I did not have a drink tonight. Just reading about the UAW and dealership demands, I think one way of dealing with them is to declare bankruptacy. When American Airlines threatened bankruptacy, the unions started to come to terms. GM is simply in dire straits, so bankruptacy is not going to change the investor and public perception that much. All they need now is another Lee Iccocca....

 

<clapping> & a standing ovation!

 

Not likely. The question to be asked is whether they can avoid bankruptcy. If Dephi can't reach a settlement with the UAW, GM will have to pick up the slack or stop production. I've read that they might burn through some $4 billion a month in that event.

Assuming that they can go Chapter 11 and shed their legacy costs then the next question to be asked is whether or not Ford can survive as they will still have those cost disadvantages.

If the government won't bail them out and the UAW won't budge, it seems as though they are between a rock and a hard place.

If I were running GM, I would simply liquidate the company. Sell off the Chevrolet and Cadillac brands and junk the rest. They are going down for the count anyway. What is the point of GMC anyway? Saab has been a bottomless pit forever. Pontiac and Buick are dead and only need to be buried. And that leaves Hummer with 11 mpg and Saturn which is just another GM model. Not much there. Sell the scrap iron to China and sell off the plants and real estate and distribute the proceeds to the shareholders and employees. Ford would be left with the domestic market and it would thrive. GM is dead but doesn't know it yet.

 

The reason the airline unions have budged is because if they didn't they would end up putting their members out of work, and then if those members are out of work, there are no dues coming in from those members. If those members are not airline employees, guess what? They are no longer members and now your union is much less powerful, and rich, than before. And now the egg is on the union's face with regard to the fact that the union caused x hundred or thousand people at broke airline A to loose their jobs. What is more important; that 1000 people have work that does allow them to put food on the table and pay the mortgage and be productive in society, or is it more important to have 500 people employed at full wages and benefits and another 500 out in the market looking for work. Hmmm. That seems pretty straight forward to me.

The same applies for the UAW and the domestic auto manufacturers. They have to make some hard choices. But then again, I think that Ford and GM are making some of those hard choices for the UAW and its members as we speak. The air lines did shed some employees, but they got the unions to reduce compensation expectations and as such were able to keep people employed and on the books. Ford and GM are both going to eliminate jobs. That is a done deal. The unions can only prepare their membership for it, they cannot actually prevent this from happening.

The long and the short of it is that the UAW is a dinosaur and an inflexible institution which has saddled the domestic manufacturers with expenses and costs which it cannot operate under. The total cost of labor in these organizations is artifically high due to the programs, benefits and general overhead created by the union.

It's funny, 70+ years ago Ford was not a union shop. For manufacturing jobs, they had some of the best pay and the working conditions weren't awful. Somebody with nearly no education could go to work for Ford and do ok, live a middle class lifestyle of the time. History shows that Ford was the last of the domestics to be unionized. And the reason was that for the longest period of time Ford was a competitive organization with regard to compensation. However pressure from union organizers and some moderately bloody incidents surrounding the lack union presence at Ford caused them to become unionized. I suppose it makes sense considering the time and place, however now unions and unionization do not work. Employers really do play the market for employees today, and a person with good job skills can move from employer to employer if they have something valuable for that organization. Like all things, the market makes demands and those that can fill it are the winners.

 

A news article I just ran across pointed out that Delphi will likely ask the bankruptcy court to void those union contracts. The UAW won't go along. A strike will ensue and GM will burn through $8 billion in cash in the first 60 days. Obviously this will put GM out of business. I'd post the link except I can't figure out how to do that in this forum.

 

The unions didn't engineer GM's problem product line.

Bob Wilson

 

The retirement and heathcare package make GM want to build SUV's even more. It makes them see sedans as not very profitable, so they let the Accords and Camerys' take it over.

 

Ahh the hell with it, first it was oldsmobile then they threatened pontiac was going under now cadillac.... Let them go!

kinda like Packard, cord, nash, desoto, duesenberg, ect

they can join the ranks of the others ,

Assuming that GM can go Chapter 11 and shed their legacy costs then the next question to be asked is whether or not Ford can survive as they will still have those cost disadvantages.

If the government won't bail them out and the UAW won't budge, it seems as though they are between a rock and a hard place.

If I were running GM, I would simply liquidate the company. Sell off the Chevrolet and Cadillac brands and junk the rest. They are going down for the count anyway. What is the point of GMC anyway? Saab has been a bottomless pit forever. Pontiac and Buick are dead and only need to be buried. And that leaves Hummer with 11 mpg and Saturn which is just another GM model. Not much there. Sell the scrap iron to China and sell off the plants and real estate and distribute the proceeds to the shareholders and employees. Ford would be left with the domestic market and it would thrive. GM is dead but doesn't know it yet.

I agree with the above statement...

 

The unions build the cars the GM engineers (and management) decide to build. There are many non-union build crappy cars that could replace your hybrid. It isn't the assembly hands but the designer brains that are at fault and GM has a bunch of non-union designers and managers.

Bob Wilson

 

That's true enough. But ultimately it is the union's extortion of the domestic auto companies that will put them under. If everything is put into an hourly wage, each UAW member and retiree comes to about $76 per hour. That is unsustainable. In 1980 GM allowed a strike to commence. Three months elapsed costing GM 1,000,000 units. The UAW creates a huge strike fund and then selects its target to strike. They either get their way or put the company out of business. The others quickly follow suit because they know they can't just not operate their factories. Even when a UAW worker is out of work they get 95% of their regular pay. Who else on the planet gets that kind of deal? No one I've ever heard of.

By contrast Toyota and other Asian companies are non-union and have almost none of the legacy costs although the nominal wages are almost identical at about $27 per hour. The cost disadvantage is just enormous at about $1500 per auto. Add to the public perception that GM autos are junk and they can't sell these tainted autos. Toyota, by contrast, could put out a polished dingleberry and there would be a waiting line.

The capitalization of Toyota is about 17 times that of GM. Even Ford's is higher than GM's. Ford also has about 1/2 of the debt of GM. The numbers don't add up. GM is terminal. Liquidate now while it still has a positive net value. Wait a while and everything will be sold off just to pay the debts off. Then nobody, neither the shareholders nor employees get a dime. It's another Enron in the making. Equivalent to a giant Ponzi scheme.