$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
Interesting observation: If a worker earns an additional $2 per hour, you get thrown into a lather. But have a group of managers with multi-million dollar salary packages lose several billion dollars, and everything's A-OK.
I'm curious from where you got that accounting lesson. My guess that it's either The Fountainhead or Atlas Shrugged (neither of which I recall being on my B-school reading list...)
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.
Well, let's see: Olds was a loser of money and market share for quite some time.
What will GM lose on Olds sales next year? Zero. What will GM lose on marketing tired Olds products next year? Zero. What will GM lose on supporting the Olds dealer network next year? Zero.
Not paying for Olds frees up resources to be dedicated to making some of the remaining badges and nameplates stronger, which one would hope could be returned to profitability. That being said, whether GM's management will actually bother doing that is an entirely different matter. I have my doubts that they'll pull it off. Controlling costs is important to turning any bad business around, but without products to match, the cuts only prolong the inevitable.
LOL. Seriously Socala, you make a very great point !
So many americans look at what a hourly employees makes versus how much a CEO and his cronies loses in buisness decisions and/or makes in salary's. Why ?
I guess I'm not the only one who can see this. We however are the few that can. :confuse:
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.
That's the problem with M&A, as I'm sure you know -- just about any mature company that has acquired assets and debt capacity can look good if you stare at its balance sheet long enough. The problem with simply looking at the ratios out of context is that it doesn't tell you much about the future product and sales performance of the entity, nor the ability of the parent to marry the culture of that entity with the acquiring firm.
I don't believe Toyota is doing everything right, but it was smart for it to create its own brands, rather than buy other mediocre ones. It's hard for me to think of a mass market automaker that went up on the auction block during the 90's buying spree that it would have made sense for Toyota to have bought, at any price.
I guess I'm not the only one who can see this. We however are the few that can
Would you have agreed with socala4 if your dad was one of the thousands that lost their jobs when Oldsmobile was chopped? He preaches pro labor, while ripping management for not getting rid of more jobs. Hard to have it both ways.
Oldsmobile and Buick were to much alike due to managements inability to distinguish the brands. It had to be chopped or changed. If my father lost his job due to oldsmobile, he would of obviously had to move to another plant. If you don't do what's best for the company, then there will be no jobs left. GM management, has proven they are out of touch with what people want to drive. Trends change and it's managements responsibility to investigate these trends, so they aren't left in the dark. :shades:
He preaches pro labor, while ripping management for not getting rid of more jobs.
If GM was producing products that people wanted, there wouldn't be much need for job cuts. If GM management handles things competently (and don't hold your breath that it will), then the money saved by dumping poor performers will be more than made back by selling higher volumes of the remaining nameplates, which would be designed so that customers are actually happy to buy them, and wish to continue to buy them.
One thing I've been emphasizing here is creating a customer focus that allows GM to compete effectively. Unfortunately, management has bungled it so badly that now market share losses are probably inevitable going forward. They could turn it around if they simply sold better cars more efficiently, but I doubt that they will.
So many americans look at what a hourly employees makes versus how much a CEO and his cronies loses in buisness decisions and/or makes in salary's. Why ?
In my opinion, we have spent years developing a middle-class workforce of what I'll call gray-collar workers (they do fairly repetitive work, but inside of offices instead of on assembly lines) who erroneously believe that they are superior to the blue-collar worker, and who have forgotten that they are only a few paychecks away from poverty themselves. They identify more strongly with the elite than with the common worker, even though they have far less in common with the likes of Rick Wagoner than they do with Joe Sixpack.
The thing that they don't realize is most Americans will never join the elite, their best hope is that they buy a house in an improving market that can give them the illusion of prosperity, and to get enough credit card debt and borrowing capacity so that they can own stuff that they likely can't afford. Too many people with minimal resources and few skills seem to believe that having an interest-only mortgage and a car lease means that they have arrived and are above the fray, when they are just as dependent upon their jobs and the whims of their employers as is the assembly line worker whom they think is beneath them.
How would GM build a car comparable to the Camry paying wages and benefits, more than twice per hour of Toyota & Honda? I think GM should pull back on all but the vehicles that make them money. The PU trucks and large SUVs are still the best built by any maker. Let Toyota & Honda fight off Hyundai & Nissan for the low margin car market.
Well, let's see: Olds was a loser of money and market share for quite some time.
So have been many other divisions.
What will GM lose on Olds sales next year? Zero.
How is that any different from spreading what would have been Olds loss onto other divisions?
What will GM lose on marketing tired Olds products next year? Zero.
How is that any different from spreading what would have been Olds loss onto other divisions?
What will GM lose on supporting the Olds dealer network next year? Zero.
How is that any different from spreading what would have been Olds loss onto other divisions?
Also, your "zero" math is very wrong. One-time big write-off is no better off than small losses over time. There is opportunity cost associated with that $2 billion dollars spent on closing down Olds. Even at 5% a year, which is way below the borrowing cost of GM with its junk status, that is $100 million a year lost in interest income.
Controlling costs is important to turning any bad business around, but without products to match, the cuts only prolong the inevitable.
The products that could save the company are certainly not small cars like you have been suggesting. Small cars are a huge drain on cash so long as there is union labor price structure. Besides big vehicles, financial services, high-tech components and entertainment are probably what the company should have transitioned into over the past two decades, just like GE did . . . that would also have trimmed down union influence, again like GE did.
Toyota pays it's workers more in the form of wages and benefits in Japan then what GM pays it's workers here in the U.S.
BTW- Gagrice, Toyota assembly workers top wages are $21 bucks an hour at the San Antonio, Tx Tundra plant. They start out more per hour $15.25 then new Delphi workers. After training is complete they go up to $21 an hour from what a friend of mine said. He went through 3 interviews.
Supervisors (Team leaders) make $22. So yes GM workers when compared to Toyota workers make more. (old tymers) However cost of living in the south somewhat makes it comparable. The biggest difference between the two is retirements. This has already been resolved since new workers only get 401K's. I suppose if GM goes belly up or moves all operations to China, then us buy american crowd won't have a choice but to root for the Japanese (new american domestic) car company's. Our Big 3 might look like this. Toyota, Honda, Nissan. :surprise:
Interesting observation: If a worker earns an additional $2 per hour, you get thrown into a lather. But have a group of managers with multi-million dollar salary packages lose several billion dollars, and everything's A-OK.
I'm curious from where you got that accounting lesson.
No accounting lessons necessary. Just second grade arithmatics will do. How many managers have multi-million dollar salary at GM? 5 or 10 or 0? Wagoner's own salary is only $2 million a year, which he is voluntarily cutting in half, so $1 million a year; not even Wagoner has a multi-million dollar salary. Whose salary is higher than Wagoner's? So the total expenditure on managers' non-existent multi-million dollar salary packages is ZERO!
Compared to that, billions were spent on excessive union salaries and benefits. With 650k members at UAW, annual union membership dues alone is close to half a billion dollars! Union members must be receiving at least 10 times if not 100 times the benefit from robbing the company and consumers before it makes sense to pay union dues.
Like I said, only 4th grade arithmatics is necessary, once you look beyond the hot rhetorics.
How would GM build a car comparable to the Camry paying wages and benefits, more than twice per hour of Toyota & Honda?
Just to add to your argument, how would GM build a car comparable to the Camry, when it can not incentivise or discipline indidividual workers? or even fire the real incompetent? How would GM bulid a car comparable to the Camry, when it can not retrain workers to adopt modern production techniques without myriads of red tape?
When GM is not facing those union imposed hurdles, it can indeed build a car to compete successfully against Camry; it already does in GM China.
Well you must of been held back. brightness with all do respect, your math is more fuzzy than John Kerry's and George Dubya Bush. 650K union members which you failed to list are mostly retired, and there dues are only 2 1/2 that of their hourly salary. It's worth every penny to have someone who is educated in labor law to step up to the plate and fight for a sliver of the pie. When uncle Rick was Presdient of GM North American Ops in the early 90's he was pulling down a million plus. He's always been very well compensated. The guy is a multi-millionaire and if I was to take a educated guess at his net worth it would be around $50 million give or take. I'd love to find out for sure though. Jack Welch who you love and admirer so much had a 1 billion dollar retirement plan. Hell it might of been ONLY $500 million. He was on 60 minutes several years back and the number I know was either or. I was like OMG :surprise: and Grandma who was a ex-employee said "Neutron Jack" always enjoyed a lavish lifestyle. She said during "contract" negotiations he would try to spoil union reps by feeding them steak and lobster, to attempt to soften what the union was asking for. She said "Neutron Jack" was nice but she said "ice water" flowed through his veins. he was very intimidating to the guys under him and wasn't afraid to use people as examples by replacing them while they were on vacation. She said management was always afraid of vacations, wondering if they would have a job when they got back. She said she felt sorry for them. Alot of them were good folks, that were doing a good job for the company, but when they reached a certain point in salary it seemed they were replaced. She also currently lives by ex-GE management and they offered their points of view to her. Many still conform to GE dress codes to this day because it was such a big part of their lives and is such a natural feeling.
My guess that it's either The Fountainhead or Atlas Shrugged (neither of which I recall being on my B-school reading list...)
B-school, eh?? I missed that earlier. So you are one of the much maligned "suits" yourself? ;-) Reading lists are quite off topic, but for what it's worth, Das Kapital offers much more econometrics than either Fountainhead or Atlas Shrugged. I would strongly recommend reading all three of them, plus Wealth of Nations, before drawing your own conclusions. At least, after acquiring some basic knowledge in socioeconomics, one would avoid making nonesense argument that free market produces serfdom; it's so far off the wall (even Das Kaptal had to introduce the institution of bougeoise-controlled state machinery before linking "capitalism" and "wage slavery"; in other words, the "capitalism" under discussion was "monopoly capitalism" not free market). No you did not make that argument, thank goodness, someone else did.
Toyota pays it's workers more in the form of wages and benefits in Japan then what GM pays it's workers here in the U.S.
I'm not sure that is relevant. It may be the reason Japan is building plants in the USA. The issue is comparing the total package for UAW workers and HonToy workers in the USA. I would say that it is just about double for the average UAW worker. Why else would they be offering $130k buyout? I know my health and retirement costs my employer $14.21 per hour. Something the HonToy is not shackled with. When Health care goes up they just tell the employee it will cost more for you to have healthcare. My point earlier and still is that even if GM had the best designed car in the CamCord class, they could not build it competitively with the current labor situation. The margins are too tight on cars. GM has no problem beating Toyota in every class of large SUV and PU trucks. The margins are much better and can absorb the higher cost of employees.
I actually agree with you that the union dues are worth every penny, to the union members! At least in the short run, before the company is bankrupt and consequently all union obligations are out of the window. Unions are just a rotten deal to the shareholders, consumers, and non-union workers, as all their property and fruit of labor are essentially robbed by a bunch of squatters.
It's easy to get lost in the histrionics, but let's get real, how much is steak and lobster for half a dozen people? How much is $1 million spread across 650k people? $1 dollar and a half! Can't even buy a cup of coffee! The total expenditure on executive lavishness, while tantalizing in news reports, is peanuts compared to across-board benefits and pay raises that cover hundreds of thousands of people.
I'm by no means endorsing executive lavishness; in fact, when they go overboard, there are laws waiting for them. In any case, it does not take away from the fact that, modest amount multipled hundreds of thousands times makes for huge sums of money. That's why free market is a much more efficient mechanims for deciding marginal pricing than collective bargaining, where billions of dollars could be influenced by $50 spent on steak and lobsters.
Well there you go again. :confuse: The UAW has allowed GM to use modern production techniques. Doing 3 jobs at once without taking a lunch break for many is common day to day. I don't understand where you get all these assumptions from ? :surprise: I agree that many plants don't employ "module building" because the workers don't have the modern equipment. The plants are very old and haven't been retooled with the latest and greatest techniques. The Chinese plants are new and modern, thus keeping "just in time delivery" a reality. I suppose having the old plants is the unions fault also. :confuse: Everything you find wrong with GM is the unions fault. My GAWD, you give the management, government, etc a free pass. Well you will get your wish for low costs since GM appears to be sending more facility's to China and Mexico. Why isn't GM importing cobalts from China yet to get your low cost small car that's of better quality. I suppose that's the unions fault too. :confuse:
Well there you go again. The UAW has allowed GM to use modern production techniques.
In exchange for "job banks," where workers are paid full salary to do nothing at all.
The Chinese plants are new and modern, thus keeping "just in time delivery" a reality. I suppose having the old plants is the unions fault also
As a matter of fact, yes. The cost of putting new plants in place would have been much much less if the company does not have to provide "job banks" for everyone who no longer has a place on the new production line.
Everything you find wrong with GM is the unions fault. My GAWD, you give the management, government, etc a free pass.
Not at all. Like I said, the management should have refocused the buiness away from domestic carmaking, thereby rendering union impotent . . . like GE did.
Well you will get your wish for low costs since GM appears to be sending more facility's to China and Mexico.
That might just be the only way possible for GM to keep its legacy commitment to UAW members . . . squeezing the sweat and blood of poor Mexicans and Chinese to feed the union . . . American consumers and non-union workers are surely not interested in feeding the union.
Why isn't GM importing cobalts from China yet to get your low cost small car that's of better quality. I suppose that's the unions fault too.
GM only started making small cars in China in the last few years after a long streak of success with big Buick sales. The market there seems to be absorbing all the output for now. Rest assured, GM will import cars from China, hopefully before Chinese brands do. Down the road, it's either the Chinese and Mexican workers support UAW retirees or the American taxpayers do through the Pension Guarantee Corp (with a more and more strigent cap).
I have a solution that many capatist don't like. The evil tariff solution. Americans can't and never will compete with slave labor country's like China and Mexico. In China they eat snakes, Monkey Brains, and live in shacks. The cost of living when compared to the U.S. is next to nothing. Do you want us as a nation to go to such poverty labor levels in a free market ? i can't agree with ya pal. I care to much about my fellow citizens and will fight against this mentality. This country is suppose to be the "standard of the world" and is where foreigners use to immigrate to live a better life. Many Americans aren't enjoying the "fruits" this country once offered. Instead they are working 3 jobs to make "ends meet". We work harder and it's still not enough, because of the huge gap between american and Chinese labor costs. The trickel down theory for China will take decades. I believe once they are wealthy enough, they will be the lone superpower. It could happen sometime in my lifetime that we are a 3rd world country. The roman empire lasted a thousand years, and we will be lucky to see 300 years. :sick:
What is the retirement formula rate of a UAW Staff member per month/per year of service in contrast to the base skilled trade rate he came from ? Why the difference ? This is not a trick question. (Staff is not JUST Gettlefinger and Shoemaker)
What would be the projected profit at GM with the same legacy costs and contractual obligations of the transplant foreign manufacturers in the U.S.(per vehicle)? What is the burden (for the Japanese)per vehicle if that same product is manufactured in Japan without Government Subsidy.?
What percentage of the population (In Japan) would even CONSIDER the purchase a Non-NIPPON vehicle. (Nationalist Attitude).
What percentage of the total (U.S) profits are used to subsize EXISTING legacy costs in JAPAN ?
I guess we just are on opposite sides of the fence. I obviously support unions and you of course don't. If I didn't have a union at my place of employement, I'd make around $6-7 bucks an hour less. Many employees where I work would be fired just because their supervisor doesn't like them. Our employer has had so many NLRB charges I can't even begin to guess the number over the last 4 years. :surprise:
my retired IUE union rep grandmother makes approx. $40,000 on retirement. She has to pay a portion for health insurance since their was some cuts in health benefits like optical and out of pockets in health and dental. She as a rep made around $80K with her travel perks which also included a car allowance. She was on the road all the darn time growing up. I did as a kid got to go to many hotels with her to swim in the hotel pools.
That's exactly it. GM doesn't produce cars that are desirable by most consumers.
Maybe for trucks and SUVs, but not for cars. And most definitely not for entry-level cars.
Without a highly desirable entry-level car, any automaker will have difficult garnering young buyers. Without young and satisfied car buyers, you'll not see a repeat customer. Nor see any of their friends, either.
Snakes are routinely sold in grocery stores in the American South and Southwest, like Texas and Arizona. I actually bought half a pound of rattle snake on a Fourth of July weekend in Boston about a decade ago because I had never tried snake meat in my life, even when I was growing up in China. I ended up tossing it away because I could not bring myself to eat it even after cooking it with the Southwest recipes.
You should really take a trip to China, and see for yourself just how far off from reality your characterization is. Even I was quite surprised at how far they have come along in terms of living standard. More Chinese households probably have large screen TV than Amerians households do; every single one of the distant relative families that I visited there had a larger screen TV than I do back in the US. None of them are among the wealthy there either. There is just such a huge upswelling of material wealth . . . it's mind boggling . . . almost like the first time I saw an American Supermarket when I left a poverty-stricken China behind nearly two decades ago; your description is much more appropriate for that old China under command-economy: everyone had a job, but there was a dearth of goods.
That kind of combination of job security and dearth of goods, result of noboy having any incentive to produce anything because their jobs were nearly 100% protected by the government, is not what I want for America. For UAW members, there is a problem even closer to heart: the only way GM can avoid bankruptcy, thereby pushing all retiree obligations to the Pension Guarantee Corp, is actually importing from China as quickly as it can. Using the benefit of cheap Chinese labor to pay for legacy union obligations.
As for cheap imports hurting the economy in general, that just makes no sense. Do you ever donate to charitable cause? I doubt the charities turn around to sell the goods to disaster relief area at prices higher than local production. The consumers are much better off with cheap imports even if domestic producers have to look for new ways of making a profit.
The roman empire lasted a thousand years, and we will be lucky to see 300 years.
Roman Empire lasted about four centuries. It was killed off by high taxation and inflation (another way of taxation). Roman Empire started to fall apart when their currency Dinar lost 98% of its value over 200 years (as the coin literally went from pure silver to 2% silver or less). Our currency the US Dollar lost 95% of its value since the 1913 Federal Reserve Act (gold was roughly $22/oz back then, as measured by the $20 coin being 1oz weight of 91% pure gold). Why the Federal Reserve Act? Because in a normal free market with free floating real cash (as in metal not Federal Reserve Notes), wages go down along with everthing else during productivity increases and economic expansion. Of course, the union members got very unhappy despite their reduced wages can buy the same amount of goods as before because all prices had come down too (sound familiar?). Enough rioting from the union and bankrupt companies from labor unrest convinced the politicians that we needed an ever-inflating currency. Not so co-incidentally, the "economic security" provided by the fiat paper currency also guarantees profit for the consortium of bankers issuing the currency and guaranteed that nations could wage wars beyond their financial means. As they say, the rest is history. We are 95% to zero ;-)
Ok brightness, do you think Americans will have the same loyalty to GM, if they import lets say Chinese Buicks from China ? I for one who will refuse, will be a new spokesmouth for Honyota. I will pee on those Chinese MB knockoff vehicles along with fintail and lemko. I will spit on the tires of GM and pray they crash and burn and hang Rick Wagoner by his toes and watch the golden eggs fall from his trousers. :mad:
An entry-level car has 80-90% of the part count of a large SUV, and sell for 30-40% the price. How can a company profitably make an entry-level car if its labor cost is high?
Americans are buying Canadian-built, Mexican-built and Korean-built Chevys just fine. Let's face it, like other posters mentioned, small cars are important in the marketing sense; the only ways GM can make small cars profitably, due to the high labor-to-material cost of small cars, are: (1) have small cars made in Mexico, Korea and China (2) drasticly cut domestic worker wages Which solution would you prefer? ;-)
Notice, Civic has long left the $10k price bracket ever since the Koreans came here.
GM dealer network will be a huge asset when it imports Chinese made cars. It took Hyundai and Kia over a decade to build up their national dealer network, and they are still very inadequate.
I will refuse still. I will have many relatives that will be on union pensions in the coming years, but due to my personal morale obligations to this country's good working class citizens, I will refuse to buy GM cars made in China.
I will buy those expensive Japanese or European brands that are made in this country or Canada.
For the same reason that some people buy Acura instead of Honda. The warranty is only as good as the company stays afloat and you have a dealer nearby for service. Also warranty does not cover conseuqential damanges such as lost business; that's actually the reason why I bought the Highlander instead of Santa Fe; and 9-5 wagon instead of Focus or Taurus wagon before that.
Based on the butt time I had riding a GM China Buick, absolutely! It's more luxurious and better put together than the two BMW 5er's that I had. I do not have a Chinese driver's license and they don't take international driver's license, so can't tell you how they are from the driver's perspective.
It won't matter how many dealerships are nearby, because Chinese made cars won't sell in large volumes in this country unless everyone started doing this. This is why the Japanese will beable to fight of the Chinese and overtake GM for #1 Your Big 2 by year 2015 will be #1 Toyota, #2 Honda, if GM starts importing cars from China.
I refuse to buy both. All you have to do is look at the VIN numbers and/or final assembly sticker along with content locations either found on the window sticker or on a seperate sheet.
Japanese are not even fighting off Koreans now. Korean cars are selling quite well in this country, as Hyndais, Kias and Chevys. Chinese cars will probably follow the foot steps, with an important twist: Chinese auto industry is less concentrated like Korean zaibatsu (okay, that's a Japanese word, I forgot what the Korean equivalent term is), making it an even better fit for American and European marque holders, like GM, BMW and MB.
:P Thanks....I know are future opponent, and I can't support them while they smile. The Chinese are very smart. Just look at all the stuff they have baughten in this country. :surprise: They are currently working on buying up infrastructure. They have 4,000 "known" front company's here in the U.S of A. GM and Ford like they did in WWII supplied the enemy. GM and Ford had contracts with Adolf Hitler in WWII. You won't learn about this in most World History classes. I as a histroy buff learned alot from the history channel and other media outlets that showed documental proof of this. If I would of been president of the U.S. back then I would of taken the upper elites and sent them to an american concentration camps and tortured them for supplying the enemy. :mad:
Without a highly desirable entry-level car, any automaker will have difficult garnering young buyers. Without young and satisfied car buyers, you'll not see a repeat customer. Nor see any of their friends, either.
Equalling a dwindling market share.
Exactly right, you get it. Which is of course exactly why Toyota, Honda, Nissan and now Hyundai have all used this small car strategy as part of their US market development plan.
The small cars may not themselves earn great margins (although probably better margins than all the rental specials built by the Big 2.5), but they serve as the gateway to turning that customer into a long-term customer.
The fact is that no one would have given Nissan (Datsun) a chance if its first car had been meant to take on a Cadillac, as no one would have taken it seriously. Instead, they started small (with the 510) in a category largely ignored by the established makers, and built their line-up from there.
GM has no credibility with the young, small car buyer, which is going to hurt its long-term prospects. If a twentysomething develops loyalty to Honda, Toyota or whomeever, they will be harder and more costly to win over. If you could sell them a small GM car today, you'd stand a better chance of selling them a larger car, minivan, etc. as they get older and more affluent. Unless you are a niche maker such as BMW, you can't cherry pick your customers, you have to cultivate them.
Comments
Rocky
Interesting observation: If a worker earns an additional $2 per hour, you get thrown into a lather. But have a group of managers with multi-million dollar salary packages lose several billion dollars, and everything's A-OK.
I'm curious from where you got that accounting lesson. My guess that it's either The Fountainhead or Atlas Shrugged (neither of which I recall being on my B-school reading list...)
Well, let's see: Olds was a loser of money and market share for quite some time.
What will GM lose on Olds sales next year? Zero.
What will GM lose on marketing tired Olds products next year? Zero.
What will GM lose on supporting the Olds dealer network next year? Zero.
Not paying for Olds frees up resources to be dedicated to making some of the remaining badges and nameplates stronger, which one would hope could be returned to profitability. That being said, whether GM's management will actually bother doing that is an entirely different matter. I have my doubts that they'll pull it off. Controlling costs is important to turning any bad business around, but without products to match, the cuts only prolong the inevitable.
So many americans look at what a hourly employees makes versus how much a CEO and his cronies loses in buisness decisions and/or makes in salary's. Why ?
I guess I'm not the only one who can see this. We however are the few that can. :confuse:
Rocky
I'm not sure if I've ever asked you this question. What vehicles do you currently own ? What new vehicles are you considering as your next ?
Rocky
That's the problem with M&A, as I'm sure you know -- just about any mature company that has acquired assets and debt capacity can look good if you stare at its balance sheet long enough. The problem with simply looking at the ratios out of context is that it doesn't tell you much about the future product and sales performance of the entity, nor the ability of the parent to marry the culture of that entity with the acquiring firm.
I don't believe Toyota is doing everything right, but it was smart for it to create its own brands, rather than buy other mediocre ones. It's hard for me to think of a mass market automaker that went up on the auction block during the 90's buying spree that it would have made sense for Toyota to have bought, at any price.
Would you have agreed with socala4 if your dad was one of the thousands that lost their jobs when Oldsmobile was chopped? He preaches pro labor, while ripping management for not getting rid of more jobs. Hard to have it both ways.
Rocky
If GM was producing products that people wanted, there wouldn't be much need for job cuts. If GM management handles things competently (and don't hold your breath that it will), then the money saved by dumping poor performers will be more than made back by selling higher volumes of the remaining nameplates, which would be designed so that customers are actually happy to buy them, and wish to continue to buy them.
One thing I've been emphasizing here is creating a customer focus that allows GM to compete effectively. Unfortunately, management has bungled it so badly that now market share losses are probably inevitable going forward. They could turn it around if they simply sold better cars more efficiently, but I doubt that they will.
In my opinion, we have spent years developing a middle-class workforce of what I'll call gray-collar workers (they do fairly repetitive work, but inside of offices instead of on assembly lines) who erroneously believe that they are superior to the blue-collar worker, and who have forgotten that they are only a few paychecks away from poverty themselves. They identify more strongly with the elite than with the common worker, even though they have far less in common with the likes of Rick Wagoner than they do with Joe Sixpack.
The thing that they don't realize is most Americans will never join the elite, their best hope is that they buy a house in an improving market that can give them the illusion of prosperity, and to get enough credit card debt and borrowing capacity so that they can own stuff that they likely can't afford. Too many people with minimal resources and few skills seem to believe that having an interest-only mortgage and a car lease means that they have arrived and are above the fray, when they are just as dependent upon their jobs and the whims of their employers as is the assembly line worker whom they think is beneath them.
Rocky
How would GM build a car comparable to the Camry paying wages and benefits, more than twice per hour of Toyota & Honda? I think GM should pull back on all but the vehicles that make them money. The PU trucks and large SUVs are still the best built by any maker. Let Toyota & Honda fight off Hyundai & Nissan for the low margin car market.
So have been many other divisions.
What will GM lose on Olds sales next year? Zero.
How is that any different from spreading what would have been Olds loss onto other divisions?
What will GM lose on marketing tired Olds products next year? Zero.
How is that any different from spreading what would have been Olds loss onto other divisions?
What will GM lose on supporting the Olds dealer network next year? Zero.
How is that any different from spreading what would have been Olds loss onto other divisions?
Also, your "zero" math is very wrong. One-time big write-off is no better off than small losses over time. There is opportunity cost associated with that $2 billion dollars spent on closing down Olds. Even at 5% a year, which is way below the borrowing cost of GM with its junk status, that is $100 million a year lost in interest income.
Controlling costs is important to turning any bad business around, but without products to match, the cuts only prolong the inevitable.
The products that could save the company are certainly not small cars like you have been suggesting. Small cars are a huge drain on cash so long as there is union labor price structure. Besides big vehicles, financial services, high-tech components and entertainment are probably what the company should have transitioned into over the past two decades, just like GE did . . . that would also have trimmed down union influence, again like GE did.
BTW- Gagrice, Toyota assembly workers top wages are $21 bucks an hour at the San Antonio, Tx Tundra plant. They start out more per hour $15.25 then new Delphi workers. After training is complete they go up to $21 an hour from what a friend of mine said. He went through 3 interviews.
Supervisors (Team leaders) make $22. So yes GM workers when compared to Toyota workers make more. (old tymers) However cost of living in the south somewhat makes it comparable. The biggest difference between the two is retirements. This has already been resolved since new workers only get 401K's. I suppose if GM goes belly up or moves all operations to China, then us buy american crowd won't have a choice but to root for the Japanese
(new american domestic) car company's. Our Big 3 might look like this. Toyota, Honda, Nissan. :surprise:
Rocky
I'm curious from where you got that accounting lesson.
No accounting lessons necessary. Just second grade arithmatics will do. How many managers have multi-million dollar salary at GM? 5 or 10 or 0? Wagoner's own salary is only $2 million a year, which he is voluntarily cutting in half, so $1 million a year; not even Wagoner has a multi-million dollar salary. Whose salary is higher than Wagoner's? So the total expenditure on managers' non-existent multi-million dollar salary packages is ZERO!
Compared to that, billions were spent on excessive union salaries and benefits. With 650k members at UAW, annual union membership dues alone is close to half a billion dollars! Union members must be receiving at least 10 times if not 100 times the benefit from robbing the company and consumers before it makes sense to pay union dues.
Like I said, only 4th grade arithmatics is necessary, once you look beyond the hot rhetorics.
Just to add to your argument, how would GM build a car comparable to the Camry, when it can not incentivise or discipline indidividual workers? or even fire the real incompetent? How would GM bulid a car comparable to the Camry, when it can not retrain workers to adopt modern production techniques without myriads of red tape?
When GM is not facing those union imposed hurdles, it can indeed build a car to compete successfully against Camry; it already does in GM China.
Like they say, one of the most brain-dead easy way to make a small fortune is starting out with a big one ;-)
"ice water" flowed through his veins. he was very intimidating to the guys under him and wasn't afraid to use people as examples by replacing them while they were on vacation. She said management was always afraid of vacations, wondering if they would have a job when they got back. She said she felt sorry for them. Alot of them were good folks, that were doing a good job for the company, but when they reached a certain point in salary it seemed they were replaced. She also currently lives by ex-GE management and they offered their points of view to her. Many still conform to GE dress codes to this day because it was such a big part of their lives and is such a natural feeling.
Rocky
B-school, eh?? I missed that earlier. So you are one of the much maligned "suits" yourself? ;-) Reading lists are quite off topic, but for what it's worth, Das Kapital offers much more econometrics than either Fountainhead or Atlas Shrugged. I would strongly recommend reading all three of them, plus Wealth of Nations, before drawing your own conclusions. At least, after acquiring some basic knowledge in socioeconomics, one would avoid making nonesense argument that free market produces serfdom; it's so far off the wall (even Das Kaptal had to introduce the institution of bougeoise-controlled state machinery before linking "capitalism" and "wage slavery"; in other words, the "capitalism" under discussion was "monopoly capitalism" not free market). No you did not make that argument, thank goodness, someone else did.
I'm not sure that is relevant. It may be the reason Japan is building plants in the USA. The issue is comparing the total package for UAW workers and HonToy workers in the USA. I would say that it is just about double for the average UAW worker. Why else would they be offering $130k buyout? I know my health and retirement costs my employer $14.21 per hour. Something the HonToy is not shackled with. When Health care goes up they just tell the employee it will cost more for you to have healthcare. My point earlier and still is that even if GM had the best designed car in the CamCord class, they could not build it competitively with the current labor situation. The margins are too tight on cars. GM has no problem beating Toyota in every class of large SUV and PU trucks. The margins are much better and can absorb the higher cost of employees.
It's easy to get lost in the histrionics, but let's get real, how much is steak and lobster for half a dozen people? How much is $1 million spread across 650k people? $1 dollar and a half! Can't even buy a cup of coffee! The total expenditure on executive lavishness, while tantalizing in news reports, is peanuts compared to across-board benefits and pay raises that cover hundreds of thousands of people.
I'm by no means endorsing executive lavishness; in fact, when they go overboard, there are laws waiting for them. In any case, it does not take away from the fact that, modest amount multipled hundreds of thousands times makes for huge sums of money. That's why free market is a much more efficient mechanims for deciding marginal pricing than collective bargaining, where billions of dollars could be influenced by $50 spent on steak and lobsters.
Everything you find wrong with GM is the unions fault. My GAWD, you give the management, government, etc a free pass. Well you will get your wish for low costs since GM appears to be sending more facility's to China and Mexico. Why isn't GM importing cobalts from China yet to get your low cost small car that's of better quality. I suppose that's the unions fault too. :confuse:
Rocky :confuse:
In exchange for "job banks," where workers are paid full salary to do nothing at all.
The Chinese plants are new and modern, thus keeping "just in time delivery" a reality. I suppose having the old plants is the unions fault also
As a matter of fact, yes. The cost of putting new plants in place would have been much much less if the company does not have to provide "job banks" for everyone who no longer has a place on the new production line.
Everything you find wrong with GM is the unions fault. My GAWD, you give the management, government, etc a free pass.
Not at all. Like I said, the management should have refocused the buiness away from domestic carmaking, thereby rendering union impotent . . . like GE did.
Well you will get your wish for low costs since GM appears to be sending more facility's to China and Mexico.
That might just be the only way possible for GM to keep its legacy commitment to UAW members . . . squeezing the sweat and blood of poor Mexicans and Chinese to feed the union . . . American consumers and non-union workers are surely not interested in feeding the union.
Why isn't GM importing cobalts from China yet to get your low cost small car that's of better quality. I suppose that's the unions fault too.
GM only started making small cars in China in the last few years after a long streak of success with big Buick sales. The market there seems to be absorbing all the output for now. Rest assured, GM will import cars from China, hopefully before Chinese brands do. Down the road, it's either the Chinese and Mexican workers support UAW retirees or the American taxpayers do through the Pension Guarantee Corp (with a more and more strigent cap).
Rocky
What would be the projected profit at GM with the same legacy costs and contractual obligations of the transplant foreign manufacturers in the U.S.(per vehicle)? What is the burden (for the Japanese)per vehicle if that same product is manufactured in Japan without Government Subsidy.?
What percentage of the population (In Japan) would even CONSIDER the purchase a Non-NIPPON vehicle. (Nationalist Attitude).
What percentage of the total (U.S) profits are used to subsize EXISTING legacy costs in JAPAN ?
As I said before this is a very complex issue !
Rocky
Rocky
Maybe for trucks and SUVs, but not for cars. And most definitely not for entry-level cars.
Without a highly desirable entry-level car, any automaker will have difficult garnering young buyers. Without young and satisfied car buyers, you'll not see a repeat customer. Nor see any of their friends, either.
Equalling a dwindling market share.
IE - GM in a nutshell.
:sick:
Rocky
Delphi is the #1 employer in Mexico, but GM in a few years will be a close second it looks like. :sick:
Rocky
You should really take a trip to China, and see for yourself just how far off from reality your characterization is. Even I was quite surprised at how far they have come along in terms of living standard. More Chinese households probably have large screen TV than Amerians households do; every single one of the distant relative families that I visited there had a larger screen TV than I do back in the US. None of them are among the wealthy there either. There is just such a huge upswelling of material wealth . . . it's mind boggling . . . almost like the first time I saw an American Supermarket when I left a poverty-stricken China behind nearly two decades ago; your description is much more appropriate for that old China under command-economy: everyone had a job, but there was a dearth of goods.
That kind of combination of job security and dearth of goods, result of noboy having any incentive to produce anything because their jobs were nearly 100% protected by the government, is not what I want for America. For UAW members, there is a problem even closer to heart: the only way GM can avoid bankruptcy, thereby pushing all retiree obligations to the Pension Guarantee Corp, is actually importing from China as quickly as it can. Using the benefit of cheap Chinese labor to pay for legacy union obligations.
As for cheap imports hurting the economy in general, that just makes no sense. Do you ever donate to charitable cause? I doubt the charities turn around to sell the goods to disaster relief area at prices higher than local production. The consumers are much better off with cheap imports even if domestic producers have to look for new ways of making a profit.
The roman empire lasted a thousand years, and we will be lucky to see 300 years.
Roman Empire lasted about four centuries. It was killed off by high taxation and inflation (another way of taxation). Roman Empire started to fall apart when their currency Dinar lost 98% of its value over 200 years (as the coin literally went from pure silver to 2% silver or less). Our currency the US Dollar lost 95% of its value since the 1913 Federal Reserve Act (gold was roughly $22/oz back then, as measured by the $20 coin being 1oz weight of 91% pure gold). Why the Federal Reserve Act? Because in a normal free market with free floating real cash (as in metal not Federal Reserve Notes), wages go down along with everthing else during productivity increases and economic expansion. Of course, the union members got very unhappy despite their reduced wages can buy the same amount of goods as before because all prices had come down too (sound familiar?). Enough rioting from the union and bankrupt companies from labor unrest convinced the politicians that we needed an ever-inflating currency. Not so co-incidentally, the "economic security" provided by the fiat paper currency also guarantees profit for the consortium of bankers issuing the currency and guaranteed that nations could wage wars beyond their financial means. As they say, the rest is history. We are 95% to zero ;-)
Rocky
Rocky
(1) have small cars made in Mexico, Korea and China
(2) drasticly cut domestic worker wages
Which solution would you prefer? ;-)
GM dealer network will be a huge asset when it imports Chinese made cars. It took Hyundai and Kia over a decade to build up their national dealer network, and they are still very inadequate.
I however won't buy it.
Rocky
My point proven.
Rocky
(1) really expensive luxury cars made in Japan
(2) still expensive BMW, MB made in China
(3) reasonably priced GM cars made in China
(4) really cheap cars made in China under Chinese brand that have scanty dealer network in the US.
Look it this way, at least some of the money you pay towards that GM car will go towards the retirees ;-)
I will buy those expensive Japanese or European brands that are made in this country or Canada.
Rocky
Rocky
Rocky
Rocky
sent them to an american concentration camps and tortured them for supplying the enemy. :mad:
Rocky
Equalling a dwindling market share.
Exactly right, you get it. Which is of course exactly why Toyota, Honda, Nissan and now Hyundai have all used this small car strategy as part of their US market development plan.
The small cars may not themselves earn great margins (although probably better margins than all the rental specials built by the Big 2.5), but they serve as the gateway to turning that customer into a long-term customer.
The fact is that no one would have given Nissan (Datsun) a chance if its first car had been meant to take on a Cadillac, as no one would have taken it seriously. Instead, they started small (with the 510) in a category largely ignored by the established makers, and built their line-up from there.
GM has no credibility with the young, small car buyer, which is going to hurt its long-term prospects. If a twentysomething develops loyalty to Honda, Toyota or whomeever, they will be harder and more costly to win over. If you could sell them a small GM car today, you'd stand a better chance of selling them a larger car, minivan, etc. as they get older and more affluent. Unless you are a niche maker such as BMW, you can't cherry pick your customers, you have to cultivate them.