Honestly, after all the discussion about this, I'm surprised that you could miss the obvious.
And last I checked, Honda and Toyota US sales during 2005 were above those of 2004, which were above those of 2003, which were above those of 2002. On the other hand, GM's year-to-year sales have been falling. Seriously, where are you getting your "facts"?
I might ask the same of you. You keep saying fleet sales. The rental car agencies I have used were mostly Ford & Chrysler. I did rent a Camry for a week. Do you have any links to establish your claims. I am using autosite to back up my previous claim.
From Automotive News ("Rental companies purchase 12% of new vehicles in U.S.", February 11, 2006):
Vehicles built by General Motors, Ford Motor Co. and the Chrysler group dominate rental car fleets. Those companies' cars and trucks made up 81 percent of rental fleet volume in 2005. That was down from 85 percent in 2004, the Manheim report says.
"Rental fleets account for a high percentage of sales for models such as the Ford Taurus and Chevrolet Impala," the report adds.
From the same article:
-2.1 million new vehicles were sold to rental companies -81% of rental fleet volume came from GM, Ford, and Chrysler group -1,006,000 rental program vehicles were bought back by makers -Commercial and government fleets bought more than 959,000 new vehicles.
"Design and Engineering has the most to do with quality. Quality needs to be designed in. "
Hallelujah! now we're making progress here. It's management practices that account for most of the quality of the car, not the workers. For it is the management who is responsible for the design and engineering.
So in other words, what you are saying is that workers don't matter much to the quality of cars. In that case, why don't we just pay minimum wage like McDonald's does? Worker quality does not matter, right? Anyone can do it. How can you be serious about saying labor input does not matter to product quality when your position is pro-labor union!
In reality, labor force quality is a huge factor in carmaking. Considering what the privileges UAW enjoys at GM, it not affects the quality of labor force itself, but also the degree of automation, as well as what model can be made at which factory. Design and engineering have to take all that into consideration, plus the need to make the numbers work under the heavy burden of union labor cost.
Just one problem -- Americans consumers don't like what GM is producing. We know this because the sales are falling. Want sales to increase? Makes excellent products that Americans want, and earn back their trust so that they are willing to buy them.
Easier said than done. The press and these forums clamored for GTO, and it is indeed an excellent car, and its sales is not too bad for the niche market that it is in . . . however, it's just not enough to be a big money maker. An M5 with 400hp can command $80k, a Pontiac with 400hp at $31k although sells for more units than the M5 does is still considered a market failure. There is much to be said about badge engineering / brand equity.
Want sales to increase? Makes excellent products that Americans want, and earn back their trust so that they are willing to buy them. Hyundai would provide a decent case study of one way to make that happen. The Cobalt is a good case study of what one should avoid.
The last time I checked Cobalt still outsells any Hyundai model. Hyundai succeeds for one simple reason: they are cheap. The can afford to do that because they do not have the legacy labor cost that GM has. When GM sells their cars cheap, as in during the discounts they had last summer, the sales numbers skyrocketted. It almost goes without saying that every single Hyundai-buying consumer would have bought a Toyota or Honda if a comparable Hoyota product were sold at the same price.
(1) Over-production. The domestic carmakers keep overproduce them because the labor contracts stipulate full wage whether the workers are making cars or not. Keep making cars and driving price down cost less than pausing production. Shunting the overproduction to the rental fleet instead of offering them for sale through the retail channel is a solution not a problem. Blaming the management for selling to rental fleets is like blaming the fire on the firefighters instead of the cigrette butt or candle that started the fire. Yes, houses with firefigters working on them are more likely to have fires, but they are not the fundamental cause of fire.
(2) Fleet operators' preference for domestic makes. Fleet operators are used to have rolling parts bins, and domestics tend to have better parts supply channel and more available mechnics that the operators can hire. In Germany, Mercedes Benz has large presence among the fleet operators.
I am sure the dismal performance of the prehistoric Uplander in recent crash tests is all because of the union, too.
Just completely deregulate the labor market, greatly increase the amount of trickle-down policy out there, and GM will be making cars that make the Japanese weep with fear, and make the Euros look like old deathtraps - while at the same time improving the standard of living for everyone. That's the rub!
That's also a good insight about why GM won't properly manage its inventories and why it dumps cars into fleets. The desire to "recover costs" from the standpoint of an accountant's mentality motivates bad managers to emphasize buildin a lot of units in order to recoup one's investment. The emphasis is on plant utilization and theoretical margins (that don't actually get earned, thanks to the consistent discounting), rather than on quality or on meeting customer wants.
There is nothing theoretical about margins or plant utilization. Carmaking has been a mass-production business since the 1920's. In this kind of business, if your plant utilization rate is low and your fixed overhead cost is high per unit, you are as good as dead. Both Honda and Toyota have much higher plant utilization rate than GM. GM management has no real power of inventory managment aside of periodic heavy discounting to get rid of the inventory pile-up. Lets go through this set of numbers for the fourth time:
If a car costs $6k in material and $6k in labor to make, making the car and selling for $11k only loses $1k, which is a $5k savings compared to losing $6k for not making the car and still having to pay the UAW workers! There is nothing theoretical about that $5k. No company can afford to pay $5k for every unit that it does not make. That is the root problem with domestic over-production. Tattered brand image comes from there . . . anything in oversupply is automaticly undesirable.
The production line that makes Uplander and other GM minivans should have been shutdown and/or completely retooled a long time ago. The basic platform is too short, too narrow and utterly obsolete. Of course, GM has neither the money nor the management freedom of either laying off all the workers on that production line or enforce a complete retrain/revamp of the production. So it has to keep coming up with new skins for an ancient platform . . . more bandages and soothing balms for a cancer patiant.
Have you read the numerous posts on this subject? Fleet sales is a solution to the over-production problem. Without fleet sales, having all the over-production showing up at the retail outlests would drive the price down even more. Over-production is a direct result of inflexible labor contracts.
Your post is a good reason why we're all in trouble when accountants rule the world.
Here's a suggestion for improved plant utilization: Use those plants to build cars that people want, so that you can sell them for retail. If you're going to build an Impala, make it so good that customers not named Avis and National are happy to buy it at their corner dealerships.
If achieving "efficiency" comes at the expense of dumping product into the market that kills residuals and brand equity, then you'd be better off not building the product. Yet another reason why Toyota makes more revenues and more profit than does GM, while selling fewer vehicles.
GM has neither the money nor the management freedom of either laying off all the workers on that production line or enforce a complete retrain/revamp of the production.
I'd bet that the billions blown on those bad acquisitions could have been used to revamp those products. (But that might mean criticizing management for having misplaced priorities, and we couldn't possibly have that happen...)
Your post is a good example of just how far divorced from reality your whole thesis really is.
What makes you think a UAW shop with lower level of automation can turn out cars made as precisely as Camry? What makes you think anyone would buy a car exactly as good as Camry but cost $1500, $3500, or $5500 more? (depending on which number of legacy cost you believe) The case for small cars like direct competitor to Civic is even worse for GM because GM does not even have a global presence like Civics and Corollas do to help pay for the R&D and platform engineering.
Now you see why GM has to compete where it is not the forte of Toyota and Honda: the big SUV's and big premium cars for profit in the consumer retail market. Fleet sales and cheap cars just help keeping the company in the running by helping paying for the astronomical labor overhead.
I'd bet that the billions blown on those bad acquisitions could have been used to revamp those products.
We have been through this upteen times. M&A has netted the company dozens of billions of dollars in profits. Without profitable M&A, the company would long have run out of money. You can not make money on M&A without doing M&A, and on the other hand sometimes deals do go bad; that's why you have to count up the entire scorecard, not just one side of the debit/credit line.
The discussion here has been about M&A in the context of the automotive business, and the effort to use M&A as a substitute for organic product development, i.e. FIAT, Saab, Subaru, Isuzu, etc.
I applaud GM for building GMAC and other adjunct businesses. The criticism has been with its inability to build cars.
Isn't it obvious why GM has so much success in other businesses but so much difficulty in carmaking domesticly? GM carmaking does fine even overseas, like GM Brazil and GM China. The main difference is UAW and its labor contracts. None of GM's other businesses have UAW to deal with, and indeed they are successful. It goes to show that GM management is reasonably competent when UAW is not around to muddy the water. It's about as clear an A/B control-test as we can expect in the real world.
We've been over this ad nauseum: GM has unionized labor in Europe and Australia, the US is not the only market in which it has labor unions.
The problem is obviously with the product. If GM could simply sell Impalas at retail at the same quantity that Toyota can sell Camrys or Honda can sell Accords, then there wouldn't be an issue, and profits would be sufficient. But American consumers aren't terribly inspired to buy products like this, leaving it to Avis and Uncle Sam to buy most of them.
Somehow, the UAW builds Chrysler 300's and Ford Mustangs, and the public buys them quite happily. Nothing prevents GM management from making their cars desirable and interesting, except for GM management.
Most of GM's products are at least average in the industry and many are near the top or at the top of the quality lists.
That is only true as it relates to the number of defects off of the assembly line. It has nothing to do with the long term reliability or durability of the cars. And that does not even include the resale value or the manufacturers record of standing behind a defective vehicle.
Your argument would be strong IF you had third party reports (i.e. Consumer Reports of Brazil or China) to prove that the GM vehicles in Brazil and China are of high quality. Otherwise, as mentioned earlier, you might be simply looking at market monopolization, corrupt governments, uneducated consumers or a combination of the above in Brazilian and Chinese markets.
At this point, I'm not sure what his argument is supposed to be, other than to defend management and to criticize unionized labor in every circumstance, irrespective of whether or not labor is even relevant to a given issue.
-If the UAW or another union builds a car that is successful or reliable, the positive result is ignored.
-If GM management fails in its attempts sells or manage the inventory of one of its imported cars, the management failure is ignored
-When GM management makes costly multi-billion dollar mistakes, their failures are rationalized.
-If a manufacturer other than GM scores a hit with a union-built car, the positive result is ignored.
-If a GM-designed vehicle fails to sell at projected levels, the union is blamed, even though it didn't design the car
-If a GM-designed vehicle is unreliable, the union is blamed, even though it doesn't manage the production line, operate the facility or engineer the product
Again, the numbers make it clear -- the union creates a high expense burden, but GM actually has overall lower costs than do some of its major rivals, so the actual expenses are not the issue, per se.
The real difference between GM and its main rivals is its wholesale prices, which are $4,000-5,000 per unit below those of its main rivals. GM's cost structure would be manageable if the cars it built could be sold for the same prices as those of its rivals, but since GM supports similar costs with far lower revenues, the lack of revenue results in signficant losses.
Cutting costs will reduce the losses, but only better products will lead to profit. Thus far, I've seen no evidence that the cost of improved quality would be greater than the price increases that would come from improved quality (obviously, this isn't true with rival profitable automakers, that are able to pass these costs onto its customers).
Likewise, it has not been shown that it is more costly to create an interesting design than a dull one (you can pay engineers the same thing to create an interesting or an uninspiring product).
And I seriously doubt that GM management would actually invest any windfalls into better products, particularly when they seem to prone to invest their money poorly whenever given a chance. Give a GM manager billions to play with it, and chances are good that he'll squander on a bad acquisition, instead of using that same cash to create a killer product that improves public perception and fetches higher prices. Sounds about as wise as would be giving a winning lottery ticket to a drunk in a trailer park.
You use a lot of numbers with little to substantiate your claims. Do you have any credible links that will back up what you say? When you are proven wrong in the case of GM M&A you change the rules. Those are not automotive ventures. I say so what, it kept my dividend coming year after year. Your constant ragging on GM management has little basis in fact. I have read all the arguments and you have lost most of them. GM doesn't have the greatest cars, so what. They are still building good trucks, buses, trains, SUVs etc, etc. They have lived up to the contracts they made with the UAW. Have the United Auto Workers lived up to management expectations?
The Honda Accord has lost market share every year for the last 3 years. I don't hear you saying how lousy Honda management is. Your hatred toward GM management is consistent, I will give you that.
We've been over this ad nauseum: GM has unionized labor in Europe and Australia, the US is not the only market in which it has labor unions.
GM Europe and Australia are not doing well either. GM Europe lost billions last year. There are difference even among unions; UAW has one of the most stifling labor arrangement. The more you raise these examples, the more it goes to prove that aggressive unions lead to terrible company performance.
The problem is obviously with the product. If GM could simply sell Impalas at retail at the same quantity that Toyota can sell Camrys or Honda can sell Accords, then there wouldn't be an issue, and profits would be sufficient. But American consumers aren't terribly inspired to buy products like this, leaving it to Avis and Uncle Sam to buy most of them.
"Simply"?? Why don't you try make an Impala in your own garage and tell us how much you would have to charge for it. GM simply does not have the level of automation or the disciplined work force to make cars with the same kind of precision manufacturing that Honda and especially Toyota have, both thanks to union. Even if GM management and design team put together a design exactly like that for the Camry, the production line would not be able to make it with the same yield rate as the Toyota Camry production can. Even if it could, the car would still have to be $1500, $3500, or $5500 more in price to cover the legacy labor overhead. In other words, still not able to sell and make profit like Honda and Toyota.
Somehow, the UAW builds Chrysler 300's and Ford Mustangs, and the public buys them quite happily. Nothing prevents GM management from making their cars desirable and interesting, except for GM management.
Once again you are showing your ignorance of the industry. Both Chrysler 300 and Ford Mustang have $1000 incentives on them right now:
And this is April, the spring car buying season! 300 and Mustang are just like GTO, hot when just coming out but the desirability fade very quickly in the model cycle.
There are plenty going on that prevent GM, Ford and Chrysler from making their cars desirable: (1) tattered reputation of shoddy workmanship from the 80's thanks to irresponsible union workers; (2) over-production rendering discounting inevitable, also thanks to the inflexible union work rules.
GM's revival in Brazil and expansion in China are both from positions of weakness, as they were both fighting uphill against much greater presence by other multi-nationals like VW. If anything, their respective governments probably favor their own domestic manufacturers. As to "uneducated consumers," I would not be so rash to dismiss people spending their own money buying so many GM cars as to make it GM the number 1 market shareholder from next to nothing.
Has GM managment lived up to UAW "expectations"? I didn't know that expectations were part of labor contracts. Socala: You are the only one making any real sense on this site. The Managment brownnosers around here are going to ignore any facts you give them no matter how much you back them up. I'd be willing to bet most if not all of the Ricky et al worshippers are probably overpaid paperpushers at whatever line of work they're in.And I'll also hazard a uess that most have never done a real days work in their ****-kissing lives.Apparently they are part of that class of people who will never honor labor and will never honor honest union work. I'm NOT saying that the UAW is perfect but a lot of people around here seem to think GM management is. How deluded! :P
If the UAW or another union builds a car that is successful or reliable, the positive result is ignored.
-If GM management fails in its attempts sells or manage the inventory of one of its imported cars, the management failure is ignored
Do you have any objective standards for success vs. failure at all?? GTO is in its third model year, and the discount incentive is only $500 on a MSRP $31k car, or 1.6% cash incentive in 3rd model year; whereas 300M is in its second model year, and already has $1000 incentive on a car with less than $24k MSRP, or 4.2% cash incentive in 2nd model year; Ford Mustang is also in its second model year, and the $1000 incentive for $19k MSRP car, that represents 5.2% in second model year!
In summary, you are claiming GTO with 1.6% cash discount in the 3rd model year is an abject failure, yet claming 4.2% and 5.2% cash discount in the 2nd model year for both 300 and Mustang are resounding success?? Do you ever think for yourself besides swallowing media hypes?
-When GM management makes costly multi-billion dollar mistakes, their failures are rationalized.
Their M&A failures were compensated by M&A successes that generated 3~4 times as much profits! You need to learn counting, not just accounting.
-If a manufacturer other than GM scores a hit with a union-built car, the positive result is ignored.
See above. You need to look beyond the hypes and analyse the numbers for yourself.
-If a GM-designed vehicle fails to sell at projected levels, the union is blamed, even though it didn't design the car
The quality of work force, and the level of automation, both of which are heavily influenced by UAW, have a lot to do with vehicle design and engineering.
-If a GM-designed vehicle is unreliable, the union is blamed, even though it doesn't manage the production line, operate the facility or engineer the product
If the union is able to shutdown production as soon as the management tries to improve production efficiency and quality like UAW did in 1998, you certainly can not blame the management for lack of trying.
Again, the numbers make it clear -- the union creates a high expense burden, but GM actually has overall lower costs than do some of its major rivals, so the actual expenses are not the issue, per se.
What numbers? Which manaufacturers are you comparing to? You are comparing apples to oranges in fleet mix, not to mention that the higher cost manufacturers are usually niche manufacturers that can maintain price by tightly control supply . . . something GM, Ford and Chrysler can not do. All they can do is proffering discounts on overproduced cars, even models that used to be hot cars. It happens in each and every model cycle! You would have known if you ever actually studied the industry.
The real difference between GM and its main rivals is its wholesale prices, which are $4,000-5,000 per unit below those of its main rivals. GM's cost structure would be manageable if the cars it built could be sold for the same prices as those of its rivals, but since GM supports similar costs with far lower revenues, the lack of revenue results in signficant losses.
Once again you are comparing apples to oranges. First of all, the cars are different. If GM made the exact same cars (even ignoring manufacturing precision and efficiency that are lacking at UAW shops), they would still be more expensive than their rivals thanks to legacy labor cost. That's why GM has to compete where Toyota ain't! It's dead meat if it ever tried to compete against Toyota head-on in the main brand Chevy. Even Buick has to offer ES level equipment at Camry price.
Cutting costs will reduce the losses, but only better products will lead to profit. Thus far, I've seen no evidence that the cost of improved quality would be greater than the price increases that would come from improved quality (obviously, this isn't true with rival profitable automakers, that are able to pass these costs onto its customers).
No one is against better quality or better products per se. GM product quality has been improving significantly in the last decade, as evidenced by numerous surveys. What constitute better products is an important management decision. So far GM's choice of Escalade-type of vehicles have proven far more on-target than your suggestions wasting money on small car, a segment tha has been losing money for three decades!
And I seriously doubt that GM management would actually invest any windfalls into better products, particularly when they seem to prone to invest their money poorly whenever given a chance. Give a GM manager billions to play with it, and chances are good that he'll squander on a bad acquisition, instead of using that same cash to create a killer product that improves public perception and fetches higher prices. Sounds about as wise as would be giving a winning lottery ticket to a drunk in a trailer park.
Speaking of yourself, perhaps, considering the (lack of) counting and accounting skills that we have seen from you so far. GM management's investment skills are actually remarkably good. The 400% returns that GM management registered over a decade-long period from mid-80's to mid-90's is probably better than your choice of mutual funds, assuming you had any. The killer products that you have been suggesting, small cars and hybrids, are decidedly money wasters, especially in GM's condition.
Socala: You are the only one making any real sense on this site.
Really? On what planet does it make sense to have 4 > 30+ (the loss vs. gain in $Billion by GM management in M&A), and 1.6 > 4.2 and 5.2 (the % discount on GTO vs. those on 300 and Mustang)? The Socala have been making are so out of touch with reality that you guys may as well blame GM management for not growing money trees on all GM-owned land.
The Managment brownnosers around here are going to ignore any facts you give them no matter how much you back them up
What facts?? That 4 > 30+ and 1.6 > 5.2 and 4.2?? If you want to use words like "brownnoser," consider yourself filled with brown matters between your ears instead of grey matters.
I'd be willing to bet most if not all of the Ricky et al worshippers are probably overpaid paperpushers at whatever line of work they're in. And I'll also hazard a uess that most have never done a real days work in their ****-kissing lives.
I never had a paper-pushing job in my life. Having worked as programer for a startup for a couple years back in the 90's, I realized that working for myself is a lot better than working for others, so that I do not have to kiss anyone's [non-permissible content removed].
Apparently they are part of that class of people who will never honor labor and will never honor honest union work.
How can you call that honest work, when they use squatter tactics to demand pays that put them in the top 20% income in this country, yet when it comes to responsibility, they claim they have absolutely nothing to do with product quality?? If labor has nothing to do with product quality at all, shouldn't they all be replaced by minimum wagers??
I'm NOT saying that the UAW is perfect but a lot of people around here seem to think GM management is.
Nobody ever claimed that GM management is perfect. Socala is the one demanding perfection. Losing $4 while winning $30+ is terrible sin in his books. All I said was that GM management is reasonably competent. Heck, their investment record, 400% in a decade or so, is actually pretty damn good, a record that would make many mutual fund managers proud.
I had an interesting discussion over the weekend at an Easter get together. This was a group of recent retirees. The distinct attitude differences of UAW vs. Salaried mindsets became apparent. If you were union the salaried workers were all "management "and as such worthless. They (management) were only trying to keep the standard of living of the UAW members from improving constantly. Salaried were labeled as brainless automatons of the "big man". "A senile ape could do their job ". When the question came up of quality of construction,waste or the time involved in assembly the response was....."Let management worry about it. That is why they are getting the big bucks' (That was followed by the comment that when one of the workers was on the line 40 years ago he created a puzzle for the dealerships. He would put an empty 1/2 pint whiskey bottle with a marble in it in the door panel. He said he didn't do it often but wanted to see if the quality control foreman would catch it. He rarely did. THAT was the real accomplishment for the day on the line.) Some of the current union members smiled but the young ones shook their heads in disapproval. There IS an attitude difference in the age groups. Maybe there is hope. Most salaried retirees were so incensed that the conversation finally trailed off. When both groups left I noted the vehicles they were driving. The salaried group had driven away with the vehicles of their previous respective employers. The union retirees had a diverse mixture of Asian,European,with very few domestic vehicles.
I guess they still consider entitlements a one way street.
In summary, you are claiming GTO with 1.6% cash discount in the 3rd model year is an abject failure, yet claiming 4.2% and 5.2% cash discount in the 2nd model year for both 300 and Mustang are resounding success?? Do you ever think for yourself besides swallowing media hypes?
And offering employee pricing across the board says what about the entire fleet? It says that you can give them away, but at the end of the year the numbers still say that the imports are gaining fast. Maybe the domestics need to shut a plant or 2 and cut down on some of the "might as well overbuild because we have to pay 'em anyway" and spend some of the savings on improving quality. Some like to say that we have 3 cars that sell real well so we must be awesome, while noting that the Camry and Accord are losing ground so they must be dieing. In fact, Toyota gained ground overall, which means that the buyers that might have bought a Camry instead bought another Toyota, which still leaves the money in the same pot. I don't see Toyota crying about losing 1000 Camry sales if the Tacoma sales rise 2000. There are several reasons that the rentals love domestics. Number 1, it gives their customers a warm fuzzy to know they are supporting domestic labor. Number 2, the cars are cheaper to buy. Number 3, they have a decent chance of surviving the 2-3 year life cycle of the rental company, after which it is someone elses problem. And number 4, the rental guys don't have to drive them. Kinda like the Domestic factory car lots. So many workers are driving imports that the company had to ban them from closer lots. When you don't even have faith in your own product, the battle is lost.
I didn't know that expectations were part of labor contracts.
Maybe you should research the subject. For the wages and benefits the company expects a level of expertise in a given craft from the Union member. I just retired after 35 years in the Teamsters Union. I was a shop steward for many of those years. I have had to defend a lot of slackers that I would have been happy to see fired. For the most part the Union workers in my craft, telecommunications, were hard working. You always have whiners and slackers. A shop steward sees both sides of the picture. I don't think you have been around long enough to see much of anything. You like to make reference to those that would kiss up to management, as if you have a lot of experience.
akenaten, Socala4, I see we've hit a few nerves. The blame everything on the union crowd, doesn't want to hold management accountable for anything. I appreciate ya'll and socala, keep the facts coming. I see your facts vs. their fiction, is hurting there ego. :P
In my working experience I've seen management run to be the first for the photo oppertunity, and some go to such links to try to take all the credit for cost savings on my production line while we just shake our heads. My team leader got a promotion, and I got $.40 cents out of a possible $.75 cents for saving my company $12 million in scrap during my review. Oops I forgot to mention I got a rubber steak dinner. I told myself after that I would never work in a non-union facility if I could help it because merit isn't rewarded and brown nosing is.
I'll take a union contract anyday over a review. The union contract ensures my hard work get's rewarded and when I see something wrong I have the freedon to speak up and tell my boss he/she is wrong without being fired. This wouldn't be tolerated in a non-union enviroment unless you are the boss.
Very much in agreement about domestics' need to get their own production under control to match market demand. There's nothing that can make a production smell "cheap and undersirable" in a hurry quite like over-production. That's why having flexible work rules are really important.
I appreciate ya'll and socala, keep the facts coming. I see your facts vs. their fiction, is hurting there ego
Okay, help me with this one, how is 4 > 30+ and why is 1.6 > 4.2 and 1.6 > 5.2?? What facts have Socala provided? Mostly partial facts and half-turths, if not outright fantasies (like "simply" make better small cars and hybrids) as far as I can tell.
My team leader got a promotion, and I got $.40 cents out of a possible $.75 cents for saving my company $12 million in scrap during my review.
$.40/hr over 225 days and 8hrs/day is about $720 a year, or a present cash value of about $12k at current interest rate. Whether that is a fair reward for saving $12mil depends on how many people are involved in the team for sharing the prize.
The union contract ensures my hard work get's rewarded and when I see something wrong I have the freedon to speak up and tell my boss he/she is wrong without being fired. This wouldn't be tolerated in a non-union enviroment unless you are the boss.
You must have a very unique type of union. Most union contracts insist on seniority-based pay scale. Whether you work hard, work not so hard, or in some cases not work at all, is completely irrelevent to your pay. If you want performance-based pay, union is certainly not the solution . . . performance evaluation is what the management is for. The bit about all non-union environment does not tolerate employees speaking up is also wrong. My employees speak up to me all the time; in fact, it's the slackers who don't put in enough effort to see problems or make improvement suggestions that get let go every year. Competitive businesses can not afford to staff themselves with yes-men and yes-women.
Most union contracts insist on seniority-based pay scale. Whether you work hard, work not so hard, or in some cases not work at all, is completely irrelevant to your pay. If you want performance-based pay, union is certainly not the solution . . . performance evaluation is what the management is for. The bit about all non-union environment does not tolerate employees speaking up is also wrong. My employees speak up to me all the time; in fact, it's the slackers who don't put in enough effort to see problems or make improvement suggestions that get let go every year. Competitive businesses can not afford to staff themselves with yes-men and yes-women.
You are right on track. I worked in a non-union shop for many years (17). Bringing in a union came up alot. Every time the company came down with a different pay scale which depended on productivity. Nobody ever got a pay cut with the updates, but the the old-timers got pretty hot when the young pups came in and made more because they worked harder. Some of the guys thought they had earned the right to sit around and BS half the day. Eventually it worked out well for everyone because the slackers either left or stepped up to the plate. They made more money, the company made more money, and more employees were brought in. We doubled our employees and made a significant increase of productivity per person all in less than a year. And no one that stayed (only 1 left) got less than a 10% increase in pay during that year. A big raise and no union dues. Gotta love it.
Unions and most of their participants either in or heading to bankruptcy
The steel workers demand more wages. The steel price goes up. The automakers pay more for steel. They are unable to set aside as much for research. Then their workers go on strike, costing millions. The company eventually settles. Now they are in a hole and they need to find even more cutbacks. So now they cut the thickness of the metal in their cars. The quality just took a hit and the steel makers are now selling less steel. Now the steel makers are paying their workers more and selling less. So they raise the price again. Now the automakers need to cut some more. I think we can use plastic where we used to put metal. Now we have hurt longterm reliability. The steel mill just closed too because they can't raise the prices anymore and stay profitable. Now we have many unemployed steel workers and a auto company that still needs SOME steel. So they have no choice but to pay whatever the only company left is selling it for. So, lets put cheaper tires on the vehicles. Next thing you know, you have Explorers rolling left and right and your company has taken a huge hit.
Thanks for the facile analysis. Here's something a bit more accurate:
Steel -- Big Steel failed to meet the rise of more nimble foreign competitors (mini-mills), that used smaller facilities and could adjust production more quickly.
Railroads -- Failed to compete with rise of deregulated airlines (faster) and deregulated interstate trucking (cheaper)
Airlines -- Airlines are always boom-and-bust, cyclical businesses (hub-and-spoke systems are expensive to operate, the quest to provide convenient service often comes at an expense of poor capacity utilization). The niche carriers such as Southwest (short-hop, not hub-and-spoke, and no long-haul services) or JetBlue (limited routings) can compete, but the rest are killed by too many routes to support and the high cost of jet fuel
Domestic automakers -- Failed to rise up to the challenge of smaller, more nimble foreign competitors, many of which were also unionized.
Your best comparison was the analogy to steel, but your reasoning was off the mark. Like Big Steel, Big Autos had far too much market share and entrenchment for their own good. Management missed the mark in both cases by underestimating competition.
The funny thing is that the mini-mills entered the US market by focusing on cheaper products, that Big Steel ignored and let them capture on the theory that low-profit products didn't matter. Too bad the automakers still haven't learned from that same mistake.
You use a lot of numbers with little to substantiate your claims. Do you have any credible links that will back up what you say?
Since you're a stockholder in GM (my condolences), you should know that the annual reports of the various automakers are available for free online, most of them via the EDGAR website or else the investor relations areas of their websites. Every number I've cited from an annual report has come from a corporate 10-K or similar release from the company.
When you are proven wrong in the case of GM M&A you change the rules.
Sorry, wrong again. I cited an article from Forbes earlier in this thread that outlined the losses generated by GM's poor automotive acquisitions, which are likely at least in the range of $15 billion. My focus in this discussion has been GM's inability to build competitive cars, not its former ability to operate a satellite TV network, which isn't relevant to the car business being discussed here.
GM doesn't have the greatest cars, so what.
Ouch. If the cars aren't great, people don't buy them, sales fall, profits fall with them, and you end up with the 2005 results -- the automaking group generating pre-tax losses of $20 billion. Good philosophy for you to have if your goal is for the company to continue losing money. As a shareholder, it's surprising that you don't feel ripped off.
Too bad GM didn't take the $15 billion mentioned above, and use it to develop some highly competitive products that could put them back on the map for the mid-market car buyer. As it stands now, GM's best hope is that gas prices drop to $2.00 per gallon, a strategy that I wouldn't bet your farm on if I were you.
The Managment brownnosers around here are going to ignore any facts you give them no matter how much you back them up.
The problem here is that this is fundamentally a practical business problem (the inability of GM to create products that meet customer needs), which includes an obvious answer (create products that meet customer needs, with branding and sales/service channels to match). Unfortunately, some have turned it into a religious debate, matching one God (Management) versus another (unions), when both are false idols.
If GM produced good products that met customer demands and the leadership's main problem was trying to keep shareholders happey with below-average profits due to union contracts, then I would have some sympathy for the management team.
But they don't, so I don't. The management incompetence is obvious -- give them the ability to build a vehicle out of reach of the UAW, and you end up with a GTO (sales well below target, inventories piled up), Aveo (more product glut...and the car just came out recently!), an entire line of Saabs that it can't sell, and a strategy to sell gas guzzlers while unleaded is touching $3 per gallon at my corner service station. No wonder I have little faith -- anyone paying attention should be heeding the calls by auto industry critics for Wagoner to resign, before things get even worse.
losses generated by GM's poor automotive acquisitions
Only your selective part of the equation. As a stockholder in GM I want them to build, buy or finance whatever makes money.
If the cars aren't great, people don't buy them, sales fall, profits fall with them
If they cannot compete with HonToy, get out of the business of small cars. I don't like them anyway. Stick with what makes money and let the Japanese fight over the small stuff. Last time I checked GM was selling more trucks & SUVs than Toyota was selling cars. Close the poor performing plants and default on the contracts to the dealers, unions and suppliers. File for Chapter 11 protection. Trim the fat and end up with a company that makes money. Isn't that what you want?
As a stockholder in GM I want them to build, buy or finance whatever makes money.
That's a good strategy. Unfortunately, these deals have lost GM money virtually every time (Hummer may prove to be an exception, and Daewoo was arguably too cheap to pass up), so your goal has not been fulfilled.
If they cannot compete with HonToy, get out of the business of small cars. I don't like them anyway.
For one, your personal preferences aren't the issue -- the issues are what the marketplace requires, and whether GM should address that need or not.
As noted before, GMNA really isn't competitive in any segment except the segment for which they were given formal protection -- the truck market. Now that Toyota, Nissan and Honda are gunning for that segment, you can expect that balloon to eventually pop, too.
The problem hasn't been GM's inability to compete in the car market, but with GM's management and its lack of foresight. As noted above, they made the same mistake with small cars that the steel companies did with low-margin products -- they allowed smaller competitors to use those cheaper products to build their own reputations and networks in the US market, which allowed those smaller firms to soon go for the big fish. They gave the baby formula to the kids who would soon grow up to beat the pants off of them.
Have you noticed that Hyundai has followed Toyota's strategy to a T, and is now ascending with its combination of a quality emphasis and targeting the low- to mid-level markets in order to build a reputation? That's exactly what GM needs to do if it is going to get the young people of today to buy a more expensive GM car twenty years from now.
If you think GM is going to emerge as the BMW of trucks, then I think you need to have a reality check, that ain't going to happen. More than likely, GM will lose market share in that segment, too, which means even more losses and a continued slide downward, with no end in sight.
Too bad GM didn't take the $15 billion mentioned above, and use it to develop some highly competitive products that could put them back on the map for the mid-market car buyer.
I would love to meet you across the negotiating table. I have bashed heads with several pretty tough CEOs at RCA & AT&T over the last 35 years. I don't think you have what it takes to operate under the constraints that a Union puts on a company. You are a typical Monday morning QB.
And Rocky if you feel you were treated unfairly by being laid off, the NLRB is who you should talk to. There are laws that protect all workers in hourly jobs.
That's a good strategy. Unfortunately, these deals have lost GM money virtually every time
You are lost in your own denial. In the world of M&A you win some and lose some. GM is still ahead on that front. Find a new pony to ride. Their non automotive M&A have supported a failing car manufacturing business for too long. If as you say the other automakers beat them out in Trucks and SUVs invest in something else. Playstations or theme parks. Don't keep throwing good money after bad. You seem to think that GM should be married for life to the automotive business. Why should they live with those constraints?
In the world of M&A you win some and lose some. GM is still ahead on that front
You need to get a new slide rule. The whole point of this discussion, including the details provided in the Forbes article, is that GM is NOT "still ahead on that front." Losing $15+ billion is not a good way to get ahead.
You seem to think that GM should be married for life to the automotive business.
The problem is that very few companies do a very good job of diversifying horizontally (out of their industries). There is the occasional exception (GE is probably the world's finest example), but in large part, most corporations have learned that diversifying away from their core competencies is a good way to lose money, because it's hard to run a business that you don't understand. And being that M&A more often than not destroys shareholder value, a growth strategy built on buying failed competitors is usually going to create more losses for the parent company, who will probably fail just as their prior owners did. Witness GM with Saab and FIAT -- both were losers before and after the deals, and cost GM dearly, so why put money into them at all?
Unfortunately, GM doesn't seem to have a core competency, hence the problem.
And Rocky if you feel you were treated unfairly by being laid off, the NLRB is who you should talk to. There are laws that protect all workers in hourly jobs.
it wasn't worht the fight. My employer can determine my wages even if I won. I didn't have a union to help me win raises. I had empty promises, and after the smoke cleared I was off to better things. Not neccessary bigger, but marginaly better.
The problem is that very few companies do a very good job of diversifying horizontally (out of their industries).
In the case of GM that is just not true. They have made Large sums of money with M&A outside their core business. Why don't you want to accept that? I hated to see them sell some of those businesses. They have done it to remain solvent. I don't know if it is ego or poor judgement. I don't think you are right, that they could have made something out of the mess they have in their automotive divisions. I did dump my GM stock just before they started selling off GMAC, the only cash cow they have left. That may be a fatal mistake. It was bad enough that they were cutting the dividend. Maybe Kerkorian will have enough stroke to split up the parts and sell them off. They do have billions in property assets. Maybe the Japanese will buy some of those plants and hire the out of work UAW members. Probably will pay more than being a greeter at Wal-Mart.
You know Ford ain't doing so hot either. They are not getting the press that GM/Delphi has garnered. The Taurus & Focus are in 8th & 10th place and selling less than last year. The Fusion & Five Hundred are selling like niche vehicles. The Mustang is losing steam. If it were not for the hot F150, Ford would have little to be happy about. They tried to play the hybrid game with Toyota and got sacked by suppliers loyal to Toyota.
I think those stupid Bill Ford jr. ads are killing them. He is pathetic. I think if I was going to make a bet on who goes into chapter 11 first, it would be Ford.
Maybe the Japanese will buy some of those plants and hire the out of work UAW members. Probably will pay more than being a greeter at Wal-Mart.
That was a slap in your union brothers face. For someone that totes being a teamster, you sure don't sound like the ones I personally know which includes my Uncle Doug (Dads Brother) :surprise:
Comments
Honestly, after all the discussion about this, I'm surprised that you could miss the obvious.
And last I checked, Honda and Toyota US sales during 2005 were above those of 2004, which were above those of 2003, which were above those of 2002. On the other hand, GM's year-to-year sales have been falling. Seriously, where are you getting your "facts"?
I might ask the same of you. You keep saying fleet sales. The rental car agencies I have used were mostly Ford & Chrysler. I did rent a Camry for a week. Do you have any links to establish your claims. I am using autosite to back up my previous claim.
auto sales to date
The fleet sales gap is undeniable. Honestly, I would hope that we wouldn't have to recycle information that is posted on this very thread.
Vehicles built by General Motors, Ford Motor Co. and the Chrysler group dominate rental car fleets. Those companies' cars and trucks made up 81 percent of rental fleet volume in 2005. That was down from 85 percent in 2004, the Manheim report says.
"Rental fleets account for a high percentage of sales for models such as the Ford Taurus and Chevrolet Impala," the report adds.
From the same article:
-2.1 million new vehicles were sold to rental companies
-81% of rental fleet volume came from GM, Ford, and Chrysler group
-1,006,000 rental program vehicles were bought back by makers
-Commercial and government fleets bought more than 959,000 new vehicles.
Hallelujah! now we're making progress here. It's management practices that account for most of the quality of the car, not the workers. For it is the management who is responsible for the design and engineering.
So in other words, what you are saying is that workers don't matter much to the quality of cars. In that case, why don't we just pay minimum wage like McDonald's does? Worker quality does not matter, right? Anyone can do it. How can you be serious about saying labor input does not matter to product quality when your position is pro-labor union!
In reality, labor force quality is a huge factor in carmaking. Considering what the privileges UAW enjoys at GM, it not affects the quality of labor force itself, but also the degree of automation, as well as what model can be made at which factory. Design and engineering have to take all that into consideration, plus the need to make the numbers work under the heavy burden of union labor cost.
Just one problem -- Americans consumers don't like what GM is producing. We know this because the sales are falling. Want sales to increase? Makes excellent products that Americans want, and earn back their trust so that they are willing to buy them.
Easier said than done. The press and these forums clamored for GTO, and it is indeed an excellent car, and its sales is not too bad for the niche market that it is in . . . however, it's just not enough to be a big money maker. An M5 with 400hp can command $80k, a Pontiac with 400hp at $31k although sells for more units than the M5 does is still considered a market failure. There is much to be said about badge engineering / brand equity.
Want sales to increase? Makes excellent products that Americans want, and earn back their trust so that they are willing to buy them. Hyundai would provide a decent case study of one way to make that happen. The Cobalt is a good case study of what one should avoid.
The last time I checked Cobalt still outsells any Hyundai model. Hyundai succeeds for one simple reason: they are cheap. The can afford to do that because they do not have the legacy labor cost that GM has. When GM sells their cars cheap, as in during the discounts they had last summer, the sales numbers skyrocketted. It almost goes without saying that every single Hyundai-buying consumer would have bought a Toyota or Honda if a comparable Hoyota product were sold at the same price.
(1) Over-production. The domestic carmakers keep overproduce them because the labor contracts stipulate full wage whether the workers are making cars or not. Keep making cars and driving price down cost less than pausing production. Shunting the overproduction to the rental fleet instead of offering them for sale through the retail channel is a solution not a problem. Blaming the management for selling to rental fleets is like blaming the fire on the firefighters instead of the cigrette butt or candle that started the fire. Yes, houses with firefigters working on them are more likely to have fires, but they are not the fundamental cause of fire.
(2) Fleet operators' preference for domestic makes. Fleet operators are used to have rolling parts bins, and domestics tend to have better parts supply channel and more available mechnics that the operators can hire. In Germany, Mercedes Benz has large presence among the fleet operators.
Just completely deregulate the labor market, greatly increase the amount of trickle-down policy out there, and GM will be making cars that make the Japanese weep with fear, and make the Euros look like old deathtraps - while at the same time improving the standard of living for everyone. That's the rub!
There is nothing theoretical about margins or plant utilization. Carmaking has been a mass-production business since the 1920's. In this kind of business, if your plant utilization rate is low and your fixed overhead cost is high per unit, you are as good as dead. Both Honda and Toyota have much higher plant utilization rate than GM. GM management has no real power of inventory managment aside of periodic heavy discounting to get rid of the inventory pile-up. Lets go through this set of numbers for the fourth time:
If a car costs $6k in material and $6k in labor to make, making the car and selling for $11k only loses $1k, which is a $5k savings compared to losing $6k for not making the car and still having to pay the UAW workers! There is nothing theoretical about that $5k. No company can afford to pay $5k for every unit that it does not make. That is the root problem with domestic over-production. Tattered brand image comes from there . . . anything in oversupply is automaticly undesirable.
Here's a suggestion for improved plant utilization: Use those plants to build cars that people want, so that you can sell them for retail. If you're going to build an Impala, make it so good that customers not named Avis and National are happy to buy it at their corner dealerships.
If achieving "efficiency" comes at the expense of dumping product into the market that kills residuals and brand equity, then you'd be better off not building the product. Yet another reason why Toyota makes more revenues and more profit than does GM, while selling fewer vehicles.
I'd bet that the billions blown on those bad acquisitions could have been used to revamp those products. (But that might mean criticizing management for having misplaced priorities, and we couldn't possibly have that happen...)
What makes you think a UAW shop with lower level of automation can turn out cars made as precisely as Camry? What makes you think anyone would buy a car exactly as good as Camry but cost $1500, $3500, or $5500 more? (depending on which number of legacy cost you believe) The case for small cars like direct competitor to Civic is even worse for GM because GM does not even have a global presence like Civics and Corollas do to help pay for the R&D and platform engineering.
Now you see why GM has to compete where it is not the forte of Toyota and Honda: the big SUV's and big premium cars for profit in the consumer retail market. Fleet sales and cheap cars just help keeping the company in the running by helping paying for the astronomical labor overhead.
We have been through this upteen times. M&A has netted the company dozens of billions of dollars in profits. Without profitable M&A, the company would long have run out of money. You can not make money on M&A without doing M&A, and on the other hand sometimes deals do go bad; that's why you have to count up the entire scorecard, not just one side of the debit/credit line.
EDS: GM bought EDS in 1985 for $2.5 billion, and sold EDSin 1996 in a spin-off worth about $10 billion;
Hughs: GM bought Hughes in 1984 for $5 billion, and sold various divisions of Hughes between 1997 and 2004 for a total of about $20 billion;
Flextronics: a spin-off in 1996 worth about $3.5 billion
GMAC: still in progress . . 51% of is fetching $14 billion in three years.
Methinks an apology from you is in order :-)
I applaud GM for building GMAC and other adjunct businesses. The criticism has been with its inability to build cars.
The problem is obviously with the product. If GM could simply sell Impalas at retail at the same quantity that Toyota can sell Camrys or Honda can sell Accords, then there wouldn't be an issue, and profits would be sufficient. But American consumers aren't terribly inspired to buy products like this, leaving it to Avis and Uncle Sam to buy most of them.
Somehow, the UAW builds Chrysler 300's and Ford Mustangs, and the public buys them quite happily. Nothing prevents GM management from making their cars desirable and interesting, except for GM management.
2014 Malibu 2LT, 2015 Cruze 2LT,
That is only true as it relates to the number of defects off of the assembly line. It has nothing to do with the long term reliability or durability of the cars. And that does not even include the resale value or the manufacturers record of standing behind a defective vehicle.
-If the UAW or another union builds a car that is successful or reliable, the positive result is ignored.
-If GM management fails in its attempts sells or manage the inventory of one of its imported cars, the management failure is ignored
-When GM management makes costly multi-billion dollar mistakes, their failures are rationalized.
-If a manufacturer other than GM scores a hit with a union-built car, the positive result is ignored.
-If a GM-designed vehicle fails to sell at projected levels, the union is blamed, even though it didn't design the car
-If a GM-designed vehicle is unreliable, the union is blamed, even though it doesn't manage the production line, operate the facility or engineer the product
Again, the numbers make it clear -- the union creates a high expense burden, but GM actually has overall lower costs than do some of its major rivals, so the actual expenses are not the issue, per se.
The real difference between GM and its main rivals is its wholesale prices, which are $4,000-5,000 per unit below those of its main rivals. GM's cost structure would be manageable if the cars it built could be sold for the same prices as those of its rivals, but since GM supports similar costs with far lower revenues, the lack of revenue results in signficant losses.
Cutting costs will reduce the losses, but only better products will lead to profit. Thus far, I've seen no evidence that the cost of improved quality would be greater than the price increases that would come from improved quality (obviously, this isn't true with rival profitable automakers, that are able to pass these costs onto its customers).
Likewise, it has not been shown that it is more costly to create an interesting design than a dull one (you can pay engineers the same thing to create an interesting or an uninspiring product).
And I seriously doubt that GM management would actually invest any windfalls into better products, particularly when they seem to prone to invest their money poorly whenever given a chance. Give a GM manager billions to play with it, and chances are good that he'll squander on a bad acquisition, instead of using that same cash to create a killer product that improves public perception and fetches higher prices. Sounds about as wise as would be giving a winning lottery ticket to a drunk in a trailer park.
You use a lot of numbers with little to substantiate your claims. Do you have any credible links that will back up what you say? When you are proven wrong in the case of GM M&A you change the rules. Those are not automotive ventures. I say so what, it kept my dividend coming year after year. Your constant ragging on GM management has little basis in fact. I have read all the arguments and you have lost most of them. GM doesn't have the greatest cars, so what. They are still building good trucks, buses, trains, SUVs etc, etc. They have lived up to the contracts they made with the UAW. Have the United Auto Workers lived up to management expectations?
The Honda Accord has lost market share every year for the last 3 years. I don't hear you saying how lousy Honda management is. Your hatred toward GM management is consistent, I will give you that.
GM Europe and Australia are not doing well either. GM Europe lost billions last year. There are difference even among unions; UAW has one of the most stifling labor arrangement. The more you raise these examples, the more it goes to prove that aggressive unions lead to terrible company performance.
The problem is obviously with the product. If GM could simply sell Impalas at retail at the same quantity that Toyota can sell Camrys or Honda can sell Accords, then there wouldn't be an issue, and profits would be sufficient. But American consumers aren't terribly inspired to buy products like this, leaving it to Avis and Uncle Sam to buy most of them.
"Simply"?? Why don't you try make an Impala in your own garage and tell us how much you would have to charge for it. GM simply does not have the level of automation or the disciplined work force to make cars with the same kind of precision manufacturing that Honda and especially Toyota have, both thanks to union. Even if GM management and design team put together a design exactly like that for the Camry, the production line would not be able to make it with the same yield rate as the Toyota Camry production can. Even if it could, the car would still have to be $1500, $3500, or $5500 more in price to cover the legacy labor overhead. In other words, still not able to sell and make profit like Honda and Toyota.
Somehow, the UAW builds Chrysler 300's and Ford Mustangs, and the public buys them quite happily. Nothing prevents GM management from making their cars desirable and interesting, except for GM management.
Once again you are showing your ignorance of the industry. Both Chrysler 300 and Ford Mustang have $1000 incentives on them right now:
http://www.chrysler.com/incentive/300.html
http://www.fordvehicles.com/features/news/detail/index.asp?id=1515
And this is April, the spring car buying season! 300 and Mustang are just like GTO, hot when just coming out but the desirability fade very quickly in the model cycle.
There are plenty going on that prevent GM, Ford and Chrysler from making their cars desirable:
(1) tattered reputation of shoddy workmanship from the 80's thanks to irresponsible union workers;
(2) over-production rendering discounting inevitable, also thanks to the inflexible union work rules.
Socala: You are the only one making any real sense on this site. The Managment brownnosers around here are going to ignore any facts you give them no matter how much you back them up. I'd be willing to bet most if not all of the Ricky et al worshippers are probably overpaid paperpushers at whatever line of work they're in.And I'll also hazard a uess that most have never done a real days work in their ****-kissing lives.Apparently they are part of that class of people who will never honor labor and will never honor honest union work. I'm NOT saying that the UAW is perfect but a lot of people around here seem to think GM management is. How deluded! :P
-If GM management fails in its attempts sells or manage the inventory of one of its imported cars, the management failure is ignored
Do you have any objective standards for success vs. failure at all?? GTO is in its third model year, and the discount incentive is only $500 on a MSRP $31k car, or 1.6% cash incentive in 3rd model year; whereas 300M is in its second model year, and already has $1000 incentive on a car with less than $24k MSRP, or 4.2% cash incentive in 2nd model year; Ford Mustang is also in its second model year, and the $1000 incentive for $19k MSRP car, that represents 5.2% in second model year!
In summary, you are claiming GTO with 1.6% cash discount in the 3rd model year is an abject failure, yet claming 4.2% and 5.2% cash discount in the 2nd model year for both 300 and Mustang are resounding success?? Do you ever think for yourself besides swallowing media hypes?
-When GM management makes costly multi-billion dollar mistakes, their failures are rationalized.
Their M&A failures were compensated by M&A successes that generated 3~4 times as much profits! You need to learn counting, not just accounting.
-If a manufacturer other than GM scores a hit with a union-built car, the positive result is ignored.
See above. You need to look beyond the hypes and analyse the numbers for yourself.
-If a GM-designed vehicle fails to sell at projected levels, the union is blamed, even though it didn't design the car
The quality of work force, and the level of automation, both of which are heavily influenced by UAW, have a lot to do with vehicle design and engineering.
-If a GM-designed vehicle is unreliable, the union is blamed, even though it doesn't manage the production line, operate the facility or engineer the product
If the union is able to shutdown production as soon as the management tries to improve production efficiency and quality like UAW did in 1998, you certainly can not blame the management for lack of trying.
Again, the numbers make it clear -- the union creates a high expense burden, but GM actually has overall lower costs than do some of its major rivals, so the actual expenses are not the issue, per se.
What numbers? Which manaufacturers are you comparing to? You are comparing apples to oranges in fleet mix, not to mention that the higher cost manufacturers are usually niche manufacturers that can maintain price by tightly control supply . . . something GM, Ford and Chrysler can not do. All they can do is proffering discounts on overproduced cars, even models that used to be hot cars. It happens in each and every model cycle! You would have known if you ever actually studied the industry.
The real difference between GM and its main rivals is its wholesale prices, which are $4,000-5,000 per unit below those of its main rivals. GM's cost structure would be manageable if the cars it built could be sold for the same prices as those of its rivals, but since GM supports similar costs with far lower revenues, the lack of revenue results in signficant losses.
Once again you are comparing apples to oranges. First of all, the cars are different. If GM made the exact same cars (even ignoring manufacturing precision and efficiency that are lacking at UAW shops), they would still be more expensive than their rivals thanks to legacy labor cost. That's why GM has to compete where Toyota ain't! It's dead meat if it ever tried to compete against Toyota head-on in the main brand Chevy. Even Buick has to offer ES level equipment at Camry price.
Cutting costs will reduce the losses, but only better products will lead to profit. Thus far, I've seen no evidence that the cost of improved quality would be greater than the price increases that would come from improved quality (obviously, this isn't true with rival profitable automakers, that are able to pass these costs onto its customers).
No one is against better quality or better products per se. GM product quality has been improving significantly in the last decade, as evidenced by numerous surveys. What constitute better products is an important management decision. So far GM's choice of Escalade-type of vehicles have proven far more on-target than your suggestions wasting money on small car, a segment tha has been losing money for three decades!
And I seriously doubt that GM management would actually invest any windfalls into better products, particularly when they seem to prone to invest their money poorly whenever given a chance. Give a GM manager billions to play with it, and chances are good that he'll squander on a bad acquisition, instead of using that same cash to create a killer product that improves public perception and fetches higher prices. Sounds about as wise as would be giving a winning lottery ticket to a drunk in a trailer park.
Speaking of yourself, perhaps, considering the (lack of) counting and accounting skills that we have seen from you so far. GM management's investment skills are actually remarkably good. The 400% returns that GM management registered over a decade-long period from mid-80's to mid-90's is probably better than your choice of mutual funds, assuming you had any. The killer products that you have been suggesting, small cars and hybrids, are decidedly money wasters, especially in GM's condition.
Really? On what planet does it make sense to have 4 > 30+ (the loss vs. gain in $Billion by GM management in M&A), and 1.6 > 4.2 and 5.2 (the % discount on GTO vs. those on 300 and Mustang)? The Socala have been making are so out of touch with reality that you guys may as well blame GM management for not growing money trees on all GM-owned land.
The Managment brownnosers around here are going to ignore any facts you give them no matter how much you back them up
What facts?? That 4 > 30+ and 1.6 > 5.2 and 4.2?? If you want to use words like "brownnoser," consider yourself filled with brown matters between your ears instead of grey matters.
I'd be willing to bet most if not all of the Ricky et al worshippers are probably overpaid paperpushers at whatever line of work they're in. And I'll also hazard a uess that most have never done a real days work in their ****-kissing lives.
I never had a paper-pushing job in my life. Having worked as programer for a startup for a couple years back in the 90's, I realized that working for myself is a lot better than working for others, so that I do not have to kiss anyone's [non-permissible content removed].
Apparently they are part of that class of people who will never honor labor and will never honor honest union work.
How can you call that honest work, when they use squatter tactics to demand pays that put them in the top 20% income in this country, yet when it comes to responsibility, they claim they have absolutely nothing to do with product quality?? If labor has nothing to do with product quality at all, shouldn't they all be replaced by minimum wagers??
I'm NOT saying that the UAW is perfect but a lot of people around here seem to think GM management is.
Nobody ever claimed that GM management is perfect. Socala is the one demanding perfection. Losing $4 while winning $30+ is terrible sin in his books. All I said was that GM management is reasonably competent. Heck, their investment record, 400% in a decade or so, is actually pretty damn good, a record that would make many mutual fund managers proud.
When the question came up of quality of construction,waste or the time involved in assembly the response was....."Let management worry about it. That is why they are getting the big bucks' (That was followed by the comment that when one of the workers was on the line 40 years ago he created a puzzle for the dealerships. He would put an empty 1/2 pint whiskey bottle with a marble in it in the door panel.
He said he didn't do it often but wanted to see if the quality control foreman would catch it. He rarely did. THAT
was the real accomplishment for the day on the line.)
Some of the current union members smiled but the young ones shook their heads in disapproval. There IS an attitude difference in the age groups. Maybe there is hope.
Most salaried retirees were so incensed that the conversation finally trailed off. When both groups left I noted the vehicles they were driving. The salaried group had driven away with the vehicles of their previous respective employers. The union retirees had a diverse mixture of Asian,European,with very few domestic vehicles.
I guess they still consider entitlements a one way street.
And offering employee pricing across the board says what about the entire fleet? It says that you can give them away, but at the end of the year the numbers still say that the imports are gaining fast.
Maybe the domestics need to shut a plant or 2 and cut down on some of the "might as well overbuild because we have to pay 'em anyway" and spend some of the savings on improving quality.
Some like to say that we have 3 cars that sell real well so we must be awesome, while noting that the Camry and Accord are losing ground so they must be dieing. In fact, Toyota gained ground overall, which means that the buyers that might have bought a Camry instead bought another Toyota, which still leaves the money in the same pot. I don't see Toyota crying about losing 1000 Camry sales if the Tacoma sales rise 2000. There are several reasons that the rentals love domestics. Number 1, it gives their customers a warm fuzzy to know they are supporting domestic labor. Number 2, the cars are cheaper to buy. Number 3, they have a decent chance of surviving the 2-3 year life cycle of the rental company, after which it is someone elses problem. And number 4, the rental guys don't have to drive them. Kinda like the Domestic factory car lots. So many workers are driving imports that the company had to ban them from closer lots. When you don't even have faith in your own product, the battle is lost.
Maybe you should research the subject. For the wages and benefits the company expects a level of expertise in a given craft from the Union member. I just retired after 35 years in the Teamsters Union. I was a shop steward for many of those years. I have had to defend a lot of slackers that I would have been happy to see fired. For the most part the Union workers in my craft, telecommunications, were hard working. You always have whiners and slackers. A shop steward sees both sides of the picture. I don't think you have been around long enough to see much of anything. You like to make reference to those that would kiss up to management, as if you have a lot of experience.
In my working experience I've seen management run to be the first for the photo oppertunity, and some go to such links to try to take all the credit for cost savings on my production line while we just shake our heads. My team leader got a promotion, and I got $.40 cents out of a possible $.75 cents for saving my company $12 million in scrap during my review. Oops I forgot to mention I got a rubber steak dinner.
I'll take a union contract anyday over a review. The union contract ensures my hard work get's rewarded and when I see something wrong I have the freedon to speak up and tell my boss he/she is wrong without being fired. This wouldn't be tolerated in a non-union enviroment unless you are the boss.
My 2 cents worth. :shades:
Rocky
Okay, help me with this one, how is 4 > 30+ and why is 1.6 > 4.2 and 1.6 > 5.2?? What facts have Socala provided? Mostly partial facts and half-turths, if not outright fantasies (like "simply" make better small cars and hybrids) as far as I can tell.
My team leader got a promotion, and I got $.40 cents out of a possible $.75 cents for saving my company $12 million in scrap during my review.
$.40/hr over 225 days and 8hrs/day is about $720 a year, or a present cash value of about $12k at current interest rate. Whether that is a fair reward for saving $12mil depends on how many people are involved in the team for sharing the prize.
The union contract ensures my hard work get's rewarded and when I see something wrong I have the freedon to speak up and tell my boss he/she is wrong without being fired. This wouldn't be tolerated in a non-union enviroment unless you are the boss.
You must have a very unique type of union. Most union contracts insist on seniority-based pay scale. Whether you work hard, work not so hard, or in some cases not work at all, is completely irrelevent to your pay. If you want performance-based pay, union is certainly not the solution . . . performance evaluation is what the management is for. The bit about all non-union environment does not tolerate employees speaking up is also wrong. My employees speak up to me all the time; in fact, it's the slackers who don't put in enough effort to see problems or make improvement suggestions that get let go every year. Competitive businesses can not afford to staff themselves with yes-men and yes-women.
You are right on track. I worked in a non-union shop for many years (17). Bringing in a union came up alot. Every time the company came down with a different pay scale which depended on productivity. Nobody ever got a pay cut with the updates, but the the old-timers got pretty hot when the young pups came in and made more because they worked harder. Some of the guys thought they had earned the right to sit around and BS half the day. Eventually it worked out well for everyone because the slackers either left or stepped up to the plate. They made more money, the company made more money, and more employees were brought in. We doubled our employees and made a significant increase of productivity per person all in less than a year. And no one that stayed (only 1 left) got less than a 10% increase in pay during that year. A big raise and no union dues. Gotta love it.
steel
passenger railroads
airlines
domestic automakers
Unions and most of their participants either in or heading to bankruptcy.
steel
passenger railroads
airlines
domestic automakers
Unions and most of their participants either in or heading to bankruptcy
The steel workers demand more wages. The steel price goes up. The automakers pay more for steel. They are unable to set aside as much for research. Then their workers go on strike, costing millions. The company eventually settles. Now they are in a hole and they need to find even more cutbacks. So now they cut the thickness of the metal in their cars. The quality just took a hit and the steel makers are now selling less steel. Now the steel makers are paying their workers more and selling less. So they raise the price again. Now the automakers need to cut some more. I think we can use plastic where we used to put metal. Now we have hurt longterm reliability. The steel mill just closed too because they can't raise the prices anymore and stay profitable. Now we have many unemployed steel workers and a auto company that still needs SOME steel. So they have no choice but to pay whatever the only company left is selling it for. So, lets put cheaper tires on the vehicles. Next thing you know, you have Explorers rolling left and right and your company has taken a huge hit.
steel
passenger railroads
airlines
domestic automakers
Thanks for the facile analysis. Here's something a bit more accurate:
Steel -- Big Steel failed to meet the rise of more nimble foreign competitors (mini-mills), that used smaller facilities and could adjust production more quickly.
Railroads -- Failed to compete with rise of deregulated airlines (faster) and deregulated interstate trucking (cheaper)
Airlines -- Airlines are always boom-and-bust, cyclical businesses (hub-and-spoke systems are expensive to operate, the quest to provide convenient service often comes at an expense of poor capacity utilization). The niche carriers such as Southwest (short-hop, not hub-and-spoke, and no long-haul services) or JetBlue (limited routings) can compete, but the rest are killed by too many routes to support and the high cost of jet fuel
Domestic automakers -- Failed to rise up to the challenge of smaller, more nimble foreign competitors, many of which were also unionized.
Your best comparison was the analogy to steel, but your reasoning was off the mark. Like Big Steel, Big Autos had far too much market share and entrenchment for their own good. Management missed the mark in both cases by underestimating competition.
The funny thing is that the mini-mills entered the US market by focusing on cheaper products, that Big Steel ignored and let them capture on the theory that low-profit products didn't matter. Too bad the automakers still haven't learned from that same mistake.
Since you're a stockholder in GM (my condolences), you should know that the annual reports of the various automakers are available for free online, most of them via the EDGAR website or else the investor relations areas of their websites. Every number I've cited from an annual report has come from a corporate 10-K or similar release from the company.
When you are proven wrong in the case of GM M&A you change the rules.
Sorry, wrong again. I cited an article from Forbes earlier in this thread that outlined the losses generated by GM's poor automotive acquisitions, which are likely at least in the range of $15 billion. My focus in this discussion has been GM's inability to build competitive cars, not its former ability to operate a satellite TV network, which isn't relevant to the car business being discussed here.
GM doesn't have the greatest cars, so what.
Ouch. If the cars aren't great, people don't buy them, sales fall, profits fall with them, and you end up with the 2005 results -- the automaking group generating pre-tax losses of $20 billion. Good philosophy for you to have if your goal is for the company to continue losing money. As a shareholder, it's surprising that you don't feel ripped off.
Too bad GM didn't take the $15 billion mentioned above, and use it to develop some highly competitive products that could put them back on the map for the mid-market car buyer. As it stands now, GM's best hope is that gas prices drop to $2.00 per gallon, a strategy that I wouldn't bet your farm on if I were you.
The problem here is that this is fundamentally a practical business problem (the inability of GM to create products that meet customer needs), which includes an obvious answer (create products that meet customer needs, with branding and sales/service channels to match). Unfortunately, some have turned it into a religious debate, matching one God (Management) versus another (unions), when both are false idols.
If GM produced good products that met customer demands and the leadership's main problem was trying to keep shareholders happey with below-average profits due to union contracts, then I would have some sympathy for the management team.
But they don't, so I don't. The management incompetence is obvious -- give them the ability to build a vehicle out of reach of the UAW, and you end up with a GTO (sales well below target, inventories piled up), Aveo (more product glut...and the car just came out recently!), an entire line of Saabs that it can't sell, and a strategy to sell gas guzzlers while unleaded is touching $3 per gallon at my corner service station. No wonder I have little faith -- anyone paying attention should be heeding the calls by auto industry critics for Wagoner to resign, before things get even worse.
Only your selective part of the equation. As a stockholder in GM I want them to build, buy or finance whatever makes money.
If the cars aren't great, people don't buy them, sales fall, profits fall with them
If they cannot compete with HonToy, get out of the business of small cars. I don't like them anyway. Stick with what makes money and let the Japanese fight over the small stuff. Last time I checked GM was selling more trucks & SUVs than Toyota was selling cars. Close the poor performing plants and default on the contracts to the dealers, unions and suppliers. File for Chapter 11 protection. Trim the fat and end up with a company that makes money. Isn't that what you want?
That's a good strategy. Unfortunately, these deals have lost GM money virtually every time (Hummer may prove to be an exception, and Daewoo was arguably too cheap to pass up), so your goal has not been fulfilled.
If they cannot compete with HonToy, get out of the business of small cars. I don't like them anyway.
For one, your personal preferences aren't the issue -- the issues are what the marketplace requires, and whether GM should address that need or not.
As noted before, GMNA really isn't competitive in any segment except the segment for which they were given formal protection -- the truck market. Now that Toyota, Nissan and Honda are gunning for that segment, you can expect that balloon to eventually pop, too.
The problem hasn't been GM's inability to compete in the car market, but with GM's management and its lack of foresight. As noted above, they made the same mistake with small cars that the steel companies did with low-margin products -- they allowed smaller competitors to use those cheaper products to build their own reputations and networks in the US market, which allowed those smaller firms to soon go for the big fish. They gave the baby formula to the kids who would soon grow up to beat the pants off of them.
Have you noticed that Hyundai has followed Toyota's strategy to a T, and is now ascending with its combination of a quality emphasis and targeting the low- to mid-level markets in order to build a reputation? That's exactly what GM needs to do if it is going to get the young people of today to buy a more expensive GM car twenty years from now.
If you think GM is going to emerge as the BMW of trucks, then I think you need to have a reality check, that ain't going to happen. More than likely, GM will lose market share in that segment, too, which means even more losses and a continued slide downward, with no end in sight.
I would love to meet you across the negotiating table. I have bashed heads with several pretty tough CEOs at RCA & AT&T over the last 35 years. I don't think you have what it takes to operate under the constraints that a Union puts on a company. You are a typical Monday morning QB.
And Rocky if you feel you were treated unfairly by being laid off, the NLRB is who you should talk to. There are laws that protect all workers in hourly jobs.
You are lost in your own denial. In the world of M&A you win some and lose some. GM is still ahead on that front. Find a new pony to ride. Their non automotive M&A have supported a failing car manufacturing business for too long. If as you say the other automakers beat them out in Trucks and SUVs invest in something else. Playstations or theme parks. Don't keep throwing good money after bad. You seem to think that GM should be married for life to the automotive business. Why should they live with those constraints?
You need to get a new slide rule. The whole point of this discussion, including the details provided in the Forbes article, is that GM is NOT "still ahead on that front." Losing $15+ billion is not a good way to get ahead.
You seem to think that GM should be married for life to the automotive business.
The problem is that very few companies do a very good job of diversifying horizontally (out of their industries). There is the occasional exception (GE is probably the world's finest example), but in large part, most corporations have learned that diversifying away from their core competencies is a good way to lose money, because it's hard to run a business that you don't understand. And being that M&A more often than not destroys shareholder value, a growth strategy built on buying failed competitors is usually going to create more losses for the parent company, who will probably fail just as their prior owners did. Witness GM with Saab and FIAT -- both were losers before and after the deals, and cost GM dearly, so why put money into them at all?
Unfortunately, GM doesn't seem to have a core competency, hence the problem.
it wasn't worht the fight. My employer can determine my wages even if I won. I didn't have a union to help me win raises. I had empty promises, and after the smoke cleared I was off to better things. Not neccessary bigger, but marginaly better.
Rocky
In the case of GM that is just not true. They have made Large sums of money with M&A outside their core business. Why don't you want to accept that? I hated to see them sell some of those businesses. They have done it to remain solvent. I don't know if it is ego or poor judgement. I don't think you are right, that they could have made something out of the mess they have in their automotive divisions. I did dump my GM stock just before they started selling off GMAC, the only cash cow they have left. That may be a fatal mistake. It was bad enough that they were cutting the dividend. Maybe Kerkorian will have enough stroke to split up the parts and sell them off. They do have billions in property assets. Maybe the Japanese will buy some of those plants and hire the out of work UAW members. Probably will pay more than being a greeter at Wal-Mart.
You know Ford ain't doing so hot either. They are not getting the press that GM/Delphi has garnered. The Taurus & Focus are in 8th & 10th place and selling less than last year. The Fusion & Five Hundred are selling like niche vehicles. The Mustang is losing steam. If it were not for the hot F150, Ford would have little to be happy about. They tried to play the hybrid game with Toyota and got sacked by suppliers loyal to Toyota.
I think those stupid Bill Ford jr. ads are killing them. He is pathetic. I think if I was going to make a bet on who goes into chapter 11 first, it would be Ford.
That was a slap in your union brothers face. For someone that totes being a teamster, you sure don't sound like the ones I personally know which includes my Uncle Doug
(Dads Brother) :surprise:
Rocky