Saturday, December 27, 2008
GM, then and now
One year ago, I posted about a conversation I overheard at a coffee shop here in Michigan, in which two GM executives got mad at another guy for suggesting maybe things weren't great at GM. Here was my recollection of that December 27, 2007 conversation:
Guy #1: So, are you still working at GM? I heard they let some people go...
GM Guy: Of course I'm still at GM! GM's doing fine.
Guy #1: Great! I just heard about layoffs...
GM Guy: That was just hourly guys. The company is doing great.
Second GM Guy: (interjecting from back in the line): GM is making great cars! We just put out the new Malibu...
GM Guy: Oh, yeah, the new Malibu is a great car. All our cars are great now.
Guy #1: Thanks! Good to know everything is great at GM.
Second GM Guy: Are you being sarcastic? Because GM is totally healthy.
Right up to the time of the first bailout hearings in Congress, GM did not get it. They sent their executives to DC in corporate jets with no plan to use the money wisely, and ended up getting parodied on Saturday Night Live. Then they got a bailout plan that almost guarantees that the company will go bankrupt in March (because the bailout sets unrealistic benchmarks to be met by then, or the loan will come due). The only hope seems to be that the Obama administration will feed GM money for as long as it takes.
Now, it seems like the GM guys must realize something is wrong. At GM headquarters, they turn the lights out at 5. The Detroit Auto Show will be a ghost town. People are panicking about losing their jobs, and they are probably right to feel that way. For Detroit it is the end of days, and if you are here, there is no missing it.
What if, a year ago, there had been a sense of urgency instead of insistence that all was fine? Perhaps if that had happened, there would be at least a glimmer of hope now, a hope that doesn't depend on becoming a pathetic and defeated ward of the state.
Comments:
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The long list of corporations that have fallen in the past eight years or so, from Enron to the banking sector to (possibly) a couple of big U.S. auto manufacturers is, indeed, appalling.
But as Mark notes (or at least hints), there is a common thread running through all of them: arrogance. Putting profits ahead of people. Not planning for the future ... indeed, fighting the future (especially as it relates to the environment), lax governmental regulation (or no regulation at all, as we're seeing now), exploitation of workers here AND abroad.
I get really angry when people use these disasters (and they ARE disasters to the 100,000s who have lost their jobs -- although they're not quite so disastrous to the fat cat presidents and CEOs with their golden parachutes) to blame the unions. Or the Democrats. Or sunspots.
Two mix a couple of analogies:
T'was greed and arrogance that killed the goose that lay the golden eggs.
And the folks in D.C. fiddled while their nation burned.
RFDIII
But as Mark notes (or at least hints), there is a common thread running through all of them: arrogance. Putting profits ahead of people. Not planning for the future ... indeed, fighting the future (especially as it relates to the environment), lax governmental regulation (or no regulation at all, as we're seeing now), exploitation of workers here AND abroad.
I get really angry when people use these disasters (and they ARE disasters to the 100,000s who have lost their jobs -- although they're not quite so disastrous to the fat cat presidents and CEOs with their golden parachutes) to blame the unions. Or the Democrats. Or sunspots.
Two mix a couple of analogies:
T'was greed and arrogance that killed the goose that lay the golden eggs.
And the folks in D.C. fiddled while their nation burned.
RFDIII
# posted by 
: 6:06 PM
: 6:06 PM
Arrogance - indeed. But, the arrogance, at least in the case of the auto manufactures, does not stop at the executives. Arrogance oozes from the workers as well - to think they're "entitled" to pay that exceeds what the market will support, EVEN IF THE EMPLOYER IS ABOUT TO CRASH AND BURN.
In order for those companies to survive, significant change must be borne by management and workers alike.
In order for those companies to survive, significant change must be borne by management and workers alike.
# posted by : 6:50 PM
: 6:50 PM
I agree with RFDIII. To think, someone would ever lay even a little blame at the feet of the saintly Democrats at a time like this. Do these people have no shame!!
# posted by : 9:57 PM
: 9:57 PM
When you are on a sinking ship, you always hope for the best; or pray that you remember how to swim!
(Sorry this is vino philosophy ~ and spelling).
(Sorry this is vino philosophy ~ and spelling).
Let's be serious. I was shopping with some friends today at REI. Now, we were willing to buy, but with the exception of the x-Mas cards I will use next year, everything (on sale) was made elsewhere and was still pricey.
I don't object to paying for the item, but when I know the job was exported over to China or the Phillipines and the person is making 50 cents and hour, I have a problem paying $30 or $40 dollars for the item in question. Just principle.. If I knew the person in China was actually getting paid a living wage making the purchase would be easier.
O' Holy Night....
I don't object to paying for the item, but when I know the job was exported over to China or the Phillipines and the person is making 50 cents and hour, I have a problem paying $30 or $40 dollars for the item in question. Just principle.. If I knew the person in China was actually getting paid a living wage making the purchase would be easier.
O' Holy Night....
Anon 5:50-- People here know that labor costs are NOT the problem. That would be a likely culprit if American cars were at a price disadvantage with Asian cars, but they aren't-- American cars in most categories are already hundreds of dollars cheaper than their competitors, and this is most true of GM. The primary problem is management decisions.
As for the workers acting like they have a "right" to certain pay, they do have that right-- it's a contract right. Management negotiated that contract. I would imagine that you consider a contract to be something of value, right?
At any rate, the workers have made significant concessions over the past two years. It's hard to describe them as "arrogant" at this point. Meanwhile, right up to just a few months ago, management had given up nothing at all in terms of perks and planes, continued to make disastrous decisions, and rewarded themselves richly when it was clear the ship was sinking.
Also, the final straw was the credit freeze caused by subprime lending-- and the subprime lending fiasco was something GM management and Chrysler parent Cerberus participated in with great gusto through GMAC.
As for the workers acting like they have a "right" to certain pay, they do have that right-- it's a contract right. Management negotiated that contract. I would imagine that you consider a contract to be something of value, right?
At any rate, the workers have made significant concessions over the past two years. It's hard to describe them as "arrogant" at this point. Meanwhile, right up to just a few months ago, management had given up nothing at all in terms of perks and planes, continued to make disastrous decisions, and rewarded themselves richly when it was clear the ship was sinking.
Also, the final straw was the credit freeze caused by subprime lending-- and the subprime lending fiasco was something GM management and Chrysler parent Cerberus participated in with great gusto through GMAC.
Anon 5:50 -- the employer exists solely because of the labor of the workers. It is they, and not the executives, who have the thing of value. The executives (at best) just make administrative decisions about what to do with that value. The market sets out only the exchange-value of the product, what people will pay for it. If the market sets an exchange-value well below what the production-value (worth) of the product is, then asking the workers to bear the brunt of the lost value is to ask the people most responsible for its worth to give up the lion's share of its final monetary value, so that the people least responsible for the worth can retain a larger share of the exchange-value.
You don't see anything morally wrong with that system?
You don't see anything morally wrong with that system?
here is what i do not get...
I see this commercial on TV today for Cadillac Escalade HYBRID. IT gets like a whopping 19 mpg.
COST? Wwell it WAS $69K!!
BUT NOW it is on SALE for a mere $54K!!!
I am gonna run right out and get one...
WHAT THE HELL???
They are actually ADVERTISING this car as like its so GREAT that it is ONLY $54k.
It is a HUGE car - yes, A hybrid BUT IT HARDLY MAKES A BIT OF DIFFERENCE because the mpg still sucks AND IT IS FIFTY FOUR THOUSAND DOLLARS.
Are they DRUNK????
I see this commercial on TV today for Cadillac Escalade HYBRID. IT gets like a whopping 19 mpg.
COST? Wwell it WAS $69K!!
BUT NOW it is on SALE for a mere $54K!!!
I am gonna run right out and get one...
WHAT THE HELL???
They are actually ADVERTISING this car as like its so GREAT that it is ONLY $54k.
It is a HUGE car - yes, A hybrid BUT IT HARDLY MAKES A BIT OF DIFFERENCE because the mpg still sucks AND IT IS FIFTY FOUR THOUSAND DOLLARS.
Are they DRUNK????
Sorry I goofed... the Cadillac Escalade Hybrid is ACTUALLY $77K "Nicely Equipped."
That RED TAG EVEN price of $54K is not going to last...
I know that is steep but it DOES GET 20 MPG.....
I KNOW I am a crunchy granola goofy non plastic grocery bag using weirdo here in Portland, Oregon... but is it ME??? OR is this like INSANE!!!!????
That RED TAG EVEN price of $54K is not going to last...
I know that is steep but it DOES GET 20 MPG.....
I KNOW I am a crunchy granola goofy non plastic grocery bag using weirdo here in Portland, Oregon... but is it ME??? OR is this like INSANE!!!!????
Lane, you've made this argument a couple of times and it troubles me for a few reasons.
"the employer exists solely because of the labor of the workers. It is they, and not the executives, who have the thing of value."
The employer buys the land where he builds the factory where the employees will work. The employer buys the raw materials that are going to be turned into the final product by the employees. The employer had the idea that allowed the business to exist in the first place, and without which there would be no job and hence no employees.
I mean, you seem to believe that labor is the only thing of value in these situations, but the reality is there are many elements of value, and labor is only one component. So you're asking the guy that bought the building, built the factory, bought the raw materials, and came up with the idea, the intellectual property, that allowed the entire operation to come into being to bear the loss.
If your argument is that labor is less wealthy than the owners and therefore shouldn't bear the brunt of the loss because it is harder on them than that is one thing. But your claim that labor are the people most responsible for the products end worth is nonsense.
"the employer exists solely because of the labor of the workers. It is they, and not the executives, who have the thing of value."
The employer buys the land where he builds the factory where the employees will work. The employer buys the raw materials that are going to be turned into the final product by the employees. The employer had the idea that allowed the business to exist in the first place, and without which there would be no job and hence no employees.
I mean, you seem to believe that labor is the only thing of value in these situations, but the reality is there are many elements of value, and labor is only one component. So you're asking the guy that bought the building, built the factory, bought the raw materials, and came up with the idea, the intellectual property, that allowed the entire operation to come into being to bear the loss.
If your argument is that labor is less wealthy than the owners and therefore shouldn't bear the brunt of the loss because it is harder on them than that is one thing. But your claim that labor are the people most responsible for the products end worth is nonsense.
# posted by : 2:20 AM
: 2:20 AM
RRL, you said: So you're asking the guy that bought the building, built the factory, bought the raw materials, and came up with the idea, the intellectual property, that allowed the entire operation to come into being to bear the loss.
No, that man is long dead. The people that own it now did none of those things.
The reason that the capital-holders should bear the brunt of the loss (in the scenario you describe) is that they assumed the risk of the venture when they invested the capital. The workers made no administrative decisions; the only way the workers adversely affect value is if they turn out an inferior product through shoddy labor (which happens).
I actually disagree with exchange or market value being used in the equation at all, because it's abstract and a reification of market relations. A labor theory of value is the only type of political economy that is both moral and sustainable.
No, that man is long dead. The people that own it now did none of those things.
The reason that the capital-holders should bear the brunt of the loss (in the scenario you describe) is that they assumed the risk of the venture when they invested the capital. The workers made no administrative decisions; the only way the workers adversely affect value is if they turn out an inferior product through shoddy labor (which happens).
I actually disagree with exchange or market value being used in the equation at all, because it's abstract and a reification of market relations. A labor theory of value is the only type of political economy that is both moral and sustainable.
No, Tyd, you are not crazy! A hybrid that gets 20 MPG and costs $54K is just dumb!
# posted by : 8:49 AM
: 8:49 AM
Tyd--
You are a little bit crazy. If someone is buying an SUV, and they get one that gets 20 MPG instead of 13, that person has saved a LOT more gas than someone who goes from a civic to a Prius, because their mileage is improving by a larger proportion.
You are a little bit crazy. If someone is buying an SUV, and they get one that gets 20 MPG instead of 13, that person has saved a LOT more gas than someone who goes from a civic to a Prius, because their mileage is improving by a larger proportion.
And, regardless of how you apportion the blame, the truth remains that, if labor doesn't accept lower pay, then the companies are toast.
(Yes, they may be toast regardless.)
(Yes, they may be toast regardless.)
# posted by : 1:35 PM
: 1:35 PM
Ahh, RRL, the defender of Big Business, predictably joins Anonymous 5:50 to deflect blame from the wealthy. Man, whatever happened to the REAL Republicans back in the 1950s who were socially responsible, fiscally responsible AND owned up to their party's mistakes?
To continually blame the worker means you've bought the fat cat's propaganda (again). NO serious study or analysis in recent blames the unions for the Big Three's demise! (Unless you believe Rush Limbaugh/Ann Coulter ... then there's not much we can do to help you.)
Mike
To continually blame the worker means you've bought the fat cat's propaganda (again). NO serious study or analysis in recent blames the unions for the Big Three's demise! (Unless you believe Rush Limbaugh/Ann Coulter ... then there's not much we can do to help you.)
Mike
# posted by : 3:25 PM
: 3:25 PM
Hi all. 5:50 here. This article shows that the key to GM success is better management AND lower wages(note that the chinese workers mentioned in this article cost GM only $60/month)http://www.nytimes.com/2005/08/09/automobiles/09mini.html
# posted by : 3:51 PM
: 3:51 PM
Okay so I guess if you are a person who still thinks they need to buy an SUV and you spend $54K on the one that gas 6 mpgs more than the other one that costs only $45K WOW then I guess you have saved a lot of gas.... it adds up...
AND!!!
I KNOW there are people who need big cars. I KNOW that.. There THREE families in my block that each have FOUR KIDS - FOUR KIDS!!! that is a LOT of kids, by the way...that is like FOUR of SPENCER and Spencer is pretty much a Toddler Tornado.
Two of those three families have each a minivan and a smaller, regular car. The third family has a Suburban and a Pickup. The third family does not need the suburban, but they do need the Pick Up for the Dad's business.
I am not trying to FORCE everyone who might need an SUV to buy a Prius or a minivan and I guess it is good that GM has FINALLY started to make HYBRID SUVS...
But in this economy people are losing houses, jobs, just everything. For GM to brag about (and spend lots of money on tv commercials advertising) a car that gets 19 mpg, and also brag that the cost of said car is ON SALE for only $54k, I THINK THEY have TO BE OUT OF TOUCH!!!
I just don't get it.
AND!!!
I KNOW there are people who need big cars. I KNOW that.. There THREE families in my block that each have FOUR KIDS - FOUR KIDS!!! that is a LOT of kids, by the way...that is like FOUR of SPENCER and Spencer is pretty much a Toddler Tornado.
Two of those three families have each a minivan and a smaller, regular car. The third family has a Suburban and a Pickup. The third family does not need the suburban, but they do need the Pick Up for the Dad's business.
I am not trying to FORCE everyone who might need an SUV to buy a Prius or a minivan and I guess it is good that GM has FINALLY started to make HYBRID SUVS...
But in this economy people are losing houses, jobs, just everything. For GM to brag about (and spend lots of money on tv commercials advertising) a car that gets 19 mpg, and also brag that the cost of said car is ON SALE for only $54k, I THINK THEY have TO BE OUT OF TOUCH!!!
I just don't get it.
Also, just because american cars are priced less than others, does not mean they aren't over-priced.
In fact, if the price is lowered enough, there reaches a point at which consumers will buy american cars even if they suck.
In fact, if the price is lowered enough, there reaches a point at which consumers will buy american cars even if they suck.
# posted by : 9:39 PM
: 9:39 PM
Anon 8:39-- if you were right, this would be that time. GM is selling vehicles at a 1/3 discount, or I should say is trying to sell them at that price. It isn't working. People aren't buying.
I drive nothing. I live in the downtown Dallas area and don't own a vehicle (haven't for over a year now). Quite un-Texan of me, I realize. I use DART light rail, and cabs on occasion.
# posted by : 10:33 PM
: 10:33 PM
My Dad was a loyal Chrysler Corp. buyer for most of his life, and he passed that on to me. He had an original 1960 Plymouth Valiant with the fake spare tire look on the trunk, a Valiant Station Wagon, a Plymouth Fury III sedan, a '68 Plymouth Satellite Wagon that ended up being my car in college, and even a Chrysler Cordoba with Corinthian leather.
He actually bought a Plymouth Cricket in 1973... one of the worst cars of all time, a British Hillman.
But he left the reservation after the Starters on the Dodge Vans he bought for the business kept frying with less than 50k miles on them (along with other problems). As the company fleet expanded, he bought Ford Vans, GMC trucks, but more and more Mitsubishis, Volvo Trucks.
I had a Dodge 400, a Dodge 600, a Boxy Chrysler LeBaron convertible, a curved version and a Chrysler Sebring. Each one got worse in terms of reliability and repair issues.
I still would have bought another Chrysler Sebring convertible, but they didn't have any with a 5 speed available in the DC area and wouldn't bring one here for me to test drive. I moved on.
Today, due to getting married and having kids I now have a Scion XA. I hate it for many reasons, but its totally reliable and after35k miles over the past three years, it has HAD no problems. I'd buy another Scion or Toyota or Lexus anytime.
He actually bought a Plymouth Cricket in 1973... one of the worst cars of all time, a British Hillman.
But he left the reservation after the Starters on the Dodge Vans he bought for the business kept frying with less than 50k miles on them (along with other problems). As the company fleet expanded, he bought Ford Vans, GMC trucks, but more and more Mitsubishis, Volvo Trucks.
I had a Dodge 400, a Dodge 600, a Boxy Chrysler LeBaron convertible, a curved version and a Chrysler Sebring. Each one got worse in terms of reliability and repair issues.
I still would have bought another Chrysler Sebring convertible, but they didn't have any with a 5 speed available in the DC area and wouldn't bring one here for me to test drive. I moved on.
Today, due to getting married and having kids I now have a Scion XA. I hate it for many reasons, but its totally reliable and after35k miles over the past three years, it has HAD no problems. I'd buy another Scion or Toyota or Lexus anytime.
# posted by : 10:34 PM
: 10:34 PM
Prof Osler - you make a good point about no sales even at the lower price.
But, I bet we can agree that there reaches a point where, if the price is SIGNIFICANTLY lowered beyond what it is now, that sales would increase.
Like, for example, in that article that I linked to, where the GM subsidiary is selling vans for only $5,000 in China.
But, I bet we can agree that there reaches a point where, if the price is SIGNIFICANTLY lowered beyond what it is now, that sales would increase.
Like, for example, in that article that I linked to, where the GM subsidiary is selling vans for only $5,000 in China.
# posted by : 10:37 PM
: 10:37 PM
Anon--
Selling vans in China, right-- where the requirements for safety equipment and (especially) pollution control are much less, and which is close to cheap labor, making shipping and it attendant costs unnecessary.
I suppose you could argue that if we got rid of all these "safety" laws and went back to leaded gas only for American cars, then GM could compete.
Selling vans in China, right-- where the requirements for safety equipment and (especially) pollution control are much less, and which is close to cheap labor, making shipping and it attendant costs unnecessary.
I suppose you could argue that if we got rid of all these "safety" laws and went back to leaded gas only for American cars, then GM could compete.
Good points - I agree that safety laws and environmental protections are important. And, also agree that the cost of transporting the vehicles here would be huge.
Whether those factors are entirely dispositive of the larger issue I'm less sure of.
Whether those factors are entirely dispositive of the larger issue I'm less sure of.
# posted by : 11:27 PM
: 11:27 PM
Regardless, all of this is moot - GM is going to either fail or suck or goverment dry.
# posted by : 11:34 PM
: 11:34 PM
We are happy enough with our Dodge Minivan, but it only has 30K miles on it. We got it with that discount and with all the rebates and stuff on it we saved like 11K on it!
There is NOTHING ELSE Chrysler I would buy. Seriously. Not at any price... and I have the discount OFF the SALE price if I want it. I heard of a dodge dealer in ILL that was doing a sale: Buy one Chrysler, get a PT Cruiser for a dollar.
I think Americans have had it. I dont think they will buy these cars even at deeply discounted prices. Its kind of sad, but it was also sad when I had like this single mom with a Cordoba that broke every other second and she could not afford to fix it, you know? The dealer was kind of like Warranty? What warranty. It was bad.
There is NOTHING ELSE Chrysler I would buy. Seriously. Not at any price... and I have the discount OFF the SALE price if I want it. I heard of a dodge dealer in ILL that was doing a sale: Buy one Chrysler, get a PT Cruiser for a dollar.
I think Americans have had it. I dont think they will buy these cars even at deeply discounted prices. Its kind of sad, but it was also sad when I had like this single mom with a Cordoba that broke every other second and she could not afford to fix it, you know? The dealer was kind of like Warranty? What warranty. It was bad.
We tried to buy American cars for years -- we had friends in the unions and I know they busted their hineys to do great work.
But our last few Big 3 cars just weren't very good -- and the mileage was atrocious.
Since then, we've stuck with Toyotas (except one wonderful Subaru).
Great cars, great mileage.
Really, this shouldn't be that hard.
RFDIII
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But our last few Big 3 cars just weren't very good -- and the mileage was atrocious.
Since then, we've stuck with Toyotas (except one wonderful Subaru).
Great cars, great mileage.
Really, this shouldn't be that hard.
RFDIII
# posted by : 1:05 AM
: 1:05 AM << Home
