Why GM will fail . . .

I've got a theory as to why GM will fail. yet again. My central theory is that they simply build a crappy product. no disrespect. it's a car and it will get you from point a to b. but it's a shoddy built crappy car. their trucks are OK. but wow not much car there for being a car. they're sub par period. they are trying with some of their new models of vehicles but it's too little too late. they need to do something revolutionary with cars or get out of the way of the companies that actually weren't sitting on their asses for two decades putting out nothing innovative or even appealing.

Detroit is already a ghost town outside of the redeveloped downtown area. This area will also end up a 'dead zone' when the towns and cities supported by GM and Ford factories close down.

Their ineptness is amazing. They not only continue their failed SUV/More Horsepower mentality, but they deliver nothing suitable to drive. Hybrids and good smaller cars where writing on the wall years ago, but the management can't manage their way out of a wet paper sack. They only offer monstrous gas hogs where extreme horsepower is the only focus. They can’t see beyond their own noses that this is not the 1980’s.

They should also abolish unions. Their only task is to bankrupt companies with their outdated good-old boy network. Unions have outlasted their usefulness except to make a few fat cats even richer.

They should go bankrupt, bringing in new management and clear thinking that might deliver a good product that makes sense and can compete with European and Japanese cars.

How can they not fail? How long are they going keep them propped up? What if this recession lasts for years or turns into a depression. Do we keep handing them billions every few months?

You can't force people to buy their vehicles. People are losing their jobs left and right....these same people will no longer be able to pay their car payments, credit cards, and mortgages.

It can't be stopped. I don't want to see them fall. But it's the only outcome. I live in Michigan. I don't want this to happen. But it has too. Throwing more money at them just hurts us more.

We need to stop our government and tell Barney "Super Soaker" Frank to shove it. He just proposed a bill for this after all.

Frank's Plan Gives GM, Ford, Chrysler $25 Billion (Update3)

Nov. 12 (Bloomberg) -- General Motors Corp., Ford Motor Co. and Chrysler LLC would get $25 billion in loans from the Treasury's financial-rescue plan under a proposal by House Financial Services Committee Chairman Barney Frank. Legislation is needed to authorize the Treasury to use part of its $700 billion rescue fund for the auto industry, Frank said today. He said he plans to introduce the bill Nov. 18 and hold a hearing on the measure the following day.

www.bloomberg.com...


Edit to add video.




I like Neil Cavuto. He is against the bailouts. He grills politicians on this all the time. He makes this one look like a fool. This was on today btw.



[edit on 12-11-2008 by David9176]

The Tier industries that support GM, Ford and Chrysler will cause a windfall of unemployment that will put this country into a depressions should they be allowed to fail.
Having said that, it is high time these three automakers cut back and become profitable companies that produce quality vehicles. Its time for them to become smaller and quit offering so many models of the same vehicle on the same chassis. This too will create unemployment but you have to focus on what will be the greater good.
I own a Toyota Coralla. Its quality is superior to any other vehicle I have owned. I also own a Ford F150 4x4 with a V8. This vehicle is also nice but I do know it will require more preventive maintenance than the Corolla.

My 2 cents.

Who wants to start a car company?

I have a feeling there could be a lot of skilled workers looking for jobs and a lot of factories/equipment available at fire sale prices.

I know that's a very simplistic statement, but in order for progress to happen sometimes the old need to wither away and die. And the faster it happens, the sooner we can get to rebuilding things.

I'm not for any kind of bailouts, I say do away with the Fed and the IRS. I support the Fair Tax movement.

But if anyone needs bailing out, give it directly to the people. Would do a lot more good and help US get through the rough times ahead.

This morning's pearl of wisdom from our financial gurus . . .

Some companies use the courts to reorganize and come out stronger. That would be difficult for GM, experts say.

The whole thing surrounds going 'Chapter 11' and the ability for GM to get DIP (Debtor In Posession) financing which basically means while GM reorganizes, they can get loans which are granted based on the lender's belief that the company can actually address the issues that lead them into insolvency.

Basically, bankrupcty protection would allow them to work their way out of contracts and obligations that are weighing down their ability to become profitable.

Take a look at DANA and Delphi as automotive suppliers who've gone this route. They managed to come up with DIP financing based on their restructuring plans.

But the lending atmosphere was a bit more favourable at that time.

"The state of the capital markets does make the prospects for DIP financing a much bigger question mark than would have been the case in other times," said Bob Schulz, Standard & Poor's senior auto credit analyst. "To reorganize does require financing."

What it appears to boil down to is whether or not there is sufficient confidence in GM's ability to come up with a viable plan to fix their problems.

In my humble opinion, if they can't get funds through traditional (lending institution) channels, that confidence is not there.

The corollary of that would be, if there is not sufficient confidence by those in the private sector, why the hell would the US government even consider throwing money at GM?

If I was an elected representative to Congress, that's exactly what I'd be asking Pelosi, Reid et al.

Wonder if anyone will?

GM should be allowed to fail....

the plant production areas & a slew of intelligent production line personnel
would be right there....

Let's open the auto market to India's TATA Motors...
they can bring on line their own 'peoples car' the Nano,
to the american scene... wow a auto for around $2500.

the big - 3, including GM, are supposed to unload their 'Legacy'
costs in 2010... so why not let the door hit 'em in the backside beforehand.


they only want to keep the shell-of-a-company alive long enough,
for the elite execs. to grab their benefits and retirement packages
there is no eglaritarian motivations bubbling up from their board-rooms...
its all a 'CYA' situation

GM has lost its last supporter

As the automaker slouches toward either some sort of bankruptcy, a forced merger or a massive government takeover, J.P. Morgan Chase analyst Himanshu Patel has finally abandoned the vehicle and opted to walk.

The analyst cut his rating on GM to “neutral” from “overweight,” a rating he had held onto since July 10, 2007, a period of time that saw the shares fall by 92%, a mind-boggling decline. Of the other 10 analysts covering the shares, seven are carrying the equivalent of sell ratings, and three have neutral ratings on the stock.

Himanshu Patel is one of the most respected and highly rated analysts for the automotive sector as named by Forbes. Clearly not in the 'lightweight' category.

With his defection as an ally, you can sufficiently say that Elvis has left the building . . .

Next stop, Congress . . . but what the heck . . . they'll give ANYONE our money.

reply to post by jibeho

Amen! I also come from a union family, and I completely agree that unions are doing more harm than good now. Gone are the days when Ebeneezer Scrooge would work people to death for pennies a day, the unions did put a stop to things like that. GM starts off every year $5 billion in the hole (I think that's right, don't have current figures) because of pension obligations and the like. The UAW was supposed to protect worker's jobs, yet a year or two ago when GM was offering buyouts in a desperate attempt to cut costs the UAW told their members to take it! All those people got was 120,000 or less, and had to quickly re-educate themselves in hopes of finding another job. Detroit and the rest of Michigan has been hurting for a while due to this problem. Jennifer Granholm scuttled a deal with Toyota to build a plant and create much-needed jobs, acting as the UAW's lapdog. On a side note, I find it almost funny that she is one of Obamas economic advisors, since under her watch MI has bled jobs and been in a recession for years now. Something like 80,000 people a year are forced to leave the state because there are no jobs.

You can see why the stock is tanking . . .

How does one 'dilute' $2.94???

Goldman Sachs suspended its rating on shares of General Motors Corp. (GM) Thursday, saying shareholders face a massive dilution of their stakes under a government rescue plan.

reply to post by GoalPoster


I think its clear that GM has been a big bankruptcy risk company since 2000 or back further even. The balance sheet is an investor's best friend. Its really a shame just how little investors pay to the most fundamental part of a company... its balance sheet. Investors are obsessed with the income statement, which just is not that important.

[edit on 14-11-2008 by truthquest]

reply to post by truthquest


I have read that if GM and Ford go belly up the fall out will put well over 200,000 + out in the streets. I only work part time now because of the economy. The call for the products I'm involved in are for disposable income, and we all know how much there is of that latlely. My full time driving job to maintain my benefits has gone by the wayside due to fuel and insurance pricing. I cannot imagine that many people plus more because of the ripple effect out of work for long periods of time without major problems! I am not very hopeful even with the bailout. GM thinks people are fooled by making the same car in thre differant ways and pricing them all differantly. Anyone who ever worked on cars knows that all the parts are interchangeable and no need to have three of the same thing with differing names!

Zindo

reply to post by kettlebellysmith


kettle,
you touched a nerve - excellent point.
asian economies - China, Japan are copy-cats
of original american capitalistic system...
we educated them, and they beat us down to it.

China keeps their currency - yuan - artificially
low - it is impossible for Americans to complete,
similarly with Japan.

low currency thing was good 30 years ago, but during
these 30 years we have lost majority of our
manufacturing capabilities...they all moved to asia.

this instead caused increased money flows to asia,
their savings rate went up with 30% (!) now.
with that much money they invested back in US and
in fact everywhere,
this is where Wall Street picked up the "bill", they
invented the whole financial sector with idiotic
mortgage repackaging schemes, CDOs, CDSs and
what not.....sadly, this was only a paper business -
not a real one. we gave our real factories out while
taking fake paper businesses in.

now it's time to pay. bailout for Wall Street is wrong.
bailing out GM is likely too late...we need import tariffs,
we need tax breaks for local businesses, we need
jobs in US not in China - this is the solution, this is the
way out; sadly now the only way out from this
sophisticatied Asian maze...but whom am i kidding,
US Congress is asleep; they're putting a band-aid on
gun-shoot wound thinking "it will disappear". it won't -
radical moves are needed.

Here's another nail in the coffin. The supply chain . . . the same suppliers that GM forced to accept net 90 payments not so long ago now find that the shoe fits nicely on the other foot.

Failure of an auto industry bailout, especially for GM, could touch off a vicious spiral. Suppliers, concerned about their own liquidity, may begin demanding cash upon delivery of parts, hastening GM's decline. A lack of payment from GM would push some suppliers into bankruptcy, disrupting product flow and shutting down assembly plants

(see it all here)

Suppliers, many of which are teetering on the brink themselves, need some sort of assurances that they will be paid for what they produce.

In today's 'just in time' world, the parts shipped today won't be paid for by GM until sometime in February. That does not sit well with suppliers who are on the hook for costs of production and are expected to serve as a short-term lender to GM.

Personally, after having terms, conditions and price dictated to us for the past five years, applaud this move and hope it serves to speed up what appears to be the inevitable demise of GM in its current incarnation.

Having said that, two words seem to imply that when push comes to shove, GM will be in some fashion bailed out by the US government . . .

Defense Contracts

Realistically, the US government doesn't have the time to replace the $800 million in contracts to GM's defense arm in short enough order to ensure that supply continues. Bigger still, the affects of a dwindling automotive sector removes from the equation the technology and knowhow to assure the continued supply of the products necesary to blast away in the various warring countries around the world.

Automotive Industry + Technology = War machine

Despite my absolute loathing for the top tier in the automotive sector, the ramifications of the industry disappearing without at attempt at dramatic restructuring run deep and leaves me thinking in this regard . . . be careful what you wish for.

General Motors & Ford are both going to fail here in the U.S. because their primary purpose in existing has changed from making cars to paying out all the benefits and retirements of workers who haven't worked for them for years. If you want to point a finger at "someone" for this problem, point it at the United Auto Workers union. Toyota, who is currently thriving in this economy, has never allowed the UAW to poison their production plants.

And this is one of the reasons that I hope all levels of government throw the greedy bastards from GM to the wolves.

They're closing up shop here, slashing jobs, gassing suppliers and generally pillaging our futures so they can source a billion dollars per year in auto parts production to India.

Sourcing auto parts from low-cost countries such as India may help the Detroit automaker in its efforts to reverse one of the biggest downturns in U.S. automotive history

On the other hand, they want us to buy their cars.

They can kiss my posterior . . . why don't they go cuddle up to India's treasury for the money.

reply to post by GoalPoster


You are correct in your feelings. I have a GM truck. I love it but if they ship any more jobs out of the country for any reason it will be the LAST american big three auto I will ever buy!!I have a personal beef with Bob Lutz and would love to see that varmint dealt with like he deals with others!!

Zindo

reply to post by eventHorizon


The problem is with our government. They won't give tax breaks to small or mid-sized businesses in order to encourage growth. And this is not just on a national scale. The county where I live has two hospitals, both of which are in trouble financially(they are run by an inept for profit group, and have really screwed up the medical care in this area). A religious based hospital group wanted to come in and take over both hospitals, but they asked the country for some tax breaks. Guess what? The county said "not no, but hell no." Now this system that wants to take over has plenty of cash, can pull much needed doctors into the area, and greatly improve the quality of life for the area. But the politicians can't see beyond the end of their noses.
I have to say I think GM, Ford, and Chrysler out to be allowed to go belly up. There will be other companies that will come in, retool, and build vehicles suitable for the 21st century, and perhaps they will even be affordable, the way cars used to be. (The average new car on the road today cost more that my first home, which I bought in 1972.)

AP

UAW president insists workers will make no more concessions; says workers have done enough

COLUMBUS, Ohio (AP) -- Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger said Saturday that workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy.

Yeah, we'll get right on that, Ron. No one had any idea that was a problem. You absolute tool.


Also to note, from the same article, in the 10,000 spoons department:

But President George W. Bush and many Republicans have come out against the [auto bailout] idea, arguing that the financial rescue package was not intended for such uses, and that a bailout would reward poor management and lead other industries to demand government handouts.

HAHAHAHAAAA seriously?? SERIOUSLY did he say that??

Now the dinosaurs have come out and spoke in their normal voice.

source link

Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger said Saturday that workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy.

"The focus has to be on the economy as a whole as opposed to a UAW contract," Gettelfinger told reporters on a conference call, noting the labor costs now make up 8 percent to 10 percent of the cost of a vehicle.... much more

I guess when you look at it that way, it doesn't look as bad as telling someone that the number is around $80 an hour in pay and benefits. Not bad money for unskilled labor working on assembly line.

Foreign car companies understand how to pay decent wages to line workers and stay in business. They have plants here in the US and do not seem to have the same problems.

These guys, on both sides of the contracts. need to get their collective head out of their collective asses and rethink a contract based on current economic conditions and not the Good Times 2 years ago when the economy was floating on a bubble.

Even if somehow, the backlog of vehicles is sold, the automakers are still stuck with bad contracts, bad business practices, and unfunded government mandates for different reasons; that put them in this position. The whole US auto industry actually needs to die so it can be remade into a functional industry based on sound business decisions.

You will find any number of gloom and doom industry spokesmen that make bold claims about how many jobs will be cut or money lost. I've got 2 things to say about these people. Look at who is funding them and there is already many jobs being lost in all segments of economy. Autoworkers are not a special group that needs to be protected, the media just seems to think that taxpayer money is needed to support them.