Well, maybe not Audi but maybe John Deere, or a prefabricated building manufacturer, or a cooperative of smaller manufacturers who don't have the capital to build-to-suit. Point is they can get out from existing obligations to do what makes sense for the long-term health of the business.
GM Declares Bankruptcy Imminent After $4.2 Billion Third Quarter Loss
- Thread starter TinmanMS6
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Well, maybe not Audi but maybe John Deere, or a prefabricated building manufacturer, or a cooperative of smaller manufacturers who don't have the capital to build-to-suit. Point is they can get out from existing obligations to do what makes sense for the long-term health of the business.
What GM needs to do is have their plants be able to manufacture every product they sell. Look at BMW's Spartenburg plant. They build the X5 and X6 side by side and the now disconutined US built Z4. BMW can techinally build just about any model there if they wanted too. Aslo look at Nissan's plant in TN. Nissan builds the Altima, Maxima, Frontier/Suzuki Equator, Pathfinder and Xterra in the same building. Does GM really do the same?
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GM does not utilize a true flexible manufacturing facility in the production of its vehicles. Of course, the practice a form of this by re-badging a Chevy as a Buick and a Saturn. They can shift production between the different brands of the same vehicle as demand warrants.
In any event, we're really in agreement about different parts of the bigger GM mess. I think they need to downsize; you believe they need to work smarter, not harder, so to speak. I also agree they need flexible manufacturing but that, in itself, will not help GM right now. Cutting production capacity by 60% will.
10 years from now when we re-examine this period in GM's history we will look to GM leadership (CEO Wagner and the Board of Directors) who played the part of the consummate addict; refusing to believe they had a problem until it was too late. Even Friday CEO Rick Wagner refused to admit that with only 60 days of cash on hand it was not yet time to CONSIDER filing for bankruptcy protection. Not even a bailout of $25B would be sufficient to turn the tide for GM as its currently structured.
Evidence: GM had ~$40b cash on hand about 18 months ago. At the time they believed that the (then) new GMT-900 trucks and SUVs, the Malibu/Aura/G6 cars, the Volt and the Solstice/Sky would generate sufficient profits to save GM. In the ensuing months, before the economy tanked, GM was shedding market share like crazy, renegotiated a sweet deal for the unions, and spun-off then bailed-out Delphi.
Today, GM has effectively no high-volume new cars in development, no cash to update faltering models (Cobalt, G6, Impala, Colorado, Solstice, etc) and assets left to sell or put-up as collateral. They literally are trying to sell the shirts on their backs (RenCen). Not protecting the share-holders and other GM creditors through Bankruptcy is dereliction of duty by any definition for Rick Wagner.
I just can't wait for the books and inevitable movie to come out. These are going to make The Smartest Guys in the Room (about the rise and fall of Enron) look like tales of the high school lunch room.
this is the main impediment to an automaker declaring bankruptcy. especially given most people's misunderstanding of C11 bankruptcy, it will be tough for any in-bankruptcy automaker to sell new cars for exactly the above reason.
Valid point and one I am drawn to make myself unless I consider other recent examples of C11. Take the airlines for example. Several have declared C11 bankruptcy multiple times in the last decade and rarely did this result in a decrease in business. One might point to the advanced-purchase nature of airline tickets as a primary difference between the industries. However, even under the pre-purchase business model we would expect to see a marked decrease in business just offset by a few weeks to a few months. This is just not the case. If anything, C11 allows airlines to immediately realize efficiencies which were not available under burdensome contracts and lower costs for consumers. We generally do not see where C11 raises consumers concerns about reliability or safety, at least not to levels which make them change their buying behavior.
I believe this could also be the case for GM...if they hire the right folks to reorganize. There will be a steep learning curve since no modern auto manufacturer has declared C11. In the airline industry there is a pretty clear path for C11 which increases the chances of a company emerging from protection stronger.
So, ask yourself: Is GM willing to murder The General as we know it? Are they willing to ax brands that have been around for decades? No doubt they will see this as euthanasia and have a difficult time doing what's needed. This is the biggest risk to customers...that they will not take big enough steps even in C11.
the primary difference is that one industry sells a durable good, and one industry sells a service. once you take your trip, you're not concerned about the airline's survival...they don't owe you anything else. on the other hand, a lot of people are going to be wary of buying a car with a warranty if they're not sure that the warranty or parts are going to be available.
while pre-purchasing tickets is an example of something the airline still ows, the timeframe is much shorter and the financial risk taken by the consumer is much less (even w/ ticket prices being what they are these days!). there is a huge difference between prepurchasing a $400 ticket for a trip next month, and buying a $25,000 car that you'll be using for 5-7 years.
again, though...the actual risk is much less than the perceived risk. most people likely don't understand that "bankrupt" doesn't mean "out of business." GM would still be around, still selling and servicing cars, but the damage created by peoples' perception of the risk is another issue altogether.
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I suppose we agree about different sides of the same issue.
The "risk" airline travelers might perceive would be of the plane falling out of the sky. I know that when I've been waiting to board a flight on an airline that had recently declared bankruptcy no one was joking about the flight being canceled. They were all joking about the engine falling off after the airline cut costs.
If airline travelers were willing to risk death to patronize a bankrupt airline I figure there's enough people out there to buy new cars at fire sale prices from GM.
From this morning's Washington Post:
"It is quite possible the auto industry is not thinking in truly contemporary terms," he said. "Consumers have lived through a lot of bankruptcies over the last 10 or 20 years. A couple of generations ago, the word bankruptcy meant liquidation. Now it very often means reorganization. That can be quite transparent from a consumer perspective." -Michael E. Levine, a former senior airline executive and a lecturer at New York University School of Law
"It is quite possible the auto industry is not thinking in truly contemporary terms," he said. "Consumers have lived through a lot of bankruptcies over the last 10 or 20 years. A couple of generations ago, the word bankruptcy meant liquidation. Now it very often means reorganization. That can be quite transparent from a consumer perspective." -Michael E. Levine, a former senior airline executive and a lecturer at New York University School of Law
that pretty much sums up the last 35 years, doesn't it? why change now?
i think C11 is the right thing for GM, if accompanied by a media campaign stressing that the company is not going anywhere. there is probably more danger of the company folding if C11 doesn't happen. either way, i agree that there are probably some deals to be had on GM products in the near future. tow rig, anyone? and those camaros and G8s are pretty sweet.
I for one hope they actually fail completely. Death to UAW!! woohoo!!
This way, all the support industries that are dependant on GM will lay off their workers and those workers will go riot against the UAW workers and it'll be a good ol southpark fight in the streets
This way, all the support industries that are dependant on GM will lay off their workers and those workers will go riot against the UAW workers and it'll be a good ol southpark fight in the streets
You are correct. I probably could tow my Miata with a G8.If only they'd made the wagon, I could throw spare tires in the back, too.
Come to think of it, I'm going to go ahead and blame the current troubles of GM directly on them passing on the G8 wagon.
i hear you...but that what back seats are for! BTW, the Magnum tows 3800 pounds. spring for a fancy aluminum trailer and there you go.
you mean the El Camino thing isn't going to save the company? i can't believe that thing won't be a huge success! (confused)
actually, they were incredibly profitable, and propped up a horrid passenger car line. that's a great reason.
edit: interesting analysis of the effect of a C11:
http://www.time.com/time/business/article/0,8599,1858702,00.html?iid=tsmodule
edit: interesting analysis of the effect of a C11:
http://www.time.com/time/business/article/0,8599,1858702,00.html?iid=tsmodule
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Nice article but consider the source:
"A carefully planned, prepackaged bankruptcy would still be troublesome," says Nicole Y. Lamb-Hale, a bankruptcy expert at the Detroit office of Foley & Lardner, a law firm that represents some GM suppliers.
Contrary to the statement above not all bankruptcy plans are created equal. The carefully planned, prepackaged bankruptcy from TTAC does not dump employee pensions on the Pension Benefit Guaranty Corp. as Ms, Lamb-Hale posits. Frankly, the whole article is heavy on doom and gloom and light on details (as I suspect most reporting at Time.com is).
I'd rather read the opinions of Paul Ingrassia of the WSJ and Thomas L. Freedman of the NYT . I don't agree with 100% of their recommendations, but their reporting of the Big 2.8's situation and its context are second to none.
agreed. i did notice the identity of most of the sources. but the point about the potential ripple effect is a good one. there are a lot of job dependent on payment of debts owed by GM. problem is, eventually those debts won't get paid, one way or another.
There are grumblings of the government bailing out the suppliers and unions if GM does end up filing bankruptcy. That might end up being a win-win for GM and the rest.
I don't think there's any end to this that's a win for the American public as a whole. Either there's an economic bloodbath as GM and its suppliers, dealerships, etc. cut thousands of jobs, or there's a whole lot of tax dollars going to bail somebody out.
I don't think there's any end to this that's a win for the American public as a whole. Either there's an economic bloodbath as GM and its suppliers, dealerships, etc. cut thousands of jobs, or there's a whole lot of tax dollars going to bail somebody out.
mazdaspeedster3
Member
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- Mazdaspeed3. 2008
How many of you work or live in the Detroit metro area? Pro/Con to the Unions you are going to unemploy an awful lot of people while NOT generating jobs for others. Granted, the idea that Unions are not needed in a world with our current labor laws is ridiculous to some extent but if you knew anything about how these industries operate and the ammount of work really put into manufacturing ANYTHING at that level you need someone in the middle to control the labor force with some understanding and to handle the lay offs and change overs...
For not wanting to start an argument I do think this will bring a lot of light to the Union money and not needing an agency at that level and really should make them non-profit or something along those lines with all un-used union dues going back to the industry or into pension retirement plans...
It is going to be an interesting end to this year and start to a new year... There are going to be some INCREDIBLE changes to the world as we know it. It is going to get a lot worse before it gets better!
For not wanting to start an argument I do think this will bring a lot of light to the Union money and not needing an agency at that level and really should make them non-profit or something along those lines with all un-used union dues going back to the industry or into pension retirement plans...
It is going to be an interesting end to this year and start to a new year... There are going to be some INCREDIBLE changes to the world as we know it. It is going to get a lot worse before it gets better!
While I understand the unions are huge for the domestic automakers, there are a lot of manufacturers who get by just fine building cars in the US without them. Honda and Toyota come to mind. There's a lot of overhead in dealing with the unions that the Big Three really don't need right now.
One way or another, there's not a pretty resolution to this whole mess. I'm generally in favor of the government leaving things alone, but I think they're going to have to get involved somewhere.
One way or another, there's not a pretty resolution to this whole mess. I'm generally in favor of the government leaving things alone, but I think they're going to have to get involved somewhere.
