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More on GM, Ford and Chrysler Mismanagement

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November 20, 2008 – Comments (8) | RELATED TICKERS: GM , F , TM

Alstry begins a post today with this headline:

Nov. 20 (Bloomberg) -- Isuzu Motors Ltd. and Hino Motors Ltd. will cut truck production in Japan and Isuzu will slash jobs as demand falls.

And once again I got to thinking, and once again I found myself in a smoke filled room with a "new to me idea" that I wanted to share.

Alot has been made of executive mismangement at the "big" three American automakers, causing them to be found in the dire straights of having to beg for loans to survive. The biggest "mismanagement" they are accused of is paying their employees well and offering excellent health benefits. We are told that average payroll costs of $78.00/employee are ridiculous. "Overpaid lug nut tighteners" the cry goes up, completely forgetting that some employees are engineers and designers and lawyers and accountants and troubleshooters and chemists. "Legacy Costs" cry the whiners, citing healthcare benefits for retirees that the "big" three cannot pay as a devastating example of mismanagement that makes the domestics uncompetitive because it adds, as I have read, anywhere from $800. to $2300 to the cost of domestic cars.

And yet in America, if you do not overpay for healthcare at work, you do not get healthcare at all. Is that competitive disadvantage the fault of Rick Wagoner or Mulally?

Fool SILUNG posted today, in defense of the $25bil loan proposal: How about competing against companies who have the full support of their countries behind them? Japan, Germany, and South Korea have universal health care, we don’tAnd in at least two out of three of those countrys he is correct.

Good post, SILUNG, many people here keep posting as though they do not understand that. I personally am old enough to remember the Domestics moving manufacturing up north to Canada, citing the healthcare savings as the reason.

After reading at most 3 million posts and responses whinig about the Domestics mismanagement and how they should be allowed to die their justly deserved death, I thought holy crap, these posters are selling some steep BS (EPG also closed up yesterday). Now you all may be listening to people with short positions on, but I do not really care, and that is not the point of this post.

As Alstry's post this morning pointed out, the "big" three's mismanagement did not improve sales at Isuzu. So I googled the phrase "Automobile Production Cutbacks" after I learned that GM and Ford mismanagement did not hurt Isuzu sales. In fact I bet that GM and Ford management did not cause production cutbacks at Isuzu, Mini, Toyota, Honda, Nissan, Pugeot, Citroen, Mercedes, Hyundai or Tata Motors either.

The domestics should get the loan. I know that will disappoint the member banks who would like to lend to GM at 12%, but those people really need to get productive jobs in farming or toy making or something. GM and the UAW have done their part in trying to provide good retirements and healthcare to their employees. They have stepped in where Hillarycare did not provide. I encourage all Americans to stand up for themselves and demand that the Domestics get the loan they need until Universal Healthcare becomes available to all Americans. It is time for America to stop sliding toward third world status.

Call the Capital switchboard at (202) 224-3121 and stand up for yourself.

 

8 Comments – Post Your Own

#1) On November 20, 2008 at 11:58 AM, mysoftballcoach (57.36) wrote:

Careful what numbers you compare.  The Honda and Toyota facilities in the U.S. don't have State sponsored healthcare and their cost is something like $48/hour.  

You are correct, that a car produced in the US vs one produced in Japan would be challenging for the US due to healthcare cost.  However, the cost of healthcare is NOT $30 per hour.  It's closer to $3 per hour.

Coach 

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#2) On November 20, 2008 at 1:56 PM, devoish (96.24) wrote:

Coach,

I agree about being careful.

The cost of TM and Honda's chemists, engineers, designing, marketing, departments are not included in that figure. Those employees have healthcare in Japan. The biggest difference in those figures is the salaried employees higher wages being included in the domestics figures.

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#3) On November 20, 2008 at 3:06 PM, PacificGatePost (< 20) wrote:

A BAILOUT PLAN

 

Here is the type of plan Congress should consider >

 

http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

           

Trying something outside the box like this, is the only way to save the U.S. Auto Industry.

 

There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW. ... and they actually "make" something, .... unlike Wall Street.  Detroit deserves saving.

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#4) On November 20, 2008 at 3:43 PM, mysoftballcoach (57.36) wrote:

Devoish-

I'm fascinated with the conversations about the US Auto industry. I certainly agree that they should be saved.  The question is how and with what stipulations if any.

For example, they have been behind the Japanese in quality for years.  I think that is pretty undeniable.  Also, they are behind the curve on fuel efficiency for years.

So what can the govt do to move the Big 3 in the right direction?  Or should the govt do anything at all?

I see merits to the bankruptcy proposal and I see the merits to a straight up loan.  Personally, I think most of the employees, from assembly line ALL the way to CEO are overpaid.  I could see a govt forced wage freeze or wage reduction being imposed until all money is repaid.  If taxpayers are going to have to tighten their collective belts because of the Big 3, then every employee of the Big 3 get to tighten their belts as well.

It will be very interesting to see how it all plays out.

Coach 

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#5) On November 20, 2008 at 3:49 PM, devoish (96.24) wrote:

That is a lot of tough talk, telling them how to run their companys, especially while saying they do not want to tell them how to run their companys.

I have no interest in trying to save the "big" three while handicapping them with 10% loans. That would be typical gov't foolishness and counterproductive. The US gov't sells treasurys at 1%. The banking industry has done an awful lot to not deserve the gift of marking those loans up. I am in favor of bypassing the banks and cutting GM a deal.

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#6) On November 20, 2008 at 4:01 PM, devoish (96.24) wrote:

Coach,

I disagree with you about quality. TM and Honda are in my top five along with GM, Ford and Hyundai. Nissan doesn't make it. Certain models from each company may or may not get their also. GM and Ford trucks do. Ford Expedition and Toyota Sequoia do not for example. The poor quality is the Europeans, Suzuki and Chrysler, but even they are not terrible. As far as fuel efficiency Ford and GM especially are not behind the curve, Americans just did not buy those products. Toyota and Nissan and Honda all got into the big truck market in the last 7 years. Next year GM will have over 30 models getting better than 30mpg.

It is considered that they blew it not producing a hybrid, but that did not sell until the USA gave a tax credit that TM and Honda were better positioned to take advantage of. That was a lucky gift from the USA to them though, not great management.

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#7) On November 20, 2008 at 5:01 PM, mysoftballcoach (57.36) wrote:

Hmmm, quality???

On CNBC yesterday was a report that 9 of 10 (or 10 of 10, i can't recall) cars that held their resale value were Japanese.

Also, a couple of years back in Consumer Reports was a report that US autos were twice as likely to have to go in for repairs in the first year of service as were Japanese autos.

Certainly you will agree there is a perception of Japanese making better cars than the US.

Those are broad statements.  Arguments can be made for various makes and models.  Personally, I think Mazda and Mitsubishi are horrible. But it's hard to argue the quality of a Honda, Toyota, or Nissan.

Let me throw this into the discussion.  F and GM have sold millions of cars over the years.  It really is hard to imagine they don't have cash socked away for a rainy day.  They have been through 1.5 quarters of sales being down about 30%.  In 2001 and 2002 my business fell off 40% each year.  Do the math, down 40% in '01 and down another 40% in '02.  Now THAT's taking a hit, but I'm still in business.  The big 3 can't take 2 quarters of being off 30% without needing a government hand?  And after being in business for 80 years.

Coach 

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#8) On November 10, 2009 at 9:20 PM, BrandonPaulChevy (< 20) wrote:

Most of the car manufacturers were guilty of mismanagement because of the panic that the global recession brought on the automotive industry. ford for example were rattled on the creation of some ford parts that caused them some delays on their production.

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