Storm Bear

GM = Get Money

Filed By Storm Bear | December 12, 2008 12:45 PM | comments

Filed in: Politics
Tags: AIG, gay cartoons and comics, government bailout, humorous blog post, politics, webcomics


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I find it odd that the "Big Three" can't believe they are in trouble. They decry they can't make money or grow with the way our trade policies are and because of competition.

Please.

I own a Honda Element, manufactured in Youngstown, Ohio - the number one state in job loss in 2004, the year I bought the car. Other car manufacturers (those fucking socialist foreigners) are not having a problem competing. Yes, they are suffering from the economic downturn like everyone else, but they are not begging for money.

I am in the market for a new car, I tend to trade every 5 years. I looked at everything and the American cars I looked at were all gas guzzlers and when compared to their Japanese cousins, they are horrid in terms of build quality. The plastics in the interior of the American cars all seemed flimsy and insubstantial. In a Saturn, I opened a little storage bin and the damn door fell off in my hand. If they can't get a storage bin right, what shape is the engine in?

I do not want to see possible millions of manufacturing jobs lost that could stem from a Big Three failure - it might put us in a shock that we may not recover quickly from. But I can't see how Ford, GM or Chrysler can succeed. The management overhaul would take longer than would be reasonable. The debt these companies already have on the balance books is too much for a robust car company to handle. Maybe if Dems didn't buckle on CAFE standards, government could have forced the Big Three to manufacture cars people wanted?

What I think needs to happen, is for a couple of billionaires to get together, buy all three plus the struggling Tesla Motors, thin out the product lines, kill the guzzlers and integrate Tesla technology into the model ranges. Also killing some of the brands would be a step in the right direction. Have you looked at the Mercury car line? Ugly, expensive, polluting and ripe for brand death.

But that idea will never fly, it makes too much sense.


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So help me, if I find one more uninformed 'journalist' trying to armchair quarterback the auto industry...

First, full disclosure. I'm a 44-year-old out gay man who's worked for one of the big three for almost 23 years. I'm college educated and white-collar.

Let's take these ill-informed comments one at a time:
1. "The "Big Three" can't believe they are in trouble". Huh? Have you been reading the news? Think things are all comfy and cozy out here in Detroit? Of course they know they're in trouble.
2."They decry they can't make money or grow with the way our trade policies are and because of competition." Untrue. The Detroit Three have said time and again the current issues stem from the economic crisis. And look around--Toyota has cut bonuses and cancelled their annual dealer meeting, Daimler has idled their Alabama plant, Honda has cut their sales forecast, and BMW says they can operate for about two more years under current economic conditions. This is an industry-wide crisis, and countries around the world have already made the decision to help. In the case of the D3, the fact that our government has no energy policy and no healthcare policy--unlike many other countries--has been equally problematic As far as trade policies, there's some truth there (although it's not the focus of discussions these days)--for example, it's almost impossible to sell an imported car in Korea due to taxes, and yet they sell cars here tariff free.
3. "They are horrid in terms of build quality." Untrue today. Five years ago, not all American cars were not as well-built as Japanese cars (neither, by the way, were Korean cars); but check out an American car dealer today. There are world-class, award-winning American cars and trucks out there as good or better than the Japanese.
4. "The management overhaul would take longer than would be reasonable." Overhaul? The D3 have been restructuring for several years. You'd like to boot out the folks that have trimmed product lines, cut fixed costs, launched world class products, and bring in people with no auto industry experience? Have you seen how well that's worked out for Bob "Home Depot" Nardelli at Chrysler?
5. "Government could have forced the Big Three to manufacture cars people wanted." Please. When gas is cheap, Americans want big cars and trucks. Want proof? Nissan opened their first large truck in factory in America in 2003, and Toyota in 2006. You think they did it for kicks? No--they did it because Americans liked large trucks and Nissan and Toyota wanted to make tons of profit. You think forcing the D3 to make Priuses would help? Prius sales are down about 40% from last year.
6. "Integrate Tesla technology into the model ranges." A Tesla roadster is $109,000, and they are building 15 a week. Their 'affordable' sedan will list for about $60,000. Think they'll sell hundreds of thousands? They can' even build tens of thousands. And if you'd bother to have read the D3 business plans submitted to Congress, you'd have seen that some of the things you've suggested--fewer brands, more hybrids and electric vehicles, and even reduced executive pay--are already planned.

Next time you all want to write about the car biz, either research the facts yourself or find someone better informed.

The workers aren't the problem. The door on the Saturn was not a problem with attaching it, it was an engineering and materials selection problem. The plastic selected for the door was too soft and too thin to last long. Those are issues that have nothing to do with the folks assembling it.

Basically, mismanagement, decades of of it, has brought them to the brink of disaster. Does Ford really need 6 types of over-sized pickups? That needs to be thinned out. Most product lines need to be thinned out, so much overlap causes wasted production capacity and that wasted engineering capacity could have gone towards alt fuel development.

Chrysler has had all their best engineers harvested by Daimler before they sold it off.

GM is the laziest of the three. With a CEO that believes global warming is a Gore-invented myth, he gets little sympathy from me. This is the same company that killed the EV1, the electric car. Again, this is not a union-caused problem, a management one. Sadly, the union workers are going to suffer and suffer badly because of management's corporate neglect.

The Big 3 are in a terrible mess and management's incompetence has tarnished the brands.

In my day job, I consult with companies, typically SF Bay Area, on how to recover from disasters. Now, I admit, I have never tended to a fuck-up the size of the Big 3, but the fundamentals of this is no different from smaller companies - bad management, failure to adequately provide for R&D, failure to consolidate product lines and expand lines that are being underserved (Jeep is an example of the latter) are the core problems of the Big 3.

This is not a problem that came about in the last 6 quarters, but a problem that goes back to the days of Roger and Me.

As to your point 1, yes, they do seemed to be shocked. If they had planned for this day, the product lines would have changed in 1999 or 2000.

Point 2 - you do not see the difference between Toyota idling a plant and still being in the black and GM shutting down plants while being 10's of billions in debt? GM squandered their value, Toyota is saving theirs.

Point 3, see above for the door story.

Point 4, if you can call what they are doing a restructuring, Ford is the only one that qualifies under that loose definition. Chrysler was looted of engineering and design talent when they were sold off and GM's attempts at serious restructure plays like a scene from RJR Tobacco.

Point 5. And? You seem to disagree with me, yet make my points. Toyota and Honda came out with A LARGE TRUCK, not 6 like Ford. What was the rest of the Toyota and Honda lines like? I think the word you are looking for is sensible.

Point 6. Yes, I said Tesla Motors. Tesla is light years away ahead of GM in terms of engineering. If you could take Tesla's electric car technology and mass produce it for all their lines, the cost of Tesla's technology would drop tremendously.

Next time you all want to write about the brand strategy, either research the facts yourself or find someone better informed.

"Facts"? I saw a lot of opinions in your response, but precious few facts (and several poorly-research inaccuracies).

In reverse order...
6. Economies of scale don't happen at the drop of a hat. Because the government lacks--and has lacked--an energy strategy, there is currently no infrastructure to support an EV-only fleet of vehicles. That's why there are hybrids, which are better suited for non-urban driving. And you'll note that while GM is working on an extended range electric vehicle for 2010 and Nissan is working on for 2012, Toyota has...? Oh, that's right. NO ELECTRIC VEHICLES. And Honda? NO ELECTRIC VEHICLES. Honda has fuel cell cars--a fleet about the same size as GM's fleet of fuel cell cars. If building a couple of hundred thousand Teslas were as simple as you state, everyone would be doing it. Talk to an electrical engineer--Tesla's solution of wiring together several thousand laptop batteries does not have high-volume applications, and that's why GM, Nissan, and others are pursuing more viable high-volume solutions.
5. FACT CHECK: Ford has six large trucks (regular, extended, and crew cab, in light and heavy duty). Toyota has THREE, not one--and, up until about a year ago, had plans for THREE more heavy duty pickups to chase after Ford.
4. Simplifying distribution channels, reducing executive ranks, consolidating behind-the-scenes activities, leveraging global resources, building where you sell instead of shipping vehicles--uh, yeah, that IS restructuring. I don't see any facts from you comparing that to RJR. And that applies more to Ford and GM than the privately held Chrysler, where admittedly there are still plenty of secrets.
3. You missed my point entirely. You claim today's American cars are crap, yet apparently you haven't set foot inside a car dealer in five years.
2. Toyota and GM (and Daimler and Hyundai and BMW) are all idling plants for the same reason--people are not buying cars and trucks.
1. Planning for an economic crisis brought on by giving mortgages to people who have no business buying houses? No one plans for that, and that's why every single automaker is in trouble.

FACT: I never said the workers were the problem. That's a whole 'nother post...
FACT: Rick Wagoner, GM's Chairman and CEO, has never claimed global warming was a 'Gore-invented myth'. He disagreed with the statement initially made by Bob Lutz (http://www.autoblog.com/2008/03/11/wagoner-disagrees-with-lutz-on-global-warming-bets-against-stat/)
FACT: Toyota US sales in Nov, down 34%
FACT (via Autoblog): "Management bonuses will be slashed 10 percent at Toyota as a result of the global economic slowdown. About 5,000 managers will take cuts as the Japanese automaker reels from falling global sales that are hitting its local market hard. Toyota vehicle sales in Japan dropped 27 percent in November...and Lexus sales dipped 24 percent. As a result, the Japanse Juggernaut will halt production for two days on one of the Tahara production lines manufacturing the Lexus LS, GS and IS models, which will prevent about 5,000 luxury cars from being built, and idle another factory in southern Japan for two days, as well. Toyota is also expected to announce lower sales and production estimates at its year-end press conference that happens at the end of this month. That news will follow the 1 trillion yen ($10.7 billion) yanked just last month from its annual operating profit forecast." In other words, it's not a Detroit problem, and it's not even just a US problem.

You appear to be in denial about the state of the global economy, as you don't even bother to address it. When you're caught up on that and can come back with some real facts, I'll be here to watch...

Oh, and Tesla? Limited product line, run by a billionaire, builds EVs in extremely small numbers? FACT: Won't meet their goals without government help (http://www.autoblog.com/2008/12/10/tesla-needs-government-loans-to-produce-model-s-sedan-on-time/). $650m for a company that's built all of 100 cars. What's their excuse?

Oh, and one more thing--leadership at Toyota and Honda (whom you appear to respect) support the government loans as well.
http://detnews.com/apps/pbcs.dll/article?AID=/20081213/AUTO01/812130355

Tesla has a lot of technology, and more importantly, patents that are light years ahead of what the big three have towards electric cars - batteries, power control, quick recharge, etc. are all things that could be used in mass production in the big three. I am not saying Tesla will be the saviors of mankind, but the development they have done will help the big three produce alt fuel products sooner than they can on their own - assuming a rate of advancement that the big three have had over the past 2 decades.

I am also not saying I am against the bailout, I am for it. I just do not believe it will produce the miracles out of Detroit some believe are possible, which is why I am so critical about the management teams.

No disagreement that Tesla doesn't have a fair amount of technology at its disposal. However, their request for government money clearly illustrates that no one, nowhere, is immune to the challenges that are also facing Detroit.

I'm glad to hear you're for the bailout--and I agree that it will not produce 'miracles' out of Detroit (to be honest, I haven't seen anyone forecasting that). Right now, the focus is on stability and survival--and we all understand that we will be operating in a different environment going forward.