GM Statement on the Administration Providing Bridge Loan to the Domestic Auto Industry
We appreciate the President extending a financial bridge at this most critical time for the U.S. auto industry and our nation’s economy. This action helps to preserve many jobs, and supports the continued operation of GM and the many suppliers, dealers and small businesses across the country that depend on us.
This will allow us to accelerate the completion of our aggressive restructuring plan for long-term, sustainable success. It will lead to a leaner, stronger General Motors, a GM that is:
- dedicated to great products, exciting design, and world-class quality
- fully committed to leading in energy-saving vehicles and technologies
- responsive to the needs of our customers, our stakeholders and the communities we live in and serve.
We know we have much work in front of us to accomplish our plan. It is our intention to continue to be transparent as we execute our plan, and we will provide regular updates on our progress. We again thank the Administration for this important support of our industry at this challenging time, and we look forward to proving what American ingenuity can achieve.
60 Comments
Leave a Reply
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)
Thank the Lord!!!!!! That is a load of bricks off my families shoulders, millions of others shoulders and the companies. Now we can go back to producing good quality, innovative cars like we have been all along.
In the interest of transparency:
1. How do you propose to drastically reduce the layers of beauracracy within GM at both the plant and HQ levels to better reflect modern business practices (and trim a significant amount of cost and time out of the decision tree)?
2. Will GM petition the federal government (both Congress and the Executive Branch) to create a tax on oil or gasoline so that the price of gas will remain high creating a market for vehicles like the Volt? Let’s be honest, the American people voted for SUVs with their pocketbooks, and won’t pay extra for fuel saving technology until it is in their financial best interests. If Congress forces GM (and Chrysler) to build expensive EREVs, don’t you think Congress should also be willing to create market conditions so those vehicles can be a sales success?
3. Will GM finally start listening to customers and weed out it’s poorly performing dealers on a customer satisfaction basis rather than just profitability? So often the most profitable dealers are the ones screwing the customers (especially in the service bays) and ultimately turning them off to GM products overall. We insiders understand the difference between the dealer and manufacturer, but to 99% of America the dealers are the public face of GM (pretty sad isn’t it?).
4. Will GM make a significant capital and strategic investment in it’s US manufacturing facilities to implement truly flexible manufacturing such as Honda practices where any model of any vehicle can be made on the same assembly line without any changeover? I understand that this is a longer term commitment because it involves the design of vehicles as well as the manufacturing facilities themselves, but I believe it is of the utmost importance. Flexible plants allow you to manage your product mix in real time without having to slowdown a plant here and accelerate a plant there. It is simply done via the production mix on the line.
5. Will GM commit to turning Pontiac, Hummer, Buick, Saab, and Saturn into truly niche brands that may have fewer than 3 models each? Currently, GM has tried to give Pontiac, Saab, and Saturn a full product lineup, and the sales charts show that it isn’t working at all. Brands must have a very clear identity in order to resonate with America. BMW is slipping because it has become too interested in niche SUVs and crossovers rather than focusing on it’s traditional lineup of sport sedans. GM’s brands are already at the bottom of this slippery slope and a commitment to returning the brands to their roots is the only way that they will survive.
Does the term “US Employee” mean the autoworkers too? If it’s, then it means the UAW must achieve equivalent compensation to that of the Toyota’s US-based workers by the end of 2009. But why didn’t Gettelfinger make the deal with Senator Bob Corker?
Look, this is a near-death experience for GM. You can only live once. Stop focusing on the redundant brands. If you want an example of the perfect automaker, look no further than BMW. Take a look at the German BMW website. (http://www.BMW.de) The website is simply fantastic. Their passion for making the perfect cars is simply astonishing. The US and Canadian BMW websites are pretty useless. BMW has a powerful image, and probably the most powerful brand in the world. That’s what Cadillac should be. Did you remember the saying “Dance like a Cadillac, Sting like a Bimmer” in the Cars movie? Its sums it up pretty well. Cadillac can be as powerful as BMW. The Cadillac product lineup is full of holes. The Pontiac Solstice, where GM is losing $10,000 on every Kappa platform, should be a Cadillac. It will be a great rival to the BMW Z4 roadster. And the latest Z4 is truly amazing. You can watch the video with designer(both interior and exterior) interviews at BMW.de and learn yourself. The interviews were actually conducted in English but with German translator. And the Infiniti brand by Nissan is fast catching up to Cadillac in sales. They use the latest technology like Intelligent AWD, and they have a more complete lineup than Cadillac. Cadillac should use an all encompassing concept like BMW EfficientDynamics, which consists of start-stop system and regenerative braking, in each and every BMW. Ford has its EcoBoost engines. The name and i came up is EcoPOWER. Power and fuel economy. I didn’t put the word “Dynamics” in it because I’m afraid BMW would sue me.
President Bush could have sent GM into bankruptcy, and saddle the Obama administration with more than a 4 year recession. He could have destroyed and totally wipeout the entire US domestic auto industry. He didnt choose to do that. I would say this President is not too bad. Consider yourself lucky. But this crises is not over, as long as you don’t make any decent profit on each and every car sold. The GM two mode hybrid system is pretty useless if you can’t put it in a Malibu. Better buckle up, or the Car Czar, known as Darth Vader, will lead a huge army of Clonetroopers, Stormtroopers, Shocktroopers and Republic Commando, and storm the Renaissance Center and do “whatever is necessary”.
North American car and truck of the year awards
This is great news. As my user name implies, I’m a long-time GM fan and wish you much success.
As I posted before, and I’m usually not critical on these blogs, but I’m sssooooo sick of that Greedy UAW and Ron Gettelfinger. Please see:
http://www.google.com/hostednews/afp/article/ALeqM5j_TvLIfiu54aJUmWkgOaWG6gjwtg
Ron states that the UAW has already made “substantial sacrifices” to help make the Big Three automakers more competitive.
If you’ve made “substantial sacrifices” and still get paid far more than Toyota & Honda workers in the US, just how much bloated excess did you have??!!
Ron Gettelfinger, seems to be acting like the begger on a street corner who throws the coins back into the street and only accepts crisp dollar bills.
Here, economics professor Peter Morici explains that Ron Gettelfinger is unrealistic and selfish.
http://newsbusters.org/blogs/mark-finkelstein/2008/12/12/surprise-early-show-economist-blames-selfish-uaw
Wake up and get your act together, UAW. Quit bickering and get to work. This is 2008 – not 1958 for crying out loud. You’ve run these companies far enough into the ground.
Would General Motors consider developing a waiting list of people for the Chevy Volt? It could be a plan like this:
(1) General Motors would agree to sell the Volt at a stated price, for example, $40,000, minus the deduction stated in # 2.
(2) People who would now voluntarily sign up to buy the Volt would pay that price immediately, but discounted with a deduction of 10% for each year that they had to wait for delivery. The deduction would be $4,000 each for two years, creating a $32,000 cost for each customer.
(3) General Motors would refund the money or most of it , to be worked out, if it were to fail to produce the Volt.
I hope that General Motors, Chrysler, and Ford can survive these difficult times and am interested in buying the Volt.
“3. Will GM finally start listening to customers and weed out it’s poorly performing dealers on a customer satisfaction basis rather than just profitability? So often the most profitable dealers are the ones screwing the customers (especially in the service bays) and ultimately turning them off to GM products overall. We insiders understand the difference between the dealer and manufacturer, but to 99% of America the dealers are the public face of GM (pretty sad isn’t it?).”
Well said HotCarNut.
I’m not sure GM’s senior leaders have ever actually realized at what a disadvantage their dealers put them. Even if GM made the best cars in the world, the drag of their poor dealers would be a headwind to GM’s success.
Let’s try this again:
Diesels among finalists for car and truck of year honors
Please RAISE your level of CUSTOMER SATISFACTION.
I personally like GM trucks but getting repairs is a nightmare. I brought my truck in to a dealership to get the fan switch fixed and it came out 8 hours later with a broken speedometer and a $400 price tag. But it’s not their fault (severe sarcasm) and they will do nothing to fix it. Needless to say, I am severely peeved.
that is the LAST time i will bring my truck in to a dealer. the customer satisfaction level of GM is nil. They don’t care about their customers and this last episode of mine has just proved it.
take some of that money and do something positive for all of us!!
Kay wrote:
“Now we can go back to producing good quality, innovative cars like we have been all along.”
If GM had been doing that all along, they wouldn’t be in this mess!
Nothing changed today except GM and Chrysler got hooked up to life support. I fear that nothing will change at GM. The same myopic management is still in place, with the same inflexible UAW and it’s entitlement mentality.
Here is a question for all you GM insiders. Did the person ultimately accountable for the design of the Pontiac Aztek ever get terminated? More likely, this was just another GM “design by committee” vehicle, where nobody was held accountable. The same people responsible for this debacle are probably still roaming the halls, unless they got a great GM retirement “package”.
Wagoner and the Board need to go. The UAW needs to accept pay, benefits, and work rules equivalent to what is provided by foreign automakers in North America. Maybe then you can get through this mess with a business plan that will allow for profitable growth in the future. If not, your market share will continue to shrink, more UAW represented workers will get laid off, and the company will continue to contract until it either dies, or gets purchased by a foreign automaker.
Part of GM’s problems started years ago with upper execs that have never run a machine,never been a first-line supervisor. They don’t understand HOW each manufacturing facility operates. All they have ever done is push papers. GM got the loan. Perhaps they will now learn by doing some “management by wondering around.”
Why the dealer bashing. GM has some of the best dealers in the industry. They have consistantly outperformed Toyota dealers in customer satisfaction. Without dealers the manufacturer’s would have to spend billions of dollars to distribute and service their products. Now independent busnessmen provide that capitol and risk their own capitol to do that.
Granted Gm has too many delaers, particularily in metro and suburban areas, the fact that they have an extensive dealer network in rural areas is a benefit to both them and the consumer as the cunsumer does not have to travel as far for service.
Please realize the positive things dealers do for their communities such, provide jobs, pay taxes, sponser local charities, etc.
I realize there are some that are not “good dealers” but that is the case with every manufacturer.
I am sure you will not post this, but here goes:
You (under the leadership – or lack thereof – of Rick Wagoner) has lost billions in shareholder value and have consistently lost market share.
What’s going to be different now? It just seems like a gigantic waste of taxpayer money.
I sure will never consider buying GM – why bother giving my money to GM – I’ve already made my donation to you with my taxes!
HotCarNut wrote:
“3. Will GM finally start listening to customers and weed out it’s poorly performing dealers on a customer satisfaction basis rather than just profitability? So often the most profitable dealers are the ones screwing the customers (especially in the service bays) and ultimately turning them off to GM products overall.”
DITTO!
Thank you! Mr. George Bush,
Wake up people, Don’t you realize that the foreign manufacturers , are just that , foreign manufacturers! They would like nothing better, than to take away our manufacturing base!.With profits going over seas. A whole generation thinks it’s cool to drive an import, but in ten or twenty years,(if it last’s that long) they won’t be so cool when their children don’t have a automotive industry of their own, and are at the mercy of the Chinese, Korean, Japanese, Russians,Germans, etc. One of the biggest sectors of our economy. Gone! Just like many other industries! No manufacturing base of their own, just empty factories, that will likely get bought up by the import companies for a song.Everything, either made over seas,or foreign owned. The Republican’s don’t get the point either. They are just too happy to line their pockets now, and not worry about the future,and because most of the import companies have assembly plants in some southern Repubican states.In a way you can’t blame them,because this brings in good revenue.But they don’t care about the working class anyway. Was it not the Republican’s that bailed out the banks , with no strings attached? More big bonuses paid to all the top dog’s!Have you read the news on that one? Don’t get me wrong, I am happy for those folks who have employment in these places,because a job is a good thing, but where will it end? I am not saying that that they build bad products either, but they are not ours! And they are not union run,and I didn’t want to talk about union’s , but what happens when all manufacturing becomes non union? You no longer have a voice! And, yes, wages, benefits,do come into it. But if everyone was buying G.M. Ford, Chrysler, this wouldn’t be an issue, now would it? Everyone would be getting better wages and benefit’s, and we would have a much more viable industry with product lines to please everyone! The sky is the limit! At every end of the spectrum! And they are not bad with their product lines anyway. General Motors has built world class products for generations,and yes they have made mistakes, but so has everyone else. And I mean everyone. G.M. has evolved and changed like everyone else.And have servived 100yrs. Yes, these are ours! We’re the ones that started it! Not those people across the ocean! WAKE UP PEOPLE! Don’t sell us out! Help protect our own economy! I never thought I would be saying, ” Thank-you George Bush”!!
Will GM commit to turning Pontiac, Hummer, Buick, Saab, and Saturn into truly niche brands that may have fewer than 3 models each? Currently, GM has tried to give Pontiac, Saab, and Saturn a full product lineup, and the sales charts show that it isn’t working at all. Brands must have a very clear identity in order to resonate with America. BMW is slipping because it has become too interested in niche SUVs and crossovers rather than focusing on it’s traditional lineup of sport sedans. GM’s brands are already at the bottom of this slippery slope and a commitment to returning the brands to their roots is the only way that they will survive.
Well put.
Now that I am giving a loan to GM, I would like someone to check the parking lots in GM’s development and engineering centers in Detroit at 5:30pm everyday to make sure that the parking lot is not empty. I don’t think you can design and build great cars with 9-5 schedule.
Design is still a product of our circumstance and not a product of our imagination. Until GM realizes it must be a product of the imagination, circumstances will not change.
If we do not capture people’s imagination we can not capture their money.
And brand and marketing are a reflection of great design and image. If we fail to capture the imagination in our commercials, retail outlets, insigia, and newpaper articles then it is just another missed opportunity.
While we consider cost while creating design, retail outlets, etc. then cost will also be an issue to the customers in the end.
Until we consider our designs, image, and brands priceless, then the cost conscious customers of today will put a price on them too.
As long as our brands are expendable, then the need to own them will be expendable too.
From the wisdom of great design from Buick, to unbound youth of Pontiac, from the wealth of Cadillac to the free spirit and and hope of Hummer, if you make room for them they will find their niche and place. But our culture changed from putting brands first, to putting money first and now so does the customer.
Money takes up wings and flies away. Brands with a brick house last forever. So goes the results, fly Plymouth, fly Eagle, fly Oldmobile. Stay Mercedes, stay BMW, stay Honda. Whose is next? More American deaths I suppose.
But in the end not a single American brand will survive, if our money first, brand second philosophy does not change.
…responsive to the needs of our customers
Yes, you really do have a lot of work in front of you. Any company that was really nimble and flexible and and had been truly “responsive to the needs of our customers” wouldn’t even need a bailout. Your plan to become lean and strong is also going to require a 180-degree turn with respect to serving the customer. You have a big job ahead of you turning around the attitude of your dealers.
—————————————————————
Kay said: “Now we can go back to producing good quality, innovative cars like we have been all along.”
Kay,
You do realize I hope that any company that had been producing quality, innovative cars would never need a bailout.
This is for Gerry and all others with the same views:
IT’S NOT THE UAW’S FAULT!!!!! How many times must people tell you that UAW Members with high seniority make $28 per hours in comparison to Toyota that makes $30 per hour. They have a higher expense due to health insurance costs and legacy retirement. Why should legacy retirements be attached to their pay by some? Our health insurance has been cut in half. I pay 50% of all of my doctors office calls. I must mail order all of my medication or it is not covered and I have to pay cash out of my pocket. We can only get generic drugs. Some drugs are not even covered. I had 5 teeth filled and 2 chipped teeth fixed and it cost me $400 in cash out of my pocket after insurance. We only get $70 a year for eye care. Would you like our health care cost to fall on the government instead?, that’s your tax dollars. Take to the lobbiest and insurance companies and drug companies for the ridiculous cost. You see when people have no insurance they wait until they are extremely ill and then they go to the emergency room. Then, when they can’t pay the bills that are thousands of dollars the federal government picks up the tab. I know this for a fact because I am a nurse for our city hospital, my husband works for GM. Billions of dollars are paid by the government for the uninsured. GM has 1 million retirees that get on the average $1,500 a month in retirement on top of the $1,500 from Social Security. That is not much money to support a husband and a wife. The union is paying half of the retirees cost per their last contract, that’s VEBA. That means it come out of the active employees checks. The jobs bank is now gone. The jobs bank wasn’t the unions doing. So, what do you want? Do you want them to work for free? My husband has a college degree. He is an HOURLY UAW Stationary Engineer. There are college edudated, highly skilled employees on the hourly UAW side too. He makes $32 per hour with 30 years seniority. I only have 10 yrs. seniority as UNION RN and I make $36 per hour. My son just started a job at Honeywell Corp. as an Aeronautical Engineer and makes $30 per hour. Do you have a college degree? See a lot of people with college degrees make more than that. Most hourly employees have over 20 yrs. seniority. The new hires only make $14.20 per hour. My daughter is starting next week at GM as a janitor through a contract company and will only make $11 per hour. So, what do you want? Them to work for minimum wage? Them to have no health care so they can die early, go without treatment or put it on tax payers? Would you be happy then?
Yes, the Auto Industry has made some mistakes. Haven’t we all? Are you perfect? However, they have on the whole made good quality cars and trucks. My husband and I have purchased 17 brand new vehicles over the past 31 yrs. WE HAVE NEVER HAD A PROBLEM WITH ANY OF THEM!!!!!!!! My entire family has always purchased GM vehicles and have never had a problem with them!!!!! My 2 adult children own Chevy Colbalt’s that get 30+ mpg and have not had a problem with them. GM has been in business for 100 years. That means they have some very old building and equipment that they have been and are tearing down, rebuilding and retooling. That costs a lot of money. They don’t get the tax breaks and kick backs from the states and federal government like the foreign auto maker have and do. The foreign auto makers have new facilities because they haven’t been here as long, so they don’t have the restructure and retooling costs. They don’t have legacy costs because they haven’t been here as long. That is why GM has had net losses and not net gains. They have had gains on sales, but losses as a result of restructuring and retooling!!!!! So, get your facts straight before you say things.
The foreign Auto Maker hurting too. IT’S THE ECONOMY!!!!!! IT’S NOT THEIR FAULT!!!!!!! TALK TO THE BANKERS AND WALL STREET THAT CAUSED ALL OF THIS!!!!!!!!!! You know, the people that got money handed to them for free with no strings attached after they sent the world into a financial tail spin!!!!!! TAKE YOUR ANGER AND FRUSTRATION OUT ON THEM!!!!! THAT’S WHERE IT BELONGS!!!!!!!
BEIJING – China is rolling out new measures to reverse a worsening economic slump with interest-free loans to companies and possible steps to boost plunging auto sales and aid steelmakers, the industry minister said Friday.
“Industrial growth is sharply declining and we have not seen a turning point yet. We feel a lot of pressure,” Li Yizhong said at a news conference.
The government will spend 15 billion yuan ($2.2 billion) to subsidize loans to companies to improve technology and cut energy use, Li said. He said Beijing might buy surplus steel to help producers as demand plummets and cut taxes to spur auto and real estate sales.
– excerpt from “China to give companies aid to cope with crisis”, AP, 2008.
In the European Union, carmakers have called for support worth €40 billion, or about $53 billion. Although they may not get that much, governments are planning a broad range of measures. Much of that support, as elsewhere, is meant to accelerate the development of “green” vehicles.
The European Investment Bank will provide the industry with €4 billion in low-interest loans in both 2009 and 2010 as part of the European Clean Urban Transport initiative. The European Commission, the EU’s executive arm, will spend €5 billion over two years for the same ends.
National governments, including those of France, Germany, Portugal, Spain and Romania, have plans to provide hundreds of millions of euros more in research and development, tax breaks and loans. Sweden on Thursday announced support valued at more than $3 billion for its auto sector.
– excerpt from “Auto industry aid pleas are rising globally”, International Herald Tribune, 2008.
Dec. 11, 2008 — The Swedish government on Dec. 11 announced a 28-billion-kronor (US$ 3.5 billion) package to help the country’s beleaguered automotive sector, including carmakers Volvo and Saab. The measures “will take the form of increased investment in research and development and state credit guarantees for raising loans (from) the European Investment Bank,” the government said.
– excerpt from “Swedish Auto Industry Gets $3.5 Billion Aid Package”, IndustryWeek, 2008.
Shelby’s Alabama, for example, secured construction of a Mercedes-Benz plant in 1993 by offering $253 million in state and local tax breaks, worker training and land improvement. For Honda, the state’s sweetener surrounding a 1999 deal to build a mini-van plant was $158 million in similar perks, adding $90 million in enticements when the company expanded the plant three years later. A 2001 deal with Toyota left the company with $29 million in taxpayer gifts.
Alabama is hardly alone. Corker’s Tennessee recently lured Volkswagen to build a manufacturing plant in Chattanooga, offering the German automaker tax breaks, training and land preparation that could total $577 million. In 2005, the state inspired Nissan to relocate its headquarters from southern California by offering $197 million in incentives, including $20 million in utility savings.
In 1992, South Carolina snagged a BMW plant for $150 million in giveaways. In Mississippi in 2003, Nissan was lured with $363 million. In Georgia, a still-under-construction Kia plant received breaks estimated to be $415 million. The list goes on.
Honda, Marysville, OH, 1980, $27 million*
Nissan, Smyrna, TN, 1980, $233 million**
Toyota, Georgetown, KY, 1985, $147 million
Honda, Anna, OH, 1985, $27 million*
Subaru, Lafayette, IN, 1986, $94 million
Honda, East Liberty, OH, 1987, $27 million*
BMW, Spartanburg, SC, 1992, $150 million
Mercedes-Benz, Vance, AL, 1993, $258 million
Toyota, Princeton, IN, 1995, $30 million
Nissan, Decherd, TN, 1995, $200 million**
Toyota, Buffalo, WV, 1996, more than $15 million
Honda, Lincoln, AL, 1999, $248 million
Nissan, Canton, MS, 2000, $295 million
Toyota, Huntsville, AL, 2001, $30 million
Hyundai, Montgomery, AL, 2002, $252 million
Toyota, San Antonio, TX, 2003, $133 million
Kia, West Point, GA, 2006, $400 million
Honda, Greensburg, IN, 2006, $141 million
Toyota, Blue Springs, MS, 2007, $300 million
Volkswagen, Chattanooga, TN, 2008, $577 million
The total figure of $3.58 billion
European Auto Bailouts
James Joyner | November 23, 2008
The American government appears unlikely to offer loan guarantees to the Big 3 U.S. automakers, despite the pleas of President-elect Barack Obama. Meanwhile, European governments appear set to help out their competitors.
British-based carmaker Jaguar Land Rover is in secret talks with the UK government over a 1 billion pound ($1.48 billion) loan, just nine months after the Indian conglomerate Tata Group bought the luxury carmaker, the Sunday Times newspaper reported.
The request reflects the sharp downturn in the global car market which has already pushed a handful of big carmakers to the edge of bankruptcy, and one UK government source said Prime Minister Gordon Brown is studying the request, the paper added.
In a Jaguar Land Rover statement, the group said on Sunday it supported UK and European carmaker’s industry bodies seeking help from governments but would not comment specifically.
Citroean, Pugeot, Fiat, and others are getting sympathetic listens to their calls for emergency measures.
Canada gave their Auto Industry $4 billion today in low interest loans due to the recessive economy.
An excellent article written in the Sunday edition of the Providence Journal by a professional auto journalist – Peter C.T. Elsworth on the bailout loans.
Even on this blog I feel we have no credibility with GM – it is just a way for GM to communicate WITH us.
If there is a reply it is usually a bunch of statistical analysis nonsense that the market numbers are not there for CNG equipped cars because they didn’t sell 10 years ago or this or that from from lower management spin machine.
If this is not the time to restructure GM from the top down I don’t know when it will be – perhaps in liquidation of its assets during bankruptcy.
http://news.beloblog.com/ProJo_Blogs/carsblog/2008/12/backseat-driver-161.html
George Bush’s motives for the bridge loans to GM and Chrysler were that he did not want to affect his legacy in the sense that the biggest manufacturing companies would crumble – along the rest of the economy – under his watch.
It is merely a way to hand-off the football to the Obama administration for them to deal with.
So I wouldn’t thank George Bush so quickly – the money will be coming out of your pocket anyway.
Excellent comments by HotCarNut, Gerry and Bill Hawkins – they are totally in line with Peter C.T. Elsworth’s article posted in a previous reply.
Disagree with most of what HotCarNut wrote, except perhaps point # 3 about the dealers.
The fact is car dealerships in general, no matter what the brand, tend to convey a message of that tends to turn off the customer. The dealers and employees should act more like GM corporate representatives conveying loyalty to the company. Honest dealerships do receive return business, so a way to measure it is from customers who return for service. We like the service we get from most GM dealers we’ve frequented. But there are those who seem too busy for the customer and don’t seem to have a GM loyal outlook like we’d like to see.
On HotCarNut’s point #2. Social tinkering by utopian leftists is a major turn off to everyday Americans. The goverment has no business telling people what to buy and how much they should have to spend.
And we hope GM doesn’t copy what the Japanese automakers which produce ugly look alikes that people will eventually stop buying when GM starts introduces great looking car line-ups with cars like the Malibu, Camaro, and the Solstice.
GM should have Pontiac takeover Saturn immediately. Saturn products should be dispersed among Chevy and Pontiac and the Saturn investment dollars should be used to build up GM’s core brands. Saturn is a tangent that has drained investment. Imagine how much more the Saturn Sky would have sold already as a Chevy Stinger.
Sometimes GM places models in the wrong division. The Cadillac SRX wagon should be a Buick, it would sell better as a Buick while th eEnclave would sell better as a Cadillac. A Cadillac Enclave would have taken much more sales away from the Lexus RX. The main reason Lexus RX customers choose the RX over the Escalade is that the RX is easier for them to park, especially in garages. A Cadillac Enclave would have solved this issue.
GM is missing sales in luxury market. I could go on and on about this. Neat cars like the Reatta and the Trofeo should have been Cadillacs at that higher price point. Alternatively, the Trofeo would have sold to Cutlass Supreme/Grand Prix customers but at a lower retail. It would not sell to a traditional Riviera/Toronado customer who wanted a larger look. GM should let enthusiasts in on some of these decisions, we understand why people want certain GM styles. Stonger mid and entry level line-ups draw customers to buy GM flagships within the core brands as customers trade-up. These customers are still there, they are sometimes waiting for GM to make a nice looking style.
There are many GM flagship customers looking for a nice looking American luxry sporty sedan or an American full size sedan. So let’s go shopping for one. GM offers the DTS and the STS, the G8, and the Lucerne. So here’s the dlilema. Let’s say the late 30’s early 40s couple with two children already have an Acadia, so they don’t need another SUV, they want a new Sedan with some prestige. The wife is really turned on buy the CTS commercial, she can identify with the women who drives the CTS and has her car “return the favor,” but she can’t get two car seats in the back seat of the CTS and put the stroller in the trunk comfortably, so she’s probably going to get an STS, since the DTS is too formal and she doesn’t like the headlights on the Lucerne. Now do you get the picture? She’s not to interested in SUVs, they aren’t her style. She currently drives an Aurora 4.0 and she loves it, but she’s ready to get a new car. So they wants another GM, since she will soon be getting a new house, and they want to impress their friends. Their economy is good and they have the budget. The Lincoln MKS is nice but it doesn’t have a V-8 option and its difficult to get the stroller in the small trunk opening of the nice trunk. So there’s one American choice. The Pontiac G8 is nice, its kinda small in the back seat, and has one attractive color, the darker red. So the STS wins since its offers a V-8, comes in red and gold and has a comfortable luxury package with a wooden stearing wheel, a V-8 and a Sun Roof.
But just one choice? GM should have offered the couple 2 or 3 choices, since many might see a foreign sedan that tempted them, and you can guess which ones, we don’t need to name them.
Buick should modify or redo its flagship design. The LaCrosse has a better looking front than the Lucerne and the Lucerne has a better looking rear angle. Why not combine the look and put the LaCrosse front end on the Lucerne
Another couple early 40s wants a luxury SUV, but has difficulty parking the Escalade, and they just don’t like the SRX, what should they do? They’ve only bought top of the line brands lately? They want a vehicle like the Enclave but they want it to say Cadillac? Do you think they might buy a Lexus RX?
The Buick customer with a large family might like a wagon, but they can’t afford the SRX what should, they do?
You see, the SRX should be a Buick wagon and the Enclave just as it is should be a Cadillac. The GM enthusiast would have no difficulty making the Enclave a Cadillac and the SRX a Buick (with a different curved headlight), but the GM brass might get goose bumps.
Similarly, the GM enthusiast would have no problem making Saturn into Pontiac and dispersing Saturn products to Pontiac and Chevy, and keeping Oldsmobile’s great heritage product line, but the GM brass might get cold feet.
A GM enthusiast would have found a better styled Cutlass Supreme in 1989, and given the bubble looking Cutlass design look to Saturn instead at the time, the GM brass would wait it out.
The GM enthusiast would have made the Trofeo a Cadillac or a lower priced Cutlass/Grand Prix and sold ten time more, the GM brass would say well, “these are what we thought we good products.” Of course they are great products, they just might be in the wrong division at the wrong price point for the wrong customer at the time.
The GM enthusiast would have taken the heavy side moldings off the Grand Am and made it look like the G6 about ten years earlier. Similarly, the GM enthusiast would have introduced the cleaner looking 2005 Bonneville V-8 about 10 years sooner and the GM enthusiast would have sold a whole lot more of them.
The GM enthusiast really likes the ride and engineering of the LaCrosse, but the rear end is too stubby and we don’t like the tail lights. The GM enthusiast really likes the Lucerne ride, engineering, and rear profile, but we don’t much care for the headlights. While we like it better than the Toyota Avalon, we think GM can make the Buicks better looking.
GM gets an A+ for engineering and designing great looking cars. But there are these issues occasionally as ilustrated where GM should bring in the GM enthusiast point of view.
With designs like the Malibu, the Camaro, and the Acadia, we say you’re right on target, just market them. Offer leather seats that are not two tone in the Malibu too. We like the Outlook, but it would sell better as a Pontiac.
We really appreciate GM, and we believe in the company and its leaders. GM has some great looking cars and engines, we just want more.
Cadillac needs a brand manager to define its powerful image. It needs Jim Taylor, the current manager for Cadillac. Please stop Jim Taylor from leaving to Hummer. It would be such a waste of talent and a loss for GM.
BTW, I emailed President Obama and urge him not to yield to Gettelfinger’s ridiculous demands. That way GM will become competitive with Toyota and debt-free sooner.
As always I have to find out from Financial Times of London what is happening in America!!!
As of January, GM and Chrysler will close 50 assembly and parts plants for the month due to overcapacity…
“The slump has left the car makers with considerable overcapacity. CSM Worldwide, a consultancy, estimates that North American assembly lines – including foreign-owned – will turn out about 7m cars and light trucks, at an annual rate, in the first quarter of 2009 – less than half their 18m-19m unit capacity.
Michael Robinet, a CSM analyst, said. “These groups want to run at 85-90 per cent. Fifty per cent is not good.”
GM and Chrysler will shut 50 assembly and parts plants for the month of January.”
YOU THINK WE WOULD FIND THIS OUT ON THIS BLOG 1ST?
Read the entire article which appears in 12.22.08 FT print edition here…
http://www.ft.com/cms/s/0/2d2c44a2-cf61-11dd-abf9-000077b07658.html?nclick_check=1
Im curious how GM plans on handling return leasees (sp) My wife who has listened to GM and said yes leasing is for me is now left in the cold when she returns her Acidia next year. I would assume there are several hundred thousand leasers that will be forced with a decision like ours, buy a new car or hit the used lot. What plans do you have for fixing this potential melt-down that is coming? Honestly, I love leasing, a new car every 3 years which is covered and an affordable payment, sounds great. Now we’re stuck looking at a high down-payment, high monthly payment, maintenance costs, all for a vehicle that’s simply not a BMW but the costs almost as much. Quality will be our first choice on brands if we do have to purchase. I can only hope GM solves it before they see more market-share deterioration. Have you even thought about some type of new program? Heck I’d even go so far to say as something like a rental system like a long term rental where I dont really buy the car. Something, because if it’s not fixed, I probably will leave the GM brands.
EXcellent post by KAy. I see no one responded to her points. Not surprising.
“I see no one responded to her points.”
You didn’t look back far enough.
Kay said: “T’S NOT THE UAW’S FAULT!!!!! How many times must people tell you that UAW Members with high seniority make $28 per hours in comparison to Toyota that makes $30 per hour.”
Kay,
OK, it may not be the UAW’s fault. But then tell me, why does everyone pick on the UAW? If the UAW is not at fault, why exactly do so many have the perception they are?
Could it be because somewhere in the past the UAW did something that left a bad taste in people’s mouth?
Could it be because of UAW militancy and rough tactics in the past?
Could it be because of UAW inflexibility in the past, and the fact union leaders have always relegated efficiency, pride of workmanship, making a quality product, and company loyalty to the bottom of their priorities?
Or could it be because the current UAW contract weights 22 lbs and is 2,215 pages long ~ full of picayune work rules, regulations, and letters of understanding that limit flexibility and tie the hands of management ~ but that say nothing about working towards efficiency and competitiveness in today’s world market?
22 pounds of inefficiency brought to you by the UAW
HotCarNut,you guys who want a big tax on gasoline must think that everybody just uses their vehicles to drive a few miles to work. a lot of us who are retired like to drive many miles just for vacations and to do things like ATVing,dirt biking and snowmobiling. we drive 20,000 miles a year just to have fun and $4 gallon gasoline is not what we want to see. we can not pull our trailers with small engines or hybrids and depend on trucks to get us where we like to go. i did not work for 42 years just to set a home and look out an watch the grass grow so we need reasonable price fuel to fulfill our dreams in retirement
No one responded to Kay because she makes no sense!
One of her more coherent sentences she states…(quoting her directly)
“GM has 1 million retirees that get on the average $1,500 a month in retirement on top of the $1,500 from Social Security. That is not much money to support a husband and a wife.”
Gee there are plenty of couples working for $9/hour in United States and managing to sustain themselves – which averages $3,000/month BEFORE TAXES.
Of course Kay and her family bought GM cars – you bought them because of the employee pricing offered to your husband – before GM started to offer the program to everyone else – and I doubt your husband would drive a Toyota or a Honda to a GM plant parking lot – let’s be realistic – that would not be politically correct!
Kay writes…
“Thank the Lord!!!!!! That is a load of bricks off my families shoulders, millions of others shoulders and the companies. Now we can go back to producing good quality, innovative cars like we have been all along.”
OK…NAME TWO GOOD QUALITY CARS OR NAME ONE INNOVATIVE CAR THAT GM PRODUCED IN THE LAST 24 MONTHS?
Of course you’re happy about the loans – because you have a self-interest for GM to stay in business – your husband works there – and you probably have a 30 year mortgage – but there is always the option of a trailer park – you can easily live there for $3,000/month.
Here is a great article from Peter Morici: (http://freep.com/article/20081223/OPINION02/812230310)
President George W. Bush has agreed to lend GM and Chrysler $17.4 billion on the condition these firms complete a plan to accomplish financial viability. The agreements set goals for automakers:
• Converting two-thirds of their debt into equity.
• Paying company stock to fund one-half of the Voluntary Employee Benefits Associations, which fund retiree health care benefits, and remove these costs from future liabilities.
• Aligning wages, benefits and work rules with U.S. Nissan, Toyota or Honda operations.
These goals are generally consistent with the conditions I outlined as necessary for the Detroit Three to achieve viability when I testified Nov. 18 before the Senate Banking Committee. For example, laid-off workers should no longer sit in the jobs banks collecting 90% of pay and benefits indefinitely and engaging in activities such as pinochle.
Financial viability requires projecting a positive net present value, taking into account all current and future costs. It does not require a positive cash flow by March 31. In fact, wage and benefit cuts only need be accomplished by Dec. 31, 2009.
Given the depressed auto market, a positive cash flow cannot be accomplished soon, and GM and Chrysler will be asking for more federal loans when they table their plans by March 31. If the auto market stays depressed into 2010, Ford will likely seek assistance. Given the likely duration of the recession, total loans of well over $100 billion will be needed.
Unless the automakers significantly reduce their debt, jettison retiree legacy liabilities, and align wages, benefits and work rules with those of Japanese transplants, they simply cannot hope to be consistently profitable. Yet the agreement permits the automakers to vary from those conditions if they can still demonstrate a net positive present value.
Enter the accounting magicians.
UAW contracts are exceedingly complex. GM and UAW leaders have mastered obfuscating the consequences of their pay structure and work rules. Calculations of net present value will importantly hinge on forecasts of future car sales and wages paid by Toyota, Nissan and Honda. A few quick pen strokes and a lousy business plan can be made a winner, with costs to taxpayers in unpaid loans becoming apparent only years later.
President-elect Barack Obama owes organized labor a huge debt for his November victory. UAW President Ron Gettelfinger can be expected to try to sell Obama labor agreements that appear to create more concessions than are real and leave the Detroit Three in the red going forward. Fooling Obama would create loans the Detroit Three never can really repay.
The government could force payment at the expense of the next creditors in line — the large U.S. banks — but the federal government is already subsidizing their losses. One way or the other, ordinary citizens who don’t earn nearly the pay and benefits autoworkers receive would be paying taxes to subsidize their rather generous lifestyles.
President Bush has punted the auto mess to his successor, and one of three outcomes is possible:
• President Obama can require the automakers and UAW to come up with a contract ordinary mortals can understand, eliminate all the foolish job classifications and work rules, and establish pay rates that make the Detroit Three competitive.
• Obama can push the automakers into a prepackaged Chapter 11, perhaps by providing some financing to ensure suppliers are paid and companies can continue to operate, and let a bankruptcy judge impose the essential conditions of the Bush agreement.
• He can let the Detroit Three continue their profligate behavior, providing subsidies masquerading as loans.
Obama faces the same kind of tough choice Bush did when he lavished generous subsidies on agriculture at the beginning of his presidency. If Obama caves to union pressures and chooses to subsidize the automakers, other unionized industries will line up. Market discipline will not apply to the 8% of the private workforce represented by unions, and damn the majority that really elected him.
“…a lot of us who are retired like to drive many miles just for vacations and to do things like ATVing,dirt biking and snowmobiling,”
Sorry Motorman, but none of those things are essential or a right. They are all voluntary, discretionary activities for those that have the means to enjoy them — the people that should be willing to bear more of the burden of higher taxes.
This is for Ted (with the bad attitude and misinformation):
There is no talking to or reasoning with people like you. You seem very bitter and have some displaced anger. I have learned about people like you through the several developmental and social pyschology class I have taken, my years of nursing experience and my own life experience. It must be a cold, lonely life for you. I hope you have a wonderful Holiday anyhow.
BTW, not that it is any of your business, I have a resonsible mortage!!!!! I borrowed for only 11 yrs. I owe less than 40k and my house is paid for. I don’t live irresponsibly in luxury even though I could have if I chose to. Remember I have a professional college degree that I worked hard for. My husband has a college degree that he worked hard for. My son is an Aeronautical Engineer. My daughter has 2 years of college. We contribute to society.
We donate thousands to charity. Do you? We volunteer our time for people less fortunate. Do you? We love our fellow man. Do you?
When you are perfect you can judge others!!!!! You should watch the Scrooge Movie. Just maybe you will learn something.
Ted Lewandowski how about the Chevy Malibu, the Cadillac CTS and the Saturn Aura? There’s 3 good quality cars in the last 24 months.
Also how about the Chevy Hydrogen Fuel Cell Equinox that is being driven by 90+ market participants as part of Project Driveway – that’s innovation for you.
Bob Wilson
“OK…NAME TWO GOOD QUALITY CARS OR NAME ONE INNOVATIVE CAR THAT GM PRODUCED IN THE LAST 24 MONTHS?”
Aura, G8, Malibu and CTS come to mind. Its a shame that you have nothing of value to add to these forums. You are one of millions of ill informed GM bashers and your opinions are based on outdated stereotypes or outright lies propagated by special interest groups who have a vested interest in the demise of GM and/or the UAW.
Ben,
I assume you know a lot of UAW workers personally since you are making so many bold claims about how they operate. Not buying a car because of the size of the contract of the workers who assemble the car is one of the most ridiculous things I have ever read. Since you cannot attack the quality of UAW workers or their hourly pay (close to non union workers in the south) you have decided to attack the size of their national contract and their alleged intimidation tactics. I live in Philly and thus do not enounter UAW workers so I can say they have never done anything to me personally. If they continue to assemble high quality cars I have no problem with them. I suggest you take the same attitude. I would also suggest you do some research before continuing to disparage the UAW’s quality and efficiency. Many of the most efficient plants in North America are staffed by UAW workers. YOu have no proof that they are standing in the way of quality and efficiency gains.
“Aura, G8, Malibu and CTS come to mind.”
You listed four. Let’s analyze that list:
1. Aura is really an Opel ~ designed in Germany, built in Belgium.
2. Pontiac G8 is an Australian Holden.
That leaves us with two quality American cars from GM ~ Malibu and CTS. But that’s only two out of all the brands and platforms GM designs, builds, and sells in the U.S.
Now if someone would go back and explain the Vega, Chevette, and Aztek, or how GM started the Saturn brand with so much promise and innovation, and then let it go the way of the others? Or how they let one of their best and most popular brands with middle-class, heartland Americans disappear ~ the Olds Cutlass? I know people in the Midwest who are still p.o’d at GM for doing away with Olds.
Sheth: “Not buying a car because of the size of the contract of the workers who assemble the car is one of the most ridiculous things I have ever read.”
Sheth,
Did I say I woudn’t buy a car built by the UAW? No, I didn’t. What I was trying to do was present some ideas to Kay of why the UAW is held in such low regard. For some reason, the media and most Americans seem to have a poor perception of the UAW. If not for the possible reasons I mentioned, why do you think that might be?
————————A Thought Experiment——————————–
As for their 22 lb, 2,215 page contract with the auto makers, here’s a thought experiment for you to try:
Let’s pretend you are the CEO in charge of a company. Your company is making a product that you hope can be compettive on the world market. In order to be competitive, your company must be agile, nimble, and innovative, put the customer first, build high quality products, and be flexible enough to adapt to changing marketng needs in a responsive fashion while being productive enough to push a quality, competitve product out the door.
Let’s say that your marketing research finds you’ve been building the wrong thing, and you must a rapid response change to stay competitive.
As you try to change the direction of your company, do you really want to be handcuffed by a 2,215 agreement with your worker’s union that is full of picayune and niggling work rules that restrict their productivity, and throw up constant and expensive road blocks to the changes your company needs to make to be competitive? Do you want to be hampered by 22 lbs of a contract that tells you what kind of workers can stand where, and do what kind of work, and that if an electrical circuit breaker trips, the entire production line has to stop until the shop steward can round up an electrician with the proper union rating and he arrives to reset the breaker?
Redd The Aura is built in Fairfax, KS. A suburb of Kansas City. The Astra is currently the only Saturn shared with Opel that’s imported from Europe. Similar names, so it’s easy to confuse the two.
Redd,
As with most GM bashers here you are poorly informed and should do some research before posting. The Aura (and Malibu) is on the same platform as the Opel Vectra but its not the same car. They have similar styling but the Aura has a completely different interior and longer wheelbase. The Aura is built in Kansas City and was designed as a US product. The only Saturn that is built in Europe is the Astra and that car sells in very small volumes.
The G8 is built in Australia but Holden is still part of GM. You are mentioning its point of origin as if Gm should be embarrassed that the G8 is a Holden product. Holden is known for making great RWD cars and they are part of GM. The CTS, STS, Malibu, Aura and Corvette are great US made GM products. The G6 is being refreshed for 2009.5 and represents another solid US product for GM. Its not best in class but it’s still attractive and competitive in fuel economy.
“Redd, The Aura is built in Fairfax, KS. A suburb of Kansas City. The Astra is currently the only Saturn shared with Opel that’s imported from Europe. Similar names, so it’s easy to confuse the two.”
Thank you Chris, I stand corrected.
“You are mentioning its point of origin as if Gm should be embarrassed that the G8 is a Holden product.”
Sheth,
From all I hear, GM should be proud of the G8 ~ I hear it’s a mighty fine car and a legitimate competitor to BMW. But if I was a GM engineer or designer in Detroit, I’d be hanging my head low that the Aussies did it and not me.
Sheth writes, “The Aura (and Malibu) is on the same platform as the Opel Vectra but its not the same car.”
How much did it cost to develop the Aura, and then the Malibu, out of the Vectra platform? If I recall correctly, it cost $100 million to “redevelop” the Astra for the US market. I think we can safely assume that the Aura and Malibu cost far more to develop than the Astra. So… why did GM do that? Why not just import the Vectra and save the money? Why do they have 3 (actually, at least 4 – there’s the G6) different versions of a FWD car of about 110in wheelbase powered by a 4 or small 6? Why not develop ONE version, get better economies of scale, have the flexibility to manufacture the car for export from the less expensive country to the more expensive country and save a whole lot of up-front development money?
Ben,
I can tell you why most Americans “hate” the UAW. Its because the media has been reporting that non college educated workers that assemble cars make $70/hr. Of course that figure is inaccurate but once it was put forward many people ran with that number and became enraged. Most Americans do not know a UAW worker and likely have never met one. It amazes me that people like you can offer so much insight into the laziness and ineffectiveness of UAW workers without much firsthand experiences with such workers. Since I don’t know any UAW workers personally I prefer to refrain from making broad generalizations about their work ethic or intelligence.
The fact that you think a union work rules document is the critical factor in changing over product mix shows how little you understand about the auto industry. Product flexibility is mostly a function of the capacity of an automaker’s plants. The transplant automakers are praised for having flexible plants but they have those plants because a) their plants are newer and b)they have less plants and often need to assemble different types of vehicles in the same plants. It has nothing to do with having non union workers. With or without UAW workers and automaker is constantly looking to slow production of unpopular models and increase production of popular models. This issue really has little to do with the unionization of the workforce.
I would also like to remind you that the Japanese automakers believe in lifetime employment and will pay workers to clean parks or take safety classes when they arent working. You are arguing that non having union workers allows companies to quickly move workers around or fire them but the non union auto workers in the south have a lot of job security. The jobs bank has been ridiculed by the press and the anti union folks but the Japanese automakers routinely pay workers not to work and promise to keep them on payroll. You should think about that the next time you praise manufacturers that don’t employ union labor.
Its interesting that you suggest that UAW work rules slow production when many of the top plants in NA are run by GM with union line workers. How is that possible if the union agreement is nothing but a document that justifies inaction and laziness?
Charlie:
Its not the “vectra” platform, its a global platform called epsilon. You cannot simply ship cars over from Europe with no changes. There are different rules, regulations and consumer tastes in the US relative to Europe. European automakers send over their cars with few changes but those are established brands and many Americans like the fact that they are getting a “premium” European brand. GM’s Euro brands are not known in the US and in many cases those models would be too expensive if sold here unchanged. Its easier for BMW or MB to ship over cars because they can charge prices that Chevy and Pontiac cannot for their cars. I don’t know how much it cost to design the Malibu and Aura but I know that many parts that you don’t see are shared underneath the surface. I know that GM’s next gen of vehicles are going to have even more in common and will be able to be assembled at any plant that makes that particular platform.
I dont know how much you know about Europe but I sincerely doubt that production in Europe is much cheaper than US production. Most of Europe has a pretty high standard of living and unions are stronger there than they are here. Importing a vehicle from Europe is a bad proposition because of the value of the Euro. This is one reason why many European automakers are raising prices every year.
To Kay and Sheth:
Interesting editorial in the Tuesday Wall Street Journal by Logan Robinson, Professor of Law at University of Detroit Mercy, former Gereral Counsel for Metaldyne, ITT Automotive, and Delphi.
http://online.wsj.com/article/SB123060246925441479.html
The editorial pretty much sums the effects of the collective bargaining agreement, “the size of a small telephone book”.
There is debate on this blog about the UAW. Kay and others have written some insightful comments regarding this.
Here’s a quote from Senator Corker:
UAW President Ron Gettelfinger, however, saw little reason to negotiate further with White House money on the way.
See:
http://www.boston.com/news/nation/washington/articles/2008/12/12/failed_auto_talks_raise_freshman_senators_status/
No one likes a cut in pay or benefits, but isn’t that better than losing your job?
Here are some pretty strong quotes from Economics Professor Peter Morici:
1) Unless the automakers significantly reduce their debt, jettison retiree legacy liabilities, and align wages, benefits, work rules with those of Japanese transplants, they simply cannot hope to be consistently profitable.
2) Yet, the agreement permits the automakers to vary from those conditions if they can still demonstrate a net positive present value. Enter the accounting magicians.
3) One way or the other ordinary citizens who don’t earn nearly the pay and benefits autoworkers receive would be paying taxes to subsidize their rather generous lifestyles, much as taxpayers are financing the bloated bonuses at large New York banks requiring federal dole to stay afloat.
4) UAW contracts are exceedingly complex. GM and UAW leaders have mastered obfuscating the consequences of their pay structure and work rules.
See:
http://www.finfacts.ie/irishfinancenews/article_1015585.shtml
I realize that UAW workers don’t actually get paid $70, but it’s commonly thought that benefits plus wages = $65 to $70 an hour. It’s commonly thought that non-union workers get $45 to $50 an hour which includes benfits and wages.
I didn’t get a chance to watch the full Congressional hearings, but if Dr Morici is wrong, Ron Gettelfinger could have corrected him as they both did attend the hearings.
If Dr Morici is right, it seems like they simply cannot continue to conduct business like that in this global market. It was OK in 1958, but not 2008.
Sheth writes, “I dont know how much you know about Europe but I sincerely doubt that production in Europe is much cheaper than US production. Most of Europe has a pretty high standard of living and unions are stronger there than they are here. Importing a vehicle from Europe is a bad proposition because of the value of the Euro. This is one reason why many European automakers are raising prices every year.”
That is true. Which makes importing an economy car, the Astra, a very puzzling move.
If we built the same cars in the US as we did in Europe, we cuold build them here and ship them there, which would reduce the cost of manufacture.
Yes, it’s true that Europe and the US have some different standards. It’s a realy puzzle why GM spends so much time and money fighting US regulations when they should be fighting to standardize regulations between the US and Europe.
Still, build the car to the higher standard or design it to meet both with suitable changes. It’s ridiculous that the Cruze should take two years to get here. It’s still ridiculout to have 3/4/however many mid-size sedans based on Epsilon.
As to the cost of redeveloping, the Aura, Malibu and G6 are noticeably different. The Opel Astra and Saturn Astra look just about identical (at least to me). Identical cost $100 million. I think we can safely assume that different costs far more. GM could have taken the extra hundreds of millions and spent it on improving reliability, fuel economy or other things that really matter in the actual performance of the automobile. Beats me why they didn’t.
Until recently, the 4-banger came with a class-trailing 4-speed. What did it cost to fixt that problem? How many sales did that feature and consequent flagging fuel economy cost GM?
Heck, look at the mileage GM is getting out of the XFE Cobalt program. That cost practically nothing. Spending some money and time on the (that’s THE) Epsilon to give it class-leading fuel consumption and then some would have made a difference in sales that slogans like “first ever G6″ and badge engineering do not.
Sheth,
“here are different rules, regulations and consumer tastes in the US relative to Europe. European automakers send over their cars with few changes but those are established brands and many Americans like the fact that they are getting a “premium” European brand. GM’s Euro brands are not known in the US and in many cases those models would be too expensive if sold here unchanged. Its easier for BMW or MB to ship over cars because they can charge prices that Chevy and Pontiac cannot for their cars.”
See that IS the problem right there. Many of GM’s lost customers don’t want American cars. But if GM were smart enough to bring its European cars over (ones worthy of a premium or semi premium tag) they could recapture some of that market.
No matter how you slice it spending more money to develop a new platform is a dumb idea. If GM has a global platform they need global badging. Not one car for the US and one for the states. It is precisely this mentality that is hurting 1/4 to 1/2 their sales (or potential customers). A lot of US customers don’t want US brands and GM has nothing non US to offer them. The rest of GM’s people are die hard loyalists that would buy a Mustang if you put a GM badge and logo on it. Heck they’d even buy Hyundais….
By the time the price difference catches up those cars will be made here as well or in China.
You simply missed that fact that European styling, European names and brands are IN right now. If GM were smart enough to notice they could drop a few American brands for a while and bring in the popular European and Australian ones.
Thank you Gerry for pointing us to that WSJ editorial. I hope Kay took the time to read it.
These paragraphs in particular says a lot about why people have the perception they do of the UAW and why the union plays a big role in the Big Three’s current straits:
“The UAW also has tremendous influence over the management. The current head of the UAW, Ron Gettlefinger, is respected. His predecessor, Steve Yokich, was downright scary.
As an officer in a UAW organized company, you knew when you were talking to Yokich (who died of a stroke shortly after retiring in 2002) that he would have your job if you made him angry. He ate vice presidents for breakfast, and many promising former executives learned this the hard way. The ability to “get along” with the union is critical to the success of a manufacturing executive. Some of this is showing appropriate respect, but some is simply catering to the union’s leaders.”
————————————————-
“The collective bargaining agreements are now renegotiated every four years; in each negotiation the power and penetration of the union grows. If the company asks to change the flow of work for any reason, from cost-savings to vehicle improvements, the local union president will listen politely, and then say something like, “We can help you with this, but what’s in it for my guys?”
Kay,
The problem is and never has been with the rank and file worker. No one is disrespecting autoworkers or the salaries they earn. The problem is with the union leadership and how they’ve grabbed for power, making it more difficult for the auto makers to be innovative and flexible so they could compete on the world market.
the federal govt has been designing most parts of GM cars for years,CAFE,crush zones,type of glass used in the windshield,air bags and even the bumpers now with the loan they will be designing the whole car.
Ben Dewberry,
Actually I disagree the problem is with the unions and their people. The people of the Union are sometimes left powerless. The Union forces them to do what it wants. The sad part is that the Union is supposed to represent the people working for GM. It is in the worker’s best interest to make sure GM’s products are top notch.
As far as Mr. Gettlefinger’s power. I can’t honestly believe that he is that respected. I would be more inclined to believe he is more feared then respected. Take a look at the history of Unions to get an idea just how powerful they are/once were.
To quote the artcile Gerry posted:
“The collective bargaining agreement with the UAW is a heavily negotiated document the size of a small telephone book. It is virtually identical for each of the Detroit Three, owing to “pattern” bargaining, but it doesn’t exist at all in their U.S. competition, the nonunionized transplants. Not only work rules, but fundamental business decisions to sell, close or spin-off plants are forbidden without permission. That permission may come, but only at a price, since everything that affects the workplace must be negotiated.”
“The collective bargaining agreements are now renegotiated every four years; in each negotiation the power and penetration of the union grows. If the company asks to change the flow of work for any reason, from cost-savings to vehicle improvements, the local union president will listen politely, and then say something like, “We can help you with this, but what’s in it for my guys?”"
Who is really in control of the companies here? The executives or the Unions?
Since it would appear that Unions have a lot of power… I’d say they are as in control as the supposed leaders of GM. The problem is many of the Union people don’t have what it takes to lead GM. As is obvious by the need for a 14 billion dollar bailout. That task should be left to GM execs and engineers. The unions should be asking what they can do to HELP GM rather then telling GM what it can and can not do.
I don’t blame GM for moving operations overseas etc..
“Some of this is showing appropriate respect, but some is simply catering to the union’s leaders. One could see this in the extreme deference paid to Mr. Gettlefinger by the CEOs of the Detroit Three during the congressional hearings, as they heaped praise on all that he and the UAW had done to help. The Detroit CEOs indulge the head of the UAW as they would a boss, because, like a boss, he can make or break their careers.”
It sounds to me more like politics then being respectful. Or more correctly that respect is demanded of Gettlefinger rather then earned as it should be.
“The Bush administration’s bailout listed as “additional targets” that work rules, as well as wages, become competitive with the transplants by Dec. 31, 2009. In reaction, Mr. Gettlefinger said that the UAW has already made “substantial sacrifices” and “will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed.” As an elected official, he cannot say otherwise. If he did, his members would quickly find someone more radical to lead them.”
This is absolutely ridiculous. Is the UAW stupid? Working with the congress to remove the unfair conditions!!!.
I have no sympathy for GM if it goes under. The people working for them clearly need a wake up call.
So GMAC borrows money from me a taxpayer and goes back to loaning to deadbeats again? This was one of the problems that got you where you are you will never learn and I will not do business with GM again
to get car sales rolling again the auto companies have to figure out a way to make auto leasing work because the average American worker can NOT afford a $400/$500 a month car payment and with GMAC at 12% rate on leasing that is not going to fly.
If GM is sincere about its future viability, they have to fire Bob Lutz and everyone in management like him. Did anyone else hear his NPR interview at the Detroit Auto Show? When asked what it felt like operating on the government’s dime, he sort of half-chuckled and then whined,
“I’ve never quite been in this situation before of getting a massive pay cut, no bonus, no longer allowed to stay in decent hotels, no corporate airplane. I have to stand in line at the Northwest counter,” Lutz says. “I’ve never quite experienced this before. I’ll let you know a year from now what it’s like.”
Welcome to OUR world, Bob! He talks like he is “roughing it” on a boy scout camping trip! His workers – the ones who still have jobs – are on furlough, he’s sitting on a product mix he can’t GIVE away, his company’s stock is in the tank, he has to beg Uncle Sugar for rent money, and he has the big brass ones to make light of the “sacrifices” he is being required to make? What an ass!
He complains that the public’s perception of his products’ quality is inaccurate, adding philosophically that it might take time for Americans to realize just how good GM’s vehicles are these days. Well, who is responsible for that perception, Bob? Who spent all those years screwing together slipshod product? Remember the Chevrolet Vega? Even after GM started caring again about quality and was building decent vehicles again, who gave all those vehicles away with employee discount gimmicks, zero-interest loans and cash rebates, eroding the GM brand. Who continued to wreak havoc on the perceived value of the GM brand by dumping all those millions of cars into fleets? It took GM nearly forty years to destroy its product image. Does GM really think they can turn around a negative image built over DECADES over night? Even if they do everything right from now on?
Someone really needs to introduce GM (and most of the rest of Big Corporate America) to a wonderfully effective system of merits, risks and rewards. It’s called CAPITALISM!! In Capitalism, CEOs make decisions about a company’s mission and direction, take calculated risks on new product ideas, and astutely manage costs. If he is good at this job, customers run to buy his products, workers are running full-tilt to make them, more money comes in than goes out, and shareholder value is increased as public confidence in the company grows. In return for his meritorious service, he gets planes, yachts, mansions, a Vale condo, Park Avenue penthouse, the richest and most exotic food and drink, luxury cars, chauffeurs, the whole U.S. Congress on his speed-dial, slave girls to attend to his every whim, supertanker-loads of money and the pièce de résistance, free box seats to the Superbowl.
If the CEO sucks at his job, customers flee from his products as from the pox, workers are thrown under the bus, they’re swimming up to their eyes in red ink, shareholder value collapses like a neutron star, and in return for running the company into the ditch, he gets planes, yachts, mansions, a Vale condo, Park Avenue penthouse, the richest and most exotic food and drink, luxury cars, chauffeurs, the whole U.S. Congress on his speed-dial, slave girls to attend to his every whim, supertanker-loads of money and the pièce de résistance, free box seats to the Superbowl.
UHH…. wait…. Something’s wrong here…. This isn’t Capitalism any more…. This is Rome burning, while Nero fiddles. Paris rioting for crusts of bread while Louis XVI sups on caviar. How ironic that it is the U.S. Government that is cast in the position of reintroducing to corporate America the concept of pay for performance. If there was any justice in the world, Lutz and all those like him who have been running our automobile companies, our banks, brokerages, etc., would get their due reward for their job performance. I would give them what they give us when our job performance stinks – NO bonus, NO salary, NO supper – just the door, with a size-12 boot up their asses for encouragement.
It is men like these, with their Royalist sense of entitlement, their short-sightedness, complacency and greed, who have taken the greatest superpower the world has yet seen and turned it into a has-been, second-rate country. They have turned us into England.
Sheth, Redd Nuckles, and others…
Sheth mentioned the Aura, G8, Malibu and CTS as “quality” or “innovative” cars. The Aura is “just” a badge-engineered Opel Vectra, designed for the EU market. So what. The Vectra is an excellent example of a popularly-priced European mid-sized sedan. GM brought over a good car and slapped a Saturn badge on it. Where’s the crime? I suppose Saturn could have continued making mediocre plastic-bodied lumps with centimeter-wide panel gaps and interiors that could have come from Fisher-Price. The Aura isn’t innovative, but it is good.
The G8 is a good car on its merits, but is ill-timed at best. This is the wrong time for a large, rear-drive car. Plus, it just doesn’t fit the Pontiac brand very well. It will fail just like the Holden-based GTO failed. Besides, it just doesn’t really look like a Pontiac. And innovative? Don’t make me laugh.
The Malibu IS a true master stroke though. The styling is striking, yet tasteful and sophisticated. I haven’t been able to say that about a Chevy sedan in a very, very VERY long time (I’m 57 years old). It looks expensive but not tawdry. I haven’t been able to say that about ANY GM sedan in a very long time. The interior is just flat-out STUNNING! Puts the Camry and Accord to SHAME! Almost up to Volkswagen and Audi level – a remarkable achievement at its price. Wonderful new 3.6L V-6 gets all the praise, but I’m also really impressed with the base I-4. Really smooth and quiet. Historically, Chevy ecotec fours have been agricultural grinders. I’ve always thought they were strong, well-built, reliable motors, but why – O WHY – has it taken so long to civilize them? But civilize them they did! All it needs is the six-speed automatic now offered only with the V-6 models. Innovative? No. Just a damned good American midsized sedan for a change. Cars like this really tick me off. General Motors really CAN build an excellent, world-class popular-priced mid-sized sedan. SO WHY HAVEN’T THEY FOR ALL THESE DECADES??!! Why did they let Camry and Accord end up owning this segment if they could have built cars like this all along?
Same comment applies to the CTS. I still haven’t really warmed all that much to the modern knife-edgy Cadillac look, but it is certainly a Cadillac. From six blocks away, I would never mistake it for anything else. And I would not be ashamed to seen in it. Indeed, I would rather be in a CTS than a bland Lexus. And the engineering, assembly quality, power, handling, ride, refinement, blah, blah, blah… at the price make me want to ask how Mercedes and BMW can sleep at night, charging the ridiculous prices they do. In the CTS, GM has rediscovered the Cadillac’s traditional role in the GM lineup. Cadillac is GM’s showcase – the best, most advanced technology that GM knows how to engineer, wrapped in leading-edge, if sometimes controversial styling, put together in the best way GM’s mass production lines can achieve. The result is not just an American luxury car, it is an American PERFORMANCE luxury car. For people who are too young to remember, the Caddies of the 50’s and 60’s weren’t just the biggest and most luxurious, they were also some of the FASTEST cars on the road.
By the way, rich Germans are buying CTS’s as fast as GM can ship them over. There is nothing to stir those feelings of American pride like the sight of a CTS with Bavarian plates, HID’s blazing, screaming down the autobahn at 250 kph in push-rod American V-8 glory. People there are pretty blazé about Porsches and Mercedes. And BMWs are used for taxis and police cars for crying out loud. But NO ONE ignores that Caddy!
William Irving: “Well, who is responsible for that perception, Bob? Who spent all those years screwing together slipshod product? Remember the Chevrolet Vega?”
William,
Whatever you may think of Bob Lutz, he wasn’t responsible for the Vega.
“Did anyone else hear his NPR interview at the Detroit Auto Show?”
Yes, I did. It wasn’t very becoming, and had to have left those who heard it with a bad impression of both Bob Lutz and GM. I’m surprised you are the first to mention it.
Couple that with his remarks about global warming several months ago, and the hairy-legged women he talked about on the Colbert Report, and one has to wonder how much longer GM’s Board of Directors will keep him around. He has done some good things, and if they do keep him, they may have to prohibit him from talking whenever he is close to a microphone.
To Nigel Gamecock —
“Whatever you may think of Bob Lutz, he wasn’t responsible for the Vega.”
True… Superficially, it does seem like a cheap shot. But my point goes a little deeper. Bob Lutz comes from a long line of GM executives who have created and who collectively represent GM’s sclerotic corporate culture. In short, Bob Lutz wasn’t responsible for the Vega, but he could have been!
His rare public utterances have been surprisingly revelatory of his character. His arrogance, entitlement, complacency, self-isolation, myopia and cynicism are his, but these attractive qualities have defined GM’s management culture for decades and without them, a steaming pile of crap like the Vega would never have been possible.
Not only does HE have to go; everyone there who thinks like him needs to go. Alfred P. “We’re-not-in-the-car-business-we’re-in-the-money-business” Sloan is DEAD! It is long past time to get some real car guys in charge who will turn loose the substantial reserve of real design and engineering talent whom I’m sure still reside within GM’s stable. The bean counters should be serving the interests of the final product, not the other way around!
If GM doesn’t finally and really “get it” and undergo a true paradigm shift in management philosophy, any and all bridge loans and bail-outs are just tossing money into a black hole. Frankly, if they haven’t gotten it yet after nearly 40 years of watching their diminishing market share and eroding brand image, I just can’t see it happening now. Stupid is as stupid does.
“…a steaming pile of crap like the Vega…”
William,
An apt description. Even 30 years later, the legacy of the Vega still hurts GM’s image. I hope whomever was responsible for the Vega is not still drawing retirement pay from GM.
I know that you must be receiving a million comments about what is going on with GM and I can appreciate your hesitancy when receiving emails like mine, but I have some very simple ideas on a way to breath life into the Saturn brand. Is there anyway that I can share my ideas with you without wasting either of our time?. I am not looking for anything from GM and I am a very successful distributor with DuPont Automotive Refinish, so I am not seeking any compensation or do I have any hidden agendas. I am a very loyal GM customer and presently own in excesses of twenty GM vehicles either personally or through my business (just so you know that we have not experienced a single major warranty transaction in the last ten years).
My motivation for talking to you is simple, I just hate to see a product go to waste that has an excellent distribution network and a product offering that is capable of so much more without GM spending much to correct it with current GM content. I would also like to see a way for all the people that make them keep their jobs. I realize all three American manufacturers are more a victim of past economic conditions placed upon them from past obligations them rather then becoming stupid all at once overnight. I think you will appreciate the simplicity of my ideas and the extremely low cost implementation that they offer. I am not looking to have this posted but I did not know of any other way to contact GM.
Sincerely,
Steve Schweid
303 877-8806
Email ss1591@aol.com