2009.06.02
Government Motors
With the bankruptcy of General Motors and a second bailout from the taxpayers boosting the government stake in the once mighty American manufacturer to $50 billion and 60 percent of the equity in the corporation, GM has essentially been nationalized.
If this was expected to be a permanent situation, then those accusing President Obama of being a socialist-gone-wild might have a point. But the president made clear this is a drastic but temporary measure, and the United States will divest itself of its share of GM as soon as it is feasible.
You can argue about the wisdom of another bailout and debate the chances that American taxpayers will ever see their investment returned, but no one should believe this was anything but a last-ditch effort to save an American institution - and thousands of manufacturing jobs.
Or so we'll argue in an editorial we're writing for later in the week.
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There is nothing more permanent that a temporary government program.....Ronald Reagan.
Only a Democrat could put tens of thousands of people out of work in one fail swoop and the newspapers would be quick to bless the action. That's the beauty of having a government owned media.
Comment by Henry — June 2, 2009 @ 12:54 pm
Only a Republican could still cling to the myth of Reagan as a paragon of government in action when he has managed to still be affecting the country in a negative ways all these years later. That is the beauty of having so many brain washing outlets to filter out all that truth and purge the ugly facts that do not match the real message of Reagan (aka Simon Legree).
Comment by Sandi Saunders — June 2, 2009 @ 1:06 pm
I'll look at buying a GM vehicle once they emerge from bankruptcy and are once again an idependent company, free of government tentacles. The more important deciding factor will be whether or not they actually sell vehicles that I like and that last more than 2 years. Their planned obsolesence model for designing and building cars turned their whole company obsolete. You got what you wished for GM, people had to replace their GM cars every handful of years and eventually quit buying GM cars because they weren't worth the hassle. Plus, anyone with half a brain can easily tell that a Chevy Equinox is the same as a Pontiac Torrent or Saturn Vue, with a few badge and styling variations. Same goes for Cobalt-G5-Ion, and numerous other identical models different in badge only. The trouble with that is when you design a horrible platform for one car, it gets spread across all brand plates and tarnishes each and every one of them. That's why brands like Honda and Toyota are taking over the market...they focus on a few vehicles, do them extremely well, and make a product that can last for decades...not just years. My 18 year old Acura has over 216,000 miles on the original engine and transmission, original paint(though it now needs to be re-done), and only has 2 spots of rust where dents chipped the paint off. In contrast, our old Cavalier went through engine and transmission parts with every oil change, had rust all over the underside, and couldn't make it to 135,000 before we had to ditch it because the repair bill was 5x the cars' value. Gm killed themselves, all this going after Obama for their failure just doesn't add up.
Comment by Other John — June 2, 2009 @ 1:06 pm
Lee Iacocca told congress 30 years ago that he believed in the FREE TRADE ACT but it should be the FAIR TRADE ACT. In other words, the import car manufacturers should be held to the same rules and regulations as the US Auto Makers. The imports, Toyota, etc are not subject to the same taxes as the US Makers are. Plus they do not have to deal with the "gangster oriented" UAW. Thus the difference in the cost to build a car. He also stated if Toyota had brought a $12,000 Corolla into the US to sell it would be $12,000. If we sent a $12,000 car like a Chevy Citation to Japan it would be $50,000.
As usual he was talking to deaf ears. This should not be blamed on any president, Democrat or Republican. Just the lame ducks we elect which create our laws.
And definately it should not be blamed on the big 3 in Detroit. I buy US products and believe if you do not support the country that we live in the next job that is lost could be your own.
Comment by Auto Man — June 2, 2009 @ 2:37 pm
Henry, do you have any idea how many people in this country would be negatively impacted by allowing GM to go totally belly-up? You might have a roof over your head and three decent meals a day, but think of the tens of thousands of our neighbors and countrymen would be facing unemployment, foreclosure and an uncertain future? Did you think of all the tax dollars their employment brings in when they work, shop and patronize merchants and service providers in their communities? No job, no money ... the system screeches to a halt and they all turn to their government looking for help.
Dude, put maybe just a little thought into things unless all you really wanted to do was to try to tar one party as being inept. With the job the GOP has done the last 30 years I don't think you really want to start down that path.
Comment by Saintbridge — June 2, 2009 @ 3:34 pm
"And definately it should not be blamed on the big 3 in Detroit. I buy US products and believe if you do not support the country that we live in the next job that is lost could be your own."
A great point AutoMan, and one that we've completely lost sight of in the rush to fill our homes and lives with more and more cheap imported...stuff.
Comment by Kristen — June 2, 2009 @ 3:53 pm
It seems to me that GM was doing just fine when Bush was in office. Suddenly now that Obama is in office, they are going broke.
Comment by Henry — June 2, 2009 @ 4:00 pm
http://247wallst.com/2008/06/03/gm-gm-sales-go/
Whoa! Looks like NOT Henry!
Comment by Kristen — June 2, 2009 @ 4:11 pm
Henry...
You might want to read the form 10-K filed by General Motors for the last 5 years. It's pretty telling as to their financial dilema.
Comment by Will — June 2, 2009 @ 4:24 pm
If some how the government succeeds in making GM profitable, how will they get out of the car business? The treatment of bond and stock holders makes investing GM much less attractive in the future. Could the UAW successfully make GM a company wholely owned by workers? I get the feeling that this restructure did not address GM's issues but was an opportunity to push management and product ideas that do not have a sound basis. No more tax payer funds, if they don't make it in the next two years, they never will.
Comment by Patt — June 2, 2009 @ 4:24 pm
This is nothing more than the Obama admin pumping billions of dollars into UAW benefits for workers and retirees. Think we'll see this money returned ala bank bailouts? er uhhh NOPE.
Comment by BUD — June 2, 2009 @ 4:37 pm
Henry, do you honestly think that? GM has been in trouble for many, many years now. It took $4.00 a gallon gas to expose their weaknesses in that they, and the rest of the Big 3, can't provide a quality small car with any sense of reliability that compares to an import brand. They excelled at trucks and SUV's, and that allowed their car market to be an afterthought. Once those sales tanked, they were exposed for being short-sighted, bloated, inneficient companies with a host of legacy issues and management problems all the way up the chain. Had Obama not been Preisdent, I fully believe that we'd be discussing what Chinese company was buying the whole of GM today, rather than GM shedding Hummer to a Chinese firm and working to re-emerge from a government-assisted bankruptcy. This was a long time coming, and Obama being President has had nothing to do with their collapse as a company, or their management failures, or their poor designs, or their awful reliability records, or their bad manufacturing record, or anything else. If nothing else, should this effort work and GM re-build itself, this may actually make GM a viable company capable of designing, building, and delivering a product that has a track record worthy of consumers buying them once again.
Comment by Other John — June 2, 2009 @ 4:40 pm
Only a fool would buy GM stock or cars while Obama's group is running it. And why should we think he'll spare Honda or Toyota? Surely, sensible people will be in Washington by 2016 when those ridiculous green standards are set to be on ALL cars sold in the U.S.
Comment by DT — June 2, 2009 @ 4:40 pm
"Henry, do you honestly think that? "
Just pointing out the obvious that everyone tries hard to ignore.
Comment by Henry — June 2, 2009 @ 4:55 pm
Henry,
GM was lining up for a multibillion bailout before Obama took office. Maybe people ignore "the obvious" because it's a lie.
Comment by Dan Radmacher — June 2, 2009 @ 5:02 pm
Seeing as how Toyota and Honda are not based in the US, and they aren't in the dismal financial state that GM and Chrysler have been in, I don't see any reason for how or why that could happen. And I don't object to new standards for fuel efficiency. I love how so many people claim that these standards will kill drivers by the thousands, yet these cars will still have to meet our already stringent safety standards before they can be put on the road. You'd think we're going to be driving motorized rickshaws the way some folks are talking. That's just not the case. Have you actually driven a small car latetly and looked at the safety equipment in them, or looked at IIHS crash tests? Many of the small cars perform well, and in many cases outperform larger cars because they are engineered better and designed to be safer.
Comment by Other John — June 2, 2009 @ 5:03 pm
Henry...
Exactly what is the "obvious"? Anyone that has the capability of reading a financial statement and analyzing it could see that GM was bleeding red ink out of the wazoo for years.
The perfect storm of $4.00/gal gasoline and a meltdown of the US Mortgage Industry served to expose the true weaknesses of the US Auto Industry (and a lot of the US Banking Industry as well).
DT...Tell me why having environmentally clean standards on vehicles is bad? I like breathing clean air myself. Don't you?
Comment by Will — June 2, 2009 @ 5:17 pm
OJ, you really should reconsider buying a GM. As owners of the company we should all be eligible to buy at manufacturer's cost.
Comment by C Ramsey — June 2, 2009 @ 5:20 pm
I'd say Henry your little theory about GM "doing just fine under Bush" has been thoroughly stomped into the dirt. That's about the only thing "obvious" here.
Comment by Kristen — June 2, 2009 @ 5:42 pm
The problem started becoming apparent after 9-11 when the economy came to a stand still. No one was selling cars and Ford was the 1st to try to get things going with 0% financing for the life of the loan and incredible rebates. They flooded the market with new cars and it was a temporary fix. GM followed suit soon after that. Then 3-5 years later no one wanted to trade. They had perfectly good cars in their driveways and actually had positive equity in their vehicle instead of being upside down on their loan. Why would you want to trade, lose money and end up with a higher interest rate than 0%? The new car market began to suffer again. Ford saw the problem and started to make their own adjustments on expenses. This is why they have not had their hand out to the government. GM and Chrysler didn't and this is why they are in the position they are now.
The industry is poor overall, Toyota has reported loses they have never had before. Ford is coming back after lots of hard times.
But my comment is still this. Any automaker, domestic or import who sells and/or produces cars in the US needs to be treated the same.
Assembly plant workers in an import plant make half what the UAW workers do in Detroit. The import manufacturers are exempt from dealing with the UAW but the Big 3 are subject to LEGALIZED EXTORTION every day and have been for decades. No wonder import cars are much cheaper.
My comment is this;
END THE DOUBLE STANDARDS OR SEND THE IMPORTS BACK OVERSEAS WHERE THEY CAME FROM IF THEY DON'T AGREE TO THE SAME RULES AND REGULATIONS!
Comment by Auto Man — June 2, 2009 @ 6:23 pm
C, that is a good point...one I had failed to consider. Maybe the discount will offset that I will have to replace it in 2-3 years.
So Auto Man, we should allow all companies to be legally extorted just to make it fair for the big 3? That doesn't sound logical to me. Besides, many of the plants where the imports are made (does that make them domestic now?) are across the south, where the cost of living is less than the Great Lakes. Seems to me that they have the right formula.
Comment by Other John — June 2, 2009 @ 7:41 pm
DT...Tell me why having environmentally clean standards on vehicles is bad? I like breathing clean air myself. Don't you?
Yes, Will I do. But I think the standards are fine now, and I don't want to pay thousands more for a crappy car just to address a global warming crisis that doesn't exist.
Futhermore, this nonsense hamstrings the car industry.
Comment by DT — June 2, 2009 @ 8:18 pm
Right on, Bud!
GM was lining up for a handout because they knew the Democratic Congress would give it to them. Congress played this game about making them come back when they had a real plan, but everyone could see through the ploy. They were going to bail out GM all along just long enough for unions to get their cut. And that's what happened.
Comment by DT — June 2, 2009 @ 8:20 pm
Why do we have climatologists that cannot tell us if will rain this Friday but want us to believe the Polar Ice Caps will melt in 10 years if we don't all drive a Toyota Prius?
There is no method to this lunacy!
Comment by Auto Man — June 2, 2009 @ 9:53 pm
My my the right does see conspiracy everywhere. Takes a lot of effort to dream some of this stuff up. Game playing and ploys...it's the stuff of a Tom Clancy novel!
Comment by Kristen — June 2, 2009 @ 10:00 pm
Kristen, You should have heard the interview with Dr. Hern, the other big late-term abortion doctor interviewed on CNN last night. That guy oozed hatred from every pore. He was as politically partisan and hateful as a person could be. These guys get really nasty when their financial empire built on corpses is threatened. He's backed up by the Democrat machine to whom both he and Tiller have been big donors as well as a friendly media. Yeah, make no mistake. They need to kneecap the pro-life movement NOW. Big votes and $$$ at stake here in the battle of public opinion. Can't let a bunch of details about Dr. Death get out.
Comment by DT — June 2, 2009 @ 10:12 pm
I'm sure it's amazing how much hatred you can "ooze" when people in you profession are being targeted for assassination. I'd say their "financial empires" are pretty secure. Maybe staying alive is a more immediate concern for them.
The "pro life" movement is kneecapping itself.
Comment by Kristen — June 2, 2009 @ 10:31 pm
Funny how CEOS have pitted union and non union both blue and white collar against each other while they sail away on multi million dollar parachutes, all the while middle class begrudges other middle class.
Wake up folks.
Ever ask yourself why the labor rate for Toyota in the US is half what it is for the big 3? Because we have become the cheap labor market. Instead of lifting the world up free trade has done nothing but lower our real wages which have been falling since 1974.
They come in and offer $ 12 a hour job with employee paid healthcare and zero 401 match. In areas that have lost jobs to China and India. Meanwhile in Japan they dont offer benefits or retirement because those functions have been nationalized (yes that is the big scary word we are told to fear Socialism.. which by the way is medicare..social security etc.). So guess what when the work force at Toyota USA ages they will roll to the public i.e medicare and SS with out the contributions that the Japanese government earns/mandates from taxes. Furthering our current problem.
Comment by Max — June 2, 2009 @ 10:35 pm
You got it Max, Thanks for the voice!
Comment by Sandi Saunders — June 2, 2009 @ 11:00 pm
Ultimately, the problem is that not enough people are buying GM / Chrysler cars. Why not? Because comparatively those cars cannot match up with their foreign (and ford) counterparts. The idiots that design and brand the GM cars have FAILED to create a compelling product that people want to buy, and that's why sales are down moreso than other auto manufacturers. (Though all are down.)
Let's take a peek at the Chevy Impala. Do you know what the difference is between an Impala LS, 1LT, 2LT, LTZ, or SS? Guess what? I don't, and I read motor trend word for word every month and consider myself pretty knowledgeable about cars. The base model (LS) is $24,000 to start, with barely any features, and goes up to $32,000 for the high end performance model (base without features.) The interior and exterior are nearly identical, with the same poorly-designed plastic components, and they are asking me to pay the same price as a better-built, better performing, japanese car with better gas mileage. It's a no brainer why these guys are going out of business.
And you want to solely blame unions for this? No. Place the blame where it needs to be: on the executives with the poor foresight to design products and market products the public wants when it wants them. And guess what... those designers and marketers are not in the union. Blaming the unions is only a political talking point the political right is using to push down the unions from organizing and taking away executive pay. Funny thing, Ford hasn't taken bailout money, they have unions, and they aren't in danger of collapse. Why is that? Oh yeah, because their executives are better at their jobs than Bob Lutz.
Now let's stop with the nonsense about this is a union problem. This is solely an issue of a terrible automaker with a long traditional history, making mistake after mistake and now they want to be able to get away with making so many mistakes (kind of like the weatherman!) I have no doubt the auto-workers could build anything put in front of them, but when you design a piece of junk, you can only make that junk assemble so well. Ultimately, the consumers can smell that it's junk.
Comment by scott — June 3, 2009 @ 12:29 am
Scott, have I mentioned that I love you? Thanks for the truth!!
Comment by Sandi Saunders — June 3, 2009 @ 8:00 am
"Consumer groups and trial lawyers are crying foul over the Obama administration’s bankruptcy plans for General Motors and Chrysler.
Those plans would extinguish all ongoing auto accident claims that blame a death or serious injury on a defective GM or Chrysler vehicle."
http://thehill.com/leading-the-news/lawyers-cry-foul-over-gm-2009-06-02.html
Interesting. Obama wants to cancel all lawsuits against GM. I wonder why.
Comment by Henry — June 3, 2009 @ 8:06 am
Scott, I agree with your mention of the variations in cars. The only one I ever figured out was Ford trucks & SUV's. There was a really stripped down model, without any taglines. The XL was slightly stepped up and might offer a radio or A/C. The XLS would offer cloth seats, CD player, maybe a power package, and a few other minor upgrades. The XLT would be the fully upgraded version with most of the bells and whistles. They also would have some specialty packages like FX4 for offroading and Eddie Bauer for luxury...but it was pretty transparent and understandable. I guess that's why I've owned more Ford trucks and SUV's than anything else...plus they are actually well built and have performed quite well compared to my previously owned GM and Chrysler products.
Comment by Other John — June 3, 2009 @ 8:14 am
Scott..surprisingly... I think it was 2007..both GM and Toyota sold the same number of vehicles( around 9.3 million). One company made billions and the other lost billions. Granted, GM management has been poor and some technologies typically lag foreign production by nearly 5 years. But union contract costs( labor wages and benefits) swamp those of toyota. Medical costs alone in 2004 per vehicle were 7 to 1.
Comment by BUD — June 3, 2009 @ 8:32 am
Bud: "Medical costs alone in 2004 per vehicle were 7 to 1."
You see that and blame the unions. I see that and blame the fact that, unlike Japan, we don't have a universal health care system and expect GM to cover health care costs not only for its current employees but for a generation of retirees - members of a middle class that GM, once upon a time, helped create.
Comment by Dan Radmacher — June 3, 2009 @ 8:36 am
I refuse to buy a vehicle from a company owned by FIAT or the government. Fiat failed in the US before because of their crappy products and they now want us to buy again? I can't think of anything the government has done successfully and affordability. Would I be notified if my Government Motors car was unsafe? Government Motors would not want their product damaged by recalls they control. My 2008 Impala would be something else if I had known what was coming. I paid 1/2 of MSRP for it after it was a rental for a few months. My next vehicle will be a Ford product if they survive and remain independent.
Comment by Ken — June 3, 2009 @ 8:38 am
Possibly a valid explanation Dan, one that I had not considered. I also know that GM's having to pay workers when they weren't productive therough the Union-inspuired jobs bank was another major cost for them, and that certainly did not help. of course, GM management could have simply not approved it, but there's no telling if the UAW would have gone on strike if GM didn't go along with it. I'd say the blame circle is about 30% GM management, 20% UAW, 35% bad design and poor reliability, and 15% bad economy.
Comment by Other John — June 3, 2009 @ 8:40 am
Max, would you rather have a $27/hour job froma solvent strong company or aq $72/hour job from an insolvent company that can't hire you?
Thank God for Toyota and Honda.
Comment by DT — June 3, 2009 @ 8:53 am
That is one of the few things I will agree with you on, DT. Even better would be a $72 a hour job from a strong company, but that likely is not sustainable unless you're a high-level manager or technician, engineer, lawyer, or doctor type.
Comment by Other John — June 3, 2009 @ 9:03 am
I'm sure it's amazing how much hatred you can "ooze" when people in you profession are being targeted for assassination. I'd say their "financial empires" are pretty secure. Maybe staying alive is a more immediate concern for them.
The "pro life" movement is kneecapping itself.
Guess what, Kristin. People whose "profession" involves mass killing of humanity shouldn't whine about their personal safety. Just as a mafia boss or drug dealer shouldn't complain that "oh, people are after me." When you do heinous horrible things, you're a target. Although I wouldn't condone their murders, I can't say society isn't better off without them.
Comment by DT — June 3, 2009 @ 9:04 am
Nobody wants to blame the Union because they feel it was created for the people. Unions are good things but only when they are out of control. I have been in the Auto business since college and my company has an office in Detroit where I travel frequently.
Last Sept while on business in Detroit the Detroit News had an article where the UAW was pushing for a labor rate increase to $70 per hour for an unskilled assembly line worker. Do you think anyone at Toyota or Honda makes that to screw an antenna into a mast when a car passes down the assembly line? I don't believe so.
If you don't have the facts about the extortion going on for decades by the UAW please don't comment.
As for the quality of US produced vehicles, I have been driving them since 1975 and never been left on the side of the road or had one towed. Most people that complain about the quality of a car abuse it and do not maintain it properly. The is required maintenance that needs to be performed.
Comment by Auto Man — June 3, 2009 @ 9:04 am
I made a mistake in my previous entry;
Nobody wants to blame the Union because they feel it was created for the people. Unions are good things but only when they are NOT out of control. I have been in the Auto business since college and my company has an office in Detroit where I travel frequently.
Comment by Auto Man — June 3, 2009 @ 9:05 am
Auto Man,
Could you find this alleged story and post a link? Because I seriously doubt that "the UAW was pushing for a labor rate increase to $70 per hour for an unskilled assembly line worker" - especially considering the average UMW assembly line worker currently makes $28.78 an hour.
Comment by Dan Radmacher — June 3, 2009 @ 9:12 am
Auto Man, I wish my experiences with GM and Chrysler were as good as your experiences with domestic cars. Despite proper care and maintenance, we had to replace an unusually high number of parts and repeatedly were left stranded when a part failed or the car overheated. Granted, this has not happened with our Ford vehicles we've owned, and that's why I still buy from Ford. It also has not happened with any import product I've driven, which is why I also own one of them too. All I ask in a car is that with regular upkeep and maintenance, that I get to the 100,000 mark with no equipment failures or major problems, and to get to at least 250,000 without having to replace an engine or transmission. Unfortunately, I was not able to do that with anything but Ford trucks or import cars.
Comment by Other John — June 3, 2009 @ 9:16 am
Dan
$70 an hour was the COST to the company of a UAW worker, not the pay rate. A lot of people get that confused.
Comment by Henry — June 3, 2009 @ 9:22 am
Uh, no, Henry. $70 an hour was the total cost of all of GM's obligations to current and past employees - it is NOT the value of the contract for current employees. In other words, it is a completely misleading and useless statistic.
Comment by Dan Radmacher — June 3, 2009 @ 9:25 am
So that labor fee of $125.00 on my repair bill was what the mechanic makes per hour? Interesting.
Comment by Sandi Saunders — June 3, 2009 @ 9:31 am
Dan:
The $70/hour statistic is hardly worthless. It costs GM $70/hour to make a car (labor costs only), while Toyota and Honda can manufacture their product at less than $40/hour. While the $70 figure for GM does represent the present day cost of obligations to past employees, much of it pension or health care for retirees, it is very real and the basis for the competetive disadvantage they experience when trying to compete against other car companies.
Until the new owners of the company (us) are able to understand numbers like this and take action to mitigate the issues they represent, GM will either have to shutter its doors or continue to come back to congress with hat in hand. Sticking our head in the sand and pretending labor costs are a 'useless statistic' virtually guarantees one of those two scenarios will come to pass.
Comment by Mike W. — June 3, 2009 @ 9:37 am
So what is the current cost to the company for an employee?
Comment by Henry — June 3, 2009 @ 9:41 am
I would be excited to hear from the liberals if they think it's OK that the UAW at GM didn't have to give an inch on wages or benefits.
If so, how can you justify that?
Comment by DT — June 3, 2009 @ 9:45 am
GM has made nothing but junk for several decades. Let it die already. Something better will take it's place if the government stays out of the way.
Comment by Jim W. — June 3, 2009 @ 9:58 am
Why did the management of GM agree to the demands of the unions if they could not sustain the viability of their company. Ford to date has not required a bailout, are their union negotiators better than those at GM and Chrysler? What about Caterpillar, and the other equipment manufacturers? There is more to this crisis than we know, and I suspect Obama had good reason to oust the GM leadership.
Comment by Blue John — June 3, 2009 @ 9:59 am
DT...
With regard to your post#22...would you be willing to sit in a closed space with a 2009 Chevy Impala running for let's say about 2 hours?
You call it hamstringing an industry. I call it preventing lazy acquiescence for the status quo.
Comment by Will — June 3, 2009 @ 10:03 am
Sandi, the labor fees cover the wages, taxes, benefits, employer contributions, employer costs (like building rent, uniforms, utilities, property taxes, office supplies, and other overhead), and profit margin for the company. Working in engineering and having done a lot of billing, while the rates seem high, when you break down the costs, they usually make sense and the expenses incurred add up.
Comment by Other John — June 3, 2009 @ 10:13 am
Dan,
I am only stating what the Detroit News had in the paper. I had a copy of the paper but a friend of mine wanted to read it and kept it. And you realize that the press has NEVER published a misleading article. lol
Look at the man in the news every day that got elected with an empty resume'.
Other John,
My best experiences have been with Ford Vehicles and secondly with GM. I have never owned a Chrysler Product so I cannot say good or bad.
Comment by Auto Man — June 3, 2009 @ 11:26 am
In response to post 52.
Ford has been making major financial adjustments for over 5 years to compensate for a slow economy and low revenue. Anyone that follows Ford will note that. GM and Chrysler waited until it was too late and they were buried with a mountain of dept.
Comment by Auto Man — June 3, 2009 @ 11:32 am
If you want to be honest and discuss ALL of the reasons a bank or a car company have problems, we can do that. If you want to be dishonest and blame the failures on the workers or the union that represents those workers only, there is no point in discussing PART of the problem. From overpaid CEO's to dilettante boards, to the you scratch mine deals to the benefits and legacy costs, mistakes were made and the chickens have come home to roost. If President Obama (that man in the news every day) had let GM fail the voices would be just as strident against that. He did what was best for GM and in the long run America and if not, he will be replaced. Although it is amazing what Bush was allowed to squander and be re-elected, it is proof positive that money does indeed talk.
Comment by Sandi Saunders — June 3, 2009 @ 12:00 pm
Auto Man,
Thanks for the information. Blaming the unions for all of the problems at GM and Chrysler appeared to be a cop out that was in line with the let big business roll mindset.
Comment by Blue John — June 3, 2009 @ 12:01 pm
Dan..in response to 34/35..those numbers come from a 2005 Harbour report comparing the NORTH AMERICAN operations of 6 major car manufacturers. The huge disparity of medical costs/vehicle have nothing to do with Japan's universal medical coverage, but have everything to do with negotiated union contracts and the covering of hundreds of thousands of retirees.
Comment by BUD — June 3, 2009 @ 12:38 pm
To sit back and pretend that other car companies are producing great, world-changing cars and that GM isn't is just absurd. To continue pretending that you can make blanket statements such as "GM cars don't last as long as X-brand's cars" is absurd. Any car will last as long as you drive it like you have some sense and take care of it appropriately. Sure, all companies have lemons, but for the most part, any car will last as well as you take care of it. GM's problems are not the fault of the car designers, that's just silly to say. GM's problems are in their checkbooks. It's a math problem! None of us here (as much as most people are pretending that they do) are looking through the accounting ledgers for GM. That's where their problems are. It's their management's fault that they let their costs pile up and didn't cut down expenses in time in other areas. You can't ask their management to take a pay cut and not expect their unions to do the same. Did their management have salaries that were too high? Probably. Did their unions demand too much in benefit increases and wage increases all the while ignoring the fact that sales and profits were dropping? Probably. My personal opinion is that their management was too stubborn and ignored the state of the business, and also their unions were too demanding and also ingored the state of the business. I think those are the two key contributors that took them to where they are today. It's dollars and cents... and common sense. It's math. There IS a correct answer and hopefully they will find it. Do what you have to do to make the money coming in greater than the money going out. There is a mathematical answer to their problems, and hopefully they will find a management team that can get them to that goal. I'm not an accountant, so I'm not going to pretend that I have the answer, but to sit and argue that GM's problems are in the design of their cars, or in the plastic interior components that EVERY car company uses, and other silly crap like that, is just ridiculous.
Comment by hokie24 — June 3, 2009 @ 12:56 pm
I drive a 2001 Pontiac Grand Am and we have a 1995 Chevy Blazer that are rolling like there is no tomorrow. I think you have hit some nails on the head hokie24! Much like the economy we now have did not happen in a couple years, neither did many many other problems and most if not all had many players.
Comment by Sandi Saunders — June 3, 2009 @ 1:12 pm
I owned one Jeep and it was a nightmare. It leaked water all over the place (was a hard-top, non removable Cherokee), had an awful transmission, no power in the engine, it chewed through exhaust parts and other components, and the cheap interior plastics corroded and fell apart rapidly. The only redeeming thing was that the 4 wheel drive was the best I've ever owned, and it was impossible to get the thing stuck. Otherwise, it was junk. The 2 Chevy's I've had were both bad. The S-10 Blazer spent numerous trips in the shop after the purchase and was relegated to short in-town trips only after a while because it was so unreliable and would just up and die randomly, without warning. The interior was also junk as the dash fell off while driving one day, and another time the A/C panel broke and fell into the dash and had to be pulled out with a set of pliers. The Cavalier was a bit better, it wouldn't die...but it went through parts and oil rapidly, was prone to overheating, and also leaked water in places where it shouldn't have. The body was also thin as a can and dented far too easily.
The only glitched I've ever had with the 4 different Fords I've owned was an electrical short in an 88 Ranger that I never managed to trace down, otherwise it was a dependable utilitarian vehicle. The other 2 Rangers and the Escape (still have) I've owned were all great vehicles that never had any mechanical problems and were well built. The Acura I still own is nearly 2 decades old with over 200K miles, and is still on original engine and transmission, with only a new clutch as the major repair. It runs strong, doesn’t leak anything, and the body has no dents except where a wayward hammer caught it with the previous owner (and virtually no rust).
To be fair, my in-laws own a Chevy and it’s proven to be a fairly reliable car, though the interior leaves much to be desired for the rock-hard front seats and the not-so-sturdy rear seat. They also have owned quite a few Dodges that he managed to take over the quarter century mark, but they have all had a lot of brake and transmission problems, which seems to be an uncanny problem with that company.
It’s good to hear that other folks have had good experiences with their GM vehicles, I wish I could say the same. Hands down for me, when I buy new trucks or SUV’s, they will be from Ford…and new cars will likely be an import brand like Honda, or perhaps Ford when they start importing some of their more stylish European models (that I hope retain the Euro styling they have now) because they have a good track record. I sincerely hope GM and Chrysler can fix their issues from the top corporate offices down to the assembly lines, we need some strong manufacturing to remain in the States.
Comment by Other John — June 3, 2009 @ 1:37 pm
Two points about GM's labor cost.
If this country had a nationalized health care system and GM did not have to directly pay health costs for its employees, who would pay them? If health care is nationalized the funding must come from somewhere, probably the taxpayers. Will the federal government use the resources and funding allocated to health care more efficiently than the private sector? If not, we all lose, not just GM.
Secondly, if GM's labor cost per person is higher than Toyota, Honda, Kia, ect, than there needs to corresponding increase in productivity. In other words, if you are paid twice the average of another person in the same job you must do twice as much. Nothing wrong with a good salary or paycheck, you just need to earn it or go out of business. In all of the discussion about GM and Chrysler, I don't productivity has been addressed.
Comment by Patt — June 3, 2009 @ 1:53 pm
I also drove and loved a 1984 Nissan Maxima (named "Nissy" and her voice commands still worked- "Fuel level is low" was a particular favorite!) till 2001 when I got my Pontiac. My son drives a 2003 Nissan Xterra and I traded my 2004 Beetle to surprise my better half with a 2008 Nissan Titan in Dec 2007. I have no complaints about Nissan vehicles either (but the Bug was the car of my heart). Never been a Ford fan, but that could be because they chose Toby Keith as a spokesperson and I cannot abide him or his music.
Comment by Sandi Saunders — June 3, 2009 @ 2:01 pm
I kinda see where this is heading.
The gov owns 60% and the union 17.5%.
I can see now the union getting what it wants.
More money and still crappy broken cars that break
just when out of wty.
If GM is so great, match wty for wty on Hyundi and Kia
and the rest.
I am sticking with toyota.
I traded my suburban in the minute the govt bought gm.
I will never buy another american made car as long as the govt.
Screws the american people by these buyouts.
This goes for any product that involves a buyout.
Comment by HERB KREBS — June 3, 2009 @ 3:27 pm
It's not inconceivable that any car manufacturer can build a lemon or two (or three or four) while in the process of building a lot of different makes/models.
My Dad always said never buy a first year production model as they always have bugs and kinks to work out. He was a die hard Chevy man and drove one up until he decided he liked the Grand Cherokee better. Of the cars he and Mom owned, the only real lemon was a 71 Caprice. Beautiful car but was a piece of junk. We laughed and joked that it must have been built either on a Monday or a Friday.
Herb...your rant about never buying another American made car while the government is involved creates a rather self full-filling prophecy. If you don't buy the cars, they don't make any money. They don't make any money, they'll not be able to pay back the government for the investment. In essense, you're screwing yourself.
The good news is that I don't need a car right now. Both of mine are paid for and are relatively new (2003 and 2004 Jeep and Volvo respectively with only about 68,000 on each). When I do, I'll look at what everyone has to offer and see what I can afford. I've never been one to buy the newest just to have the newest. The last car I bought was 1 year old with only 9K on it. Still had warranty and I paid a lot less than brand new.
I hope they do well and begin to build a new, innovative product that is reliable.
Comment by Will — June 3, 2009 @ 3:42 pm
Warranties aren't nearly as much about quality as they are about how long a company is willing to cover repairs to get you to buy their product. A warranty is just a marketing tool more than anything. Companies delicately adjust their warranties based on how much their company is willing to cover repairs in order to get you to buy their product. That of course factors in their repair/recall rates, sure, but a warranty is still 95% a marketing tool more than a gauge of quality. GM is a bit more of a popular brand than Kia or Hyundai, so their popularity doesn't require them to offer so much in warranty, because they know that their market share shows that their customers are willing to give up some warranty time compared to other companies in order to own the GM car that they want. So part of Kia's and Hyundai's marketing strategy is to offer a longer warranty to try to attract customers, which is just basically something that says these companies are willing to take a little more risk of paying for repairs for a longer period of time in return for hopefully increasing their market share in the long term.
Comment by hokie24 — June 3, 2009 @ 4:24 pm
Will, how did breathing clean air metamorphose into global warming? I thought gasoline engines produced carbon monoxide not carbon dioxide. Please, somebody educate me.
OJ, is overheating a function of poor design?
DT, you said, "I would be excited to hear from the liberals if they think it's OK that the UAW at GM didn't have to give an inch on wages or benefits."
Why just liberals? I would be excited to hear from anyone on this. Why am I just hearing it from one source? I seldom ever listen to the news but I would have thought Herb, Henry, and several others would have been on this in less than a heartbeat.
Can someone explain this $72 an hour figure to me? I thought I read somewhere that retired management benefits were included in this number.
Comment by allen bunch — June 3, 2009 @ 8:52 pm
Allen no one is discussing the unions not giving an inch because it is not true and credible people know it.
Comment by Sandi Saunders — June 3, 2009 @ 9:11 pm
Will,
Do you think we will ever see this money back anyway.
Right now we are sa far in debt it is stupid.
We got change allreight short changed.
We will never see this money.
Oh by the way, seems like Ford did a pretty good job
without govt intrusion, and yes I would want a 31 year old running
my co.
Talk about a Obama plant.
Doesnt matter, got plenty of money and will spend it were i see
fit and that means no buying for me for ANY american made product
that has buyout in the name.
If they sink, the hell with them, they were stupid enough
to agree to let the Govt take over.
Comment by Herb Krebs — June 4, 2009 @ 5:54 am
Just look at any Consumer Reports magazine from any year. GM products have so many red indicators its rediculous. It is also not only quality but the way the vehicle handles and feels. There is no comparison between Japanese and GM products IMHO. The rice burners blow everything America has made which is a shame because we have the technical know how to produce a good car. We just don't.
Comment by Jim W. — June 4, 2009 @ 9:43 am
For Ford, they have focused on their cars and not churning out junk ones like GM and Chrysler. The Fusion/Milan, Taurus, Fusion/Milan Hybrid, and Focus all seem to get rated fairly well by various reviews, and they also sell a fair amount of them too. GM by contrast used the hideous J-Car platform for their compacts across all brand lines, even including Cadillac and Buick, and it brought with it the problems that platform was plagued with through each generation it was built. Plus, the general lack of creativity and distinguished brand identities really hurt sales. Who could ever tell the true difference between a Chevy Cavalier and Pontiac Sunfire? Other than a bumper and name plate, they were the same. The same went for most vehicles in the GM stables, they were all cloned off a handful of designs, which sadly weren;t good to begin with. You would think when they take one platform and use it to build cars for 5 or 6 brands, rather than having 5 or 6 unique cars...they could get the quality and design right, they never did. Even my second run Acura Integra had been more reliable than the last run Cavalier that we used to own (and that platform was around for nearly 2 decades).
Comment by Other John — June 4, 2009 @ 10:16 am
I hear so many comments from people stating they will not support the big 3 and will buy imports only. I consider this to be undermining the things that made this country the superpower it is today. I also consider this type of comment to be un american.
There was a chain reaction from Detroit 100 years ago which stemmed the industrial revolution and growth of the US. The automakers supported us producing goods and services thru 2 World Wars which stopped the worldwide spread of communism and the 3rd Reich. The problems in big business are not just confined to the automakers. Greed is in every large corporation and needs to isolated and stopped. We need to support the big 3. If they fall, there will be a chain reaction throughout the business and industrial market and millions of jobs will be lost.
Comment by Auto Man — June 4, 2009 @ 11:18 am
As I said earlier, I'll buy Ford because their products have proven worthwhile to me to pay for, because they last and have been reliable. Once the same can be said for GM and Chrysler, I'll reconsider them as well. But, as long as I'm the one buying my cars, I look for style, value, price, and reliability. I might sacrifice on one of those areas if the others make up for it in my mind, but I will not buy an inferior product with a lousy track record that costs as much or more than a superior product. Blindly supporting Detroit despite the quality of their products is likely a big part of why their collapse did not happen sooner.
Comment by Other John — June 4, 2009 @ 11:32 am
OJ, is overheating a function of poor design?
Does anyone else remember reading that retired management benefits were included in the $72 an hour figure?
By the way, does anyone remember what date Ford said they were going to run out of money if sales did not improve?
"The problems in big business are not just confined to the automakers."
Auto Man, that is way too rational for this thread. Also, I understand what you are saying but, I do not think we can support the Big 3. There are no longer enough working people in this country who can afford new vehicles to support the Big 3. I think the Big 3 better get geared up to export their vehicles to India and China. At least the" "gangster oriented" UAW" members could afford to buy a new vehicle occasionally.
Comment by allen bunch — June 4, 2009 @ 12:00 pm
Well said and true Auto Man #73! Many of us blindly support things and a company that has such a part in American history should not be thrown away without a chance.
Comment by Sandi Saunders — June 4, 2009 @ 12:14 pm