A troubled giant is facing change [General Motors]

As recently as 1980, GM sold 44.5 percent of the cars bought in the United States. Last year - even with heavy discounting - that was down to 27.3 percent.

This came as GM said it expected to lose $850 million in the first quarter (the actual numbers are due this week), its bond rating plummeted to near junk status and its stock fell to a 10-year low.

Crunch the numbers - particularly the huge health care and pension obligations it agreed to in labor contracts signed during the salad days - and it is hard to imagine how GM survives.

"GM has become essentially a giant health care provider that also makes some cars,"

"It's pretty astounding," he says. "GM only has about 160,000 actual employees, but something like over 1 million people - retirees, retirees' families - are covered under its social umbrella. That's the bind it's gotten itself into."

Even laying workers off doesn't help much. Under their United Auto Workers' contract, laid-off workers get up to 95 percent of their salary for five years.

"The math of General Motors just doesn't make sense," Peter Morici says. "Basically, they sell cars for less than it costs to make them. "If you have high costs, what you do is take it out of the design of your cars," Morici says. "You put in inexpensive interiors. You don't have an adequate inventory of up-to-date engines and transmissions to put in cars. They had to buy Honda V6s to put in the Saturn Vue. "You lower production costs by cutting back on vehicle design," he says. "You try to fool the consumer."

"The union and management seem to be in some sort of compensation pact," he says. "They are slowly dissolving the company to pay themselves."

Of course, it's still about $500-1000 dollars more expensive than the Matrix. Although, the Pontiac dealers sell/install a factory supercharger for it that boosts the engine power. That's something Toyota doesn't offer.

I think Toyota does sell a factory supercharger developed by its TRD (Toyota Racing Development) group. My guess is that Pontiac's supercharger is actually TRD's.

I'm surprised that the Vibe is more than the Matrix. When Geo/Chevy sold the Prizm (Corolla clone), it was cheaper than the Corolla.

You are kidding I hope. Under your idea there would be no incentive to produce anything that works, like in the Communist countries.

Are you suggesting that the restrictive trade policies that were in effect for more than 200 years during which America grew from sparse colonies to the World's leading industrial power were communistic? Odd, it seems to me that exporting America's wealth, industrial assets and technological know-how around the world under the guise of "free trade" is much more in line with Marxism than sensible trade policy that puts America's interests First...not Last. And is that not the duty of our government to do as such?

"Based upon your philosphy how did we ever put man on the moon and be the worlds leader in just about every hi-tech industry back in 1945-1985 when we have tarrifs of some sort and a huge manufacturing base?? When we were exporting more than importing.. HMMM?? "

That was a different world back then. America had the benefit of a monopoly after WWII(due to destruction of everyone elses industries), but the wheels were coming off by the 60s. As far as the Man on the Moon, no one is going to spend a billion dollars on a car that blows up and kills the occupants every 100 trips. And that is what our protected government produces, that and lots of good paying 'jobs'.

Germany has tried your protectionist plan and it is a disaster. The few jobs they have left are centered around the employee. This article says 12.7 % unemployment. You can protect all the jobs you like but your products will never sell when you drive the costs through the roof.

http://www.freerepublic.com/focus/f-news/1376024/posts

That was a different world back then. America had the benefit of a monopoly after WWII(due to destruction of everyone elses industries), but the wheels were coming off by the 60s.

Nice study in selective reasoning. You conveniently leave out some 200 years of American history. Even before the industrial revolution America's economy grew rapidly and by the onset of WWII America had the largest, most prosperous economy in the world. This all took place when America had tariffs in place to protect and nurture the growth of its industrial base.

Germany has tried your protectionist plan and it is a disaster. The few jobs they have left are centered around the employee. This article says 12.7 % unemployment. You can protect all the jobs you like but your products will never sell when you drive the costs through the roof.

You are attributing the wrong cause to Germany’s current economic malaise. Much of Germany's employment woes are attributable to the high costs of reunification with East Germany. Turns out that when people grow up in a communist system they forget how to compete. It's still going to take another generation for Germany to assimilate their east block kin.

If your point is that socialism in general is hindering Germany I agree but I got the sense at times that you were talking about some other country other than Germany. While railing about the high costs of protecting jobs in Germany (presumably extending the point to America) you then implied such costs make it impossible for such countries to produce competitively priced products.

Seems to me Germany, despite its current economic problems, does very well indeed in selling their products to the rest of the world. They are by far the leading industrial power in Europe and like Japan and China run huge trade surpluses with us. In addition to having a large world market share of luxury autos and motorcycles Germany also is an export leader in industrial machinery, tools, medical equipment, precision instruments and a bevy of other manufactured products including pharmaceuticals.

How can this be with all their job protections and protectionism itself? Oh did I mention that despite their problems Germany also has one of highest standards of living in the world. Amazing!

'Oh did I mention that despite their problems Germany also has one of highest standards of living in the world. Amazing!'

Funny, then why are young people fleeing the country(see below)? It sounds like things are getting very ugly in Germany. Why don't they all sign up for those high paying export jobs that we give away. One would think Americans would be fleeing to Germany. Oh, the flight is in the other direction. Amazing!

Ischgl Journal; Nation That Once Drew Guest Workers Now Sends Them

By RICHARD BERNSTEIN (NYT) 1029 words
Late Edition - Final , Section A , Page 4 , Column 3

ABSTRACT - Germans, especially young people from former East Germany, are traveling abroad in search of work; just as Germany set up recruitment offices in Anatolia 40 years ago to persuade Turkish workers to take unskilled factory jobs in Germany, now there are job placement services in Austria seeking young Germans for positions as nurses, hospital orderlies and waiters; many Germans feel what is driving young Germans to Austria is German economic reform aimed at reducing unemployment insurance enough to make it impractical for person to remain unemployed rather than take low-paying job; photo; map (M)

http://query.nytimes.com/gst/abstract.html?res=FA0F11F8385A0C778DDDAD0894DD404482&incamp=archive:search

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