Repper

Autoworkers' Pay Only Small Factor in Detroit's Problems

Finally someone broke it down correctly. I'm SO sick of people throwing that $73/hr amount in ignorance, as if it was take-home pay. Most UAW workers are not rich, though historicly much better paid than the general market would dictate. Recent changes in contracts will largely narrow that gap over time, and new proposed emergency concessions will virtually eliminate it in a few years. Finally the UAW will not be a huge yoke on the necks of the big three.

Still, I do think that their high pay and benefits (including retirement legacy costs) accompanied with rediculous work rules, and their historic resistance to productivity improvements are a large part of why the big three struggle in such tough times. I hope that the union finally realizes that holding the company hostage for their own benefit only hurts everyone in the long run. I hope the emergency changes now proposed really do take place, and stay in place.

Big Two Bailout: Likelihood of Success Is Slim

"According to Professor Edward Altman, famous for his Altman z-score company solvency model, he has calculated that with the recent bailout proposal whereby GM was seeking $18 Billion, even with the temporary infusion of cash, GM will be bankrupt within a year unless they continued to receive new funding. This is not a sustainable model and we should not beguile ourselves into this illusion."

He did not take into account any of the changes proposed. That stat is only accurate if the company made no changes in capacity or cost structure AND if the credit market stays locked keeping the auto market at historic lows. Facts are that the company already has made changes from which they will realize more and more of the cost savings. Also the plans they submitted outline many more changes that will make them more viable. Of course it all relys somewhat on the credit market loosening, so that the auto market will start to ramp back up at least a little. (If the credit markets don't loosen the HUGE TARP bailout was all worthless.)

Big Two Bailout: Likelihood of Success Is Slim

"#1) People will be hesitant to buy a car without assurances that the company is a going concern.

Well, wouldn't you be more comfortable buying a car from a company that you know is backed by the US government with skin in the game and a more sustainable model? Under the current proposal, we may very well have to eventually cut bait, and consumers know this. GM may never start selling cars at a sustainable rate again under the current proposal."


You make a huge and (IMO) very wrong assumption here. You assume that consumers realize that the vehicles would still be backed and that the company's future is just as healthy. The fact is that typical consumers don't know much about big business and will shy away from any uncertainty because there are so many other options.

Six Myths about the Big Three

And resale value is ONLY a producet of consumer OPINION about brands, not about actual durability.


On Nov 21 02:56 PM Morvo wrote:

> Oh, and btw -- to all those apologists for the big 3 (particularly
> GM domestic), citing recent articles by consumer reports that essentially
> boil down to "their cars aren't quite the disasters they once were,"
> make sure you read this recent WSJ piece:
>
> online.wsj.com/article...
>
>
> Resale value determines true worth.

Six Myths about the Big Three

For all you who love to ignorantly spout your cynical distain for your own country's companies, the following applies specifically to GM, but both Ford and Chrysler are similar in the changes they’ve made too.

Think GM has done nothing to improve their business and cost structure? Facts:
• Reduced structural cost by $9 billion from 2005-2007 (down 22%) with plans for further reductions of $5 to $6 billion by 2011 (down ~35%)
• Rightsized manufacturing capacity: From year-end 2004 to year-end 2007, GM removed 1.3 million units of assembly capacity (24% net reduction)
– Further rightsizing planned with reduction of 0.7 million units by year-end 2010 (total net reduction of 36%)
– More than 60% of remaining capacity at year-end 2010 will be dedicated to fuel efficient cars and crossovers
• Streamlined U.S. operations: Total headcount reduced from 177,000 in 2002 to 93,000 today (47% reduction)
• 2007 UAW Hourly Labor Agreement provides basis for competitive manufacturingbase in U.S. by 2010
• Historic agreement with UAW to fund retiree health care obligations with independent VEBA trust, eliminating majority of risk related to U.S. retiree healthcare starting in 2010
• GM leads in manufacturing productivity in 11 out of the 20 North America segments in which it competes (2008 Harbour Report)
– GM also has 5 of the top 10 best rated engine plants in North America, and the #1 transmission plant, all located in the U.S.

Think GM Builds nothing but crappy, gas-gusslers?Facts:
– North America Car of the Year: Chevrolet Malibu and Saturn Aura
– Motor Trend Car of the Year: Cadillac CTS
– European Car of the Year: Opel Insignia
– Green Car of the Year (LA Auto Show): 2-Mode Hybrid Chevrolet Tahoe
– 11 of last 13 U.S. launches have been cars or crossovers
– J. D. Power Initial Quality Survey: In 2008, GM had more segment leaders than Toyota
or Honda, and GM has improved overall survey performance by 25% in last 5 years
– Reduced number of warranty repairs by 40% over the last 5 years, and are on track in 2008 to achieve a further 15% reduction vs. 2007 levels
– 20 GM vehicles with EPA highway fuel economy of 30 mpg or better (most of any manufacturer, domestic or import)
– World leader in bio-fuel vehicles with over 3 million FlexFuel vehicles on U.S. roads today, with commitment to reach 50% of annual GM volume by 2012
– 6 hybrids in U.S. today, and 2 more by year-end 2008 (most hybrid models of any automaker)
– Largest hydrogen fuel cell vehicle test fleet in the world
– Chevrolet Volt (E-REV) production on schedule to begin in 2010

Think GM doesn’t affect the total economy that much? Facts:
- Directly employs nearly 240,000 people
- Provides healthcare to 2 million Americans and pension benefits to
775,000 retirees and spouses
- Supports another 5 million jobs at dealers, parts suppliers and
service providers
- Comprises nearly 4% of U.S. GDP
- More than $225 billion invested in U.S. over last 2 decades,
including $10 billion in 2007 alone
- $12 billion spent annually in U.S. on R&D, exceeding aerospace,
medical equipment and communications
- Purchased $156 billion in U.S. auto parts in 2007, supporting jobs in
all 50 states
- Largest purchaser of U.S. steel, aluminum, iron, copper, plastics, rubber and electronic chips

Six Myths about the Big Three

You don't know waht you're talking about. THEY DO NOT BUILD "CRAP".
The Cobalt is actually a very good car, with good quality numbers. Ever even looked at one? A Civic is no safer in a crash; that's rediculous.
The writer of this article forgot about the Aveo as well. A direct competitor with the fit.

Look at some FACTS about GM before spout blind insults:
– North America Car of the Year: Chevrolet Malibu and Saturn Aura
– Motor Trend Car of the Year: Cadillac CTS
– European Car of the Year: Opel Insignia
– Green Car of the Year (LA Auto Show): 2-Mode Hybrid Chevrolet Tahoe
– 11 of last 13 U.S. launches have been cars or crossovers, the truck launches were hybrids
– J. D. Power Initial Quality Survey: In 2008, GM had more segment leaders than Toyota or Honda, and GM has improved overall survey performance by 25% in last 5 years
– Reduced number of warranty repairs by 40% over the last 5 years, and are on track in 2008 to achieve a further 15% reduction vs. 2007 levels
– 20 GM vehicles with EPA highway fuel economy of 30 mpg or better (most of any manufacturer, domestic or import)
– World leader in bio-fuel vehicles with over 3 million FlexFuel vehicles on U.S. roads today, with commitment to reach 50% of annual GM volume by 2012
– 6 hybrids in U.S. today, 2 more by year-end (most hybrid models of any automaker)
– Largest hydrogen fuel cell vehicle test fleet in the world
– Chevrolet Volt (E-REV) production on schedule to begin in 2010 - first to market!



On Nov 21 08:58 AM sickofthehype wrote:

> Well the fact of the matter is they DO build crap. Their ignorance
> to staying ahead of the game has caused their demise, and their cheaply
> made products are winning over less and less buyers each year. <br/>
>
> Toyota launched their Prius in 2000, almost 9 years ago! Come on!
> These guys were too caught up in the moment selling gigantic SUVs,
> and now look at them. And the small car segment is horrible. Would
> you buy a Cobalt or a Civic? Most would prefer the Civic. Would you
> rather be in an accident in a Cobalt or a Civic, that's the better
> question.
>
> In business you stay ahead of your competitors, and they have failed
> to do so. Now quit the whining and deal with the ramifications.
>
>
> The reason for the 'tone' of the articles about the Big 3 is that
> most people have the same opinion about the current situation. Poor
> management, poor products, failed ingenuity = too bad.

Six Myths about the Big Three

The leaders of those companies wouldn't have had to. The Japanese government wouldn't have hesitated to help their automakers in a similar situation. They have always been subsidized and protected by their government. not the same here, obviously.


On Nov 21 08:00 AM No Comment wrote:

>
> No doubt these 3 CEOs shouldn't fly on a scheduled airline flight
> - after all - by the time you add the expense of body guards, the
> 20 assistants that they bring along, the extra seats on the left
> and right for their brief case (can't expect them to work with one
> seat), and so on, they might as well have flown on their own jet.
>
>
> Can you imagine what Northwest Airlines would have charged for in
> flight service of congac, caviar, and wine? Just the checked baggage
> surcharge would wipe out any cost savings.
>
> Perhaps the final lesson that Detroit CEOs need to take from their
> Japanese counterparts is how to handle a similar crisis at a Japanese
> company.
>
> Seppuku in front of Congress.

Why Most Americans Don't Mind if the Big Three Fail

Their message (if you actually heard it) DID outline the significant changes tha have been made in recent years, and how they feel they can be profitable again. It hasn't been "business as usual" in detroit for many, many years.


On Nov 20 12:07 PM rightinsanfrancisco wrote:

> If Detroit's message were that they have made significant progress
> (with credible examples) and that they have a viable plan to be successful
> after this credit crisis, the American public would be glad to help
> them over the hump. But instead, their message is that the sky will
> fall if they go bankrupt. People will invest in something viable,
> but not a failed proposition with their leaders flying their jets
> into Washington and their multi-million dollar salaries.

Automakers: Bailout Arguments, Pro and Con

I agree that Chapter 11 would be the best way for these companies to reorganize and develop a more competitve cost structure, BUT everyone arguing for chapter 11 fail to realize one major point: They couldn't survive a bankrptcy filing. Finiky consumers with other options will NOT buy cars from them.

Automakers: Bailout Arguments, Pro and Con

Yes most discussion is GM vs Toyota because they are the biggest players involved, and the comparisons are most direct. Most of the same things could be said of Ford vs Honda etc.


On Nov 20 10:37 AM Killjoy wrote:

> I keep hearing all this talk about GM compared to Toyota....What
> about Honda?!? They had a record year, and i can buy a brand new
> fully loaded car for under $20,000. I'll take that over a hybrid
> that weighs 1k lbs more and that has maintenance twice as expensive
> as non-hybrid more fuel efficient car.

Let the Detroit Automakers Fail

You know nothing about the industry or what the auto comapnies have been doing lately. You make sweeping comments about being bloated, refusing to change, etc. Just plain ignorance. I hesitated to even grace you with a reply, but I felt someone should call you out.

Why Most Americans Don't Mind if the Big Three Fail

I'm afraid a depression in this country that would be caused by the immediate fallout of sucha failure would cause a great decrease decrease in demand. Yes some manufacturing would come back, but in whos' hands? Most likely foreign run companies. I'm afraid that would not be good for our countries future either.

I'm very sorry that you had/have such problems with your '96 Ford. It sounds like you got a real lemon, and that sucks. Your expreience will obviously steer you, and those you talk to, away from Ford (and probably other domestics as well). Unfortunately you should realize that there have been a TON of change made over the past decade. Every new generation of vehicle that comes out getts better and better in quality and reliability from any auto maker, and the domestic comapanies have caught up in those areas. but the perceptions caused by past sins will be extremely difficult to overcome.


On Nov 20 09:48 AM rdr4 wrote:

> There seems to be a presumption, on the part of the alarmists, that
> a failure of the big 3 would create an vacuum in the industry. <br/>The
> demand for automobiles and trucks is not going away, it is being
> redistributed. Although it is possible that some other automaker
> might buy a substantial amount of the Detroit big 3 car makers distressed
> property to allow for the increase in their anticipated market-share,
> the foreign automakers seem to feel that the Detroit environment
> does not enhance their potential for producing a cost effective product.
>
> Toyota, VW, Nissan, Honda, etc, appear to share that thought.
>
> I have a 1996 F-350 diesel work truck pick-up, bought new. The glow
> plug condenser goes out every 3 months. The driver seat self destructed
> at 36,000 miles ( I weigh 180). The leaf springs broke although the
> truck was never overloaded. Ford did not even stock the springs.
> The transmission fell apart at 147,000. Now, the heater failed and
> Ford does not stock any replacement, nor is there a part available
> in the aftermarket. Yes, I want more of this, not!
> Supporting Detroit is like holding a dead body above your head while
> swimming across a rampaging river.
>
>
>

Why Most Americans Don't Mind if the Big Three Fail

A rare, relatively even handed view of what's going on here. Americans do have a warped view of what these companies are now because of everything in their past. Too few of the criticisms I hear about them really hold any water:
1) SUVs were a product of consumer demand. CAFE standards only work if people want to buy small cars. They make every car as efficient as possible while meeting consumre demands (performance, etc).
2) Domestics have fuel economy as good or better than competitors in most if not all segments.
3) Domestic's quality and reliability is as good or better than foriegn competition in most segments.
4) UAW has made some concessions (though perhaps not quite enough)over the past several years.
5) Domestics are mostly ahead of the curve with alternative fuel technologies. (GM just made the mistake of putting their hybrid technology into the trucks they thought people would keep buying rather than having a direct competitor with the prius, but the Volt will leapfrog that.)
It's too bad all the changes they've made and work they've done to become competitive may be for nothing if this whole thing goes bad. And yes, bad for the automakers WILL be bad for the entire country. Yes, they COULD be leaner and more competitive if they shed some of their contractual obligations through chapter 11, but I am one of those that believe a chapter 11 would soon become a chapter 7 due to lack of sales. Those millions of jobs would be hit by that and our fragile economy would surely be in depression.
Also, even if they did stay afloat through a babkruptcy, whatever guaranteed loan(s) that would be needed to get them through a chapter 11 would cost the taxpayers much more than is currently under consideration.
I also believe that if they get some kind of assistance and do somehow make it through the other side of this economic crisis, they can and will be profitable with the changes they have/are making.

Wall Street Breakfast: Must-Know News

The problem with the domestic automakers (besides the current economic woes effecting every automaker) is not how they’re currently run, nor lack of innovation, nor the quality, appeal (if you can discount prejudices), or fuel efficiency of their products. They have corrected and continue to improve those things that have been problems in the past. The problem boils down to 2 things:
1) Higher structural costs than competitors including huge legacy costs due to huge increases in health care costs and a huge retirement population.
They have tried to stem these costs by restructuring their labor agreements and benefit offerings, but those changes will take some time to realize.
2) A large portion of the American consumer population and media who refuse to give up promoting the pervasive misconception that US automaker don’t build good products, and they won’t even consider a domestic vehicle when they go to make a purchase.

Now I agree that any cheap loans from the government should come with heavy concessions to help ensure sustainability and payback of those loans (with interest), but don't discount the changes that have already been made by these comapanies. The facts are that they have been working hard doing the right things.

Bust-Up, Not Bailout

Those advocating Chapter 11 don't realize the reality of the situation. Buying a car is a huge investment for people. They won't buy one from a company that they fear may not come out of bacruptcy, which will then lead to the ultimate failure of the company(s) for complete lack of sales. An airline can continue as normal under Chapter 11 because they're only selling a $200-$1000 SERVICE that is not a long-term investment for a consumer. Not the case for cars.


On Nov 12 12:00 PM kotika98 wrote:

> also, dont forget, bankruptcy does not mean closing the doors forever.
> At least it didnt have to mean that, if they did it a year or two
> ago. Most likely GM would continue like before the next day after
> bankruptcy, only that their pension, healthcare and other obligations
> would be wiped out allowing for a fresh start.