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.
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our first clue at energy issues came during the embargo in the 70's. what did detroit do? nuttin. they've had over 30 years to retool but the were more interested in selling gas guzzling cars. many GM and Ford autos in europe get 45 MPG today. but in the US? we get SUV's and gas guzzling trucks. the auto industry has fought new CAFE standards for 25 years.
their problems are because of poor management and greed. quit blaming the worker's health care for your lack of insight. i say let them sink. we can all drive toyotas which, by the way, are made in the US as well.
Please give me the name of the GM executive or Union Leader that put the gun to your head and forced you to by an SUV or super duty Truck.
Cheap gas combined with a lack of a coherent energy policy and a national preoccupation with pick-up trucks. The enemy here is US! Labor, management and the stockholders are all to blame. The magnitude of their incompetence and short-sightedness is astounding. No more money for these jerks without a massive rethink of the entire industry.
When the big three decided to stop research and development of hybrids after W was elected (and after taking $1 billion in government handouts for the research), you can bet the UAW had little to do with those decisions. Japan and Korea now have the edge.
I doubt execs who have retired since I worked at GM have had their million dollar pensions cut.
But let's blame the UAW.
Get real guys. Industries come and they go. Being geared to monster trucks really does not help. In the UK the miners union held the country to ransom with 'power' and we only had electricity a few days a week. My neighbors blew themselves out of the window trying to change a gas canister on a small camping stove. Not seriously hurt thankfully. Unions and Labour did not get elected for 13 years after that. Now in the UK there is 'legislation' rather then unions. Cars and wonderful Motorcycles died a death. Shipbuilders went 'west'. There is a town in mid England called Corby that is 90% Scottish where they had to move to stay in 'steelworking'. Minnesota is unfortunate to rely so much on automobiles. We have to move into different fields. We have to stay light on our feet. That is the nature of the beast.
Management incompetence is to equally blame. Detroit cars, while getting better, have been awful in terms of quality and looks. Fuel-efficiency, CEO pay, health care, while important issues, are all distractions. If that was the case, why cannot GM's fuel-efficient vehicles compete. Bottom line is GM does not make vehicles that customers want to buy. If they bought GM and Ford cars, they will not be in this shape regardless of the higher cost issues. Just look at the German cars. When Saturn came along, it started producing cars that looked and felt like the one's customers want. But GM executives from other divisons starved Saturn. Also, the fact that employees at Toyota or Nissan plants do not want to unionize tells a great deal about management - they take care of the workers, not treat them like pawns.
Unless Obama somehow forces these automakers to fixing their basic problems, the bailouts will just go down the drain. It may just be better to blow them up in bankruptcy. Airlines went through that and we did not lose air service. As for the manufacturing base, there will be pain but in the long-run US will need cars and someone will have to make them here - may be a new American auto company that operates like the Japanese companies.
Not the fault of the unions -- although there are some traceable abuses; the bottom line is that the product is CRAP. Why buy CRAP when I can buy a German or Japanese car that will last 200k miles EASILY
Exactly!!
These auto companies are very important to our economy. Laying off three million people is going to impact the economy. We are talking about people who build the cars and the parts companies, the dealerships all the way down to the mechanics who work at the dealerships. Do these people who are not for the bail out of the auto industries think these people will be able to afford their homes if they have no job? I understand the difficulties of creating a car in this society. When Carter was President, he tried to get people to buy fuel efficient cars. Then the economy got better and Reagan threw those proposals out the window. Now gas is low again but we know it will rise higher. The auto industries only give the American people what they want. The economy is not making it easier to buy a car so they are suffering. Some government help should help them develop fuel efficient cars. What is America producing now a days? Even if we have foreign car companies in our country employing Americans, how much money are we willing to send to places like Japan? Isn't our deficit high enough. What about our workers?
Many factories will still operate under bankruptcy like the airlines did but will allow the companies to re-structure and become competitive including shedding expensive union contracts and bad management that designs and produces crappy products.
Detroit created its own slow demise. Fifteen years ago, Japanese cars were getting 40 miles per gallon. The auto industry just couldn't seem to grasp the significance. Every new year saw external design changes that were merely cosmetic to the point where you couldn't distinguish one brand from another. Auto management seemed bereft of the creative imagination required to what was needed, not necessarily what was desired. Then came America's unquenchable desire for Big, clunky, gas guzzlers and the industry retooled to meet the demand, knowing full well that petroleum supplies were not infinite. Now that the economy is on steep skids and money is extremely tight, Detroit's hand is out with the other system failures for rescue. Pouring money into the auto industry, we hear, will prevent economic disaster nationwide. Unless there is massive internal change in that industry, it will be another case of cosmetic application.
For some reason, I expected something more than a blame-the-unions exchange.
Would the auto industry be doing so badly if they actually did something (before they were forced to - as may be the case soon) to make more energy-efficient vehicles? To claim that they make what the people want to buy is ridiculous. GM, Ford, Chrsyler, and all of our other industries and corporations create consumer desire . . . they don't just make what the people want. (If they did, I wouldn't be driving a Honda.)
I have no sympathy for any company that thinks its entitled to slave labor. If health care is really such a drag (and not outrageous CEO and exec. pay), then people need to start getting honest and working towards UNIVERSAL HEALTH CARE. Our jobs are going overseas - in part - to take advantage of workers in other countries that DO have health care provided.
Blaming union members, the middle class, the working-class poor, the poor, minorities, Democrats, immigrants, gays, etc. for everything that goes wrong in this country is just sick. They are always the scapegoats. It's time to stop scapegoating and actually do something to help progress this country.
Thanks oooJade. I couldn't agree more.
I simply don't want what they're selling.
The unions created the middle class. Without strong unions, nobody in this country would ever have risen above minimum wage and slave hours. And how do you all repay the union leaders and members who fought off, sometimes physically, the Company brutes, and who sacrificed their family security and went out on strike, sometimes for months at a time, in order to create a better life for millions and millions of laborers? You follow the lead of the Fat Cats with an agenda and do your damndest to destroy the only organizations that still recognize the worth of the American laborer and fight for them.. Unbelievable.
Union excesses need to be viewed in the larger context of overall inefficiencies that extend to management and the very products themselves. It is unfair to blame unions for GM's demise when we should really be talking about the fact that for decades all of Detroit has made lousy vehicles that do not compete in quality with what the Japanese make. GM has squandered its unique, global industrial advantage as other manufacturers in other countries such as Japan, simply put, have built better cars. What's their excuse, other than a refusal to reinvest and reinnovate, ie laziness and greed? They are not competitive in terms of their product. Period.
American workers are still the most productive in the world. So, if we cost more, there is a reason. If healthcare costs have skyrocketed, don't blame unions. Blame all of us, a whole country which is the only industrialized nation in the world not to have socialized medicine. It is hardly the worker's fault his/her healthcare costs are so high.
Your family may have worked at GM, but I am surprised at the few lessons actually learned about why Detroit is sinking, most importantly, not to blame themselves.
"Blame all of us, a whole country which is the only industrialized nation in the world not to have socialized medicine. It is hardly the worker's fault his/her healthcare costs are so high."
The workers who have EMPLOYER-paid healthcare, AND our MOSTLY REPUBLICAN Government "leaders" who have TAXPAYER-paid healthcare, are among the MAJORITY of Americans who do NOT support "SOCIALIZED" HEALTHCARE for EVERY American. Their "I'VE GOT MINE ... F**K EVERYBODY ELSE" attitude DISGUSTS me. I blame THEM for for the reason AMERICA is the ONLY industrialized nation in the world not to have socialized medicine.
I'll bet these so-called "right-to-lifers" would change their "ME, MYSELF & I" attitudes IF THEY were to lose THEIR EMPLOYER/TAXPAYER-paid healthcare! MOST of those who are not "cost productive", and/or have "pre-existing conditions", wouldn't ... for the LIFE of them ... be able to AFFORD or ATTAIN healthcare coverage. THEY would be joining the 47 MILLION uninsured Americans in KISSING THEIR A$$ES GOODBYE!
It's time AMERICANS WOKE UP, and started CARING for EACH OTHER!!!
Do unto others as you would have them do unto you!!!
NO CORPORATE WELFARE
WITHOUT UNIVERSAL HEALTHCARE!!!
I'm pro union. That said, The UAW needs to give a little more. They are not the most important workers in the country. They can be replaced easily. Some parts of their contract are bad for other unions. And,, bad for the U.S. It is time to make the UAW contract more sensible. Not take everything away, but make it work for the economy we live with now.
Go into bankrupcy and reorginize the whole sha-bang, union contract included.
GM is coming into the fate that a long list of other industries faced years ago. Who makes televisions, DVD players, appliances, steel textiles? More and more these jobs went overseas. you name it we are losing it. Not all of it can be traced to high wages, not all of it is poor products. I believe that the domestic auto makers have great cars that are as reliable as any import. Since the very first oil embargo the media has beaten the drum that the Domestics are out of touch with the American consumer. Ignore the fact that just a couple of years ago large SUV's were the best seller of any type of vehicle. Ford GM and Chrysler have fault in this, they took their eye off the fuel effecient segnment and now are paying a high price. What we have to remember the imports have a huge advantage over and above lower wages and lower health care costs.
But, but as steel demand rose around the world, new steel mills are now being built here and auto factories as well just not by Detriot. So American companies and Americans factories will do well as long as expensive unions and bad management are tossed out - only bankruptcy can do that.
Certainly bad management has it's part in this, certainly unions have their part in this. Steel mills and new auto plants were ENTICED by states that did not have manufacturing per say. They offered huge deals to companies to start new factories while the exisiting ones up north were falling apart. I personally do not want to see unions go away. We need a safegaurd on business because without it business will roll over the worker. I have belonged to unions and been a business owner who rejected unions. Also don't forget that the steel companies and auto giants were around for 70 years before the imports got their foot in the domestic door. Lets see where they will be in 70 years.
Now now, PATina, nobody said "let's return to laissez-faire and social Darwinism" here. Fact is, the UAW and the Big Three were colluding to help themselves and their members, not the consumer. (Or for that matter the larger economy in general, where ALL of us are stakeholders). That's a crappy way to run any business, especially when employees suffer due to the inevitable failures.
The union/mgmt negotiations in Detroit became annual affairs with threats on each side over the smallest points. Nobody had an interest in changing, let along transforming, the US auto industry.
Now that the white-collar ranks of each automaker are being decimated, it's time for the UAW to do likewise. Fact is, there is no money left in any of these companies for all of the benefits demanded. Hell, GM will run out of net working capital by April of '09 at this rate, and will go into Chapter 11 if something isn't done. Yes, cutting back benefits for employees and retirees sucks -- but again, where... is.. the.. money?
Maybe the UAW should provide its own version of a buyout. Offer its members payback of all past dues in return for rescinding membership, and allowing the plants to be open shops. Giving up representation would stink for those who accepted, but they might actually have MORE job security in the long run.
If only the UAW and management were more proactive even ten years ago. If only.
Interesting. And too most new production seems to go to countries that have single payer healthcare like Canada. Hasn't GM been calling for same?
Yes !!!!! Lets get rid of unions... go back to the days when wages were market driven (no more minimum wage)... when working conditions were crap... no such thing as a weekend... and no health care... period.
That's what real CAPITALISM is !!!! Only those who can afford it get to go to school, go to the doctors, eat !!!! The rest of you can just fight over the scraps !!!!!
(While I would love to say I'm being sarcastic... I'm not. I truly believe that we really won't know what we have until it's gone. So let's get rid of all traces of Socialism... unions, public education, minimum wage, health care... and watch how fast we turn into a third world country).
I don't think the point was to eliminate unions.
The point was that fat and happy people were like proverbial grasshoppers.
Problem is, winter is here.
No planning for the inevitable future.
I would guess you dont live anywhere near Detroit or Wichita or Seattle. There was and may still be a time and a place for unions but what the unions have done to air and auto manufacturing is disgusting. The workers make wages sometimes double of what they could get if they were laid off. They whine and strike over benefits the rest of us would kill for. They push the wages and benefits up so high that their companies are no longer viable. And you know what, most of them are still not happy.
Im all for fair wages but the stuff that goes on around Wichita is disgusting.
I don't thinks Toyota, Nissan and Honda workers in the US has met your sarcastic fate!! There is a better way for everyone which includes cpompetent management that takes care of its workers without unions.
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