PDA

View Full Version : Economics Auto Industry at 2 minute warning....


petegz28
03-30-2009, 09:03 AM
GM told they will get funding from the Fed Gov for only 60 days more. If they have not got their shit together by then they go into bankruptcy.

Chrysler was told to get a partner in the next month or they will have to shut down.

HonestChieffan
03-30-2009, 09:17 AM
Disaster .....I cannot think there is anything good in this deal.Looks like a knee jerk as a result of a knee jerk

banyon
03-30-2009, 09:20 AM
This should have been the financial plan as well.

RINGLEADER
03-30-2009, 09:24 AM
How much money did we throw at these fools?

I'm sure we'll have government take-over of the auto industry next.

:shake:

dirk digler
03-30-2009, 09:24 AM
GM told they will get funding from the Fed Gov for only 60 days more. If they have not got their shit together by then they go into bankruptcy.

Chrysler was told to get a partner in the next month or they will have to shut down.

I have to admit that is stupid. There is no way they will be able to turn it around in 2 months so why give them money.

Garcia Bronco
03-30-2009, 09:28 AM
It was throwing money at them was a mistake before it even happened.

petegz28
03-30-2009, 09:37 AM
It was throwing money at them was a mistake before it even happened.

This. But once again this comes down to greed in the boardroom. And in this this case with the UAW as well. Neither side bothered to give a fuck about the future. Both sides wanted "theirs" now.

ChiTown
03-30-2009, 09:38 AM
I'm sure we'll have government take-over of the auto industry next.

:shake:

http://www.reuters.com/article/GCA-autos/idUSTRE52S1VV20090330?pageNumber=1&virtualBrandChannel=0

GM, Chrysler rocked by Obama autos team hard line
Mon Mar 30, 2009 10:28am EDT

By John Crawley and Helen Massy-Beresford

WASHINGTON/PARIS (Reuters) - The Obama administration seized the wheel of the failing U.S. auto industry on Monday, forcing out General Motors Corp's CEO, pushing Chrysler LLC toward a merger and threatening bankruptcy for both.

GM shares plunged around 20 percent in Frankfurt after steps outlined by the White House autos panel marked a stunning reversal for management at both GM and private equity-owned Chrysler.

The moves came after Europe's second-biggest carmaker by sales PSA Peugeot Citroen ousted CEO Christian Streiff, replacing him with former Corus head Philippe Varin from June 1.

The Obama administration pledged only to fund GM's operations for the next 60 days while it develops a sweeping restructuring plan, instead of granting GM's request for up to a further $16 billion in loans.

GM CEO Rick Wagoner, who had presided over the company's rapid decline in the past five years and had run the automaker since 2000, was forced out at the request of the autos panel headed by former investment banker Steve Rattner. A majority of GM's board will also be replaced.

"We are left to look back and say that Wagoner's appointment as both chairman and CEO in 2003 was little more than an act to ensure the dynasty of GM boardroom arrogance and failure continued," said Howard Wheeldon, senior strategist at brokerage BGC Partners.

Wheeldon said Wagoner's departure had been all but inevitable since the automaker sought government funds and said he was disappointed the authorities had not insisted on an external replacement.

UNDER FIRE

Wagoner protege and GM President and Chief Operating Officer Fritz Henderson was named as new CEO. Wagoner's departure came as the Obama administration came under fire for not blocking bonuses to executives at American International Group Inc.

The senior labor leader of GM's German brand Opel, being spun off with the UK's Vauxhall and seeking investors and government support, said the move was overdue.

In Europe, auto stocks fell on concerns about the broader industry impact of the failure of a major U.S. producer. The DJ Stoxx European autos index fell 6.4 percent by 1000 GMT, while PSA Peugeot Citroen fell 7.7 percent.

In France PSA Chairman Thierry Peugeot said in a statement the exceptional difficulties faced by the industry warranted a change in management, but Streiff defended himself saying his policies had equipped the group to weather the storm.

Some analysts viewed the appointment of Philippe Varin as positive.

"It brings somebody in that can look at the problem with fresh eyes. The hope will be that he will have a similar impact here to the impact (Sergio) Marchionne had at Fiat, and indeed Varin had at Corus," said Credit Suisse analyst Stuart Pearson.

Elsewhere, Russia's Avtovaz bucked the trend, its shares surging after Prime Minister Vladimir Putin pledged 20 billion rubles in aid, while Spain's plan to grant subsidies for green cars won approval from the European Commission.

Chrysler, controlled by Cerberus Capital Management, was given 30 days to complete an alliance with Italy's Fiat or face a cut-off of its government funding that could force its liquidation.

Fiat was not immediately available for comment.

The autos panel rejected a claim by Cerberus that Chrysler could be viable on its own, citing its relatively small size, weak product line-up and declining U.S. market share.

AGGRESSIVE RESTRUCTURING

If Chrysler can complete a tie-up with Fiat and cost-saving deals with creditors and its major union, the Treasury would consider investing up to another $6 billion, officials said.

U.S. officials said there had been progress in recent negotiations involving the task force. Fiat had agreed to take less than the 35 percent stake in Chrysler the two companies had first negotiated, the senior official said.

Meanwhile, Henderson, a key architect of GM's now-rejected turnaround plan, was charged with working with U.S. officials and advisers to develop a more aggressive restructuring.

"We believe our approach to GM is starting with a clean sheet of paper," the senior official said.

GM bondholders, the official said, could have to take less than the 33-cent-on-the-dollar payout they have been offered and should abandon hope of a government guarantee.

The Obama administration had also not ruled out a quick bankruptcy process for either GM or Chrysler, he said.

Wagoner had been outspoken in his opposition to a Chapter 11 reorganization, saying it would drive away consumers and probably lead to GM's liquidation.

GM had asked for more than $16 billion in new government loans, while Chrysler wanted $5 billion to ride out the weakest market for new cars in almost 30 years.

GM has lost about $82 billion since 2005 when its problems began to mount in the U.S. market. GM stock has also lost about 95 percent of its value since Wagoner took over as CEO. Although he inherited many of the company's deeper problems, his critics say he failed to act fast enough to resolve them.

HonestChieffan
03-30-2009, 09:40 AM
every politician needs a scapegoat

blaise
03-30-2009, 09:50 AM
I don't see how they expect things to change at GM. They're still making the same inferior quality cars, and they're still advertising them the same way (you're a retarded pussy if you don't drive a Chevy truck, just ask Howie Long).

petegz28
03-30-2009, 09:50 AM
every politician needs a scapegoat


Yes, but in this case Wagnoer is getting what he deserves. The American Auto Co'.s have run around acting like they are still #1 with more brands of cars\trucks\SUV's than choices on a McDonald's menu.

Meanwhile Honda and Toyota and Nissan all have two lines of cares, their mainstream line and their luxury line. GM has Chevy, GMC, Pontiac and Caddilac and Saturn just in the U.S. alone.

Ford is the only one worth a shit right now.


GM has hoity-toity boardrooms and executive suites and such, as I understand it the Japanese Co's do not have such hoity-toity perks. Then you have the whole UAW ordeal to ice the cake.

The American Auto's have brought this on themselves as much as it pains me to say it. And the Fed Gov should never have given them 1 dime.

ChiTown
03-30-2009, 09:57 AM
Yes, but in this case Wagnoer is getting what he deserves. The American Auto Co'.s have run around acting like they are still #1 with more brands of cars\trucks\SUV's than choices on a McDonald's menu.

Meanwhile Honda and Toyota and Nissan all have two lines of cares, their mainstream line and their luxury line. GM has Chevy, GMC, Pontiac and Caddilac and Saturn just in the U.S. alone.

Ford is the only one worth a shit right now.


GM has hoity-toity boardrooms and executive suites and such, as I understand it the Japanese Co's do not have such hoity-toity perks. Then you have the whole UAW ordeal to ice the cake.

The American Auto's have brought this on themselves as much as it pains me to say it. And the Fed Gov should never have given them 1 dime.

The deal with the American Auto Industry starts, and stops, with UAW. It has nothing to do with "hoity toity" offices and perks.

petegz28
03-30-2009, 09:58 AM
The deal with the American Auto Industry starts, and stops, with UAW. It has nothing to do with "hoity toity" offices and perks.

I disagree. I disagree big time. Both sides are to blame.

dirk digler
03-30-2009, 10:00 AM
I don't see how they expect things to change at GM. They're still making the same inferior quality cars, and they're still advertising them the same way (you're a retarded pussy if you don't drive a Chevy truck, just ask Howie Long).

Yep. Those commercials are stupid and arrogant.

ChiTown
03-30-2009, 10:01 AM
I disagree. I disagree big time. Both sides are to blame.

Sure

Management is to blame for catering to the UAW hostage like-tactics, and the UAW is to blame for thinking so highly of their services.

petegz28
03-30-2009, 10:02 AM
Sure

Management is to blame for catering to the UAW hostage like-tactics, and the UAW is to blame for thinking so highly of their services.

Among other things....

dirk digler
03-30-2009, 10:03 AM
The deal with the American Auto Industry starts, and stops, with UAW. It has nothing to do with "hoity toity" offices and perks.

Yeah it has nothing to do with inferior products... LMAO

KC native
03-30-2009, 10:05 AM
Sure

Management is to blame for catering to the UAW hostage like-tactics, and the UAW is to blame for thinking so highly of their services.

So, the UAW is responsible for management's failure of having too many car lines, failure to build cars that people want, and failure to develop quality cars in a timely fashion?

ChiTown
03-30-2009, 10:06 AM
Yeah it has nothing to do with inferior products... LMAO

:spock:

Let me repeat. United Auto Workers. Thanks

RINGLEADER
03-30-2009, 10:07 AM
This. But once again this comes down to greed in the boardroom. And in this this case with the UAW as well. Neither side bothered to give a **** about the future. Both sides wanted "theirs" now.

There should be greed in the boardroom.

Only a couple years ago these companies had outstanding performance.

But even then I think this problem has more to do with the consumer changing their minds in a relatively major way in a fairly short period of time. People seem to think the amount of time it takes to go from idea to concept to production is a year or two. GM was in the big car business because that's what the consumer wanted -- not because they had some overriding interest in making big cars. Gas going from $1.50 to $4.50 in the span of a couple seasons made their existing lines hard to sell. Combined with the current economic conditions it made them next to impossible to sell.

RINGLEADER
03-30-2009, 10:09 AM
So, the UAW is responsible for management's failure of having too many car lines, failure to build cars that people want, and failure to develop quality cars in a timely fashion?

1) No;
2) They did build cars people wanted until gas went north of $4.00 (which was last year);
3) It typically takes more than 5 years and multiple prototypes to get one new car line.

KC native
03-30-2009, 10:10 AM
:spock:

Let me repeat. United Auto Workers. Thanks

That's not the UAW. That's management's decision as far as materials and design.

dirk digler
03-30-2009, 10:11 AM
:spock:

Let me repeat. United Auto Workers. Thanks

Umm the Auto Workers don't design the cars and don't decide what goes to market. Sure they are to blame but to totally blame them is stupid.

beer bacon
03-30-2009, 10:12 AM
:spock:

Let me repeat. United Auto Workers. Thanks

UAW pushed for ten different lines and 80 different truck models and the GM execs caved. UAW :cuss:

KC native
03-30-2009, 10:13 AM
1) No;
2) They did build cars people wanted until gas went north of $4.00 (which was last year);
3) It typically takes more than 5 years and multiple prototypes to get one new car line.

WRT #3 That's one of their biggest problems. I can't remember exactly how long it takes foreign automakers to bring a new model to market but IIRC it's something like 3 years vs US automaker's 5-10 years.

This is a perfect example of management's failure.

KC native
03-30-2009, 10:13 AM
UAW pushed for ten different lines and 80 different truck models and the GM execs caved. UAW :cuss:

Link?

RINGLEADER
03-30-2009, 10:14 AM
Umm the Auto Workers don't design the cars and don't decide what goes to market. Sure they are to blame but to totally blame them is stupid.

You're right. The consumer does.

beer bacon
03-30-2009, 10:15 AM
1) No;
2) They did build cars people wanted until gas went north of $4.00 (which was last year);
3) It typically takes more than 5 years and multiple prototypes to get one new car line.

GM has been dying for a long time. They haven't posted a profit and have lost market share for years and years. They intentionally design unreliable, inefficient cars, and lobby for tax loopholes for gas-guzzling SUVs. They shelved an electric model ten years ago.

I am constantly astounded by the incompetence and short-sightedness of this country's corporate leadership.

dirk digler
03-30-2009, 10:16 AM
You're right. The consumer does.

The consumer designs the cars?

beer bacon
03-30-2009, 10:16 AM
Link?

Everybody knows that UAWs delivered an ultimatum to GM that their workers would strike if the company didn't put the entire company's hopes on bloated pieces of trash.

petegz28
03-30-2009, 10:16 AM
There should be greed in the boardroom.

Only a couple years ago these companies had outstanding performance.

But even then I think this problem has more to do with the consumer changing their minds in a relatively major way in a fairly short period of time. People seem to think the amount of time it takes to go from idea to concept to production is a year or two. GM was in the big car business because that's what the consumer wanted -- not because they had some overriding interest in making big cars. Gas going from $1.50 to $4.50 in the span of a couple seasons made their existing lines hard to sell. Combined with the current economic conditions it made them next to impossible to sell.

Greed in the boardroom has us where we are now.

KC native
03-30-2009, 10:18 AM
Everybody knows that UAWs delivered an ultimatum to GM that their workers would strike if the company didn't put the entire company's hopes on bloated pieces of trash.

Again, Link?

RINGLEADER
03-30-2009, 10:29 AM
WRT #3 That's one of their biggest problems. I can't remember exactly how long it takes foreign automakers to bring a new model to market but IIRC it's something like 3 years vs US automaker's 5-10 years.

This is a perfect example of management's failure.

If you're talking about incremental design that is used by all car makers (some to larger degrees than others). US automakers have designed vehicles in less than three years but they rely on existing lines. That's not true all the time but to say that management failed in this particular instance is to ignore a lot of the market conditions that existed.

The Prius was DOA until gas went through the roof. That car, however, was already in the marketplace. Now that gas prices have come down Prius sales have cooled off. Not against the Prius or fuel-efficient cars (I'm all for that BTW), just showing that the same conditions that are hurting GM can be applied the other way.

And when it comes to new technology and hybrid vehicles the development time is even longer because, understandably, there's a lot of trial and error along the way. (For the record I'm ALL for this -- if you're going to subsidize the auto industry this is where you should build the infrastructure -- but it isn't going to happen overnight).

RINGLEADER
03-30-2009, 10:30 AM
The consumer designs the cars?

The consumer buys the kinds of cars they want. If the company doesn't have those kinds of cars available then they don't sell many cars.

So yes, in an indirect way, the consumer does contribute to the design of cars (even though I was speaking more about who's responsible for cars actually come to market).

dirk digler
03-30-2009, 10:36 AM
The consumer buys the kinds of cars they want. If the company doesn't have those kinds of cars available then they don't sell many cars.

So yes, in an indirect way, the consumer does contribute to the design of cars (even though I was speaking more about who's responsible for cars actually come to market).

Fair enough but in the end GM Management is ultimately responsible for what they make and what comes to market and they have failed horribly.

petegz28
03-30-2009, 10:43 AM
The consumer buys the kinds of cars they want. If the company doesn't have those kinds of cars available then they don't sell many cars.

So yes, in an indirect way, the consumer does contribute to the design of cars (even though I was speaking more about who's responsible for cars actually come to market).

Then why have Honda and Toyota kicked the shit out of the Big 3?

Cave Johnson
03-30-2009, 10:50 AM
Not sure how closely anyone's been following the GM restructing process, but the bondholders and autoworkers are engaged in a game of chicken as to which party will make the first concession (bondholders are owed $28B, UAW $20B for health care).

The president's hard line is an attempt to light a fire under both parties.

Chrysler, on the other hand, is probably toast.

Garcia Bronco
03-30-2009, 11:00 AM
WRT #3 That's one of their biggest problems. I can't remember exactly how long it takes foreign automakers to bring a new model to market but IIRC it's something like 3 years vs US automaker's 5-10 years.

This is a perfect example of management's failure.


1.5 to 2 years to bring a car from concept to production for japanese manufacturers. I don't know about German automakers, but I would assume it's about the same.

Garcia Bronco
03-30-2009, 11:02 AM
But even then I think this problem has more to do with the consumer changing their minds in a relatively major way in a fairly short period of time. People seem to think the amount of time it takes to go from idea to concept to production is a year or two. GM was in the big car business because that's what the consumer wanted -- not because they had some overriding interest in making big cars. Gas going from $1.50 to $4.50 in the span of a couple seasons made their existing lines hard to sell. Combined with the current economic conditions it made them next to impossible to sell.

It didn't help, that much is certain.

Dave Lane
03-30-2009, 11:54 AM
Sure

Management is to blame for catering to the UAW hostage like-tactics, and the UAW is to blame for thinking so highly of their services.

The UAW has already agreed to wage cuts equal to what Toyota and Honda US is getting paid.

Demonpenz
03-30-2009, 11:59 AM
I saw some Uaw guys today just eating and laughing think anythings changed? Sheeeet

KC Dan
03-30-2009, 12:07 PM
The UAW has already agreed to wage cuts equal to what Toyota and Honda US is getting paid.
It's not the wage rates that are killing the Big-3. It's the legacy costs that they will not give in on. This will end up in a pre-packaged bankruptcy because the UAW will not give in on legacy costs.

petegz28
03-30-2009, 12:14 PM
Hey don't anyone worry... Wagoner is getting a multi-million $ severance. I guess that was the fault of the UAW as well?

Brock
03-30-2009, 12:39 PM
It's not the wage rates that are killing the Big-3. It's the legacy costs that they will not give in on. This will end up in a pre-packaged bankruptcy because the UAW will not give in on legacy costs.

Protecting retirees is bad, I guess.

KC Dan
03-30-2009, 12:43 PM
Protecting retirees is bad, I guess.
I didn't say that it was bad. I said that the impediment to a worthwhile restructuring without bankruptcy are the legacy costs protections. That is why a bankruptcy is going to happen eventually. It has to now.

petegz28
03-30-2009, 12:47 PM
I didn't say that it was bad. I said that the impediment to a worthwhile restructuring without bankruptcy are the legacy costs protections. That is why a bankruptcy is going to happen eventually. It has to now.

It is going to happen. And the pensions will be cut in 1/2. The UAW is finally going to be forced to give in along with the execs. Though as Wagoner walks away with millions for ruining a comany one can hardly feel sorry for either party.

patteeu
03-30-2009, 01:16 PM
Where did we come up with the ironclad economic rule that having a bunch of different car lines and a lot of models within each line is a bad business practice? It's not nearly as clear to me that this is the case as it is that paying $2000 for each car sold to support ongoing retiree fringe benefits while your competition pays nothing is bad for business.

patteeu
03-30-2009, 01:21 PM
If GM is forced into bankruptcy, will the warranties on their cars still be honored?

If not, won't the price of new and almost new Chevy vehicles drop substantially overnight?

http://kids.christiansunite.com/images/animals/vulture.jpg

petegz28
03-30-2009, 01:25 PM
If GM is forced into bankruptcy, will the warranties on their cars still be honored?

If not, won't the price of new and almost new Chevy vehicles drop substantially overnight?

http://kids.christiansunite.com/images/animals/vulture.jpg

Yes they will be.

RINGLEADER
03-30-2009, 01:54 PM
Then why have Honda and Toyota kicked the shit out of the Big 3?

Do I really have to answer this again?

RINGLEADER
03-30-2009, 01:55 PM
It's not the wage rates that are killing the Big-3. It's the legacy costs that they will not give in on. This will end up in a pre-packaged bankruptcy because the UAW will not give in on legacy costs.

This is true and true.

RINGLEADER
03-30-2009, 01:57 PM
Yes they will be.

That's what I thought was so funny (but typical) about what Obama said in his speech this morning. He says the government has no interest in running GM. Then goes on to fire the company's chief executive and pledge to support their warranties with more tax-payer funds. ROFL

mlyonsd
03-30-2009, 06:33 PM
That's what I thought was so funny (but typical) about what Obama said in his speech this morning. He says the government has no interest in running GM. Then goes on to fire the company's chief executive and pledge to support their warranties with more tax-payer funds. ROFL
And people just nod their heads and say yea, he's doing a great job.