Is GM finished?

[varwoche]

Still, I think much of thinking about superior foreign quality comes from perpetuation of an old idea, not from exact evaluations.

Consumer Reports -- who by no means is the only source that rates Japanese cars higher -- surveyed over a million car owners. Do you suppose that the owners of American cars were biased by the perpetuation of an old idea of Japanese superiority?

It's naive to hold onto a single anecdote in the face of this much evidence.

 

[Fnord]

... There have been some posts earlier (I believe in this thread, but perhaps in another) that seemed to provide evidence that GM and Ford have caught up (or, at least, are catching up) with the Japanese in terms of quality. My question was whether Chrysler has similarly improved in recent years.

Regardless of the alleged validity of your statement, if the buying public does not agree, then it is unlikely that American Auto will ever catch up with Japanese Auot sales.

GM may (once again) be the very best vehicle brand available, but if no one wants to buy a Chevy, then it won't be sold.

 

[Furcifer]

Grr, I'm stuck on a PDA because I can't get a computer tonight so I can't respond to BAC properly. I didn't read the W.Post, nor did I read wiki. If I want to know what Kenny said I'll walk over to the local tomorrow and ask him myself . What's annoying is you trying to interpret wiki and the Washington Post when I'm telling you straight from the horses mouth. I was on that health plan for 20 some years, my fathers been on it for 40 years! It's not the same! The CAW negociated a different contracts with GM and Chrysler in 2002, so making any blanket statement like you've done it patently false, or erroneous.

(sorry for the lame response, I can only open 1 window at a time on this smartphone, I will provide better detail as soon as I can)

 

[ZirconBlue]

Consumer Reports -- who by no means is the only source that rates Japanese cars higher -- surveyed over a million car owners. Do you suppose that the owners of American cars were biased by the perpetuation of an old idea of Japanese superiority?

It's naive to hold onto a single anecdote in the face of this much evidence.

I've heard it argued that Consumer Reports has something of a selection bias problem, since they are only polling their subscribers.

Not that I buy it, but just wanted to throw that out there.

Regardless of the alleged validity of your statement, if the buying public does not agree, then it is unlikely that American Auto will ever catch up with Japanese Auot sales.

GM may (once again) be the very best vehicle brand available, but if no one wants to buy a Chevy, then it won't be sold.

True. It's not enough to make a reliable car, you have to change public perception, which takes a lot longer.

 

[Fnord]

Yes, you might create a serum that wipes out both the H1N1 and HIV virii, relieves menstrual cramps and male-pattern baldness, and extends the average human life-span by 200%.

But if no one else believes that it does all that, then you may as well be just another quack selling homeopathic elixers.

Chrysler, Ford and GM may have learned their lessons and are now back to producing the highest-quality cars and trucks ever. But who's gonna believe it?

 

[drkitten]

I've heard it argued that Consumer Reports has something of a selection bias problem, since they are only polling their subscribers.

Not that I buy it, but just wanted to throw that out there.

The only problem with that is the fact that, even if it were true, this still means that subscribers who buy GM cars are more dissatisfied than subcribers who buy Hondas.

While I can certainly see reasons and instances where CR subscribers would not be representative of the population as a whole (they're almost certainly more literate and wealthier, for example).... I can't imagine subscribing to a magazine makes you less able to identify a car that won't start in cold weather. Or more able, for that matter.

 

[BeAChooser]

I didn't read the W.Post, nor did I read wiki.

LOL! Well how about this?

http://www.openmarket.org/2009/06/0...s-through-taxpayer-bailout-of-general-motors/

The federal government is spending more than $50 billion to bail out General Motors, with no end in sight. But the UAW union refused to sacrifice its privileged position to save the company, demanding excessive wages and benefits that are much higher than most Americans get. The Obama Administration caved in to its demands, saddling GM with high labor costs that may doom the company in the long run.

As the Washington Post notes today, the “concessions” that Obama obtained from the UAW were merely cosmetic: “Union concessions were ‘painful’ only by the peculiar standards of Big Three labor relations: At a time when some American workers are facing stiff pay cuts, UAW workers gave up their customary paid holiday on Easter Monday and their right to overtime pay after less than 40 hours per week. They still get health benefits that are far better than those received by many American families upon whose tax money GM jobs now depend. Ditto for UAW hourly wages . . . . Cumbersome UAW work rules have only been tweaked.”

What's annoying is you trying to interpret wiki and the Washington Post when I'm telling you straight from the horses mouth.

I didn't "interpret" anything. I quoted those article directly. As for the "horses mouth" .... There are a lot of horses mouths around here that claim all sorts of things that have proven to be untrue.

The CAW negociated a different contracts with GM and Chrysler in 2002

And what does that have to do with the GM/Chrysler bailouts of 2009 and the sweet deal that Obama (the Patsy) has offered automotive unions? Afterall, THAT is what you and I were originally discussing. We've only gotten to the point of you making claims about losses in benefits 8 years ago (under the Bush administration?) because what you claimed about losses this year apparently wasn't true. So exactly what concessions has the Obama administration extracted from UAW (or CAW) in exchange for taxpayers buying the company for them?

 

[GreenLines]

Every time I read the title of this thread, in my head I go: God I hope so.

****ing piece of **** Chevy Lumina. Worst ****ing car I ever owned.

 

[davefoc]

Every time I read the title of this thread, in my head I go: God I hope so.

****ing piece of **** Chevy Lumina. Worst ****ing car I ever owned.

This is another anecdotal piece of evidence for what people have been discussing here, I think. The managers of GM not only claimed profits that were non-existent because of their failure to adequately account for the future costs of various aspects of the union contracts*, they gave up future customers and future income by producing low quality automobiles that produced short term illusory profits for GM.

I think this failed accounting of future costs is the principal cause of the current banking crisis as well. Managers were highly incentived to produce illusory short term profits by accounting that grossly underestimated risk as a means of maximizing bonuses. From my somewhat uninformed perspective it seems like this is the area of banking reform which the Obama administration has failed completely to address. Bonuses in the banking business are huge not because wealth is being created but because the illusion of increased wealth is being created and nothing seems to have been done to address that.

*Pensions, health care and job banks. All of these had long term unpredictable costs. By shuffling these costs off into the future the GM managers were able to maintain the fiction of GM profitability (and thus their bonuses) for years until the whole scheme finally unraveled a year or so ago now.

 

[Prometheus]

This is another anecdotal piece of evidence for what people have been discussing here, I think. The managers of GM not only claimed profits that were non-existent because of their failure to adequately account for the future costs of various aspects of the union contracts*, they gave up future customers and future income by producing low quality automobiles that produced short term illusory profits for GM.

I think this failed accounting of future costs is the principal cause of the current banking crisis as well. Managers were highly incentived to produce illusory short term profits by accounting that grossly underestimated risk as a means of maximizing bonuses. From my somewhat uninformed perspective it seems like this is the area of banking reform which the Obama administration has failed completely to address. Bonuses in the banking business are huge not because wealth is being created but because the illusion of increased wealth is being created and nothing seems to have been done to address that.

*Pensions, health care and job banks. All of these had long term unpredictable costs. By shuffling these costs off into the future the GM managers were able to maintain the fiction of GM profitability (and thus their bonuses) for years until the whole scheme finally unraveled a year or so ago now.

I vaguely remember some discussion of this idea in regards to the overall banking crisis (not GM specifically) during an NPR show a few months ago. I don't remember which program it was though.

 

[Debunker]

From my somewhat uninformed perspective it seems like this is the area of banking reform which the Obama administration has failed completely to address. Bonuses in the banking business are huge not because wealth is being created but because the illusion of increased wealth is being created and nothing seems to have been done to address that.

As far as I remember, Obama said specifically that he was ashamed about the bonuses of (if I remember well) AIG, and that he was intentioned to put caps on bonuses of (partially) public owned companies

 

[Debunker]

This would be true, if only there had been equity to give the unions. I believe the order of priority in a normal bankruptcy would be salaries, bonds, pensions although perhaps pensions would be ahead of bonds. Either way their was nothing left to divvy up. The government injected mass amounts of capital into GM and then gave a lot of that capital in the form of funded pensions and an equity stake to the unions.

What I do not really understand is why the government can not control directly a company, if they own a big part of it.
That is, if GM has been given so much money, why do people claim that managers ar still over-paid.
Why can not the government put a cap on the bonuses, since it is now the government who owns much of the assets of GM (if I am not wrong)?

 

[davefoc]

What I do not really understand is why the government can not control directly a company, if they own a big part of it.
That is, if GM has been given so much money, why do people claim that managers ar still over-paid.
Why can not the government put a cap on the bonuses, since it is now the government who owns much of the assets of GM (if I am not wrong)?

I think most of the griping about bonuses is bailed out bank bonuses. And this is outrageous. The large banks are still afloat largely because the federal government bailed them out. There bonus structure may have been a significant contributor to the current problems. Managers are incentivized to engage in risky behavior which produces the illusion of a wealth gain for which they are rewarded with a hefty bonus. In the future when reality instead of shaky accounting takes effect and in fact it turns out wealth was really lost and not created the managers have already gotten their bonuses and the federal government is faced with letting the bank fail or throwing in more money. The solution to this problem was to constrain the risks that banks take that took bailout money so that funny money bonuses weren't possible. One author that suggested that part of the solution was to insist that if the government puts up money it is in a position to win big if the bailed out bank regains solvency. It seems like nothing like this was done. Banks that had the greatest power managed to play the federal government for a sucker. Massive consolidation occurred and the big winners were large banks that got large bailouts from the federal government. In a sense the managers deserved large bonuses because they increased the value of their companies massively by taking the federal government for billions of dollars.

Reasonably enough, the Obama administration did step in and put some constraints on the managers of the companies that the federal government bought. Criticism of the Obama administration for that was one of the crazier pieces of non-sense to come out of the partisan Republican spin machine. The federal government owned a controlling interest in the companies and reasonably enough it stepped into to get rid of the losers that had driven the companies into the ground and to put some constraints on executive compensation.

 

[kevinquinnyo]

davefoc
"Managers are incentivized to engage in risky behavior which produces the illusion of a wealth gain for which they are rewarded with a hefty bonus."

nice nonsense

 

[davefoc]

nice nonsense

You didn't understand what I wrote or you don't agree with it?

 

[Furcifer]

I didn't "interpret" anything. I quoted those article directly. As for the "horses mouth" .... There are a lot of horses mouths around here that claim all sorts of things that have proven to be untrue.

Here: Chrysler Consessions

The total amounts to $19/hr. I don't give a **** what the Washington Post says, that's a considerable amount. Sorry, we all don't make your kinda money where $19/hr is a paltry sacrifice.

And what does that have to do with the GM/Chrysler bailouts of 2009 and the sweet deal that Obama (the Patsy) has offered automotive unions? Afterall, THAT is what you and I were originally discussing. We've only gotten to the point of you making claims about losses in benefits 8 years ago (under the Bush administration?) because what you claimed about losses this year apparently wasn't true. So exactly what concessions has the Obama administration extracted from UAW (or CAW) in exchange for taxpayers buying the company for them?

$19/hr from the CAW. Similar savings were seen in the US. This came about as part of the two tiered wage system, the changes in overtime pay, declassification of jobs, the waiting period to start receiving health care, the type of health care when on unemployment etc.

You've misrepresented the fact that the health care for a few workers saw little change as it being for everyone. Check your facts BAC, most Union workers have seen changes in the health care they would have had 10 years ago.

As for the prior concessions I'm not sure why you think they don't matter?

 

[Furcifer]

*Pensions, health care and job banks. All of these had long term unpredictable costs. By shuffling these costs off into the future the GM managers were able to maintain the fiction of GM profitability (and thus their bonuses) for years until the whole scheme finally unraveled a year or so ago now.

You don't know anything about how this business operates and how it functions on speculation and projection. You refuse to learn more about it before making statements like this. At times I wonder if you have a specific agenda or are really voicing concerns. You're wording suggests there was some sort of criminal intent. I still don't see any indictments, are they forthcoming?

In your later post you allude to the real problem, the financial institutions created the illusion of wealth were there was none. At least the Big 3's wealth was mostly tangible, only some of which was based on the illusion created in the financial sector. The only way out of this mess is to start producing a product here in North America and keeping these monster financial institutions in check.

 

[davefoc]

You don't know anything about how this business operates and how it functions on speculation and projection. You refuse to learn more about it before making statements like this. At times I wonder if you have a specific agenda or are really voicing concerns. You're wording suggests there was some sort of criminal intent. I still don't see any indictments, are they forthcoming?

In your later post you allude to the real problem, the financial institutions created the illusion of wealth were there was none. At least the Big 3's wealth was mostly tangible, only some of which was based on the illusion created in the financial sector. The only way out of this mess is to start producing a product here in North America and keeping these monster financial institutions in check.

Could you enlighten me. Could you pick a year in the last twenty where GM made a real profit if the cost of the pensions, medical insurance and job banks were accurately deducted from the allegedly profitable year?

My point is that executives were able to claim profits by shuffling underestimated costs off into the future. Recessions happen, job banks will cost a lot of money in a recession. How did GM account for the future costs of job banks when it was allegedly making a profit?

My suspicion is that the executives who oversaw the failure of GM pretty much knew what was going on. They were sucking money out of GM while the getting was good knowing that what they were doing was driving GM into insolvency. Perhaps I am wrong and they were implausibly incompetent and just they watched GM dwindle away without realizing that even GM could fail if it pissed away enough of its capital.

The only way out of this mess is to start producing a product here in North America and keeping these monster financial institutions in check.

I agree with this comment to a degree but I think that things are going to get a lot worse before the government is forced to make reforms. Right now the government was perfectly willing to throw billions of dollars away on GM and Chrysler for political reasons in a way that made GM weaker than if they had done nothing and that made Chrysler unsaleable. Eventually the congress is going to need to constrain the massive US expenditures on crony driven military and agricultural spending and it is going to need to stop the massive deficit spending that is driving jobs and production to China. But while there is money to be borrowed congress is going to keep borrowing it and spending it as long as their special interest benefactors keep the bribes rolling.

 

[Furcifer]

My point is that executives were able to claim profits by shuffling underestimated costs off into the future. Recessions happen, job banks will cost a lot of money in a recession. How did GM account for the future costs of job banks when it was allegedly making a profit?

My suspicion is that the executives who oversaw the failure of GM pretty much knew what was going on. They were sucking money out of GM while the getting was good knowing that what they were doing was driving GM into insolvency. Perhaps I am wrong and they were implausibly incompetent and just they watched GM dwindle away without realizing that even GM could fail if it pissed away enough of its capital.

What large corporations sit on "rainy day" funds and deduct them from reported earnings? I'm not aware of any, but that's not to say they don't exist. GM calculated and reported its profits like any other business. They were managing it (not the best, but certainly not the worst) fine until the bottom fell out of the financial sector.

I agree with this comment to a degree but I think that things are going to get a lot worse before the government is forced to make reforms. Right now the government was perfectly willing to throw billions of dollars away on GM and Chrysler for political reasons in a way that made GM weaker than if they had done nothing and that made Chrysler unsaleable. Eventually the congress is going to need to constrain the massive US expenditures on crony driven military and agricultural spending and it is going to need to stop the massive deficit spending that is driving jobs and production to China. But while there is money to be borrowed congress is going to keep borrowing it and spending it as long as their special interest benefactors keep the bribes rolling.

I'm not sure you really understand what Henry Ford and the automobile did for the US middle class. Perhaps you could read up on him a bit then tell me if you think the US economy will recover without a strong US based automotive sector. At some point the economy moved from farming to automotive. A very, very large portion of the economy relies on making and buying cars. I'm not sure there is anything to replace it.

 

[davefoc]

There are healthy car manufacturers in the US. And GM might have become healthy if the government hadn't prevented it. And the idea that the government should keep any industry going because it was useful in the past is exactly the same kind of thinking that doomed the UK in the fifties. Failure is a critical part of capitalism. Things change and keeping the old, corrupt and/or inefficient going is the sure path to disaster.