fateexceeds
Contributor
Letting GM fail would not collapse the entire economy! You are right that many jobs would've been lost, but as 1sty said above, GM could have been cut up and sold, which would've retained many of those jobs.
More reasons not to buy GM
- Thread starter fateexceeds
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Letting GM fail would not collapse the entire economy! You are right that many jobs would've been lost, but as 1sty said above, GM could have been cut up and sold, which would've retained many of those jobs.
I don't think there would have been many buyers of GM's parts. Honestly, Ford, Honda, Toyota, VW, etc. would have no reason to buy another automaker. Possibly they would purchase some land or equipment from them, but not an entire brand. Just look at how the sale of Hummer, Saturn, Saab, and Pontiac went. No jobs, maybe very few, would have been saved.
GM employs 244,500 people globally. Analysts at the time determind that every job at GM supported a minimum of 10 jobs at suppliers. That means the demise of GM could have cost 2,445,000 jobs (worldwide, with a large concentration in the US). Analysts also said that the payouts from the unemployment system for the number of estimated people losing jobs would have been greater than the amount the automakers were given. Not to mention GM's 400,000 retiree's currently getting benefits, which the US governement would have to pick up the tab for.
I'm not defending the business practices of any company, but I do believe GM and Chrysler were on a turn-around before the sky started falling. Ford was very far along in their resturcting and you see where they are now. GM was through the beginning stages, but still had some work to do. Chrylers turn-around was in its infancy since Cerberus just took the helm. GM and Chrysler were caught with their pants down. Had this economic crisis happened 3 or 4 years down the road I feel they would have been in decent shape to weather the storm.
Having seen inside these two companies before, during, and after Ch. 11, I can guarantee you that they have been shaken up, top to bottom. The entire organization is different. Both compaines are acting smarter (more customer, quality, and product focused), more nimble (decisions are made much, much quicker), and the cost structure is improved. The Ch. 11 filings allowed the necessary blood-letting to happen in a controlled environment, and much quick than it would have happened otherwise.
Personally, I feel the bankruptcy's were necessary and good for the companies, workers, consumers, and economy. The alternative of 2.5 million people being almost instantly unemployed would have been a disaster. GM is expecting to IPO late this year and the government will begin selling off shares in a controlled manner. There is a very good possability that the government will make money on this transaction.
Everyone is entitled to their own opinion. Some people looked in from the outside, while others got to live it.
There is only a certain number of cars made each years that will find a buyer. Better cars at better values will bring more people into the buying catagory.
So this means that If GM goes away, the parts supplies will not be completely dead as those GM buyers are simply going to go get a car from another maker. Some companies will go under but other expand. The other makers need to buy more parts at that point.
Also as the other companies increase production to fill the vacuum left by GM, they will have need to hire more people.
Having more of their cars sold in the US means more production plant s will be required here.
As we have seen, Chrysler and GM sucking has helped ford tremendously.
Except suppliers aren't just companies that stamp out parts, and OEM's source projects years before production. A lot of suppliers are high tech companies that do a lot of product development on systems in the vehicle. These are global businesses that supply ALL automakers. The amount of revenue most, if not all, suppliers would lose due to the GM/Chrylser fall out would send them into bankruptcy. That would dry up the supply chain for every other automaker, worldwide. Then things start cascading.
The number of people they hire would not be that large a number, and it would be more then 5 years down the road. They would have to establish all new plants and tooling in order to do this. It doesn't happen over night. In addition, with 2.5 million people out of work, car sales would have dried up even more, so I doubt anyone would have been expanding.
Also, the engineering behind the models they would be increasing production of would already be done. There would be no new white collar jobs from this scenerio (and only a limited number of blue collar jobs).
In a long term (10-20 year) outlook your opinion may play out. But the immediate consequences would have been disasterous, especially with how fragile the economy was at the time. Lots of communities would have been devistated and the government would have been supporting large numbers of people.
I don't mean to get into a philosophical debate over whether the bailouts were right or wrong. Obviously, my opinion is that they were necessary in order to prevent further collateral damage. Now is the time to focus on making America a leader in automotive technology and products.
With the new products out there (Equinox, SRX, CTS, Cruize, Volt, LaCrosse, Regal) and the one's to come (Malibu, Aveo, Excelle, Alpha, etc) GM is proving they are a relevent company that makes quality products that people want. And now they can do it on a cost structure that makes sense. Chrysler has the new Grand Cherokee, followed by a new Charger, 300, Avenger, Sebring, Journey, and Minivan. Hopefully they can prove the same thing, but product wise they had a bigger hill to climb.
Only one problem, I can only speak for me, and I'm pretty sure most of my own family, but none of us would actually buy any of those cars. As much as I do kinda like the regal sport, when it comes down to it, I'd still buy a jap car. I'm sure I'm not the only one that thinks that way.
Matter of fact, the only way I'd buy american, is if there were no other options out there.They've sucked for decades, and that reputation doesn't vanish from my memory over night no matter what the american auto journalist are trying to convince us of.
Time will tell, but I don't think GM is ever going to be anything other then "GM" if you know what I mean.
Personally, I work in the auto industry and buying American effect me, my friends, family, and local economy a great deal. I've owned both American and Japanese cars, and I've had the luxury of driving a great number of different vehicles. For a daily driver, any of the American companies make very good vehicles that suit my and my family's needs.
The CTS is a wonderful car and has earned many accolades. The V is unmatched in its level of performance in the segment, IMO.
The Malibu has great NVH, gets great mileage, and rides and handles decent. Although it's getting long in the tooth since most of its competitors have been refreshed in the last year or two. The new model is due out next year.
The new Buick Regal is a VERY strong mid-size car. Read today's review if you don't believe me (http://www.autoblog.com/2010/05/06/2011-buick-regal-first-drive-in-germany/). The LaCrosse is a very nice larger sedan as well.
The new Equinox gets 30 mpg (best in class), ride and handle's nicely, great NVH, and has plenty of room.
The Chevy Cruize has a very upscale interior for a compact car (it's no Cobalt) and can get up to 40 mpg! It gets the highest marks for safety in European crash tests and comes with ~11 airbags standard. Early reviews of the car are very good.
The new Ford Fusion is a great car and probably the best hybrid midsize car on the market.
The Fiesta looks like it's going to be a strong contender. Followed by the launch of the new Focus.
The Mustang 5.0L has been getting very good reviews and offers BMW M3 performance numbers at a bargain price.
My point is that, outside of shopping for a sports car, any of the American companies offer a number of very good products in a variety of segments (for my needs). Sure, I would love it if GM built a Hyundai Genesis Coupe or G35 Coupe type car. But for my daily driver needs there's no reason for me to look elsewhere.
I'm sure other people have their own opinions, and that's fine. If you go out and drive a Fusion, Regal, and Mazda 6 and decide you like the 6 the best, that's fine with me. But at least go to the dealer and give them a fair shake.
I, for one, will be waiting for this:
In the US it's AWD, 6 speed, Brembo Brakes, 2.0L Turbo, 255HP/295 lb-ft.
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- 96 Miata M-Edition, 2015 Mazda 3 Hatch
i want the insignia/regal so badly.
There are NO reasons not to buy GM. If you went buy the whole I hate GM because the took our money or paid big bonuses to people Or for the fact that they sell bla productes then I guess you'd have to either move for be rich. Because All of the banks that hold our money did the same thing. We have stores (from WalMart to your local malls) that laid off people just so the bosses could keep their pay checks. It's called busness. Just about everybody has either did or are doing the same thing.
Don't by GM, they can't make money, the let go employees. They stop selling cars so they stop ordering parts. Those parts makers now have to cut back. So on and so on.
Don't by GM, they can't make money, the let go employees. They stop selling cars so they stop ordering parts. Those parts makers now have to cut back. So on and so on.
If allowing GM to fail means people lose jobs and by association there is a string of others that do as well then so be it! These jobs are no longer required, useful or profitable. As such they should be gone.
If you dont buy GM, your buying something else so that company hires people, they pay different parts people, and its no big difference. Yes you have have less overall money flowing into parts builders as there is less diversity in parts needed.
If a foreign company takes on most of the sales that would have been GMs they are more likely to open up production plants here instead of building abroad, which means new construction, tooling, and many more jobs especially if they can build better cars for a lower price so more people end up buying more cars. Remember your economics 101 here, if cars cost less, more people will buy them.
Lets not pretend this is all for the parts people as manufactures Like GM already ruined their buisness by using global platforms meaning they needed a less diverse parts bin. The consolidation of sales By removing one of the top 5 manufacturers doesn't mean complete fall out. There are still 4 other companies of similar size making cars that will need more parts to make more cars.
That type of thing will continue to happen anyways and will only increase in the future to allow further cost savings.
Also I assure you there are several companies that would pay in the billions for Buick alone because of its Chinese market penetration. Then there is also Chevy trucks which will fetch a solid price and will not be killed off. I would think Toyota would be all over it to get a super duty competition vehicle out there.
The reality is the economy, technology, and consumer demand changes. Some things disappear in this and others are created. Its called progress.
Think about this for a second, who is bailing out the newspapers and magazine? Do you have any idea what the impact has been on paper mills?
What about email, that seriously took a s*** on the post office and on paper mills again as technology continues to do.
Or how about this, who cried for the factories and workers that made tape deck and VHS parts now that they are closed?
NO ONE!
Because those companies started building other parts or they went under as other plants opened.
If the world simply doesn't need more parts for cars then there is no reason to keep up this corporate welfare. If the free economy says we need less of something, the government should not artificially boost it up. That only ends up making a bigger fall later and one that now cost everyone + interest in national debt because you KNOW nothing else was cut in the budget to allow for this money to go to GM's stocks.
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Stop, right there. That is the statement of issue.
What did people say about the Cobalt?
Its no cavalier
But guess what... the cavalier was a piece of s*** too and easily outpaced by its foreign competitors.
Will it be different this time?
Is GM really designing to be the best three years from now or to be the best three years ago?
Ford I would not even put in the same ballpark as GM and Chrysler. They are a completely stable company that is doing fantastic. They are kicking GMs balls without government backing.
Obviously their focus is for every new vehicle to be 'best in class.' You can believe me that the organization's focus has changed or you can read it in the magazines when it's launched. The Cruize has been available in Europe for a year or so already, so you should be able to find plenty of info.
Many of their new products have best in class fuel economy, interior noise levels, and top safety ratings. The Regal was even European Car of the Year last year.
About 3 years ago Ford was in the same boat as GM. Had this economic crisis happened when Ford had to mortgage the company they would have had the same outcome.
Believe what you want, you're entitled to it. All I ask is that you actually go out and drive their new cars (some are just hitting dealers this summer) before passing judgement.
And GM making cars is not like the switch from BetaMax to VHS. The car is not obsolete, GM's cost structure was. GM sells plenty of volume, but the number of cars they needed to sell in order to break even was astronomical due to retiree pensions, health benefits, union labor cost, etc. Bankruptcy was the only way to resolve those issues as quickly as possible. Now that most of the blood letting is done they can go back to the business of making cars, and I can guarantee that the people still left working for the company are determined to succeed at building the best quality product.
Many of their new products have best in class fuel economy, interior noise levels, and top safety ratings. The Regal was even European Car of the Year last year.
About 3 years ago Ford was in the same boat as GM. Had this economic crisis happened when Ford had to mortgage the company they would have had the same outcome.
Believe what you want, you're entitled to it. All I ask is that you actually go out and drive their new cars (some are just hitting dealers this summer) before passing judgement.
And GM making cars is not like the switch from BetaMax to VHS. The car is not obsolete, GM's cost structure was. GM sells plenty of volume, but the number of cars they needed to sell in order to break even was astronomical due to retiree pensions, health benefits, union labor cost, etc. Bankruptcy was the only way to resolve those issues as quickly as possible. Now that most of the blood letting is done they can go back to the business of making cars, and I can guarantee that the people still left working for the company are determined to succeed at building the best quality product.
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skylar2ups
Member
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- 2011 Mazda3 iSport
That is a backwards way of looking at the auto market, as long as you take care of the cars they will last, KIA and Hyundai cars got a bad rap because they didn't last but if you look at the people who were buying the cars and how those people treated the car (i.e. no maintenance at all) you can't expect the car to last. I have relatives that have older Ford's, Kia's and other brands that have lasted with no problems because they respect their car and take care of it.
The topic of hand is not if GM can make a decent car now.
That is irrelevant to my argument as unless they hit a level of sales almost un hea. It doesn't matter how good their cars are they are costing the US tax payer too much money and never should have been saved.
That is my central argument. The opposition to that was that people will lose jobs. Which I countered that this is common in manufacturing as not only technology changes but economies due as well.
But lets look at it another way if you think bailouts were so great as was Bankruptcy....do you know how much money GM now doesn't have to pay the parts makers that they owed them?
Part of the sales condition of GM could have been that the buyer has to pay these debts. And didnt Gm kill off several divisions which also cost parts suppliers jobs anyways?
Then there is the cost of roughly 4 billion to settle those union contracts but since they didn't have that money, its either tax payer money or another loan that will still just burden them.
For a politician stand point this has nothing to do with saving GM to save job, its to keep the UAW as happy as possibly. A foreign maker is not going to higher them. They will setup in Texas, Florida, and other non union F'd over areas and make better cars for less money.
This bailout moved the costs from several hundred thousands to several hundred million people, added interest to it and then increased in exponentially in cost over time.
Parts manufacturers were going to get screwed one way or another so that invalid. In bankruptcy they dont have to be paid. In sell off they may have to but less parts are needed in the future which can still be the case.
GM paid nothing back as they used one set of bail out money to pay another.
GM cant make a line of cars good enough to undo decades of idiotic design and product failures. If they can its going ot take a decade to get people.
GM's IPO has to be extraordinarily successful for their being any chance of us being paid back.
Here is a good blurb on it:
"After blatantly mischaracterizing American opposition to GM's federal bailout, Whitacre then makes the claim that GM has repaid its government loan in full. That's baloney. GM got more than $50 billion in loans from Washington. Most of that money was converted to GM stock, and $7.1 billion was left to be repaid in cash. GM repaid that $7.1 billion "ahead of the original schedule" only because Washington moved its due date up to this summer.
What of the other bailout money GM got? The Congressional Budget Office expects taxpayers will lose more than $30 billion of it. But wait, there's more!
GM didn't repay the $7.1 billion from profits it made selling cars. Neil Barofsky, inspector general for the Troubled Asset Relief Program, from which GM got its bailout, told Congress last week that GM repaid that money "by taking other available TARP money" it had laying around in an escrow account.
So GM repaid taxpayer money with taxpayer money. And that small portion of its bailout is all taxpayers can expect to get back. That makes GM's new ad identical to those over-the-top Burger King ads. Both are shamelessly selling Whoppers."
That is irrelevant to my argument as unless they hit a level of sales almost un hea. It doesn't matter how good their cars are they are costing the US tax payer too much money and never should have been saved.
That is my central argument. The opposition to that was that people will lose jobs. Which I countered that this is common in manufacturing as not only technology changes but economies due as well.
But lets look at it another way if you think bailouts were so great as was Bankruptcy....do you know how much money GM now doesn't have to pay the parts makers that they owed them?
Part of the sales condition of GM could have been that the buyer has to pay these debts. And didnt Gm kill off several divisions which also cost parts suppliers jobs anyways?
Then there is the cost of roughly 4 billion to settle those union contracts but since they didn't have that money, its either tax payer money or another loan that will still just burden them.
For a politician stand point this has nothing to do with saving GM to save job, its to keep the UAW as happy as possibly. A foreign maker is not going to higher them. They will setup in Texas, Florida, and other non union F'd over areas and make better cars for less money.
This bailout moved the costs from several hundred thousands to several hundred million people, added interest to it and then increased in exponentially in cost over time.
Parts manufacturers were going to get screwed one way or another so that invalid. In bankruptcy they dont have to be paid. In sell off they may have to but less parts are needed in the future which can still be the case.
GM paid nothing back as they used one set of bail out money to pay another.
GM cant make a line of cars good enough to undo decades of idiotic design and product failures. If they can its going ot take a decade to get people.
GM's IPO has to be extraordinarily successful for their being any chance of us being paid back.
Here is a good blurb on it:
"After blatantly mischaracterizing American opposition to GM's federal bailout, Whitacre then makes the claim that GM has repaid its government loan in full. That's baloney. GM got more than $50 billion in loans from Washington. Most of that money was converted to GM stock, and $7.1 billion was left to be repaid in cash. GM repaid that $7.1 billion "ahead of the original schedule" only because Washington moved its due date up to this summer.
What of the other bailout money GM got? The Congressional Budget Office expects taxpayers will lose more than $30 billion of it. But wait, there's more!
GM didn't repay the $7.1 billion from profits it made selling cars. Neil Barofsky, inspector general for the Troubled Asset Relief Program, from which GM got its bailout, told Congress last week that GM repaid that money "by taking other available TARP money" it had laying around in an escrow account.
So GM repaid taxpayer money with taxpayer money. And that small portion of its bailout is all taxpayers can expect to get back. That makes GM's new ad identical to those over-the-top Burger King ads. Both are shamelessly selling Whoppers."
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I would say he is right on.
It takes a decade for someone to consider giving a company another chance with $20K.
You have to prove you have a good product over that time period so people believe your cars will last.
I am unaware of any study or statistic that can link a certain make or model of cars buying demographic to being likely to not maintain it leading to numerous failures.
Everyone has econo cars and if you look at 1990 as a snap shot, would it be better to have bought a Carola, Cavalier, or an elantra?
We all know the Carola won the longevity contest with the Civic over their competition by a LARGE margin. DId some cavaliers last as long, sure, but not with less failures overall and equal percentage of cars.
I certainly will not be giving GM any more of my money for at least a decade after that s*** bomb G5 my wife had.
Sure the engine will last 100,000 miles too bad the suspension, sunroof, and electronics didn't.
AFAIK, the government money picked up the tab for most, if not all, of the outstanding debts the automaker owed suppliers. The company I work for was owed between $60-70 million from Chrysler, and I believe that was paid in full. It was part of the program the government set up to keep suppliers from going belly-up and bringing down other companies, like Toyota and Ford.
The escrow account was set up as a pool of money for GM to use for its operations in order to keep them solvent. Paying the loans off with this money shows that GM is becoming profitable enough to the point that they don't need that much of the government money in reserves. Also, it's good business because the government loan is at a higher interest rate than what's available to them through the private sector now.
fateexceeds
Contributor
The difference is that Ford realized it was in a proverbial sinking ship and started turning itself around, without government assistance. Why didn't GM and Chrysler decide to do anything until they needed a bailout? Instead of playing the what-if game, let's look at reality. Ford handled the situation the right way, without using public money, while GM and Chrysler gladly took taxpayers' money to try to fix years of mismanagement and poor business decisions and are only turning things around at the government's behest.
Now, Ford is making some of best vehicles to come out of Detroit in more than two decades, while GM is more worried about winning the PR battle with their bogus claim of paying off their loan early. And winning over some auto 'zines does not constitute making quality vehicles - we'll see if GM has truly started taking quality seriously in a few years, when we can make more accurate assessments of the reliability of their new vehicles like the Cruze and the Lacrosse, etc.
Now, it's entirely possible that the Cruze, etc., will be much better quality vehicles than the last generation of GM cars. If that's the case, it's a win-win for everyone, because it should help GM earn back some of the business it has lost and return the company to profitability (which will in turn help justify the bailout and job preservation).
But my main point remains thus: GM should not be paying ridiculous bonuses to failed former CEOs with public money! If GM does succeed in its recovery attempt, then I have no problem with the executives responsible earning bonuses, but the money had better come from GM's profits, not the public!
As things stand, I will not consider buying a GM vehicle until I see tangible evidence that the current culture (i.e. rewarding failure with public money and lying to the public about repaying the loan) has come to an end.
No it certainly did not.
It gave money to GM and Chrysler to disperse out to its suppliers. Gm and Chrysler only paid their largest suppliers and still made them accept a reduced amount and on much longer terms. Chrysler was viewed as more fair to their suppliers from what I can find.
But with both only the largest companies could sustain this. All the others were bascily told to go to hell as they could afford to wait or take the hit.
So Again this isn't about suppliers, as a great many were not paid and had to file bankruptcy anyways.
As I am employed by a small company, I can tell you that having to exend terms to 90 days more then already being 180 past due means you are basically out of business.
he escrow was set up with tax payer dollars and then was used to pay back the loan which was also tax payer dollars. So they gave us back our money....with our money?
Then the retard CEO goes on TV saying how they paid everything back to the government which was a lie on multiple levels.
GM is not profitable, they lost several billion last quarter. Losing billions does not mean profitable.
fateexceeds
Contributor
I agree completely. It truly does take time for people to trust an automaker again after years of producing junk.
I know many people who used to be diehard "buy American" guys but who now buy Euro or Japanese cars. My grandfather was in the plumbers' union for decades, so he was very supportive of the UAW and always made sure to buy American cars made by UAW workers; but he eventually decided to jump ship for Toyota because of the superior quality. Many of my coworkers are in their 50s & 60s and grew up driving and tuning American muscle, but they are now driving Subarus, Infinitis, VWs, etc., because of the crap that has been coming from Detroit the last couple of decades, and they will not switch back.
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- 2011 Mustang GT
Funny how this thread blew up, but some great points.
I'm more of a Ford fan typically, but I have to chime in about this situation. What GM did when they were bleeding money and jobs with its CEOs is bulls***. These "golden parachutes" that we allow to keep happening need to come to a stop. The average worker wouldn't get a lump-sum if they got fired, so why does a CEO get it? Where did the pay scaling get so skewed that we're paying a CEO 50-100 times what an engineer makes?
Either way, I do want to see GM be a successful company again, pay its loans back, and come out with a portfolio of vehicles that force other automakers to take notice. To me, as an engineer, this competition continues to fuel product refinement and technological innovation. Sure, GM and Chrysler could have dropped off and drastically reduced their stake, but it would have had a ripple effect for years to come. Without their products in each segment, some companies wouldn't have bothered to spend additional money for R&D to push engine/powertrain development and make their vehicles better. Sure, there are still a host of other companies to compete with, but GM currently has some vehicles (not all) that are serious competitors in the domestic auto market. The public has lost faith in Toyota & Chrysler, and people are flocking to Ford more than I ever thought. I never thought I'd hear from many GM loyalists that felt their business tactics were unethical that they' d consider a Ford.
It'll be interesting to see what this does in 2-3 years as the market (hopefully) recovers enough and brings us back to a more stable economy. Auto sales have perked up quite a bit, and GM now has streamlined itself into a much stronger body now IMO. They really did fatten up with useless badge jobs and piss-poor quality. They've got a way to go, but I think it's perfectly attainable in a short time frame.
I'm more of a Ford fan typically, but I have to chime in about this situation. What GM did when they were bleeding money and jobs with its CEOs is bulls***. These "golden parachutes" that we allow to keep happening need to come to a stop. The average worker wouldn't get a lump-sum if they got fired, so why does a CEO get it? Where did the pay scaling get so skewed that we're paying a CEO 50-100 times what an engineer makes?
Either way, I do want to see GM be a successful company again, pay its loans back, and come out with a portfolio of vehicles that force other automakers to take notice. To me, as an engineer, this competition continues to fuel product refinement and technological innovation. Sure, GM and Chrysler could have dropped off and drastically reduced their stake, but it would have had a ripple effect for years to come. Without their products in each segment, some companies wouldn't have bothered to spend additional money for R&D to push engine/powertrain development and make their vehicles better. Sure, there are still a host of other companies to compete with, but GM currently has some vehicles (not all) that are serious competitors in the domestic auto market. The public has lost faith in Toyota & Chrysler, and people are flocking to Ford more than I ever thought. I never thought I'd hear from many GM loyalists that felt their business tactics were unethical that they' d consider a Ford.
It'll be interesting to see what this does in 2-3 years as the market (hopefully) recovers enough and brings us back to a more stable economy. Auto sales have perked up quite a bit, and GM now has streamlined itself into a much stronger body now IMO. They really did fatten up with useless badge jobs and piss-poor quality. They've got a way to go, but I think it's perfectly attainable in a short time frame.
For the record, the Mazda6 is produced in Flat Rock, MI, and the Ford Fusion is produced in Hermosillo, Mexico. Which one's American? (dunno)
