Saving the US Auto Industry

[xoxoxoBruce]

Originally Posted by monster

...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.....

That's not true, there are automobile plants and suppliers all over the country and they're all affected by this shit. Everyone with half a brain knew the pain would be spread out.

[Bullitt]

Originally Posted by xoxoxoBruce

That's not true, there are automobile plants and suppliers all over the country and they're all affected by this shit. Everyone with half a brain knew the pain would be spread out.

Truth. A town 10 minutes north of me is home to a Chrysler stamping plant that's scheduled to shut down by end of 2010. 1,200 workers will lose their jobs.

[tw]

Originally Posted by monster

we're sick of being told 'you made your beds, now lie in them"

Do you now appreciate the ferocity of my criticisms? Who kept saying, "Make even more of this crap. Keep stifling innovations that existed even in 1975."

Why is Ford not in the same trouble? Ford started fixing itself almost ten years ago - only just got started. It says how long and bad things must be for GM and Chrysler.

For well over 30 years, GM stifled every innovation except when Federal regulations required it. Americans who bought GM and Chrysler products anytime in the 1990s have themselves to blame for today's problems. "Buy American" voted them (ie Rick Wagoner, Bob Nardelli) to run the American economy. Now we must all pay because they enriched the wealthy - even blamed the unions for shorting the pension funds.

GM forgot to put $20billion into their pension funds and $10billion into their health care funds. Guess who now pays for it. All through the 2000s, shorting pension funds was acceptable to that administration - as long as GM reported profits. Only profits mattered - as any stock broker or Wall Street banker always said. So we pay for their lies. Appreciate why my accusations have been so accurately ferocious for so long – alongside “Saddam had WMDs” and business school concept about profits (screw the product). Of course we all pay today because we believed lies from wacko extremists and business school spin many years ago.

When do we start paying for "Mission Accomplished"? Time to be smart was many years and decades ago.

[TheMercenary]

Originally Posted by Bullitt

Truth. A town 10 minutes north of me is home to a Chrysler stamping plant that's scheduled to shut down by end of 2010. 1,200 workers will lose their jobs.

They will have to get in the back of the line. This is going to worse before it gets better.

[Pico and ME]

Originally Posted by xoxoxoBruce

That's not true, there are automobile plants and suppliers all over the country and they're all affected by this shit. Everyone with half a brain knew the pain would be spread out.

Then a lot of people in my town dont have half a brain. Just the people I work with for instance. They have no sympathy for the UAW workers and seem to relish their pain. They totally fail to realize that its the transmission plants in this town and those union workers that support their retail jobs.

[classicman]

An interesting account of GM history


Who's to Blame for GM's Bankruptcy?
Just about everyone—from management and the UAW to government, consumers, the competition, and the media

First of all, management. For most of its existence, GM was not really a centrally unified company in the modern sense. Founder Billy Durant smashed together different companies—Chevrolet, Pontiac, Buick, Cadillac—and allowed them to compete with each other with only the thinnest level of oversight. Alfred P. Sloan, who took over the company in the 1920s, imposed a measure of discipline on these rival fiefdoms by creating more financial controls and a more rational positioning of each brand, with Chevrolet being the car for the masses and Cadillac being the car of the elite. But the company was still very decentralized.

Following World War II, this lumbering GM dominated the American automotive landscape, reaching 50.7% of the market in 1962. It didn't matter if GM was late to market with a feature or a design because "we had such enormous power that we could always steamroller everybody else," recalls Bob Lutz, the just retired product development chief who first joined GM in 1963.
Not Ready for Toyota

Then there was labor, and management's decision over the decades to grant the United Auto Workers higher wages, medical benefits, and pensions with each contract negotiation. This helped to elevate the standard of living for many blue-collar Americans, but health-care costs would emerge as a major burden on GM, as would a confrontational standoff between management and labor.

Then there was overseas competition. GM simply was not ready to respond to Toyota Motor (TM) and other Japanese manufacturers when they began to gain serious ground in the early 1980s. Toyota, in particular, had developed a lean manufacturing system that was completely different from the mass-assembly-line techniques GM was still using, many decades after Henry Ford perfected them. GM's fractured structure meant that each division had its own manufacturing processes, its own parts, its own engineering, and its own stamping plants.

Hungry for jobs, U.S. states began to encourage Japanese manufacturers to locate plants, or so-called transplants, in their states. The Big Three figured that would saddle the Japanese with the same labor costs and the same labor problems they had. But they were wrong. The Japanese located in mostly southern and border states that were solidly anti-union. They hired younger, less expensive workers, and they created an entirely new relationship between management and labor. This led to an entirely new auto industry. The net effect was to rachet up the competitive pressures on Detroit, not ease them.

The Bush Administration gave a Band-Aid to GM and Chrysler in the form of a bridge loan to get them through to the early days of the Obama Administration. But then came the final surprise. Industry observers widely assumed that Obama, a Democrat from Chicago, understood the manufacturing base of the Midwest and would help it. The fact that the UAW had helped deliver five states in the Midwest to Obama deepened that assumption.

But Obama turned to other members of his political alliance for answers. From New York, he brought in investment banker Steve Rattner, a major fundraiser, to head the government's automotive task force. Rattner arrived on the job with the assumption that Chapter 11 bankruptcy was the right course for GM, and promptly sacked Wagoner when he demonstrated signs of resistance. Wagoner's heir apparent, Fritz Henderson, was elevated into the CEO position. Meanwhile, Obama tilted toward the California environmentalists by pushing through new fuel-efficiency standards, which would add another layer of cost to production.

It's a good read and displays the "Too big to fail" mentality that was ingrained in them long ago in another world.

[Undertoad]

David Brooks in the NYT echoes tw's concerns that GM's problems are fundamentally cultural and terribly ingrained. He says that gov't ownership of GM won't solve GM's biggest problem at all.

On Jan. 21, 1988, a General Motors executive named Elmer Johnson wrote a brave and prophetic memo. Its main point was contained in this sentence: “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.”

On Jan. 26, 2009, Rob Kleinbaum, a former G.M. employee and consultant, wrote his own memo. Kleinbaum’s argument was eerily similar: “It is apparent that unless G.M.’s culture is fundamentally changed, especially in North America, its true heart, G.M. will likely be back at the public trough again and again.”
...
G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company’s viability. It will impede it. We’ve seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn’t really understand. The result is quagmire. The costs escalate. There is no exit strategy.

$50B is throwing bad money at a broken corporate culture. The only way to save GM is to kill GM.

[Cyber Wolf]

Looks like the Hummer is going to be a Chinese brand...

http://money.cnn.com/2009/06/02/news...n=money_latest

[classicman]

Originally Posted by Undertoad

$50B is throwing bad money at a broken corporate culture. The only way to save GM is to kill GM.

Yup - and throwing $50B at a company that is worth just a fraction of that is insane. We already tried that, repeatedly. Seems like the mentality in Washington needs some adjustment too.

[glatt]

I've had one GM vehicle in my life. It was given to me by my grandfather when he got too old to drive. A Buick Century sedan. I got it when it was 8 years old and had only 70K miles on it. The molding on the driver's door started peeling back and getting in the way of the door operation, so I epoxied it back down. The light in the glove compartment would stay on when the compartment door was closed, draining the battery over a day or two. So I removed the bulb. The electrical connections located underneath the glove compartment were loose, and if the passenger accidentally kicked that panel, the car would die immediately. Wiggling the wires around and pushing the connections together would let it start up again. At about 85K miles, it needed a new engine because several seals were leaking, and I actually got it rebuilt for some reason. Then about 10K miles later, the transmission went. I actually got that fixed too. It was then that I started shopping for a new car.

I can say that the Buick was very comfortable on long road trips. You could easily sit in that car all day on the road and not be in pain when you climbed out. Other than that, it was a piece of garbage. I will never buy another GM vehicle (my Geo Prizm is technically a GM, but that doesn't count.)

[classicman]

GM incentive package to shed workers

It seemingly has become an annual (or semiannual) event, but area autoworkers are being given another chance to leave the troubled industry.

The latest incentive package from General Motors Corp. came as part of the concessions the United Auto Workers union accepted last week in the company’s ongoing restructuring.

GM is offering $20,000 cash and a $25,000 car voucher to production workers who decide to retire with their benefits.

For skilled-trades workers, the cash portion of the retirement package is $45,000 with the same car voucher.

For those not eligible to retire, GM also is offering more cash to walk away and sever all ties with the company, along with the $25,000 car voucher.

Employees with less than 10 years could get $45,000. Those with at least 10 years but less than 20 are being offered $80,000. For those with 20 years or more, it’s $115,000.

Those with 28 or 29 years at GM are being offered a bridge to retirement, with the company providing a monthly gross wage of $2,850 or $2,900 until qualifying for retirement.

Seems like a sweet deal if you can get it.

[xoxoxoBruce]

For those not eligible to retire, GM also is offering more cash to walk away and sever all ties with the company, along with the $25,000 car voucher.

I guess that means giving up vested pension rights?

[classicman]

Yeh, I think you are correct, but that is also for people who have not been there very long. Otherwise they would fall into one of the other categories - no?

[xoxoxoBruce]

Pension is vested after 5 years, I think that's the law now. So anyone with over 5 years (after all the layoffs that's probably everyone) would be giving up something, but reducing GM's future obligations. For a guy 35 or 40 years from retirement that $45k right now would be tempting.

[ZenGum]

Yeah, in some places you can buy I house for that, I hear.


Chinese Hummers? Is that like Chinese whispers?