GM

[tw]

Originally Posted by TGRR

That's a very good point. However, in the case of the sought-after bailout, I believe mgmt DID give up something.
Am I remembering this correctly?

Well yes. They gave up 30% and 50% per year salary increases. Salary increases that occurred even as GM was losing money and shorting the pension funds. Increases that occurred when GM then complained about legacy costs - because those same executives had shorted the pension fund to claim quarterly profits - and justify more executive bonuses.

Did they give up the private airplanes? No. Only a few. Why does GM need private airplanes? Because GM corporate executives are not permitted to fly on commercial airliners - that are too dangerous.

So rent a private jet when one is needed? That too would mean aanother perk denied elite executives.

So they gave up what? Did they take bonuses when the UAW gave up previous concessions? Of course. Did they surrender their hundred of $million golden parachutes? Of course not. They give up something when they surrender bonuses from past years that were never earned. UAW gave up concessions in years previous and GM executives took more bonuses.

There is only one reason why GM products are some of the worst in the world. There is good reason why the only part of GM that is productive was the part run by Louis Hughes. Hughes was then driven from GM because he was a car guy; not a bean counter. Rick Wagoner - whose history was to run only unprofitable operations - got promoted instead of Louis Hughes. What did he give up? They rewarded Wagoner for created quarterly losses.

Where are these concessions? He could not even tell Congress how much money GM would need from the government. What kind of leader is that? Typical of someone who also says GM has no internal problems; that GM's only problem is the economy. Any concession is for show. He sold off two(?) of six(?) private jets.

[DanaC]

The unions are an easy target. They're amongst the first to get hit by totalitarian states. There's a reason for that. Look at the countries that disallow unions. Active employment unions are as important as democratic oversight in a civilised capitalist society.

[classicman]

Feel bad for Ford yet? They didn't take the money.

[tw]

Originally Posted by classicman

Feel bad for Ford yet? They didn't take the money.

Ford got rid of the MBA Jacque Nasser maybe seven years ago. Ford then started innovating again. For example, seven years after William Clay Ford finally started it, the 70 horsepower per liter engine finally arrived in Ford last year.

Yes, Ford is losing money. But not like GM because Ford let engineers again were permitted to make decisions - not MBAs.

[classicman]

I know - I was referring to the fact that even though Ford didn't take the money, but is seemingly still being painted with the same brush as those that did.

[classicman]

GM names former sales boss to international post

DETROIT (AP) - General Motors Co. says it has reassigned its former U.S. sales chief to a similar post in its international operations.
The automaker says Susan Docherty will be vice president of international sales and marketing effective June 1.
Docherty will coordinate sales efforts in GM's Asia, Latin America, Africa, Middle East and Russian markets. She will report to Tim Lee, president of international operations.
GM says international operations account for almost half of its sales.
Docherty had been vice president of U.S. sales, service and marketing. Her job eventually shrank to just marketing. She was replaced in that position earlier this month by former Hyundai marketing head Joel Ewanick.

Link
Correct me if I'm wrong, but this person apparently failed at her previous position, so she is now getting hired into a similar one.

[Trilby]

Originally Posted by classicman

Correct me if I'm wrong, but this person apparently failed at her previous position, so she is now getting hired into a similar one.

That's GM's MO.

That's their entire philosophy of bidness, right there.

[classicman]

but - but - but we own them - it was gonna be different now ...
Take it away tw.

[TheMercenary]

[classicman]

DBAD merc. tw will have some great insight into this.
Personally, I'm looking forward to it.

[tw]

Originally Posted by classicman

tw will have some great insight into this.

I wish I did. Because GM top management and the BoDs were so corrupt, then Rick Wagoner has zero chance of being fired. Finally Obama did what was that obvious and necessary.

A resulting and repeated top management shuffles have resulted in almost no information. Did the car guys finally take charge? Did a corporate war recently end? Not obvious.

Well, the Chevy Volt even could not work a few years ago when they tried to demonstrate it to a PBS show. The Volt was supposed to be out already. Something happened. The Chevy Volt is now scheduled for sale at the end of 2010. Was it delayed because car guys finally got control of the car? Are now trying to fix fundamental defects? Or do defect exist because bean counters have still subverted reliability? I cannot learn anything.

We can suspect the Volt is delayed to make something better. Just not known is why.

Unknown who is running GM. They are busy claiming profits and pay backs that sound so much like the money games of earlier years. Is GM really making profits? Even that is not obvious. Especially when GM (apparently) need not release detailed information.

Alan Mullaly said something stunning in a recent meeting I attended. All Fords will have four cylinder options by next year. That implies all Fords will have 70 HP/liter engines in all cars. All Ford cars will have as much horsepower as mid 1970 American V-8 cars. Ford is clearly innovating. Whereas I still would not buy a Ford. Anyone who is buying an American car should only consider Fords.

Marchionne has been making statements about Chrysler. Pushing the new Jeep. Does it still have a suspension and steering system that has always been defined as "barbaric"? Unknown if Chrysler’s car guys are finally designing cars. The new Jeep might be an indicator. Meanwhile, Chrysler will remain a dog until it start selling more reliable and superior engineered Fiats. That is still years away. And then we will see whether Marchionne's magic worked.

We know Ford has long been on the right track. Especially interesting is an apparent productive chemistry between Ford and Mullaly. There is very good reason to suspect Chrysler dealerships will have products to sell in a few years. GM remains a complete unknown. The battle between car guys and bean counters may be in full war mode. Or GM may be slowly converted from bean counter to car guy mentality. Almost complete silence says nothing useful.

[Urbane Guerrilla]

Michael Medved has an interesting comment about GM's lack of innovation, attributing it to their being in chronic fear of being hit with a major antitrust suit. Senior management, he says, was supposed to let up on competitiveness to keep GM market share below fifty percent, typically about forty-five, and thus stay below the trustbuster radar. This meant, don't claw after that next half percent of market share by any of the competitive means, such as marketing ingenuity, price wars, or technical innovation. The eventual result was technical sclerosis for several decades and then slumping product quality, as everybody in the firm found other concerns than customer service, maintaining customer loyalty by making such things actually palpably beneficial, or really anything that makes a company a good one. Contrast that kind of attitude with, say, what goes on at your local Trader Joe's.

Makes you rethink the whole antitrust idea -- after all, is not the free market itself firmly and naturally anti-monopoly, as trust busting is alleged to be? Why, then, should it be required to bring suit against a business simply because it is successful in a very large way? What that really is is a pointer that says There's a really big market over here. Wanna get into it? Competitors barrel-roll in, many with what they hope is improved or just plain better technology than the pioneer outfit is using, to fill this need that has come up.

Five Big Lies About American Business is one heckuva book.

[ZenGum]

Originally Posted by tw

Well, the Chevy Volt even could not work a few years ago when they tried to demonstrate it to a PBS show. The Volt was supposed to be out already. Something happened. The Chevy Volt is now scheduled for sale at the end of 2010. Was it delayed because car guys finally got control of the car? Are now trying to fix fundamental defects? Or do defect exist because bean counters have still subverted reliability? I cannot learn anything.

We can suspect the Volt is delayed to make something better. Just not known is why.

Maybe the volt is dodgy, but the bean counters are forcing them to put it on sale anyway. Just a thought.

Originally Posted by Urbane Guerrilla

Makes you rethink the whole antitrust idea -- after all, is not the free market itself firmly and naturally anti-monopoly...?

No. Well, not always. Bigger companies have an advantage over smaller companies (economies of scale, bargaining power, ability to survive lean times etc) and can often take over or put out of business smaller competitors. This tends toward monopoly, or at least oligopoly.

Now you might reply that ...

Competitors barrel-roll in, many with what they hope is improved or just plain better technology than the pioneer outfit is using, to fill this need that has come up.

Maybe if you're thinking of lemonade stands, but the cost of starting a car company must be in the billions, before the first sale. How many car company start ups have there been recently?

That said, if a company really did back off from improving their products out of fear of antitrust action, something has gone very wrong.

The market won't solve all our problems, but neither will the government.

[tw]

Originally Posted by ZenGum

Maybe the volt is dodgy, but the bean counters are forcing them to put it on sale anyway. Just a thought.

Maybe. Maybe not. When Iacocca took over Chrysler, the K-car was a disaster designed by bean counters. Iacocca did an emergency total redesign that saved the K-car. And started the rescue of Chrysler. Then he used that design for mini-vans. Nobody previously had designed a new car that quickly. Did that happen with the Volt?

Economies of scale are a myth. Economies of scale only exist in smaller organizations. Why did GM products cost more to build than Mercedes? Because GM's scale made economies impossible.

If economies of scale existed, then Citigroup was the world's most efficient bank. Opposite was true because, again, that 'economies of scale' is only an economist's myth.

As 1980 Ford and IBM both demonstrated, 'economies' only existed after both companies massively downsized. Fiorina was so stupid in the HP Compaq merger meeting. She also repeated that economies of scale myth - claiming HP would be more profitable because they would be #1 in this business and #2 in that market. Reality. They had to throw her out to save HP. She promoted an 'economies of scale' myth because that is what they teach in business school. Fortunately, they threw her out before she did too much damage.

A company becomes #1 in the industry because they are innovative - first have 'economies'. But economists foolishly think if A results in B, then B must also result in B. Defective logic. If 'economies' result from being #1, then #1 must result in 'economies"? Total bullshit.

When a company is profitable, then it can become #1. If a company is #1, it does not automatically become profitable. Did the merger of Sears and Kmart make them more profitable? Of course not.

Mazda could sell less than 13,000 Myatas and be profitable. Due to 'economies of scale', GM could not be profitable on any model if selling less than 50,000. GM products always needed more parts to do same. Scale increased costs. Due to the 'economies of scale' myth, GM parts also cost more to build.

Auto companies would not innovate because management could not see an innovation if they sucked it up their nose. Then, as taught in the business schools, they invented excused to blame others. What made auto companies profitable and efficient? Downsizing. "Economies of smaller scale". Once a company achieves a certain size, then "negative economies" are created with increased scale.

[classicman]

Originally Posted by tw

Why did GM products cost more to build than Mercedes? Because GM's scale made economies impossible.

'economies of scale' is only an economist's myth.

As 1980 Ford and IBM both demonstrated, 'economies' only existed after both companies massively downsized.

Due to the 'economies of scale' myth, GM parts also cost more to build.

What impact does the exorbitant benefit and pensions package have on costs? As more people retired there was an increase in fixed costs to cover them. right?

But economists foolishly think if A results in B, then B must also result in B. Defective logic. If 'economies' result from being #1, then #1 must result in 'economies"? Total bullshit.

Wait what? Where is that from? I'm missing something.

Downsizing. "Economies of smaller scale". Once a company achieves a certain size, then "negative economies" are created with increased scale.

Didn't reducing retirees benefits also have an impact? I'm not saying one is exclusive of the other, but as the number of retirees grew with benefits that were very costly to the companies, the companies fixed costs grew as well, decreasing profit margins.