He liked engineering Detroit so much he bought the industry.
What does it mean if a President can force the resignation of a CEO that still answers to shareholders?
Or force a merger?
The rationale was drawn from the infinite corporate experience that President Obama brings to the table …
[Wagoner] is considered responsible for increasing GM’s focus on trucks and SUVs—at the expense of the hybrids and fuel efficient cars that have become more popular in the last couple of years.
In other auto news: American hybrid sales fall off a cliff
GM needs to go bankrupt. What makes them any different from the airlines that serially have gone to bankruptcy court and re-emerged made whole again or not. It never cost taxpayers anything.
KevinB very good analysis on the benefits side. The other big factor is the terms of plant closings. Employees were provided the opportunity to transfer to another factory/plant and maintain their position. If they refused, they were allowed to enter into a “job pool” that provided compensation/wages at a reduced level (60%, I think) until retirement and then the pensions you commented on took over. There was no mitigation clause that reduced or eliminated this benefit should the employee gain employment elsewhere. As a result, many affected individuals simply went to work for another auto manufacturer in the same position, effectively double dipping. These types of unsustainable benefits are major contributors to the downfall of the so called big three.
With Obama’s help and guidance, Cadillac will be the new Lada!
A good many of you are fortunate enough to be looking at the problem from the outside looking in. It’s interesting to see the many theories of those who not part of the inside loop. However, having dealt with GM and it’s bureaucracy for over 20 years I think I sum up the big 3’s problems in one sentence…
Too big to be willing to change to the market conditions.
To me from where I’m sitting, it’s really that simple. I’ve seen how this elephant walks.
http://www.youtube.com/watch?v=al6ndfn-Bic
From a lot of comments on here . I take it their will not be a ground swell in sighing a formal oath of Loyalty to Obama by an Acorn apostle?
Just Imagine Canada, if Harper did such a thing. Now this guy thinks he’s a financial wizard & hesitates not to use questionable powers over private citizens. My only surprise is not seeing Americans riot over becoming serfs by proxy by the uber CEO. The consummate community organizer himself. Obama! Yes we can !!!!!!! He is, every day.
JMO
Never forget that O’Bomb-a was democratically elected. People were warned and chose to elect him anyway. Let’s be happy for them, especially the MSM which is getting hammered mercilessly by adverting drying up. Good on the CEEB too.
What the financial industry did *right*, was to buy the federal politicians. The money they invested in the politicians was small compared to what they have gotten out of it. What the auto industry did *wrong* was *not* to buy any politicians. “Right” and “wrong” in this context require some redefinition, of course.
We must never forget that the US has one of the most corrupt governments in the world.
KevinB
the “quality” of a NA car may be good today, but the industry spent many years working very hard to build up a reputation of building junk, so , they will not reverse this in a year or two
also some of these ” american cars are as good or better than the japanese” is biased opinions from biased people
John Lewis, there was a time I’d have given you an argument about that. Now, I can’t really object. It seems to be true. Saying the Democrats are -more- corrupt isn’t much of a recommendation, frankly. How many drops of pee spoil the soup?
That’s why I keep banging the drum for LESS government. It can be as crooked as it likes if it has no power to steal your money and curtail your freedom.
Glad I dumped my GM stocks. I guess the shareholders and board of directors no longer have any say in how the company is run.
Favourite line of the day
Obambi forcing Chrysler to merge with FIAT….Fix It Again Tony!
This is all about ideology, people. The numbers don’t matter to socialists, they don’t care what the cost is. We see that with our precious NDP in Canada, and here is Obumble, practicing pure NDP doctrine……
When will America wake up from it’s hypnosis?
All the people with some “special insight into the automakers” who say they have been making bad decisions for decades, etc.
I have some bad news for you Wagoner was the exec that was turning it around he concentrated on the money making SUVs because up until the artificial wealth bubble burst that was what people were buying.
Small passenger vehicles could not be produced domestically to compete with imports/new domestic plants on trim and reliability. The price point was too low so they concentrated on trucks and larger vehicles where there was a profit margin.
Nobody saw this artificial oil price coming, it was a direct result of too much wealth having been created in the markets on the back of the real estate bubble, traders and fund managers ran out of places to put it where it could earn the 10% a year they were used to. That along with the Green Hype resurrecting the defunct Peak Oil theorists and calls for carbon free energy, the opportunity was perfect as India and China were on a tear.
There was a 3% cushion in available supply that analysts ignored because that was not the narrative they needed to jack the price, then as the price rose you saw a frenzy develop as they saw the earnings of big oil companies. Everyone wanted some of that!
It was that event that started the recession and killed the Automakers globally, hate to tell you that this is not just a domestic story, pick up a foreign newspaper once in a while.
Look at GM Stock in October 2007 it was over $40.
Not really the sign of a company being mismanaged into the ground. Yes they lost market share over the years but that will happen when you are being out produced and are dragging around 25 years worth of “Generous Motors” baggage and Foreign automakers were setting up shop, competition is GOOD but all pieces of the pie get smaller.
Wagoner did more to turn around the viability of GM than his predecessor and was well liked and respected by the unions, why he got fired was because he refused to kill off certain products in accordance with Obama’s Green Fantasy Cars Vision.
To Illiquid Assets,
I mentioned earlier that Wagoner was a clown. He wasn’t. He did do a good job. The unions respected him and he was able to get a lot of concessions. However, money managers and people with shares in the company saw problems in that the value of shares dropped quite a bit and he was not moving fast enough to make changes. I haven’t checked the GM stock but I know that it was over 80 bucks around 2000 and had been dropping for a long time. Wagoner as the CEO has to take the blame. I live very close to Oshawa and I know lots of GM workers and that they make outstanding vehicles and they have real pride in what they do. To me it’s all management.
GM lost a lot of business due to their lack of respect for customers over the years (long before Wagoner was in charge). My first car as a kid was a new Pontiac 2000 in 1983 (the only year for this car – the next year it was called the sunbird). I had problems with my spark plug wires while under warrenty. They replaced one under warrenty. I had to go back to have a second one replaced – I said maybe you should replace the two remaining wires – they said they were okay. A few weeks later I had to go back and get my 3rd wire replaced – I said maybe you should replace the 4th one – they said it was okay. Lo and behold the 4th one failed – I went back and they acqused me of tampered with it and that it was therefore not under warranty – I had not touched anything – it would cost $48 bucks to replace. Even as a little kid I told them to get lost – I went to Canadian Tire – grabbed a complete set of wires and replaced everything myself for less than $48 bucks – and probably completely voided my warranty – I never had a problem again. I wrote a letter to the president of GM Canada – he actually got back to me and told me that I had tampered with the wires. Needless to say that I never bought or will buy a GM product again – nor will my family – which is small but it’s over 20 cars. I switched to Ford and have been happy ever since.
I look at it this way, cconn and Illiquid. ALL the car makers are selling vehicles that cost a year’s pre-tax pay. That’s been the constant since forever. They design them that way.
Problem, real people can’t save up a year’s pre-tax pay in the life of a car anymore.
So, nobody can buy a car without credit. Pretty much the entice cost of the car is on credit. You start looking at total cost of ownership, a hefty chunk of your income is tied up in your wheels, leading to another reason for that difficulty with the saving, leading to more reliance on credit.
Now, under cover of the Cult of Safety and the Cult of the Environment, the Big Three managed to choke off all competition in North America. The Japanese manufacturers managed to bull their way in to the North American market because they got big enough back home, and thus they became part of the gang.
This was done in collusion with the US and Canadian governments, who basically wrote regulations nobody but the Big Three could meet. This accelerated in the 1980’s to the fever pitch we see today, when cars have to be engineered to nearly aircraft-level tolerances.
Which is how they kept the price point so high. Its artificial.
I built a quite nice little race car for myself. Took me 6 months, learn by doing. Capable machine, hardy, good roll cage, good suspension etc. All off the shelf dune buggy stuff. I currently have about $6,000 in it, give or take a couple hundred bucks. If I went with brand-new everything, I could have still done it for under $20k.
That’s one guy buying retail, hand assembled in the garage. A proper facility could crank them out for sale at under $10k all day long.
But nobody can, because of the regulations. Which is kinda fascism. Watery version, but still.
Comes the perfect storm of credit crunch, oil price and having the wrong cars tooled up. BANG, sales fall off a cliff, the Big Three can’t crack their nut this year. Bush gives them a loan, to keep the scam intact. But its a big nut.
Now we have Bary, messiah of The West. He wants to run both sides of the scam at once. He wants to make the rules AND the cars, to his specifications, to please his supporters. Full on fascism.
So if I’m right about that, in the next little while we will see Government Motors shifting over to very expensive, very small hybrids and electrics to meet stringent new US EPA regulations and take advantage of brand new gas guzzler taxes. Add scrappage regulations to remove the backlog of used cars in the wrecking yards and dealerships, and you’ve got car Nirvana.
A government issue Volksmobile that extracts the maximum possible dollars from the populace, makes the big political donors happy, keeps the dinosaurian manufacturers stumbling along a heartbeat ahead of insolvency, and keeps those unions cowed and compliant.
Next up, household appliances and consumer staples. //phantomsoapbox.blogspot.com/2009/03/why-is-road-to-hell-paved-with-good.html
And to keep it all sliding smoothly, John F’ing Kerry is out there yesterday keeping the assault rifle ban alive. Gotta protect the Mexicans, y’know. Well, the Mexican government anyway. Car plants down there to keep safe.
Whole thing seems kinda crooked to me, know what I mean?
GYM, you are incorrect. Impala’s & Malibu’s are impeccable for their reliability. Not only that, when’s the last time you saw a Tow-yota dealer in a town of 5000-6000?
The electric car died a natural death because of infernal combustion becoming more efficient than lead acid batteries. Battery technology has not improved significantly, and so the electric car remains a non-starter.
Currently, Bary the Messiah of all things good and fuzzy is trying to jazz some spark in the corpse of the electric car, in the hope that it will stumble about in Frankensteinian fashion long enough to get him the Greenie vote in 2010 and 2012, before going to ground again.
Batteries, inquisitive lefty. Batteries.
Phantom wrote: “Add scrappage regulations to remove the backlog of used cars in the wrecking yards and dealerships…”
Let’s hope the total gun ban is implemented before this regulation…