Posted on 05/05/2005 10:18:27 AM PDT by kellynla
Edited on 05/05/2005 10:22:03 AM PDT by Admin Moderator. [history]
NEW YORK - News that General Motors' debt has been cut to junk status sent a tentative market lower Thursday afternoon, with investors already wary after the previous session's rally and ahead of Friday's April employment report.
The Dow Jones industrial average (down 41.75 to 10,342.89, Charts) lost 0.6 percent just after 1 p.m. ET, with component GM the biggest decliner.
(Excerpt) Read more at money.cnn.com ...
If GM hasn't figured that out yet, I have my doubts they ever will.
Toyota Exec Urges Japan Cos. to Up Prices
4/26/05 Associated Press. Toyota's chairman is urging Japanese automakers to raise prices or find other ways to even the playing field with ailing U.S. rivals General Motors and Ford in hopes of heading off a possible protectionist backlash in the crucial North American market. We are really in a sad state if this is how businesses operate these days. Is this what they teach in Japanese business school, give your opponent a helping hand when he's down? In a fair world they would double the pressure, slash prices, and throw everything they had at their opponents. Who would benefit? US consumers and the thousands of people employed in the US by Japanese owned factories. Milton Friedman once said: It is a mystery to me why... it is regarded as a sign of Japanese strength and American weakness that the Japanese find it more attractive to invest in the U.S. than Japan. Surely it is precisely the reverse - a sign of U.S. strength and Japanese weakness. So what are the Japanese worried about? Our pork happy Congressmen might decide to steal money from other citizens to prop up the failing US car companies with subsidies, or, most likely, these Congressmen might slap hefty tariffs on Japanese imports to, as satirist Ambrose Bierce wrote, protect the domestic producer against the greed of his consumer. More condescension of government towards it's citizenry - for 'the public good', they will restrict our choices. A key reason for the Japanese success is that their plants are located in more business friendly states like Alabama and Tennessee. Also, their workers aren't unionized (translation: paid more then they are worth). One of the reasons Union membership has been declining over the past 20 years is that companies employing union workers have been going out of business or into bankruptcy (Ex - United Airlines, US Airlines, American Airlines and mining industries). Where is the only area where Unions haven't lost members? You might have guessed it - the only place where they are free from that pesky thing called 'competition': in the bloated Federal Government with their hands in our pocketbooks.
In short, a good portion of GM's woes might be blamed on the Unions. Not sure how much. They say healthcare is a reason for a majority of their problems.
Well, in fairness, they do have a couple of good products the Caddys and the new Vets and I guess the Tahoe/Yukons are okay but man the rest could be exterminated and I doubt anyone would miss 'em. LOL
Well, that's not totally it.
There was a good article on how GM had become the first "welfare state" to go bankrupt.
Let Die , Take it out of its misery.
"In short, a good portion of GM's woes might be blamed on the Unions. Not sure how much. They say healthcare is a reason for a majority of their problems."
oh pulllllezzzz...
the problems are poor quality and even worse design!
American auto manufacturers built the finest cars in the world up until 1970 and then they started cutting corners and building junk!
Sum it up in one word - UNIONS!!! Even a parasite knows better than to kill it's host, unions aren't quite as bright. They would rather bankrupt huge American Corporations in order to remain in "power" over their stupid unionized workers. Workers that refuse to acknowledge the fact that virtually every union around is utterly corrupt and really doesn't give a damn about the worker. Unions are nothing but corporate blackmailing thugs....
Saturns are better and cheaper than Toyotas and the maintenance costs are less.
You think GM and Ford and Chrysler had finer cars than Mercedes and BMW and Porsche?
While I'm certainly never one to pass up on bashing unions that's not the problem at GM (and Ford for that matter). The problem at GM is that they've been producing vehicles that are of markedly lower quality than their Japanese competitor for 25 years, we now have an entire generation of Americans who were raised in a time when "quality car" meant "Japanese car", and we're working on generation #2. Even though the American manufacturers have gotten better in recent years they're still behind the Japanese companies. And given how much of the Japanese manufacturing is done in America we know it's not the workers, quality starts with management and GM's (and Ford's) management simply does not do what they need to for the company to make good cars and trucks. Nothing they do with the healthcare costs or other labor costs is going to change the fact that their cars suck, all that will do is make it so they aren't losing many as quickly, but sales will still continue on their downward spiral, which eventually bankrupts any company no matter how low their costs.
Okay boys and girls, what did I miss?
GM stocks are in the $31 range, up from last week's $26 and down from yesterday's almost $33.
Problem with GM, besides crappy vehicles, is the UNIONS are bankrupting the company. Defined benefit plans and Cadillac healthcare plans will eventually do this.
Wonder what this news does to Kirk Kerkorian's offer?
You got that right brother. The newer Caddy they brought out a few years ago is well engineered but is Hillary butt-ugly.
Maybe that was true in the 1980s, but my 1998 Olds Intrigue has been a great car. I would put up against any import for quality and reliability.
"Your headline is inaccurate."
that's why I have (junk stock, junk status) in parenthesis...
my assessment!
or have you not looked at the stock in the past few years...
Please explain how Toyota made a roaring success out of the GM Fremont, CA UAW plant. Also explain how the UAW chickened out of an organizing vote in Marysville, OH and can't organize the Japanese transplants.
I'm a management guy and IMHO the US-run auto industry is a disaster because our managers are poor performers compared to those of Toyota. We have to be honest and admit that Toyota beat GM et al fair and square. It's why I only drive Toyota products -- because they are the best value for the money. GM, on the other hand, can't make a decent midsized car.
glad to hear it!
now would you like to buy some GM stock? LOL
I remember quite clearly how the FT proponents said in the 1990s how all these Asian imports would make GM a stronger more competitive business. I guess it didn't quite work out that way (as usual with FT).
It'll be interesting to see (and very important that they do) if they can get out of this......
Chevy trucks are exaclty the same as the GMC line. Lose one of them.
It's not the FT people's fault that GM refuses to see the writing on the wall. But thanks to FT at least the American people can still buy good cars with low continuing cost of ownership, not our fault American companies are unwilling to do what it takes to provide those vehicles.
You are right. This is tied to unions in this way:
Both management and unions were complacent, thinking they'd get to keep 50% market share forever.
So ... the unions got greedy and demanded too much (sepcifically healthcare til you die provisions),
and the management went along, not realizing they would be piling on huge costs down the road.
Now that competition has been heating up, and profit margins got squeezed, GM has less headroom.
GM is experiencing in miniature what could happen to USA if we dont fix Social Security.
GM was pretty screwed up in the 1980s, but they came back ... and all American cars have improved markedly in quality and design in the last 20 years. But it is not enough to be better than you were before, you have to be better than your competition is *NOW* to win back maket share. GM has been playing catch-up for 20 years, and now their own past mistakes have caught up before they could catch up to their peers.
Of course the union contract was approved by management so you can lump them in on the problem. GM and Ford are hold outs in the health care benefits area. Most companies long ago put their people into HMOs and pass some of the escalating cost of health care to the workers. Not so with the auto makers. They also pay full health care costs for their retirees. This is crazy economics, and it laps over into the auto side of the house because they can't spend what it takes to come up with new and inovative designs. So now they will pay even higher costs to manage their huge debt. And they are seeking to reopen the union contract, but the union wants management to cut the dividend too. It is going to be a mess. The only thing GM can take comfort in is that Ford is in it too and they are big enough to warrent some federal assistance as well.
My 94 saturn was great, 01 ok, 03 was junk.
So why does the fortunes of one company [or two] drive the market. Fear not, up is coming, someone will arrive to save the day. After the daily roller coaster rides, everyone gets on and off at the same spot.
"As soon as the communist chinese cars start selling over here, GM will go bankrupt, and so will Ford. WE really dont need to have a car industry in the United States- that is archaic and old fashioned. With free trade, all factory jobs are obsolete and will be replaced with service jobs."
If it wasn't for American industry we would all be speaking German or Japanese or in the scenario you predict, Chinese...now maybe you don't have a problem with that but I DO!
I don't want to be dependent on my past, present and possible future enemies for a job and/or miilitary hardware, thank you.
"American auto manufacturers built the finest cars in the world up until 1970 and then they started cutting corners and building junk!"
Actually, they cut corners from 1945 onward--it just became really noticeable in the 1970s. Read David Halberstam's "The Reckoning" for the gory details.
It is easy to imagine GM stock standing at double the current value in four years but it is also easy to imagine it at 40 percent of current value in four years. There is risk and while most investment advisors have a "sell" on GM or at least a neutral position, some mavericks may make lots of money on GM stocks buying low during this panic and selling high in four years.
"I remember quite clearly how the FT proponents said in the 1990s how all these Asian imports would make GM a stronger more competitive business. I guess it didn't quite work out that way (as usual with FT)."
You *DO* realize that the Honda plant in Ohio is making a huge number of cars (Passport, minivan, etc.) and has *MORE U.S. CONTENT* than many American-brand cars.
Same for Toyota Sequoia - built in Tennessee.
This is not about *where* the cars are made, this is about the management of the company.
What's killing them isn't cost competitiveness, it's quality, they simply don't make better vehicles than the competition. Forget the communists, they aren't part of this. The companies killing GM and Ford are Japanese companies doing most of their manufacturing right here in America often dealing with the exact same unions. Do some comparison shopping and you'll find GM, Ford, Toyota and Nissan generally have the same class of vehicles with roughly the same prices in each identified sub-market, but the Toyotas and Nissans are better vehicles with higher customer satisfaction, lower continuing cost of ownership, and higher levels of value retention. If GM and Ford want to survive they need to make better vehicles, that starts at the designs approved by management.
Mr. Iacoca, please pick up the red courtesy phone.
I think this is more of a leadership and vision problem. The Ponitac Cars, Yukon/Tahoe's and the pickups are really the only successful products they have.
Gas price goes up, SUV sales go down and earnings go in the toilet.
So the success of Honda in Marysville OH and Toyota in Georgetown KY is because the Japanese have imported Chinese Communists to work the assembly lines? Capitalism is doomed because Communists have lower labor costs?? In other words, Communism will succeed because they pay their workers less of the value they add than Capitalist countries do??
I think you are seriesly confused.
That's good to hear, after having spent 10 minutes researching the subject at my local used car dealer and buying an older one. I'm operating on the crapshoot theory of used-car buying.
Most of the designers aren't unionized. It's the designers that are designing bad vehicles, the managers that are approving bad vehicles, and then the union guys making the bad vehicles they're told to make. I suppose the unions could demand better vehicles, that would be overstepping their legitimate authority in my book but unions do that all the time anyway. But in the end their problems start with bad management decisions.
The market in the 1970s changed ... and the US makers were too slow to respond.
It's not much use for a company to complain about changes in the market ... they've got to respond to them.
"As soon as the communist chinese cars start selling over here, GM will go bankrupt, and so will Ford."
The commies tried it. Remember the Yugo? Undersold every damn car in America. Nobody wanted to buy one, though.
Yugo did the impossible: they made American cars look as if they were high quality.
Carolyn
I think it was Charlie Adams who said, "What's good for General Motors is good for the USA, and vice versa" during his confirmation hearings to be Eisenhower's Secretary of Defense.
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