“It’s just SO EASY to say “SO WHAT”!!! ”
Yes. Sounds like “resignation” or mental default doesn’t it?… Sounds like what a young person would say when they lack a reasoned answer… maybe now the “#1 auto maker” monkey is off their backs :)
Your Governments are selling out America with their parasitic taxes and subjective “something-for-nothing” laws that “encourage” asset-sucking behavior/hucksterism. It amazes me that “corporate america” is as productive as it is under these conditions…Same goes for “corporate EU”. Can you imagine how prosperous the world would be if Governments would just get the heck out of the way and quit pandering to beggars and brats.
The Delphi crap is going to do serious damage to GM. Keep an eye on this, um, comedy. April sales will be telling to the Delphi situation as potential Delphi investors may just run for the hills. Watch for taxpayer money to “fix” this. GM wont make a car people willingly want to buy so they will get the gov’t to steal money from us.
I just sitting here looking at my old GMC Van, 1988 one, its leaked from the Roof from a year old, when it rains, its worth nothing in todays market, it still runs with a little maintenance, sucks Petrol as its a V*8, we always have been a GM family for years but now we have a 2001 Camry, which is our family vehicle, would not purchase a GM or any “domestic” vehicle in the future.
Health care and pensions costs that run into the tens of billions.
Can someone please explain to me how these two items are a liability for GM? When GM agreed to pay a worker’s pension and health-care, were they not required to set aside money into a fund to pay for these liabilities?
How were they allowed to simply promise to pay future benefits out of future revenues? And aren’t the unions responsible for these benefits? Why did the unions allow GM to give them IOU’s instead a cash from current revenues that the union would then invest for future benefit liabilities?
I can’t help but think that (a) this is all a smoke screen for some other issue, or (b) the unions totally failed in their duty to protect their members’ benefits.
Taxman,
You are absolutely correct. For starters, anyone with a Harvard MBA should be fired from GM. Seems from Enron to Ford to GM, the Harvard MBA is viewed as a means of entitlement to loot the company you work for.
Fire their asses, replace them with West Point and
Annapolis grads – who are trained to work hard and be honest, not a bunch of crooked bastards.
Oh, who cares, it is too late anyway. Henry Ford must be turning over in his grave if he saw the idiots running GM and Ford.
Last time I checked there were two signatures on every lucrative UAW contract, one of which is from a GM executive in agreement to all of these benefits. I guess they hung themselves by thinking they would maintain their market share no matter what.
Turbo G: Correct. There is a tale of unbridled greed and cultural insularity, with no "good guy" in sight. Both the union and their paymasters are guilty of short term thinking, arrogance and corruption. That said, GM's management holds the ultimately responsibility for agreeing to unsustainable union contracts. They are charged with looking after the shareholders' (and thus the customers') best interests. This they have not done. Nor has GM Board of Bystanders held GM's management accountable for their actions. As for the idea that GM's situation represents a wider malaise within American corporate governance, perhaps so. If it is true, then GM's decline and fall are a sure sign that the system's working– however painful that will be for tens of thousands of people who rely on this diseased host for their livelihood.
GM being a public company have one goal of existance, repeated by the CFO/CEO when every quarterly report is issued .. “to increase shareholder value”. They are not there for the good of their customers, their workers or the US in general, they are there to make rich people and institutions richer. In the past year their stock value has risen so they CAN claim to be successfull. You don’t need to make a profit for stock value to rise, it’s the rate of change (or the rate of rate of change) of making money that is more important to the speculators who pump the stock. Making less of a loss is the same as making more of a profit, even if market share is tumbling.
Of course you can’t run a company idefinitely at a loss, but if you own stock (like all the top management probably do) you can still turn a profit yourself.
Can someone please explain to me how these two items are a liability for GM? When GM agreed to pay a worker’s pension and health-care, were they not required to set aside money into a fund to pay for these liabilities?
No, they are not required to set aside enough money to cover it. These are self-funded plans which in theory are to be in part covered by the company managed retirement fund investments and in part by future earnings of the company. The accounting can be complicated, but the bottom line is that there is not neccessarily a large enough pot of money waiting to pay the benefits. GM has put extra billions into the pot from time to time, but it never is enough. Rapidly escalating health care costs have also overrun the earlier expectations.
As far as these managment failings being a widespread corporate culture problem, I really do believe that much of the blame goes back to modern MBA education, which started at Harvard and has spread thoughout modern American higher education.
Good point turbo g.The big 3 did in fact agree to a ALL union contracts.Now they cry the blues,whose fault is that?
Management runs the company, period.That fact is stated on page one,paragraph one,line one in every contract for the big three going back to day one.
At any time over the last 30 yrs the big three could of dug in thier heels ,and said enough is enough.But as RF pointed nobody “had the balls”or the charm.
So they collect thier fat pay checks,and garanteed pensions and blame it on union greed,and legacy costs and a government,that won’t pay health care.
Management has only one place for the blame,and thats on thier on incompetant ass
The worst part is the domestic automakers have been beaten on our own soil. The Japanese and other foreign companies were prudent enough to avoid UAW infection and these plants seem to operate just fine. How can you blame the consumer (or attack him/her with patriotism) when all they are doing is just choosing the best product for the best price. That is what America and capitalism are all about. (and the way it should be…) Rant over.
The comment by jthorner has it right: when firms promised pensions and health care benefits for retirees, they weren’t required to put money in escrow that would, with its investment earnings, be sufficient to pay those future expenses. Instead, they could gradually pay down the unfunded liability. This usually works out OK.
In the automotive industry, the companies and UAW essentially made these bets: Outside competition would continue to be trivial; this would maintain pricing power for the Big 3 (especially GM); the Big 3 could therefore continue to prosper despite inefficiencies, sloth, blunders and above-market pay for everyone; and thus eventually the future retirement costs would be funded.
But as it turned out, external competition grew intense, the Big 3’s market share began spiraling down, they lost pricing power, and inefficiencies and above-average expenses became unaffordable. Job buyouts, more early retirements and growing health care costs added to pressures on benefit programs. Over-optimistic investment earning predictions meant less income for the programs. And to make matters worse, government relaxed funding requirements.
The companies and UAW bet on the come, and their bet turned out badly. (But hey, it’s not like they’re the only entities that screwed up. The US has a ten trillion unfunded social security liability, medicare’s unfunded liability is six times SS’s, and the so-called trust funds are nothing but federal IOU’s to itself.)
Detroit has many decaying unused factories and blocks of vacant lots and abandoned houses. Sadly, a poet may someday write an “Ozymandias” about Motown.
You are right Sitting@Home!
“No, they are not required to set aside enough money to cover it.”
They are required to set some aside. If I recall right, a couple years ago GM floated a somtin-like $17B bond for the sole purpose of funding retiree benfits.
It is not a coincident that Harvard (and Yale) crank out politicians and corporate CEOs/owners. The establishment setup a system of public education to train the masses simple (repetitive) skills and to put up with boredom and to obey. Harvard/Yale were setup to train managers (MBA) of the masses. This system was taken from the Prussian-model handbook (Hence the term Kindergarten). Seems kinda primative today…Maybe someone needs to inform the Deans of Harvard and Yale that it is not the late 1800s anymore…Maybe the bankruptcy judge will inform them.
“The big 3 did in fact agree to a ALL union contracts.”
A word comes to mind. Expediency…To avoid a crippling strike…See GM/Delphi in May…How exciting!
Luther (Vandros?)…I owe you a beer or three if/when your prediction comes true :D
Wishing on a star…
It does make me wonder what is it going to take for GM to sit and say “You know what? We’re in a bit of a pickle here!”.
Slowly, but surely, I’m starting to sympathise with the Unions. Work with me here. GM has done nothing to highlight the urgency of the mess they’re in. Yet, Lutz and Rabid Rick still rake in obscene amounts of money whether GM sinks or swims. I was reading another auto blog site (Yes, Mr Farago! I’ve been cheating on you!) and Rabid Rick makes almost 10 TIMES more money than Katsuaki Watanabe of Toyota. I’ll run than by your again, Rabid Rick makes almost 10 TIMES more money than Katsuaki Watanabe of Toyota. As much as I think Mr Ghosn is overrated, at least he decalred that if Nissan wasn’t profitable after 3 years, he’d resign along with his team.
So, let’s recap, GM is losing market share, losing profitablity, losing talent, not developing cars fast enough, whining about CAFE standards whilst other car makers are trying to implement them, over paying CEO’s whether they’re doing a good job or not and paying CEO’s more than CEO’s of more successful car makers.
And they want the UAW to make concessions……?
@KatiePuckrik
Ah, but you see, Katsuaki Watanabe hasn’t done such a wonderful job of pulling off brand eroding cross-platform synergies as Rick has been responsible for. That’s why the boss of Toyota only deserves 1/10 of what the boss of GM pulls in – Rick has a much harder time of it, trying to make all his crazy brand purchases make sense.
(snark alert)
Thank you KatiePuckrik for seeing our side,and luther,both parties get crippled in the event of a srrike Rastus keep your beer on ice,wer’e not going anywhere just yet.
The way I see it, untiil the top management of GM shows us[the union people]some financial responsibility,nothing will change.
On the floor a lot of folks think its,smoke and mirrors and voodo acounting.Then we hear/read of executive compensation,and see the lack of acountability.
Is it any wonder that a bunch of uneducated[not stupid]folks might question just how bad the financial situation really is?
You would be forgiven for thinking that GM’s upper management WANT a nasty acrimonious strike as a prelude to CH11, hence the ‘steady as it goes boys’ from the CEO. I feel bad for Mikey and others like him who are dedicated but who will left holding the baby when the smoke clears.
As much as the executives have bungled things for GM (and Ford & Chrylser), the Unions have hurt them too. Case in point is the updates that GM wanted to do for the platforms listed in the article, and the UAW for getting into a hissy over non-union janitors and truck unloaders.
The other thing is the Union contracts mandate that the lines keep running when the manufactures want to shut them down to keep from oversupplying the market and destroying any resale value of the vehicles. Toyota and Honda don’t have this problem. If demand for a model slows, they shut the lines down for a bit until demand picks up. What does the UAW and big 3 do? Keep pumping out cars no one wants.
There are two parties to blame for GM’s impending demise – the executives and the UAW. They both are to blame for this. Neither is willing to give for the betterment of the company, and they are going to go down together.
When Leo Mullins was running Delta Air Lines, he and his team set up, with Board approval, bankruptcy-proof pension plans for the top level management. So now that Deltaq went C11, Leo is still sitting on th ebach collecting checks. Very. Large. Checks.
Contrast that with the current Delta CEO, Gerald Grinstein. He has pubicly stated that he will not protect his pensions from bankruptcy, and that in a few months, when Delta’s board piscks a new Chairman/CEO, he will “fade off into the sunset”. THAT’s a stand-up guy, and he has earned the respect of Delta’s workers for it.
$10MM a year for destroying the most famous manufacturing company in history? Hell, I’d have done it for $5MM a year and saved them some money.
Like some others, I’m beginning to have more sympathy with the UAW. At least they’re honest in thier greed.
It’s amazing how clueless GM management truly is. Apparently now that Toyota has become #1, it’s just too much work for them to even consider trying to beat them now. Of course, they haven’t really tried in the last couple of decades.
My parents bought a Chevy Celebrity brand new in 1987. My dad was about the have heart surgery, and I think he wanted my mother to have a new car in case anything happened to him. They bought it because even in the summer of ’87, GM had some crazy sale on. Anyway, my dad came out of the surgery fine. Even though he was better, the car was still the biggest POS we’ve ever had the displeasure of driving. We drove the car to Florida in 1988, and we had to keep a package of spare fuses in the car because one fuse kept blowing. Even after many trips to the dealer, none of the problems we experienced got repaired. Dealership service sucked, the service people were rude, etc. In 1991, my dad bought a brand new Tercel. Great car, great economy, and the dealership was excellent even for minor issues that cropped up. We finally got rid of the Celebrity in 1994 (sold it to a neighbour that was a mechanic). My dad bought a brand new Accord in ’94. Kept the Accord for 11 years, and still got close to $4000 Cdn when he sold it. Now we’re a VW family. Anyway, after all my rambling, my point is that based on my family’s experiences, we’ll never buy a new GM product. My grandmother bought a ’95 Buick Regal brand new because it was a domestic product, and she wouldn’t buy anything but a GM because of what happened in World war II. She’s now 87, so she probably won’t be buying another new GM product. It’s too bad that the diehard GM believers are slowing going away, but that’s what happens when you screw your customers around for decades. It’s sad to see them go down, but it all goes back to Robert’s statement about insanity.
Turbo G:
April 29th, 2007 at 10:27 pm
The worst part is the domestic automakers have been beaten on our own soil. The Japanese and other foreign companies were prudent enough to avoid UAW infection and these plants seem to operate just fine.
Without the UAW those plants would pay much less. Union contracts are well-known to increase pay and benefits for non-union workers as well at competing non-union companies.
Mook:
April 29th, 2007 at 1:37 pm
I refuse to root for the big 2.2. They had their chance. I’ve had a GM vehicle in the past, and they didn’t take care of me. Meanwhile my Toyota has been great. I just wish Tesla or someone would take their place.
Anyone who thinks a Chapter 11 Bankruptcy filing by GM or Ford, and to a lesser extent whatever remains of Chrysler after its sale, is delusional and not a friend of the USA.
Forget about the big 2.5’s active employees who get dumped, that in itself would probably cause a mild recession. It’s the retirees who would simultaneously whack the US economy with upwards of a half trillion dollars per year in extra costs.
First, they would have their pensions whacked considerably as their pension plans are transferred to the Federal Pensions Benefit Guarantee Corporation (PBGC). All those union retirees in the upper Midwest and Florida would start spending a lot less on everything after their pension checks take a huge haircut.
Second, the PBGC would need a huge taxpayer bailout to cover the pensions dumped on them that would make the Savings and Loan bailout look like a rounding error.
Third, all those Big 2.5 retirees now receiving gold plated health care would be dumped into Medicare, increasing that programs annual expenditure dramatically.
So anyone hoping for a Chapter 11 Bankruptcy filing by any of the big 2.5 is hoping for a serious Recession or Depression in the US. I think any American hoping for something that terrible for their country should seriously think about moving to a country they feel more affinity for.
a little side note – Byzantine Walls were very good (they are still round Istanbul now) just too many foolish decisions made years earlier lost it to the Turks but the city is still there. St Sophia’s got minirets and became a mosque.
In the same vein the new owners will keep the corvette, GMC, Cadillac, Opel/Holden but the rest will be history.
airglow:
Forget about the big 2.5’s active employees who get dumped, that in itself would probably cause a mild recession.
Could you please explain how it is that Chapter 11 results in everyone losing their job? I thought that result was reserved for Chapter 7.
So anyone hoping for a Chapter 11 Bankruptcy filing by any of the big 2.5 is hoping for a serious Recession or Depression in the US.
Most of us aren’t “hoping” for bankruptcy; we simply see it as inevitable.
Generally, your post is an excellent argument against having things like the PBGC and Medicare; something I heartily endorse. Just please stop with the flag-waving.
There is a nice summary of the current issues at an economic blog site here http://globaleconomicanalysis.blogspot.com/2007/04/ford-warns-on-sales-gm-offers-rebates.html
This guy is a pretty good economist and he suggests the problems are systemic and deep and unlikely to change soon. He also points out strange inconsistencies between Waggoner and Lutz.
Reply to Loserboy:
“Most of us aren’t “hoping” for bankruptcy; we simply see it as inevitable”
“Just please stop with the flag-waving”
First—if GM (and Ford) bankruptcy is inevitable—then why continue to discuss the obvious. Its like trying to analyze who is going to win a WWF wrestling match.
Second, can we refrain from calling those that root for and drive domestics “flag-wavers”—its these kinds of labels that really dumb down the discourse.
umterp85:
My flag-waving comment was directed at this:
I think any American hoping for something that terrible for their country should seriously think about moving to a country they feel more affinity for.
It’s that “If you don’t love this country, then get the Hell out” attitude I don’t appreciate. The notion that “What’s bad for GM (et al.) is bad for America” is hard to cast any other way, frankly.
The picture accompanying the article is interesting for the way its lit up the blogsphere. Not by accident, there is an image of what is assumed to be a zeta sedan/coupe over Fritz’s left shoulder. If Zeta is off again for Chevrolet, why did they put it in the picture?
The way these guys run GM and Ford is embarassing.
Hey this is the USA isn’t it? Not some rotten scummy communist place. So it’s every one for themselves. Either work or don’t. Too bad you didn’t get the top job. And if you can’t find a good job keep looking or move to China. What a wonderful thing to be able to choose to buy a GM or not!
Let’s face it, the 2.5 are not going to survive, and if any part of them do, it won’t resemble anything like what is in place today. That is not wishful thinking, but reality. There are way too many factors against them, many of their own making.
The US economy is slowing down, that is a fact, and it does not take a genuis to ascertain that will mean fewer new car sales. Fuel prices are stuck in the mid $3 range on the west coast and elsewhere and will be there for some time, perhaps even go higher. There is simply no indication fuel prices will dramatically go down, and if they decrease, it will be for a short period. The effect is people have less money to spend on new cars.
The housing market is in bad shape, less money for people to buy new cars.
Partly because the 2.5 flooded the market with cheap financing, “employee pricing” and other gimmicks the past few years, there is not a pent up demand for new cars.
The domestics on-going image of building lesser quality cars.
Clearly the shift is occuring to more fuel efficient and more reliable cars (at least the perception of such). The 2.5 does not win on any category, except initial new car price perhaps (after all the rebates etc.)
IMO, it is not a matter of if one or more of the 2.5 fail, but when. I give Ford maybe two to three years before the big B is filed, GM slightly longer. Chrysler, well anyone going to buy that cash black hole?
GM and Ford do not equal America. I’d like to see an American manufacturing sector that isn’t slowly dying because of unions, legacy costs, and the attitude that they are special. GM is just a company, and it’s a company that has been slowly dying since before I was born. A chapter 11 is the only thing that might get their house in order; even if they manage to survive the current crisis without declaring bankruptcy, it just means that they’ll keep on digging the hole they’ve been digging for decades.
And to the union guy who is cheering on the UAW– I agree that it would be infuriating to see the executive compensation numbers then hear the same jerkoffs demand that you take a pay/benefit cut. Psychologically I get it. But it doesn’t change the underlying fact that it is your job that is on the line. Is it better to go down fighting just to see the look on Wagoner’s face? Or to keep your job and take the hit? If I were a union leader I’d be more concerned about my worker’s long term well being that I would giving the execs the bird, however much they deserved it.
Supporting American mediocrity is not patriotic.
Toxicroach: “Supporting American mediocrity is not patriotic”
IMHO—Whichever car one buys (I happen to prefer domestics)DOES NOT have a thing to do with patriotism. Can we all make a deal and heighten the discourse. Namely—if you buy domestic—you are not some flag waving, under educated idiot from US fly-over land. If you buy foreign you are not some unpatriotic, wine drinking snob from the left or right coast.
If we get these steroetypes out of the way and discuss the real issues—-all of us may learn something new from one another that we did not know prior to reading.
I know we play in a black-white world….but there is much to learn from the greys.
Can we give it a shot ??
I didn’t mean to impugn anyone’s patriotism. What I was trying to point out was how truly devastating even one big 2.5 bankruptcy would be for the US Economy. The number of retires alone who will have their standard of living reduced and their pension and health care liabilities transferred to the federal government are truly mind bogging and totally unprecedented.
A Ford or GM Chapter 11 filing would send shockwaves through the US and global economies and cause a serious recession in the US. Anyone who is truly wishing for a Big 2.5 bankruptcy filing might reconsider if they truly understood the probable negative ramifications for the US as a whole.
I didn’t imply that buying GM makes you an undereducated idiot. Or at least I didn’t mean to imply that.
I think a bankruptcy or worse is inevitable. The plus side of a bankruptcy is that it would let the 2.5 clear out all the junk that is holding them back now. The downside is coming whether we want it to or not; the plus side is an American car industry that isn’t hog-tied by 50 years of accumulated stupidity.
To the individual who so eloquently puts it (It’s GOOD to be the King!…and everyone ELSE can kindly go pound sand!):
During that final day at one of those 12 plants, where everyone is saying their tearful goodbyes to friends and coworkers, right before they shut off the lights and lock the gates once and for all….right before the workers go home to put their house for sale on a terribly depressed market, or better yet…contemplate suicide…
…you can gather them all in the parking lot and lead a mass rendition of “Yesterday Once More” by the Carpenters.
“every sha-la-la-la
every wo-oh-oh-oh
still shines…”
Be sure to pay the RIAA first, though, as otherwise you’ll be sued for “stealing”.
Rstus: You are correct about the farewell crooning, and up in the executive suites, home of the bk proof pensions they will be singing that Steve Miller ditty: “..go on, take the money and run..”
It was Einstein who originally made that observation about “the definition of insanity.” What makes anybody think that GM would take anything from Einstein?
Airglow – this is not 1950. The US auto industry is now a much smaller part of the total economy, with computers, software, aerospace, service industries now making a larger share of the economy.
A GM bankruptcy will have a negative effect on the bond market, but still not as large as the savings and loan debacle of the 1980’s.
The US economy can handle a GM, Ford and/or Chrysler bankruptcy, with about the same level of problems caused by the steel and airline chapter 11’s.
The reduced size three have already been peeling off many of the jobs over the decades.
US auto industry just is not that important anymore.
Honda in particular has done a good job of creating auto jobs in the US. These transplant jobs are offsetting the Detroit losses to some extent.
No one is wishing for a big 3 failure, but only Michigan will feel the pain. Not too many other states have that many domestic auto jobs left anymore, so there is little political support for the 2.5.
No one in Washington cares, politicians are totally clueless anyway. Bunch of useless idiots there won’t be of any help.
So get ready, it will happen.
1. His pay raise barely covers the price of a nice walkup apartment in Umbria for his annual September one month vacation (After his “retirement” he will need a break from Aruba once in a while). Can’t a guy catch a break once in a while?
2. While the accountants orgs. continue to chase pension fund highjinks, everytime the Dow has a good year that allows them to raise their projected return rates and lower the annual actual cash commitment.
3. Just off hand, having no experience in this area, how DO you walk in to a labor meeting with your golden bankruptcy proof parachute and your nice pay raise, and tell everybody else in the room to tighten their britches and cut, cut, cut?
4. If your board cuts your pay, don’t you go to their board meetings a little cranky and want to cut their pay? The fact that many BofD’s are mutual back scratching operations can sometimes be just a tad infuriating. See Mark Steyn’s hilarious commentary on the Conrad Black trial to see what nimrods these BofD’s can really be.
mat51: “This is not 1950”
While I agree with you that the Big 2.5 is less now than it was 20 years ago…the larger issue is that the loss of the Big 2.5 is yet another blow to the loss of US manufacturing jobs. Also, please don’t say that Toyota / Honda etc make up for the Big 2.5 losses becuase they won’t even come close….if you have a counter to this please provide your reference and I will check it out.
I am a free market guy…but also old school in that I think you need to make something tangible (i.e. heavy manufacturing)to remain viable and also ensure national security in the LONG TERM. Clearly we are already on the slippery slope—-but I’d like to think the US is capable of being more than an “empty suit” economy with highly transferable intellectual assets. The pending negotiations with the UAW will go a long way to determining this fate.
“Without the UAW those plants would pay much less. Union contracts are well-known to increase pay and benefits for non-union workers as well at competing non-union companies.”
Perhaps. Perhaps not. I do not believe Japan is unionized. So the question is if someone that works on the line is as well compensates in Japan (relative to their economy) as someone that works on the line in Toyota/Honda plant in the US.
If the US workers are not higher paid than the japanese line workers, then I’m not so sure your argument has merit.
Does anyone know the answer to that?
Umpterp85 –
Honda does have significant manufacturing and engineering in the US. They should be commended for this. Now, Honda is going to build an assembly plant in my state of Indiana. GM let go all 30,000 employees they used to employ in Anderson Indiana. Why the ***k should I buy GM?
Bought a Mustang and Ford just closed the Connersville and Indianapolis Visteon manufacturing plants. Screw Ford.
Toyota is expanding Camry production to Lafayette Indiana.
If I want to support the automotive manufacturers creating jobs in my state I will buy Toyota, Honda or Subaru.
Nothing will re-create the massive automotive employment of the big three of the 1950’s and 1960’s.
I too would like to see manufacturing stay in the US. I really would like to see the diminished three survive. Won’t happen, too much bad management, never did change, never did learn.
Auto plants in Japan are, in fact, unionized:
http://www.jaw.or.jp/e/
Matt 51
First, I never said Honda didn’t have manufacturing jobs in the US—I did say the number of jobs they have created (including the new plant in Indiana) pales in comparison to those currently employed by GM and Ford. My point is that the more “Andersonville Indianas” we have the worse off we will be and the less economically secure our country will be LONG TERM —another Honda plant employing 2500 will not make up for the 500,000+ manufacturing jobs lost if GM and Ford go away.
Also—this is a free market—-thank god you can buy what you want and don’t have to buy a —-kng GM (your words not mine)
umterp85-
Those jobs are gone no matter which car you buy. I buy American all my life, the jobs are gone to China anyway. However, what jobs remain appear to be Japanese, so I am very grateful to those companies who put work in my state. GM let the citizens of this state down in a big way; understand, most of the country really does not care if GM survives or not. They must survive based on merit. They must compete. It is too late, they never figured it out.
Yes, I am very proud to live in America, where we are free, and have freedom of speech. Being forced to buy GM would not be in the national interest, it would only be protecting a special interest. Failure by bad management has serious consequences for employees.
Roger Smith or Rabid Rick? same poison, take your pick.
The US govt and UAW never helped, both helped kill GM. Mostly they killed themselves.
I still don’t understand why Toyota and Honda can build quality cars with so many fewer people than the 2.5 have. This is the logical conclusion of the argument that Toyota jobs can never replace GM jobs.
I also have a problem with the young working people of today working ever harder to support the ya-owe-me retired generation. This greatest generation may be the first in US history to happily push excessive costs onto the next generations in order to fund ever more costly medical care and ever nicer retirement homes in Florida. Today’s young families are working harder than ever while the gold plated UAW retirees are living better than any retired working class generation in history. Why should the 29 year old couple with two kids pay a premium for a GM minivan POS when they can get a better van at a better price from Hyundai? Should they do this to support the fishing boat and Sun City home of the retired GM worker?
What premium on what GM van jt horner.The GM van is priced in the same range as the Hyundai.
If the young couple don’t want to buy a GM van, who says they have to.certainly not the retired guy in Fla.
And how exactly is the Korean Van superior to the GM?
You refer to the GM in terms that arn’t useally condoned here at TTAC .Perhaps you should enlighten us ignorant masses,with your automotive knowledge
This editorial in the Detroit News deals with Michigan’s budget woes, but it’s highly relevant to the current discussion.
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070430/OPINION01/704300312/1008
It brings to mind Engine Charley’s famous observation that “what’s good for the country is good for General Motors, and vice-versa.”
General Motors has carried this country on its shoulders time and again. It’s mistakes, easily recognized in hindsight, were to raise the value of common labor, to provide those laborers with outstanding healthcare and other benefits, to make being a car dealer a lucrative independent business, and to try and give consumers the products they wanted. American’s loved the GM battleship when there was no competition from abroad. Now that the rest of the world has grown up, GM is in a hole thanks to the huge cost of doing business in this country — due partially to GM’s own past success.
You carpers should be ashamed of yourselves. Ask your fathers if America would have won WWII and been able to hold steady through the Cold War without GM powering the economy. Would American laborers be the best-compensated workers in the world?
GM’s problems are America’s problems, only in more concentrated form.
Speaking of waking up, I got an unpleasant shock this morning. Gas here hit 107.9/litre. That’s $4.10 a gallon…for regular. Premium is $4.50. Ow. I put this here because GM really needs to think about the economy/hybrid/diesel side of the equation, and also come to the realization that the buyers of it’s profitable vehicles are getting squeezed like lemons. They can’t shake off gas prices like this indefinitely.
“GM is in a hole thanks to the huge cost of doing business in this country”
“Would American laborers be the best-compensated workers in the world?”
Which would you like? A country where the cost of doing business is low? Or a country where laborers are the best compensated in the world? I don’t see how you can have both.
GM Philosopher:
“GM’s problems are America’s problems, only in more concentrated form”
I could not agree more on this statement. The continued net loss of industrial jobs in the US will haunt my kids and grandkids future. It is a matter of national security.
Net, we cannot let our aerospace and automotive industries vanish—otherwise we truly will become a likeness of the person in the office we all dispise—the “empty suit”…or worse yet the Mckinsey consultant who offers little in economic value (read a service based economy) and whose asset is highly transferable / replaceable in an increasingly educated global economy.
There are those that say that GM and Fords demise is inevitable. I would hope that all stakeholders involved (UAW, Mgmt, Board, Gov’t)would have the b–ls to step up to the plate and find a solution—-I hold out hope but am not confident.
For that—-our generation (mostly boomers)should be ashamed of itself.
Roger Smith gave up 20% of the US auto market share, more than any human in history, and then he loots for himself a huge pension just before he retires.
Board revolt fired Stemple, borrowed vast sums of money that were totally squandered, and then they spend the next 5 years worrying about branding their cars like Proctor & Gamble does toothpaste.
No wonder Ross Perot thought GM management came from another planet, they were and are totally clueless.
Prepare for chapter 11, over 300B in debt with a 16B market cap. Oh yeah, GM can be saved – if you believe that, then let me sell you the deed to the Brooklyn Bridge.
To Mat51:
I grew up in Schenectady NY. Like some cites in Indiana (and most of upsate and western NY) Schenectady was a one-horse town. In 1950 General Electric employed 50,000+ in Scenectady—today that number is less than 3,000.
Unlike you—-I do not hate GE for the moves they made even though it devasated my hometown. I still but GE products. The cost of doing business (high taxes—high wage costs + union stranglehold) there became untenable—so they moved elsewhere.
GM and Ford are in trouble because they did not have a visonary leader like Jack Welch to guide them through the changing times against similar problems.
Like I said—I am not confident—but rather hopeful that our generation can step up and solve problems as opposed to rooting for an inevitable loss. This vengeful and defeatist attitude will not serve our children or grandchildren well.
umterp85 –
I was working for GE when Neutron Jack took over, and I have no respect for him. Nothing more than a thug, not a visionary. Later, I went to work for a GM division.
Tell you what, I still bought GM product and Ford product until this year, now I bought my first Toyota. Oh what a feeling!
I do not feel I have to scrape and bow to bad management. I RESPECT good management.
Neutron Jacks claim to fame came from running GE plastics, when you investigate what he actually did it is enough to make one vomit. Yes, he made a fortune for shareholders during his reign, but GE was made into a crippled giant, more a bank than a manufacturer. GE has been struggling to recover from his mismanagement ever since.
You say I hate GM, I say no, I am telling it like it is.
GM management deserves to be called out, if more people had done so in the past, it might have made a difference.
To Mat51: “GM management deserves to be called out, if more people had done so in the past, it might have made a difference.
You stated the problem perfectly—–too many people calling out problems—not enough trying to find solutions—makes people feel better but does nothing to set up a better place for our kids. Hope you enjoy your Toyota !
I am from the UK and I get the feeling maybe I haven’t got a total grasp of the problem here in the United States. So I wrote a small scenario, please tell me if I am off the mark….
I am the manager of a hospital (for this instance we shall call “General Hospital”) that has been the leader of industry for 76 years. But under my tenure, I am killing patients at greater rate than I am curing them. Families are furious at me, the newspapers are crying out for my resignation but I say to the board of directors that I am “in a stage of turning around, please judge me after my plan has been executed in 3 years’ time”. This of course doesn’t worry me, because sink or swim, I have my financial future secure with my golden parachute. Meanwhile, my second in command is charged with keeping the hospital clean and sterile. He is too busy moaning that government legislation dictates that hospital standards have to be so clean, he’d have to charge each patient an extra $5000 each to achieve these standards. Whilst he is whining, the hospital is barely functioning due to old equipment and aging staff. He, as well, has a golden parachute.
In another district, a Japanese hospital, named Hospoyota is treating patients, far more effectively, by curing them or treating them to a high standard of quality and reliability (note these 2 words!). Because of Hospoyota’s philosophy of long term thinking, emphasis on treating the patient with the best possible treatment or product and planning for the future against cleaniness standards the government enforces, their patient throughtput is astronomical.
Meanwhile, General Hospital is creaking under a weight of more bureaucrats than doctors and the fact Hospoyota is taking their patients away from them, which means less revenue. So what do I do? I sack a third of my doctors. Doctors are angry because they are paying the cost of my management mistakes and have seen nothing in the way of changes for the better for General Hospital. The rest of the Doctors threaten to strike because they see this as unfair. I start crying again because they are making my job difficult. To cover my tracks, I publicly state that my competitor has distinct cost advantages because they are located in a district which doesn’t tax hospitals as much as this district, plus their labour rates are cheaper than here. Hospoyota relocate to my district and achieve the same results, only this time talent doctors from this district go to work for them and take more patients away from me.
My second in command has gone on many public junkets telling the world how the hospital has many concepts. Concepts which will revolutionise the hospital. However, the concepts which my second in command are talking about, don’t actually exist. The press start to get annoyed and write negatively about my hospital in the papers.
Come the end of the year, the hospital posts losses of $10.6 billion, I push for more doctors to be laid off without solving the problem of why my patients are dying, why my hospital’s cleaniless standards are slipping and why Hospoyota’s operations are profitable and efficient. The board of directors pay me $10 million for my efforts.
Now take that scenario and move it to the auto industry. Why can’t people who can do something about this situation not see this mess……?
This cartoon from Drew Sheneman (Newark Star-Ledger) says it all:
http://www.cagle.com/working/070424/sheneman00.gif
KatiePuckrik:
You forgot about the orderlies and facilities folks (janitors, electrician, plumbers, etc). I can see how the doctors were suffering a similar fate as, let’s say, engineers at another General location, but you did not address the other workers and how the hospital dealt with them. Otherwise, very close.
Umpterp51, we can get in a flame war, or let it lie. You call me names, I’m gonna call you names.
I love my Toyota.
Note though, Caterpillar is in a high tax state, IL, with a UAW workforce, and they are competitive on a world wide basis.
The difference? The quality of the management.
Don’t worry KatiePuckric youv’e got a great grasp of whats going on.
Well written comment,and very accurate
I have to point out again that it is not only GM management, but the UAW that has helped cement GM, Ford, and Chrysler’s position with their labor contracts.
There’s entirely too much finger pointing going on when they both need to sit down and discuss saving their collective behinds. Management needs to be able to shut down lines when necessary and the labor needs to understand that it is necessary for survival.
At the same time management needs to take that golden parachute and cash it in to save the companies they are leading. It’s crap that someone can bring home that much income in one year while the company they are supposedly running is bleeding billions of dollars.
Well bob you have nailed it again. The April results are in and they aren’t pretty. Even toyota and honda dropped 4%, but gm did a 10% swoon. This means the two japanese nemesis gained again on gm (and ford who dropped 14%). Are there any retail sales going to be left once gm and ford sell their last units to the fleets? The new pickups at gm are sitting for 85 days and incentives are back. I said it before, with $4.00 gas on memorial day, do you think people will forget and think pickup or suv in the near future? Each gas shock digs these fuel meisters a little deeper in their graves and with it the profits of the American mfgs.
Here I am again for what its worth, being a Canadian, all Automobile manufactures here are “Foreign” whether they are made here or in far off lands! Now there seems to be a trend in a lot of “Posts” to blame the Union (UAW-CAW)this is grossly unfair as the Union members do not design these vehicles or engineer them either, therefore we are back to lousy management of each company.
I also think that Chrysler is “toast”, who in there right and sound mind would wish to buy this outfit, I note that Magna has the inside track, I think that Frank Stronack age is getting in the way of a sound business decission, I know that Magna makes Vehicles in Austria for Chrysler, but making them in North America is another matter!
Also the money given by share holders to Top management is terrible and not good for the Shop floor worker, when Market shares are in downward spiral.
Ted,
It’s not the UAW worker’s fault (i.e. not at all) as much as it is the UAW leadership that is to blame. They are forcing the manufacturers through labor contracts to keep outdated lines and models in production to keep money rolling into the UAW/CAW’s pockets. That along with the mismanagement of the big 3 is leading to their demise.
Chrysler will be spun off debt free, therefore Chrysler is in a much better financial position than GM (300B debt) or Ford (100B) debt. Again, Caterpillar pays the same UAW wages and benefits and competes on a world wide basis. Primary problem is not the UAW, they are a secondary problem.
“… money given by share holders to Top management … ”
It isn’t the shareholders who give the money to the management. Management picks the board. The fiction that shareholders choose the board is one of many modern illusions.
Matt51,
Correct me if I am wrong, but I don’t believe that Caterpillar has the same level of competition around the world that the big three do.
Caterpillar may not be a good example…in the late 1980s or early 1990s, it went through a bitter and protracted strike. If I recall correctly, the UAW eventually agreed to accept significant cuts and a two-tiered wage structure (for new hires).
Management runs GM not the UAW/CAW.
Management has to agree with the collective agreement,or they don,t sign it.GM can sit back with thier unsold inventory,and wait the union out.
How long can the unions survive a strike?Things start to fall apart around the 6 week part.Nobody can suvive too long with no pay.The 5yr{management demanded and got 5 instead of 3} UAW contract comes up in Sept.CAW-GM comes up fall of 08.What will happen?
Does any body think the present management has the balls to last 8 weeks maybe 10?Not a chance,they are too busy lining thier own pockets,and waiting for thier gauranteed pensions.[my pension is not]
The UAW/CAW will not give an inch of our hard fought gains.
Whatever takes place in the next few years, good or bad{and nobody but nobody knows for sure}the unions will not be to blame , that responsibility rests soley on managements shoulders.
GM has survived for a 100 years or so,and will still be around long after all of us are dead and gone.
Mikey,
In the early 1960s, a reporter asked an autoworker about rumors of his company’s impending exit from the automobile business.
The autoworker replied, “This company will be here long after you and I are gone!”
The company in question? Studebaker.
Correct me if I’m wrong but GM in 2007 is a little bit bigger and more powerfull than Studebaker in 1964.
Mikey,
Bigger? Definitely.
More powerful? That’s debatable.
GM certainly doesn’t have control over pricing as it once did (through the early 1980s, Chrysler and Ford would wait until GM announced its prices before announcing their prices on competitive vehicles).
It is no longer a styling leader, and, with the exception of the Corvette, Tahoe/Suburban/Denali/Yukon and Silverado/Sierra, its vehicles aren’t class leaders within their respective segments.
And it certainly isn’t looked upon as a technology leader.
I hardly consider GM to be a powerful company.
GEEBER
I beg to differ with you opinion,but we will see how it plays out eh.
Hi guys,
Caterpillar – they did have a bitter UAW strike – Caterpillar broke the union, but for some unknown reason, allowed them back. However, what Caterpillar was requesting was entirely reasonable – I think they wanted a long term contract of 6 years so they could plan their business. As best as I can remember, UAW gave up nothing on wages or benefits. Caterpillar faces competition from Kamatsu of Japan and many other fine companies. Caterpillar is no 1, because they have fine management and fine engineering. Yes, the UAW wages and benefits are affordable. It is always a weak excuse of bad management to blame the union.
Example no 2 – Allison Transmission Division of GM – have over an 80% market share in US – facing competition from all over the world including Japan and Germany. Full UAW wages and benefits. They are extremely cost competitive due to fine engineering in their manufacturing organization. Now GM is selling this winning division to raise cash. Key to their success story? Oustanding management and outstanding engineering.
I can also mention GE aircraft engines in Cincinnati, a world leader in jet engines, again with UAW representation, but GE wage and benefit package is not as rich as what Caterpillar and Allison Transmission pay.
You will all see the morning news of GM’s large profit in first quarter of 2007! All profit comes from India & China I think, whereas in North America they lost a lot of Money, in these Eastern countries they can sell almost anything, they dont need to worry about clean emissions or anything else, dont expect they have Unions either?
Matt,
Caterpillar locked out the UAW members and hired replacement workers, and “out sourced” as much production and warehouse work as it could.
The end result was to greatly weaken the UAW. The union is probably much weaker – and much less militant – than it was before the strike.
Geeber,
They later fired all the replacement workers and took the orignal UAW workers back. UAW was not greatly weakened.