Posted on 06/03/2009 6:58:48 AM PDT by arthurus
...t is hard for most of my friends and family to understand why I have been so negative on the Detroit autos for years. Unlike the mass media, I don't think the product they produce was the main problem at the end. I told people these companies would eventually go bankrupt / or something along those lines for several reasons. Why? Well for the following reasons and after each point I follow with a parallel to the United States.
1. GM had massive pension / post retirement liabilities which made it almost impossible to stay in the black and service those obligations (US parallel = social security / health care, etc.).
(Excerpt) Read more at seekingalpha.com ...
Ford has the same obligations as the Former GM.
The best possible next event would be an orgy of backpedalling on Obama’s unfortunate comments by the administration to the heady music of spin-doctoring by the media. This is the best we can hope for. But not matter how zealous that effort, or how cacophonous a spectacle, the markets have heard the president, who has confirmed their hunch in an unmistakable way. In doing so, he has given them the ammunition they need to bring this already vulnerable nation to its knees, financially, weakening its reputation further, demolishing its bargaining position in the capital markets, and possibly forcing it “out of business.”
Good analysis.
There are many parallels there.
GM and Chrysler were DOOMED.
That's why they had to fork over more than $30 per hour in direct pay to their workers ~ everybody in the UAW knew the companies couldn't come up with the moxie to pay retirement and retired health benefits.
If the companies and unions had been honest and bargained in good faith, and set aside the funds necessary to back up the fringe benefit packages, they'd still be in business ~ and making less than $30 per hour.
BTW, many of the foreign auto and auto parts manufacturers in the United States are already into the same trick bag and regularly pay more than $30 per hour in direct compensation.
With the devolvement of GM and Chrysler to the level of major bicycle makers they will no longer provide a great attractor for "labor", and that should result in a decline in pay and benefits throughout the auto industry worldwide.
One Ford retiree told me about his neighbors dog that bit him while on his motorcycle. He sued and won a few bucks. I asked why go to the trouble. He said the attorney cost was free to company retirees so why not sue.
Besides, the dog was not riding a Harley.
The USA has been incredibly blessed with peace and prosperity over the last 60+ years. This has made Americans highly resistent to change (which involves uncertainty or even some hardship) and our politics reflects that.
My mother is a retired Ford employee who worked up at the top...there is no free attorney costs.
Make it 4...bad management!
Well the coup de grace was the present plunging economy. New car sales of all sorts are down. Used and new cars are a glut on the market. I discovered a dirty little secret in the car market recently — folks are backing out of car purchases at a high rate. This is flummoxing businesses like the used car king Carmax, whose bureaucratic nature gets them sitting on hot, easily saleable cars for days while some marginal buyer fumbles and bumbles around trying to get credit, to look at a car from some distant city, or to decide whether to keep the car at all. But again the car you think was gone may be back in a few days.
Almost correct, Gm long ago thought they could replace consumer demands with "slick marketing" of bad products. They have really turned out a lot of under-engineered trash over the years. Just last week I passed a rear wheel drive GM car with it's rear axle hanging out. Sheared c-clip
It’s amazing how simple economics escape the Northeastern liberal. Econ 101: In order to make a profit: Merchandise A must cost less to produce than the price merchandise A is being sold for. End of lecture!!!
I’m not buying any Ford stock, either.
You may have no choice. GM stock was forced on us and Ford may be next.
Writing from Shanghai.
GM in China is reporting record sales and record profits.
A machine company in Chengdu bought Hummer.
GM’s “management” was so focused on “marketing” ........... all same thing grasshopper.
Well, not quite Sensei.
They were more focused on million dollar salaries with multi million dollar bonuses for running a business into the ground.
They totally disregarded the interests of their stockholders for their own greed.
They caved into the union thugs at every challenge instead standing up for the interests of the business, owners and workers.
If that's "marketing", well, it's a form of marketing with which I am unfamiliar.
Harley Earl invented it. The management lived it.
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