General Motors at a Fork in the Road ……And…… A Possible Solution for a Robust Resurgence

Automotive News ^ | January 10, 2006 | Jerome B. York

[Jorge]

Kerkorian has been much in the automobile news concerning a "takeover" and "dismembering" of General Motors.

Wow, this is much more serious than I ever imagined.

[Richard Kimball]

I'm no M$ fan, but I was reading where every year Microsoft cuts the bottom 10% of their employees, as rated by their supervisors, production, etc. You can't argue with their profitability. The problems I see at GM are:

1. I don't think some of the top management cares about cars. I think they'd be just as happy marketing laundry detergent.
2. Union contracts prevent job elimination based on poor performance. Job cuts under the current structure are like trying to lose weight by cutting off a leg instead of having liposuction.
3. Way too much long term debt that will be difficult to pay off.

[Iris7]

There have been improvements with Lutz.

V-8 Solstice, 400 hp. Claimed better handling and breaking under all conditions.

The Monaro affair was always intended as low volume - the UAW insisted. Turned out to be lower volume than hoped. Monaro was the only rear wheel drive GM platform available at the time.

[Iris7]

"...spending $2 billion to buy 20 percent of Fiat, then another $2 billion not to buy 20 percent of Fiat."

The second $2 billion was to NOT have to buy the rest of Fiat. An utter debacle and a total waste of money. Fighting Fiat in court for $50,000,000 a year would have been smarter.

[Iris7]

Neutralizing the UAW fully would mean rewriting the 1938 "Fair Labor Standards Act" amongst others, I believe. I did a quick Google and find one is looking at a semester course to cover the absolute basics of labor law.

[Iris7]

Good to hear from you.

The change will be huge.

[Iris7]

For sure GM has to make good cars. Wagoner thought the Aztek was mighty fine and could not figure why it wouldn't sell.

You might like my post #43.

Mallett C6-Hammer conversion. You want 800 hp? You got it. More? Pay your money and make your choice.

[Iris7]

How to have a fighting chance for General Motors survival.

Then a bunch of not fun stuff to do, esp. for Mr. Wagoner.

No one is going to like it. Everybody has to take a hit, including the Board and stockholders, and a big hit.

Jerry York is Kervorkian's man. Kervorkian is saying do it this way or you will really, really wish you had.

[Iris7]

Penske is very good. He would do the job.

Mallett is a Penske operation. I have posted pics of two Mallett cars on the thread, #43 and #47.

[Iris7]

Situation is as presented to the best of my understanding. Avid student of Detroit.

Ford is in worse straits but the Ford family owns a controlling interest. Really cannot take over the company at this time. Getting close though.

[Iris7]

I don't know about Microsoft but for sure Citibank uses the "fire ten percent a year" rule.

Your three points are well taken. The $24,000,000 a day cash burn is the most immediate problem.

[Iris7]

Read "braking" not "breaking". I am blaming the spell checker!!

[forester]

Thanks for the ping to a long, but worthwhile speach. I just interviewed for a management job at a sawmill. Actually, I also interviewed there three years back under old management...they hired a bureacrat instead of me, who they then fired within a year. Now they got new management 'cuz they got similar problems to GM...as in the "we've always done it this way" mentality.

If hired, they told me I would have to champion a "change" in current practices. Sounds like Mr. York.... doesn't it? Fortunately, the sawmill company isn't burning $24 million/day....good grief that's a big leak to try and plug up!

[traviskicks]

· First of all, as I pointed out a moment ago, the airline and other bankruptcies have shown us all what the worst deal is – the one you get in a bankruptcy court. So it stands to reason there is a solution substantially better for all than bankruptcy – one that gets GM and the other companies into an acceptably competitive mode.
---

Unforauntely, taxpayers will pick up a good portion of the tab. If they didn't then the union would have real incentives to come to the table.

[ken5050]

Bookmark for later.

[Eric in the Ozarks]

What imbecile at GM thought Fiat would be the key to anything ?

[SVTCobra03]

I think if I had the money to do a Mallet conversion I would just go ahead and get a Z06.

[gogeo]

I read the full speech. His memory of 1978-1984 does not square with that of Lee Iacocca. The UAW was asked to give up substantially more than $1/hr.

What's more, while the cost of employing UAW workers is astronomical, classification and seniority rules raise that cost astronomically.

The job bank...in order to survive GM has to drastically reduce the size of its work force. There's no economic benefit to cutting head count if they are then paid to play cards.

I follow the emotional appeal of this shared sacrifice cr@p, but not the logic...the market says that each class of employee has a value. GM's cost problems come from the fact that their hourly workforce is compensated at about double the market rate, and there's more of them than anyone else.

Jerome York is, in the end, acting in Kirk Kerkorian's interest. Kerkorian is a vulture investor, a classification made famous during the eighties. Whatever the solution is, Kerkorian is not part of it.

The biggest flaw of all in all that's been proposed is that it allows GM to survive, not thrive. It's just the first step.

[sam_paine]

I would modify that suggestion as follows: Chevrolet - Corvette and Camaro

You forgot pickups and SUVs....I have always thought it was stupid to let Ford claim Number One pickup volume all these years when GMC+Chevy has always kicked Ford's butt (same trucks, different grilles.)

I think they always thought that GMC could be sold at non-Chevy dealerships so they weren't competing with the bow tie badge at, say, a Pontiac dealership. How stupid.

They should either consolidate them as all Chevy or all GMC. Not sure if it would save any cash, but there must be some idiotic replication of bureaucracy because of that.

[Fraxinus]

GM's cost problems come from the fact that their hourly workforce is compensated at about double the market rate, and there's more of them than anyone else.

The individual line workers are not significantly over compensated (wages only). I have seen reports that Toyota's workers in the US take home more pay than Ford's in plants in neighboring towns.

The idiocy of the job bank needs only one caveat, keeping a cadre of skilled workers who can rapidly take positions to expand production is a good idea.