Of all the failures that have led GM to the brink of bankruptcy, the automaker's failure of imagination is the most profound. Never mind the plug-in electric – gas hybrid Chevy Volt. How about conjuring a vision of a company with two or three tightly-focused brands that each produce a handful of distinctive, class-leading and profitable vehicles, that markets them with relentless focus, and stands behind them with a national network of honest, efficient and courteous salesmen and mechanics? Whatever else Car Czar Bob Lutz can say about GM's product strategy, that ain't it. Which begs the question: what does The General want to do with U.S. taxpayer’s money?
The proposed cure is symptomatic of the disease. Like General Motors’ endless, target-less turnaround, the automaker’s plans for low-interest federal loans are utterly vague. GM won’t disclose exactly how much federal money it wants, or what they want to do with it. “We know the legislature authorized up to $25 billion," GM spokesman Greg Martin told the St. Louis Post-Dispatch. "But the amount that could really make a difference likely is much higher.”
Of course, that all depends on who gets how much and what Martin means by the phrase “make a difference.”
If GM wants a share of the proposed $25b in federal loan guarantees to subsidize production of the company’s “game-changing” plug-in Volt, six to ten billion ought to do it. Free marketeers may wonder why American taxpayers should subsidize the producer (GM) rather than the consumer (a buyer of ANY vehicle that meets a certain mpg rating), but hey, Michigan is a "battleground state." American votes jobs are on the line.
Did I say $25b? In the run-up to and (especially) including the Democratic and Republican national conventions, Detroit has been lobbying pols to increase the federal tax cash to $50b. Michigan Senator Debby Stabenow hinted that even more federal funds might be needed (a lot now, a lot later). This desperate doubling down stripped away any pretense that the supposedly eco-friendly federal loans will pay for Uncle Sam's green dreams. It’s bailout bucks, pure and simple.
Well, not so pure and not so simple.
The $25b loan program is part of last year’s Energy Bill. Your elected representatives mandated that the funds be used to develop and build fuel-efficient vehicles. To channel these loans to The Big 2.8, applicants (supplicants?) must use the low-interest (4.5 percent) loans to re-tool U.S.-based production facilities to manufacture gas-misers. The bill also stipulates that The Department of Energy– the agency charged with steering boatloads of Benjamins to Motown– must give “priority” to assembly plants that are at least 20 years old. (Toyota and Nissan have one qualifying plant each, and they don’t want/need the money).
Of course, federal programs are almost infinitely… mutable. Even though the Energy Bill’s wording seems clear enough, Detroit’s spinmeisters are already pointing out that the final rules are yet to be written. (The final definition of applicable vehicle types should be a fun read.) Taxpayer grumbles about federal favoritism aside, dumping more money into this part of Uncle Sam's trough will be easy enough.
Assuming (as we must) that significant federal funds will flow into GM’s new product development, it should be remembered that the tax money will replace GM cash already allocated for that purpose. GM can then use the [former] development money for housekeeping: union buyouts, unconscionable executive compensation, Delphi's pensions, etc.
So, what’s the bet that the $25b to $50b (to whatever) loans won’t do any damn good? And by “good” I don’t mean that GM will end-up with electric Volts or gas-miserly Cruzes. I mean what are the chances that our tax money will provide anything more than a temporary, ineffectual band aid for GM’s arterial spray of red ink?
Even if you gave GM a blank check and said “Here, whatever it takes. Build something that will kick the imports (the other guys’ imports, not yours) ass,” they couldn’t do it. Or do it often enough, what with eight brands selling over 40 different(ish) products.
Heads up feds: tight money has not been– nor is it now– the bane of GM’s existence. The General’s goose was cooked by managerial and union greed, sloth, arrogance and, above all, bureaucratic bungling. As anyone who’s ever worked for a company with its head up its ass will tell you, giving copious amounts of fresh capital to execs in charge of a dysfunctional corporate culture to “fix” their business is like trying to extinguish a log fire with gasoline.
If we used our $25b to buy out every GM senior manager and union worker currently employed by the company, and then let the new guys get on with it (with performance-related pay), GM might dodge the bankruptcy bullet. Or, alternatively, embrace C11 as the best way to create a sustainable American automaking endeavor. In fact, the new team would do whatever they'd have to do to survive. And if they didn’t, they wouldn’t. Imagine that.
Glad you’re back Robert. Another hard hitting article on the sickness we call ‘detroit’. Fed funds will most likely be frittered away just like the $Billions of shareholder funds. Unless there is a revolution inside GM, I don’t see much changing. Just more of the same. Until the fed gets tired of the game or the game is over. My guess is the funds will be used to payoff/bribe employees into buyouts/ early retirements, delphi, GMAC,etc. Not for the new gas efficient cars that need to be built.
And who is to say that the market can absorb all of these new ‘cars’ once they are built. And that Detroit can make money even selling small cars? The gravy train from truck sales has probably ruined the economic thinking needed to make real money on cars. How much will Detroit have to raise prices to show real profits? They are the same as the japanese now. But the japanese make real money; detroit loses money. Big difference. Something is going to have to change.
I have been rereading some older literature on the subject, On a Clear Day You Can See General Motors (John Z. De Lorean, by way of Patrick Wright, 1979) and The Decline and Fall of the American Automotive Industry (Brock Yates, 1983) in particular, and it is astounding how many of the problems those books outline are still relevant over two decades later.
Both books point to product (mis)management and corporate culture as main culprits. The corporate world GM has created and sustained over the years is simply appalling; rewarding those who choose to fall into line and remain invisible and punishing any attempts to (sometimes vocally) change the system. This world breeds mostly “yes-men” who consider disobedience of any kind to be corporate suicide, so a bad decision from a superior would be touted as the greatest idea ever, even if the opposite were true.
Wright cites the Vega and Yates devotes an entire chapter to the 80s J-Car failure, but small domestic “import fighters” have mostly been horrible failures. GM consistently over-promises, only to under-deliver come game time. Once the imports gained a foothold (it seems in whatever market they choose, nowadays), their superior products proved a strong argument for, say, the one time buyer of a Honda Civic, to later buy an Accord. If, after years of buying GM products, one buys a nearly trouble-free import, why would one feel the need to buy domestic again? If my Honda Civic treats me well, why buy a Vega (or Pinto)?
I can’t verify how much has changed over the years, but it seems evident to not much has – Except in a few instances, GM still cannot make class competitive cars. Perhaps most damning is how long and arduous the corporate system makes product development, possibly one reason we can’t go buy a competitive small car from GM now. Had GM invested as much time and energy into even one competitive small car program as they had a single SUV program earlier (don’t forget, GM milked the SUV boom just as much as Ford), I believe they would be in a substantially better position today. And the Aveo doesn’t count!
I’m really pulling for the General, for mostly historical reasons, but it has so many roadblocks preventing success: a flawed corporate system, inferior and badge-engineered product, too many brands/dealers, brand perception, and the UAW, to name a few. Government bailouts could help a few areas, but even with world-class vehicles and a flawless product portfolio it would take years to erase the perception gap propagating for the last few decades. The corporate culture would be just as difficult to erase, if not more so.
When I worked for GM this was the concept on small cars. First if you can make a nice large car you can make a nice small car.
The parameters are the same. Durable, good looking, quiet, efficient, handle nice, and fun to drive.
With small cars they said with the union burden driving up the cost why build a good small car. When a small car buyer walked into the show room sell the big car or let them walk and if they bought the small car, well they will be back soon to buy the good car.
When a car company willfully sells a 4 cylinder car without harmonic balancers (early Saturns included) they kwow the engines will shake them selves to death and the vibration will cause the occupants of the car to grow weary of riding in it. It is such a well known concept that lawnmowers have harmonic balancers added to their engines. Vegas rusting out in one year and getting 12 miles to the gallon. So, the creation and sale of the poorly designed small cars was a willful act.
Let us see if GM has seen the light and will make the CRUZ a decent car. They know how they just have to change their marketing concept.
Detroit`s struggle to pull Volt through is epic. So is the amount of cash at stake. Maybe they should have talked to Bob Lazar who is currently also involved in Hydrogen technologies. behind that guy lies some information only small fraction of us are ready to fathom. I can`t tell you the proof or how I know it,but he has it . and it is physical. Small amount of milligrams of( ) that Sandia National Labs could approve his previous statements. (and it is not lithium6 hydrate).unfortunately everyone would try to benefit from it and squeeze profits, that is why it will be kept secret.No disclosure date as of yet.anyway I am so happy.So happy.
@jurisb:
I struggle to understand what Lazar has to do with GM’s problems and advanced batteries. He is discredited even by the other UFO believers. I hoped he might have discovered something really important like the 11 secret herbs and spices in KFC or the original 1886 formula for Coca Cola!
Nevertheless, help from outer space may be the only viable thing left for Wagoner and his band of complete incompetents at GM. I know of no earthly redemption for their idiocy.
So we have come to this, a chrysler type bailout for the entire domestic auto industry. A complete admission of total failure by an entire industry. This must be a first in America. Too big to fail is the new kool aid slogan from Detroit. One thing is certain, this bailout when it comes, will stave off bankrupcy for all of the three domestic builders. However, it is only bankrupcy which will allow these companies to down size the correct way; which is to cut dealers and brands. Thus, overproduction of unwanted vehicles will continue to be sold by un-necessary dealers to people who will only buy for a fire sale price. If employment is the only criteria, I guess it works and extends a charade for another several years that began with GM’s “fire sales” in the nineties. These sales now go on, we are told so that dealers can clear their lots. But no one ever says that this is to allow for re-ordering of more unwanted cars and trucks which will have to be cleared later for you guessed it. If downsizing slowly is the answer, then how do you justify slowing down the buick line when the average dealer now sells 6-8 units per month? Don’t say it’s okay, because they have GMC and Pontiac now in the same store. Which means this typical dealer can now sell 25-35 new cars a month, or maybe even 50. This when their competitors with far fewer stores grind out in excess of 100 cars per month. In many cases this is a store with only one brand ex. toyota or honda. You can’t throw excrement against the wall and hope enough will stick to make it. And the idea of fire saling the cars and trucks to drive the competitors out has been disproven long ago. Finally, the halo brand saves the day is the same argument as wasting money on nascar. Corvettes, Volts, (inthe same league because they cost over $40,000) cannot bring customers into a showroom to then by a mediocre car for say $20,000.
jurisb:
Nevertheless, help from outer space may be the only viable thing left for Wagoner and his band of complete incompetents at GM. I know of no earthly redemption for their idiocy.
LOL, the TTAC statement of the week.
I understand that even the Corvette is now for sale at “employee prices”. If so, then GM has sunk so low that they’ve screwed up their only remaining world-class marque. I regret deeply the effect a bankruptcy will have on employees, stockholders and communities but… Fifty billion is too dear a price to bail out a company so mismanaged for so long.
I am very much against giving any low cost loans to the big 2.8. As the article says all that this will do if free up other money for housekeeping.
Here is a better idea (in my opinion). Make the cash available to MIT or some other hi tech institution and let them administer the funds with the automakers. I think this way we would get a good high mileage product without waisting all the money on union benefits and corporate jets.
Ah! Detroit capitalism! Private profits, public losses.
I really would like to sit one of these Detroit execs (Rick Wagoner, mainly) and see their jusitifcation for a bailout partnership. Didn’t anyone think to stash some of their SUV profits for a rainy day?
Oh well, at least GM will have a new cash hoard to make a fresh set of mistakes!
Which means TTAC will have a fresh set of material!
Everybody wins!
God bless, America! :O)
The probability is increasing that we’ll soon face the question of whether to rebuild New Orleans. Again. There are strong parallels here it seems. I say it makes equal sense to do one as the other, which is to say none at all. Under current management as directed by the BoD, GM has as much chance of recovering after a bailout as New Orleans does of having no more hurricanes. Let’s cut our losses.
Ford, maybe, but only after a thorough analysis and directing any future profits to the tax payers until the loan is repaid with interest.
This is worse than a Chrysler style bailout, because that wasn’t taxpayer money. That was merely a guarantee that backed private loans. This is just flat-out giving them the bread from the taxpayer’s pocket.
No commentator that I’ve seen has addressed, at least with any clarity, two questions. First, precisely how is it that Detroit is going to repay these loans? Paying back a loan is always a bet that the investment of the funds will make money faster than the interest accrues. How, exactly, does Detroit plan to accomplish this.
Of course, second, is the question of what it will actually take to make a dormant industry competitive. Certainly not a mere $50 billion. The absence of any actual plan means there is no actual answer to the question of the amount of total investment needed. That question is, of course, as stated in the piece, impossible in the absence of a concrete plan.
There is another book, Chrome Colossus, which explains much of today’s GM. In a sense, it is the government’s fault. The GM of the fifties knew that it would be hit with an antitrust suit to split away Chevy if it penetrated more than 50% market share. So, GM of the sixties figured out the way to make more money was not to sell more cars, but to make cars more cheaply.
GM has never regained the old market and sales oriented mentality.
There seems no reason to believe that government subsidies are likely to change things. The culture at GM is simply too deep. Even if Wagoner and the entire GM board were axed, the replacements would pop up out of the same mold.
There is a lot of blame to be passed around for the current melancholy state of the auto industry in the U.S. The government’s inane antitrust policies are part of the picture, historically.
But there is already a government mechanism for bringing a new and vital manufacturer from the remnants of an old one that can no longer be saved, and that’s called bankruptcy reorganization.
In the end, GM goes into Chapter 11. The question is not whether. It is when. Government subsidies may postpone that and make emerging from Chapter 11 more problematic, but won’t prevent it. Chrysler ultimately will be Chapter 7, along with Delphi. The Ford family will sell out its interest in the company to a foreign manufacturer, as the Class A vs. Class B stock arrangement of Ford means that’s the only way the family can preserve any of its fortune.
what does The General want to do with U.S. taxpayer’s money?
I’m in favor of the bailout in theory, but will probably be against it in practice. The question asked is important – just wtf is the general, and the Ford family, and the 3 headed dog planning to do with the money? I fear there won’t be any requirement to change management teams. IOW the govt. is -probably- going to give Willie Sutton the keys to the bank.
Avoiding Ch 11 is like a cancer patient avoiding chemo. One can pray for a miracle, but w/o killing the cancer cells the disease will probably spread.
inept123, For those watching, the corvette success story has been fading lately. In the last two years, dealers have them laying on lots tying up giagantic floor planning. Discounting, of this brand started a while back. Yes, there are some exotic racing models that are in some demand, but the run of the mill $50.000 corvette is dead. There is a cult like Harleys and Minis who will always buy them, but the idea that they will sell in quantity to average motorists is not happening. And apparently the cult, is keeping what they have and not buying the newest iterations at the pace they had been. I don’t blame the car, but the economy is not right for corvette. I would add that most $50,000+ sport cars are suffering. It’s that corvette sold the most in this segement and it seemed like it would never slow down. More of the perfect storm for GM.
wmba: “help from outer space may be the only viable thing left”
Ohmigosh, wmba, you’ve revealed the secret plan to resurrect the Detroit Dead. OK, here are details: It’s called Plan 9, and the objective is to perfect a solaranite battery that’ll give the Volt a 300 mile range. (If 90% is downhill, that is. The laws of physics can’t be repealed.)
blindfaith: “When a car company willfully sells a 4 cylinder car without harmonic balancers (early Saturns included)…”
Incredible! That’s why the engines in American economy cars tend to be so rough compared to Toyota and Honda 4’s? I’d call that willful negligence. And stupid.
I don’t know how anyone can conceive of one car that’ll save the company. Any such conclusion is based on an analysis that fails to include certain facts.
Like these. Last year @ 12/31, GM had $40,000,000 more liabilities than assets. As of June 30, GM’s liabilities exceed its assets by about $60,000,000,000. In 6 months, the (negative) working capital has degraded by $20,000,000.
So even if it gets all $50,000,000,000 (which it won’t) and uses 100% of it to pay down debts (which it won’t, especially if the Christmas Exec bonus period is near), it’ll still be in a pile of debt.
http://finance.yahoo.com/q/bs?s=GM
Tell me, is the Malibu or the Corvette or even the not-yet-here Volt going to make GM even $1b ?
You know what they say… $50 billion here, $50 billion there, and soon we’re talking about real money
Of course if accruals aren’t your flavour check out GM’s cash flow statements. Even without all the accounting tricks, it’s still a sad picture.
Dynamic88 :
Avoiding Ch 11 is like a cancer patient avoiding chemo. One can pray for a miracle, but w/o killing the cancer cells the disease will probably spread.
I agree. The politicians have just stolen my money to give to the sick cancer patient.
I feel bad for the cancer patient, but I don’t think he’s going to get better by taking my money and going off on a vacation.
Aside from the fact that it’s morally wrong to have taken my money without my permission.
The government, if it gives this corporate welfare to GM, is in fact saying that they know how to spend my tax dollars better than I can do with my after tax dollars. But I chose Toyota product made in NA. If I had thought GM was better I and millions of others would have invested I money with them.
There is what is seen and what is not seen.
What is seen is the saving of a failing american
institution that failed because its corporate culture lost sight of making cars that people actually wanted to buy.
What is not seen is that had my share of this bail-out money not been extorted from me by my government it would now be on its way to provide me with goods and services from more deserving North American companies to make them even more profitable and prosperous. So good companies to suffer at the expense of those poorly run is what government will achieve if this plan goes ahead.
An idea adapted from an economic study by Frederic Bastiat 1801-1850
by T2
How ironic that the evil gov’t regulations that the Det 2.5 said would bring them to ruin are what is keeping them afloat now! Without the CAFE regulations, they wouldn’t even have the existing Cobalt and Focus, which are about all they will have until 2010.
Now they want $50b from the pockets of those who won’t buy their cars for God knows what. I have no doubt they will get it, given it’s an election year, but strings need to be put on this money.
First, no personal gain – equal sacrifice. No dividends, no corporate bonuses,no raises.
No golden parachutes for those who will need to be cut.
Second, this aid needs to be allotted on a case by case basis. For GM, Rabid Rick and all his managers and the Board need to go. Except Lutz. He’s the only GM suit who knows ANYTHING AT ALL about cars, and he is responsible for GM’s only successes. A new board of people who know how to run a business should be appointed to oversee the dismantling of the company’s obsolete business model. A lot of the money could be used to buy out the dealers of the brands that will be cut.
Ford is well along this road; they dumped their PAG group and will put Lincoln back in its place on top of the Ford line. Mercury is being dropped and Ford will finally build in America the really good small cars they make in Europe. They just need enough to get by.
Chrysler? Just tell us who’s buying the company!
It’s that corvette sold the most in this segement and it seemed like it would never slow down. More of the perfect storm for GM.
The Corvette has the dubious distinction of carrying whatever self-respect GM had during the dark years. No matter how crappy the Cavalier, Grand Am, Citation, Lumina or Deville were, GM could confidently say that, well, it could produce a world-class sports car, while Toyota and Honda couldn’t. If the Corvette dies, GM has…what?
Anyone gotten into an argument with a GM fan? How long did it take for the inevitable Corvette vs Supra/S2000 discussion to start?
The problem is that Toyota decided “Hey, we don’t need to make a money-sucking sports car to pimp our image! We can just make the Camry and Corolla really, really good instead!”…and thusly died the Supra, Celica and MR2. Soul-destroying or not, you can’t argue with the results.
Toyota realizes that it is not Ferrari (or even BMW). It has high costs to meet. It needs volume and breadth to survive ups and downs. It does not low-volume, low-margin princesses. It took GM some twenty-five-plus years to learn the same thing, if they’ve indeed learned it at all: they still seem hell-bent on becoming a boutique manufacturer, instead of a full-line one.
billc83, spot on, sir. I cannot recommend the DeLorean book enough. Really gives you a visceral feel for the problems at GM. I have not yet read the Yates book, but I intend to track down a copy.
Yates’ book is remarkably current in its basic critique. However, someone desperately needs to write an update. (Clearly that won’t be Yates.)
The irony of DeLorean’s critique is that he had the chance to show Detroit how it should be done but utterly failed.
One reason DeLorean failed was that, at heart, he was a company man: He did not have the character to run his own show. GM may have squelched DeLorean’s genius, but it also had enough checks and balances in the system to keep DeLorean from doing anything too stupid.
Another reason DeLorean failed is that his corporate model was built too closely along the lines of what he knew: American automotive culture. The inevitable result was that DeLorean failed to create a uniquely valuable car, backed by a customer-driven dealer network.
After all these years this is still Detroit’s basic problem. I’m skeptical that a government bailout of GM would lead to the most needed internal reforms. That’s not a knee-jerk rejection of government’s role, but merely an acknowledgment that GM’s problems are so deeply rooted.
See you at GM Death Watch 200.
GM is not the problem. GM is being destroyed by the government and people not looking at the load GM Ford and any other business that competes against overseas competitors.
The BIG 2.8 pays for SS, Medical Insurance, EPA, Comp, disability ins and retirement annuities. Then they have to provide a competitive prodcut.
Does any of you BRILLIANT people figure out how you can produce a car that competes with all that burden plus Asian laborers that are willing to work hard hard for Fish Heads and Rice.
Please tell me what share of the car is Healthcare, SS, retirement money and EPA standards then compare the BIG 2.8 product prices. Let’s talk about this. Let’s level the field and you will find out what value these cars really are.
Folks the Chrysler bailout cost the U.S. taxpayers nothing.
When I was working at the Penta Star Corp. Chrysler did not draw on the loan. It was there for the taking but Chrysler sold the Tank manufacturing plant to create the working capital funds to complete the creation on the K car which just a body on the the frame of the OMNI/Horizon.
So for nothing, the U.S. government kept a business going.
Now if you want to talk government substidized industry why don’t we talk about General Dynamics pprimarily owned by a rich St.Louis family. General Dynamics gets all its money by getting defense contracts. Now what is wrong with this.
Welcome back Robert. After reading this Deathwatch, I keep having the recurring thought…” Rarely is it the case when the people that got you into trouble are the same people to get you out of trouble” …So how in the heck do we get rid of the ‘Bad’ decision-makers and replace them with the ‘Good’ decision-makers? Oh yes, the Board (bored?) will handle such matters. Somehow, I doubt that will happen.
“stands behind them with a national network of honest, efficient and courteous salesmen and mechanics?”
That’s the kicker.
I have written before how GMC/Chevy spat upon me regarding failure to perform warranty-covered repairs upon numerous defects, some safety related, via the “Unable to replicate” mantra.
With decades of semi-truck ownership, working in the used auto/truck parts industry, maintaining and repairing mechanical equipment of all types, I know a defect when it arises and know when I am being shunted aside.
Lemon laws and the legal system are not always viable options for various reasons, as those knowledgeable of the legal system and variances among states are aware; perhaps one reason why GMC/Chevy’s (and its dealer network) attitude towards consumers appears to vary between states as noted by differences in warranty coverage noted in postings upon message boards dedicated to late-model Silverados.
With a “very bitter taste in the mouth” I read the quoted words, along with anguish that taxpayer money will be used to assist a firm that so blatantly spat upon one who attempted to do the “right thing.”
My intellect told me “Buy Toyota.” A part of me nudged my innards to “help the home team.”
I saw the sticker declaring the Silverado was assembled in Ft. Wayne, Indiana and the made-in-the-USA component percentage was sizable and the reviews and apparent reliablity of the vehicle was at least average so…. Chevy it was.
For my “loyalty” I was literally spat upon.
Corporate GMC, after being contacted about non-repairs and lack of diagnosing of defects, after being told of different dealerships telling me to live with defects, had a female corporate droid with NO knowledge whatsoever of anything mechanical or electrical, an obvious cubicle-dwelling denizen ensconced in an air-conditioned office, solve the problem in GMC’s eyes with….
“Take it to the dealer.”
I am livid that that taxpayer money will assist GMC.
It took me years of hard labor to save up for my first brand-new vehicle after 30-plus years of used cars…. what America’s working-poor can afford, doing the vital jobs the elite class babbles that Americans will not do.
I am angered my money helped to pay the salaries of GMC higher-ups who earn more in a couple months than I, and many GMC customers, will earn in a life-time of labor.
I think back to two tours in southeast Asia when it’s possible those GMC big-wigs were in college and garnering the connections, the networking that asists in leading to those careers/jobs that allow the few to amass immense wealth and power that allows the few to literally spit upon their customer base.
The heck with GMC.
I just hope the firm falls and that somehow, the few at the top who never seem to suffer are found negligent somehow and stripped of their wealth and forced to live as mere commoners.
Yeah…. that will be the day.
I would not be so angry if taxpayer money was not involved but in our so-called “free market” system the commoners exist within, it seems the elite class operates within a different set of rules.
Thank you for taking the time to read this and know I empathize with the “little people” who would suffer if GMC collapsed.
blindfaith,
The Omni/Horizon (L body) and the Aries/Reliant (K) have nothing in common. Other than they are both front wheel drive, have four wheels, and run on gasoline. They are two completly different platforms.
You know it is kind of funny we are on death watch 194. I guess all the hate can’t kill GM.
GM must do something right.
You know it is kind of funny we are on death watch 194. I guess all the hate can’t kill GM.
GM must do something right.
Stan –
I’ll give you the answer I used to give the Daewoo true believers while they were denying that their ‘best car company ever’ was slowly dying…
Soon, my pretty, soooooon……
“194” isn’t such a large number. Doesn’t GM lose that much money every nanosecond?
The average CEO makes $40,000 (FORTY THOUSAND DOLLARS) a DAY! Roughly 350 times more than the average working person.
That means while some make less than that – there are a good number making MORE than that PER DAY.
I think we are seeing the erosion of our economy where truly the rich are getting richer and the poor are getting poorer. A economical polarization like that which I saw travelling overseas and never expected to see in America. Maybe it has been here all along and I’m just now noticing it.
There is no reason for top level management to make a working man’s annual salary EVERY DAY.
Things are too far off center here. I don’t see any reason for any of the domestic car companies to recieve any gov’t money when they have that kind of management costs. Time to throw out a crowd of people and put the guys at the top in touch with the guys at the bottom directly – in pay, in daily planning and in meetings on a regular basis. Those people don’t necessarily need to be the same people as now.
I want to see these companies flourish but they’ll not get any sympathy from me nor would I like them to get my tax dollars in any fashion. I feel a patriotic duty to buy their products and WANT to but I have an equally compelling feeling that I don’t want to feed the zoo animals at the big three in any capacity. Maybe I’ll do my part and buy a used domestic from a private seller and keep it alive with aftermarket parts… GRIN!
I have to wonder if despite what our Founding Fathers might have intended – if America hasn’t created a royal class accidentally through simple greed. All our political leaders are rich and some are even millionaires despite a “modest” federal salary. Our corporate managment makes 350+ times more than the average employee per year. Our gov’t gives multi-billion dollar corporate handouts, pork barrel projects, multi-billion dollar gov’t contracts, and invades foreign countries under the guise of security.
At the same time folks point to the nation’s poor and says – no, we can’t afford to do any more for you.
Who is really costing America the most money?
Don’t get me wrong – I’m not happy handing money out to ANYONE that WON’T (but can) get off their duff and change their situation. You know the type – those who might be underfunded but somehow can’t even clean up their property (a no cost project). Yes, for some their shabby property is a sign of their deeper problems.
Yeah, I’m not making much sense. Just rambling here.
So what is the answer? Quit massive gov’t spending and lower the taxes to return the savings to the citizens? Seems to me this would only benefit the elite of America who pay most of the taxes. Shrink the corporate bloat? All that does is impact how many jobs put the bacon on the dinner tables for employees. Shrink the corporate bloat and pass the savings on to the customer? Seems to me folks would just buy more stuff (see discount super-store) which we’ve established is not really good for our environment (throw away society).
Ride this train as fast as it can go until the boiler explodes?
Give me some answers…
This is from the fast lane blog:
Myth: GM no longer matters to the U.S. or its economy.
Fact: The U.S. auto industry still generates more employment, annual economic output, exports, and retail business than any other industry. It directly employs a quarter of a million people, and supports another 5 million Americans at dealerships, suppliers and service providers.
U.S. based carmakers spend more on R&D than any industry – more than $12 billion annually. We also provide healthcare benefits to 2 million Americans, and support nearly 800,000 retirees and spouses with pension benefits.
There is also the matter of national pride. GM is one of a handful of U.S. based manufacturing companies that compete head-to-head with the world’s best in global markets. We are proud that we have become a truly global company, and proud that we are a leader in fast growing markets like China, Brazil and Eastern Europe. We are also proud that American brands like Chevrolet and Cadillac known and admired around the world.
Myth: GM’s biggest problem in North America is its union contracts.
Fact: There is no question that the growth of imports, and of non-unionized U.S. factories owned by overseas competitors, posed a tough challenge for GM and its unions. The only realistic solution was to do what we did — negotiate agreements that narrow this gap.
The most recent GM-UAW agreement, signed in 2007, helps close fundamental competitive gaps with our import competitors, and we anticipate significant savings as we implement the key provisions of the agreement between now and 2010.
GM’s unionized North American factories compete with the best in terms of quality and productivity.
We are confident that a collaborative relationship with our unions continues to be in everyone’s best interest.
Myth: GM has too many brands.
Fact: GM has grouped its 8 U.S. brands into 4 retail channels: Chevrolet, Buick/Pontiac/GMC, Saturn and Cadillac/Saab/Hummer. This allows GM to offer the broad range of choices that customers want, while streamlining product development and back-office operations.
GM has announced a strategic review of the Hummer brand, which will study options ranging from revamping the product portfolio to selling the brand. GM is also using its global operations to develop distinctive new products for its U.S. brands.
Fact is, to continue growth, many carmakers have entered new segments or added new brands as the market has grown and fragmented. The number of brands is not the key, but rather GM’s ability to provide strong products and efficient marketing support for them.
Myth: GM is not moving fast enough.
Fact: Global automakers like GM are among the largest manufacturing companies ever created. GM, for example, builds more than 9 million cars a year in 35 countries, and employs 266,000 people around the world.
Despite its size, GM has made substantial changes in just the past eight years. We now design and develop most of our vehicles globally, and this global expertise has helped create award winning products like the Cadillac CTS, Chevy Malibu, Saturn Aura and Buick Enclave. Our global engineers have also helped GM reclaim its place as a leader in energy saving technologies.
And we have grown rapidly in new markets like China, Latin America and Eastern Europe.
In 2000, just 42% of GM sales were outside the U.S. By 2008, nearly 60% of GM sales were in these fast growing international markets.
Also, keep in mind that the auto business is cyclical. The down cycle in the U.S. market that began in 2006 and sharpened last spring is posing short-term challenges for everyone. Weathering these down cycles and continuing to build for the future is simply part of the business
GM’s strategy is straightforward: Continue to build toward sustainable success, in the U.S. and around the world.
Myth: GM opposes higher fuel economy standards.
Fact: GM fully supports new national corporate average fuel economy (CAFÉ) standards of 35 mpg by 2020, a dramatic increase of 40% over previous standards. Along with other interested parties, we will work with the government throughout the rulemaking process on details of the new regulation.
GM continues to believe that a single set of tough national fuel economy standards is the best way to focus the industry’s efforts and to reduce fuel consumption and CO2 emissions nationwide.