GM fires 9% of their workforce
November 22, 2005 7:09 AM   Subscribe

General Motors is cutting 9% of their workforce. Some fear it is too little, too late. Chicago Tribune fear this is only the beginning. Detroit News has an FAQ for those affected. A sad day for the US automotive industry indeed.
posted by SharQ (79 comments total)
 
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posted by you just lost the game at 7:21 AM on November 22, 2005


Funny that with all this doom & gloom they didnt eliminate or even cut the $2/share (8%+) dividend. Funny like how when all the airlines go out the mgmt teams scramble to prepare giant bonus and compensation plans pre-bankruptcy while the employees pension plans get smoked. The juxtaposition of these corporate bankruptices against the new bankruptcy laws is just too revealing. Do you think if the last thing I did before declaring bankruptcy was get a $million cash advance on my credit card and put it in a trust I would get to keep the money?


And yes, the irony that this is coming from a man "named" Roark...
posted by H. Roark at 7:22 AM on November 22, 2005


All of the innovation in the auto industry has been coming from overseas lately. "Lately" meaning the past 25 years. This is unsurprising.
posted by wakko at 7:23 AM on November 22, 2005


If GM eliminates the dividend, numerous large investment funds would drop the stock like a flaming bag of dogshit, which would perpetuate the company's downward spiral.

The blame for the decline lies on both sides of the fence. GM designs and markets awful, awful automobiles (to wit: the 'new' GTO that has none of the original's heritage, the god awful Monte Carlo) that don't sell well. Union demands that the company continue to run plants that make cars that don't sell well in order to keep their members employed.

Result? Excess inventory that GM has to push out the door at below cost, and an oversized employment roll making the same cars that are losing them money.

If Chrysler can resurrect itself, GM probably could too... but it'd take a real visionary to say, "You know, these cars/trucks suck. We need to stop building minivans, Chevrolet passenger cars, and potentially kill off a brand (we're looking at you, Buick.)"

Is it likely? Probably not. Really sad, though.
posted by fet at 7:29 AM on November 22, 2005


I was listening to a thing about this on NPR. Apparently GM has got themselves some huge problems. Some of their biggest are their contracts with workers. They can't really lay people off... if they do, they get paid full rate anyway! And they literally are not allowed to close plants; their contracts with their employees will not allow it!

Now, as they were pointing out, many of the problems are management's fault. For instance, they want to close a minivan plant in Georgia because their minivans aren't selling well. But THAT is because they haven't invested anything into their minivan lineup, and newer/hotter/better stuff from Honda and Toyota have stolen all their sales. Had they been investing in new designs, they'd have had a much better chance of keeping those plants open.

Like most complex situations, there aren't hard and fast answers... but ye gods, how the hell did they let themselves get railroaded into contract terms that one-sided? Can't lay people off and can't close plants... EVER. That's just NUTS.

on preview: yes, fet, their cars just fundamentally suck. Until they stop sucking, all the bandaids in the world will only slow the bleeding, they won't stop it.
posted by Malor at 7:31 AM on November 22, 2005


I'm hoping the Chevy dealership down the street doesn't find out that I'm going to be car-shopping next year...they might kidnap me and hold me for ransom!
posted by alumshubby at 7:35 AM on November 22, 2005


Why is this "a sad day for the US automotive industry"? Sad for the people getting laid off, sure, but it's one of the first signs that the US automotive industry is taking steps to fix their massive problems.

Rather lose 9% than 100% plus all the people on pension.
posted by quiet at 7:36 AM on November 22, 2005


And they literally are not allowed to close plants; their contracts with their employees will not allow it!

I think this is untrue, as this article in the NY Times says:

"..cold drizzle fell in a mainly empty parking lot at the center as this city took in the news that G.M. would close all or part of 12 operations in North America. Here in Lansing, where two of those plants are situated, the automaker's cuts will be deep."
posted by spicynuts at 7:44 AM on November 22, 2005


Rather lose 9% than 100% plus all the people on pension.

Yes, but the layoffs may not actually fix things. To some extent, the reason that they have too many workers is because profits are down, not the other way around. What GM really needs is to make cars that people actually want to buy.
posted by unreason at 7:45 AM on November 22, 2005


It's sad to see companies fail, is all I meant. I would personally never buy an US-designed/built vehicle. Not because I hate America or US design, but because most of the cars coming out of there are huge, fuel-guzzling, and pointless.

My personal choice would be a Jetta TDI (yeah, that's a Diesel), or if I felt rich, a BMW 1-series with a 1.8 litre Diesel. Those two cars are big enough for me, they drive fantastically, and you can get some *seriously* good mpg figures.
posted by SharQ at 7:46 AM on November 22, 2005


And Ford is poised to follow with cuts of their own.

The layoffs will definitely hurt a lot of people, but they're just reaping what they sow. As other have said, domestic cars basically suck. And it's not like the Big 3 are the only domestics these days - a lot of "foreign" cars are made in the US and Canada these days. It has little to do with domestic versus overseas competitiveness. The designs from the big 3 stink. There's no other way to describe it. How these companies can continue to move so slowly in this day and age amazes me. Let these companies fade away like the dinosaurs they are.
posted by GuyZero at 7:53 AM on November 22, 2005


I've always wondered if the fact that your average auto worker gets $25/hour is part of the problem.
posted by DieHipsterDie at 7:53 AM on November 22, 2005


The core problem: GM makes shitty cars. Period. My Honda is in the shop and the rental car company gave me a Chevy Cobalt, which I have seen touted in the media as the first small car from GM that can compete with the Japanese econoboxes. Hah! I'll see y'all in a while after I manage to bring these waves of derisive laughter under control.
posted by twsf at 7:55 AM on November 22, 2005


it truly is a sad day for corporate executives that are getting their parachute retirement packagaes. give me a fucking break. this is only a sad day for the workers, not the shareholders, not the executives, not anyone who is *rich*.

arguing that auto workers are overpaid is a bullshit proposal; why shouldn't someone with high skills be ably to rely on their job? why should a middle-middle-middle-manager, who graduated legacy from yale, be getting $250 an hour to do nothing? no, you're right, a poor auto worker is most certainly worth less than a rich executive.

well, at least we have national health insurance, strong unemployment benefits and... oh, whoops!
posted by yonation at 8:05 AM on November 22, 2005


This sad day for the U.S. auto industry began some time ago, when Detroit lobbied congress to soften gas mileage targets rather than innovating the sorts of products that the market would prefer to purchase. This is what you get when management is rewarded for thinking only short term/stock price.
posted by spock at 8:07 AM on November 22, 2005


First of all, the negative PERCEPTION of weak GM products is because of stongly established opinions from the past. Current GM products are the best they have ever been, although I will concede that they need to make more lust-worthy cars.

What's wrong with GM is what's wrong with America - too many taking out (retirees) and too little putting in (current workforce). It doesn't help any that the company is setup for big volumes that are no longer profitable. The future is the long-tail (pardon the buzzword). GM needs to make 250k Cobalts for the line to be profitable; they need to make 50k Solstices to do the same.

GM is making the painful moves that they have to...and in turn will possibly put the Asian manufacturer's in the same boat a decade from now. Don't be suprised if the industry and the unions become a unified voice for nationalized healthcare. This is a planned move.
posted by rzklkng at 8:14 AM on November 22, 2005


Move along everyone, nothing to see here. It's just a small sideshow in the slow normalization towards the "new American economy" of cheap, expendable labor.

And yes, GM makes shitty cars.
posted by chef_boyardee at 8:17 AM on November 22, 2005


Here's our earlier chat.....
posted by bowline at 8:17 AM on November 22, 2005


spicynuts: according to the NPR article, they won't be able to close the plants until 2008. They have to schedule the closings after their current contracts expire, because the contracts won't allow the plants to close.

I realize that the article you linked claims that a plant is closing in 2006, but all I can do is repeat what I heard. They definitely said 'not until 2008' in the NPR radio bit.
posted by Malor at 8:17 AM on November 22, 2005



I've always wondered if the fact that your average auto worker gets $25/hour is part of the problem.
posted by DieHipsterDie at 7:53 AM PST on November 22 [!]


I've always wondered if the fact that your average industry CEO gets $3154 an hour (358 times the compensation of the average nonsupervisory pay*) is part of the problem. What's your point? That production workers are not equally sharing in the pain? They're the ones to be laid off, not Rick Wagner.

If you want to look at part of the problem, look at how much the health insurance cost is per worker--and how much less this would be if the administrative costs to exclude people from coverage were eliminated (yes, that's right, I advocate universal health coverage). That step alone would reduce the onerous hidden-cost burden carried by US manufacturers.

But let me also say that CEOs/COOs get paid far too much relative to their risk, contribution to the bottom line, vision-thing, whatever. And when the company fails and goes into receivership (just look at the airlines) the CEO compensation ratchets up to even more unbelievable levels.

Yeah. It must be the $25 an hour (probably $55-60 an hour with the benefits) of the line worker that is the problem. Not the idiot decisions by management. Nope.
posted by beelzbubba at 8:18 AM on November 22, 2005


Don't be suprised if the industry and the unions become a unified voice for nationalized healthcare.

I've been wondering why large retail- and service-oriented companies like Wal-Mart and McDonald's aren't also lobbying for this.
posted by alumshubby at 8:19 AM on November 22, 2005


Or I'll hand rzklkng the concession that they made shitty cars, but oh boy, did they ever. I've got a GM van out in the driveway that's falling apart, all except for the engine, and it's got far less miles than my Accord.
posted by chef_boyardee at 8:20 AM on November 22, 2005


Forgot my source on CEO pay:

In 2004, the average CEO of a major company received $9.84 million in total compensation, according to a study by compensation consultant Pearl Meyer & Partners for The New York Times. This represents a 12 percent increase in CEO pay over 2003. In contrast, the average nonsupervisory worker’s pay increased just 2.2 percent to $27,485 in 2004.
posted by beelzbubba at 8:21 AM on November 22, 2005


Not closing plants until 2008 is gonna be a huge surprise to the Lansing, Michigan workers who report to work at the plants being shuttered as we speak. 1600 jobs gone in Lansing by 2006.
posted by beelzbubba at 8:26 AM on November 22, 2005


Sadly, quality isn't the entire issue. Audis, for example, have serious reliability issues, partly due to the fact that they're engineered for driving pleasure rather than durability. But people keep buying them, when, say, a Toyota or even a Pontiac would be cheaper and more durable (though not as sexy to drive or be seen in).
posted by QuietDesperation at 8:28 AM on November 22, 2005


I've always wondered if the fact that your average industry CEO gets $3154 an hour (358 times the compensation of the average nonsupervisory pay*) is part of the problem. What's your point? That production workers are not equally sharing in the pain? They're the ones to be laid off, not Rick Wagner.

Oh shut the hell up. I was positing a question, that's all. Industry CEOs and for that matter most of the executive class are all overpaid. If they took some pay cuts maybe some of these plants would stay open.

All skilled positions (mechanics, carpenters, construction workers) should be paid $25/hour.
posted by DieHipsterDie at 8:29 AM on November 22, 2005


I always get confused by the numbers with this stuff. 30K jobs lost is a significant number in the context of the economy, even though 30K people is a tiny slice of the population overall.
posted by scarabic at 8:32 AM on November 22, 2005


I've always wondered if the fact that your average auto worker gets $25/hour is part of the problem.

It's not.
posted by wakko at 8:33 AM on November 22, 2005


this is only a sad day for the workers, not the shareholders, not the executives, not anyone who is *rich*. - yonation

Not all shareholders are rich. For instance, the CPP (Canadian Pension Plan) which every employee in Canada pays into (and draws from after 65) holds equity in GM (Source). So every working person in Canada holds a tiny bit of GM. Many many other big pension plans and mutual funds hold equity in the major auto companies.

Don't be suprised if the industry and the unions become a unified voice for nationalized healthcare. - rzklkng

I've been wondering why large retail- and service-oriented companies like Wal-Mart and McDonald's aren't also lobbying for this. - alumshubby

Maybe because Wal-Mart doesn't pay health insurance for their employees? They mostly avoid it by never giving full time hours, so they don't pay the benefits. Nationalized healthcare is wonderful in a lot of ways, but it isn't free. It's just paid for by tax dollars instead of by insurance premiums. So for companies that don't buy health insurance for their employees, nationalized health care would be more expensive & therefore undesirable because they wouldn't have a choice about paying the tax dollars.
posted by raedyn at 8:36 AM on November 22, 2005


I always get confused by the numbers with this stuff. 30K jobs lost is a significant number in the context of the economy, even though 30K people is a tiny slice of the population overall. - scarabic

There's a few reasons for this. First, 30,000 jobs, that affect 30,000 families. So it's more like 75,000 people directly affected (NB: I'm totally guessing at average family size, but you get the idea). Those families that are now broke aren't spending their money elsewhere in the economy. So there will be fewer houses built, fewer dinners out, less vacations taken.

It's also all the businessess that cater to the plants that they are closing down. The statistic I heard on CBC news last night is that for every job in a GM plant, there are 7 non-GM employees that are making parts that the GM assembly plants use. Obviously if they're shutting down a plant, or removing a shift, the plant is going to need fewer grills and transmissions and steering wheels. So the people who supply those plants will likely see layoffs as well, just not immediately. Those layoffs (spread between many companies) may eventually out number the people that GM directly laid off.
posted by raedyn at 8:48 AM on November 22, 2005


Some cars made in the U.S. are not bad, but sadly most are shit. The Ford Escort has almost always been a pretty reliable car, and people drive them to their deaths, 150K and 200K thousand miles later.

Personally, I blame the oil industry for lobbying Congress along with the auto manufacturers to keep loose the fuel economy resctrictions for American-made cars. It's a simple supply and demand scenario. As long as the demand for oil is high (bad MPG) the oil industry profits. With the price of oil being so high recently, Americans are finally geting fed up with the shitty MPG of American cars and are now buying more fuel-efficianet cars from foreign manufacturers.
posted by camworld at 8:49 AM on November 22, 2005


But in the good news category: skilled manufacturing workers in the US are in demand.
posted by sexymofo at 8:49 AM on November 22, 2005


Those of us who watched "The Day Today" knew about this long ago thanks to the in-depth reporting of Peter O'Hanraha-Hanrahan.

MORRIS: The American car company General Motors have today announced a cut in their workforce at their plant in Detroit. Our economics correspondent, Peter O'Hanraha-hanrahan is there at the moment. Peter, what's going on?
O'HANRAHA-HANRAHAN: Chris, it's a mass redundancy measure, it's the biggest layoff in American industrial history. 35,000 jobs in one fell swoop. Gone!
MORRIS: 35 *thousand*?
O'HANRAHA-HANRAHAN: Yes.
MORRIS: Peter, there's only 25,000 people at the plant!
O'HANRAHA-HANRAHAN: That's right Chris, mass redundancy on an unprecedented scale.
MORRIS: Would you mind telling me how the plant can function on minus 10,000 workers?
O'HANRAHA-HANRAHAN: I don't know Chris, you tell me.
MORRIS: I'll tell you what, Peter, you mean 35 *hundred* workers have been sacked.
O'HANRAHA-HANRAHAN: No, 35,000, it's all here.
MORRIS: Let me see what you've got down there!
O'HANRAHA-HANRAHAN: Er, 35 hundred, you were right, I made a mistake.

/does feel slightly bad about people losing jobs but even solemn occasions are improved with humour...
posted by longbaugh at 8:51 AM on November 22, 2005


rzklkng writes:
"First of all, the negative PERCEPTION of weak GM products is because of strongly established opinions from the past. Current GM products are the best they have ever been, although I will concede that they need to make more lust-worthy cars."

Ok, so current GM products are "the best they have ever been." Are they better than the imports? Are they as reliable and do they perform as well and are they as environmentally friendly? Maybe, but I'm doubting it.

Anyway, what your post reminds me of is the *advertising* I see for US vs non-US cars. US carmakers seem to concentrate on inspiring "lust," or describing the cool masculinity of their vehicles, on how jealous your neighbors will be of your new vehicle and such; commercials from overseas manufacturers otoh, are usually not so dumb, and describe the car's features and have a tone, of" hey, this is a nice car." (The Saturn line was the only exception to this, for a while.)

I'm not sure what this means, but I think it's significant somehow.
posted by washburn at 8:54 AM on November 22, 2005


Malor writes "Some of their biggest are their contracts with workers. They can't really lay people off... if they do, they get paid full rate anyway!"

Not only that but they get it from the other end as well, many lawsuits were filed by ex Oldsmobile dealers when GM disbanded the name.

If I were in charge of GM ala Iacocca at Chrysler circa 1980 here's what I'd do.
  1. Fold the automobiles made by Buick into Saturn, Pontiac into Chevy, GMC light trucks into Chevy, Hummer into GMC medium/HD trucks, Saab into Cadillac (or maybe Saturn). All this competing against themselves made sense in 1950 but it's insane now. All their advertising dollars are split 2/3/4 ways
  2. Turn all dealerships into GM dealers able to sell any GM car or truck.
  3. Team up with Target/Ford/WalMart etc. and lobby hard for single payer healthcare in the USA. Surely the might of all the retail/manufacturer/industrial giants is larger than that of the insurance lobby.
  4. revive an F-Body. Call it what ever you want but get a car to compete with the Charger and Mustang. Frat boys and mid-lifers who can't afford corvettes need a choice from GM.
  5. Get a small, common rail, direct injection desiel in several of my cars, small pickup and van.
  6. The Sprinter is killing my fleet sales of Astro/Safaris (see above). Make commercial sales the focus with the soccer mom crowd an afterthought.
  7. Lobby the goverment to make a Smart clone legal and rebadge something for the first 5 years until an inhouse design can take off. Every time gas rises a nickel is free advertising. They are insanely popular in Canada and the US has more large cities.
  8. Get somebody who can go big or go home like DeLorean when he was head of Pontiac in charge of Chevrolet.
posted by Mitheral at 8:56 AM on November 22, 2005


Unfortunately, I don't really have the time to address all of the misinformation in this thread, but I do want to point out a couple of things: (1) Yes, the GM/UAW contract prevents GM from permanently laying off any employee, (2) In some instances it is cheaper for GM to stop production at a facility and continue paying the employees full wages (this is the so-called "JOBS Bank"); these workers often sit in strip mall storefronts and watch TV or read books eight hours a day, (3) in light of the above, to the extent there is actual hourly headcount reduction before 2007 (when the contract expires), it will have to come through negotiated buyout or early retirement packages -- nobody's being "fired" (for better or for worse).

I also want to briefly address beelzabubba's point: Remember that a corporation is a large pyramid. Even if salaries are outragous at the top, addressing them does very little to address billions lost by a company the size of GM -- you could reduce all of the directors and officers to $0, and you couldn't get to $20 million. On the other hand, the difference of every dollar in the hourly wage of GM's 180,000 production workers corresponds to more than $350 million in cost savings -- take $27 down to $24, and you've saved a billion dollars. Not saying both shouldn't be looked at, just that one can actually make a difference.
posted by pardonyou? at 8:56 AM on November 22, 2005


why do you sell? simply to sell, or to make the economy better? if it's to make the economy better, is it to enrich yourself or make a better society? if it's to make a better society, that should be your ultimate goal, and semantic arguments against reduction of CEO pay and for shareholders won't change the fact that these bastards actively work against it.
posted by yonation at 9:00 AM on November 22, 2005


thank god george w. bush is president.
posted by quonsar at 9:08 AM on November 22, 2005


An import REQUIRES a timing belt change at 50k costing $1000, but this is regularly scheduled maintenance. A domestic has a timing chain that needs to be replaced at 100k, but is viewed as a failure. The difference is the consumers perception of each.

What GM is doing is smart:
  • Cars like the Solstice and Sky that are profitable at small volumnes (niches)
  • Investing in Hybrids
  • Cutting Redundancy (Buick Raineer, Saab 9^7, Bonneville, etc.) so they don't compete intra-company
  • Knowing when to kill stinkers (new minivans)
  • Reducing the dependance on volumne business (fleets, rebates, etc.)
  • Adjusting pricing (Example, car previously cost $25k, with GM offering $5k in rebates. GM reprices the car at $21k, and is perceived at a higher value. This will help resale value and residual rates, in time.)


  • And as far as "lust" is concerned, the majority of people make their decision at the limbic system - the primitive brain - hot button marketing - selling sex appeal, attractiveness, fear, safety, etc.
    posted by rzklkng at 9:10 AM on November 22, 2005


    My two cents: I was car shopping last month and bought a Mazda6 Wagon (built in Michigan with a Ford drivetrain, ironically) because:

    1. The Pontiac looked OK from the outside, but drove like every rental car quality GM product I've ever been in.

    2. The salesman broke the sun visor off of the Dodge Magnum in mid-test drive. Not a good sign of quality.

    Sad for GM though.
    posted by punkfloyd at 9:33 AM on November 22, 2005


    I am no fan of GM products but I drive by one of the plants they are closing down on a daily basis. Most of the guys I see going in and out are middle aged and probably have families.

    There is nothing in the local economy that can absorb that many, mostly unskilled, laborers at anything like the wages they are being paid now.
    posted by 517 at 9:36 AM on November 22, 2005


    is it ever going to end? ... i live a mile from a former gm plant that's been empty for years ... in lansing, if you go down cedar st, you can see the old olds plant which has been empty for decades ... in battle creek, there's an abandoned clark forklift factory that's been sitting there since 1975 ... i can also name off some abandoned paper mills, warehouses (often full of tires) and lots of boarded up businesses

    the odds of my factory being open in 10 years aren't so great, either

    i feel like this state's made a lot of money for a lot of people and for the past 30 years, the rest of the country's turned their backs on us ... the federal government takes our tax dollars to build up other states and we can go to hell

    i hear the west's running out of water ... if they want to use ours, they'll have to move back here to do it
    posted by pyramid termite at 9:49 AM on November 22, 2005


    ps ... gm sucks ... get a ford, they're much better
    posted by pyramid termite at 9:53 AM on November 22, 2005


    It's all about the product, stupid. As everyone has stated here, General Motors builds commodity products that most people have no desire to purchase. Compound this with a poor reputation built over the past 30 years and, voila! When you think automobile, you think "Honda" "Toyota" "Nissan".

    General Motors' recent products are, actually, quite reliable and well built. If you read recent surveys many GM products rank above average or better. It's not the quality, per se, but the perception of poor quality that is a large part of the problem with this company.

    Me, I am partial to the German automobile manufacturers because their cars are very fun, unique and built like bank vaults. Now - the Germans have been riding on the reputation of "German Engineering" (whatever that is supposed to mean, but apparently it is a 'good' thing) for decades now and it is recently that their poor outsourcing choices have begun to rear their ugly heads with the number of 'gremlins' many of these cars are affected with. Look at Daimler-Benz and Volkswagen for classic examples of what happens when you try to cut costs on the supply chain and reduce dealership support: customers get really pissy. Now, Audi on the other hand has actually gotten its ducks in a row over the last 24 months. While Audi fared poorly in quality surveys for many years, the past two years have seen an immense rebound in performance.

    Let's compare GM to Audi for a moment (keeping in mind that Audi is majority owned by Volkswagen, AG and most of their product lines share components - but no longer 'platforms' as they did in the mid 90s through 2004). Audi is primarily an engineering driven company. Most executives are PhDs and have backgrounds in auto design and engineering. Their products are quite 'lusty' and their dealership support (recently) is fantastic. Audi pours the majority of its resources into product development and has a unique process whereby in the development phases of a new car if they determine that the car is not interesting enough or cannot justify itself, it's axed right away. In short, Audi's primary goal is to produce lusty cars that people want to buy.

    General Motors, on the other hand, is a financially driven company. Their executives are predominantly from finance backgrounds and they know little of engineering or marketing. They know that their jobs are to push up the stock price, to keep the unions happy and to make certain that shareholders receive a consistent dividend. In other words, General Motors' primary function is to keep its shareholders happy. GM is more of a finance company than an automobile company and it shows in every possible manner. Whereas the Germans and now the Japanese understand the need for beautifully crafted interiors with good quality parts that have a substantial feel to them, GM still saddles its buyers with craptastic interiors that are a sea of hard plastic and god-awful body cladding that should make any boy racer cringe (Hello, Pontiac?).

    While I used Audi in my description here, you could take Mazda, Nissan, Subaru or Honda as examples of good, engineering driven companies that 'get it' (usually - I'm not so certain about some of Subaru's recent moves, sadly)

    General Motors has gotten away from the business of making cars because there are far too many hands in the GM coffers with interests that have little to do with the engineering and quality manufacture of vehicles.

    Several years ago when Volkswagen began to slide, then chairman of the board Dr. Ferdinand Piech famously said at the annual corporate meeting that Volkswagen did not care if shareholders were upset about the stock price or about a lower-than-expected return on investment. He wanted money poured into the company to build product, and good product would drive sales and sales would drive the shareprice. While VW is in its own trouble at the moment, the attitude demonstrated here by Herr Piech is that which General Motors should adopt. Sadly, there are far too many hands in the proverbial cookie jar for that to happen.
    posted by tgrundke at 9:59 AM on November 22, 2005


    As a further of example of what happens when "engineering" companies begin to fall prey to greedy shareholders, see Apple in the late 1980s. Then CEO John Sculley was riding a wave of incredible profitability (at one time, Apple's margins were estimated to be close to 50%!!) and shareholders demanded he keep milking the Macintosh profit cow for all it was worth.

    Sadly, Apple's tendency to side with shareholder demands at the time led it to miss the fundamental rule of the technology industry: it's not the best product that wins, but the product with the widest adoption that wins. While engineering underlings were screaming and pushing for low-cost Macs to flood the market and gain marketshare, Sculley turned a deaf ear in favor of extremely high margins and profitability.

    Now that Apple has gotten back to its 'engineering' roots, the company has fared far better. Steve Jobs is notorious for snubbing shareholders and ignoring their correspondence.
    posted by tgrundke at 10:05 AM on November 22, 2005


    Remember that a corporation is a large pyramid.

    The "pyramids" have radically different shapes company to company. Some are very management top heavy. That's more common in service and high tech industries, I think, as manufacturing requires massive amounts of labor. The idea that reducing board salaries to 0 resulting in not even 20 million in savings is disingenuous though - there are huge amounts of management fat at levels below director.
    posted by MillMan at 10:10 AM on November 22, 2005


    You can't fold Saab into Cadillac, they're the only division with some decent engineering.

    It comes down to this: Fold them all down. Collapse the marketing lines.

    Every car company manufactures and distributes cars based on their company's name. Except GM (except GMC, but that is just crap).

    My car is a Pontiac. Well, sort of. It's actually a Toyota Matrix with the name 'Pontiac Vibe' on it. And why did I buy it? Because I got it damn cheap because of GM's poor business practices.

    They should just eliminate all the brands, except for Saab. Spin Saab off as a seperate holding company, but maintain an owernship stake to steal what good engineering is left. Then make the GM Cobalt, the GM Aveo, the GM Vibe, etc. and GM Trucks, not GMC, GM.
    posted by benjh at 10:17 AM on November 22, 2005


    I have to agree with benjh - consolidation is important going forward. Buick should be folded into Cadillac, Pontiac into Chevy and all trucks into GMC.
    posted by tgrundke at 10:24 AM on November 22, 2005


    tgrundke: Using Pïech as an example of a good auto executive is a huge mistake, especially considering the massive failure of hubris that the Phaeton was. Beautiful car, but building a $1bil factory to build an ultra-luxury car under the umbrella of a non-aspirational brand like Volkswagen (hello, people's car!) instead of turning it into the new A8 was idiotic, and has helped pitch VW over the edge.

    Had Pïech focused on keeping his bread and butter (Golf, Jetta) more market competitive instead of trying to drag the whole brand upmarket, they'd be in much better shape today.
    posted by fet at 10:25 AM on November 22, 2005


    jeez, excuse the umlaut brainfart -- piëch, not pïech.
    posted by fet at 10:25 AM on November 22, 2005


    benjh: The problem with bringing everything under a single GM brand is that there's a great deal of brand equity built up in the brands underneath the larger GM umbrella -- IE, Chevrolet Corvette, Pontiac GTO, GMC trucks, etc.

    Trying to sell a "GM STS" instead of a Cadillac STS would be even more of an exercise in futility.
    posted by fet at 10:27 AM on November 22, 2005


    Fet, you made me laugh with the umlaut brainfart. That was classic.

    I agree with your criticism of Piech for the Phaeton - however, the car has been successful in the rest of the world, just not here in the US. Also, that glass factory they built (gorgeous!) is used to assemble Bentleys as well - Bentleys that ride on the same basic platform as the Phaeton and that have a two year backlog.

    I digress - your point is well taken, and is a good example of engineering hubris and excess. Other than moves like the Phaeton project and pushing pricepoints of its core products higher than need be, he did revive the company from the brink of disaster in the early 1990s. While VW may be floundering today, it is not nearly in the position it was in 1990, nor what GM is today.
    posted by tgrundke at 10:32 AM on November 22, 2005


    I've only owned one GM car: my current Saturn coupe, which I've had since 1996. 112,000 miles, few problems, no more than the Honda Prelude I owned before it. Dealership (Winner Saturn, West Chester, PA) has been wonderful to work with: fast, pleasant, convenient service, low cost parts. Honda dealership was arrogant, unpleasant, parts were expensive, waits were long.

    I'm probably going to trade in within the coming year. Planning on buying another Saturn.

    It's only one data point, but my experience is that Saturns, at least, GM does well compared to the competition. If they did the rest of their line this well, I find it hard to imagine the company not being a success.
    posted by Slithy_Tove at 10:35 AM on November 22, 2005


    Fet, I would agree with your comment about branding in general, but specifically, tell me what "brand value" something like Buick or Pontiac has today? They're both damaged and neither carries much symbolism today.

    It may not be posisble to kill them off just yet, but if GM can start to build compelling products in Cadillac and Chevrolet and slowly starve Pontiac and Buick, they should be able to successfully move most customers to the new brands.

    This is especially true of SUVs, where customers are notoriously 'brand independent'. In fact, I read a story yesterday about the Porche Cayanne and how part of the problem with their recent slowdown in sales is that SUV buyers jump from brand to brand, depending on who has the 'trendy' product at the moment.
    posted by tgrundke at 10:36 AM on November 22, 2005


    Well, Buick is a bad example. I think Buick could be killed off with only a few pained noises from the editorial staff at Car & Driver to be heard... Pontiac is probably the second most elligible brand to be killed, but if I were to be the King of GM, I'd kill Chevrolet cars first (selling the Corvette as just a Corvette -- notice that it only has the bowtie on the car, but nothing that actually says Chevrolet.)

    GMC and Chevrolet would continue on as truck manufacturers, as they serve different market segments -- GMC more professional grade up to larger, delivery truck-type vehicles, and Chevrolet more passenger/workman level. Some of the overlap between the lines (Suburban/Yukon come to mind) would have to be killed, obviously.

    Pontiac would continue to make cars, reducing their model line to sporty, under-35k vehicles, with the goal of producing an IS350/G35-level sporty RWD midsize as the halo car and the Solstice/Vibe on the lower-end brand-initiation vehicles.

    Cadillac would do what they do, with the CTS being the bridge between the upper Pontiac and the more luxury cars (like the difference between a high-end Maxima and a G35.)

    Saab should get sold. GM isn't doing anything for the brand other than wringing anything unique out of it, with a series of parts that don't transfer to any of their other cars. Whoever thought up the 92X and the 9-7 should be slapped with a bucket of lutefisk. Saab even before GM bought them was struggling, and as a brand it needs to find its own way in amongst the Germans and better Japanese brands. By no longer differentiating it as a specially Scandinavian vehicle, GM has really killed that goose too.

    Keep the Subaru investment as a way of funneling small motor design into Pontiac.

    I find GM an incredibly interesting business, and think that if they found a real personality to run it (not Lutz, as much as I like him) and give free reign, it could survive. The revival of Cadillac is a good example -- there's no reason that couldn't be done with their entire portfolio.
    posted by fet at 10:44 AM on November 22, 2005


    fet, their entire portfolio is frakking ginormous.
    competing niches within the company.

    boil it down to a dozen lines serving specific needs, and make those lines excellent.

    but hey, at least they can still buy the cars at manufacturer's cost, huh?
    posted by Busithoth at 10:59 AM on November 22, 2005


    fet writes "I think Buick could be killed off with only a few pained noises from the editorial staff at Car & Driver to be heard.."
    And Tiger. :)

    Your restructuring looks good too fet. Anything that a) collapses the number of brands by half and b) puts car guys in charge is a big step forward.

    I can't see them selling Saab though, who the heck would be insane enough to buy it? Unless it was Nationalised somewhere.
    posted by Mitheral at 11:03 AM on November 22, 2005


    This is sad news for the auto workers who are being laid off and for an American Company that is on the ropes.

    That said this is a grave the management of GM has dug for itself and been digging for the past 10 years. GM has hitched their company's future to SUV's and Trucks. Now that we've had nearly 2 years of high fuel prices it's coming back to haunt them.

    I have no idea where their management team has been the last few years. Probably holding strategy sessions for their Hummer and Cadillac brand, but jeez they really should have developed something that would be attractive to folks when fuel prices started to go nuts...
    posted by aaronscool at 11:04 AM on November 22, 2005


    Fet - good commentary there, I would agree with most. Unfortunately for GM, they just sold their stake in Subaru. I couldn't agree more about Saab - it really should just have been permitted to die 10 years ago. If memory serves me correctly, they've only turned a profit twice in about 10 - 12 years?

    I picked Chevrolet to stick around because I think of the brand names in GM's portfolio, Chevrolet still has a resonance in America. I don't think Pontiac carries any symbolic tie or weight anymore, just like Buick.

    I do agree with you on the trucks: GMC being "professional" and Chevrolet trucks being "mainstream", however, for the sake of maximizing marketing/support/development dollars, I think it would be best to consolidate all trucks under one brand name. If GM is to slim things down considerably, this would be the way to do it.

    When I think GMC I think "trucks", when I think Chevrolet I think "passenger cars" and when I think Cadillac I think "luxury cars". This could be only my personal perception of the corporation and its underlings - discussion would be interesting on this topic alone.

    That is firmly where GM should be targeting like a laser. Take the best components, give them real identities and let them stick.

    Going back to the Volkswagen/Audi example - the Phaeton overlap in North America with the Audi A8 is a classic example, even though the two cars were 'targeted' at different demographics. In the eyes of the consumer, they were close enough to be seen as overlapping products. This is why I am glad to see Audi getting more autonomy from Volkswagen so they can develop products that are far more innovative and unique. No longer does the A6 remind you of a Passat, for example.

    GM needs to stop throwing cars at the marketplace in the vain hope of finding a buyer. It needs to start consolidating what vehicles it does produce and realize that 'more' does not mean 'better'.
    posted by tgrundke at 11:04 AM on November 22, 2005


    Clark Howard, a year or so ago, was talking about a list of the best-built cars on the market. (Clark is a consumer advocate based in Atlanta... you can hear him in some other cities, but I'm not sure whether he's nationwide.)

    The winner, far out and away, was Lexus; their rate of manufacturing defects was less than half that of the #2. I believe #2 was Acura.

    #3 was, get this, Buick.

    I don't know how well-designed Buicks are, but it appears the quality of the work on the assembly lines is extraordinary.
    posted by Malor at 11:21 AM on November 22, 2005


    November 4th: Pictures of hundreds of unpurchased Hummers.

    November 22nd: News of GM firing 9% of their workforce.

    Connection?
    posted by VulcanMike at 11:21 AM on November 22, 2005


    Meanwhile...

    MotorTrend: The Honda Civic has an impressive 2006 lineup that includes four new models - all winning the Car of the Year award.
    posted by VulcanMike at 11:23 AM on November 22, 2005


    An import REQUIRES a timing belt change at 50k costing $1000, but this is regularly scheduled maintenance. A domestic has a timing chain that needs to be replaced at 100k, but is viewed as a failure.

    Two words: Quad 4.

    You know, the GM engine that was going to change everything? The only thing that really was changed was the timing chain.

    Often.
    posted by eriko at 11:30 AM on November 22, 2005



    I also want to briefly address beelzabubba's point: Remember that a corporation is a large pyramid. Even if salaries are outragous at the top, addressing them does very little to address billions lost by a company the size of GM -- you could reduce all of the directors and officers to $0, and you couldn't get to $20 million. On the other hand, the difference of every dollar in the hourly wage of GM's 180,000 production workers corresponds to more than $350 million in cost savings -- take $27 down to $24, and you've saved a billion dollars. Not saying both shouldn't be looked at, just that one can actually make a difference.
    pardonyou


    My main point wasn't the relative compensation, but the question of whether the lineworker compensation was the problem bringing the companies down. I do think the relative compensation is unfair, but whether they make $1 an hour or $200 an hour is not as important as whether the sourcing decisions are made through cronyism, whether the design and engineering decisions are made by those who are out of touch with the customer and with the products the company makes.

    I do also think that GM suffers from the sins of the past, but honestly, the last few Malibus and HHRs I've ridden in did little to dispel the notion that, as in the days of the Ford Fairmont and the Dodge Aries K, the American auto manufacturers think that a little bit of plastic "chrome" and "walnut" will address the serious lack of reliability and competency.

    I drove nothing but American until the American Auto Industry downsized me. My 1996 Toyota has 140K and has cost less than $2500 in service and maintenance. My last Taurus lost the rear main seal at 1.6K and my last Intrepid was one with a bad crank bearing that cut the crankshaft in two at 47K (with a 50K warranty). What pissed me off about that was the (fairly common at one time) service notice that was issued on the Intrepid. The engineers knew that they had a bad batch of bearings out there, knew the time frame that the cars were built and which plant they came from. Recall? No, service notice--if the defect happens during warranty, the car company pays; if it happens out of warranty, YOU pay. It only cost me inconvenience (and lack of faith in the product), but what of others whose engine failed as a result of a hidden manufacturing defect; and before one argues that the company might make good on an out-of-warranty defect, when the crank bearing goes like that, and the crankshaft drops out on the expressway at 70mph, the problem is not just with the repair.

    Engineers at Chrysler knew that the ZF transmission on the early Eagle Premiers were a problem. Service notice. I'm sure I could think of other service bulletin situations in my 25 years around the auto industry.

    I used to spend a lot of time defending the US Auto makers, and not because many used my products on some models, but because the engineers that I knew were conscientious. Some time during the Jose Lopez era the manfacturers focused more on wringing every last cent of cost out of the suppliers, which reduced the suppliers' incentive and ability to innovate.

    Someone else mentioned it--short-term financial focus and being in business as a method to accrue financial gain will result in a less satisfactory experience than one where profit occurs as a result of passion for the product or passion to provide for the common good.
    posted by beelzbubba at 11:37 AM on November 22, 2005


    'More' usually means 'same damn car, different body panels'. How many variations does GM use of the basic designs? Lots of fat that can be removed. The cutting will be painful though - Lansing is pretty much going downhill fast, and this after all the tax breaks we used to lure GM into staying here in the first place. Now they close up shop and leave town. No contribution to Lansing from worker wages, no contribution from tax dollars. Thanks, GM, for pissing on the folks that built your company. Here's hoping you get your shit together and start employing people again.
    posted by caution live frogs at 11:38 AM on November 22, 2005


    GM's brand equity is worth less than the company's stock.

    Does anyone really care about their individual brands anymore?

    Maybe they could pull what Toyota does in Japan, and just name their cars based on the names of the cars.

    Take, for example, the RAV4. In Japan, Toyota has a seperate logo and everything for it. Maybe GM could run with that kind of concept, and just strip the names away completely.

    I'm going to look at what I think at each brand level:

    Chevy - Poor

    Pontiac - Poor and Sad

    Cadillac - Spent way to much on too little car, didn't know Lexus was the new Cadillac. (Well, that, and pimping up an ES-CA-LADE. Theres a sure fire way to turn off middle America)

    Buick - I'm 65 and Feeling Foxy

    Saab - Pretentious, but at least its good engineering.

    Hummer - Because killing arabs is good for fuel mileage

    It's just a problem company that needs to reimage itself. People see GM vehicles as poor, even if they are the best in class. They need to reimage themselves.
    posted by benjh at 11:44 AM on November 22, 2005


    My roommate just got a Cobalt and the first thing I remarked was that it was remarkably better than any other GM car I had seen as of late. It's solid, feels good, drives well, peppy and gets about 30mpg (and he commutes in stop and go) I liked it better than the Civics he had looked at. YMMV but I think if they can inject whatever went into making that car not suck into their other lines they might recover.
    posted by evilelvis at 12:08 PM on November 22, 2005


    GM deserves to die. A corporation that so absolutely fails to address the obvious is a corporation that needs to be euthanised, so that other, competent companies can take their place.

    Perhaps Honda or Toyota will snap up the workers. Retrain them, put them to work building good cars. It would be a blessing all around.
    posted by five fresh fish at 12:36 PM on November 22, 2005


    One thing that's been alluded to here but not said outright is that the American auto business, unlike most any other kind of business, is manufacturing-driven as opposed to market-driven.

    In other words, they go ahead and design, tool up, and build tens of thousands of a car that they think Americans will want, and then turn on the marketing machine and try to sell them - as opposed to what most other companies who sell stuff anywhere do, which is study the market intensively before and during the design process, so as to have a pretty good idea of how well the item is going to sell before spending millions or billions on the manufacturing.

    It's a very odd situation, and a very strange way to run a business nowadays, which is a leftover from the immediate post-WWII-thru-late-1960s era of industrial and manufacturing explosion, when cars pretty much just flew off dealer lots and there was essentially zero foreign competition.

    So the American carmakers are all still running on this sort of mindset, some more than others; this is why we get stinkers like the Pontiac Aztek - definitely the very ugliest vehicle ever foisted upon the car-buying public, there is no angle from which that car looks even decent, the proportions are all wrong - of which they built something like 100,000 over a 3-year period, even after the first year sales were worse than dismal, because they were committed to manufacturing that many before anyone who might buy one had even seen it.

    This was all explained to me by one of the executives of my former employer, and I found it fascinating that such a huge industry could be so disconnected from the way the rest of commerce in general operates.

    GM's troubles are partly caused by this adherence to an overall business model that doesn't work so well nowadays.

    I have two cars, a 23-year-old Honda Accord hatchback that still runs beautifully at 160,000 miles (which is pretty low, but it needs a paint job) and a 38-year-old GM product, a Camaro SS muscle car. At some point I'll probably replace the Honda, but of course the Camaro I'll hang onto forever if I can... and if GM goes out of business, it will be worth more! :)
    posted by zoogleplex at 3:39 PM on November 22, 2005


    I'm going to look at what I think at each brand level:

    Chevy - Poor

    Pontiac - Poor and Sad


    I would add to the Pontiac description - driven by crazyass bastards.

    No offense intended to anyone here who does drive a Pontiac, but here in Canada at least, it seems like absolute worst drivers - the people likely to try to overtake you on a highway as you're approach a hill and a curve with NO visibilty for oncoming traffic - are the ones in Sunfires and Grand Ams.

    I often wonder if their "Built for Drivers" campaign helped inspire that.

    /poster realizes that she has no scientific data to back this up - just an opinion based on observation
    posted by Zinger at 4:38 PM on November 22, 2005


    Could someone please explain why, when Honda and Toyota have absolutely dominated the rankings on quality, comfort, and value for the past decade, they chose to instead purchase a car with the GM, Ford, or Chevy badge?
    posted by five fresh fish at 4:58 PM on November 22, 2005


    five, many buyers stick with the same brand their whole lives. Their parents bought GM, so they buy GM. In some cases this is due to a longstanding relationship with a particular dealer.

    But most people buy the GM SUVs because of a perception that they need the extra weight and power.

    I live in a GM town -- the Janesville plant managed to survive this round of cuts. It's now the oldest GM plant and -- having retooled for production of large SUVs -- is clearly at risk next time. Lotta loyal GM owners here, but also a lot who get their cars through a family member with an employee discount and so on.

    I don't actually think that GM (or any American) cars are as far behind in quality as they were years ago. Thirty years ago, Japan competed solely on price, but then got a reputation for cheap cars. They then aggressively competed on quality, and it took years, but that drove quality up across the industry. What GM is behind on is a) labor costs (the highest in the industry); b) the related labor per car (the highest number of man-hours in the industry); c) the related oldest plants in the industry; d) supplier relationships; e) brand confusion and sameness; f) innovation. Those are a lot of things to come in last on.

    They never really adjusted to the drop from selling half of US cars to selling one third of US cars. They only recently cut Oldsmobile, which had tried to become some amalgam of Pontiac and Cadillac; and now Saturn is going away. Saturn is really instructive -- GM couldn't figure out how to innovate without starting a "different kind of company". The executives blame that on union foot-dragging in terms of legacy contract provisions, but it's much more complicated than that. Chrysler innovated like hell in the 1980s and still ended up being absorbed.

    GM stands for staid, tired, undifferentiated vehicles, and that's fine but no recipe for success. They need to shed brands, and now they've finally shed workforce. Time will tell whether they've done it in time.
    posted by dhartung at 5:28 PM on November 22, 2005


    fff - i buy my cars used, as i can't afford anything else ... depending on the make and model, there are some advantages ... repair costs tend to be cheaper, parts easier to find, and knowledgable mechanics plentiful ... i don't think it's as bad as it used to be, but repairing foreign cars can be a great pain

    also foreign cars tend to cost more, even used

    i'm not saying i wouldn't buy a foreign car ... i bought a '97 ford escort this year from a guy who only sells ford escorts, has his own garage and his own junkyard full of ford escort parts ... he swaps and switches various cars to make some of the cars he sells and he sells them fairly reasonably for a dealer

    i've had it 6 months, no real problems yet, except the windshield molding got torn partially off, probably with some help from some punk kid ... but duct tape fixed that
    posted by pyramid termite at 7:08 PM on November 22, 2005


    ps ... i've owned gm cars ... have i mentioned that they suck?
    posted by pyramid termite at 7:16 PM on November 22, 2005


    An import REQUIRES a timing belt change at 50k costing $1000, but this is regularly scheduled maintenance. A domestic has a timing chain that needs to be replaced at 100k, but is viewed as a failure. The difference is the consumers perception of each.

    My import, a Toyota, has a non-interference timing chain that is supposed to last the life of the vehicle (I'm not sure how many km's that is however and I take such claims with a grain of a salt.) That's their chief benefit. It if it does need to be changed at 160000km then therein lies the problem.

    If a repair is needed, it's listed at $260 U.S. plus labour.
    posted by juiceCake at 8:00 PM on November 22, 2005


    Man, GM already got rid of their Cutlass Sierra, now you guys want 'em to ditch the Buick LeSabre?
    If GM listened to you, the souped-up Impala SS would become just another vague memory of the past!
    posted by klangklangston at 8:45 PM on November 22, 2005


    I don't actually think that GM (or any American) cars are as far behind in quality as they were years ago.

    They're not. The gap is so small as to be meaningless. But perception lags reality by years. And conversely, some imports have been coasting on their quality reputations.
    posted by pmurray63 at 1:16 AM on November 23, 2005


    termite: I also buy only used cars. Used Japanese cars have a higher initial cost, but a lower long-term cost, vis a vis repairs.

    pmurray: and if they coast, they will find their market eaten alive by the likes of Hyundai, who appear to now excel beyond all reason wrt to initial quality.
    posted by five fresh fish at 11:17 AM on November 23, 2005


    five fresh fish writes "Could someone please explain why, when Honda and Toyota have absolutely dominated the rankings on quality, comfort, and value for the past decade, they chose to instead purchase a car with the GM, Ford, or Chevy badge?"

    Probably because they don't dominate those things, it's only magazine perception. There is probably more difference car to car in quality of new Camarys coming off the line than there is between any given Camry or 300. And in certain segments the market leader is a Dodge or Chevy or Ford (like say minivans, it's not a fluke that Caravans own the market).

    Like pyramid termite I buy used, I've never owned a new car. American stuff is cheaper to repair and generally used parts have higher availablity. When I needed a driver's side window for my Corolla (at the time ten years old) it took four weeks and had to come from fricken' Japan. I can walk down to the local wrecker's and buy a used side window for my powerwagon today or have a new one tomorrow and it's 33 years old. American manufacturers are often taken to ask for not "innovating" enough but the flip side is there is a lot more continuty than you see with imports.

    And I say the above with fairly broad experience. I've got millions of kilometres in driving Dodges, Fords, GMs, Toyotas, Hondas, Nissans and heck even a Lada for a while. The quality has gone up noticably every decade since the 60's. My 96 Caravan(230K) is vastly better than my 89 Caravan(280K) and my 89 Caravan is vastly better than was my 82 Corolla(300K).

    One other thing I've noticed is import owners, especially compact owners, seem to brag about the number of kilometres on their high mileage autos much more than domestic fan boys. I had ~300K on my older Fiero when I sold it (150K by me) and it was still going strong. This is by no means unusual as a month or two on the list will show. I've converted the A/C to 134a on a Ford window van with 750K and the company I was doing service for had another 12 just like it. However you never hear about them. Yet a Civic breaks 300 and the fan boys are falling all over themselves telling you about It's a car culture difference.
    posted by Mitheral at 1:54 PM on November 23, 2005


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