Ideas on Saving GM

normajean777 · 02-25-2009, 08:25 PM

I would like to see people's ideas on how to genuinely save GM, ie, avoiding bankruptcy and becoming profitable once more. There are many other companies who are probably worth talking about as well, but please avoid them in this discussion unless they are directly related and fruitful. Also, it is not a discussion about what the government can do to save them, it is about what can be done themselves.

So perhaps its to late? Maybe not. On my end I've always wondered why the union is so stubborn that they won't budge to save a company that employs thousands of the union members. They don't want to give up their health plans now, but what happens in a year when they have no job, because the company is now bankrupt. Furthermore, if GM went bankrupt, Ford would be in a position (but likely wouldn't use it) to fire all of their unionized workers, and have the opportunity to pick from a very large pool of skilled workers, forced to work at a much lower wage.

mulletman · 02-25-2009, 08:44 PM

I've always been of the opinion that capitalism works. Make a better or more desirable product than your competition, and market it for a competitive price, and you'll move product. Spend less than you're taking in, and you'll be profitable. Why they seem to be incapable of doing one or both of the above probably stems from a variety of reasons.

I'm just kinda wondering why everyone seems to be so up in arms about "saving GM." Why didn't we have a "save Eastern Airlines" campaign? Or a "save PanAm" campaign? Why is there no current "save Mesa Air Group" campaign? When companies suck, they generally end up going under.

**bravesfan007** · 02-25-2009, 09:52 PM

I think the unions which were a good thing when they were originally started have now got to a point where they're putting their own selves out of a job. Personally, I think even now GM is not doing the right thing. They've agreed to pretty much do away with Pontiac but keep Buick. I mean, I know Buick sells but that's what Cadillac is for right? I just think those two are competing for the same market much in the way Saturn has/did (since it's now gone) with Chevrolet.

OneHope · 02-26-2009, 07:51 AM

For me and my family, if GM goes under we will be better off. If GM stays afloat then our position becomes more tenuous.

My thinking generally is that a company like Ford was more responsible and better at what they did and therefore don't currently need 'saving'. Why should we help GM when by helping the company it will hurt a company like Ford?

mulletman · 02-26-2009, 10:30 AM

Indeed. If GM can help themselves, and pull out of the hole they're in, then more power to them. However, if the government is going to throw them a bone simply because they want to help some people keep their jobs, then I fully expect the flight school I was recently laid off from to call me up and tell me that I can come back to work because my job is now federally subsidized.... I also have a problem with companies surviving when the free market has clearly spoken, and deemed their products inferior.

Jfool · 02-26-2009, 12:26 PM

I agree... the only way to "save" GM is to see if they can save themselves. I think GM knows how to truly save GM; create value for the customer, and lower your costs. Why haven't they? Too much focus on quarterly profits, unions, and complacency... not necessarily in that order. Getting outside help only defers the real issues.

On the subject of unions; they not only cause higher costs because of wages and other compensation, but they limit the flexibility of operations, something I would think a car company would need to thrive. It's not something easily quantified.

If GM can't save itself, then something more worthwhile than just "GM" will arise from the loss.

**Epaphras** · 02-26-2009, 12:46 PM

The unions. They need to make major concessions. Toyota and Honda thrive without unions. It's possible.

I heard on Michigan Radio (NPR) yesterday that the UAW met to discuss cuts in benefits...they basically said they'll only budge on cash bonuses and cost-of-living wage increases. C'mon, seriously? Get with the times and go into emergency mode. Better less and lower-paying jobs than no jobs at all!

mulletman · 02-26-2009, 01:08 PM

Quote:

Originally Posted by Epaphras

The unions. They need to make major concessions. Toyota and Honda thrive without unions. It's possible.

I heard on Michigan Radio (NPR) yesterday that the UAW met to discuss cuts in benefits...they basically said they'll only budge on cash bonuses and cost-of-living wage increases. C'mon, seriously? Get with the times and go into emergency mode. Better less and lower-paying jobs than no jobs at all!

Indeed. It reminds me of when the Delta Airlines pilots threatened to strike, and management reminded them that it would be a murder-suicide of the company....

***Art*** · 02-26-2009, 02:39 PM

Quote:

Originally Posted by Epaphras

The unions. They need to make major concessions. Toyota and Honda thrive without unions. It's possible.

I heard on Michigan Radio (NPR) yesterday that the UAW met to discuss cuts in benefits...they basically said they'll only budge on cash bonuses and cost-of-living wage increases. C'mon, seriously? Get with the times and go into emergency mode. Better less and lower-paying jobs than no jobs at all!

UAW is ridiculous. I think they have a lot to do with the failures within the US auto industry.

**Epaphras** · 02-26-2009, 02:48 PM

Quote:

Originally Posted by Art

UAW is ridiculous. I think they have a lot to do with the failures within the US auto industry.

It sucks being in Michigan and having our economy so tied-up in the auto industry - it's very hard watching the UAW drag us down and preventing the Big Three from being flexible enough to restructure and come out of this thing for the better. It's really, really frustrating to watch.

**bravesfan007** · 02-26-2009, 03:05 PM

Quote:

Originally Posted by Art

UAW is ridiculous. I think they have a lot to do with the failures within the US auto industry.

I would imagine they account for nearly 75% or more of the current problem within the auto industry.

I would also imagine that they're lobbying power is very strong and thus they get the money before other things.

normajean777 · 02-26-2009, 03:07 PM

Quote:

Originally Posted by Epaphras

The unions. They need to make major concessions. Toyota and Honda thrive without unions. It's possible.

I heard on Michigan Radio (NPR) yesterday that the UAW met to discuss cuts in benefits...they basically said they'll only budge on cash bonuses and cost-of-living wage increases. C'mon, seriously? Get with the times and go into emergency mode. Better less and lower-paying jobs than no jobs at all!

I fully agree with you, but even after that, what next? They need to restructure everything. Make better models and make them more similar.

Its been a while since I read it but I think it was one of Toyota's cost saving techniques that there vehicles have parts shared by like four or five other vehicles. Like they would have the same chasis or even smaller stuff like identical steering wheels and dashes. GM does some stuff like that, but all in all the parts are completely different and unshared adding cost to the revamping of factories for shifting production, and overall since a larger scale mass production could likely bring costs down further by itself.

What about the dealers? They have to many dealerships selling cars, how can they can rid of them without spending money?

jthomas1600 · 03-04-2009, 05:29 PM

Quote:

Originally Posted by Epaphras

The unions. They need to make major concessions. Toyota and Honda thrive without unions. It's possible.
!

I agree with everything said here about unions. However the poor economic times are hurting all the automakers http://www.bloomberg.com/apps/news?p...tM&refer=japan. I know several people who have lost good jobs or lost income due to less hours etc. and they will not be buying new cars this year. So saving GM or any automaker is more complex than renegotiating union contracts--although that would be a good start.

**bravesfan007** · 03-04-2009, 06:16 PM

Quote:

Originally Posted by jthomas1600

So saving GM or any automaker is more complex than renegotiating union contracts--although that would be a good start.

Oh I totally agree that it will take more than just reworking the union situation to get the auto industry turned around. I just think it's got to be one of the starting points. Even as we speak they may not be selling cars, but they are incurring high costs because of the benefits they give their employees because of the unions.

JerryLove · 03-06-2009, 10:28 PM

Hrm...

The reality of the economics is more complex than seems to have been dealt with here.

Let's get the simplest out of the way: why save GM and not [insert less significant business / business that failed in better fiscal times]? Because their failure didn't ripple as badly.

GM's what, 60,000 workers? Then there are the suppliers and their suppliers: let's call those together 200,000. Then double that (at least) to account for dealerships: so 400,000 jobs conservatively. In areas of concentration (IOW manufacturers and suppliers but likely not dealerships), there are at least as many dependent jobs (employees live in houses and buy food).

So a collapse would remove more than a half-million jobs... directly.

GM also grossed $166B last year, and spent more than that. There's a lot of direct and indirect revenue stream to the government there (taxes), and again, jobs associated with those.

So why intervention? After all, if the company fixed its business model tomorrow, it should make money the next day, right?

Well, there are a lot of problems there too. Let's take a really simple one: the Purchase Order.

SOP for business is that you give a supplier a PO, and they send you whatever you ordered. Then they bill you. Then you pay. The process generally takes 2-3 months.

So here is our hypothetical GM with a working business model they can implement today, but no cash, and suddenly the suppliers (who know bankruptcy will mean that they won't get paid) demand "cash up front". So GM needs to suddenly have money that they weren't going to spend for three months or so to get the parts to make the cars that make the money to pay for the parts... all the while continuing to pay the old invoices.

Let's make an analogy. Imagine you live paycheck-to-paycheck. You put all your expenses on a credit card, and you pay it off at the end of every month when you get paid. You've got your expenses balanced (you aren't in increasing debt), but you aren't saving any either (after all, money just socked away is money that isn't doing work).

This all goes just fine... unless your credit card company suddenly yanks your credit. Now you've got no way to pay for things until payday. How will you eat?

Now replace "monthly" with "semi-annually".