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Comments
It's always easy to tell everyone to start a buisness and build your own wealth. If you have a product for instance to sell in a competitive market, it's going to take more then just good marketing to sell that product when probably one is already being manufactored in a third-world country. :sick: Service sectors are being done by illegal aliens, or over in India. Granted there are the exceptions, but like some of you said it's hard to jump into a competitive market and survive. The strong will survive, and if you don't make it you will be sky high in debt for taking the risk with no other participants. Banks aren't going to loan you $ 2 or 3 million to get started. I suppose one could ask brightness for a loan
It's hard to get a buisness started in this country. 40 or 50 years ago with less competition and no internet it was alot easier to survive. Today we have a global economy and to make it big it's going to take money (lotsa) to make money and not many folks do it the old fashion way anymore is all I'm saying.
Rocky
P.S. congrats brightness on the new addition :shades:
Rocky
That is why so many people stay in jobs that they hate. They are unwilling to take a risk. If it was super easy no one would would work for anyone else. There are opportunities everywhere, the bigger the reward the bigger the risk. Always been that way. I envy people that will put their house on the line to go for the gold. Always wish them the best.
Rocky
Besides, they already speak English, so you wouldn't need to learn another language to do this.
:P
And you've already got an edge in the door with your TS clearance.
Just go to: www.nsa.gov
Rocky
Give me a membership card to the good old boys club, and I'll gladly step up.
Membership to the entreprenuers' club is not given; you get your own. Start small, and earn your own stripes every step of the way.
Boo hoo those poor execs, being second guessed for their failures and astonishing ability to lead companies into junk bond status.
So, how many industrial dinosauers have you rescued?
Lots of them.
Rocky
http://www.politicalaffairs.net/article/articleview/2978/1/156/
Oh my, we are all in trouble. Most of the country does not have private pension plans!! We are all going to be in povery!!
There is such a thing as savings. The government even makes it easy with a bunch of things called IRA's, 401's and a bunch of others. Hey even some companies voluntarily give their workers money to put into the savings accounts. Social Security should not be anybodies retirement account. It should only be for minimal sustenance if something happens with your savings. (my opinion)
One issue is the safety of these savings. What if the countyr goes inot some tailspin and all money is lost? Well if that happens the government would not have any money either so it would be shere hell either way.
I do believe most future generations will see some sort of poverty. Homes costing over $100 dollars a square foot, energy prices, health care expenses, automobiles, wages, child care, doesn't leave alot of extra disposable income to invest and save for your average american for retirement.
You fortunatly make enough income in your household to be self funded. I know people, with your income that don't save and cry foul. I'm just saying it takes everything most people make to just live. I guess I'm one of the lucky ones that has a 401K with a company match. :confuse: I just assumed most everyone has atleast a 401 since it's so common in Michigan. But if your making $11 dollars and hour, how is one suppose to invest in a 401K. It's like a faux retirement plan.
Rocky
IMHO, the $2-3 million that you are thinking of what it takes to start a busines is an order, if not two orders, of maganitude too high. Like I said, I started my own business with $20k savings. You can find plenty business like Pizza shop for sale in the $50-100k range; those are all turn-key operations with existing lease and customer good will. Even a Doctor's or Dentists existing practice with hundreds if not thousands of clients only fetch somwhere around $500k in CA and Northeast, half that or less in most of the rest of the country; $750k range if you get the real estate too (usually a condo with other doctors and dentists) instead of paying rent. The seller usually offers financing, at least 1/4 of the full value, so that the bank will furnish the rest.
Then there are businesses that require hardly any initial capital at all. Due the baby on the way, we hired a house cleaner on a weekly basis. We pay her $60/hr; well, actually 45min, that's all it takes for her to clean our place every week, and the remaining 15min she can use to drive to another client of hers. We got her number off a flyer at the YMCA gym. What's her capital requirement? About $300 for a carpet steamer and a vacuum, plus $25 for a business registeration with the town, assuming she already has a car to get around.
Notice, none of those businesses can be outsourced to India or China. On the contrary, when people spend less on basic manufacturing goods as cheap generics goods from overseas become easily accessible, they have more money for pizza shops, doctors/dentists and house cleaning.
Internet and immigration are great facilitators for business (mine would not exist without internet, and my employees would not have their current jobs if not for immigration; none of them are immigrants, but I would not be here to have a business that they can work for), just like highway network 50 years ago, or railroad half a century before that, or steam boat on canals and turnpikes stage horse carriages half a century before the railroad! The highway network put many veggie and fruit growers in New England and New Jersey out of business as California and Florida produce could reach the northeast in a timely fashion. The railroad and refrigeration allowed meat packers of the midwest to drive beef raisers of the northeast out of business. The Erie canal in the early to mid-1800's made corn and wheat farming unprofitable in the congested northeast. Plenty business in the northeast ceased to exist as each and every one of those transportation/communication technological advance took place as the old businesses no longer offered consumers a compelling value. Yet, the living standards of northeasterners steadily improved, and the owners of those expired buinsnesses found something else productive to do. That's called creative destruction.
How to survive and prosper in a society that is undergoing such rapid progress? Learn to adept. A job or business is not about doing what you'd like to do, but about offering others a compelling value so that with the money you make you can get service from others and have your dream fulfilled. That's how a market economy works. Founding a business is certainly not about getting your own turn at bossing over thousands of slaves and taking your own long lunch breaks. There's an old adage: even a thousand-mile journey starts with the first step. Think small when starting a business, so that the task is not so daunting that it never gets started. Avoid taking on debt or even quitting your day job before your own business is off the ground. If you find your niche, your business will grow; growing a business is a far tougher task than starting a business. It took me over half a decade to grow a business from a one-employee (myself) outfit to have half a dozen employees, and let me tell you, the managing part is a lot harder than the work itself. I can only imagine the difficulty of running a business with 350k employees. Getting back to the topic, how can anyone who is not even certain that they can run a one-employee business successfully be so certain that they can run a 350k-employee business better than the people who have shown success at intermediate levels. Monday morning quarterbacking is easy, but we need to keep in mind that, if placed in the field, none of us here can win any game at that competitive level.
Rocky
Who said anything about entrepreneurs? We're talking about corporate clowns, these aren't exactly hard working entrepreneurs. It's not what you know. Deflection? Stick to talking about traffic patterns in places you've never been, and the buying habits of people you don't know.
ROFL at the talk about "earn your own stripes"...it's not hard when you are born on third base, eh...
Do you talk about cars, or do you just post to promote your fractured serf 'n elites economic thought?
"So, how many industrial dinosauers have you rescued? "
Defend the relevancy of that statement. It's not my position to do so. But here's something for you...how many have your corporate heroes "rescued"?
" but we need to keep in mind that, if placed in the field, none of us here can win any game at that competitive level. "
And you need to keep in mind that those placed in that field through whatever reason are losing a lot of those games, too.
The time is coming to dust off some guillotines.
fintail, you are exactly right. They all start out on third base, and it's not hard to score when you have a 2 base advantage. :shades:
Rocky
Let's get back to th UAW and Domestic Automakers...
Hmm, that's precisely what we were talking about. See the tail end of my post#908, to which you were quoting and replying.
Deflection?
That's what you are doing. See above.
Stick to talking about traffic patterns in places you've never been, and the buying habits of people you don't know.
How exactly did you come up with that conclusion? Considering that I'm actually one of "those people," and in almost constant contact with other members of "those people."
Do you talk about cars, or do you just post to promote your fractured serf 'n elites economic thought?
Do you talk about cars or do you just post to promote your fractured communistic economic thought? To host: if this line of questioning is not appropriate for this forum, please remove both posts. At least I have posted some facts about the name you gave for your supposed "corporate clown," much to the embarassment of your rhetoric.
"So, how many industrial dinosauers have you rescued? "
Defend the relevancy of that statement. It's not my position to do so. But here's something for you...how many have your corporate heroes "rescued"?
Well, the "corporate clown" that you explicitly named, Rick Wagoner, engineered the GM Brazil turn-around, and instrumental in GM China success. How many business turn-around successes have you had?
The time is coming to dust off some guillotines.
Is that supposed to be a veiled threat of revolutionary uprising? While we are at it, let's not forget that the original guillotine chopped off more heads of the revolutionaries than those of the aristocrats. I don't see what's to celebrate even for a bona fide revolutionary if the Old Maiden were to be dusted off for real.
Fat chance of that. GM CEO is not an elected political office. While Duke graduates over a thousand of undergrads every year, and hundreds of Harvard MBA's are handed out every year . . . thousands if you count those of Yale, Stanford, etc.. only a handful of them got to the positions of CEO's at a company as large as GM in the last few deccades. The wash-out rate is far greater than small business failure rate.
Besides, golden parachutes are usually handed out with golden handcuffs to secure non-competition from key employees . . . yes, CEO's are employees. If you have a set of skills critical enough to your employer, you can secure a golden parachute, too.
Reading for comprehension. You boasted that I should "try my own hand" at becoming a corporate coward, I replied that I didn't have the good old boys membership card, and you replied with tripe about being an entrepreneur. Deflection. Dude, you're not a good goalie.
"How exactly did you come up with that conclusion?"
Your off-base posts...your wikipedia insight.
"Considering that I'm actually one of "those people," "
Nice claim. So is it an inheritance that gets you going, or cronyism? Do daddy's friends keep your supposed little business thriving, or is it just maintained through a trust?
Do you talk about cars? No. You come here to promote your warped economic ideals, crooked gutless ideas that will lead us to a land of serfs and elites. You think benefits suck now? Wait and see what would happen if your world came true. You'd want to invest ina good personal security staff, in your dream world.
Oh, and you are now asked to document which communist ideals I support. Put up or shut up.
"engineered the GM Brazil turn-around"
But you still can't name precisely what he did, and the things he "learned" in that little article that was posted do not paint him in a particularly insightful light.
"How many business turn-around successes have you had? "
Give me a good old boys membership card, and we'll see. See, mommy and daddy didn't gift me with a cookie cutter Big School MBA...I paid my own way through a state school, so I won't be able to be at the helm of any dinosaur turnarounds.
"Is that supposed to be a veiled threat of revolutionary uprising?"
I don't have the power to engineer any revolutions...I'll just say be prepared for some future strife, because as economic viewpoints such as yours lead to further socioeconomic decay, it WILL happen. And IMO some out there deserve to have some real fear put into their lives.
If you're going to whine to a host about removing posts, then you should really support the removal of 95% of yours, as they have nothing to do with cars or the topic, it's just propaganda of flawed economic thought. The only reason you are here...
Nope. Reading for comprehension yourself. I said if you are so good at noticing others' inadequacies, perhaps it should be easy for you to find a niche where you can offer consumers a compelling value. . . i.e. finding a market niche, the most important component of starting an entreprenureship, should not be too hard for you.
Nice claim. So is it an inheritance that gets you going, or cronyism? Do daddy's friends keep your supposed little business thriving, or is it just maintained through a trust?
Hahaha, for most of their working career, both my parents were making less than $50/mo thanks to the "socialist paradise" that they were living in (couldn't blame on globalization back then because the socialist paradise was isolationist)
Do you talk about cars? No. You come here to promote your warped economic ideals, crooked gutless ideas that will lead us to a land of serfs and elites.
I came here to talk about UAW and its relation to the decline of domestic automakers. I have no idea why you kept harping about "suits" . . . oh, wait, you named a "suit" for personal whipping boy who actually rescued a big chunk of GM.
You think benefits suck now? Wait and see what would happen if your world came true. You'd want to invest ina good personal security staff, in your dream world.
Once upon a time, I actually lived in a world of serfs and elites, a world where money counted for nothing but "benefits" was everything. Everything, from housing, to education, to medicine, to meats, sugar and monthly allowance of rice and flour were "benefits" in the form of "coupons" (ration books) that one had to present for purchase in order to ensure "equality." Money was useless without "coupons" that came as a benefit package for a job courtesy of government. Of course, the political leadership elite was just a wee bit more equal than all the rest, and their benefit package indeed included armed personal guards, whole platoons of them. That's what happens when market economy is replaced by socialist command economy. Yes, everyone had a job, and everyone had "benefits." The problem is that, nobody had real incentive to produce anything to fulfill the "benefit" promises made by the government, hence shortage in everthing.
Oh, and you are now asked to document which communist ideals I support. Put up or shut up.
Your support for collective bargaining, and your disdain for market economy. Read Das Kapital for yourself; distain for the market is the center theme of communism, and collective action by workers (need I mention the threat of life and death struggle that you mentioned?) through "thorough revolution" was the means. BTW, I did not go out of my way to accuse you of being a communist; frankly, I don't think many in this country know what the Communist Manifesto is even if they harbor similar ideals; therefore I usually refrain from using the loaded term. The statement I made in my last post was simply a paraphrasing of your content-free personal attack, using identical sentence structure but turned back at you.
But you still can't name precisely what he did, and the things he "learned" in that little article that was posted do not paint him in a particularly insightful light.
He turned around GM Brazil while being put in charge of the operation, mostly through introduction of innovative products that were well suited to the market. What more do you need to know? How exactly do you explain what Eisenhower personally did to win on the Battle of the Bulge? Besides being in command and led to the ultimate success? As to "learned," there are many degrees of learning: book knowledge vs. first-hand experience etc.. IMHO, in that particular context, it was simply a humble way of expressing that Wagoner would then use his success at GM Brazil to convince his colleagues later that GM China also had to embrace new products and good products to succeed in a growth market, not hand-me-downs (a seemingly obvious marketting trap that you fell into yourself). That strategy was very much behind the success of GM China, and one that Wagoner can take credit for personally.
See, mommy and daddy didn't gift me with a cookie cutter Big School MBA...I paid my own way through a state school, so I won't be able to be at the helm of any dinosaur turnarounds.
Good for you. I got most of my education on scholarships and financial aid, plus loans and my own work; parents never paid a penny, nor could they have, based on their $50/mo "salary." I went to some of the big schools. MBA was certainly something I could have had if I wanted. My parents actually wanted me to have that, but I thought little of it and not worth the student loan that would produce . . . considering the management issues that I'm having, going back to school to get and MBA at some point in the future may not be a bad idea.
I don't have the power to engineer any revolutions...I'll just say be prepared for some future strife, because as economic viewpoints such as yours lead to further socioeconomic decay, it WILL happen. And IMO some out there deserve to have some real fear put into their lives.
I was born into the midst of a "revolution," one that was devowing its own children like most political upheavals do. Society breaks down when the economy sours . . . when the pie gets smaller, unfortunately everyone trying to maintain the size of their own slice has to look to the neighboring slice. It's just human nature. That's why we all have to do everything we can to make sure that the pie keeps growing; free market is the only proven to do that. Having been born into and lived under a socialist redistributive "revolution" unlike most people in this country, I think many indeed need to have real fear about socialism and "revolutions."
they have nothing to do with cars or the topic, it's just propaganda of flawed economic thought. The only reason you are here...
Let's retrace the discussion, shall we: the discussion topic is UAW and its relation to the decline of domestic car makers. I contended that union is one of the, if not THE, big reasons behind domestic carmakers' decline. Union supporters came forth to attack the management and defend the union by arguing that without union the employees would not get a fair shake. I counter that the best way to ensure employees to get a fair shake is making it easy for another employer to offer the employees a better paying and more respectable job opportunity right next door; union work rules and "benefits" cast in rigid terms in frozen time capsule can not hope to keep up with economy reality, and often get in the way of that.
That's the gist of the productive discussion, until you jumped in with content-free fanciful personal attacks.
I'm just curious -- do you believe that management of either of these companies merit any criticism for their actions? All I see are elaborate excuses meant to whitewash poor results, rather than an objective assessment of those actions taken or not taken by those who have been paid to manage these businesses.
All I need to do is to look at the product lineup, distribution channels and M&A track record to know that GM has a few problems upstairs. Let's hope this spin doctoring can turn losses into profits, because the management certainly doesn't seem capable of doing it.
You haven't shown Wagoner's insight. For his education and salary, I would hope he would realize that a good modern product is a key to success, and that this wasn't something to be "learned". That he had to "convince" this to other cowardly suits shows the basic ineptitude of good old boy executive heirarchy.
"I counter that the best way to ensure employees to get a fair shake is making it easy for another employer to offer the employees a better paying and more respectable job"
That's the most ridiculous argument in the world. Don't you think that employers would collude to pressure wages downward if the market existed completely devoid of controls? Of course they would. Human greed and lack ethics dooms so-called "free markets" just as they do communism. Checks and balances won't occur naturally. Maybe you just have way too much faith in mankind. History tells that can be a dangerous thing.
Stick to your ever-blossoming tales and your propaganda. I think I'll find a soicio-economic forum and go convince people which car is best.
I just have to wonder, who is pulling your strings? There's something behind all this...
I'm not seeing any analysis here of the role of labor and management in the current fortunes of these specific automakers. . . I'm just curious -- do you believe that management of either of these companies merit any criticism for their actions?
Of course the management makes mistakes from time to time. The most significant one often cited in Wagoner's career was his attempt at increasing productivity between 1996 and 1998 triggering a union work stoppage that cost GM $4 billion.
I will leave you to decide how that incident alone illustrates whether management or union is the main problem; and how much actual "managing" power the management really has.
Sure. Instead, you fling about hollow adjectives such as "socialist paradise" and compare other posters to Marx (not Groucho). Sounds like something Tailgunner Joe would have done.
Of course the management makes mistakes from time to time.
Just as I expected, your sole example consists of something for which you'd blame the union. How insightful.
How's this for a start -- Wharton has documented that 70% of M&A deals destroy shareholder value, and yet this is a strategy that GM has pursued. Not surprisingly, it has lost a lot of money doing it. Since Wagoner went to HBS, I'm surprised he never read a case study or two that would have taught him this, and that he might have been inspired to build some brands organically, rather than buying up second rate players that create more liability than benefit.
Here's another -- too many products, including many that customers don't want. Any reason why the company has opted to design and produce products that customers wouldn't want, when it should have produced products that customers do want? I thought it was the job of management to figure out what customer needs could be met, and then meet those needs. (Since you referenced entrepreneurship before, you should know that this same dictum applies to the Fortune 100 as well.)
While makers such as Toyota launch successful small cars, the current GM strategy seems based upon selling large vehicles that use a lot of fuel. Is that forward thinking? Innovative? Creative?
Then I look at Automotive News, and I see that GM carries an average of 90 days worth of inventory, versus Honda and Toyota that carry 49 and 41 days, respectively. Is that lack of inventory management skills evident at the General a sign of quality management? Would you not agree that a company that is losing money that ties up its money in excess inventories (an indication that it is incapable of selling the stuff that it makes) something that should inspire shareholder confidence?
I don't think it is much a strategy as a noose hanging around the neck of GM. They have UAW contractual agreements that can only be met by keeping employees working or watching TV on the payroll. Those contracts were agreed to when PU trucks and SUVs were the rage. If you can remember back to the dot.com era. Money was flush and OIL was cheap. The UAW chose to strike in the middle of the buying frenzy for the large vehicles. In hindsight GM may have been wise to shut the doors and close the plants right then. They took the easy road and signed contracts that are now killing them.
GM carrying a large inventory of unsold vehicles is the end result of promising too many people a job during slack periods. Honda & Toyota do not have that noose hanging on their neck. When car sales slack off they send their employees home without pay. Very simple when you are the robber baron types at Honda & Toyota.
Since when are Toyota and Honda finding it necessary to idle production? They continue to increase sales and market share, while maintaining flexible production lines that can easily switch a line to produce different nameplates as necessary. Production shutdowns become routine when a company develops a habit of building products that customers don't want, and become unnecessary when their needs are fulfilled.
Is it any surprise that Saab has eight months worth of 9-5's in inventory when the car does not offer any form of differentiation of interest to the consumer, and when these European luxury cars meant to compete with the likes of BMW and Audi suffer from both below-average reliability and the lack of the free maintenance plan offered by its rivals? Does it surprise anyone that there are currently three months of Cobalts sitting in inventory, while there are only 18 days worth of Civics?
That's all due to management, management and management, the same management that decided to make a new small car that isn't even as good as a five year old Toyota, and that ranks the bottom of the Consumer Reports survey.
Yet you made the same assumption that any crap would sell well in a developing market like China because all the other cheap crap there. VW and Toyota made that mistake in China for nearly a decade with their entry level cars (despite their own more expensive modern models making all the profits there); GM China was the one did it right by taking an innovative approach to the market.
Don't you think that employers would collude to pressure wages downward if the market existed completely devoid of controls? Of course they would. Human greed and lack ethics dooms so-called "free markets" just as they do communism. Checks and balances won't occur naturally. Maybe you just have way too much faith in mankind. History tells that can be a dangerous thing.
First of all, collusion among employers is very much against the law (anti-trust laws). More importantly, what you are describing is simply untrue. The natural check and balances come into play because the same employee can only work for one employer at a time. Check out this article:
http://www.businessweek.com/magazine/content/06_13/b3977049.htm
Apparently, wages in China surged 40% last year because all the multi-nationals and local employers were bidding up wages even in a supposedly bottomless labor pool. I indeed have a strong faith in mankind: the innate urge and inalienable right for everyone to look after his/her own interest. Employees will switch jobs when there are better offers, and consequently, employers have to pay more to keep them. It's only when monopolies and oligolopolies are in play then the market is different and no longer a free market. That's why the government's primary job in the market place is enforcing contracts and preventing the rise of monopolies; excessive regulations usually lead to monopolies because of the economy of scale in dealing with red tapes and buying off officials.
I just have to wonder, who is pulling your strings? There's something behind all this...
In case you did not know, the single most prominent leading theorist of modern Libertarianism, Ayn Rand, was a Russian Jew immigrated to the US in her youth. Like Rand, having lived under socialist distopia, I have a profound admiration and enthusiasm for my adopted homeland, and the "fountain head" of Anglo-American civilization's overwhelming success over all others : the free market place. Especially now with my new born baby, I sincerely wish that my child (and future children) never experience the old world continental envy-driven social system, where free market is replaced with its only alternative in the distribution of wealth and natural resources: coercion.
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=20- 06-03-18T234045Z_01_N18399194_RTRIDST_0_AUTOS-GM-DELPHI.XML
I did not use that adjective to describe a poster. Fintail sought to bismirch with the false supposition that I was raised with a parental trust fund. It was only fair to tell him exactly what kind of living conditions I had in my youth. There is nothign hollow about "socialist paradise" if you ever lived in one: having your basic necessities restricted to 9oz bread or rice per day, 4oz meats per week, 3oz sugar per month, 2 yards of cloth per year; get your ration book ready for every purchase, which was not that frequent because shelves were empty most of the time even after waiting in line for hours . . . all the while being told that you were living in a socialist paradise compared to the poor starving to death in the streets in America . . . That was not a movie. . . "socialist paradise" is a bitter ironic word for it all.
and compare other posters to Marx (not Groucho). Sounds like something Tailgunner Joe would have done.
Not at all. MacCarthy's obsession was branding every left-leaning intellectual communist _SPY_ working for the USSR; his tactics were guilt by association, and guilt by supposition of conspiracy. I was not keen on labels, but if we really pick a poster around here for using MacCarthy tatics, your fellow traveller Fintail has all the trappings for his repeated attempt to link me to one kind of right-wing conspiracy or another, none of which fits.
Since Wagoner went to HBS, I'm surprised he never read a case study or two that would have taught him this
Notice, Wagoner did not actively pursue merger and acquisition during his tenure. The majority of cost for acquiring Saab was paid in the early 90's, long before Wagoner's tenure; the excise of call option for the remaining half was a no brainer since the strike price was so much below market price by any metric. Wagoner actually walked away from the Fiat deal, which was also initiated before his tenure. Wagoner has been doing the reverse of M&A, namely, spin-offs, which are highly profitable for GM shareholders.
Here's another -- too many products, including many that customers don't want.
Much of the badge engineering is due the need to fulfill franchise model count requirement at the lowest cost possible. GM can not unilaterally close down local dealer franchises, which are protected by various state laws. As to models that customers don't want, the primary problems are vehicle quality and over-production . . . both are heavily related to the low quality production lines that have to be kept running thanks to UAW work rules and contracts. Now, don't even bother throwing the red erring line that the management was party to negotiating those contracts; there is a huge difference between negotiation and being held hostage. When Wagoner tried to improve productivity at the domestic production lines, it led to the most costly "mistake" in his career: a 13 week work stoppage by the UAW that cost GM $4 billion. How can the management be held responsible for a work force like that? Henry Ford, Alfred Sloan and Walter Chrysler all fought the union tooth and nail; they were all pushed aside by the political feudal overlords of the union bosses. The union monster is a political creation that the company managers can do nothing about except for accommodating. When the profit margins were good during the oligopoly years, the two can practically engage in profit-sharing at the expense of the consumers; when the competition offers alternatives, the consumers simply refused to be ripped off by over priced expensive cars.
While makers such as Toyota launch successful small cars, the current GM strategy seems based upon selling large vehicles that use a lot of fuel. Is that forward thinking? Innovative? Creative?
Toyotas have been getting bigger and heavier in the last few years, in case you did not notice. Given GM's domestic labor cost, it does not make any sense whatsoever to pursue small cars in the US until the union contracts are a thing of the past. Small cars involve almost as many steps in the assembly process (ie. similar labor cost) but can only sell for much much less than big vehicles. GM does make innovative small cars in Brazil and China, where the management is not being over-ruled by the UAW.
Then I look at Automotive News, and I see that GM carries an average of 90 days worth of inventory, versus Honda and Toyota that carry 49 and 41 days, respectively. Is that lack of inventory management skills evident at the General a sign of quality management? Would you not agree that a company that is losing money that ties up its money in excess inventories (an indication that it is incapable of selling the stuff that it makes) something that should inspire shareholder confidence?
What you are not including in your bean counting is the fact that GM domestic workers have to be paid at their expensive wages regardless whether they are making cars or not. Here's a simple illustration: spending $5k in labor and $5k in material, then sell the car for $9k (losing $1k) is better than not making any car at all and still having to pay the $5k in labor cost as dead loss; much better, to the tune of 80% cut in losses! That's how warped the UAW-created reality is.
http://www.autoblog.com/2006/02/01/honda-cutting-pilot-production-at-lincoln-ala- - - bama-plant/
In short: Honda is cutting Pilot production by 12% as of Feb 2006 reporting.
Is it any surprise that Saab has eight months worth of 9-5's in inventory when the car does not offer any form of differentiation of interest to the consumer, and when these European luxury cars meant to compete with the likes of BMW and Audi suffer from both below-average reliability and the lack of the free maintenance plan offered by its rivals?
We have been though this already. The 9-5 invetory duration number was very skewed by the introduction of new revised model. Manufacturers have to build up inventory on hand before launching a new model (not just a new model year, but a new model), and the old model sales slows down to a trickle as the manufacturer switches production and consumer wait for new product. It's ludicrous to use the normal inventory duration caculation method of dividing the later into the former during product transitions. For example, a two-month Lexus IS launch inventory on hand means 8000 units; whereas the old IS sold only about 400 units a month in 2005. Does that mean Lexus IS had a 20 month invetory back up just before the launch of new IS?
Another thing wrong with your post on the topic is that the outgoing 9-5 was actually far more reliable than either BMW or Audi, according to CR and JDP.
Inventory is not held by GM. the independent dealers are the ones that have the excess inventory. Either way not good but it is not GMs inventory.
That never leads to a good place!
There have been a lot of posts about what GM management should do to turn things around, but I don't think I have seen anything about how the UAW would do it. I wonder how the UAW would propose to turn things around for GM NA? If the task was handed to the UAW, what would it's plan be?
Now, there are some ground rules and conditions that have to be taken into account.
Rules:
1. Nothing illegal.
2. No new laws passed to impose restraints on foreign trade, to reduce environmental regulations, etc.
3. No manipulation of the Federal Reserve or of the foreign exchange rates.
Conditions:
1. In the election this November, plan on the Republicans keeping control of the Senate and a 50% chance that they will keep control of the House.
2. Plan on gas prices of $2.25-$2.50 a gallon during the winter months and prices of $2.75-$3.00 a gallon during the peak summer driving months. Note: These prices do not factor in hurricanes or terrorism. (See next two conditions.)
3. Plan on a major (Category 3, 4, or 5) hurricane to hit in the oil producing areas of the Gulf of Mexico and/or in the refineries of Louisiana or Texas each year for the next 5 years. Figure that a hurricane hit will raise gas prices an additional 50 cents to a dollar and that the increase will remain in effect for up to 6 months.
4. Plan on al Qaeda continuing its attempts to attack oil production or distribution facilities anywhere in the world. I won't even try to predict how much the price of gas at the pump will increase if they succeed in one of their attacks.
5. Don't forget about the aging workforce of the US. The first year of the Baby Boom generation turns 60 this year. There will be more Baby Boomers retiring from the workforce than there will be new workers entering it. This will have the effect of increasing labor costs for companies that have failed to plan for a tight long-term labor market.
6. Plan on the economies of China and India continuing to grow and that their demand for oil will continue to grow. Plan on the rate of growth of the Chinese economy to decrease somewhat from its current rate to something that is more sustainable over a longer term.
7. Don't forget about the US debt and the continuing annual budget deficits.
8. Plan on the war in Iraq continuing for at least 3 more years.
9. The UAW can do all the turnaround work (engineering, new product design, company restructuring, changes in rates of pay and benefits, workforce reductions or increases, etc.) itself, or it can work cooperatively with GM management and GM white collar staff, it can turn to third parties (outside of GM and the UAW) for assistance, or it can do a combination of these.
Okay, given these rules and conditions, how would the UAW save GM NA? Let the turnaround begin!
Let me pose a hypothetical question to all of the contributors that have already made up their mind that the domestic producers are wrong in direction, engineering and management.
Could the non-domestics (Japanese, Korean,MB,VOLVO... ad.nausium ) suceed,or even compete with profit given the
same legacy costs/Union Agreements/Lack of Government subsidies that exist for current domestics? Don't dwell on the Past deal with NOW !
If so. Explain. No fairy tales, just workable solutions.
I need to know not just WHAT but HOW you think you could do it.
same legacy costs/Union Agreements/Lack of Government subsidies that exist for current domestics? Don't dwell on the Past deal with NOW !
I already addressed this: If GM could simply sell cars at the same average wholesale price at which Toyota sells its cars, it would be making a profit, even with the legacy costs.
The real problem is that GM brands no longer have any value. Brand value is that degree of goodwill and je ne sais quoi that allows BMW to sell a tiny mini at high prices, or Lexus to sell a luxury sedan for more than a larger Buick. As a result, GM can't sell what it produces quickly enough, and what it does sell gets sold at relatively low prices.
Brand management is the job of management, not labor. Toss in some really bad M&A deals put together by the management team that squandered billions of dollars with no benefit for improving those brands, and you have a quagmire at the top of the food chain.
Anyone who knows something about growing a business knows that while cost controls are certainly helpful to stop bleeding, they can't turn a bad company into a good one. Even if you eliminated the legacy costs today, you would still have brands with a poor reputation, an uncompetitive product line-up, and no viable plan at the top to get consumers to buy GM cars.
All of that is a sign of poor management. With all the talk of entrepreneurship here, perhaps people should know what the definition of entrepreneurship is: The ability to work with constraints and scarce, limited resources to create additional resources. I don't see the creativity at the top to do this, and I would want to see a much more radical degree of surgery and change before I'd get my hopes up that anyone at the helm is prepared to do anything that would actually fix what's broken.
If the employees of the Big 3 want to remain employed. I think that a cut of 25% in wages and benefits would be a good place to start. That would be for Union and non-union employees. Retirees need to be weaned off of the rising health care plans. Very few pensions include full healthcare for life. Offering long time employees a buyout package is wise. You will get rid of many non producers. implement the ability to hire part time and contract labor. That is what many companies are doing to survive. Give management the tools to weed out those that are not beneficial to the operation. Evaluations that have the teeth to cut pay for poor performance.
How's that for a start? And that is from a 45 year union member that prodded management for a buyout. This gave my company the option to hire a younger employee that they could train to work on all the latest equipment. It was foolish to keep sending me to training so close to retirement age. So I got a Silver parachute and will be happy to pass the baton to a younger employee.
PS
Our Union quit paying healthcare benefits to retirees 20 years ago. Smart move that has kept our pension plan in good condition.
And how would that make the Cobalt a better car that meets consumer needs?
Cutting wages is all well and good, and at this pace, it's probably inevitable when the BK eventually gets filed. (We'll see what happens, but I'm convinced that BK is already part of the strategy, and is just a matter of time.) But all wage cuts will do is to reduce the losses, it won't create any profits, because customers buy cars, not profits or losses.
Bad news for everyone: If you don't create products that consumers want, the company is dead. It might help to notice that (a) GM lacks competitive offerings in the two most popular passenger car segments in the US, and (b) the segment in which GM is most competitive is a segment that is vulnerable to both increasing oil prices and increasing competition from transplant rivals. What is GM going to do about this?
"First of all, collusion among employers is very much against the law"
ROFL, yeah, the law stops all bad things from happening. He who has the gold makes the rules.
"Apparently, wages in China surged 40%"
But most people are still peasants, modern day serfs. In a completely unregulated market, we'll be headed there too.
"employers have to pay more to keep them."
Not if they all act together. Looking at the people in control, why do you think they would act ethically? They'll do what earns them the largest bonus, and that's it.
"where free market is replaced with its only alternative in the distribution of wealth and natural resources: coercion."
Why can't you fathom this? There is no real "free market". There's as much bizarro-world socialism here as anywhere. It'd be a shame if you and your gifted little supposed business were faced with "coercion"...one amazing story after another...
You're someone's shill, it's just a matter of finding out who...
Get some sleep.
It is the 3rd best selling car in it's class. Not everyone hates it. I don't like little sedans so I am the wrong guy to judge the Cobalt.
Again, we're back to fleet sales. You can bet that Avis, National and Enterprise are among the biggest buyers of these cars, not Joe Average. The spiral continues...
I know many in this forum think a big international union like the UAW or IUE-CWA, just take members money, negotiate conracts, save fired employees jobs, and that's about it. I growing up got to expierence alot. My grandmother was a IUE union rep for almost 22 years. I went with her to the union halls and got to listen to her talk on the telephone, got to sit in her office and watch union members come to her hall for union meetings, I also got to go on trips with her to other locals. It was a very great expierence, and I treasure it very much to this day. Grandma used to teach classes at Michigan State, she was the first women appointed by former Gov. Blanchard to serve on the boiler board of rules and regulations in the state of Michigan. She also taught diversity classes, sexual harrassment, industrial safety classes, etc, at various locals in the midwest.
I just wanted to point out other things unions do to improve conditions that in most cases help employers have a better relationship with its employees, thus it's not all doom and gloom all the time.
Rocky
Read the automotive trades, and you'll see that even the automakers themselves recognize that large fleet sales are bad for business. And no, Toyota and Honda have relatively few, because they also know that dependency on rental fleets are a sure path to the same failures suffered by the Big 2.5.