And in most years we are wealthier than previous years. Even with the current downturn we are still a very wealthy country.
For people who keep mentioning the jobs bank, it's being phased out by 2010. It should be done sooner though.
And why do people rave so much about Japanese management? Is that why Nissan has that great Japanese executive Carlos Ghosn? Is that why people rarely mention the other four or five large Japanese auto companies?
Anyways, as far as GM:
And why do people rave so much about Japanese management? Is that why Nissan has that great Japanese executive Carlos Ghosn? Is that why people rarely mention the other four or five large Japanese auto companies?
Anyways, as far as GM:
- Sell Hummer and Saab, close GMC
- Make Pontiac a specialty brand (get rid of the G3, G5, G6 and Torrent)
- Shut down at least 50% of dealerships
- Get VEBA fully funded
- Renegotiate contracts at all plants -- no need for ultra-strict shop rules
profit is a function of revenue minus cost times quantity. You can either increase quantity, increase revenue, or decrease cost. There is no point in looking at items that will take 1-2 years to be realized. They need impact immediately.
Increasing revenue is not an option until completely different products come online so that is out for another x years of development. This isn't an immediate solution that they need.
Increasing quantity is difficult, the car market has shrunk so the only way is to steal share. This can come through tariffs on imports (government action) or one if its competitors going out of business to free up some market share or huge tax rebates on new cars from US auto companies (such as making the first $10,000 tax deductible).
Finally there is decreasing cost to increase marginal revenue. Most of their cost is fixed meaning they need to shut down plants, fire people, reduce marketing expenses, reduce R&D, squeeze suppliers for variable. Suppliers have been squeezed as far as they can be. Reducing R&D would be shooting themselves in the foot 4 years from now. Firing people they are already doing. Shutting down plants is already being done. Reducing marketing will hurt new vehicle launches, however, reduction on current vehicles will help.
My Recommendation:
Instill a temporary 1 year 10% tariff on all non US Manufacturers. Allow people to buy vehicles manufactured by US companies to not pay sales tax and allow them to claim $5,000 on their income tax for vehicles bought in 2009.
Reduce marketing on current vehicle lines.
Lay-off additional people.
Increasing revenue is not an option until completely different products come online so that is out for another x years of development. This isn't an immediate solution that they need.
Increasing quantity is difficult, the car market has shrunk so the only way is to steal share. This can come through tariffs on imports (government action) or one if its competitors going out of business to free up some market share or huge tax rebates on new cars from US auto companies (such as making the first $10,000 tax deductible).
Finally there is decreasing cost to increase marginal revenue. Most of their cost is fixed meaning they need to shut down plants, fire people, reduce marketing expenses, reduce R&D, squeeze suppliers for variable. Suppliers have been squeezed as far as they can be. Reducing R&D would be shooting themselves in the foot 4 years from now. Firing people they are already doing. Shutting down plants is already being done. Reducing marketing will hurt new vehicle launches, however, reduction on current vehicles will help.
My Recommendation:
Instill a temporary 1 year 10% tariff on all non US Manufacturers. Allow people to buy vehicles manufactured by US companies to not pay sales tax and allow them to claim $5,000 on their income tax for vehicles bought in 2009.
Reduce marketing on current vehicle lines.
Lay-off additional people.
glenn1
Lifer
- Sep 6, 2000
- 25,383
- 1,013
- 126
The Big 3 cannot be fixed under the current environment. They'd do fine if they were allowed to specialize in what is their competitive advantage; making big, heavy, gas guzzler cars that allow for a premium price. Congress is mandating they make instead lots of small, fuel-efficient cars on which they lose tons of money and are completely non-competitive with Japanese brands. Couple that with the fact that the future CAFE fuel standards are set impossibly high (35 mpg by the year 2020; the Honda Fit which I just bought a few weeks ago doesn't even get that and it's a subcompact) and you might as well start boarding up the factories at GM, Ford, and Chrysler.
StageLeft
No Lifer
- Sep 29, 2000
- 70,150
- 5
- 0
Like the Honda Fit, Nissan Versa, etc? Until the country is so poorly off that people truly have to buy these tiny coffins-on-wheels, they will avoid them. I'd much rather drive my aging minivan than one of those little things with my kids' feet punching holes in the back of my seat and a trunk so small I have to start running equations on how to fit two suitcases in the back!
To answer the original question, GM is fvcked. Answering it is akin to trying to figure out how to take a moribund 75 year old and turning him into an Olympic hopeful for the 2012 games in sprinting. GM will either crumble to a tiny version of its former self in the fairly near term or remain on government life support until the market turns around massively and they completely revamp business or somebody finally pulls the plug. Parts of GM will stay around for a long time but the company as it is now absolutely cannot operate and be viable without significant and constant government attention. We'll all see this to be true during the dog and pony show this Tuesday when they put lipstick on a pig.
re-define GM. they're not in the car business, they're in the transportation business.
then lobby Congress to put up mass transit, e.g. light rail - with GM getting half the
business for the light rail cars.
also, buy a few electric car companies. like Zap. fire all the top management that
so thoroughly f&cked up the company, and put the production manager that swims
the 6 AM shift in charge of the division.
and give me TARP funds to beta-test a Tesla.
then lobby Congress to put up mass transit, e.g. light rail - with GM getting half the
business for the light rail cars.
also, buy a few electric car companies. like Zap. fire all the top management that
so thoroughly f&cked up the company, and put the production manager that swims
the 6 AM shift in charge of the division.
and give me TARP funds to beta-test a Tesla.
While it's not combined, the Chevy Cruze will get over 40mpg highway. It will use a turbo charged 1.4l engine (one of the things people were worried about was that GM wouldn't have the $350 million to retool the Lordstown, Ohio plant).
Dealerships are franchised independent retail/service outlets. If anything, they should be more autonomous from their Overlords at Generous Motors.
Franchises are tied to a single brand (though some may sell several brands under a pseudo-franchise arrangement). The franchise is more about location or designated area.
The overwhelming majority of franchises have no 'value' though goodwill may be paid for a hot brand in a great location - Chevy is pretty much the exception. Cadillac, too, because of their recent 'rebirth' (but 20 years ago their customer base was dying off and no one was interested in their product anymore because all they sold were 'land yachts' - LOL).
If each franchise became a retail/service outlet for the complete GM product line the 'weak' franchises that couldn't complete would fall by the wayside. This would probably kill off some single independent franchises but efficiencies would be gained from consolidation of multiple retail/service outlets under one corporate 'umbrella'.
I don't really care how many 'brands' they have as long as efficiencies continue to be made to each platforms common components. I could not care less that different body panels hang on a Chevy Volt than a Pontiac Zap - I just want the flux capacitor to work in each of them.
Franchises are tied to a single brand (though some may sell several brands under a pseudo-franchise arrangement). The franchise is more about location or designated area.
The overwhelming majority of franchises have no 'value' though goodwill may be paid for a hot brand in a great location - Chevy is pretty much the exception. Cadillac, too, because of their recent 'rebirth' (but 20 years ago their customer base was dying off and no one was interested in their product anymore because all they sold were 'land yachts' - LOL).
If each franchise became a retail/service outlet for the complete GM product line the 'weak' franchises that couldn't complete would fall by the wayside. This would probably kill off some single independent franchises but efficiencies would be gained from consolidation of multiple retail/service outlets under one corporate 'umbrella'.
I don't really care how many 'brands' they have as long as efficiencies continue to be made to each platforms common components. I could not care less that different body panels hang on a Chevy Volt than a Pontiac Zap - I just want the flux capacitor to work in each of them.
ProfJohn
Lifer
- Jul 28, 2006
- 18,161
- 7
- 0
Your tariff idea is insanely stupid.
I suggest you go back and look at the causes of the Great Depression. One of them was raising tariff in order to protect jobs at home.
If we raise tariffs then Japan, China etc etc all do the same and the end result is less trade and everyone losses.
ProfJohn
Lifer
- Jul 28, 2006
- 18,161
- 7
- 0
Might as well make GM a cabinet position then because light rail is a money loser just about every where it is tried.
There are very few cities in this country with the density to support light rail.
Rail worked in Europe because their cities are packed much tighter.
Of the 125 most densely packed cities in the world source only 9 are in the US. The highest ranked US city is only 90th on the list.
The UK, with a population smaller than California, has 4 cities that have higher density than the any US city.
GuitarDaddy
Lifer
- Nov 9, 2004
- 11,465
- 1
- 0
Lot of good ideas here, I agree with Glenn in that GM has no chance as long as the CAFE rules require them to make cars they can't sell and lose money on when they do. I beleive we need a serious revamp of the CAFE requirements to reward reduced emmisions, but get away from MPG requirements that are killing the big three.
Somewhere somebody has a dream of the entire US driving around in tiny econo-box'es that get 50mpg as the salvation to our energy problems and that just does'nt mesh with reality, in dense urban areas maybe. But millions of americans commute long distances, live in rural area, haul boats, trailers, off road, farming, ranching, etc.. where larger more powerful vehicles are necessary. It is a choice and a way of life in much of this country.
Our regulations should be directed at rewarding reductions in emmisions through use of alternative fuels (ethanol,biodeseil,CNG,LP,etc...) as well as rewarding efficiency by basing measurements on fuel to power ratio, not by setting stupid mpg limits.
MPG is so heavily dependent on size and weight that it is not a relevant measurement, of anything but size and weight. For so long now our stupid government regulations have force the big three to crank out econo-boxes that nobody wants, when their bread and butter has always been powering America with good ole HP's
Let them do what they are good at and reward true inovation, and stop trying to stuff them in a stupid 35mpg box.
And if you want to incentivize Americans to move to smaller more fuel efficient cars, give a tax credit for purchase of vehicles that get over $$mpg, place the incentive on the demand
And while I'm on my soapbox rant:
Many of the ideas being pushed and publisized like fuel cell, electric plug-ins, etc... are novelty ideas at best. The infrastructure necessary and the range of these vehicles immediately limits them to dense population areas which ignores 90% of the US, and there cost effective implementation is way in the future somewhere. To think these technologies are anywhere near currently viable for much of anything is a media pipe dream.
Somewhere somebody has a dream of the entire US driving around in tiny econo-box'es that get 50mpg as the salvation to our energy problems and that just does'nt mesh with reality, in dense urban areas maybe. But millions of americans commute long distances, live in rural area, haul boats, trailers, off road, farming, ranching, etc.. where larger more powerful vehicles are necessary. It is a choice and a way of life in much of this country.
Our regulations should be directed at rewarding reductions in emmisions through use of alternative fuels (ethanol,biodeseil,CNG,LP,etc...) as well as rewarding efficiency by basing measurements on fuel to power ratio, not by setting stupid mpg limits.
MPG is so heavily dependent on size and weight that it is not a relevant measurement, of anything but size and weight. For so long now our stupid government regulations have force the big three to crank out econo-boxes that nobody wants, when their bread and butter has always been powering America with good ole HP's
Let them do what they are good at and reward true inovation, and stop trying to stuff them in a stupid 35mpg box.
And if you want to incentivize Americans to move to smaller more fuel efficient cars, give a tax credit for purchase of vehicles that get over $$mpg, place the incentive on the demand
And while I'm on my soapbox rant:
Many of the ideas being pushed and publisized like fuel cell, electric plug-ins, etc... are novelty ideas at best. The infrastructure necessary and the range of these vehicles immediately limits them to dense population areas which ignores 90% of the US, and there cost effective implementation is way in the future somewhere. To think these technologies are anywhere near currently viable for much of anything is a media pipe dream.
Yup. People in this thread still are either in denial or just don't get it. Fine, get rid of the Union and let every one make $10 hr but don't expect to sell many $30k vehicles anymore because none of the workers will be able to afford them. GM made a ton of sales off of workers and their family. Now that they are out of a job, there goes 6 figures in sales each year just in that alone.
The thing is that Americans are dying to work (over 2000 people applied for a job as a parking meter reader) but there is no where to go. The days are over where you can get laid off and find a job in a month. The days are over for teenagers to get a job at Mcdonalds. I will not be surprised if unemployment benefits get stretched out for another year. Where are all these people going to work? There is nothing out there and no sign of hope. Keep moving all of our factories overseas.
IT is not that factories are moving overseas, it is that automation has greatly increased productivity. We make more product today in the USA and ever before, we just use a lot less people to do it. 100 years ago, most of us were farmers, today 2% of our population is able to feed and still export great quantities of food. Manufacturing is taking the same path.
We are no longer a manufacturing-focused economy anymore. The days of raising a family on a single assembly line worker's wage are over.
As we move towards a service based economy, it will require a higher-educated labor force. The current labor force will have to adapt to meet that need.
In the current economic environment, assembly line workers are not expected to buy $30k cars, simply because their skills are not worth as much in today's economy as to 50 years ago.
Protectionism will not work either. If you impose a huge tariff on imported goods on China, China will do they same and kick out all the foreign companies. Keep in mind, GM is VERY profitable in China, where do you think the money they made in China goes? That's right, back to the good ol USA so we can fund our ever-deteriorating operations here.
If we produced everything here, expect $5000 tvs, $300 Nikes, and $3000 sofas. The reason that we are able to live in a higher standard of living than 50 years ago is because of global trade. Housing appliances as a percentage of income were extremely expensive back then compared to now. We are able to afford a LOT more things nowadays, purchasing power has increased.
Yes there will be casualties in economic globalization, but it is absolutely beneficial for everyone to trade with each other to maximize economic efficiency big-picture wise. If you don't even acknowledge this fundamental concept of microeconomics, then you are simply too naive or just stubborn.
I heard one economist predicting that this is going to be a jobless recovery. I think he has a point. I just don't think a "service" economy is going to work. Whats to prevent GM from moving all R&D to China so they don't have to pay $80k a year plus benefits to each engineer?
Corporations/shareholders etc... are shooting themselves in the foot right now and they just don't see it. I don't think anyone is advocating making everything in this country but Jesus we need to make some stuff here. People need to work and companies need to show some loyality to American workers. I'm sick of reading about how a Japanese company is going through tough times and they are going to layoff American workers first and protect the ones back home.
Corporations/shareholders etc... are shooting themselves in the foot right now and they just don't see it. I don't think anyone is advocating making everything in this country but Jesus we need to make some stuff here. People need to work and companies need to show some loyality to American workers. I'm sick of reading about how a Japanese company is going through tough times and they are going to layoff American workers first and protect the ones back home.
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