Michigan’s upcoming Republican primary has made the Bush and Obama administrations’ bailouts of General Motors and Chrysler a political football that both the Republican candidates and Pres. Obama are kicking around. The Seattle Times published an Associated Press fact-checking piece that was fairly balanced in that it pointed out that both the Republicans and Pres. Obama might be stretching the truth in their respective claims about the bailout.
On one point, though, I think that Calvin Woodward and Tom Krisher of the AP themselves told a bit of a fib, so I thought I’d run it by the B&B for your opinions. In discussing Rick Santorum and Mitt Romney’s criticism of how Pres. Obama’s team, headed by Ron Bloom and Steve Rattner, structured the bankruptcies and reorganizations of Chrysler and General Motors, the AP addresses the notion that the companies were given to the UAW and, in Chryslers case, Fiat as well.
SANTORUM: “All the federal government did was basically tip to the cronies, tip to the unions, gave the unions the company.” – June 13 New Hampshire debate.
ROMNEY: “The idea of billions of dollars being wasted initially – then finally they adopted the managed bankruptcy. I was among others that said we ought to do that. And then after that, they gave the company to the UAW. They gave General Motors to the UAW and they gave Chrysler to Fiat.” – Nov. 10 Michigan debate.
THE FACTS: These are distorted accounts of complex arrangements by which the companies, unions, government and courts fashioned a plan to lighten staggering health care and pension costs at the heart of the automakers’ decline.
A trust owned by the United Auto Workers – but not directly managed by the union – received a 17.5 percent ownership stake in GM in return for taking over the health care costs of blue-collar retirees. That stake declined as the company left government ownership by selling stock to the public; it’s now about 10 percent. In return for its share, the UAW could not strike over wages at Chrysler or GM in the last round of contract talks, and it gave other concessions too.
Just as the government did not give GM to the union, it did not give Chrysler to Fiat.
Chrysler and Fiat have paid back all but $1.3 billion of Chrysler’s $12.5 billion bailout – with taxpayers likely to be out the rest. The Italian automaker got control of Chrysler by buying 23.5 percent of the company from the U.S. and Canadian governments, after receiving an initial 20 percent stake in exchange for management expertise and technology, then 15 percent for meeting performance targets.
Though I think they minimize the ties between the UAW and the VEBA it owns that manages members’ health care, Woodward and Krisher do a decent job of explaining the structuring of the UAW’s stake and what obligations it took on in exchange for equity stakes in the companies. I think, though, that they conflate the genuinely complex health care and pension obligations of the companies to their UAW employees and retirees, and the manner in which Fiat gained control of Chrysler. I believe that they also exaggerated Fiat’s skin in the game.
The $11.2 billion in loans to Chrysler that have been repaid, were not paid back by “Chrysler and Fiat” (emphasis added). As Sergio Marchionne told a flock of business and autojournos at the NAIAS last month, the auto market in Europe, upon which Fiat is heavily dependent, will continue to be flat for the next two or three years. Fiat’s not making the billions needed to pay back those loans. That revenue was generated by Chrysler’s operations in North America.
Okay, so you can say that it’s Marchionne and Fiat’s management that has brought Chrysler back from the brink. Actually, as Pete DeLorenzo is wont to say, most of the new Chrysler product that’s behind the company’s reversal of fortune was developed by a skeleton crew of “true believers” in Auburn Hills during the dark days when the company was financially failing and being restructured. DeLorenzo sometimes is a bit of a one note Johnny when it comes to the rock star known as Sergio, but he has a point. It was Chrysler, not Fiat, that made the product that has quite possibly has brought the Walter P.’s company back from the dead.
Where I really think Krisher and Woodward fall down is when they try to say that 60% of Fiat’s controlling share of Chrysler was paid for. The article admits that Fiat paid not on thin lira for the first 35% of Chrysler they were awarded by Rattner’s team. For the purposes of accounting, a value was placed on Fiat’s “management expertise” and “technology”, two things they would have brought to the table even had they paid real money for Chrysler, in exchange for their first 20% of the Auburn Hills automaker, and then 15% of Chrysler was given to Fiat for meeting artificial targets that TTAC’s Ed Niedermeyer has shown to have been essentially a rigged game relating to the production of high gas mileage vehicles.
So what do you say, Best and the Brightest? Did the US government “give” Chrysler to Fiat?
Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks – RJS
“two things they would have brought to the table even had they paid real money for Chrysler”
Seriously, at the time do you think anyone, with any sense, would have paid actual cash money for Chrysler?
Yeah, that’s a good point. Who wanted to pay billions for a used Chrysler in 2008? If I recall, the options were
1) “have Fiat pay for 25% of Chrysler and pretend they paid for 60%”
2) “pay for the whole bailout with taxpayer money, like we did for GM”
3) “some Chinese company buys the Jeep brand in a Chapter 7 liquidation, the rest goes to the crusher”
and (1) there seems the most palatable.
So now, after all is said and done and things are much, much better, everybody’s a Monday morning quarterback. NO ONE wanted Chrysler – you quite literally couldn’t give the thing away. I think the administration couldn’t believe they were lucky enough and Fiat stupid enough to take it at the time.
Agreed. People have short memories. NOBODY would take Chrysler, not even the Chinese. If not for FIAT, there would be no Chrysler today.
Before putting Fiat on a saviors’ mantle … Did they assume any debts? Did they assume obligations? What were Fiat’s risks and what were the potential benefits?
I wouldn’t have paid cash for a Chrysler, much less the whole company.
To believe there was no profit to be had from Chrysler in 2008 is to be completely devoid of any business sense. Perhaps to politicians and other idiots, Chrysler was worthless, but to anyone who ever managed money, there was a lot of money to be created.
Chrysler was worth billions. It just couldn’t figure out how to make billions. That doesn’t mean it was worthless, just worthless to the idiots running it the way they had it structured.
What the morons in the Administration believed is that the Company needed to be handled in it’s entirety. This is because these idiots think in terms of running a government entirety. These fools haven’t a clue how to run a lemonade stand. These were the wrong people to depend upon. They may have been sincere, and they may really, really, really wanted to help – but they were as useless as a Ringling Brothers Clown during an open heart surgery procedure.
Worse, these freaking morons framed the situation, so that we have come to believe in viewing this Chrysler bailout as they presented it. That would be like listening to the Clown tell us what happened during surgery. Ratner was not someone who should have been a mile anywhere near any meeting during this crisis. Instead, he should have returned to his little car with the other 18 clowns and then beeped his red nose.
Chrysler was a clusterfark. It needed to have been hacked into profitable bites by those who know how to do that. We have had hundreds of years of doing this correctly. Instead, we got this clusterfark triple clusterfarked by an Administration full of clusterfarkers.
The only thing we had to do is bend over and take it several billions times.
Now they are claiming success? Their definition of success is not being blamed for what happened after they got involved, regardless of results. These boobs and losers wouldn’t know success if they discovered that it gave them campaign cash to cover up their extramarital affairs.
Was Chrysler given to Fiat?
Yup. Because the Administration is full of sincere, frightened, well meaning idiots whose expertise was in lying to the Public, not running a business.
Yes, they were given to Fiat, at the very least. At the most, they were paid to take Chrysler.
Was Chrysler “Given” to Fiat?
Fiat was given Chrysler stock, and the Chrysler entity was provided with debt, in exchange for what was effectively Fiat’s sweat equity.
If Chrysler defaulted on the debt, then Fiat presumably wouldn’t have been liable. In that sense, Fiat had very little skin in the game; there was no substantive stick to accompany the carrot.
At the same time, the US government needed a new operator with automotive management and industrial turnaround expertise, and it didn’t have a lot of choices. Since Fiat could face extinction without expansion, Marchionne was highly motivated to make the deal work, which apparently was good enough.
Yes they were given to Fiat, but in terms that the game was rigged.
It’s worth noting that Chrysler probably wouldn’t have had a buyer otherwise, but it sucks the way it panned out.
Unless you mean you think it would be a better world without Chrysler, and with the consequent loss of suppliers, and the resulting reduction in competitiveness for American car making as a whole, what exactly sucks about it? That Fiat, who were willing to take a chance no one else would take, came out looking pretty good in the end? Boo-hoo.
Seems like most Americans these days just want to bitch and moan about everything these days. Anyone who actually gets off his rear and does something gets lambasted for his troubles.
@Boltar- +1 Chrysler is doing very well indeed, and it is certainly no thanks to Fiat. The folks right here in Auburn Hills deserve the accolades for their sales growth last year.
Except the loss of a company doesn’t mean the demand they fill is destroyed. For every buyer of a new Chrysler, there would still be a buyer–just of something else. It is not unrealistic that much of that business would have gone to Ford or GM, thus putting them on even better footing and thus a need to expand, hire, and essentially have use for the people, suppliers, equipment, and networks Chrysler left behind.
That’s one possible outcome. I don’t know if it would have happened or not. However, I do feel confident enough to say that most people aren’t smart enough to deduce what would have happened, either.
@redav- +1
No one can possibly know what might have been. We do have understanding of the weakness of the supply chain, the reality that 95% of suppliers are shared among the Detroit 3 and almost 2/3 of them with the foreign transplants as well. One supplier failure could have brought down the whole industry. The progression is simple. Any supplier goes down. The vehicles produced with parts from that supplier go down as a result. Then all the other suppliers for that vehicle line have to stop production with no demand. The cascading effect would have brought all car making in America to a top, in the estimation of some. Would it have gone that way? Unknown and unknowable at this stage.
We have the example of UAW’s targetted strikes. They were able to stop almost all production at GM by striking one oxygen sensor plant. Handy for the UAW, because it had the effect of a general strike. The icing on the cake for them: we were forced to pay the laid off workers 95% of their pay instead of them suffering with miniscule strike pay.
Those of us inside the business were painfully aware of this fragility.
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In a legitimate (or normal) bankruptcy Chrysler’s secured creditors would have determined how the company was restructured, either by being sold off, shut down, or reorganized. Instead the government did a “cram down” and set the terms of the reorganization by giving management of the company to Fiat (with a purchase option), giving some of the assets to the UAW retirees, and keeping some reissued stock to make the numbers work.
Arguably this was done with the intention of preserving pattern bargaining based UAW contracts that would have been renegotiated in a normal bankruptcy (as is currently being done at American Airlines). Chrysler would have survived (although restructured) a normal bankruptcy, but the end of pattern bargaining was not a result the UAW was willing to tolerate. The cram down allowed the labor status quo to be preserved.
By plan or dumb luck, Fiat has turned out to be a more than competent manager of the talent and resources at Chrysler. When you get something for nothing it is definitely a gift, but Sergio has invested a lot of time and talent on Chrysler product engineering vs. financial engineering. With the improved product Chrysler is putting out they seem to have a good shot at surviving, and maybe even thriving.
GM should be so lucky.
Where did you think Chrysler was going to get the funds to reorganize? No one was willing to offer debtor in possession financing to an auto company back in 2008 – it would have gone Chapter 7 and the debt holder would have got essentially nothing.
No, Chrysler would not have survived a normal bankruptcy in 2008. The banks were not going to loan out a ton of money on the bet that Chrysler would suddenly turn around when (a) the mortgage/CDO bubble was in the middle of exploding, and (b) Chrysler was a basket case under Cerberus, worse under Daimler, and had basically been circling the drain since the K-car lost its sales momentum. The company would have been liquidated. Its only asset worth anything significant was the Jeep brand, which would have been purchased by Renault/Nissan or some Chinese firm. The tooling for everything else would be crushed into scrap metal, sent to Shenzen, and turned into Chinese-built laundry machines and PC cases.
Fiat jumped at the deal because they were on the ropes in Europe as well and desperately needed to expand to stay competitive. (A good idea on their part, as now Chrysler is holding up the company while Europe slides into a financial crisis). In the absence of Fiat, I can’t see anyone else going for it, not in 2008.
The real question is “would anyone have cared”. I mean, I understand the GM bailout. I don’t like it, but it was probably the least bad of the possible alternatives; GM was one of America’s largest employers and having them go under right as the Great Recession started would be really bad. But let’s be honest, here, if GM was stable and it was Chrysler alone going under, nobody would have lifted a finger. It feels almost like Chrysler got bailed out because we were already doing GM anyway, so what the hell, right?
Would anyone have cared? Let’s see…
Chrysler employees
Chrysler suppliers
Chrysler customers, who might like to keep their cars running for another 5 or ten years.
But yeah, in normal times Chrysler probably could have been left to die, but it wasn’t normal times. And it seems like Fiat benefited the most out of this deal, which does rankle a bit. But as Pch points out, they were probably the best option available at the time. And if that means I get to drive a sweet little Alfa with a Dodge badge on it some day, I won’t complain too loudly.
Network effects mean Chrysler going under would leave American car-building as a whole more untenable. Similar to why iPhones can pretty much only be. Built in China today.
But quite right that under Cerberus Chrysler was headed for the trash heap quickly. Existing ownership was an impossible mess. The government managed to pull off a. Huge win for continued auto production in the US. If it had been China acting under the same circumstances and with the same results, have the complaining crowd we have today would be applauding the incredible finesse of Beijing at ma nagging capitalism.
“In a legitimate (or normal) bankruptcy Chrysler’s secured creditors would have determined how the company was restructured, either by being sold off, shut down, or reorganized.”
Is there a central website where you folks get your misinformation? I find it interesting that the same inaccuracies get rehashed here, over and over again.
If there was a secret society meeting I missed it. Darn spam filter.
For example, American Airlines is going through BK right now, and the secured creditors are at the front of the line in approving how the restructuring takes place. The unsecured creditors get whatever is left. If there are labor agreements or retirement plan issues those parties make their case before the court and new terms are imposed as needed.
The judge makes sure everybody follows the rules and signs off on the outcome. This is how a BK is normally done. If there is misinformation here I can’t find it.
“For example, American Airlines is going through BK right now, and the secured creditors are at the front of the line in approving how the restructuring takes place.”
Translation: You really have no idea what happened with the Chrysler bankruptcy, nor do you understand the law.
You claimed that cramdown isn’t legitimate. You are completely wrong. Not only is cramdown legal, but there is a statute within the Bankruptcy Code that specifically regulates it. (Feel free to look up 11 U.S.C.A. § 1129(b)(2) if you are so moved.)
As for secured creditors, they approved the Chrysler plan. But even if they hadn’t, they could have been legally crammed down. They were paid at least, and arguably more than what was required under what is referred to as the “Cramdown Statute,” so there was no breach.
If you don’t like the bailout, that’s your business. But trying to frame your opinions as a legal argument is complete and utter nonsense. Don’t try to hide behind a law that doesn’t say what you falsely claim that it says.
Would there have been a buyer for a post bankruptcy Chrysler with no UAW contracts or costs?
I’m tired of hearing the whining about the secured creditors. Chrysler was technically bankrupt long before the government stepped in. If you were a reader of TTAC back in the day, you would have read about how Cerberus just gave up its stake in Chrysler for nothing. Like – “you can have it, I don’t want it.” If the “secured creditors would have had a plan and leadership, they had the opportunity to put together a Chrysler restructuring. Nobody but the US and Canadian governments were ready to bring new money to the table, so they got to call the shots. It meant cutting a deal with the unions, a deal that aligned the workers’ interests with the future prosperity of the company.
Much like CEOs that lead turnarounds get a windfall, Fiat as a corporation got a windfall for taking on the reorganization plan. Chrysler is the longshot bet that paid off, at least so far. In the fall of 2008, I wanted Chrysler to succeed, but I didn’t think it was possible. I thought the best course of action would be to fold Jeep and the minivans into GM, and maybe the 300. I was wrong. Even with government money, GM didn’t have the management skills necessary to incorporate a substantial piece of Chrysler plus do everything else they had to do. I think Sergio and his crew, the “true believers” and everybody else down to the third shift cleaning crews deserve a piece of the credit.
You’re tired? Boo hoo. Side with a lawless tyrant like Obama and the least you can expect is to be reminded that you’re on the side of fascist expediency. How did you get tired of hearing about bankruptcy law without ever learning it? It definitely explains your level of development.
There is a relevant difference between American Airlines and Chrysler: American Airlines is being restructured to be a successful ongoing business following the chapter 11 rules while Chrysler was sold to Fiat under the section 363 rules. Since it was officially a sale and Fiat received ownership after clearing some fairly low hurdles, I think it’s fair to say that Chrysler was given to Fiat. However, the market value of Chrysler as a whole was pretty low and it’s not like other companies were trying to bid more.
The question not asked is what form of bankruptcy would result in the maximum value to secured creditors? I suspect parts of Chrysler are worth real money if you can get rid of the uncompetitive parts. For example, what is Jeep worth? What about Ram or Mopar? Could you sell the Saltillo, Mexico truck plant? When the government stepped in to preserve Chrysler as a whole, they blocked the good parts from finding homes with other car manufacturers.
“When the government stepped in to preserve Chrysler as a whole, they blocked the good parts from finding homes with other car manufacturers.”
If there was so much value there, then the secured creditors should have taken the equity in the company (which they were offered), and sold it off themselves.
The secureds obviously preferred the cash. They didn’t not want to take ownership of the assets and liquidate them. It’s pretty obvious why they expressed their preferences by taking the money.
The point of the bailout was to keep the million or so jobs from disappearing. As noted nobody wanted to buy Chrysler or GM and they would have probably been left to liquidation. The old loyalists at Chrysler may have done the work on the improvements but it would’ve been for nothing had they been left to fail.
The question of whether these companies were “given away” is irrelevant and at best academic. What Santorum and Romney have the 20/20 hindsight luxury of not talking about is what would have happened if GM and Chrysler were left to a slow, painful liquidation process. The disruption in the supply chain for the remaining OEMs, the even-larger unemployment rate, the destruction forever of a big chunk of the US industrial capacity, more spent on TANF and unemployment insurance and SNAP…hard to believe anyone in Michigan but the most obtuse would cast a vote for these twits.
Touché.
GM and Chrysler are not going to remain where they are today. They will continue to encounter a crisis until the right leadership is found to change the way they do business. That would have happened without spending billions we don’t have for jobs that will not remain.
Governments do not know how to run businesses, or make business decisions. They don’t even know how to run themselves. These were the wrong people with the wrong knowledge making the wrong decisions. The billions only postponed the inevitable changes underway, and were a complete waste of the money taken from us.
@vanilladude- You seem to be ignoring the numbers, “should have been allowed to die” Chrysler and GM gobbled up most of the share the Japanese lost last year, making money in the process. Ford,”the good one” lost share last year.
All three companies are the beneficiaries of the 2007 UAW contract, which is the foundation for their profitability today, even with the market still very weak.
No doubt, GM & C-F actually have a big competitive advantage in interest costs comparede to Ford, courtesy of bankruptcy.
Mitt’s career really started to take off when he returned to Bain & Co. dring the period when the consulting firm was falling apart. His remedy was to transfer ownership from the original owners and founders to its current managers and employees.
Weird that he is so opposed to that idea for GM and Chrysler, especially given how well Detroit has performed the last two years.
“Mitt’s career really started to take off when he returned to Bain & Co.”
Ha ha ha! Yes, and I’m really sick and tired of those Fingerhut commercials that have surfaced. I thought that company went out of business in the 1980’s! Courtesy of Bain & Co.
Six months (and more) after bankruptcy and Fiat takeover…
December 2009 Ed Niedermeyer
– Pentastarred zombie is crashing into oblivion
– Chrysler continues to exhibit all the signs of freefall
– nothing short of a BIBLICAL MIRACLE will stop Chrysler ignominious decline
– Chrysler is a DEAD AUTOMAKER walking
March 2010 Pete DeLorenzo
– Chrysler is DEAD and BURIED one way or another
– Fiat-Chrysler doesn’t have a snowball’s chance in Hell of surviving
– at this point Sergio & Co. are going to need A MIRACLE for a shot at survival.
– despite Sergio Marchionne’s track record in rescuing Fiat, the Chrysler situation is dramatically different, and to assume that because he did it once he can do it again is wildly optimistic and woefully off-base
Welcome to the internet and instantaneous responses to long-term issues. Nothing new in hyperbole extended to its illogical end. If you go through any car website and most magazines you’ll find a bunch of gearheads who love manual transmissions (less than 10% of yearly sales), 2-door sporty cars (again about 10% of overall sales), and want more powerful engines (generally agreed upon but eat into bread-and-butter sales due to loss of MPG). They are wonderful to read and appreciate but to take them as smarter than anybody else is questionable at best.
Isn’t it still early to declare the big 3 safe and successful? Clearly, they are much better, but is the disease that caused the sickness actually gone?
I really don’t care. Results speak the loudest and right now Chrysler is doing quite a bit better than anybody expected. The company seems to have learned more from its near death experience than GM has.
In fact the thing I’m much more excited about than this article is the day I can go over to Dodge’s website and “build my own” Dart to get a good idea of what one optioned the way I want would cost me.
Hey Dan, I’ve been waiting for the same thing, and now you can do that at Dodge’s web site: http://www.dodge.com/en/2013/dart/futuredart/trs/dispatch.do
Having just seen the Dart at the Pittsburgh Auto Show, it looks as good in person as it does in photos. Judging by the comments of the onlookers, Dodge had better be ready to produce a lot of them.
Thanks for that. Man, I hope that orange color with a manual combo isn’t impossible to find on dealer lots.
@PintoFan, it don’t matter as long as they’ll let you order it without throwing a fit. With that many combinations they better be ready for some special orders.
Wow – they are offering actual colors!! I’m impressed!
Off topic – gslippy thanks for the Dart link. Great to see the options. It seems to be a new thing having configurators out there a “survey” tools. Ford did it with the Escape recently.
Chrysler has had lots of practice with near death experiences, 1934, 1962, 1979…
@Ed dan- The Dart is a good looking car! I hope the Fiat-Chrysler hookup works and we get some great cars from them. I suppose I am biased, living 6 miles from Chrysler HQ. What will they say if Marchionne decides to put the HQ in Auburn Hills. Will it still be an Italian company?
Chrysler was in fact given to Fiat considering Fiat had no skin in the game and literally ended up buying Chrysler for pennies on the dollar. In return they now own the fastest growing brands in the US, outpacing market growth by 4 to 1. Almost all of the latest designs at Chrysler Co selling well were conceived before the bankruptcy. Though I am happy for Chrysler’s growth and profits under Fiat, I wish the Govt had instead bribed Ford to take over Chrysler, which BTW was on the ropes too and could use much needed capital. Ford could have killed Mercury, Chrysler. Kept Ford, Jeep, Dodge (which will be like GMC for Chevy) and Lincoln. I think Chrysler would have made much bigger profits under Ford.
It doesn’t matter Fiat owns them, its still an American Brand with 90% or more of their sales in the US.
That’s an awful idea. Ford can’t even manage two brands properly. Having GM take over (which floated around in the media at the time) would have been even worse.
Having a company with no U.S. presence was the only viable option. The DaimlerChrysler merger would have worked if the Germans weren’t so arrogant and cheap. The AMC-Renault tie-up would have worked if the French had a clue about designing reliable cars. Fiat-Chrysler? Well, I have my hopes.
I don’t know all of the details about what went wrong with the AMC-Renault combination. But I do know — because I owned one — that the Cherokee/Wagoneer SUV that was introduced in 1984 was a very well-designed vehicle. And the proof of it is the vehicle’s longevity in the marketplace.
Before Ford introduced the Explorer, the Wagoneer/Cherokee started the entire “SUV as replacement for the family station wagon” phenomenon which continues to this day. These things sold in much greater volumes than the larger “Grand Wagoneer,” or the Suburban. The competing Ford products — the Bronco II and the Blazer — were hardly competitive.
Renault was taken over by the French state and the US didn’t aallow a foreign state owned company to own Chrysler
Bruce,
The Cherokee was way over-engineered. It was the first unibody Jeep so they made it very sturdy. It was also Dick Teague’s swan song. He came up with a clean, chiseled design that was obviously a Jeep but also didn’t look dated after being in production for two decades. Also, using the AMC inline 6, one of the most durable engines ever made, contributed to the Cherokee’s longevity in owners’ hands. It’s hard to find one with less than 100,000 miles and there are those with 200K that are in pretty good shape. Great car. I came very close to buying one but opted for an Explorer because with three kids and camping gear, the Cherokee was too tight a fit (and we found an exceptional deal from a very professional Ford salesman down the street from the Jeep dealer).
The early XJs with the GM 2.8 V6 and assorted Renix components weren’t great. But the AMC-derived straight six really transformed it, and the quality of the post-1987 Chrysler built vehicles was a lot better.
The XJ and the ZJ Grand Cherokee, which was essentially completed before the buyout, are a testament to just how good the AMC engineering team was. So good that they essentially replaced Chrysler’s own engineering department after the takeover. Some of those guys must still be banging around the company, which would explain how Chrysler managed to pull the excellent new Grand Cherokee seemingly out of thin air.
It’s nice that we are giving so much credit to AMC/Chrysler engineers for developing the current Grand Cherokee, but doesn’t that fly in the face of all the reports that the hard core engineering on the platform was performed by Daimler Benz and is shared with the ML?
FromABuick,
Until he got fired in the restructuring, the head of product development for Chrysler was Frank Klegon, who started out as an electrical engineer working on sound systems for AMC. He now runs his own consulting company and also is the international president of the SAE.
Charly: Renault was taken over by the French state and the US didn’t aallow a foreign state owned company to own Chrysler
The French government already had a stake in Renault when it bought a controlling interest in AMC.
AMC did sell AM General, the subsidiary that held government defense contracts, when it was taken over by Renault.
Renault sold AMC to Chrysler for the same reason Daimler unloaded Chrysler on Cerberus – it could not compete in a tough market. The difference was that the American new-car market was booming in 1986-87 when Renault sold AMC, while the new-car market was tanking when Daimler sold Chrysler.
The federal government did not pressure Renault to sell AMC. The FRENCH government did, because it was concerned that AMC’s losses would hurt Renault.
Until we got to the snide remarks about Romney, I thought that this was one of the most rational discussions I’ve seen here recently.
Declining to discuss the merits of Mitt et al, I think that I agree with the majority here that, yeah Chrysler was given to Fiat, but that beat the heck out of shuttering the company. I am rather impressed so far with the turn-around. While the credit for the designs goes to Auburn, great credit hast to be given to Fiat for approving them. It’s pretty rare for a new management group to come into a failing company and tell the engineers, “you guys have some great ideas even if you are failing, go ahead! “
For some reason, the Chrysler outcome annoys me far less than the GM deal. Maybe its because Chrysler itself (the Auburn Hills staff, not the clowns from Daimler or Cerberus) wasn’t intellectually or culturally bankrupt. Or because Chrysler was so royally screwed by two different owners. Whereas GM’s plight was self-inflected and, in my view, the root of the problem (arrogant, stupid management) was not corrected by the bankruptcy.
The first batch of products from Chrysler are pretty remarkable considering the skeleton staff that put them together. Maybe that mentality survived from the AMC years. If nothing else, I give Marchionne credit for recognizing what there, maintaining it and giving the company a public face. Chrysler has potential, all it needed was a couple of FWD platforms and PT Barnum-type huckster. Which, after all, isn’t that essentially what Iacocca was?
I am thoroughly convinced that the world needs three men to ‘restart’ ‘things’.
Lee Iacocca, Ronald Reagan, and Frank Sinatra. Tell me i’m wrong…?
BTW, i’m in my late 20’s, so spare me the ‘old man’ comments. :)
One thing to remember is if you only sold one car last year, you only have to sell two this year for 100% growth.
Big growth numbers for Chrysler don’t mean much to me. I’m more concerned if Chrysler and GM can consistently bring superior products to market that heal their long-term malaise. A year or two of strong sales that coincide with disasters for the Japanese don’t convince me that they are out of the woods yet.
Eh, whatever. Let’s see what happens when the price of a gallon of gasoline crosses the $4 per gallon point again. If Chrysler doesn’t have a bunch of Darts to sell, they’ll have a hard time propping themselves up with pickups and SUVs.
$4? it is already there in The Imperial State of Mexi-fornia. $5 is not that far off for those of us out here. AT $26,900 that Dart is not that appealing either.
I tried the Dart configurer. I wasn’t impressed. Maybe it will be a huge success, but I really don’t know what the target market is and how it will have enough appeal to make a difference.
If it isn’t a hit, are they back on the death watch?
$26,900? Holy markup Batman!
How expensive is a loaded Focus or Cobalt… Titanium or LTZ anyone? I can get a Focus sedan up to almost $30,000 pretty easily on Fords “Build Your Own.”
Make mine an SXT turbo manual in “True Blue” and “light frost beige” interior. The only options I need are the “popular equipment group” and the “premium audio” group. $22,450 ain’t bad when compared to a similarly equiped Focus. And I love the numbers I’m finding online for the torque output of the 1.4ltr turbo four 184 lb·ft (249 N·m) @ 2,500 rpm. Torque down low! Who would have thunk it?
Holy hell… I spec’d the same car and colors earlier this week, Dan. Loaded, though.
And $26,900 is still ridiculous for a Fiasler compact.
@Rob, and once upon a time I thought that $26,000 was crazy for anything physically smaller than an Impala but I’m starting to think its the world we live in. Honestly though, I would argue that the Cruze is worth the price premium over the Cobalt it replaced, the new Focus is worth the price premium over the OLD Focus, and the Dart is sure as heck worth the price over the god awful Caliber by Rubbermaid.
The Focus is really the only vehicle in its class I might consider at $30K list. The Dart’s a small Fiat… branded as a Dodge… assembled by the UAW. In my opinion, no part of that statement justifies more than 24 large, regardless of the technology in it.
I’m not saying it won’t prove to be a decent car — and infinitely better than the Caliber, which should be a given — but $24,000 loaded seems more realistic for what the Dart is. At least until the car is proven to not fall to pieces within the first 1-2 years of ownership.
The car companies were bail out.
The people who used to make computers, TVs, electronics, cloths, tools, plastics, machinery and most thing you have in your house lost their jobs to China.
Why weren’t they bail out?!? Many of them had much better effectivity and much better quality than car companies.
Well, those largely happened in isolation, not all at once at the same time as a huge financial crisis. I mean, Studebaker went broke in the early sixties when the market was doing great, they weren’t going to take anything else down with them. GM and Chrysler simultaneously folding right at the credit crunch would have turned a bad economy into a catostrophic one. Eastman Kodak going bankrupt now isn’t going to collapse our national Jenga tower. Exceptional circumstances get exceptional procedures.
Because we are convinced that making cars people don’t want to buy is a noble cause, that rescuing companies investors shunned is essential for America, and if that isn’t a good reason it’s because the Unions spent 200 million dollars electing people to give them what they want.
My problem is that these were terrific opportunities to get their cost structures competitive for the future and the government basically punted on that. I have little doubt there will be another day of reckoning some point in the future because of this.
And perhaps the taxpayers will have to assume responsibility for the VEBA one day.
One thing that didn’t change were the UAW’s work rules. Though the health care and pension issues have been either resolved or kicked down the road, the existing work rules and job classifications have pretty much remained and continue to hamper productivity. The entire reason for job classifications and work rules is to increase the number of union members that are hired. From the union’s POV that makes sense but it hardly aids productivity.
I bet that if you asked a competent factory manager if he or she (GM’s Poletown factory is run by a woman) would rather pay lower wages or have more flexibility with work rules and job classes, they’d take the latter. Doesn’t Toyota only have just two job classes in their factories?
“One thing that didn’t change were the UAW’s work rules.”
This is not quite accurate. The current profits of Ford, GM, and now Chrysler, are largely the result of provisions in the 2007 UAW contract that addressed this issue. I believe there are fewer classifications now, as well.
I have to agree with your appreciation of flexibility as an important issue.
Work rules have definitely changed. Job classifications have too.
There aren’t any UAW janitors anymore; that was contracted out. Hi-Lo drivers in some instances have been contracted out or are lower wage workers. Aside from Electricians, Waste Water Treatment Plant Operators and Jitney repair, most trades have been combined.
@pgcooldad- Thanks for details.
Thanks for correcting me.
I won’t be investing in any company that has a large, powerful union which can use the government to get what it wants. Doesn’t really matter how things turned out, it set a dangerous precedence that tells investors who gets paid and who gets laid and who is left holding the bag.
Then don’t invest in any auto company whose manufacturing base and headquarters are concentrated in the first world.
Good for you…invest in a company that is controlled/supported by THE Government…i.e. China, Korea, Japan, etc. Not the union representing the employees…. What a patriot you are….
Furthermore….buying a car is not an “investment” ; it is vote of confidence/no confidence in the manufacturers competence and ability to build a desirable product…period.
Bailout discussion? Must be a slow news day.
In any case, what Romney and Santorum have to say about the bailout couldn’t be less relevant, or more predictable. They’ve both already written off Michigan in the general election anyway, so they risk literally nothing by rehashing some generic conservative chestnuts about what was done 3-4 years ago. Thinking that the auto bailout is going to get some kind of traction as a major campaign issue is pretty laughable. A relatively closed forum like TTAC is not a good gauge of what really matters to the public at large.
It’s enough of an issue in the general election that the AP did a story about it and the Seattle paper ran it, so it’s clear that it’s not an issue isolated to Michigan. Since the AP story addressed comments made by both the Republican candidates and Pres. Obama, it seems as both sides are willing to rehash the issue. Frankly, I’m disappointed that this thread got off into the general issues of the bailout. That wasn’t my intention, which was to discuss how much skin Fiat put in the game.
Skin in the game? If you are talking cash… not much. But Fiat’s current survival is pretty much dependednt on the success of Chrysler. So, that is an awful lot of skin, especially compared to the German folks that pretty much trashed the company.
Off topic: I am not sure where i read this, but it seems there is an increasing displeasure among the executives of other automakers (specially Ford and Toyota) with how the GM’s bankruptcy and bailout has stacked the odds against them. It seems they are unofficially pushing the Govt very hard to even the playing field.
Also off topic: There is not one journalist who studied the effect on car prices if GM and Chrysler got liquidated. When the tsunami affected production by less than 5% last year, car buyers were paying record high prices, sometimes by more than $1800 per car compared to 2010. Used car prices also shot up. Now imagine 30% of the production wiped out. Everyone who has bought a car since 2009 benefited irrespective of what car they bought. Your fav Toyota and Honda would have cost you a lot more. Incentives would have been cut to the bone. Rental car companies would charge more without a cheap supply from GM and Chrysler. Business would be paying more for tight supplies of F-150’s due to no competition from Dodge, Chevy and GMC, and pass these costs on to their customers. Car buyers who paid more for their Fords, Toyotas and Hondas have less to spend at the malls, restaurants, supermarkets etc. So the $50** or so it might cost** per taxpayer for the bailout is saved by all Americans many times over. This is ignoring unemployment payouts and losses on payroll tax revenue of 300,000 directly employed by GM and Chrysler and about a million other jobs indirectly employed at dealerships, suppliers, small business, advertising agencies etc.
** if the govt sells the stock today
I sincerely doubt any major automaker perceives GM as a threat, real or imagined, now or at any other time since the early ’80s.
“General Motors has enormous technical and manufacturing resources. You ignore a company like that at your own peril”
– Jim Press in 2007 when he still ran Toyota of North America in response to my question about him being quoted as saying GM would come back. Now Press had a fall from grace after going to Cerebus era Chrysler, but he had a good run at Toyota and knows the business. He’s since been quietly hired at Nissan.
I have to disagree. GM has a lot of talent. Management implemented a “don’t even try to do your because we really don’t care” atmosphere which has become ingrained in the company’s psyche.
As GM struggles to right the ship and change that attitude they’ll become more of a force.
Funny thing is I want GM to be a strong, intelligent, profitable company *but* they only make two cars I’d spend my money on and those two might not be my first choice.
Hopefully the upcoming ATS will change that.
Your point about a constrained market and price elasticity is quite astute.
Chrysler was given to Fiat, the backmarker of Euro brands.
@alluster- GM & Chrysler both gained a great competive advantage over Ford due to the bankruptcies. Ford is beloved, “they didn’t take a bailout”, but have a mountain of debt compared to GM in particular. They also have a very much smaller global scale. It has been reported that Ford’s interest costs are a $1,000/car more than GM. Ford has a legitimate beef, though they were fortunate to be able to avoid dancing with the devil. They will have to perform much better than they have been with their flat market share last year over 2010.
Chrysler has had successive relationships with Mitsubishi (Japan), Daimler (Germany) and now FIAT (Italy). It should be renamed “Axis Motors”
I wonder what the executives from Japan, Germany and Italy think when they’ve visited the Walter P. Chrysler Museum, which has some floor space devoted to Chrysler’s WWII era defense work.
Probably similar to what BMW execs think when they see P-51 Mustangs powered by Rolls Royce designed V12s (built when both automotive and aviation parts of RR were under the same management) which fought well against BMW powered Me-262 jet fighters.
They also have had relationships with the Rootes Group(UK) and Simca(France), if that balances anything. Fiat being a chief beneficiary of the bailout must rankle some at GM, who in 2005 were basically robbed of two billion dollars to get out of their Fiat ownership position that had already cost them $2.4 billion in 2000. Fiat did a good job of burning through GM’s cash both times and also diluted GM’s ownership of 20% to 10% by doubling their outstanding shares before GM was to be required to take full ownership of Fiat. One might think that Fiat issuing new shares would have obviated GM of their burden, but the European courts were looking at secretly broke GM as a giant cash filled pinata and GM paid up rather than risking being forced to buy another 90% of Fiat shares.
It still seemed incredible to me how GM got stuck with that rotten FIAT deal.
“It still seemed incredible to me how GM got stuck with that rotten FIAT deal.”
Wagoner must have thought that he was getting FIAT on the cheap. The FIAT deal was touted at the time as a way to get cost savings through synergies, plus growth in Latin America.
Of course, that proved to be false economy. The old GM had a disastrous track record with these joint venture and acquisition ventures, and this was no exception. If GM wanted more market share in Latin America, it should have built its brands to earn it. But this is GM, so it didn’t.
Presumably, the put option was seen as a sort of formality that didn’t matter much, since the end game was to get the right of first refusal to purchase FIAT. Wagoner obviously blew it, and badly.
Whenever a corporation touts an M&A deal for its “synergies”, watch out. The chance of those cost savings failing to materialize is high, and the odds of it backfiring are almost as high. There are very few companies that are adept at acquiring other companies, and GM was not one of those exceptions.
GM’s connection with FIAT was primarily a joint venture- F-GP, Fiat GM Powertrain. GM wanted the diesels and ended up getting them in the divorce settlement. Whether it was worth $2B is another question.
At one point, Fiat seemed like it could be a good partner, but that was before we looked inside their operations and understood their quality and capability.
I hope they can help Chrysler survive, but I think the help will actually flow the other direction, as the profits are right now.
Chrysler was once a proud engineering company, but that was many decades ago. Their current profitability is a trick of the bailout. I’m not suggesting Fiat is better, but look at what Chrysler is really bringing to the table. They have the trucks that aren’t relevant in any of Fiats markets. They have minivans, whose European sales volume shrank to the point that Austrian production ended in 2007. Lancia took over branding in some countries last year, but Voyagers are not going to tip the scales much. They have tired Mitsubishi platforms and engines that are on their way out. They have Mercedes’ current SUV platform, which might be profitable as a small volume product with the right drivetrain in various countries. They have the LH platform, which could only be sold to the wealthiest Europeans based on running costs no matter what engine it receives. It is hard to imagine many outside of the Italian government that will pick an improbably heavy car riding on 15+ year old Mercedes suspension originally intended for cars that weighed 3,200 to 3,800 lbs. My friend’s Magnum R/T Hemi with 100,000 miles feels like it has spent 300,000 miles in NYC cab duty, so shot is its suspension. I wouldn’t be surprised if Mercedes spent more money on bushings, shocks, and steering components for their 3,200 lb E200 W210 than Chrysler is spending on their latest 4,400 lb 300C V8s. The new small Chryslers are to be Fiats, starting with the Dart. They’ll have Fiat engines and Fiat IP.
Whatever happens going forward, Fiat will be calling the shots and determining engineering priorities.
“It still seemed incredible to me how GM got stuck with that rotten FIAT deal.”
…. and it looks like GM hasn’t learned from history. Rumor has it they are in talks with Peugeot Citroen to form a joint venture alliance in Europe and that the talks are in the “advanced” stage. I think the motive may be to pad their global sales numbers with the 4 million cars PSA sells. How many times has GM formed alliances with struggling companies, only to fall flat on their faces. I wish someone can punch GM in the face if this deal goes through.
“Chrysler has had successive relationships with Mitsubishi (Japan), Daimler (Germany) and now FIAT (Italy). It should be renamed “Axis Motors”
Must admit, ‘Axis Challenger’ has a nice ring to it…
Although “Axis Ram” sounds like a porn star…
I’d quote an ‘Orgasmo’ reference, but I think even this site isn’t NC-17…
+1
circa 2009, verbatim,
“A buyout by the UAW and a shotgun-wedding with Fiat will save GM and Chrysler respectively, with a little help from the US taxpayer.” -‘President’ Barack Obama
Bring on the Dart, hell, i’ll look at buying one. Bring on the Barracuda (at least have the decency to call it a Chrysler), i’ll look at buying one. GM can f*** off in every respect as they won’t make the Caprice available civlian, P.S. where’s my Ute/El Camino??????
Fiat, schmiat. Anyone with a brain and who watches the news knows Chrysler was forced into it, hands down.
A very high Chrysler executive made it pretty clear to me that the folks in Auburn Hills look forward to not being owned by Fiat. They’re happy to have been bailed out and in general they seem to admire Marchionne and are good soldiers on his team but they want to be American owned.
FWIW, the folks at GM appreciate the bailout but could do without the albatross of Government Motors around their necks. I haven’t spoken to a single GM salaried employee that doesn’t want Commerce to divest its shares ASAP.
I’m not surprised that a Chrysler executive looks forward to not being owned by Fiat, but I think he is dreaming. Fiat gambled big to make Chrysler work, and they have no reason or incentive to offload it once it becomes profitable.
From what I have read about Marchionne’s very demanding work habits and management style I’m not sure I would want to work for him either, but my company did not get bought out or go BK. I don’t think American auto executives are used to the demands and accountability expected by a workaholic perfectionist and I’m sure the old school Auburn Hills management would love to be on their own again. Not gonna happen.
Yeah, in so many words Chrysler was given to Fiat, 25 percent that looks like 60 percent. But the alternative was that the current administration wanted to let Chrysler die altogether.
We had to bribe Fiat to take Chrysler. Hell, it cost us $1.3B large. But the UAW came out ahead. They got to keep their jobs with Chrysler and continue to live large because of the $1.3B.
But the upside is that Chrysler is now just like Toyota, Honda, Nissan, Mazda, Hyundai, Subaru, Mercedes, BMW, etc, in that Chrysler is a foreign-owned company providing jobs to Americans who make cars for Americans right here in America.
@highdesertcat:
EXACTLY.
Andy, That was enough for me to buy a 2012 Jeep Grand Cherokee Overland Summit for my wife a few months back.
I doubt that I would be so generous as to ever buy another GM product as long as it remains a domestic auto company living large on the tax payer dime.
At least we cut our losses with Chrysler. But we won’t cut our losses with GM ’til we give away GM to China, or otherwise bribe China to take GM off our hands, like Fiat did with Chrysler.
@highdesertcat- What share of Chrysler jobs do you think are gold collar, professionals- engineers and managers, compared to those foreign brands you cite?
I am sure it is a far higher percentage for Chrysler, Ford & GM than for the others.
Most of the foreign brands conduct no R&D, little to no engineering, and have no top management in America.
Those who think just letting Chrysler go and having the foreigners pick up the slack would be the same for the country ignore these realities.
What seems to be missing in many comments is an understanding of the strategically important capability of running an auto company that exists here with the “Detroit 3” alone. Though Chrysler is owned by Fiat, almost all the products they are selling now are have been dveloped right here in Auburn Hills.
@DrOlds: Additionally, if auto manufacturing was such a low-value enterprise, why do other countries struggle mightily to establish their own companies?
Having grown up in an highly industrialized area (steel country), I can appreciate what happens in an industry. Once an industry has left your area, it will be devilishly hard to get it back. It could take decades, and every day where production is gone, is that much more ground that has to be made up.
It’s not a Nietzche-like “what does not kill me makes me stronger” paradigm.
If it doesn’t kill you the first time, it will the next.
@geozinger- GREAT POST! Seems you know a bit about reality compared to some of the theoretical thinkers here. The good news is that Chrysler and GM are hiring the knowledge workers we really need to maintain a domestic industry.
@DoctorOlds (love the avatar pic BTW):
‘Most of the foreign brands conduct no R&D, little to no engineering, and have no top management in America.’
I understand the -justified?- cynicism towards Acura these days, but they (we?) recently announced they would HQ in Ohio, with most R&D and all managerial decisions (and actual ‘boots on the ground’ existing manufacturing ops). See 2015(?) NSX, impending ILX (to be built in the US), MDX production to be moved to Alabama instead of Alliston, Ontatio…
Seems the Zaibatsu are finally telling Acura division of Honda to ‘sink or swim’. I’m sure the ‘strong’ yen is a major factor in this decision. And quite frankly, damn the consequences, and with my job on the line, I SUPPORT IT.
Think Kanamitsu buying out OCP in Robocop (the movie trilogy is more analogous than most of us realize). Sort of…
@acuraandy- Thanks. Educator(of teachers)Dan found it for me when I stumbled on this site as the auto world collapsed in late ’08.
I seem to recall some discussion from Honda about relocating the corporation HQ to the US. Probably a long time ago (memory fails).
Toyota has a Tech Center in Ann Arbor, ironically, staffed by a lot of folks from the GM (we are not the incompetents some weak-minded folks believe).
It is nice to see a reasonable presentation of information. I am interested in knowing more about what sort of functions Acura will have here?
Correct me if I am wrong. Doesn’t Honda employe 85% of corporate engineering and management staff in Japan? If not, any idea what the percentage is today?
And I still love the whole Oldsmoble Gang. Still have a goal of having a 455 Rocket someday, “Elephant Engine Ernie” here I come! http://www.musclecarsforever.com/images/old_ads/1970_Olds_442_ad.jpg
@EducatorDan- There are not a lot of 455’s around these days. 520 ft-lb of torque! A heck of a lot more with the latest edelbrock heads!
I’ve got a 425, capable of more HP because of higher RPM limit, but that 30 CI the 455 has over it is worth around 35 ft lb. which would be more driveable on the street. I built the 425 (a ’66 Toronado engine) to replace my long stroke 400 in my ’69 442 Convertible. I was fooling around with a buddy in a Porsche turbo and spun a rod bearing trying to chase him at 130 or so.
The weakness of the 455 is a tendency for a rod bearing to wipe if you over rev them. With 520 ft-lb, you really don’t have to.
I feel blessed to have been part of the Olds gang. I wish you would tell PCH101 that there just could be some people inside GM who knew how to build good cars and were trying to make the right things happen.
I do miss my Oldmobiles. At least there is a gleaming new plant on the Olds site cranking out some awesome Cadillacs. Can’t wait to get into an ATS. Sure wish it was a Cutlass!
@DoctorOlds, rumor has it after 2013, at least on the Acura side, 75-80% US management and R&D.
Not sure about Honda proper.
Keep in mind Acura brand was originally nothing more than a luxury sales channel to sell JDM Honda models at a premium since, even back in the 1980’s, the yen was worth ‘more’ than the US $.
This business model makes sense believe it or not. MUCH more than keeping Buick in the US, hell, sell it to Wuling and be done with it as far as i’m concerned. Buicks (and a significant subset of GMs) are more Chinese than American now (and for the past decade) anyway.
The ONLY WAY i’d buy GM again is if they either made the Caprice available civilian, for sub-$25k (with few ‘frills’ and A V8!); Or, and this will never happen, bring back Oldsmobile as an ‘American’ Buick; name the Caprice/Lumina/Commodore a Delta 88 or 98. Hurst (Cruze) Cutlass? Fiatsler is toying with a Dodge Barracuda, so why not?
Dan Akerson and/or Bob Lutz, are you listening?! I’d wager not.
Olds, in case you missed it, I owned a lot of GM cars over the decades, to include a Custom Cruiser and a Toronado.
I was also heavily invested in GM and domestic auto stocks for decades until 2007. I thank my lucky stars that my broker was a visionary. I’m glad I dumped GM before it took a dump on me.
But to the topic at hand. From a purely practical financial point of view, dumping Chrysler, even at the cost of way more than the bail out money plus the $1.3B, was a wise decision. it did wonders for Chrysler, for Fiat, for the UAW, for the customers and for the Treasury (in the form of revenue from various taxes).
Dumping GM as well would have been an equally wise decision as was giving the UAW a slice of the pie. Now the UAW won’t be so eager to strike themselves and bargain themselves into financial ruin.
What you get with this selective bail out of failed companies is just a nationalization of company debts and liabilities. GM doesn’t pay any taxes. GM just exists on the dole without any expectation of having to repay the billions that the government sank into that gaping wound and bottomless pit.
We all would be better off with GM owned by anyone besides us. Look what happened to Chrysler when we dumped them on Fiat! And it is actually paying we, the people, some dividends. GM? Not so much.
I will lay some facts out around your comments.
“GM doesn’t pay any taxes.”
New GM was allowed to carryforward $45B in tax credits for old GM losses as a quid pro quo for new GM continuing to fund pension programs. Analysts argued that forcing hundreds of thousands of GM pensioners to be dumped on the PBGC would bankrupt it, putting taxpayers on the hook for $billions.
New GM has already burned through around 1/3 of the tax credits and will likely use the rest in just a few years, after which GM will pay taxes again.
Opinion: It sure seems a lot better to help the restructured company get on its feet. That is the purpose of bankruptcy. Ford is likewise paying no taxes due to carryforward tax credits for prior losses. And, If they really won’t be making any money, as you have prognosticated, how can you complain about tax credits. They will have meaning.
“GM just exists on the dole without any expectation of having to repay the billions that the government sank into that gaping wound and bottomless pit.”
What is this dole? The meaningless or dwindling tax credits? How do you think there is any on-going funding of GM, as the word dole implies?
Olds, you can parse the tax advantages given GM any way you like, but the bottom line remains that GM is a liability to the tax payers and will cost us billions more in the next two years.
Examples of ‘the dole’ are the Obama administration purchases of hundreds of Volts while at the same time urging its cronies in industry, i.e. GE, to do the same. Did you forget about the $7500 tax deduction each Volt costs the tax payers.
The Volt is clearly a project that was soundly rejected by the real-world buyers. The current administration is forcing its ideology on ‘the people’ but that, too, will fail.
In a couple of years the Volt will be a mere figment in our national nightmare called the Obama administration. Another left-wing environmentalist ploy to wean the US off oil. It ain’t gonna work, but it will cost the tax payers a ton of dough.
So, please, I admire your staunch defense of GM, but the only winners at GM are the UAW members who were allowed to continue to live the High Life at tax payers expense.
MOST Americans see GM as a loser that should have been liquidated after March 31, 2009. MOST Americans choose NOT to buy a GM product. There is no other way to interpret that fact.
It doesn’t matter how the Obama administration or the GM fans try to spin the real-world facts. What remains after all the wishing and hoping is that GM is in the same downward spiral it found itself in during 2008. Many people choose not tpo buy a GM product for fear of buying an orphan. Remember Oldsmobile? How about Pontiac, Hummer, Saturn, Saab?
There’s a reason why GM died. Many of those factors still exist today. GM will need another bail out in 2013/2014 because they’re short in Canada and losing money in Germany.
The topic is Chrysler. It was a dead company, and like GM, enjoyed the same taxpayer funded bail outs but has once again become successful as a subdivision of Fiat. Good stuff. That’s all it took. Bribing Fiat to take it off our hands. Now it is like buying a Toyota or Honda, Nissan or Hyundai – Made in America by Americans, for Americans.
GM? Fuggedaboutit! GM should have been given away to China, or India, Russia, Brazil, France… Hell, anyone who would take it off our hands. Wait ’til this months sales numbers come out. Did you know that GM has tons of unsold 2011 Silverado trucks? They should give one to every tax payer who will take. Most of them won’t.
@highdesertcat – Some visionary your broker is – it took him until 2007 to figure out that GM was going down? Look at the long-term chart. From 2000 on, GM stock was pretty much heading straight down…
Did he gave you the nod to start buying Ford again in late ’08 when it was a dollar and change, that was the time to buy that one again.
WRohrl, I should have been more clear. He warned me long before the end of 2007 but I was loathe to divest until I myself was convinced that there was no more hope for GM. When I reached that point the decision was an easy one to make. I cashed out.
I am completely divested and out of the market, the bonds, the T-Bills, now. All of it cashed in. My plan was to start drawing Social Security retirement early at age 62 and hope to live long enough to see social security go broke.
I’m 65 now and instead of putting money in to the system, I’m taking money out. It’s all about timing. Hope things turn out as well for you as they did for me. I worry that none of my kids will be able to recoup much of the money they are pouring into the system now.
Personally, I don’t think Fiat got a free lunch here, not by a long shot. They had to provide at least SOME of their technology to Chrysler to make it happen. What you say may well be true that some of what we see now with Chrysler’s resurgence was brought on by those who kept the flame alive during its darkest hour.
But I contend, that without Fiat, they would NOT be able to do as much as they have in such a short time.
That said, no one wanted to become Chrysler’s partner for fears that have, so far, turned unfounded, but at the time, who knew the reality, outside of a few diehard souls within the company?
I think a lot of what ailed Chrysler goes back to Daimler who bought it and then ran it into the ground. It’s true that Chrysler was not exactly healthy before Daimler came along, but they exacerbated the issue to a great extent.
So while the Obama admin may have stretched the true to some extent, I don’t think Fiat got a free ride here, not by a long shot, even if they were forced (rightly to some extent) to up their average mileage for the entire fleet (even if artificially high).
In retrospect, IMO maybe it would have been best to let Chrysler sink or swim on its own back in 1979 . I have problems with the governnment doing bailouts whether under a mediocre Republican (W) or a mediocre Demo prez(Obama). When the small business I worked for couldn’t make payroll a couple of years ago that was it for my job.The too big to fail arguement bothers me.Where Mitt Romney sounds hypocrytical of course is backing the bailout of the financial sector while opposing the auto bailout , which makes him sound like the brain dead richboy that he is. And yes the greedy unions and the clueless management were both to blame for the fall of the big3.
bill, Obama has his re-election sewed up. The Republicans don’t have a contender that will attract any majority vote, and the GOP knows it. That’s why there will be ‘brokered convention’.
Get set for ‘four more years’ of Obama-nomics.
(BTW, I’m an Independent)
Even more so–if the economy improves throughout the year (or rather, if people feel the economy improves), there is absolutely nothing any competition could do that will stop Obama from re-election.
Even without that, the GOP candidates are moving too far from the political mainstream in an attempt to win their party primary, which will damage the hell out of their chances in a general election.
Actually, I predict that a lot of voters will stay home this November if the field of contestants remains the way it is now.
Inside scuttlebutt from my poker-playing Republican friends has it that the GOP will actually ask a current Republican Governor to enter the race. That’s how desperate they are. And if the first one turns them down they’ll press on to another one, and another one.
And, frankly, this may well be the very first election year that I choose not to vote in November. In 2008 I didn’t care for Obama and I didn’t care for McCain so Joe Schmoe got my vote.
But, had Hilary gotten the nod instead of Obama, I would have been more than delighted to cast my vote for the most qualified candidate in that race.
Love’m or hate’m, I did pretty well with Clinton in the White House, and with Shrub too. But with Obama? Well, you know how well you are doing with Obama.
Actually, I think a lot of voters will stay home in November if the field of candidates remains the same.
Scuttlebutt has it that the RNC will reach out and invite a current Republican Governor to enter the race at their convention. If the first one turns them down, they’ll press on to another one, and another one.
I vote for the best qualified candidate and had Hilary made the ticket in 2008 I would have been delighted to vote for her. I did pretty well when Bill Clinton was in the White House. With Obama, not so much.
I didn’t care for McCain in 2008 because he could never be a Reagan. I didn’t see where Obama was qualified for the job. But for those who are doing better with Obama than they did with Shrub or Clinton, I say, get ready for four more years of enjoyment.
Americans got what they deserved when they elected Obama. With the choices as they are today, I’ll be staying home on voting day and live my life around Obama-nomics. Many people already do so. Hey, if you don’t work, you get to collect and not pay taxes. It’s hard to beat a deal like that.
You know, I wonder. It’s pretty much conventional wisdom that Daimler looted Chrysler and as Ciddyguy said, “ran it into the ground”. Has any reporter ever called Dieter Zetsche out on that?
Of course not, Ronnie. But if it had been the other way around you can bet your ass that every reporter available would have swarmed chrysler.
That’s at least partly because the idea that Daimler looted and ran them into the ground is at least a massive oversimplification and at most an all-out lie.
First of all Daimler paid 37 billion US$ for Chrysler and then. When they sold it – Cerberus didn’t give the money to Daimler, but instead put it directly into Chrysler with Daimler taking another couple of billion loss.
The often rumoured “piggy bank” that Daimler looted…Chrysler had about 8 billion US$ in ash, cash equivalents and marketable
securities in their last annual report ending 1997. At the end of 2007, after being sold to Cerberus, they had 9 billion US$. In fact, Chrysler was profitable after they were sold to Cerberus until the Credit Crunch hit (unlike say GM).
And as for the often quoted mismanagement that ran Chrysler into the ground: Yes, it existed. Noone will (probably ever) argue that Daimler did a very good job managing Chrysler, or that the merger was a good idea in the first place. But Chrysler was not a perfect company, which was ruined in a couple of years by dominating germans. Yes, Chrysler was (highly) profitable before the merger. So were GM and Ford in those years. The middle/end of the 90’s were good times for US carmakers. The beginning 2000’s were not – for none of them. Ford went from a 7.2 billion net profit in 1999 to a 5.5 billion loss in 2001, GM went from a 6 billion profit in 1999 to a 600 million profit in 2001 (which was later on reduced to 200 million thanks to recalculations). Chrysler was no different, just a bit earlier.
Afterwards, you can talk about the management of Chrysler by Daimler. It certainly wasn’t very succesful (or successful at all). But they also weren’t that much worse off than GM or Ford by themselves.
When Daimler took over Chrysler, Chrysler was a highly profitable company.
But it was profitable in large part because it underfunded product development relative to its peers. It was overly dependent upon a few hit products, such as the minivans, that were facing increasing competition from strong rivals, and overly dependent upon US sales. The company was heading for the wall; Eaton knew that, which very well may explain why he sought out an acquisition.
Daimler botched the takeover badly, but Chrysler would have had issues, regardless. Chrysler has traditionally experienced extreme boom and bust cycles because of its lack of scale and excessive dependence upon US sales, and that cycle was bound to catch up to it again during the inevitable economic slowdown. The Mopar fans and Detroit flag wavers don’t want to see this, of course; it’s much easier to play victim.
@fusion- To correct your factual knowledge: GM was profitable or broke even nine of the ten years of the decade, 1998-2007, leading to the collapse of ’08.
GM made $21B over the decade, including a loss of $3.2B in reported in 2005.
Many confuse the $30B+ writedown for future entitlement obligations due to an accounting change, and the $20B+ contribution to fund the VEBA as operating losses.
GM didn’t lose big until 2008, when even illustrious Toyota reported a global loss.
These are facts. Bring data if you disagree. Opinions are like… Everbody has one.
@pch101, pretty fair assessment. What’s new is the labor agreement. Time will tell.
@pch101-“It was overly dependent upon a few hit products.”
Would that be like Toyota and Honda who derive 49% and 63% respectively from just three models?
Chrysler, GM and Ford were all dependent on trucks, large vehicles that could be produced profitably under pre-’07 labor agreements. All three lost money on the small car production in that era.
“Would that be like Toyota and Honda who derive 49% and 63% respectively from just three models?”
Not really, no. Unlike Chrysler, those companies weren’t short changing their R&D in order to book profits. Those segments have to be defended.
“Chrysler, GM and Ford were all dependent on trucks, large vehicles that could be produced profitably under pre-’07 labor agreements. All three lost money on the small car production in that era.”
Detroit made crappy small cars. They didn’t have the brand equity to sell small cars profitability.
Again — you assume that if Detroit can’t do it, then nobody can do it. It should be obvious by now that Detroit just hasn’t been all that competent.
@PCH101- I make no such assumption. I know the labor costs for the US makers put them at a $1,600 disadvantage, a pretty tough nut to crack when it represents 10%-15% of the selling price of a low end car. That kind of money would have gone a long way toward better products. Still waiting for you to bring data to show the profit the Japanese are making on the few small cars they assemble here.
Are you just anti-American, thinking all American car companies are incompetent, or simply ignorant??
I’ll give you credit for the latter, because the first is ugly.
“I know the labor costs for the US makers put them at a $1,600 disadvantage”
Yes, it’s very convenient to ignore the even larger gap paid out in the form of incentives.
And it’s even more convenient to ignore the sales lost due to the creation of inferior products, which caused customers to defect to the competition and for those GM brands to lose volume and pricing power.
If people want to understand why GM failed, they need to read your posts. Your rhetoric echoes those of the managers who ran GM into the ground.
@PCH1- Not ignoring those issues, but highlighting a huge nut that the foreigners never had. In a simplistic analysis, you ignore the truth that the Japanese home market demands high content small cars, giving them economies of scale and PD dollars.
I can understand your obsession with incentives since you are ignorant of the larger issues at play.
It appears your world view is now condensed to “Americans are stupid.”
“I can understand your obsession with incentives since you are ignorant of the larger issues at play.”
One would have hoped that GM would have been “obsessed” with being able to sell cars for higher prices than it cost to build them. That could explain that little bankruptcy problem that you and your coworkers created.
“It appears your world view is now condensed to “Americans are stupid.””
I hadn’t realized that GM represented the entire country.
The old GM proved to be a failed company. GM’s failure was the fault of the mediocre talent that managed GM. You can’t blame the entire country for what GM did wrong.
There were other, smarter Americans such as Rattner who helped to restructure GM and to liquidate what was left of your former employer. Down the road in Dearborn, Alan Mulally is another smart American who spearheaded the turnaround of Ford. Please don’t try to compare Rick Wagoner and your former GM coworkers to more talented Americans like that.
Yes Chrysler was given away. And for what? what did the tax payers and shareholders get from fiat? The answer is nothing but hope and empty promises.
Oh wow, now we can buy the fiat 500, that is just so OMG AMAZING.
The reason chrysler is doing better has just about nothing to do with being taken over by fiat. And everything to do with them being bailed out, debts forgive, etc etc.
Much easier to succeed when overnight you have billions in obligations disappear. At that point any decent CEO can run a company.
Even if they weren’t handed over to Fiat, I’m still impressed with the progress they have made as a company thus far. Peter DeLorenzo from Auto Extremist is convinced that the whole thing is a sham and is destined for failure at any second.
He’s always been a Chrysler h8er though.
Their current success is real, but Chrysler-Fiat still lacks the scale necessary to compete with the big global players. Even Ford has a scale concern, now smaller than Hyundai-Kia.
Going back to what Fusion said just above me, Chrysler was NOT in good health before Daimler got involved and would’ve probably had sunk on their own, though it may have taken longer who knows? But Daimler DID I think exacerbated the issue to a great extend and Cerebus seemed to not to know what to do.
Thus Chrysler was in a very weak state back in 2009. But I WILL say this, both Fiat and Chrysler are in this together partly due to the feds insistence as no one else wanted Chrysler But Fiat did and for ulterior motives, to get their foot back on US Soil and they felt with Chrysler’s distribution system, they can more easily start up shop with Fiat and Chrysler needed a new infusion of modern, up to date small, fuel efficient cars so both sides are using what the other has in what is billed as Friends With Benefits.
And I believe that is partly why it is working as well it is as of right now.
Yes, Marchione is a hard one to work with, but a very good article showed how Marchione works and one is he puts people where he see them doing best and gives them all the rope and tools to make it happen, if they fail (read, can’t do their job), they get let loose after a period of try, try again but I think he doesn’t give them many retries and that is ultimately a far more challenging situation to get into initially but in the long run is probably the best way to go, because once you have proven yourself, the rest becomes MUCH easier and the challenges continue to grow within the company – and this is new to Chrysler upper management as part of the way Marchione is doing it is by cutting out the hierarchy and his OWN office is a modest one on the 4th floor, rather than on the top floor where the executives normally are and that challenges old, preconceived notions from those who fear change, such as upper management, but it’s the rank and file that seem to like working with Marchione the most.
Anyway, I see this as a win, win situation for both companies as they both know that neither could survive without the help of the other, which in the end is what FWB is all about, right?
@pch101-
I wonder if you read your own words, “Detroit made crappy small cars. They didn’t have the brand equity to sell small cars profitability.”
As for your opinion of Rattner, it simply proves how uninformed you really are.
It just dawned on me what a fruitless quest to use data and logic with someone whose opinions are not founded on them.
“I wonder if you read your own words, “Detroit made crappy small cars. They didn’t have the brand equity to sell small cars profitability.””
It’s not exactly a secret outside of the Michigan bubble that Detroit handed much of the mainstream passenger car market over to the Japanese and much of the luxury car market to the Germans. It’s only because of government intervention that GM now has a shot at trying again.
Again, I find it really odd that you want to brag about the wisdom of being a GM insider, even though it is that “wisdom” that caused the company to fail. It’s one thing to shoot yourself in the foot, but you keep reloading, and reloading, and reloading…
Only in you limited imagination.
No facts, just emotion. You sure wouldn’t make much of a business man.
Data, data, bring some data rather than subjective blather, repeating yourself with no other basis than what you think.
You just can’t do it, can you.
“Only in you limited imagination.”
I’m pretty sure that I didn’t imagine the GM bankruptcy.
I’m pretty sure that I didn’t imagine that the top selling passenger cars in the United States throughout the last decade consisted of the Corolla, Civic, Accord and Camry.
I’m pretty sure that I didn’t imagine that BMW and Mercedes now set the benchmark for the luxury sedan segment.
I’m pretty sure that I didn’t imagine that GM went from having around 50% market share to around 20% today.
I’m pretty sure that I didn’t imagine that GM has had incentives above the industry average, while Toyota and Honda have maintained them below the industry average.
I’m pretty sure that I didn’t imagine that GM is dominant in the fleet market, and that many of its top sellers only hit those volumes because of rental sales.
None of that is imagined, and to those who follow the car industry, none of it is a secret. Yet it stuns you to learn this.
This is why GM failed — because these issues, which should have scared the piss out of you, didn’t faze you in the slightest. GM ignored its competition, made endless excuses, and ultimately filed bankruptcy because of it.
GM exists today because it was bailed out and reorganized by outsiders. You could at least show a bit of gratitude to those who designed the restructure and who paid to keep it from disappearing completely.
He’s got a point doctor olds.
Having inside data from a failed organization is hardly proof of possessing great knowledge. This is like a zombie giving healthing living tips.
srogers- Since you are on this site, I understand your perspective. I don’t mind if you brush me off as not knowing anything, tainted by merely having a career with GM. I will still present my perspective and the data to support my ideas.
I can’t help but wondering how someone can be so simple minded as to believe all of the hundreds of thousands of people who have worked for GM are collectively responsible for the course of events over decades that nearly killed the American auto sector, a cold hard, incontrovertible reality.
I know what I know. I was paying attention to DATA about the car business 50 years ago. I was connected to or part of the Oldsmobile Division for the last 47 years of its existence witnessing unparalleled success and the eventual slide into oblivion. I share many of the criticisms of GM’s actions, but also am aware of the business realities that drove decisions, and yes, the god gory stumbles along the way.
I am fairly criticized as a GM cheerleader. That’s why I am here from time to time. That alone does not prove me wrong.
I put my experience and vantage point up against anyone as qualifications for my understanding of the path of the car business for decades leading up to the collapse of ’08. I am happy to read factual data founded arguments against what I write, and will actually be happy to learn. My goal is to tell you the truth, from an inside perspective, not from one who is defending his own actions. I was just an engineer, not a decision making executive. I just had the circumstance to have a job assignment that put me in regular, face to face touch with top leadership. I sat through dozens of quarterly business meetings, discussing our wins and failures. I knew the plans, the reasons behind them and found my opinions on that knowledge.
“I was paying attention to DATA about the car business 50 years ago.”
You keep confusing “General Motors” with “the car business.”
In case you didn’t notice, General Motors **failed** with the car business. It needed to be rescued by government overseers who fired the CEO, and restructured the business.
Again, you should come down from your mount and stop pretending that you can school us in the art of success, when your company imploded. Your ways did not work. The fixation on cost, at the expense of brand equity, did not work. It’s obvious that they didn’t work — the company filed bankruptcy, and all that’s left of the old business is the Motors Liquidation Company.
@Fusion- I want to make it very clear:
I have never said everything was fine in GM! I don’t dispute that product quality, whether design, manufacturing or durabilty, lagged the best entries in the past. I haved a different sense of the proportional impact of these issues and management decisions on the financial condition of the company.
I do present numerical evidence of their success now, making money, gaining market share, being #1 in the world again as evidence that the company is on track, and I know the organizational and contractual foundations of that success.
I do say, the whole domestic industry was financially depleted by years of being pinched by adversarial government poicies,a monopolist union, and competent global competition.
I reject the notion that GM had some sort of unique cultural shortcomings, employed an inferior species of humans, particularly when compared to the other Americans.
I would agree with the statement that their is plenty of blame to go around, and reject the notion that this very complex, long term slide of the domestics is just the result of stupid leaderhip.
It is not me who is confused and practicing emotional thinking.
I am not trying to school you in the art of success. Just trying to enlighten you as to the truth of what has happened. That is what this site is abouty, is’t it?
@doctor olds: Before you criticize my numbers, get your own in order. For example the 3.2b you name as “operating” aren’t operating losses, they are “adjusted net losses”.
Anyway, “Profitable” or “break even” are not calculated using operating profits / EBIT / whatever you call it. GM has this habit (see also the Opel predictions) of releasing all sorts of “adjusted” numbers. If you are talking overall profitability, you have to include things like accounting changes – because the loss you are recording because of that change has either been recorded as a profit or not been recorded as a loss in the years before. In GM’s case (the 39 billion write-off) they had created a huge amount of assets in the form of deferred income taxes on their balance sheets – and in 2007 realized that 39 billion of those can not be used. So they had to perform a non-cash relevant write-off.
If you want to take this write-off out of the 2007 financials, then you’d have to readjust all the years beforehand, because it never should have been recorded as an asset in the first place.Same thing with the other huge losses, like the 10 billion in 2005.
Which is why your overall profits for the timeframe 2001-2008 are wrong. If you wanted to exclude those one time charges, you’d have to readjust all the numbers beforehand too, because those numbers reflect the build-up in the unjustified assets.
While this isn’t liquidity or operations relevant, it is very relevant for the stockholders – the company suddenly is worth tens of billions less than you thought before. Those “unrelevant” accounting tricks put them into a situation were GM had 50 billion US$ in negative equity, because they had a lot more liabilities than they had assets. Which is quite often a sign that a company is overdue for bankruptcy…
If you want further proof that GM wasn’t “fine” in the 00’s and then suddenly crashed in 2008 – look at the stock market. GM stock peaked back in 2000 and then went on a downward slope for the rest of the decade.
I do agree, that if you really want to compare the profit of the car-makers, you’d have to look at the operating profit/EBIT. However, I am not really interested in looking those up right now. And those are problematic too btw – because profits of JV’s count as financial profits, the whole China business is not included in operating profits, and you have to look at the value split between automotive operations and financial services, etc.
Anyway, this is getting very far off-topic. Point was, that the 2000-decade was not a healthy time for any of the US carmakers. And the problems that they suffered were mostly homemade and rooted in the years (and decades) before. Chrysler was the first to suffer from them, and Daimler management certainly wasn’t able to get the company on a sustainably profitable course, but the (often proposed) idea that Chrysler was a sustainably(!) healthy company and Daimler “looted” them is not really true. Neither is the idea that GM was a healthy, profitable company before the financial crises happened…
I can see you tried to bring some data, and actually be logical.
There are actually 2-3 data points in your latest rant. But you started out gradually, then slowed down and went backward:
“This is why GM failed — because these issues, which should have scared the piss out of you, didn’t faze you in the slightest. GM ignored its competition, made endless excuses, and ultimately filed bankruptcy because of it.
GM exists today because it was bailed out and reorganized by outsiders. You could at least show a bit of gratitude to those who designed the restructure and who paid to keep it from failing completely.”
You claim to be a mind reader, making you look very silly indeed, and you really have no understanding of the basis for all Detroit makers return to profitablity. Not a surprise since you don’t understand the failures.
Your subjective opinions are just that, and they are assuredly founded on ignorance of reality and parroting what you read, so proud you know the word on the street.
And you were almost doing it! Keep trying and it may work for you, if you try hard enough, you can overcome your handicap.
Now, how much do those top selling Japanese cars make and where are they produced?
Data, data, who has the data?
And despite you underserved self impression, I do appreciate the fact that the federal government in both a republican and a democrat administration recognized the right thing to do and did it.
“you really have no understanding of the basis for all Detroit makers return to profitablity.”
Honestly, you’re living in sort of bizarro Fantasyland in which you think that GM resurrected itself, in spite of the government. The denial is a bit sad, frankly. I guess that you just can’t admit that you devoted your entire career to what was effectively a lie.
I’ll give you a very abbreviated summation of the mentality that destroyed General Motors: They schooled you to fixate on marginal cost, when they should have taught you instead to focus on maximizing revenue per unit.
Rather than cutting costs in ways that damaged your products and, ultimately, your brands, you should have instead been improving your products so that you could build your brands and justify higher prices. It is possible in some industries to cut one’s way to long-term prosperity, but automaking is not one of them.
You got the whole thing completely backwards, treating your product like a trash commodity that could only be sold through severe discounting. This is an extreme version of what can go wrong when second-rate finance people who fail to understand the drivers of revenue are put in charge of a business. (And I say that as someone who works in finance.)
@PCH101- Ah, you work in finance. It is all clear now. The bean counter with absolutely no understanding of the real world, lecturing the product guy . What a laugh!
I remember now! You are an expert in GM because you worked in some field office as an intern. No wonder you are so smug, with such a deep and broad understanding founded on an accounting office somewhere! Oh yeah, and what you see in the blogosphere.
I apologize for trying to get you to understand something beyond your capacity.
“The bean counter with absolutely no understanding of the real world…”
I’ve turned around failing assets. In contrast, you helped to destroy one. Of the two of us, I’d rather be me, frankly.
“…lecturing the product guy”
You made lousy products. You really should be embarrassed. It’s odd how you take so much pride in second-rate stuff that was so awful.
Dr.Olds, I don’t like getting into topics like the one here. But I have to say that at least you are a real car guy, you know about engines and how they work and everything. That is pretty rare with posters on this website. I enjoy conversing with you about engines.
Thanks Moparman426W. I appreciate a kind word. I do love cars!
Hey, the market has spoken, a third of cars in the last year came from GM and Chrysler.
The savings all consumers got from the bailout in terms of competition make up for whatever taxpayers lost.
As a progressive liberal, the Republicans criticizing the successful bailout is music to my ears as independents and moderates are turning to Obama to save themselves from the impractical and increasingly nutty rightwing ideologues.
The real problem Detroit has had fighting the imports is that the state socialists over in Japan have spent trillions keeping the yen down. Japan has a higher per capita public debt than Greece or California.
Strip out sales to fleet customers, and then talk to us about how much market share GM and Chrysler have. And then let’s talk about which GM and Chrysler entries are class leading (not too many that come to mind – Toyota and Honda make better minivans, and Ford makes better full-size pickups, while Toyota and Nissan make better mid-size pickups).
And let’s hang up the tired excuse of currency manipulation. Toyota and Honda have gained market share regardless of the value of the yen against the dollar. They’ve been gaining market share in the United States since the early 1970s, when they first drove the low-cost Europeans out of the market.
Toyota and Honda gained market share because they have successfully adopted the Toyota Lean Production system, which allowed them to produce superior products at a lower cost. GM and Chrysler, meanwhile, wailed about currency manipulation instead of trying to change the way they did business. Ford has worked the hardest to adopt the Toyota Lean Production system, and, amazingly enough, it has the best overall line-up of the domestics, and the most solid financial results.
@PCH101. A friggin bean counter, get real. We know who should be embarassed and it ain’t me. I actually know something about the world. To you, it is all theoretical, and frankly, finance is not a particularly rigorous discipline.
Lets hear some more yada, yada,yada,…
A Bean counter.
First a salesman and now a bean counter. Good lord!
“get real”
Number of companies that I’ve helped to destroy: Zero.
Number of companies that you’ve helped to destroy: One. And a really big one, too.
Again, you should really be embarrassed. The work that you did helped to turn Americans into Japanese and German car owners. How you could possibly take any pride in that, I don’t know.
Since bean counters and salesman are so beneath you, I’ll bite: I’m an engineer. The hubris in this statement alone jives with everything I’ve ever read or observed and the attitude of every other GM engineer I’ve personally met.
The absolute refusal to change methods because “This is the way we’ve always done it.” Applying the Not Invented Here attitude even to stuff developed by the other divisions. Quoting numbers, processes and arcane corporate rules all day long without actually addressing or solving the problem. Blaming everybody else for failures, but never themselves, because they’re so much smarter and more logical.
Sure, bean counting caused a lot of product issues that were beyond your control. But that’s no excuse for the myriad half-baked “innovations” coming out of GM for decades. Here’s a just a few off the top of my head:
-Putting a timing chain on the Quad 4 for durability, then specing a cheap, failure prone water pump. The repair costs just as much as a belt replacement on my Honda. Why even bother?
-The brakes on the X cars.
-Having to unbolt the engine from its mounts to replace the rear plugs on front drive V6s.
-Letting the consumer serve as beta tester for sleeveless aluminum block motors, the V8-6-4, etc, etc
I’m sure you’ll hit me with reasons why I’m wrong or ignorant or whatever. This seems to be your style. However, if you and your peers had any real pride in your profession, these examples and others wouldn’t have happened, because they would have been corrected or killed before they hit the showroom. There’s no ethical excuse for pushing unsafe or unreliable technology out the door. Engineer stuff to anticipate the inevitable bean counting rather than dig in your heels and deflect the blame when it inevitably fails.
But no, It’s always the finance guys’ fault, or the UAW’s, or Japan’s, or – my favorite – the customer’s.
The thing that struck me most after reading Delorean’s and Lutz’s books was how almost nothing changed in 30 years. Even their outsized egos couldn’t stop the cancer. Shoot, you guys paid Ross Perot three quarters of a billion dollars just to make him go away after he started running around trying to fix stuff. And based on the same “We’re #1 at ___” self-congratulatory BS I hear spewing from every GM PR hack and fanboy, I’m thoroughly convince the bankruptcy didn’t fix it either.
Well said and well written. +1!
I don’t know why these guys get into these pissing contests since neither is going to change the mindset of the other. To some extent they are both right, and they are both wrong (from their respective points of view and experiences.
What is glaring in all this discussion is that the Chrysler Division, under the control of Fiat, is doing great. GM, under the control of the US government, is all hype and spin. GM will fail again and need another bail out. Sooner, rather than later.
What is also self-evident in these discussions is who the people are who have real-world practical experience and know where-of they speaketh, and who is talking out of his ass because his mouth knows better.
The deeper and broader the base of an individual’s knowledge developed by real-world experience in an area of expertise, the more we all can learn.
Arguing a point to death based on shallow experience or a narrow area of expertise quickly reveals how quickly someone can reveal the sum of his total knowledge in twenty words or less.
Get real is right! For goodness sakes, all you are qualified to do is watch someone else do something and count the money they make.
A sideline chatterer even in your professional life.
A man like you has no place lecturing anyone else about anything real, particularly how to run a business.
It was presumptuous, know nothing bean counters who pushed the product decisions you criticize. A friggin bean counter! what a laugh. Guys like you are simply priceless.
I’m starting to feel badly about this. It seems that I’ve driven you to the brink of rambling, incoherent madness.
(Of course, all of those awful cars that you built should have done that to you already. The guilt must be overwhelming.)