Fixing the auto problem...

[Larry Gude (Premo)]

Originally Posted by Tilted

I
The cynic in me can't help but conclude that it will - though it would probably choose subtle measures over overt ones.

The easiest and simplest thing to do that would be fitting with your thoughts, subtle, would be cost of money.

Favorable interest rates and terms.

The other (another) thing I expect is unburdening GM of the legacy costs. There is talk now of it becoming a union problem, but I think it's gonna get rolled into some sort of government entity specific to the task; some sort of GSE that is set aside to deal with the existing legacy costs that will expire when the terms are met (they're all dead).

Oh, yeah; Existing employees will be picked up by the new government run healthcare system.

Come on. Live a little. Have some fun with this!


"Ok, the meeting will now come order. Today, Bob, passenger side air bag installer, will walk us through his ideas on how to manage the major problems in his department; labor and cost of materials. Bob?

"Alrighty then, men. First off, we need to cut wages and benefits by 1/3, tell the manufacturers we need another 10% off the bags AND they need to start including fasteners, and we're going to get an extra 79 minutes work per day per man by cutting back some on lunch and breaks. Additionally, I just wanted to say we should stop serving Bud Lite at these meetings.

...

...


Just kidding!!!! About everything! I just wanted to say all that and see the look on all y'alls faces! ####ing priceless! We're sending a mass email over to Big O tonight and he'll help us close up that pesky projection and actual cost gap on those silly spreadsheets! Hey! Anyone know how to make a pie chart in Excel? We wanna look at some stuff tonight while we're at it. Some folks feel like being back by Thursday after Memorial day is expecting a bit much...another beer, anyone?"

[Tilted]

Originally Posted by Larry Gude

Let your mind wander into just what GM is going to look like in a year once actual government ownership and direction begins to percolate through the company for some time.

Look at Chrysler; what is a labor operated car maker gonna look like? Well, how would chemistry class be if the kids were in charge? How would the asylum operate if the inmates were telling management what to do.

Keep in mind - under the current Chrysler plan, even though the UAW will own a majority equity interest to begin with, the U.S. and Canadian governments will effectively control the company. The U.S. will control 4 board seats, and Canada will control 1. That's out of 9. And those 2 governments are only supposed to have a total equity position in the company of 10%.

It's kind of like the situation at Ford, which I've long thought was not healthy. The Ford family still owns special shares that give them a 40% voting interest (effective control of the company), even though they own much, much less of the actual common equity. The decision makers have little financial stake in the consequences of their decisions.

Originally Posted by Larry Gude

The easiest and simplest thing to do that would be fitting with your thoughts, subtle, would be cost of money.

Favorable interest rates and terms.

The other (another) thing I expect is unburdening GM of the legacy costs. There is talk now of it becoming a union problem, but I think it's gonna get rolled into some sort of government entity specific to the task; some sort of GSE that is set aside to deal with the existing legacy costs that will expire when the terms are met (they're all dead).

Oh, yeah; Existing employees will be picked up by the new government run healthcare system.

Come on. Live a little. Have some fun with this!


"Ok, the meeting will now come order. Today, Bob, passenger side air bag installer, will walk us through his ideas on how to manage the major problems in his department; labor and cost of materials. Bob?

"Alrighty then, men. First off, we need to cut wages and benefits by 1/3, tell the manufacturers we need another 10% off the bags AND they need to start including fasteners, and we're going to get an extra 79 minutes work per day per man by cutting back some on lunch and breaks. Additionally, I just wanted to say we should stop serving Bud Lite at these meetings.

...

...


Just kidding!!!! About everything! I just wanted to say all that and see the look on all y'alls faces! ####ing priceless! We're sending a mass email over to Big O tonight and he'll help us close up that pesky projection and actual cost gap on those silly spreadsheets! Hey! Anyone know how to make a pie chart in Excel? We wanna look at some stuff tonight while we're at it. Some folks feel like being back by Thursday after Memorial day is expecting a bit much...another beer, anyone?"

I think that remains a significant possibility - especially if the bankruptcy court actually does its job and mandates a fair restructuring, which would hand the VEBA funds significantly less value than they expect to get under the current, wink-wink-nod-nod plan. (Okay, don't laugh, I know full well that isn't going to happen, but ...)

If that were to happen, I suspect that Obama would lay the blame for the government having to pick up the tab on the bankruptcy court and those evil bondholders who saw that the UAW got screwed.

[Larry Gude (Premo)]

Originally Posted by Tilted

I think that remains a significant possibility - especially if the bankruptcy court actually does its job and mandates a fair restructuring, which would hand the VEBA funds significantly less value than they expect to get under the current, wink-wink-nod-nod plan. (Okay, don't laugh, I know full well that isn't going to happen, but ...)

If that were to happen, I suspect that Obama would lay the blame for the government having to pick up the tab on the bankruptcy court and those evil bondholders who saw that the UAW got screwed.

I say that because the goal, I ASSUME, is to keep the damn things alive so, A, it sounds like what a first year business student would say if it was up to him "Well, hell, at this point, how about we dump the legacy costs on the government?" and B, they MUST get rid of the legacy costs. They simply have to to even stay in business let alone ever repay any of this.

Remember when Priceline came out? They gave preferential shares to the airlines in exchange for all those tickets, giving them, essentially, zero cost of goods sold? The airlines made MORE profit off of those shares when they sold them then ALL of the profits in the ENTIRE history of commercial aviation combined.

That kind of low or not profit reality is where the auto industry is headed.
If it's not there already. And I mean to stay.

It will be interesting to see what they actually do that makes Toyota and others rise up an object. As it is, if I'm Toyota watching this chaos unfold, I'm on the verge of being embarrased how much better they are going to be than Chrysler and GM given how much better they already are. And they will act appropriately and worry about becoming complacent given the spectre of now virtually NO competition for global dominance.

This is just sad, really.

[Alexa]

Originally Posted by Larry Gude

Obama is going to be learning it is a whole lot easier to drive into the mud than it is to get out. That is why government MUST take measured steps in all things. It must NOT be dramatic and flashy.

Let your mind wander into just what GM is going to look like in a year once actual government ownership and direction begins to percolate through the company for some time.

Look at Chrysler; what is a labor operated car maker gonna look like? Well, how would chemistry class be if the kids were in charge? How would the asylum operate if the inmates were telling management what to do.

We are literally staring into the abyss here. We are dealing with madness. Just think about how employees would run a company.

Then, go back to musing over government motors.

You wanna good laugh? Consider this; What would USGM (United States General Motors) likely do in a few years to deal with poor production and cost over runs?

Contract it out.

In response to the part of your comment that is in bold. They would look a lot like Hot Dog on a Stick, Mast General Store and Lifetouch (the folks that take all of our the school pictures). All of these are well known "employee owned" companies and thriving. You may find this link informative:

A personal stake: Why employee-owned businesses return more than a profit [Articles]

[Larry Gude (Premo)]

Originally Posted by Alexa

In response to the part of your comment that is in bold. They would look a lot like Hot Dog on a Stick, Mast General Store and Lifetouch (the folks that take all of our the school pictures). All of these are well known "employee owned" companies and thriving. You may find this link informative:

A personal stake: Why employee-owned businesses return more than a profit [Articles]

You wanna point out the glaring difference or shall I?

[This_person]

Originally Posted by Larry Gude

It just occurred to me; now that rule of law is out the window in terms of GM, Chrysler, contract law and so forth, why doesn't Obama just close all the foreign manufacturers operating in the US? Shut down the manufacturers, the dealerships. Maybe allow them to do repairs on their makes and models. Maybe.

Then, the US makers can have 100% of the market and that should mean no repercussions, domestically speaking, whatsoever for the current problems, how we got here and what to do next.

All the US dealers can stay in business.
All the part vendors.

Plus, in exchange for this, make the US people bring home all their foreign manufacturing. Which they may have to anyway.

I wsa really hoping you were going to say "let's set up a system where businesses try and sell products people want, and if they don't they lose money. They'll be totally at the mercy of their own abilities, and the good ones will survive and prosper, the bad ones will fail, and we'll all come out ahead because of it."

[Larry Gude (Premo)]

Originally Posted by This_person

I wsa really hoping you were going to say "let's set up a system where businesses try and sell products people want, and if they don't they lose money. They'll be totally at the mercy of their own abilities, and the good ones will survive and prosper, the bad ones will fail, and we'll all come out ahead because of it."

Interesting idea. A bit antiquated, but, has possibilities.

Two words for you;

We lost.

[Tilted]

Originally Posted by This_person

I wsa really hoping you were going to say "let's set up a system where businesses try and sell products people want, and if they don't they lose money. They'll be totally at the mercy of their own abilities, and the good ones will survive and prosper, the bad ones will fail, and we'll all come out ahead because of it."

Did you fall and bump your head? It will be okay. Just lay down and get some rest - the delusions will go away soon enough.

[This_person]

Originally Posted by Larry Gude

Interesting idea. A bit antiquated, but, has possibilities.

Two words for you;

We lost.

Originally Posted by Tilted

Did you fall and bump your head? It will be okay. Just lay down and get some rest - the delusions will go away soon enough.

I know, I know, "Don't come to me with the failed policies of the past..."

[Tilted]

Originally Posted by Larry Gude

I say that because the goal, I ASSUME, is to keep the damn things alive so, A, it sounds like what a first year business student would say if it was up to him "Well, hell, at this point, how about we dump the legacy costs on the government?" and B, they MUST get rid of the legacy costs. They simply have to to even stay in business let alone ever repay any of this. I need to do some digging to figure out just how much 'legacy' debt will remain if the current plan goes through. It pays $10 Billion of it and exchanges $10 Billion of it for equity. There may not be a significant amount owed going forward - but they were constantly making new arrangements, so I'm just not sure.

Remember when Priceline came out? They gave preferential shares to the airlines in exchange for all those tickets, giving them, essentially, zero cost of goods sold? The airlines made MORE profit off of those shares when they sold them then ALL of the profits in the ENTIRE history of commercial aviation combined. Didn't know that.

That kind of low or not profit reality is where the auto industry is headed.
If it's not there already. And I mean to stay. I agree - at least for GM.

It will be interesting to see what they actually do that makes Toyota and others rise up an object. As it is, if I'm Toyota watching this chaos unfold, I'm on the verge of being embarrased how much better they are going to be than Chrysler and GM given how much better they already are. And they will act appropriately and worry about becoming complacent given the spectre of now virtually NO competition for global dominance.

This is just sad, really.

...