At GM, the Endgame Begins

Auto unions

Goodbye corrupt auto unions.

Vern Gilmore of TX @ Nov 08, 2008 00:18:07 AM

Please don't send your resume to the Auto Industry

Rick – since you have all the answers, I would be curious to get your thoughts on how to run the auto business in the US @ 11.0 – 12.0M units. Per JD Power, October sales came in at 10.8M on a seasonally adjusted basis. Less than 1 year ago, this average pushed 16.0 - 17.0M units. Funny how the banks are going bankrupt when they don’t actually build anything or have foreign competition here in the US. Consolidate brands? Restructuring consumes lots of cash and takes years. At this point, it only accelerates the situation. Pump out high-quality, smaller vehicles faster? GM is already there with the Vibe (GM/Toyota JV) and mid-size Malibu (US produced). Small vehicle sales generally do not generate profit or cash. Continue work on the electric-powered Chevy Volt? GM announced today, this is the mainstream strategy. Keep them coming Rick.

PS One of your bloggers noted $50B? The real answer is a $25B loan for the Big Three and Suppliers. How much GM actually receives is still TBD. This comes with lots of red tape and is administered by the government (e.g., not the most efficient operation in the world). They will likely get it ready to go after the Big Three are already dead. Mr. Blogger will be the first to blog when Toyota and Honda raise prices in the future just because they can, with limited domestic competition. I guess his desire is to be as dependent on foreign autos as we are on oil. What's next? Steel Companies? Defense Business? Banks?, Insurance?, Retail? At least we will have fast food covered.

Mr. Chevrolet of MI @ Nov 07, 2008 22:52:45 PM

GM Deserves more help than Wall Street

If you’re not in the car business, it seems to make no sense. Why don’t those high-paid GM numbskulls just get it right?

First: New cars are planned and developed five years BEFORE they go on sale—it’s like trying to turn an oil tanker around to move much faster.

Second: Legacy arrangements with the UAW mean they just cant close unprofitable plants—there are agreements to keep building cars (and most especially trucks) no one wants.

Third: GMAC (which they a controlling interest in was sold to Cerberus) was cutting them off from good financing to try to force a merger with Chrysler (which Cerberus also owns).

Fourth: State franchise laws mean they cant just close down (or consolidate quickly) the thousands of redundant dealerships they have without having to pay millions—or tens of millions—per retail store they shutter.

Now, I’m no excuser; they’ve made plenty of mistakes. And been arrogant. But the recent cars they’ve come out with have been fully competitive. But it was too little too late. They compete against foreign companies whose governments provide healthcare to their workers (worth about $39/hr in labor savings) and have protectionist tariffs against our cars. Give ‘em some help to make it through! At least they make something of value, instead of shuffling papers about, like the Wizards of Wall Street.

Isaac Bouchard of CO @ Nov 07, 2008 18:00:51 PM