Is GM going bankrupt?

[Sikander]

Originally posted by Ted Striker


BOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!



Blaming labor.

No labor is only doing it's job which is getting everything it can in the short run with no regard to the future. Unlike business though it has a government enforced monopoly which makes it virtually impossible for those it supplies to compete within the United States. It's the government and all those who reflexively support labor unions who are to blame, and most of the damage was done long ago.

[Sikander]

Originally posted by Ted Striker
Interesting stat some lady just gave on Tavis Smiley:

60% of the GM and Ford workforce is obese

10% of them have diabetes

She said this would be a push to bring more health awareness into schools because medical costs were affecting big businesses.

Which seems to be the only damn thing people respond to anymore, is big business needs.

I think she was being optimistic though.

Michael Moore is actually quite representative of the group. Fat, obnoxious, hostile and demanding. The perfect employee for a company bent on bankruptcy.

[Dinner]

http://www.businessweek.com/bwdaily/dnflash/apr2005/nf20050426_7826_db035.htm

In a wierd turn of events the Chrysler part of DC is financially the best off of the big three while Ford made $1.2 billion last quarter and GM lost $1.1 billion. The article didn't give figures for Chrysler but did say it was the "best off". The quality of the cars built by the big three seems to be pretty good (in that they don't break very often) but cost cutting has meant that the look and feel of many of Detroit's cars just doesn't match the look and feel of the competition's cars. GM's accountants seem to have fallen in love with cheap shiny plastic which the costumers all hate. That's not a good thing if you are in the business of meeting costumer expectations.

Business week is reporting that used car prices are up and that the big three would really like to raise prices in order to return to a sound financial footing. That tells me Detroit still doesn't get it. Your cars are pilling up on dealer lots at the current price so you won't sell more if you raise prices 10%. I'm afraid Sikander is right on this one in that labor is going to have to take the hit because they've already decontented all they can and they've squeezed suppliers for all they can and raw materials like steel are more expensive while competition means they can't raise prices. That just leaves labor or dealers to take the hit and the dealers will just walk rather then lose money on a deal.

The labor contracts which make GM pay the same even if factories are ideal is killing them. If you have to pay workers even when they don't work then you might as well keep the factory running and pumping out cars. The problem is that results in over supply and falling prices which makes everyone unprofitable. You have to be able to match output with demand or else you will lose your shirt, ergo, the labor contracts need to be changed in order to reflect market realities.

Sadly even if labor contracts were fixed you still have a screwed up and entrenched management at GM which continues to make all the wrong moves. Chrysler and Nissan turned there business around not just by cutting costs but also by coming up with better designs, edgier styles, better engines, and more compelling products. They knew that in the car business product is king and so they spent big even when they were losing money so that the could develop hot new cars which pulled them out of the red. GM is doing the opposite; they are delaying new models or even canceling models in order to cut costs. Having old cars which don't sell well now won't make things easier or GM's results better next year or the year after that. Unless GM spends the cash to develop new modes which aren't dogs then they're going to have a rough time of it.

[JohnT]

Originally posted by Ted Striker
By the way, I thought that the Japanese built so many plants in America specifically to bypass import tarrifs.

They did. However, if GM goes under (or threatens to), the fact remains that they still are Japanese companies and will have political pressure put upon them (fairly or unfairly) regardless.

[Ted Striker]

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[Ted Striker]

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[Rufus T. Firefly]

Originally posted by Sikander


Michael Moore is actually quite representative of the group. Fat, obnoxious, hostile and demanding. The perfect employee for a company bent on bankruptcy.

Of course, Moore owes his whole career to the documentary he made about how GM stopped hiring people like him when they moved some of their manufacturing South of the Border, to labor-union-free Mexico.

But I'm not interested in defending Moore. What I am interested in is the question of how much of GM's labor force, broadly considered, actually belongs to the UAW. Their parts are manufactures largely overseas; some of their assembly already happens outside the country. I can't find any figures on-line, but I honestly wonder about the impact of union contracts on GM's current predicament; seems to me that they've spent the better part of the last 25 years drastically reducing the number of unionized workers on the payroll, and they still can't stay afloat.

[Rufus T. Firefly]

Originally posted by Ted Striker
GM sounds like it will eventually die off the way AT &T.

Uh, Ted? They're still around, and until they got dragged down when the tech bubble burst they were actually a more profitable company than they had been as a government-sanctioned monopoly.

[DanS]

AT&T only exists as a name, Rufus. It was recently gobbled by SBC for a paltry $16 billion -- about as much as GM is worth.

It is apparent that GM is no longer promoting the interests of its shareholders and is instead promoting the waning interests of its employees and retirees. There are few other explanations for a $15 billion market capitalization while doing a couple hundred billion in business each year. Essentially, the company is worthless.

[Ted Striker]

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[Rufus T. Firefly]

Originally posted by Ted Striker



Apparently you've missed the last 5 years of bad decision making

Hey, let's be a broadband provider! no..no..that isn't gonna work...

Hey, let's be a wireless provider! no..no.. that sucks too.


In any case, SBC bought them out for $17 billion, the entity known as AT &T will soon cease to exist.

GM will suffer the same fate, trying to reincarnate itself and eventually end up going down.

No, I haven't missed it. Sadly, AT&T stock is the largest part of my widowed mother's stock portfolio, and she refuses to part with it out of loyalty (my dad worked for now-defunct AT&T subsidiary Teletype).

I just meant that AT&T had actually tried to adapt as a corporate behemoth and had, for a while, succeeded. That seems to me different from GM's strategy, which seems to be to assume that the business hasn't really changed that much since 1955.

[Ted Striker]

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[DanS]

I remember posting about that about 3 years ago, asking "how the hell do they STILL stay in business." To which Sten replied, "because they're a BANK now." I'm still not sure what Sten meant, maybe they tried dabbling on the financial investments side.

Yes, GM is a bank now. But the losses in the auto business are getting so bad that even the bank can't rescue it.

[Dinner]

To be fair the backbone of AT&T's business was local telephone service which was taken away from it by anti-trust courts. It was a strong healthy company until it had courts take away it's core business. GM won't die because the politicians won't let a company which still amounts to 1% of US GDP go down. With luck the down grading of the company's credit rating, the $2 billion FIAT debacle, and the rivers of red ink will make share holders act up and kick out the current management.

GM is in a much better position then Nissan was in the late 1990's when it got new outside management who focused on design and delivering products which fit costumer expectations. That pulled Nissan from deep in the red to deep in the green and the same thing could be done with GM if they kick the old guard out and get some fresh blood.

[DAVOUT]

Originally posted by Oerdin

GM is in a much better position then Nissan was in the late 1990's when it got new outside management who focused on design and delivering products which fit costumer expectations. That pulled Nissan from deep in the red to deep in the green and the same thing could be done with GM if they kick the old guard out and get some fresh blood.

You just need a French management ... which would of course not be accepted by the current administration if a team had volonteered for that despairing mission.