OT: General Motors
General Motors paid for my college education at the University of Michigan. General Motors provided a salary for many middle class families that also helped doctors, dentists, attorneys, etc. The trickle-down effect of General Motor's existence should not be understated. The value-add for this wealth generation and distribution, while it lasted, was significant.
While I've become better acquainted with and generally support economic Darwinism, I can't help but feel that General Motors gave what it could to the common man. It created a middle class in Detroit. So when I see the decrease in real wages since the 80's and the growing gap between the pay at the top and bottom, I'm not really surprised.
We've gotten exactly what we wanted. Welcome to the new America.
And this is what we voted for? A man that can tell private companies how to run... lesson learned - do not take bail out money and keep gov't. out of the pockets of all. Hell, the gov't can't run anything (outside of the military) that works (ss, amtrak, USPS, etc...) Thanks no checks and balances having government!
If this is what people voted for then we have a seriously uneducated country!
March 30th, 2009 at 11:38 AM ^
> do not take bail out money and keep gov't. out of the pockets of all.
GM and the rest of the companies are free to do just that. In fact, I'd like them to return to me (and you and everyone else) the money they already took.
AMEN!
I see this thread ending well.
hey I think Michigan could go udnefeated for the next 3-4 years what you guyzzthink, about that i think they r going to win iut all go blue
March 30th, 2009 at 12:27 PM ^
chuckle
I won't shed a tear for GM. They have failed to adapt to the changing global economy. Unions, bad management, poor car designs, too much focus on trucks and gas guzzlers, the list goes on and on. Although Ford is still struggling a little, they've made the steps back to profitability and hence have asked for very little from the government.
If GM doesn't want the government telling them what to do, then don't take their money. Bankruptcy is the best thing that can happen to GM; let them use the courts to get rid of alot of debt and restructure the company to become more efficient. I don't really see another way for GM to get out of their current predicament.
How are the unions GM's fault? The unions have the last legal monopoly in this country: a monopoly on the labor market.
I should have worded that different. I guess I was trying to say that GM should have dealt with unions a long time ago. The fact that unions are still around and sucking GM dry just amazes me. I think the "job bank" really symbolizes unions; how can someone be paid not to work, taking all this money without even producing anything.
gahh...I really don't want to get into this but here I go.
The Unions (as far as I know, but correct me if I'm wrong) are not separated by corporation. There is no "GM Union" or "Ford Union" there is only the UAW.
Also, a big reason GM, Ford and Chrysler are in the mess they are in is because of the banking crisis. That's a separate issue that is out of their hands, they cannot control how much banks are willing to lend for auto loans.
Politics suck.
March 30th, 2009 at 10:02 AM ^
I would have loved for GM to "deal with" the unions (really: union) a long time ago too, but union-busting is against the law. I just don't see how the auto companies can be blamed for the actions of an organization which they are continually at odds with and which has a wide array of labor laws on its side.
I think there are some legit criticisms of the Big Three but at the same time there are some silly stereotypes they're going up against both in Congress and in public opinion. I cringe for example when I hear "they should stop building cars nobody wants" which is ridiculous because GM's been the worldwide sales leader for decades, finally topped only in 2008 (and just barely) by Toyota.
March 30th, 2009 at 11:39 AM ^
I'm still wondering why they didn't do a gov't aided bankruptcy in the first place. If their biggest fear/concern was the union, why didn't they get help from the courts? I am a unionized worker and I'm baffled how people turn a very gray issue into black and white (meaning pro- or anti-union).
*not accusing you, wahoo. This post had to go somewhere.
March 30th, 2009 at 10:02 AM ^
Sorry but you may be confused. Ford is NOT profitable. The reason they didn't ask for the bailout money is because they recieved a giant loan just before the banks went to hell and the credit seized up. They were very fortunate to have timed the loan correctly. That is not "good business practice" rather it is simply getting lucky. They are in no better position than GM in the long run.
Also the reason they aren't profitable is not because of "too much focus on gas guzzlers" if anything those "gas guzzlers" are one of the few products they make very well. What they should do is focus more on trucks because they are the only products that make Ford and GM money. They lose money on their small car business because the foreign auto makers make much better products.
Going into bankruptcy would cut end the union contracts which (partially) put them into this position in the first place, but their suppliers would also shut their doors and it would put the Big 3 in a very difficult position as well. So, no bankruptcy wouldn't be the "best thing" in many aspects.
March 30th, 2009 at 11:28 AM ^
Ford's monster loan before the credit markets froze up was not dumb luck. They have a continuous line of experience dating back prior to the financial crisis of 1907. They've seen worse than this. They've seen the banking system as we know it today form; they know how it works and what to expect from it. They saw what was coming and made a great move to stay in the game. It's all about the family, man.
March 30th, 2009 at 11:38 AM ^
If this were true then they would have short sold all of their financial stock they are surely invested in. Then they wouldn't have needed a loan at all! If you believe that they really foresaw the banking crisis then I don't know what to say to you to change your mind. That is a pretty crazy opinion though.
Said he recognized the severity of the derivatives/subprime bubble as early as 2005. Numerous economists and financially-concerned people -- professional and amateur alike -- saw it coming in 2007 and early 2008. It's not like you have to be a soothsayer......
March 30th, 2009 at 11:42 AM ^
[Lions Management Joke Goes Here]
Before this bad boy gets started, I would just like to say that all your opinions about GM, the government, etc. are utterly fantastic and by posting them I have changed my whole belief system and am entirely on your side. I never thought I could be so dumb. Good job all of you and keep on reaching for that rainbow.
With Obama as the new head coach, it's possible! Look how well he did with his bracket. Plus you get to see a great dunk.
http://rivals.yahoo.com/ncaa/basketball/ncaatourney;_ylt=ArPVq0fqpMxaGP…
And look for Rick Wagoner to transfer to U of M as UM is in his top 5. I hear he runs the 40 in 4.3 seconds and throws a great spiral. UM could use his leadership abilities.
Have a great Manic Monday.
March 30th, 2009 at 10:06 AM ^
a GM car that doesn't blow up at 70,000 +1 miles and I'll consider shedding a tear for their plight.
And yes when you fuck up your business so bad that you need a massive loan, be it from the government or anyone else, don't be surprised when they attach some strings to it. My bank wouldn't loan me money for my car unless I had full coverage insurance. But I wanted the car so I agreed to their terms.
March 30th, 2009 at 10:16 AM ^
The GM 3.6 L V6 is one of the best engines ever built. It routinely lasted well past 100,000 miles and most (if not all) if well maintained lasted upwards of 200,000 miles. It was so well made that they discontinued making it because it lasted too long.
March 30th, 2009 at 10:20 AM ^
I drove an Oldsmobile from 60,000 to 110,000 miles. The only problem I ever had with it was a seized-up tensioner which shredded the serpentine belt - a $30 do-it-yourself fix at AutoZone. That Olds wagon got me 25 highway and it was a 1995 model. I await your tear. Anecdotal evidence seems to be all anyone needs to believe GM cars are that bad, so there's some anecdotal evidence to the contrary.
March 30th, 2009 at 10:22 AM ^
Actually, one issue of Consumer Reports or any industry source that evaluates cars would be enough evidence to point out how bad GM cars are. (They have actually been decent of late, too little too late though).
March 30th, 2009 at 10:26 AM ^
Or, y'know, JD Power. The one that gave Buick top overall marks.
March 30th, 2009 at 10:26 AM ^
Buick has a 3 car line.
March 30th, 2009 at 10:36 AM ^
Five for the 2006 model year which is what JD Power studies in their survey. All of their surveys use three-year-old models to measure problems from cars of that age.
March 30th, 2009 at 10:38 AM ^
GM doesn't suck because Buick in 2006. Got it.
March 30th, 2009 at 10:45 AM ^
Uhhh... kind of a terrible argument. You are better than that.
March 30th, 2009 at 10:56 AM ^
Cadillac resurgence (minus Deville)
3.6L
LS# engines
Transmissions
Australian RWD platforms (Zeta)
Platform underpinning 2008/9 Saab 9-3 (Epsilon II)
Buick Reliability from 2006 onward
4WD trucks (powertrain and engines anyway)
These are things GM has done well lately.
Things GM has done poorly lately:
Small cars
Quality of anything NOT Buick
Interiors (couple exceptions, 2009 Malibu and Saturn brand overall were pretty solid)
Midsize cars
Hummer
Saab
Hybrids
Pontiac (outside of G8)
I'll stop to sum it up here: The things GM excelled at are the things that are no longer the mass market items. They didn't do anything in good times to firm up, and the 0% interest rates after 9/11 only delayed the inevitable.
March 30th, 2009 at 11:45 AM ^
Define "Has done poorly lately."
Hummer is still a great brand name. I know many people who have bought an H2 and love them.
Quality of GM trucks are still very good compared to Toyota and Nissan. Also they outsell both brands.
Saab is still a fine brand. I don't know what the problem is with them.
I guess I just don't realize what is so poor about these automobiles you have listed. Outside of the hybrids and small cars which are and are known to be garbage. The government mandates fleet feul efficiency standards so that they must continue to sell the garbage small cars in order to continue to sell the trucks and SUVs which they are great at making.
March 30th, 2009 at 12:17 PM ^
You're kind of missing the point here. Hummer sales have tanked and it's a brand that suffers in these bad times. This hurts GM. It's nothing against people loving their $50k H2s.
Quality of GM trucks is better than Toyota and Nissan, their primary competitors are Ford and Dodge, and yes I know the C/K twins combined outsell the F-150 and Ram. Once again, truck sales are down for the foreseeable future and GM banked on redesigned trucks and big SUVs leading them back to prosperity, not a good move.
Saab is fine in the sense it's a fine brand, but they have basically one car now, the 9-3. This is hard to maintain as a brand. The 9-7 is the same as the TrailBlazer, Envoy, Ranier, (did I miss one?) family. The 9-2x was a Subaru badgineering exercise, then GM sold Subaru to Toyota.
At a micro level things are fine, but it's the macro level that's killing GM. The Sloan model is and has been dead for years. GM should have closed down all brands except for Chevy, Cadillac and maybe Pontiac or Buick back in 2001. Look at auto companies that are not bleeding massively:
Mercedes - 1 brand (2 if you include Smart)
BMW - 1 brand (2 if you include Mini)
Toyota - 2 brands (3 if you include Scion)
Honda - 2 brands
Nissan - 2 brands
Volkswagen - 2 (3?) brands (VW and Audi, Porsche can be here or not)
Hyundai - 2 brands (Hyundai and Kia)
Now domestics:
Ford - 5[3?, 4?] brands (Ford, Mercury, Lincoln, Volvo, Mazda. Mercury is going the way of Oldsmobile, there are no independent Mercury dealers anymore. Volvo is being explored for sale. Ford no longer has Mazda controlling interest but will continue to own them in the current sense. Jag, LR, and Aston sold off. Ford will be down to 2 brands, and whatever is left of Volvo/Mazda, shortly.)
Chrysler - 3 brands (Jeep, Dodge, Chrysler. Dodge and Jeep could be fine on it's own, but Chrysler is in a shitty near-luxury spot that's obsolete now that there are tons of competitors and you can buy a BMW/Acura/Lexus for $28k)
GM - 8(!) brands (Chevy, Cadillac, Pontiac, Saab, Hummer, Saturn, GMC, Buick)
This isn't 1960 anymore, GM thought it could keep 50%, then 40%, then 30%, then 27% (PINS YES!) then 20% market share. Guess what, it's not happening, and 8 brands are too many for 20% market share. By not slashing brands and dealers years ago, GM is in a crisis of it's own making. I for one will not be mourning them.
You hit the nail on the head right here:
"The government mandates fleet feul efficiency standards so that they must continue to sell the garbage small cars in order to continue to sell the trucks and SUVs which they are great at making."
If CAFE didn't exist, and instead gas was just taxed higher, this problem doesn't exist. Manufacturers can't stick to what they do well instead of being forced to make shit they don't do well. And the actually penalty for usage of gas is placed where it should be, on the consumer not on the manufacturer. This worked in Europe very well.
I guess I just don't agree with your assesment of the acquisition of a product for a niche market being "done poorly."
A product that has a cult like following that may or may not do well with the majority of people does not mean that it is a poor decision to acquire it.
This is not so much an argument between you and I as it is a philisophical disagreement. I am not going to change your mind, I am just letting you know that I don't agree with that particluar mindset in the area of brand acquisition.
If the goal of a company is to be profitable and stay solvent, then those were bad acquisitions. The H2 is a heavy duty Tahoe. The H3 is built off the Canyon/Colorado platform. That's all they have for an entire brand. Clearly badge-engineering is a poor strategy. That's what I'm decrying. The acquisition spree (Ford is guilty as well, Jag cost them well over $13B while they owned them) hurt both GM and Ford, but only Ford has taken steps to resolve the problem.
Agree to philosophically disagree I suppose.
Badge engineering can't be that bad. What is the Lexus ES but a gussied-up Camry? The Acura TL has always been essentially a Honda Accord. Nissan/Infiniti do the same.
There's a difference between Badgineering and platform sharing. I'm not going to cite 100 examples to argue us in circles, but I'll leave it at this: The public perception is that the Lexus ES is a Lexus, not a Toyota. The public perception was that the Lincoln MKZ was a Ford with a different badge, not a Lincoln. Also, can you explain the need for 5 versions of the same SUV (TrailBlazer, Ranier, Envoy, Saab 9-7, Bravada) or the most recent example (Enclave, Acadia, Traverse, Outlook, Cadillac planned for 2011)?
Why is the Saab 9-7 a badge-engineered TrailBlazer and the ES is simply platform sharing? Styling-wise there are a lot more differences between the Saab and Chevy than between the Lexus and Toyota. The Lexus shares an engine with the Camry, same as the Saab and Chevy do. The interiors are all different. And the Rainier replaced the Bravada - they were never in production at the same time.
Much of your question about this has to do with the dealers. The cost of phasing out brands is insane, mainly because of the dealers. And it's a lot cheaper to build similar cars with different badges so you can send one to the Chevy dealer and another to the Pontiac dealer and another to the Saturn dealer, than to completely engineer from scratch three separate cars. Maybe it seems silly to have so many brands, but it's a model that worked for a very long time, and how are you going to expect the company to try and axe some perfectly good successful brands because 30 years from now there will be this credit crunch?
To the first paragraph, it's perception plain and simple.
To the second paragraph, specifically "Maybe it seems silly to have so many brands, but it's a model that worked for a very long time, and how are you going to expect the company to try and axe some perfectly good successful brands because 30 years from now there will be this credit crunch?"
it was broken before the credit crunch. GM has lost money since 9/11.
March 30th, 2009 at 10:42 AM ^
was rated the best quality in 2007-2008 by I think beating out Lexus for the first in in like 10 years. US and GM as well as Ford cars are excellent and perception is the problem.
March 30th, 2009 at 11:34 AM ^
2001 Chevy Malibu (a manly man's car, for sure)
120k+ miles. Runs like a dream, unless I push it over 90mph for too long. No serious problems thus far. I stay on top of it with repairs, replacements and such... that kind of helps.
March 30th, 2009 at 10:08 AM ^
GO DETROIT.
March 30th, 2009 at 10:19 AM ^
Karpodiem reads NakedCapitalism? Consider my mind blown.
March 30th, 2009 at 10:54 AM ^
There's a lot that would blow your mind.
March 30th, 2009 at 10:21 AM ^
... I agree. It's a sad day for Detroit. I, too, had a GM funding scholarship to UM and my dad worked at a third party supplier to the Big 3 (he's retired now).
There is enough blame to go around, Unions, Management, government. I'm not getting into this political debate. It's just a sad day for anybody who was raised in SE MI, and that is all.
March 30th, 2009 at 11:19 AM ^
I'll avoid political talk and just say that I've yet to own a car that wasn't made by GM. The same goes for my father and grandfather, who refused to purchase anything other than Chevy vehicles.
March 30th, 2009 at 12:16 PM ^
We can argue about whether GM (and Chrysler) deserve more money until we're blue in the face. However there a few facts we need to face. From an economic standpoint, if the Big Three are allowed to fail, yes it creates a tremendous incentive to fix the mess and re-negotiate with the unions. On the other hand, there are thousands of auto suppliers who depend on the continued operation of plants across the country. Bankruptcy could force production shutdowns and force contract re-negotiations with suppliers, leading to the devastation of the auto supplier market (one that is supported by numerous small business owners). Guess who else depends on suppliers to build their cars in this country? Oh yeah, Toyota, Honda and everyone else. Notice how all of those companies have publicly said they support whatever it takes to keep the Big Three on their feet? A collapse of the Detroit automakers would have a tremendous nation-wide ripple effect on the economy as a whole. You want to see double-digit unemployment for sure? Let them go under.
And let's be clear about how this mess started. Despite what many haters believe, GM (and to some extent Ford), was actually turning around the business in the past couple of years. When the housing market collapsed and the subprime mortgage mess caused a run on the investment banks, the very little equity GM and Chrysler had to spare was brought to zero in seconds. You want things fixed, fix the banks first. Pumping trillions into infrastructure and greening the economy are great projects that should be done regardless, but they mean jack squat in terms of bringing us out of the current situation.
March 30th, 2009 at 12:23 PM ^
GM was not turning around business at all like you imply here. GM's own RESCAP division was into subprime lending, they are not innocent victims. As for your comments on equity, GM had negative equity as of 2006. (http://heartsofthegods.blogspot.com/2006/11/general-motors-gm-will-have… shitty blog but the numbers are correct).
Ford mortgaged everything for that $27B line of credit they got before the storm. GM just stumbled on, business as usual while bleeding cash and market share. GM is, and has been, insolvent, only a bankruptcy will give them any chance of ever emerging to a profitable company.
As for suppliers, the government can give them bridge loans to retool to make parts for the surviving auto companies. If you feel that there won't be enough demand for each auto supplier, than their isn't enough demand for GM to exist anyway. Over capacity must be cut, and if this means a GM liquidation and 10s of suppliers go under then so be it.
You cannot borrow your way out of debt and you can't produce your way out of over capacity.
I know Consumer Reports has already been brought up, but here are their latest rankings for major automaker brands:
1. Honda
2. Subaru
3. Toyota
4. Mazda
5. Mercedes-Benz
6. Nissan
7. Volkswagen
8. BMW
9. Hyundai
10. Volvo
11. Mitsubishi
12. Ford
13. Suzuki
14. GM
15. Chrysler
The Big 3 are among the 4 worst brands and I have to agree; Their cars are just plain terrible. I know companies like GM provide a lot of funding for the University, so I'm conflicted, but I really feel like it's no one's fault but their own.
Edit: And I swear every car company has won a J.D. Power and Associates award for something.
It really all depends on who you believe. JD Power pretty much slams Nissan and Mazda, for example. And they break it down by brand rather than company so you get more detailed results.
I do know this: I have a tough time believing that a car company that had to rebrand in order to shed a reputation for building rust shitboxes has now surpassed BMW. If you ask me people ascribe too much to the Asian carmakers based on Toyota's reputation and to a lesser extent Honda's. Nissans, Subarus, Mitsubishis, and the like are really no better than any of the Big 3 cars.