Saving the US Auto Industry

[tw]

Originally Posted by classicman

Pontiac should have never been "saved" it should have been taken out back and shot back in the 80's. GM has been producing multiples of the same car with a different name on it for years, decades. So has Ford and Chrysler. Why is there a Mercury brand? Same answer - they should have stopped producing these same cars with different names decades ago. It was a failed business plan.

The business plan works for VW. Passat, Jetta, Bug, TT, and other VWs are the same platform.

Problem was that GM's solutions did not come from car guys. That is when all GM designs were removed from the Divisions (where division presidents protected their innovators from corporate accountants) and moved into three GM super engineering groups. BOC (Buick, Oldsmobile, Cadillac) and CPC (Chevy Pontiac, GMC), and GM Coach and Bus.

Once the finance sheets report bad products, well, a company must go into emergency rescue as Chrysler did in 1979 (Iacocca and the K car) and Ford did in 1981 (Peterson and the Taurus).

GM did not do that when four hours from bankruptcy in 1991. Instead they shorted the pension funds and did other bean counter miracles.

Clinton realized this problem. So they offered Detroit a whole new paradigm. Government would pay for a new revolutionary design. So the government gave the auto companies hundreds of $millions to design Hybrids - Prodigy, Precept and ESX3.

And then a new administration stopped any requirements that the automakers innovation. With George Jr's arrival, all new propulsion designs and development were terminated. Even the 70 horsepower per liter engine remains quashed because no government regulation required it.

Pontiac, et al could have been saved. But that meant product people had to take charge. Instead, government in 2000 even encourages more bean counter games. That is when the demise of GM and Chrysler were inevitable.

Curiously, Ford had William Clay Ford - a car guy. Ford is viable because William Clay and Jaques Nasser are rumored to have had even two fist fights. Nasser was a bean counter all his life - starting in Australia. When William Clay replaced him in 2001, Ford started a desperate effort to save itself. As a result, Ford is viable. In serious trouble. But Ford can survive because they corrected the problem only at the very last minute - in 2001.

[classicman]

Originally Posted by tw

The business plan works for VW. Passat, Jetta, Bug, TT, and other VWs are the same platform. Blah blah blah

There need not be so many makes - not models all those you mentioned are VW vehicles. Chrysler & Dodge - same thing. Ford & Mercury - same thing.... Buick, Cadillac, Chevrolet, Saturn... They all make the same shoddily built cars with different names.

Its all a smokescreen to capture market share when virtually none of them could stand on their own against the better engineered, better built & longer lasting competitors vehicles.

[tw]

Originally Posted by classicman

There need not be so many makes - not models all those you mentioned are VW vehicles.

I never much understood why one would buy a Sable when the same car is sold in a Ford dealer as a Taurus. Maybe because Ford could franchise a second dealer in the same region - create competition.

TT selling under the Audi name is a VW product. You would not know it because VW does it correctly. Those listed models (and others) are the same one platform. VW could do it right - car guys making decisions. Roger Smith of GM could not even drive a car. He had no idea that the Chevy Vega and Cadillac Cimmeron looked like the same car. It did not say that on spread sheets.

How difficult was it to make any innovation decision in GM? I got in the elevator. The sign spelled "Empolyee" - the word spelled correctly. My union escort told me why all signs had been changes in only two day. Roger Smith had resigned two days ago. He spelled it "employe". So all signs were changed everywhere in GM with incorrect spelling. Then two days after he resigned, all signs were changed back to the correct spelling.

Smith made same cars in different divisions look alike. As long as they sold under different name plates, they would have different reputations. Same people designed GM products and even stifled the 70 hp per liter engine.

[classicman]

It took you all that just to agree with me - LOL You really are a funny guy no matter what they say.... and they say plenty.

[tw]

Originally Posted by classicman

It took you all that just to agree with me - LOL

Oh. So you really knew the TT was a VW product; but posted contrary anyway?

There is a difference between us. I don't know something without a long list of supporting facts. Soundbytes are sufficient reasoning for you.

Meanwhile, marketing of the same car under two different nameplates is curious. Curious are those who think one is superior to the other. Using feelings to *know* works on many people. I never could understand why so many want to be taken. Why would anyone know without first learning facts and numbers? And yet so many routinely do that even when facts are obvious and easily obtained. Ie Saddam's WMDs - a perfect example.

If I said this in a soundbyte, the same conclusion would only be a lie. Always necessary is supporting reasoning. Otherwise the entire post is wasted bandwidth or an article for Daily News readers.

[tw]

Moving on to more facts. GM (a company worth less than $1billion) has been given $15billion in government assistance. Rick Wagoner said nine month ago that GM was losing money but did not need assistance. Now GM says they want government assistance raised to $27billion.

Enron accounting is alive and well.

[tw]

From the Wall Street Journal of 30 Apr 2009:

Chrysler Chapter 11 Is Imminent
Talks between the Treasury Department and lenders aimed at keeping Chrysler LLC out of bankruptcy broke down Wednesday, making it all but certain the car maker will file for Chapter 11 protection Thursday, according to people familiar with the discussions.

Administration officials, who have been braced for a Chrysler bankruptcy filing for weeks, say all the pieces are in place to get the company through the court quickly, perhaps in a matter of weeks.

The administration had successfully strongarmed 70% of Chrysler's debtors to swap debt for cash. But the so many other smaller debtors (ie hedge funds) were refusing. The deal was also reported to provide Cerebus Capital with nothing. Other rumors said that Nardelli would be replaced probably by the CEO of Fiat. After all that, apparently Chrysler will instead file for bankruptcy on Thursday.

I suspect investors who had seen this coming and invested in Ford will prosper tomorrow. However, these things can often result in strange collateral damage. Thursday will be interesting.

[ZenGum]

You guys have just cancelled the importation of Aussie built Holden utes (to you, the Pontiac, some kind of pickup). The factory was already on 75% time, which they are cutting further, probably to 50%.

Fair enough call, sales were down 85% on this time last year.

Yup, times are tough all over.

[tw]

Originally Posted by ZenGum

You guys have just cancelled the importation of Aussie built Holden utes

Appreciate how important these changes are. For example, with contempt for free markets, George Jr said Chrysler was too big to fail; did anything necessary to protect cancer in America. Well, Obama has finally started fixing America by shaking Wall Street to the core. Telling Wall Street that if they continue to support economic perversion, then bankruptcy is one punishment.

Selling off America is necessary to pay for George Jr economic stimulus plans. Fiat will get Chrysler for peanuts. Cerebus Capital (Nardelli and friends) will be wiped out. Daimler will pay $1billion to Chrysler's pension funds. And America will sell off the remains to Fiat.

What will Fiat bring to save Chrysler? How did the French save Nissan? Same example used by Carlos Ghosen of Renault to save Nissan will probably be used by Sergio Marchionne to save Chrysler. How Marchionne first did the same thing in Fiat:

The single most important thing was to dismantle the organisation structure in Fiat. We tore it apart in 60 days, removing large numbers of leaders who had been there a long time and who represented an operating style that lay outside any proper understanding of market dynamics.

In short, he remove the reason for 85% of Fiat's problems.

Same concept were implemented by Iacocca in Chrysler and Petersen in Ford. Ford reduced 48 layers of management until only 5 remained. Same problem exists in Chrysler. Obama was shocked to learn that Chrysler had 10 times more management just in public communications compared to Fiat. A problem routinely found when management comes from business schools. Where image is more important than the product. So much management means a company in denial, innovation cannot happen, and unions get blamed. All symptoms in both Chrysler and GM.

Ghosen had to eliminate the same 'blame the employees' attitude - stop massive corporate infighting - before Nissan could be rescued. But management changes alone will not solve Chrysler. The bottom line: Chrysler products, like their factories, still suck.

Fiat under Marchionne had previously worked with GM to develop a new engine technology called (if I remember) multiple air porting. GM management suddenly backed out claiming the technology was too complex. But GM engineers privately said they were both shocked and impressed at the technical knowledge in Fiat. End result was that GM had to pay Fiat $2billion to end their alliance (yes GM's Wagoner was that stupid).

Rumors suggest that Fiat will soon introduce this revolutionary engine this year. Fiat would market these innovations through their newly acquired dealer network - which is Chrysler’s biggest asset. If this new engine technology is as innovative as the CVCC was to Honda (a Ford innovation stifled by Henry Ford for almost 20 years) or if as innovative as the 70 Hp per liter engine was to most all foreign automakers (a GM innovation stifled for 17 years), then Chrysler may be saved. A solution that addresses the product and that eliminates a reason for 85% of Chrysler's problems.

Of course, most Chrysler manufacturing is in Canada.

Marchionne has residual problems. He is still working on many Fiat problems. For example, like GM, Fiat had 19 platforms. That ridiculous number will only be down to six in 2012. Fiat still has many internal problems. Can Marchionne also implement massive management changes in both American and Canada?

Rescuing Chrysler will be a legendary solution that, of course, requires management that understands how the work gets done.

GM needs solutions just as radical. No import vehicle was going to save GM. Would a Ute save Pontiac? Of course not. Wagoner had to also be removed because solutions this radical are not possible under current GM management. The need for change this radical has been obvious even a decade ago – when the reader ignored propaganda and goes for the facts with a Great White attitude.

Clinton tried to save them in the 1990s when the problems were glaringly obvious. But an extremist agenda was to eliminate anything that represented or was started by Clinton. All this could have been averted. Will government mandated change be severe enough - or too little too late?

Yes, most people have little grasp of what is required to save these auto companies. Instead some even waste time with silly nonsense even about too much government in business. So many people remain in denial how bad both GM and Chrysler really are - financially, management wise, and products.

[sugarpop]

Originally Posted by tw

Appreciate how important these changes are. For example, with contempt for free markets, George Jr said Chrysler was too big to fail; did anything necessary to protect cancer in America. Well, Obama has finally started fixing America by shaking Wall Street to the core. Telling Wall Street that if they continue to support economic perversion, then bankruptcy is one punishment...

Too bad he isn't using the same kind of tactics with Wall Street and the banks. *heavy sigh*


Does anyone know if there are any crinimal investigations going on into the people/institutions that caused the economic collapse?

[lookout123]

Considering more than half of them are our elected leaders I seriously doubt it.

[classicman]

DETROIT (AP) -- Chrysler LLC plans to fire up to 800 of its 3,200 dealers on Thursday, a lawyer seeking to represent the dealers said on a conference call.
The lawyer, Stephen Lerner, who heads the bankruptcy and restructuring practice of the law firm Squire Sanders, told dealers on the Tuesday call that the automaker plans to reject at least 800 franchise agreements, according to a dealer who listened to the call.
Chrysler will file a list of dealers it wants to retain with the U.S. bankruptcy court, said the dealer, who asked not to be identified because the call was confidential.
A Chrysler spokeswoman said Tuesday that the automaker is working to reduce the number of dealerships along with other restructuring actions. Spokeswoman Kathy Graham said the 800 number was just speculation.

Too little way too late.

[classicman]

Update

NEW YORK – General Motors on Friday told about 1,100 of its dealers — one in five — that they would be dropped by late next year, adding to the economic pain radiating from the beleaguered Detroit automakers to cities and towns across the country.

Including Chrysler's decision a day earlier to eliminate a quarter of its own, about 1,900 dealerships — many pillars of their communities and heavy advertisers for local media — learned in a matter of 48 hours that they would be forced either to sell fewer brands or close altogether.

The GM dealerships will be eliminated when their contracts end late next year.

"We're 98 years old. We're two years from a hundred, and I don't want to go out at 99 years," said Alan Bigelow, whose family runs a Cleveland-area Chevrolet dealer that learned it was on GM's hit list.

While GM doesn't own the dealers, the company says its network is too big, causing dealers to compete with each other and giving shoppers too much leverage to talk down prices and hurt future sales.

Several hundred of the GM dealers knew already they were headed for closure, but most of them learned for the first time Friday. An industry group says the GM and Chrysler cuts combined could wipe out 100,000 jobs.

Both GM and Chrysler are scrambling to reorganize and stay alive in a severe recession that has pummeled car and truck sales for U.S. automakers, which had already been losing market share to foreign companies for decades.

Chrysler LLC is already in bankruptcy protection, and industry analysts say General Motors Corp. is making its cuts now in preparation for a bankruptcy filing June 1. The company says it would prefer to restructure out of court.

GM declined to reveal which dealers will be eliminated. Many dealers vowed to fight, first through a 30-day company appeal process, then possibly in court.

GM's dealers are protected by state franchise laws, and the company concedes it would be easier to cut them if it were operating under federal bankruptcy protection. GM says it's trying to restructure outside of bankruptcy because of the stigma of Chapter 11.

Chrysler dealers have fewer options because the company has already filed for bankruptcy protection, and federal bankruptcy judges generally trump state law. And Chrysler said on Thursday that its cuts were final.

GM outlined a plan to cut about 40 percent of its 6,000-dealer network by the end of 2010 in hopes of getting the company back on its feet. Besides the 1,110 dealership cuts, the company will shed about 500 dealerships that market the Saturn, Hummer and Saab brands, which GM plans to phase out or sell.

[monster]

Ya know, Detroit's pretty happy about the latest shit... in the scheme of things... we sorta figure at least the rest of the states will finally realize we weren't kidding when we said it was a problem for the whole country, not just Michigan..... we're sick of being told 'you made your beds, now lie in them" -those of us who are non auto union are were screwed because someone else made our beds with second hand sheets and we got stuck with them. But our sheets were laundered with yours, so welcome to the fucked club.

[sugarpop]

yea monster, I hear you. I didn't really want to bail the banks out, but I did want to do something to help the autoworkers, even though I think the car companies have been badly mismanaged for a very long time. but, there are too many jobs involved, or were. I'm sorry if it is affecting you.