Things are really really bad at GM

[Small Dealer]

Here is a site where the dealership information is available by state:


Automotive Retailing: Driving the U.S. Economy


Here is a short study released this week, with some numbers attached to the issue:

[Rusty]

Originally Posted by Moose GXP Take a look at the Global results posted yesterday. Only one global region made a small profit, GMLAAM. All others took a loss.

GM, as well as the other BIG 2, are international conglomerates. I think Federal Government should increase subsidies to R&D departments working on alternative fuels which would give budgetary relief for other product development. However, that doesn't solve the problem of product not moving. GM's cancelling development of new products (Corvette C7 & Stage II for Ecotec come to mind) will further slow traffic into their showrooms of those few who still qualify for loans. Taxpayers will be paying a high price for the Banking Debacle, the warnings of which the Legislature ignored. When you spread wealth around exuberantly, you'll wind up with very few who are still wealthy. The severity and term of the current situation depends a lot on what actually happens as a result of the recent elections, both Presidential & Congressional. In the meantime, Gm is looking for chunks of money wherever they can get it.

Regarding the size of GM; futurists have been discussing the advantages of ONE US auto manufacturer for over a decade. The balance of which Country provides what part of the Global Economy seems to be shifting, the adjustment for some will be more difficult than for others.

[Rusty]

Originally Posted by kwtoxman Some would probably disagree Adamvip. The domestics will not disappear if they aren't bailed out. At least not literally. A C11 will cause lots of pain, but as others have mentioned, reorganized comanies will emerge. IMO the large short term pain of not bailing anyone out will alleviate the more significant long term pain of the status quo with bailouts. The labour force and supporting industries will not disappear. There will be new partnerships and business cases. These different points of view are an interesting discussion, all with good points.

On both comments.

[Moose GXP]

Originally Posted by Rusty GM, as well as the other BIG 2, are international conglomerates. I think Federal Government should increase subsidies to R&D departments working on alternative fuels which would give budgetary relief for other product development. However, that doesn't solve the problem of product not moving. GM's cancelling development of new products (Corvette C7 & Stage II for Ecotec come to mind) will further slow traffic into their showrooms of those few who still qualify for loans. Taxpayers will be paying a high price for the Banking Debacle, the warnings of which the Legislature ignored. When you spread wealth around exuberantly, you'll wind up with very few who are still wealthy. The severity and term of the current situation depends a lot on what actually happens as a result of the recent elections, both Presidential & Congressional. In the meantime, Gm is looking for chunks of money wherever they can get it. Regarding the size of GM; futurists have been discussing the advantages of ONE US auto manufacturer for over a decade. The balance of which Country provides what part of the Global Economy seems to be shifting, the adjustment for some will be more difficult than for others.

Another interesting point to bring up is that the US Domestic automakers are the only automakers in the world who do not already receive financial support from their government.

[AztekzRpurty]

1 in 12 U.S. jobs is tied to the the domestic auto market. If GM and chrysler go under, you'll feel it a lot more than you would if they hadn't bailed out wall street.

Whether you agree or not, there's no way Washington will let them go down.

[Rusty]

Originally Posted by AztekzRpurty 1 in 12 U.S. jobs is tied to the the domestic auto market. If GM and chrysler go under, you'll feel it a lot more than you would if they hadn't bailed out wall street. Whether you agree or not, there's no way Washington will let them go down.

Probably ture; but if they combine, will they need a bail out to avoid going down?

[kwtoxman]

There is a lot of press coming out. Here is another example of some in the media not being keen on taxpayer bailouts.

TheStar.com | Business | Running out of options

[AztekzRpurty]

I'm reading that if they merge, GM would probably gut Chrysler and get a few more months of survival out of it, but the merger doesn't seem to be getting anywhere from what I'm seeing.

[AztekzRpurty]

Originally Posted by kwtoxman There is a lot of press coming out. Here is another example of some in the media not being keen on taxpayer bailouts. TheStar.com | Business | Running out of options

Since when was the Chrysler bailout of 79 "ill-fated"??!! It was loans, not a bailout, and Chrysler came back strong and repaid the loans early!!

That writer is just anti-american in my opinion.

[Rusty]

Originally Posted by AztekzRpurty Since when was the Chrysler bailout of 79 "ill-fated"??!! It was loans, not a bailout, and Chrysler came back strong and repaid the loans early!! That writer is just anti-american in my opinion.

I think his point is that shortly after repaying the loans Chrysler was not in a much better situation than before the loan was made. And, by only infusing money without requiring a change in management strategies only put off the inevitable and didn't solve the problem.

[Jus2shy]

From what I've read, the bail-out that is currently up for the auto makers is to re-tool for more eco friendly vehicles, and cut back on the larger vehicles that drive their business. I can't believe the big 3 didn't see the price of fuel going up. But then, fuel is back to its normal price. Shows how much investors can skew the market.... I say nationalize gas!!

[Moose GXP]

I think GM would come out of Chapter 11 stronger than if they were bailed out. I think that's what the Feds want.

[chuckdoc]

I agree with chapter 11. All of you saying the world will end if we do not bail out GM do not understand bankruptcy.

The only way I would support a bailout is if the CEO is replaced and without a golden parachute. The problem is not the workers (as we all learned on MECCA tours) it is with bad management decisions. This ranges from making cars no one wants to buying parts so cheap that they would be guaranteed to fail. (Door handles for instance, water pumps, rearends, wheel well liners etc.) People do not buy one car over another due to a price difference of 200 or 300 bucks. They need long term reliability. Without that, no mater what they make, people will not buy. To give them more money is just silly unless they have a management change. The new guys need to get the money and tell America that GM screwed up. We made cars with cheap plastic parts and designed them with ugly in mind and we are going to change. This will not work as an advertising campaign only but they actually have to do it. Forget initial quality and 90 day quality only statistics. They need three year quality.

[Snugglebear]

Originally Posted by AztekzRpurty 1 in 12 U.S. jobs is tied to the the domestic auto market. If GM and chrysler go under, you'll feel it a lot more than you would if they hadn't bailed out wall street. Whether you agree or not, there's no way Washington will let them go down.

What percentage of that 1 in 12 are actually related to the OEMs or their suppliers? I have a nasty feeling that, just like with statistics from foreign nations including simple technical certificates for equipment repair with those of computer science or engineering BS, MS, or PhDs, this number is rather inflated. My gut instinct is that many of those 1 in 12 are mechanics at Pep Boys, clerks at tire centers, smog check stations, etc. Should domestic OEMs take a hit these guys still won't feel it since the all cars must be maintained. Likewise, shrinkage of domestic OEMs opens up opportunity for the foreign companies, most of whom already manufacture here. In that way only the UAW loses.

Originally Posted by chuckdoc I agree with chapter 11. All of you saying the world will end if we do not bail out GM do not understand bankruptcy. The only way I would support a bailout is if the CEO is replaced and without a golden parachute. The problem is not the workers (as we all learned on MECCA tours) it is with bad management decisions. This ranges from making cars no one wants to buying parts so cheap that they would be guaranteed to fail. (Door handles for instance, water pumps, rearends, wheel well liners etc.) People do not buy one car over another due to a price difference of 200 or 300 bucks. They need long term reliability. Without that, no mater what they make, people will not buy. To give them more money is just silly unless they have a management change. The new guys need to get the money and tell America that GM screwed up. We made cars with cheap plastic parts and designed them with ugly in mind and we are going to change. This will not work as an advertising campaign only but they actually have to do it. Forget initial quality and 90 day quality only statistics. They need three year quality.

More than just the CEO - most of the management team, probably down to mid-level, would need to file resignations. They screwed up at all levels. Some aren't bad guys, I understand, but there has to be a culture shift, and most folks who have been at a company a while don't change much. The average worker just needs to lower their expectations and watch the UAW bite it - they've bled GM dry over the years.

Anyway, there is not much popular support for a GM bailout. Their credit rating and history is far worse than the banks and other financial institutions that have been lining up at the Fed discount window or for TARP injections, which come with surrendering an equity stake. What you have is a new, more labor friendly government who will probably bite the big one right out of the gate. They will try to prop up failure with more money rather than helping the domestic OEMs take their bitter medicine. Bankruptcy exists for a reason and can be a good tool to use in many circumstances. Similar to how the FDIC arranged the death of WAMU and subsequent asset sale to JP Morgan Chase, the Feds could perform some type of non-cash intervention to help out the OEMs. While I'm not advocating a breakup, small, targeted loans combined with bankruptcy reorganization wouldn't be too bad. The domestics would renegotiate contracts, shrink as necessary, eliminate a lot of overhead, trim the dealer network, focus on sections of the market they need to, get back to basics with vehicle manufacturing, change their culture, and be allowed to borrow some money from the Feds (with stipulations, naturally) to continue on. However, I just don't see this happening - it harms the UAW, undercuts the Democrats, and would be too effective. No, they'll throw money around and screw the taxpayer in exchange for Michigan's votes in 2010 and 2012.

[Moose GXP]

'Red Ink' Rick needs to go. It's amazing he still has a job.