Is GM finished?

Saturn's got a buyer: Penske. They're gonna keep 3 models for the time being and start shopping for additinal makes to bring in later.
 
In My Spare Time said:
Saturn's got a buyer: Penske. They're gonna keep 3 models for the time being and start shopping for additional makes to bring in later.
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They intend to use the Saturn name and dealer network to import and distribute foreign models.

Somewhat similar to the Fiat/Chrysler deal.

It will be good for the Saturn dealers if it is allowed to go through.
 
3bodyproblem said:
If they lost the legacy costs and the economy didn't fall apart (as much as it has). For some reason people like yourself continue to think Toyota and Honda are "viable" right now. They aren't. If things continue like this for much longer Toyota will follow GM in a massive "restructuring".

I have no idea how you can say pensions are "disatrous" union contracts. The UAW pensions aren't different are no different than any other company pensions. .....
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So let the unions fund their own pension plans.

Wait....they used to be allowed to do that, didn't they? That was a disaster of corruption.

First the disaster offloaded to the employer.

Then it's uploaded to the government.
 
3bodyproblem said:
They aren't. If things continue like this for much longer Toyota will follow GM in a massive "restructuring".
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Possibly, and it won't cost US taxpayers $50B now and untold $B's later. A number closer to $0B will git 'er dun.
 
davefoc said:
Under the UAW theory of economics I should form a union with other apartment owners and when our market share drops we should apply to the government for massive subsidies to cover the losses that our mismanagement has caused.
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Great analogy. The Union doesn't manage, never has and never will. But if they did, this might make sense.
 
ZirconBlue said:
I don't know about Honda, but Toyota is still doing fine. Yes, they posted a loss for 2008, and probably will continue to do so for a while, but that was the first time it, what?, 70 years. Last I heard they hadn't laid off any full-time workers or closed any plants.

From CNN last month:
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Way to pick up on the differences between NA and Japan. When NA's start living in 700 sqtft apartments with their inlaws we'll talk. You really don't have any idea what the cultural differences mean to the business and the economy do you?
 
3bodyproblem said:
Way to pick up on the differences between NA and Japan. When NA's start living in 700 sqtft apartments with their inlaws we'll talk. You really don't have any idea what the cultural differences mean to the business and the economy do you?
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Does that mean you (and your buddies) aren't willing to "sacrifice" for Obama's New America? For shame!

:rolleyes:
 
3bodyproblem said:
Great analogy. The Union doesn't manage, never has and never will. But if they did, this might make sense.
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3bodyproblem, I am afraid we are going over old ground here.

Either you believe that labor is similar to a commodity in that it is subject to the law of supply and demand or you don't.

Generally, labor union supporters tend to ignore the unintended consequences of raising the price of labor above market wages. The basic idea is exactly analogous to the apartment situation that I mentioned. When the economy was rolling along lots of people were choosing to have an apartment on their own. That drove the price of apartments up. Now that the economy is struggling lots of people are choosing to live with their parents or with roommates. This is causing a surplus of apartment units on the market. What will happen is that rents will drop until supply and demand meet.

Unions prevent demand from meeting supply by coercion. This creates a surplus of workers who then must compete for the remaining jobs. The effect of artificially raising the wages of Detroit workers has been disastrous for Detroit. Manufacturing has been spread out all over the country and the world as Detroit unemployment rose. But the unemployed Detroit workers had no choice to work for less and keep their jobs. Just as in the current situation the workers who are losing their jobs in the factories that are being shut down do not have the option of working for less money to keep their jobs. So the obvious unintended consequence is more unemployment and lower wages for non-union workers.

Normally, the final limit on union excess is the demise of the company that they are involved with. This was not true in the case of GM. An inept Bush administration followed by a politically motivated Obama administration insured that the UAW would end up with a sweet heart deal. It was horribly unfair to the bulk of workers in the US whose tax dollars were used to treat the UAW in a special way. And it may very well lead to the inability of GM to function independently in the future. Both because future government interference is likely and because what remains of the UAW contract is potentially enough to do GM in again even with 50 billion dollars of tax payer money. As GM market share continues to drop, look for the need to maintain unneeded workers on the payroll for a year to be sufficiently harmful to GM that it will fail again.
 
balrog666 said:
Does that mean you (and your buddies) aren't willing to "sacrifice" for Obama's New America? For shame!

:rolleyes:
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If that's where it's headed, that's where it's headed. I think it's naive to think it can continue (or could have) like it was. In the same breath it's naive to think the UAW had anything to do with it. On a good day the UAW couldn't screw up what the government can do in a pen stroke Do you really think this mess is because a couple of skilled trades said "It's not my job" :rolleyes:
 
davefoc said:
3bodyproblem, I am afraid we are going over old ground here.

Either you believe that labor is similar to a commodity in that it is subject to the law of supply and demand or you don't.

Generally, labor union supporters tend to ignore the unintended consequences of raising the price of labor above market wages. The basic idea is exactly analogous to the apartment situation that I mentioned. When the economy was rolling along lots of people were choosing to have an apartment on their own. That drove the price of apartments up. Now that the economy is struggling lots of people are choosing to live with their parents or with roommates. This is causing a surplus of apartment units on the market. What will happen is that rents will drop until supply and demand meet.

Unions prevent demand from meeting supply by coercion. This creates a surplus of workers who then must compete for the remaining jobs. The effect of artificially raising the wages of Detroit workers has been disastrous for Detroit. Manufacturing has been spread out all over the country and the world as Detroit unemployment rose. But the unemployed Detroit workers had no choice to work for less and keep their jobs. Just as in the current situation the workers who are losing their jobs in the factories that are being shut down do not have the option of working for less money to keep their jobs. So the obvious unintended consequence is more unemployment and lower wages for non-union workers.

Normally, the final limit on union excess is the demise of the company that they are involved with. This was not true in the case of GM. An inept Bush administration followed by a politically motivated Obama administration insured that the UAW would end up with a sweet heart deal. It was horribly unfair to the bulk of workers in the US whose tax dollars were used to treat the UAW in a special way. And it may very well lead to the inability of GM to function independently in the future. Both because future government interference is likely and because what remains of the UAW contract is potentially enough to do GM in again even with 50 billion dollars of tax payer money. As GM market share continues to drop, look for the need to maintain unneeded workers on the payroll for a year to be sufficiently harmful to GM that it will fail again.
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This is an antiquated view. The premise that the Union doesn't have a vested interest in the company making money and being competative is so naive. Hoffa's dead, get over it.

You simply don't understand the numbers involved in running a company as large as GM. You don't understand millions, the billions, that are made or lost in an instant. I can remember Allan Greenspan lowering interest rates a 10th or a percent and our days of orders jumping from 8 days to 24 days over night. Do you have any idea what kind of money is involved in a transaction like Bell ordering 5000, 10 000, 20 000 vehicles in a single day? What about when the price of fuel rises from $1.97 a gallon to $2.05 a gallon? These things you wouldn't even bat an eyelash at mean the difference between the company making $150 million and losing $150 million.

You're trying to make analogies to a business that remains fairly steady and doesn't change in the blink of an eye. You're trying to extend your own experiences into an area that just isn't the same. The automotive business doesn't rely on the price of labour to remain competative. Changing what 2 million workers make from month to month isn't as easy as raising or lowering the rent.
 
3bodyproblem said:
Way to pick up on the differences between NA and Japan. When NA's start living in 700 sqtft apartments with their inlaws we'll talk. You really don't have any idea what the cultural differences mean to the business and the economy do you?
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I have no clue what you're trying to say here. Are you forgetting that Toyota employs a great many people in the US? And that those people are not living in 700 sqft apartments? And what does any of that have to do with the fact that Toyota is sitting on a sizable cash reserve that the NA manufacturers do not have?
 
davefoc said:
2. They are relieved of pension commitments they can no longer afford.
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Pensions are protected from creditors in bankruptcy proceedings. Even secured creditors can't touch existing benefits. At most bankruptcy can end further accrual of benefits.

davefoc said:
3. The union contract is rescinded. ridiculous work rules are removed. Workers are paid at market.
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Autoworker pay already starts at $13 an hour. Cutting that, health plans and capping pension benefits would pretty much guarantee the union wouldn't play along which would guarantee a chapter 7 under which even secured creditors would get nothing.

The bottom line is that Chrysler and GM are only worth anything if they stay in business, which can only happen if the workers are on side.
 
lomiller said:
Pensions are protected from creditors
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Too bad GM pensions weren't fully funded and thus are not protected from COMPLETE FAIL. I have a feeling the congress will wind up bailing out the pension plans and lumping them in with congress and railroad workers.
 
Supreme Court Delays Sale of Chrysler to Fiat

The Obama administration’s effort to hurry Chrysler through bankruptcy court ran into an unexpected last-minute delay on Monday, when the Supreme Court said it would consider whether to hear the objections of three Indiana state funds and consumer groups.
. . .
“I think the points of law are so clear in this case that they need to be examined by this body,” said Richard Mourdock, the Indiana treasurer.
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The political implications as well as the economic implications of this are pretty large.
Mourdock is a republican politician who is leading the charge to stop this sale because, I presume, he thinks that Chrysler is worth more dead than alive for the pension funds he controls. If he gets his way and the SC hears this case, hastening Chrysler's demise, the political blame (or credit) for killing Chrysler would then fall entirely on republicans.
 
lomiller said:
Pensions are protected from creditors in bankruptcy proceedings. Even secured creditors can't touch existing benefits. At most bankruptcy can end further accrual of benefits.

[snip]
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No, they aren't, especially if they were never fully funded. And GM looted them as much as the UAW ever did.
 
lomiller said:
Pensions are protected from creditors in bankruptcy proceedings. Even secured creditors can't touch existing benefits. At most bankruptcy can end further accrual of benefits.
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I don't know about bankruptcy law, but, perhaps ironically, some of those creditors are themselves pension funds.

From what I've heard, anything not already paid is not really protected (how could it be?). If a pension trust was already set up, then anything already in the trust would be protected, I assume.
 
corplinx said:
Too bad GM pensions weren't fully funded and thus are not protected from COMPLETE FAIL. I have a feeling the congress will wind up bailing out the pension plans and lumping them in with congress and railroad workers.
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The US government already insures pensions, so yes the taxpayer would be on the hook for an underfunded pension plan.
 
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