Even the possible phaseout of GM's Saturn division, he said, was in the works well before Congress demanded that GM produce a so-called viability plan by Dec. 2 to show it can become self-sufficient and pay back its loans. Saturn has its best-reviewed product lineup in years, including the Aura sedan. But GM management made a proactive move to look at phasing out the brand because its sales didn't match the critical acclaim. "We had to reassess. There's simply not enough money to support all the brands," Lutz said. Mr. Lutz objected to recent suggestions by Senator Christopher J. Dodd of Connecticut, the chairman of the banking committee, and others that Mr. Wagoner should be replaced, saying that firing him would be a “serious step in the wrong direction.”
“This has nothing to do with trying to improve the executive team,” Mr. Lutz said. “This is the equivalent of the Incan or Mayan days when everybody would go to the top of the volcano and throw a virgin in. It’s the feeling that if we make a sacrifice that somehow the gods would be appeased.”
“Why is it that we’re just dumb old Detroit all of a sudden?” Mr. Lutz said. “Going from a 17 million vehicle market to a 10.8 million market, that’s what the problem is.”
Mr. Lutz said the Big Three may be partly to blame for the chilly reception they received in Washington when they asked for federal assistance.
“I have personally been sensing this hostility on the part of Washington my whole life,” he said. “But it’s partly self-inflicted, because I think there was a period in the U.S. automobile industry where we did not treat Washington and the politicians with sufficient respect.”
He said he looked forward to working with a government oversight board monitoring GM’s use of federal loans.
Outside overseers, Mr. Lutz said, would get a first-hand look at how difficult it is to be a profitable car company but be hamstrung by huge legacy costs, and comply with dealer franchise laws and regulations on fuel efficiency and vehicle safety.
“They would have an inside look at the stress that a lot of this government regulation is putting on our industry,” he said.
I know this is not directly GM but it does indicate the cost of changing a hybrid battery. For a 2002 Prius with $174,000 miles.
The prospective bill was much higher than just the replacement battery, however. The service manager said a new battery management computer might be needed, at a cost of $1,176. And there was $31 for new electrical cables and $720 for labor. With taxes, the estimate came to $5,785.76.
Heather Knowles says that the dealership replaced her Prius' battery pack toward the end of October, charging her the new, lower price of $2,299, plus about $650 in labor. No new computer was needed.
"The whole bill came to just under $3,000," she said.
“Why is it that we’re just dumb old Detroit all of a sudden?” Mr. Lutz said. “Going from a 17 million vehicle market to a 10.8 million market, that’s what the problem is.”
What is Lutz's excuse for losing money in 2005 - 2007 when the US market was selling 16M+ cars?
“I have personally been sensing this hostility on the part of Washington my whole life,” he said. “But it’s partly self-inflicted, because I think there was a period in the U.S. automobile industry where we did not treat Washington and the politicians with sufficient respect.”
It's not just DC where this hostility exists. There is no love for the automotive industry where I live (south central PA).
Outside overseers, Mr. Lutz said, would get a first-hand look at how difficult it is to be a profitable car company but be hamstrung by huge legacy costs, and comply with dealer franchise laws and regulations on fuel efficiency and vehicle safety.
And who's fault is huge legacy costs? GM management agreed to the terms of the contract. Fuel efficiency? How stupid of us Americans to want a fuel efficient car made by our own manufacturers? It's ashame we have to rely on Toyota and Honda to make legitimate hybrid cars.
I really beginning to think Lutz is getting a little too old for this game. Blame everyone else for your problems, not the decisions management made.
James T. Fleming, president of the Connecticut Automotive Retailers Association, said that fewer dealerships “will happen one way or another,” and that a Congressional rescue package “is preferable to bankruptcy or no action.”
The dealers hope that Congress will help them by giving consumers temporary tax breaks on auto loan interest, and they want other help to loosen credit so dealers can finance their inventories. Some dealers are hoping an auto bailout will allow the manufacturers to offer them compensation if they agree to close without a fight.
The economic decline among the dealers is undermining their legendary political clout. Their powerful lobbying organizations secured the franchise laws in virtually every state, which protected them from efforts to winnow their numbers in the past. Now it is possible that Congress will try to suspend or otherwise override those laws as part of a reorganization plan, something dealers have begun to lobby against.
In recent years, dealers that have closed their doors have usually come to severance agreements with the manufacturers, accepting compensation packages worth as much as $500,000.
"Today the Michigan senator Levin said 3M jobs would be lost without a loan. Boy are they inflating the numbers now and the full court press is on." LOL so shameless.
"Maybe the Feds should just give every tax payer a $7000 tax credit toward the purchase of any new vehicle and let Americans decide who lives and who dies. " Good idea. I second this motion.
"That would be great but you know my opinion is that if the big 3 go under no one will be buying steak dinners anywhere" I will :P
"Correct, and I say they're full of it. Sorry, but that's like saying if McDonald's goes out of business, they'll take Burger King and Wendy's with them, as well as the entire American beef and ranching industry. How likely does that sound? " 3 words, bud: FULL OF BULL (or is it beef?) :P
Regarding GM's ad: boo hoo, you made that mistake tears ago, forgiven, but not forgotten. You make the mistake again, not forgotten, nor forgiven, Rick. Like the old saying: fool me once, shame on ya, fool me twice, shame on me!
Kernick is right on with his post #2593. Simply put GM needs to operate on the "supply meets demand" basis, not the vice versa they're doing now: "demand must meet supply", America, we need more customers. LOL yeah right.
Then again maybe it wont matter. I heard the congress already passed the D3's bailout proposal. Maybe I should stop paying taxes instead :P
Today the Michigan senator Levin said 3M jobs would be lost without a loan. Boy are they inflating the numbers now and the full court press is on." LOL so shameless.
3 million is the number in the original study.
http://www.thetruthaboutcars.com/wp-content/uploads/2008/11/finaldetroitthreecon- tractionimpact_3__001.pdf Scenario 1: 100 Percent Reduction in Detroit Three U.S. Operations Should all of the Detroit Three’s U.S. operations cease in 2009, the first year total employment impact would be a loss of nearly 3.0 million jobs in the U.S. economy— comprised of 239,341 jobs at the Detroit Three, 973,969 indirect/supplier jobs and over 1.7 million spin-off (expenditure-induced) jobs. The employment picture recovers somewhat in 2010 (2.5 million jobs lost) and 2011 (1.8 million jobs lost), due to increased U.S. production by the international automakers, and the process of dislocated workers finding new employment.
100 Percent Reduction in Detroit Three U.S. Operations Should all of the Detroit Three’s U.S. operations cease in 2009, the first year total employment impact would be a loss of nearly 3.0 million jobs in the U.S. economy
A 100% reduction in all operations of the Detroit Three is a completely unrealistic scenario, even in bankruptcy. If you make ridiculous assumptions you get ridiculous answers.
Scenario 2: 50 Percent Reduction in Detroit Three U.S. Operations Should one or more of the Detroit Three fail in 2009, initially all U.S. automotive operations would be affected, including international producers and suppliers. In this scenario, the remaining Detroit Three and international producers recover in 2010. The first year total employment impact would be a loss of nearly 2.5 million jobs in the U.S. economy—comprised of 239,341 jobs at the Detroit Three, 795,371 indirect/supplier jobs and over 1.4 million spin-off (expenditure-induced) jobs. The employment picture recovers in 2010 (1.5 million lost) and 2011 (1.0 million jobs lost), due to the resumption of U.S. production by the surviving Detroit Three producer and international automakers, and the process of dislocated workers finding new employment.
Scenario 2: 50 Percent Reduction in Detroit Three U.S. Operations Should one or more of the Detroit Three fail in 2009, initially all U.S. automotive operations would be affected, including international producers and suppliers.
How? No one is detailing or showing research indicating that McDonalds going BK will take down Wendys, Burger King, the American beef industry, and the Union of Funny-Looking Uniform Manufacturers.
Actually I think the only one that will fail is Chrysler because they will not be allowed anymore loans after the one being approved this year (hopefully) due to the fact that Cerberus refuses to fund them and they have the money. But the US can not allow them to fail, they may not take down 1 million jobs with them but it will take enough to make this recession go deeper and longer. Chrysler is a shell of a company now. There is hardly anyone there anymore. Engineers are gone. Purchasing is gone. Only enough people to keep the plants running.
I foresee complete oversight by the government and revisions made to make both companies profitable in the long term in their view. Chrysler will be "bought" by the government and "sold" to some other parties. Someone will get Jeep, someone will get the minivan and someone will get the full size pick ups. Not sure who needs the trucks other than Nissan and they are in huge trouble right now and have no money.
I foresee the government guy coming in and working out deals with the creditors. I see him working out deals with the UAW to bring ahead concessions and reduce other beni's/pay. I foresee him making deals with the extra dealers. But that is all he is going to be able to do since everything else is already set to kick in. Plants are already being closed to lower capacity. I see him taking money out of the pension fund (10 billion).
The big issue will be how much power he will have to make deals. Can he really "force" dealers to close w/o spending the $20 billion or so to make it work?
I foresee him in March reporting "both companies have cut to be equal to the imports and once we start selling at normal rates they will be profitable" and then recommend more loans to take the companies thru the year.
If the above does not happen I foresee a depression unseen since the great one.
I know we all disagree but only time will tell. We have 3 different studies showing what will happen and we have a bunch of guys/Republicans with import plants in their states saying something else.
Good luck to us all. Oh, yea the above only works if they get the small loan this year.
I am copying this so I can bring it back next year to see how I did.
If one of the big 2 goes under it takes down suppliers. They are barely surviving now.
If just one seat maker loses just 10% of his already decimated business he goes under. This shuts the assembly plant down for at least 1 month until all those other OEM tools (toyota, BMW, MB, Nissan, etc.) can be moved to another supplier(and there are only 3 or 4 seat suppliers and they are all in the same boat). Meantime all the OEM plants shut down that use those seats and almost all the OEM's will have seats at those sources. One month shut down will cause all the other suppliers to stop building parts for one month. They cannot do that in this credit constrained period. They are all on the brink of collapse now.
So it is like a house of cards and we all go down. It will take massive amounts of money to bring it all back.
Now to your McDonalds example. They go out of business. The hamburg that was going to McDonalds is diverted to Burger King/Wendy's/whatever. People just walk next door and buy the same thing slightly changed in presentation. People can easily go next door and do it instantly.
Cannot do that with seats. There is no instant increase in seat production for the other OEM's.
If GM goes under Toyota does not see an instant increase in sales. In fact there will probably be a sudden decrease because of all the lost jobs and buyers just plain scared to buy anything. They lose business instantly and cannot pay their bills. The supplier goes under.
Now all it takes is one or two suppliers to bring down everyone.
So in a house of cards, what's the wiser move? Reinforce the guys on top, or the base of the house? I still say give the bailout to the suppliers, and let the Big3 fend for themselves. The whole problem is the risk of the suppliers going under, right?
If the country's only cattle ranch is in danger of going under, do you give a loan to the cattle ranch, or to McDonalds in the hopes that they don't go broke so they can buy more beef? You know, the fast food analogy really kind of works. :shades:
Of course, I know you would give the loan to McDonalds because of your love for Big Macs. :P But really, Whoppers are OK too.
Giving the loans to suppliers would also work to keep them in business and have suggested that here before.
If GM does not get the loan look for that to happen. Just hope it can happen fast enough to keep the other OEM plants open to save the country from depression.
BUT I do not think that will be enough. The loss of the big3 employees and dealers will be enough to drop us into a depression since we are almost there now.
I know we all disagree but only time will tell. We have 3 different studies showing what will happen and we have a bunch of guys/Republicans with import plants in their states saying something else.
Agreed, there are many opinions but we will all be here in a few months to discuss how it is turning out.
I did hear that the economist Martin Feldstein, economist at Harvard, feels the bailout is a major mistake. He also isn't being paid by the automakers.
Whatever happens it won't be pretty. But the US needs to clean itself up if it wants to be competitive on a world stage.
Agreed, there are many opinions but we will all be here in a few months to discuss how it is turning out.
I probably will not be here if GM does not get the loan. GM will be gone and we will be moving to NY or Chicago. Wife has lots of job offers. Just do not want to go.
I probably will not be here if GM does not get the loan. GM will be gone and we will be moving to NY or Chicago. Wife has lots of job offers. Just do not want to go.
Hope that doesn't happen. We wish the best to you.
If just one seat maker loses just 10% of his already decimated business he goes under.
Here's where that line of thinking fails, and its not plausible. The business environment is not static, it is full of choices that all manufacturers can make each hour, based on the actions of others. Let me explain.
If GM announces they are going under tomorrow, and will stop buying seats from Supplier A which supplies every auto manufacturer, and Supplier A says "now we can't stay in business", what do you think happens? According to what you and your experts think nothing, right? The rest of the whole auto industry just says "OK"? Is that what you think would happen? Toyota, Ford, Nissan, Chrysler,Honda ... each with their multi-billion $ operations are just going to agree to close up for a while, and pay the costs for closing? That's the scenario that happens?! Bulloney!
Those companies would be talking with Supplier A within an hour to see what they Supplier A needed to stay open. There are options such as 1 of these guys like Toyota or Honda who have deep-pockets from many years of profits buying Supplier A. They could also offer Supplier A a loan. Or they could renegotiate with Supplier A to pay them more per seat to make up for the shortfall of temporarily losing market-share.
You must understand that companies will not shutdown multi-billion businesses because they have to spend an extra $50M here and there to keep some supplier open.
Critical suppliers to the remaining companies will be kept open by the remaining companies one way or the other. The remaining companies are going to do everything they can to grab the marketshare of any of the Big3 that fail.
The loss of the big3 employees and dealers will be enough to drop us into a depression since we are almost there now.
Are you inferring that now that we're buying 10M vehicles per year, instead of 16M vehicles, that we as a nation need to loan money to keep enough workers and plants to make 16M vehicles? You don't think the industry needs to immediately cut its workforce to a 10M level? If so do these workers and plants that are kept around: a) do nothing, or b) produce vehicles we don't want and need? Would the vehicles be stacked up with FEMA trailers?
Also explain to the rest of us why people who don't earn a living from an auto manufacturer or supplier should be biased as to who makes how many cuts? The cuts need to occur, I really don't care where; and the markets (people) have spoken thru their purchases on what they prefer.
An analyst report on CNBC tonight forecasts auto industry sales to fall 11% in 2009.
Considering this in the current efforts, a bankruptcy plan should be part of any bailout. Fiscal responsibility from our government demands nothing less.
Even a Business School 101 drop out can see the pending doom of a sure collapse of this domestic industry. Hopefully, the pillars in Government have vision to respond accordingly.
Bankruptcy might not be POLITICALLY CORRECT but it's FISCALLY CORRECT.
Let's see...Making Fiscal Sense:
Obama and Biden believe that spending that cannot withstand public scrutiny cannot be justified. Obama and Biden will slash earmarks to no greater than year 1994 levels and ensure all spending decisions are open to the public. * Make Government Spending More Accountable and Efficient: Obama and Biden will ensure that federal contracts over $25,000 are competitively bid. Obama and Biden will also increase the efficiency of government programs through better use of technology, stronger management that demands accountability and by leveraging the government’s high-volume purchasing power to get lower prices. * End Wasteful Government Spending: Obama and Biden will stop funding wasteful, obsolete federal government programs that make no financial sense. Obama and Biden have called for an end to subsidies for oil and gas companies that are enjoying record profits, as well as the elimination of subsidies to the private student loan industry which has repeatedly used unethical business practices. Obama and Biden will also tackle wasteful spending in the Medicare program.
Better to complete this plan now so no egg on Obama's face!
in 10 years or 20, the auto bailout will be one of the most short-sighted, irresponsible expenditures of taxpayer funds there has been in a long long time. :-(
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Those companies would be talking with Supplier A within an hour to see what they Supplier A needed to stay open. There are options such as 1 of these guys like Toyota or Honda who have deep-pockets from many years of profits buying Supplier A. They could also offer Supplier A a loan. Or they could renegotiate with Supplier A to pay them more per seat to make up for the shortfall of temporarily losing market-share.
That's probably the exact reason that Ford is asking for a line of credit (they stated they don't NEED an out and out direct immediate loan...wonder if they'll tell Congress "No thanks" to the initial package?). They've been starting to do well and show profitability, so they could make use of the suppliers and any freed-up capacity eventually, but their turnaround is too recent for them to have built up enough of a war chest to keep Supplier A afloat if needed.
HMM, your plan would save 2 million jobs even if all three D3 fold.
Yeah, it's smart, fiscally sound, fair, forward thinking, and more efficient with funds. That's why no one in Washington would ever come up with it or go for it. :sick:
Those companies would be talking with Supplier A within an hour to see what they Supplier A needed to stay open. There are options such as 1 of these guys like Toyota or Honda who have deep-pockets from many years of profits buying Supplier A. They could also offer Supplier A a loan. Or they could renegotiate with Supplier A to pay them more per seat to make up for the shortfall of temporarily losing market-share.
That is one supplier. Multiply that by 100's. But I have said all along that the suppliers could be kept opening by giving them loans/cash.
Why would they need to do that to 100's? There are probably a handful that are critical to the other auto manufacturers. If there are 3 companies making shock absorbers, maybe 1 closes and their business is switched to the other 2. Same with tires and wheels. In those cases no loan money is needed because the elimination of 1 supplier, strengthens the other 2.
Suppliers that do an average of 25% of their business, have to cut 25%. They become smaller and adjust.
I think you have this false impression from having been so close to GM and the way it operates, that companies can't and do not make adjustments, unless they plan years in advance. Maybe the Big3 are failing because it's like steering a supertanker, and not doing so well on a slalom course?
If I'm managing a factory and I have 4 customers each pulling 25% (that's GM's market-share) of my business, and 1 goes out of business, I have my staff working on an immediate layoff with actual cuts. In the meantime from Hr #1 after I was notified of that customer pulling the business, I have my Sales manager and myself talking to the competitors of that failing business, to see what their increases will be. I would have to be a fairly incompetent manager, to have no way to keep my business going if 25% of my business went away tomorrow.
ALL businesses fail, it's just a matter of time. So to not have a plan for a business for a failure of a customer or a supplier, or to rely on a customer or supplier too much is incompetence.
In the industry I work in we try to get 2 suppliers for anything critical. If one has a quality problem or a fire, we switch to the other. We ask each supplier also not just to have 1 place where they make an item - again in case of fire or natural disaster. I'm sure we not the only ones doing this, as we have customers who ask us to document our contingency plans, similarly. Our customers also ask us to document how we make things, and that should our business fail, they have the right to the formulas and instructions on how to make our products. And if my company failed, I could start my own company tomorrow, leasing space; and be on the phone with customers tomorrow, and I'd get some of the people who worked here, and we could make that product for them.
The desire to make $ will overcome all obstacles!! Greed is good sometimes. This is why the conomy has never shutdown because of the failure of 1 manufacturing company; and I see you have not found 1 example. Companies and people react to fill any "vacuum" left by the failure of ANY business.
Yeah! And then there's people like me who WON'T buy a foreign car regardless of whether or not we are flush with money and our business/employment situation is stable. It will be used domestics from here on out if the Big Three fall.
Yeah! And then there's people like me who WON'T buy a foreign car regardless of whether or not we are flush with money and our business/employment situation is stable. It will be used domestics from here on out if the Big Three fall.
There's still Tesla. And doesn't Mack make an SUV these days? :shades:
Here's an idea, if the Big3 fail, why not start your own new domestic automaker? Seriously, if you make a product that enough find desirable at the price, you'll be successful.
Oh, starting my own domestic automaker was a dream I had when I was a kid. I used to draw my own designs of various cars. I don't even remotely have the capital to even attempt it. The last guy who seriously tried was Henry Kaiser and we all know how well that went over. Well, maybe if I stumble across a genie in a magic lamp, I'll wish for it. You guys will then have some pretty awesome domestic cars.
i> Why would they need to do that to 100's? There are probably a handful that are critical to the other auto manufacturers. If there are 3 companies making shock absorbers, maybe 1 closes and their business is switched to the other 2. Same with tires and wheels. In those cases no loan money is needed because the elimination of 1 supplier, strengthens the other 2.
Every part is critical in a car. Just one not available will stop the line.
I used seats as an example. How about the door trim. Cannot run to a different supplier for that. Then there is the IP upper close out panel. Cannot run to a different supplier for that. How about the side door glass? And it goes on and on. The only parts that I can think that are not critical are nuts and bolts. Even shock absorbers are vehicle specific.
And I used just one seat supplier. All 3 suppliers lose ~25% of their business if GM goes under. GM and the OEM's dual tool very few parts anymore. Seats, door trim, IPs, cradles, etc. are not dual tooled. Tooling is just too expensive. And moving tools takes weeks to get the parts back up and running.
Today the suppliers just cannot survive losing another 25% of income. GM going down will shut down the industry unless huge amounts of cash are given to all the suppliers.
The auto industry would undergo a restructuring process akin to bankruptcy reorganization, only with fewer rigors and with the government, not a judge, in control, and with many associated political complications.
The program would be overseen by an official, tapped by President George W. Bush, whom congressional aides and lawmakers describe as an "auto czar." This person would act as a kind of trustee with authority to bring together labor, management, creditors and parts suppliers to negotiate a restructuring plan. He or she also would be able to review any transaction or contract valued at more than $25 million.
"We call this the barbershop," said House Speaker Nancy Pelosi, a California Democrat. "Everybody's getting a haircut here, in terms of the conditions of the bill," she said, noting the likely impact on labor, bondholders, shareholders, car dealers, suppliers and executives. "The management itself has to take a big haircut on all of this."
And I used just one seat supplier. All 3 suppliers lose ~25% of their business if GM goes under. GM and the OEM's dual tool very few parts anymore.
In plants were I've worked, we've also had different tooling for different products. Say a supplier is running 2 shifts, totalling 16 hours. If today they are putting the tooling on a machine for 4 hours to make GM armrests, and they change tooling then to make Ford armrests for 4 hours and Toyota for a few hours ... , why can't they adapt? I really don't understand this. Is there factory setup really this screwed up?
The supplier couldn't cut from 16hr to 12 hr to makeup for the reduction in GM demand? Or ...
If Ford and Toyota get the GM marketshare they can't run the Ford and Toyota tooling 6 hr vs. 4 hr per day?
And the supplier can't say to Toyota or Ford, that we're upping the price 10%, or the alternative is we close up. And Toyota or Ford won't pay the extra?
And moving tools takes weeks to get the parts back up and running.
What's that - union speed? For chrissakes!, in 1942 an aircraft carrier - the Yorktown - that was nearly sunk at Coral Sea was repaired (including the whole flight deck!) in 24 hours and sent back into battle!! (I suggest the UAW and Big3 take such a survivor attitude! instead of being negative and going back "we can't do that because of contracts and rules!")
Tooling for shock absorbers or plastic pieces can be changed in 15 min at a typical factory. I've been to a Sylvania plant that makes auto lighting, and they can make 1000's of one bulb per day, or 20 of a hundred different bulbs.
I wonder about how the suppliers shake out. Back about 8 years ago Nissan was on the brink of failing with $22 billion in the red and 1,100 suppliers. Renault brought in Ghosn who cut the number of suppliers to 400 and turned a profit within a year.
I don't know if there's another Carlos Ghosn out there but he proved that turning things around can indeed succeed and that the status quo on suppliers isn't sacred.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
Mulally has said his strategy since he left running Boeing to take over Ford two years ago was to speed up the three-step line of attack the company had in place: cut production to match demand; make cars people want; and focus on core brands.
It's not complicated, but it has meant breaking with old Detroit ways of doing things, selling brands people admired and laying off tens of thousands.
It also sounds like Ford is prepared to use it's credit line and any credit from the feds to support their suppliers. Together with the resources of all the other auto manufacturers, ALL suppliers will not go out of business. What will happen is that the number of suppliers will adjust and the size of each supplier will adjust TO MEET DEMAND.
If Ford could survive a GM bankruptcy I'd be all in favor of letting exactly that happen. The reason Mulally supports the bailout is because he's afraid the market panic of a GM bankruptcy could cause enough panic to take Ford down with it despite Ford's good plan.
If they'd start building the Fusion in the USA they could tempt me.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
For chrissakes!, in 1942 an aircraft carrier - the Yorktown - that was nearly sunk at Coral Sea was repaired (including the whole flight deck!) in 24 hours and sent back into battle!! (I suggest the UAW and Big3 take such a survivor attitude! instead of being negative and going back "we can't do that because of contracts and rules!")
That's a big issue. I read in an article recently that a machine broke down at a Honda plant (in Ohio?). Many employees flocked to the machine and they improvised a workaround solution. They saved a loss of 750 cars of production because they continued operating. The article said that in a union shop there would be discussions of roles, reviews, etc. Some people would not be allowed to be involved at the machine due to competition for specific jobs. It would have taken days instead of hours and that would have been a lost 750 units of production. I don't know if this is all correct but that is what the article indicated.
For chrissakes!, in 1942 an aircraft carrier - the Yorktown - that was nearly sunk at Coral Sea was repaired (including the whole flight deck!) in 24 hours and sent back into battle!!
Though the workers at Pearl were real good at what they did, they were not miracle workers. One bomb hit the Yorktown as compared to what hit the Lexington. That being said, the Yorktown arrived on the 27th and left on the 30th with workers working around the clock.
"Yorktown was still able to operate aircraft. Though her damage was estimated to require 90 days of repairs when she arrived at Pearl Harbor on May 27, the Navy Yard worked around the clock and she sailed for Midway on the morning of May 30.[17"
I say fire the ENTIRE upper management. Give the employees a percentage share in the company and hire new people from the workers to be the new bosses(at maybe 2-4x their old salary - and NO idiocy or stock options or whatnot).
ie - if GM has several billion shares, The stock is bought by the government and held by them(no open trading). If the stock makes a profit, when the employee leaves the company, they get any profit since the time they were hired in cash.(kind of like a stock option, except the government pays it out but still keeps the actual shares for the next hire to use). This would give the government control over the company like a private firm and also give the employees a huge incentive to work their butts off to save the company and make some money as well.
If you do poorly, well, your bonus is zero. If you do well, you get a huge payout.
Because, the leadership certainly doesn't seem to understand how dire it really is. The employees seem to, though.
He lies. Trust me. He is spending it all on R&D and other B.S. He thinks it's a variance and if the economy wasn't bad, well, business would go on as usual.
It's a disaster and we need him gone. I would make this a requirement. In fact, I'd love for a Democrat in the Senate to do a filibuster on this point.
No one expected sales this low. In anyones wildest thoughts 10 million vehicles a year was impossible. 13 million maybe. This country is much worst off that anyone thinks. And it looks like it will get worse.
No one expected sales this low. In anyones wildest thoughts 10 million vehicles a year was impossible.
People in upper management making $500,000 - several million can't consider that there can be a chaotic disruption to the economy? I make far less, and one of my jobs 2 years ago was to come up with a basic plan for our production being destroyed - due to fire. The plan is to be back up and producing in 2 weeks whether it be in circus tents, with emergency parts sourced anywhere in the world, and now we have a plan.
I can think of a few things off-hand that could drive sales to no more than 5M next year! (nasty flu strain, terrorists using WMD's, the collapse of the financial system, and there's a variety of natural disasters - serious earthquake in CA, 1+ mile comet strike ...).
The government is not coming in to bailout every single business in such a case, and life will go on after, so does your business survive?
The problem is the Big3 have locked themselves into being a certain size with their contracts and fixed-costs. Their bad long-term business model. You're also telling me that they're suppliers have no cash, having been squeezed for so long, and I bet they can't adjust their costs either (fixed costs again?, hard to lay anyone off, lots of pensioners?).
This country is much worst off that anyone thinks. And it looks like it will get worse.
And that is why we don't think GM and Chrysler will earn a profit anytime soon, and every 3 months we'll be pumping $15B into them, with no hope of repayment. These sort of organizations will be an anchor on the economy. I do not want my social security funds spent on propping up jobs to build cars we don't need.
If the government wants to ensure these people have jobs, then lets get some public works projects going, $20/hr + health care, no pensions, give them a shovel and vest, and put them to work building roads, bridges and rails and such.
If the government wants to ensure these people have jobs, then lets get some public works projects going, $20/hr + health care, no pensions, give them a shovel and vest, and put them to work building roads, bridges and rails and such.
That has been my position on this recession and auto mess from the start. It looks like that is more what Obama is leaning toward. Giving money to the B3 is just money down the drain. I would say if GM just hit a snag this year maybe a loan would be in order. This is an ongoing mess. Wagoner could not make a decent profit all during the dot.com bubble, when SUVs were going off the lots faster than he could build them. Spread that infrastructure wealth around the country. Not just concentrated in the mid section. The people out of work in CA are no less important than those in Michigan. Besides the Midwest got the last big handout with the ethanol boondoggle. What have they done with those billions of dollars?
Comments
Mr. Lutz objected to recent suggestions by Senator Christopher J. Dodd of Connecticut, the chairman of the banking committee, and others that Mr. Wagoner should be replaced, saying that firing him would be a “serious step in the wrong direction.”
“This has nothing to do with trying to improve the executive team,” Mr. Lutz said. “This is the equivalent of the Incan or Mayan days when everybody would go to the top of the volcano and throw a virgin in. It’s the feeling that if we make a sacrifice that somehow the gods would be appeased.”
“Why is it that we’re just dumb old Detroit all of a sudden?” Mr. Lutz said. “Going from a 17 million vehicle market to a 10.8 million market, that’s what the problem is.”
Mr. Lutz said the Big Three may be partly to blame for the chilly reception they received in Washington when they asked for federal assistance.
“I have personally been sensing this hostility on the part of Washington my whole life,” he said. “But it’s partly self-inflicted, because I think there was a period in the U.S. automobile industry where we did not treat Washington and the politicians with sufficient respect.”
He said he looked forward to working with a government oversight board monitoring GM’s use of federal loans.
Outside overseers, Mr. Lutz said, would get a first-hand look at how difficult it is to be a profitable car company but be hamstrung by huge legacy costs, and comply with dealer franchise laws and regulations on fuel efficiency and vehicle safety.
“They would have an inside look at the stress that a lot of this government regulation is putting on our industry,” he said.
The prospective bill was much higher than just the replacement battery, however. The service manager said a new battery management computer might be needed, at a cost of $1,176. And there was $31 for new electrical cables and $720 for labor. With taxes, the estimate came to $5,785.76.
Heather Knowles says that the dealership replaced her Prius' battery pack toward the end of October, charging her the new, lower price of $2,299, plus about $650 in labor. No new computer was needed.
"The whole bill came to just under $3,000," she said.
What is Lutz's excuse for losing money in 2005 - 2007 when the US market was selling 16M+ cars?
“I have personally been sensing this hostility on the part of Washington my whole life,” he said. “But it’s partly self-inflicted, because I think there was a period in the U.S. automobile industry where we did not treat Washington and the politicians with sufficient respect.”
It's not just DC where this hostility exists. There is no love for the automotive industry where I live (south central PA).
Outside overseers, Mr. Lutz said, would get a first-hand look at how difficult it is to be a profitable car company but be hamstrung by huge legacy costs, and comply with dealer franchise laws and regulations on fuel efficiency and vehicle safety.
And who's fault is huge legacy costs? GM management agreed to the terms of the contract. Fuel efficiency? How stupid of us Americans to want a fuel efficient car made by our own manufacturers? It's ashame we have to rely on Toyota and Honda to make legitimate hybrid cars.
I really beginning to think Lutz is getting a little too old for this game. Blame everyone else for your problems, not the decisions management made.
The dealers hope that Congress will help them by giving consumers temporary tax breaks on auto loan interest, and they want other help to loosen credit so dealers can finance their inventories. Some dealers are hoping an auto bailout will allow the manufacturers to offer them compensation if they agree to close without a fight.
The economic decline among the dealers is undermining their legendary political clout. Their powerful lobbying organizations secured the franchise laws in virtually every state, which protected them from efforts to winnow their numbers in the past. Now it is possible that Congress will try to suspend or otherwise override those laws as part of a reorganization plan, something dealers have begun to lobby against.
In recent years, dealers that have closed their doors have usually come to severance agreements with the manufacturers, accepting compensation packages worth as much as $500,000.
LOL so shameless.
"Maybe the Feds should just give every tax payer a $7000 tax credit toward the purchase of any new vehicle and let Americans decide who lives and who dies. "
Good idea. I second this motion.
"That would be great but you know my opinion is that if the big 3 go under no one will be buying steak dinners anywhere"
I will :P
"Correct, and I say they're full of it. Sorry, but that's like saying if McDonald's goes out of business, they'll take Burger King and Wendy's with them, as well as the entire American beef and ranching industry. How likely does that sound? "
3 words, bud: FULL OF BULL (or is it beef?) :P
Regarding GM's ad: boo hoo, you made that mistake tears ago, forgiven, but not forgotten. You make the mistake again, not forgotten, nor forgiven, Rick. Like the old saying: fool me once, shame on ya, fool me twice, shame on me!
Kernick is right on with his post #2593. Simply put GM needs to operate on the "supply meets demand" basis, not the vice versa they're doing now: "demand must meet supply", America, we need more customers. LOL yeah right.
Then again maybe it wont matter. I heard the congress already passed the D3's bailout proposal. Maybe I should stop paying taxes instead :P
LOL so shameless.
3 million is the number in the original study.
http://www.thetruthaboutcars.com/wp-content/uploads/2008/11/finaldetroitthreecon- tractionimpact_3__001.pdf
Scenario 1: 100 Percent Reduction in Detroit Three U.S. Operations
Should all of the Detroit Three’s U.S. operations cease in 2009, the first year total
employment impact would be a loss of nearly 3.0 million jobs in the U.S. economy—
comprised of 239,341 jobs at the Detroit Three, 973,969 indirect/supplier jobs and over
1.7 million spin-off (expenditure-induced) jobs. The employment picture recovers
somewhat in 2010 (2.5 million jobs lost) and 2011 (1.8 million jobs lost), due to
increased U.S. production by the international automakers, and the process of
dislocated workers finding new employment.
Should all of the Detroit Three’s U.S. operations cease in 2009, the first year total
employment impact would be a loss of nearly 3.0 million jobs in the U.S. economy
A 100% reduction in all operations of the Detroit Three is a completely unrealistic scenario, even in bankruptcy. If you make ridiculous assumptions you get ridiculous answers.
Scenario 2: 50 Percent Reduction in Detroit Three U.S. Operations
Should one or more of the Detroit Three fail in 2009, initially all U.S. automotive
operations would be affected, including international producers and suppliers. In this scenario, the remaining Detroit Three and international producers recover in 2010. The first year total employment impact would be a loss of nearly 2.5 million jobs in the U.S. economy—comprised of 239,341 jobs at the Detroit Three, 795,371 indirect/supplier jobs and over 1.4 million spin-off (expenditure-induced) jobs. The employment picture recovers in 2010 (1.5 million lost) and 2011 (1.0 million jobs lost), due to the resumption of U.S. production by the surviving Detroit Three producer and international automakers, and the process of dislocated workers finding new employment.
Sad thing is taxpayer's money would be lost at the end of the day and jobs will be lost none the less.
Regards,
OW
Should one or more of the Detroit Three fail in 2009, initially all U.S. automotive
operations would be affected, including international producers and suppliers.
How? No one is detailing or showing research indicating that McDonalds going BK will take down Wendys, Burger King, the American beef industry, and the Union of Funny-Looking Uniform Manufacturers.
I foresee complete oversight by the government and revisions made to make both companies profitable in the long term in their view. Chrysler will be "bought" by the government and "sold" to some other parties. Someone will get Jeep, someone will get the minivan and someone will get the full size pick ups. Not sure who needs the trucks other than Nissan and they are in huge trouble right now and have no money.
I foresee the government guy coming in and working out deals with the creditors. I see him working out deals with the UAW to bring ahead concessions and reduce other beni's/pay. I foresee him making deals with the extra dealers. But that is all he is going to be able to do since everything else is already set to kick in. Plants are already being closed to lower capacity. I see him taking money out of the pension fund (10 billion).
The big issue will be how much power he will have to make deals. Can he really "force" dealers to close w/o spending the $20 billion or so to make it work?
I foresee him in March reporting "both companies have cut to be equal to the imports and once we start selling at normal rates they will be profitable" and then recommend more loans to take the companies thru the year.
If the above does not happen I foresee a depression unseen since the great one.
I know we all disagree but only time will tell. We have 3 different studies showing what will happen and we have a bunch of guys/Republicans with import plants in their states saying something else.
Good luck to us all. Oh, yea the above only works if they get the small loan this year.
I am copying this so I can bring it back next year to see how I did.
If just one seat maker loses just 10% of his already decimated business he goes under. This shuts the assembly plant down for at least 1 month until all those other OEM tools (toyota, BMW, MB, Nissan, etc.) can be moved to another supplier(and there are only 3 or 4 seat suppliers and they are all in the same boat). Meantime all the OEM plants shut down that use those seats and almost all the OEM's will have seats at those sources. One month shut down will cause all the other suppliers to stop building parts for one month. They cannot do that in this credit constrained period. They are all on the brink of collapse now.
So it is like a house of cards and we all go down. It will take massive amounts of money to bring it all back.
Now to your McDonalds example. They go out of business. The hamburg that was going to McDonalds is diverted to Burger King/Wendy's/whatever. People just walk next door and buy the same thing slightly changed in presentation. People can easily go next door and do it instantly.
Cannot do that with seats. There is no instant increase in seat production for the other OEM's.
If GM goes under Toyota does not see an instant increase in sales. In fact there will probably be a sudden decrease because of all the lost jobs and buyers just plain scared to buy anything. They lose business instantly and cannot pay their bills. The supplier goes under.
Now all it takes is one or two suppliers to bring down everyone.
If the country's only cattle ranch is in danger of going under, do you give a loan to the cattle ranch, or to McDonalds in the hopes that they don't go broke so they can buy more beef? You know, the fast food analogy really kind of works. :shades:
Of course, I know you would give the loan to McDonalds because of your love for Big Macs. :P But really, Whoppers are OK too.
If GM does not get the loan look for that to happen. Just hope it can happen fast enough to keep the other OEM plants open to save the country from depression.
BUT I do not think that will be enough. The loss of the big3 employees and dealers will be enough to drop us into a depression since we are almost there now.
Agreed, there are many opinions but we will all be here in a few months to discuss how it is turning out.
I did hear that the economist Martin Feldstein, economist at Harvard, feels the bailout is a major mistake. He also isn't being paid by the automakers.
Whatever happens it won't be pretty. But the US needs to clean itself up if it wants to be competitive on a world stage.
I probably will not be here if GM does not get the loan. GM will be gone and we will be moving to NY or Chicago. Wife has lots of job offers. Just do not want to go.
Just too busy then to sit at the computer.
Hope that doesn't happen. We wish the best to you.
Here's where that line of thinking fails, and its not plausible. The business environment is not static, it is full of choices that all manufacturers can make each hour, based on the actions of others. Let me explain.
If GM announces they are going under tomorrow, and will stop buying seats from Supplier A which supplies every auto manufacturer, and Supplier A says "now we can't stay in business", what do you think happens? According to what you and your experts think nothing, right? The rest of the whole auto industry just says "OK"? Is that what you think would happen? Toyota, Ford, Nissan, Chrysler,Honda ... each with their multi-billion $ operations are just going to agree to close up for a while, and pay the costs for closing? That's the scenario that happens?! Bulloney!
Those companies would be talking with Supplier A within an hour to see what they Supplier A needed to stay open. There are options such as 1 of these guys like Toyota or Honda who have deep-pockets from many years of profits buying Supplier A. They could also offer Supplier A a loan. Or they could renegotiate with Supplier A to pay them more per seat to make up for the shortfall of temporarily losing market-share.
You must understand that companies will not shutdown multi-billion businesses because they have to spend an extra $50M here and there to keep some supplier open.
Critical suppliers to the remaining companies will be kept open by the remaining companies one way or the other. The remaining companies are going to do everything they can to grab the marketshare of any of the Big3 that fail.
Are you inferring that now that we're buying 10M vehicles per year, instead of 16M vehicles, that we as a nation need to loan money to keep enough workers and plants to make 16M vehicles? You don't think the industry needs to immediately cut its workforce to a 10M level?
If so do these workers and plants that are kept around: a) do nothing, or b) produce vehicles we don't want and need? Would the vehicles be stacked up with FEMA trailers?
Also explain to the rest of us why people who don't earn a living from an auto manufacturer or supplier should be biased as to who makes how many cuts? The cuts need to occur, I really don't care where; and the markets (people) have spoken thru their purchases on what they prefer.
You have my vote. The suppliers are worth more. Heck, a gallon of gas in August cost more than 1 share of GM!
Regards,
OW
Regards,
OW
Considering this in the current efforts, a bankruptcy plan should be part of any bailout. Fiscal responsibility from our government demands nothing less.
Even a Business School 101 drop out can see the pending doom of a sure collapse of this domestic industry. Hopefully, the pillars in Government have vision to respond accordingly.
Bankruptcy might not be POLITICALLY CORRECT but it's FISCALLY CORRECT.
Let's see...Making Fiscal Sense:
Obama and Biden believe that spending that cannot withstand public scrutiny cannot be justified. Obama and Biden will slash earmarks to no greater than year 1994 levels and ensure all spending decisions are open to the public.
* Make Government Spending More Accountable and Efficient: Obama and Biden will ensure that federal contracts over $25,000 are competitively bid. Obama and Biden will also increase the efficiency of government programs through better use of technology, stronger management that demands accountability and by leveraging the government’s high-volume purchasing power to get lower prices.
* End Wasteful Government Spending: Obama and Biden will stop funding wasteful, obsolete federal government programs that make no financial sense. Obama and Biden have called for an end to subsidies for oil and gas companies that are enjoying record profits, as well as the elimination of subsidies to the private student loan industry which has repeatedly used unethical business practices. Obama and Biden will also tackle wasteful spending in the Medicare program.
Better to complete this plan now so no egg on Obama's face!
Regards,
OW
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Unfortunately *that's* an oxymoron!
That's probably the exact reason that Ford is asking for a line of credit (they stated they don't NEED an out and out direct immediate loan...wonder if they'll tell Congress "No thanks" to the initial package?). They've been starting to do well and show profitability, so they could make use of the suppliers and any freed-up capacity eventually, but their turnaround is too recent for them to have built up enough of a war chest to keep Supplier A afloat if needed.
Yeah, it's smart, fiscally sound, fair, forward thinking, and more efficient with funds. That's why no one in Washington would ever come up with it or go for it. :sick:
That is one supplier. Multiply that by 100's. But I have said all along that the suppliers could be kept opening by giving them loans/cash.
Why would they need to do that to 100's? There are probably a handful that are critical to the other auto manufacturers. If there are 3 companies making shock absorbers, maybe 1 closes and their business is switched to the other 2. Same with tires and wheels. In those cases no loan money is needed because the elimination of 1 supplier, strengthens the other 2.
Suppliers that do an average of 25% of their business, have to cut 25%. They become smaller and adjust.
I think you have this false impression from having been so close to GM and the way it operates, that companies can't and do not make adjustments, unless they plan years in advance. Maybe the Big3 are failing because it's like steering a supertanker, and not doing so well on a slalom course?
If I'm managing a factory and I have 4 customers each pulling 25% (that's GM's market-share) of my business, and 1 goes out of business, I have my staff working on an immediate layoff with actual cuts. In the meantime from Hr #1 after I was notified of that customer pulling the business, I have my Sales manager and myself talking to the competitors of that failing business, to see what their increases will be. I would have to be a fairly incompetent manager, to have no way to keep my business going if 25% of my business went away tomorrow.
ALL businesses fail, it's just a matter of time. So to not have a plan for a business for a failure of a customer or a supplier, or to rely on a customer or supplier too much is incompetence.
In the industry I work in we try to get 2 suppliers for anything critical. If one has a quality problem or a fire, we switch to the other. We ask each supplier also not just to have 1 place where they make an item - again in case of fire or natural disaster. I'm sure we not the only ones doing this, as we have customers who ask us to document our contingency plans, similarly. Our customers also ask us to document how we make things, and that should our business fail, they have the right to the formulas and instructions on how to make our products. And if my company failed, I could start my own company tomorrow, leasing space; and be on the phone with customers tomorrow, and I'd get some of the people who worked here, and we could make that product for them.
The desire to make $ will overcome all obstacles!! Greed is good sometimes. This is why the conomy has never shutdown because of the failure of 1 manufacturing company; and I see you have not found 1 example. Companies and people react to fill any "vacuum" left by the failure of ANY business.
There's still Tesla. And doesn't Mack make an SUV these days? :shades:
Here's an idea, if the Big3 fail, why not start your own new domestic automaker? Seriously, if you make a product that enough find desirable at the price, you'll be successful.
Why would they need to do that to 100's? There are probably a handful that are critical to the other auto manufacturers. If there are 3 companies making shock absorbers, maybe 1 closes and their business is switched to the other 2. Same with tires and wheels. In those cases no loan money is needed because the elimination of 1 supplier, strengthens the other 2.
Every part is critical in a car. Just one not available will stop the line.
I used seats as an example. How about the door trim. Cannot run to a different supplier for that. Then there is the IP upper close out panel. Cannot run to a different supplier for that. How about the side door glass? And it goes on and on. The only parts that I can think that are not critical are nuts and bolts. Even shock absorbers are vehicle specific.
And I used just one seat supplier. All 3 suppliers lose ~25% of their business if GM goes under. GM and the OEM's dual tool very few parts anymore. Seats, door trim, IPs, cradles, etc. are not dual tooled. Tooling is just too expensive. And moving tools takes weeks to get the parts back up and running.
Today the suppliers just cannot survive losing another 25% of income. GM going down will shut down the industry unless huge amounts of cash are given to all the suppliers.
Take the job in Chicago. You can run for governor. There will be an opening very soon.
bankruptcy reorganization, only with fewer rigors and with the
government, not a judge, in control, and with many associated political
complications.
The program would be overseen by an official, tapped by President George
W. Bush, whom congressional aides and lawmakers describe as an "auto
czar." This person would act as a kind of trustee with authority to
bring together labor, management, creditors and parts suppliers to
negotiate a restructuring plan. He or she also would be able to review
any transaction or contract valued at more than $25 million.
"We call this the barbershop," said House Speaker Nancy Pelosi, a
California Democrat. "Everybody's getting a haircut here, in terms of
the conditions of the bill," she said, noting the likely impact on
labor, bondholders, shareholders, car dealers, suppliers and executives.
"The management itself has to take a big haircut on all of this."
In plants were I've worked, we've also had different tooling for different products. Say a supplier is running 2 shifts, totalling 16 hours. If today they are putting the tooling on a machine for 4 hours to make GM armrests, and they change tooling then to make Ford armrests for 4 hours and Toyota for a few hours ... , why can't they adapt? I really don't understand this. Is there factory setup really this screwed up?
The supplier couldn't cut from 16hr to 12 hr to makeup for the reduction in GM demand? Or ...
If Ford and Toyota get the GM marketshare they can't run the Ford and Toyota tooling 6 hr vs. 4 hr per day?
And the supplier can't say to Toyota or Ford, that we're upping the price 10%, or the alternative is we close up. And Toyota or Ford won't pay the extra?
And moving tools takes weeks to get the parts back up and running.
What's that - union speed?
Tooling for shock absorbers or plastic pieces can be changed in 15 min at a typical factory. I've been to a Sylvania plant that makes auto lighting, and they can make 1000's of one bulb per day, or 20 of a hundred different bulbs.
I don't know if there's another Carlos Ghosn out there but he proved that turning things around can indeed succeed and that the status quo on suppliers isn't sacred.
It's not complicated, but it has meant breaking with old Detroit ways of doing things, selling brands people admired and laying off tens of thousands.
http://www.usatoday.com/money/autos/2008-12-10-ford-ceo-alan-mulally-interview_N- .htm
It also sounds like Ford is prepared to use it's credit line and any credit from the feds to support their suppliers. Together with the resources of all the other auto manufacturers, ALL suppliers will not go out of business. What will happen is that the number of suppliers will adjust and the size of each supplier will adjust TO MEET DEMAND.
If Ford could survive a GM bankruptcy I'd be all in favor of letting exactly that happen. The reason Mulally supports the bailout is because he's afraid the market panic of a GM bankruptcy could cause enough panic to take Ford down with it despite Ford's good plan.
If they'd start building the Fusion in the USA they could tempt me.
That's a big issue. I read in an article recently that a machine broke down at a Honda plant (in Ohio?). Many employees flocked to the machine and they improvised a workaround solution. They saved a loss of 750 cars of production because they continued operating. The article said that in a union shop there would be discussions of roles, reviews, etc. Some people would not be allowed to be involved at the machine due to competition for specific jobs. It would have taken days instead of hours and that would have been a lost 750 units of production. I don't know if this is all correct but that is what the article indicated.
Though the workers at Pearl were real good at what they did, they were not miracle workers. One bomb hit the Yorktown as compared to what hit the Lexington. That being said, the Yorktown arrived on the 27th and left on the 30th with workers working around the clock.
http://en.wikipedia.org/wiki/Battle_of_the_Coral_Sea
The point is sometimes you have to work extremely hard to survive.
ie - if GM has several billion shares, The stock is bought by the government and held by them(no open trading). If the stock makes a profit, when the employee leaves the company, they get any profit since the time they were hired in cash.(kind of like a stock option, except the government pays it out but still keeps the actual shares for the next hire to use). This would give the government control over the company like a private firm and also give the employees a huge incentive to work their butts off to save the company and make some money as well.
If you do poorly, well, your bonus is zero. If you do well, you get a huge payout.
Because, the leadership certainly doesn't seem to understand how dire it really is. The employees seem to, though.
December 21, 2007
http://www.highbeam.com/doc/1G1-172753316.html
GM's Wagoner: No Bankruptcy and Enough Cash
July 11, 2008
http://www.autoobserver.com/2008/07/gms-wagoner-no-bankruptcy-and-enough-cash.ht- - ml
http://www.nydailynews.com/money/2008/12/07/2008-12-07_sen_christopher_dodd_gms_- - rick_wagoner_ha.html?page=0
It's a disaster and we need him gone. I would make this a requirement. In fact, I'd love for a Democrat in the Senate to do a filibuster on this point.
People in upper management making $500,000 - several million can't consider that there can be a chaotic disruption to the economy? I make far less, and one of my jobs 2 years ago was to come up with a basic plan for our production being destroyed - due to fire. The plan is to be back up and producing in 2 weeks whether it be in circus tents, with emergency parts sourced anywhere in the world, and now we have a plan.
I can think of a few things off-hand that could drive sales to no more than 5M next year! (nasty flu strain, terrorists using WMD's, the collapse of the financial system, and there's a variety of natural disasters - serious earthquake in CA, 1+ mile comet strike ...).
The government is not coming in to bailout every single business in such a case, and life will go on after, so does your business survive?
The problem is the Big3 have locked themselves into being a certain size with their contracts and fixed-costs. Their bad long-term business model. You're also telling me that they're suppliers have no cash, having been squeezed for so long, and I bet they can't adjust their costs either (fixed costs again?, hard to lay anyone off, lots of pensioners?).
This country is much worst off that anyone thinks. And it looks like it will get worse.
And that is why we don't think GM and Chrysler will earn a profit anytime soon, and every 3 months we'll be pumping $15B into them, with no hope of repayment. These sort of organizations will be an anchor on the economy. I do not want my social security funds spent on propping up jobs to build cars we don't need.
If the government wants to ensure these people have jobs, then lets get some public works projects going, $20/hr + health care, no pensions, give them a shovel and vest, and put them to work building roads, bridges and rails and such.
That has been my position on this recession and auto mess from the start. It looks like that is more what Obama is leaning toward. Giving money to the B3 is just money down the drain. I would say if GM just hit a snag this year maybe a loan would be in order. This is an ongoing mess. Wagoner could not make a decent profit all during the dot.com bubble, when SUVs were going off the lots faster than he could build them. Spread that infrastructure wealth around the country. Not just concentrated in the mid section. The people out of work in CA are no less important than those in Michigan. Besides the Midwest got the last big handout with the ethanol boondoggle. What have they done with those billions of dollars?