foofighter

are the honda and toyota plants unionized? I thought i read somewhere that they arent, and things are going pretty good for them. This contract is due up for renegotiations soon, so hopefully everyone will think smart about the long term gain/costs that this will do to Ford/GM and the like.

mmarshall

Here is a list of all the new 2006 vehicles sold in America that are UAW-produced:
http://www.uaw.org/uawmade/cartruck2006.cfm

Leets

Funny how some of the most reliable cars in the country are absent from that list.

ktiger

This is what I mean when I say you have to start with the management of this company. They just don't get it! Instead of making cars that people want to buy they come up with gimmicks to intice people to buy cars they other wise would not purchase.

Motley Fool
GM's Gas Gimmick
Monday October 17, 5:07 pm ET
By Seth Jayson


I couldn't help shaking my head when I heard GM's (NYSE: GM - News) latest scheme to drum up sales: a card worth $500 in gas for the tanks of its money-sucking SUVs. That's supposed to revitalize sales that have declined precipitously in the face of higher energy costs? In a market where American garages are already full of SUVs?

Fat chance. And even if it does, it will do little to help GM. If you recall, heavy discounting got GM into its current mess. Recent monthly comparable sales are dropping like crazy because, unlike last year, this year's cars aren't being sold at giant discounts. This is the dangerous game where Ford (NYSE: F - News) and DaimlerChrysler (NYSE: DCX - News) do just about anything to gain worthless "market share" against each other, or against less desperate foreign competitors Honda (NYSE: HMC - News) and Toyota (NYSE: TM - News).

Let's review: When you lose money on every product you sell, selling more of it is rarely a good thing. Unless, of course, you can make money by convincing the people who buy that thing to finance it with you. Then you might squeak by -- but not necessarily. As today's walloping loss shows, GM is giving away a pretty expensive toaster every time it signs up one of these new bank accounts.

But the mere possibility that a finance-based model could be the only sustainable route for big American auto brings us to an odd realization. GM's gas gimmick might only be the second or third dumbest idea out of GM in the past few weeks.

At the top of my list is the continuing sale of the finance wing -- the profitable part of the business, mind you. The reason, if I've understood it correctly, is this: It'll get debt off the books, which might raise GM's current junk debt rating, which could then lower the costs of borrowing. It's not exactly killing the goose that lays the golden egg -- more like tossing aside the only consistent egg-provider you've got, all so that you can borrow more cheaply to run the unprofitable leftover with crummy sales and cutthroat competition.

If GM had a plan to run the company without having to borrow like its life depended on it -- because it does -- then we might have something. Until then, I'll be wondering, as I have for a long time, why anyone might want these shares.

GM need to clean house in the executive tower and go outside of the company ranks to replace them. Not only does GM need to stop thinking inside the box, they need someone to tell them that they are inside the box.

bmgs400

For darn sure..they should be. If I'm not satisfied with my job and nothing is in on the horizon, I look elsewhere. I've moved my family from Florida to Ohio in 1996 then to NH in 1997 (working in Mass) for just this reason. I will never take a job that isn't going to challenge me and enhance my experience/skills which looks good on a resume and in time returns $$$. Yeh, I'm back in FL now but that's for another reason.

bitkahuna

iTrader: (20)

I wouldn't doubt that the Union won't let them do different work from what they were doing before.

Absolutely! But these people have been on a gravy train for so long they're not willing to gett off their butts to learn a new skill and get another job because they believe (probably correctly) they could never match the income of their auto job.

bitkahuna

iTrader: (20)

What makes them 'chimps' in your view? Running GM or Ford is a HELL of a lot more difficult than welding together cars.

Iceman

Yes, and that's exactly the part I find pathetic. I would simply have too much self-respect to collect those wages for doing nothing. Call me crazy, but I would accept a pay cut to take a job where I felt I was making a difference and a contribution. Wait a minute--I AM! I guess that's kind of what military service is: sacrificing pay and material rewards for the satisfaction of doing something truly important.

bitkahuna

iTrader: (20)

That retirement is costing THOUSANDS of extra dollars per car which makes GM cars less competitive and is why they often MUST use cheap materials to have any chance at a profit.

While I agree that a company must keep up it's end of any contracts whether good or bad, those same companies don't operate in a vacuum. If those contracts end up making the company uncompetitive or unprofitable so that the company doesn't have the money to fulfill them, what can they do? Companies are not governments, they can't just print money or indefinitely issue bonds.

There's a sad co-dependency between these auto workers and the companies they work for. They need each other but they're killing each other at the same time.

Before GM and Ford had serious competition this co-dependency worked without any pressure for GM and Ford to become more efficient. But as competition heated up, GM and Ford have had to become much more efficient but the retirement obligations alone of workers ALREADY RETIRED is so huge that it puts a huge crunch on cash flow.

GM's head has remarked that their best shot at survival is that the retirees die off quickly!

Yes, but again, governments are different than corporations. Often times government jobs don't pay that well (I have no idea about yours) or are often not very exciting, but they generally offer great stability and security. Aging auto workers often come from parents who worked their whole lives for auto makers and retired quite well off, but those days are coming to an end and autoworkers like most workers need to look out for themselves.

But you bought a Lexus, and now a Subaru! Because I guess you didn't think the GM vehicles were competitive. Why? Many reasons including management incompetence but also a major cash crunch from union and retiree obligations!

ANYONE can have an IRA - they don't need a corporation to have one - they just have to be more PERSONALLY RESPONSIBLE and put money into one. All large companies offer generous 401k's too which aren't generally reliant on the solvency of the company later in life. By investing in IRAs and 401ks, ANY worker can retire comfortably - I guarantee it.

bitkahuna

iTrader: (20)

Dumb naive article. GM currently HAS to make more vehicles than their dealers can sell. It's a ridiculous situaiton, but true. Why? Pay workers you can't get rid of to make cars you sell at a small loss, or pay workers not to work at all and lose a bundle. The UAW has GM by the short ones.

So if GM has to make more cars than the dealers can absorb they have to resort to gimmicks to help those dealers move the inventory. And know what? They WORK. That stupid 'employee discount' was SO SUCCESSFUL Ford and Chrysler followed suit.

I doubt GM management is proud of what they're having to resort to but they're truly between a rock and a hard place. They're basically trying to keep the company alive until they can renegotiate the UAW contracts, close unneeded plants, and the retirees, whose healthcare costs are crippling GM, die.

bitkahuna

iTrader: (20)

No these union members would rather collectively wallow in their self-pity about how GM has screwed them while their collect their GM welfare check.

MarkW2005

I don't think this UAW/GM-Ford deal about layoffs is a major problem.

The bottom line is that their cars suck. That's the fact. That's the reality.

And this is the major reason why I, as a consumer, brought a Lexus and not a lincoln town car.

Rockville

My sister in law was a Veterinarian at the Detroit Zoo. She got a higher position offer and moved to Pittsburgh to work in their zoo. She bought a new house and had to leave her Detroit house on the market. That was a year and a half ago and it still hasn't sold. Detroit has probably the worst economy of any of the large industrial cities in the US.

GM is in about twice as bad of a position than Ford. There is somewhat of a youth movement afloat at Ford. They have promoted manufacturing experts that were at Mazda and in Ford Mexico (the first woman) and now giving them the authority to make changes here at home. When comparing labor efficiency to production output Toyota is the benchmark and sells their production theory to other industries. When you go to a Lexus plant you see really intelligent robots doing repetitive tasks and they don't take coffee breaks! In Tahara Japan they can make three different models on the same line with total automation. The parts arrived that morning for those cars built that afternoon. Lean and Mean....

Toyota could stroke a check for GM and it wouldn't make a dent in their cash reserve. In fact the asset value of Toyota is greater than GM, Ford, and Daimler-Chrysler all put together. The managerial mistakes for the last 30 years are now coming back to haunt Detroit. The latest Automotive News has remarked that the Domestic dealers saw a huge dropoff in business in September after the incentives ended. They are now lamenting that October is even worse. Maybe they should hire Ghosan? Chrysler is actually the only improvement of the three.

Toyota is considering opening a plant in Detroit. Despite the problems it would be a political victory for their image. It will surely be a non union plant if it happens at all.

ktiger

True but sooner or later the gimmicks will run their course and all they will have left to stand on will be the vehicles. That's when it will hit the fan and the smell will not be nice.

I've owned several american made cars in my days but not anymore. After 4 years of ownership and 70,000 miles my wife's 1995 Dodge Caravan LE front end was worked on 7 times for a total cost of $4,680.00. I spent that money within a year. Exit Caravan enter 2000 Jeep Grand Cherokee, after 40,000 miles and $3,000 worth of repairs within a year, I traded it in for a CPO LX 470. 60,000 miles later the only money that I have spent on the LX is for maintenance service.

xknowonex

iTrader: (2)

Well in other countries, I dont think they spend much on healthcare because that burden is placed on the government. With many of the GM cars, like the Malibu, who the heck would buy it even if it was hand made and came with exotic woods???? I shift the blame back on to the bean counters on top.