Posted on 11/20/2005 2:57:23 PM PST by Angry Republican
The company is bleeding billions, but management is beginning to see the light. There are a few bold steps -- including the scrapping of one of its brands -- GM execs should take to keep the auto giant running.
According to some analysts on Wall Street, General Motors lost credibility last week when the company said that it would be restating 2001 earnings.
That’s what it took for GM’s management to lose credibility? How about years of mismanaging its production effort? Or refusing to aggressively streamline its product offerings, recklessly pursuing incentive strategies, failing to address ballooning health-care and pension liabilities?
In order for something to be lost you must have possessed it to begin with, and GM’s management team hasn’t had any credibility for years.
So now, as speculation mounts that General Motors will be forced into bankruptcy, are we really going to believe management when it says that it has no plans to file for bankruptcy protection? Of course not. Let’s at least hope management has begun to realize that it's a possibility.
Bleeding billions
General Motors is in a world of hurt. Even after the United Auto Workers announced Friday that it had ratified the deal to curb health-care costs, General Motors still faces a big uphill battle if it wants to avoid bankruptcy. One analyst has upped his odds for GM filing for bankruptcy protection within the next two years from 30% to 40%. Others have said it's almost a certainty.
Why all the pessimism? GM has been running through cash faster than Paris Hilton at a La Perla store. The company burned almost $10 billion over the past couple of years as the combination of high health care/pension costs, restructuring charges and soft sales slashed its cash horde by about a third.
(Excerpt) Read more at moneycentral.msn.com ...
Companies never...repeat never..sign union contracts that they don't think they can live with. Hence..STRIKES occur. Yes.. some of these contracts in hindsight seem to be in bad judgement but at the time they were executed management felt that they could handle the provisions. It is continous and repeated bad decisions like these by the multi-million dollar a year executives that hamstring a corporation and leave it bankrupt while the members of the board walk away with millions in benefits as their reward for poor stewardship.
While I agree that GM's problems are primarily benefits related, I've never understood all the overlap and duplication in their product line.
Why do we need a GMC and Chevy truck line? Not to mention the upscale Caddy truck/SUV offerings.
Close the doors and make all their cars in China.
For one thing, when GM spun Delphi off 6 years ago, the UAW forced GM to guarantee Delphi workers' pensions, etc. Now Delphi is in bankruptcy, and it's dragging down GM with it.
So GM is still feeding the Delphi workers even though they have not been part of GM for 6 years. And now it looks like the Delphi workers are going to strike, which will shut down all of GM in short order.
These union leaders are economic terrorists.
Oh.....I thought they were going to start building cars that people wanted.
When Roger Smith, et al, made these provisions, GM could handle them. Anybody with an ounce of sense also knew that in 20 years, they probably wouldn't be able to handle them and I'm sure that senior management in the 80s knew this. However, they also knew it wouldn't be their problem and making this Faustian bargain would result in huge personal rewards for them.
"No mention of the real problem--the fact that the UAW has tied management's hands."
and
"If East Germany was a car company it would be GM."
My GM credentials - Born in Marion IN (Fisher Body). Graduated from Anderson (Indiana) HS when the unemployment rate was 22% due to GM layoffs. Worked as a contractor for EDS (miserable!) at GM facilities for 6 months.
The truth is that both are right, but since labor problems are ALWAYS a management problem (as are quality problems) I'm laying the blame on management.
If you've ever had the chance to work for a GM exec (or Ford exec for that matter) you'll know why the workers have a union. The nastiest people I've ever met were Big 3 execs and management. I don't like the UAW but there IS a reason why they exist, and why those contracts are like they are.
THE REAL ISSUE is that fewer cars are needed for the current market, since cars routinely last 3 times longer than they used to. And, since it takes far fewer workers to make the cars that are needed, it means far fewer employees. Finally, leasing has leveled out the boom and bust cycles, which means that you don't need massive factories (and employee numbers) for those boom cycles.
Tim
Unions have bankrupted their employers before, seemingly as "lessons" to other big companies.
The only thing I can say is that it should be a core business principal of every company in America to eliminate unions from their workforces at all costs.
Unions are parasitical organizations that have driven thousand of companies out of business and millions of jobs overseas. They know it, too, but they don't care. The union bosses have become fabulously wealthy doing nothing more than blackmailing companies, and the union workers are totally brainwashed.
They are poison, plain and simple, and they have to go.
They bankrupted Delphi.
Until a few years ago,I saw far more Oldsmobiles in my neck of the woods than Pontiacs.....and far,far,far more than Saturns.
I think they chose the wrong division to kill off.
The SSR is a cool retro type of vehicle but for $6000 more I could own a new Vette.
GM has 25 billion in the bank. MSN doesn't know squat.
Shoot the designers.
GM used to produce some of the greatest designs.
Now, they are clueless and don't seem to care.
The dunder heads at GM could have spent the development money on the SSR on your retro Camaro. Now the SSR's languish on the lots, the line is on hold, but the Mustang assembly lines just keep on humming...
They did it with Federal Mogul.
Unions are losing their monopoly and they are panicking. They have a major shrinkage problem.
I shoud be out putting the LS6 I just bought in my 68 Camaro but it's to cool here today.
Do some quick math..take the cash on hand, divided by the number of shares outstanding..compare it to the price per share..and you get an idea of what the whole shebang is worth..
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