You are right, that in Germany the unions have a strong position, especially in the automotive industry. And here, as in the US, the workers at VW, BMW, DCX etc. get paid better than other workers, according to the housetariffs. However, the Unions have always been willing to negotiate in case a company runs into problems. They agreed with VW the 4 day week. They have agreed moderate pay increases in the last years, etc. In the US, the relationship is absolutely confrontational. The UAW is known for having thrown quite some companies into bankruptcy, even though they had the chance before to negotiate some cost reductions which helped the companies to survive. A big problem in Chapter 11 will be that if GM asks the court to set aside the labor union contracts and the health and benefit contracts, the obligation on the union to keep peace terminates immediately after the judge grants consent. Therefore the UAW can go on strike. Altogether, the hardliner UAW union and the risks arising out of this scenario have probably also kept the GM Management away from Chapter 11. Even if they file, it will be difficult to come out in good shape. As was stated before – who will buy a car with a 5 year warranty if he doesn’t know whether the company will then still be there? When BenQ Siemens filed for bankruptcy in Germany last year for their mobile phone business, people stopped buying there mobile phones, the oparator companies delisted then, etc. – there was nothing left to be reorganized after a few weeks. No business any more.

I am no expert in the auto industry. And I don’t know exactly how the blame for the current situation at GM should be shared between labor and management. But I do know that the blame should be shared in some fashion. That says nothing about your dad who may have been a great employee.

But when you suggest that some of us here in this forum want to see benefits be “taken away” from folks, that is simply not true. Most here are simply making the observation that benefits will be taken away, not that we necessarily want that to happen.

And who is the party responsible for taking away these benefits? The answer is auto consumers, as mentioned by the prior poster. Auto consumers are simply unwilling to pay GM enough for its products so that GM can afford to pay all of its wages, benefits and other costs. That is what has GM headed for a BK court.

Why is the shareholder greedy and self centered if they want to have some profit instead of losses. They are the owners aren’t they?

Are the customers “greedy” and “self centered” if they want more money to go into R & D and higher quality components instead of going to the retirees? Do you expect them to readily buy what they would consider a lesser car so that the retirees can have more?

One of my jobs is a union blue collar job. I am a former minor union official. I understand the whole, “a promise is a promise” argument. It may not be moral to change the retirees benefits but here is question that I am sure the unions are looking at themselves right now. If paying less in healthcare benefits to retirees saves the companies in question (GM, Ford, Chrysler) is that not preferable to the company going under? If the latter happens the retirees will get less benefits anyway.

You are also not going to sway many people because although the benefits were promised, not only are they are unsustainable but they are currently platinum plated.

My father recently passed away, he was 91 and my mother who is 85 is currently living in a very nice assisted living facility in California.

They both worked for the government, my dad for the county and my mom for the city. The vast majority of people would think they had a gold plated retirement. They both have a defined benefit retirement plan until they die and the survivor each continues to recieve their spouses retirment in addition to thir own until they die. They also get social security. They also recieve cost of living adjustments to their government pensions. The one thing they don’t get and the vast majority of people don’t get is healthcare benefits. They get medicare. To cover what medicare does not cover mt parents each paid around 200 dollars, 400 dollars total a month for a health insurance supplement. If the firmer big three could pay their retirees a set dollar amount to help them get supplemental insurance and the retirees would have to pick up the balance (and yes the amount the retirees pay would go up each year) is that not preferable to letting the companies go under?

I don’t think anyone here wishes ill on the retirees but the fact is that many people like myself will not currently consider a domestic auto. The former big three have taken steps to correct their past sins but it is going to cost money and they don’t have any left.

If the union and the retirees are unwilling then I could just as easily and be justified in calling the union and retirees “greedy” and “self centered”.

I grew up in a GM household. My dad retired from GM after 42 years of service.

In those days, 50s and 60s in the north, most folks went to work for a company and in return for their loyalty, the company provided retirement benefits. It was their deal for the time in service.

Hourly employees did not design or engineer the cars coming down the production line. Why do you all insist on blaming them? They worked with a promise of healthcare benefits and pensions. You all seem to think it is moral to go into court and take that away.

My dad worked two jobs most of his life to pay for my college educationso that I would not have to work in a factory without air conditioning doing a rudundant job 8-10 hours a day.

While they most likely are way overpaying on labor when you look at the entire cost of a person on the job, and post retirement. Do they have a productivity number for uaw people? does it go up/down?

It will be interesting to see how they take care of their dealership networks. To pee off the dealerships more than they are doing by producing undesirable product for the masses, might make more dealers jump ship than they need to. How are they planning on inviting the overpopulated to leave? Maybe those unhappy GM dealers will start selling those chineese cars. Timing might even be close to spot on for them hu? I mean they ARE coming right? How did Hyundai begin with their dealerships?

Thats a 12 shooter GM keeps loaded for trimming its toe nails ain’t it? auto-reload, laser sights, wide dispursal shotgun like pellet load…..

I wasn’t saying it was the same thing. But I was pointing out that tax payers continue to pay the same amount regardless of a new incentive for a corporation, and therefore the tax money the government no longer receives from the corporation must either be made up through:

A. Decreased spending
B. Increased taxation

Yes, sometimes incentives are in place to attract business. But once a business is established, incentives are merely there to help support the business…and then they fall into the category I named above. They stop being incentives, and start becoming breaks.

I was pointing out that there are two ways of helping the industry from a monetary government standpoint. Tax incentive/break, which reduces total government income, or handout, which increases total taxation or debt.

The third way is decreased bureaucracy, but I’ll eat my shoe if our government ever decreases the bureaucratic hurdles :)

I think GM could be saved if they cut out sarbanes-oxley by itself….

Joe O.

Tax incentive are there to lure company, they are money that the company pays the government but doesn’t have to because of the break. Government can budget for that, they can say hey for 2007 we are suppose to get 100 mill from auto tax, but because of tax break, we can only get 25 mill, so our budget is decreased by 75 mill.

Handing money to the car company directly out of tax i pay is something completely different. it be like government had budget of 100 mill and all of sudden it has to give GM 75 mill so all remaining social services can only spend 25 mill.

In the end it is like having us tax payers give the auto company money, but at least the incentives the government can plan for it, and other social services isn’t going to get the short end of the stick.

Assume that today, outside of BK, GM as a global whole has total revenue of 100 and total costs of 105, all in cash (forget the bogus GAAP adjusted profits that GM keeps reporting, only cash flow will matter in BK). So GM is spending 5 more dollars than it takes in each year. If you drill down into the global GM numbers, you will see that GM NA is the real source of the cash flow deficit. Let’s say that GM NA has 60 of total revenue and 70 in total costs for a deficit of 10. And let’s say that all other GM ops have total revenue of 40 and costs of 35 for positive cash flow of 5. The net of GM NA and all other global ops is negative cash flow of 5. This is steady negative cash flow is eating up GM’s cash account quarter by quarter. GM has been selling assets for the past two years to keep restocking the cash account. What GM is frantically trying to do is bring NA ops to at least to breakeven cash flows to keep from having to file the NA auto subsidiary. But employee buyouts, plant closures, cost cuts, etc. have as yet not been enough to restore positive cash flow because market share losses and weak pricing power are working against GM in NA.

If GM does have to file the NA ops (international subsidiaries that are cash flow positive will not be filed), it will be using the rules of BK to shed costs that it can’t shed outside of BK. If GM NA enters the court with 60 in annual revs, it may restructure around an assumed 40 in revs to allow for the sales fallout of filing. Plants will be closed, retiree benefits will be slashed or eliminated, pension plan will handed over to the PBGC, wages and benefits for remaining workers will be cut, work rules will be completely revamped, dealers will be chucked, existing common stock will be cancelled, new common stock will be given to existing bondholders in exchange for their bond principal (drastically reducing or eliminating GM’s cash interest costs), etc. This will take NA costs from 70 pre BK down to say 30. GM NA will then exit under a Ch 11 reorg with revs of 40, costs of 30, positive cash flow, good return on equity and a sustainable and defensible business plan for a reduced share of the NA auto market.

Ch 7 only happens if GM NA simply can’t get costs down below 40 in our example. Then all assets are liquidated and asset sales proceeds are distributed to creditors as partial repayment of their debts. Ch 7 is unlikely for GM IMO because GM does have some products that fill a need in the marketplace and that can compete if they can be built with a competitive cost structure. Right now, GM can’t make its cost structure competitive because of union contracts. State franchise laws are also a big problem for right-sizing the dealer network.

If GM can stop the NA cash burn then it has a chance of staying out of BK. But a filing by F or Chry will allow those companies to fix their cost structures and either or both will then emerge and start taking share from GM with lower priced products. I think they might all end up filing eventually, especially if we get a recession and auto sales tank.

Something to consider: industry specific tax breaks or taxes are a way of targeting companies and either granting them money or taking money from them. A common day example is the talk of an “Oil Profit Windfall Tax”; as if when a company makes a sudden extreme profit it becomes the realm of the government to take some of that money.

Anyway. My point is that it’s not black and white, unfortunately. Currently, auto industries have a series of taxes and incentives throughout their program that have some of the same effects as would a government payout.

What is the difference between the government reducing taxes on a company (or industry) vs. paying them? Well, in one scenario the government loses a certain amount of tax dollars. In the other, the government directs a certain amount of tax dollars. You can decide which is better.

By the way, France subsidizes Airbus directly, which outrages me personally. A private company should not be government subsidized.

While 1/2 million people might lose their jobs in the current carmakers go under, I think the economy would be able to handle it. Being in that mindset, I find myself on a mostly empty boat, but I believe the economy is no longer affected to the same degree by fluctuations in the manufacturing industry….

Besides which, I think that the best thing for the mfrs. and the US is for them to be destroyed in such a way that all baggage gets taken care of (or left behind) and a true opportunity for a phoenix situation arises.

Joe O.

There is always a surge when a new model hits the lots. Time will tell if the GMT900 PU’s are really successful, Personally I think they will succeed if, The Texas coast is left alone by mother nature, if there is not a recesion, if there is no interuptions to oil supplies from the middle-east, if The US refrains from colobering Iran, if the Democrat controlled Congress does not go all green, if GM avoids CH 11, if, if, if….. The GMT900 SUV’s are not selling as well as anticipated so it’s too early to tell if the 900’s are succesful.

You sound like a Constitutionalist, zoomzoom. I happen to agree with you. Unfortunately, 99.9% of the politicians and lame-stream media that tells the sheeple how to think, don’t agree with us.

It’s called socialism for the richest and poorest and capitalism for the working stiffs (i.e. “survival of the fittest for those in the middle” coz good luck, yer job just got exported to Mexico / China).

I for one am sick of it. Chrysler should have died in 1980, of natural causes and any or all of the big 2.33432433 currently should die if they cannot cut the mustard. If the money-lenders didn’t see any benefits to lending Studebaker-Packard any more money in 1956 (even though the line of credit was promised earlier, as part of the merger) and likewise in 1980 with Chrysler, why should we the people bail out these companies?

So the executives can give themselves huge bonuses for building Vegas, Chevettes, Monzas, flaming Fieros and Pontiac Azteks?! Or, for that matter, explosive Pintos, K-cars, Gremlins or Pacers?

I don’t think so…

Newsflash: the best selling pickup in America in February was Silverado. Hickup or trend? We’ll see.

Well, it’s easy to decide what to do with other peoples’ money, especially when you stand to benefit from it.

I have to wonder why you’ve stopped at keeping an auto manufacturer in business? Why not cut out the middleman company? Why not just take the money from us taxpayers and just GIVE it to the 2.5 employees? Better yet, Congress could just pass a law that every taxpayer must “adopt” a 2.5 employee and his family. Each taxpayer should pay an employee’s mortgate, property taxes, car payment, private school costs for the kids, college tuition, new clothing every month, and weekly grocery bill? Oh, and don’t forget a trip to the movie theatre once a week and that Cancun vacation every year!

Do you get my point here?

No one person has any moral right to decide that the other 320-350 million other taxpayers’ money “should” be used to assist any private company. Or any private individual.

At what point did you begin to believe that it’s your own free pot of gold at the end of the rainbow?

Delphi could blow up very quickly if Cerebrus asks Judge Drain to wipe the slate. The ‘deadlines’ keep getting extended.
Then again, if Cerebrus walked, would the whole process / mess start again with a new (and much weaker and more confrontational) firm?!? Could the new firm just buy the patents and move the production lines south/overseas? Sure, GM dies in the process, but millions of GM vehicles currently on the road are gonna need future parts. Is that a viable business plan?

Supposedly 1 billion more than originally budgeted. Ouch.

I’ve believed the following for awhile now, and with each new piece of evidence it seems to hold true:

The American MFRs are no longer “the big dogs” in the field. They may have strong rest-of-world components, but their domestic side is failing and has grown, steadily, weaker in the face of foreign giants. Toyota and Honda, among others.

When I look at this situation, I see companies with alot of assets, poor management, and a luke warm product line. Luke warm defined by the fact that there are stars out there among the offerings, but they are tempered by some of the total crap.

To me, this situation reminds me of when you need to start using guerilla tactics…so to speak. They have tried to take on their nemesis directly, and have had mild success in some areas. A win the battle, lose the war situation so to speak.

I think it’s time to start getting small and fluid. GM and Ford have long product cycles, and clients nowadays want freshened car every 3-years; freshened to the point where outward and inside indicators show a “new” car.

To do this, I think they need to cut product development way down. Stop trying to fill every market niche, and form a core. Stop flagrantly flaunting their inability find a corporate identity.

Cadillac has done well because it never lost it’s identity; only taken it in new directions. They’ve improved quality, gotten some very unique and nice styling, and stayed loyal to the brand and to it’s customers.

Saab had tremendous identity. Quirky and unique, orthopaedic seating, strong small engines. Saab should build the 9-5, 9-3, and 9-2 (or a 9-3 hatchback). It should parts share those parts which are not visible, but should provide it’s unique feel and driving experience. Stop the cheapness and the bad pricing schemes.

I don’t think the problems are the cadillacs and saabs…they have a brand identity, they have a following, and they make only a few key models.

The problems are the chevys and pontiac style brands. What does it mean to own a Chevy anymore, or a Pontiac?

Well, Chevy’s are built like a rock and an american revolution. I don’t know about you, but when I think of that I picture a Silverado. In my mind, they need to focus on building Silverados, redo the Impala which still has some credibility, and either cut their small-car out of the equation or put some serious resources into it.

Chevy could do well as a brand by selling only a mid-size truck and full-size truck, mid-size car, and maybe a small SUV. They need to stop spending resources on other efforts.

Anyway…the real root of my idea is that I think we need a few new american brands and to close down some old ones. Saturn can stick around, as they are quickly becoming the american car brand that imports european people’s cars (and this ain’t no v-dub).

Then, we need to stop calling them american brands. First off is the perception that american iron is crap iron and that the only people who buy american cars are brand/country loyalists (nothing wrong with that, just like there are loyalists who buy VW despite their recent reliability record).

Besides which, it’s become meaningless. Foreign automakers have done a fine job setting the mindset that they are american built now. And for good reason. They’ve got a ton of plants in our country.

Sometimes, it’s best to start over. You get the initial customers who buy you because you are new and don’t have any image-baggage. No one expects much of you.

And in business/sales, expectations are everything. The lower the expectations, the more you can exceed them.

Restructuring only counts in a failing business when it’s radical. So far, I haven’t seen radical.

Joe O.

P.s. I hope my ramblings made sense…I kept stepping away from my desk and then restarting. Not a good recipe for a quality posting.

To the right of this DW was an ad, big metal looking bracket and a few pins. I clicked on it and Total Automotive landing page intorduced me to a solution to my door hinge problems on 99 and newer Chevy and GMC C/K series trucks and SUV’s

The site had center stage comments sent in by users of the product, and they all commented favorably on how neat-o the product was to install.

On all my hondas with 250K plus, and my Dakota ‘88 with 120K no door hinge problems. And these guys are saying how easy it was to change both sides in just one afternoon.

Are those door hinges so bad that the much less used passenger hinge also falls apart in just a few years? I don’t know what year the cmt900 came out, but ifn its part of the “‘99 and up” well thats sad.

Sweat the details…..Not.

In any filing for bankruptcy protection, you are just making an application. Before hand your lawyers advise you on the best action to take. If you know you are making money and have the prospect to get over the “hump” and get back on yer feet, Ch 11 is the way to go. 7 is for liquidation mostly, and assets are divied up by the judge. Its also for cases where the fire sale does not meet debts. You are protected for some personal items.