Senate and UAW just gave up a few minutes ago ..., tomorrow is gonna hurt ... Options

[mitchntx]

I also want to point one thing about this argument that a Toyota that is made here is just as American as a GM car that is made in the US. That is simply not true, not even close. Where the car is made, is only a very small part of the picture. Of course, I'm an engineer, so my opinion may be biased here too, but Japanese cars are almost exclusively designed in Japan. There are engineering centers here in the US, yes, but they are just minions to Japan. Toyota has an engineering center in Ann Arbor, a suburb of Detroit, but the powertrain engineers are basically a liason to US based suppliers. They do not engineer the parts. Most of the engineering done in Ann Arbor is for vehicle crash safety, dynamics, and some vehicle calibration, centered on having emissions testing support for EPA testing. So, when you talk about Toyota cars being just as American because they are made here, remember, the jobs that Toyota has here in the US are decidedly low in tech and on the totem pole vs. what the domestic auto companies have here. As foreign auto companies gain ground here, those higher tech jobs are being lost. Do we really want to replace engineering jobs with manufacturing jobs? Is that a net gain for our country?

I'm the one that brought it up and I went back and looked to make sure I didn't say that the American assembled Toyata was just as American as your GM. I didn't say that and would never assume that.

I did say ...

The vast majority of cars sold in the US are actually assembled here by US workers. And if discussing profits, publicly traded companies means that everyone, US citizen or not, can get a piece of that pie. But, bottom line, if Toyota wants to continue to employe 50,000 US citizens at it's San Antonio assembly plant, then that is 50,000 people bringing home a pay check.

Yes, the high tech jobs are going elsewhere and have been for years in multiple industries and disciplines. There can be only 2 reasons for it. Better talent or lower costs.

Toyotas are assembled here because of lower costs.

It's a tough nut to swallow, but I believe the myth that we Americans are over-paid when compared to a global work force is becoming a reality. And these econmic times are the fall out from that.

[94bird]

Mitch, I was referring to this:

Besides, who knows where cars are made? My Trans Am was assembled in Canada, with a gazillion Mexican parts. But, it's an American car. My G8GT is made in Australia, with who-knows-where parts. But it's an American car. Whereas my neighbor's Toyota is made in America, with who-knows-where parts, but it's foreign?

It's not just that comment though. I see or hear this almost every day, and just wanted to put my opinion out there.

Regarding high tech jobs going overseas, yes, that's true, but manufacturing jobs usually lead the way. It's the low tech jobs that generally go first and are less valued because of the pay scale and resulting standard of living. Think, textile manufacturing. Once we start losing most of our higher paying jobs, we're in a lot more trouble.

[mitchntx]

OIC ... I can see both sides ... ALL cars are now homoginized to a large degree.

I think we can all agree, though, that we all began down this slippery slope decades ago, are feeling the bubble burst today and are realizing there is no short term fix.

[00 Trans Ram]

94bird - You're right, it sounds like I was saying that. Not what I meant, though. I meant that it's getting tougher to distinguish. But, you're right in that a Japanese car still has most of its profits going overseas.Also, I think you are SPOT ON with talking about the Big 3 not doing enough PR. I have a responsibility to learn if I want to express an opinion. But, if they want me to agree with them, then they should make that info easy to find. Otherwise, I'm likely to find info that runs counter to their position and base my position on that.That said, if anyone knows of a way to save the companies, lessen union power, but preserve what workers now have, then I'm all for it! Perhaps say that current workers keep what they have been promised, but all new employees will have whatever it takes to make this work (lower wages, no pension, etc.)???

[trackbird]

CASHOLA!!!!!

http://www.cnn.com/2008/POLITICS/12/19/aut...lout/index.html

(Bolding by me)

Feds to lend $13.4 billion to automakersStory Highlights
Automakers must show financial viability by end of March

Loans will be recalled if automakers do not meet viability standard

Loans come from $700 billion Troubled Asset Relief Program




WASHINGTON (CNN) -- The federal government will provide $13.4 billion in loans to Detroit automakers, the White House said Friday.


President Bush said Friday morning automakers must show they can be profitable businesses by March 31.

"Allowing the U.S. auto industry to collapse is not a responsible course of action," President Bush said Friday morning.

"The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing," according to a statement released by the White House.

An additional $4 billion may be available in February, the Bush administration said.

The loans are designed to stabilize U.S. automakers through March 2009, at which time the automakers must show they are financially viable.

"If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury," the statement says.

Financing will be drawn from the $700 billion Troubled Asset Relief Program, it says.

The president said Friday the plan will give the automakers a chance to show they can be viable outside a "disorderly bankruptcy" which he said would drive American into a deeper depression with effects "far beyond the auto industry."

The government will put other conditions on the loans, Bush said Friday, including making pay competitive with foreign automakers with large U.S. operations such as Toyota and Honda. Employees of foreign automakers generally make less than those in U.S.-owned plants.

The plan also puts limits on executive compensation and perks such as corporate jets, requires the automakers to adhere to fuel efficiency and emission standards and open books to government scrutiny.

Chrysler Chairman and CEO Bob Nardelli thanked the administration for the loan.

"A letter of intent was signed which outlines the specific requirements that must be achieved," Nardelli said in a statement. "These requirements will require consideration from all constituents, requiring commitment first in principal, leading to implementation this coming year. Chrysler is committed to meeting these requirements."

[00 Trans Ram]

interesing.I don't know - but is it realistic to expect a 180 turnaround in less than 4 months?

[trackbird]

interesing.I don't know - but is it realistic to expect a 180 turnaround in less than 4 months?

Not in my opinion, but the bankers are walking around with "lots" of govt. money and little oversight and the Big 3 are going to get beat to death over "some" money.

The investment bankers ran up the price of oil/fuel which killed demand for trucks and SUV's (which are quite profitable). Then the banking industry locked up the credit market by giving bad home loans to everyone on the planet and seeing record defaults. This has made it nearly impossible to purchase a new car, thus severely hurting the domestic auto manufacturers. However, the manufacturers are getting "oversight" and have to perform while the banking industry seems to be mostly unregulated with regard to what they do with the funds they have received.

I still say the banking meltdown caused the domestic auto manufacturers to wind up where they are currently. And everyone is picking on the wrong group...

[CrashTestDummy]

I still say the banking meltdown caused the domestic auto manufacturers to wind up where they are currently. And everyone is picking on the wrong group...

Yeah, but the coyotes look after their own kind....

[marka]

Howdy,

The investment bankers ran up the price of oil/fuel which killed demand for trucks and SUV's (which are quite profitable). Then the banking industry locked up the credit market by giving bad home loans to everyone on the planet and seeing record defaults. This has made it nearly impossible to purchase a new car, thus severely hurting the domestic auto manufacturers. However, the manufacturers are getting "oversight" and have to perform while the banking industry seems to be mostly unregulated with regard to what they do with the funds they have received.

I still say the banking meltdown caused the domestic auto manufacturers to wind up where they are currently. And everyone is picking on the wrong group...

This picture says it pretty well:

http://www.flickr.com/photos/stoller/2907411559/

Mark

[marka]

Howdy,

Having said that... I'd rather have seen GM/Chyrsler go though a "managed" chapter 11 with the government stepping in as a creditor as needed, plus incentives for folks to buy a domestic car, plus some program / "money vault" to ensure service for ten years.

I think expecting everyone involved to sit down and agree that they should hurt themselves for GM to succeed is completely insane. Gettelfinger in particular doesn't strike me as someone that will bend at all.

GM has other problems and its 100% true that its not all just about the UAW... But the UAW isn't helping. If the workers aren't being stepped on, the UAW is just making things cost more, unless all the union employees that work only on union business and the union lobbyists are doing it for free (and they sure as hell aren't). Chapter 11 would let them ditch that anchor, hopefully along with another few.

Couple that with some new direction (which they're already starting to do, but need to do more of... No minivan? Really?) and I think GM can be as good as any other car company.

But I think Chapter 11 is the only way they'll politically be able to shed the deadweight.

Mark

[94bird]

I think the simple answer is many things have conspired to put the Detroit 3 into dire straits. The final straw was the credit crisis when GM's cash was very low because they were giving huge sums of money to Delphi, buying out workers to bring in lower paying workers, etc. It may not be common knowledge, but most UAW workers who had good seniority, and who took buyouts in the past 2-3 years got close to $100K each to take "early retirement". Multiply that by 25,000 workers or more per year, and you can see that billions of cash has been going each year to lessen their labor costs in the long run. I don't think the credit crisis is hitting the Detroit 3 any harder than the transplants, but the big difference is how little cash GM and Chrysler have on hand to deal with 6-12 months of very low sales. Ford is very lucky since it got a good LOC in '06 IIRC, for about 28 billion dollars. They couldn't get that deal this year and were lucky they hadn't tapped into it too much until now.

But, I'll be the first to say too many times GM's thinking has been too short sighted. The company is many times too quick to think about whether a project will pay off in the short term and not about whether it will strengthen their portfolio if the market changes. It does amaze me, since everyone knows if you don't have a broad enough portfolio, and the market wants a car you don't have, you're likely 3-4 years away from having it in the market. You just can't afford short term thinking in conditions like that.

[94bird]

But I think Chapter 11 is the only way they'll politically be able to shed the deadweight.

Whether or not it's formally called Chapter 11 or not, GM and Chrysler are functionally in bankruptcy right now, with DIP financing from the government. A real Chapter 11, where you go to court to get your plan approved before you can come back out of it, is what Delphi has been in for about 4 years now. They still don't have an approved plan to exit Chapter 11. GM's been bankrolling Delphi's buyout packages for UAW workers, etc. for the duration of Delphi's bankruptcy, and it's seemed like a money pit. There are just so many stakeholders and road blocks to getting everyone to agree to a final company structure and debt settlement it becomes nearly impossible.

Multiply that by at least ten fold, and you're somewhere in the ballpark of how difficult it would be for an OE automaker Chapter 11 to work. Compound this by the fact that if Delphi is in bankruptcy, OEs will still order parts from them. albeit with purchasing terms designed to protect the OE if the supplier moves to Chapter 7. If an OE goes into bankruptcy, customers won't buy from them. End of story.

The current path has a shot at working, but there has to be a big stick in the negotiations that scares everyone enough to think that negotiating is better than just fighting for a spot in a Chapter 7 liquidation. I haven't seen that big stick yet.

[marka]

Howdy,

If an OE goes into bankruptcy, customers won't buy from them. End of story.

Bull. If anything has been proven, its that the American consumer buys the cheaper product, all else equal and often all else NOT equal. One of the saddest thing about this whole mess is that the OEMs have managed to convince folks of this particular fallacy.

With tax credits for purchasing a new domestic vehicle, help with credit for a domestic purchase, and some handwaving about "we guarantee service/parts" by the government, people would buy the cars, perhaps more so than in the past.

The current path has a shot at working, but there has to be a big stick in the negotiations that scares everyone enough to think that negotiating is better than just fighting for a spot in a Chapter 7 liquidation. I haven't seen that big stick yet.

There's no stick anymore. The government has proven to them that they'll bail them out and there's no reason to expect folks (Gettelfinger in particular) to think it won't keep happening. Couple that with the reorg process being more political than it would have been under chapter 11 (since by definition it'll be a new process) and I think there's less chance it'll work.

Certainly there's a shot it'll work, and I'd hope some of the people in charge have learned some lessons, but I think the chances are fairly remote. These fuckers have been getting away with (hell, rewarded!) dumbass decisions for so long they don't know how to make smart ones. And no, that's not specific to GM and its various stakeholders.

As an example, Madoff ought to be executed, but I bet he ends up with a better life than any normal person could hope to expect.

Mark

This post has been edited by marka: Dec 21 2008, 06:07 PM

[00 Trans Ram]

Bring a little levity to the situation:


(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree1.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree2.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree3.jpg)

THE RIGHT WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree4.jpg)

THE WRONG WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree5.jpg)

[killer_bluebird]

I'm surprise no one has said anything about the though that GM, Ford and Chrysler have also put their products in peril by diluting their brands. (if I missed a post mentioning this feel free to ignore my ramblings) I mean does GM needs to sell cars under the GMC, Cadillac, Chevrolet, Pontiac, Hummer, Buick, Saturn and SAAB Brands, especially when a lot of the cars are the same they just have different styling or options. I do understand that there is a sense of history attached to the names but I think they should consolidate brands. Why do I have to choose between a Saturn Outlook, Chevrolet Equinox, Buick Enclave, GMC Acadia, and Cadillac SRX. It is not enough that a Brand has to compete with the other car companies offerings but do they really need to compete with other brands withing their own company? I mean if you offered only the Solstice and not the Sky you would be reducing costs by reducing having to tool, manufacture and stock parts for each of the 2 brands (personally I like the sky better but you get the idea). I mean when you look at Honda they have 2 brands Honda (economy, sporty and Mid-Scale) and Acura for (Upscale Luxury and sporty luxury) then you have Toyota/Lexus similarly. GM could be Saturn (economy), Chevrolet (Mid-scale and performance) and Cadillac (Luxury and Sporty Luxury). Ford maybe would look like Ford Brand (Economy, Mid-scale and performance), Lincoln (Upscale Luxury), Jaguar (Upscale Performance). I don't know but I think doing this makes a lot of sense as they can market their products better, increase quality (less money dedicated on variations for the different brands and spent increasing quality, fit and finish), and better use of manufacturing facilities by reducing the complexity of building different brands of vehicles based on the same underlying platform. That coupled with new labor agreements can move this companies into profitability in my opinion.


Edit by trackbird: Acura is Honda's upscale line (not Mazdas).

This post has been edited by trackbird: Dec 23 2008, 01:03 PM

[pknowles]

I'm surprise no one has said anything about the though that GM, Ford and Chrysler have also put their products in peril by diluting their brands. (if I missed a post mentioning this feel free to ignore my ramblings) I mean does GM needs to sell cars under the GMC, Cadillac, Chevrolet, Pontiac, Hummer, Buick, Saturn and SAAB Brands, especially when a lot of the cars are the same they just have different styling or options. I do understand that there is a sense of history attached to the names but I think they should consolidate brands. Why do I have to choose between a Saturn Outlook, Chevrolet Equinox, Buick Enclave, GMC Acadia, and Cadillac SRX. It is not enough that a Brand has to compete with the other car companies offerings but do they really need to compete with other brands withing their own company? I mean if you offered only the Solstice and not the Sky you would be reducing costs by reducing having to tool, manufacture and stock parts for each of the 2 brands (personally I like the sky better but you get the idea). I mean when you look at Mazda they have 2 brands Mazda (economy, sporty and Mid-Scale) and Acura for (Upscale Luxury and sporty luxury) then you have Toyota/Lexus similarly. GM could be Saturn (economy), Chevrolet (Mid-scale and performance) and Cadillac (Luxury and Sporty Luxury). Ford maybe would look like Ford Brand (Economy, Mid-scale and performance), Lincoln (Upscale Luxury), Jaguar (Upscale Performance). I don't know but I think doing this makes a lot of sense as they can market their products better, increase quality (less money dedicated on variations for the different brands and spent increasing quality, fit and finish), and better use of manufacturing facilities by reducing the complexity of building different brands of vehicles based on the same underlying platform. That coupled with new labor agreements can move this companies into profitability in my opinion.

GM and Ford do have a lot of brands. However, most Americans that are not into cars don't understand that a Lexus ES300 is basically a Camry with leather. My wife didn't understand until we saw a Camry and an ES300 parked next too each other at the mall. She looked at the interiors and said "It's a Camry with leather and color accents".

[BigEnos]

I'm surprise no one has said anything about the though that GM, Ford and Chrysler have also put their products in peril by diluting their brands. (if I missed a post mentioning this feel free to ignore my ramblings) I mean does GM needs to sell cars under the GMC, Cadillac, Chevrolet, Pontiac, Hummer, Buick, Saturn and SAAB Brands, especially when a lot of the cars are the same they just have different styling or options. I do understand that there is a sense of history attached to the names but I think they should consolidate brands. Why do I have to choose between a Saturn Outlook, Chevrolet Equinox, Buick Enclave, GMC Acadia, and Cadillac SRX. It is not enough that a Brand has to compete with the other car companies offerings but do they really need to compete with other brands withing their own company? I mean if you offered only the Solstice and not the Sky you would be reducing costs by reducing having to tool, manufacture and stock parts for each of the 2 brands (personally I like the sky better but you get the idea). I mean when you look at Honda they have 2 brands Honda (economy, sporty and Mid-Scale) and Acura for (Upscale Luxury and sporty luxury) then you have Toyota/Lexus similarly. GM could be Saturn (economy), Chevrolet (Mid-scale and performance) and Cadillac (Luxury and Sporty Luxury). Ford maybe would look like Ford Brand (Economy, Mid-scale and performance), Lincoln (Upscale Luxury), Jaguar (Upscale Performance). I don't know but I think doing this makes a lot of sense as they can market their products better, increase quality (less money dedicated on variations for the different brands and spent increasing quality, fit and finish), and better use of manufacturing facilities by reducing the complexity of building different brands of vehicles based on the same underlying platform. That coupled with new labor agreements can move this companies into profitability in my opinion.


Edit by trackbird: Acura is Honda's upscale line (not Mazdas).

At one time, GM had like 40-50% of the US market and they used all of those brands to cover the demographic. Obviously that's not a reality now that they are in the low 20% range of the US market. GM needs to cut models, dealers, and plants to be profitable. The unions make it tough to cut production capacity, and every division wants its piece of the pie, and who wants to close down a dealership?

One of the main problems with GM having so many different models and divisions is marketing. It's difficult to properly launch 4 different models when, like you said, they are essentially the same vehicle. Most people don't even know what a current Saturn looks like, which is a shame because I think they are some of the best looking cars GM is making now.

[94bird]

Regarding GM cutting brands, they've already said they want to sell Hummer and Saab, and are studying whether they want to sell or shut down Saturn. Pontiac will become a niche brand. That will leave them with Chevy, Buick, GMC, Pontiac and Cadillac. They've also announced they will reduce their dealerships by about 2000 (approx. 33%). This goes a long way, but GM has said for a long time now, their main brands to focus on are Chevy and Cadillac. That begs the question why they're not proposing to cut more brands. For what I've read, the main reason is, Buick, GMC, Pontiac are traditionally under one dealership. This gives a dealership a reasonably full line of products to sell, no matter what the market trends are. If GMC was disbanded, for example, this dealership would have no trucks or SUVs to sell. GM wants to keep Buick, as this is a very strong selling brand in China and older people here also gravitate toward's a Buick design features. Buick has also topped the quality charts with JD Power for a few years now.

So, a BGP dealership would have some family cars and a crossover with Buick. They would potentially have cars like a G8 and Solstice with Pontiac. They would also have SUVs and trucks through GMC. That's a viable dealership, albeit missing a fuel sipping car, like an Aveo, Cruze or Astra. That could easily be rectified through the Pontiac brand.

Chevy is already a full line dealership and Cadillac is doing quite well, so not much change is needed there.

I understand the logic stated above, but I think it's short sighted thinking again. It will be hard to just drop down to Chevy and Cadillac, but I think it needs to be done. Saturn has failed as a brand, but some of their products like the Astra should be folded into Chevy I think. GMC just is not needed. Chevy trucks and SUVs basically duplicate their whole product line. Buick is the only brand with a good following in the BGP group that would be hard to get rid of, but I would still do it.

[94bird]

Howdy,

If an OE goes into bankruptcy, customers won't buy from them. End of story.

Bull. If anything has been proven, its that the American consumer buys the cheaper product, all else equal and often all else NOT equal. One of the saddest thing about this whole mess is that the OEMs have managed to convince folks of this particular fallacy.

With tax credits for purchasing a new domestic vehicle, help with credit for a domestic purchase, and some handwaving about "we guarantee service/parts" by the government, people would buy the cars, perhaps more so than in the past.

Mark

Ah, but Mark, when I said bankruptcy, I meant a true Chapter 11. This would have no safety net by the government. As soon as you add the safety nets you mentioned it's not Chapter 11 anymore. As it is, the OEs are already functionally in a government backed Chapter 11. There is really very little distinction. The Treasury gives the DIP financing because the private sector never would in today's financial environment and the Presidential appointed overseer is the bankruptcy judge. A huge reorganization is still going to happen, just like in Chapter 11. It just means that a bankruptcy court won't be involved.

Show me a survey of the American people that says anywhere near a majority of them would buy from an OE in Chapter 11. The surveys I've seen, and I'm not including any done by the automotive industry, say otherwise.

[00 Trans Ram]

A little info on the Buick, GMC, Pontiac dealership position.

When I bought my G8 earlier this year, I thought that Pontiac was a HORRIBLE match for a Buick-GMC dealership. Pontiac is trying to sell cars to a younger generation. But, every dealership I went to was filled with the all the ambience of a mortuary. They'd have a couple of $20k Buicks on the floor, plus a couple of GMC trucks. Then, some lone G8 would be off to the side.

No wonder I don't see more G8s on the road. This, despite the fact that my friends (owners of an Audi RS4, Audi S4, BMW 550i, BMW 328i, and BMW 750i) all said that they thought the G8 looked just as good as any of their cars, admitted that it outperformed all but the RS4, and cost less than every one of them.

GM not only has financial problems, they have image problems. Even when they innovate something new (like the Volt), people assume that they are following someone else's lead.