That’s what the headline in the Times promises. I don’t think so. The whole restructuring plan is as phony as Rick Wagoner’s contrite road trip to Washington in a Chevy Malibu Hybrid. Here are some highlights from GM’s document submitted to Congress.
Brands and Nameplates-Although they ackowledge what everyone already knows–they are trying to sell Hummer, Saab and Saturn–there is no reason to believe they will find a buyer for these brands in the next year. Worse, they are only reducing the “nameplates” (models) from 48 to 40.
Dealerships-They promise to reduce the dealerships from 6500 to 4700 by 2012. This is ridiculous. Honda serves the whole country with 1300 dealers.
Mileage Standards-A little while ago (above) Wagoner was crowing about the new Hummer model, but now he’s acting like GM is in the forefront of green companies, “Volt represents a fundamental reinvention of the American automobile industry…No other company has made such a commitment to the American people.”. What a crock!
Sales Assumptions-A year ago GM said their North American market share would be around 20%, but in Appendix B they seem to have raised their assumption to almost 23%. last time I looked, they were losing market share not gaining.
I have no doubt that Congress is going to come to GM’s rescue in some form. Ford seems to be able to survive as long as they get the previously approved aid to upgrade their alternative energy production. As to Chrysler, I have no idea why the American tax payer should come to the aid of a Hedge Fund like Cerebus Capital. It is a tribute to 20 years of mismangement that Chrysler could disappear and no one would notice the difference.
Congress should ask GM to cut further–commit to kill Pontiac, Buick and GMC–and make Saturn their green brand. The key is to restructure the $66 billion in debt. Here the government can help. The new loans should be conditional on at least 60% of that debt being converted to equity. A government “cram-down” is needed and I’m pretty sure the existing bondholders have no desire to try to extract their money in a bankruptcy.
15 responses so far ↓
B Sammut // December 3, 2008 at 9:55 am |
I can’t imagine anyone in their right mind would buy Hummer. That is a dinosaur that is choking on it’s last breath.
I had no idea on the number of dealerships GM has compared to Honda, amazing.
“Volt represents a fundamental reinvention of the American automobile industry…No other company has made such a commitment to the American people.”. That could be the funniest thing I read all day. I guess Rick Wagoner hasn’t heard of Toyota and Honda.
JTMcPhee // December 3, 2008 at 10:11 am |
“$25 billion to carry us to spring.” “$34 billion to carry us to the end of the year.” Only reasin there’s no doubt that money will flow to feed the dinosaurs in their dotage is good old “interest,” and not the kind the public might expect private industry to pay back on a “loan” of public money.
NPR did a possibly atypical interview with a GM line worker a couple of weeks ago, when the first Silk-Tophat-in-Hand “request” was made by the Three Pigs (the “Pig Three?”).
I guess all the rest of us and our descendants, who will be paying down this latest installment debt on the largest transfer of present and future REAL wealth to the blessed few of today for generations to come, are supposed to feel that it is important to preserve the dead-end job and hence standard of living of a guy who’s paying on a late-model monster truck and another new car and a subprime upside-down house mortgage and a giant flat-screen entertainment center.
Like nobody else has descended to shopping at the Dollar Tree, eating chunk lite tuna instead of wild-caught salmon and such.
How many of us still don’t get it? The consumer culture is like the guy who has been shot through the heart, and keeps walking until he finally goes down from bleeding out. As long as we are all content to continue to be called and think of ourselves as “consumers” and not “citizens,” and eschew comity and civility in favor of a self-pleasing sense of entitlement, we ain’t gonna walk very far before going down.
And the Wise Men of The World are still telling us it is our “duty” to keep feeding the cumsumptive flames by buying new cars and following Bush’s wise advice, post-Twin Towers, to “Go shopping.”
Does anyone believe that the Big Iron culture can “change,” and is likely to somehow survive into the future? Why spend the huge and futile costs of life support on a brain-dead carcass, on the argument that “It’s too big to fail?” Let it die– the “big” historic US carmakers are a pretty small fraction of the US-based auto industry, and in any event, at what point will we be ready to try to undo the warping of our history by our descent into the Car Culture? Feed the Pig Three, it will be just that much longer before there’s money to do something about functional mass transit and free-bike programs, and even fuel-cell cars and such that would still keep us dependent on the whole auto-based mess ?
Let’s not forget it was Big Auto and Big Oil that bought up and shut down the interurbans and trolley lines and broke up the rights of way so they could never be resurrected and we would have to Los Angelenize the nation, and now the planet that wants to be Just Like Us.
billy-bob // December 3, 2008 at 2:02 pm |
Detroit automakers are the cluster-f**k fractal honed to industrial perfection/precision.
You can’t make this stuff up.
doug // December 3, 2008 at 3:02 pm |
Jon–you are right on target–a debt for equity swap forced by the govt. along with operational changes need to take place—lets see if congress will figure it out–
doug // December 3, 2008 at 3:11 pm |
ps–the real reason that the funds will flow is that the country can’t afford to let these companies fail right now–latter maybe
JTMcPhee // December 3, 2008 at 7:18 pm |
Will one of you really smart people help us dummies understand how these particular US auto companies are more “vital to our national security” and “can’t be allowed to fail” like failed capitalist enterprises are supposed to do?
What, is this 1940, and “we” need to have industrial capacity on tap to churn out Bradley Fighting Vehicles that don’t stand much of a chance in a fight (advice to crews: If someone’s shooting at you, bail out and find REAL cover) and Humvees and even M-RAPs and main battle tanks to go fight a massive land war in Eastern Europe and Asia?
I kind of suspect that the highly specialized machinery that builds cars these days is not too easy to retool to make tanks or fighter aircraft, like GM did with Old-Grumman designs in WW II. An F-35 does not come off a Saturn assembly system.
And I have a little trouble getting past the recollection that the Big Car Companies and Big Oil and Big Rubber all got together many decades ago to destroy the mass transit infrastructure of light rail, interurbans and trolleys, tear up and sell the rights of way to ensure that the cost of re-placing them would be prohibitive, and scammed us into the whole ugly sprawling petroleum- and individual-vehicle consumptive culture that it looks like many folks just don’t want or know how to give up or get out of.
And Henry Ford’s notion that industry should create reasonably well paid jobs so that the workers could afford the products of industry is kind of given the lie by the great plan to lay off 20,000 workers so certain business elements will be safe from losing a single bit of their cherished lifestyles.
So tell me again why “we” are going to dump 25 or 34 or 100 or 162.58 billion dollars or whatever the “final” number in the PowerPoint will be, into these moribund parasitic entities? I didn’ even see any effort to present to Congress the “cost” figures that “prove” that the country somehow can’t afford to “let these companies fail.”
And did I miss something, or are ALL of us facing an overwhelming demand that we stop doing what we have done and start doing something different? People all over the world are getting “let go,” businesses of all sizes are doing Chapter 11 or straight bankruptcies or other kinds of going-out-of-business acts. Homelessness and suicide and spouse and child abuse are moving right up.
The world has “changed,” and that a company that makes ball bearings for GM (and maybe Honda and Toyota) and Lockheed-Martin (you know, “We never forget who we work for –” and just who is that again?) might get “rippled” is kind of old news, too bad, we are all having to learn new tricks. We are facing the need to completely retool how things work: There are tsunamis (not “ripples”) and 12-on-the-Richter-scale bumps and waves of “change” whooshing through the human economy and ecology. All the way not only to the local corner store, but even to Walmart! What is so special about “American auto companies” and their suppliers that they are exempt from having to think about how what they’ve done to date has proved to be part of a deadly mix that’s suddenly acting like E.coli 01:57 or melamine in our economic food chain? And re-tool to do something else? Are we about to actually acknowledge that “capitalism” only works when the bubble is expanding, and then it’s “suddenly socialism” for “businesses too beg to fail?”
And what is sacrocanct about a “defense” establishment that has shown time and again, $400 hammers and $10,000 toilet seats aside, that its members can’t even produce body armor when it’s needed, and MRAPS, and up-armor for Humvees being blown up by US-made munitions sold at a profit to Saddam back when he was “our friend” and that the generals were too dumb to police up before the Hajjis grabbed ‘em and hid ‘em away to make the IEDs and EFPs of today?
And do you know with any kind of certainty that the Big Iron boys will do something wise and different with 34 or 150 or 300 billion in “life support,” any better than the largely wasted trillions in taxpayer debt that are whooshing out the Fed’s and Treasury’s wide-open vaults and into the hands of people who continue to pay themselves big bonuses, fly their tax-deductible corporate jets, and sneak off to high-end spa “seminars?” With a giant sneer at the mopes who are going to have to somehow create the future REAL-ECONOMY wealth that they have siphoned off as present (in several senses) dollars to fund their so-comfortable, no-consequences retirements?
I see absolutely no evidence that “death” of the US auto industry (actually, a slow decline like what happens to morbid humans on ventilators and ventricular assists and dialysis and pacemakers in our “health”-care system) so many are saying “we” have to save is, or should be treated any differently, than Macy’s or Big Oil or the “defense establishment” or any other sector facing “change.”
But hey, what do I know? I’m sure the lobbyists for the interests involved have absolutely convincing PowerPoints that prove beyond any doubt that $34 billion for 20,000 fewer jobs and maybe magical new technology somewhere down the road is just the cat’s pajamas or Emperor’s New Clothes that will lead us back to a consuming Promised Land.
Right. Sorry, the situation just causes my pituitary and adrenals to start overproducing testosterone and adrenalin. Is that understandable?
billy-bob // December 3, 2008 at 10:59 pm |
JT: I think you nailed it dead on.
If you haven’t done so already, I encourage you to cut, paste, and submit to your members of congress.
fourios // December 4, 2008 at 10:51 pm |
Quote: “Failure is supposed to be punished and success is supposed to be rewarded, not the opposite. When companies fail, their resources, their assets, get redistributed. What happens is people who are incompetent lose their assets and people who are competent buy them, and they reorganize them. The government is propping up and rewarding bad behavior.”
This man has it right. http://www.forbes.com/feeds/ap/2008/12/03/ap5775256.html
David // December 5, 2008 at 6:32 am |
I read elsewhere that you could acquire all of the GM common stock for around $3B. I think somebody like Google should just buy a controlling interest in GM and convert them into a hybrid car/ electric train/wind turbine company.
Davaudian // December 5, 2008 at 7:07 am |
Great stuff here today…thanks JT for putting your health at risk. I’m hoping they bankrupt, merge, dump the albatross that is the UAW, and make some decent cars like the new Mini Cooper electric.
P.S. A new Tesla showroom just opened up in Westwood.
JTMcPhee // December 5, 2008 at 1:17 pm |
I think David and I are among the many folks who are asking what’s “changed” in the Great Steal-Wealth-From-Future-Generations-At -A-Rate-That-Shames-Welfare-Queens-And-Social-Security-Claimants Game. Ask questions like David’s and the following on Red and Blue sites and you will get ignored our shouted down as anti-labor and unAmerican and all that. “Don’t you have any affinity (sic) for the poor line workers and the millions of people whose livelihoods depend on those jobs with the industrial base of this country that is so important to our national security?” So I say:
Just another couple of dumb questions for really smart people to answer or ignore:
If all of GM’s common stock can be bought for $3 to $4 billion, and there are turnaround specialists out there with lots of pent-up entrepreneurial energy, and there’s this perceived “need” to keep the remaining Big Three plants and suppliers and employees and camp followers as an absolutely indispensable part of “the economy,” why does it make any sense to fork over maybe 10 to 30 times what it would cost to buy the equity in the company and leave the dinosaurs in place, instead of grabbing the stock at present prices and installing new people with “change” as their mantra, and get on with greening that fraction of our industrial base?
The present crew (though maybe enough people love Nardelli to let him pass) give no indication that I can see at least (other than obviously intensive Oliver North-type prep by their PR people to “say the right thing”) that they have any real new ideas, or desire to redirect the means of production over which they hold sway, into any new and more sensible channels.
Or maybe “we” can just give each of the 3 (or is it 30?) million people who are supposed to be on the point of being thrown out of work if’n the Big Three are “allowed to fail” (haven’t they already DONE SO?) their share of $34 or $100 billion to go to the mall, buy a new car, whatever? Along with a nationwide cease-and-desist on foreclosing ANYBODY’s mortgages, to the “lending institutions” who take with both hands at both ends of the store? Mr. Potter apotheosized, by Paulson, Bernake and the lay-down Congress.
Or has so much effort been expended on “the plan” that it’s just business-as-usual all over again?
JTMcPhee // December 5, 2008 at 6:15 pm |
And per the NY Times, it appears that our leaders have “come through” again. Change, my arse.
http://www.nytimes.com/2008/12/06/business/06auto.html?hp
JTMcPhee // December 5, 2008 at 6:35 pm |
GM To Introduce New “Green” Transmission!!!
A General Motors release today confirms that the company’s elite engineering staff has developed a new-technology transmission that will increase its CAFE from 17 mpg to over 100 mpg. The transmission, which has been developed in secret, was revealed to legislators considering transfers of public funds to the formerly giant automaker to allow it to continue business, and was central in the deicision to extend public funding to the automakers.
The transmission is already in production, the legislators were told, and it has been provisionally named the “ParadigmShift.”
Jon Taplin // December 5, 2008 at 8:28 pm |
JTMCPhee- I only know one thing. The US government is going to print a lot of money between now and 2012. I think what we are all concerned about is that we spend the money where there is scarcity (Fiber to the home, smart grid, ET) rather than spend it where there is overcapcity. (Auto manufacturing, commercial real estate)
Davaudian // December 6, 2008 at 7:53 am |
I guess I’m still pissed at the big three for collusion back in the early ’70’s when they dropped the 5 year warranty and went with the 1 year. Bastards….also phrases like..”we’re not trying to make cars, we’re trying to make money.” by GM ubermanagement. My dad sold cars back then (Mopar) and he was actually embarrassed that you could see loose screws, belts, and hoses on new cars he was trying to sell.