what does it mean that GM declared bankruptcy

[bodie54]

It's interesting how some commentators think that Obama is a socialist/communist. From a European persepctive he's at most centreist, and in some cases quite right wing

Dear sproing,
I see you're relatively new here. FYI, it's considered bad form to interrupt a perfectly good paranoid delusional episode, particularly one relating to our current president. Please endeavor to keep your rational observations to yourself.
Thank you, The Management

 

[sproing99]

It feels like the US car industry is going through what the UK car industry did in the 1970's and 1980's:

- Making **** cars no-one wants
- Enormous pension liabilities
- Unions have the management by the short and curlies
- Outdated working practices
- Outdated plant - historic underinvestment
- Massive government investment/ownership

The lesson from the UK seems to be:

- You're fucked
- Some the domestic industry will survive but only that with a strong brand
- There may still be auto manufacturing in the US, it will be foreign owned

Of course, the US market may be more loyal (after all France and Italy have managed to retain a domestic car industry albeit with large amounts of long-term government support) and you may pull through.

GM's presence in the Latin American market may be its lifeline

 

[sproing99]

Interesting post from Robert Peston (a BBC economic blogger).

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/06/bosses_pay_and_wpp.html

Despite the market going down the toilet, chief executives are lining their own pockets. The one thing we can be confident of is the incompetence and veniality of those in charge.

 

[lostwood_7]

I was watching the Sox/Tigers game last night, and NESN made a comment directed to the GM sign located in the back of the center field. They stated that the owners of the field would leave the sign up, even though GM cannot afford to pay there contract to advertise there. It was to show support for all 3 big automakers. The reality of it is, it would cost too damn much to take that sign down, then it would be to leave it there.

 

[D-rock]

A standing ovation to you sir!

Someday, in America, (if only in my dreams) Americans will learn that begging the Fed for help will only cause more problems.

Who didn't know that the bailout money would only postpone bankruptcy?

The shareholders knew, that was why they either got out or stayed away.

Foreign interests knew, that was why they waited to offer buyouts of certain assets.

Congress knew, but they have never been known for their astounding wisdom in financial matters.

The White House knew, but the bailout was set up to protect union workers from having their contracts re-negotiated under section 1113 of Chapter 11, US bankruptcy code. Or so I'm told.

GM knew, but when one finds oneself in such peril, one tends to take any arrangement to relieve the problem, however briefly.

Is anyone to blame? The failure was inevitable, and a fresh, bright-eyed administration was eager to jump in blindly and try to help. Well intentioned, I hope.


But then it may be a purely evil attempt to nationalize transportation:dunno:
Depends on where you get your information, I guess

What needs to be kept in mind also is that the loss of auto manufacturing jobs doesn't happen in isolation. They are so tied to other parts of American industries, and that for each job lost in auto manufacturing there are multiple other jobs loss do to parts suppliers shutting down, and all the people that get paid from that no longer spending money in local business or anywhere else for that manner.

I think a lot of the people out there that would prefer to see the auto manufactures go down because of their economic ideology just don't realize the devastation and full consequences of what would happen if GM or Chrysler went into something like Chapter 7 or had to start liquidation their assets on a gigantic level. I bet those people would change there tune if they had to feel the full repercussions of that which the vast majority of Americans would if that happened in one form or another. All of that would also be happening right on top of one of the worst economic periods we have seen. The loss of income and manufacturing base would probably be catastrophic at this point, and the recovery would take an extremely long period of time, if it happened ever. I wouldn't be surprised if we just never fully recover from where at now as it is, let alone adding something to that with it.

In fact, in my opinion I don't see us coming out of this ahead. Like all past economic downturns for the past 40 years there will be parts of our country that just never recover, and it's going to be even worse this time. The recovery we do have will just serve to create an illusion that things are getting better long term. This isn't going to be something that in 5 years time or even longer that we are going to be better economically like never before and everything will be alright, and we never have to worry or anything like that. Unless we start fundamentally changing how our economy and society works, we are going to have a huge lasting permanent scars from this along with all the other smaller ones from times past. The American economic model of the last 40 years just isn't sustainable. Unless we start getting almost every American a reasonably paying sustainable job that's easy for them to get and keep, start controlling regulating the cost of things health care, start building true wealth for all people not just a small portion of the upper class, and start using that wealth to pay off our debts and have stability in our economy we are quickly heading to the point where we are going to be in extremely deep trouble in the future.

 

[Facetious]

The goverment didn't make GM bankrupt.

GM was the maker of it's own destiny.
Poor product and abysmal financial management.

I'll buy that to a certain extent, but understand that along the way our economy has morphed into a global business dynamic. It's a multiple number of things that led to the demise of GM. It's just that the government made it easy for the chairmen at GM to acquiesce to an offer they couldn't refuse. The government fired GM CEO, Rick Wagoner still gets to ride off into the sunset with millions in severance and sundry bonuses.

As we all know, over the last dozen - 15 years, the American corporation has been outsourcing American jobs to cheaper overseas competitors.
The eventual effect of outsourcing / offshoring millions of American jobs is an idle and displaced American workforce (unemployment). Unemployed people who are struggling to make their house payment typically end up foreclosing on their home, or at best, in a short sale.
These people generally will not be in the market for a new car any time soon - how many million foreclosures will there be ?
Add in last years spike in oil prices and all bets are off at GM.

Somebody asked why Ford has survived the economy downturn and I have my own opinions on that.

Granted, Ford has done a much better job than GM and / or Chrysler in the area of the hybrid car demand as of late, case in point the Ford "Focus" (?) or is it "Fusion" (?), anyway, they're selling a lot of units, even today.

Ford motor company has an international reach that GM and Chrysler do not. FOMOCO is much more politically invested than GM and Chrysler, and that may have given them an edge as far as having the ability afloat during this downturn.
As I recall, Ford almost took bailout monies from the gumment, but in the end, turned it down citing something like "we think that we can make it on what we have".

 

[E-Ann-Hilden]

It feels like the US car industry is going through what the UK car industry did in the 1970's and 1980's:

- Making **** cars no-one wants
- Enormous pension liabilities
- Unions have the management by the short and curlies
- Outdated working practices
- Outdated plant - historic underinvestment
- Massive government investment/ownership
The lesson from the UK seems to be:

- You're fucked
- Some the domestic industry will survive but only that with a strong brand
- There may still be auto manufacturing in the US, it will be foreign owned

Of course, the US market may be more loyal (after all France and Italy have managed to retain a domestic car industry albeit with large amounts of long-term government support) and you may pull through.

GM's presence in the Latin American market may be its lifeline

I am not too hip on the government bailout either, but it does save jobs in my State and many others at a large cost. Putting the loss of GM or Chrysler on top of all the Wall Street and Bank problems would be a very hard one at this time. The Big 3 are one of the largest buyers of steel, metals, plastics, electronics, rubber products to name a few in the U.S. They also support so many Tier 1, 2 & 3 manufacturers. It is a real big picture and affects so many people.

- Making **** cars no-one wants (GM sold 9+ million cars in 2007)
- Enormous pension liabilities (Yes, legacy cost are their downfall)Unions have the management by the short and curlies (too some degree)
- Outdated working practices (They have been improved vastly, but still lag)
- Outdated plant - historic underinvestment (GM has built 2 very modern plant in the last 8 years, but it really has too many plants right now)- Massive government investment/ownership (Too be seen, good or bad)

- You're fucked (too be seen, the U.K. industry was much smaller and Vauxhall and Ford still are there)
- Some the domestic industry will survive but only that with a strong brand (Cadillac is a strong brand and so is Chevrolet)- There may still be auto manufacturing in the US, it will be foreign owned (Very unlikley, most foreign automakers have enough capacity and sell here already)
GM's life line is China and Brazil right now. It is a true shame they are letting Opel go, they make excellent cars.

 

[E-Ann-Hilden]

I'll buy that to a certain extent, but understand that along the way our economy has morphed into a global business dynamic. It's a multiple number of things that led to the demise of GM. It's just that the government made it easy for the chairmen at GM to acquiesce to an offer they couldn't refuse. The government fired GM CEO, Rick Wagoner still gets to ride off into the sunset with millions in severance and sundry bonuses.

As we all know, over the last dozen - 15 years, the American corporation has been outsourcing American jobs to cheaper overseas competitors.
The eventual effect of outsourcing / offshoring millions of American jobs is an idle and displaced American workforce (unemployment). Unemployed people who are struggling to make their house payment typically end up foreclosing on their home, or at best, in a short sale.
These people generally will not be in the market for a new car any time soon - how many million foreclosures will there be ?
Add in last years spike in oil prices and all bets are off at GM.

Somebody asked why Ford has survived the economy downturn and I have my own opinions on that.

Granted, Ford has done a much better job than GM and / or Chrysler in the area of the hybrid car demand as of late, case in point the Ford "Focus" (?) or is it "Fusion" (?), anyway, they're selling a lot of units, even today.

Ford motor company has an international reach that GM and Chrysler do not. FOMOCO is much more politically invested than GM and Chrysler, and that may have given them an edge as far as having the ability afloat during this downturn.
As I recall, Ford almost took bailout monies from the gumment, but in the end, turned it down citing something like "we think that we can make it on what we have".

GM sells in as many markets as Ford. With the loss of Opel or Vauxhall it will change at least in the European market. Chrysler, I agree is not a global company.

GM does make more hybrids than Ford. But Ford has done better marketing and produced a fine car in the Fusion.

Ford was smart about regrouping and mortgaging assets. They sold off Aston Martin, Land Rover and their share in Mazda. They were looking like the weakest of the Big in 2005-06, but with a fresh management came in with new ideas that have really paid off in this downturn. They are still losing $$$, but have the reserves and have a one brand program now.

 

[titsrock]

Gov't Intervention + Gov't Regulation - Greedy, Out-of-touch Execs - Failed Business Plans = WINNING STRATEGY

 

[titsrock]

As we all know, over the last dozen - 15 years, the American corporation has been outsourcing American jobs to cheaper overseas competitors.
The eventual effect of outsourcing / offshoring millions of American jobs is an idle and displaced American workforce (unemployment). Unemployed people who are struggling to make their house payment typically end up foreclosing on their home, or at best, in a short sale.
These people generally will not be in the market for a new car any time soon - how many million foreclosures will there be ?
Add in last years spike in oil prices and all bets are off at GM.

Other than conflating 2 separate issues--home mortgage meltdown with Auto maker meltdown--there is an alarming truth in this part. We don't have enough high paying jobs to accommodate the work ***** we have. It presently costs *roughly* 200k to raise a ***** in America. Unless we actually create an industry that can accommodate millions of workers for decades--like nationalizing healthcare could or *GREENING* America...we're going to have people in their prime work years moving out of America toward cheaper countries...

 

[Facetious]

Dear sproing,
I see you're relatively new here. FYI, it's considered bad form to interrupt a perfectly good paranoid delusional episode, particularly one relating to our current president. Please endeavor to keep your rational observations to yourself.
Thank you, The Management

I like your discreetness

Now, from your paper of record. It ***** me how they "blame" it on capitalism when the conditions listed are, by all accounts, a socialists' *****.

It's all good ! relaaaaaax.

"Paranoid" and "delusional" are those who do not identify with a one superior ideology ? Where have I read that before ? hint : history

careful with that :o

 

[Mr. Daystar]

Other than conflating 2 separate issues--home mortgage meltdown with Auto maker meltdown--there is an alarming truth in this part. We don't have enough high paying jobs to accommodate the work ***** we have. It presently costs *roughly* 200k to raise a ***** in America. Unless we actually create an industry that can accommodate millions of workers for decades--like nationalizing healthcare could or *GREENING* America...we're going to have people in their prime work years moving out of America toward cheaper countries...

How can you not see how the 2 are related? I work as a driver in the steel treating industry. I pick up, and deliver to stamping plants, and other metal processing companies. I can't count the number of bigger companies, that have gone by the wayside, because auto makers are getting most of their parts already heat treated, and plated, right off the container ship from China, or shipped up from Mexico by train, then short haul by truck, to the plant. My company, like many in my area, is so slow, it's scary. If I get 30 hours a week, it's a pretty good week, and most of my stops are cut back to 4 days/32 hours per week. I lost track of how many box cars I've seen loaded with chassis, that were being sent to Canada, or Mexico, where shipments from other divisions will be sent, for assembly. You take away a mans job, he looses his house...that's a pretty easy line to draw, don't you think? That's just the auto industry. How many others have moved overseas? Or to the south and North. Clinton fucked us with NAFTA, and handed jobs to Mexico...our jobs, and Bush let his buddies move their **** to the Middle East and India. No jobs, no money...and there goes your home. It's all a vicious circle. Although I will say this, not all of the foreclosures could have been avoided. Thanks to certain organizations, a HUGE number of people that shouldn't have ever gotten home loans did, and then lost it all, helping to drive down property values, and add to the problem.

 

[sproing99]

.....lots of good points.......

I'd just like to pick up on a couple of points from yout rebuttal (so to speak)

(GM sold 9+ million cars in 2007)
- If sales of SUVs and trucks continue to fall, this could be a problem
- In most of the world, Chevrolet is re-badged Daewoo
- Opel and Saab are gone
- There will be issues in Latin America if Opel engineering is gone
- If public sentiment turns, sales plummet

In the UK, healthy sales of 3 million dropped steadily over a period of 20 years. Eventually the brands just weren't viable

(Very unlikley, most foreign automakers have enough capacity and sell here already)
There are benefits to manufacturing in-situ:
- lack of exposure to exchange rate fluctuation
- access to local markets
- public sentiment