34
   

Let GM go Bankrupt

 
 
husker
 
  1  
Reply Sat 15 Nov, 2008 01:05 pm
@roger,
http://online.wsj.com/article/SB122487032121567191.html
Chrysler's Woes Are Partly The Result of Poor Quality
Auto Makers Showing in Consumer Reports Survey Is Evidence of Miscues

*
High Seas
 
  1  
Reply Sat 15 Nov, 2008 01:26 pm
@husker,
Problem isn't just quality, problem is that Big 3 in Detroit have average labor costs of $72/hour, while non-union foreign carmakers in Tennessee have costs of $44/hour. The airlines went into chapter 11, so did Macy's - they kept operating while they reorganized. Labor will get re-hired by whomever buys those plants out of bankruptcy proceedings.

Bailing out those Big 3 Motown incompetents is best illustrated here:
http://s.wsj.net/public/resources/images/PT-AK196_NOBAIL_D_20081114170031.jpg
Bi-Polar Bear
 
  1  
Reply Sat 15 Nov, 2008 01:43 pm
@Foxfyre,
actually that cartoon is closer to a good idea than it's meant to be.....we'll give you the money....but shitcan the upperechelon dead wood and either build 'em efficient as we want....or go work flipping burgers.....and no bullshit about how it can't be done....it can.
0 Replies
 
H2O MAN
 
  1  
Reply Sat 15 Nov, 2008 01:54 pm
Two things the big 3 must do right now in order to survive.

Void the union contracts and renegotiate from scratch.
Build better vehicles that Toyota and Honda are building.
0 Replies
 
hamburger
 
  1  
Reply Sat 15 Nov, 2008 02:02 pm
@High Seas,
opel - the german arm of GM - has in the past usually done quite well and been able "to send some money home" .
it has changed now as bloomberg news reports :

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=GM%3AUS&sid=aRnVQLDr9IIo

Quote:
GM's Opel Is in Contact With German Government for Possible Aid

By Chris Reiter

Nov. 14 (Bloomberg) -- General Motors Corp.'s Opel unit is in contact with the German government about possible financial assistance, the Ministry of Economics said.

``We are already in contact with Opel,'' the ministry said today in a faxed statement. ``Opel must now put concrete, substantive numbers on the table so that we can analyze the situation.''

Opel is in talks with the government about loan guaranties to help it raise money, Handelsblatt reported today, citing Opel chief Hans Demant. Opel's home state of Hesse is considering providing a guaranty of 500 million euros ($633 million), the newspaper said, citing unidentified government sources.

Joerg Schrott, a spokesman for Ruesselsheim, Germany-based Opel, wasn't immediately available to comment.


so is the rot spreading ?

btw if the BIG 3 go under , i doubt that much of the "leftovers" will be picked up by any other carmaker (can't think of a single one who would be interested - except to perhaps ship some manufacturing equipment overseas - but even that is doubtful) .
IF (or is it WHEN ?) the big 3 go under , there will be massive unemployment .
are one or two million additional unemployed sustainable ?

and this is the news from australia :

Quote:
CANBERRA, Nov 10 (Reuters) - Australia's government is to inject an extra A$3.4 billion ($2.3 billion) into the ailing car industry to offset tariff cuts and a global economic slowdown, Prime Minister Kevin Rudd said on Monday.


High Seas
 
  0  
Reply Sat 15 Nov, 2008 02:12 pm
@hamburger,
Hamburger - you are mistaken. "Massive unemployment" isn't the issue, it ain't gonna happen; what will happen is a 50% cut in that $72/hour average wage.

Did you know that Daimler Benz only found a buyer for Chrysler by holding on to the pension liabilities (ie by essentially paying the hedge fund to take that deadwood off its hands), after of course taking a massive loss of $50billion? No, you did not - if you had studied the numbers you wouldn't be making such baseless statements.
eoe
 
  1  
Reply Sat 15 Nov, 2008 02:20 pm
Mr. Herbert broke it down for me better than anyone.
"It’s easy to demonize the American auto industry. It has behaved with the foresight of a crack addict for years. But even when people set their own houses on fire, we still dial 9-1-1, hoping to save lives, salvage what we can and protect the rest of the neighborhood."
www.nytimes.com/2008/11/15/opinion/15herbert.html?hp
0 Replies
 
hamburger
 
  2  
Reply Sat 15 Nov, 2008 02:41 pm
@High Seas,
Quote:
Hamburger - you are mistaken. "Massive unemployment" isn't the issue, it ain't gonna happen; what will happen is a 50% cut in that $72/hour average wage.

Did you know that Daimler Benz only found a buyer for Chrysler by holding on to the pension liabilities (ie by essentially paying the hedge fund to take that deadwood off its hands), after of course taking a massive loss of $50billion? No, you did not - if you had studied the numbers you wouldn't be making such baseless statements.


do you believe that a 50 % cut in wages is going to cure the ills of the big 3 ?
imo there are many other - and deep seatied - problems to be solved .
to the best of my knowledge the japanese cars aren't cheaper than big 3 cars - pound for pound they are probably more expensive .


if the big 3 are going to be run by "some other" corporation , the big 3 won't have the money to take on the pension and other liablities .
daimler had the financial resources to take on its liabilities from chrysler -
but the formerly big three ??? i have grave doubts that they could take on those liabilities without help .

as an aside , daimler did take a hit from the chrysler fiasco - which was really foreseeable .
on top of it , daimler quality dropped like a stone .
looking at some quality reports of consumer reports and other magazines tells a clear story (and so do the stories of owners of daimler cars made about 3 to 7 years ago ) .
daimler is beginning to improve product quality again , but it'll have work to do to regain its former name .

from "business week" :

http://www.businessweek.com/autos/autobeat/archives/2007/03/mercedes-benz_s.html

Quote:
Mercedes-Benz Scores Zero in Consumer Reports. Ouch!
Posted by: David Kiley on March 20

We all know vaguely that Mercedes-Benz had had some quality “issues.” But whenever J.D. Power and Associates come out with their Initial Quality Study, or some other ranking that shows Mercedes falling, we get the Mercedes spin machine bad mouthing the methodology.

But then Consumer Reports comes out. And it’s ugly if you are a Mercedes fan. You know how many Mercedes-Benz vehicles the magazine recommends? Zip. Zero. Nada. Zilch. The methodology is flawed, you say? Skewed to the lower-end of the car buying public? Then how is it that the magazine does recommend nearly two-thirds of BMWs and 45% of VW-Audi vehicles. CR went out of its way to indicate that a used 1998 LS400 would be a better buy than a 2006 Mercedes ML500. Actually, it says that the 1998 Lexus had fewer problems than last year’s ML, but you get the idea.

Among the least reliable used cars ranked by CR: The MB SL, SLK, CLK, CLS, E Class sedan, R-Class, M Class.
High Seas
 
  0  
Reply Sat 15 Nov, 2008 02:55 pm
@hamburger,
As far as Daimler, we're saying the exact same thing, Hamburger, except that you know neither the original negotiations (was previously involved in the MBB, RTG Raketten, Kraus-Maffei et al projects so am familiar with that one as well) nor the final get-rid-of-the-garbage effort - which still left Daimler Benz holding this poisoned bag of unfunded pension liabilities.

The 50% drop in the wages will be a consequence of the chapter 11 filing, not a solution, let alone a method to avert bankruptcy. Kindly re-read my comments.

To sum up: nothing can solve the Detroit big-3 problems except for outright recognition of catastrophic management incompetence going back decades, and the inevitable bankruptcy. If you think their employees are worth bailing out, whereas those of the airlines, or of Macy's, were not, please explain why.
hamburger
 
  1  
Reply Sat 15 Nov, 2008 06:16 pm
@High Seas,
high seas wrote :

Quote:
To sum up: nothing can solve the Detroit big-3 problems except for outright recognition of catastrophic management incompetence going back decades, and the inevitable bankruptcy. If you think their employees are worth bailing out, whereas those of the airlines, or of Macy's, were not, please explain why.


IF the lifeboat is big enough , let everybody get into it , if it isn't , some will not be taken in or thrown overboard - i'm sure you are familiar with that .

it's not much different than with the banks and other financial institutions :
some will be considered "worthy" enough to be saved - others will not .

it's a pretty crude and cruel method , but it's been practiced before and will likely be practiced again .

lots of small , independent businesses go belly-up all the time - they might get a bit of sympathy but that's about all - isn't it ?
it doesn't seem fair , but life never is fair - is it ?
hbg

ps. "potential votes" might also be taken into account - just my guess .
0 Replies
 
RexRed
 
  1  
Reply Sat 15 Nov, 2008 06:51 pm
@husker,
Quote:
Chrysler's Woes Are Partly The Result of Poor Quality


Yes, unfortunately, they don't have years of soaking the customer under their seat belt.
0 Replies
 
spendius
 
  1  
Reply Sat 15 Nov, 2008 06:59 pm
According to the news here the bailout package as agreed after a fierce debate in Congress and two votes has been altered so much that it is felt it should go back to Congress for a fresh vote.

That's what was said.
0 Replies
 
talk72000
 
  1  
Reply Sun 16 Nov, 2008 03:23 am
To test if it is the management problem or the unions' demands that is at the heart of the malaise, Detroit should build plants in non-union states so as to be on equal footing as the foreign auto manufacturers. I believe Detroit has lately been controlled by bean counters and not designers or engineers.
0 Replies
 
BillRM
 
  1  
Reply Sun 16 Nov, 2008 06:37 pm
@ossobuco,
For GM to suvive a bankruptcies and continue in business is still going to require government funds as who else will loan GM a dime in bankruptcies let alone the 20 or 30 billions dollars it will need?

In or out of bankruptcies it will need funds to operate from day to day and the only source of those funds I can see is the tax payers.
roger
 
  1  
Reply Sun 16 Nov, 2008 06:55 pm
@High Seas,
You do understand that that $72.00/hr is not a wage. It's a total including pension, healthcare benefits, employment taxes, and possibly other items. Cutting wages in half would not begin to bring the total down to $36.00/hr.
0 Replies
 
Finn dAbuzz
 
  2  
Reply Mon 17 Nov, 2008 12:28 am
@BillRM,
The Big Three must do the following:

1) Pry loose the Union fingers around their throats
2) Create a new business model
3) Clear the deadwood out of their management ranks
4) Build cars Americans want to buy.

The best chance for these four goals to be met is bankruptcy.

Investing multi-billions of taxpayer dollars in terminally ill businesses will not.

If, after they file for bankruptcy and achieve or begin to achieve the four goals listed above I will support taxpayer investment as may be necessary.

It is foolish to give a drunken sailor money and trust that he will use it to get his life straight.
JPB
 
  1  
Reply Mon 17 Nov, 2008 08:53 am
@Finn dAbuzz,
I finally saw a two-sided debate on MSNBC last night (rebroadcast of Sunday's Meet The Press).

The "bailout is necessary" side made the point that the cost of bankruptcy in the first year would be in the billions and that customer loyalty or "faith" in the company would further erode sales. He (don't recall who 'he' was) stated that surveys have shown that Americans won't purchase a car (or other product that is supposed to last for years) from a company undergoing Chapter 11 because they need confidence that the parts/service for the vehicle will be available long term. It isn't like a plane ticket which you'll use in a few weeks and be done with it.

I don't like the concept of a bailout either, but I don't want us to be shortsighted and stuck on principle during a time when the economy is in a free fall.

Edit -- I agree with the list of Must Do's, finn. I just think that they are long term fixes that won't happen quickly and that a quick infusion may be necessary to get them started.
rosborne979
 
  1  
Reply Mon 17 Nov, 2008 09:09 am
The other point to remember in all this is that the public may not be buying many cars from GM or from anyone else for a while. And there's no way a bailout of GM can fix that problem.

Fixing the productivity at GM is only part of the problem. If consumers stop buying vehicles (which they are already starting to do), then all the UAW will be producing is expensive lumps of unsellable merchandise.
0 Replies
 
tycoon
 
  1  
Reply Mon 17 Nov, 2008 10:54 am
@Bi-Polar Bear,
Bi-Polar Bear wrote:

I agree. Protect the retirement and savings investments of the workers.... and then let the company die if it must. Maybe they should have thought about this 30 years ago and started retooling their plants to make gas efficient vehicles.

No one bailed out the dinosaurs when their time was up.


Why? Because UAW workers are "special" people? My 401k has tanked. I demand a bailout.
0 Replies
 
BumbleBeeBoogie
 
  1  
Reply Mon 17 Nov, 2008 04:18 pm
The American auto industry is in financial trouble because of stupid management product decisions for several decades. It is interesting to watch the Republicans' position to not bail out the auto industry. The basic reason for their position is they see it as an opportunity to break the Auto Workers Union.

BBB
 

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