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 ...
Sorry you see that as a pro worker anti GM diatribe. It was not written with that in mind at all. It was, what I think, is a fair assesment of choices that have been made.
Yes I am pro worker but I am also pro business. Both have to work together for a mutually beneficial goal of success for each to enjoy that very success for the long term.
As for your vanity. I think you nailed it pretty good. Outsourcing, like all other things, requires balance. I would argue that creating jobs overseas is a very good thing, when done in balance.
When people in China have more money in their hands they will spend it and thus stimulate China's economic growth. As they grow, they will demand more freedom in how they spend that money. This , I would offer, is a good defense to the trade defecit, as it is an alternative to war that brings change to communist China.
For the USA to continue to grow in the long term, as you said, other countries have to grow also in order that they may catch up and be able to afford goods and services originated in America.
Many in the world come to the USA to work. It is time that, if noone else in those countries will, we bring those jobs to them. After all, everyone in the world cannot come to the USA. Mexico sure is trying though. ;~)
Back to the GM thing for a minute. 30 thousand jobs cut today. Local economies will feel that deeply (even the one in Ontario). Labor made concessions (again). Who is going to benefit by this? Stockholders.
Production will lessen and thus supply will go down, they get their price back up as they want. This will also increase value of used GM vehicles when they are already overvalued. I see this downsizing and overhead reduction in combination with supply side control to manipulate price as a way to make their numbers fit the short run for stockholders to increase interest in investing in GM. I understand that angle but I think it is a bit to short sighted and lacks balance.
For the long term stability of a business I think growing thru problems is the key. Maybe they have hit a cross roads and grew a bit too much and this is just s short term pull back that will facilitate a future growth explosion when they see more investment. But I doubt it.
I think this choice was one designed to increase trust in their company and in real time I think it will make people frown upon GM and make them tend to stay away from it. Where if they were growing, people would be attracted to that growth. Over all balanced growth now, not just a few dollars growth in a stock.
The socialism part is the collectivism of unions. Numberous stories are posted here all the time about union members who can't be fired or file a grievance after they screw up big time. Perhaps you aren't familiar with union rules that specify that put a straight jacket around your job position. You can't work more than your allotted time (based mostly on seniority even though older workers are less likely to want extra work). You can't fix things that are broken because there are specific people tasked to fix things. Then the line either shuts down or keeps producing defective parts because all the workers have been trained to do nothing. You blame my uncle himself, but it seems that your grandfather was in a different era and your knowledge is out of date.
In the early 1960's a neighbor who was an engineer at the Tarrytown plant told my father that GM would be out of business in 50 years, because the bean counters were running the company. They (the bean counters) knew exactly how much it cost to produce per pound, but not how to make it or make it better. It took the government to require seat belts, because seat belts added cost not profit.
One of my jobs was, but I wasn't in the union. However I was strictly limited in what I could do to perform my job (e.g. couldn't plug a printer into the network).
Have you taken a look at the safety improvements unions have brought to the workplace?
Are you suggesting the workplace would be unsafe if it weren't for unions? If so, please take off your rose-colored glasses. My non-union employer considers safety a top priority (we have lots of fab shops and labs).
To clarify my position, unions do more harm than good especially in the long run. By implementing rigid rules, everyone is forced to the same low standard. Any deviation to produce more or suggest productivity improvement that could threaten union jobs is strictly prohibited.
This past winter, I was in the market for a new car. I had about two grand worth of credits toward a GM vehicle, thanks to my long-time use of their credit card. I had bought a Geo Prizm back in 1993, and it had served me pretty well.
I went to the GM lots to find a good small car. I didn't care too much about design. I just wanted something that moved, got good gas mileage, was safe, and would last.
According to all the consumer magazines, none of the GM small cars were recommended buys. The main thing the GM lots had was the Chevy Cavalier, which hasn't been re-engineered in years. The dealer was willing to sell me a new Cavalier for $11,000. It looked liked business was slow.
I ended up buying a Toyota Corolla for $17,000. The technology on the Corolla was so much better.
It's not price. It's that GM doesn't even try to make a decent small car. Now that prices are up and more people want small cars, GM is going to have to get to work or be left behind.
If you couldn't plug in a connector then it wasn't your job to do so. Though YOU yourself may be qualified others doing the job you DO have may not be. This can be a good thing or a bad thing depending on perspective and inividual circumstance.
I am suggesting wait....stating that unions have created safer workplaces and I state that becasue its true. This is one reason WHY your bosses want to create a safer workplace. A benefit that unions have brought to our workplace with monitoring the workplace and exposing how much money a bit of safety can produce.
"To clarify my position, unions do more harm than good especially in the long run."
You mistake the word UNION with the word CONTRACT.
"By implementing rigid rules, everyone is forced to the same low standard. Any deviation to produce more or suggest productivity improvement that could threaten union jobs is strictly prohibited."
HOGWASH! that is nothing more than unsupported bluster.
Contracts are agreed to by the company right?
Also, if you were more qualified then why aren't you in that union job? Go down to the local and demostrate that qualification, they will offer to organize you.
Then you could go do that union job and have some fella say he is more qualified to plug that cable in than you are. Just like you just did.
If an agreed to contract is bad you cannot blame one side. Yet, This is exactly what do you.
I preferred to do my job AND move my own box. The union people were content to move a box every now and then and sit around the rest of the time.
If an agreed to contract is bad you cannot blame one side.
These contracts are negotiated from a level playing field. The workers have the right to cripple the company but the companies are heavily regulated in their interactions with unions.
If you were at YOUR business what you preferred would actually matter. IF you can observe Union members sitting around doing nothing I suggest you document that fact for use in your own singular bargaining with your employer.
Sorry but your attempt to deflect liability for agreeing to the contract was unsuccessful. Regulations exist on both sides. Your premise is flawwed when you say their goal(right) is to cripple the company.
Corperations with a whole host of high dollar lawyers negotiating a contract with unorganized labor is a level playing field? That is how you would have it. Right? Unions are what level the playing field.
Organized labor is right and proper. Agreeing to a foolish contract like one you complain about here is something you would need to take up with those that agreed to it.
You strike me as a person that works non union in a predominantly union environment and wishes they got the benefits of a union contract but doesn't want to join the union so you can keep on union bashing. ( at least prevailing wage environment which would mean that much of the funding is federal dollars)
How about you put your money where your ficticious mouth is and lets just talk about WHAT union you are speaking of and who this contract is with. My bet is you will refuse to do so and your examples will be exposed for the made up augmented crap they are.
Yikes, I gave an example from my past employment and you read it like I'm still working there? In post 87, I used the word "was". In fact, it was only a summer job but long enough to learn to move boxes at night when you won't be caught. I bash unions only because they deserve to be bashed. You defend them because???? The only thing we can tell from your rant in #56 is you don't like "fat cats" or salesmen who underbid or just about any other "suits". You express a lot of tired leftist sentiment although I will admit it sounds heartfelt.
If you want to keep bashing the "suits" that's fine. But remember that "suits" are often the people who start companies or increase their efficiency so more people can be employed. Sometimes they figure out efficiencies that make people redundant or otherwise adversely affect workers. But try to remember that the savings from those efficiencies are reinvested, create more jobs, and raise everyone's standard of living. You may be looking too closely at some of the twigs and be missing the forest.
I agree with that, but then it's time to ask why. The reasons are complex, but the lack of unionization is not a main one. The main ones are inflation, American preference for cheaper imports, high private sector health care costs (from government shortchanging on one end and medical cartel on the other), and at least $100 billion in regulatory costs. One solution is pretty obvious, less government meddling in all aspects of the economy from monetary policy to regulation. The others are harder, for example we all have to take the time and effort to buy American, and that includes buyers at American companies like GM. Sometimes it's just pure laziness that gives business to China like people who can get cheap crap at WalMart in one trip so they have more time to watch TV.
Even playing field is what is needed. In this country today an illegal labor force stunts the ability of labor to organize and present what their compensation demands are and the justification for it. That is to say looking at what the company takes in, what goes out in overhead minus labor and what net profits are before labor management and stockholder dividends go out.
When a company can contract out certain work to what they KNOW is performed by illegals they tip the playing field in their own advantage. Much as they are doing today with outsourcing. I would argue that illegal labor force is a form of outsourcing.
I would also argue that when a table of suits takes 10 million dollars as their own compensation while the folks doing the actual labor to start with are making 25 or 30 grand a year, a very real and true gap is exposed. This is something organized labor can bring to the table when they make demands for what labor wants in a contract.
As for Wal mart, Hey man I am wearing socks right now that came form wal mart...and you know what? They were made here in America. But I will offer that only buying American is a strategy that has seen its time pass. Lots of people work at Wal mart that otherwise would not have a job. People that slam wal mart dismiss this part of it totally. Just because something isn't made here, doesn't mean that we cannot use that commodity to create labor and thus grow our economic cycle.
I am all for less government meddling. A bit of personal responsibility from management in our largest corperations would facilitate that. I mean to say that their actions could deterr government interference. When you want someone to stop bothering you the best way to do it is to remove their reasons by your own actions or simply show them with facts that what they demand is not warranted. This can happen from business to government and from business to organized labor.
But notice, when labor does that to management, to the tune of 30 grand to ten million comparisons people seems to just want to bash the unions.
Think about this for a minute. that suit could take 2 million and 8 more million could be sent to labor. When this happens, people have more money to buy more goods, like a new GM car. This would increase sales and EVERYONE could make more money. I offer to you that the gap in compensation leads to a stalling of money cycling on the most grassroots of levels. This in turn harms the sales of business itself. Basically, I am saying that suits taking too large a cut is akin to cutting off their own noses to spite their own face.
I do not wish to take something away from someone simply becasue they have it. ( ie tax the rich) I would much rather those folks see that their own greed is hurting their own country in the long term. I would much rather they see that, if they took a more realistic share, thus allowing for more pay to labor, all can benefit including themselves.
I would offer that is along the lines of what Bill gates did...when the Government backed off what portion they would take for dividends paid out, the decision was made to pay out. This very same idea will work from employer to employee as it did from government to employer.
I believe Gates wanted that money to go to the people and not the government.
I would offer that companies would be more willing to make changes to close the gap if the government stepped back a bit. I think we see things similar on that note. I think a spending based tax system would facilitate much progress, as it would eliminate the war being fought between companies and government. I think both entities have forgotten where the money comes from and have dismissed labor alltogether. This country is heading for a serious crash this continues.
Basically people are gonna say SCREW IT. When they do a culture of gimme gimme, cuz working as labor leads to nowhere, is going to explode and what we saw in New Orleans is going to multiply by the the nth degree. While many must play a role in reform, it is my opinion that management of corperations could lead the way. I think Bill gates could teach alot to alot of people if they were willing to learn.
Most that work for microsoft give a care, most that work at mcdonlads don't. While both sets of suits make lots of money, which labor does? Mickey dees makes many of the same mistake(imho) that GM has made. Consumers and even labor are fed up. This problem if dismissed will crash them both.
I have thought about that and have concluded that although the workers can help the economy by spending, the suits help it by investing. That's not a black and white rule, but generally holds. This points out another flaw in our tax and monetary policy which is that it encourages spending over investment. What else would you do with dollars that are about to decline in value, inflation eating away at long term investments and double taxation of corporate profits?
Your depiction is a false dichotomy, the third choice is to not give the money to either the workers or the suit, but to reinvest it in the company to improve productivity and hire more workers. But tax and monetary policy makes that option less attractive.
I happened to hear Waggoner on local radio (950 WWJ) here in SE MI yesterday during his press conference.
He said something, I had not heard, he mentioned the Salaried ranks now (or will soon) have a Health Savings Account ( HSA) Option as part of their benefit options.
Folks this is big, at some point the Union will have to address this cost savings option as well.
It will kill them, DNC types having to adopt a RNC/GWB idea that made it in to legislation. They would rather have a root canal without anesthesia.
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