GM layoffs

[Sean Malone]

WSJ says GM/Chry deal heating up.


A deal has not yet been finalized because of a slow reception from GM’s board of directors, according to people close to the negotiation. An important element under discussion would be exchanging Chrysler for GM’s 49% stake in GMAC LLC, and it is unclear if that will happen.

GM believes it can gain more than $10 billion in cost synergies from the deal and gain access to Chrysler’s $11 billion in cash.

So GM soaks Chrysler dry and within 5 years they are either up for sale again or they go the way of Oldsmobile. I can't imagine any good things happening for Chrysler over this. At least with the Daimler deal there wasn't a direct competition in product line. Chrysler doesn't have a true luxury model and Mercedes doesn't have pick ups and minivans. With GM, there is direct model line correlation. GM will call the shots and I'm sure they will have no problem axing the Viper to bolster 'vette sales. Same with the pickup truck line.

[SurfaceUnits]

Same with the pickup truck line.then po'ed dodge truck buyers will go to Ford or Toyota, not necessarily GM

[oddlycalm]

GM isn't exactly pure though.
Farthest thing from it. GM purchasing has been irrepairably damaging vendor relationships even since Lopez. I was just pointing out the article wasn't accurate.

The irony to me was that Lopez was discredited in the most dramatic fashion and yet GM purchasing was still allowed to follow his policies...:tony:


Cerberus is looking for the door on the auto business and some kind of deal will get done. If GM doesn't take the bait it will be Renault back for a 2nd bite I imagine.

oc

[Indy]

Here is the basic Lopez model at work (trust me, I have been there):

Division Head: Purchasing Head, we must have have 20% cost savings in 12 months. Submit your plan.

Purchasing Head: Purchasing Managers, we must have 20% cost savings in 12 months. Make it happen and show me how.

Purchasing Manager: Buyer, we must save 20% from your suppliers. I need your plan by Monday:

Buyer makes a spreadsheet utilizing past history, current knowledge, and mostly imagination, after which he starts polishing his resume.

The spreadsheets get added together and sent up the line, resulting in the Purchasing Head assuring the Division Head that Purchasing will save the company 25% this year.

Buyer negotiates with suppliers and gets 2%. Manager rejects the outcome and sends Buyer back to do more work. Buyer makes a new spreadsheet, includes process improvements, logistics savings, etc. which along with the 2% add up to a fictional 20%.

Suppliers, angry, start finding new ways to get their 2% back and more.

The spreadsheets are inflated a bit up the chain, until Division Head can claim to President that 25% will be saved. Division Head is a hero.

After twelve months, costs are up 3%. Division Head has already been transferred or head-hunted out to another company, claiming 30% savings on his resume. New Division Head starts the process over again.

Repeat endlessly.

[G.]

You have been there, Indy.

[oddlycalm]

Here is the basic Lopez model at work (trust me, I have been there)...
Yup, that's the way it plays internally. My cousin works at Worldwide Purchasing and we've been comparing notes for years. In many cases the reality is that if GM actually got what the big bosses think they want the vendors would all be out of business....:gomer:

oc

[chop456]

Our babysitter's lease is expiring on her '04 Grand Am. For some reason, she likes the car and asked how much it'd be to buy it. $280/mo. for 72 mo. :laugh:

Hard to believe they're in trouble. :shakehead

[Methanolandbrats]

Our babysitter's lease is expiring on her '04 Grand Am. For some reason, she likes the car and asked how much it'd be to buy it. $280/mo. for 72 mo. :laugh:

Hard to believe they're in trouble. :shakehead
That's only 20k! Sounds like a good price if it's still running when the loan is paid. :thumbup:

[Stu]

Our babysitter's lease is expiring on her '04 Grand Am. For some reason, she likes the car and asked how much it'd be to buy it. $280/mo. for 72 mo. :laugh:

Hard to believe they're in trouble. :shakehead

how much did she pay in total for the lease.

and why would anyone get a car loan for 6 years (unless its 0%)

[Sean Malone]

That's only 20k! Sounds like a good price if it's still running when the loan is paid. :thumbup:

No way. Try more like $9k.

[Methanolandbrats]

No way. Try more like $9k.;)

[Andrew Longman]

You have been there, Indy.

Indeed. That's almost chapter and verse.

BTW, one of the things that I find most distinctive between Honda and the big three I've worked with is that people DON'T move around a lot.

The guy at Chrysler/GM etc making a call on on whether to/how fix a quality/warranty problem at the big three is not likely to be in his job in 18-36 months so his pay back period is quite short while in many cases I've been dealing with the same people at Honda for nearly 20 years. Its not that they don't get promoted but they move places where they benefit from good decisions they made years ago.

If you want a good read, try The Critical Chain by Brock Yates. He chronicles the development of the 96 Chrysler Minivan and the crap they gave suppliers to take another 2 cents out of a part. As an unfortunate buyer of a 96 Dodge minivan I know the effect on the consumer from glove compartment doors that fell off to electical gremlins that could not be solved to fuel pumps and AC compressor pumps that repeatedly failed for really stupid simple reasons -- at $1200 a pop.

[Methanolandbrats]

Friend of mine had a Chrysler minivan of that vintage. Both axles and the transmission failed just after the warranty ended. It also started burning oil and the windows fell down in the doors. He called Chrysler to see if they would help with repairs since it was only a few miles out of warranty. They said "if you choose to drive your vehicle beyond the warranty period, it is your responsibility" :D:laugh:

[oddlycalm]

BTW, one of the things that I find most distinctive between Honda and the big three I've worked with is that people DON'T move around a lot.

I dunno AL, I haven't found Honda to be a shining beacon of light and Toyota is worse. Is your experience with them on the assembly or manufacturing end? Mine is all on the manufacturing side, so take it for what it's worth.

None of the US nationals we deal with have any authority to act on their own and their Japanese ghost counterparts are in revolving door mode. In addition, the Japanese engineers seem to lack the technical understanding (based on my inference from their actions) to make timely decisions about manufacturing process. We recently witnessed a re-tooling decision on a line of cam lobe grinders that took 18 months to make. That decision didn't warrant more than an hour of attention IMO, and the US employees knew that as well. Instead they had to do months of studies and get quotation updates every few months.

Same thing with machines sent from Japan already tooled. They make the same mistakes time after time and the machines have to be re-tooled upon arrival. My offers to meet with the engineers in Japan responsible for the program have always been declined without comment. This leaves the engineers and techs to spend ridiculous amounts of time and money to make modifications consistent with problems they have already solved.

The irony is that Honda actually builds and rebuilds machine tools. Honda have their own proprietary line of gear grinders that are reasonably advanced and they have a large machine rebuild facility at Kariya where they rebuild and re-tool machines. We have worked directly with both these divisions so I know that they have engineers that understand manufacturing. They aren't sending any of them to Ohio from what I've seen.

Toyota is even more inflexible at their Kentucky and West Virginia plants. The machines are shipped from Japan already tooled and all the tooling and perishable items they buy come from Japan, often at several times the price of the same item from the US distributor. What this means is that even obvious process improvements are not allowed. There is no US based support for the either the machines or the tooling so process problems are solved, if ever, after many months rather than in hours or days. All spindle rebuilds are done in Japan so if a machine goes down it stays down for weeks rather than one or two shifts.

IMO the strength of the Japanese builders is product planning/engineering and assembly process. On the manufacturing side they turn out acceptable parts but at costs much higher than they need to be. The part quality is no better than what we see at Ford Essex or GM Tonawanda but the cost has got to be 2-3x higher for the same item.

oc

[dando]

In addition, the Japanese engineers seem to lack the technical understanding (based on my inference from their actions) to make timely decisions about manufacturing process. We recently witnessed a re-tooling decision on a line of cam lobe grinders that took 18 months to make. That decision didn't warrant more than an hour of attention IMO, and the US employees knew that as well. Instead they had to do months of studies and get quotation updates every few months.


Sounds like CMMI 16. :shakehead

-Kevin

[Andrew Longman]

I dunno AL, I haven't found Honda to be a shining beacon of light and Toyota is worse. Is your experience with them on the assembly or manufacturing end?

My experience is with assembly (HAM) in Maryville, Anna, Bama and Ontario (and a little with small power in NC). Also with American Honda (Finance, dealer relations, etc) in Torrence and HPD. And I've done a ton of work, on Honda's dime, helping their supplier network improve quality and product planning.

They are slow. That's Japanese. I'm currently working with a Japanese pharma company. It is maddening.

But the upside is they don't make mistakes and they are far less likely to introduce needless complexity to the business.

Yes a given part might cost more, but the fact that their inventory and SKU are a fraction of the competition means the true cost of that part is far less than the competition.

In the big three, and most US firms there are strong incentives for engineers to just make another part to meet a need or solve a problem rather than thinking carefully and with a long view about what to do with the existing part.

[oddlycalm]

Now Cerberus is talking breaking up Chrysler and selling off the various assets. Wonder who they will sell the pention liability to...?

Kerkorian & Cerberus abandon ship (http://www.bloomberg.com/apps/news?pid=20601109&sid=auaBB9fRscCQ&refer=home)

oc

[dando]

Now Cerberus is talking breaking up Chrysler and selling off the various assets. Wonder who they will sell the pention liability to...?

Kerkorian & Cerberus abandon ship (http://www.bloomberg.com/apps/news?pid=20601109&sid=auaBB9fRscCQ&refer=home)

oc

Is there anything left to sell? :(

-Kevin

[oddlycalm]

Is there anything left to sell? :(

The big assets at Chysler IMO are the Jeep product line, the Kokomo transmission operation and the Auburn Hills tech center. From what is being said it's pretty clear that neither GM or Renault wanted the whole company.

oc

[Sean Malone]

The big assets at Chysler IMO are the Jeep product line, the Kokomo transmission operation and the Auburn Hills tech center. From what is being said it's pretty clear that neither GM or Renault wanted the whole company.

oc

GM only wants access to Chryslers 10 billion dollars.

I've been following the progress i.e. rumors around the Chrysler 'phoenix' global engine; a V6, cylinder deactivation, dual variable valve timing, two-stage oil pump and gas direct injection. Insiders claim refinement at the level of Lexus. As part of the carry over contracts from the Daimler days, Mercedes would receive these engines as a workhorse powerplant in their entry level models. Assembly would be coming from the Trenton plant.
Latest rumor says the phoenix project has been shelved pending 'merger' talks.
Ironic, Chrysler finally designs a decent engine only to be carved apart and left to die.
I'm pulling for the rumored 20% Nissan purchase. GM can swing.

[TKGAngel]

GM may sell AC Delco in order to help their financial situation.

Source: http://www.aftermarketnews.com/Item/36555/gm_may_sell_acdelco.aspx

[FTG]

I'd buy the Jeep brand, if I could manufacture them at one of my non union plants and sell them through my existing dealers. The main reason GM wouldn't do a deal is they already have too many dealers.

[Sean Malone]

I'd buy the Jeep brand, if I could manufacture them at one of my non union plants and sell them through my existing dealers. The main reason GM wouldn't do a deal is they already have too many dealers.

Chrsler has been a red headed dependent for decades now...it's GM who is gasping for air.

[oddlycalm]

GM may sell AC Delco in order to help their financial situation.

Source: http://www.aftermarketnews.com/Item/36555/gm_may_sell_acdelco.aspx

Nice find.

GM has retained Merrill Lynch to assist in this initiative.
Because they are the current experts in solving a liquidity crunch....? :gomer:

oc

[Andrew Longman]

Chrsler has been a red headed dependent for decades now...it's GM who is gasping for air.

I read an analysis that Chrysler has zero competitive advantage

There was a time when Jeeps knowledge of 4WD was special and that's why Chrysler picked up that part of AMC, but lots of folks have lead on them now with AWD.

Their ability to squeeze cost out of the supply chain was an advantage and much of the reason Daimler was interested in them, but then they saw to costs they incurred in quality and brand damage.

They have too much capacity, too many dealers, too many models and nameplate and too many models that speak to a shrinking market for V8 Detroit muscle. And they lag in green technology and power.

The Jeep and minivan brands have strong equity.

Trucks to a lesser degree

PT Crusier has a following

That's about it

Would the world miss the Chrylser 300, Pacifica or Sebring?

The have minimal brand loyalty and mostly compete on cost and discounts

[oddlycalm]

I read an analysis that Chrysler has zero competitive advantage

There was a time when Jeeps knowledge of 4WD was special and that's why Chrysler picked up that part of AMC, but lots of folks have lead on them now with AWD.
Agreed, Renault left AMC with some great AWD technology and it was a long time ago.

The Kokomo tranny works makes GM Powertrain Toledo look like a blacksmith shop but at a moment where there is plenty of excess capacity and all manner of automotive assets in the market all at once I wouldn't hold my breath waiting for anyone to pay much. Kenosha and Trenton are both old buildings with a mix of old and new machinery.

In a breakup Cerberus will be lucky to make enough to fund the pension liability which I assume they will be stuck with. Whatever, this will be a major drubbing and perhap even a game changer for the private equity folks.

oc

[stroker]

I had an odd thought.

What about Chrysler being bought out by Fiat? There's no product overlap, Fiat's big enough to be serious, and Fiat could use the Chrysler dealer network to get back in to the US Market?

[Sean Malone]

Would the world miss the Chrylser 300, Pacifica or Sebring?

The have minimal brand loyalty and mostly compete on cost and discounts

The same could be said for 95% of all vehicles made today.

But I'll argue the competitive advantage aspect. HEMI 300's, HEMI Charger's, the new HEMI Challenger and of course the Viper have done an great job in creating buzz and getting people into the V6 versions. Hell, pick up any console video game and there will be a 300 or Charger in it and most definitely a Viper.
Aside from the 'vette, how many Chevy cars have a buzz other than in their dash?

It's not like were talking about Yugo here. But, now you attack the product and insinuate that the brand isn't worth continuing to bolster?:shakehead Since Iaccoca and Lutz turned Chrysler around in the early 90's, they've created more unique and exciting vehicles than GM has in the past 40 years.

the latest news leans towards the Nissan deal. Keeping my fingers crossed, although that would mean us tax payers will probably bail out GM and their 1 BILLION dollar a MONTH losses. Get the axe dear, it's chicken for dinner.

[Andrew Longman]

The same could be said for 95% of all vehicles made today.

But I'll argue the competitive advantage aspect. HEMI 300's, HEMI Charger's, the new HEMI Challenger and of course the Viper have done an great job in creating buzz and getting people into the V6 versions. Hell, pick up any console video game and there will be a 300 or Charger in it and most definitely a Viper.
Aside from the 'vette, how many Chevy cars have a buzz other than in their dash?

It's not like were talking about Yugo here. But, now you attack the product and insinuate that the brand isn't worth continuing to bolster?:shakehead Since Iaccoca and Lutz turned Chrysler around in the early 90's, they've created more unique and exciting vehicles than GM has in the past 40 years.

the latest news leans towards the Nissan deal. Keeping my fingers crossed, although that would mean us tax payers will probably bail out GM and their 1 BILLION dollar a MONTH losses. Get the axe dear, it's chicken for dinner.

I thought about the brand equity of the Hemi and I think there is some case for it, but in an era of global warming and $4 gas the engine and any buzz it creates has minimal benefit especially if you only have crap to sell at a steep discount otherwise. And it positions the company as not being very leading edge and with the times.

I think 1 of 6 people who walk into a dealer wind up walking out with a car. I read that GM justifies the Vette because it gets a few more people into the showroom to just check it out. Some of those walk out buying something else.

BTW, Iacocca hated the idea of the minivan and only some very determined former Renault engineers stuck with the case long enough to eventually get it green lighted.

By the mid 90s Chrysler had allowed other to eclipse them in the minivan market and they literally were close to backrupcy when Eaton and Lutz took over from Iacocca. The 96 minivan update saved Chrysler but they still needed Daimler to keep them going longterm.

Granted Lutz brought distinctive product design to Chrylser, as he is now with GM. He's a car guy and I had the pleasure of having dinner a few times when he was on the board of my former company but their is an absolute limit to what design can do when the engineering is commonplace and customer loyalty is almost non-existant, as it is at Chrylser.

[Sean Malone]

I thought about the brand equity of the Hemi and I think there is some case for it, but in an era of global warming and $4 gas the engine and any buzz it creates has minimal benefit especially if you only have crap to sell at a steep discount otherwise. And it positions the company as not being very leading edge and with the times.

I think 1 of 6 people who walk into a dealer wind up walking out with a car. I read that GM justifies the Vette because it gets a few more people into the showroom to just check it out. Some of those walk out buying something else.

BTW, Iacocca hated the idea of the minivan and only some very determined former Renault engineers stuck with the case long enough to eventually get it green lighted.

By the mid 90s Chrysler had allowed other to eclipse them in the minivan market and they literally were close to backrupcy when Eaton and Lutz took over from Iacocca. The 96 minivan update saved Chrysler but they still needed Daimler to keep them going longterm.

Granted Lutz brought distinctive product design to Chrylser, as he is now with GM. He's a car guy and I had the pleasure of having dinner a few times when he was on the board of my former company but their is an absolute limit to what design can do when the engineering is commonplace and customer loyalty is almost non-existant, as it is at Chrylser.

Yeah, I've read the books too but I've only had dinner with a few of the mechanics who tell me about the guys who trade in their Ram trucks every two years.
Again, you're deflecting the issue at hand, it is not brand loyalty that killed the Big Three, it's superior products from other manufacturers. Actually a vicious circle.
At least Chrysler tried to generate a following with creative products while GM hired VP's from Colgate and Proctor & Gamble.
But back to your comment about the apathy towards Chrysler products, there is no disputing that the world will continue to spin if Chrysler goes the way of the doodoo, but my concern isn't for the products, it's for the 10's of thousands of American employees who will lose their jobs.
I'm hoping for the best for all of them.

[Andrew Longman]

Sean, my brother in law buys another Dodge truck every few years too, just as soon as the transmission fail. I don't get it, but I know what you mean.

Chrysler has tried to do a few things distinguish their cars styling wise and I'll give them credit even if I don't like most of it. The problem is unless that converts to customer loyalty, and it hasn't outside of Trucks, Jeep and to a lesser degree minivan, then it leaves them without a competitive advantage.

They can't compete with Honda and Toyota increasingly a host of other companies on cost, innovation, strength of dealer network, use of technology, product development agility, or anything else people can think of.

Really maddening is what GM did to Saturn. They quarantined the company and were well on their way to gaining cult status and loyalty close to Honda. They used state of the art flexible manufacturing methods. They were the anti GM car. Its success only told them they had to kill it and integrate Saturn within the rest of GM as a cost cutting move as soon as times got hard.

For all that, they spent all that money for yet another GM nameplate they did not need.

[dando]

GM/Cerebus shaking the Uncle Sam $$$ tree:

http://www.cnbc.com/id/27409944


General Motors and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler, two sources with direct knowledge of the talks said on Monday.

The government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker, according to one of the sources, who was not authorized to discuss the matter publicly.

:shakehead

-Kevin

[JLMannin]

I suspect that the other $7B would be used to set up a fund, administered by the UAW, to absolve the companies of their existing pension and healthcare liabilities.

[cameraman]

I suspect that the other $7B would be used to set up a fund, administered by the UAW, to absolve the companies of their existing pension and healthcare liabilities.

How would one go about investing such a fund? How would you like to be some upper level gnome at the UAW and be told, here take this $7 billion and invest it somewhere it will pay a return but we won't lose a dime.:eek:

[Stu]

How would one go about investing such a fund? How would you like to be some upper level gnome at the UAW and be told, here take this $7 billion and invest it somewhere it will pay a return but we won't lose a dime.:eek:

etrade savings account. 3.3%

[dando]

No bailout for you!

http://www.iht.com/articles/2008/11/03/business/03gm.php


The Treasury Department has turned down a request by General Motors for up to $10 billion to help finance the automaker's possible merger with Chrysler, according to people close to the discussions.

Instead of providing new assistance, the Treasury Department told GM on Friday, the Bush administration will now shift its focus to speeding up the $25 billion loan program for fuel-efficient vehicles approved by Congress in September and administered by the Energy Department

-Kevin

[SurfaceUnits]

NEW YORK (CNNMoney.com) -- With auto sales at the weakest pace in 25 years and the Treasury's decision not to aid ailing automakers, job losses in the struggling industry could potentially get much, much worse.

If the Big Three carmakers were to cut U.S. operations by 50%, 2.5 million jobs could be lost in 2009, according to a study released Wednesday.

The Center for Automotive Research (CAR), reported that the total employment impact includes nearly 250,000 jobs lost at the automakers and nearly 800,000 at auto industry suppliers.

In addition, CAR projects that there would be over 1.4 million additional job losses outside the industry, such as those lost from store closings in the community hit by a plant closing.

In economic terms, cutting operations in half would reduce personal income by over $125.1 billion in the first year, and $275.7 billion over three years, CAR said. And the impact of this personal income loss would cost the government $49.9 billion in 2009, and over $108.1 billion in total tax losses over three years.

"The likelihood of one or two of the Detroit Three manufacturers ending operations is very real," David Cole, chairman of CAR, said in a statement.

But a larger fear is a complete shutdown.

If there was a 100% reduction in Big Three operations, CAR estimates that about 3 million jobs would be lost in the first year alone.

"A complete shutdown of Detroit Three U.S. production would have a major impact on the U.S. economy in terms of lost wages, reductions in social security receipts, personal income taxes paid, and an increase in transfer payments," Sean McAlinden, CAR chief economist, said in the release. "The government stands to lose on the level of $60 billion in the first year alone, and the three year total is well over $156 billion."

Year to date, the auto industry has announced 110,610 job cuts, more than double than the same period in the year before, and the highest of any industry with the exception of finance, according to a report released Wednesday by global outplacement firm Challenger, Gray & Christmas.

[trish]

Why couldn't the automakers get some of that trillion dollar bailout money? I guess helping the rich stay rich is the number one priority. Forget about the blue collar worker. And so much for the money stolen from us loosening up credit. I hear it's harder than ever for small businesses to get a loan.

[cameraman]

"The likelihood of one or two of the Detroit Three manufacturers ending operations is very real," David Cole, chairman of CAR, said in a statement.

But a larger fear is a complete shutdown.

Bollocks. There is still a market for cars & trucks in the US and the whole population isn't going to suddenly start driving Kias. The big three could very easily become the medium three and they might even get reorganized via the bankruptcy courts but a permanent shutdown of all aspects of those three companies with all production facilities sold as scrap and everyone laid off? Pure bollocks.

[Sean Malone]

Why couldn't the automakers get some of that trillion dollar bailout money? I guess helping the rich stay rich is the number one priority. Forget about the blue collar worker. And so much for the money stolen from us loosening up credit. I hear it's harder than ever for small businesses to get a loan.

The last article I read from the end of last week said the gov is offering 25bill to the Big 3 in return for zero emissions vehicle production. *extreme simplification*

[Sean Malone]

Bollocks. There is still a market for cars & trucks in the US and the whole population isn't going to suddenly start driving Kias. The big three could very easily become the medium three and they might even get reorganized via the bankruptcy courts but a permanent shutdown of all aspects of those three companies with all production facilities sold as scrap and everyone laid off? Pure bollocks.

I agree. I'm curious as to why all the fear mongering by 'industry analysts'. Hopsing to scare the money out of the gov?

[trish]

Ford reported a 3rd Qtr loss of $129 million. More layoffs too.

Ford burns through $7.7 billion in cash (http://news.yahoo.com/s/ap/20081107/ap_on_bi_ge/earns_ford)

The article says that Ford could run out of cash after 2010.

[SurfaceUnits]

I agree. I'm curious as to why all the fear mongering by 'industry analysts'. Hopsing to scare the money out of the gov?

yeah right, they're going to hang around and continue to lose: "Ford Motor reported a $3 billion operating loss in the latest quarter, and said Friday it would reduce staff and capital spending in order to preserve its dwindling cash." because they are good guys. :rolleyes:

[oddlycalm]

Bollocks. There is still a market for cars & trucks in the US and the whole population isn't going to suddenly start driving Kias. The big three could very easily become the medium three and they might even get reorganized via the bankruptcy courts but a permanent shutdown of all aspects of those three companies with all production facilities sold as scrap and everyone laid off? Pure bollocks.

What most people seem to forget is that while there are not enough buyers to sell the usual 16 million vehicles this year there will still be around 10 million cars sold in the US this year. Parts have to be made for all of them and they all have to be screwed together somewhere. The US builders have blown their market share in a big way, but it doesn't mean they won't make any cars. The big difference between the current situation and downturns in the past is that neither GM or Ford have profits from international operations to help float the boat this time.

GM has put a hold on talks with Cerberus and is focusing on liquidity which is what they should do. GM needs cash, not Cerberus' dirty laundry. If Chrysler fails GM and Ford stand to benefit.

oc

[FTG]

and they all have to be screwed together somewhere.

Korea, India and China.


According to you guys, eEveryone who runs a unionized auto company is an idiot. "GM said it had burned through $6.9 billion during the quarter." I can't think of any idiots looking to throw away $24 billion a year. Can you?

[Stu]

Korea, India and China.


According to you guys, eEveryone who runs a unionized auto company is an idiot. "GM said it had burned through $6.9 billion during the quarter." I can't think of any idiots looking to throw away $24 billion a year. Can you?

look in washington

[Sean Malone]

What most people seem to forget is that while there are not enough buyers to sell the usual 16 million vehicles this year there will still be around 10 million cars sold in the US this year. Parts have to be made for all of them and they all have to be screwed together somewhere. The US builders have blown their market share in a big way, but it doesn't mean they won't make any cars. The big difference between the current situation and downturns in the past is that neither GM or Ford have profits from international operations to help float the boat this time.

GM has put a hold on talks with Cerberus and is focusing on liquidity which is what they should do. GM needs cash, not Cerberus' dirty laundry. If Chrysler fails GM and Ford stand to benefit.

oc

Things aren't looking good for Chrysler. They are splitting their product line (Chrysler, Dodge, Jeep, Viper) into separate a-z lines for easier selling. It looks like the Viper deal is done. The unnamed buyer is spending $80mill.

I wouldn't be surprised to see GM or Ford try to get Jeep through some sort of trade.

With all of the Nissan negotiations Chrysler had over the last few years I suspect they are a player for either the Viper line or maybe Chrysler. Dodge may be able to survive with some gov money.
Although, some of the rumors I've read say it's just empty threats in hopes the gov will prop em up.
Regardless, the Big 3 are in deep.

[oddlycalm]

It's not just product lines, it's a plant by plant game at this point. Chrysler sunk serious money plants like Kenosha and Kokomo. When you compare Kenosha to GM Flint V6 one has modern machinery with skilled people and the other is a museum with disinterested personnel. Same with the Kokomo transmission plant vs GM Hydramatic Toledo. One is a modern factory, one is not. GM was interested in a lot more than additional product lines.

I would also point out that most cars are assembled in the markets they are sold in for a very good reason; cost. Shipping works for lower volume lines such as Subaru and Volvo, but we aren't going to see a business model where companies ship 10 million cars on RoRo's from India, China or Korea. Aside from the cost structure neither the ships or port facilities exist in sufficient quantity.

Ultimately, you have the same thing with manufacturing. Importing everything isn't practical or economical. The fact that it weighs a lot and is in transit for a month are deal killers. That's why Siemens, Bosch, GKN, Tremec, Linamar, Thyssen Krup, SKF, NTN, JTEKT and many others have plants in the US or on US borders.

The US spinoff parts suppliers are either dead, sold off, or soon will be. Visteon was allowed to quietly die in 2005 when Ford formed Automotive Components Holdings, LLC to act as an umbrella for the former Visteon divisions. Delphi remains in bankruptcy with business units sold as buyers are found. That process will accelerate in the coming months.
oc

[FTG]

I would also point out that most cars are assembled in the markets they are sold in for a very good reason; cost. Shipping works for lower volume lines such as Subaru and Volvo, but we aren't going to see a business model where companies ship 10 million cars on RoRo's from India, China or Korea. Aside from the cost structure neither the ships or port facilities exist in sufficient quantity.


Good point. The $400 billion of annual trade with china is mostly transported on the backs of trained dolphins. :rofl:

Labor cost of a car. Page 17 (http://74.125.95.104/search?q=cache:uqE0ON2vl7QJ:www.gerpisa.univ-evry.fr/rencontre/11.rencontre/papers/Mercer.pdf+%25percentage+of+auto+cost+labor&hl=en&ct=clnk&cd=3&gl=ca&client=firefox-a) $8,655

[SurfaceUnits]

The nation's largest automaker reported that it lost $4.2 billion; GMAC lost 2.5B

[Gnam]

I saw a TV ad for GMAC bonds. They said they were the safest place for your money, returning 3.25%.
Signs me up. :gomer: :rofl:

[Sean Malone]

I saw a TV ad for GMAC bonds. They said they were the safest place for your money, returning 3.25%.
Signs me up. :gomer: :rofl:

The weird thing is, GM doesn't own GMAC, the guys who own Chrysler do.:saywhat:

[SurfaceUnits]

and they are trying to get GMAC turned into a bank holding company so they can get at the tax dollars

[SurfaceUnits]

GM opens first Russian factory

ST. PETERSBURG, Russia (AP) — General Motors Corp. has opened its first Russian assembly plant.

The $300 million, 70,000-car-a-year factory that was dedicated Friday just outside of St. Petersburg is a bright spot for the staggering automotive giant.

This plant is GM's first in Russia, where demand for cheap, well-built cars has exploded amid a decade-long economic boom.

GM already produces 100,000 cars a year through Russian joint ventures.

The St. Petersburg region has become a mecca for foreign car manufacturers. Ford and Toyota have opened plants there and Nissan, Hyundai and Suzuki will also be launching production soon.

[cameraman]

GM's foreign operations are not its problem. It is paying for the idiotic US contracts it agreed to over the last 50 years.

Blame the unions? There are two sides to every contract and if the GM management negotiated suicidal contracts, well it isn't the union that are to blame.

[oddlycalm]

Good point. The $400 billion of annual trade with china is mostly transported on the backs of trained dolphins. :rofl:

Most imorts from China arrive as containerized cargo. It's not possible to handle cars as efficiently as containers. As of now they have to be driven on, driven off, and require extensive processing operations at the port of entry. Ever wonder why we have foreign transplant auto operations in the US? If it was more profitable to ship cars here from existing factories they would have continued to do that.

oc

[trish]

Well, they won't get part of the bailout for the bankers. http://news.yahoo.com/s/ap/20081112/ap_on_bi_ge/auto_bailout_49;_ylt=Age9vIbmx_8fJ3edv66Hy_Gb.HQA

[oddlycalm]

The shareholder equity is down to almost nothing at this point, around $2 billion. They are going to get wiped out regardless what happens. Best thing now would be a pre-packaged bankruptcy where the debt holders exchange their debt for equity and GM emerges with a balance sheet that will allow it to move forward and operate. The taxpayers should not be loaning GM money to pay the interest on debt it incurred in the past, that's just money down a rathole.

oc

[cameraman]

+1

[Andrew Longman]

The shareholder equity is down to almost nothing at this point, around $2 billion. They are going to get wiped out regardless what happens. Best thing now would be a pre-packaged bankruptcy where the debt holders exchange their debt for equity and GM emerges with a balance sheet that will allow it to move forward and operate. The taxpayers should not be loaning GM money to pay the interest on debt it incurred in the past, that's just money down a rathole.

oc

Good analysis. There are unfortunately some who will call them too big to fail.

GM has been horribly managed for years and letting go of GMAC got them out of the banking biz which was the only competitive biz they had.

[trish]

Good analysis. There are unfortunately some who will call them too big to fail.

GM has been horribly managed for years and letting go of GMAC got them out of the banking biz which was the only competitive biz they had.

I read that GM owns 49% of GMAC. Confirmed here. (http://biz.yahoo.com/ap/081111/gmac_credit_rating.html?.v=1)

[Andrew Longman]

I read that GM owns 49% of GMAC. Confirmed here. (http://biz.yahoo.com/ap/081111/gmac_credit_rating.html?.v=1)

Cerberus owns the other 51%. Cerberus was trying to trade Chrysler for the other 49%. So far that hasn't happened and at this point I don't think it will, but GM was been a bank that gave a away cars instead of toasters for a lot of years. Losing control of GMAC took control of that strategy away from them.

[dando]

Cerberus owns the other 51%. Cerberus was trying to trade Chrysler for the other 49%. So far that hasn't happened and at this point I don't think it will, but GM was been a bank that gave a away cars instead of toasters for a lot of years. Losing control of GMAC took control of that strategy away from them.

Bingo. Give that man a free Fiero...errr, toaster. :gomer: :(

-Kevin

[devilmaster]

Bingo. Give that man a free Fiero...errr, toaster. :gomer: :(

-Kevin

Take the fiero! Look what can be done with it ;)

http://www.jimmysautomotiveandcustom.com/pastjobs.htm

http://www.jimmysautomotiveandcustom.com/images/IMSAKit.jpg

http://www.jimmysautomotiveandcustom.com/images/cust2.jpg

http://www.jimmysautomotiveandcustom.com/images/cust4.jpg

:gomer:

[dando]

Take the fiero! Look what can be done with it ;)


Drop the clutch. Literally. :saywhat:

-Kevin

[emjaya]

Don't panic, "help" is on the way. :saywhat:


THE American owners of local Ford and Holden plants will be laughing at the Australian "suckers" who have handed them a $6.2 billion industry assistance package, former car company executives say.

http://www.news.com.au/business/story/0,27753,24639993-462,00.html

[SurfaceUnits]

too bad the health care industry isn't tits up; paulson and pelosi could confiscate that as well.

[Stu]

too bad the health care industry isn't tits up; paulson and pelosi could confiscate that as well.

meh, they already control over 50% of it.

[coolhand]

Well, I believe that GM and Ford are constructs of the Fordist Economic era. They have not adapted well. Cars can still be made in America however I think these guys need to fail so new companies can emerge using the same assets.

Look at the Tech industry, no one has these emotional ties to brands and companies change, disappear get bought out all the time. Look at the short time frame that we have gone from Microsoft to Google. They have totally different business plans. Imagine if the government kept giving money to IBM in the 80s and supporting their operating system, it would of stamped the microsofts and intels out of the market.