Recent events at GM/Delphi

[gravitar]

Just wondering what your take is on the recent situation facing GM. The press is reporting the situation as being pretty bleak. I just got done watching the 60 Minutes story on GM, and although they didn't go so far as to predict disaster, they did bring to light a lot of the hige difficulties GM has to overcome. Bob Brinker (Economist w/ a weekly radio program) took it a step further on his program yesterday, suggesting that if Delphi strikes and it is prolonged, that GM may be finished. So anyway.. First of all, for you guys that are NOT in an automotive town, is this even a topic of discussion? I live and work in "Ground Zero" of the automotive industry, so its hard for me to figure out what the rest of the world is thinking. It wasn't until a few years ago that I began to realize that there WERE any industries other than automotive.. I'm still not 100% sure that there are So if you aren't in an industry that deals directly with the Big-3, do you even really care? And for some of you fellas that have a few more years under their belt than me, put this in perspective. Are things REALLY as bad as they seem right now? I'm used to hearing bad news about the US auto industry, but not THIS bad and for so long. So is the unthinkable possible? Could GM really go under?

[Justin27]

I think what is happening in Detrot is reflective of the whole country in requards to manfacturing. I am in the textile world. Every month there is a another company going under. Everything can be produced overseas cheaper. The last company I worked for moved all it's manfacturing the China. The days of company suppoted pension plans are gone. Ask the pilots of the major airlines. I will contuine to make my living in automation but I will push my kids to the medical field. Justin Edited April 3, 2006 by Justin27

[TimWilborne]

I most definitely care. If GM was to collapse, it would not be good for anyone. Before I give my opinion on the matter, I would like to know what you Detroit guys really think needs to be done to fix, not patch, GMs problems. You are the most affected and will have to make more sacrifices.

[TimWilborne]

Here are my key questions that will effect everyday people. Pensions – Should they be eliminated? Insurance – Should workers pay a larger portion of insurance cost? Wages – Should they be cut or made into a more incentive based system? Unions – Are they helping or hurting? Job Cuts – No one likes job cuts, but how much resistance is there to the massive about of job cuts it will take to make GM as efficient as other automotive companies? Edited April 3, 2006 by TWControls

[jstolaruk]

Here in the Motor City, if you didn't work for the Big 3, pensions for the most part are self-funded. Some employers have a matching plan but not many. If you want the tremendous health plans that UAW workers have, sharing the cost would put them on par with the rest of us. IMHO, UAW wages are extremely high for the amount of productivity their employers get in return. If you saw what I see everyday I'm in a Big 3 facility, you'd be as disgusted/sad as I get. I think Unions have outlived their usefullness and now I believe many of the workers are questioning the value they get in return for their union dues. I haven't heard any grumbling from workers I know, more of personal concern if their job disappears. Many have their lifestyle based on income that included overtime. Overtime recently has been rare. The sad thing is many could have had a free ride to college and most didn't take advantage of it. These are just my personal observations. When I go down to Mexico to a couple of the Ford facilities, I see a better attitude toward work and more productivity and, of course, lower wages. The arguement could be that they are too low but over the last 15+ years I've seen a positive improvement in their quality of living. Thats what the US auto workers have to compete with. Edited April 3, 2006 by jstolaruk

[waynes]

This is really scary news guys!!! For a company the size of GM to collapse would have an astronomical effect on the rest of the industry. As I am sure you are aware, GM is almost double the size of Toyota and Ford. If you consider that Toyota owns Yamaha, Panasonic, etc. then it becomes clear that a collapse of GM will not only the guys in Detroint (and all the other manufacturing facilites), but all the other business interests scattered around the globe!!! I hope this will not happen. Edited April 3, 2006 by waynes

[jstolaruk]

There was an article in the Detroit Free Press about W.L. Ross, a guy thats has already been buying up some of the auto suppliers that are in bankruptcy on the cheap and has expressed interest in buying up some of the US plants that Delphi is looking to shed. So it may not be a matter of those plants disappearing but they certainly would look different (leaner) after this is all over. Just to put the US Delphi thing into prospective, Delphi has 160 plants world wide with 185,000 employess; 29 plants w/ 50,000 employees in the US/Canada. Delphi is looking to shed 21 of those 29 plants here in N.A. but there would be a net increase of 13 plants elsewhere. Edited April 3, 2006 by jstolaruk

[TimWilborne]

Well I thought this topic would get more response than this. I know that there are many participants of this forum from the Detroit area. Are you guys thinking that GM could not possibly fall? Or perhaps it is similar to a Textile mill town I lived in as a child. The mill owned the city and over the years the mill's business dropped off and the plants got outdated (by 100 years or so). A company came in and bought the mill only for its name and shut it down. I was still the primary employer of the city but no one was upset that it would be shutdown. There was more of a feeling of relief that everyone could finally move on and look for jobs in other industries. Is that the feeling? Here are my opinions on my question. And I apologize before hand if I offend any of the Detroit guys. I know this is a very touchy subject. I think it is time that Detroit began aggressively attracting new industries. How they have managed to hold on to the automotive industry is beyond me. But while I believe GM will stay based out of the city, I don't see a way they can keep from moving their plants elsewhere. The wages are just too high for this type of industry. How much heavy industry do you see in any large city. It has been a trend with most other industries for the last 100 years or so to push industries further south in search of lower wages. In most of the cities, when the heavy industries move out, they are replaced with more high tech more profitable industries. What this industry would be for Detroit, only time will tell. That's my take on it. Again I apologize if I offended any of you Detroit guys or anyone else in the automotive industry. My thoughts are with you during this time. Edited April 4, 2006 by TWControls

[jstolaruk]

no offense taken.

[BobLfoot]

TW - here is hoping that the UAW / CAW members of this board don't take your head off. I've worked in several industries over the course of my life. Started in agricutural, then Telecommunications, Automotive, Warehousing, Airline and now Food Industries, Everyone thinks that their position is the only one that makes sense. We need to recall that no one has the total picture on any issue. You are correct that the American worker has a tough road when competing against the foreign worker with a lower cost of living. This is true as long as stockholders and CEO's insist on maximum return for investment. We may one day reach the point where we a re producing products so cheaply and profits are so large if w could sell them, but none of our target market have jobs any longer to buy them. It will not be pretty of comfortable, butthe whole global economy will settle out eventually. Just my humbe opinion.

[TERdON]

I couldn't care less about Detroit actually, haven't got any close connection to it at all. To add, most of the cars produced by GM are petrol-thirsty SUV monsters, which truly are really unmodern. Quality problems really don't help... The problem is though, that Saab Automobile is being owned by GM. Although Saab hasn't been first for the environmental friendly car race, they did release a really interesting concept hybrid ethanol (E85) car in Stockholm during the week. Part of the picture is that the finances of Saab hasn't been really great. It would be sad to see GM's problems in general to affect Saab badly as well.

[gravitar]

Well how dumb am I, I started the topic and haven't really given my own opinion yet! One thing I'm sure we can all agree on, the problems that got us where we are today are very complex. You can't point to just one or two causes to blame it on. Unfortunately that means you can't just solve one or two of the problems and turn the thing around, either. I think the root of the problem is that the Detroit auto establishment didn't face any serious competition until about 30 years ago. This created a culture of "comfort" and complacency throughout the industry. At every level of every company that serves the Big 3, nobody really worries about their way of life. Our fathers retired comfortably, our fathers fathers retired comfortably.. for some of us it goes back even farther than that! Detroit has been the Land Of Plenty for so long, nobody is really scared about someone from outside the establishment taking their comfortable existance away from them. Nobody's looking over their shoulder. So anyway.. What I'm getting at here is, all the things people mention as the causes.. The UAW, retiree pensions, unusually high wages, free healthcare, etc. These are all SYMPTOMS, not the root cause! This is why management made so many sweetheart (or just plain dumb) deals with the unions.. This is why everyone was guaranteed retirement benefits and free healthcare.. This is why quality, value, and styling have (perhaps) suffered.. Why bother? Why work your hardest, drive the hardest bargain, or do your best? At the end of the day, there's enough to go around. This prosperity is our BIRTHRIGHT (so we thought), just like for generations before us. This concept might be hard to understand for those of you that haven't experienced it firsthand. But believe me, it exists. Everywhere I've worked (I've spent my entire career here in Detroit), people are comfortable. I can't think of a better adjective than that. People don't sweat the details, don't go the "extra mile". (Now I'm not saying EVERYONE is like this of course.. but this is the general mentality) People get in their comfort zone, and refuse to leave that place until it is TOO LATE. Until we come to grips with our culture of complacency, we can't begin to understand what it really takes to turn things around. The shame is, I fear that by that point it'll be too late.

[gravitar]

I was hoping to get the "take" on this from people on other continents. I'm glad you weighed in. What is SAAB's positioning in their home market? Are they like your "Chevrolet"? Over here, they appeal mostly to a small segment of the market.. I would say mainly those that seek out status or trendiness (or a percieved higher level or styling and craftsmanship), and specifically look for European imports. So is the sentiment that SAAB is "held back" by GM? Are they losing respect and marketshare, or are they holding their ground? Would it have any measurable effect on your economy if GM were to sell SAAB? I also find it interesting how you percieve GM as a whole ("most of the cars produced by GM are petrol-thirsty SUV monsters, which truly are really unmodern. Quality problems really don't help") since GM does offer a very wide selection of cars and trucks from the smallest to the biggest. I'm not saying you're WRONG, I'm just curious how widespread this belief is. There's probably parts of this country where most feel this way, too. The PERCEPTION of GM probably isn't helping their situation! I will say one thing, the petrol-hungry SUVs are definitely the most PROFITABLE vehicles in their line-up.. So maybe that's how they get more attention than the cars? Edited April 5, 2006 by gravitar

[TERdON]

Uhm, I'm not sure, but there might be some cultural bias here (hint: petrol prices here are almost three times what you have - so many people value fuel economy much more). I do know that Ford has some cars I consider small, but I don't really know of any small GM cars. Actually most people here have no idea whatsoever what cars are GM ones or not, as they don't use the company name on them. So please educate this ignorant Swede. :) And just to make sure, a small car in my eyes is something like the Toyota Aygo, the Volkswagen Golf, the Suzuki Swift, Ford Fiesta, Peugeot 205, Volkswagen Lupo, Ford Ka, Volkswagen Beetle or similar ones.The Smart Car would be really small, and if you get it smaller than that it's probably not a car anymore... Big cars would be a Saab 9-5 combi, a Volvo 945, the seven-seated Peugeot 505 Break my parents used to own (I have 4 siblings - big family), Volkswagen minvans etc. A SUV just is obscene (especially considering most people who use them as a penis extender more than anything in my eyes - you don't need such a car to drive the kids around or go shopping. *'nother trollish comment * And sorry to say, the SUVs sell pretty well even in Sweden (it's very swedish to want to be american, actually). The environment cries with me... Anyway, even though most other brands perhaps earn most of their profit from SUVs as well, they also try to put green cars / smaller and efficienter cars on the market, sometimes even with a loss, under their main brand name. That makes a great deal of difference to me. I haven't really seen any efforts from GM to make cars greener - and even though that perhaps has nothing to do with what goes on behind the scene, it gives me the perception that they just don't care. It also makes for questions about future fuel economy - petrol prices are going one way only, and it sure ain't down. Actually a future problem might be similar to the crisis in the automotive industry in the 70s - when not a single american car manufacturer expected people to want cheap, small, japanese, cars, that held together almost for ever and where cheaper to own when oil prices spiked. :) To be fair to GM, this isn't a perception I have of only GM, it's a perception GM shares with the US in general. Having a president closely connected to the oil industry, not even wanting to discuss issues like the Kyoto treaty and that even flat out denies even the possibility of the green house effect really burns the image of USA as a country where the environment matters (even with parts of the US making great efforts - California stands out especially). Also feel free to check some statistics on oil consumption per capita over the world - USA is above or far above all european countries except strangely enough Luxembourg, Gibraltar and some odd islands. Basically - if energy is cheap, feel free to waste it, and ignore the hidden environmental cost that no one (at least not in our generation) has to pay. Or, just perhaps, I'm merely a grumpy environmentalist (I do know I'm extreme even for Europe with that), who is really, really bitter because no one really cares about the world we live in. </rant>

[Sleepy Wombat]

--- TANGENT ---- Just a point to consider when thinking about all of these ENVIRO friendly Electric / Petrol Hybrid cars.. Considering tha amount of batterys required (especially when the car is totally electric) we should start to stop and think of the amount of dead useless batterys in a number of years to come also..... I think that battery technology needs to improve considerably.. --- END TANGENT --- The best car that i believe that GM has is the Australian Exported Holden Monaro....

[jstolaruk]

SLIGHTLY O/T I think the path of least resistance for alternative fuel vehicles right now is the bio-diesel. Until distribution channels for hydrogen develops and the cost of fuels come down, the bio industry is showing a lot of activity. If the car manufacturers put more effort into it they'll help their long term survival. Edited April 6, 2006 by jstolaruk

[TERdON]

E85 cars don't have any batteries, neither do the above mentioned biodiesel ones.

[Imbroglio]

I work for a tier 1 supplier to GM and have been very interested in how GM plans on handling it's current issues. There does seem to be a complacency in the automotive industry and in the US. There also seems to be a mindset that we are entitled to certain things like free healthcare, great paying jobs for semi skilled workers and cheap gas. This to me is the root cause of most of the problems we are facing as an industry and as a Country, the mindset of entitlement.

[Money4Nothing]

I've worked for both a union facility and non-union facility...and I must say the the non-union facility far out-performs the union facility. Unions were great at one time and saved US industry, but now they need to go the way of the dodo. $

[DanW]

I'm convinced GM will go into bankruptcy, primarily because I used be Mr. GM, until a year ago, when I bought a Toyota and advised my daughter to buy a Toyota. When GM loses long time customers like me, who resisted the lure of better designed, better built vehicles for decades, they're doomed. In 1979, the US congress provided support for Chrysler, which was nearing bankruptcy, in the form of government guaranteed loans. I opposed it then, as now, as being an unconstitutional form of fascism (violates the general welfare clause, being a form of special welfare). The 1979 Chrysler incident will be the model and precedent for the US goverment bailing out GM, in whatever form is required. When that happens, GM will be able to take actions under the cover of bankruptcy, that it can't take now. But even operation during bankruptcy, or actions like subsidized purchases of GM vehicles for government agencies, won't bring sales numbers up to the level of their current production capacity (at least, according to a Ford analyst I know), so production capacity HAS be shed, whether by closure or sale. Grim picture for long time employees expecting a pension, for contractors servicing GM, and for GM's suppliers. Dan

[jstolaruk]

Bankruptcy maybe, mostly as a way to shed its legacy costs. I was in the GM Powertrain Willow Run plant this morning and had some time to talk to some of the skilled trades. These guys had 34-43 years in and they were all waiting to see what kind of incentive plan they would be offered to retire. Pensions are guaranteed for the most part (by taxpayers of course) but health care coverage is not; that will take a big bite out of any pension when GM decides to drop their retirees (which has already happenden elsewhere).

[TimWilborne]

On thing to think about here, the government has be rewarded very well in terms of taxpayers being employed and Chrysler did pull out. And this wasn't a one time thing for the US government. Don't forget about them bailing out NYC. Another investment that had tremendous returns. Hey, may be we finally found something the US Government is good at Edited April 8, 2006 by TWControls