I had never thought of being a GM stockholder. Not through personal investment but as an American citizen,we are now all quasi-stock holders of General Motors which declared bankruptcy Monday. How did we get to this point and so quickly? Anyone who still thinks we are just in a recession should immediately go out and buy a new Chrysler product... oh,sorry,I mean Fiat. Actually the decline started over 20 years ago but going over the edge seemed to happen so rapidly. Something like $8b in assets and $16b in debt! For those of you with GM,Chrysler or even Ford(still liquid) subsidiaries in your respective countries,I wish you good luck. The restructuring may be necessary but it will be painful with global repercussions. A.J.
Unintentional stockholder
- Thread starter A.J.
- Start date
Al, I think it's more like $80B in assets and $180B in debt - that's quite a leverage ratio. Can you imagine what the debt service is on $180B??? No wonder GM is going under between the debt service and retiree/legacy/union costs.
It's a matter of weak leadership. Instead of taking on the tough issues and negotiations the weak leaders of GM (not just the CEO but also the Board and other senior mgmt) just conceeded. They conceeded too much to the unions - I'm sorry but a guy who hasn't graduated from high school can be making $90,000+/yr. on the shop floor with a full pension and lifetime medical at 40 (after 20 years on the job), that's not right. That's not a competitive labor rate in the global economy. A Chinese or Indian or Latin American worker makes 1/4 that on a fully loaded basis so how do you expect GM to compete? And agreeing to pay GM workers when they're not on the job? What dip sheit CEO agreed to that (as was agreed in 2000)?? Rick Wagoner agreed to that to avoid a strike because a strike would negatively affect the stock price in the short term which in turn would have had an immediate effect upon VP/C-level stock-based pay (can't have that, oh no!). The pussy (and the Board) should have had the backbone to take it on head first and have it out (ie. an extended strike) rather than make piece meal concessions all along the way. The cumulative weight of these concessions amounts to a significant burden upon the expense structure of the company.
Here's another one - what dip sheit agreed to a compulsory put option with Fiat to the tune of $2B? Again, Rick did. GM had to pay $2B to get out of it. $2B wasted. Any fresh MBA grad/accountant could have seen that coming a mile off.
No doubt unions have a valid existence but the UAW went too far and just plain shot themselves in the foot. Same as the Machinists Union did with Boeing - now Boeing subcontracts almost all of the components in a new plane to 3rd parties overseas rather than produce them on the shop floor with overpriced union labor.
The reality is that we live in a truly global economy and have done so for the last 10-20 years. It's real simple - if you can't compete with global pricing standards then you're not going to be in business for long. Better to get your business organized to compete with global pricing than waste a bunch of time kicking and screaming and whining about unfairly low labor costs abroad. Shut up and get on with it.
Oh, and all that talk by senior GM execs and Board members along the lines of "we're confident that GM will emerge a stronger company and be well equipped to compete in the 21st century".....what the f? These guys are the guys that f'd it up in the first place. They're OBVIOUSLY not equipped to make such assessments and express such unfounded confidence given the company performance under their (poor) leadership. If I was them I'd be so ashamed of myself and my performance that I'd want to go crawl under a rock in Mexico and hide for the next 10 years.
That said, there are a lot of good and decent and hard working people that work for GM in the rank and file - they shouldn't be suffering the unfortunate consequences of a bunch of screw ups and poor leadership in the C-suite and Board room. But they are.
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Yeah,
Indirectly, GM financed the Fiat purchase of Chrysler! There is a tectonic shift in the auto industry and some players who didn't appear on the US map previously are gonna be big players here!
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Ron Earp
Admin
Do they?
I firmly believe they did 40+ years ago. But the employment landscape is far different now than it was in 1925. The Federal government has irrevocably altered that with the passing of thousands of employment laws that put to rest many of the issues that unions we formed to solve. On top of that the individual states have passed additional employment laws to fill in gaps the Federal government left out.
In no way am I insinuating that there aren't problems in the employment sector. But what are the issues that the unions are solving? About the only thing the general public observes from union activity is the result of various extortion tactics used against the employer to raise wages, lower work hours, increase insurance, and so on.
Please bear in mind I grew up and live in a "non-union" state and don't have a very good grasp of union activities. I know we have many forum members who are big three families and my question isn't meant to inflame. I'm just trying to get enlightened on the union situation because many folks, including me, think the unions are one of the root causes (and not the only one) for the failure of the US auto industry.
Cliff,
Hopefuly they will do better our sake. It's good to see the Union owning a stake also. After all unions now are big buisiness. It's good to see that Vauxall ,Opel and Holden are going to be spared Chapter 11 along with GMofC. Most if not all of these operations made money. Frank Stronach(Magda) will turn Opel /Vauxall around. I hope(GM) they take the Japanese aproach to management and go lean and mean. I also hope they get involved with the customer with a leaner and meaner dealer network where you get your problems fixed and not gouged or runaround.
Dave
GM Retired
Hopefuly they will do better our sake. It's good to see the Union owning a stake also. After all unions now are big buisiness. It's good to see that Vauxall ,Opel and Holden are going to be spared Chapter 11 along with GMofC. Most if not all of these operations made money. Frank Stronach(Magda) will turn Opel /Vauxall around. I hope(GM) they take the Japanese aproach to management and go lean and mean. I also hope they get involved with the customer with a leaner and meaner dealer network where you get your problems fixed and not gouged or runaround.
Dave
GM Retired
Gentlemen:
Just a few observations:
- GME lost $3 billion (or was in Euros or £?), but it was 3 billion.
- GME has a lot of indirect and expensive labour in the EU system.
- GME sales were $35 billion in the last 12 months (not small so they lost 10% of their top line revenue).
- They build good cars.
- The German government did want any job cuts.
- German labour, despite its reputation, is not the most effective or efficient.
How Magna could buy the business and then cut jobs outside Germany (the Ellsemere Port plant is the most cost effective GM plant in Europe) and not look at the German plants is beyond me.
Again, not trying to upset anyone, espically if it is one's livelihood, but the GM organization was not a textbook case of good management.
Agreed with Ron, the Union is a prime cause of the bankruptcy. I remember my dad back in the early 1970s saying the unions wanted too much. My dad was a union supporter (he had a very profitable family business with my uncle), and he could not understand the union demands.
Last night BBC Radio 4 interviewed the shop steward of the Ypsilanti plant of GM, and he talked about good leadership. Guess what, he was talking about the union and not GM, Government or other responsible management.
It will be interesting to see how the Union now plays their 18% stake.
Best
Dom
Just a few observations:
- GME lost $3 billion (or was in Euros or £?), but it was 3 billion.
- GME has a lot of indirect and expensive labour in the EU system.
- GME sales were $35 billion in the last 12 months (not small so they lost 10% of their top line revenue).
- They build good cars.
- The German government did want any job cuts.
- German labour, despite its reputation, is not the most effective or efficient.
How Magna could buy the business and then cut jobs outside Germany (the Ellsemere Port plant is the most cost effective GM plant in Europe) and not look at the German plants is beyond me.
Again, not trying to upset anyone, espically if it is one's livelihood, but the GM organization was not a textbook case of good management.
Agreed with Ron, the Union is a prime cause of the bankruptcy. I remember my dad back in the early 1970s saying the unions wanted too much. My dad was a union supporter (he had a very profitable family business with my uncle), and he could not understand the union demands.
Last night BBC Radio 4 interviewed the shop steward of the Ypsilanti plant of GM, and he talked about good leadership. Guess what, he was talking about the union and not GM, Government or other responsible management.
It will be interesting to see how the Union now plays their 18% stake.
Best
Dom
I guess that its easy to say anti union stuff when its "your site" But the fact of the matter is the unions only negotiated what the factories let them away with. Gm and the others were so short sighted that they figured it would roll on forever. All they had to do was let the negotiations break down and go to a lockout strike mode to correct the situation, its not the fun way to do things but it works. General motors needs to die out and be reborn there is no doubt about that. But all the union workers are making about the same wage around the country and ford says they put an f150 out the door for less labour cost than the toyota boys can put out the tundra. Apparently there are other problems with gm. Its easy to blame a worker, but its also irresponsible and does the labour negotiation process a disservice. And if you think that we have nothing to fight for in the work place any more you must have the best job in the world and I wish you well, but the real world isnt quite as rosy.
I agree with most of what has been written. How is that possible you ask? There are a host of issues with GM, the most prominant being the management at the top. As for the unions, how is it that Toyota can produce cars and trucks in the US and still make a profit when two of the Big Three cannot? Simple, they run with a flatter management structure. That means there are less fiefdoms to protect. Let's keep in mind that the suppliers and jobbers manage to make a profit and they produce most of the components for these companies. This is despite that every time GM or Chrysler gets into trouble, these suppliers get hammered to lower costs. Toyota recognized that US suppliers were competitive with other producers in the world marketplace and made a huge investment here. There are a lot of talented and efficient companies in the US and the technology generated by this group is cutting-edge. If we take the fat out of the boardroom and management levels that produce nothing to the bottom-line and put those resources toward better production, we can compete with anyone. It was time for GM to change, as painful as that is for the great people who work there in the rank and file.
Garry
Garry
Gentlemen:
The point I made about indirect labour was not operational labour, but the management overhead. I suspect GM has / had a large number of people in its management staff that was there absorbing resources, and hopefully contributing to the greater good of the organization.
Mr. Marchionne, upon going into Fiat, cut 150 jobs from staff that supported him because they were redundent, and he got his info from the operting divisions, which ran much leaner.
Best
Dom
The point I made about indirect labour was not operational labour, but the management overhead. I suspect GM has / had a large number of people in its management staff that was there absorbing resources, and hopefully contributing to the greater good of the organization.
Mr. Marchionne, upon going into Fiat, cut 150 jobs from staff that supported him because they were redundent, and he got his info from the operting divisions, which ran much leaner.
Best
Dom
Ron Earp
Admin
No, this being "my" site has nothing to do with what I wrote. But I'm also not worried that a strong arm from AFL-CIO is going to come down and silence me. Well, mostly not worried.....
I'm simply asking a question because I, and I'm sure many other folks, only see the side of union negotiations as I described.
What are the unions lobbying for in the workplace besides higher wages and better benefits for their members? There is only so much blood you can squeeze from a stone.
Ron Earp
Admin
This is the only information the AFL-CIO shows on their website when you click "Why Join a Union":
I told him we couldn't afford to pay the labor rates of $325 / hr for booth assembly (minimum of two hours, it takes one person about 15 mins to erect our booth) and that the job was going to be finished in about five minutes. He went off to get his boss and they both came back, however, I was fortunately done with the work at that time. They gave me an earful, I gave them the same mentioning something to the effect that "if he had to have protection of a contractual entity to preserve his job then he didn't have much of a job". I was not well-liked by those two, but the feeling was mutually shared.
Three days later when it was time to tear the booth down I stopped at the convenient mart and got a 12 pack of beer. When the show closed I handed the beer off to a nearby union guy to allow my screwdriver to go unnoticed while I spent 15 minutes to pack my booth. I've since replaced all the screws with thumbscrews from McMaster so that we don't need to use tools at all. But I shouldn't have to do that at all. If contracts have to be written to force folks to use local union labor something ain't right.
Union members earn better wages and benefits than workers who aren’t union members. On average, union workers’ wages are 30 percent higher than their nonunion counterparts. While only 14 percent of nonunion workers have guaranteed pensions, fully 68 percent of union workers do. More than 97 percent of union workers have jobs that provide health insurance benefits, but only 85 percent of nonunion workers do. Unions help employers create a more stable, productive workforce—where workers have a say in improving their jobs.
I still remember a union situation that happened to me in Boston about four years ago. I was in the convention hall setting up our company's trade show booth (there were eight people in my company then, ten now) and I was screwing two pieces of a podium cabinet together. A hall worker came over to me and told me that I could not use a tool to assemble any part of a trade show booth and that if I was using a tool I needed to hire a hall union worker to assemble my booth.
I told him we couldn't afford to pay the labor rates of $325 / hr for booth assembly (minimum of two hours, it takes one person about 15 mins to erect our booth) and that the job was going to be finished in about five minutes. He went off to get his boss and they both came back, however, I was fortunately done with the work at that time. They gave me an earful, I gave them the same mentioning something to the effect that "if he had to have protection of a contractual entity to preserve his job then he didn't have much of a job". I was not well-liked by those two, but the feeling was mutually shared.
Three days later when it was time to tear the booth down I stopped at the convenient mart and got a 12 pack of beer. When the show closed I handed the beer off to a nearby union guy to allow my screwdriver to go unnoticed while I spent 15 minutes to pack my booth. I've since replaced all the screws with thumbscrews from McMaster so that we don't need to use tools at all. But I shouldn't have to do that at all. If contracts have to be written to force folks to use local union labor something ain't right.
Ron I agree with you about there only being so much blood that can be squeezed. That is why I also said that the folks at gm were short sighted in not negotiating with a little backbone. Dont ever blame anyone for taking what they negotiated for. Remember that all these conditions and benefits were agreed upon by "BOTH" parties. I also dont disagree with the fact that union workers are paid more, and more of them recieve pensions. There are reasons a person belongs to a union after all. I have also seen the unions that are out of control and usually thay are the ones that represent the city workers and the like. Probably the same that were at the convention hall. If you have ever had your wage lowered or benefits taken away "just because" you would see that the need for unions still exists. You used to rely on a hand shake and that was good.
Doesnt work that way anymore , does it. I dont want to get into a battle with anyone here but Gm has made its own bed,lets not blame the workers or anyone else.
Doesnt work that way anymore , does it. I dont want to get into a battle with anyone here but Gm has made its own bed,lets not blame the workers or anyone else.
I find it odd that,on a TV interview, a high ranked salaried worker,i.e.,non-union, was complaining that they(salaried) were sold down the river and now thought they should have been 'organized' so they would have a way to fight for their interests! That's not a pro or anti union statement, just thought it pointedly sad.....no one came out of this well except the ones who precipitated it.
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