Saving the US Auto Industry

[classicman]

DETROIT – General Motors Corp. is planning to temporarily close most of its U.S. factories for up to nine weeks this summer because of slumping sales and growing inventories of unsold vehicles, two people briefed on the plan said Wednesday.

The exact dates of the closures are not known.

GM spokesman Chris Lee would not comment

Thousands of workers could be laid off but would still get most of their pay because their United Auto Workers union contract requires the company to make up much of the difference between state unemployment benefits and their wages.

The automaker's sales were down 49 percent in the first quarter compared with the same period last year

Can't we just get this over with? Isn't it the best (of the worst) case scenario to just DO IT ALREADY?

[monster]

i quake at the prospect of what that will do to the parts industry.

But but but..... How come the workers are allowed to be paid on top of unemployment benefit. if the company is still paying them anything they're not damn well unemployed. beest had a week unemployed last year, but his company owed him a day of paid vaction, so they paid him for one day and it was deducted from his unemployment. Why isn't what GM pays their wotkers deducted from theirs? Surely Union contracts cannot override State laws?

/angry layperson

[tw]

Originally Posted by monster

i quake at the prospect of what that will do to the parts industry.

Good part companies will simply make more parts for productive companies that actually let engineers do designing. Those who cannot meet fundamental quality concepts (that are required by the better auto companies) will die. A victim of their inability to adapt to quality defined even by Deming in Japan in the 1950s.

Some must die. They ran to manufacturers who buy parts only on price. Whose autos demonstrate what happens by ignoring Deming, innovation, and other reasons why GM and Chrysler must now enter bankruptcy.

Jobs must be lost, in part, because bean counters played money game rather than surrender the company to innovators. 1991 - GM was four hours away from bankruptcy. Instead GM played money games such as shorting pension funds, then inventing a myth about legacy costs to hide their mismanagement.

Since too many Americans continued to buy their myths and crap, now the damage must be deeper and more painful. Time to save these jobs was back in the 1990 when it was obvious what was needed. Just another example of why good Americans buy using the free market - ignore anti-American myths such as "buy American".

Time to save those jobs was when Clinton tried to do it by giving them hundreds of $millions to design hybrids. Clinton administration knew what was necessary to save jobs. The solution was subverted by the George Jr administration and Congress that stopped demanding innovation from automakers.

Time to pay. Fundamental economics demands that it be painful.

Of course, GM today all but said they will go bankrupt on 1 June. Chrysler has little hope of averting bankruptcy. Now that GM no longer had Wagoner, GM is slowly admitting how bad their company and products really are. GM also will shutdown factories for up to 9 weeks this summer. At least GM will not make the mistake of manufacturing more bad vehicles as Chrysler did in 1978.

[monster]

Originally Posted by tw

Good part companies will simply make more parts for productive companies that actually let engineers do designing. Those who cannot meet fundamental quality concepts (that are required by the better auto companies) will die.

right.

You have no idea about this business, do you?

Most parts companies make parts for all manufacturers. Not just the select few who meet your "good" criteria. they do their job and they do it well, but they haven't been paid for a while. By good and bad auto companies alike. Because when the bad ones don't pay, the good ones say "well why should we pay either?" And once the debtors go into chapter 11, they're protected.

[tw]

Originally Posted by monster

Most parts companies make parts for all manufacturers. Not just the select few who meet your "good" criteria.

Those manufacturers manufactures will (in the future) be making more of better parts for better cars. If Chrysler disappears, the manufacturers make more those other parts for other companies.

Meanwhile, yes, many part companies must disappear. The time to avoid this problem was four, ten, and twenty years ago. Those who foolishly could only sell to GM (who did not go through a process of earning the right to sell to Toyota, et al) probably will go under. But time to have worried about this was many years ago when the problem was obvious.

My sympathies to a part company president who sat next to me and said, "GM will show me how to cut my costs." But then, his own statement should have (and hopefully) told him to start making parts for better companies.

We have all suffered because, "Reagan proved that deficits don't matter." So we voted the idiots back in office rather than fix the problem. Bankruptcies today could only have been averted back then - fundamental economics. Now many companies must go under.

[sugarpop]

Originally Posted by monster

i quake at the prospect of what that will do to the parts industry.

But but but..... How come the workers are allowed to be paid on top of unemployment benefit. if the company is still paying them anything they're not damn well unemployed. beest had a week unemployed last year, but his company owed him a day of paid vaction, so they paid him for one day and it was deducted from his unemployment. Why isn't what GM pays their wotkers deducted from theirs? Surely Union contracts cannot override State laws?

/angry layperson

yea, that doesn't seem right.

[sugarpop]

I never understood why a company would have to borrow money to pay workers or bills. If you grow so fast that you can't make your bills with your profits, maybe you need to scale back.

And the only reason why GM might make more fuel efficient cars than anyone else, is because they make so many damn differnet kinds of cars. They also probably the most ineffecient cars.

What kills me is from the 70s, after the big fuel shortage, until 1983 the fuel efficiency doubled. After that it stood still. In addition, the weight of cars increased about 1000 pounds and horsepower doubled as well, which added to inefficiency. Less than 1% of the energy in the tank actually moves the car. From 1985 until 2007 mileage standards remained unchanged but big truck and SUV sales almost doubled. Because these vehicles have lower standards than cars, average fuel economy today is actually a bit less than it was 20 years ago, despite hard-won gains in engine efficiency.


I got all this information last night when I watched NOVA, Car of the Future. You can check it here: http://www.pbs.org/wgbh/nova/car/

They had previews of all kinds of future cars plus ones that are available now, like the Tesla. But the Tesla is expensive, it is comparable to other high end sports cars. It is fully electric though. It goes 250 miles on a single charge. And it is 85% efficient, as opposed to the 20% or less efficient combustion engine. Tesla is working on a more affordable family style car, but it will still be in a higher price range than a lot of people can afford, like a Lexus or BMW or Mercedes or something.

Maybe Congress should be giving money to people like that, to help bring down the prices so more people can afford them. http://www.teslamotors.com/

[tw]

Originally Posted by sugarpop

And the only reason why GM might make more fuel efficient cars than anyone else, is because they make so many damn differnet kinds of cars.

Where are these numbers that GM makes more fuel efficient cars than anyone else? I ran those numbers. I don't see it. I see that GM's "19 models above 30 MPG" is a myth. How many models does GM have? I count 40. Only 12 are above 20 MPG. Of those, all but one are less than 26 MPG.

Mercedes that has nothing but big cars has same fuel efficiency numbers even though GM has many small cars. This becomes obvious once we add other numbers. Mercedes cars routinely do 70 horsepower per liter or higher. GM still has cars that remain evn in the 50s. That fundamental world standard says who implies who needs bankruptcy to eliminate MBA management.

Why is GM hurting? GM cars are so poor - so designed by business school graduates - that many models still require two extra pistons just to equal a standard performance engine. So they blame the unions. What is the background of a chief engineer? Industrial arts. Somebody who better understands fashion.

Why did fuel economy increase in the 1970s? Less pollution (what myth purveyors spin as pollution control equipment) means a car burns more fuel for energy and less fuel wasted as pollution. In short, government regulation required automakers use electronic ignition, fuel injection, and other innovations that had existed decades and generations previously. Once we stopped demanding reduced pollution, then gas mileage stopped increasing.

Yes, it remains a lie: decreased pollution means decreased gas mileage. Propaganda that lives on when one forgets to ask embarrassing questions and demand the numbers. Same myths claim GM has high mileage cars. World standard is just under 21 MPG. GM's number is just over 18 MPG because GM's products were designed in accounting departments.

So many high mileage cars from GM is a GM claim. Therefore it is probably a lie. I did the numbers. Reality. GM's mileage numbers are only higher than Chrysler - another crappy auto company - that averages 17 MPG.

[tw]

To claim profits, GM shorted their pension funds. Then lied by spinning it unfair legacy costs. (BTW, the Fox News propagandist also said same.) If (more likely, when) bankruptcy occurs, GM's obligations to pensioners would disappear. This means more $billions from the government (PBGC). But that only covers part of the $billions that GM shorted to claim profits and justify massive bonuses to their executives. Why does GM owe so much? Instead of addressing reasons for bankruptcy in 1991, bean counters (including Rick Wagoner) shorted the pension funds. When those employees were working, GM simply forgot to fund the pension fund. When those employees retired, GM still had not funded the pension fund.

This problem was obvious to everyone (who wanted to know) for the past 15 years. Some of us helped GM harm America. Some continued to buy the "Heart attack of America". Shame on anyone who bought a GM product in the past 15 years - helped GM continue their many scams.

To cover some debts, GM sold off Hughes Electronics. All profits from that sale (some tens of $billions) went into the pension funds. But that still was not enough because GM lies (creative accounting) was that massive. How large? From the Washington Post of 24 Apr 2009:

Retired Auto Workers Face Big Hit
If the GM pension plans are terminated, they would be at least $20 billion underfunded, according to the government's Pension Benefit Guaranty Corp. The federal agency would insure about $4 billion of that gap, leaving the GM pension plans with $100 billion in obligations and only $84 billion in assets.

Likewise, if the Chrysler pension plans are terminated, they would be at least $9 billion underfunded, according to the agency, which would insure about $2 billion of that. This would leave the Chrysler pension plans with $28 billion in obligations and only $20 billion of assets, according to the pension agency. ...

In addition to cuts in their pensions, the retirees also face potential reductions in their health benefits. GM owes $20 billion to its union retiree health fund, and Chrysler owes $10 billion to its fund.

Enron accounting has been alive and well. So extremists responded by subverting government oversight including the SEC - encouraged more Enron accounting.

For years, this Rick Wagoner promoted 'legacy costs' myth was so obvious that all should have known it. Nobody can deny the reality of a damning number that said GM was in trouble: 70 horsepower per liter engine.

More corporate welfare as government gets stuck with another $billions bill. How long ago had this event become obvious?
American protecting its turf
Enron accounting was alive and well and encouraged by deregulation. Time to start paying - and then Cellar extremists will again blame Obama.

Remember years ago when the LA Times defined how bad GM really was? So GM attacked the LA Times to bankrupt it. Of course. What's good for GM is good for America - no matter how much it harms America. That was the GM mantra even 30 years ago - for those who remember the 1970s. It never changed.

Good news though. America has many patriotic companies from Japan and Europe making cars here.

[sugarpop]

Originally Posted by tw

Where are these numbers that GM makes more fuel efficient cars than anyone else? I ran those numbers. I don't see it. I see that GM's...

I was just replying to someone else tw. I don't actually believe that either.

[classicman]

Parts companies will go under - many of them, because the borrow and spend game is O-V-E-R. Time for us all to live within our means. We all better get used to it and fast. Spending money one does not have does not work.

The false demand has vanished and the fictional wealth that was being spent is gone.
Supply will shrink to that of the real demand. The strong shall survive and the weaker companies will perish.
Simple irrefutable facts.

[lookout123]

or they needed a car and didn't really give a damn about who lied or how they kept their books.

[tw]

Originally Posted by lookout123

or they needed a car and didn't really give a damn about who lied or how they kept their books.

Sounds like an extremist.

Meanwhile, Pontiac is now officially on the block. A reality that was obvious even in early December last year:
Wagoner blames it all on the Economy!

Enron accounting is alive and well. How may $millions was Rick Wagoner's severance pay for doing to GM what Nardelli did to Home Depot, Fiorina did to HP, Akers did to IBM, Spindler and Sculley did to Apple, ...

[lookout123]

Are you really so foolish to believe that more than a relative handful of consumers care about the financial strength or the management of the company that made the product they want? Not caring doesn't make someone an extremist but seeing everyone other than yourself as an extremist might qualify you as insane. They want what they want and that pretty much is the end of the story. Personally I wouldn't want a GM product but I see a lot of them on the road so someone must want them.

[xoxoxoBruce]

I really love my Chevy truck, but I just found out today I can get a new Azure convertible for only $15,000 down and $4250 for 84 months.