Escorting someone off site is to protect everyone from someone going ballistic. This is not to mention averting chaos in potential data files or engineering information on their computers. It just takes ONE person to do that and it is catastrophe.
I'll bet the bigger catastrophe will come from the loss of morale and productivity from the workers who remain, the vast of majority of whom probably did a decent job and exhibited greater loyalty to their employer than their employer would ever extend in return.
It can't be a joy to go into work each day when that day might end up with a security escort and a quick kick to the curb after years of loyal service. If GM is going to turn itself around, it is going to need talented people to do it, not people who are running scared and hiding under their desks hoping not to attract the ax.
for a corporation that has a shareholder proposal on it to declassify the Borad of Directors so that they can be removed for cause or without cause by a vote of the shareholders. Otherwise they can only be removed for cause under Delaware law.
Think we'll see many board members of poorly managed corps being removed this way? They'll stop in and their access card won't work and they'll be given a box and escorted away?
...if Rick Waggoner went down to GM headquarters only to be stopped by a rent-a-cop, have his access card confiscated, his personal property handed to him in a box, the keys to his executive limo taken, and forced to take the bus home? He'll be nervously sitting on a dirty Detroit bus with a lot of former autoworkers glaring and growling at him. It would be like putting the jailhouse snitch in a holding cell with a lot of hardened convicts!
This is actually what happened where I used to work, along with some of the other comments. Morale went straight to the dumps, people really didn't give a you-now-what anymore, thinking "Well, why should I work my self to death when all they're going to do is fire me?". Basically ran the emotional gamut, from fear to sorrow to anger.
What also didn't help was the insulation of the favorites - they were all left alone. The only problem was the favorites didn't do their jobs to begin with, so when the workers were let go, no one was left to do the work.
Company filed BK within 2 months after that lay-off at the office. Won't get into that but let's just say the underhandedness continued. In comparison to what's going on @ Delphi, Miller's an angel.
This is actually what happened where I used to work, along with some of the other comments. Morale went straight to the dumps, people really didn't give a you-now-what anymore, thinking "Well, why should I work my self to death when all they're going to do is fire me?". Basically ran the emotional gamut, from fear to sorrow to anger.
What also didn't help was the insulation of the favorites - they were all left alone. The only problem was the favorites didn't do their jobs to begin with, so when the workers were let go, no one was left to do the work.
Company filed BK within 2 months after that lay-off at the office. Won't get into that but let's just say the underhandedness continued. In comparison to what's going on Delphi, Miller's an angel.
Unfortunately, you've described an all-too-common pattern. I'm sure you know that this is often an indicator of top-heavy management structure in which the chief executives are so insulated with the rank-and-file and middle management that they refuse to hear their knowledge or feedback (i.e. one of the reasons that they were on the payroll in the first place), and then use it to the benefit of the company.
If I was GM's CEO, I would have done something similar to this:
-First, I'd identify the few employees who genuinely suck, and send them packing. Give them a benefits payout and a headhunter, and kiss them goodbye.
-Take the rest of the employees are presumably good or pretty good, and have a meeting hosted by Wagoner and the top brass. Make it an in-person meeting, even if that means getting on some airplanes and making it a road show. Sit the employees down in a room and tell each of them that they have 120 days to develop a coherent, concise but factually-based business plan that they would advise that the company to use to achieve a turnaround, along with a seven-year forecast to match. The plans can be done individually, or otherwise managers can get together with each other to form teams of up to 5-7 people in order to prepare their plans. Fire them up, and let them know that good ideas will be adopted, and that those who develop good plans will have a hand in implementing those ideas. Their plans should include their areas of expertise (engineering, marketing, etc.), but put that in the context of the overall goals of profitability and increasing market share. Those whose plans are poorly constructed or fail to address basic systemic issues with the company won't be staying on board following this business planning session.
That process may seem cumbersome, but it would distinguish the visionaries with motivation fron the pencil pushing order takers and old-school Kool Aid guzzlers, and would readily identify those who have the mindset best suited to leading a turnaround. It would also mine the employees for a lot of ideas that probably needed to be heard long ago and identify who has the big picture mentality to go the distance, while also making it fairly clear who is too mediocre, uninspired or tunnelvisioned to help make the grade in a leaner, meaner company.
Will any of this happen? No, of course not, GM top management seems to live on a pedestal of its own design, and has decided that cost cutting is the optimal way to go, even though no company can be made profitable strictly by cost cutting if there are no products to match or if the remaining employees don't have the will to continue. If GM was a smaller firm, it would have imploded a long time ago, it's simply its sheer size and weight that has allowed it to continue for as long as it has.
Thank you for your comments. But,I feel you lack an appreciation of the problems on hand. This is not a case study in your local MBA program. It is decidedly much more complex. The house cleaning ,"leaning out", communication workshops (Go Fast) you are talking about have been taking place in the salaried ranks for about the last decade. (As for the Union half management CANNOT change what they NEED to. The union will not allow it.) History is just that. You can't go back and change it. We all know the problems of misdirected management goals, over capacity,labor distrust, product stagnation just to mention just a few. The resulting unintended consequences are yet to come in full force throughout the industry. Chapter 11 is a real possibility. I have yet to see anyone make a suggestion that addresses the root causes of the problem and a viable solution. No, I do not have one but this is far from a case study . You HAVE to make it work. That is the "tough part"! Since I presume you are a large stockholder......let em' know how to do it or at least tutor York.(Do you have anything in the way of a background in the auto industry ? Your solutions are theoretical but lack some real world tempering.) Please correct me if I am mistaken.
My guess is that the Delphi filing for cancelling the union contracts will be postponed again. This time by the Judge in the case. Let's see if I am right.
George, there's nothing theoretical about it. I've been paid to save bleeding deals, and every turnaround has certain things in common. In every case, you need to:
-Control expenses -Collect the money that people owe you -Get rid of and/or sell off extraneous products, assets and obligations that either suck margins or create a distraction -Hire people dedicated to turning the business around and who have the mentality and guts to do it -Create products and services that customers want
Cutting bodies is not enough, you need to cut the right bodies. The GM defenders on this thread who support the status quo, blame the consumer/Japanese/dollar/etc. would be the very first on my termination list, because they are the classic excuse makers who fail to recognize problems or see a solution that lies in their hands.
The purpose of the business planning process is to get managers to see that each of them is either part of the solution or part of the problem. I suspect that the good ones remaining have been so stiffled by GM groupthink that they have been unable to be heard until now, and those people need to be identified and heard. By forming their own teams of their own choosing, you will soon learn who knows what, who can work with whom, and who is willing to stick their necks out when times are tough. In addition, it's about time that the company looked to its own people (the best of whom should be regarded as an asset, not an expense), and realized that the answers probably already lie in the hands of people currently on the payroll who know the business, understand what's wrong with it and would be happy to solve it if only they were given the chance. The rest of them need to get canned and replaced, so the competent can be left to drive the ship.
GM has failed because it has been far too big for its own good, and simply spent money on borrowed time until now, because it is nearly broke. Drastic solutions are now needed, meek solutions that get rid of a couple of cars or trim payrolls are by themselves not enough. I'd say that the industry hacks are part of the problem, not part of the answer.
Agreed.The tenets you have noted are all PART of a rational business analysis. You have however grossly misjudged GM's ability to identify those whose talents they can use. Rick is not as insulated as some people think nor is he that dumb. As for size ? It is in the process of dramatic change and will continue. Have you seen some of the strategic thinking for the moves that are now taking place? This whole rhetoric of team building, election of leaders from within is fine on a smaller scale with labor restraints abated. The companies that are just a few billion dollars strong MAY get it to work .However, if you do not have structural control of both salaried and union labor I doubt it will survive.
I've already shown you how Wagoner was an integral driver behind the deal that lost the company $4.4 billion, twice the cost of that last strike that the anti-UAW types continuously like to cite. The deal was clearly flawed from the onset, and most people who create such terrible losses for their employers get round-filed in a hurry. Even the worst worker on the line is unlikely to have lost GM anywhere near that kind of money.
Where is the process of dramatic change that you're talking about? For the most part, I see a sea of low margin GM products that are sorely lacking and not highly competitive, an excessive number of nameplates, most of which should be punted sooner than later, and a sprawling dealer network that seems to largely be in the used car business. A few hopes on the horizon, such as Solstice, but those are the exceptions, not the rule.
Unless GM cuts the number of nameplates by at least half (preferably more), terminates large numbers of dealerships in favor of larger, more successful operators, and develops a few home-run products in key segments, it is likely to fail to reemerge as a major player. Higher oil prices could help to seal that fate, because the company is clearly not prepared to address that likely reality.
And a BK is inevitable, so you are seeing the last gasps of the union having any real power, the membership has already plummeted in size over the last couple of decades and remains on a downward trajectory, so I see no reversal on the horizon. You can go on about the union, but the union isn't the cause of most of the problems with product, distribution or branding that the management created for themselves.
Amazing if they are really planning on closing almost all plants here in US. I wonder if Delphi has been working with their overseas plants to get the US made components sourced over there or have already told GM (and other OEMs) that they will not longer be supplying the parts? If so the longer the UAW "negotiates" the longer Delphi has to outsource the parts overseas and the OEM's to get new suppliers. This is really going to be tough on a number of cities.
"Even the worst worker on the line is unlikely to have lost GM anywhere near that kind of money."
I'll just pretend you didn't say that. It bears little on the subject at hand . The solutions you were talking about (brand reduction) were discussed at length at a strategic level for the past 15 years. I imagine it was the topic of review repeatedly on Wagoners watch as well. Each time the analysis of financial obligations incurred for that type of move made it prohibitive. (Read: Liabilities could have bankrupt the corporation back then.-CONTRACTUAL OBLIGATIONS) Your comments are a bit dated.
As for your assertion that Wagoner was the primary driver for the Fiat deal you are assuming a lot. He may have been the most visible one but the thrust was much broader than you can appreciate. But then again, leadership takes the fall regardless of what details are entailed.
Your rebuke of my assertions that GM changes are dramatic are flawed. I can only reply to wit:. "A bicycle IS easier to turn than a battleship " So what? It is not rational unless you do something catastrophic and can start over. It will just take GM longer. But then if your perspective of scale is THAT small anything is possible
. There are philosophical,cultural and economic structures at Toyota that American Manufacturers are very reluctant to adopt since it will change the accepted norm. You are being very selective in your criticism of the TOTAL leadership of the American automobile industry. They do have their faults I will admit that but I STILL do not believe you understand the complexity of the problem.
By the way, I DO ascribe to "due diligence". Please don't confuse that with "analysis" paralysis".
If I were a betting man I would say that the alternative supply negotiations (China) are part of Delphi strategic plan. Who knows they may already be in the pipeline.
Eventually all but perhaps a couple Delphi plants will be overseas. I'm at the point I hope Delphi, goes belly up. :mad: Delphi will close the plants eventually, regardless what the UAW gives up. :sick:
I guess anymore it doesn't matter. We are like mice in a maze. This country is going down the drain. I really hope someday this country will turn itself around. I predict I won't get the oppertunity in my lifetime to see it. :sick:
...probably envy their parents and grandparents. Back in the day, each generation most likely did better than the one preceeding it. Today, each succeeding generation will likely do worse than the one before. I'm sure we're only two or three generations from an America that resembles a third-world banana republic. Future generations will look at the remains of industrial America as we look upon the ruins of ancient Rome or Greece and ponder those who built and then lost such a great civilization.
Now that Delphi has filed a request with the BK court to void the contracts with the UAW and with GM, will this start a chain reaction? The UAW had threatened to strike if Delphi attempted to void the contracts. A strike at Delphi could severely affect production at GM and lead to a BK filing by GM. But, is that such a bad thing in the long run?
It is going to require a whole lot more than just reducing labor and health and retirement costs for GM to recover. GM needs to build the vehicles that consumers want. In some cases, it is. It is strong in full-size pickups and big SUVs. Cadillac has become a player once again. And the Corvette is a strong niche player. But what about all the rest of the nameplates?
GM will have to take extreme measures to have a shot at fixing its North American business. The first thing it needs to do is determine what it really wants to be. Should GM continue to try to be a full spectrum manufacturer, making everything from luxury cars to economy cars, small cars to big cars and SUVs and trucks? Should it focus on what it is doing well and abandon the rest? Or should it choose a middle course of continuing with what it is doing well at as well as drastically streamlining the rest of the product line?
I recommend the middle course. Sales of SUVs and trucks and Cadillacs are not going to be enough to cover the losses from the rest of the product line. GM needs to admit to itself that for at least the next five to ten years its market share is not going to increase and that, if it doesn't take drastic action now, that market share is going to continue to decrease. So, it needs to permanently reduce capacity and it needs to consolidate models in order to shrink its cost structure.
So, to the question of whether a strike at Delphi helps or hurts GM, I say it will help GM. After Delphi strikes, GM files for bankruptcy. Then, GM files with the BK court to void contracts with the unions as well as with its dealers. And then GM slashes redundant models and consolidates brands. And finally, GM needs to develop the vehicles that consumers want to buy instead of continuing to focus on the vehicles that GM wants to build.
As I said here before. When GM has an indication of a possible component supply issue a team starts looking at what can be done to keep the plants going. I am sure when Delphi started talking bankruptcy Purchasing was talking to Delphi and looking at other sources. Sounds like Delphi was also looking at other sources themselves to keep the business one way or the other. Now that the Delphi union is digging in the closing of plants starts.
Well our wondeful politcians have more important issues, like deciding if Barry Bonds took steroids. MY GAWD, I'm sick and tired of this issue. Barry issue Vs. Delphi Issue. Seriously which one matters most and has the most consequences on X amount of people. :confuse:
I will not argue your points. The corporation is well aware of the road that lies ahead. Unfortunately the most expedient way to do that is to file chapter 11. When divested of the constraints of the contracts and legacy costs it really can do something.
If you think that won't have an impact on the national economy I think you are dreaming. The state's operational tax budget could be severely hampered with this move. I guess a loss of 28-32% in operating revenues. Stocks will fall for about two years if BK is taken as an option. The real estate bubble in this state will implode and population centers such as Detroit will see a tremendous increase in crime. This WILL reach out to the SE Michigan Region.
"Neither the politicians nor Barry Bond have absolutley anything to do with Delphi or the UAW."
Agreed. Why in the heck do we think things would be BETTER if politicians stuck their nose into the business affairs between the UAW and Delphi? Or between the UAW and GM for that matter?
I think the only reason why anyone would WANT politicians involved would be if they felt that UAW pressure (all those Union votes) would make the politicians see things THEIR way.
Personally, I think the less involvement of politicos into the internal negotiations between management and labor the better.
I gauge what politicians SHOULD be involved in on this basis: what issues would cause the least damage to this country if they were screwed up by politicians. And then ask yourself what are the chances they'll screw up any given issue. You may find that the more mundane, inconsequencial issue they can entertain themselves with, the better.
GM needs to admit to itself that for at least the next five to ten years its market share is not going to increase and that, if it doesn't take drastic action now, that market share is going to continue to decrease.
GM needs to realize that its market share will continue to decrease no matter what it does, until it completes the transition from being the biggest fish in a small pond to being one fish among a few dozen in a much bigger pond. They *should* be planning a glide path to equilibrium at 12-15% US market share (about 8-10% being trucks and large SUVs), but hubris has them entertaining ridiculous fantasies of regaining a third of the market or more.
The solutions you were talking about (brand reduction) were discussed at length at a strategic level for the past 15 years. I imagine it was the topic of review repeatedly on Wagoners watch as well. Each time the analysis of financial obligations incurred for that type of move made it prohibitive.
If memory serves, GM ended up paying roughly $500 million in cash to cut Olds loose. (It took more accounting charges than that, which help to create tax shield for the net expense, so the actual net outlay after taxes would have been lower than this.)
In contrast, GM has spent about $8 BILLION on bad M&A deals, with FIAT merely being the crown in the jewel.
The funny thing is that an insightful management team could have taken a fraction of that $8 billion, and instead of flushing it down the SAAB-FIAT-Isuzu hole, dedicated it to consolidating the dealer network and reducing nameplates. That in turn would have created increased efficiencies which would have freed up its $6-7 billion annual R&D budget to focus on creating three killer cars in popular consumer segments (I'd pick the compact Civic/Corolla and mid-sized Accord/Camry/Altima classes, leaving a third for a wild card, perhaps to create a new class that would make GM unique for a time, ala Chrysler's early monopoly on the minivan).
You don't seem to understand that these divisions and nameplates cost more money to perpetuate than they would to kill off. GM has three times the number of nameplates that Toyota does, a burden which is invariably going to reduce efficiency and increase costs. Other than shortsightedness and a lack of courage, can you think of a single reason why this disparity should have been continued for as long as it has?
Not that long ago a husband made enough money to support his family nicely. Mom stayed at home and the kids did not run the streets getting in trouble. We did not have all the fancy gadgets of today. We did have a home enough to eat and decent clothes. I'm not sure we are making any progress. I had as much fun learning to drive in our 1949 Packard. I had a lot of fun in my first car a 1947 Pontiac convertible. Maybe we need to go down a notch or two.
To answer the question: Yes, I think Delphi filing will cause the dominoes to fall. When all the dust settles, however, I think GM will survive, but in a different form, and the UAW will be history. Say goodbye to gold-plated benefits, boys. Lots of smart, hard working people in this country, but the union weight -- no incentives among workers and a HUGE retirement pool -- is too much for any company to bear. Doesn't matter whether GM's management is filled with 170 IQ types or chimps, the odds are stacked too much against the company. I've fought FOR unionization in my past, but the UAW is simply way way WAY out of touch with reality. I think they're going to get a wakeup call.
We did not have all the fancy gadgets of today. We did have a home enough to eat and decent clothes. I'm not sure we are making any progress. I had as much fun learning to drive in our 1949 Packard. I had a lot of fun in my first car a 1947 Pontiac convertible. Maybe we need to go down a notch or two.
Don't forget we walked one mile to school in rain, shine, snow, ice every day and never were driven in a car.
Was 1949 about the time when huge physical computers were intoduced to business world? Think about progress, evolvement of computers, telecom, internet, robotics, medicine, surgery, etc and improvements in productivity in last half century. If astute observer in 1949 could have known level of sophistication in 2006, they would have said that workers in 2006 would only have to work 3 days per week at most. UAW would be negotiating today to reduce 8-hour work day in three-day work week to 7 hour days. Problems we would face in 2006 would be how to use all of our leisure time so as not to be bored.
From time-to-time there are stories of a family that lives on one income, but frugally and without gadgets. Of course there are the Amish that are gadgetless. Wonder if these folks lead more fulfilling lives then those with McMansions, newer 3-4 vehicles with NAVI of course, all latest gadgets such as 80 inch LCD HDTV, summer home, etc.
UAW would be negotiating today to reduce 8-hour work day in three-day work week to 7 hour days.
What happened to all that talk of a 4 day work week back in the 1960s? Now you have to work two jobs 6-7 days a week to survive in places like NYC & CA.
Rare example: Our best friends live on one income with 6 children still at home. NO TV and they drive around in a big old van. All are home schooled and twins just accepted into college. It can be done with a lot of sacrifice. No frivolous spending.
What happened to all that talk of a 4 day work week back in the 1960s? Now you have to work two jobs 6-7 days a week to survive in places like NYC & CA.
What happened was that the US was opened up to cheap imports from the whole world. While we bask with $5 toys and $10 gadgets the rest of the world slowly increases their standard of living while the US manufacturing went out of business. To keep up we worked harder and harder and longer. Not to say many have not done well but many have fallen behind.
What happened was that the US was opened up to cheap imports from the whole world. While we bask with $5 toys and $10 gadgets the rest of the world slowly increases their standard of living while the US manufacturing went out of business.
Heard that some trades people such as electricians, carpenters and drywallers are being undercut and underbid by illegal immigrants. Wonder if these trades covered by unions anywhere and what influence large unions such as UAW, though not in their purview, might have on this situation.
That would probably be more true in the southern/western states. We do see a lot of mexican folks here in Michigan in the summer working for the landscapers. No idea if they are legal or not.
to be a management combo of socal and george35 to turn this company around. And what I mean by that is, there's a need to shake things up and I believe these two can get to the root cause of the problems and most importantly, implement solutions.
Though GM is "upset" that Delphi is in-route to cancel the contracts, the powers that be should have known that was Miller's plan from the get go.
Also, the announcement of the plant closures shouldn't be a shock; again, Miller darn near came right out and said that was going to happen. They already were shifting more production and setting up for this event. As stated in an earlier post, as soon as Delphi filed BK, most likely before, GM Purchasing was making sure Delphi had contingency plans to get parts in from the non-US plants.
The R&D and Olds cost figures are available in GM's own annual reports.
The FIAT figures have been widely reported -- I only included the combined $4.4 billion cost of putting the deal together and severing it four years later. The remainder are estimated costs of acquiring SAAB, Isuzu, Suzuki, Subaru, etc.
The thing is, I may have lowballed it. This Forbes columnist noted in this October 2005 commentary that his prior estimated loss of $16 billion may have been conservative -- "The Masters Of Disaster":
Companies do not like to admit failures, no matter how much they cost, because they might pierce the mystique of the chief executive officer. Management perpetuates its mistakes in the hope that something positive will eventually happen, but what usually occurs is an eventual day of reckoning and a big write down.
The "alliance" strategy of General Motors is such a disaster. This is its tactic of buying pieces of foreign automakers: Subaru, Suzuki and Isuzu in Japan, Fiat in Italy and Saab in Sweden. The theory behind the GM "alliances" was faulty to start. Owning a piece of a foreign automaker does not give a company a serious inroad into the Japanese or European markets. At one time, I calculated these investments cost GM $16 billion. Now, I think that my estimate was too small.
It would be a wonderful exercise for GM's Chief Financial Officer, Vice Chairman John Devine, to assign some bright people to calculate the true cost of GM's failed automotive investments. This would have to be what I call a "hard" study: That is, the point would be to show the cost of folly, rather than the usual whitewash exercise to prove that these investments made sense.
For example, there would have to be a calculation of the "opportunity cost," meaning what all else GM could have done with all that money. Remember, the investment in Isuzu began in 1971, almost 35 years ago. In Suzuki, it started in 1981, in Saab more than a decade ago. That's a lot of opportunity cost, and a lot of money that GM could have used to design and build better vehicles. Or perhaps, to have saved Oldsmobile. Heck, GM would have even been better off just parking its cash in money market funds.
Most important, Mr. Devine should look past the official spin control and take a critical look at all the benefits that management says the company accrued from all those foreign stakes. For example, GM often excuses the Fiat disaster (maybe $5 billion-plus down the drain) by bragging about the wonderful diesel engines that it is getting for its European Opel cars. GM could have saved a lot of money by just buying these motors from Fiat or setting up a joint production venture, as Ford Motor did with Peugeot.
This punchline at the end of the article sums things up nicely: It's part of the sad story of Detroit's efforts to compete internationally by buying instead of creating.
No, more coming. Attrition will not get the 7%. Like I said before, new trucks are about done, Epsilon will be done overseas, Daewoo will do the future smaller cars. Crossover trucks will be out in a few months. Not much left but Zeta?
From the macro point of view of the U.S. economy, we need to remember that the cheap import is helping the U.S. inflation contained. The U.S. workers are giving away jobs that can be done by foreigners, from its own economic benefit as consumers. Unfortunately, auto assembly work can be done at foreign plants.
$16 billion?? Even if the management had lost $160 billion on bad deals, the positive cash reserve would still mean that they made enough good deals to offset the bad ones . . . even after paying for the dead weight that is union benefits for decades. Domestic carmaking, the part of the busines that involves the union, has been a money loser for decades. If not for the money the "shirts" raked in from running the financing arm and periodicly selling off successful non-core business ventures that GM judiciously invested, the company would have been bankrupt long time ago, and no money would have been avaiable to pay for the lavish union expenditure for decades. The primary fault of the GM management is that, they should have refocused the business onto something other than the labor-intensive low-margins legacy carmaking business, like GE did.
There is no evidence whatsoever that the killing off of Olds has benefited the company in any way or shape; the return from killing of another division is even less tangible.
Union supporters keep harping about GM should focus R&D effort on making a successful small car . . . never mind that GM has not had success with small cars in three decades! The labor structure makes domestic small-car making unprofitable because small cars have higher labor to material cost ratio due to part-count not scaling with vehicle size and the all-important sale price. Never mind after a short blip late last year, the big vehicles are once again the money makers first quarter this year. . .
Just by reading this forum, one can easily conclude that GM could have had far worse management than it actually has been having ;-) Frankly, I think GM shareholders should just sell the whole domestic carmaking side of the business to the union for $1 like the way BMW got rid of Rover.
What happened was that the US was opened up to cheap imports from the whole world. While we bask with $5 toys and $10 gadgets the rest of the world slowly increases their standard of living while the US manufacturing went out of business. To keep up we worked harder and harder and longer. Not to say many have not done well but many have fallen behind.
IMHO, that is a common misconception being promoted by some politicians for political reasons. Foreign imports can only sell if they are either of higher quality than domestic production or sell at lower price (except for in cases where they achieve cult status like MB, low quality and high price, but that is so exceptional as to be quite irrelevent to the general discussion). How can domestic living standard drop when there is an infusion of foreign subsidy of consumers? It's like saying, if your town was previous in a draught, 10% of the population had to work for drilling wells and pumping water . . . now suddenly there is sustained rainfall filling up the resevoir . . . free water way under-cutting the pumped water in price, how can that be a negative on the town's standard of living? Yes, the well drillers are out of business, but are the towns folks worse off overall?? I don't think so.
If cheap imports were indeed a bad thing to the local population, why would we even bother sending aid food or clothing to any foreign country or disaster areas?
Goes to show that "feeling like being part of the family" is a double-edged sword . . . someone actually was running the business as if it were his own family fief!
GM is going to bankruptcy because of the UAW. There's no why GM can get out of chapter 11. Unless they Boot the UAW. Still even thou they get rid there Union GM will have a hard road ahead of them. If GM goes to bankruptcy the US economy might not be so good. IF GM goes into bankruptcy they might not sale GM IN the US but they might still be in business in Asia and Europe.:sick: :sick: :sick:
In a previous life, I used to work for a leading US investment bank, based in Tokyo. In early 90s, we tried our best to sell companies to Toyota (it was already hugely cash rich then, and was worried about political back lash in the US due to exports from Japan). We had a number of meetings with their management, they would sit through our presentations with a wooden face, and instead of discussing the valuation / benefits of financial leverage, would focus on the technological competence of the work force (of the target company), which would drive us nuts. We even brought in our heavy guns, the guys who were advising GM and Chrysler, and I remember on of these experts exclaiming "These Japanese companies just don't get it, do they? They are going to get their asses kicked by US companies"
Fifteen year later, it seems that the dour, dull looking Toyota managers may not have been that stupid after all....
By the way, at a recent meeting with analysts (in Tokyo), Katsuaki Watanabe, President of Toyota, said that profitability was currently depressed as Toyota was investing hugely in manufacturing capacity growth as well as new technologies (e.g. Hybrid power trains), but that this would "level off after two three years" at which point profitabilty would improve.
Does not sound like Toyota is overstating its profitabilty...
Comments
I'll bet the bigger catastrophe will come from the loss of morale and productivity from the workers who remain, the vast of majority of whom probably did a decent job and exhibited greater loyalty to their employer than their employer would ever extend in return.
It can't be a joy to go into work each day when that day might end up with a security escort and a quick kick to the curb after years of loyal service. If GM is going to turn itself around, it is going to need talented people to do it, not people who are running scared and hiding under their desks hoping not to attract the ax.
Of course it will. There will be a huge amount of people losing their jobs.
Think we'll see many board members of poorly managed corps being removed this way? They'll stop in and their access card won't work and they'll be given a box and escorted away?
2014 Malibu 2LT, 2015 Cruze 2LT,
Making your point by suggesting doomsday scenarios isn't going to help anyone take your arguements seriously either.
What also didn't help was the insulation of the favorites - they were all left alone. The only problem was the favorites didn't do their jobs to begin with, so when the workers were let go, no one was left to do the work.
Company filed BK within 2 months after that lay-off at the office. Won't get into that but let's just say the underhandedness continued. In comparison to what's going on @ Delphi, Miller's an angel.
What also didn't help was the insulation of the favorites - they were all left alone. The only problem was the favorites didn't do their jobs to begin with, so when the workers were let go, no one was left to do the work.
Company filed BK within 2 months after that lay-off at the office. Won't get into that but let's just say the underhandedness continued. In comparison to what's going on Delphi, Miller's an angel.
Unfortunately, you've described an all-too-common pattern. I'm sure you know that this is often an indicator of top-heavy management structure in which the chief executives are so insulated with the rank-and-file and middle management that they refuse to hear their knowledge or feedback (i.e. one of the reasons that they were on the payroll in the first place), and then use it to the benefit of the company.
If I was GM's CEO, I would have done something similar to this:
-First, I'd identify the few employees who genuinely suck, and send them packing. Give them a benefits payout and a headhunter, and kiss them goodbye.
-Take the rest of the employees are presumably good or pretty good, and have a meeting hosted by Wagoner and the top brass. Make it an in-person meeting, even if that means getting on some airplanes and making it a road show. Sit the employees down in a room and tell each of them that they have 120 days to develop a coherent, concise but factually-based business plan that they would advise that the company to use to achieve a turnaround, along with a seven-year forecast to match. The plans can be done individually, or otherwise managers can get together with each other to form teams of up to 5-7 people in order to prepare their plans. Fire them up, and let them know that good ideas will be adopted, and that those who develop good plans will have a hand in implementing those ideas. Their plans should include their areas of expertise (engineering, marketing, etc.), but put that in the context of the overall goals of profitability and increasing market share. Those whose plans are poorly constructed or fail to address basic systemic issues with the company won't be staying on board following this business planning session.
That process may seem cumbersome, but it would distinguish the visionaries with motivation fron the pencil pushing order takers and old-school Kool Aid guzzlers, and would readily identify those who have the mindset best suited to leading a turnaround. It would also mine the employees for a lot of ideas that probably needed to be heard long ago and identify who has the big picture mentality to go the distance, while also making it fairly clear who is too mediocre, uninspired or tunnelvisioned to help make the grade in a leaner, meaner company.
Will any of this happen? No, of course not, GM top management seems to live on a pedestal of its own design, and has decided that cost cutting is the optimal way to go, even though no company can be made profitable strictly by cost cutting if there are no products to match or if the remaining employees don't have the will to continue. If GM was a smaller firm, it would have imploded a long time ago, it's simply its sheer size and weight that has allowed it to continue for as long as it has.
Thank you for your comments. But,I feel you lack an appreciation of the problems on hand. This is not a case study in your local MBA program. It is decidedly much more complex. The house cleaning ,"leaning out", communication workshops (Go Fast) you are talking about have been taking place in the salaried ranks for about the last decade. (As for the Union half management CANNOT change what they NEED to. The union will not allow it.) History is just that. You can't go back and change it. We all know the problems of misdirected management goals, over capacity,labor distrust, product stagnation just to mention just a few. The resulting unintended consequences are yet to come in full force throughout the industry. Chapter 11 is a real possibility.
I have yet to see anyone make a suggestion that addresses the root causes of the problem and a viable solution. No, I do not have one but this is far from a case study . You HAVE to make it work. That is the "tough part"! Since I presume you are a large stockholder......let em' know how to do it or at least tutor York.(Do you have anything in the way of a background in the auto industry ? Your solutions are theoretical but lack some real world tempering.) Please correct me if I am mistaken.
My guess is that the Delphi filing for cancelling the union contracts will be postponed again. This time by the Judge in the case. Let's see if I am right.
-Control expenses
-Collect the money that people owe you
-Get rid of and/or sell off extraneous products, assets and obligations that either suck margins or create a distraction
-Hire people dedicated to turning the business around and who have the mentality and guts to do it
-Create products and services that customers want
Cutting bodies is not enough, you need to cut the right bodies. The GM defenders on this thread who support the status quo, blame the consumer/Japanese/dollar/etc. would be the very first on my termination list, because they are the classic excuse makers who fail to recognize problems or see a solution that lies in their hands.
The purpose of the business planning process is to get managers to see that each of them is either part of the solution or part of the problem. I suspect that the good ones remaining have been so stiffled by GM groupthink that they have been unable to be heard until now, and those people need to be identified and heard. By forming their own teams of their own choosing, you will soon learn who knows what, who can work with whom, and who is willing to stick their necks out when times are tough. In addition, it's about time that the company looked to its own people (the best of whom should be regarded as an asset, not an expense), and realized that the answers probably already lie in the hands of people currently on the payroll who know the business, understand what's wrong with it and would be happy to solve it if only they were given the chance. The rest of them need to get canned and replaced, so the competent can be left to drive the ship.
GM has failed because it has been far too big for its own good, and simply spent money on borrowed time until now, because it is nearly broke. Drastic solutions are now needed, meek solutions that get rid of a couple of cars or trim payrolls are by themselves not enough. I'd say that the industry hacks are part of the problem, not part of the answer.
Agreed.The tenets you have noted are all PART of a rational business analysis. You have however grossly misjudged GM's ability to identify those whose talents they can use. Rick is not as insulated as some people think nor is he that dumb.
As for size ? It is in the process of dramatic change and will continue. Have you seen some of the strategic thinking for the moves that are now taking place?
This whole rhetoric of team building, election of leaders from within is fine on a smaller scale with labor restraints abated. The companies that are just a few billion dollars strong MAY get it to work .However, if you do not have structural control of both salaried and union labor I doubt it will survive.
Where is the process of dramatic change that you're talking about? For the most part, I see a sea of low margin GM products that are sorely lacking and not highly competitive, an excessive number of nameplates, most of which should be punted sooner than later, and a sprawling dealer network that seems to largely be in the used car business. A few hopes on the horizon, such as Solstice, but those are the exceptions, not the rule.
Unless GM cuts the number of nameplates by at least half (preferably more), terminates large numbers of dealerships in favor of larger, more successful operators, and develops a few home-run products in key segments, it is likely to fail to reemerge as a major player. Higher oil prices could help to seal that fate, because the company is clearly not prepared to address that likely reality.
And a BK is inevitable, so you are seeing the last gasps of the union having any real power, the membership has already plummeted in size over the last couple of decades and remains on a downward trajectory, so I see no reversal on the horizon. You can go on about the union, but the union isn't the cause of most of the problems with product, distribution or branding that the management created for themselves.
I'll just pretend you didn't say that. It bears little on the subject at hand . The solutions you were talking about (brand reduction) were discussed at length at a strategic level for the past 15 years. I imagine it was the topic of review repeatedly on Wagoners watch as well. Each time the analysis of financial obligations incurred for that type of move made it prohibitive. (Read: Liabilities could have bankrupt the corporation back then.-CONTRACTUAL OBLIGATIONS) Your comments are a bit dated.
As for your assertion that Wagoner was the primary driver for the Fiat deal you are assuming a lot. He may have been the most visible one but the thrust was much broader than you can appreciate. But then again, leadership takes the fall regardless of what details are entailed.
Your rebuke of my assertions that GM changes are dramatic are flawed. I can only reply to wit:. "A bicycle IS easier to turn than a battleship " So what? It is not rational unless you do something catastrophic and can start over. It will just take GM longer. But then if your perspective of scale is THAT small anything is possible
. There are philosophical,cultural and economic structures at Toyota that American Manufacturers are very reluctant to adopt since it will change the accepted norm.
You are being very selective in your criticism of the TOTAL leadership of the American automobile industry. They do have their faults I will admit that but I STILL do not believe you understand the complexity of the problem.
By the way, I DO ascribe to "due diligence". Please don't confuse that with "analysis" paralysis".
I guess anymore it doesn't matter. We are like mice in a maze. This country is going down the drain. I really hope someday this country will turn itself around.
Rocky
It is going to require a whole lot more than just reducing labor and health and retirement costs for GM to recover. GM needs to build the vehicles that consumers want. In some cases, it is. It is strong in full-size pickups and big SUVs. Cadillac has become a player once again. And the Corvette is a strong niche player. But what about all the rest of the nameplates?
GM will have to take extreme measures to have a shot at fixing its North American business. The first thing it needs to do is determine what it really wants to be. Should GM continue to try to be a full spectrum manufacturer, making everything from luxury cars to economy cars, small cars to big cars and SUVs and trucks? Should it focus on what it is doing well and abandon the rest? Or should it choose a middle course of continuing with what it is doing well at as well as drastically streamlining the rest of the product line?
I recommend the middle course. Sales of SUVs and trucks and Cadillacs are not going to be enough to cover the losses from the rest of the product line. GM needs to admit to itself that for at least the next five to ten years its market share is not going to increase and that, if it doesn't take drastic action now, that market share is going to continue to decrease. So, it needs to permanently reduce capacity and it needs to consolidate models in order to shrink its cost structure.
So, to the question of whether a strike at Delphi helps or hurts GM, I say it will help GM. After Delphi strikes, GM files for bankruptcy. Then, GM files with the BK court to void contracts with the unions as well as with its dealers. And then GM slashes redundant models and consolidates brands. And finally, GM needs to develop the vehicles that consumers want to buy instead of continuing to focus on the vehicles that GM wants to build.
Painful? Absolutely! Necessary? Yes!
Rocky
http://www.forbes.com/work/feeds/ap/2006/03/31/ap2637076.html
http://www.mlive.com/news/sanews/index.ssf?/base/news-18/1143818406120570.xml&co- ll=9
Rocky
If you think that won't have an impact on the national economy I think you are dreaming. The state's operational tax budget could be severely hampered with this move. I guess a loss of 28-32% in operating revenues. Stocks will fall for about two years if BK is taken as an option. The real estate bubble in this state will implode and population centers such as Detroit will see a tremendous increase in crime. This WILL reach out to the SE Michigan Region.
Hold your breath !
Agreed. Why in the heck do we think things would be BETTER if politicians stuck their nose into the business affairs between the UAW and Delphi? Or between the UAW and GM for that matter?
I think the only reason why anyone would WANT politicians involved would be if they felt that UAW pressure (all those Union votes) would make the politicians see things THEIR way.
Personally, I think the less involvement of politicos into the internal negotiations between management and labor the better.
I gauge what politicians SHOULD be involved in on this basis: what issues would cause the least damage to this country if they were screwed up by politicians. And then ask yourself what are the chances they'll screw up any given issue. You may find that the more mundane, inconsequencial issue they can entertain themselves with, the better.
GM needs to realize that its market share will continue to decrease no matter what it does, until it completes the transition from being the biggest fish in a small pond to being one fish among a few dozen in a much bigger pond. They *should* be planning a glide path to equilibrium at 12-15% US market share (about 8-10% being trucks and large SUVs), but hubris has them entertaining ridiculous fantasies of regaining a third of the market or more.
If memory serves, GM ended up paying roughly $500 million in cash to cut Olds loose. (It took more accounting charges than that, which help to create tax shield for the net expense, so the actual net outlay after taxes would have been lower than this.)
In contrast, GM has spent about $8 BILLION on bad M&A deals, with FIAT merely being the crown in the jewel.
The funny thing is that an insightful management team could have taken a fraction of that $8 billion, and instead of flushing it down the SAAB-FIAT-Isuzu hole, dedicated it to consolidating the dealer network and reducing nameplates. That in turn would have created increased efficiencies which would have freed up its $6-7 billion annual R&D budget to focus on creating three killer cars in popular consumer segments (I'd pick the compact Civic/Corolla and mid-sized Accord/Camry/Altima classes, leaving a third for a wild card, perhaps to create a new class that would make GM unique for a time, ala Chrysler's early monopoly on the minivan).
You don't seem to understand that these divisions and nameplates cost more money to perpetuate than they would to kill off. GM has three times the number of nameplates that Toyota does, a burden which is invariably going to reduce efficiency and increase costs. Other than shortsightedness and a lack of courage, can you think of a single reason why this disparity should have been continued for as long as it has?
Not that long ago a husband made enough money to support his family nicely. Mom stayed at home and the kids did not run the streets getting in trouble. We did not have all the fancy gadgets of today. We did have a home enough to eat and decent clothes. I'm not sure we are making any progress. I had as much fun learning to drive in our 1949 Packard. I had a lot of fun in my first car a 1947 Pontiac convertible. Maybe we need to go down a notch or two.
Don't forget we walked one mile to school in rain, shine, snow, ice every day and never were driven in a car.
Was 1949 about the time when huge physical computers were intoduced to business world? Think about progress, evolvement of computers, telecom, internet, robotics, medicine, surgery, etc and improvements in productivity in last half century. If astute observer in 1949 could have known level of sophistication in 2006, they would have said that workers in 2006 would only have to work 3 days per week at most. UAW would be negotiating today to reduce 8-hour work day in three-day work week to 7 hour days. Problems we would face in 2006 would be how to use all of our leisure time so as not to be bored.
From time-to-time there are stories of a family that lives on one income, but frugally and without gadgets. Of course there are the Amish that are gadgetless. Wonder if these folks lead more fulfilling lives then those with McMansions, newer 3-4 vehicles with NAVI of course, all latest gadgets such as 80 inch LCD HDTV, summer home, etc.
What happened to all that talk of a 4 day work week back in the 1960s? Now you have to work two jobs 6-7 days a week to survive in places like NYC & CA.
Rare example:
Our best friends live on one income with 6 children still at home. NO TV and they drive around in a big old van. All are home schooled and twins just accepted into college. It can be done with a lot of sacrifice. No frivolous spending.
What happened was that the US was opened up to cheap imports from the whole world. While we bask with $5 toys and $10 gadgets the rest of the world slowly increases their standard of living while the US manufacturing went out of business. To keep up we worked harder and harder and longer. Not to say many have not done well but many have fallen behind.
Heard that some trades people such as electricians, carpenters and drywallers are being undercut and underbid by illegal immigrants. Wonder if these trades covered by unions anywhere and what influence large unions such as UAW, though not in their purview, might have on this situation.
Though GM is "upset" that Delphi is in-route to cancel the contracts, the powers that be should have known that was Miller's plan from the get go.
Also, the announcement of the plant closures shouldn't be a shock; again, Miller darn near came right out and said that was going to happen. They already were shifting more production and setting up for this event. As stated in an earlier post, as soon as Delphi filed BK, most likely before, GM Purchasing was making sure Delphi had contingency plans to get parts in from the non-US plants.
Crumble, crumble :sick:
The FIAT figures have been widely reported -- I only included the combined $4.4 billion cost of putting the deal together and severing it four years later. The remainder are estimated costs of acquiring SAAB, Isuzu, Suzuki, Subaru, etc.
The thing is, I may have lowballed it. This Forbes columnist noted in this October 2005 commentary that his prior estimated loss of $16 billion may have been conservative -- "The Masters Of Disaster":
Companies do not like to admit failures, no matter how much they cost, because they might pierce the mystique of the chief executive officer. Management perpetuates its mistakes in the hope that something positive will eventually happen, but what usually occurs is an eventual day of reckoning and a big write down.
The "alliance" strategy of General Motors is such a disaster. This is its tactic of buying pieces of foreign automakers: Subaru, Suzuki and Isuzu in Japan, Fiat in Italy and Saab in Sweden. The theory behind the GM "alliances" was faulty to start. Owning a piece of a foreign automaker does not give a company a serious inroad into the Japanese or European markets. At one time, I calculated these investments cost GM $16 billion. Now, I think that my estimate was too small.
It would be a wonderful exercise for GM's Chief Financial Officer, Vice Chairman John Devine, to assign some bright people to calculate the true cost of GM's failed automotive investments. This would have to be what I call a "hard" study: That is, the point would be to show the cost of folly, rather than the usual whitewash exercise to prove that these investments made sense.
For example, there would have to be a calculation of the "opportunity cost," meaning what all else GM could have done with all that money. Remember, the investment in Isuzu began in 1971, almost 35 years ago. In Suzuki, it started in 1981, in Saab more than a decade ago. That's a lot of opportunity cost, and a lot of money that GM could have used to design and build better vehicles. Or perhaps, to have saved Oldsmobile. Heck, GM would have even been better off just parking its cash in money market funds.
Most important, Mr. Devine should look past the official spin control and take a critical look at all the benefits that management says the company accrued from all those foreign stakes. For example, GM often excuses the Fiat disaster (maybe $5 billion-plus down the drain) by bragging about the wonderful diesel engines that it is getting for its European Opel cars. GM could have saved a lot of money by just buying these motors from Fiat or setting up a joint production venture, as Ford Motor did with Peugeot.
This punchline at the end of the article sums things up nicely: It's part of the sad story of Detroit's efforts to compete internationally by buying instead of creating.
Union supporters keep harping about GM should focus R&D effort on making a successful small car . . . never mind that GM has not had success with small cars in three decades! The labor structure makes domestic small-car making unprofitable because small cars have higher labor to material cost ratio due to part-count not scaling with vehicle size and the all-important sale price. Never mind after a short blip late last year, the big vehicles are once again the money makers first quarter this year. . .
Just by reading this forum, one can easily conclude that GM could have had far worse management than it actually has been having ;-) Frankly, I think GM shareholders should just sell the whole domestic carmaking side of the business to the union for $1 like the way BMW got rid of Rover.
IMHO, that is a common misconception being promoted by some politicians for political reasons. Foreign imports can only sell if they are either of higher quality than domestic production or sell at lower price (except for in cases where they achieve cult status like MB, low quality and high price, but that is so exceptional as to be quite irrelevent to the general discussion). How can domestic living standard drop when there is an infusion of foreign subsidy of consumers? It's like saying, if your town was previous in a draught, 10% of the population had to work for drilling wells and pumping water . . . now suddenly there is sustained rainfall filling up the resevoir . . . free water way under-cutting the pumped water in price, how can that be a negative on the town's standard of living? Yes, the well drillers are out of business, but are the towns folks worse off overall?? I don't think so.
If cheap imports were indeed a bad thing to the local population, why would we even bother sending aid food or clothing to any foreign country or disaster areas?
Fifteen year later, it seems that the dour, dull looking Toyota managers may not have been that stupid after all....
Does not sound like Toyota is overstating its profitabilty...