View Full Version : GM: Bankrupt
http://www.bloomberg.com/apps/news?pid=20601087&sid=aANNKydxImM0&refer=worldwide
GM= Government Motors as of today.
May 31 (Bloomberg) -- General Motors Corp. plans to name Al Koch as the automaker’s chief restructuring officer tomorrow when GM is expected to file for bankruptcy protection at 8 a.m. New York time, the Wall Street Journal reported, citing unidentified people familiar with the matter.
Koch, a turnaround specialist and managing director at the advisory company AlixPartners LLP, will be the highest-ranking executive at GM from outside the company, the newspaper said. He will oversee approximately 60 Alix workers employed by GM and will report to GM Chief Executive Officer Frederick Henderson and the automaker’s board.
The 67-year-old Koch was interim chief financial officer of Kmart Corp. when it filed for Chapter 11 bankruptcy in 2002, the Journal said. Koch also spearheaded a turnaround of Champion Enterprises Inc. that allowed the manufactured-home builder to avoid bankruptcy, the Journal reported.
If GM emerges from bankruptcy, Koch is expected to lead a new management team to wind down the “Old GM” which would include efforts to sell or spin off the automaker’s assets including the Saturn, Pontiac and Saab brands and as many as 20 factories, the newspaper said.
Well, that's not good. Don't the stocks now become worthless? That has to hit retirees especially hard.
The gov't now will own 70% of G.M.. The Federal gov't is now in the insurance, banking, automotive business, etc. They don't even know how to run the gov't business, without having a deficit every year.
They will get pennies on the dollar for the billions they "loaned" G.M. over the last 6 months, to keep them from going bankrupt in the first place.
Perhaps the Federal gov't should not have loaned them the billions...:eek:
GM has been touting their "lose your job, we make your payments" program for a while now. If they are bankrupt, and these payments are seen as debts that they owe, I wonder where that leaves these people?
thopkins22
06-01-09, 07:25
They should have been allowed to go bankrupt in the first place. Instead they stole billions of our dollars....
Don't the stocks now become worthless? That has to hit retirees especially hard.
The stock was already worthless, trading at less than a $. Of more concern to the retirees, I am sure, is what is going to happen to their benefits.
This bankruptcy should be no news to anyone - GM has been bankrupt for years, the only difference is now it is official.
Gutshot John
06-01-09, 09:10
Well, that's not good. Don't the stocks now become worthless? That has to hit retirees especially hard.
Their stock was trading at less than a dollar already. GM Retirees have pensions, not 401Ks. That said with bankruptcy those pensions may disappear anyway.
I feel no sorrow, GM ripped me off when I traded my Saturn in a few years ago. I vowed I'd never buy another GM car after that experience.
Their bad business decisions screwed themselves.
Nananana...Nananana...hey hey hey...goodbye.
RogerinTPA
06-01-09, 10:56
This bankruptcy should be no news to anyone - GM has been bankrupt for years, the only difference is now it is official.
Totally in agreement. Wish they could have done this a year ago and saved the tax payers billions of dollars in bailout funds. Sometimes, bankruptcy is a public service, especially on this grand scale. A day late and a dollar short if you ask me.
IIRC pension funds are insured by the Government with a system similar to the FDIC.
IIRC pension funds are insured by the Government with a system similar to the FDIC.
I was thinking more along the lines of the retiree health insurance.
I was thinking more along the lines of the retiree health insurance.
At least the UAW members have this trust fund thing which was taking over the retiree health care stuff and that fund is getting like 6 or 9 billion in case plus 17% of the new GM
They should have been allowed to go bankrupt in the first place. Instead they stole billions of our dollars....
... and they're not done. It's been said that they need another 31 billions.
obalamadingdong pushed the bailout for a quick vote all to SAVE the car companies that were going to backrupt anyway. They voted in the middle of the night on a bill that no one fully read, now we're stuck with this.
Beware when they try to rush another bill through, watch for the health care bill next.
Their stock was trading at less than a dollar already. GM Retirees have pensions, not 401Ks. That said with bankruptcy those pensions may disappear anyway.
I feel no sorrow, GM ripped me off when I traded my Saturn in a few years ago. I vowed I'd never buy another GM car after that experience.
Their bad business decisions screwed themselves.
Nananana...Nananana...hey hey hey...goodbye.
How did GM rip you off?
Gutshot John
06-01-09, 13:12
I'm not really going to get into it since it's long over with, but essentially I learned that any sales promotion with "smart" in the title...isn't.
Secondarily I learned to get any verbal promise in writing, and have a lawyer review that contract.
Third...if they won't put it in a contract...walk the f*#K away.
I have no sympathy for GM, its management nor the dealers.
The_War_Wagon
06-01-09, 13:23
A company with no business plan, run by a gummint with no clue. :rolleyes:
Move over Studebaker - look out DeSoto - here comes the latest FORMER automaker, to the museum of FORMER American car companies... :(
decodeddiesel
06-01-09, 13:33
I have no sympathy for GM, its management nor the dealers.
I agree. I have a hard time sympathizing with any "stealership" nor any employee of such an establishment. I know that is the life of a salesman paid by commission but I think for the most part those people are the lowest form of scum.
As far as GM the company goes they made their bed with their lousy business decisions over the years and now we the tax payers are going to lie in it. The whole thing sickens me.
Now this "restructuing" to create better more fuel efficient smaller cars...yeah...hurry out and buy your Zaporozhets Comrades. :cool:
Business_Casual
06-01-09, 16:16
The truth is that GM was hobbled by bad executive decisions compounded by greedy unions. The stupid CAFE standards have not helped US makers, only their smaller car making competitors.
However, if you think that GM will be fixed, take a look at the genius in charge now, a 31-year old almost lawyer with no car experience:
http://finance.yahoo.com/family-home/article/107136/The-31-Year-Old-in-Charge-of-Dismantling-G.M.?mod=family-autos
Good luck, Detroit. You are going to need it.
M_P
Going4Broke
06-01-09, 16:47
The truth is that GM was hobbled by bad executive decisions compounded by greedy unions. The stupid CAFE standards have not helped US makers, only their smaller car making competitors.
However, if you think that GM will be fixed, take a look at the genius in charge now, a 31-year old almost lawyer with no car experience:
http://finance.yahoo.com/family-home/article/107136/The-31-Year-Old-in-Charge-of-Dismantling-G.M.?mod=family-autos
Good luck, Detroit. You are going to need it.
M_P
+1..:mad:
They say that because of the unions, just getting hired there at even an entry level was assurance of a secure middle class lifestyle. A decent $28 an hour to start and a very strong benefits/retirement package.
Now it's $14 with "good" benefits.
EzGoingKev
06-01-09, 23:35
The truth is that GM was hobbled by bad executive decisions compounded by greedy unions.
I always hoped I would see the demise of the big three.
All three of the US auto makers are out of touch with the times and make shitty cars that people do not want. None of them should have gotten bail out money.
I always hoped I would see the demise of the big three.
All three of the US auto makers are out of touch with the times and make shitty cars that people do not want. None of them should have gotten bail out money.
Well, that's just incorrect.
thopkins22
06-02-09, 01:40
Well, that's just incorrect.
How so? They were poorly run and bloated. They all had duplicate lines of the same crap, branded differently with names like GMC and Oldsmobile.
Care to guess the last year GM made a profit selling cars? Even before this mess the only profit came from their financial side.
How so? They were poorly run and bloated. They all had duplicate lines of the same crap, branded differently with names like GMC and Oldsmobile.
Care to guess the last year GM made a profit selling cars? Even before this mess the only profit came from their financial side.
Which part of this has to do with quality of their product? They've had internal financial issues for a long long time. Not to mention auto's last 10x's as long as they used to, eliminating that old "need" for a new vehicle due to rust, mechanical, and electrical issues. GM has some GREAT vehicles out right now. They've had their up and downs, sure. However, they've put out some really great vehicles. The damning of American cars due to a perceived and unsupported "shittyness" is ridiculous. Chrysler has some great vehicles out. Ford gets a few things right and the new fiesta will be a hit imo. GM has a tremendous showing lately.
Yes, re-badging cars to the extent GM did it. Stupid. The vehicles weren't all crap though. We could argue the merits of a particular vehicle till the cows come home. Just take a look at the modern engineering, technology, and what price it's being offered. It's ASTOUNDING if you get down to the math of it.
Every auto maker profits mainly or only from their financial side anymore. That's not exclusive to GM.
The amount of engineering and technology in modern cars is the largest culprit in profitably downfalls. They simply can't sell them for what they have in them. Part of the American "i want better, I want more, I want it now, and I want it cheap" culture.
Bottom line. GM failed. Like any business can. They shouldn't under any circumstances get tax payer money. It's a crime and a shame. I just don't agree with notion that the failure was because the "are out of touch with the times and make shitty cars that people do not want".
Actually, no, they are pretty "shitty" cars for the most part. There are some exceptions but most GM cars are rather boring and pedestrian and strike no-ones imagination. If people were banging down the doors for them they would not be in quite the mess they are in.
They may be OK or even great quality-wise, but they are boring and pedestrian. Even the cookie cutter Hondas and Toyotas capture the imagination more than most (US) GM Models. For some reason, GM (and other big companies and also VW unfortunately) does not think exciting cars will sell in the US. They all have to be cookie cutter boring pedestrian automatic transmission cars with plastic interiors. If you look at some of GMs Opel offerings you can see better more exciting stuff that "does not sell" in the US. (VW has this sickness too so we get the boring automatic with cookie cutter interiors instead of the range of options and stuff they have in Europe).
E-guns,
I don't know, I kinda like the R32 and the new CC. The CC's interior is pretty freak'n awesome! The R32 always had a nice snarl to it.
I have an Audi and I love it! I also have a Wrangler and love it too. Sometimes that makes me feel like a democrat and a republican at the same time.
I had hoped the big 3 would pull their heads out before this happened. I feel like they stopped making cars people really wanted about the time catalytic converters became a requirement. Even finding a car that had 300hp for 20 years was almost impossible. They completely lost touch with the American public and lost their branding at the same time. The only reason I have any kindred inkling for GM at all was my Dad's 60's Impala's and Chevy's.
Its almost as if they collaborated to make terd sandwiches and broom stick them down our throats.
There were signs of turn around--I was really considering the new Camaro in Z28 trim, but I think they canned it.
I'm curious as to how this is going to shake out. Having the government step in and own GM is going to be a strange thing to see! Didn't the Russians teach us some lessons here??? I hope they don't start making ladas!
:(
EzGoingKev
06-02-09, 04:01
The damning of American cars due to a perceived and unsupported "shittyness" is ridiculous. Chrysler has some great vehicles out. Ford gets a few things right and the new fiesta will be a hit imo. GM has a tremendous showing lately.
I worked in the automotive field for about 20 years. I started pumping gas when I graduated high school and went on to turning wrenches. I started out working on cars and light trucks, moved on to heavy duty trucks and equipment. I moved on to motorcycle stuff, mostly race prepping/performance work of Japanese sport bikes. I have done all kinds of specialty machine work, engine building/tuning, and suspension building/tuning.
When I was younger, I was a die hard GM guy, having owned many Z-28's, Monte Carlos, and Trans-Ams.
I hurt my back and ended up as a warranty administrator for a while. My last job was with a company contracted with almost all the auto manufactures and major insurance companies to support aspects of their support programs.
As a warranty administrator, I would see GM cars with 20k miles on them just out of warranty by time or vehicles not even two years old that were out of warranty due to mileage. These fairly new GM vehicles would commonly need $3k worth of work. These issues would be verified by inspectors that were sent out. Wheel bearings, power window regulators, AC components, ECM's, and intake manifold gasket claims all day long. GM has been producing the same V6 for 20 years and their intake gaskets still fail. This is totally unsat. Fuel pump failures are another one.
At my other position I would contact consumers directly on behalf of the manufacturer. The more GM customers I spoke to, the more I heard from long time GM customers how poorly this vehicle was made and how poorly they were treated at the dealership. I was informed constantly that this would be their last GM purchase.
GM is not the only American manufacturer that has these problems. Ford for example makes a V8 that they install in their trucks and vans. The spark plugs have been blowing out the rear cylinders and their timing chains & tensioners have been falling apart for 15 to 20 years. Their transmissions are still failing due to the same case wear at the piston for 15 years. I wish I had a nickle for every Ford ignition coil that went bad.
I have never been a fan of Ford. I do not think they make their cars any cheaper. They do sell a lot of Mustangs though. They have been THE trailer park Ferrari for the past 25 years.
Chrysler for their part has made some improvements. After 10 years they now sell an improved ball joint so that they don't wear out in 25k miles. Too bad the rest of the vehicle falls apart.
I always thought that Chrysler produced THE best vehicles for used car lots. Take a 20k mile K car in great condition and take a worn out one with 180k on it and you can't tell the difference.
I just don't agree with notion that the failure was because the "are out of touch with the times and make shitty cars that people do not want".
They are so in touch with the times that the dealerships are full of big trucks that they can't sell. But wait, GM has announced an electric vehicle for 2010, too bad the Japanese hadn't thought of that 5 years ago.
The Japanese make the best vehicles on the road today with Toyota at the top of the list. Their dealerships are based around the consumer, not the FU attitude of the American manufacturers.
You don't see the same major problems in Japanese vehicle for 20 years. Problems due arise though and I have seen the Japanese voluntarily extend warranty coverage on that item. Once the NTSB gets involved, the American manufacturers do too. Until the NTSB gets involved the policy is too make sure you stock plenty of replacement parts and charge extra for them.
Actually, no, they are pretty "shitty" cars for the most part. There are some exceptions but most GM cars are rather boring and pedestrian and strike no-ones imagination.
We don't share the same definition of shitty. Also, I'll get to the "exciting car" issue in a moment.
If people were banging down the doors for them they would not be in quite the mess they are in.
Every automaker on the planet is in some form of crisis and/or downturn currently. Even Ferrari... arguably the most exciting brand. GM is not in this current situation due to their product sales numbers. Business, at that level, is different than what you might be used to dealing with. They have investments that didn't turn out for them. They have pensions and medical that are sucking them dry. They have increased costs of raw materials and fuel to contend with. They have the greenies beating down their damn doors via government threat and regulation. They have defaults in their lending arm. They have borrowing issues in the financial arm. They have leverage issues in their financial arm. They have rumor issues to contend with. and on and on and on. Somewhere in that list is, low sales volume. Their exposure is massive. You fellas need to read a little more about the industry and it's woes. :cool:
They may be OK or even great quality-wise, but they are boring and pedestrian.
That's a matter of opinion and again, factors little into their demise. I'm all for a good ole ford v chevy conversation or Europe v American battle but, we have another thread for that. :D
Even the cookie cutter Hondas and Toyotas capture the imagination more than most (US) GM Models. For some reason, GM (and other big companies and also VW unfortunately) does not think exciting cars will sell in the US. They all have to be cookie cutter boring pedestrian automatic transmission cars with plastic interiors. If you look at some of GMs Opel offerings you can see better more exciting stuff that "does not sell" in the US. (VW has this sickness too so we get the boring automatic with cookie cutter interiors instead of the range of options and stuff they have in Europe).
You are pointing the finger at the wrong person for all your concerns re: Europe cars coming stateside. ;) Talk to your safety freaks, green freaks, and law makers about that one. I would love to see more diesel offerings here.
My advice to everyone is take a good, hard look at what is happening. There is a TON of lessons to be learned here. You have to know the underlying issues though in order to grasp the education. Simply firing off emotional rants and/or headline deep opinions close your eyes to what is actually there. Hardly any of you trust the media when it comes to anything else, why start now? Cross reference your sources, investigate their public record financials. Listen to interviews. Read various sources of opinions. etc. Just like anything else.
Autos are a passion of mine. I certainly don't have the level of technical and engineering knowledge some of the people on this board possess but I do understand commerce at that level. My primary source of income has a lot to do with the success and failures of companies and ideas therefor, I'm a bit of a stickler when those 2 things combine. (yes, I have 2 careers. Like many people here I'm sure)
EzGoingKev
06-02-09, 04:18
In 2007 GM and Toyota sold roughly the same amount of vehicles. GM lost $38 billion and Toyota made $18 billion.
Sounds like GM's management is in touch to me.
I worked in the automotive field for about 20 years. I started pumping gas when I graduated high school and went on to turning wrenches. I started out working on cars and light trucks, moved on to heavy duty trucks and equipment. I moved on to motorcycle stuff, mostly race prepping/performance work of Japanese sport bikes. I have done all kinds of specialty machine work, engine building/tuning, and suspension building/tuning.
When I was younger, I was a die hard GM guy, having owned many Z-28's, Monte Carlos, and Trans-Ams.
Awesome. :cool:
I hurt my back and ended up as a warranty administrator for a while. My last job was with a company contracted with almost all the auto manufactures and major insurance companies to support aspects of their support programs.
As a warranty administrator, I would see GM cars with 20k miles on them just out of warranty by time or vehicles not even two years old that were out of warranty due to mileage. These fairly new GM vehicles would commonly need $3k worth of work. These issues would be verified by inspectors that were sent out. Wheel bearings, power window regulators, AC components, ECM's, and intake manifold gasket claims all day long. GM has been producing the same V6 for 20 years and their intake gaskets still fail. This is totally unsat.
What sort of numbers are we talking here? 1% of the vehicles sold? 3%? 10%? Sometimes I feel like every person on earth is crack head, prostitute, dead beat and/or moron. Then I realize how little of the population I deal with. Honest question.
At my other position I would contact consumers directly on behalf of the manufacturer. The more GM customers I spoke to, the more I heard from long time GM customers how poorly this vehicle was made and how poorly they were treated at the dealership. I was informed constantly that this would be their last GM purchase.
Sample size question again. Also, people love to complain. You know that. GM has made some shit in the past. I can not argue that. If you were there during those times, I have no doubt you heard plenty of honest responses.
GM is not the only American manufacturer that has these problems. Ford for example makes a V8 that they install in their trucks and vans. The spark plugs have been blowing out the rear cylinders and their timing chains & tensioners have been falling apart for 15 to 20 years. Their transmissions are still failing due to the same case wear at the piston for 15 years.
It isn't a lack of desire that keeps these companies from fixing nagging issues. Do you believe it is? Every move has a $ sign attached. There might be an acceptable level of quality that has been built in due to financial restraints. etc. It ain't right, but it could be the reason. Also, every system has a weak point. If it wasn't that, it would be something else.
I have never been a fan of Ford. I do not think they make their cars any cheaper. They do sell a lot of Mustangs though. They have been THE trailer park Ferrari for the past 25 years.
Trailer park Ferrari. LOL. That's funny. Also, my sentiments exactly. :D
Chrysler for their part has made some improvements. After 10 years they now sell an improved ball joint so that they don't wear out in 25k miles. Too bad the rest of the vehicle falls apart.
Chrysler has advanced LIGHT YEARS compared to where they were.
I always thought that Chrysler produced THE best vehicles for used car lots. Take a 20k mile K car in great condition and take a worn out one with 180k on it and you can't tell the difference.
The first sentence I agree with for a different reason. For the consumer it's great. You get a low mileage, under warranty car that from a company that has made tremendous strides lately in quality and engineering all for a price that is reflective of their past history. Shame for new Chrysler owners, great news for used car buyers.
They are so in touch with the times that the dealerships are full of big trucks that they can't sell. But wait, GM has announced an electric vehicle for 2010, too bad the Japanese hadn't thought of that 5 years ago.
That is a very recent development. How fast do you think they can shift? What would you do with the truck inventory? Throw it out? Gotta do something with it. Might as well try to get something for it.
The Japanese make the best vehicles on the road today with Toyota at the top of the list. Their dealerships are based around the consumer, not the FU attitude of the American manufacturers.
Japs = reliable, fuss free autos. I can agree there. Just get in, turn it on, and drive. Toyota has been having some of their own quality and financial issues lately though. My personal experience: My brother in law has an avalon. WOW what a car. Really is great ride. (notice I didn't say drive... I said ride :D ) It really is terrific car to be driven in. My sister has a 4 runner that has survived her antics. My mother though, has a limited sequoia. Has been plagued from the word go. Mechanical issues. Trim falling off. Bad carpet. etc. 2 outta three ain't bad but no one is immune. The sequoia was the most expensive one out of the bunch.
I haven't noticed much a difference in the quality of dealerships from jap to american. The local toyota dealership is a PITA do deal with as is the honda. The american autos are bad as well. Cadillac and Chevy being the worst.
The best experience I had all around from researching, buying, servicing etc has been BMW. I was living in mobile when hurricane Ivan went through. I got a letter from BMW stating their concern and to contact them if I wasn't able to make payments and they would, without penalty, allow me to stop until I was able to get back on my feet. I was floored. I was lucky and didn't need the offer but certainly appreciated it. Service was always a breeze as well. They would do extras for me with out charge. Stuff that wasn't covered under their service plan. Always had me a rental car. Not to mention I got a great deal on the BMW.
You don't see the same major problems in Japanese vehicle for 20 years. Problems due arise though and I have seen the Japanese voluntarily extend warranty coverage on that item. Once the NTSB gets involved, the American manufacturers do too. Until the NTSB gets involved the policy is too make sure you stock plenty of replacement parts and charge extra for them.
The Japanese had the luxury of watching from the side lines for a while before they jumped into the American auto market hot and heavy. They also have far fewer generations of retirees sucking them dry through unions etc.
In 2007 GM and Toyota sold roughly the same amount of vehicles. GM lost $38 billion and Toyota made $18 billion.
Sounds like GM's management is in touch to me.
You are jumping from money management issues to quality of product statements.
No doubt, GM's management is and has been F-ed. There are reasons for the discrepancies is profit/loss between the 2. I covered some of them in my posts above.
ThirdWatcher
06-02-09, 05:13
A lot of good points have been made in this thread. The only question I have (and I really don't mean to muddy the waters) is "What is an American car?":confused:
We have "Japanese" cars that are Made in USA and "American" vehicles that are made in Canada and Mexico (which technically are part of North America, but not the USA).
IIRC pension funds are insured by the Government with a system similar to the FDIC.
No, pensions are not insured similar to a savings account in a bank. I worked for United Airlines and when they did Chap 11, my pension became worth pennies on the dollar when they went TU.
http://www.pbgc.gov/
The key wording for GM pensioners is:
Both plans, one for hourly workers and one for salaried employees, continue to be insured by the PBGC, which guarantees benefits up to limits set by law.
Nathan_Bell
06-02-09, 07:53
Sythesizing from a bunch of articles that I have read on what killed GM. In order that I can recall them.
1. Inability to institutionally break with the pre-1970's oligopolic mindset. When there was only the Big Three and you were one of them, you could agree to anything and not have a competitive disadvantage, as the other two would get swhacked with it as well.
This led to a good number of other issues.
2. UAW, they did not fight the union's encroachment into managing the company. Look at the working rules, the people that I know who worked for Gm said that they quit counting pages and started weighing it a long time ago. You cannot run a company when it requires lawyers to decide if giving someone a reprimand is acceptable in a given situation.
3. Emissions and safety regulations. They failed on the marketing of these additions. People would see an auto that was one year newer costing $5k more and assume that the mfg r dealers were trying to rip them off. When it was actually the requirments of the Federal government coming online for that year. Not necessary to print, "it's the government's fault" in big red letters, but it generally took real research to see what drove that type of increase in price. Inform folks what they are paying for.
4. Sell cars people want! THey were willing to offer and sell pickuptrucks with a whole gamut of non-cookie cutter set-ups. Do so with the cars as well.
5. Failure to break the planned obsolescence business approach. Had they built the vehicles to last, instead of someone buys it and then three years later they get rid of it because the thing rattles like a maraca. Losing about 65% of the retail value in that time. Most cars that are bought are currently taken out on 4-5 year notes, make a car that will last at least a few years beyond that time frame. Without feeling like a rattle trap
There are tons of articles, some are well written, out there right now on how Government Motors came to be. At least one of these points have been in all of them I have read
Gutshot John
06-02-09, 08:08
Given Ford's refusal to take taxpayer money and their apparent quality in recent years, they will be the only domestic manufacturer I buy from in the future.
I've worked for two of the Big Three (GM Powertrain and Ford Scientific Research Labs). For starters US Industry is being purposely brought down. NAFTA was the beginning. Then all of the other trade agreements followed, e.g., GATT, WTO, GAFTA, FTAA and now the NAU. However, I was at FoMoCo when NAFTA was being pushed and it was sold to upper management who then sells it to middle management, etc as a tool by which "we can make these cars for less and sell them here for a larger profit". They laughed at my analysis of "Free Trade" (See Ricardo, the epynonymous founder of Free Trade). I told them that the US would be flooded with products from Developing Nations and we'll lose our manufacturing base. They screamed bloody murder....
The second thing I noticed is that there were precious few car guys in either company and when they were there they were not promotable. I didn't realize why until after I had made a conscious decision to leave Ford. The seemingly intrinsic knowledge the car guy's have does not require several layers of consensus meetings followed my Marketing Studies followed by two more consensus meetings. When material would be presented in meetings we'd just "know" that what is presented is factual or not. My number one hobby is the Automobile. I KNOW the US public would not absorb a full-sized four door convertible (yes, it was in the product plan); I KNOW the US market would inhale 6 cyl Mustangs that had GT running gear (suspension tuning, LSD, brakes); I KNEW that the US public would have bought (and probably still would) smal turbodiesel Focus, Ranger, Escape vehicles. But Upper Management wasn't at all interested.
Third thing was the seemingly insurmountable Ignorance (of World Events and how they would effect business and Ignorance of the Industry); Arrogance in the belief that their fantastic education and promotions was enough. Believe it or not when the Toyota full-sized Pickup was released the Truck guys blew it off and spent only a 1/2 day in the Benchmarking Center studying it. One of the now- VPs, Richard Parry-Jones had to MAKE them spend a week studying the vehicle. And guess what? They changed their opinion of it. This was 1997ish. I had to force my department to drive a BMW 5 Series sedan that I managed to save from being scrapped. Our department kept that vehicle for about 1.5 years for free. My management had never driven one and not more than 5 in a department of 60 had ever driven one. But they were all very defensive and did not wish to take the vehicle home for an overnight evaluation. This was in 1998. Us car guys during a class for new hires birthed the concept of the SVT Contour. I led the team. Looking back, our final presentation had Richard Parry-Jones and several other very high-ranking, well thought of execs including the head of SVT. I didn't think much of it at the time but it was maybe 7 yrs later when I reviewed the schedule that it fell into place; that and the fact that the head of SVT knew my name when I showed up for meeting a couple of years after the fact. Of course, our little team of Ford College Graduates (who we still have a beer and laugh about this) received no credit. But when I left I did send note describing my thoughts did respond and I often received kudos from him on other less exciting products like the Hydrogen Internal Combustion Engine Bus Project. So that's all the recognition I require out of the deal.
Then there was a "Rogue Warrior" Pickup concept that EASY to do and had a beautifully thought out support by several very famous SOCOM guys was unceremoniously ignored. That was 2006. They could have sold every single vehicle. From several "back of napkin" meetings I thought, "Why not have an F-150, an Explorer and perhaps an Expedition?" They thought it a great idea. Too bad they never got a response from Ford. There were other N.A. companies waiting for a MAJOR US company to jump in and there was to be an "All America Tour" in many cities and, of course, Ford's vehicles would be upfront and would be featured in FPS video games. But lack of foresight kills...
I've worked WITH Chrysler when I was in the employ for one of the exhaust suppliers and it was atrocious going to Auburn Hills or whenever their engineers would visit our facility. Yes, they had a few very good guys but the rank-and-file had serious issues. GM's engineering capability was good but they, too, had a "holier-than-thou" attitude towards the supplier. In all honesty, Ford did, too. I personally treated them as one of our own but that was NOT the norm.
Okay, enough of examples; you get the point.
In summary, NO significant Car Enthusiats, NO insight, much less FORESIGHT (focus only on quarterly profits), Arrogance, Ignorance and Apathy in the culture made it damned difficult to produce a superior product. On top of all of this - which is correctable - was legislation dismantling US infrastructure (i.e., manufacturing base) and removing tariffs from imports.
I had heard this years ago from persons far wiser than myself:
"As goes GM so goes America. As goes America so goes the world." :(
P.S.
Ford didn't require money to operate only because it was in the process of divesting (at a loss, mind you) itself of all of it's acquired "English Patients" (Jag, Land Rover plus Volvo and a host of other stupid shit they bought like a Magnesium mine in Australia and some "QuikLub" outfit among other crap...) When I was there it was reported yearly that Ford spent $100 billion to make $2 to 3 billion profit... They are losing money at an astronomical rate (don't have the figures in front of me but $8 billion seems to be number I recall) . In nine months they'll be rumblings about "assistance" from gov't or merger with someone. BTW, while I was there VW took a look at Ford and for some reason people were hoping that we would have bought BMW - not realizing how big BMW is who, btw, is considering merging with Daimler-Benz according to EUro car magazine CAR - or was it AUTOCAR, I forget.
decodeddiesel
06-02-09, 08:59
I always hoped I would see the demise of the big three.
All three of the US auto makers are out of touch with the times and make shitty cars that people do not want. None of them should have gotten bail out money.
I agree. It's a shame we're going to funnel at least $31 Billion more of OUR money into GM over the next few months.
I was watching the news and they were interviewing GM employees (read union scum) as they were exiting a plant that was soon to be closed down. Such gems as "Yeah, the upper management got us into this"..."The CEO really messed things up at GM"..."I don't know what I'm going to do now that the plant is closing, GM has always been there for me"...and my favorite "I just want to say to all Americans if you own a non-American car it's all your fault".:rolleyes:
Yeah because that $37 an hour with the best benefits you can get job as a paint robot re-filler had nothing to do with it.
decodeddiesel
06-02-09, 09:30
The best experience I had all around from researching, buying, servicing etc has been BMW. I was living in mobile when hurricane Ivan went through. I got a letter from BMW stating their concern and to contact them if I wasn't able to make payments and they would, without penalty, allow me to stop until I was able to get back on my feet. I was floored. I was lucky and didn't need the offer but certainly appreciated it. Service was always a breeze as well. They would do extras for me with out charge. Stuff that wasn't covered under their service plan. Always had me a rental car. Not to mention I got a great deal on the BMW.
That is amazing! I have always a bit smitten with BMWs (the new 335xi-oh my!) and hearing something like that just blows me away.
I always hoped I would see the demise of the big three.
All three of the US auto makers are out of touch with the times and make shitty cars that people do not want. None of them should have gotten bail out money.
Oh, I am most certain our enemies abroad feel just the same as you do hoping to see the demise of the Big Three...
On your second point: It's spelled N-A-F-T-A. Without it and it's subsequent expansion they would not need a "bailout" with OUR money.
Thomas M-4
06-02-09, 11:00
Oh, I am most certain our enemies abroad feel just the same as you do hoping to see the demise of the Big Three...
On your second point: It's spelled N-A-F-T-A. Without it and it's subsequent expansion they would not need a "bailout" with OUR money.
I worked in the steel industry for 6 years I watched weeks after N-A-F-T-A started the company I worked for buy substandard sheet metal from Russia [out of gage and rusted:mad:] shipped it 1,000s of miles on boat from russia to Mobil bay transferred to a train and taken to Birmingham to be polymer coated with a world class sheet metal factory less than 100 yards from the back door that they had been using exclusively for 30+ years. Take a look around your house that sheet metal is used for garage doors, refrigerators, & florescent lighting fixtures the sheet metal used to be made in Birmingam AL now russia and china.
The big 3 all of them are at fault also the UAW Chrysler should have been let fail in the first time they had troubles maybe it would have shocked GM and ford into changing their practices but in stead they got bailed out [:rolleyes: look were we are today] now tax payers are going to continually proping up GM billions down the drain now how bad is going to 4-5 years from now hundreds of billions and producing even worse cars than they do now.
Gutshot John
06-02-09, 11:27
Blaming NAFTA for the demise of the auto industry is like blaming the weatherman for a tornado.
What does NAFTA have to do with Russian steel? You do know Russia has nothing to do with NAFTA and that we have no FTA with them?
I grew up in Pittsburgh and the demise of the steel industry occurred 15 years before NAFTA even existed...mostly for the same reasons the auto industry went tits up.
1. An inability of management to recognize changing market conditions
2. High labor costs that were not justified to produce low-grade steel
3. Unions that were unwilling to make concessions when conditions changed.
The EU and China and any number of other nations are signing FTAs in the hundreds. We have fewer than 20. This means that they will be able to sell their products overseas without tariffs that are applied to American products. That makes their products cheaper even without associated labor costs.
If FTAs were the problem I doubt they would be doing that. In the meantime their market share will continue to grow while ours shrink until we (and in particular organized labor) wakes up to the realities of economics. FTAs are the only hope for our continued economic health.
The EU and China and any number of other nations are signing FTAs in the hundreds. We have fewer than 20. This means that they will be able to sell their products overseas without tariffs that are applied to American products. That makes their products cheaper even without associated labor costs.
If FTAs were the problem I doubt they would be doing that. In the meantime their market share will continue to grow while ours shrink until we (and in particular organized labor) wakes up to the realities of economics. FTAs are the only hope for our continued economic health.
I don't disagree with you on FTA. However, Europe has an "organized labor" problem that is probably much greater than ours (watch France and look at IG Metall in Germany for example).
Gutshot John
06-02-09, 11:35
I don't disagree with you on FTA. However, Europe has an "organized labor" problem that is probably much greater than ours (watch France and look at IG Metall in Germany for example).
I agree, but with their use of FTAs, they negate our comparative advantage.
E-guns,
I don't know, I kinda like the R32 and the new CC. The CC's interior is pretty freak'n awesome! The R32 always had a nice snarl to it.
I have an Audi and I love it! I also have a Wrangler and love it too. Sometimes that makes me feel like a democrat and a republican at the same time.
There is nothing wrong with the CC. But go look at vw.com and its "build your own car" and then go to volkswagen.de and look at the "Konfigurator". Just looking at a basic Passat (I have a basic Passat and like it). On the US side there are about 3 choices you can make -- everything else is canned and you have no control. If you want the 2.0 engine, you get one track and otherwise you get another track. Once you get past the 2.0 to the bigger engines, I don't think you can NOT get an automatic transmission. If you want the 4MOTION, it is only available on the highest end.
On the German side, there are 2.0 4MOTION, Diesel 4MOTION (which when there was a US Diesel Passat you could not get), there are automatics AND Manual transmissions available at every engine type. In the US we get dumbed down versions of the cars with no ability to get the car you really want. VW has decided "what Americans want" and only offer a few set choices unlike in the rest of the world.
GM does basically the same thing. They decided what boring basic car the American public wants and that is all they produce. They think they know what the US Public buys. (Obviously they are wrong). The American car market is too dumb to get the interesting options and cars.
(I know the pollution regulations etc affect some choices but the option to offer 4MOTION with a 2.0 is not the fault of pollution regulations)
Thomas M-4
06-02-09, 11:44
Blaming NAFTA for the demise of the auto industry is like blaming the weatherman for a tornado.
What does NAFTA have to do with Russian steel? You do know Russia has nothing to do with NAFTA and that we have no FTA with them?
I grew up in Pittsburgh and the demise of the steel industry occurred 15 years before NAFTA even existed...mostly for the same reasons the auto industry went tits up.
1. An inability of management to recognize changing market conditions
2. High labor costs that were not justified to produce low-grade steel
3. Unions that were unwilling to make concessions when conditions changed.
The EU and China and any number of other nations are signing FTAs in the hundreds. We have fewer than 20. This means that they will be able to sell their products overseas without tariffs that are applied to American products. That makes their products cheaper even without associated labor costs.
If FTAs were the problem I doubt they would be doing that. In the meantime their market share will continue to grow while ours shrink until we (and in particular organized labor) wakes up to the realities of economics. FTAs are the only hope for our continued economic health.
N-A-F-T-A is not the main problem but none the less I watched it happen first hand. Government and Management have played a far worse role than free trade and the unions are also to blame [ A perfect f@ck storm if you ask me]
decodeddiesel
06-02-09, 11:54
Blaming NAFTA for the demise of the auto industry is like blaming the weatherman for a tornado.
What does NAFTA have to do with Russian steel? You do know Russia has nothing to do with NAFTA and that we have no FTA with them?
I grew up in Pittsburgh and the demise of the steel industry occurred 15 years before NAFTA even existed...mostly for the same reasons the auto industry went tits up.
1. An inability of management to recognize changing market conditions
2. High labor costs that were not justified to produce low-grade steel
3. Unions that were unwilling to make concessions when conditions changed.
The EU and China and any number of other nations are signing FTAs in the hundreds. We have fewer than 20. This means that they will be able to sell their products overseas without tariffs that are applied to American products. That makes their products cheaper even without associated labor costs.
If FTAs were the problem I doubt they would be doing that. In the meantime their market share will continue to grow while ours shrink until we (and in particular organized labor) wakes up to the realities of economics. FTAs are the only hope for our continued economic health.
Damn you for providing a rational economics argument in a thread completely overrun by emotionally driven finger pointing! ;)
Anyone who thinks free trade is a bad idea PLEASE do some research on the subject. I high recommend you watch the documentary "The Commanding Heights" and formulate your opinion from there. Look at India from the end of British rule through the 1990s vs. today. Look at China. I don't want to get into a rut discussing the pitfalls of a centrally planned economy vs. free trade...
Of course being a registered Librarian and regular reader of Mises.org and the Cato Institute I am more than a little set in my ways.
Back on GM...seems they are going to sell the "Hummer" brand. I wonder who's going to take on that albatross.
Damn you for providing a rational economics argument in a thread completely overrun by emotionally driven finger pointing! ;)
Anyone who thinks free trade is a bad idea PLEASE do some research on the subject. I high recommend you watch the documentary "The Commanding Heights" and formulate your opinion from there. Look at India from the end of British rule through the 1990s vs. today. Look at China.
China is not a good example. They participate in free trade on the outgo but not on the incoming. They sell into free trade but do not open their markets to free trade.
decodeddiesel
06-02-09, 12:19
China is not a good example. They participate in free trade on the outgo but not on the incoming. They sell into free trade but do not open their markets to free trade.
That is true to an extent. You're right in that China has an enormous trade surplus (which they are using to buy out America but that's a discussion for a whole other thread). China is importing huge amount of raw materials, and while they tend to place excessive tariffs on incoming finished goods, the population is demanding more and more "western" goods and the government is slowly being forced to comply. Commanding heights of the economy are still publicly owned (ie nationalized) but small and mid sized companies are private. Regardless I was more showing them as an example of a successful transition from a closed, centrally planned and driven communist state to a more open free market.
I'm extremely aware of Russia buying up steel mills and I've collected all of the articles from WSJ Online, Online Financial Times, Pravda, globalresearch.ca and several others.
Once your economy is stagnating (due to unlawful legislation and treaties) the infrastructure can be purchased relatively easily. NAFTA set the stage for what we see going on right this very minute and Bush is on the record for proposing having zero tariffs by 2015. Aren't tariffs supposed to pay for federal gov't?
Unfortunately, few seem to recognize that both are vital to our National Security which brings the next question: Why in Hades were they allowed to be run so horribly then?
Anyone who thinks free trade is a bad idea PLEASE do some research on the subject. I high recommend you watch the documentary "The Commanding Heights" and formulate your opinion from there. Look at India from the end of British rule through the 1990s vs. today. Look at China. I don't want to get into a rut discussing the pitfalls of a centrally planned economy vs. free trade...
Research "Ricardo, Free Trade". It was developed as a form of warfare against nations. I see it no differently. If I can produce the same product as you for 40% less and you allow me to have unhindered access to your market YOU fail. Period. Tariffs are supposed to pay for Fed Gov't. Instead they force 25% or more from us. We'll have no infrastructure soon. And those business leaders proscribe to the same school you're knocking. They believe in "Free Trade", too. GM has a massive facility in China...
Business_Casual
06-02-09, 12:35
You are conflating two issues - free trade and federal regulation.
Who has a minimum wage law? Who has an EPA? Who has an OSHA? Who has the regulation duplicated at the State level? Who has labor unions that are allowed (encouraged) to use criminal tactics against corporations? Who has a media that attacks business on a regular basis?
Gee, it is a complete puzzler how something could be made more cheaply in China.
M_P
Nathan_Bell
06-02-09, 12:46
You are conflating two issues - free trade and federal regulation.
Who has a minimum wage law? Who has an EPA? Who has an OSHA? Who has the regulation duplicated at the State level? Who has labor unions that are allowed (encouraged) to use criminal tactics against corporations? Who has a media that attacks business on a regular basis?
Gee, it is a complete puzzler how something could be made more cheaply in China.
M_P
In my more darkly ironic moods I laugh at the situation. Two of the biggest supporters of Democratic politicians in the past century were the lawyers and the labor unions. The lawyers "to protect the interests of the laborers" have made it impossible for the laborers to find work, due to the regulatory burden the lawyers crafted.
Gutshot John
06-02-09, 13:11
In my more darkly ironic moods I laugh at the situation. Two of the biggest supporters of Democratic politicians in the past century were the lawyers and the labor unions. The lawyers "to protect the interests of the laborers" have made it impossible for the laborers to find work, due to the regulatory burden the lawyers crafted.
The entire situation is indeed rife with irony.
You are conflating two issues - free trade and federal regulation...
... Gee, it is a complete puzzler how something could be made more cheaply in China.
M_P
Why is it we must everything exist in isolation with most people? Our politicians are the ones who voted in the inane federal legislation as well as NAFTA... ALL THINGS ARE INTERRELATED. We sign agreements with nations that can offer cheap consumer manufacturing which means no regulations or little in the way of regulations compared to the US. The goal whether unstated or not is to dismantle what our Founders have created. Period. How would YOU approach such a task? Would you rely solely on those you've convinced within the US to legislate from within or would you use a "two prong" approach and encourage all to form a "Global Community" with all manner of traps for the unsuspecting. I don't think we've one ONE WTO suit. Not one. Yet it was "fast tracked" into legislation just like NAFTA.
Funny how "we all" now see the UN as less than benevolent only when they drag their feet on something the public is led to believe is the proper thing to do militarily yet wholly miss the legislative treaties the US either signs with some NGO of the UN or merely adopts similar proposed legislation as outlined by the UNO.
The more I have these conversations the more convinced that this nation shall collapse and few will have a clue as to why and how it happened; all they'll know is that it DID happen. The Ivory Tower sect has convinced many to believe the fallacy of "free trade" as more and more businesses pick up and leave (and you and I pay for their transporting factories and for the disinfranchised employees and their families) and never seem to quite "get it."
Must we be prostrate and starving before we 'turn the corner'? It certainly appears that way.
In my more darkly ironic moods I laugh at the situation. Two of the biggest supporters of Democratic politicians in the past century were the lawyers and the labor unions. The lawyers "to protect the interests of the laborers" have made it impossible for the laborers to find work, due to the regulatory burden the lawyers crafted.
GM, Ford and Chrysler collectively spent $1 billion lobbying Congress in 1993/94 for NAFTA's 10,000 page unread bill which was "fast tracked" into existence. The UAW was even in on it. NO, I'M NOT LYING. There were UAW guys who were telling me at the time the UAW said it would be good for them, too. :eek:
And the vast majority of the engineers and managers think NAFTA is good, too. :confused: Now that many are now without jobs you'd think they'd study it a bit more deeply. No, they blame it on those who purchase foreign products. Idiots! :mad:
Gutshot John
06-02-09, 13:20
That is true to an extent. You're right in that China has an enormous trade surplus (which they are using to buy out America but that's a discussion for a whole other thread). China is importing huge amount of raw materials, and while they tend to place excessive tariffs on incoming finished goods, the population is demanding more and more "western" goods and the government is slowly being forced to comply. Commanding heights of the economy are still publicly owned (ie nationalized) but small and mid sized companies are private. Regardless I was more showing them as an example of a successful transition from a closed, centrally planned and driven communist state to a more open free market.
You're absolutely correct. We don't have an FTA with China, but the trade deficit we have is amongst low-quality cheap goods that are easily manufactured with unskilled labor.
When it comes to high-end capital manufacturing, high-quality specialty steel and other products that require a highly skilled workforce (heavy equipment amongst other things) we sell far more to China than they sell to us. So far our products are so good that the higher cost for our good is justified as the amortized cost is less and the margin is justified. This advantage however will not last forever.
The problem is that other nations that can perform high-end manufacturing (EU, Japan, Korea) will sign FTAs with the Chinese who will increasingly buy theirs instead of ours as they will be tariff-free and therefore cheaper.
Similarly the adoption by the Chinese of EU manufacturing standards (ISO) will increasingly lock our products out unless we adopt the highly costly EU standards which they have an advantage in. Increasingly ISO is not limited to manufacturing standards, ISO now applies to management and environmental standards as well.
The Unions are handicapping us...and in so doing killing the goose that laid the golden egg.
decodeddiesel
06-02-09, 13:24
You're absolutely correct. We don't have an FTA with China, but the trade deficit we have is amongst low-quality cheap goods that are easily manufactured with unskilled labor.
When it comes to high-end capital manufacturing, high-quality specialty steel and other products that require a highly skilled workforce (heavy equipment amongst other things) we sell far more to China than they sell to us. So far our products are so good that the higher cost for our good is justified as the amortized cost is less and the margin is justified. This advantage however will not last forever.
The problem is that other nations that can perform high-end manufacturing (EU, Japan, Korea) will sign FTAs with the Chinese who will increasingly buy theirs instead of ours as they will be tariff-free and therefore cheaper.
Similarly the adoption by the Chinese of EU manufacturing standards (ISO) will increasingly lock our products out unless we adopt the highly costly EU standards which they have an advantage in. Increasingly ISO is not limited to manufacturing standards, ISO now applies to management and environmental standards as well.
The Unions are handicapping us...and in so doing killing the goose that laid the golden egg.
Thanks for laying that out for me. I agree and can see the validity on all points.
decodeddiesel
06-02-09, 13:30
Research "Ricardo, Free Trade". It was developed as a form of warfare against nations. I see it no differently. If I can produce the same product as you for 40% less and you allow me to have unhindered access to your market YOU fail. Period. Tariffs are supposed to pay for Fed Gov't. Instead they force 25% or more from us. We'll have no infrastructure soon. And those business leaders proscribe to the same school you're knocking. They believe in "Free Trade", too. GM has a massive facility in China...
What's your point? The government should subsidize the failing American auto industry (or for that matter all American heavy industry) because it's "vital to national security"? Give me a break.
Maybe while we're at it we can completely close off our economy from the rest of the world and be forced to "buy American" through huge excessive tariffs.
Ooooo Ooooo!!! Can I get on a 10 year waiting list for a Chevy Cobalt please?
Nothing wrong with it, but you are about the most socialist thinking person I have ever seen on this forum.
Research "Ricardo, Free Trade". It was developed as a form of warfare against nations. I see it no differently. If I can produce the same product as you for 40% less and you allow me to have unhindered access to your market YOU fail. Period. Tariffs are supposed to pay for Fed Gov't. Instead they force 25% or more from us. We'll have no infrastructure soon. And those business leaders proscribe to the same school you're knocking. They believe in "Free Trade", too. GM has a massive facility in China...
The tariffs go to support heavy regulation and taxation. By this I mean that one of the big differences in economies in terms of cost of producing goods comes from the cost of regulation and taxation. The reason country A can produce a product for 40% less is that they have less regulation and taxation and other similar sorts of costs.
Blocking trade through tariffs with someone who does not regulate or tax their companies only hides the inefficiencies you introduce through your overbearing regulation.
I've wondered what would happen if we adopted a policy similar to what Jack Ryan implemented in I believe it was "Executive Orders."
Basically, our policy to a foreign country with regards to trade barriers, tariffs, free trade, etc is to exactly mirror their policy to us.
Those countries with little or no barriers have little or no barriers to our country. Those with barriers have those same barriers selling to us.
I wonder how that would work in real life.
While I am a libertarian at heart, there is one problem with libertarianism. You cannot adopt the libertarian style policies in a vacuum. They cannot be implemented piecemeal and also the whole system needs to be mostly run according to the same principles. So one country that adopts real libertarian policy in a world economy of people who don't and it does not work that well.
Thomas M-4
06-02-09, 15:05
There is not one single part that is the problem its a total sh!t storm government, management , unions are all responsible for this load of crap and nobody is going to stop them its that simple the rich will get richer and the poor will get poorer. When I was in the Army I was trained to attack a position from all sides if possible that is what is happening now being attacked from all sides guess what they are going to win because there is no organized Resistance. We the people or going to pay for GM leaching on the tax payer for many years with no return.If there is any one thing to be blamed it the mindset most of the country is in. By buying your way out problems, selling out your neighbors livelihood to make a fast buck.
Maybe I am old fashioned but I was raised by grandparents that lived through the great depression and fought in WII and helped build the middle class NOT TO SHIT IN THE BED THAT YOU LIE IN.
Business_Casual
06-02-09, 15:07
The tariffs go to support heavy regulation and taxation. By this I mean that one of the big differences in economies in terms of cost of producing goods comes from the cost of regulation and taxation. The reason country A can produce a product for 40% less is that they have less regulation and taxation and other similar sorts of costs.
Blocking trade through tariffs with someone who does not regulate or tax their companies only hides the inefficiencies you introduce through your overbearing regulation.
I suppose you've read your history - our fledgling country, newly independent from Britain tried a tariff scheme that nearly bankrupted us.
M_P
I suppose you've read your history - our fledgling country, newly independent from Britain tried a tariff scheme that nearly bankrupted us.
M_P
I have read the history (though admittedly long ago). I am not advocating tariffs and my point is in a modern economy what the effect of tariffs is (intended or not).
Gutshot John
06-02-09, 15:22
I've wondered what would happen if we adopted a policy similar to what Jack Ryan implemented in I believe it was "Executive Orders."
One of the reasons I hate Tom Clancy, he just makes stuff up. Basically it's a nice idea but Constitutionally flawed.
The Senate has the Constitutional authority to ratify treaties. Tariffs would have to be enacted by Congressional statute. Existing tariffs would have to be repealed by statute. Essentially the President can limit some things through regulation, but he can't regulate international trade writ large.
Free-trade authority is given to the President to NEGOTIATE FTAs, which are then ratified by up-down vote in the Senate, but the power still rests in the legislative.
Since the cost of raw materials are essentially the same for everyone on a global market, and since capital is the same, the biggest variable is labor costs.
Japan used to have lots of cheap labor, but with their limited population labor costs have gradually raised over the last 20 years. China has virtually a limitless source of cheap (unskilled) labor and that's their comparative advantage for at least another century.
One of the reasons I hate Tom Clancy, he just makes stuff up. Basically it's a nice idea but Constitutionally flawed.
The Senate has the Constitutional authority to ratify treaties. Tariffs would have to be enacted by Congressional statute. Existing tariffs would have to be repealed by statute. Essentially the President can limit some things through regulation, but he can't regulate international trade writ large.
Free-trade authority is given to the President to NEGOTIATE FTAs, which are then ratified by up-down vote in the Senate, but the power still rests in the legislative.
No one is saying to do it by decree. You jump through the hoops. The question is what the effect of such a policy would be and how it would work or not (after being implemented according to powers and authorities of each party)
Since the cost of raw materials are essentially the same for everyone on a global market, and since capital is the same, the biggest variable is labor costs.
Japan used to have lots of cheap labor, but with their limited population labor costs have gradually raised over the last 20 years. China has virtually a limitless source of cheap (unskilled) labor and that's their comparative advantage for at least another century.
China is already losing this advantage. There are lots of companies going to Vietnam and other countries that are cheaper to the rising costs of labor in China. As more Chinese make more money they want a more middle class life and make more demands. Those demands in the end cause the cost of labor to go up.
Gutshot John
06-02-09, 16:28
No one is saying to do it by decree. You jump through the hoops. The question is what the effect of such a policy would be and how it would work or not (after being implemented according to powers and authorities of each party)
If we're talking about theory I think it's an excellent idea, I'd love to see them try. That said, it's virtually a political impossibility.
If I were God I'd say that we have blanket tariff rate on ALL goods entering our market from a particular country. If they charge us a 10% tariff on our goods, we put a 10% tariff on theirs (this is a simplification since individual products are charged diffferent tariff rates but you get the idea). If they charge no tariff...we charge no tariff. Invariably however our market is FAR larger than the rest of the world so while we have greater power, but that means there will always be some form of unfairness to us. This is why we will ALWAYS have a trade deficit.
China is already losing this advantage. There are lots of companies going to Vietnam and other countries that are cheaper to the rising costs of labor in China. As more Chinese make more money they want a more middle class life and make more demands. Those demands in the end cause the cost of labor to go up.
Not really, if you think about it labor like everything is subject to supply/demand forces and that's a function of population. The population of China is FAR bigger than Vietnam. China has a billion people willing to work for peanuts, Vietnam does not. You can pay the people of Vietnam less...for now, but eventually, like Japan and South Korea before them, wages will rise rapidly as the labor reserve dwindles.
Most of the Chinese money/middle class is in the Eastern Regions of China, in the west, there is a vast population with very little money. In China there is a far larger labor reserve willing to work for less money.
Ironically, with the population of Mexico and the United States, the North American free-trade zone is the only economy that can compete with China in the long-term.
Business_Casual
06-02-09, 17:20
Have you ever shipped anything across the Pacific ocean? It isn't cheap - that is one vast stretch of water. Not to mention the cost of spoilage, pilferage and storage.
Cheap labor helps, but only to an extent. If it were all cheap labor why are the laundry baskets so damned flimsy? :D
M_P
thopkins22
06-02-09, 20:09
If they charge us a 10% tariff on our goods, we put a 10% tariff on theirs
Why punish the American consumer for the flawed policies of another country?
Gutshot John
06-02-09, 20:34
Why punish the American consumer for the flawed policies of another country?
You mean the American consumers like Union guys who bitch about losing their job to overseas competition and then go shopping at Wal-Mart.
You won't find much sympathy here.
You mean the American consumers like Union guys who bitch about losing their job to overseas competition and then go shopping at Wal-Mart.
You won't find much sympathy here.
While this statement is painted with a very broad brush, it has merit via the overall context of the issue.
Still, how does one fault a person buying goods at a better (ok, cheaper) price, especially during a recession? Maybe Wal-Mart themselves caused it and are rubbing their greedy hands together with delight?
I simply don't see ideology being practical here. How can one advocate free trade yet have issue with us being able to buy goods at a cheaper price that serve their respective needs?
The standard for the quality of goods should be high and Americans should benefit from the purchases we Americans make. But, we now reap what we have sown, do we not?
Gutshot John
06-02-09, 21:45
In broad terms I was responding to a hypothetical compromise. If that's the compromise that gets made I can live with it.
Still, how does one fault a person buying goods at a better (ok, cheaper) price, especially during a recession? Maybe Wal-Mart themselves caused it and are rubbing their greedy hands together with delight?
Walmart does what its customer's want. If their customers were willing to pay more for domestic goods, Walmart would stock more of them.
I simply don't see ideology being practical here. How can one advocate free trade yet have issue with us being able to buy goods at a cheaper price that serve their respective needs?
I'm not talking ideology. Ideology would be "free trade no matter what".
The standard for the quality of goods should be high and Americans should benefit from the purchases we Americans make. But, we now reap what we have sown, do we not?
Precisely my point.
politicaldookie
06-02-09, 22:49
At least the UAW members have this trust fund thing which was taking over the retiree health care stuff and that fund is getting like 6 or 9 billion in case plus 17% of the new GM
We're paying to fund that VEBA.
I lived in Argentina for a while in the early nineties. At that time Argentina had very high import duties on foreign produced automobiles in order to "protect" their own auto industry. One of the automobile manufacturers that they were protecting was Ford. Ford of Argentina's principle model was the Falcon. The exact same Falcon manufactured in the U.S. from 1960 until 1963 was manufactured in Argentina up until 1991. The exact same car for over 30 years with only minor updates to the headlights and taillights! Ford could do that because they had no competition. Did protecting Ford Argentina from "imports" keep Ford competitive? No. Did it serve the Argentine people by allowing them to buy the best car possible for their Australes? No. Would "American" cars be as "good" as they are if they didn't have to compete against Toyota? If Chrysler had its way we'd all still be driving K cars. Imports and competition can most times be a good thing.
I lived in Argentina for a while in the early nineties. At that time Argentina had very high import duties on foreign produced automobiles in order to "protect" their own auto industry. One of the automobile manufacturers that they were protecting was Ford. Ford of Argentina's principle model was the Falcon. The exact same Falcon manufactured in the U.S. from 1960 until 1963 was manufactured in Argentina up until 1991. The exact same car for over 30 years with only minor updates to the headlights and taillights! Ford could do that because they had no competition. Did protecting Ford Argentina from "imports" keep Ford competitive? No. Did it serve the Argentine people by allowing them to buy the best car possible for their Australes? No. Would "American" cars be as "good" as they are if they didn't have to compete against Toyota? If Chrysler had its way we'd all still be driving K cars. Imports and competition can most times be a good thing.
No argument from me.
The idea with mirroring the other countries policies (ie, they put a 10% duty on X import from us, we do the same to them) is to apply pressure to them to get rid of the duties, not to raise funds through tariffs. Kind of giving them a taste of their own medicine.
decodeddiesel
06-03-09, 09:15
I lived in Argentina for a while in the early nineties. At that time Argentina had very high import duties on foreign produced automobiles in order to "protect" their own auto industry. One of the automobile manufacturers that they were protecting was Ford. Ford of Argentina's principle model was the Falcon. The exact same Falcon manufactured in the U.S. from 1960 until 1963 was manufactured in Argentina up until 1991. The exact same car for over 30 years with only minor updates to the headlights and taillights! Ford could do that because they had no competition. Did protecting Ford Argentina from "imports" keep Ford competitive? No. Did it serve the Argentine people by allowing them to buy the best car possible for their Australes? No. Would "American" cars be as "good" as they are if they didn't have to compete against Toyota? If Chrysler had its way we'd all still be driving K cars. Imports and competition can most times be a good thing.
Absolutely true. Many countries have tried this exact same thing, and it has never worked. India did this with their auto industry through the 90s. They were selling a redesign of a British car from the 40s , and due to the tariffs it was the only car anyone could afford. The waiting list to get one was 12-15 years long towards the end and the cars themselves were rubbish. This is the path we are headed down once the government starts imposing the kinds of restrictions and regulations they are itching to throw onto the American people.
Nathan_Bell
06-03-09, 10:07
Absolutely true. Many countries have tried this exact same thing, and it has never worked. India did this with their auto industry through the 90s. They were selling a redesign of a British car from the 40s , and due to the tariffs it was the only car anyone could afford. The waiting list to get one was 12-15 years long towards the end and the cars themselves were rubbish. This is the path we are headed down once the government starts imposing the kinds of restrictions and regulations they are itching to throw onto the American people.
Are these type of protectionist duties and tariffs in our future? Big, Huge eared One has been pushing that the "new" GM and Chrylser will be building green econo-boxes, autos that the US has never embraced. Will they try and start thumbing the scales to try and make us buy these cars by pricing the cars we actually want out of our price range through tariffs. luxury taxes, gas taxes, etc?
decodeddiesel
06-03-09, 10:30
Are these type of protectionist duties and tariffs in our future? Big, Huge eared One has been pushing that the "new" GM and Chrylser will be building green econo-boxes, autos that the US has never embraced. Will they try and start thumbing the scales to try and make us buy these cars by pricing the cars we actually want out of our price range through tariffs. luxury taxes, gas taxes, etc?
Of course no one can predict the future, however I will say that protectionism is a damn scary thing, and a time proven way to strangle the life out of an industry and even an economy. I apologize for the wiki link, but it's a good one: http://en.wikipedia.org/wiki/Protectionism
Protectionism is a classically Socialist maneuver. It dovetails right in with the current administration's economic and political agenda.
ETA: Please allow me to quote Alan Greenspan who has criticized protectionist proposals as leading "to an atrophy of our competitive ability. ... If the protectionist route is followed, newer, more efficient industries will have less scope to expand, and overall output and economic welfare will suffer."
decodeddiesel
06-03-09, 10:48
I keep talking about it, so I will link it.
http://www.pbs.org/wgbh/commandingheights/lo/story/index.html
It is a three part series which PBS (ugh...I know) did a few years back. It features many key events in the 20th and 21st centuries and how some key economists and world leaders influenced these events and their impact on the sociopolitical climate of the world.
In their own words: "The purpose of this site is to promote better understanding of globalization and, world trade and economic development, including the forces, values, events, and ideas that have shaped the present global economic system."
I was introduced to this by my political science professor a few semesters ago and it really helped me understand how economics and politics are connected and why free trade is the right answer.
I recall our Founders complaining about the early Republic being flooded with "foreign goods" (i.e., British goods). The Revolution was not about "taxes" but about trade and currency. Carey and Lincoln would disagree with many here. I also recall 100% tariffs on imports early in this nation's history. We've been in an economic battle with The Crown from day one. I know many here don't buy into that; my response is "follow the money..."
At any rate, the ‘largest abdication in history’ of one country's military power to another, the current United States Government-owned, and 24th largest defense contractor to the American Military, General Motors, has been ordered to sell its AM General Division to China’s Sichuan Tengzhong Heavy Industrial Machinery Company for $500 million, which these reports state is a price that is ‘pennies on the dollar’ compared to this vital defense companies actual worth.
AM General is an American heavy vehicle manufacturer based in South Bend, Indiana best known for the civilian Hummer and military High Mobility Multipurpose Wheeled Vehicle (HMMWV or Humvee) which China’s Dongfeng Motor Corporation and Shenyang Aircraft Corporation have long sought to duplicate with limited success.
According to these reports, US Treasury Secretary Timothy Geithner, who was literally laughed at this week by Chinese students when he said “Chinese assets in US Dollars are very safe”, brokered the deal for the sale of AM General under threat by China’s leadership that it would no longer buy up any more American debt unless this sale was made.
No matter what one believes about economic warfare (aka "Free Trade") the bankrptcy of GM is a travesty that we all will come to regret. I'm done.
The Chinese did not buy AM General; They bought Hummer, which in reality is nothing more that a trademark licensed to GM which GM affixed to some re-bodied Tahoes sold as H2's and re-bodied GM 5 cylinder Colorado pick-ups sold as H3 and H4's. Not much of a good deal for them. No real market for these toys in the U.S. during a recession and the utility of these vehicles in their home market is questionable. All the parts are cribbed from the GM parts bin so overseas production is a tough prospect. H1 production ended in 2006, although produced by AM General they were marketed by GM Hummer dealerships for a short while.
The Chinese did not buy AM General; They bought Hummer, which in reality is nothing more that a trademark licensed to GM which GM affixed to some re-bodied Tahoes sold as H2's and re-bodied GM 5 cylinder Colorado pick-ups sold as H3 and H4's. Not much of a good deal for them. No real market for these toys in the U.S. during a recession and the utility of these vehicles in their home market is questionable. All the parts are cribbed from the GM parts bin so overseas production is a tough prospect. H1 production ended in 2006, although produced by AM General they were marketed by GM Hummer dealerships for a short while.
Gotcha. I spent yesterday digging and calling some contacts of mine who corrected me. Thanks!
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