Re: GM's Dick Wagonwheel dont wanna rub butts in bed with french

GM did align itself with the stylists who designed the body of the AMC Pacer, and they produced the Pontiac Aztec and most of the Cadillac fronts.

Reply to
MaceFace
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But Rolls Royce is not known for high quality. They don't ride as smoothly as Cadillacs or Lincolns, and they break down at high rates.

Reply to
Johnny Hageyama

Don't worry, it will only be a few years until Mr. Hunter's "argument" rests in peace. Isn't he the guy who used to like to brag that GM, Ford and Chrysler all outsold any import ??????

GM and Ford both are in a sales and market share tailspin. Neither company has their act together on enough fronts to stop the slide. Both are going to end up far smaller companies than they are today, if they survive at all.

Have a look at what happened to the UK based auto industry from

1950-1990 if you want to see an example of what can happen when a long history of poor management decisions and union shortsightedness act together to undermine an industry. Of course in the UK you had the added component of significant government meddling in the car industry, which we may see in the US if a labor-backed goverment (that would be the Democrats) once again takes power.

John

Reply to
John Horner

It is always interesting to see how big cos eventually fill up with stupid bean counters

You have any website to read about the development?

John Horner wrote:

Reply to
Gosi

Yeah, but a lot of Toyotas, Hondas, BMWs, Nissans, VWs, etc., are not imports. Toyota gets about 67% of its parts sold in US cars from the US. And the proportion of US parts is rising in import makes, and falling for US makes.

GM is in bigger trouble. They don't have as many international operations as Ford.

But Ford and GM's big problems are their pension obligations and union obligations that make it hard to close plants.

Reply to
Jeff

I never implied that ONE did, that was something you inferred. What I said was more Americans buy vehicles from GM and Ford than any import. I guess simply logic escapes you. Clueless people like yourself shouldn't be so smug ;)

mike hunt

Reply to
Mike Hunter

The same guys that designed the Toyota Pruis, Honda Element, and all of the Scion models, I'll bet. LOL

mike

Reply to
Mike Hunter

How do you know that? What year and model did you own? ;)

mike

Reply to
Mike Hunter

A free lunch can be the most expensive meal in the world. For living proof, look at General Motors. A big reason that GM has gotten into such trouble is that the pension and health care commitments it made to employees decades ago seemed to be a free lunch.

The United Autoworkers placed a high value on these benefits, but the accounting rules of the time placed no cost on GM's risk of providing them. So the UAW and GM made deals that were heavy on benefits, relatively light on wages.

Lower salaries meant that GM reported higher profits, which translated into higher stock prices -- and higher bonuses for executives. Commitments for pensions and "other post-employment benefits" -- known as OPEB in the accounting biz -- had little initial impact on GM's profit statement and didn't count as obligations on its balance sheet. So why not keep employees happy with generous benefits? It was a free lunch. Besides, GM's only major competitors at the time, Ford and Chrysler, were making similar deals.

Now, as we all can see, pension and health care obligations are eating GM alive. The bill for the "free" lunch has come in -- and GM is having trouble paying the tab. In the past two years, GM has put almost $30 billion into its pension funds and a trust to cover its OPEB obligations. Yet these accounts are still a combined $54 billion underwater.

"Any market economist would tell you that things that are 'free' are overconsumed," says Greg Taxin, chief executive of Glass, Lewis & Co. "That's true of pensions, it's true of OPEB, and it's true of stock options in the '90s." That's a lesson the SEC seems to have ignored, given last week's decision to let companies delay counting the value of options as an expense. But that's a topic for another day.

GM began its slide down the slippery slope in 1950, when it began picking up costs for medical insurance, pensions and retiree benefits. There was huge risk to GM in taking on these obligations -- but that didn't show up as a cost or balance-sheet liability. By 1973, the UAW says, GM was paying the entire health insurance bill for its employees, survivors and retirees, and had agreed to "30 and out" early retirement that granted workers full pensions after 30 years on the job, regardless of age.

These problems began to surface about 15 years ago because regulators changed the accounting rules. In 1992, GM says, it took a $20 billion non-cash charge to recognize pension obligations. Evolving rules then put OPEB on the balance sheet. Now, these obligations -- call it a combined $170 billion for U.S. operations -- are fully visible. And out-of-pocket costs for health care are eating GM alive.

GM spokesman Jerry Dubrowski says the company expects to pay $5.6 billion in health care costs this year for 1.1 million people covered by its plans. That's up from the $3.9 billion it shelled out in 2001 to cover 1.2 million people.

"At the time GM began offering these benefits, no one had any idea that the costs for prescription drugs and medical services would explode the way they have," Dubrowski said. True. But the UAW was astute (or lucky) enough to push the risk of covering these costs onto GM.

GM's pension funds are in pretty good shape, thanks to an $18.5 billion infusion two years ago. GM got this cash by selling bonds at relatively low rates, hoping to resolve its pension problems once and for all. This maneuver has been successful so far, but funding the pension plans has consumed much of GM's borrowing power and strained its balance sheet.

At the end of last year, GM says, its U.S. pension funds showed a $3 billion surplus. GM's pension accounting, which assumes that the funds will earn an average of 9 percent a year on their assets, is highly optimistic. But things are under control -- as long as GM stays solvent.

By contrast, OPEB is out of control. At year-end, OPEB was $57 billion in the hole, even though GM threw $9 billion into an OPEB trust in

2004. The company has no legal obligation to pre-fund these costs, but it's trying to show the financial markets and its workers that it's dealing with them. The OPEB trust has a hefty $20 billion of assets -- but GM calculates its obligations at a staggering $77 billion.

What's more, GM says they're rising at 10.5 percent a year. Thus, even though President Bush's Medicare prescription drug benefit whacked $4 billion off GM's OPEB obligation last year -- thanks, George -- it covered barely half the year's increase in the liability.

If GM were making lots of money selling vehicles, this would all be manageable, sort of. GM could buy enough time for demographics to bail it out, as more retirees begin getting Social Security and Medicare, reducing GM's costs, and other retirees die off. Its ratio of retirees to workers, currently 2.5 to 1, would shrink. Alas, GM's vehicle business is in the tank. Unless GM starts making money on vehicles or gets a break from the UAW or the federal government, things are going to get really ugly. I hope that doesn't happen, but it easily could.

The bottom line: Whenever you offer someone a free lunch, make sure that you'll be able to pay the bill when it comes in.

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Reply to
Gosi

I have an uncle who's a car nut and an aunt who's an Anglophile. They each have the same model -- Silver-something. Also a friend of my FIL told me not to buy one, as if I could afford even the owner's manual.

Reply to
Johnny Hageyama

Mayb e you can download it in PDF.

Jeff

Reply to
Jeff

Ya, right ;)

mike hunt

Reply to
Mike Hunter

Would you *please* stop posting this stuff to alt.autos.subaru!!!

We're largely a tech support type of newsgroup and this political discussion is a distraction and waste of time for us.

It's easy. If you want to reply to this, just delete alt.autos.subaru from the list of TO fields.

Reply to
Jim Stewart

"Gosi" wrote in news: snipped-for-privacy@h48g2000cwc.googlegroups.com:

fascinating article, and many good points... but 1 question. You even mention that Ford and Chrysler made similar deals. GM is having the hardest time dealing with retirees and health care... sure, they are the biggest company of the 3, but proportional to sales, all 3 should be in similar straights. For Ford's problems, the healthcare and retirees are mentioned as an "oh yeah, us too." to the other problems. Similarily, Chrysler (profitable) deals with them but doesn't parade them out as an excuse.

IT all comes back to the product. Chrysler is making products people want, and the profits allow them to deal with decades-old bad deals. Ford and GM are not, but at least Ford (until recently) had some hits to carry the load.

It's all about making cars people want. JP

Reply to
Jon R. Patrick

Alas, there was a time when ALL of the automotive news groups were largely the tech support type. Techs and engineers exchanging information. I got involved years ago as a automotive engineer. After a while people started to come in looking for a fix for their personal vehicles. Eventfully the groups began to become loaded up with people looking for a free fix. Today the NGs are pretty much just chat room for people that have no life. People who troll the NGs, to denigrate the brand, and lately the party in power. Apparently no one will listen to them out in the real world. LOL

mike hunt

Reply to
Mike Hunter

It also lets people who do like talking about cars a place to chat about cars. While you may not have a life, I do.

Jeff

Reply to
Jeff

Try alt,autos.general, that is the place for import owners to go when they want to denigrate GM and Ford ;)

mike

Reply to
Mike Hunter

Actually, I don't denigrate Ford.

Jeff

Reply to
Jeff

GM and Ford sell more vehicles in the US than any import. Apparently a lot of buyers do like what the have to offer.

It is a shame the employees that work in the foreign assembly plants get such poor benefits and wages. One might suspect the vehicle they assemble would cost less than those for GM and Ford, not more. Seems like the import brands are screwing people other than those that work for them ;)

mike hunt

Reply to
Mike Hunter

(...)

But GM, Ford and D-C are in different circumstances.

While GM has a profitable foreign division (they make Vauxhaul, Holden, Opel and Saabs), the foreign division is not as big as Ford's. GM sold about $28.6B worth of vehicles in North America last quarter vs. about $17.3B outside North America. GM has also had to pay out lots of money to cover the pensions for Delphi (the parts maker in bankrupcy that GM used to own).

Ford has a higher percentage of overseas operations. For every 10 cars they sell here, they sell about 8 oversears (sorry, I couldn't find overseas sales figures) vs about 5 for GM. So they are able to balance out overseas markets.

One thing I don't understand is why GM sold GMAC. I mean that was making money for them. And even when they lost money on a car, they could get some back by financing it.

D-C is a whole other ball of wax, because they were part of a merger of equals with Diamler-Benz (it just seems Dialmer-Benz was more equal).

I am sure that how well paid up the pensions are for the three companies plays into their financial results. However, making liabilities for the future like they did without knowing the ballpark of the future costs is rather stupid. Which why companies go with 401ks rather than pensions nowadays. And European operations have an advantage because the government does the pensions in most european countries.

It seems for will do alright with the Focus and the 500. They also sell a lot of trucks, which aren't doing as well right now as they used to.

Actually, it is all about making cars people will buy. I want a BMW, a Hummer, Explorer Sport Trac, an Escape Hybrid, a Honda Fit, an Dodge Ram with 4WD (but no plow), Dodge Nitro CrossFire, Liberty, and a Honda ATV (4wd + plow, too). I need a really big garage. Which of these am I likely to buy in the next year: none (although the Honda Fit is the most likely one).

It's what people will buy, not just what they want.

Jeff

Reply to
Jeff

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