Global Motors - Does your organization (workplace) receive government subsidies?
Having followed other threads in 'General News and Business Articles' with great interest, especially GM News, this article (of a different flavor) is offered for discussion to explore other 'possible' root causes. We do live in an exciting time of history in the making.
Quote:
Decades of corrupt collusion with the foreign-aid industry have left General Motors, once the colossus of the auto industry, facing extinction.
by William Norman Grigg
The New American - Cover Story - May 16, 2005 - (Vol. 21, No. 10)
General Motors is not merely the world's largest car manufacturer; it is an institutional icon of American capitalism, a pillar of our manufacturing economy, and for decades has been among the bluest of blue-chip investments. As the industry leader in one of America's signature industries, GM is regarded by economists, sociologists, and pundits as a bellwether of our nation's economic fortunes.
Thus it's a matter of no small concern that GM, the once-unassailable colossus of the auto industry, appears destined either for extinction or a taxpayer-funded bailout.
On April 18, GM announced first quarter losses of $1.1 billion. That dismal report came two weeks after Moody's Investor's Service cut GM's debt rating to what a Reuters report called "a step above junk status." The company is saddled with roughly $300 million in debt, and a descent into outright junk status would make it difficult - perhaps approaching impossible - for GM to borrow money as interest rates begin to increase.
“There seems to be no mechanism for a renewal of the company short of bankruptcy.” Commented Britain’s Supplier Business journal. A leveraged buy-out seems extremely unlikely at best, since GM’s pension and health care liabilities represent “a poison pill to would-be acquirers.”
Over the past several years, GM has capitalized on the Federal Reserve’s efforts to hold down interest rates by avidly promoting zero-interest, no money-down offers to car buyers. And also thanks to the Fed’s loose money and credit policy, GM’s financial subsidiary, General Motors Acceptance Corp (GMAC), has become the company’s most profitable concern.
“If GMAC were an independent company, it would be the eighth-largest U.S. bank,” observed a March 23, 2004 Bloomberg News report. While GM’s auto sales have remained stagnant, “it’s the financial unit GMAC that [has been] most crucial to General Motors’ performance.” In 2003, “the worlds No. 1 automaker earned far more profit - $2.8 billion, or 87.5% of the $3.2 billion total - lending money, writing mortgages and selling securities than it did selling its cars and trucks…Now, GMAC’s ability to prop up its parent could be jeopardized because borrowing costs will rise ‘at some point,’ says Federal Reserve Chairman Alan Greenspan.”
Since those words were published a year ago, “at some point” has arrived - with the expected results for GM’s financial arm. While GMAC remains the “only bright spot in GM’s portfolio,” commented the April 6 Cincinnati Enquirer, its profits “are quickly coming under pressure because of higher interest rates.” This means, once again, that GM will have to borrow money, at rapidly escalating interest rates, in order to finance car leases and purchases (as well as GMAC’s home mortgage loans.) However, customers who bought cars in recent years “will be paying lower interest rates until they turn in or sell their vehicles” - thereby creating another revenue shortfall for the company. Accordingly, it’s not surprising that GMAC, the conglomerate’s only profitable concern, has recently been rated two steps above junk bond status.
Many of GM’s problems stem from a bad business model in which a supposed automobile manufacturer has made seven times a much profit from lending money than it has from building and selling cars - a model based in large part on the engineered boom and bust cycles of the Fed’s own monetary machinations. GM’s decline has also been encouraged by a corrupt relationship with the federal government’s foreign aid bureaucracy, which has subsidized the company’s efforts to move production overseas - especially to Communist China and the former Soviet Union.
Beijing Motors? A press conference held at the Great Wall unveiled the Chinese-built General Motors Hy-wire, a fuel cell-powered automobile. GM began producing cars in China 20 years ago, and the Asian giant may soon emerge as the world’s leading auto manufacturer.
GM Vice President Troy Clarke posed in front of the Chinese-built Sequel automobile during a presentation in Shanghai.
[See attachment], For those who want to read the complete article.
Last edited by Don Palmer; 12th May 2005 at 08:22 PM.
Reason: Add Introduction
Caution, these are personal opinions expressed after some Bubs.
Caution, these are personal opinions expressed after some Bubs.
The whole thing is really scary. The economy is skunky IMO. We are loosing jobs over seas and it will continue I think because the union leaders are led by the ones who don't care about lost jobs. They live for today and 3-4 years from now they retire. In 10 years, the automotive industry in this country will be a disaster.
I think union leadership in tandem with American auto makers could turn things around it they wanted to. The US government can't afford to bail out the GM pension program.
The Japanese are doing well because they are good, and they don't have the pension and union burden.
I think the only way to save the US auto industry for Ford and GM is for the unions to come up with a compromise plan to prevent the jobs from going overseas.
Thanks for the . Yes, this topic (especially at this level) could be a sacred cow. And I might be tarred, feathered and run out of "The Cove" on a rail, for posting this, but I weighed in on this one to see if some brave souls would openly discuss this aspect or condemn it. BTW, What's a "Bubs"?
Quote:
Originally Posted by tarheels4
Caution, these are personal opinions expressed after some Bubs.
The whole thing is really scary. The economy is skunky IMO. We are loosing jobs over seas and it will continue I think because the union leaders are led by the ones who don't care about lost jobs. They live for today and 3-4 years from now they retire. In 10 years, the automotive industry in this country will be a disaster.
I think union leadership in tandem with American auto makers could turn things around it they wanted to. The US government can't afford to bail out the GM pension program.
The Japanese are doing well because they are good, and they don't have the pension and union burden.
I think the only way to save the US auto industry for Ford and GM is for the unions to come up with a compromise plan to prevent the jobs from going overseas.
Thanks for the . Yes, this topic (especially at this level) could be a sacred cow. And I might be tarred, feathered and run out of "The Cove" on a rail, for posting this, but I weighed in on this one to see if some brave souls would openly discuss this aspect or condemn it. BTW, What's a "Bubs"?
Well, I reckon you deserve a little karma before they run you out. What about me?
Yes, this topic (especially at this level) could be a sacred cow. And I might be tarred, feathered and run out of "The Cove" on a rail, for posting this...
Oh, I don't think that's going to happen. Because of my recent thread, though, there are a few people who would like to tar and feather me I think...
I will say I'm in Bangkok because so much automotive is moving here to Thailand. GM and Ford both have plants here as well. I may end up moving here because there's plenty of work. On the other hand, it will be quite a life style change. I have a lot of mixed emotions about it.
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A Search is a terrible thing to waste! One Test is Worth 1000 Expert Opinions - The plural of anecdote is not data.
We can't solve problems by using the same kind of thinking we used when we created them. - Unknown
I will say I'm in Bangkok because so much automotive is moving here to Thailand. GM and Ford both have plants here as well. I may end up moving here because there's plenty of work. On the other hand, it will be quite a life style change. I have a lot of mixed emotions about it.
Mmmm.... Thai food.
Having worked for several years at a GM supplier and formerly GM-owned company, I will point out that the union leaders are not only getting ready to retire within the next few years, but they don’t seem to fully grasp the seriousness of the situation.
I won’t even get into all the problems I saw with the union, but the general attitude was the same as it was 20 years ago – “I’m expected to make at least 400 parts on my shift, so I’ll make my 400, which should take me about 6 hours, and then I’ll read a magazine until it’s time to go home.” That was fine 20 years ago when the plant was making so much money, it had cash and man-hours to burn. Then, nobody saw any need to try to make the company more profitable.
Where I worked, it was like nobody in the union realized that that plant is NOT MAKING MONEY anymore. You often heard “Oh, they just want to reduce headcount in this department so the greedy owners can make more money.” All management wanted to do was get the plant back out of the red.
Aside from being unwilling to make any concessions to the company, the union continued to burn company cash by putting up fights over stupid things. Because of headcount reductions, we were at a point where we had one snack machine and one soda machine for every 10 people in the plant. The food service company that had the contract decided to reduce them to match the current need.
The union filed a grievance, because employees had to walk an average of an extra 100 feet to get their Twinkies and Pepsi. Company management wasn’t even responsible for the change, so we tried to talk the vendor into putting the machines back. They wouldn’t, so we ended up making all kinds of concessions to the union as a “fair exchange” because the union had us by the you-know-what. Things like paying people the wages they lost when they were sent home without pay for discipline, and re-hiring (with back pay) people who had been fired for showing up drunk or high on coke for the 5th time. Over some vending machines.
It was absurd. I’m not saying the union guys were a bunch of jerks, I just honestly don’t think they believed management when they said “We’re not making money anymore, guys.”
I know I’ll probably get flamed for this, and I’m not necessarily anti-union, but anytime the child is allowed to boss the parent around, it’s not going to turn out well.
Last edited by jmp4429; 13th May 2005 at 09:41 AM.
Global Motors - Does your organization (workplace) receive government subsidies?
Caution, these are personal opinions expressed after some Bubs.
. Yes, this topic (especially at this level) could be a sacred cow. And I might be tarred, feathered and run out of "The Cove" on a rail, for posting this, but I weighed in on this one to see if some brave souls would openly discuss this aspect or condemn it. BTW, What's a "Bubs"? 
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