Thoughts on some of the sentiment regarding the government saving General Motors
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Thoughts on some of the sentiment regarding the government saving General Motors
I started this as a post on a thread here, but by the time I finished, I wound up with a monstrosity that really should have it's own thread.
I think there needs to be a bit of clarity on what is or isn't, what is likely or absurd regarding what to expect with the government involvement in saving the US auto industry. ... and make no mistake (especially in GM's case) the government literally saved them.
Some of the posts and sentiment are really getting way out there. I'm not going to try and convince the paranoids (that simply becomes a back and forth that eventually ends up in someone crossing the line when they run out of logical reasons or proof), so I'm posting this for the broad group here that simply want a realistic assesment of things.
FICTION:
The evil, "Big Brother" government is going to dictate to GM or Chrysler that they will sell nothing but electric, hybrid, or solar powered cars.
FACTS:
The greatest concern with the so-called auto company bailout is that the taxpayer isn't throwing their money down a rathole. Nearly 75% of the public oppose even the money GM & Chrysler have recieved so far. Congress itself couldn't pass a bill to support the industry. It's obvious that there is no support to help the auto industry. In short, the public would rather let GM and Chrysler die.
As such, the focus on everything involving the Automobile Task Force has focused on making the car companies viable. That doesn't automatically mean profitable, but to make it so that they can easily survive any future downturns and compete with imports and pay back the taxpayers that didn't want to give them the money in the 1st place. Those goals were very clear in their assesment of GM & Chrysler's plans. They even called GM's Volt (what some here ignore that it's GM not the federal government that pushed this vehicle), not financially viable.
FICTION:
The government is using the bailout to run US car companies into the ground.
FACTS:
To see how really absurd this notion is, one only has to look at the fact that General Motors would have been in in court if not in liquidation without any hope of recovery this moment if there was no help from the US government.
In short, they ran themselves into the ground, and they are only around because of taxpayer money.... against the public's will, might I add.
If your car was pushed over a cliff at the Grand Canyon and ended up at the bottom, it's completely ludicrous to go beserk, and complain incessantly if the crane hauling that wrecked mass of unrecognizable metal bumped it on a couple of rocks and maybe scratched the paint hauling it back up to be towed away.
Same goes for those people worried about government involvement at GM and Chrysler. They aren't going to come close to what was done by the companies themselves.
FICTION:
This is the end of fun cars and performance cars.
FACTS:
This is the end of cars that don't sell, or "loss leaders". Camaros will sell as long as there is a market for them. Mustang is essentially a "Protected Species" and a rolling "National Landmark". Corvette is financially essentially self sufficient.
How about this:
The Infiniti G37 with a V6 engine (whose future in a CAFE world is hardly in doubt) gets 17 mpg city and 25 on the highway with a manual.
The new firebreathing, 426 horse Camaro SS LS3 gets 16 & 24 (the L99 gets 16 & 25).
Less than 1 mpg off.
End of performance cars????
ONLY if people stop buying them!
FICTION:
Everything would be just fine if the Feds just handed over the money and stayed out of the way.
FACT:
Hardly. As has been made clear in reports about both GM and Chrysler, both were living in states of denial.
Noone wants to admit that their company is doomed. In fact, job security depends on good forcasts, or at least explaining how you are going to repair things. Giving reports to board members and stockholders is always about the positive, even in negative circumstances. So one can't completely blame Bob Nardelli for saying Chrysler could make it on it's own when it can't, or Rick Wagoner's belief that GM could take the slow approach to fixing it's issues. They've been told this by people who want to keep their jobs, and perhaps they wanted to keep their jobs themselves.
The very nature of business is to maximize profits and minimize expense, but in recent years it has also been to look no farther than the bottom line or the next quarter. The measurement is how are we doing over last year. Sales numbers trump how much is actually being made per vehicle. Shortages are made up by volume if not by some other vehicle, and if volume doesn't cut it, throw more incentives at it (instead of spending the money to improve the vehicle).
If GM simply got a blank check, it would still do what it has been doing... only this time, it would have been with OUR tax dollars.
FICTION:
The government is going into the car business, and take it over.
FACT:
Again, hardly.
The Automotive Task Force is a temporary group of people with specific instructions. These are people with day jobs, who are essentially doing this on the side.
The government simply doesn't have the manpower (or money) to staff car companies with people throughout. When you step back, and look at all the positions that would have to be filled, the whole thing begins to sound silly.
But lets (for the sake of plausable argument) say the Feds decide that since taxpayer money is involved, they should have a say in GM. What would realistically happen?
First, they would have a seat or 2 on the board of directors.
That's the end of the world, because the government knows nothing about running a car company, right?? ....Uh, wrong.
Consider GM's current board of directors:
John Bryan: Retired from Sara Lee
Armando Codina: CEO of Flagger, a real estate firm
Karen Katen: retired president of Pfizer
Kent Kreza: Northrop, areospace.
Philip Laskawy: Ernst & Young, investments
George Fisher: Eastman Kodak
Kathryn Marinello: CEO of Ceridian, and information and staffing agency.
Nevell Isdale: CEO of Coca Cola.
Eckhard Pfeiffer: of Compaq
http://www.gm.com/corporate/investor...gov/board.jsp#
A board of directors are simply people who were elected or have a huge financial intrest in a company. THEY are the ones who direct a company because they are so heavily invested in it.
Right now, the Federal government OWNS General Motors (if it wasn't for their money, GM wouldn't be here). Yet, has no members on the board.
But lets say the adminsitration places a person on the board as a condition to reciving money (normal corperate practice for a huge investor... too many examples to recount here). Chances are it would be someone with a massively heavy economics background (judging by the makeup of the Automotive Task Force and the emphasis on viability), whose sole purpose would be to keep an eye on finance and counter the "quarterly mentality" tendancy that all companies have.
That person would have a vote on electing a new CEO or top officers. As has been the case with other examples where the government has stepped in, they tend to keep insiders in play when it comes to the day-to-day operations (despite as much as many of our more paranoid members might want you to believe otherwise).
When people from the outside are recruited, they tend to be people with skills to overcome a shortcomming (ie: a military person, or someone who was highly successful at handling a government project similar to what's needing fixed).
Robert Rubin (former Treasury Secretary under Clinton) whose spent most of his career dealing with government and global economic policy is on the Board of Directors at Ford.
There are always going to be the "Government-can-do-no-good", people in the world. But just as the devout enviromentalist, they talk more from conviction than reality and try to fit a philosophy into every circumstance, whether it actually fits or not. There are instances where the government is not the answer, and could make matters worse.
This certainly is not one of those instances.
The painful truth is that not just GM, but all of our automotive industries got themselves to a position where they are... remember, things started going to h*ll even before the economy caved in.
On one side, Ford got lucky and got a good CEO and got all types of loans and credit before things dried up, and started turning themselves around first. On the other end, you have Chrysler who went from just 10 years ago having one of the car industry's largest cash stockpiles to being wiped out 1st by Mercedes (after Jeep & Chrysler's valt of money) then by Cerberus (after Chrysler Financial), and whose existance depends hooking up with a 3rd rate European car company that stopped selling in the US long ago because of poor quality.
GM is getting all the press because it's so integral to the economy, and such the flagship of the US car industry, it simply can't fail. The fact that it was managed downwardly till this point is both shocking and enraging.
But, in this instance, we still have a General Motors at a time we shouldn't....
...and I'm more confident that we'll have a GM in the future than I was last fall.
I think there needs to be a bit of clarity on what is or isn't, what is likely or absurd regarding what to expect with the government involvement in saving the US auto industry. ... and make no mistake (especially in GM's case) the government literally saved them.
Some of the posts and sentiment are really getting way out there. I'm not going to try and convince the paranoids (that simply becomes a back and forth that eventually ends up in someone crossing the line when they run out of logical reasons or proof), so I'm posting this for the broad group here that simply want a realistic assesment of things.
FICTION:
The evil, "Big Brother" government is going to dictate to GM or Chrysler that they will sell nothing but electric, hybrid, or solar powered cars.
FACTS:
The greatest concern with the so-called auto company bailout is that the taxpayer isn't throwing their money down a rathole. Nearly 75% of the public oppose even the money GM & Chrysler have recieved so far. Congress itself couldn't pass a bill to support the industry. It's obvious that there is no support to help the auto industry. In short, the public would rather let GM and Chrysler die.
As such, the focus on everything involving the Automobile Task Force has focused on making the car companies viable. That doesn't automatically mean profitable, but to make it so that they can easily survive any future downturns and compete with imports and pay back the taxpayers that didn't want to give them the money in the 1st place. Those goals were very clear in their assesment of GM & Chrysler's plans. They even called GM's Volt (what some here ignore that it's GM not the federal government that pushed this vehicle), not financially viable.
FICTION:
The government is using the bailout to run US car companies into the ground.
FACTS:
To see how really absurd this notion is, one only has to look at the fact that General Motors would have been in in court if not in liquidation without any hope of recovery this moment if there was no help from the US government.
In short, they ran themselves into the ground, and they are only around because of taxpayer money.... against the public's will, might I add.
If your car was pushed over a cliff at the Grand Canyon and ended up at the bottom, it's completely ludicrous to go beserk, and complain incessantly if the crane hauling that wrecked mass of unrecognizable metal bumped it on a couple of rocks and maybe scratched the paint hauling it back up to be towed away.
Same goes for those people worried about government involvement at GM and Chrysler. They aren't going to come close to what was done by the companies themselves.
FICTION:
This is the end of fun cars and performance cars.
FACTS:
This is the end of cars that don't sell, or "loss leaders". Camaros will sell as long as there is a market for them. Mustang is essentially a "Protected Species" and a rolling "National Landmark". Corvette is financially essentially self sufficient.
How about this:
The Infiniti G37 with a V6 engine (whose future in a CAFE world is hardly in doubt) gets 17 mpg city and 25 on the highway with a manual.
The new firebreathing, 426 horse Camaro SS LS3 gets 16 & 24 (the L99 gets 16 & 25).
Less than 1 mpg off.
End of performance cars????
ONLY if people stop buying them!
FICTION:
Everything would be just fine if the Feds just handed over the money and stayed out of the way.
FACT:
Hardly. As has been made clear in reports about both GM and Chrysler, both were living in states of denial.
Noone wants to admit that their company is doomed. In fact, job security depends on good forcasts, or at least explaining how you are going to repair things. Giving reports to board members and stockholders is always about the positive, even in negative circumstances. So one can't completely blame Bob Nardelli for saying Chrysler could make it on it's own when it can't, or Rick Wagoner's belief that GM could take the slow approach to fixing it's issues. They've been told this by people who want to keep their jobs, and perhaps they wanted to keep their jobs themselves.
The very nature of business is to maximize profits and minimize expense, but in recent years it has also been to look no farther than the bottom line or the next quarter. The measurement is how are we doing over last year. Sales numbers trump how much is actually being made per vehicle. Shortages are made up by volume if not by some other vehicle, and if volume doesn't cut it, throw more incentives at it (instead of spending the money to improve the vehicle).
If GM simply got a blank check, it would still do what it has been doing... only this time, it would have been with OUR tax dollars.
FICTION:
The government is going into the car business, and take it over.
FACT:
Again, hardly.
The Automotive Task Force is a temporary group of people with specific instructions. These are people with day jobs, who are essentially doing this on the side.
The government simply doesn't have the manpower (or money) to staff car companies with people throughout. When you step back, and look at all the positions that would have to be filled, the whole thing begins to sound silly.
But lets (for the sake of plausable argument) say the Feds decide that since taxpayer money is involved, they should have a say in GM. What would realistically happen?
First, they would have a seat or 2 on the board of directors.
That's the end of the world, because the government knows nothing about running a car company, right?? ....Uh, wrong.
Consider GM's current board of directors:
John Bryan: Retired from Sara Lee
Armando Codina: CEO of Flagger, a real estate firm
Karen Katen: retired president of Pfizer
Kent Kreza: Northrop, areospace.
Philip Laskawy: Ernst & Young, investments
George Fisher: Eastman Kodak
Kathryn Marinello: CEO of Ceridian, and information and staffing agency.
Nevell Isdale: CEO of Coca Cola.
Eckhard Pfeiffer: of Compaq
http://www.gm.com/corporate/investor...gov/board.jsp#
A board of directors are simply people who were elected or have a huge financial intrest in a company. THEY are the ones who direct a company because they are so heavily invested in it.
Right now, the Federal government OWNS General Motors (if it wasn't for their money, GM wouldn't be here). Yet, has no members on the board.
But lets say the adminsitration places a person on the board as a condition to reciving money (normal corperate practice for a huge investor... too many examples to recount here). Chances are it would be someone with a massively heavy economics background (judging by the makeup of the Automotive Task Force and the emphasis on viability), whose sole purpose would be to keep an eye on finance and counter the "quarterly mentality" tendancy that all companies have.
That person would have a vote on electing a new CEO or top officers. As has been the case with other examples where the government has stepped in, they tend to keep insiders in play when it comes to the day-to-day operations (despite as much as many of our more paranoid members might want you to believe otherwise).
When people from the outside are recruited, they tend to be people with skills to overcome a shortcomming (ie: a military person, or someone who was highly successful at handling a government project similar to what's needing fixed).
Robert Rubin (former Treasury Secretary under Clinton) whose spent most of his career dealing with government and global economic policy is on the Board of Directors at Ford.
There are always going to be the "Government-can-do-no-good", people in the world. But just as the devout enviromentalist, they talk more from conviction than reality and try to fit a philosophy into every circumstance, whether it actually fits or not. There are instances where the government is not the answer, and could make matters worse.
This certainly is not one of those instances.
The painful truth is that not just GM, but all of our automotive industries got themselves to a position where they are... remember, things started going to h*ll even before the economy caved in.
On one side, Ford got lucky and got a good CEO and got all types of loans and credit before things dried up, and started turning themselves around first. On the other end, you have Chrysler who went from just 10 years ago having one of the car industry's largest cash stockpiles to being wiped out 1st by Mercedes (after Jeep & Chrysler's valt of money) then by Cerberus (after Chrysler Financial), and whose existance depends hooking up with a 3rd rate European car company that stopped selling in the US long ago because of poor quality.
GM is getting all the press because it's so integral to the economy, and such the flagship of the US car industry, it simply can't fail. The fact that it was managed downwardly till this point is both shocking and enraging.
But, in this instance, we still have a General Motors at a time we shouldn't....
...and I'm more confident that we'll have a GM in the future than I was last fall.
Last edited by guionM; Apr 2, 2009 at 02:21 PM.
Registered User
Joined: Aug 2000
Posts: 6,165
From: Sterling Heights, MI
Guy, make no mistake that there are a LOT of zealots out there that look at this as an opportunity to kill the American SUV/muscle car. Hopefully our leaders are not quite this mad and understand the reprocussions of not offering a full line of vehicles.
The question I have is, If GM is going to be led into a government-backed bankruptcy, shouldn't it have been done almost immediately, therefore not necessitating the money GM has already received?
The question I have is, If GM is going to be led into a government-backed bankruptcy, shouldn't it have been done almost immediately, therefore not necessitating the money GM has already received?
Registered User
Joined: Jul 2001
Posts: 1,808
From: FL/MI
The government does dictate a great deal about what has to be in cars and what mileage they get.
On the mileage thing, well we are told that it's to keep money from flowing out of the country for "foreign oil".
However,,,,There is ZERO politics that will do anything to increase domestic oil supplies. If people drive less or use less oil, there's movements by government to increase the taxes. To believe the government doesn't try to shift buying patterns through policy, fees, and other legislation? Think again Guy.
I'm glad the taxpayer is helping. I hope the government is making non-politically motivated decisions. Keep it about money and not about special interests that will want to insinuate their 2 cents... fine with me.
It all depends on your definition of "fun" and "performance".
You yourself have decried trucks and SUV's. It's all in what you are into.
It's also dependant on what you can afford. Fun and performance can be "bang for the buck".
If CAFE goes to 35 mpg and gas guzzler is raised, the G37 is deader than Abe Lincoln.
Without the government bending some laws and doing what only they can do, the speed and concession he was supposed to get were just not possible.
The feds are in for a bumpy ride with the NADA if they think you can shut down a business without some compensation. The government knows bankruptcy cures a multitude of sticky issues.
Let's agree that government makes the rules and prints the money. Two things that business just can not do.
I don't think so. Government is much happier creating mandates. It's preferrable to be the boss and set the expectation. Let someone else figure out how to pull it off and pay for it...
Registered User
Joined: Mar 2005
Posts: 3,123
From: Melbourne, Australia
I'm unsure about the government's role if this article paints an accurate picture of GM's perception problem... http://www.gminsidenews.com/forums/f...problem-77445/
Maybe Ch11 is the necessary evil to clean GM of it's evil past.
Maybe Ch11 is the necessary evil to clean GM of it's evil past.
Banned
Joined: May 2008
Posts: 213
I'm unsure about the government's role if this article paints an accurate picture of GM's perception problem... http://www.gminsidenews.com/forums/f...problem-77445/
Maybe Ch11 is the necessary evil to clean GM of it's evil past.
Maybe Ch11 is the necessary evil to clean GM of it's evil past.
Registered User
Joined: Mar 2005
Posts: 3,123
From: Melbourne, Australia
Registered User
Joined: Apr 2001
Posts: 3,698
From: USA
I started this as a post on a thread here, but by the time I finished, I wound up with a monstrosity that really should have it's own thread.
I think there needs to be a bit of clarity on what is or isn't, what is likely or absurd regarding what to expect with the government involvement in saving the US auto industry. ... and make no mistake (especially in GM's case) the government literally saved them.
I think there needs to be a bit of clarity on what is or isn't, what is likely or absurd regarding what to expect with the government involvement in saving the US auto industry. ... and make no mistake (especially in GM's case) the government literally saved them.
GM is a patient that is very sick, but fixable. The governement right now is doing the bare minimum to keep GM's pulse going...but not fixing the issue.
I mean..lets look at the reality. Had GM not gotten government money it would have went bankrupt. Would it have emerged? Who knows...if they did, they most likely would have been broken up.
Now GM has gotten government money...and guess what...they still will likely end up in bankrupty...and still will likely end up divided up.
Bankruptcy is a very murky thing...and I won't buy GM will survive it in a meaningful way (with or without government help) untill they are out of it.
FICTION:
The evil, "Big Brother" government is going to dictate to GM or Chrysler that they will sell nothing but electric, hybrid, or solar powered cars.
FACTS:
The greatest concern with the so-called auto company bailout is that the taxpayer isn't throwing their money down a rathole. Nearly 75% of the public oppose even the money GM & Chrysler have recieved so far. Congress itself couldn't pass a bill to support the industry. It's obvious that there is no support to help the auto industry. In short, the public would rather let GM and Chrysler die.
As such, the focus on everything involving the Automobile Task Force has focused on making the car companies viable. That doesn't automatically mean profitable, but to make it so that they can easily survive any future downturns and compete with imports and pay back the taxpayers that didn't want to give them the money in the 1st place. Those goals were very clear in their assesment of GM & Chrysler's plans. They even called GM's Volt (what some here ignore that it's GM not the federal government that pushed this vehicle), not financially viable.
The evil, "Big Brother" government is going to dictate to GM or Chrysler that they will sell nothing but electric, hybrid, or solar powered cars.
FACTS:
The greatest concern with the so-called auto company bailout is that the taxpayer isn't throwing their money down a rathole. Nearly 75% of the public oppose even the money GM & Chrysler have recieved so far. Congress itself couldn't pass a bill to support the industry. It's obvious that there is no support to help the auto industry. In short, the public would rather let GM and Chrysler die.
As such, the focus on everything involving the Automobile Task Force has focused on making the car companies viable. That doesn't automatically mean profitable, but to make it so that they can easily survive any future downturns and compete with imports and pay back the taxpayers that didn't want to give them the money in the 1st place. Those goals were very clear in their assesment of GM & Chrysler's plans. They even called GM's Volt (what some here ignore that it's GM not the federal government that pushed this vehicle), not financially viable.
There is plenty in the press about the "green" policy agenda being pursued along with this bail out. Think about it. Every politician wants to be seen as a greenie that is strong on energy. However no polician who wants to be reelected will vote to increase the gas tax. This is why we have things like CAFE which don't work. The bail out is the perfect scenerio....because under the banner of "saving American industry" you also get enough control over the automakers to limit their product portfolios to vehicles that look good politically. I can see the campain ads now...touting how GM was saved and remaded a green company (a 5th it's pre bail out size). Do you honestly think the government cares about GM being profitable? The same government that spends twice as much as it brings in? All the current government wants is GM to be their to pay it's legacy costs and keep the unionized voting base happy.
FICTION:
The government is using the bailout to run US car companies into the ground.
FACTS:
To see how really absurd this notion is, one only has to look at the fact that General Motors would have been in in court if not in liquidation without any hope of recovery this moment if there was no help from the US government.
In short, they ran themselves into the ground, and they are only around because of taxpayer money.... against the public's will, might I add.
If your car was pushed over a cliff at the Grand Canyon and ended up at the bottom, it's completely ludicrous to go beserk, and complain incessantly if the crane hauling that wrecked mass of unrecognizable metal bumped it on a couple of rocks and maybe scratched the paint hauling it back up to be towed away.
Same goes for those people worried about government involvement at GM and Chrysler. They aren't going to come close to what was done by the companies themselves.
The government is using the bailout to run US car companies into the ground.
FACTS:
To see how really absurd this notion is, one only has to look at the fact that General Motors would have been in in court if not in liquidation without any hope of recovery this moment if there was no help from the US government.
In short, they ran themselves into the ground, and they are only around because of taxpayer money.... against the public's will, might I add.
If your car was pushed over a cliff at the Grand Canyon and ended up at the bottom, it's completely ludicrous to go beserk, and complain incessantly if the crane hauling that wrecked mass of unrecognizable metal bumped it on a couple of rocks and maybe scratched the paint hauling it back up to be towed away.
Same goes for those people worried about government involvement at GM and Chrysler. They aren't going to come close to what was done by the companies themselves.
If the government really wanted to fix GM's structural issues...it could be done at much less the cost, and and in far less time. Instead...they are stringing it out..giving just enough money to keep GM alive..but not enough to right the ship for good.
My opinion is that they are gonna try and help...but only if certain political/ policy terms are met. If they are not 100% met, then if you string it out long enough the public will have enough, and it won't be politically toxic to let GM fail.
FICTION:
This is the end of fun cars and performance cars.
FACTS:
This is the end of cars that don't sell, or "loss leaders". Camaros will sell as long as there is a market for them. Mustang is essentially a "Protected Species" and a rolling "National Landmark". Corvette is financially essentially self sufficient.
How about this:
The Infiniti G37 with a V6 engine (whose future in a CAFE world is hardly in doubt) gets 17 mpg city and 25 on the highway with a manual.
The new firebreathing, 426 horse Camaro SS LS3 gets 16 & 24 (the L99 gets 16 & 25).
Less than 1 mpg off.
End of performance cars????
ONLY if people stop buying them!
This is the end of fun cars and performance cars.
FACTS:
This is the end of cars that don't sell, or "loss leaders". Camaros will sell as long as there is a market for them. Mustang is essentially a "Protected Species" and a rolling "National Landmark". Corvette is financially essentially self sufficient.
How about this:
The Infiniti G37 with a V6 engine (whose future in a CAFE world is hardly in doubt) gets 17 mpg city and 25 on the highway with a manual.
The new firebreathing, 426 horse Camaro SS LS3 gets 16 & 24 (the L99 gets 16 & 25).
Less than 1 mpg off.
End of performance cars????
ONLY if people stop buying them!
FICTION:
Everything would be just fine if the Feds just handed over the money and stayed out of the way.
FACT:
Hardly. As has been made clear in reports about both GM and Chrysler, both were living in states of denial.
Noone wants to admit that their company is doomed. In fact, job security depends on good forcasts, or at least explaining how you are going to repair things. Giving reports to board members and stockholders is always about the positive, even in negative circumstances. So one can't completely blame Bob Nardelli for saying Chrysler could make it on it's own when it can't, or Rick Wagoner's belief that GM could take the slow approach to fixing it's issues. They've been told this by people who want to keep their jobs, and perhaps they wanted to keep their jobs themselves.
The very nature of business is to maximize profits and minimize expense, but in recent years it has also been to look no farther than the bottom line or the next quarter. The measurement is how are we doing over last year. Sales numbers trump how much is actually being made per vehicle. Shortages are made up by volume if not by some other vehicle, and if volume doesn't cut it, throw more incentives at it (instead of spending the money to improve the vehicle).
If GM simply got a blank check, it would still do what it has been doing... only this time, it would have been with OUR tax dollars.
Everything would be just fine if the Feds just handed over the money and stayed out of the way.
FACT:
Hardly. As has been made clear in reports about both GM and Chrysler, both were living in states of denial.
Noone wants to admit that their company is doomed. In fact, job security depends on good forcasts, or at least explaining how you are going to repair things. Giving reports to board members and stockholders is always about the positive, even in negative circumstances. So one can't completely blame Bob Nardelli for saying Chrysler could make it on it's own when it can't, or Rick Wagoner's belief that GM could take the slow approach to fixing it's issues. They've been told this by people who want to keep their jobs, and perhaps they wanted to keep their jobs themselves.
The very nature of business is to maximize profits and minimize expense, but in recent years it has also been to look no farther than the bottom line or the next quarter. The measurement is how are we doing over last year. Sales numbers trump how much is actually being made per vehicle. Shortages are made up by volume if not by some other vehicle, and if volume doesn't cut it, throw more incentives at it (instead of spending the money to improve the vehicle).
If GM simply got a blank check, it would still do what it has been doing... only this time, it would have been with OUR tax dollars.
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Joined: May 2008
Posts: 213
The government has not "saved" the automakers....yet. All they have done is prolonged the suffering before there is a resolution.
GM is a patient that is very sick, but fixable. The governement right now is doing the bare minimum to keep GM's pulse going...but not fixing the issue.
I mean..lets look at the reality. Had GM not gotten government money it would have went bankrupt. Would it have emerged? Who knows...if they did, they most likely would have been broken up.
Now GM has gotten government money...and guess what...they still will likely end up in bankrupty...and still will likely end up divided up.
Bankruptcy is a very murky thing...and I won't buy GM will survive it in a meaningful way (with or without government help) untill they are out of it.
I think you have your head in the sand on this one Guy. One mistake is trying to use logic and politics on the same context. Remember...our government is the only entity in the world that gets away with spending TRILLIONS more than it brings it. Now I am not saying the internal combustion engine is gonna die...but I don't think you are gonnna see anything that would excite a performance car enthusiast come out of GM for a very long time.
There is plenty in the press about the "green" policy agenda being pursued along with this bail out. Think about it. Every politician wants to be seen as a greenie that is strong on energy. However no polician who wants to be reelected will vote to increase the gas tax. This is why we have things like CAFE which don't work. The bail out is the perfect scenerio....because under the banner of "saving American industry" you also get enough control over the automakers to limit their product portfolios to vehicles that look good politically. I can see the campain ads now...touting how GM was saved and remaded a green company (a 5th it's pre bail out size). Do you honestly think the government cares about GM being profitable? The same government that spends twice as much as it brings in? All the current government wants is GM to be their to pay it's legacy costs and keep the unionized voting base happy.
I would not say "run GM into the ground". But...consider this. AIG was in trouble...and they got $100 Billion+ pretty easy from the government to right the ship. The government basically gave them the money under the attitude of "fix the problem and figure out the details later".
If the government really wanted to fix GM's structural issues...it could be done at much less the cost, and and in far less time. Instead...they are stringing it out..giving just enough money to keep GM alive..but not enough to right the ship for good.
My opinion is that they are gonna try and help...but only if certain political/ policy terms are met. If they are not 100% met, then if you string it out long enough the public will have enough, and it won't be politically toxic to let GM fail.
Pretty much anything in GM's portfolio now that makes money will continue to be made. However if you think any new performance vehicles will come out of GM soon....your dreaming. The fact that GM cancelled their performance division the day before unvieling their restructuring plan shows where performance stands with them. Maybe we will get a cool new coupe based off the Mailbu.
I believe the majority of GM's issues in terms of not being profitable are structural....in much the same way as social security. When you have a workforce of 40,000 and 1 million collecting retiree benefits....that is a recipe for disaster..no matter how great the company.With the cars GM makes now...I would love to see how the company would perform without the legacy costs it still bears from back when it had 50% of the market. I am not saying GM's management did not screw up...but even with perfect management...GM likely would have needed some kind of major cash infusion to right the legacy cost ship.
GM is a patient that is very sick, but fixable. The governement right now is doing the bare minimum to keep GM's pulse going...but not fixing the issue.
I mean..lets look at the reality. Had GM not gotten government money it would have went bankrupt. Would it have emerged? Who knows...if they did, they most likely would have been broken up.
Now GM has gotten government money...and guess what...they still will likely end up in bankrupty...and still will likely end up divided up.
Bankruptcy is a very murky thing...and I won't buy GM will survive it in a meaningful way (with or without government help) untill they are out of it.
I think you have your head in the sand on this one Guy. One mistake is trying to use logic and politics on the same context. Remember...our government is the only entity in the world that gets away with spending TRILLIONS more than it brings it. Now I am not saying the internal combustion engine is gonna die...but I don't think you are gonnna see anything that would excite a performance car enthusiast come out of GM for a very long time.
There is plenty in the press about the "green" policy agenda being pursued along with this bail out. Think about it. Every politician wants to be seen as a greenie that is strong on energy. However no polician who wants to be reelected will vote to increase the gas tax. This is why we have things like CAFE which don't work. The bail out is the perfect scenerio....because under the banner of "saving American industry" you also get enough control over the automakers to limit their product portfolios to vehicles that look good politically. I can see the campain ads now...touting how GM was saved and remaded a green company (a 5th it's pre bail out size). Do you honestly think the government cares about GM being profitable? The same government that spends twice as much as it brings in? All the current government wants is GM to be their to pay it's legacy costs and keep the unionized voting base happy.
I would not say "run GM into the ground". But...consider this. AIG was in trouble...and they got $100 Billion+ pretty easy from the government to right the ship. The government basically gave them the money under the attitude of "fix the problem and figure out the details later".
If the government really wanted to fix GM's structural issues...it could be done at much less the cost, and and in far less time. Instead...they are stringing it out..giving just enough money to keep GM alive..but not enough to right the ship for good.
My opinion is that they are gonna try and help...but only if certain political/ policy terms are met. If they are not 100% met, then if you string it out long enough the public will have enough, and it won't be politically toxic to let GM fail.
Pretty much anything in GM's portfolio now that makes money will continue to be made. However if you think any new performance vehicles will come out of GM soon....your dreaming. The fact that GM cancelled their performance division the day before unvieling their restructuring plan shows where performance stands with them. Maybe we will get a cool new coupe based off the Mailbu.
I believe the majority of GM's issues in terms of not being profitable are structural....in much the same way as social security. When you have a workforce of 40,000 and 1 million collecting retiree benefits....that is a recipe for disaster..no matter how great the company.With the cars GM makes now...I would love to see how the company would perform without the legacy costs it still bears from back when it had 50% of the market. I am not saying GM's management did not screw up...but even with perfect management...GM likely would have needed some kind of major cash infusion to right the legacy cost ship.
Registered User
Joined: Dec 2005
Posts: 1,502
First of all, another great post guionM As far as the "green" technology goes....
Remember back in November or so when the automakers got several billions of dollars in low-interest loans to develop green vehicles, and nobody complained? But when the automakers asked for a "bailout", there was a massive public outrage! Why is that?
In short, "green tech" is a politically-correct backdoor way of providing government support for the automakers. This makes sense if you understand the politics of Obama's party -- he's got two very distinct groups to answer to, and needs to get us California yuppies on board with something that helps the midwestern working man.
Also, the government is now an investor in GM. What investor is going to kill off the golden goose? (Trucks)
(Hopefully this post won't get censored.
)
Registered User
Joined: Jan 2003
Posts: 44
From: Calgary,Alberta
Instead...they are stringing it out..giving just enough money to keep GM alive..but not enough to right the ship for good.
No one wants to go down as the administration that killed the American auto industry.
Registered User
Joined: Jun 2000
Posts: 3,463
From: SoCal
IMO this ugly collapse for GM in particular couldn't have come at a better time. I was just debating this the other day. There is no doubt that the poor economy and credit crunch have put GM over the edge but they have been floundering for a long time. They showed the ability to loose money in relatively good economic times. It has been obvious for a long time that GM needed to revise its business model and decrease brands and production to meet its shrinking market share. But since they were so burdened with high legacy costs, the Oldsmobile debacle fresh on their mind and VEBA on the horizon GM’s fate was almost inevitable without something major happening.
I won't say GM got lucky because really there isn't any good luck in all of this. But they are fortunate that with a very bad economy and the US Govt. getting involved in the private sector on an unprecedented scale they could finally get the help they need to alter their business model and shed some of their burden under the cloak of said terrible world economy. They wouldn't have been able to even get close to Capitol Hill if the USA Inc. hadn't set up TARP and Stimulus with the sole idea to get involved in private business.
The things GM is doing and may need to do to become a viable automotive company are the things they really needed to tackle maybe even a decade or more ago. But now with the help of the Government and the country in a dire economical situation only now can they share their burden and not be forced to completely close up shop.
The road ahead for them is no doubt ugly as well it should for any company that has to consider bankruptcy an option but I say better now than surviving and meeting this almost certain doom under less favorable conditions from those in Washington DC.
I won't say GM got lucky because really there isn't any good luck in all of this. But they are fortunate that with a very bad economy and the US Govt. getting involved in the private sector on an unprecedented scale they could finally get the help they need to alter their business model and shed some of their burden under the cloak of said terrible world economy. They wouldn't have been able to even get close to Capitol Hill if the USA Inc. hadn't set up TARP and Stimulus with the sole idea to get involved in private business.
The things GM is doing and may need to do to become a viable automotive company are the things they really needed to tackle maybe even a decade or more ago. But now with the help of the Government and the country in a dire economical situation only now can they share their burden and not be forced to completely close up shop.
The road ahead for them is no doubt ugly as well it should for any company that has to consider bankruptcy an option but I say better now than surviving and meeting this almost certain doom under less favorable conditions from those in Washington DC.
