Obama fires GM CEO!!!!

[Meadmaker]

For what it's worth, the wages and benefits of "new domestics" vs. US owned companies are actually not very far apart. Those Mercedes workers in Alabama get paid pretty much what the GM workers in Michigan get paid. Maybe a bit less, but not much. Here in Detroit, we've seen that number tossed around a great deal lately, and basically, they are paid close to the same amount.

There are two major differences. One is that GM, Ford, and Chrysler have huge retiree costs to deal with.

The other is fair grist for the anti-union mill. While the employees are paid the same, it takes more of the UAW employed domestic workers to make a car. I went to a Chrysler plant on Thursday. I found my machine, and then waited. The engineer I was working with had to go get an electrician so the electrician could stand there and watch me work. Never mind that I didn't even have to open the door of the machine at all. I stuck a serial cable into my machine and my laptop, and uploaded data. Nevertheless, a Chrysler engineer, a Chrysler electrician, and a supplier engineer (me) all stood around while I did my work, and that was after the 20 minute wait while the Chrysler engineer went to find the electrician. Of course, by the time I was done at that machine, it was lunchtime. I had another machine to go to, so I had to go there and wait 30 minutes until the end of lunch, so the different Chrysler electrician could watch me while I uploaded data from that machine.

At the Mercedes plant, I would have gone to the office, told the Mercedes engineer I was there, and headed out to the plant floor, and left the plant 20 minutes later, with no work required from any Mercedes personnel except the guard at the front gate.

 

[Meadmaker]

Based on your earlier post on this subject, I believe you would say the same thing if they were to go bankrupt today. So a bankruptcy in December wouldn't have cost any more than one today, in terms of the ripple effect (and you made a compelling case for that, BTW), and it would have cost a lot less in terms of how much taxpayer money got shovelled into the furnace.

In any case, bankruptcy doesn't necessarily mean cessation of operations. Bankruptcy does not always mean liquidation.

I don't know what would happen today. The problem in December was that the crisis came on so suddenly that GM and Chrysler were not only about to go bankrupt. If that were the only problem they might have been able to deal with it. The problem was that they were about to run out of cash. That would have been a far, far, worse problem. No one would have loaned them any money, and they simply would have had no ability to pay employees, suppliers, or utilities. They would have stopped.

In the three months since, and with the infusion of cash from you and me, they've been able to prepare for the worst. At least, they should have done so, and the papers around here all seem to think that's the case.

Presumably, also, I would hope that execs at companies like mine, and plant managers at plants like Toyota Kentucky have made arrangements to weather the storm. I know North American executives at all the transplants have spent a lot of time on the phone shoring up weak spots in their supplier network. A GM bankruptcy would still be a huge problem for our company and plenty of others, but it shouldn't be the same catastrophe that the sudden shutdown would have been had it happened last year.

 

[Meadmaker]

A lot of industry people disagree with this assessment.

http://money.cnn.com/2009/03/29/news/companies/motor_world.fortune/index.htm



He spent years trying to clean up the messes of those who went before him.

And failing.

It doesn't take a Harvard MBA to figure out that GM's old ways were unsustainable. When market share declines, you have to close plants. When you pay more than your competition to make the same product, you have to lower costs.

Such decisions are not the kind of thing that justifies a multi-million dollar salary. The guy oversaw a loss of about 80 billion dollars, a share decline of 98%, and pending bankruptcy.

The real question that must be asked is why it took a politician to fire him. The fact that he stayed around so long speaks volumes about American corporate culture, and could give some insight into how we got where we are.

 

[mhaze]

You wrote:



But now you claim that $28/hour is somehow the lap of luxury?

Now, as to the pension issue, that's also false.

If you read the link I provided, you'd learn:



So the workers made huge concessions over two years ago, and aren't making $70 an hour.

Aside from that, you've really nailed it.

The automakers arrived at the $70+ figure by adding up all the costs associated with providing wages and benefits to current and retired workers and dividing the total by the number of hours worked by current employees.

 

[Unabogie]

The automakers arrived at the $70+ figure by adding up all the costs associated with providing wages and benefits to current and retired workers and dividing the total by the number of hours worked by current employees.

Right. And I was simply pointing out how dishonest that accounting is, especially in the context of assembly line workers enjoying such lavish salaries.

 

[gdnp]

The automakers arrived at the $70+ figure by adding up all the costs associated with providing wages and benefits to current and retired workers and dividing the total by the number of hours worked by current employees.

Does that include the CEO's salary? Or just the union workers.

 

[Brainster]

I remember reading somewhere, though I'm racking my brain where, that the $70 figure came from an analysis that included pensions, and what have you, for ex-employees. If I recall correctly someone took the budget for pay and benefits for current AND retired employees and then divided it by only the current to get the mythological number.

Of course without being able to remember where I read that I could easily be wrong.

Yep, it's in the article linked to debunk the $70 per hour claim:

But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.

Only $10 per hour is the value of the benefits to current workers, while $32 per hour is pensions and benefits to retirees. So the real problem is not current pay but pay to past employees.

 

[gdnp]

Yep, it's in the article linked to debunk the $70 per hour claim:



Only $10 per hour is the value of the benefits to current workers, while $32 per hour is pensions and benefits to retirees. So the real problem is not current pay but pay to past employees.

So they are counting the pensions of employees given buyouts and early retirement in the cost.

If they lay off another third of their workforce, the "cost per employee" should exceed $100 per hour.

 

[Darth Rotor]

The Shrub had turned over a lot of government operations to private contractors by the time he term limited out.

Lefty, you may not have a grasp on this, but that's been going on since the late 80's. What he and Rummy did was continue a trend that two previous presidents, and all of Congress, began. NOt sayin' they did any better or worse than predecessors, but what they did do was start a major war, or two, and find out that the structure that has been agreed by Congress, for two decades, and so funded, has some rather stark holes in it.

Nearly all of them were worse than not getting the job done.

You are speaking out of your arse, but in some cases, I'd agree. However, that's a case by case matter. In the IT field, quite a bit of good service is rendered, for example, by contractors.

Their shower points gave soldiers dysentary and electrocuted some of them.

I see something about a heat lamp fallacy here, but I'll not engage further. That particular issue, showers/electrocution, is a disgrace. Also criminal negligence.

Take the lot out and shoot them.

I see, the truck drivers in Iraq ought to be shot, as well as the food service people.

Got it.

More foaming at the mouth noted.

And there is no way that Wagoner is any more fit to run GM than a government ecconomist, but that isn't the plan.

Actually, he ran it for almost a decade. Given his results, I'm a bit surprised he was not sacked sooner. How you presume that a government economist has what it takes to lead and manage a car company I'm a bit confused on. Academic excellence does not a leader make.

If private industry can do things better than government, why does our military logistics system suck so badly and why are all our manufacturing facillities shutting down?

When you are done with that straw man, feed it to your mule.

Don't whine about the unions getting too sweet a deal.

Who is so whinging? Not I.

They are making concessions to keep their jobs, and they can far less afford it than can a whiney schmuck with a golden parachute.

Yep.

Wagoner is not a victim here, people.

Agree. Again, what puzzles me is why the board didn't let him loose sooner.

The industrial soul of our country is a victim of jerks like him.

This so called "industrial soul" has been sold out on a continuing basis since the late 1970's.

Or hadn't you been paying attention?

Hell's bells, Bob Dylan was writing songs about it in the late 60's ...

 

[luchog]

On the contrary, I don't believe Obama has done anything near deserving the slanderous cut downs he's already getting.

Despite the fact that nearly all of his major cabinet employees are criminal tax evaders?

 

[elbe]

Yep, it's in the article linked to debunk the $70 per hour claim:



Only $10 per hour is the value of the benefits to current workers, while $32 per hour is pensions and benefits to retirees. So the real problem is not current pay but pay to past employees.

I should clearly read a bit closer then. I tried searching for it but the results I was finding just covered the initial claim not the extended explanation.

 

[DC]

This coming from the guy who wants to set a maximum wage. Thus eliminating all incentive to climb the ladder, seek higher education in business, or keep a competitive edge amongst nations.

so our society only works when a few with good education earn millions, while others need 3 job just to get enough together to feed his family. and other do not even find a job and cant feed his family.

do you really belive that the one guys work is woth a 140 times as much as the work of the guy that actually builds the car?

Such wages have lost all sence of reality and moral.

is this the kind of society we are? Do we really want that?

In our companys we pay a min of 3 800 CHF and a max of 10 000 a month for one of the CEO's. and the main company is already operating since decades.

 

[davefoc]

Wow, the level of partisanship at JREF boggles the mind at times.

Bush threw money at GM and Chrysler without any significant concessions from anybody involved and in general acted like a complete idiot with regard to the situation. Post Bush the situation is exactly as bad as it was previously except the US is out tens of billions of dollars.

Obama, reasonably enough, demanded the resignation of the CEO and the board that played a significant role in creating the GM mess. He is demanding major concessions from unions, bond holders and other sinificant stake holders before the government agrees to anything except some short term keep alive money and he is telling people that bankruptcy may very well be the only option to gain enough concessions for GM to become a viable company again. And he is telling the truth about the nonexistent chances for Chrysler as an independent company.

In short Obama is doing what Bush should have done.

But Bush is a Republican and for the true believer Republicans-are- wonderful-Democrats-are-socialist-diots crowd around here facts don't matter. Bush was in the right party, regardless of what an idiot he was, and Obama is in the wrong party so everything he does has to be stupid.

None of this is to say that BPSCG isn't right and the best thing for everybody concerned (except for the people who managed to scam a few bucks out of the government handouts) was to get GM into bankruptcy court and to remove enough encumbrances that it could be a stable company again. In the end, I suspect BPSCG might have been right, especially in light of the clueless Bush giveaway program to "save" GM.

 

[leftysergeant]

Lefty, you may not have a grasp on this, but that's been going on since the late 80's. What he and Rummy did was continue a trend that two previous presidents, and all of Congress, began. NOt sayin' they did any better or worse than predecessors, but what they did do was start a major war, or two, and find out that the structure that has been agreed by Congress, for two decades, and so funded, has some rather stark holes in it.

Rummy thought that it was a good idea to apply business models to running the military and ran it right into the ground. I wouldnm't be a bit surprised if he was the brain-dead bozo who came up with the idea of encouragiung mid-career NCOs to take a cash-out early retirement. For that, whoever thought it up, should never again be allowed to address a soldier or the family members of soldiers. Disasterous, idiotic idea. Too many Republican presidents have listened to that sack of compost as though he actually knew what he was doing, and look what it got us. Dweebs with no brains trying to run the military like a contracting business.

In the IT field, quite a bit of good service is rendered, for example, by contractors.

I have problems with that just on a security basis.

I see, the truck drivers in Iraq ought to be shot, as well as the food service people.

Nah. Just the dirtbags who went to Third World countries to hire them.

Oh, yeah, everyone above the levewl of receptionist at Black Water, too. A blot on humanity they are, the lot of them.

 

[Meadmaker]

The real question that must be asked is why it took a politician to fire him. The fact that he stayed around so long speaks volumes about American corporate culture, and could give some insight into how we got where we are.

I saw a headline this morning that some "activist shareholders" at AIG are trying to oust the head of the executive compensation committee from the board of directors. We need to see a lot more of that in America.

 

[BPSCG]

Despite the fact that nearly all of his major cabinet employees are criminal tax evaders?

Huh?

Some of them are tax evaders - not remotely "nearly all."

And if any of them have been charged with criminal tax evasion, I missed that headline.

 

[gdnp]

does anyone recall who was the driving force behind the funds for GM and Chrysler in December? Was it congress or the president? I recall some debate about whether the money should come out of the TARP funds, a previous bill that had money for retooling, or a new allocation, but I do not recall whether the major push was republicans, democrats, consensus, etc.

 

[BPSCG]

Wow, the level of partisanship at JREF boggles the mind at times.

Bush threw money at GM and Chrysler without any significant concessions from anybody involved and in general acted like a complete idiot with regard to the situation. Post Bush the situation is exactly as bad as it was previously except the US is out tens of billions of dollars.

Obama, reasonably enough, demanded the resignation of the CEO and the board that played a significant role in creating the GM mess. He is demanding major concessions from unions, bond holders and other sinificant stake holders before the government agrees to anything except some short term keep alive money and he is telling people that bankruptcy may very well be the only option to gain enough concessions for GM to become a viable company again. And he is telling the truth about the nonexistent chances for Chrysler as an independent company.

In short Obama is doing what Bush should have done.

But Bush is a Republican and for the true believer Republicans-are- wonderful-Democrats-are-socialist-diots crowd around here facts don't matter. Bush was in the right party, regardless of what an idiot he was, and Obama is in the wrong party so everything he does has to be stupid.

None of this is to say that BPSCG isn't right and the best thing for everybody concerned (except for the people who managed to scam a few bucks out of the government handouts) was to get GM into bankruptcy court and to remove enough encumbrances that it could be a stable company again. In the end, I suspect BPSCG might have been right, especially in light of the clueless Bush giveaway program to "save" GM.

What bothers me more than the $84 billion (I'm not certain about that figure, but since nobody's corrected me on it, I'll continue to use it) is the fact that we have a major industry in a position where the president can dictate who he does and does not want running it. We have the government now running the two mortgage giants, Fannie Mae and Freddie Mac. Where does it stop? Insurance companies - think AIG? Banks - think CitiGroup?

Obama got it partly right by telling GM it wouldn't get any more money unless Wagoner left. He should have simply said GM won't get any more money. Period. More tax money for GM means a GM more than ever subject to the whims of 535 US representatives and a president.

 

[BPSCG]

Rummy ... the brain-dead bozo ...that sack of compost ... Dweebs with no brains ... dirtbags who went to Third World countries to hire them......Black Water, too. A blot on humanity they are, the lot of them.

Someday I'm going to compile a list of everyone LS hates, right after I get a 500 GB hard drive to store it on.

 

[Disbelief]

What bothers me more than the $84 billion (I'm not certain about that figure, but since nobody's corrected me on it, I'll continue to use it) is the fact that we have a major industry in a position where the president can dictate who he does and does not want running it. We have the government now running the two mortgage giants, Fannie Mae and Freddie Mac. Where does it stop? Insurance companies - think AIG? Banks - think CitiGroup?

Obama got it partly right by telling GM it wouldn't get any more money unless Wagoner left. He should have simply said GM won't get any more money. Period. More tax money for GM means a GM more than ever subject to the whims of 535 US representatives and a president.

To date, GM has received about 13.5 billion and Chrysler 6 billion.