Detroit Free Press: New Contract Will Save The Big 2.8

Frank Williams
by Frank Williams
detroit free press new contract will save the big 2 8

Detroit Free Press writers Katie Merx and Tim Higgns have reached new heights of hyperbole. After boldly proclaiming "A new U.S. auto industry emerges" because of the new UAW contract with GM, they tone down their rhetoric a bit– but not much. They speculate that the new agreement will make "GM more competitive against its foreign rivals." They also claim the contract has the "potential to shape a new Detroit auto industry that can compete on a more-level playing field with … foreign rivals not burdened by huge retiree legacy costs." But then they temper their enthusiasm by admitting "GM, Ford and Chrysler still face challenges to consistently develop vehicles that resonate with Americans, to slim down their dealer networks and to improve their image on quality." So what's it gonna be– a "more competitive" GM because they now have a "level playing field," or a return to business as usual before the ink is even dry on the contract? Watch this space (General Motors Death Watch 148 later today).

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  • Hltguy Hltguy on Sep 27, 2007

    RobertSD: You state "(the new contract with the UAW) is the last peg to get in place.." apparently you feel this alone will save GM What does the proposed contract do to resolve the bloated dealer structure? Hos much cash is left after funding the VEBA? The perception gap that exists? Which new GM product is going to turn the ship around? The Volt? When does that hit the streets? When do the small block diesels hit the street? What are they going to do with the rental car company aka Buick? Pontiac? etc.etc.

  • VLAD VLAD on Sep 27, 2007

    Of course it will help with sales in certain circles if it develops the way you say. 15b to put on the hood is significant.

  • Landcrusher Landcrusher on Sep 27, 2007

    What they need is $40 a barrel oil. If Gettelfinger wants to save all his guys jobs, he needs to get the government to open up all the protected lands to drilling. Maybe he can talk to Katie about knocking off a all the environmentalists :)

  • RobertSD RobertSD on Sep 27, 2007

    hltguy : Did you ignore half my post? I said that this is the last major peg while everything else is in motion from product development to operational efficiencies. They may not be completed as of now is what I should have stated more clearly, but that doesn't mean things aren't happening. The contract has nothing to do with those workings, it just gives GM and Ford less uncertainty and better operational cash flow as they overhaul. It makes otherwise skittish investors more likely to invest with billions in uncertainty and cost erased. I'll admit that GM has a daunting task raising the $35 billion needed to fund the VEBA. But Ford doesn't. If Ford gets the 70% deal, they will owe just about $16 billion, probably an amount they can cover without borrowing any money if they don't want to and without disrupting their R&D work. And, given GM's recent internal changes and focus on balance sheet - showing somewhat adept finance skills after all - I would doubt they would have proposed something they didn't think they could fund.