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If GM does go BK and they reorganize without each car starting $2,500 in the hole then there will be no one to blame because they will be successful.
Looks like Oshawa which is CAW not UAW is willing to work with GM to keep making cars. Not the cars the Union wants to build but the cars that GM wants to build. Too bad the UAW leadership is not thinking of the workers like the CAW leaders.
Buckley said the union leaders did not like the changes but it was "not the time to play around" with the workers' futures. A senior national CAW official said earlier the changes are not concessions but "smart bargaining" because the union is compromising to gain something.
Oshawa CAW
How much of that do you think is from having a retired worker base to pay healthcare for and retirement to along with the other effects of having had a worker base that stayed rather than being dismissed to the woodpile of used out, too expensive to employ workers that can always go to Walmart as greeters?
Check back on the non US automatkers in 25 years and see how they're doing on that. Oh, forgot, they don't have protections as workers so they'll not be in employment for that to even happen. The workers will be out before they hit retirement and older age where health costs go up. They'll have been replaced!!!
But who cares about the workers, right?
2014 Malibu 2LT, 2015 Cruze 2LT,
Consumers sure don't. I'm not buying a UAW made car over a superior non UAW produced one just to supposedly care about the workers.
The managers are supposed to manage the company on behalf of the shareholders -- that's why we call them "managers."
The drastic measures that you spoke of would require the approval of the board and shareholders, not management decisions.
So, if they can't develop successful products, then why are they there?
SUV's were very successful products, so were pickup trucks. GM China has quite a few successful products, and so do GM Brazil. In case you did not realize, Wagoner had quite a successful track record in the auto industry before becoming CEO of GM. The company is not exactly recruiting random smart alecs like you and me ;-)
If they are incapable of utilizing existing resources to achieve profitability or to fix problems, then why are they there?
To prevent the places from being taken up by smart alecs like us ;-)
If they can't make tough decisions and implement them, then why are they there?
To play the game within the set parameters, not committing harakiri by trying to play hardball like you have suggested; not the management after the 1950's anyway.
Look, the manager-owners did try to shake off the union when they were personally headed by industrial titans like Henry Ford, Alfred Sloan and Walter Chrysler. They were all foiled by the political feudal overlords of the union bosses (FDR, just to name one)
Always an excuse and a justification, but just how is this Blame The World strategy supposed to create shareholder value? Managers are supposed to lead, create and innovate, not simply cop out at every opportunity.
I suppose you also believe every property damageor life lost from fire is the result of firefighter incompetence, not conditions beyond their control.
I'm just curious -- when they've BK'd the union into irrelevance, and they still haven't turned around the company, who are you going to blame then?
You can certainly come back here and get your vindication when that happens. The current facts on the ground however cast serious doubt to your theory:
(1) GMAC, the biggest dividision under GM that is not has not been messed with by UAW, has been doing very well over the past two decades;
(2) Overseas carmaking operations, such as GM China, which is not UAW, has also been doing very well.
So unless you have strong evidence there's something in the water or air around Detroit that makes the same managers stupid when they get transferred to GM domestic car making, I'm inclined to believe that the management is facing much tougher circumstances at the GM domestic operation than they do at GMAC and GM China. The most prominant and consistent of those circumstantial differences? UAW.
GM has to cut costs and they do it in the interior of every single car they make. They have to cut costs in production becuase they start $2,500 in the hole on every car due to the UAW. Lexus doesn't have this problem, hence the world class interiors they have and stay priced competitively.
No, the company has done a fine job of hiring a long legacy of poor management teams, not just one.
Let's take FIAT -- after only a five-year partnership, GM dissolved most of its relationship for a mere... TWO BILLION DOLLARS.
Imagine that -- dissolving its partnership with a weak firm cost GM only $400 million for each year of its existence. And why did it need to pay $2 billion to sever a failed marriage -- because GM's management negotiated a buyout clause that it did not want to honor.
So, who cut this deal? (I doubt that anyone at UAW had anything to do with it.) And what are the "legacy costs" associated with this modest $2 billion mistake (four times what GM had to pay the Olds dealers) in a JV that it shouldn't have negotiated in the first place?
Has anyone at GM management once made a public association between its own poor judgment and how such a deal got put together in the first place? Perhaps we should blame the exchange rate of the rupee or Mercury (the planet, not the car) being in retrograde. God forbid if we actually held GM managers responsible for the actions of GM management.
Let's take the SAAB deal. Since buying 50% of it in 1990 and acquiring the other half a decade later, GM has lost money with company for every single year but one. GM has not disclosed what it paid for SAAB, but this columnist in Forbes, estimated the total cost of this entity to GM at about $4 billion (and that was as of $4 billion -- it has continued to lose money ever since).
This one's a bit tough to blame on the UAW, given that SAAB's have been assembled only in Europe, where the UAW doesn't operate. Nor is the UAW responsible for the failure of the SAAB 9-5, which last I checked, GM was holding more than one year of inventory. (Apparently, you can still find more than a few brand-new 2005 models gathering dust at the back of a dealership.)
Just two posts, and I'm already up to $6 billion in management-induced losses. Better hurry, maybe we can find a way to blame the workers for this one, too.
So actually, not including any losses that it would have incurred during the partnership, this deal cost GM $4.4 billion. That's almost $900 million per year for a relationship that never worked.
Toss that in with the SAAB deal, and we're almost up to $9 billion. And we haven't even gotten to Subaru yet...
GM must have thought they could operate in a failing Socialist country. They were used to working under similar restraints with the UAW.
Not all GM acquisitions are failing. It is a tough business. Remember that Nissan almost went belly up until they were bailed out by Renault. Nissan's demise was not because they did not build superior vehicles. Back when they were Datsun they were much better than Toyota or Honda. I know I owned all three at one time.
Some good news
I think that some of you are long overdue for a trip outside the United States, and you might learn that these "failed socialism" comments are a bit misplaced. According to the CIA World Factbook:
Sweden has achieved an enviable standard of living under a mixed system of high-tech capitalism and extensive welfare benefits. It has a modern distribution system, excellent internal and external communications, and a skilled labor force...Privately owned firms account for about 90% of industrial output...The government's commitment to fiscal discipline resulted in a substantial budgetary surplus in 2001, which was cut by more than half in 2002, due to the global economic slowdown, declining revenue, and increased spending. The Swedish central bank (the Riksbank) focuses on price stability with its inflation target of 2%. Growth remained sluggish in 2003, but picked up in 2004 and 2005.
According to The Economist, Swedish unemployment during 2003 was under 5%, while the inflation rate was under 2%, which was consistent with the three previous years. So where are you getting this information about "failed Socialism" when the CIA tells us that 90% of its industry is privately owned?
Not all GM acquisitions are failing.
That's good, or they'd have even less money than they have now.
So, is anybody upset about the Case Of The Missing $8+ Billion? Or are we going to rationalize that, too?
Protection. I have been reading about UAW protection at the job banks. This is where UAW workers go who do not have any work to do, but they get paid their full salary anyway per the Union contract. These workers are complaining that they are bored.
Most workers in this country do not have any "protection". Why should the UAW workers be different? Back when they made all of the cars, they controlled everything. Now they don't and they have to compete and cannot do it.
Also, when you talk about medical costs, GM is the largest purchaser of Viagra in the world.
I do believe you are confusing basic termination rights and age-related rights with UAW protection putting them in job banks when the jobs at their plant are GONE because of modernization or lower sales guaranteed by a contract with their union. I recently had a friend not treated right actually by two companies in Tennessee over workman's comp injuries and new employment rights. His factors also include that he's over 50.
I don't know anything about viagra. Is there another drug they should be substituting? That's out of my area of expertise luckily.
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Just to put the numbers into perspective, Ford pumped $2.1 billion into Jaguar in 2005 alone. Jaguar sells less than one 10th the cars that Fiat does. BMW lost over $6 billion on Rover over less than 6 years (also thanks to antiquated labor structure at Rover). Going ahead and buying Fiat would have been a terrible decision, knowing the new information about the company. BTW, the 500+ million only reflected the buyout cost of the final group of dealerships; the overall cost of Oldsmobile shut-down cost about $2 billion.
Knowing what we all know today, GM should not have entered the Fiat deal at all. However, occasional management mistakes like that do happen, at any company. Toyota sweated from the Daihatsu purchase for years; BMW lost $6 billion; Ford is being siphoned for over $2 billion a year, all over buying much smaller carmakers. Not to mention, if you are really bent on getting styling a boost like you said in the previous post, acquiring Fiat would have been a good move, if Fiat had been running as well as the cooked books said it was; i.e. an honest mitake that you would have made yourself.
Where do union supporters get off expecting management to make super-human prescient decisions under impossible circumstances, yet steadfastly ingore the glaring running sore that is the antiquated union labor structure.
Is always better especially when it's someone else's decisions we're Monday morning quarterbacking. Looks like they all could have done better if only they had known the future.
It is harder to string many bad choices after each other.
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Sure, let's do that:
-If a grunt worker wants to get benefits for himself and his family -- benefits that GM management already agreed to provide -- then he is some evil Commie bloodsucker who is out to destroy American industry.
-When management finally, long after its sell-by date, shuts down a division, the $500 million it pays is a lot of money
-Yet when management blows $4.4 billion dollars in five years, it is an "honest mistake"
Now you know what I can't take these arguments seriously. Maybe it's because they taught me the new math, but I coulda sworn that $4.4 billion was about 900% higher than $500 million.
(And let's not forget the $4+ billion spent on Saab. What smart manager decided that having over one year's worth of inventory rotting on the dock was a wise idea?)
http://www.lewrockwell.com/orig6/sanandaji1.html
The flourishing supply of Swedish nannies in this country since the early 1990's is quite indicative of how far the "third way miracle" of the 1980's had sunk.
I'll go with The Economist, thanks.
They would be smarter to spend the $2500 and add it to the MSRP. Lexus sells a lot of cars that are pretty expensive, but people believe it is worth it. GM cars tend to be cheaper. I don't see $2500 as too big a price to pay for a decent interior. They haven't even tried until very recently.
Take a look at the new LaCrosse and Lucerne. Material and fit/finish the LaCrosse does better than the old Camry and Accord. Have not had the chance to really look at the new Camry though.
If GM had any brand equity, it could get away with that. But thanks to poor management decisions, its brands simply don't have the value that they once did or could have had had they made better choices.
This columnist at Bloomberg understands the problem:
-GM's average wholesale price during the first three quarters of 2005: $18,861
-Toyota's average wholesale price during similar period: $23,769
-Difference: $4,908
Relevant quote: "[Deutsche Bank Securities Rod] Lache called GM's dependence on fleet sales ``the largest source of the revenue disparity'' between the automaker and its rivals.
Talk about "legacy costs". If GM hadn't destroyed the value of its brands to the point that it could sell its cars at the same wholesale prices as does Toyota, it could more than cover those medical benefits that are management's most recent scapegoat. Let's just hope they can avoid too many more of those $4 billion "honest mistakes" that they are so skilled at making.
Talk about "legacy costs". If GM hadn't destroyed the value of its brands to the point that it could sell its cars at the same wholesale prices as does Toyota, it could more than cover those medical benefits that are management's most recent scapegoat. Let's just hope they can avoid too many more of those $4 billion "honest mistakes" that they are so skilled at making.
If I had to predict the future, I'd say:
- GM will try hard not to go into bankruptcy
- They will fail, they might make it to '08 before they go
- There will be a real ugly time with the unions
- Customers will continue to desert GM in droves, even though the quality of their cars is improving significantly (just not soon enough)
- GM in 2012 will be a company with 15% market share (if lucky). But they will be leaner, more competitive, and be making much better cars.
- Retirees will really be screwed by all of this. Those posters who knock 401K's and demand pensions will wish they had gone the other way.
Me, I'm GLAD I have a 401K instead. I get to control the money and make the decsions I need to make it through retirement, not a bunch of bozos at a poorly managed company.
Not sure where you got the number. Saab 9-5 was going through a model transition in the past few months. The 2005 model year was the last of 4-yr run, and sales volume came to a trickle because every Saabphile knew that the new revised model has the ouput greater than the old Aero while a price lower than the old Linear. Perhaps you got your number while the 2006 model was being held up in the dock for product launch? You know even the hot selling new Lexus and BMW typically have a several months' worth of inventory on hand before new product launches. That combined with slow sales of the last year perhaps led to a temporary long duration. For what it's worth, Saab just set record sales volume in both January and February. Perhaps the investment is finally paying off.
Even if the entire $8.4 billion losses on Fiat and Saab were indeed mistakes, you have to set that against the overall merger/acquisition/spin-off returns: GM made over $11 billion on the sale of Hughs Electronics alone! Flextronics was another highly profitable spin-off. EDS was no slacker either. The reality is that GM is currently sitting on a significant cash nest egg, almost none of which had anything to do UAW as domestic carmaking has been a big money loser for over a decade. Practically all that money has come from the endeavor of the much maligned "suits"; with spin-offs and GMAC carrying the bulk, if any, positive contribution to the bottom line over the past five years.
No problem as long as he is producing enough to pay what his package costs. That is hard to do sitting in a rubber room watching cartoons. Cradle to grave mentality kills incentive to work hard.
The reality is that GM is currently sitting on a significant cash nest egg
Sorry, but no, GM does NOT have a lot of cash, I have already covered that elsewhere on its forum. GM is laden with green compared to your average family in the suburbs, but relative to its size and liabilities, GM has minimal liquidity. And worse yet, I'd bet that as is the case with other troubled companies, the balance sheet overstates the values of its inventory, which means that the company's asset position is probably worse than it looks. (Those year-old Saabs are not exactly appreciating while they sit in storage and on the books.)
A company doesn't find itself with a junk-level debt rating by having a clean balance sheet. Having a poor product mix, i.e. poor prospects for the immediate future, surely doesn't help much, either.
GM made over $11 billion on the sale of Hughs Electronics alone!
What benefit do GM's current shareholders get from the sale of Hughes? That sale occurred five years ago.
In any case, while that deal provided a good return, Hughes also distract GM from its core business, namely cars. Meanwhile, market share has slid all the while, with deals such as Hughes disguising the fact that the central business line was working on borrowed time, i.e. that GM had effectively become a niche player serving the truck, SUV and fleet segments, and had greatly eroded its status as a diversified full-service automaker.
Sorry, but that cash is gone. They gave a lot of it to feed the unsuccessful SAAB and the completely absurd FIAT deal, while apparently not nearly was committed to building a decent compact car. If this was baseball, GM management would have struck out a long time ago.
A better comparison might be to consider him the libertarian, internet-age answer to Ayn Rand, a political cult pop star who has more visceral appeal than anything else.
Sweden has a stable economy, not some horrid carwreck as some have tried to depict here. The cliches sound like something that could have come out of the Cold War -- now that we've run out of Communist enemies, is there some need to paint Sweden as the new Soviet Union?
Here's a thought -- prior to the great Ford-GM M&A competition, which yielded all kinds of mistakes, SAAB had a quirky niche following and a limited product mix, which GM has never really leveraged it to its full potential. Meanwhile, other brands with which it might have once had a shot at competing against have long since passed it by. Call it yet another opportunity lost by the capable "honestly mistaken" managers of General Motors. I doubt that there is anything that Sweden could have done to help GM design a car that people might actually want.
If I had to predict the future, I'd say:
- GM will try hard not to go into bankruptcy
Honestly, I think that GM is preparing for BK. All of this talk of "legacy costs" is its way to motivate the marketplace to support the stock price if and when the filing is announced. A BK will greatly weaken the UAW, and if GM management can convince Wall Street with its spin doctoring that breaking up the union solves all of the company's problems, then the negative impact that a BK would have on the stock price could be minimized.
Nice try, but I think it's pretty clear that the analysts aren't completely buying it. (Take the guy above with DB quoted by Bloomberg, who illustrates that the gap between Toyota and GM margins is attributable more to fleet sales than it is to medical benefits.)
After years of bad M&A deals and pie-in-the-sky dot.coms destroying shareholder value in a majority of instances, analysts are now wise to the fact that no company can succeed unless it has products that people want, which puts GM behind the 8-ball. I'd bet that they'll file BK within the next year or so, and not with any reluctance.
Now you know what I can't take these arguments seriously. Maybe it's because they taught me the new math, but I coulda sworn that $4.4 billion was about 900% higher than $500 million.
You are ignoring the fact that while GM management was losing $4.4 billion on the Fiat deal, it was making over $11 billion on the sale of Hughes Electronics, and billions more on Flextronics. Mistakes do happen. And the Fiat loss was more due to Fiat cooking books and international politics than anything else. Considering BMW lost $6 billion on Rover, and Ford losing $10 billion or more on Jag so far, it's rather prescient of GM to take an option out on the Fiat merger to begin with and limit the loss to $4.4 billion. Fiat is a much larger company (hence potentially much greater mess) than either Rover or Jag.
Now GM management made dozens of billions of dollars on spin-offs while losing a small fraction of that on Fiat; what does the Union have to show for the billions of losses that it's generating for GM?
You will have to find some one else to indulge yourself in facetious debate. You were talking about a specific model at a specific time when citing 9-5, not the brand in general. I already explained to you that inventory duration on specific models are backward looking numbers, not forward-looking ones, therefore often present quirks during a model transition. Don't even begin to think Lexus did not have 5k IS250 and IS350 units on hand on the eve of launch; and if you use IS300 sales in the last few months of its model run to divide into that inventory, the "inventory duration" would indeed be half a year if not a full year or more. . . of course nobody in their right mind would extrapolate from there that either Lexus or Saab would take a year to sell their new models on hand.
GM does NOT have a lot of cash . . . GM is laden with green compared to your average family in the suburbs, but relative to its size and liabilities, GM has minimal liquidity. And worse yet, I'd bet that as is the case with other troubled companies, the balance sheet overstates the values of its inventory, which means that the company's asset position is probably worse than it looks. (Those year-old Saabs are not exactly appreciating while they sit in storage and on the books.)
GM has $4 billion cash and marketable security on hand. Your snide comment aside, that is a huge chunk of cash by any standards, especially a company with market cap of only $24 billion. That's "cash and marketable securiy"; not counting any cars.
A company doesn't find itself with a junk-level debt rating by having a clean balance sheet.
The big liabilty item is UAW union contract. The street is apparently predicting a bankruptcy to vacate the union demands.
What benefit do GM's current shareholders get from the sale of Hughes? That sale occurred five years ago.
Why did you bring up the Fiat case then? The last chunk of Hughes was sold to News Corp in 2003 for $4 billion. The Hughes events were very much concurrent with the Fiat case. Why did you keep beating your dead horse on one, yet completely ignore the other, when the net effect was $9 billion dollars plus to the company's bottom line?
In any case, while that deal provided a good return, Hughes also distract GM from its core business, namely cars. Meanwhile, market share has slid all the while, with deals such as Hughes disguising the fact that the central business line was working on borrowed time, i.e. that GM had effectively become a niche player serving the truck, SUV and fleet segments, and had greatly eroded its status as a diversified full-service automaker.
Pure spinning now. Somehow making money somewhere, anywhere, to help pay for the ludicrous existing legacy union obligations is a bad thing now?
while apparently not nearly was committed to building a decent compact car. If this was baseball, GM management would have struck out a long time ago.
Now the closet executive has finally shown his color. If you were in charge, you would have bump your nose bloody building a decent compact car, eh? It's quite obvious that given UAW labor cost structure, there is no snowball's chance in you-know-where that any domestic carmaker can make a profit off producing compact cars (cars that take just as much labor input but sell for much less). None of them could. The smart managers learned to work around the insurmountable problems. The dumb ones just keep their nose bashed in against the wall. More evidence that GM management could have done worse, far worse.
No it does not. It has gone through drastic inflation over the past decade and half. After the collapse of the Soviet economy, the Left brought Sweden to prominence as another alternative to capitalist open market, shortly before its economy collapsed in the early 90's. A stable and prosperous economy simply does not have nannies and secretaries as its primary labor exports to the neighboring countries.
SAAB had a quirky niche following and a limited product mix,
Which was headed towards certain extinction before GM stepped in.
which GM has never really leveraged it to its full potential. Meanwhile, other brands with which it might have once had a shot at competing against have long since passed it by.
Such as? Rover is extinct after BMW lost $6 billion dollars on it; Jag is headed that way, despite Ford having spent over $10 billion on it; Alpha is going down with Fiat. So what genius do you have that can make a small volume producer profitable, one that does not have a platinum brand equity like Porsche? At least GM is gradually moving Saab in the right direction, financially speaking.
What planet are you on? The same planet on which domestic carmakers laden with UAW labor cost structure can compete with imports on compact cars? BK means automaticly wiping out equity holders . . . creditors come before the equity holders, that's the most basic of security and corporate laws.
http://www.miami.com/mld/miamiherald/business/14085778.htm
http://www.autonews.com/apps/pbcs.dll/article?AID=/20060313/SUB/60310071/1003/AN- E
http://www.autonews.com/apps/pbcs.dll/article?AID=/20060313/SUB/60310075/1003/AN- E&refsect=ANE
http://www.bloomberg.com/apps/news?pid=10000087&sid=a_NNyFc5xJvM&refer=top_world- _news
From the first one: ""Most of us who are on that fringe there (near the 30-year-and-out point) have always been in the worst jobs, the assembly line jobs."
I saw one (anecdotal) example of the assembly line job. It was a lady watching a conveyor assemble air conditioning compressors (V-5). She had a paperback book next to her. She sat on a stool. When something dropped she picked it up off the floor and put the rightpart in. Didn't happen often. I could have done that job with only my paultry background in 1 minute of prep. Conveyor was a square about 20'x20'.
I have been told on this discussion or another that those jobs have been reduced in number along with the job of sleeping on top of the wooden boxes of parts stacked nearby in the just-in-time warehousing stock.
Perhaps that's a job that turned into the jobs bank position. The plant is gone now.
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Delphi is downsizing its network of suppliers to get better technology and lower prices. And as Delphi dumps unprofitable products, it is eliminating suppliers who produced parts for those products.
Sounds Walmart like in reducing suppliers. Then if you don't walk their walk, they strangle you. Can you say "Rubbermaid"?
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"The $30,000 Lucerne -- designed to compete with Toyota's Avalon"
Which came first? The Park Avenue/LeSabre or the Avalon? The author makes it sound as though Avalon was first in the slot and GM was attempting to position something it its slot. Avalon may be a competitor to some of the Lucerne models but not all because of the wide (too wide) range.
The author glides over the fact that most rentals from GM/F are very stripped. One method would be to require higher option levels. That will give users a better impression of the brand.
Bloomberg mentions selling early to the fleets and that actually increases brand exposute to some buyers. A coworker rented a Taurus when they first came out for a trip to Upper Michigan to his parent's summer home just so he could test drive it since he was getting ready to buy a car.
Bloomberg also mentions fleet sales haven't gone up in numbers as much as retail sales of GM/F have dropped therefore increasing the apparent percentage of sales going to fleets. The article also mentions fleet sales to companies rather than rental as being good. Fleet sales are fleet sales whether they're to a company for outside salesmen or other uses or not.
Last is the average wholesale price for GM vs Toy. Those data were not in the article so they are unsourced but I assume it's a credible source. Do those include Scion and Lexus brands of Toy? I assume they include all of GM including Saturn? The average is not as useful if it's comparing high lines and low lines. Compare car sales in the same price range to get a more meaningful comparison.
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Actually, it doesn't, I don't know where you're getting your information.
Yes, equity holders are at the end of the line -- they can certainly kiss their dividends goodbye (which is probably overdue for GM, anyway), and expect some pain during part of the process.
But BK will also allow GM to restructure and wipe out portions of its debt, to cramdown the union contracts, and to pass on its pension obligations to the federal government. If it chooses to wipe out portions of the dealer network (as it should), then it will be able to do so at a discount, because BK will give it leverage to force a good settlement.
Overall, BK would be good for the long-term value of the stock IF the Street can be convinced that BK and the killing of the union would solve GM's problem. But I would submit that the analysts have already figured that GM's most overwhelming problem is a poor line-up of product that isn't good enough to increase market share against rivals with better products, coupled with low margins that dooms GM to earn far less per car than can its competition. GM will probably have to shrink some more, and become much leaner and meaner, before it has a shot to improve its market share.
And despite what you keep telling us, GM's balance sheet is pretty miserable. As of its last quarterly report, GM had $53 billion in cash and marketable securities...but why forget the liabilities of $446 billion that go with it? Again, you don't end up with a junk rating if your balance sheet and pro forma income statement are any good.
They still have the best line-up of PU trucks and SUVs. Tahoe sales are up 35% over last year. Number 2 behind another domestic the Explorer. I guess the gas prices are not scaring off the truck and SUV buyers as was predicted. If GM would just quit trying to compete in the cheap car market with throwaway Japanese & Korean vehicles they may make it. GM should do what they do best. Trucks and SUVs. Shut down all the loser car factories and let those people go to work for Toyota and Honda. If GM wants to sell cheap cars bring them in from China. Sell them at Wal-Mart in the appliance dept.
That would certainly be one alternative, but that would convert GM from being an all-things-to-all-people kind of automaker to a niche player. That would put a lot of eggs into one basket, and exposes the company to both long-term trends that might reduce overall truck demand, and vulnerable to firms such as Toyota who will work to make inroads into these truck/van/SUV segments.
If you observe all of the car companies that have been successful in their efforts to grow in the US as full-service automakers, they have all started with compacts that competed on price, added some sort of sporty car to bring some positive attention and flash, and then worked their way up to higher-priced luxury cars once they had built their credibility. If GM completely abandoned the car market, they'd have a hard time getting back to it, in my opinion.
I would think that they would simply be better off by focusing their energies on building one great car in each segment, instead of three or four mediocre similar ones that don't impress anyone. They need a few home-run products that will improve their image and reputation with retail customers, and create the basis for new brand loyalty.
Name one that lives under a UAW contract. Also I would hardly call Honda a full service automaker. Toyota is trying, they have a quite a ways to go.
I don't follow the point of this comment. Are you saying that Cobalts would be better cars, or that Avis would pay more for Cobalts than they already do, if there was no union? Would the FIAT or SAAB acquisitions been successful, instead of noteworthy failures, if there had been no union? Would the dealer network be more competitive if there was no union?
Again, GM is betting the farm on these large vehicles, which is kind of bad. It makes you think how can they expand into a segment that they realize is not going to produce the number they once thought it would. It's wuite obvious that when gas hits highs, as it is now, people don't want that honking SUV; they want the cross-over, a fuel-efficient sedan and the like. And with the way E85 is (can't get it in most places, the price is the same as gasoline, the energy is only 60 - 70% of gasoline, fuel economy is not as good as straight-gas conunterpart), it really isn't a solution, a quick stop-gap at best.
I just think they are again making a mistake and riding the wrong horse. Instead of Secretariat their riding Milford.
Kia and Toyota
Dana Corp
They just might be better and profitable. If they lose on every car. The only reason to build them is to keep people working rather than collecting full pay in the rubber rooms doing NOTHING. You keep worrying about the M&A. Do you have proof that all are losers or that they have not made money overall on the M&As. GMAC is an acquisition that is carrying the bulk of the load. I have no problems with the dealer network. The GM dealers I have dealt with were better than the Toyota and Honda dealerships I have used.
There is no excuse for buying FIAT. It was "Found In A Toilet" when I was a kid a long time ago. Saab on the other hand was the best thing Sweden managed to screw up.
The problem with the dealer network is that it is too large. They cannibalize one another and generate fewer sales per dealership, which makes it harder for these dealers to be profitable and to build the brand. GM would be better off if it killed off many of them, and increased per-store sales, which would make their retail business more attractive for prospective retailers. But that would involves some other hard choices, such as reducing the number of nameplates from 80+ to something more manageable, i.e. 25-30.
Why would you expect the Cobalt to be better? It was designed by white-collar workers within GM, not by the workers. Hold those responsible for the design for the problems with the design.
You've already seen the data above -- if GM could simply sell cars at the same prices that Toyota does, it would not only hurdle those medical costs, but it would be making a profit. Just changing this one factor would completely turn the company around.
But instead, the company is losing market share to rivals that will strengthen, and then use the money they earn to further turn the screws to GM. You could eliminate the union today, and you'd still end up with a company with inefficient structures, mediocre products and very little in the way of a gameplan to pull themselves out of it.
Very simple. The car is only as good as the last piece assembled. If the guy putting the seats in leaves out a bolt and you have to take it in for warranty that costs the company money. As far as design I don't really like small cars so I am the wrong person to debate with. I feel cramped in an Accord. You are blaming all the problems with GM cars on design. You are not accepting that the guy putting them together has any responsibility in the quality of the finished car. You always go back to ONE plant in Canada that is high in Quality. Well they are negotiating to keep their jobs. The rest of the UAW workers better be watching and accepting change. It is inevitable whether you want to blame all the the GM ills on management or not. Our Union had to accept change to keep our contracts. The UAW workers are no better than workers anywhere else in the USA. They have just had a longer run of featherbedding than most. They are still where many Unions were in the 1960s and 1970s.