Yesterday, a Yahoo news bulletin popped up: “GM’s losses narrow.” If that’s the way you see it, please don’t tarry here. You know GM CEO Rabid Rick Wagoner’s turnaround plan is “gaining traction.” You know GM’s too big to fail, that the supertanker will change course and avoid the jagged rocks of bankruptcy. The fact that GM’s fundamentals are still broken— too many brands, models and dealers; excessive bureaucracy and crushing union obligations— is not your concern. For those of you willing to stare into the abyss, let’s take a closer look at those third quarter results.
First, GM’s cash flow is still negative. GM NA dropped $367m for the quarter. That might not seem like much compared to last year’s $1.67b hit, but it’s not chicken feed— especially considering its origins. As the official press release joyfully proclaims “This significant progress largely reflects improvements in structural costs, as the company executes the pension, health care and manufacturing cost reduction initiatives related to its North American turnaround plan.” In other words, GM has reduced its costs and it’s still taking in less money than it spends. Even worse, there ain’t much more GM can cut.
No wonder Rabid Rick Wagoner was talking up the chances of the new Chevrolet Silverado/GMC Sierra pickups and the Saturn Outlook/GMC Acadia crossovers. While these vehicles offer the prospect of higher profits, their market segments are heating up, driving margins down. And they only represent a fraction of GM’s lineup across its eight US brands. The fact that GM’s margins are being squeezed across the board is a far more important financial factor than the Silverado/Outlook’s potential success. With over a million unsold units on the ground, the pressure to slash prices will grow, reducing margins yet further, and continuing GM’s reputation as the K-Mart of cars.
And there's your fundamental problem: GM is not a price leader. It’s still a high cost producer selling products at a discount. Public demand for its retail products just isn’t strong enough for it to charge prices equal to Honda/Toyota/Nissan. Bottom line: GM makes little to no margin overall on its North American auto business. Not to put too fine a point on it, it’s unclear whether GM can ever make a profit in North America again.
As always, market share is key, and the signs are on the disastrous side of bad. Despite public pledges to reduce bulk sales, nearly 25% of GM's sales still go to fleets. Pull those sales out of the equation and GM's market share at the retail level is only about 19%, spread over eight brands. Take out employee/vendor pricing deals, and the true retail demand for GM products is less than Toyota’s.
Now consider this: GM's third-quarter North American market share slipped a percentage point compared to a year earlier. In light of Ford and DCX' falling market shares, GM’s highly-trumpeted “market share stabilization” actually means it’s losing ground to the so-called imports. That ain’t good. Conquesting sales from Ford and Chrysler is hard enough. Taking on the non-union guys over at Honda, Nissan and Toyota will be just about as hard as it sounds— if not harder.
GM’s balance sheet may not show this sort of mission critical information, but there’s plenty else to set off warning bells (for those who aren’t deaf to the dangers). What are we to make of the fact that GM drew on its secured line of credit in Q3, and then repaid the money? We’ve been saying for quite some time that GM’s wandering on the edges of a liquidity crisis. The sale of half of the GMAC finance unit grows more important by the day— especially considering the rapidly deteriorating asset quality of their mortgage/auto receivables. Are the loan loss reserves adequate? If not, bad things are bound to happen.
There are other "hidden" shoals, such as the psychological impact of federal changes in the rules regarding corporate accounting for pensions and other post-employment benefits. When they kick-in in ‘07, GM will have no stockholder equity. None. While the development won’t have any cash impact, the the development will bring to light the magnitude of the liabilities facing Generous Motors. It’s a huge negative, despite being downplayed by GM’s management. And if that isn't enough to convince GM execs to break out the Prozac, UAW negotiations are set to begin…
In short, GM’s future is far from secure. Wagoner’s highly touted “turnaround” is based on the idea that GM can return to profit without changing its business basics (downsizing does not equal change). It won’t because it can’t. It no longer has the time or the money to do so. But more than that, its management doesn’t have the will. The man who does— investor Kirk Kerkorian— knows that he’d have to destroy GM to save it. If he lives long enough, one way or another, it will come to pass.
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What are we to make of the fact that GM drew on its secured line of credit in Q3, and then repaid the money?
What!?!
So, if I’m reading this right, they took up substanstial extra loans then payed them back within the end of the quarter so that their liabilities look lower on the balance sheet?
Why would they even do this, it’s not like the shareholders are going to think oh yeah that’s normal…
I suppose they’ve already took up another loan in the meantime then, which they’re going to pay back before the end of December?
As allways intresting reading.I can,t agree with you though.Change is happening at GM maybe a little too slow a pace but I think that to will change.
G.M. has to focus on building a good car for good price the rest will fall in place.
You state that GM has no more room to cut.I don,t think so GM has to look no father than its overpaid,bloated management work force.GM could dump 30% by just getting rid of the dead wood that contribute nothing to our product.
Correct.
Always like to see corporate Exec MBAs do the Romper Room Do-Bee-(Us) dance. It brings me pride as an American.
Show me a couple of consecutive quarters in black ink with no fudging, or at least two out of four, and I’ll believe there’s been a turnaround. Maybe it’s still coming, and maybe GM will have time. Maybe.
Right now, it still looks like GM still needs an alien ship to pull their supertanker up and drop it in healthier waters, and those just don’t exist.
I wonder how long before Kerkorian brings in his own team of accountants and demands to be allowed to do a full audit?
During his time as a member of GM’s Board of Bystanders, Kirk’s inside man Jerry York had access to all the papers he needed to make a proper assessement. Which he shared with the world in his resignation letter.
Kirk knows the score.
No wonder Rabid Rick Wagoner was talking up the chances of the new Chevrolet Silverado/GMC Sierra pickups and the Saturn Outlook/GMC Acadia crossovers. While these vehicles may do well, they only represent a fraction of GM’s lineup across its eight US brands. The fact that GM’s margins are being squeezed across the board is a far more important financial factor than the Silverado/Outlook’s potential success
The truth about these vehicles (Silverado, Outlook) is that although they only represent a fraction of GM’s lineup across its brands, they represent a far larger piece of the pie when it comes to profits. These are the kinds of products (the only kinds, unfortunately) that the 2.5 make money on.
Good point. I've amended the text to further indicate why the Silverado/Outlook won't save GM's bacon.
RF: Just a thought…How about renaming the series to:
Generous Motors Death Watch :)
Does anyone know how much profit GM made this quarter if they adjusted for one time payments such as restructuring costs (buyouts). I heard they made an adjusted profit of over 500 million. Just wondering if this was true?
Their adjusted net income was $529m.
I honestly can’t wait for this series to die. Dead horse, as it were. You are regurgitating the same tired banter. Truth told, GM performed better than Ford or DCX, made some gains, and if it weren’t for one-time-charges, MADE money this quarter.
You see? I told the GM Kool-Aid crowd not to read on, and they just couldn't resist. Again, if you can't stand the truth (or what I perceive to be the truth) don't read the series. Either that or make your case.
What does "made some gains" mean? What do you mean by "outperforming"? Are you touting the fact that GM lost less market share/money than Ford and DCX? And don't you mean that GM WOULD HAVE MADE some money this quarter? In fact, they didn't.
There was some thought that the new Chevy Silverado and GMC clone would do a lot for GM. I have to wonder. I note that GM has raised the list price for the 2007 Silverado by $2K and taken away the standard air conditioning (so the effective increase is closer to $3K).
At 2006 price and giveback levels, judging by the fleet parked at the nearby Chevy dealer, Silverados were already a tough sell.
Don’t listen to the GM crowd on this series. GM’s BK would have a profound effect on the economy. Anything that could save the General should be considered, and this is the place to consider it.
Ill post it here as well.
Bush has finally agreed to talks with the 2.5 CEOs. The talks may go something like this:
1. The CEOs will want Bush to put a gun to their competitors heads.
2. The CEOs will want Bush to put a gun to the Taxpayers heads.
3. The CEOs will want Bush to repeal the stupid “Labor Laws” that make them so uncompetitive.
If you guess 1 and/or 2, you are right. If you guess number 3 than you are far to rational.
By a certain perspective, the deathwatch series are very entertaining. If you let go and roll with it, it doesn’t provide a horror story, but more of an instructional “video” on how a company should not be run. (not if you want to make money at least)
If GM lives on, TTAC has lost nothing. But if/when GM does the big 11, TTAC will serve as the almost historical repository of eveything GM (and Ford) did wrong. Every opportunity lost, every resource squanderd, every deal gone haywire, will be here for the world to look back and see. I do not at all think it implausible that these “dead horse” rants will be the source for thousands of economists, business professors, and even politicians to mull over long after the collapse. Heads will be shaking, frowns will be cast, and all will see…the signs were all there. Like your grandpa looking back pre-WWII, seeing the writing clearly on the wall.
Hmmm, I currently enjoy the freedom to buy any car in the US market, subject only to my budget and my own preferences. I can choose not to give a penny of my money to Detroit automakers — since I don’t utilize their products. Kind of neat, really. So how do the expect George Bush is going to change that?
I just surfed over to Edmunds and read the owner reviews on the Saturn Relay. These are interesting reading. Apparently, GM has inadvertently tapped in to the market of people dim enough to think grafting a squared-off snout onto a Venture creates an “SUV.” If this pool of customers remains available to GM, perhaps bankruptcy CAN be averted.
Kevin,
They’re called tariffs, and governments use them to force people to buy local. This is ironicaly, the same thing that the 2.5 are arguing that foreign governments do to them. The local stuff is cheaper, so to have the same or less car, you have to pay a greater premium because of the import tarrifs placed on foreign products. I believe something similar happened with Japanese products in the early/mid ninteyes when a mitsubishi gallant suddenly went from 16k to 45k overnight…but im sketchy on this (I was overseas at the time) so don’t quote me.
My bet, the big 2.5 will demand caps on how much they have to pay in medical healthcare, and demand import tarriffs equal to or greater than what japanese/chinese tariffs are for GM.
Much is always made in this series and other articles about how the UAW is one of the 2.5’s biggest problems and isn’t a problem for the Japanese companies. Regardless of whether or not it is true, what I’ve never seen here is an explanation (to my satisfaction) of why those companies do not have unions. I can see only 3 reasons:
1. Employees sign an agreement when hired that they are not allowed to form unions so if they decide to do so their jobs can be threatened by the evil corporation. Think Wal-Mart, who actually has specially trained “swat teams” to deal with pro-union activity.
2. Apathy. They just don’t care.
3. They are generally satisfied enough with their payrate and benefits that they don’t feel the need to form or join a union.
I’ve seen many UAW allied employees come on here and bitch about how great the UAW is and how the competition sucks for not having unions… but I’ve never seen someone that works for Honda, Toyota, or Nissan come on here and say either “We don’t need the UAW because (whatever)” or “Our company really sucks because we get paid unfairly and not enough benefits but they force us not to join the union so we can’t do anything about it”.
So… which is it?
lzaffuto:
Non-Union US Automakers tend to work in rural parts of the country, where the wage offered by say Toyota or BMW is double what they can make at the only other job available to them — WalMart.
Of course, the non-union wages are half of what UAW’s are. So, they can’t afford the cars they make, i.e. contribute less to the economy than a UAW worker would, as a UAW worker would have more money to spend. They have no retirement and lousy healthcare. If they are injured on the job they are at the whim of a multinational corp and/or the state to help them out. If they are wrongly terminated, they have no one to back them up. Their children don’t have the opportunity that Unions have provided to the middle class since WW2, especially the Boomers, who are now mostly very loudly anti-union
Remember, the UAW is Satan, so keep voting non-union!
Poorer Americans are the answer!
“Hmmm, I currently enjoy the freedom to buy any car in the US market, subject only to my budget and my own preferences. I can choose not to give a penny of my money to Detroit automakers — since I don’t utilize their products. Kind of neat, really. So how do the expect George Bush is going to change that?”
I think what they mean is this: If the US raises the price of import tariffs to the point where the average American family can’t afford their cars, then those people would look to cheaper (domestic) alternatives. People buy imports because they consider them a good deal and they can afford them. If (and this is just an example) the price of a regular Accord went up to $40k, then the average American family probably would not buy one. I bought a Scion TC for my wife for $17k, and it was a great value in terms of features and content for the price. If import taxes forced Toyota to raise it to higher than $20k, then I would have looked at something else instead.
Slate has aggregated quite a few cartoons skewering the US auto industry here: http://cartoonbox.slate.com/hottopic/?image=0&topicid=67
Because they are Men !?
If you do not like your job you look for something else to do. You dont go ganging-up on/threaten your employer.
Perhaps the UAW could start their own car company and compete with GM/Ford/DCX.
Or maybe “Land of the free home of the brave” is just a cruel joke.
JJ: I am not sure you did take that right, but now I’m not sure either. I thought the implication was they took the loan so they could have enoguh liquid assets. Basically, GM hit up the “we’ll hold your check til payday” loan shop. That’s kind of a hilarious image, I hope GM had to bring in their most recent pay stub and telephone bill to get the money.
BusinessWeek dug into the accounting numbers a bit more than TTAC (thats what they are supposed to do) and they say that only $81 million were profits that weren’t from special one-time windfalls. The BusinessWeek article pegs the GM situation pretty much the same (aka perfectly) as TTAC:
http://www.businessweek.com/autos/content/oct2006/bw20061026_856936.htm
Oh and they finally got around to correctly noticing that DCX is a fullblown crisis, it just took them a while to get there:
http://www.businessweek.com/globalbiz/content/oct2006/gb20061025_313879.htm
Jonny – regarding your post about unions:
First I appologize to RF for going off topic here, but I guess the subject of the the UAW has to come up in comments on the Death Watch.
My problem with unions isn’t the fact that there are unions. Or even the fact that there are things such as job banks, or that it’s all but impossible to fire a union employee, or that they get paid so much. I figure if you can get a bunch of people together who say that they’re going to form a union that gives them better bargaining power with the big evil corporation, that’s fine. More power to you.
What I have a problem with is the labor laws that give the unions complete control. Let’s say the UAW decides to go on strike, that’s fine, and I think they’re totally in the right to do that. What I don’t like is that GM can’t bring in others who really do want to work for whatever price GM is offering. That gives all the power to one side. You can’t have a fair negotiation with one side having all the power.
In the south without all the labor laws, if the Toyota employees decided to strike and demand more money, then Toyota can just fire the non working employees and replace them with people who will work for the prices Toyota is willing to pay. If no one is willing to work for those prices, then Toyota will be forced to increase the wages. That’s the way is should be. The labor laws up north put a strain on the equilribrium, they say that the union sets the price, not the sum of all possible workers and the employer.
In the short term, all is great and wonderful with a union, the employees get all kinds of money and not very much work (who wouldn’t want that?). The problem is that the equilribrium is displaced (to borrow a chemistry term). So over time (i.e. the last 30 years at GM) problems start happening. In GM’s case, (assuming nonincompetant managment which may or may not be the case), if the unions weren’t taking so much money, then maybe there would be more money available for product development and maybe they could recover tooling costs quicker and then have quicker refreshes of their models (everyone on the forum here derides GM for the 10 year life cycles of cars compared to Toyota’s 3 year refreshes/redesigns). This could all translate into increased revenues and in the end the workers and managment would be in a better place (i.e. not bankrupt).
And to close my rant, you mention that non union people don’t get pensions. I think that’s the way it should be! In fact, I don’t want a pension. I want more money up front, that I can invest the way I want rather than trust that the company is investing my pension money. When you get a large group of people controlling a large group of money, you can definately be sure there will be fraud (GM’s pensions, Social Security, etc). It should be up to you to prepare for your future, not trust someone to take care of you, becuase they don’t care about you, they will screw you as soon as they can.
/end rant.
Mike
lzaffuto: If … the price of a regular Accord went up to $40k, then the average American family probably would not buy one.
Yes, but we can’t assume the 2.5 would keep their prices static in this scenario. If you need to replace a vehicle, and your choices for new vehicles include a $40k Accord or a $38k Impala or Fusion, it would probably be a boon for the used car market and Chinese manufacturers, instead.
In order to increase its sales GM needs to hire Karl Rove to work on strategy. Anyone who could get the voters to go for a lightweight like Bush–twice!–can get the American public to buy inferior vehicles for more money.
Miked:
I humbly and totally disagree. With everything you said.
Again, the 1935 Wagner Act that transfered control from the company owners to the non-owning Labor Unions is the root of all the 2.5s problems. ALL !
Of course the “Property-Rights-Challenged” will disagree.
lzaffuto:
hey,maybe these “special swat teams” have threatnened employees at Honda,Toyotaand Nissan to not post pro-union views on-line?
For a company to employ Swat Teams to fight union involvement considering the pay scale is the same as union shops,makes your whole argument really empty.
Youre qoute——-
I think what they mean is this: If the US raises the price of import tariffs to the point where the average American family can’t afford their cars, then those people would look to cheaper (domestic) alternatives.
Please anybody correct me if I’m wrong,Japan already does this & not with just autos.
Hell—a pair of Levis cost 200 + dollars & they are stitched together in Malyasia.
Theres no really FREE TRADE as long as the U.S. continues to let this imbalance to continue
It’s a little misleading to say the transplants pay scales are similar. Living in Central Ohio, I run into people working out at the Honda plants in Ohio. While it is true the Honda employees may make close to same pay (but not benefits), Honda employs literally thousands of temporary employees at much lower rates of pay.
I met a guy that has been a temp out there for almost four years – two years on the engine line, and now nearly two years on the exhaust installation line. They dangle the potential of being a Honda employee in order to keep them.
Transplants are out in rural areas because people out there still have a work ethic – they can survive on $12 a hour as a temp, as what other choice do they have? They are not the type to sit around and collect welfare.
Sure he counts as someone employed by the transplants, but a lot of them are not making the money that Toyota, Honda, Nissan, etc. claim.
“Merrill Lynch cut its rating on GM shares to “sell” from “buy,” becoming the fifth brokerage to lower its rating following GM’s earnings report, as tracked by Reuters Estimates.”
You can’t use smoke and mirrors to stump the numbers watchers.
http://www.msnbc.msn.com/id/15433374/
Lieberman, you really are far out of your depth commenting on basic economics, personal finance, and labor in rural areas. You should stick to talking about cars. Do I really have to smack you down?
No employment but Wal-Mart? Maybe you should visit a red state some time. My family members live in a rural area, and they all have 6-figure incomes (doctors and accountants). There’s not a town in America in which retail stores (much less Wal-Mart by itself) are the dominant employer. Of course not, do you have eyes at all? If those rural citizens have bothered to get educated and groom valuable skills, then they have good employment opportunities. If not, they’re lucky to have jobs at all, we don’t owe them anything.
They have no retirement and lousy healthcare.
They don’t have 401ks? They can’t contribute to Roth IRAs? Tax laws that encourage retirement savings don’t apply to them? Oh, I guess you mean you’re a pension fan. You haven’t noticed how idiotic that poorly conceived and short-lived economic construct has turned out to be? Oh, with GM grabbing 3 billion in cash out of the VEBA when the going gets tough, you really want them some company subject to a DeathWatch series to be in control of your financial fate when you’re old and vulnerable? That’s just stupid.
Lousy healthcare? What, because the have a token co-pay instead of an unlimited free access to scarce resources? Are you telling me they don’t have health care insurance at Toyota plants?
If they are injured on the job they are at the whim of a multinational corp and/or the state to help them out.
Oh really? So you’ll confirm they do not have the group disability insurance as a benefit like most workers do? They don’t have state worker’s comp funded by Toyota’s taxes? No Aflac? And they can’t buy a private disability policy? Should I give them my financial advisor’s number?
Their children don’t have the opportunity that Unions have provided to the middle class since WW2
Really? Please, just go on record as saying American kids today don’t have as good career opportunities as their grandparents did in the 1950s. I mean who wants to be a software programmer or an IT project manager or an electrical engineer or graphical designer or a free lance blogger/podcaster when you could have been a freakin’ milkman instead. It’s a wonder people in the 50’s didn’t die of boredom.
So, they can’t afford the cars they make, i.e. contribute less to the economy than a UAW worker would, as a UAW worker would have more money to spend.
Oh is THAT how the math works? So we’re all better off when some some of us are robbed of too much of our money to ensure that others of us are are overpaid? Well here’s the solution, lets make the minimum wage 1 million dollars an hour. Boy, that’ll really inject a lot of money into the economy. Wait … is it possible you’re forgetting the other side of that equation — which by the way is the side that matters most?
Kevin,
I won’t go point by point with you here, but no — most won’t have Roth IRAs. Workers comp is a nightmare, Walmart employs more people than the federal government and the idea of Red States vs. Blue States is a myth.
feel free to continue this with me offline
jonnylieberman@gmail.com
Sheesh, this sort of got off on the union thing. Which, I hesitate to say, is no longer germane. Union growth/long term viability in this country is exclusively the province of government employee unions, industrial unions are dinosaurs.
Here’s another aside: WSJ today had a Page 1 article about Fiat’s revival under a non-auto industry CEO. And that $2 bilion GM ponied up to get out of the agreement helped quite a bit. I guess it’s a zero-sum game. (Of course, it’s subscriber only, I just happened to be at the library today.)
One of the interesting points made was that the new CEO didn’t feel that Fiat’s labor costs were high enough to cut, at 6%-7% of total expenditures. No plants were closed, instead, he whacked away middle management, and promoted underlings. And instead of allowing Fiat to take a bad design, redo it, and delay its introduction, he made the team move up the intro by 6 months. Of course, it’s a small company with just a few cars, but a very interesting read.
Money quote:He’s doing it with an in-your-face taunt: “The leaders of many of the world’s largest auto firms have lost their way,” says Chief Executive Sergio Marchionne. “If you’re going to fix a broken car company, call in an amateur.”
I hate to hammer this in to the ground, but this latest quarter continues a near 10 year long phenomenon at GM, they continue to have negative cash flow in their NA auto operations. No amount of capital investment can explain it. I guess Merrill is out of the GMAC sweepstakes, eh?
Farago: (downsizing does not equal change)
A parenthetical proclamation of poignantly propitious precision.
Perhaps this passing parenthesis prescribes the most pressing proverb of American productivity.
Downsizing equals we can no longer effectively manage our business. An admission of being a victim of change. An admission of following, not leading.
all this union bashing, i dont understand.
if ford/gm/dcx fold, it wil be the union members who suffer.
not all u lounge chair quarterbacks
Mr. J. Lieberman,
Your beliefs regarding unions are unbelievable. It’s 2006 now.
And allow me to take this boiling discussion off the burner.
The number of manufacturing workers – union or non-union – are in permanent decline. We are living in an age where it simply takes less people power to make things.
So, arguing over the merits of union or non-union manufacturing workers is becoming increasingly moot.
Just as the % of people laboring in the agriculture sector declined precipitously during the 20th century (http://www.ers.usda.gov/publications/EIB3/EIB3.htm), we are seeing the same trend in manufacturing here in the 21st century.
While this trend is undeniably painful for those currently employed in the manufacturing sector, everyone benefits in the long-term.
The net effect of fertilizer and farm machinery increasing agricultural productivity in the 20th century was:
1. Fewer people toiling in the fields freeing up more people to compose music, look at the stars, design cars, write bad sitcoms, etc. etc.
2. Cheaper food for everyone.
The net effect of robots and smart design increasing manufacturing productivity in the 20th/21st century is:
1. Fewer people toiling in factories, freeing up more people to compose music, look at the stars, design cars, create websites, read websites, write more bad sitcoms, etc. etc.
2. Cheaper manufactured goods for everyone.
And please don’t bring up how U.S. jobs are moving to China- China has lost more manufacturing jobs in the past decade than the U.S. because of aforementioned reasons.
Sorry to be simplistic here, but it seems like some people here needed a primer on macroeconomic phenomena.
Union workers who make a lot of money don’t make a strong economy.
Productive people and increased productivity benefits everyone.
end rant.
I think it’s too easy to blame the UAW. Of course, if you want to produce budget cars, you need to save every penny and therefore have more trouble paying UAW wages. But if you want to produce quality cars (which should be the objective here), wages aren’t really a big factor in producing the car.
GM (as well as Ford and Chrysler) have two major problems:
1. They don’t produce quality cars. They’re not even trying. If they’d produce good cars, everything would be already much brighter
2. They didn’t build up enough reserves for their retirees. Instead, they wasted that money for whatever, believing that they’d always have as many employees as during the 1950s who can generate enough revenue to pay the bills for the retirees.
So it’s not UAWs fault that the Big Three are in the position they are in right now. But now it could be too late. They can’t talk away the health care and pension costs and every downsizing (due to a lack of quality in their vehicles, see #1) will only worsen the problem as it forces less employees to generate more money for health care, pensions or buyouts.
Of course the UAW could be a little bit more cooperative, but they can’t make all the retirees disappear and it’s those retirees well earned right to get their pensions and health care. It’s not the retirees fault that GM didn’t create big enough reserves, which basically means that GM was stealing from those formes workers when they were still working for GM, hoping that they could steal enough money from future workers so that nobody would ever find out. Well, we did find out…
With all the downsizing, rightsizing, layoffs, firings, …whatever euphamism you wish to call it…
Anyone who still “belives” in a pension (regardless of whether you “deserve” them or not) is a total idiot with no self responsibility.
If you belive in pensions, I bet you can’t wait for Santa to come visit you 8 weeks from now.
Ho Ho Ho…
I can’t Wait for the “next” quarterly results from GM. I think ole Saint Nick will deliver coal and switches…as usual!!
Maybe those unemployed autoworkers can decorate, with lights and tinsel, the old Buick out front…the one up on blocks, instead of a tree. Being unemployed around XMas (and Haunakua (sp) for our Jewish friends) is a real drag.
And a MERRY Christmas to you, GM “Management” team!! GIve yourselves a “bonus”…it’s well deserved.
Rastus:
You can say that we shouldn’t believe in pensions and I can say that and we can deal with it. But those people who are already retired have no chance to deal with it anymore. They were assured that they’d get their pensions, so they are not to blame if they didn’t get a private pension plan of whatever sort.
I agree, that in the future there won’t be pensions anymore, but it’s going to be a very slow process (if someone who’s 45 would start now with his private plan, he only has about 20 years left, so he’d still need some sort of pension). This process might prove to be too slow for the likes of GM.
Also, if you’d officially get rid of pension plans, the Big Three would have to pay higher wages TODAY (instead of putting part of the wages into pension funds), but they would still have to pay pensions for decades to come. So that would be virtualy impossible. If they’d do that, the Big Three would immediately die instead of slowly spiraling down into the Black Hole.
Tom:
I cant comment on your second point but as for your first:
“GM (as well as Ford and Chrysler) have two major problems:
1. They don’t produce quality cars. They’re not even trying. If they’d produce good cars, everything would be already much brighter”
I totally disagree, mind you 20 years ago this was true but not in todays world, GM has been fighting this stigma for 20 years now and they are finally making headway (check out JD Power awards) and you will see that Buick and Cadillac are up there with toyota and honda. So kick the quality myth
cykickspy:
Quality doesn’t equal reliability. There is a lot more to it, like interior quality that the domestics are just lacking. Cheap plastic, fake wood and cheap materials in general are to be fount in almost every domestic car. Plus, they are at least one model cycle behind the foreign competition in terms of technology. Suspension, gearbox, drivetrain, engine and electronics are all far behind of the rest.