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Anonymous
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BroDeal said:Maybe in your fantasy world. Here in the real world the labor cost that goes into a GM car is about $2400, which is roughly 8% of the total vehicle cost. GM did not go bankrupt because of a few percent difference in production costs. They went bankrupt because they made crappy cars relative to the competition and have been doing so for forty years. They treated their customers with contempt. It has been a total management failure. They have steadily retreated for decades, gradually ceding different market segments to the imports until they were left at an Alamo of their own making, with the company reliant on trucks and large SUVs.
John DeLorean's book, "On a Clear Day You Can See GM," written in the early 70's, shows how incompetent GM's management was; and the situation never got better. Sure the UAW is greedy and their members lazy, but the union is not the reason why GM failed.
Ford brought in management from outside the auto industry, and they are the last man standing.
Nope, but nice try.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aCRwRYakxQSI&refer=us
http://online.wsj.com/article/SB123853988781575499.html
"The GM bailout has become a political operation run out of the White House. It will stay that way. Talk of UAW layoffs already disguises the fact that UAW workers are actually offered generous buyouts and early retirement -- they aren't just sent away with a last paycheck. What about Chrysler? A few weeks ago, Fiat was saying it would consider a merger if a loan from Washington was guaranteed. Now Washington is saying a loan will be forthcoming as long as Fiat does a deal. That's not an ultimatum -- that's a nod and a wink.
Mr. Wagoner did more than any GM executive to deal with the cursed legacy of 75 years of too much government attention. Not for him, though, and not for Team Obama, the real solution to make GM "viable": Getting rid of its North American business to end its UAW captivity.
That captivity, imposed by the 1935 Wagner Act, is the sole relevant factor distinguishing the Detroit Three from the world's other auto makers. The result is downright weird: "Our" auto companies operate in a world that's less "American," in a sense, than the Japanese and German companies that come here and enjoy a free labor market.
The Wagner world was given a second lease on life by a peculiar feature of Congress's 1975 fuel economy law. Known as the "two fleets" rule, it effectively forces Detroit to make its cheap small cars in high-wage domestic UAW factories, even if it means losing money on every car. The rule has no fuel-economy function. Its only purpose is to shield the UAW monopoly inside each Detroit auto maker from global labor competition."
http://www.dailymarkets.com/stocks/2008/11/24/more-on-total-hourly-labor-costs-gm-vs-toyota/
"There’s also the “jobs bank,” a feature of the UAW contract that drew fire from senators, in which workers get 95% of their base pay and all of their benefits if they are laid off or their plant is closed. In the past, workers could stay in the jobs bank forever unless they turn down two job offers within 80 kilometres of their factory. GM’s new contract imposes a two-year time limit, and workers are out of the jobs bank if they turn down one job within 50 miles or four jobs anywhere in the country. GM has about 1,000 workers in the jobs bank now because it’s been thinned out by early retirement and buyout offers. At its peak, the jobs bank had 7,000 to 8,000 people, Sapienza said."
"Bottom Line: Even with the new contract, there will still be about a $14 per hour pay gap in total labor costs between GM and Toyota, and more than a 29% wage premium for UAW workers compared to their nonunion counterparts at Toyota."
What a great liberal idea... get paid 95% of what you normally make for not working. How very smart, in a pure business sense.
Ford, after Jaques Nasser, realized they overpaid for their acquisitions, particularly Volvo. When they started to lose money they knew they were in trouble and leveraged every asset and began shedding non-Ford brands. They still have enormous debt service and will never be the same company.