It’s the morning after the day of. The day General Motors admitted to the world that they don’t have enough cash to last until the end of the year. And for once, GM’s standard-issue PR ploy– leave the bad news until Friday afternoon, reveal some corrective action (axing 7k jobs) and downplay its significance– worked against the General’s generals. GM’s impending bankruptcy was buried beneath and within President-elect Barack Obama’s first press conference. The story was denied bailout-fueling urgency. It’s the ultimate condemnation of GM CEO Rick Wagoner’s administration: they can’t even exploit their own incompetence for the company’s survival.
“Red Ink Rick” bears no small amount of responsibility for this, the ailing American automaker’s final PR debacle. In an interview with GM goodfella Phil LeBeau, Wagoner contradicted the public statement accompanying The General’s cataclysmic third quarter financial results, which read as follows: “Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.”
“As we close the quarter, we’ve got 16.2b in available liquidity,” Wagoner soothed the CNBC reporter. “Um, that’s well above, ah, what we think our minimum operating crash requirement is.”
Huh? When Tracinda investor and Lion of Las Vegas Kirk Kerkorian scored a seat on GM’s board for Jerry York, his consigliore pegged the amount the General needed to keep the lights on at $10b. (Back when $10b was a lot of money.) Other sources say it’s $14b. Even using York’s lower number, GM’s currently burning through cash at a rate of $3.2b a month. So, at best, GM’s got two months to go. They won’t make it to New Year’s.
So why isn’t Wagoner facing the inevitable and telling the American public “bail us out or we’re NSFWed?” Because, apparently, the CEO who’s been at the helm during GM’s descent into desperation reckons his latest cost-cutting measures will make the company’s fourth quarter cash burn “look more like the first two quarters of the year.” Even assuming GM’s burn rate returns to a retro-style $1b per month, the automaker has what, an extra six months?
As the scorpion said, it is in my nature; Wagoner is a born prevaricator. Now that the company has passed the point of no return— the point where even $25b in direct federal aid can’t resurrect GM’s market share, strengthen/trim brands, develop market-leading products, promote those [theoretical] products and bank enough profits to pay off existing debt (never mind any new obligations to American taxpayers)– Wagoner will continue to bluff and bluster until all hope of a C11 resurrection disappears.
No surprise there. But I must admit that I am surprised by the mainstream media’s reaction to this non-turn of events. TTAC’s Best and Brightest have crammed my in-box with links to stories analyzing GM’s Q3 results, and the looming prospect of a Chapter 11 filing. The AP’s Tom Krisher’s report, “GM’s Running on Fumes,” is typical of the coverage: we knew it was bad, but not this bad, but anyway, Congress will bail ‘em out. In other words, GM’s admission of a terminal liquidity crisis is a bit of a false sunset.
None of the reports puts the focus where it should be: GM’s busted business model. The fact that House Speaker Nancy Pelosi’s United Auto Workers-shaped trial balloon– we’ll stuff $25b into the Detroit union’s VEBA health care fund– wasn’t immediately shot down as the most ineffectual bailout idea ever created by hand of man reflects the ongoing myopia afflicting the press.
GM’s bailout boosters will eventually come ‘round to the idea that there must be some kind of radical change at GM for the company to qualify for federal aid. But their idea of “radical change” is likely to be politically rather than economically-driven. Jobs, jobs, jobs will be the order of the day. Not cars, cars, cars. Wagoner, Lutz and the rest of the gang who couldn’t talk straight may be forced out (to survive on the hundreds of millions they plundered from their employer). But the priorities will not shift.
What GM needs is root and brand overhaul, a cathartic cleansing of existing dealer agreements and union contracts and obligations. Not to mention an entirely new mindset regarding product development and brand promotion. As we’ve stated here for the last three years, the only way GM can accomplish these tasks is through the federal protections of bankruptcy law.
Rick Wagoner’s ultimate argument against doing the right thing, the only thing that can save GM: no one will buy a car from a bankrupt automaker. By the same token, no one with any sense buys a car from an automaker headed for bankruptcy. With or without intelligent press reporting, GM’s death throes are becoming clearer every day. As is the final, inevitable result
At this point, I wonder if Wagoners victory condition is to hang around long enough to get the bailout, then retire. That way he can save face; it will be someone else who has to pull the trigger that puts the once greatest company in the world out of business; Red Ink Rick won’t be in the public mind as the guy who killed GM.
As someone who really wanted a Camaro, I have no choice but to bail if GM’s this close to bankruptcy. That 370Z looks really tempting, and Nissan’s not going to go under, right?
Even if GM gets help from Congress there’s still something lacking that Congress can do nothing about: provide LEADERSHIP and VISION for the company. Aside from Mulally, there doesn’t seem to be one single competent get-er-done leader in all of Detroit. Where’s the Iacocca or Deuce, right or wrong, who can make a decision and move mountains? I don’t think money is the biggest problem here.
Yesterday on CNBC their bailout poll showed that 70% of Americans do not wish to bail out the automakers.
With the Wall Street/Credit Crisis bailout, that fiasco happened so fast (and faster if Paulson had had his way) and was framed to make the issue seem confusing to Joe-Six-Pack so that most Americans did not even understand the issue until their ‘leaders’ in Washington had already rammed it down their throats. No wonder Congress has such a low approval rating.
Last night on Fox, no one amongst their ‘All-Star Panel’ supported the automaker bailout idea. They even sounded a lot like TTAC blaming poor management, calling for a C11 re-org, new management and consolidation. If you can’t even get channels that have GM spokesmen like Sean Hannity to show you even the slightest bit of love and the general public is voting 7-3 against the automotive bailout, I don’t think they’re going to have an easy time getting Congress to agree to another 25 billion unless they sneak it in as earmark on another bill.
As much as it may look like the Big 3 have successfully drained the bailout trough for another 25B, I don’t think the bailout issue is anywhere near a done deal. We shall see.
Like many, I have expected this. Yet it is still sad to see is happen. If only GM had a leader of conscience and competence to lead the company, instead of myopic bean-counters who cut development costs to inflate the quarterly earnings.
Of course, blame must be apportioned back to the leaders of fifty years ago who gave the UAW everything in the future in exchange for peace today. As Chamberlain said “I have secured peace in our time.”
It turned out the same.
If I were Pelosi, my requirement for a bailout would be that the 5 top layers of management must resign (idiots).
GM management drove it into oblivion. How can a team develop a vehicle and get production approved on a vehicle with negative profit? At my former Japanese employer heads would roll if the vehicle wasn’t profitable. This has gone on for at least 10 years. And here we are at GM.
Are the car companies exaggerating their losses, to trigger a bailout? Newsweek wonders …
http://www.newsweek.com/id/168109
Wagoner probably sleeps well each night. Besides being a long term bullsh!t artist, he has no conscience. When he looks in the mirror, he probably says to himself: “What a man”! He and Lutz should be forced to room together in a studio apartment for the rest of their lives and only have an entry level Aveo to drive around in.
Going Out Of Business by Steely Dan:
“It’s high time for a walk on the real side
Let’s admit the bastards beat us
I move to dissolve the corporation
In a pool of margaritas
So let’s switch off all the lights
And light up all the Luckies
Crankin’ up the afterglow
‘Cause we’re goin’ out of business
Everything must go
Talk about your major pain and suffering
Now our self-esteem is shattered
Show the world our mighty hidey-ho face
As we go sliding down the ladder
It was sweet up at the top
‘Til that ill wind started blowing
Now it’s cozy down below
‘Cause we’re goin’ out of business
Everything must go “
The situation is beyond dire. Over the past several decades, the brands of General Motors have been in trouble. Alfred Sloan’s “a car for every purse and purpose” creed has been thoroughly trampled on and pissed away. At the same time, GM has witnessed a startling and steady decline in market share, with Toyota consistently making inroads to their claim as largest automaker in the world. With the threat of collapse more real than ever, General Motors must act now to save themselves from ultimate failure.
Sloan’s model was perfect for its time, a time when General Motors dominated over all competition. Now, with the imports and past customer relations taking a significant bite out of GM’s own market share, it has more brands under its umbrella than it did with market share at its peak. Simple mathematics states that less market share should directly correlate to fewer brands. As Toyota and Honda grew larger, they created Lexus and Honda to cater to the luxury segment which their ever-increasing market share did not cover. As GM continued to lose market share, it should have been shedding brands over the years; granted, a tough task with dealer franchise laws tilted in favor of dealers, but ultimately necessary to continue profitable operation.
With eight domestic brands under its watch, GM desperately needs to shed some weight. Even with the renaissance of its luxury brand, Cadillac remains a second rate competitor to its Lexus, Mercedes, and BMW deposers. Buick remains a brand without direction, forever destined to remain in Cadillac’s shadow even if Cadillac leaps upmarket tomorrow. Pontiac no longer “builds excitement,” with the G8 propping up any performance claims the company clings to. The Vibe no longer does, the G6 has become a born rental car, and G5 sales were stillborn. The last vehicles to not be badge engineered for GMC were the Syclone and Typhoon, a decade and a half ago. Saab sales have been dealt a strait flush – down the toilet.
GM faces more trouble near the bottom. Even the once mighty Chevrolet has become the laughingstock of the “value” segment. Honda and Toyota continue to be seen as greater than their domestic counterparts, while the Koreans are often seen as a better value, offering a much greater warranty. Saturn, Roger Smith’s five billion dollar baby was fought tooth-and-nail by GM management during its inception and infant stages. As a result, the once arguably innovative brand has been reduced to hawking rebadged Opels. And yet, Saturn still has yet to make a profit for the mothership.
Saddest of all, perhaps, it the GM has made some downright noble attempts of late to right the ship. Products such as the Malibu and CTS show a striking improvement. New models such as the Enclave (and its offspring) and G8 also show promise (in quality, if not sales). But good product is no longer enough. GM’s financial situation is no so horrible that even having a sales leader in a segment or two can’t save it.
Even Chapter 11 can’t guarantee the survival of General Motors. It very well could help with a much needed reorganization and union troubles. The perception gap will still remain, being magnified by the stigma of bankruptcy. Most likely is a government bailout in conjunction with a government bailout. But the execution must be damn near flawless to ensure GM’s ultimate survival.
There are far too many variables on the table to aptly analyze how the General could stay alive, or even if they will. A few things are absolute (and often pointed out here at TTAC!). GM MUST shed brands. A Cadillac – Chevrolet duo seems most likely to survive the fallout. The UAW needs to be addressed. Product quality needs to not falter. The damaging and self-serving corporate culture needs to be eliminated.
But even if these steps are taken, GM will still faces some major obstacles during its rebirth. There are many angry ex-owners who will never return, and no amount of product quality or apologies can ever sway them to return from their imports. More still follow the mantra of the still relevant perception gap that’s been thirty years in the making – choosing to believe that import cars are better made than domestic cars, no matter what. This perception gap can not and will not go away overnight. No amount of talk can solve this particular problem; only in years (and possibly decades) can the perception gap become less damning for Detroit, and only with superior product. Until then, Cadillac and Chevy will both considered a second rate competitor to their imported brethren by a great multitude of average American buyers, who fear buying a car from a bankrupted company who previously chose to sell less than competitive vehicles.
I guess the first loan will be the hardest. After this uncle Sam’s socialized auto companies will simply put their needs into the federal budget every year along with HEW, Defense, etc. This might allow for a couple of new cabinet posts. Director of federalized motor production, and director of nationalized national banks. I would like the first job. Just think to get to go to the secret design studios and see what is cooking for the future. Then I take the request for ever more money back to Washington and get Congress and the Country to make sure their federlized autos don’t fall behind say Abrams tanks or early school programs in funding. I would even do this job for free.
As angry as I am at the current bumbling GM management, I think that there is maybe even a bigger reason for this tragedy.
Going back to the very beginnings of GM, the Billy Durant, Alfred Sloan days, the company’s strategy was this: If your competitor was selling a four cylinder, offer your customers a six at the same price point. More choices and bracketing your competition propelled the General into the “Whats good for GM is good for America” domination of the North American market and a good deal of the rest of the world.
“More”, “Bigger”. But what too often got left at the side of the road was the “Better”. And for a long time it didn’t matter.
Now it does.
In a kind of a sad way, I think that much of what was in GM’s DNA is now not working. You can’t gas guzzle your way out of this predicament.
Might Wagoner’s contradictory statements have been intended to reduce the public alarm at GM’s situation? After all, once the “orphan” fear kicks in an automaker can experience a quick downward spiral in sales. So GM p.r. geniuses appear to be attempting to raise enough fears to encourage a bailout without scaring away too many potential buyers.
The irony of Wagoner’s rejection of Chapter 11 is that the longer the current drip, drip, drip of bad financial news continues, the more likely it is that GM will experience a collapse in buyer confidence. Would it not be better to get past Chapter 11 as quickly as possible?
Perhaps, but Rick is an “evolutionary” kind of guy. He doesn’t do dramatic course corrections like Ghosn, who with remarkable speed ditched Nissan’s ill-advised investment in a full-sized truck platform in favor of selling badge-engineered Dodge Rams. (How much money will Nissan lose on its failed foray into big trucks?)
Wagoner reminds me a bit of Roy D. Chapin Jr. of AMC. Chapin was clearly in over his head but hung on for years after he should have been booted. Somehow the financial world liked the guy. Perhaps it was his calm bearing, blue-blood background and well-tailored suits. Chapin kept on promising that blue skies were around the corner . . . and kept on driving the corporation into the ground. Yet no one stepped in to stop him until it was too late.
In a way it’s really easy to analyze the American auto industry, because the same basic patterns are repeated over and over with almost psychotic frequency.
With one out of 10 US jobs tied to the auto industry, the only choice now is to get GM & Ford back on their feet with executive pay and bonus stipulations by the Feds. Workers make only $15.00 per hour now, pay for their own health care basically and have no defined pension plan. The problem is that GM/Ford haven’t been able to hire to many of these workers because of the economy. Thanks Barney Franks… http://www.youtube.com/watch?v=1RZVw3no2A4 tells the whole story. There are approx. 3-1/2 million people and their families tied to GM/Ford/Chrysler and even bigger than AIG. Our government at 10% approval rating is just about where they stand with the taxpayers. I do believe that Ford’s owners blue oval stocks (only owned by the Ford family) will have to be given up to the Feds. when the money is approved.
I think we need to give GM some time. After all, just last month they decided to turn the escalators off at RenCen on nights and weekends.
I made a mistake. When I first heard the politicians talking about subsidizing health care costs I thought they meant for everyone – which I favor and said I supported – but now I hear it is only for GM workers (VEBA) to relieve some of the expenses for GM. This I do not support.
We do need socialized medicine for everyone in the U.S. We must get rid of the insurance companies that take 1 out of every 3 dollars we spend on health care and torture our doctors with their unique to each company’s forms and rules.
But just relieving GM of some of their expenses will not save GM. As others on TTAC have mentioned over and over GM needs a drastic fundamental reorganization.
Or maybe this money pit should just be encouraged to go away. We need some of GM’s workers in order to catch up to the Germans making solar panels or the Japanese making new types of batteries.
Truthbetold37
“If I were Pelosi, my requirement for a bailout would be that the 5 top layers of management must resign (idiots).
GM management drove it into oblivion. How can a team develop a vehicle and get production approved on a vehicle with negative profit? At my former Japanese employer heads would roll if the vehicle wasn’t profitable. This has gone on for at least 10 years. And here we are at GM.”
You nailed it. Saab, Saturn, the GM 10s,the Sky & Solstice twins.Money losers all. And while we’re building cars at a loss lets add DEX-COOL problems,plastic intake manifolds that leak,CVT transmissions that fail before 40,000 miles, try to convince the world that ON Star is more desireable than a NAV system [since we’ve already dropped billions into it’s technology], farm out small car development with hook ups that went nowhere : Subaru, Fiat, Isuzu,Suzuki, Nummi and sell our participation in the first four at a loss. The hit list is so long that blood should run in the streets in a mass beheading.
This is criminal abandonment of fiduciary duty and if the BOD doesn’t see fit to do anything about it, why should the US taxpayer?
GM is burning through cash so it can fie bankruptcy and bust the UAW.
But while that’s sad, and reprehensible it its the wrong thing: there are no brains at the top of this company. It needs to be totally reinvented or gutted.
Why does GM have 53 different vehicles that no one wants while Honda has 15 that people do want?
I don’t get it.
Let GM die! We live in a country of capitalism. The big 3 were already bailed out once in the 1980s. That was their chance to change. They chose not to change. They chose not to look at how they could efficiently take the market in a positive, responsible fashion and use their power to drive forward-thinking change. They had their chance to be first on the market with bio-fuel cars – Ford had one ready in 1985. They had their chance to participate in hybrid change as an interim to hydrogen. They certainly had enough lobby power to change the infrustructure so that gas stations were ready with biofuels and hydrogen. They also had the marketing budget to sway the public into being responsible, not “bigger is better” glutany.
The world has changed. Consumers are actually educated and the internet has played a huge part of that. If you can’t see the writing on the wall since 1991 when the hydrogen car was an actual vehicle and government grants were available in the numbers of $5M per car company through 1995.
It is simple personal economics – if gas prices increase this affects my energy bill, my food costs, my driving habits etc. Then I need to invest in things that keep my costs down – never mind global warming it is how far can I personally make my budget go. Why is Honda and Toyota doing so well – simple they recognized this and again just like the 1980’s took advantage of the market changes. You can’t blame them for being at the forefront of providing quality vehicles, vehicles that hold their investment value, and are fuel efficient on top of that.
But it’s not the end for US car manufacturers, just perhaps the big three. In Southern California there is Apteria which has a backlog until 2010 and Tesla Motors (electric cars) in Northern California. Innovation, change and listening to the consumer market as to what will drive them to purchase. (Marketing 101).
Insanity is defined as ” doing the same thing over and over again and expecting a different result.”
That’s the big 3 in a nutshell.
The AP’s Tom Krisher’s report, “GM’s Running on Fumes,” is typical of the coverage: we knew it was bad, but not this bad, but anyway, Congress will bail ‘em out. In other words, GM’s admission of a terminal liquidity crisis is a bit of a false sunset.
I think the mainstream financial and automotive media knew in their heart of hearts that GM/Detroit had issues long ago. But they pulled their punches.
Sure, they didn’t want to offend a major advertising segment. That’s part of it, but the real reason is deeper. Many reporters see similarities between the Detroit 2.x and their own business models.
There are strong similarities…
Unions with unproductive and overpriced work rules? Both major newpapers and GM.
Myopic management that doesn’t understand the customer? Most major media liberal management and big 2.x managers are equally clueless / contemptuous of the masses.
Brutal competition from much faster industries? For the big 2.x, it’s Toyondissan. For the media, it’s the web 2.0. (And maybe talk radio).
If Detroit is able to secure a stream of taxpayer funds, look for those in the media to start making noises about how they are to ‘important’ to fall.
Stein X Leikanger :
November 8th, 2008 at 12:29 pm
Are the car companies exaggerating their losses, to trigger a bailout? Newsweek wonders …
http://www.newsweek.com/id/168109
Their losses are not significantly higher than their losses in the past few years, so I’m guessing no.
ferrarimanf355
About that 370Z & a Nissan bankruptcy. The way the rest of the world economy is imploding…
2009: Very very unlikely
2010: Not quite so unlikely
2011: Anybody’s guess
ExtraO,
…
Fuji Heavy Industries won’t go under, right?
ferrarimanf355 :
November 8th, 2008 at 5:54 pm
ExtraO,
…
Fuji Heavy Industries won’t go under, right?
Toyota’s bought a significant stake in them (Subaru) and is working with them on a future sports/sporty car, so no way. They get to bathe in Toyota’s Scoorge McDuck money pit. Isuzu too.
GM needs to show that they are working to right the good ship lollipop before government gives them any money. C11
1. Give up the corporate jet. And why does Rick W/Fritz H have to attend every new plant opening or auto show (GM India-9/2/08, Paris Auto Show, LA Auto Show)
2. Give up the corporate gas card. That’s right, managers still have corporate gas cards.
3. Kill the executive climate controlled parking garage. Make them park outside with the rest of us common folks.
4. Create a clear marketing message. GM is not a BRAND. The money spent on those GM emblems on the front fender/door is non value added.
5. Support current products with good marketing. Why are they spending advertising dollars for the VOLT, it’s 2 yrs away?!?!
6. Auction off the Intellectual Property for the VOLT. Use the money for the vehicles that actually fund the company. And I don’t mean the Escalade Hybrid.
7. Kill some brands!!!!!
Remember Daewoo, went bankrupt in Korea and was scooped up by GM. We have the AVEO, and several China models from this.
Perhaps the same good could come out of a GM bankruptcy.
There is nothing horrible will happen with country and economy if GM and the rest of 2.6 “big” will see the maker in the form of Chapter 11.
The 2 really big ones can be re-organized only if fundamental changes in governance will be made: most important transparency. GM needs really independent board of directors elected based on professional achievement. Ford needs to abolish company control by one family/trust.
Perhaps laws should require directors (the board) and management every C-level VP and President and CEO to liable for deception of investors. Investors have to have voice in working of the company.
Compensation of upper echelon should be tied to performance of their units and company. I am not suggesting cap, but Red Ink Rick makes 5-6 times salary and perks over CEO of Toyota and even more over Honda’s CEO, and those companies prosper.
Life expectancy at the top should be tied to performance of the unit (or company).
Every compensation consultant and VP of HR must be fired.
Unions already have representation on the board of directors, their seat should be subject to their meeting objectives on productivity and cost.
In reality the congress will subsidize failure, until new congress will be elected.
When some or all of the Detroit-3 disappear other North American manufacturers including Honda, Nissan, and Toyota will increase production to supply the demand. Displaced workers can apply for the new jobs.
“Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.”
This statement caught my eye. Most analyses I have read work on the assumption that the ‘approach’ refers to a decline to close to the minimum level.
But if one was cynical (ahem), ‘approach’ can have a different meaning this context. Look at it from the other side – ‘approach’ I take to mean ‘almost reach’, but it doesn’t specify from whether it’s a position of ‘operating’ solvency, or insolvency…
(Of course, it doesn’t make any difference either way, just thought it was a piece of weasel wording which warranted comment.)
Also, as RF notes, a lot of the MSM coverage seems to miss the fact that the Q3 results peg GM’s standing at September 30. If they’re burning through $2.3 billion a month (and there’s no reason to think that has in any way decreased over the past few weeks), they’re not even going to last until Obama’s inauguration. In fact, by that count, they’re already well below the $14 billion minimum cited by some sources. The final countdown can now be measured in hours.
When some or all of the Detroit-3 disappear other North American manufacturers including Honda, Nissan, and Toyota will increase production to supply the demand. Displaced workers can apply for the new jobs.
That’s a bold assumption to make, and that assumes that Nissan, Toyota, and Honda is willing to increase production. This also assumes that the economy will pick up significant momentum to justify this increase in production.
Given the current and future economic outlook and the significant reduction in sales for all three companies, I doubt this will happen anytime soon, if at all.
The core problem with Detroit is pretty well summed up in this graphic from the Associated Press. Until the Detroit 2.8’s market share lines shift from chutes into ladders, no amount of money will make one bit of difference. If the unions weren’t pushing this so hard, not one soul in Congress would even bat an eye at the collapse of the auto industry (witness the destruction of the rest of America’s manufacturing backbone for evidence).
According to CNBC (http://www.youtube.com/watch?v=E4sLx5O_3M0) the Big 2.x account for only 239,000 jobs (directly) and 0.73% of GDP. The US has lost about 1 million jobs since January. So if the Big 2.x were to suddenly vaporize, it wouldn’t be pretty but it wouldn’t be as devastating as the auto industry’s sycophants would have you believe (“ya gotta save us; one in fourteen jobs in the US is tied to the auto industry!”).
Sound familiar?
The British car industry started with 200 brands, dominated the world between 1939 and 1955. In 1950, the UK provided 52% of the world’s exported vehicles (if Wikipedia has it right.) Unions, management and government ineptitude took their toll. 1975, the bulk of the Brit car industry was nationalized as British Leyland. Which did less good than a nationalized Amtrak. Chrysler sold out to Peugeot. Jaguar went to Ford, Bentley to VW, Rolls to BMW, Rover was sold to China. There is no more “British” car industry. And so? Did their world collaps? They still drive. Still drive on the wrong side of the road, but that’s a totally different matter.
Gardiner Westbound
When some or all of the Detroit-3 disappear other North American manufacturers including Honda, Nissan, and Toyota will increase production to supply the demand. Displaced workers can apply for the new jobs.
Well said Sir!! Instead of whining that you are going to lose your “secure job in your Union” and ask to bail out your BROKE employer……Its time to find a better job.
Quasi
That’s a bold assumption to make, and that assumes that Nissan, Toyota, and Honda is willing to increase production. This also assumes that the economy will pick up significant momentum to justify this increase in production
The jobs may not show up the day the big 3 go down but I beleave they eventually will. The demand for auto’s WILL go up with a drop in production. The key is in a functional company without gouging unions. I beleave I am making more than I am worth right now. I also beleave that I may lose my job at anytime by my employers fault or my own. But I beleave that my world will always go around because I refuse to borrow from my grandchildren.
“Why does GM have 53 different vehicles that no one wants while Honda has 15 that people do want?”
Let me see…does Honda outsell GM? Can you say Ridgeline, RL?
“Back over at the Honda brand, one surprise in the numbers is the collapse of Accord sales, down from 30,936 to only 19,783, a 36 percent drop in Honda’s #1 selling product. “
Gardiner Westbound : When some or all of the Detroit-3 disappear other North American manufacturers including Honda, Nissan, and Toyota will increase production to supply the demand. Displaced workers can apply for the new jobs.
They can apply for the new jobs, but the other auto manufacturers are not going to hire them. Displaced workers from the Detroit 3 are tainted. The transplants (Honda, Nissan, Toyota and others) seem to be afraid that the displaced workers might try to unionize and the workers have a reputation, deserved or not, of being inflexible and difficult to retrain.
OTOH, with the state of “churn” in the North American job market, the displaced workers might be able to fill jobs abandoned by the workers who go to work for the transplants. Possibly some might be hired by various suppliers who provide parts for the transplants.
They can apply for the new jobs, but the other auto manufacturers are not going to hire them. Displaced workers from the Detroit 3 are tainted. The transplants (Honda, Nissan, Toyota and others) seem to be afraid that the displaced workers might try to unionize and the workers have a reputation, deserved or not, of being inflexible and difficult to retrain.
The NUMMI experience would suggest that this is incorrect. NUMMI rehired most of the UAW workers who had worked on the GM line, schooled them in Toyota Production System techniques, and turned a hellhole of a plant into a productive facility with a low absentee rate and high assembly quality.
GM in particular has gotten the union that they deserve. When the worker is disrespected, they offer disrespect in return. When the company is indifferent to product quality and customer satisfaction, the workers respond accordingly.
Managers are ultimately there to manage the business. The results, good or bad, belong to them.
I am not a GM/Ford worker but do believe that GM and Ford need this cash infusion from the Feds in excess of $50 billion. If AIG can mis-manage and swindle the taxpayer and economy and go nearly into bankruptcy, then GM/Ford need the same. With 3.5 million jobs, city tax bases, banks, tier 1 & 2 suppliers at stake, lets do it. The alternative is just to great. Just keep executive bonus’s and pay under a Federal watch and the Ford Family has what they call “Blue Oval” stock that no one can have except them. Sorry Bill, if you except Federal money, you have to put this stock available to the public if you take the money. In the end, make sure the companies pay this money back to the taxpayer, Chrysler did years ago, and early.
I’ve known that GM would fail since the 1973 Cosworth Vega fiasco.
http://www.cosworthvega.com/cosworth_vega_history.html
Everything that is wrong with GM today is in the story of the Cosworth Vega.
Lazy and lousy engineering; a union strike; years of advertising before the repeatedly-delayed introduction of the car; overpromising in the ads (see Volt); quality woes; overpricing; Large-ego-interference by top management; too many dealerships;CAFE standard blues; finally getting it right on its death bed. – oh and it’s ugly as hell too.
I watched this all unfold between 1971 and 1975 and knew that GM was dead; the corpse just hadn’t stopped twitching yet.
That’s when I learned the GM/Aircraft Carrier analogy – both take a long, long time to turn around, and both are hard to sink. However, once they’ve been seriously damaged, they’re almost impossible to save.