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Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
3958 messages, Last post on Oct 02, 2009 at 4:52 PM
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Good article posted elsewhere this morning: Alex Taylor III writes: Wagoner's biggest flaw may be that he has been too forgiving. Here is a company that has lost more than $72 billion in the past four years, and yet you can count on one hand the number of executives who have been reassigned or lost their job. After spending $1 billion to shut down Oldsmobile, Wagoner has allowed GM's other weak divisions to live on despite their fading resonance in the marketplace. (A competitor says Wagoner is "too fundamentally decent" to cut off dealerships and put their employees on the street. GM says closing divisions isn't cost-effective.) Nonetheless, the dedication and thoughtfulness that Wagoner communicated, along with measurable signs of progress (growth in foreign markets, successful new products, continued payroll reductions) prompted me to produce a skein of optimistic, if hedged, stories about the company. I should have taken to heart the analysis of Fortune's Carol Loomis, who saw bankruptcy looming for GM some three years ago. But after my most recent piece suggesting that a real turnaround was at hand, I finally ran out of patience. The company had been caught totally off guard by the spike in oil prices and possessed no backup plan when truck sales cratered and destroyed GM's business model for North America. Despite hopeful pronouncements, Delphi, its former parts division and now an independent company, took another turn for the worse and sank deeper into bankruptcy. If Washington wants to bail out GM, it's fine with me. A lot of short-term angst will be avoided, and taxpayer money has been spent for worse purposes. But you have to wonder whether the insular, self-absorbed culture that still dominates GM is up to the job of restructuring the company quickly enough to make it profitable and competitive again. GM has been on a downward path ever since I began covering it. What is going to make it different this time? As painful as bankruptcy may be, it would give GM the leverage it needs to redo its labor contracts and dealer franchise agreements, downsize the company, recruit new management, and position itself for an economic upturn in 2010 that would enable it to regain some fraction of its former glory. Once again, boys might even dream of becoming chairman of General Motors http://money.cnn.com/2008/11/21/magazines/fortune/taylor_generalmotors.fortune/i- ndex.htm?postversion=2008112508 |
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Whether you think industry A, B, C, or D need bailout help, read the following. If the government continues to spend now, we are using any reserves we have, and will not have these options in the future. http://www.marketwatch.com/news/story/At-rate-government-need-a/story.aspx?guid=- %7B6F4AF0CA%2D9A05%2D4E38%2D9D82%2DD8E1D22739E2%7D&dist=SecMostRead We must be very careful how we spend $, to use it only in the most critical of spots. I always question how Congress spends $ on some of their projects and then says they don't have $ to fund healthcare, and help injured veterans and such. |
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| I saw Nissan is pulling out of auto shows. These can't be that expensive for a company that size, so I'm wondering if they are getting into the same cash crisis as Detroit? | |
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Replying to: nvbanker (Nov 24, 2008 11:34 am) Invite the workers back.....I wonder what the GM management contingency planning is thinking about this. Will all workers, former UAW and engineers, have to fill out job applications after a Chapter 11? Will managers also have to reapply? What are chances of hot-head union guys being rehired? Will Democrats have passed card-check law that would allow former UAW workers to quickly rejoin union? Will Congress require a new top managment team and new Board? Would favor some type of modest loan to help bridge GM through a pre-packaged Chapter 11 and with some kind of assurance from GM to drop brands, models, dealers. |
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Replying to: tlong (Nov 24, 2008 10:15 pm) 1. gas stay at $1.75 a gallon, where it belongs. 2. The economy snaps back to normal, because underlying the fundamentals are good. 3. Continue to fight the union for concessions by threatening and executing plant closings. 4. Continue evolving product lines as they already have. I'm perfectly content with the new Malibu if I want to get 30 mpg hwy in a 170 HP car. The Obama plan is based on the fundamentals being bad before Nov. 4th, and that they are good after Nov. 4th. So far, we are on plan. Obama just said we need a 2% of GDP injection to snap back to life. Kinda like America is Ironman, but has a bacteria infection that a few pills will cure. The big question is, gas at $1.75 is a requirement of the economy snapping back. Will we allow the oil suppliers to destroy everything again, if it snaps back?
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Replying to: berri (Nov 25, 2008 7:16 am) I think it's just as much a factor that they don't consider Detroit to be an important show any more. But I imagine it's also for cost-cutting. Automakers are focusing more on the LA show these days... |
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Replying to: nippononly (Nov 24, 2008 11:05 pm) If you take a minute to watch this amazing state of the art Ford plant in Brazil you will see what the Big 3 are capable of. Listen to the last few words too - Ford would love to build this plant in Detroit but the UAW won't allow it. Ford Plant in Brazil
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Replying to: nippononly (Nov 25, 2008 7:31 am) Nissan pulled out of the Chicago auto show too, from what I've heard. I wonder if they're also going to pull out of the DC and Philly auto shows? |
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Replying to: dave8697 (Nov 25, 2008 7:22 am) I think you should start reading a financial paper, if you think the underlying fundamentals of the economy are good! Many people have overspent for years, they've bought houses that are now worth 50%, or have seen no appreciation in 10 years, people have nothing to show for 10 years investing in 401K's ... As the Obama team is now saying - we'll be lucky, very lucky, if we're out of recession in 2-3 years. Decades of bad decsions that got us in this situation - whether in the Big 3 or the economy, are not going to be fixed in a few months. I think the Big3 will again get raked-over-the-coals if they come back to Congress with a few tweaks to their business-as-usual. They had better come back with a plan for a market of 10-12M vehicle sales and what realistic slice they have of that, what revenue they have from that, and what their total costs will be. And the bottom line better show they can make a profit! If they come in with vehicle sales in 2009 will be 15M, and our marketshare will increase, but we'll still lose money because of pensions and wages, then they should be ushered to the door (or committed for wasting our time). The Big3 need to plan for a very bad economy and how to make $; if the economy turns around then great they make more $. But we can not loan $25B now, and in summer '09 when that's gone, give them another $25B. I am not responsible for what the Big3 or the unions got themselves into; they have never helped me, and therefore I see little reason to support them forever!  Let them all get in a room, and decide what they will cut to start making money; they either decide to live in some matter or decide to hold their position and die!
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Replying to: driver100 (Nov 25, 2008 7:33 am) All I can say is WOW. That is one impressive operation. Too bad it is not sitting in the USA. |
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