my thoughts on the gm situation and i want to know what you think
i watched a very good discussion last night on cnn about the obama plan for the car companies. the show had people both pro and con and one kind of inbetween and after it was over, rhonda and i talked for hours about what was presented.
you know part of me believes that we are on our way not to economic recovery but to a world wide depression that could make the depression of the 1930's seem tame while at the same time i think that we could pull out of this within a year. i would be interested in reading what any of you think because i just don't know.
back to the car companies, gm in particular. here is my take: i think that any company needing tax payer assistance must be held to some standards. (i will get to the banks and insurance companies later) by that thinking, gm must come up with a viable plan to start on the road to recovery. gm has been making bad decisions for a couple of decades by not concentrating on building cars that americans want. they make superior trucks and suvs and i have bought one, a 1993 gmc Z-71 pickemup truck that was, dollar for dollar, one of the best vehicles i have ever owned but trucks really should be for a very limited market; cars are what most people drive. every year, honda and toyota sold more cars than gm, the japanese cars ran better, looked better, got better gas mileage, lasted longer, were better appointed inside and had higher resale value. did gm (or ford or chryler for that fact) look at what was happening and try to bring cars of equal quality and reliability? hyandia (sp) is another prime example; they started, what? 10, 15 years ago? at first their cars were crap but each year they got better and better and better and now their ratings are sky high. if a south korean company can start from scratch and within two decades become not only viable but a leader then why couldn't gm or chrysler? it is not the unions fault that the powers that be in those companies didn't design and build superior cars. ford on the other hand has increased their small car department and the FIT is doing quite well in europe and probably will here as well. the new mustang is a much better car than the mustang of the 90's.
the car makers of america and all the suppliers and dealers make up about 16% of the american work force and account for a huge percentage of gnp. how can we let them fail? also our national security is tied to the car makers, they provide vehicles for the military as well. how can we let them fail?
BUT on the other hand, if a company makes bad decisions year after year, makes bad products year after year, squanders money year after year HOW CAN THEY NOT FAIL? if you or i had a business that did those things we WOULD GO OUT OF BUSINESS AND GOOD RIDDANCE TO US. right? so how can they not fail? should we, the taxpayers, keep pouring money into companies that will continue a proven bad business plan just because the companies are "too big to fail?"
and why was not the same kind of pressure put on the banks and aig? why do we keep throwing money at them when they have cost us much more than the car companies? why are we willing to have thousands of blue collar workers be put on the bread lines when we coddle the bankers and the wall street fat cats. obama makes the head of gm step down but citibank and boa keep rocking along with the same management as before. why is that gander not as good as that goose?
(personally i think, wagner at gm, did something or said something that brought the hammer down on him. flying to the d.c. meetings in his private jet didn't help his cause at all but i think it was something more and he pushed obama and thought he could get away with it but obama has shown he is willing and able to play really hard ball. besides it was a "shot across the bow" for all chief executives of all the companies looking for tax payer money and you can rest assured that they all took notice)
i have no answers. i have questions. i have worries. i have anger. i have concern for my country. i think the american public better start paying really close attention and start getting more and more information. the power still rests with the people as it always has but the people must realize that and use their power. the power of the vote, the power of the protest, the power of unrest.
i always had a certain amount of regret that i was born when i was, i missed the great events that shaped world history. i was a baby during wwII, too old for vietnam, wasn't here for the civil war or the american revolution or the french revolution or wwI or roman empire etc etc, but, sure as shit, i could be here for the fall of america. bummer. especially since i am old and not really ready for the barricades but if it comes to that, well, count me in. i won't be violent and i won't hurt my fellow man but i bet i could come up with some mischief to perform.
you know part of me believes that we are on our way not to economic recovery but to a world wide depression that could make the depression of the 1930's seem tame while at the same time i think that we could pull out of this within a year. i would be interested in reading what any of you think because i just don't know.
back to the car companies, gm in particular. here is my take: i think that any company needing tax payer assistance must be held to some standards. (i will get to the banks and insurance companies later) by that thinking, gm must come up with a viable plan to start on the road to recovery. gm has been making bad decisions for a couple of decades by not concentrating on building cars that americans want. they make superior trucks and suvs and i have bought one, a 1993 gmc Z-71 pickemup truck that was, dollar for dollar, one of the best vehicles i have ever owned but trucks really should be for a very limited market; cars are what most people drive. every year, honda and toyota sold more cars than gm, the japanese cars ran better, looked better, got better gas mileage, lasted longer, were better appointed inside and had higher resale value. did gm (or ford or chryler for that fact) look at what was happening and try to bring cars of equal quality and reliability? hyandia (sp) is another prime example; they started, what? 10, 15 years ago? at first their cars were crap but each year they got better and better and better and now their ratings are sky high. if a south korean company can start from scratch and within two decades become not only viable but a leader then why couldn't gm or chrysler? it is not the unions fault that the powers that be in those companies didn't design and build superior cars. ford on the other hand has increased their small car department and the FIT is doing quite well in europe and probably will here as well. the new mustang is a much better car than the mustang of the 90's.
the car makers of america and all the suppliers and dealers make up about 16% of the american work force and account for a huge percentage of gnp. how can we let them fail? also our national security is tied to the car makers, they provide vehicles for the military as well. how can we let them fail?
BUT on the other hand, if a company makes bad decisions year after year, makes bad products year after year, squanders money year after year HOW CAN THEY NOT FAIL? if you or i had a business that did those things we WOULD GO OUT OF BUSINESS AND GOOD RIDDANCE TO US. right? so how can they not fail? should we, the taxpayers, keep pouring money into companies that will continue a proven bad business plan just because the companies are "too big to fail?"
and why was not the same kind of pressure put on the banks and aig? why do we keep throwing money at them when they have cost us much more than the car companies? why are we willing to have thousands of blue collar workers be put on the bread lines when we coddle the bankers and the wall street fat cats. obama makes the head of gm step down but citibank and boa keep rocking along with the same management as before. why is that gander not as good as that goose?
(personally i think, wagner at gm, did something or said something that brought the hammer down on him. flying to the d.c. meetings in his private jet didn't help his cause at all but i think it was something more and he pushed obama and thought he could get away with it but obama has shown he is willing and able to play really hard ball. besides it was a "shot across the bow" for all chief executives of all the companies looking for tax payer money and you can rest assured that they all took notice)
i have no answers. i have questions. i have worries. i have anger. i have concern for my country. i think the american public better start paying really close attention and start getting more and more information. the power still rests with the people as it always has but the people must realize that and use their power. the power of the vote, the power of the protest, the power of unrest.
i always had a certain amount of regret that i was born when i was, i missed the great events that shaped world history. i was a baby during wwII, too old for vietnam, wasn't here for the civil war or the american revolution or the french revolution or wwI or roman empire etc etc, but, sure as shit, i could be here for the fall of america. bummer. especially since i am old and not really ready for the barricades but if it comes to that, well, count me in. i won't be violent and i won't hurt my fellow man but i bet i could come up with some mischief to perform.
posted by Ron Shock | 9:00 AM
7 Comments:
It is the other way around. We should have let Chrysler and Harley Davidson go under way back when. Someone would have bought the assets, and the good parts would have stayed. Yes, it worked out OK that time, but it set a bad precedent.
Until a couple months ago, I worked in an auto plant that was rated one of the most efficient in the US. There were an incredible number of highly paid people, especially skilled trades sitting on their ass. There were also a lot of incredibly dedicated hard working people, including skilled trades taking up the slack. Both groups get paid the same, making the dedication and work of that group even more impressive. Everyone knew who the ass-sitters were, to the point we would schedule things that needed to get done when they weren't working.
Not many of the people in charge now are responsible for the core problems. The biggest issue that I see is unfunded retirement packages. Both the unions and the management from back then were wrong to accept unfunded promises. Lines of Demarcation is the other. There were times where I (non-union) was the one fixing something, but nobody could start until 3 or 4 different tradesmen were there to watch, because it might involve work belonging to their trade--even if they didn't actually know how to perform that work and weren't interested in learning.
It made sense for the US car companies to concentrate on trucks--Little competition, extremely high profits. Until gas went above $2.50 per gallon, the SUV plant I worked at was responsible for somewhere around 10% of GM's total profit, and ran 20 hours a day, 6 days a week. It would have been silly to do anything but make as many as they could. You can't specialize in everything, and their specialty was trucks.
GM was working on fixing some of the fundamental problems. Had gas prices gone up more gradually, or even at the same rate but a few years later, they would have been much better able to manage.
If we were going to bail out financial companies, it should have been loan guarantees when they loaned money out, not no-strings-attached money shoved at them. Another blogger I know is an IT guy at a major, stable financial institution. They were effectively required to accept bailout money.
Bailouts give power to the government, but so do social programs. We need to get away from the idea that government is there to fix all our problems.
exellent points as always. obviously, american made trucks are the best in the world. the big 3 make quality trucks. big markups, good product. good business. it was the other upteen divisions that were lagging. they specialized in cars but our cars, for the most part, weren't special while our trucks were, now, corvettes, hot rod mustangs, hemi chrysler are special but very, very limited market. you know what i mean. the honda accord and toyota camery, the civic and the corrolla (sp) those are the kind of cars that can be sold to the largest market. they are good, reliable (really important...our trucks are fucking reliable....our cars aren't or at least that is the perception) and they are reasonably priced. they weren't cheap but people felt they were getting their money's worth. people buy a honda on reputation. everyone who had one liked it or that was ther perception. that kind of rep is built over the long run and we are just now getting started on that run. what to do?
if gm only made trucks it would be flush.
i have seen myself what you described about x working and z loafing. what to do?
Being an automotive tech for the past 18 years, I've worked on nearly every make and model of vehicle out there. I can say this with 100% certainty. NOBODY makes better vehicles than the japanese. Even their pickup trucks are starting to give the big 3 a run for their money.
Gm, chrysler, and even ford have nobody to blame for this fiasco but themselves. Instead of silly things like rear view cameras and satellite radio, they should have been concentrating on such things as fuel economy, engine longevity, and better aestethics overall. As far as the unions go, they are nothing more than greedy bastards. I find it ridiculous that the individual assembling the car makes much more per hour than the person who is responsible for repairing it. Not only that, technicians have the considerable expense of providing their own tools, as well as the never-ending learning curve.
I don't care about bells and whistles. The over-complication of the most basic things is what is hurting the industry as a whole. We are losing technicians at a rapid rate, and there is nobody waiting in line to take their place.
The trickle-down effect of this bailout is going to affect every automaker world-wide. Few people realize how many of these vehicle lines intersect with each other in terms of vehicle computer systems and the technology that runs them. GM, for all their bad decisions pioneered computer systems in cars, and if they fail, Delco, Delphi, and packard electric all fail with them, and most of these companies components can be found on toyota, chrysler, honda, and others. This whole thing worries me
There are some indications that GM is starting to get it. I've seen European auto journalists who praise the Pontiac G8 and Cadillac CTX, saying they are great cars, and unusual for an American car, competitive with European makes.
As far as the deadwood--GM needs a simpler classification system for trades, and the ability to fire without an act of congress. It shouldn't take an electrician to carry a printer, or a toolmaker to measure door fit, or to watch the computer that measures every truck. There were (thankfully only a few) plants where electricians meet managers at the gate to carry laptops to offices, because only electricians are allowed to "move a computer".
I won't argue with Dwizz here on the basic platform, but I'd also say that GM at least needed to distinguish their cars a lot more. (I think they are just starting to figure that out...) I've had two older Buicks in the last few years. The basic cars were OK, but no significant difference from a Chevy. Buick is supposed to be the near-luxury division. Near-luxury should have a reclining driver's seat, A near-luxury fullsize should have power windows and locks, and the power locks should work with the key. Near-luxury should have AC and heat controls equal to a Ford Escort or Nissan Sentra from the same era. The dash should have more than 2 gauges, and shouldn't have blank panels marked "information center" on both sides where gauges would obviously go on a different model.
And no near-luxury car should use a 90 hp pushrod 4 engine, especially in a midsize--Fine for the Chevy version, not for the Buick.
I believe that no matter what industry you are talking about, the most important thing for a company is to have a vision. Not a few fancy words to fill up your business plan but REAL vision.
Banking industry and U.S. auto manufacturers did very well for a while and didn't bother to come up with a long term plan if things went bad. Banks lend money to people who can't afford the houses they bought since house prices kept going up. So, they thought it was a win-win situation for both the banks and the people buying those expensive houses. Presidents of the banks pushed lower level managers to achieve certain amount of loans per month. That led to lower level managers pushing underwriters to loosen up their criteria s. I know for a fact that people who were "self employed" and making "$15K" a month (of course without any documentation) with 620 credit rating purchased houses that were over $600K... And we all know the result of that...
On the other hand U.S. auto manufacturers did not even bother considering that the oil prices may go up. I was reading an article yesterday on Business Week and Chrysler's CEO Bob Nardelli says "I cannot let Chrysler be in a position of not having products should fuel prices go back up to $4 a gallon. We cannot get caught in that vulnerable position." In the last sentence there is a confession which is very upsetting to me. How can a giant company like Chrysler cannot think that gas prices may go up and they may need a B plan?
Anyways, there is a lot to write and say but I don't want to keep going. I really enjoy reading your blog Ron.
I think the auto industry had, and blew, their chance to make cars we want to buy. Instead of producing fuel efficient vehicles, they produced larger SUVs and Hummers. Like Soner said, they had no vision. Instead of looking forward, they looked at the bottom line. I don't think they should be bailed out. They gambled and lost and we shouldn't enable stupidity. And yet, I do not understand why we bail out bankers (who produce nothing) and not auto manufacturers (who at least produce something). I guess the auto makers pulled the short straw, so they had to be the scapegoat to appease the sheeple.
Hi Ron,
I sent an email to your AOL account in response to your email.
If you didn't get it, you may have to put my address in your address book so it won't wind up in your junkmail folder. Jim@JimGaliano.com
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