Big 3: A sign of things to come

[Stunt]

Over the last several years I've been keeping a close eye on the state of the automotive industry as the "big 3" have slowly degraded potentially to their non-existence. We can debate the reasons for this failure but I think we can all agree it's a combination of many things; 1) retirement benefits, 2) labour costs, 3) large benefit packages, 4) building cars people don't want, 5) flooding the market with product and others but those are the main issues. I will look at these factors and show how GM's mistakes are being continued on a national level.

1) There is currently more retirees than employees at GM and I imagine Ford and Chrysler are in similar situations. Since GM had a much greater market share they employed more people in the past and now the workers must indirectly support these retirees through reduced productivity. This is a parallel to the broad economy as the baby boomers begin to retire and consuming more healthcare, social security and stop working. There will be much fewer workers to support all the retirees and what they need to live.

2) Now consider labour costs where GM employees received much more money than other sectors and reduced the productivity of the company as well. One could make a comparison to increasing healthcare and education costs; input costs of a thriving economy; technically this is a nation's cost of a trained and healthy workforce to be productive.

3) GM's benefit packages play a role in the total cost of the retired and working employees. If you look at the current coverages offered by the government in terms of heathcare, social security, military, and other pet projects the government's benefit package is much too excessive for the nation to support with the revenues and liabilities it currently has.

4) Using resources to invest in products that people don't want is very similar to government investing in services people don't want and offer little in terms of growth and sustainability of the nation itself. The Iraq war is a good example of this and other pork spending projects where resources are diverted to projects that will not offer future revenue or benefit like education, financial sustainability, increased efficiency.

5) Flooding the market with product reduced the resale value of cars and drove the new car prices through the floor as picking up a slightly used car was a much more attractive option compared to buying new. Similarly flooding the market with cash through low interest rates and questionable lending practices have caused people to retract spending and businesses to deleverage and reduce investment. The bubble has made it more attractive financially to be more conservative and reduce risk rather than committing new money for something with marginal benefit. This has killed new/continued spending which represents the vast majority of economic activity and growth.

It's really eerie to see the parallels between what's happening in the broad economy and government infrastructure and the management of GM over the last couple decades. GM could be a sign of things to come; unfortunately unlike GM which can receive a bail out go bankrupt, cease to exist; the United States as a whole cannot. Now I'm not saying people or corporations should be taxed more or that government funded benefits should be cut. That's a debate that people will need to have eventually but it feels like leadership is delaying the inevitable if policies are not significantly changed.

 

[dmcowen674]

Is there a point to your rant?

 

[Stunt]

I'm pointing out that like GM's business model, the policies implemented by politicians and the fed are not sustainable; the parallels between GM's situation and the US's is uncanny. There needs to be a significant shift in how government operates and that's not one party...that's both parties. Democrats need suck it up and either raise taxes to pay for the social programs they implement/advocate and Republicans need to suck it up and get spending cuts before tax cuts. The American people need to understand that the social programs they want cost money and you cannot have healthcare and tax cuts and solve the world's problems. I don't even want to know how much money politicians have committed to people not yet retired with the current structure.

Are people looking the other way and hoping things don't fall off a cliff in their generation?

 

[dmcowen674]

Originally posted by: Stunt
I'm pointing out that like GM's business model, the policies implemented by politicians and the fed are not sustainable

Man for years you and your buds insisted I was wrong when I said the American Automakers were in bed with the Polticians and Saudi's.

Now you say I was right all along.

Why the lie for so many years?

 

[StageLeft]

Originally posted by: dmcowen674
Is there a point to your rant?

FAIL

Stunt brought up some good points with a well thought out post.

Man for years you and your buds insisted I was wrong when I said the American Automakers were in bed with the Polticians and Saudi's.

Now you say I was right all along.

Why the lie for so many years?

FAIL

 

[Craig234]

Originally posted by: Stunt
Over the last several years I've been keeping a close eye on the state of the automotive industry as the "big 3" have slowly degraded potentially to their non-existence. We can debate the reasons for this failure but I think we can all agree it's a combination of many things; 1) retirement benefits, 2) labour costs, 3) large benefit packages, 4) building cars people don't want, 5) flooding the market with product and others but those are the main issues.

Do realize that your first 3 of 5 factors all pump money to the people in ways that helps the economy, and ending them has a price for the economy.

The larger issues IMO as far as the economy are the totally wrongful increasing concentrations of wealth at the top.

 

[Stunt]

Originally posted by: Craig234

Originally posted by: Stunt
Over the last several years I've been keeping a close eye on the state of the automotive industry as the "big 3" have slowly degraded potentially to their non-existence. We can debate the reasons for this failure but I think we can all agree it's a combination of many things; 1) retirement benefits, 2) labour costs, 3) large benefit packages, 4) building cars people don't want, 5) flooding the market with product and others but those are the main issues.

Do realize that your first 3 of 5 factors all pump money to the people in ways that helps the economy, and ending them has a price for the economy.

The larger issues IMO as far as the economy are the totally wrongful increasing concentrations of wealth at the top.

So if GM wants to sell more cars they should be paying their employees more and spending more on retirees? :roll:

All spending has a positive effect on the economy...hell drug dealers still buy cars and houses; but it's more about the most effective use of resources. Pumping money into military helps the economy, pumping money into the bridge to nowhere helps the economy...get the idea? My point is not how GM interrelates to the economy but how GM's management is paralleling how the US government is managing finances.

 

[babylon5]

GM is a reflection of USA in general. GM could have been leading the market with EV1 if they keep devloping, but they literally buried EV1 alive because SUVs made more money for them at the time. Now look where it got them.

USA could be the leader of the world, but for many reasons, it is sliding slowly just like GM is.

 

[brencat]

Originally posted by: babylon5
GM is a reflection of USA in general. GM could have been leading the market with EV1 if they keep devloping, but they literally buried EV1 alive because SUVs made more money for them at the time. Now look where it got them.

Unfortunately, it appears that the way the 'public company' model operates has more to do with why some great innovations get shelved in favor of profit. A public company CEO has a mandate to shareholders to grow the stock price, period. And not necessarily to create a great company. Now this can be done a number of different ways of course -- make a great product, buy back stock, cut costs, improve efficiency, etc. But at the end of the day, it's about making the quarterly guidance and then hitting the EPS estimate. Shareholders demand double digit growth in just about everything -- margins, YoY EPS, ROE/ROIC, and if it's not delivered then the stock goes down and top management is out of a job if it goes on that way for too long. This encourages short term thinking, earnings manipulation & smoothing, and a neverending chase for the annual bonus.

In some ways, private companies don't have this kind of pressure. More companies need to get away from giving earnings guidance and playing the "make the number" game and start refocusing again on product and innovation.

 

[sandorski]

Short Term thinking is a plague on American Society.

While other Nations were acting on the coming Demographic Bubble, US Politicians were afraid to touch the issue because they had their Political Careers to protect.

Personally, I think one thing is largely to blame for this Short Sightedness:

1) Presidential Term Limits: Sure, it was to prevent some schmuck like Dubyah from dominating the Office, but it prevents Good Presidents from implementing any kind of Longterm consistency that works. If Clinton had stayed for a Third Term(if he was elected), he most certainly would have avoided Deficits and the Projected 10 year $Multi-Trillion Surplus may actually exist. Unfortunately someone in the past decided the Electorate shouldn't be able to choose anyone beyond 2 Terms.

Every new President has His(so far) own Agenda that changes the way things work. Thus wholesale changes are common and way too many Rules change forcing everyone, especially Business Interests, to stay focussed on the Short Term.

There are probably other reasons, like the Need of Publically Traded Companies to always improve the Bottom Line, but I don't feel like typing anymore.

Edit: Ah, Brencat went into the Business aspect.....should have read the whole thread. :Q

 

[Wreckem]

Originally posted by: dmcowen674

Originally posted by: Stunt
I'm pointing out that like GM's business model, the policies implemented by politicians and the fed are not sustainable

Man for years you and your buds insisted I was wrong when I said the American Automakers were in bed with the Polticians and Saudi's.

Now you say I was right all along.

Why the lie for so many years?

The fact of the matter, the United States cannot keep up with its non discretionary spending levels over the long term. Reports by the GAO and CBO have even said as much. By 2030, Medicare, Social Security, and Interest Payments on Debt, will comprise 75-80% of the federal budget. This is based off of the current tax base, which will only be shrinking over the next 20-30 years as well. We are talking tax brackets into the 60% range to cover liabilities caused by previous generations lack of foresight.

Shit will hit the fan in the 2030s. No one, sans a few, in Washington want to even discuss it. Medicare and SS are the third rail, but medicare has serious long term issues. And before you say "universal healthcare", if we cannot afford medicare which only covers a small precentage, how can we afford nationalize healthcare. The dems, Clinton and Obama were never for truely nationalizing healthcare, they were just for nationalizing the health coverage. The fundemental problem is the cost of healthcare, not the cost of health insurance. The dems do not even try to attempt to address the cost of healthcare, and Obama has only pledged for "unverisal coverage" of children.

 

[Wreckem]

Originally posted by: sandorski
Short Term thinking is a plague on American Society.

While other Nations were acting on the coming Demographic Bubble, US Politicians were afraid to touch the issue because they had their Political Careers to protect.

Personally, I think one thing is largely to blame for this Short Sightedness:

1) Presidential Term Limits: Sure, it was to prevent some schmuck like Dubyah from dominating the Office, but it prevents Good Presidents from implementing any kind of Longterm consistency that works. If Clinton had stayed for a Third Term(if he was elected), he most certainly would have avoided Deficits and the Projected 10 year $Multi-Trillion Surplus may actually exist. Unfortunately someone in the past decided the Electorate shouldn't be able to choose anyone beyond 2 Terms.

Every new President has His(so far) own Agenda that changes the way things work. Thus wholesale changes are common and way too many Rules change forcing everyone, especially Business Interests, to stay focussed on the Short Term.

There are probably other reasons, like the Need of Publically Traded Companies to always improve the Bottom Line, but I don't feel like typing anymore.

Edit: Ah, Brencat went into the Business aspect.....should have read the whole thread. :Q

Thats a crock of shit. The Dot Com and Housing bubbles still would have burst if Clinton had a 3rd term. Economic issues cause the government to run bigger deficits as they try to prop up the deck of cards. We probably wouldnt have had the war in Iraq, but theres no possible way the projected surplus would have materialized.

 

[sandorski]

Originally posted by: Wreckem

Originally posted by: sandorski
Short Term thinking is a plague on American Society.

While other Nations were acting on the coming Demographic Bubble, US Politicians were afraid to touch the issue because they had their Political Careers to protect.

Personally, I think one thing is largely to blame for this Short Sightedness:

1) Presidential Term Limits: Sure, it was to prevent some schmuck like Dubyah from dominating the Office, but it prevents Good Presidents from implementing any kind of Longterm consistency that works. If Clinton had stayed for a Third Term(if he was elected), he most certainly would have avoided Deficits and the Projected 10 year $Multi-Trillion Surplus may actually exist. Unfortunately someone in the past decided the Electorate shouldn't be able to choose anyone beyond 2 Terms.

Every new President has His(so far) own Agenda that changes the way things work. Thus wholesale changes are common and way too many Rules change forcing everyone, especially Business Interests, to stay focussed on the Short Term.

There are probably other reasons, like the Need of Publically Traded Companies to always improve the Bottom Line, but I don't feel like typing anymore.

Edit: Ah, Brencat went into the Business aspect.....should have read the whole thread. :Q

Thats a crock of shit. The Dot Com and Housing bubbles still would have burst if Clinton had a 3rd term. Economic issues cause the government to run bigger deficits as they try to prop up the deck of cards. We probably wouldnt have had the war in Iraq, but theres no possible way the projected surplus would have materialized.

I disagree, but we'll never know. Clinton would have made decisions based on maintaining Balnace in the Budget and not go on a Tax Cutting spree and NMD spending spree amongst other things.

Dot Com Bubble was certainly something he would have needed to deal with, but the Housing Bubble was something he could have avoided.

 

[Wreckem]

Originally posted by: sandorski

Originally posted by: Wreckem

Originally posted by: sandorski
Short Term thinking is a plague on American Society.

While other Nations were acting on the coming Demographic Bubble, US Politicians were afraid to touch the issue because they had their Political Careers to protect.

Personally, I think one thing is largely to blame for this Short Sightedness:

1) Presidential Term Limits: Sure, it was to prevent some schmuck like Dubyah from dominating the Office, but it prevents Good Presidents from implementing any kind of Longterm consistency that works. If Clinton had stayed for a Third Term(if he was elected), he most certainly would have avoided Deficits and the Projected 10 year $Multi-Trillion Surplus may actually exist. Unfortunately someone in the past decided the Electorate shouldn't be able to choose anyone beyond 2 Terms.

Every new President has His(so far) own Agenda that changes the way things work. Thus wholesale changes are common and way too many Rules change forcing everyone, especially Business Interests, to stay focussed on the Short Term.

There are probably other reasons, like the Need of Publically Traded Companies to always improve the Bottom Line, but I don't feel like typing anymore.

Edit: Ah, Brencat went into the Business aspect.....should have read the whole thread. :Q

Thats a crock of shit. The Dot Com and Housing bubbles still would have burst if Clinton had a 3rd term. Economic issues cause the government to run bigger deficits as they try to prop up the deck of cards. We probably wouldnt have had the war in Iraq, but theres no possible way the projected surplus would have materialized.

I disagree, but we'll never know. Clinton would have made decisions based on maintaining Balnace in the Budget and not go on a Tax Cutting spree and NMD spending spree amongst other things.

Dot Com Bubble was certainly something he would have needed to deal with, but the Housing Bubble was something he could have avoided.

How? The Dems are just as guilty for creating the housing bubble as are the republicans. Hell some Dems want to "nationalize" housing and saw the bailout as a way to do it(which is why there were still quite a few Dems that voted no on the second time around).

Most of our current economic problems stem from the housing/mortgage failure, which problems trace their roots back to before Bush. Bush didnt help matters, Clinton wouldnt have either.

Most economic problems, as well as government budget problems come from Washington's short term approach where they dont fix shit until its broke. Well let me tell you if they continue to do that the US is in for another great depression or worse. We have serious long term problems that no one will address.

 

[sandorski]

Originally posted by: Wreckem

Originally posted by: sandorski

Originally posted by: Wreckem

Originally posted by: sandorski
Short Term thinking is a plague on American Society.

While other Nations were acting on the coming Demographic Bubble, US Politicians were afraid to touch the issue because they had their Political Careers to protect.

Personally, I think one thing is largely to blame for this Short Sightedness:

1) Presidential Term Limits: Sure, it was to prevent some schmuck like Dubyah from dominating the Office, but it prevents Good Presidents from implementing any kind of Longterm consistency that works. If Clinton had stayed for a Third Term(if he was elected), he most certainly would have avoided Deficits and the Projected 10 year $Multi-Trillion Surplus may actually exist. Unfortunately someone in the past decided the Electorate shouldn't be able to choose anyone beyond 2 Terms.

Every new President has His(so far) own Agenda that changes the way things work. Thus wholesale changes are common and way too many Rules change forcing everyone, especially Business Interests, to stay focussed on the Short Term.

There are probably other reasons, like the Need of Publically Traded Companies to always improve the Bottom Line, but I don't feel like typing anymore.

Edit: Ah, Brencat went into the Business aspect.....should have read the whole thread. :Q

Thats a crock of shit. The Dot Com and Housing bubbles still would have burst if Clinton had a 3rd term. Economic issues cause the government to run bigger deficits as they try to prop up the deck of cards. We probably wouldnt have had the war in Iraq, but theres no possible way the projected surplus would have materialized.

I disagree, but we'll never know. Clinton would have made decisions based on maintaining Balnace in the Budget and not go on a Tax Cutting spree and NMD spending spree amongst other things.

Dot Com Bubble was certainly something he would have needed to deal with, but the Housing Bubble was something he could have avoided.

How? The Dems are just as guilty for creating the housing bubble as are the republicans. Hell some Dems want to "nationalize" housing and saw the bailout as a way to do it(which is why there were still quite a few Dems that voted no on the second time around).

Most of our current economic problems stem from the housing/mortgage failure, which problems trace their roots back to before Bush. Bush didnt help matters, Clinton wouldnt have either.

Most economic problems, as well as government budget problems come from Washington's short term approach where they dont fix shit until its broke. Well let me tell you if they continue to do that the US is in for another great depression or worse. We have serious long term problems that no one will address.

Different priorities. Not all the dominoes were in place until Bush's Presidency. Clinton may have Vetoed subsequent Bills that were necessary as well as not have the increased Deficit pressures of the Tax Cuts to deal with. Clinton had a longterm Plan, Bush's Policies did not follow that plan at all, in fact it reversed it.