Mickey Kaus says that it’s time for GM to bow to the inevitable. I agree — bankruptcy wouldn’t make things any worse, and could improve many things (including not having to bail it out with taxpayers’ funds any more). As a member of a GM family, I don’t say that with any cheer, but at some point, reality must be accepted.
[Update in the afternoon]
Here’s one more reason for GM to throw in the towel. The “Cap and Trade” in the budget bill will kill the industry, and Michigan.
GM’s condition is not that much worse than their competitors, however bankruptcy is not a bad thing. It would give them the competitive edge they need right now to survive. The unions have choked the golden goose to the point where it has no other choice now than to shake of the leeches or die.
Their cost structure is a mess, to be sure, and they have aging plant and an elderly workforce. But the unions didn’t force them to design and market crappy cars. Apart from a couple of niche products, I really can’t think of anything in GM’s lineup worth owning.
But the unions didn’t force them to design and market crappy cars.
No, they didn’t. The company’s been mismanaged for years, and there’s plenty of blame to go around.
I disagree with the notion that the unions didn’t force GM to market crappy cars.
GM created the unique brand of Saturn, which for awhile had a unique labor agreement and was building highly successful cars that used unique equipment. Then in the late 90’s, the UAW wanted more of the pie. They went on strike in 1996, when GM decided to purchase brake components for Saturn from other sources. This created a work stoppage across all GM brands. With help from the Clinton Administration, UAW was able to modify the way GM handled the Saturn brand.
I owned two early model Saturns and loved them. The last of those two, an SL2, got 36 mpg and was fully loaded. It still looked brand new at 6 years. However, we purchased a third Saturn, an LS2, after the 1996 strike. I’ve never had a car in the shop for as many piddly things as that vehicle. Primary problem was wire harnesses that had lots of faults and shorts. After removing so many panels to fix the vehicle, the car rattled like a cargo train, and with a tailwind it got 20 mpg. Did I mention having to replace the brake pads with less than 20,000 miles?
Because of that, we traded in both the LS2 and SL2 for Hondas. We never looked back at GM brands, and after their recent requests for bailout money; I’ll probably won’t for a long time to come. If I buy US, I’ll buy a Ford.
Bailing out the auto makers will cost little and keep more jobs compared to what bailing out Wall St. is costing and with no accountability. GM was making the cars people wanted to buy and filling demand until the schemimg of the oil companies caused gas prices to sky rocket and auto sales to come to a screaching halt. Rumors are that right now super tankers full of oil are being held off shore while the oil companies wait for this to cause the price to go up and then they will unload.
Fiscal insanity in government reached new heights under Bush and it will continue under Obama. People should realize that governments are run by corporations now and Obama has the same masters as Bush did. Wall St. said give us money or else and Bush did and Obama will too, it’s insane.
Tsk, Jane. You think engineers have the final say over product design? Not in this world. Management tells them what the car has to cost to make, which they calculate by subtracting from the market price the price of all the UAW goodies. The latter pushes down the amount of dough you can put into high-quality manufacturing.
I don’t think it’s a coincidence that where they were able to charge much higher prices (luxury cars, trucks) they made better products. More money was available for engineering and manufacturing.
I mean, the quality of the car and the quality of the employee health plan are, at least in the short term, in a zero sum competition for the per-car revenue. One goes up, the other must go down.
Bailing out the auto makers will cost little and keep more jobs compared to what bailing out Wall St. is costing and with no accountability.
The government gave GM billions just a few months ago and that money is gone. GM is asking for billions more. Given their business model and high costs, GM may never be able to make a profit again much less ever pay back the money they’ve received. How much will we be “loaning” them over the next 5 or 10 years compared to the number of jobs saved? “In for a penny, in for a pound” is foolish economic policy, but given the current administration, keeping union jobs is probably more important than anything else. What is wise politically for them is often more important than what is wise economically.