ellives

GM problems: Deeper than Delphi

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ellives    0

http://money.cnn.com/2006/03/31/news/compa...dex.htm?cnn=yes

GM problems: Deeper than Delphi

The brewing battle between Delphi and its unions don't help, but General Motors has a lot of other headaches to worry about.

By Chris Isidore, CNNMoney senior writer

March 31, 2006: 3:09 PM EST

NEW YORK (CNNMoney.com) - One of these days General Motors will have some good news. But it's tough to remember the last time it had one of those days.

Friday certainly wasn't one as bankrupt auto-parts supplier Delphi asked a bankruptcy court to throw out its union contracts and the United Auto Workers union vowed a long and crippling strike in that event.

Such a strike would quickly halt production at GM as well, but its union contract would require it to keep paying workers, hemorrhaging up to an estimated $1 billion a week in additional losses at a company that posted a $10.6 billion net loss in 2005. Many worry an economy-rattling GM bankruptcy filing would follow.

This tough turn comes on the heels of a long list of problems that have been front and center in recent weeks:

The recent restatement of results that raise already staggering net losses.

A criminal probe looking at its relationship with suppliers.

Labor costs so out of whack that it's worth it to the automaker to pay employees $140,000 just to go away.

Negotiations to sell a majority stake of it one major profit engine, GMAC.

Shares of GM (up $0.23 to $21.29, Research), which have lost almost a third of their value over the past 12 months, were down Friday morning but had recovered by Friday afternoon.

"The bad news certainly isn't going to end for a while," said David Cole, chairman of the Center for Automotive Research.

The good news is that most experts contacted Friday -- including Cole -- said they think that a strike is not inevitable at Delphi. "At this point I still feel they'll get something done that avoids a strike," said Kevin Tynan. "But that said, it's still a long way to go."

GM has maintained that it can avoid bankruptcy and said Friday it is confident that an agreement at Delphi can be reached without disrupting its own operations.

But Tynan said that GM will likely have to pay more than $1 billion in one-time payments to the hourly workers at Delphi to get the them to accept significant pay cuts, as well as significantly subsidizing the ongoing pay to union members at Delphi if they are to avoid a strike.

But with the company's own financial problems, there's only so much it can do to solve the problem at Delphi, according to Tynan and other experts. GM's own contract with the UAW expires in September 2007.

"They might want to (pay more) in the short term to avoid a strike," said Bob Schnorbus, chief economist at JD Power & Associates. "But if they're spending money now to gloss over the hard decisions that Delphi needs to make, they're only going to compound their problems when their turn comes up."

Even some of those who don't think there will be a strike at Delphi think that GM will eventually find itself in bankruptcy court as it tries to trim its own costs.

"They still have their own cost issues to deal with," said Tynan. "My feeling is that it (a GM bankruptcy) is inevitable anyway. I don't know if that's two years, five years or 10 years, but this cost structure is not sustainable. What a strike at Delphi probably would mean is that it would move up the bankruptcy before the 2007 negotiations."

Holding out hope

Still there are others who believe that GM should be able to weather these gathering clouds. David Healy of Burnham Securities said that he thinks GM would have the resources to weather even a two-month strike at Delphi, and that the company's battered stock is probably at or near a low point.

"My guess would be that a two-month (Delphi) strike would raise net losses by $4 billion to $5 billion," said Healy. "That's a kick in the nuts, but they can afford it. They could have an extra $11 billion come Monday (from a sale of GMAC)."

Monday could also bring some half-way decent March sales numbers for the company that has continually been losing market share. The Power Information Network (PIN), a unit of JD Power, showed that GM's U.S. sales to consumers during the first 12 days of March were off 1.7 percent from a year earlier, but the industry as a whole saw sales to consumers fall 13 percent.

Perhaps more importantly, PIN's data shows sales of its new large SUV models, on which GM is basing much of its hopes of a turnaround, have been very strong. The new versions of the Cadillac Escalade, Chevrolet Tahoe and GMC Yukon have seen the transaction price up 15 to 20 percent from the price GM was getting for those models in the past two years.

"We often see increases for new models, but that's more than one generally sees," said Tom Libby, senior director of industry analyst for PIN. "It's early to say they have hits on their hands, but the signs are very positive."

So maybe Monday will be a better day for GM. After the past two weeks, it could use it.

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ellives    0

I love that quote: "Labor costs so out of whack that it's worth it to the automaker to pay employees $140,000 just to go away."

*My* question is: "Who the hell is running this company?" Paying people $140K to get rid of them is the stupidest thing I've ever heard. GM needs to grow a pair and start getting rid of these employees without paying them off. Make the list... call them into a room and tell them they're done. The days of the UAW are over. The UAW isn't running the company. Tell them to get the hell out.

Plunking down the billions it will cost them to pay these people to go away is just ridiculous. They need that money to combat Toyota and there's just no way around it. If they consummate this deal, there'll be another need to get rid of people in a year and they'll have to pay more precious cash they need to keep up the fight. This will be a death of a thousand cuts so why not just draw the line now and get it over with.

http://money.cnn.com/2006/03/31/news/compa...dex.htm?cnn=yes

GM problems: Deeper than Delphi

The brewing battle between Delphi and its unions don't help, but General Motors has a lot of other headaches to worry about.

By Chris Isidore, CNNMoney senior writer

March 31, 2006: 3:09 PM EST

NEW YORK (CNNMoney.com) - One of these days General Motors will have some good news. But it's tough to remember the last time it had one of those days.

Friday certainly wasn't one as bankrupt auto-parts supplier Delphi asked a bankruptcy court to throw out its union contracts and the United Auto Workers union vowed a long and crippling strike in that event.

Such a strike would quickly halt production at GM as well, but its union contract would require it to keep paying workers, hemorrhaging up to an estimated $1 billion a week in additional losses at a company that posted a $10.6 billion net loss in 2005. Many worry an economy-rattling GM bankruptcy filing would follow.

This tough turn comes on the heels of a long list of problems that have been front and center in recent weeks:

The recent restatement of results that raise already staggering net losses.

A criminal probe looking at its relationship with suppliers.

Labor costs so out of whack that it's worth it to the automaker to pay employees $140,000 just to go away.

Negotiations to sell a majority stake of it one major profit engine, GMAC.

Shares of GM (up $0.23 to $21.29, Research), which have lost almost a third of their value over the past 12 months, were down Friday morning but had recovered by Friday afternoon.

"The bad news certainly isn't going to end for a while," said David Cole, chairman of the Center for Automotive Research.

The good news is that most experts contacted Friday -- including Cole -- said they think that a strike is not inevitable at Delphi. "At this point I still feel they'll get something done that avoids a strike," said Kevin Tynan. "But that said, it's still a long way to go."

GM has maintained that it can avoid bankruptcy and said Friday it is confident that an agreement at Delphi can be reached without disrupting its own operations.

But Tynan said that GM will likely have to pay more than $1 billion in one-time payments to the hourly workers at Delphi to get the them to accept significant pay cuts, as well as significantly subsidizing the ongoing pay to union members at Delphi if they are to avoid a strike.

But with the company's own financial problems, there's only so much it can do to solve the problem at Delphi, according to Tynan and other experts. GM's own contract with the UAW expires in September 2007.

"They might want to (pay more) in the short term to avoid a strike," said Bob Schnorbus, chief economist at JD Power & Associates. "But if they're spending money now to gloss over the hard decisions that Delphi needs to make, they're only going to compound their problems when their turn comes up."

Even some of those who don't think there will be a strike at Delphi think that GM will eventually find itself in bankruptcy court as it tries to trim its own costs.

"They still have their own cost issues to deal with," said Tynan. "My feeling is that it (a GM bankruptcy) is inevitable anyway. I don't know if that's two years, five years or 10 years, but this cost structure is not sustainable. What a strike at Delphi probably would mean is that it would move up the bankruptcy before the 2007 negotiations."

Holding out hope

Still there are others who believe that GM should be able to weather these gathering clouds. David Healy of Burnham Securities said that he thinks GM would have the resources to weather even a two-month strike at Delphi, and that the company's battered stock is probably at or near a low point.

"My guess would be that a two-month (Delphi) strike would raise net losses by $4 billion to $5 billion," said Healy. "That's a kick in the nuts, but they can afford it. They could have an extra $11 billion come Monday (from a sale of GMAC)."

Monday could also bring some half-way decent March sales numbers for the company that has continually been losing market share. The Power Information Network (PIN), a unit of JD Power, showed that GM's U.S. sales to consumers during the first 12 days of March were off 1.7 percent from a year earlier, but the industry as a whole saw sales to consumers fall 13 percent.

Perhaps more importantly, PIN's data shows sales of its new large SUV models, on which GM is basing much of its hopes of a turnaround, have been very strong. The new versions of the Cadillac Escalade, Chevrolet Tahoe and GMC Yukon have seen the transaction price up 15 to 20 percent from the price GM was getting for those models in the past two years.

"We often see increases for new models, but that's more than one generally sees," said Tom Libby, senior director of industry analyst for PIN. "It's early to say they have hits on their hands, but the signs are very positive."

So maybe Monday will be a better day for GM. After the past two weeks, it could use it.

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Guest Josh   
Guest Josh

I love that quote: "Labor costs so out of whack that it's worth it to the automaker to pay employees $140,000 just to go away."

*My* question is: "Who the hell is running this company?" Paying people $140K to get rid of them is the stupidest thing I've ever heard. GM needs to grow a pair and start getting rid of these employees without paying them off. Make the list... call them into a room and tell them they're done. The days of the UAW are over. The UAW isn't running the company. Tell them to get the hell out.

Plunking down the billions it will cost them to pay these people to go away is just ridiculous. They need that money to combat Toyota and there's just no way around it. If they consummate this deal, there'll be another need to get rid of people in a year and they'll have to pay more precious cash they need to keep up the fight. This will be a death of a thousand cuts so why not just draw the line now and get it over with.

<{POST_SNAPBACK}>

I'm going to assume you dont honor any of your contracts that you sign, do you? Under that notion, I bet you have more than $1,000 in debt from switching from one cell phone company to another because you dont like to "pay" when you break an agreement, right?

It's a contract. It's valid. They signed it. It goes far deeper than "pulling them into a room and saying you're done." Far deeper.

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ellives    0

Agreed it's more complex than I describe HOWEVER.... we're talking about the Company's survival here. They have to be ruthless or they won't survive.

The problem with these "buyout offers" is the people who are worth anything will take them and go find other jobs because they have marketable skills and therefore value. The dead wood, the people skating by, those that know they can't get anything comparable, will not take the offer. The end result will be a brain and skill drain that will kill the Company for sure. Thank Ross Perot for the expression "giant sucking sound" because it is very appropriate in this situation.

Oh and as for the $1000 debt comment, the typical "early termination fee" is $150 and not $1k that you refer to. I've never broken a cell contract but I also never sign any business contracts without a "business downturn" clause. You'd think GM would be smart enough not to do it either.

It's going to be an ugly ~18 months to get through the UAW contract next year.

I'm going to assume you dont honor any of your contracts that you sign, do you? Under that notion, I bet you have more than $1,000 in debt from switching from one cell phone company to another because you dont like to "pay" when you break an agreement, right?

It's a contract. It's valid. They signed it. It goes far deeper than "pulling them into a room and saying you're done." Far deeper.

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thegriffon    5

The brain drain is happening at Ford withput layoffs. GM is cutting the "dead wood", as you call it, in laying off unnecessary white-collar staff. Assembly workers are another matter. Anyone can leave until they hit certain limits at each plant. Would be intersting to know what those limits are.

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ellives    0

Brain drain is going to happen without incentives when a company loses money, and for the same reason I cited already - those people can find jobs elsewhere with profitable companies. We all like to minimize the risk we'll find ourselves unemployed.

I do not agree with your implication that only white collar employees have "dead wood" and assembly workers as a group do not. Both groups certainly have their share. They both have damaging effects to the company as well. I'm more concerned about the undesirable loss of the "non-dead wood" white collar staff. These are the people that define the future of any company. Everyone else helps but particularly the key decision makers in the company define strategy, and GM needs good 5- and 10-year strategic plans in place. It's troubles did not appear overnight and they won't be resolved quickly either.

The brain drain is happening at Ford withput layoffs. GM is cutting the "dead wood", as you call it, in laying off unnecessary white-collar staff. Assembly workers are another matter. Anyone can leave until they hit certain limits at each plant. Would be intersting to know what those limits are.

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KillFort    0

As Josh has stated, the problem is far deeper than calling people into a room.

First of all, a contract is a contract. GM isn't the only company filling 1113 motions right now. Look at Delta and the pilots on strike. Delta wants to void their contracts. As the trend continues, it disregards any value for what the very definition of a contract is. Suddenly, nobody takes them seriously and companies are simply allowed to do whatever they want and the executives make sure to grab the most money when the bubble burst. It's similar to a pinata breaking, the tallest and biggest kids selfishly grab the most and run with no accountability whatsoever. But we aren't talking candy here, we are talking people's lifes.

As more and more of these motions creep up at companies, the warning signs show a much larger problem. You have to ask yourself why, all of a sudden, are we Americans being forced to settle for less? To give up our standard of living because these companies can't compete?

The answer is this: The global economy doesn't work for our current standard of living. We as a country can do one of two things: (1) Fight to keep our standard of living. (2) Sell ourself out in order to race to meet the rest of the world's crappy living with this so called "free trade."

It's pretty obvious Washington has decided option (2) for the majority of the country. You have to ask yourself, "If it is free trade, why are our deficits sky high?"

It's only a matter of time before it begins to reach and affect everyone in the USA. We have to hang on! We have worked so hard to get the American Dream to what it is! What people need to realize is that the UAW sets standards for not just autoworkers, but many other industries. If a UAW worker is getting paid well, white collar has always proportionally been matched. And I'm not just talking auto related. This standard touches many in ways they don't understand in the bigger scheme of things, the fabric of our country. This is really the Middle Class standard of living we are giving up here. It's the backbone and it is being broken. Think of it as the oil pan of a car, once it is removed, all the "oil" is getting sucked down and even the "oil" at the top will be eventually pulled down too. Once all these contracts get voided, there will be no one left to stick up for and set the standard. Companies will just continue to cut and lower standards for ALL employees as being seen across the country at an alarming rate. Think of it this way, GM has cut blue collar jobs.... but who followed shortly after? That's right, white collar. No one is safe any more. Everything works hand-in-hand.

For example, I have a friend who just recently graduated with a Masters in Accounting from a Big Ten School. He is white collar, works 80+ hours a week and bitches constantly about being over worked. The company tells him to shut up and be happy he still can hang on to his job. Really though, it's just a matter of time when that will fall out too.

The point is, why are we subjecting ourselves to this constant lower standard? The issue is not between the UAW and GM, or the unions of this country and the companies. It's far larger. The companies in this country can't successfully compete because Washington, this Administration and their current legistlation is allowing the breaking of our standard by supporting this "global enonmoy" standard. We are being forced to do much more for far less, blue collar and white collar alike. Please everyone, see the big picture and speak out to the government. Even Rick Wagoner constantly bitched to Washington about how currency manipulation and the lack of protectionism is ruining everything. UAW vs. GM is only focusing on small crack when if you look up, you can see the tidal wave ahead. If you all want to eventually live like those in Afghanistan while China and India and the rest of the world sucks up our resources, be complacent, but I personally want to fight for what we have created while we still have something left.

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ellives    0

Quite eloquently written.

As Josh has stated, the problem is far deeper than calling people into a room.

We're agreed on this point.

First of all, a contract is a contract.  GM isn't the only company filling 1113 motions right now.  Look at Delta and the pilots on strike.  Delta wants to void their contracts.  As the trend continues, it disregards any value for what the very definition of a contract is.  Suddenly, nobody takes them seriously and companies are simply allowed to do whatever they want and the executives make sure to grab the most money when the bubble burst.  It's similar to a pinata breaking, the tallest and biggest kids selfishly grab the most and run with no accountability whatsoever.  But we aren't talking candy here, we are talking people's lifes.

Nobody is going to disregard any contracts. Let's not confuse GM's financial situation with the union's problems and contract law. They are three different things.

As more and more of these motions creep up at companies, the warning signs show a much larger problem.  You have to ask yourself why, all of a sudden, are we Americans being forced to settle for less?  To give up our standard of living because these companies can't compete?

The answer is this:  The global economy doesn't work for our current standard of living.  We as a country can do one of two things:  (1)  Fight to keep our standard of living.  (2)  Sell ourself out in order to race to meet the rest of the world's crappy living with this so called "free trade." 

This issue is the one that's complicated. As I have stated here before, as the economy becomes more global, the natural competitive landscape will cause some areas of the US economy to be dragged down while the standard of living in other countries is dragged up. This is painful of course for those impacted in the US but of course those in other countries have had and continue to have much lower standards of living than in the US.

It's pretty obvious Washington has decided option (2) for the majority of the country.  You have to ask yourself, "If it is free trade, why are our deficits sky high?"

Our deficits are so high because we spend too much. Blame the deficit problem on Bush. It lays at his feet. It has nothing to do with GM, the unions or contract law.

It's only a matter of time before it begins to reach and affect everyone in the USA.  We have to hang on!  We have worked so hard to get the American Dream to what it is!  What people need to realize is that the UAW sets standards for not just autoworkers, but many other industries.  If a UAW worker is getting paid well, white collar has always proportionally been matched.  And I'm not just talking auto related.  This standard touches many in ways they don't understand in the bigger scheme of things, the fabric of our country.  This is really the Middle Class standard of living we are giving up here.  It's the backbone and it is being broken.  Think of it as the oil pan of a car, once it is removed, all the "oil" is getting sucked down and even the "oil" at the top will be eventually pulled down too.  Once all these contracts get voided, there will be no one left to stick up for and set the standard.  Companies will just continue to cut and lower standards for ALL employees as being seen across the country at an alarming rate.  Think of it this way, GM has cut blue collar jobs.... but who followed shortly after? That's right, white collar.  No one is safe any more.  Everything works hand-in-hand.

Hang on to what? You'll have to should me some factual evidence to demonstrate the relationship between UAW wages and my salary. Why is it you pro-union people want to tie GM to the success or failure of the UAW? The problem with the UAW is not GM. It's the UAW. They need to be successful getting themselves into Toyota, Honda, et al. Until this happens, there is no future for the UAW. Start thinking about these auto manufacturers and the importance of them to the union in terms of the profit they're generating. If you use this as your measurement, you're wasting your time on GM. That ship sailed long ago and particularly in the last year with $10B in losses. Go get Toyota and their fat profits. What's that? The UAW can't get in there? Why not? Because their assembly workers are happy with that market labor rates without supporting the overhead of a union.

For example, I have a friend who just recently graduated with a Masters in Accounting from a Big Ten School.  He is white collar, works 80+ hours a week and bitches constantly about being over worked.  The company tells him to shut up and be happy he still can hang on to his job.  Really though, it's just a matter of time when that will fall out too.

If your friend doesn't like it, he should find another employer.

The point is, why are we subjecting ourselves to this constant lower standard?  The issue is not between the UAW and GM, or the unions of this country and the companies.  It's far larger.  The companies in this country can't successfully compete because Washington, this Administration and their current legistlation is allowing the breaking of our standard by supporting this "global enonmoy" standard.  We are being forced to do much more for far less, blue collar and white collar alike.  Please everyone, see the big picture and speak out to the government.  Even Rick Wagoner constantly bitched to Washington about how currency manipulation and the lack of protectionism is ruining everything.  UAW vs. GM is only focusing on small crack when if you look up, you can see the tidal wave ahead.  If you all want to eventually live like those in Afghanistan while China and India and the rest of the world sucks up our resources, be complacent, but I personally want to fight for what we have created while we still have something left.

You can try the "blame the government" argument. It won't help your case. "The lack of protectionism?" Are you serious? When we raise trade barriers here, other countries will raise their barriers too. What is served by this approach? The goal should be to eventually raise the standard of living everywhere in the world so people everywhere AREN'T as poor as they are currently. What makes the US so special?

I tell you to stop connecting the UAW's future with GM because it's not there. GM needs to level the playing field just to survive in a marketplace with the likes of Toyota and Honda. Getting equivalent labor rates is just one piece of the puzzle. GM has has huge other issues they have to deal with including getting their manufacturing processes to be as efficient as Japan, Inc. This is another huge piece of the puzzle and in some ways is tougher and even more daunting than the labor issue.

[/color] Edited by ellives

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KillFort    0

You can try the "blame the government" argument. It won't help your case. "The lack of protectionism?" Are you serious? When we raise trade barriers here, other countries will raise their barriers too. What is served by this approach? The goal should be to eventually raise the standard of living everywhere in the world so people everywhere AREN'T as poor as they are currently. What makes the US so special?

MOST IMPORTANTLY, what is your occupation and the country you live in?

Ask this question to yourself, why is it that China can practice unfair trade practices but we can't? And by we, I mean the United States. When you ask "what is served by this approach?" I'll tell you: Other countries besides the U.S. are being "served" finely because people like you are helping their cause to be number #1. I'll tell you what makes the U.S. special: I live and work here and it's my childrens' future at stake. To which I repeat, where do you currently live? BTW, I work at a non-union corportion and I am white collar but I'm smart enough to know that if those below me are getting paid well, then more than likely, I'm getting paid better. When their wages decrease, mine directly correlate.

This Utopia you speak of, where every country is just as equal as the U.S. doesn't work in reality. There are a limited number of resources on this planet, so there can only be one #1. And since there has been only one super power for quite some time, the citizens of the U.S. have been living pretty damn well. Since I am a U.S. citizen, I plan on protecting that standard of living for myself and the people around me, my fellow citizens and keep on living well!

When you talk about Toyota getting "fat," did you ever ask the question why? Because their citizens and government support the hell out of their standard of living and plan on protecting it to the very end. At least their citizens are smart enough to see the bigger picture beyond this union vs. non-union debate. Even if you take away the unions, would Toyota still be making a killing from currency manipulation? Ever think about that?

I'm assuming you are not a U.S. citizen because if you were, you'd be fighting to keep your standard of living and those around you. Anybody in their right mind would rather see resources and jobs stay in their own backyard rather than hand them over to people across the globe who are just waiting to take our wealth so they can start living posh and I can start living poorer. Screw that! I work too damn hard for my standard of living. I can't imagine that you are a U.S. citizen currently working here with such a nonchalant attitude, "get another job." I'd like to see you say that when someone &#036;h&#33; cans you or forces you take a much lower wage and you have to go to another company and accept the "new standard" of lower salaries and longer hours to "compete" in this global economy. Anybody with that mentality can't possible live in the U.S.... Work more, get paid less? Yeah, that makes a lot of sense buddy??? I'd rather see all people work hard and get fairly compensated.

AND please, answer this question, have you ever worked on a car assembly line? I have while in college before becoming white collar. I've seen both sides of the fence. Every job has its difficulties and the blue collars deserve every penny for theirs.

Edited by KillFort

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Guest Josh   
Guest Josh

I am with Killfort on this through on through. I won't disect every point I liked that was made by the poster (him/her) due to the lack of hour of sleep I'm going to lose yet still have to run the store tomorrow and be the only manager. Blah. Enough said.

Personally, I don't blame the UAW. Some may see that as "wow Josh, REALLY?" but the fact of the matter is, there are many tangibles that have lead to what we're going through now and there are far and away too many variables to let this come to as peaceful of an ending as we're all hoping for.

It just won't happen.

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Guest Josh   
Guest Josh

I'm assuming you are not a U.S. citizen because if you were, you'd be fighting to keep your standard of living and those around you. Anybody in their right mind would rather see resources and jobs stay in their own backyard rather than hand them over to people across the globe who are just waiting to take our wealth so they can start living posh and I can start living poorer. Screw that! I work too damn hard for my standard of living. I can't imagine that you are a U.S. citizen currently working here with such a nonchalant attitude, "get another job." I'd like to see you say that when someone &#036;h&#33; cans you or forces you take a much lower wage and you have to go to another company and accept the "new standard" of lower salaries and longer hours to "compete" in this global economy. Anybody with that mentality can't possible live in the U.S.... Work more, get paid less? Yeah, that makes a lot of sense buddy??? I'd rather see all people work hard and get fairly compensated.

I'm sorry but rock the f@#k on!!! :metal: You are 100% right. I don't understand what people just don't see in this. It's more a "Union is bad" mentality than a "hey, we're all getting dicked over in the end" type deal!

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CaddyXLR-V    3

But how many workers would need to be let go, just because of efficiency? Lets say there was no competition, GM would still need to let workers go due to advances in technology, and they cant even do that. Just think of the job you do now, how many people and how much time would it have taken someone to do in 1910, or even in the 1950s? One person on a computer today, can probably do the job of 20 in 1950. One farmer can probably do the job of 100 farmers back in the early 1900s. That means people will have to be let go. We cant just employ people for the sake of employing people. The point is to advance our technology, and keep our technology one step ahead, that it why the US has long been #1.

Edited by CaddyXLR-V

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ellives    0
MOST IMPORTANTLY, what is your occupation and the country you live in? 

I REALLY wanted to put a nasty response on here to this question but I won't. I know some will say it's against my core personality not to but:

<---see where I'm from (it's on every one of my posts)

Ask this question to yourself, why is it that China can practice unfair trade practices but we can't?  And by we, I mean the United States.    When you ask "what is served by this approach?" I'll tell you:  Other countries besides the U.S. are being "served" finely because people like you are helping their cause to be number #1.  I'll tell you what makes the U.S. special:  I live and work here and it's my childrens' future at stake.  To which I repeat, where do you currently live?  BTW, I work at a non-union corportion and I am white collar but I'm smart enough to know that if those below me are getting paid well, then more than likely, I'm getting paid better.  When their wages decrease, mine directly correlate.

I also work at a non-union company and am what you'd consider to be "white collar." I couldn't care less what other's in my company make. I have not control over it. My boss makes 20 to 30 times the money I make. Should I try to unionize so I can get some of his money? There are of course plenty that make less than me but nobody is starving.

This Utopia you speak of, where every country is just as equal as the U.S. doesn't work in reality.  There are a limited number of resources on this planet, so there can only be one #1.  And since there has been only one super power for quite some time, the citizens of the U.S. have been living pretty damn well.  Since I am a U.S. citizen, I plan on protecting that standard of living for myself and the people around me, my fellow citizens and keep on living well!

OK - so if I'm using your logic, shouldn't we just incinerate all the Iraqi's so we can take their oil? I mean after all, we're going to run out of oil soon and need it to sustain our standard of living, right? Why waste time and our men and women's lives over there trying to avoid civilians while we're hunting down the insurgents? Just slaughter them all and make it easy on ourselves. (I know this is an extreme. I'm only using for illustration and am not in any way advocating this approach. I hope this conflict is over as expediently as possible so our armed services can come home.)

I don't think it's a Utopia I'm after but it does seem like we ought to be able to get to a place where people worldwide can make an actual living where 40% are not below the poverty line.

When you talk about Toyota getting "fat," did you ever ask the question why?  Because their citizens and government support the hell out of their standard of living and plan on protecting it to the very end.  At least their citizens are smart enough to see the bigger picture beyond this union vs. non-union debate.  Even if you take away the unions, would Toyota still be making a killing from currency manipulation?  Ever think about that? 

Every poster on this forum has asked this question before. The answer is complicated but certainly the main 2 components are labor costs and they are just better at building cars. Get yourself a copy of the book "The Machine that Changed the World" and you'll understand. I did. Currency manipulation? I'd buy that if you were talking China. The argument just does not apply to Toyota. Much of their stuff is built in the US.

I'm assuming you are not a U.S. citizen because if you were, you'd be fighting to keep your standard of living and those around you.  Anybody in their right mind would rather see resources and jobs stay in their own backyard rather than hand them over to people across the globe who are just waiting to take our wealth so they can start living posh and I can start living poorer.  Screw that!  I work too damn hard for my standard of living.  I can't imagine that you are a U.S. citizen currently working here with such a nonchalant attitude, "get another job."  I'd like to see you say that when someone &#036;h&#33; cans you or forces you take a much lower wage and you have to go to another company and accept the "new standard" of lower salaries and longer hours to "compete" in this global economy.  Anybody with that mentality can't possible live in the U.S.... Work more, get paid less?  Yeah, that makes a lot of sense buddy???  I'd rather see all people work hard and get fairly compensated. 

/quote

Nobody wants to work more and get paid less. I've done it though - I'm still making less now than I was 5 years ago. The criminals in the telecom industry caused my problem and at least some of them are in jail now.

AND please, answer this question, have you ever worked on a car assembly line?  I have while in college before becoming white collar.  I've seen both sides of the fence.  Every job has its difficulties and the blue collars deserve every penny for theirs.

Nope. Never worked an assembly line. I've worked plenty of &#036;h&#33; jobs though. I'm not sure how the question is relevent though. I earned everything I have. I paid for my own education and I manage to live quite comfortably all without the benefit of a union. Go figure.

Get yourself the book and read it. At least you'll understand why GM has a huge struggle again and doesn't need labor issues.

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ellives    0

"Blame" is such a terrible word. I'm not blaming the UAW for GM's current situation. I *am* questioning the relevency of the UAW. If you accept this statement then there is no value being brought by the higher wages their members require and therefore they are putting GM at a disadvantage when they can ill afford to have one.

I agree though Josh. The ending will not be peaceful nor desirable from what I can see.

I am with Killfort on this through on through. I won't disect every point I liked that was made by the poster (him/her) due to the lack of hour of sleep I'm going to lose yet still have to run the store tomorrow and be the only manager. Blah. Enough said.

Personally, I don't blame the UAW. Some may see that as "wow Josh, REALLY?" but the fact of the matter is, there are many tangibles that have lead to what we're going through now and there are far and away too many variables to let this come to as peaceful of an ending as we're all hoping for.

It just won't happen.

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ellives    0

Maybe I was tainted by observing my old man back when he was in the union. He was all about "what can can I get out of the union" and "what can I get out of my company." It was never about what he could and did do for the company. I know he put his time in but that was it. The union gave him shelter at times when he probably wasn't the best person for the job. Good for him but bad for the company.

Of course as I wrote that, the Social Security system comes to mind. People are bitching more because it's heading towards bankrupcy but over the last 30 years when people paid into the system for 10-20 years but lived on the system for 25 or 30 after retiring, none of them bitched. Why would they, as they were getting way more of the system than they put in. Aren't some of the compensation GM's UAW workers getting the same?

Maybe I do have a "nonchalant attitude, "get another job."" but that's because I *can* get another job. I'm good at what I do - I got an education and I will probably never lack for a job, and I'm not sorry about it.

I'm sorry but rock the f@#k on!!! :metal: You are 100% right. I don't understand what people just don't see in this. It's more a "Union is bad" mentality than a "hey, we're all getting dicked over in the end" type deal!

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Newbiewar    1

I love that quote: "Labor costs so out of whack that it's worth it to the automaker to pay employees $140,000 just to go away."

*My* question is: "Who the hell is running this company?" Paying people $140K to get rid of them is the stupidest thing I've ever heard. GM needs to grow a pair and start getting rid of these employees without paying them off. Make the list... call them into a room and tell them they're done. The days of the UAW are over. The UAW isn't running the company. Tell them to get the hell out.

Plunking down the billions it will cost them to pay these people to go away is just ridiculous. They need that money to combat Toyota and there's just no way around it. If they consummate this deal, there'll be another need to get rid of people in a year and they'll have to pay more precious cash they need to keep up the fight. This will be a death of a thousand cuts so why not just draw the line now and get it over with.

if they take them into a room and say, goodbye, have a nice life... the union has contracts to continue to pay them for an addition 5 years... :nono: soo... 140k is like 2 years pay...

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KillFort    0

ellives, I know what location your profile list. I know the layout of the site.. been a member a long time. The question was rhetorical but nobody necessarily puts their true location on an Internet site. I simply want to make the point. I do congratulate on your success and will look at the book you suggested.

I'm glad so many views are coming into this conversation. It forces us to think about how the world is changing and for so many close to home, it seems to be getting worse than better.

I too, like you, possess the ability to get another job but for how long? It's getting harder and harder all the time. We are being forced to add that extra burden to ourself and for what? So that others across the globe can bask in our decline? What country are we leaving for our children? One that is deadly competitive is the sad emerging reality.

Every country wants a chance at #1 but that doesn't mean we grant them the leverage to do so. The middle class is what makes the U.S. special. Hardly any process worth while goes from 0 to 100 instantly. I think of the middle class the same way. A lot of hard-working individuals made this country the envy of the world. A two-class society isn't worth while in my opinion, just as I consider a two-party system too black and white.

You may consider many in the unions dead weight. I dare say there are many more who are proud of the work they do and bust a** to do a quality job. I also dare to say there is just as much if not more dead weight in the white collar world. In fact, I find the white collar world a much sadder place, especially once you get to a certain level in a corporation.

I appreciate everyone's input. And Josh, thanks for the feedback. It's late.. I'm sure there's more left to be said but sleep sounds better right now.

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ellives    0
ellives, I know what location your profile list.  I know the layout of the site.. been a member a long time.  The question was rhetorical but nobody necessarily puts their true location on an Internet site.  I simply want to make the point.  I do congratulate on your success and will look at the book you suggested.

I don't see any risk by putting my true location. I think it gives people some insight into your perspective when they know where you're from - exactly what we've been talking about i guess.

I'm glad so many views are coming into this conversation.  It forces us to think about how the world is changing and for so many close to home, it seems to be getting worse than better.

Me too. No one is completely right in their opinions. It's the effective conglomeration of all of them that will yield the right answer. I agree the world *is* changing and I fear not for the better. I worry I'm becoming like my grandmother - she worried about this stuff all her life.

I too, like you, possess the ability to get another job but for how long?  It's getting harder and harder all the time.  We are being forced to add that extra burden to ourself and for what?  So that others across the globe can bask in our decline?  What country are we leaving for our children?  One that is deadly competitive is the sad emerging reality.

What's wrong with a world that is competitive? It already *is* competitive. It's just changing. Try getting your kid into college. It's competitive worldwide and they're all competiting for those willing and able to pay $40-50K/year in costs.

Every country wants a chance at #1 but that doesn't mean we grant them the leverage to do so.  The middle class is what makes the U.S. special.  Hardly any process worth while goes from 0 to 100 instantly.  I think of the middle class the same way.  A lot of hard-working individuals made this country the envy of the world.  A two-class society isn't worth while in my opinion, just as I consider a two-party system too black and white.

I'm not sure what you mean by "worthwhile" and I'm not convinced the US is heading for a two-class society. I *do* know a two-party system is necessary to make the decision easy that are too ignorant to effective use any other system. Most people don't research candidates at ll before they vote and the vote on what they've heard or sound bites the media privileges us to hear. Howard Dean is a classic example of this. Whatever you think of the man's policies and ideas, the truth is his campaign was destroyed by one 20 second clip from Iowa. Nobody remembers anything else about him.

You may consider many in the unions dead weight.  I dare say there are many more who are proud of the work they do and bust a** to do a quality job.  I also dare to say there is just as much if not more dead weight in the white collar world.  In fact, I find the white collar world a much sadder place, especially once you get to a certain level in a corporation.

It's really tough to make sweeping statements and be right. I have always had disdain for the way unions protect EVERYONE in the union when they know damn well there are very specific people who shouldn't be members. They just don't want to rock the boat so they let things continue. My kid had one of these people as a teacher a while back. Everybody in town knew the teacher was worthless but she was in the union so nothing was done and year after year children are subjected to this worthless sack of &#036;h&#33; teacher. That's a sad legacy of unions to me.

I'm sure we all know white collar people who are useless. The last 2 or 3 people in my current job fit this category. Eventually people figured them out and dealt with them. I see these people benefiting from apathy or incompetence of those above them. Nobody likes confrontation so things have to get REALLY bad before these people are canned.

I appreciate everyone's input.  And Josh, thanks for the feedback.  It's late.. I'm sure there's more left to be said but sleep sounds better right now.

Me too. And same to Josh. I finally had to through in the towel at 1:30 AM. I think we've gotten off the track too far when the real discussing is GM and my brand Cadillac.

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FUTURE_OF_GM    26

Here we go with the OBLIGATORY weekly gloom and doom article in the MAINSTREAM press... (A good way to nail the coffin shut--1 article a week slowly turning perception=guilt free)

NEW YORK (CNNMoney.com) - One of these days General Motors will have some good news. But it's tough to remember the last time it had one of those days.

Umm... ALL the GMT900 news has been good... ALL the sales news has been good... ALL the 'reduced incentives/higher transaction' news has been good... ALL the UAW buyout news has been good... SEE THE PATTERN?!?!?!

The recent restatement of results that raise already staggering net losses.

ONLY an issue because the press has made it one... I HARDLY see how a restatemment (Besides image problems) is in any way relevant to 2006.

A criminal probe looking at its relationship with suppliers.

LOL... So, SEC is a criminal probe now??? And, BTW, this is OLD news.

Labor costs so out of whack that it's worth it to the automaker to pay employees $140,000 just to go away.

Uncontrollable AND a positive SKEWED negative by this author.

Negotiations to sell a majority stake of it one major profit engine, GMAC.

Another POSITIVE *supposedly* skewed negative by this guy.

Shares of GM (up $0.23 to $21.29, Research),

That's a helluva rise for such NEGATIVE news.. (Of course, that's PROBABLY the reason FOR the negative news)

which have lost almost a third of their value over the past 12 months, were down Friday morning but had recovered by Friday afternoon.

AGAIN... OLD, REHASHED, RE-REPORTED &#036;h&#33;!!! C'mon man?!?!? Is this an article or a RE-RUN?!?!?! (Oh wait, it's the obligatory negative article--- OF COURSE it's a RE-RUN!!!)

"The bad news certainly isn't going to end for a while," said David Cole, chairman of the Center for Automotive Research.

Nope, wont stop until the media/analysts get what they want; which is a GM chapter 11.

GM has maintained that it can avoid bankruptcy

LOL, we all KNOW that wont happen (nudges the press)

But Tynan said that GM will likely have to pay more than $1 billion in one-time payments to the hourly workers at Delphi to get the them to accept significant pay cuts, as well as significantly subsidizing the ongoing pay to union members at Delphi if they are to avoid a strike.

GM: EVERYBODY'S DOOR MAT!!!!

"They still have their own cost issues to deal with," said Tynan. "My feeling is that it (a GM bankruptcy) is inevitable anyway. I don't know if that's two years, five years or 10 years, but this cost structure is not sustainable. What a strike at Delphi probably would mean is that it would move up the bankruptcy before the 2007 negotiations."

LOL... WOW!!! What an ARROGANT SERIES of predictions!!!! I bet THIS will certainly KILL some business for GM!!! (That's the goal right???--If not, then WHY pretend that you can predit the future and then say it all over national press; ESPECIALLY if you've got GM's best interest at heart.)

I think this 'analyst' is forgetting that the 'cost structure' *SHOULD* peak around 2008 and then begin to decline.

Holding out hope

Still there are others who believe that GM should be able to weather these gathering clouds. David Healy of Burnham Securities said that he thinks GM would have the resources to weather even a two-month strike at Delphi, and that the company's battered stock is probably at or near a low point.

That's laughable....

"My guess would be that a two-month (Delphi) strike would raise net losses by $4 billion to $5 billion," said Healy. "That's a kick in the nuts, but they can afford it. They could have an extra $11 billion come Monday (from a sale of GMAC)."

Wow... Such "PROFESSIONAL" people we have on Wall Street... Running our industry into the ground.

Monday could also bring some half-way decent March sales numbers for the company that has continually been losing market share. The Power Information Network (PIN), a unit of JD Power, showed that GM's U.S. sales to consumers during the first 12 days of March were off 1.7 percent from a year earlier, but the industry as a whole saw sales to consumers fall 13 percent.

That in itself is EXTREMELY POSITIVE news.

Perhaps more importantly, PIN's data shows sales of its new large SUV models, on which GM is basing much of its hopes of a turnaround, have been very strong. The new versions of the Cadillac Escalade, Chevrolet Tahoe and GMC Yukon have seen the transaction price up 15 to 20 percent from the price GM was getting for those models in the past two years.

Meh... Just wait until oil hits $70 per barrel in a week (LIke they're predicting) and gas prices shoot above $3 per gallon because of this whole IRAN :bs:

GMT900 is as good as dead if that happens.

"We often see increases for new models, but that's more than one generally sees," said Tom Libby, senior director of industry analyst for PIN. "It's early to say they have hits on their hands, but the signs are very positive."

Good news.

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FUTURE_OF_GM    26

I'm going to assume you dont honor any of your contracts that you sign, do you? Under that notion, I bet you have more than $1,000 in debt from switching from one cell phone company to another because you dont like to "pay" when you break an agreement, right?

It's a contract. It's valid. They signed it. It goes far deeper than "pulling them into a room and saying you're done." Far deeper.

I agree... Not to count the reprecussions with SALES of GMs vehicles (MIght not be significant, but every little bit helps at this point)

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ellives    0

Face it. The media is only deemed as good as their last "big" story so they're out scrounging whatever they can and amplifying it for their own benefit. They're all whores.

I agree... Not to count the reprecussions with SALES of GMs vehicles (MIght not be significant, but every little bit helps at this point)

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regfootball    234

dude, there's a lot of truth to what your saying, but as long as the folks who have money to buy cars more frequently buy toyotas instead of ford or gm, then GM will have to resort to ruthless things and draw lines in the sand in order to compete and have a chance of winning customers back.

the divide in society now here is that if you ARE somebody, you buy foreign. If you're NOT somebody.....then you are stuck buying an incentivized domestic. Its ok to buy korean, because its asian and you still get a deal. The divide is wider now so those that are NOT somebody can't even buy new cars anymore while German and Japanese lux and near lux and premium mainstream cars sell at increasing record numbers and prices. GM is forced into selling less advanced hardware in order to have a chance at hitting affordable prices. At some point, they must adjust their cost structures to allow them to not get behind in hardware, material quality and feature content. The public perception these people hold is 'why should i buy GM it is paying for someone's inflated labor contract, not what's going into MY car'.

As Josh has stated, the problem is far deeper than calling people into a room.

First of all, a contract is a contract.  GM isn't the only company filling 1113 motions right now.  Look at Delta and the pilots on strike.  Delta wants to void their contracts.  As the trend continues, it disregards any value for what the very definition of a contract is.  Suddenly, nobody takes them seriously and companies are simply allowed to do whatever they want and the executives make sure to grab the most money when the bubble burst.  It's similar to a pinata breaking, the tallest and biggest kids selfishly grab the most and run with no accountability whatsoever.  But we aren't talking candy here, we are talking people's lifes.

As more and more of these motions creep up at companies, the warning signs show a much larger problem.  You have to ask yourself why, all of a sudden, are we Americans being forced to settle for less?  To give up our standard of living because these companies can't compete?

The answer is this:  The global economy doesn't work for our current standard of living.  We as a country can do one of two things:  (1)  Fight to keep our standard of living.  (2)  Sell ourself out in order to race to meet the rest of the world's crappy living with this so called "free trade." 

It's pretty obvious Washington has decided option (2) for the majority of the country.  You have to ask yourself, "If it is free trade, why are our deficits sky high?"

It's only a matter of time before it begins to reach and affect everyone in the USA.  We have to hang on!  We have worked so hard to get the American Dream to what it is!  What people need to realize is that the UAW sets standards for not just autoworkers, but many other industries.  If a UAW worker is getting paid well, white collar has always proportionally been matched.  And I'm not just talking auto related.  This standard touches many in ways they don't understand in the bigger scheme of things, the fabric of our country.  This is really the Middle Class standard of living we are giving up here.  It's the backbone and it is being broken.  Think of it as the oil pan of a car, once it is removed, all the "oil" is getting sucked down and even the "oil" at the top will be eventually pulled down too.  Once all these contracts get voided, there will be no one left to stick up for and set the standard.  Companies will just continue to cut and lower standards for ALL employees as being seen across the country at an alarming rate.  Think of it this way, GM has cut blue collar jobs.... but who followed shortly after? That's right, white collar.  No one is safe any more.  Everything works hand-in-hand.

For example, I have a friend who just recently graduated with a Masters in Accounting from a Big Ten School.  He is white collar, works 80+ hours a week and bitches constantly about being over worked.  The company tells him to shut up and be happy he still can hang on to his job.  Really though, it's just a matter of time when that will fall out too.

The point is, why are we subjecting ourselves to this constant lower standard?  The issue is not between the UAW and GM, or the unions of this country and the companies.  It's far larger.  The companies in this country can't successfully compete because Washington, this Administration and their current legistlation is allowing the breaking of our standard by supporting this "global enonmoy" standard.  We are being forced to do much more for far less, blue collar and white collar alike.  Please everyone, see the big picture and speak out to the government.  Even Rick Wagoner constantly bitched to Washington about how currency manipulation and the lack of protectionism is ruining everything.  UAW vs. GM is only focusing on small crack when if you look up, you can see the tidal wave ahead.  If you all want to eventually live like those in Afghanistan while China and India and the rest of the world sucks up our resources, be complacent, but I personally want to fight for what we have created while we still have something left.

Edited by regfootball

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