Anybody notice GM??

[wollensak]

In case no one noticed, events on Wall Street this week show the US economy may have hit a wall of worry.

Of far more interest than the 3.6% loss in US stocks this past week, however, is the financial status of General Motors.

Eric Reguly's article in the Saturday Globe & Mail contains some chilling data about the health of GM. GMs pays more in (private) health care costs per vehicle sold ($1525 USD) than it does for steel. GM made just $290 profit per car sold, compared to $2000 for Toyota. Even if GM lays off vast numbers of workers, it is caught in labor agreements with the UAW that pay laid-off workers up to 95% of their pay for up to 5 years.

Things are no better at GMAC which has seen it's borrowing costs escalate 26% in one year. GMs dividend is sure to be cut, and it's debt instruments are headed for junk-bond status.

The article goes on to suggest that GM may well spin off GMAC, then file for Chapter 11 bankruptcy within a year or so to free itself from some of its 301 BILLION USD debt.

All this has happened during a prolonged boom in consumer spending and the lowest interest rates in generations.

This is OTBs cue to come in and debunk the whole thing with more wonderful tales of US competitiveness etc, or TomPeepin to weigh in on the commie nature of the Globe, or some other stuff.

All I know is they used to say that what's good for GM is good for America.
I take this as a pretty serious situation.

 

[ice_dog]

Time has changed. The GM of 2005 is not the same as the GM of 1965. Same thing is true for IBM. Even software giant like Microsoft has lost much of its glory from 10 years ago. MSFT has been going sideways for well over two years now. This may be a cliche, but nothing lasts for ever.

 

[Malibook]

GM will go bankrupt and restructure.

Hopefully they will do enough to recover to sustainable existance.

 

[onthebottom]

I think any firm with a massive union payroll that receives large pensions is on its way to bankruptcy. If you maintain a product line like Buick the odds double.

OTB

 

[Keebler Elf]

Especially when said company doesn't fund its pension plan properly and instead screws over its workers by filing bankruptcy...

An agreement requires both sides to sign off on it. And once they do, it should be their job to fulfill the obligations they agreed to.

 

[onthebottom]

The UAW has done such a good job negotiation a non-competitive work environment for themselves (pay, benefits, work rules....) that they are about to get (over next 10 years) what non-competitive workers get - a pink slip.

In a sick twist of irony, Japanese companies are doing quite well building better cars in the US with US workers.

OTB

 

[slowpoke]

The last time I bought a new Chevy was in 1974. It was a bloated, rust-prone, gas guzzling, useless piece of shit. Since that time I've never even dreamed of buying another US auto. Instead we've bought 4 new Toyotas, 3 new Hondas and a new Volvo. Collectively, we've driven those post-Chevy cars over a million miles. The Chevy was a pig for repairs and probably cost as much as any 3 or 4 of the subsequent cars in annoying failures that shouldn't have been necessary. I'm not talking about the usual brake pads, rotors, batteries, mufflers / exhaust pipes or shock absorbers. I'm referring to universal joints, rocker arms, alternators and even a leaking oil pan.

In 1977 there was a 2 month waiting list to buy a new Honda Civic. It wasn't perfect but it was a dream compared to that abomination from Detroit. I think it was just careless arrogance back in the 70's that prevented GM from taking the competition seriously. It's been downhill ever since.

 

[antaeus]

GM may be nearing the end of the line of the classic business dilemma: the transfer of it's sustainable profit earning businesses to disruptive, structurally focussed companies.

Disruptive companies entered the automotive market with focussed corporate structures supporting certain business value chains and consequently able to make healthy, sustainable profits. The dilemma is that GM, like other companies in similar situation, were only too happy to sell off or exit their underperforming businesses to the disruptors. GM looks good occasionally to the financiers as they lower costs, etc., but the disruptors became entrenched earning what were previously GM's profits. GM enjoined the disruptors to take on more of their underperforming businesses, as the disruptors were offering to, and the cycle continued until supposedly GMAC was their only healthy, sustainably profitable business.

GM's suppliers: Magna, JCI, Allison, Budd, Visteon, Delco, "value-added" like never before, are doing very well. All of them earning profits that were previously GM's.

I don't think there is one single reason GM is screwed, as the politico union bashers are ignorantly claiming. It's a combination of things, primarily the business dilemma described above as it is probably unreversible for GM, a sullied brand due to poor product, onerous badly managed pension plan, debt, etc.

 

[Marla]

GM may be nearing the end of the line of the classic business dilemma: the transfer of it's sustainable profit earning businesses to disruptive, structurally focussed companies.

Disruptive companies entered the automotive market with focussed corporate structures supporting certain business value chains and consequently able to make healthy, sustainable profits. The dilemma is that GM, like other companies in similar situation, were only too happy to sell off or exit their underperforming businesses to the disruptors. GM looks good occasionally to the financiers as they lower costs, etc., but the disruptors became entrenched earning what were previously GM's profits. GM enjoined the disruptors to take on more of their underperforming businesses, as the disruptors were offering to, and the cycle continued until supposedly GMAC was their only healthy, sustainably profitable business.

GM's suppliers: Magna, JCI, Allison, Budd, Visteon, Delco, "value-added" like never before, are doing very well. All of them earning profits that were previously GM's.

I don't think there is one single reason GM is screwed, as the politico union bashers are ignorantly claiming. It's a combination of things, primarily the business dilemma described above as it is probably unreversible for GM, a sullied brand due to poor product, onerous badly managed pension plan, debt, etc.

I think they are in trouble as I know a lot of managers who are lamenting the blues. They have been selling zero finance deals rather than cars for a few years now.

 

[onthebottom]

.......
I don't think there is one single reason GM is screwed, as the politico union bashers are ignorantly claiming. ......

Hey, you tawkin to me.............

If you want to find the source of the cost structure problem (the impetus for this thread you will recall) you will find it with the UAW. As for GM, even Saturn has never turned a profit so they have serious issues, as I said any firm that still has a Buick product line is DOA.

OTB

 

[james t kirk]

I don't think there is one single reason GM is screwed, as the politico union bashers are ignorantly claiming. It's a combination of things, primarily the business dilemma described above as it is probably unreversible for GM, a sullied brand due to poor product, onerous badly managed pension plan, debt, etc.

Exactly.

I read Reguly's column as well and I thought that he (Reguly) hit the nail right on the head.

Interesting because GM is now putting house badges on all of its models, i.e. a "GM" badge on each front fender (like British Leyland used to do with Austin, Triumph, MG. Wait, that's a bad example given that Leyland, the former 3'rd largest auto producer in the world just closed shop last week)

GM is trouble all right.

I was always a GM man right up until I experienced my 1997 Buick Park Avenue and its idiotic design. (More problems and quality nightmares than anything British Leyland could have ever dreamed up in their worst nightmares) I always bought GM, in all my life, I only drove GM (and British Leyland, so I speak from experience)

Well, I just went out last week and bought a brand new Infiniti G35x.

Part of me wants to fax the invoice to GM and say, "See you dumb assholes. All this fucking money could have been yours, but you fucked me around and fucked me around and fucked me around so many times with that piece of shit Buick that I will never ever buy another GM in my life."

I am sure that there are some GM execs on this board and to you I write, fuck you, fuck the way you treat your customers when your crap explodes, and fuck the garbage that you build and try to pass off as automobiles.

Anybody want to buy a used 97 Park Avenue?

 

[Dancerfan]

.


I am sure that there are some GM execs on this board and to you I write, fuck you, fuck the way you treat your customers when your crap explodes, and fuck the garbage that you build and try to pass off as automobiles.

Well,i dunno about GM execs,but im a GM hourly employee of over 30 years,and all i can say to you is Fuck you too with your goddamed attititude!
Ive driven nothing but big 3 autos all my life,never had any major probs with any of them,we do a damn good job of building what we build,and i think I told you before id put up anything we make up against anything the imports make and youd find all would match up just fine!
Remember my friend,Its not the execs who will pay the price for this,its guys like myself,your neighbors,maybe even ppl like you who will suffer if all you import lovers get your wish and GM goes tits up.which it wont!
Remember,the job you save might be your own one day!

 

[onthebottom]

Well,i dunno about GM execs,but im a GM hourly employee of over 30 years,and all i can say to you is Fuck you too with your goddamed attititude!
Ive driven nothing but big 3 autos all my life,never had any major probs with any of them,we do a damn good job of building what we build,and i think I told you before id put up anything we make up against anything the imports make and youd find all would match up just fine!
Remember my friend,Its not the execs who will pay the price for this,its guys like myself,your neighbors,maybe even ppl like you who will suffer if all you import lovers get your wish and GM goes tits up.which it wont!
Remember,the job you save might be your own one day!

I think GM and Ford products have come a long way since the 70s when they were pieces of sh*t. Having said that I don't think anything the Big 3 make compares with the quality of Toyota and Honda, you're just outclassed with design and production. I bought a full size SUV a couple of years ago, looked at Suburban, Escalades, Navigators.... and nothing was near the Land Cruiser I bought. Just the way it is, US autos are like US beer, the Bud of autos if you will.

I'd be interested in that I think the UAW is going to put the Big 3 out of business here in the US, are you Union and if so do you think the work rules, benefits and pay are competitive?

OTB

 

[chd]

Well,i dunno about GM execs,but im a GM hourly employee of over 30 years,and all i can say to you is Fuck you too with your goddamed attititude!
Ive driven nothing but big 3 autos all my life,never had any major probs with any of them,we do a damn good job of building what we build,and i think I told you before id put up anything we make up against anything the imports make and youd find all would match up just fine!
Remember my friend,Its not the execs who will pay the price for this,its guys like myself,your neighbors,maybe even ppl like you who will suffer if all you import lovers get your wish and GM goes tits up.which it wont!
Remember,the job you save might be your own one day!

GM VS THE IMPORTS
ALL WOULD MATCH UP JUST FINE
THAT IS THE SMILE OF THE YEAR
LOL

 

[Dancerfan]

I think GM and Ford products have come a long way since the 70s when they were pieces of sh*t. Having said that I don't think anything the Big 3 make compares with the quality of Toyota and Honda, you're just outclassed with design and production. I bought a full size SUV a couple of years ago, looked at Suburban, Escalades, Navigators.... and nothing was near the Land Cruiser I bought. Just the way it is, US autos are like US beer, the Bud of autos if you will.

I'd be interested in that I think the UAW is going to put the Big 3 out of business here in the US, are you Union and if so do you think the work rules, benefits and pay are competitive?

OTB

I cant see how you feel that the UAW is going to put the big 3 out of business,that certainly is not the goal of any union.
Yes im a hourly employee but in Canada so we have a different union than in the US,in the US the main probs GM has is what it costs them for health care,thats really what GM major problems are,and slow sales mainly because of the all the incentives offered after 9/11 in the "Keep America Rolling" program,the company mortgaged the future at the time and when you do that,the future catchs up with you.
Look,im the first one to tell you that GM as any company is not perfect,they seem to be always behind in bringing out new models,they seem to look at the competitions products and the develop their own versions,the pickup truck thats built where i work,while its a good product was designed in 1998,and is getting stale now,all other competitors have brought new styles to the market,while GM doesnt plan to till the 2007 model year!
Is that the fault of the guy on the line?
Of course not,we have no say in that at all,we just do our job that were paid to do.
Do we make good money? Yes of course we do,no ones complaining about that,if you were to work on an assembly line youd feel too that we earn our money when we go to work every day.

 

[james t kirk]

I am not blaming the guy on the line for my shitty Buick.

Wanna buy it by the way? I doubt you do.

It's a poorly designed car with very bad quality, and terrible reliability. It's been on the hook more times than I can count and cost into the tens of thousands of dollars to keep on the road, and this is with me doing most of the work myself. Other than when engine blew after 122,000 km in Quebec due to a plastic intake manifold.

I used to be a 100% GM man, and a car hound on top of that. I have done frame off restorations, rebuilt motors, etc. After seeing the junk design of my Buick, I stand by my position.

I actually think that the GM's of the 70's and back were preferable to what they are building today. We had a 77 Monte Carlo with a 305 2V when I was a kid. That car was a great car. My buddy had a 67 Impala with a 327 4V that his parents tossed him. That car was a great piece of engineering.

One last parting shot.

All of the Japanese stuff is built all over the world, including Canada. Parts come from all over the world too. Toyota, Honda have all built plants in Canada, infact continue to expand in Canada. The days of "don't buy an import - save a north american job" are over.

 

[james t kirk]

GM won't close it's doors no.

It will go Chapter 11 bankruptcy, re-organise / rationalize into 2 divisions, screw their creditors, kick out the UAW, screw their pensioners to a fraction, fuck their share holders completely, and re-open a whole hell of a lot leaner and meaner.

Happens every day - Air Canada, Dupont, Stelco, Federal Mohgul, etc. etc.

Look for two divisions to be left standing at the end of the day:

GM
Cadillac

Harly Davidson now has a higher market value than GM. GM shares are at a 12 year low I believe.

 

[onthebottom]

NPR reported this morning that GM lost a BILLION dollars in Q1!

Ouch

They are going to have to sh*t can all but two divisions (Chevy, Caddie) and get their act together. In two decades their US market share has dropped from 40% to 25%.

OTB

 

[impala77]

first of all GM's market share only really had one direction to go and that was down. The days of one manufacturerer owning almost 50 % of the market are gone, the problem is that GM had not readjusted themselves to accept this inevitable turn, they still fought to maintain 40 or 50 % instead of reorganizing themselves in to a lean mean corporation ready to take their 20-30 % of the market and focus on what really matters, the product.

In the 70's they were caught flat footed when small cars emerged as gas prices shot up, when they finally did enter the small car party they gave us the chevette. The 80's and 90's saw cars like the lumina, the corsica and the various minivan attempts, not to mention questionable quality materials (plastic manifolds) and orange peel paint.

Basically to sum it all up, GM has become less of an automotive leader and more of an automotive follower and even when they fallow they fail to get it right, in my opinion this is not so much a unionized worker problem but it leads directly to management. The writing has been on the wall for GM for as long as I've been on this earth (late 70's in case your wondering) but they have chosen the wrong course of action to correct it.