Pre-packaged Bankruptcy Is GM's Only Option - Barron's 50 comments
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Despite protestations from G.M.'s (GM) brass, bankruptcy may indeed be its best option, Barron's says. The dying automaker would need $100B to survive through 2009 in its current form - a massive sum it's unlikely to see from Congress, which is wary of throwing money at what many see as a flawed business model.
Mind you, a traditional Chapter 11 filing could quickly slide into Chapter 7 bankruptcy if GM (or Chrysler or Ford (F) a few months down the road) can't find anyone to lend them the money to keep operations running. That's why Barron's advocates a "pre-packaged bankruptcy" - in which a company enters bankruptcy protection with almost all of its financing in place - in this case backed by the government for a year or so. "In that time, and under the protection of the court, GM could begin to restructure its business with a much higher probability of long-term survival," Mark Bane, co-head of bankruptcy operations at the law firm of Ropes & Gray, says.
This would go a long way toward reassuring car buyers who might otherwise not want to purchase a vehicle from a bankrupt firm, for fear of not having warranties honored or parts being available - one of Detroit's arguments against Chapter 11. The plan needn't even be called a bankruptcy. Term it a financed reorganization, or whatever else might make it sound more palatable to GM's board.
Assuming they go down this road, what's the end of the story? To survive long-term, the Big Three will have to find a way to cut costs (duh), figure out how to make cars that Americans like, and shrink their bloated operations and dealer networks. Consider that U.S. automakers pay employees over $70/hour, compared with the $40/hour Toyota (TM) and Honda (HMC) pay their non-union employees.
GM would probably have to cut its 60K hourly-workers to about half of that, cut pay across the spectrum, close half of its plants, and wind down unprofitable brands (Saab, Pontiac, Hummer, GMC). Ford would have to say goodbye to Mercury. And Chrysler would likely have to close down everything except Jeep and its minivans - making it a likely takeover target for one of the other two, or a foreign carmaker.
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This article has 50 comments:
Is this what the author of this article is advising?
Another thing, during GM last contract settlements they have ALREADY slashed "newhires" salaries from $26.50 per hour down to $14.00 per hour. (would the author be willing to work for the same wages?) ....plus their benefits have also been reduced. GM has ALREADY been trying to survive...and have been trying to get cost down, for some while now.
I will NEVER, EVER, own a Toyota.
On Nov 29 09:59 PM User 214846 wrote:
> I worked for GM 70 dollars in Hour I wish. Get your facts right.
www.humanevents.com/ar...
Who Killed Detroit?
by Patrick J. Buchanan
Who killed the U.S. auto industry?
To hear the media tell it, arrogant corporate chiefs failed to foresee the
demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no
one wanted, while the clever, far-sighted Japanese, Germans and Koreans
prepared and built for the future.
I dissent. What killed Detroit was Washington, the government of the United
States, politicians, journalists and muckrakers who have long harbored a
deep animus against the manufacturing class that ran the smokestack
industries that won World War II.
After working there for over 31.5 years the company has given me a decent monthly retirement...but what some seem to fail to realize is the fact that we have EARNED it. I hear some authors of canceling retiree contracts cutting benefits....to that I say WOAH....STOP and THINK.
The authors...(and it seems to be perpetuating from Seeking Alpha) are suggesting such deeds...Do YOU have retirement packages...Just "How would YOU like it if we were interfering with YOUR "livlehoods"? You can sit behind a computer just "writing to your hearts content"...what your personal/ professional opinions are...in another words ..."doing" ABSOLUTELY NOTHING.....yet trying to give you OPINIONS on the welfare of others...
Sirs...I give you a "challenge" STEP away from your keyboards....WALK in the shoes of those that have diligently built automobiles for this Great Nation...put in all the Blood, Sweat and Tears of "our" profession....live OUR life....See what it is like to get YOUR hands dirty...I mean "work" ...REAL work....not just banging on a keyboard. And then and "only then" LISTEN to some of the proposal that people like YOU are suggesting....
Yes give up your salaries...and work for those wages that you yourself are constantly ridiculing. Just DO IT. I'll guarantee that you wouldn't last more than 2 Days in an automotive plant.
On Nov 29 09:59 PM User 214846 wrote:
> I worked for GM 70 dollars in Hour I wish. Get your facts right.
As for Rick Wagoner asking for bailouts for the Big 3....you have every RIGHT to question his personal habits (ie: flying in corporate jets) I don't blame you...nor the Senate for asking such questions. They are very pertinent questions and should expect answers. If Rick Wagoner expects the "hourly" side of the industry to accept concessions then HE should also be willing to "give up" some of HIS salary also...(which he was so "unwillingly to do.) In my opinion he made a "fool" of himself in front of the Senate a couple of weeks ago.
Michael A. Grand, Futurist / Visionary
if you are worried about somebody invading the USA - just start arming the population. get rid of any laws which prevents private citizens from owning assault rifles and automatic weapons. rocket propelled grenades and stinger missiles in the hands of properly trained citizens would be a larger deterrent than tanks.
Richard
John
More of the same, which will only perpetuate the cycle of boom/bust for the NA automakers. Sad, because GM could be a force globally if they only were proactive in managing their long-term obligations.
Step 2 (For any Bankruptcy Plan): The Auto Workers Union go down w/ the Ship, as they should, being an equal part to the DEATH of an AMERICAN Icon.
Step 3 (Under Bankruptcy Protection): Figure a way to get the Labor Force to accept "Start Anew" Contracts that allow competiveness to Toyota (USA). This will never happen though, the AWU still gung up w/ the 1st sunken ship.
Step 1-A (alternate to above): NO Bankruptcy. The FED GOVT. steps in to Form one US Auto Manufacturer (the sum of GM + F + Chrysler). Nope, it'll never happen either.
SELL-SELL-SELL-SELL the Stock and let VW & Toyota serve our vehicular needs?
WOW, what a mess!!
1) Sell All of GMAC and the Insurance Business (Ditech)
2) Cut down from five regional offices to two. One in Atlanta (east of the Mississippi River)and one in LA (west of Mississippi River). That means Chicago, New York, and Dallas are closed. With about 250 people working in each location (750 total) at an average of $100,000 each, that is a yearly savings of $75 million. Operation cost (rent, equipment, etc.) at the three locations will save another $1.8 million. Benefits for the 750 employees will save another (at $20,000 each) another $15 million.
3) Next, there is an average of three offices per state (local offices in cities across the country), if we close them, that is another $3 million in office space.
4) Next, the District Managers work out of their house and the Zone Managers (or whatever term is given to them), could be let go. They make around $150,000 a year and there are about 75 of them. Again, a savings of $11.25 million. With benefits, a total of $12.75 million in savings.
5) Next, cut around 150 jobs at the Detroit GM Headquarters. A savings of around $18 million with benefits.
6) Next, cut Buick down to two cars (Enclave and Lucerne), cut Pontiac to one (G6), cut GMC to two (Yukon and Sierra), cut Saturn to one (Vue) – and put all cars to a new umbrella called “United GM”. This will save GM billions. Also cut back on two Chevy models and two Cadillac models.
7) Next, cut advertising in December, January, February, March, April, and May (with the exception of auto show advertising for a three week period during the show and its incentives). This will save GM around $1.4 billion.
8) Sell all five planes. This will save GM $100 million in sales and another $100 million in yearly travel expenses for a total savings of $200 million dollars.
Plan Two on Fixing GM
How to save GM
1) GM needs to cut their total car models to 25 (from 60). What they could do is get rid of all Buicks expect Lucerne and Enclave; get rid of all Pontiacs except G6; get rid of all GMCs except Sierra and Yukon; get rid of all Saturns except the Vue; get rid of Saab all together; get rid of at least three Chevy models; get rid of at least two Cadillac models.
2) Get rid of half the dealerships. Chevy seems to have the best distribution so change the Chevy dealerships to Chevy, BPG, Saturn, and Cadillac
3) Close at least three of the five regional offices
4) Close all Zone offices and have employees work out of their homes
5) Get rid of 50% or more of white collar workers in the field
6) The factories will close based upon which models will be discontinued
7) Have upper management take a 35% pay cut
8) Have middle management take a 20% pay cut
9) Cut advertising from $2.3 billion per year to $750 million
10) Get rid of advertising groups and have national advertising only
11) Get rid of co-op advertising dollars
12) Get rid of all promotional advertising
13) Cut all regional and national meetings that cost more than $100,000
14) No parties for auto shows
15) Have special cash incentives for cash only purchases
16) Once the Volt battery is discovered, convert at least half the cars and trucks left after the cut to Hybrid
17) Move 1/2 the engineers to be used to discover more fuel efficient standards and more alternative fuel / hybrid cars
18) Sell all five planes and travel coach (a $100 million savings from cost of planes and a $100 million savings in yearly air cost for a total savings of $200 million).
1) Reliability issues of the 80 gave the worst image of quality and the perception hasnt changed despite the progress.
2) The US auto industry essentially ignored and failed to capture the immagination and needs of the new genration, making the same ugly basic designs.
3) Failing to recognize the needs of most immigrants; reliability, good gas milage, cost, and a half good looking design. Next time you get in the car, look at the drivers around you and do a little bit of statistics of your own.
4) From (2) and (3), the US Auto industry isolated itself to a small segment of an aging "patriotic" population that would only buy American cars, despite its "short commings."
Given that all these are management short sitedness, do they really deserve the million $ salalries? I think its time to offshore the management, for a change, and use the savings for survival!
All salaries and wages need to be seriously reduced. All benefits neeed to be cut. If not, the Japanese, and Koreans will prevail. Is that what we want ?
As far as other aspects of pre-packaged deal, all three have to drastically reshape their dealer networks (maybe a federal law preempting state franchise regulations would help here) and get rid of extra brands. GM only needs two, "Cheap" and "Expensive", for example. One could actually see the benefit of creating two new brands and closing franchises of the old ones (the strongest dealers could bid on them).
Let us pray that the Administration has the guts and the wisdom to do the right moves, and do it fast and decisively to remove uncertainties not only for the Big3, but for their suppliers, dealers, creditors. stockholders, and finally the tax payers
The college boys who spend their days tickling the computer key boards should give real work a shot. You're probably right. They would probably only last a day or two, if that. Let's see how they hold up under butt breaking work. What a sad scene that would be. The computer key board ticklers are pretty quick to reduce your pension, cut your health care benefits, and kick you to the curb. They actually believe the guys working the factory line, destroyed the US auto industry. Fools! They want to blame the line workers for the auto industry's policy of building cars that nobody wants to buy. It's been about 40 years since the US auto industry was issued the wake up alarm. The alarm said...Wake up! Start building energy efficient cars of quality. If you don't......The Japanese will. When the Japanese do, they will dominate the US market, and markets around the world.
The leaders of the US auto industry are to blame, period. Plain and simple. They are a bunch of short sighted, greedy give me the money NOW, fools. The greedy fools bought Hummer.
Tomorrow? What's that? Who cares about tomorrow.
A tip of the hat to Fcountry.
On Nov 29 11:39 PM Fcountry wrote:
> I must admit that I am a GM retiree, Of course I want GM to prosper.
>
> After working there for over 31.5 years the company has given me
> a decent monthly retirement...but what some seem to fail to realize
> is the fact that we have EARNED it. I hear some authors of canceling
> retiree contracts cutting benefits....to that I say WOAH....STOP
> and THINK.
> The authors...(and it seems to be perpetuating from Seeking Alpha)
> are suggesting such deeds...Do YOU have retirement packages...Just
> "How would YOU like it if we were interfering with YOUR "livlehoods"...
> You can sit behind a computer just "writing to your hearts content"...what
> your personal/ professional opinions are...in another words ..."doing"
> ABSOLUTELY NOTHING.....yet trying to give you OPINIONS on the welfare
> of others...
> Sirs...I give you a "challenge" STEP away from your keyboards....WALK
> in the shoes of those that have diligently built automobiles for
> this Great Nation...put in all the Blood, Sweat and Tears of "our"
> profession....live OUR life....See what it is like to get YOUR hands
> dirty...I mean "work" ...REAL work....not just banging on a keyboard.
> And then and "only then" LISTEN to some of the proposal that people
> like YOU are suggesting....
> Yes give up your salaries...and work for those wages that you yourself
> are constantly ridiculing. Just DO IT. I'll guarantee that you wouldn't
> last more than 2 Days in an automotive plant.
Even if we still had a healthy investment banking community and a strong economy, this would be a daunting challenge for private capitalism.
Now, it needs to be led by the best experts in Congress, Judiciary, and Administration who have our entire national interest at stake, including return on our investment in this industry.
I am not a big fan of Mitt Romney as a political figure but he may have the best set of skills and relationships to accomplish this enormous task. His father was the head of an American car company and he has led a successful investment company.
If the Obama folks and congress want to reach out to get problems solved, he may be a good choice to lead this critical effort for the future of our country.
I have a very open and honest question for you...
IF GM was to go into bankruptcy (as you are suggesting) ..[quote}
"to get rid of their pension and medical obligations to retired workers (and, hopefully, old management as well")
Then what is to happen to us (retirees) ? Are we just left "out on the street"with no money...and no benefits? Is that what you are suggesting? Are you willing to give up YOUR retirement?...Do you want others suggesting ways to financially RUIN everything that you have worked for? What is your suggestion for compensation (if any)?
There are many of us who have invested in our OWN company (GM) only to see our investments "tank"...because of the Wall Street
mess....so first we lose our money...now there are people like you who want to trash our retirement income and our benefits also? What if your Mother, Father, Uncle or Aunt worked or the automotive industry...would you be suggesting the same?
What about those of us who have worked there ALL our lives...building YOUR cars ...which I must admit is NOT an easy job....(you should try it sometime).
I think that is a GREAT idea ...akhait...and all the other "carslayers"..the next time that you and yours decide that it is time to purchase a new vehicle, don't just simply buy one....BUILD it YOURSELF....build one for your friends and family....build one for people that you don't even know. Build them for YEARS.
Your car builders try to achieve what America wants...when gas was cheap...people wanted Trucks and SUV's we built LOTS of them...look how many are out on the road they are EVERYWHERE. Were people "forced" to buy them? We built what they wanted. Once gas went up (whose fault is THAT?....sue your market makers and the oil companies)...but to blame us is ludicrous.
AS for Hybrids....the auto industry is trying to come up with alternatives....yet the science of building "perfect BATTERIES" is just now being perfected. Would you want a carbuilder to put just "any ole" battery in your vehicle...and then you would have to replace such an expensive item (boy you would be complaining THEN)...but NO the automotive people wanted to come up with the Solution for dependable batteries for your vehicle first. I guess that YOU could have given them the solution...but did you?
This Big 3 bankruptcy sham is an obvious class war designed to benefit the elites and destroy the middle class.
Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler.
Thank you for your post. I believe you are right. I have also been thinking about this for a very long time. We are in trouble because we are not making anything that uses our national abilities and resources to excel in a global market. Pre-fab housing made of building materials created from recycled waste now going into landfills to house a billion people living at a subsistence level could be a new global business. Engineering living spaces, creating pre-fab sewage and water treatment plants, designing mass produced mass transit system components, creating green energy systems, and rebuilding our infrastructure through systems innovation are the road out of this. How did we become the absolutely worst business people on Earth? We are a nation of completely talentless and feckless business people who only manufacture toxic financial nuclear WMD's like Credit Default Swaps derivatives. The Casino Economy must end. We must get clean and sober and actually make things again that sell worldwide. Pre-fab modular subsistence housing made from recycled materials that we sell all around the world could be a new mass growth market industry. Why not think about this?
On Nov 30 01:16 AM Mike123A wrote:
> The USA North American Operations (NAO) Automobile Industry GM, Ford
> and Chrysler have reached the end of its incubation stage of industrialization.
> They will downsize automobile production, merge, re-tool, design
> and build new factories and products to house humanity in our entire
> World. This new Global Industry will be the catalyst that drives
> our Civilization forward and out of the current Global Economic Crisis.
> I worked for both General Motors Corporation and Delphi Corporation
> for 27 years as an assembler, spot-welder, toolmaker journeyman,
> dimensional control inspector, team instructor, team leader, and
> machinist. This industry works as a military operation with the ability
> to correct for errors by using intelligent management, engineers,
> and organized union labor. Those who think this industry will not
> survive are mistaken. The planned framework has been in place since
> 1943 – 1945 during World War II in the U.S. Board of Economic Warfare.
> It is only a matter of when this industry will begin. It will happen
> as I stated to the President’s Council on Sustainable Development
> in 1994 at the Labor Department in Washington, D.C., and again to
> GM Management and the UAW in 1998 during the Industrial dispute that
> shut-down 25 assembly operations. Now, this industry will negate
> NAFTA, GATT, and WTO wage disparity. The World is now Global. A new
> Architecture for a new Global Civilization is about to blossom and
> evolve out of the moribund NAO Auto Industry.
>
> Michael A. Grand, Futurist / Visionary
[qoute] The unions are the cancer that eats out the heart of American industry. Their pernicious avarice has eventually sucked all of the life out of every industry they work at. They destroyed the American steel industry, and now they have brought about the eminent collapse of the Big-3 auto companies. Their workers must now learn what is the flip side of the juicy wages and benefits they have extorted over the years: job loss, pension reductions, and the black mark on their resumes when they go looking for that next job: "former union worker". I'll bet more than 75% will be passed on for employment because of that single fact.
**********************...
Sir,
As you can tell I obviously disagree with you and I am suspecting that you probably have never done an honest "HARD DAYS Work" in your entire life. (Please feel free to correct me if I am mistaken.)
Let me refer to a past commentary posted on this board...You may not appreciate it...but I hope that you at least take the time to read it.
These are our jobs and retirements that we are fighting for..so please keep an open mind.
**********************...
100 Years Later: With GM In Decline, Flint is Now a Service Economy
paulk8756 and BioInvestor
I am a retired GM employee...(I guess that is pretty obvious)...Let's go BACK in automotive history....Just WHY were those Unions even formed in the first place? Could it be because Ford used to hire "henchmen" to beat those who even talked of better working conditions? Are you even aware of what the working conditions used to be like? Would any of you work in sweat shops where you couldn't even go to the bathroom? One of the first thing that the Unions created was a better working environment...(wow... a 15 minute break every couple of hours..so you could go to the bathroom)...then some type of insurance due to the HAZARDS in working in such environments....( these things are taken for granted at this time...but they all had to be negotiated.)
I started at GM in 1974...I diligently worked there for 31.5 years...during that time I received a torn rotary cuff (shoulder injury), a broken thumb, scalding from over 200 degree water....These are called Industrial Accidents..I have seen people mauled only to be drug off their job..and immediately replaced...just to keep the line going...How many "writers" have these types of accidents? How many "investors" would even consider working under these conditions?
Now I must admit that the automotive industry has gotten MUCH better concerning Safety....MUCH better... But there was a time when things weren't so great.
I started out making $7.00 per hour in 1974...and was up to about $26.00 per hour 30 years later... you do the math $ 19.00 divided by 30 equals$0.63 cents per hour per year raise. Are you saying that a person isn't worthy of a $0.63 an hour per year raise?
When times were good we all made out but 15 years ago when things got touchy we all took pay freezes...all the employees figured out better build processes...we had to to stay alive....Did management take pay freezes? Yeah right....WE are all supposed to be working together...it is ALL OF OUR jobs at stake...
Now take a look at GM management, take Roger Smith, for example, who darn near ran GM into the ground within a 3 year period...took MILLIONS in severance PLUS a 2 MILLION per year retirement package...then made it where it could never be done in the future. Hey that's really looking out for the company. (at that time the President of this Great US of America was only making $250,000 per year).
If you will do your research....manpower is only about 4% ...I repeat 4% of the total cost of building a vehicle....The BIGGEST cost is parts "transportation&q.... costs of getting the parts to the plants.
So for those of you that are more than happy to sit back and blame the UNIONS...may I suggest that you do a little further research...you may be surprised what you may find.
Dig DEEP ...very DEEP...learn what you are talking about before you criticize.
I have over 31.5 years EXPERIENCE and I KNOW what I am talking about...I have lived it.
Sincerely and respectfully,
Fcountry
Mon Jun 23rd 08:35 AM
100 Years Later: With GM In Decline, Flint is Now a Service Economy
All of this was due to the Autoworkers being "overpaid" ? I'll BET those Autoworkers probably work a LOT harder and make a LOT less than the author of this article. So using Mark Perry's logic then Seeking Alpha could be in serious trouble and will probably have to move oversees.
Mark Perry isn't stating the fact that those autoworkers have taken serious wage cuts/freezes to help out their companies. Is HE willing to do the same?
Sincerely and respectfully,
FC
www.youtube.com/watch?...
www.youtube.com/watch?...
www.youtube.com/watch?...
Amazingly, they are STILL being created!
WHEN will they be COMPLETELY STOPPED and DECLARED TOTALLY ILLEGAL by Federal law?
Can there be a program to phase them out worldwide within 12 to 18 months?
Should governments buy them up directly and shred them ? Would that be cheaper than injecting trillions of dollars of Federal Reserve fiat money into the banking system to cover them?
www.youtube.com/watch?...
www.youtube.com/watch?...
www.youtube.com/watch?...
Plus the $70/hr the author states probably takes into account a quite generous benefits package.
On Nov 29 10:07 PM Fcountry wrote:
> How do the Authors of this article and others get that GM,s hourly
> salaries are over $70.00 per hour...it just isn't true. He really
> should read other articles from Seeking Alpha about the untruism
> of that figure.
> Another thing, during GM last contract settlements they have ALREADY
> slashed "newhires" salaries from $26.50 per hour down to $14.00 per
> hour. (would the author be willing to work for the same wages?) ....plus
> their benefits have also been reduced. GM has ALREADY been trying
> to survive...and have been trying to get cost down, for some while
> now.
I'll bet that I don't get any takers...just complainers.
Your point is well taken and your question is legitimate. However, it is irrelevant at this eleventh hour of imminent collapse of the Big3, the situation of which was exacerbated by easy credit, greed, oil prices, and long-term decline. Survival is at stake and the clock is ticking. Money is real and no matter how hard you punch the calculator it just won't add a single more dime. So please, I pledge we all come to our senses.
On Nov 30 05:12 PM Fcountry wrote:
> To those that are criticizing the Auto world...would ANY ONE of you
> "trade jobs" and work in the auto industry...it is very easy to criticize...but
> would YOU personally....work like they do? Ask yourself that...be
> honest...I am very curious to ANY response that I receive.
>
> I'll bet that I don't get any takers...just complainers.
You are exactly right...I concede to your insight...I was put in the defense mode by some who who were obviously "uninformed" (concerning their facts) and not thinking about the WHOLE picture and its ramifications to all involved.
I am watching this whole saga (as are many) whose livelihoods depend on the outcome.
May this whole mess be peacefully and intellectually resolved (for EVERYONES sake).
Sincerely,
FC
Hell, if you can do it why can't we all do it?
Because the rest of us know better, that's why.
What if we were all union workers? Welcome to socialism.
Your biggest problem today isn't defending yourselves. Most of us in the rest of the country won't buy it anymore anyway. Your biggest problem is that these aren't isolated conversations among scattered groups of people any more. And your biggest problem right now is that maybe millions of people are reading this and nodding their heads in agreement.
Many of us don't have it a fourth as good as you do and you feel, and your union encourages you to feel, ENTITLED to as much in pay and benefits as many doctors and successful engineers. You will no doubt get your bailout money, and I won't hold it against any politician I like and support for not throwing his career away taking on the unions. None of my money will ever again be part of your paycheck, though. Read the feedback from all the non-union people above. Think I alone feel this way? We all work hard for our money. Think you work hard? Cry me a river. I’ve worked hard all my life. Most of us do NOT get, or ever have an opportunity to get, a job that pays like that and allows them to retire at 50 with a nice pension and medical for life, already having made far more money than most of us will ever see working till we’re- well, too old to work. And all of us have had the pleasure of driving by one of your picket lines on our way to work when our communities have lost enough jobs that there were probably thousands of people driving by that would have loved to take your damn job for half the money you were already making even without the benefits you already had.
So a large part of the country has had it with you and your sense of entitlement. Many will never buy anything you make. YOU did this.
Companies pass these costs on to consumers. When the consumer price index goes up, you, of course, get your cost-of-living increases you negotiated into your contract. The rest of us, which HAPPEN TO BE THE MAJORITY, didn't participate in the mechanism which just drove prices up, even though our money is now worth less, too. When you drive prices up for everyone and protect yourself from the resulting inflation, all you've done is maintain your (artificially and unfairly) elevated economic position while at the same time making the rest of us poorer.
. YOU"LL get "no more concessions" from many of us in the rest of the country. And the bailout? Won't matter in the long run.
Here's the problem with that. If you have a willing, able workforce that will do a job for $15 an hour, and the union forces payment of $26 an hour plus $20 in benefit costs for that same job, then the company will inevitably suffer and decline every year, just as you have witnessed. You can't run a local plumbing company paying $50 an hour to plumbers, if other plumbers in the same town are working for $25...and doing fine at that rate, paying rent, buying cars and food, and perfectly content at that rate. The unions have created an artificial level of compensation that has nothing to do with the employment market. The results are what you see in the Big 3 right now.
You can rail at Toyota all you want, they are not forcing anyone to come to work. If they offer 20 jobs at $12 an hour and 700 people want the job, they should lower the wage. That's how it works, the employer's job is to pay what is needed to get a competent worker on board, and not more.
On Nov 30 04:33 PM Fcountry wrote:
> Homer 11
>
> [qoute] The unions are the cancer that eats out the heart of American
> industry. Their pernicious avarice has eventually sucked all of the
> life out of every industry they work at. They destroyed the American
> steel industry, and now they have brought about the eminent collapse
> of the Big-3 auto companies. Their workers must now learn what is
> the flip side of the juicy wages and benefits they have extorted
> over the years: job loss, pension reductions, and the black mark
> on their resumes when they go looking for that next job: "former
> union worker". I'll bet more than 75% will be passed on for employment
> because of that single fact.
>
> **********************...
> Sir,
>
> As you can tell I obviously disagree with you and I am suspecting
> that you probably have never done an honest "HARD DAYS Work" in your
> entire life. (Please feel free to correct me if I am mistaken.)<br/>
>
> Let me refer to a past commentary posted on this board...You may
> not appreciate it...but I hope that you at least take the time to
> read it.
> These are our jobs and retirements that we are fighting for..so please
> keep an open mind.
>
> **********************...
>
> 100 Years Later: With GM In Decline, Flint is Now a Service Economy
>
> paulk8756 and BioInvestor
>
> I am a retired GM employee...(I guess that is pretty obvious)...Let's
> go BACK in automotive history....Just WHY were those Unions even
> formed in the first place? Could it be because Ford used to hire
> "henchmen" to beat those who even talked of better working conditions?
> Are you even aware of what the working conditions used to be like?
> Would any of you work in sweat shops where you couldn't even go to
> the bathroom? One of the first thing that the Unions created was
> a better working environment...(wow... a 15 minute break every couple
> of hours..so you could go to the bathroom)...then some type of insurance
> due to the HAZARDS in working in such environments....( these things
> are taken for granted at this time...but they all had to be negotiated.)
>
> I started at GM in 1974...I diligently worked there for 31.5 years...during
> that time I received a torn rotary cuff (shoulder injury), a broken
> thumb, scalding from over 200 degree water....These are called Industrial
> Accidents..I have seen people mauled only to be drug off their job..and
> immediately replaced...just to keep the line going...How many "writers"
> have these types of accidents? How many "investors" would even consider
> working under these conditions?
>
> Now I must admit that the automotive industry has gotten MUCH better
> concerning Safety....MUCH better... But there was a time when things
> weren't so great.
>
> I started out making $7.00 per hour in 1974...and was up to about
> $26.00 per hour 30 years later... you do the math $ 19.00 divided
> by 30 equals$0.63 cents per hour per year raise. Are you saying that
> a person isn't worthy of a $0.63 an hour per year raise?
>
> When times were good we all made out but 15 years ago when things
> got touchy we all took pay freezes...all the employees figured out
> better build processes...we had to to stay alive....Did management
> take pay freezes? Yeah right....WE are all supposed to be working
> together...it is ALL OF OUR jobs at stake...
> Now take a look at GM management, take Roger Smith, for example,
> who darn near ran GM into the ground within a 3 year period...took
> MILLIONS in severance PLUS a 2 MILLION per year retirement package...then
> made it where it could never be done in the future. Hey that's really
> looking out for the company. (at that time the President of this
> Great US of America was only making $250,000 per year).
>
> If you will do your research....manpower is only about 4% ...I repeat
> 4% of the total cost of building a vehicle....The BIGGEST cost is
> parts "transportation&am... costs of getting the parts to the
> plants.
>
> So for those of you that are more than happy to sit back and blame
> the UNIONS...may I suggest that you do a little further research...you
> may be surprised what you may find.
>
> Dig DEEP ...very DEEP...learn what you are talking about before you
> criticize.
>
> I have over 31.5 years EXPERIENCE and I KNOW what I am talking about...I
> have lived it.
>
> Sincerely and respectfully,
>
> Fcountry
>
> Mon Jun 23rd 08:35 AM
> 100 Years Later: With GM In Decline, Flint is Now a Service Economy
>
>
> All of this was due to the Autoworkers being "overpaid" ? I'll BET
> those Autoworkers probably work a LOT harder and make a LOT less
> than the author of this article. So using Mark Perry's logic then
> Seeking Alpha could be in serious trouble and will probably have
> to move oversees.
> Mark Perry isn't stating the fact that those autoworkers have taken
> serious wage cuts/freezes to help out their companies. Is HE willing
> to do the same?
>
>
> Sincerely and respectfully,
>
> FC
On Dec 01 10:52 AM nonunion guy wrote:
> Fcountry, you make some good points about unions being founded to
> pull people out of squalid and dangerous working conditions. The
> problem was that once that became dramatically better, the unions
> didn't stop, or even slow down, they accelerated their efforts to
> split the pie in their favor.
>
> Here's the problem with that. If you have a willing, able workforce
> that will do a job for $15 an hour, and the union forces payment
> of $26 an hour plus $20 in benefit costs for that same job, then
> the company will inevitably suffer and decline every year, just as
> you have witnessed. You can't run a local plumbing company paying
> $50 an hour to plumbers, if other plumbers in the same town are working
> for $25...and doing fine at that rate, paying rent, buying cars and
> food, and perfectly content at that rate. The unions have created
> an artificial level of compensation that has nothing to do with the
> employment market. The results are what you see in the Big 3 right
> now.
>
> You can rail at Toyota all you want, they are not forcing anyone
> to come to work. If they offer 20 jobs at $12 an hour and 700 people
> want the job, they should lower the wage. That's how it works, the
> employer's job is to pay what is needed to get a competent worker
> on board, and not more.
On Nov 29 09:59 PM User 214846 wrote:
> I worked for GM 70 dollars in Hour I wish. Get your facts right.
if no one buys your cars, for whatever reason, you do not deserve a raise. in fact, unless the nature of the work has changed (ie, not gotten simpler), I would argue NO raise is deserved.
On Nov 30 04:33 PM Fcountry wrote:
> Homer 11
>
> [qoute] The unions are the cancer that eats out the heart of American
> industry. Their pernicious avarice has eventually sucked all of the
> life out of every industry they work at. They destroyed the American
> steel industry, and now they have brought about the eminent collapse
> of the Big-3 auto companies. Their workers must now learn what is
> the flip side of the juicy wages and benefits they have extorted
> over the years: job loss, pension reductions, and the black mark
> on their resumes when they go looking for that next job: "former
> union worker". I'll bet more than 75% will be passed on for employment
> because of that single fact.
>
> **********************...
> Sir,
>
> As you can tell I obviously disagree with you and I am suspecting
> that you probably have never done an honest "HARD DAYS Work" in your
> entire life. (Please feel free to correct me if I am mistaken.)<br/>
>
> Let me refer to a past commentary posted on this board...You may
> not appreciate it...but I hope that you at least take the time to
> read it.
> These are our jobs and retirements that we are fighting for..so please
> keep an open mind.
>
> **********************...
>
> 100 Years Later: With GM In Decline, Flint is Now a Service Economy
>
> paulk8756 and BioInvestor
>
> I am a retired GM employee...(I guess that is pretty obvious)...Let's
> go BACK in automotive history....Just WHY were those Unions even
> formed in the first place? Could it be because Ford used to hire
> "henchmen" to beat those who even talked of better working conditions?
> Are you even aware of what the working conditions used to be like?
> Would any of you work in sweat shops where you couldn't even go to
> the bathroom? One of the first thing that the Unions created was
> a better working environment...(wow... a 15 minute break every couple
> of hours..so you could go to the bathroom)...then some type of insurance
> due to the HAZARDS in working in such environments....( these things
> are taken for granted at this time...but they all had to be negotiated.)
>
> I started at GM in 1974...I diligently worked there for 31.5 years...during
> that time I received a torn rotary cuff (shoulder injury), a broken
> thumb, scalding from over 200 degree water....These are called Industrial
> Accidents..I have seen people mauled only to be drug off their job..and
> immediately replaced...just to keep the line going...How many "writers"
> have these types of accidents? How many "investors" would even consider
> working under these conditions?
>
> Now I must admit that the automotive industry has gotten MUCH better
> concerning Safety....MUCH better... But there was a time when things
> weren't so great.
>
> I started out making $7.00 per hour in 1974...and was up to about
> $26.00 per hour 30 years later... you do the math $ 19.00 divided
> by 30 equals$0.63 cents per hour per year raise. Are you saying that
> a person isn't worthy of a $0.63 an hour per year raise?
>
> When times were good we all made out but 15 years ago when things
> got touchy we all took pay freezes...all the employees figured out
> better build processes...we had to to stay alive....Did management
> take pay freezes? Yeah right....WE are all supposed to be working
> together...it is ALL OF OUR jobs at stake...
> Now take a look at GM management, take Roger Smith, for example,
> who darn near ran GM into the ground within a 3 year period...took
> MILLIONS in severance PLUS a 2 MILLION per year retirement package...then
> made it where it could never be done in the future. Hey that's really
> looking out for the company. (at that time the President of this
> Great US of America was only making $250,000 per year).
>
> If you will do your research....manpower is only about 4% ...I repeat
> 4% of the total cost of building a vehicle....The BIGGEST cost is
> parts "transportation&am... costs of getting the parts to the
> plants.
>
> So for those of you that are more than happy to sit back and blame
> the UNIONS...may I suggest that you do a little further research...you
> may be surprised what you may find.
>
> Dig DEEP ...very DEEP...learn what you are talking about before you
> criticize.
>
> I have over 31.5 years EXPERIENCE and I KNOW what I am talking about...I
> have lived it.
>
> Sincerely and respectfully,
>
> Fcountry
>
> Mon Jun 23rd 08:35 AM
> 100 Years Later: With GM In Decline, Flint is Now a Service Economy
>
>
> All of this was due to the Autoworkers being "overpaid" ? I'll BET
> those Autoworkers probably work a LOT harder and make a LOT less
> than the author of this article. So using Mark Perry's logic then
> Seeking Alpha could be in serious trouble and will probably have
> to move oversees.
> Mark Perry isn't stating the fact that those autoworkers have taken
> serious wage cuts/freezes to help out their companies. Is HE willing
> to do the same?
>
>
> Sincerely and respectfully,
>
> FC
Personally I believe the American culture suffers from decades of oversold leadership being equated with salesmanship. (Part of the Western Medicine Man syndrome).
Would the Obama regime be brave enough and wise enough t make this unorthodox move? I believe Mit is hanging around idling, a talent somewhat wasted.
On Nov 30 01:55 PM Gandalf wrote:
> The depth of the problems faced by the 3 American auto makers requires
> that all three should go into bankruptcy under a common bankruptcy
> judge and master in bankruptcy with the objective of rationalizing
> the research, development, product portfolio, manufacturing, marketing,
> service/warranty and financing into one global competitive and profitable
> company. This is something the US taxpayer can invest in. Without
> this bottom-up rationalization, there is no hope for any one of these
> failed management organizations.
>
> Even if we still had a healthy investment banking community and a
> strong economy, this would be a daunting challenge for private capitalism.
>
>
> Now, it needs to be led by the best experts in Congress, Judiciary,
> and Administration who have our entire national interest at stake,
> including return on our investment in this industry.
>
> I am not a big fan of Mitt Romney as a political figure but he may
> have the best set of skills and relationships to accomplish this
> enormous task. His father was the head of an American car company
> and he has led a successful investment company.
>
> If the Obama folks and congress want to reach out to get problems
> solved, he may be a good choice to lead this critical effort for
> the future of our country.
I am pretty certain that the $70/hour is the total compensation package for GM Workers, not their actually hourly pay. You have to add in health benefits, retirement, etc. That IS what the car companies are paying to the employees (whether they see it in their paycheck or not).
Additionally, I think that the taxpayers have every right to demand concessions from the UAW, including reduction in retirement benefits and reduction in salary/benefits. If the companies were not asking for a bailout, I wouldn't care what they do, but when they are asking for taxpayer assistance then the taxpayer has every right to demand certain terms. Would you rather the companies go bankrupt and you have NO job/benefits at all? That is an option, though I would venture to guess that it is not as appealing as taking a paycut, which, in turn, is not as appealing as continuing business as usual. That being said, business as usual is not an option when you are asking for someone else to bail you out.
I just want to say that I am actually hoping for a bailout. I bought GM at $3.40 a couple weeks ago.
On Nov 29 11:44 PM User 309376 wrote:
> The 70 dollars an hour is the manufacturing cost of a GM vehicle,
> not what the employee makes. Hope this helps you further understand
> why the American auto companies are in this position.