|
||
Thoughts on GM from a GM Family
All four of my grandparents were lifelong General Motors employees and my father worked there when he was young. Accordingly, its recent collapse has been a topic of conversation in my family. Today, its market cap fell to 1.88 billion dollars. That means that the relatively small company I work for, IAC, could buy GM with the extra cash sitting in its bank account. Insane.
Here's the email conversation I had with my father today, in case you're interested hearing a somewhat inside perspective.
Me: My take: take it to bankruptcy, pay the creditors, reorganize. No point in throwing money at something that's broken.
Dad: Not as easy as it sounds. The late great USA. Dems owe the unions for votes. Reorganization has already been implemented. Legacy costs and union benefits costs are astronomical for Ford and GM. Toyota pays about $47/hr per employee, GM about $80/hr in salary for people WORKING NOW. Health care and retirement benefits are killers for US auto plants, not Jap plants because they are too new for retirees. Which Democrat is willing to tell the unions their negotiated contract is void? Not Obama. He's too smart for that.
Me: Well, he's got a smart team of economic advisers assembled. Hopefully people like Warren Buffet and Larry Summers can explain the reality of the situation in clear terms. GM is a health care charity. It needs to turn back into a business.
Dad: Your point that GM is a health care charity is exactly correct. When companies are businesses they do well and make money and everybody thrives. When I was a kid all my health care costs were provided by GM, never a nickel out of my parents' pocket. GM was referred to as Generous Motors. Our country lived in the immediate post-war era which is almost incomprehensible to people today. No foreign competition (it's hard to make stuff when someone is dropping atom bombs on you). Our country had a surplus of everything. A 4-year old car was usually in the junk yard or sold to used car dealers from the South. They called it planned obsolescence. All natural resources imaginable.
So the unions said we want more and we really don't want to work and you can't really fire us or we will strike and you will be out of business. I know -- I was there on the production line turning out crap as a member of the union. So the companies treated the unions the way the drug dealer treats a high priced lawyer - merely a cost of doing business. All were happy for a while.
But as you know that scene did not last forever. But both parties lived in never never land and pretended that all would be OK forever.The government did not help matters either.
So here we are today watching the birth and death of a country and its industrial might. Maybe we are all to blame and just can't see it. Maybe we became too successful and greedy and lazy. Of all the millions of people you know, do you know of anyone who works in an auto plant or in any capacity where they actually make something? Selling insurance and stock to each other doesn't count.
The joke in Russia used to be, "We pretend to work and you pretend to pay us." Maybe our joke should be, "We pretend we WANT to work and you pretend to WANT to pay us."
A health care charity indeed.
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
Several years ago I was in Seoul, South Korea on business for a week. During that time, I saw only two vehicles that were not made in South Korea. The two vehicles were Mercedes Benz' and both had diplomats license plates. That is the difference between FAIR TRADE and FREE TRADE! Foreigners have free access to our markets, we do not have free access to their markets. If General Motors ever learned how to make competitive products, they would still have to operate at a disadvantage.
Where are the flying cars that the 1939 Poplar Mechanics magazine spoke of in their "future" issues?
"Maybe we are all to blame and just can't see it."
I don't blame myself for the decisions made in Detroit.
That's what drives me nuts about the auto companies is theyre so ready to schluff off the blame. There's a TON of finger pointing, but NO ONE in Detroit wants to blame themselves. I think the laborers have gotten away with being the victims and having the victim mentality for far too long.
There is such a legal theory that contracts can be void because they are no longer feasible. This may be such a case. Maybe all the laborers' years of free insurance, benefits, whathaveyou is all they should have gotten. Sorry, the gravy train has ended.
It is business afterall. America should get ready to buy Teslas and Fisker cars, because I DO NOT THINK that the big three have it in them to change.
Let's Not Scapegoat the Auto Unions Just Yet: I'm still unclear on a few relevant points regarding the domestically produced cars by Honda, Toyota and the Big Three. 1. How do the domestic auto workers at Toyota and Honda obtain their health insurance? 2. Why are their domestically produced vehicles superior to those of the Big Three? These are relevant questions and the answers will shed light on the problems faced by the Big Three.
The reality is that Big Three (and the rest of the large companies) have failed to do the right thing, fight for a single payer government controlled health insurance. This single thing would launch the US into a competitive basis with the rest of the world on a business basis. The fact that the big three and the rest of the American business community is fighting this option, shows the utter lack of comprehension of how a capitalist, competitive environment works.
Maybe this is the place where the fools in charge of our economy will have their heads handed to them, and out of the ashes will rise a better system. There is always hope anyhow. . .
It is not just the BIG 3 who are losing customers! All car companies are hurting but they are not near bankruptcy!
CORRUPT Banks who still make profits received $250+ Billion to help merge BIG BANKS into MEGA BANKS!
SO we can certainly help Auto Companies with 1/5th that or $50 Billion to save 10% of the JOBS in AMERICA!
____________________________________________________________________________
Certainly, high paid white collar people should be required to take a 30% cut in pay and union workers should take a 15% cut in pay! And these companies should only produce cars with 30+ MPG ratings.
Sell the "GAS GUZZLERS" at losses to get rid of them and stop producing them!
Replace Top Executives with Experts having Hybrid and Green Cars Experience!
If all American fathers and sons were as straightforward and smart as these two appear to be, I'm pretty sure we would have fewer problems and way fewer bailouts.
Gee maybe universal health coverage would have been better for the companies?Where were the unions?Why didnt they fight for it on the grounds our healthcare system makes us less competitive?
I have no insurance and I can tell you that when I talk to people who have a union and I mention universal health care, they look at you in absolute horror. They really think they have it made. No, union workers do not get this -- they think only of themselves, not the entire country. They only think of the rest of the country when their gravy train runs out -- as is happening to the Big 3. We really need a system that everybody pays into. If the system is based on preventive care and wellness, it will bring costs down substantially, make our products more competitive. I won't talk about why certain parts of the health care industry -- specifically hospitals -- would not be happy with health care as opposed to sickness care -- off topic. And another fly in the ointment is Big Pharma -- healthy people are definitely not in their best interest.
You are wrong about union workers. Most of them do want universal health care coverage for all. Yes , they do think they have it made. But they know the system is fragile. The downfall of the unions is that they have fought for others not in the unions to get the benefits that they have. If it had not been for unions, I can tell you that your working conditions would not be as good as they are today, whether you are in a union or not. Because others have gotten the benefits without being in the union, membership has fallen off drastically through the years.
I once belonged to the IBEW union. It had it's good points. However, they too often protected emplyees who really deserved to be fired. Other employees would use the union to protect themselves from having to work.
Also, the most senior employees always received the promotions, not the most qualified.
I think unions still have a place, but they need a big shakeup. They need to work WITH the company, not against them.
I agree with some of what you are saying. There has to be some careful compromise, as I found out, there are others in management that would take advantage of any softening of the rules on removing workers. It's real dicey. Some of this problem could just be taken care of by better union officials that just won't tolerate jerkoffs than by changing the rules. I fought our local president for 31 years and he won all of the time , but I never stopped embarassing him when he was wrong , and it kept him probably more on the straight and narrow. I got him back though. I got Obama elected.
Here's the REAL problem:
DAIMLER OK'D RETENTION PLAN FOR EXECS
Chrysler leaders get millions
Automaker defends payouts amid looming bailout talks
BY TOM WALSH and TIM HIGGINS • FREE PRESS BUSINESS WRITERS • November 13, 2008
http://www.freep.com/article/20081113/BUSINESS01/311130002
The first step to bailing out the Big 2 and Chrysler should by Universal Single Payer health care. Every other Westernized country has this; the US not having it is an incredible disadvantage in terms of labor cost. How about some protective tariffs combined with mandating high percentage American-source components while Detroit learns to compete again? Why not eliminate some of their divisions? Why does there need to be Pontiac or Buick or Mercury or any branch of Chrysler besides Jeep? What's with GMC? The vast majority of difference between GMC and chevy trucks is the low-ball GMC price tag. What sense does that make? Between Brands that have long outlived their usefulness and the "little guy, you're on your own!" business mentality that pervades this country, The Detroit dinosaurs are lucky to have made it this far; without the SUV boom of the last decade, they'd have gone extinct years ago.
Just handing $50 Billion to GM/Ford/Chrysler is money down the drain.
american ceos are the problem,their outrageous salaries have hamstrung the quality of their products and the care of the employees.i will never buy an american vehicle again,my favorite car by far was a honda accord,it lasted with only minor altercations. honda ,toyota and mazda are better than ANY american product. watch out for korean vehicles because they are getting better and more reliable than american cars.
As bad as things are now for the big 3, it wouldn't be as bad if they were selling more (desirable) cars. Detroit laughed at and even suppressed the ideas and technologies of Hybrids, Ethanol motors and electric platforms. They wanted to keep building SUV's bigger and bigger, with no effort to increase efficiency. Japanese companies also built a few big trucks, but never lost sight of the importance of good quality, economical small and midsize cars like Detroit did. Case in point is the ironically named Chevy Cavalier, or Pontiac Grand Prix.
GM has had some great designs, like the Corvette, Pontiac Solstice, etc. But those examples are few and far between, and also are not practical cars, but cars designed to get people to the dealers. Now all of the Big 3 are reintroducing clones of 70's muscle cars for the same reason. The whole industry needs to retool away from the land yachts and start making tomorrow's cars. They need to plan at least 3 years down the line.
In GM's case, they need to start running as a single company, is it me, or for the longest time has it seemed that the various companies they bought up nearly a century ago are still trying to run as independent outfits, rather than parts of a larger whole? GM would prolly be in much better shape ifn they turned the company into a cohesive whole. That and figured out a way to deal with the pension problem, even if they were to suddenly turn the ship around, that's a huge anchor they're dragging, and it will only get bigger.
As to the other makers, Ford just needs a loan, they need time to roll out their new plan, one which is more logical than GM's bet on the Volt strategy, concentrating on small and midsized cars is the way of the future. Chrysler, as much as i like Dodge and many of the vehicles Chrysler makes, i think its time to let this one die, bailed out nearly 30 years ago, Lee Iaccoca paid the loan off early, and the company was in the black when Daimler-Benz bought it, then they ran it into the ground and sold it to suckers. Yeah, its time to let that one die i think.
Whatever the future holds for the auto industry and the economy, its going to get a lot darker before the light, hopefully we'll be smart enough to fix it... That or it'll be time for a revolution.
The way I see it, GM has always hated their customers. That may seem odd in our present day setting to say, but that is the truth. When they had this market all to themselves they build crap vehicles, take it or walk. Then the Japanese entered the market, and eventually provided a much better product in the same price range as the crap vehicles were still being pushed out the door at GM. They built the cars that made the most money, screw the consequences. They drove an entire generation of buyers away and decided they could manage to make money selling idiotic products to people who refused to buy a better car "cause it ain't American!" Well my wife drives a Pathrfinder (builts in California), I drive a Titan truck (built in Mississippi). Both vehicles are well made by Americans, for Americans. Every other industry has to re-invent itself, but GM continues on, right into the toilet. Until they wake up what is the point?
Years ago, I read that every worker on a Japanese auto assembly line had the authority to stop the line if they found that a problem was occuring with every vehicle. The Japanese wanted for their cars to leave the factory with as few defects as humanly possible. At the same time, the Detroit automakers would allow cars to be shipped and sold with known defects, with the policy of having dealers make the repairs under warranty. These policies resulted in the rise of Toyota, etc. and the fall of GM, etc.
You must be logged in to comment. Log in or connect with
