Forbes - "General Motors Is Headed For Bankruptcy -- Again"

[copperhead]

^ sure thats a possibility, however what if the ones that were going to buy gm decided to buy forign after gm goes under? then less of the workers are likely to be absorbed by us auto makers. which still leaves the parts suppliers, they would still face a real possibility of going under too if they arent producing enough to make a profit. either way its unlikely that all the would be gm buyers would buy forign after the loss of gm, same could be said the other way around as well though too. imho i think all of the domestic car makers need to make more fun to drive cars that the average working man can afford.

 

Instead of buying a Malibu, Americans can buy a Marysville built Accord, a Mississippi built Altima, or a Kentucky built Camry. Although to be fair, a typical GM owner would probably be more likely to switch to a Georgia built Kia Optima or Alabama built Hyandai Sonata.

 

Also, the "average working man" can no longer afford to buy a brand new car that isn't at the bottom of the market, therefore the people designing these cars don't give a shit about what the "average working man" thinks or wants.

 

That's something to think about while you drive around in your Canadian built Camaro.

[zeitgeist57]

If they suck at what they do, let them die while the others continue to prosper.

 

THAT'S UNAMURRICAN

 

We're in the "New Normal", bro-jangles. HERPDERP in 2012...

[Green Bastard]

Instead of buying a Malibu, Americans can buy a Marysville built Accord, a Mississippi built Altima, or a Kentucky built Camry. Although to be fair, a typical GM owner would probably be more likely to switch to a Georgia built Kia Optima or Alabama built Hyandai Sonata.

 

Also, the "average working man" can no longer afford to buy a brand new car that isn't at the bottom of the market, therefore the people designing these cars don't give a shit about what the "average working man" thinks or wants.

 

That's something to think about while you drive around in your Canadian built Camaro.

 

i totally agree.

 

there are alot of forign cars are now built in the us, but some are still built overseas. and if gm goes under and people start buying forign cars built here in the us, your still displacing jobs. so while jobs are being created in marysville, kentucky, mississippi, georiga, or alabama, people are losing jobs in detroit (referring to gm specifically). either way the majority of the money is still going overseas when you purchase a forign car as well, which still takes some away from our economy.

 

either way you look at it, i still believe that the government should stay out of business, even the ones that are "too big to fail". when the government was started the idea of laissez faire was adopted, too bad they arent holding to it.

 

just a side note, i dont own a canadian built camaro any more, i own a mazda which was likely built in japan at the time.

[copperhead]

i totally agree.

 

there are alot of forign cars are now built in the us, but some are still built overseas. and if gm goes under and people start buying forign cars built here in the us, your still displacing jobs. so while jobs are being created in marysville, kentucky, mississippi, georiga, or alabama, people are losing jobs in detroit (referring to gm specifically). either way the majority of the money is still going overseas when you purchase a forign car as well, which still takes some away from our economy.

 

either way you look at it, i still believe that the government should stay out of business, even the ones that are "too big to fail". when the government was started the idea of laissez faire was adopted, too bad they arent holding to it.

 

just a side note, i dont own a canadian built camaro any more, i own a mazda which was likely built in japan at the time.

 

http://www.mozilla.org/en-US/

 

Download the Firefox web browser. It has a built in spell check so you can look like less of an idiot.

 

When you buy a car, the profits don't walk away. They are spread out to the shareholders through dividends. Chrysler is the only car company that I know of that isn't public, and therefore retains its profits. Or rather, Fiat retains its profits.

 

Humans are migratory. Most people won't just sit around and die if what they need (food/clothing/employment) is no longer available where they live. Once a place no longer has resources, people move to where they can be found. Detroit has tons of empty homes, and its not because everyone moved to an apartment. The old industrial towns have shrinking populations, because there is no reason to stay. The up and comers ("forign" car companies, in your words) are building newer, faster, less wasteful, generally non-union shops that generally pay better than the big 3. Their cars are of a higher quality because they want to make sales, in order to make profit. GM was told that sales don't matter, because here's $25 billion dollars to keep doing the least possible to slide by so long as the unions are happy. Chrysler had changed hands a couple times so there were a lot of transition periods, but was owned by a private investment firm at the time, who are very motivated by profits so they were doing everything in their power to improve. Ford had the insight and stability to restructure ahead of time.

 

If GM were to go under, the parts suppliers would shift to supplying parts to the other existing companies that suddenly have a spike in sales to make up for the loss of the competitor. The factory workers would have unemployment coming in long enough for them to relocate somewhere that isn't Detroit (which sounds wonderful to me) and find work somewhere else.

 

You know, the last GM that I can honestly say I loved was a G-body from the mid 80's. Some day I'd like to find another just like it. Granted, I've not been in one of the new Cadillacs, but anything I've sat in under the Chevrolet badge has been dull. Hopping into a C5 and seeing the same crappy stereo that's in a Cavalier doesn't say much for the company in my opinion.

[Green Bastard]

the up and comers as you call it, where are they're home offices? last i checked money filters through there before it goes out to stock holders which is what i was referring to. and i agree about gm making most cars just bland these days. the only thing to come out the doors recently that spikes my interest is the camaro, and that's a car i cant afford. i dont disagree with you about the fact that gm should be left alone, and while the other car companies will have spikes (if gm goes under), who's to say that the same suppliers gm used are going to be used by the other companies? now i could be wrong, but i *thought* that most forign car companies used parts not made here in the us. and yes i realize that the big three are just as guilty (hell gm uses mostly parts made in mexico afaik).

 

and i do realize that people will re-locate, but i remember seeing something on tv not too long ago about detroit specifically and the people there being too poor to be able to move to another city (ie, they couldnt sell they're houses and didn't have enough money otherwise to move).

[Mallard]

When you buy a car, the profits don't walk away.

 

Actually they do when the company is based in a foreign country. Don't get me wrong, it's great that they are doing SOME operations in the US, but the profits go overseas.

 

 

Once a place no longer has resources, people move to where they can be found. Detroit has tons of empty homes, and its not because everyone moved to an apartment. The old industrial towns have shrinking populations, because there is no reason to stay. The up and comers ("forign" car companies, in your words) are building newer, faster, less wasteful, generally non-union shops that generally pay better than the big 3.

People leaving Detroit has nothing to do with foreign car makers. Even the Big 3 have headquarters outside of Detroit (GM has offices in the Ren Cen, but the Tech Center is in Warren). Everything moved to the suburbs, including employers.

 

Their cars are of a higher quality because they want to make sales, in order to make profit. GM was told that sales don't matter, because here's $25 billion dollars to keep doing the least possible to slide by so long as the unions are happy. Chrysler had changed hands a couple times so there were a lot of transition periods, but was owned by a private investment firm at the time, who are very motivated by profits so they were doing everything in their power to improve. Ford had the insight and stability to restructure ahead of time.[/qutoe]

 

Look at the latest quality metrics. This statement is not true.

 

GM was told sales don't matter? Last I checked, they still sold more cars than anyone in the world last year and are continually in the top 2 for this statistic. GM had started a turn-around plan, but it was about 2 years after Ford began theirs. The economy taking a dump came at a bad time for them, but Ford squeaked by.

 

If GM were to go under, the parts suppliers would shift to supplying parts to the other existing companies that suddenly have a spike in sales to make up for the loss of the competitor.

 

It wasn't (and isn't) an issue of the suppliers shifting who they sell to, it's an issue of the outstanding debt that a large company like GM would leave them with. Parts are sourced YEARS ahead of time (right now we're quoting MY2016), so this shift would not be quick. Also, it's not like GM paid for the development costs, tooling, production equipment, etc. up front. This is all rolled into the piece price and divided across up to 5 years of volume. Leaving the suppliers with this type of debt would send them into bankruptcy, they would lay off massive amounts of workers, and this would cascade across the industry.

 

The factory workers would have unemployment coming in long enough for them to relocate somewhere that isn't Detroit (which sounds wonderful to me) and find work somewhere else.

Oh really? Is that why people had unemployment running out even though these companies did not go under? There aren't many jobs actually in Detroit anyway, everything is suburban. Have you ever been anywhere other then downtown Detroit?

 

Hopping into a C5 and seeing the same crappy stereo that's in a Cavalier doesn't say much for the company in my opinion.

 

This does not happen anymore.

 

You say above that the car makers don't care about the average person affording their car, and that new cars aren't affordable, but why do you think they have increased in price? On one hand you blast them for re-using a radio across all their models and demand a bespoke peice of hardware. Then when you get more bespoke hardware you blast them for increasing the price. Building a car is expensive and in the past years certain models have been torn apart in the press for how soft the dash feels in a $20k car, and if the buttons on the radio feel good to the touch. The Cobalt had a cheap plastic interior, but started around $13k. Now you can have the up-market materials you whined about in a $16.5k Cruze.

Edited August 17, 2012 by Mallard

[BDHG940]

Interesting read.

[CRed05]

 

Sums up GM, the Camaro does the same thing.

[ShoMeSomeFun]

My job doesnt pay as well as I want it to in the states so I relocated to Qatar, and I contribute to their economy while maintaining a home in the states. Most people in the world move to other countries to find better paying jobs and support their family. Only in America do we have the ideology that we should keep GM afloat to keep jobs in Detroit.

 

What we need is a change in ideology not another bailout for GM.

 

Let GM burn and people will have to move and figure it out. No sense for the tax-payer to keep bailing out a failed product sucks but thats most likely what needs to happen.

 

If GM files bankruptcy does that still cost the tax-payers?

[wagner]

I don't like bailouts, but I don't know if I like what "could" happen if we let GM or some other very large company die.

 

Back when all of this was going down I was doing some work for a big DC law firm. The attorney and I got to talking about this bailout stuff, now mind you this is an attorney who deals heavy in the funding of projects, companies, and things like that.

 

He explained it to me that if a large American company like GM goes down, it is over. The domino effect could be horrific and would do all kinds of damage. That is just the high level of it, but to me it makes sense.

 

Think about it from a nature point of view: GM is a large food source, it dies off, what happens to all the animals that feed on GM (parts companies)? They die, what happens to all of those who feed on the parts companies (workers, companies that supply them)? They die too.

[CRed05]

He explained it to me that if a large American company like GM goes down, it is over. The domino effect could be horrific and would do all kinds of damage. That is just the high level of it, but to me it makes sense.

 

Think about it from a nature point of view: GM is a large food source, it dies off, what happens to all the animals that feed on GM (parts companies)? They die, what happens to all of those who feed on the parts companies (workers, companies that supply them)? They die too.

 

That's impossible. It was Obama's plan and he's a non-American Muslim communist that didn't graduate high school. How could this possibly be the case? HE WANTS TO TAKE YOUR BEAR ARMS!!!!

[ShoMeSomeFun]

I would think that maybe with all of the big companies that were needing a bailout at the time a "die-off" could happen.

 

But if its just GM I think the market and people would adjust in time. Yea its going to be terrible for those displaced people but GM needing another bailout this soon. Shouldnt they have hired some smart people to avoid this so soon.

 

I just think the American public would not be forgiving in another bailout this quickly. Surely that money could be used to help people in other ways.

[wagner]

That's impossible. It was Obama's plan and he's a non-American Muslim communist that didn't graduate high school. How could this possibly be the case? HE WANTS TO TAKE YOUR BEAR ARMS!!!!

 

The problem is that the pin on this grenade was pulled DECADES ago. Read the previous article I posted and Google the guy in question.

 

GM was about as organized as a monkey shit fight at the zoo, guy shows up, consolidates, tells the union fucks to get their act together, and GM saved money. VW saw this, steals the guy, applies what he does, and look, VW is slowly creeping up the ladder.

 

In an ideal world the federal government should not be sticking it’s fat fingers in an individual’s business (that is the job of state and local governments). Instead we have this FUBAR system where the greed and total stupidity of men has put us into an unprecedented situation.

 

Cliffs: No matter what the media, your mom, or anybody else tells you this world is headed towards total fuckdum.

[mmrmnhrm]

So what you are saying is that if GM were to suddenly be out of the picture, the people that would have gone out and bought a brand new GM are instead going to not buy anything at all? These people wouldn't go spend their money on one of the other surviving companies, therefore causing them to expand to make up the difference, therefore bringing in a large share of the displaced workers?

 

No. Customers would still want to buy cars, but there wouldn't be any to buy.

1. GM goes under, doesn't pay the bills to their parts suppliers.

2. Weak suppliers begin going under as banks call in their lines of credit.

3. Parts shortages cause production halts at otherwise healthy car manufacturers. The assembly lines are stopped and parts inventory (from suppliers who were healthy) starts to pile up. As inventory grows, new orders stop.

4. Without new orders, healthy suppliers stop building. People get laid off, and now there's less money flowing through the economy.

5. Less money in the hands of people causes slowdowns everywhere else as debt gets paid down, savings go up, etc (what we've been seeing the last four years). A recession begins, further feeding the negative cycle.

 

For a good example of what happens when just *ONE* supplier is unable to deliver, take a look at the availability of cars with metal-fleck/pearl paint last year. There was just a single supplier that bloody everyone bought that stuff from. That supplier was in Japan, and got whacked by the Tohoku earthquake/tsunami. End result? Not a single metal/pearl car on anybody's lot, anywhere!

[Mallard]

I would think that maybe with all of the big companies that were needing a bailout at the time a "die-off" could happen.

 

But if its just GM I think the market and people would adjust in time. Yea its going to be terrible for those displaced people but GM needing another bailout this soon. Shouldnt they have hired some smart people to avoid this so soon.

 

I just think the American public would not be forgiving in another bailout this quickly. Surely that money could be used to help people in other ways.

But they DON'T need another bailout. The point is the guy who wrote this article is a complete idiot and the theme of his article is unfounded. In one breath he says GM failed because of the idiots steering the ship, then in the next questions the new CEO's ability because he is replacing the management team. If they were so out of touch shouldn't they be replaced? This article has no basis.

 

For my thoughts on how the industry would handle a GM sized company going out of business just read my previous posts. There was a supplier support program in place during the Ch. 11 proceedings and the company I worked for at the time took over $25 million, which was outstanding debt owed by these companies. Do you expect them to swallow that and still continue to provide services to other OEM's uninterrupted?

[Mallard]

 

For a good example of what happens when just *ONE* supplier is unable to deliver, take a look at the availability of cars with metal-fleck/pearl paint last year. There was just a single supplier that bloody everyone bought that stuff from. That supplier was in Japan, and got whacked by the Tohoku earthquake/tsunami. End result? Not a single metal/pearl car on anybody's lot, anywhere![/QUOte]

 

For another good example you could look at the shortage of certain silicon that existed in the year+ following disasters in Thailand. Suppliers were scrambling to resource chips so they could continue to build electronics and some parts from Freescale (i think) were in extremely short supply.

[LPFSTheFett]

For the record, I think the article is a complete joke, but I also feel the same about GM and our countries current path of recovery. So many people think money can fix everything and it can't. If you have a bucket full of holes, it will lose all of it's water. Just filling it back up with water again(a bail out), doesn't solve anything. You have to focus on solving the problem.

[TTQ B4U]

I didn't read the entire article outside a quick skim, but I thought the word was GM Had a good year?

 

In terms of offering, I think Mike hit it solid when he said the average American can barely afford a new car that's not a cheap entry level one. It's rediculous. Even in our family where we can afford cars from their entire lineup, I wouldn't spend that much on them. It's a fucking car already...

 

The Malibu name needs to go. My parents bought an LTZ version several years ago and I associate it with 80yr old people looking for basic yet decent inside, transportation. It has very little if any style and the again, ditch the name.

 

Not the same car, but when VW came out with the CC it was the first VW I looked at said I like it and would own it. Looked at one for my company car but it's priced way too high IMO. Nice car, but again, fully loaded, not of value to me.

 

I wish GM all the luck in the world, and only hope they can figure out how to produce some nice cars for a far better value. The new Cruze is a nice car and I've driven them. I wouldn't own one at this point in my life, but if I was just starting out, it would again, be decent. Still needs a little more of style factor IMO but it works and is IMO the best entry level one I've seen from them in years.

[El Karacho1647545492]

But they DON'T need another bailout. The point is the guy who wrote this article is a complete idiot and the theme of his article is unfounded. In one breath he says GM failed because of the idiots steering the ship, then in the next questions the new CEO's ability because he is replacing the management team. If they were so out of touch shouldn't they be replaced? This article has no basis.

 

For my thoughts on how the industry would handle a GM sized company going out of business just read my previous posts. There was a supplier support program in place during the Ch. 11 proceedings and the company I worked for at the time took over $25 million, which was outstanding debt owed by these companies. Do you expect them to swallow that and still continue to provide services to other OEM's uninterrupted?

 

Thank you for this and your other posts.

 

I couldn't help thinking while reading that article that the guy who wrote it did research AFTER he'd made up his mind about his opinion, and not before. Looking down the list of previous articles he's written, there's an obvious bias and chip on his shoulder.

 

Very poorly written and presented argument, will not read that guy's opinion again.

[wagner]

Thank you for this and your other posts.

 

I couldn't help thinking while reading that article that the guy who wrote it did research AFTER he'd made up his mind about his opinion, and not before. Looking down the list of previous articles he's written, there's an obvious bias and chip on his shoulder.

 

Very poorly written and presented argument, will not read that guy's opinion again.

 

Media bais? That does not happen...

 

Hey look at this over here, ignore that fiscal cliff talk that is just a rumor anyway...

[TTQ B4U]

22 Stats That Show How The Emerging One World Economy Is Absolutely Killing American Workers

 

http://theeconomiccollapseblog.com/archives/22-stats-that-show-how-the-emerging-one-world-economy-is-absolutely-killing-american-workers

[crummer]

It only took 200 years for China to claw their way back, and as much as you can try to blame it on "open trade" you can also attribute it to how the government in China has become more open in regards to business.

 

http://www.theatlantic.com/business/archive/2012/06/the-economic-history-of-the-last-2-000-years-in-1-little-graph/258676/

 

As far as this too big to fail stuff goes, and if GM goes down the whole industry goes with it due to supply chains, I don't buy it any longer in the automotive industry. If you haven't fixed the fundamental processes that took you down to begin with, you in effect have not solved anything. GM started cash flowing negative back in 2006 as they had reached a point where labor costs were out stripping profit margins and they were handcuffed by the decisions made by leaders 10 to 15 years before '06. But with the classic attitude of "kick the can" neither man nor leader would look to the future and make the right decision. So it sounds like we are back at a precipitous point once again, and I am inclined to let the current leaders fail. Because someone, somewhere in the world will buy the assets, patents, and brand from bankruptcy court and GM will once again be enabled by passion instead of greed & stature.