General Motors

LiamC

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In the news today, it is reported that GM has said that they don't have a viable business model going forward. Is this true, or are they drumming up leverage for more federal money?

I certainly hope it isn't true, more for the workers sake, but if it isn't, then it's a pretty callous tactic.
 

CougTek

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I read the same thing in the local business news. IMO, Rick Wagoner should have been fired at least five years ago. Him and most of their administration consil. They obviously didn't make the job for the last several years. I also read that GM lost over 82 billion during the last 3 fiscal years. How many companies would have kept their CEO that long...and still put their trust into the same man AGAIN.

I wouldn't worry too much for Holden though. It is a profitable division so it will be bought by someone else in the event GM closes. And Clocker looks like a talented ingeneer so he should find a job elsewhere. Perhaps he'll have to move, but I doubt he'll be in too much trouble for long.
 

udaman

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I read the same thing in the local business news. ...And Clocker looks like a talented ingeneer so he should find a job elsewhere. Perhaps he'll have to move, but I doubt he'll be in too much trouble for long.


Sounds wildly optimistic, IMHO. We have no idea what Clocker's position is, or will be (unless someone has heard from him recently). There are many, many 'talented' engineers out of work in this recession. Same for MBA's and others with higher degrees of learning.

I don't think the world wide recession has hit bottom yet, it will get worse before it gets better. If demand/sales don't pickup, all 3 of the USA's major auto companies face possible bankruptcy. Even the foreign auto companies in the USA are laying off workers.

http://news.yahoo.com/s/nm/20090305/bs_nm/us_gm;_ylt=AucYjgCZjMOImPwL7VTiyvp34T0D

^^^ah crap, CutNpaste doesn't format well.

DETROIT (Reuters) – General Motors Corp on Thursday said its auditors had raised "substantial doubt" about its ability to survive outside bankruptcy if it fails to stem its losses and stop burning cash.
The "going concern" warning from the struggling U.S. automaker had been expected, but underscored the stakes for GM as it seeks up to $30 billion in U.S. government aid to restructure outside a court-supervised bankruptcy process.
GM's shares dropped 17 percent to $1.82 on the New York Stock Exchange as investors reacted to the news.
GM said its creditors had agreed to waive a requirement that could have allowed them to force the automaker to repay more than $6 billion in loans because of the warning in order to allow GM to press its case for government aid.
The automaker had warned late last month that it expected auditors Deloitte & Touche would question its viability after it reported a loss of nearly $31 billion for 2008.
"Amid the automotive depression, GM is dependent upon the largesse and forbearance of the U.S. and foreign governments to sustain its various entities," S&P equity analyst Efraim Levy said in a note for clients.
The disclosures came in GM's delayed annual report to U.S. Securities Regulators and a 25-page discussion of the growing risks facing the automaker ranging from tight credit and troubled suppliers to slumping demand for new cars.
GM has about $1 billion in convertible debentures that mature on June 1. Absent a deal to restructure its debt, that looming payment could force GM into bankruptcy, it said.
The automaker also reiterated that a bankruptcy filing could force a liquidation because of the lack of financing its reorganization would require and consumer reluctance to buy vehicles from a bankrupt automaker.
GM faces an end of March deadline to complete concession talks with the United Auto Workers and bondholders to reduce its debt load as part of a bid to convince the autos task force assembled by U.S. President Barack Obama that it can be made viable with a new round of government help.
"Our future is dependent on our ability to execute our viability plan," GM said in its annual report filed with U.S. securities regulators.
"If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. bankruptcy code," it said.
In a separate statement, GM said the "going concern" note would not have any effect on its turnaround efforts and said it expected to be able to fund its operations again when cost-savings are in place and global auto sales recover.
Some analysts have said the red flag from GM's auditors could risk cutting the credit available to its suppliers just as many of those smaller companies face a deepening cash crisis of their own.
FOCUS SHIFTS TO CREDITORS
Representatives of GM's bondholders were scheduled to meet on Thursday with the U.S. autos task force. Under GM's bailout, its debt holders have been asked to take a payout of one-third of the $27 billion GM owes through a debt-for-equity swap.
Bondholders have balked at those terms and are asking Washington to guarantee their remaining debt in the automaker.
GM's 8.375 percent bonds due in 2033, rose a penny on the dollar on Thursday to 13 cents as its yield fell to about 64 percent, from 69 percent on Wednesday. Those bonds traded as high as 21.5 cents in January to yield about 39 percent back in January, according to MarketAxess data.
Separately, GM said in its SEC filing that its lenders had waived "call" provisions that could have forced early payment of its $4.5 billion secured revolving credit facility, a $1.5 billion term loan and a $125-million inventory financing facility.
The new waivers allow GM's lenders to call those loans if the U.S. Treasury rejects GM's restructuring plan and request for additional aid and forces it to repay the $13.4 billion it has already borrowed from the U.S. government.
GM has lost some $82 billion since 2005 and has been hit hard by the steep drop in global auto sales in the past year.
Industry-wide U.S. auto sales have fallen 40 percent from their 2007 peak. Sales globally are down about 24 percent from a peak in January 2008, GM said.
GM said it expected to post a loss that could top $1 billion in the current quarter as it begins to report results separately for its troubled Saab unit.
The Swedish auto brand is up for sale and attempting to reorganize under new ownership and with aid from the Swedish government.
 

Handruin

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Seems that the same happens to banks and automobile manufacturers. The CEO does a crap job...and they remain employed.
 

Fushigi

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Pretty much all of the auto makers saw sales off by 36+% in January. That includes Honda & Toyota, both of which are asking the Japanese gov't for a few yen.

Right now as a consumer I'm holding on to my current vehicle. There are several reasons but the economy is certainly one of them. I don't think it would be wise to take on $20K+ in financing or to spend $20K of reserved funds for a new car when my 10 year old car runs fine. That reserved $20K is a decent rainy day fund and the financed $20K would be a big liability should our household situation take a dramatic change for the worse.

I would imagine many people who could actually afford a new vehicle are taking the same approach. If there's nothing blatantly bad about their current vehicle, don't assume any risk by buying a new one. Wait a few more months or a year or until they feel safer about their situation.

The automakers are simply going to have to adjust expectations around a couple of years of drastically decreased demand.
 

Handruin

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I'm in that exact same position where my current vehicle is new enough and working fine that taking the unnecessary risk of a new car isn't worth the risk. On a larger scale I'm also withholding purchases for lots of other things which I'm sure others might be doing also.
 

Handruin

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For now you are. :) I'm craving a certain vehicle, but it's a frivolous expenditure that I don't want to risk right now.
 

Handruin

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I'm really liking the 09 Nissan 370Z with the sport package. For the money (about $33K sticker), I'm not finding anything else that performs as good. I would take this car to the track if I owned it. It would also be a 2nd car, I wouldn't replace my daily driver.
 

Handruin

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I test drove the 350Z last april when I was considering it back then. I also think it was a track edition which offered the LSD and a few other goodies (rays wheels, etc). I didn't want the luxuries of the touring (heated seats, leather, nav); I wanted a track car, which for the 09 370Z, they simplified the models and offered a sport package which gives the big brake kit, better wheels/tires, and a neat rev-matching feature on the 6-speed manual (I'm not great with heal-to-toe downshifting).

From what I've read, the sport pacakge is worth the $3K price tag. 60-0 breaking distance has been tested at 101 feet which I think is fantastic for the money!? It has done a 0.97G in the skid pad. Zero to 60 times range in tests from 4.7 to 5.3 seconds. In car driving tests say it handles quite well, even if a bit stiff. There is a decent amount of road noise from the grippy tires, but I'm fine with that if they stick awesome (which it sounds like).

I know the visual aesthetics of a car are all opinion-based but from the pictures I've seen, I really like it so far. The lines on the car appeal to my own tastes. This could change when I see one in person some day.
 

Handruin

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I'm not familiar with the Caterham cars. The one you linked to looks fun, but I don't have a garage to build the kit car. The other models would be out of my price range for a fun car. I'm sure it would be fun, I just don't have the tools or resources for assembling it.

I don't know enough about the Elise to be swayed one way or another. Initial impressions were not favorable by me. It looks like I could spend the same amount of money on a used Elise as I could on a new 370Z.
 

ddrueding

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The Caterham can be had assembled and ready to go for about the price of the Elise. The main difference between them and the 370Z can be summed up as follows:

Caterham Classic: 1200lbs (11.5lbs/hp)
Lotus Elise: 1975lbs (10.4lbs/hp)
Nissan 370Z: 3200lbs (9.6lbs/hp)

So, a marginal power increase, but you still have to push all that weight around the corners.

I'm not saying it isn't an excellent car (it is), I'm just saying that these are the cars that will be lapping you on a track. ;)
 

CougTek

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I'm really liking the 09 Nissan 370Z with the sport package. For the money (about $33K sticker), I'm not finding anything else that performs as good.
How much is a Mitsubishi Evo? It might not beat the GT-R, but it's more than a match for the 370Z. And it has an excellent all-wheel drive system.
 

CougTek

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Ok, I've checked and the 370Z is lighter and it has more hp than the Evo. It has less torque though. I would still take the Evo for the all-wheel drive. So that you can go to the race track even in winter...
 

Handruin

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You beat me to looking up the info, but you found what I found. The evo doesn't really excite me that much. AWD is nice, but I'd like the fun of a RWD car. I've seen people add after market turbos to 350Z's and can only imagine what a 370Z with a turbo would be like.
 

udaman

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In the news today, it is reported that GM has said that they don't have a viable business model going forward. Is this true, or are they drumming up leverage for more federal money?

I certainly hope it isn't true, more for the workers sake, but if it isn't, then it's a pretty callous tactic.

Obama Admn says Clocker's beloved Volt is basically still born. Tesla's sedan is targeted @$58k, assuming massive amounts of aid/investiment...better economy.

Chrysler to be sold to Fiat, or go bankrupt.

GM will likely cut or sell Hummer division...it's about time!

Not good news for Clocker, he's too young for a 'buyout'/forced retirement...yes?


"total confidence"...but the program only lasts to the end of April??? That inspires 'total' confidence, lol.

http://news.yahoo.com/s/ap/20090330/ap_on_go_pr_wh/obama_autos

General Motors Corp.'s new chief executive said Tuesday that more of the automaker's plants could close and bankruptcy is "more probable" as GM works to meet new, tougher requirements for government aid. In his first news conference as CEO, Fritz Henderson said he expects the company would "need to take further measures" beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month. GM also is likely to offer another buyout program to workers as it looks to cut labor costs, Henderson said.
President Barack Obama said Monday that GM's initial plans to become viable didn't go far enough. He gave the company 60 days to make more cuts and get more concessions from bondholders and unions or it won't get any more government help.
The Obama administration also asked former CEO Rick Wagoner to resign, and Henderson took over as CEO on Monday.
Henderson said that although GM would prefer not to use bankruptcy protection to save itself, it is "certainly more probable" than in the past.
The company, he said, has until June 1 to accomplish changes sought by the government, or it will be in bankruptcy. The 60-day deadline should be enough time, but if it becomes evident that the changes can't be made by the deadline, GM could go into court sooner, he said.
"It doesn't have to take 60 days. If it's quite clear that we're not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment" reviewed by the Obama administration's autos task force, he said.
Henderson also said GM is still talking with potential buyers of the Hummer brand, and a decision on the brand's fate will come in the next few weeks. GM said in a viability plan filed with the government in February that it would make the decision in the first quarter, which ends Tuesday.
In an effort to increase sales, GM launched a program called "Total Confidence" that will make car payments for customers who lose their jobs through no fault of their own.
GM will make up to nine payments of $500 each to qualifying customers. Consumers must qualify for state unemployment benefits to be eligible for the program.
The program starts Wednesday and runs until April 30.
Ford Motor Co. announced a similar program Tuesday, which will take over customer's payment of up to $700 a month for a year in the event of job loss.
Shares of GM fell 32 cents, or 11.9 percent, to $2.38 in midday trading. Ford shares fell 6 cents, or 2.2 percent, to $2.70.

oops, wrong quote for link above :p

President Barack Obama asserted unprecedented government control over the auto industry Monday, bluntly rejecting turnaround plans by General Motors Corp. and Chrysler LLC, demanding fresh concessions for long-term federal aid and raising the possibility of quick bankruptcy for either ailing auto giant. Obama took the extraordinary step of announcing the government will back new car warranties issued by both GM and Chrysler, an attempt to reassure consumers their U.S.-made purchases will be protected even if the companies don't survive.
"I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars," Obama said in his first extended remarks on the industry since taking office nearly 10 weeks ago. And yet, he added, "our auto industry is not moving in the right direction fast enough to succeed."
Obama, flanked by several administration officials at the White House, announced a short-term infusion of cash for the firms, and said it could be the last for one or both.
Chrysler, judged by the administration as too small to survive, got 30 days' worth of funds to complete a partnership with Fiat SpA, the Italian manufacturer, or some other automaker.
GM got assurances of 60 days' worth of federal financing to try and revise its turnaround plan under new management with heavy government participation. That would involve concessions from its union workers and bondholders. The administration engineered the ouster of longtime CEO Rick Wagoner over the weekend, an indication of its deep involvement in an industry that once stood as a symbol of American capitalism.
Obama's announcement underscored the extent to which automakers have been added to the list of large corporations now operating under a level of government control that seemed unthinkable less than a year ago. Since last fall, the Bush and Obama administrations, often acting in concert with the Federal Reserve, have engineered the takeover of housing titans Fannie Mae and Freddie Mac, seized a large stake in several banks and installed a new CEO at bailed-out insurance giant American International Group.
Other presidents have forced showdowns with major industries, with mixed results. Harry Truman's decision to nationalize the steel industry on the eve of a strike in 1952 was ruled unconstitutional by the Supreme Court. But Ronald Reagan succeeded in busting the air traffic controllers' union three decades later.
The latest addition to the list, the once-proud auto industry, has struggled with foreign competition for more than a generation, then was further battered by the recession and credit crisis gripping the economy. Obama said 400,000 industry jobs have been lost in the past year alone, many in Michigan.
Under Fritz Henderson, newly named as CEO, General Motors issued a statement saying it hopes to avoid bankruptcy, but will "take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."
Chrysler Chairman Bob Nardelli sought to assure customers, dealers, suppliers and employees that the automaker "will operate 'business as usual' over the next 30 days" while working closely with the government and Fiat to secure the support of stakeholders.
Sergio Marchionne, CEO of Fiat, issued a statement calling the Obama administration's involvement "tough but fair, and we believe we will arrive at a result that will establish a credible future for this crucial industrial sector and that assigns the right priority to the repayment of U.S. taxpayers' funds."
Fiat executives have talked to administration officials about a proposal to acquire a 35 percent stake in Chrysler in exchange for small car technology, transmissions and other items that Chrysler has valued at $8-$10 billion.
There was no immediate response from the United AutoWorkers Union. One worker, Don Thompson, 56, of Chesterfield Township in Michigan, said automakers were being punished because of public anger over the banking bailout. "They're using us for the mistakes they've made in Washington," he said.
Other workers alleged a double standard in how Washington dealt with Wagoner, as opposed to CEOs of bailed-out banks. "They're using him as a fall guy," said Frank Rowser, financial secretary for UAW Local 909.
When Wagoner leaves the automaker, he will take a financial package worth an estimated $23 million.
Ford Motor Co., the third member of the Big Three, has not requested federal bailout funds.
Obama said bankruptcy would be a way for either GM or Chrysler to "quickly clear away old debts that are weighing them down so they can get back on their feet," and stressed that either firm would remain open.
"What I am not talking about is a process where a company is broken up, sold off and no longer exists. And what I am not talking about is having a company stuck in court for years, unable to get out," he said.
Still, fears about the industry's future sent stocks plummeting, with the Dow Jones industrial average losing about 254 points. GM plunged 92 cents, or 25.4 percent, to $2.70. Chrysler is not publicly traded.
Obama's remarks were prompted by the expiration of a temporary bailout approved by the Bush administration last winter, with $17 billion in federal funds to help GM and Chrysler survive. Under its terms, the two automakers had until March 31 to submit restructuring plans as it searched for additional federal funds.
At the time, it appeared Bush had avoided an industry collapse on his watch yet had deferred the most difficult decisions for his successor.
By his comments, Obama bought himself a little more time, but made it clear it was fast running out. "Now is the time to confront our problems head-on and do what's necessary to solve them," he said.
The administration issued papers detailing the prospects for survival of both GM and Chrysler, credited them with making difficult choices, yet also stressing the difficulties that remain.
It said that while GM's new car of the future, the Volt, "holds promise, it will likely be too expensive to be commercially successful in the short run."
The government has said it's willing to provide another $6 billion in financing for Chrysler if it is able to finalize an alliance with Italy's Fiat Group SpA. But to get the money, Chrysler must rid its balance sheet of most of its debt, including any investment by its private owners.
That means Chrysler's majority owner, Cerberus Capital Management LP, would have to give up the $1 billion interest it has in the automaker, according to a person briefed on the deal. The person asked not to be identified because terms are still being negotiated.
Cerberus would retain ownership in Chrysler's financial arm, but it has pledged to the government the first $2 billion in profits to repay a federal cash infusion, the person said.
 

Stereodude

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GM is now Government Motors. And rest assured the gov't will ruin the company because their Automotive Task Force doesn't have a single person on it with any automotive experience and they'll use GM to try out their crazy ideas for what cars should be (that no one wants).
 

ddrueding

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GM was ruined without the govt. That they have decided to screw around with the corpse is just bad taste. We should have let it go months (and billions) ago.
 

Stereodude

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GM was ruined without the govt. That they have decided to screw around with the corpse is just bad taste. We should have let it go months (and billions) ago.
They should have just declared bankruptcy in the beginning instead of taking bailout money. Now they're going to end up declaring bankruptcy anyway and be stuck being a puppet of the Federal gov't.
 

Fushigi

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Car sales are off by around 40% across all brands. The "nobody wants" mantra applies to darn near everything at the moment. So I think more than "nobody wants a GM car" the real saying is "nobody wants to take on a car loan" or make a $15-40K purchase. We're in a period where people are putting on hold the practice of trading in every 4-6 years or as soon as the car is paid off. For instance, my car is 10 years old and has been paid off for 8 of those 10 years. I'm still as secure in my job as can be hoped for. Yet I'm delaying a new car purchase.

As to the gov't task force not having industry experience, I'm not sure that's a bad thing. GM, especially Chrysler, and to a lesser extent Ford have not done well. You can blame unions, fickle consumers, or whatever else you want but the end result is that the D3 have largely been unable to run profitable operations for years.

I'd like GM to survive in order to preserve the jobs they bring to the US. But in their current state it just cannot happen.

As to the Volt, perhaps it won't survive as a GM technology but there's little reason why it couldn't be a salable asset. Sell the tech to Ford or an Asian company like Hyundai (who has yet to market hybrids although plans are in the works) and use the funds to help GM survive.
 

ddrueding

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I think letting the D3 go could be the start of a new car manufacturer renaissance of sorts. I can see Tesla, and perhaps some of the other small start ups buying a single plant, getting some trained workers for cheap, and having a go. Keeping the obviously incapable leadership of the D3 in place would be as dumb as keeping the heads of bailed-out banks in charge of their own bailout...oh, wait.
 

Stereodude

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Obviously the issue is that they aren't profitable. The current D3 leadership isn't the main reason for that. Their legacy costs from their retirees is the key problem. My Dad is a GM retiree. I have limited sympathy for GM. Obviously they can't afford to keep paying over 1 million people who don't work for them, but it's pretty crappy that the employees are punished for a lack of foresight and poor planning by GM.

It seems that there is no corporate responsibility. I have no idea how a corporation could be properly punished for pulling stunts like this. There's got to be some way to encourage employers to be more responsible. Otherwise they just run wild knowing they can default on their commitments later. Ultimately I guess the shareholders should have held them accountable and now will lose their investments because they didn't. That seems like a really slow feedback loop though.

Maybe the creditors and retired employees should be given ownership shares of the post bankruptcy GM.
 

ddrueding

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I am not a fan of large government or excess regulation, but the two lessons I would like to see learned go like this:

1. Place caps on the percentage of a market controlled by one company, preventing companies from becoming "too big to fail" (eg: a company cannot have a market cap of >$1B and a market share >20% without spinning off elements until they are below those caps).

2. Increase transparency (I can't help but think that if the companies that were so screwed were required to report more and more often, investors would have been more wary).
 

Fushigi

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Quite true on the legacy costs being one of the primary factors leading to the D3's problems. The major corollary is the D3 also failed to keep up with the strides in quality that the Asians were bringing to the table. People don't like it when their car is in the shop and they found that Honyotas tended to fail less often. Which lead to market share declines. So while the D3 leadership figured they could cover legacy costs with profits from new car sales, those sales failed to keep pace.

The funny thing is Toyota has been slipping in quality lately and the D3 have improved a good bit. Right now, average quality across the board is quite good and the difference across brands in repairs per 100 cars is slight; something like under 2%.

IMO another major problem has been deferred pension funding. Corporations should be required to fund pension obligations by the end of the quarter in which they are incurred (like they do with 401(k) matching contributions). This crap about funding them with future revenue has to stop; it's an obviously flawed and failing model regardless of industry.

Re: Corporate responsibility. One concept behind corporations was that while they earned a fair profit they would stash some of it away to tide them over during lean times. This would allow them to keep employees on payroll until times improved which in turn helped the overall economy. But the greed/instant gratification culture of "gotta have good numbers this quarter" has led to head count slash-and-burns whenever profits dip (note I didn't say when losses occur).

Re: "too big to fail". If it is too big to fail, call it what it is: close enough to a monopoly as for the difference to not matter. Split it up under the anti-trust laws or nationalize it. Splitting it up being my preference.

Along those lines, if an entity (corporation) accepts loans/funding from any source (gov't bailout/our tax $), said source should be able to place conditions on the funding. It happens all the time anyway - you can't get a car loan without agreeing to maintain full auto coverage insurance for the duration of the loan. Ditto home owners insurance (and PMI where applicable) and mortgages.

A painful truth is that corporations have the same rights as individuals in the eyes of the law. However, corporations are amoral entities. They do not exist to improve mankind's condition nor to help with survival of the species. They exist solely to create a return on the investment from their stakeholders. They have nothing but the profit motive to guide them. Any perceived morals and ethics are imparted by the corporate leaders and we've all read about how corporate leaders share personality traits with psychopaths.

I'm not clear on it 100% but from what I know of the D3 failings as well as the finance industry fiasco I haven't seen where any of it has been illegal (Mr. Bernie's antics aside). If that holds true it serves as some pretty damning evidence that some degree of regulation is necessary.
 

Stereodude

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IMO another major problem has been deferred pension funding. Corporations should be required to fund pension obligations by the end of the quarter in which they are incurred (like they do with 401(k) matching contributions). This crap about funding them with future revenue has to stop; it's an obviously flawed and failing model regardless of industry.
As of last year GM's pension was fully funded. It's not now primarily due to their use of it to pay for early retirement incentives and some of the union programs.

However, once GM goes bankrupt all that pension money goes into the "general fund", the employees get screwed, and the Feds pick up GM's pension obligations at a fraction of the original percentages. In GM's case the action of rolling over all the pensions to the taxpayer will likely bankrupt the PBGC as well.
 

jtr1962

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A painful truth is that corporations have the same rights as individuals in the eyes of the law. However, corporations are amoral entities. They do not exist to improve mankind's condition nor to help with survival of the species. They exist solely to create a return on the investment from their stakeholders. They have nothing but the profit motive to guide them. Any perceived morals and ethics are imparted by the corporate leaders and we've all read about how corporate leaders share personality traits with psychopaths.
Yep, that's the hard truth of it. Left to their own devices, corporations would plunder natural resources, pollute the planet, and in general transfer most of the wealth to those few on top in the interests of profit. Overall this is obviously not a good thing. We're ending an era where corporations were grossly underegulated. We need to find a proper balance between underregulation and overregulation. The latter is just as bad as it severely slows growth, and results in higher taxes to support a larger government bureaucracy.

Truth is I don't see the breakup of the big three as a bad thing. As a whole, the auto industry is one of the most retrenched industries on the planet, and the US auto industry is the worst of the worst in that regard. Failure to innovate and to see long term trends is what has resulted in the current problems. SUVs and trucks may have sold well for a while, but a lot of that was a fad brought on by heavy advertising. Long term trends include the move away from internal combustion, and in general a decline in auto sales across the board. The latter is caused by changing demographics. The number of miles driven per vehicle has been on the decline since roughly 2004. Combined with the in general better quality of vehicles this means less need to replace cars every 6 or 7 years. Add to that higher energy costs, greatly increased use of public transit (it is now at its highest level since WWII, and will only go up as more systems get built), greater urbanization, and a general disenchantment with the auto as the panacea to solve all our transportation woes. These factors all point towards lower auto usage and purchasing rates. Many were evident years ago, yet the US auto industry failed to adapt. Even if they had, they would still have needed to downsize long term. That's why in my opinion any bailouts are a mistake. We have excess capacity which must be gotten rid of. No sense trying to keep factories around which will never be needed given the emerging trends. I won't go so far as to say the age of the automobile is over. It isn't. But it's now on the decline. In the future it will likely just be a much smaller piece of a transportation puzzle increasingly served by other modes. The resurgence of rail in the 21st century is probably the single greatest trend which has gone largely unnoticed by those in power. If GM et al were smart, they would have geared up to start making mass transit EMUs, high-speed trainsets, and railcars ten years ago.
 

ddrueding

Fixture
Joined
Feb 4, 2002
Messages
19,524
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Horsens, Denmark
Trains are the ideal replacement for aircraft, they just suck at replacing cars. That many people use cars when they wish they could use aircraft means that trains will absorb some of that market as well.
 

jtr1962

Storage? I am Storage!
Joined
Jan 25, 2002
Messages
4,174
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Flushing, New York
Trains are the ideal replacement for aircraft, they just suck at replacing cars. That many people use cars when they wish they could use aircraft means that trains will absorb some of that market as well.
There are a lot of factors which determine whether or not trains can successfully replace cars for local transit. Population density is one. The higher the population density the more cost effective it becomes to build a comprehensive mass transit network. And the more comprehensive the transit network the more likely it will be useful enough that people will use it instead of driving.

As for long distance travel, trains are a shoe-in on medium distance air and Interstate routes if they are fast enough. Up to about 1000 miles high-speed rail can beat or match air travel time. It can beat auto travel time over any distance. It's just a matter of having enough frequency of service to make it attractive. And of course actually building it. ;) Sad to say, the US has 20 years of catching up to do in that area.

Stereodude said:
I was expecting a post from our resident liberty truncating fan. Thanks for being timely.
I'm just relating trends which are happening. Don't kill the messenger because you don't like the message. Autos aren't disappearing any time soon. I said as much. But their role in future transportation will thankfully be diminished mostly to the roles where they're best suited (i.e. travel in rural areas where no public transit alternatives are economically feasible, or short distance shuttles to other modes of transport). That's a good thing, not a bad thing, IMO. Autos have all but made large cities unliveable by their sheer numbers and the congestion and pollution they cause. And I'll add I'm less than thrilled about the takeover of many businesses by the government just as you are. But that's what The Obama :bow: decreed, so that's what we're all going to have to live with.
 

timwhit

Hairy Aussie
Joined
Jan 23, 2002
Messages
5,278
Location
Chicago, IL
Has everyone already forgotten that AIG was essentially acquired by the gov't during the last administration? The gov't also "loaned" them $152 billion by November 2008. This is not just an Obama thing.
 

Stereodude

Not really a
Joined
Jan 22, 2002
Messages
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Michigan
Yeah, and the tax cheat who's now the Treasury Secretary is the genius who played a crucial role creating that debacle under the Bush Administration as well as Bear Stearns and passing on Lehman Brothers. I blame Bush for listening to his advisers and starting bailout / stimulus mania, and I doubly blame Obama for continuing down the bailout/"stimulus" path and doubling down / going all in on the idea after it was proven that bailouts and stimulus (porkulus) don't work.
 

udaman

Wannabe Storage Freak
Joined
Sep 20, 2006
Messages
1,209
Link to Bloomberg article, because unlike Yahoo/AP stories, it will be around for a while:

GM Bankruptcy Seen as Tale of Best, Worst of Assets (Update4)
http://bloomberg.com/apps/news?pid=20601087&sid=azwLDwPkZ4ck

So, GM's profitable/best selling divisions keep going on business as usual, #1 selling vehicle being the Silverado pickup truck, lol...very green :p Caddy's also high mileage/efficient on fuel, lol.

http://news.yahoo.com/s/ap/20090530/ap_on_bi_ge/us_general_motors

Now why would new fuel efficiency standards imposed by Obama Admn, result in decision to make these smaller fuel efficient autos in the USA vs China? China's costs surely would be much less?

21k factory workers lose their jobs by year's end, with 1k dealerships to lose out too.

DETROIT – With an almost certain bankruptcy filing days away, General Motors is beginning its reinvention, planning to retool one factory to make its smallest vehicles ever in the U.S. and rid itself of the biggest.
As GM's board began two days of meetings Friday to make a final decision on the company's fate, its main union overwhelmingly approved dramatic labor cost cuts. Germany's finance minister said a plan was approved for Canadian auto parts maker Magna International Inc. to rescue GM's European Opel unit. And a deal to sell GM's rugged but inefficient Hummer brand also appeared on the horizon.

The moves provided more clues about what a restructured GM might look like ahead of the expected Chapter 11 filing Monday. Taxpayers will eventually own nearly three-quarters of a leaner GM, with a total government commitment of nearly $50 billion.

GM has yet to confirm it will seek bankruptcy protection but scheduled a news conference for Monday in New York.

With the government's backing and nearly $20 billion in U.S. loans so far, the company has made more dramatic changes in just a few days than it has in decades.

"It's been coming to a head for a very long time," said Aaron Bragman, an analyst for the consulting firm IHS Global Insight. "But in just the past few months we've really seen steps being taken to completely and dramatically change the face of American auto manufacturing."

GM said it plans to reopen a shuttered U.S. factory to build subcompact cars. The retooled factory would be able to build 160,000 cars a year and create 1,200 jobs, offsetting some of the 21,000 that will be lost when GM closes 14 factories by the end of next year.

GM's stock tumbled to the lowest price in the company's 100-year history, closing at just 75 cents after trading as low as 74 cents. The government plan for GM revealed Thursday would make the shares virtually worthless.
The United Auto Workers' reluctant but overwhelming ratification of concessions will save GM $1.3 billion per year and bring its labor costs down to those of its Japanese competitors. The new UAW deal freezes wages, ends bonuses and eliminates some noncompetitive work rules.

The changes, plus others that will be worked out in court, will shrink GM and position it to be among the world's most competitive automakers if it can emerge from bankruptcy protection and survive the global auto sales slump, Bragman said.

"They've eliminated their legacy costs. They've already invested in new product that's coming. They have the ear of the government unlike any time in their history, and the government has said basically 'we are going to help you survive and thrive,'" Bragman said.

GM is banking on more demand for smaller cars previously shunned by Americans. The government decided earlier this month to raise fuel economy standards for the entire U.S. fleet by 2016.

The new standards were one of the biggest factors in GM's announcement to build subcompacts in the U.S. rather than in China, said a person familiar with GM's plans who spoke on condition of anonymity because of the sensitive nature of the plans.

Chrysler LLC, already in bankruptcy protection, is banking on the same thing. It wants to sell all its assets to Fiat Group SpA so the Italian automaker can start building its sophisticated small cars on this side of the ocean.

The strategy is still a big gamble. Americans have opted for bigger cars and trucks, with the exception of last summer, when gas topped $4 per gallon. GM and Chrysler hope people will spend more for better-equipped subcompacts with more luxurious interiors and performance that rivals the best luxury sedans.

Smaller costs after bankruptcy should help the companies make money even though compact cars carry far smaller profit margins than pricey SUVs. But there remains a risk that gas prices will remain low and the cars won't sell, blowing up the automakers' new business models.

The UAW deal moves billions in retiree health care costs off GM's books, giving a union-run retiree health care trust 17.5 percent ownership of a post-bankruptcy GM. The trust will take on health care costs for retirees next year. Higher health care costs alone account for a $1,500-per-car cost gap between GM and Japanese vehicles.

But just cutting labor costs won't be enough to save the company. It also has been working to streamline its engineering and design, as well as standardize many parts so they can go into multiple models.

"They've already made huge progress," said Laurie Harbour-Felax, president of a consulting company that studies competitive cost differences between automakers. "The problem is you can't see that because revenue died, because nobody's buying cars."

I don't see substantial #'s of buyers willing to buy 'luxo' subcompacts. Americans as well as foreigners, a bigger car is a sign of status, luxury, being well off. Europeans make do with subcompacts, not because they want to, but because they are taxed both ways for less fuel efficient engines/heavier cars. Americans would buy subcompacts/fuel efficient cars in a second, if they had to pay the prices for fuel the heavily taxed Euro counterparts suffer through.

Right now, fuel is a full $1/gal more here in So. Cal from the low back at the end of last year. Seasonal summer rises? Even if fuel goes back up to historical highs, I did not see a huge drop in gas guzzlers vehilces on the road, people trading them in en masse, not here in So. Cal. SUV's and similar gas guzzlers still dominate the roads. Similarly I did not see much lessening of gas guzzling driving behavior. Hell, lots of Prius drivers out there with the SUV's, must be psychologically thinking they are 'green', but they drive like any other maniac teenager/20'something male aggressive drivers.
 
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