Will GM follow Delphi into bankruptcy?

[ckramer]

The chances that General Motors will file for bankruptcy are now about 30 percent, according to one industry analyst, following the bankruptcy filing by the company's former parts unit, Delphi.

Rod Tadross, Banc of America's securities analyst, estimated Monday that GM's retirement liabilities rose to about $6 a share after the automaker warned Saturday that it could be on the hook for as much as $11 billion in contract obligations to its former employees at Delphi.

GM spun off the world's largest auto-parts maker in 1999 but retained responsibility for some of the company's retirement health and pension benefits if Delphi filed for bankruptcy before 2007.



link

[BeatleBoot]

1. The Delphi Bankruptcy is Getting Less Attention Than Deserved

This is a major event that will have ripple effects throughout the economy.

Others have gone before Delphi - Tower, Collins & Aikman, etc

But Delphi is much bigger than those smaller suppliers.

And if GM goes bankrupt - hold onto your hat. The impact could be devastating to our country.

[Delphinus]

3. I agree.

Delphi filing bankruptcy will affect a ton of people. Folks I used to know, lived in Anderson, Indiana, and the entire town was built around Delphi. Don't know what's going to happen with them.

[bigworld]

4. If the airlines can do it, why not GM?

If I were GM, I'd seriously entertain declaring bankruptcy. I mean, if the airlines can do it and continue operating, why shouldn't GM?

I agree -- it would shake the markets and destroy a huge chunk of our economy, but GM's never cared much for anything beyond their company walls before, so my money's on them actually doing this. The bastards.

[raccoon]

38. Welcome to DU, bigworld! nt

[loudsue]

13. One of the cornerstone big blues going bankrupt will be "HUGH!!!111"

You're so right about that, BeatleBoot. And that's just ONE of the really huge things that is going on. With airlines falling one by one, and the housing market on the brink of tanking, all the insurance companies that are going to take a hit from Katrina, and salaries going down, things don't look real good right now.

"Ripple effects throughout the economy" INDEED!!!

:kick:

[Delphinus]

2. The Guardian (UK) talked about it too ...

General Motors edges closer to bankruptcy

David Teather in New York
Tuesday October 11, 2005
The Guardian


A Wall Street analyst yesterday warned that General Motors has a 30% chance of filing for bankruptcy following a weekend of further turmoil in the Detroit motor industry including the bankruptcy filing of GM's largest parts supplier, Delphi.
The filing means that GM, which spun off Delphi in 1999, could be liable for up to $11bn (£6.3bn) in healthcare and pension benefits for workers who transferred to the parts supplier. It also faces possible supply disruptions. Shares in GM fell more than 4% to $27.08.


http://www.guardian.co.uk/business/story/0,,1589111,00.html

[Oerdin]

5. More then likely with in 5 years.

When GM spun off Delphi they agreed to cover worker pensions if Delphi went bankrupt with in 8 years. That means GM will now be on the hook for about $11.5 billion in added pension costs. GM currently is having a very hard time with its existing pension costs and has recently had to sell assets like it's 20% share of Fuji Heavy Industries (Subaru). Add on top of that the current CEO is a complete fucktard who lost $3.5 billion in 3 years in the FIAT debacle with absolutely nothing to show for it and you see why GM is in bad shape.

The basic reality is al the old auto parts and manufacturing companies can't afford to continue to old way of doing things. The management is ingrown and is scewing everything up (see how they continued to focus on SUVs and ignore their car lines even with years of warning that oil prices were going up; see how they ignored hybrids)while the unions have simply priced themselves out of the market. Delphi pays an average of $60 per hour plus benifets for its blue collar workers while the Japanese are paying around $38, the Koreans around $20, and the Chinese (who will soon be in the US market) are paying around $9. The products are largely similiar but the price structures make it impossible to make money. We can't have blue collar workers making $115,000 per year working on an assembly line when the Chinese can do the exact same job for $17,000 per year or less. Hell even 1st world countries like Japan ($72k) and Korea ($38k) are much more cost efficent.

At the end of the day the current managers need to go, the union workers are going to have to accept more realistic wages, and pension liabilities are going to have to be cut. Bankruptcy is the only way to do that. I really doubt many people are going to cry for the poor oppressed union workers who are making $115,000 per year though. Most people realize how absurdly over priced that is.

[hogwyld]

20. Thank you for breaking it down to plain english!

I didn't realize that they make that much! I live in Silicon Valley, one of the most expensive places to live, and a typical degreed Engineer will make about 100k per year. Of course, he has to fund his own 401k retirement plan, pay about a hundred bucks a month for health insurance, etc. Bless the unions, but I think they have cooked their own goose.

[daleo]

24. How many assembly line workers make $115K per year

How much overtime would that require? I just find it hard to believe this is anything but a very exceptional case.

[hogwyld]

27. I imagine quite a few

I heard of this and similar wages from a number of sources such as newspapers, magazines, business periodicals. Do you know that the longshoremen at the port of oakland regularly make about 130,000 per year? This came from the KTVU local newscast. Something is terribly out of whack!

[daleo]

28. This is from the U.S. census website

http://pubdb3.census.gov/macro/032003/perinc/new10_001.htm

In their 2003 survey, they found about 4% of all employed people made over $100,000. That is the upper end of their published income distribution, from that I would estimate perhaps 2 or 3% made $115,000. Given the fact that this group will include management, doctors, lawyers, dentists, engineers, CPAs, etc., I don't think that leaves room for too many of the mythical $115 K auto workers or longshoremen.

I have known blue collar workers who have made high wages for short times on large industrial jobs, etc. when there was a lot of overtime, if they had excellent union contracts. But those are a few exceptional cases, and they don't make that money for long. As often as not, they were unemployed as soon as the big job was over.

http://www.uaw.org/contracts/03/ford/ford02.cfm

Here is a link to a UAW contract. After 4 years the rate for an assembler is $28.50 per hour. That comes to $58,000 per year, which is a good middle class income, but a long way from $115K.

I know benefits will make this a higher number for the company. Some will also be subtracted from this wage.

[Blue Diadem]

32. Here is a link with a much lower GM figure

http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20050905/BUSINESS09/50905041

Snip:
Topping the list are cashiers, who currently make $15,420 a year on average.

Next are food preparers and servers, who make $14,500 a year on average, according to the study.

Wal-Mart, a retailer with typically lower wages, was Ohio’s top employer last year, with 42,800 employees, state figures show. Meanwhile, General Motors Corp., which pays factory workers $26 an hour, had only half as many workers. GM is the state’s sixth-largest employer.

You may be also be hearing the annual figures that include overtime. Many of these workers work 10 or more hours a day, 6-7 days a week. Depending on their contract, that could mean double-time for at least some of those hours. This article doesn't state if $26 is an average hourly wage, but I'm betting it is because skilled trades people would be making more than assembly workers etc.

[daleo]

35. I imagine they cherry picked the highest payout they could

From tens of thousands of yearly incomes, they combed through the data, found an outlier, and called that a "typical" wage, or some such ambiguous term.

[5thGenDemocrat]

42. Assembly line wages

I can offer an insight about the pay scale at Delphi.
My buddy, Mike B, has 18 years seniority at Delphi Plant 3 (formerly Saginaw Steering Gear). Working a standard 40 hour week, he grosses 1K/wk and takes home about $800.
He tells me it is possible, by working double-shifts and figuring for second- or third-shift premiums, to make about $110K/yr -- but you'd practically have to live at the plant to do it.
John
And there isn't any appreciable overtime to be had right now -- so that's all hypothetical.

[Blue Diadem]

33. Delphi's average wage is $25 an hr, it's the benefits that cost so much

http://www.wtol.com/Global/story.asp?S=3957705

Snip:
Delphi employees and their unions will probably be asked for wage and benefit concessions to help the company. Employees make an average wage of $25 per hour. When benefits are factored in the total compensation reaches $65 per hour.

[daleo]

34. I would like to see the audited evidence.

I know health care can add a healthy amount, as can pensions. But workers contribute to both of these as well. I simply don't believe benefits bring anyone's wages to the $65 per hour equivalent. Typically benefits might add 20% or 30% to total staff costs. This implies that benefits are nearly tripling costs.

As for pensions, these corporations are supposed to have invested pension money, and that should have earned a healthy return. I think they took the money and ran, rather than making prudent investments.

These numbers are heavily torqued in my opinion. A TV news site that doesn't actually provide any backing for their numbers does not satisfy my standard of evidence. There will be a lot of propaganda about this.

[Psephos]

36. Here's the real problem

Pension and medical obligations, due to stupid contracts from the 1980s and early 90s. Stupid for GM to have signed them, and stupid for the UAW to have demanded them. Both sides did the politically easy thing in the short run and hoped the future would take care of itself. GM needed plants to keep humming without strikes and keep the annual profit figures intact and the shareholders happy. Union management needed to take big increases back to the locals to prove they were tough enough for the job. Well, now it's the future. Talk about leaving the fence gate open for lower-cost competitors. GM and the union deserve each other.

Here's a good article from last April in the WaPo, but you can Google for plenty of others that say pretty much the same thing.

http://www.washingtonpost.com/wp-dyn/articles/A64599-2005Apr18.html

Every car that currently rolls down a GM line carries $1500 of obligation to families and pensioners. (We're not even talking about current employees.) If GM sells fewer cars, guess what, the obligations don't go away, so the per-car bennie tax just goes up, making it harder to sell cars, making the per-car bennie tax go even higher up, well, you can guess how that ends. Despite all the blather in this thread about how much GM employees make, the actual figure for blue collar workers at GM is around $70/hr when all benefits are accounted for. In Japan and Korea, that number is under $40. In China? Who knows, probably under $15.

GM management...blah blah blah...UAW blah blah blah...finger point finger point finger point...quick, let's find an ideologically correct whipping boy. Then we can all hate hate hate and feel like we've done something.

Well, I'm sick of hate hate hate. The problem won't be solved by haters. Quite simply, other people in other countries, from executive suite down to janitor closet, are willing to do quality work for less than we are willing to do it in the US.

This is the reality of the global economy and it ain't going away.

It's possible there is a way out of this bramble but it sure as hell isn't by turning around and going back the way we came.

Peace.


On edit: Hmm, I sound a bit rantish here. Must be because I'm from Michigan. I'll add my standard disclaimer: these are my opinions, nothing more, nothing less. And nothing personal.

[Blue Diadem]

37. Thanks for the wapo article.

It would seem that to be put on an even global playing field, our country would need to implement a national health care system. That in itself would elimate many costs associated with not only GM/Delphi's problems but other companies as well. Also to be considered an even playing field, wouldn't it be necessary for CEO's and others in upper management to have the same pay structure the other countries do? If irc, our CEO's make 10x the amount that the countries you mentioned do.

Again, I appreciate the article. I'd always heard the reason so many workers had to work long-term overtime at factories was because the companies refused to hire more people. Why? The answer was benefits. They said it was less expensive to pay someone time and a half or double time compared to the benefit expenses of hiring an extra person.

edited to add: I re-read your post and see you already addressed the executives pay issue.

[daleo]

39. The point of the discussion is what is the real cost of labor

So, debating the factual foundation of rates of pay, benefits, etc. is not blather.

If we assume that benefits amount to $1500 per car, and also that they amount to $65 per hour, that would imply that the cost of actual labor per car is about $1000. I back into this number in the following way:

- the actual contract stipulates about $28 per hour.
- the claimed cost per worker is $65 per hour, so $28 is 43% of that.

- the claimed cost of pensions and benefits is $1500 per car.
- 43% of that gives $650 per car wages, leaving $850 for all benefits.

- The price of a car is well over $20K, SUVs are often over $50K. Where is all the money going?

GM got itself into financial trouble - a large part of that is the fast and loose pension accounting that has gone on in the last 20 years, part is bad investment decisions, part is free trade with low wage countries. The last item is the key one.

I don't doubt auto workers will be made the villains here, and these middle class jobs may well be wiped out. But it won't be their fault - you can hardly blame them for contracts they bargained for 15 years ago, under entirely different trade conditions.

Essentially, they and other workers have been abandoned by the political class. The same is happening with IT professionals and other professionals. If this continues, the U.S. will turn into a very bifurcated economy, with a relatively small upper class ($100 K plus) and a large working poor ($30K or so), and a sparse middle class.

[Psephos]

41. I agree with your sentiments, but not your analysis

Your numbers are based on some incorrect assumptions.

According to Morgan Stanley analysts, the price tag on every new General Motors car and truck includes about $1,824 (as of December 2004) that covers pension and health care benefits for retired GM employees and their spouses. Toyota's cost is $186 per vehicle -- one-tenth that of GM. The Japanese have younger work forces at their U.S. factories -- in part because they've been hiring en masse only since the 1980s and thus have few retirees. By contrast, GM has 2.5 retirees for every active worker in North America.

So, to be clear, the benefits-tax-per-car figure is for already-existing obligations (medical for retirees, families, pension liabilities due to actuarial changes, etc.). It has nothing to do with current unit cost of labor per car. It's simply added cost.

The actual cost of labor to build a car in America is a separate issue. Roughly, it's about 50% - 100% more than the first-tier Asian manufacturers pay, and about 200% more than the second-tier pays.

I agree with you that debating the factual foundation of rates of pay, benefits, etc., is not blather. Blather is when those who do not know the facts present their opinions and suppositions as factual - usually with a lot of huffing and puffing. I saw a lot of that here (not from you, I'd like to add).

I further agree with you also that GM got itself into financial trouble, for a number of ill-considered reasons. However, its pension accounting has been pretty good. In fact, the numbers revealed in its pension accounting have been the reason Moody's downgraded their credit status to BB-. The numbers are not pretty. If you did not read the article whose URL I posted, please do...or Google for something similar from a non-political source. There are plenty of good articles out there.

With regards to the implosion of US carmaking, some will vilify auto workers, that's a given. Others will vilify fat-cat executives, that's also a given. How tired that we must keep replaying the same old class warfare polemics left over from an earlier century, when the real problem is so obvious to anyone without a political axe to grind. Namely, that there are plenty of other people in the world willing to do the same quality of work for less than half as much as money. This applies to workers, engineers and designers, and executives - top to bottom.

20th Century rhetoric is worse than useless as a remedy for the problems of the 21st Century economy. Worse than useless because it seduces us with the pleasures of enragement and so, diverts our attentions from actually overcoming the challenge.

Blame and fault-finding are the indulgence of the keyboard class. People who want to get stuff done spend their time, well, getting stuff done. In a globalized economy, there are those who want to compete, and those who don't. You can usually tell the ones who don't because they'll be whining, finger-pointing, and conspiracy-theorizing.

Cheap overseas labor is not what leads to outsourcing; productivity per dollar spent on labor is. It's easy to justify paying someone a thousand dollars an hour as long as they're creating two thousand dollars an hour of value. Middle class jobs in America needn't disappear as long as American productivity per unit of labor outpaces the competition. That will require that management and labor think of each other as teammates, not adversaries. It will also require change in technology, in work methods, and in attitudes. That last one is the hardest change of them all.

Peace.

[Psephos]

6. This is a bellwether of radical changes ahead in the economy

GM bankrupt? Sounds almost as ludicrous as Northwest and Delta filing for bankruptcy on the same day, doesn't it?

American manufacturing workers now compete with low-wage counterparts in developing countries. It's not just the hourly wages but especially the medical and retirement benefits that make manufacturing in the US increasingly noncompetitive.

I don't know the answer here. I hear a lot of the same ideological solutions over and over, but the math doesn't add up. The one number that matters is that, everything else being equal, it costs US carmakers $1500 more per vehicle just to pay benefits to retirees and families. Add another grand for labor differentials and tax burdens. Very few car buyers will pay a couple of thousand dollars extra for a car just because it's made with American labor.

Peace.

[shrike]

9. Er, what about the absurdly overpriced managers?

I agree $115,000 is out of line for assembly line work. (Must be among the best paid union employees in the country: I know union carpenters and pipe-fitters who don't make that much.) However, the guys at the top have hopelessly bloated salaries, get rewarded for screwing up and screwing over (where I live, the top execs gave themselves all a nice bonus before defaulting on the pension plans.) and have no fear of getting outsourced because they call the shots.

Too often Americans get mad at the wrong people: welfare queens and "Greedy" union workers while the men behind the curtain go scot free.

[Psephos]

15. No argument there

Of course the executive suite is overpaid.

Greed ain't going away anytime soon in the human race.

But if you do the math, executive overpay is not what's made manufacturing in America unsustainable. These clowns have been overpaid for decades. Seems to me that if that was the only problem, then GM et al. would have gone bankrupt in the 50s, 60s, or 70s.

Blue collar overpay is also not what's made manufacturing in America unsustainable. Because to call it overpay is to say they got something they shouldn't have.

The problem is that times have changed, and old pay scales don't work in the new global economy. Simple as that. Executives overseas don't make as much as their US counterparts, and blue collar workers overseas don't make as much as their US counterparts. Because of their cost advantages, Asian automakers in particular are able to devote more of their money to research, innovation, and capital improvements in their plants. Meanwhile, in the US the hidden tiger waiting to pounce is the medical and pension liabilities the automakers have accumulated. Anyone who has worked for GM knows the bennies are first-class in every respect. But with medical costs growing at 10-15 percent per year steadily for the past decade, those bennies are no longer sustainable if they can't be tacked on to the price tag of the car.

Few people are going to buy an American car for several thousand dollars more than for what they can buy an equivalent car made overseas.

So rather than play the same ol' game of pointing fingers and vilifying, let's figure out how to fix the central problem: there are people all over the world willing to do quality work for a lot less than what Americans are willing to do it.

Peace.

[shrike]

21. I'll beg to differ on one point

Exec salaries HAVE gone up -- don't have the figures right in front of me, but the average president used to make reasonably more than the average employee. (I have no problem with high CEO salaries. Just ridiculous ones.) Now he makes ridiculously more than the average employee. Plus perks, bonuses, stock plans -- plus payment for failure, in many cases. AND, while the overseas exec makes less, the American exec's job is not getting outsourced to Asia -- yet.

I'd be willing for the blue collar folk to do with less ONLY if the people at the top acknowledge we're all in this together, and that an $8 an hour middle class is not good for this country.

The people at the bottom cannot absorb those high health care costs anymore than the corporations can. They cannot pay for their own retirements, cannot buy a $200,000 house, etc ...

Usually those who don't want "finger pointing" are those trying to deflect blame. Since you're posting on DU, I'll assume you are not one of those people. But for change to happen, the "haves" are going to have to understand that it is necessary. The haves, remember, are the ones with the power, especially with unions going the way of the dinosaur.

[PerceptionManagement]

25. What about their crapy, poorly built cars & trucks?

Most people (evendently) would buy a used Honda, Lexus or Acura rather than a brand new GM/Ford/Mercedes(Crysler) any day.

Let the market work. GM's value and poor quality drove them out of the market. The Japanese work relentlessly to improve thier products. Makers like GM seem to always be out for the short term buck.

[shrike]

31. The point is not how poorly the cars are designed

The point is that the workers -- and the workers alone, apparently --are being asked to sacrifice for a generation of mistakes.

[democracy eh]

7. "What’s good for General Motors is good for America"

puts that quote in a new context

let the race to tbe bottom continue

[sam sarrha]

8. only long enough to rid themselves of those pesky Pensions..

[Sadie5]

10. Oerdin is full of it

Those wages were negotiated to keep a middle class here in America. Bush wants to do away with the middle class.PERIOD! GM saw the Airlines file bankruptcy, do away with pensions, and get away with it, now they will try the same crap on the American worker. As for many of those workers, some are old Delphi employees, some are hires after the transfer from GM. The old employees are already working at other plants GM owns. The newer hires are out of a job, but can collect unemployment and pay for their insurance. The new hires did not make the same wages as the old employees, in fact, they made much less, so GM is lying about the wages they made. If GM does try this, they will see a big time strike, and if they simply move to say China or elsewhere, they will never sell another car in the US, which they probably plan on doing.

[Sadie5]

11. Almost forgot

GM has already been told by the Union about those bloated salaries the top brass make. They have been told to give up those salaries for the sake of their very own jobs. The Union is doing their job.

[hogwyld]

40. It's coming

Unfortunately, I don't think GM cares if you strike or not, they will move manufacturing overseas, because they cannot stay in business with the status quo.

[robcon]

12. I think GM is in an irreversible decline

The company is shrinking, its dealerships are not doing well and are opting out of GM, it has discontinued Oldsmobile, and needs to shed another division (from what I hear.)

And they haven't faced competition from Chinese cars yet - and that is coming within the next decade, if not sooner.

It's a death spiral, IMO.

[triguy46]

14. You're right...

you reach a point when you can't pull out of the dive. It will be slow, but it is lumbering toward death, only being maintained by the denial of the stockholders and employees.

[robcon]

16. All the talk about cost savings is useless

If GM can't develop cars that people want (and they haven't been able to do that effectively since the 70's, IMO) they're doomed. The cost penalties vs. competitors that they claim can be overcome only through a 'hot' car model or two. No sign of that from GM.

GM's latest purchases, Saab and Hummer, suggest that they don't get it.

[Sadie5]

17. This has been their problem

The first cracks started showing up when they purchased shares in foreign companies. They then started saying they were losing money. As for those who guess at what the problem might be, well...you need to be an employee to see through the bull****. There is no crisis. They simply want to pad their corporate pockets at the expense of others. If pensions and health benefits are done away with this will be accomplished. GM owns many more lucrative companies which will always keep them afloat. As for the cars being more than the foreign cars, they are priced about the same, give or take a few thousand. Deals such as o% financing are almost always available. And NO, we are not willing to give up what we fought long and hard for, for many years. Many of the responses seem to say that we are overpaid and should accept the slave wages they offer. If we do this then I can assure you that the CEOs pay will only increase while the shareholders get a decrease. All but a few of the responses sound as if they might have come from some Conservative board instead of DU. I thought we were all fighting to keep the middle class alive. Let GM have it's way and thousands more middle classer's will go down. Unions need to survive or we will all be working for slave wages with no end in sight.

[robcon]

18. You're incorrect on a lot of points, DemoS

The first cracks started showing up when they purchased shares in foreign companies. They then started saying they were losing money. As for those who guess at what the problem might be, well...you need to be an employee to see through the bull****. There is no crisis."

Gee, a BB- rating from the credit market suggests otherwise, DemoS. Chronically losing money does that to you, I guess.

"...They simply want to pad their corporate pockets at the expense of others. If pensions and health benefits are done away with this will be accomplished."

whose pockets????? The corporation has no pockets, DemoS.

"...GM owns many more lucrative companies which will always keep them afloat. "

namely?????

GMAC is a declining finance company, which is dependent on the sale of GM cars (not a growth business, to be sure) for its success.

Saturn has been a bust. It may be folded into another division, or axed.

Saab is declining. Hummer is dropping like a rock. Opel (Europe) has been declining for years.

They have talked of ending the Buick division. The average age of the Buick/Cadillac customer is over 60 - not exactly a growth market.

"...As for the cars being more than the foreign cars, they are priced about the same, give or take a few thousand. Deals such as o% financing are almost always available. "

Pricing is not the key to success in the auto business. Discounting is more important. Toyota and BMW, for example, don't have to discount their cars as much, and are developing cars, images and reliability that keeps customers satisfied. That is the only way to establish a successful car company.

The recent GM "employees' pricing" was a "success" except that it shows, once again, that GM can't sell its cars at anywhere near regular price, while many of its competitors can.

"...And NO, we are not willing to give up what we fought long and hard for, for many years. Many of the responses seem to say that we are overpaid and should accept the slave wages they offer. If we do this then I can assure you that the CEOs pay will only increase while the shareholders get a decrease. All but a few of the responses sound as if they might have come from some Conservative board instead of DU. I thought we were all fighting to keep the middle class alive. Let GM have it's way and thousands more middle classer's will go down. Unions need to survive or we will all be working for slave wages with no end in sight."

You don't have a choice, DemoS. GM will be belly-up in five years, IMO.

[hogwyld]

19. Face the reality

115,000 isn't exactly middle class wages! College educated engineers in Silicon Valley make that but usually put in about 60-70 hr/weeks. Either the unions concede some pay/benefits. 75% of something is a whole lot better than 100% of nothing. Once that golden goose leaves our shores, she isn't ever coming back.

[shrike]

22. She'll leave anyway

While I agree that $115,000 is ridiculously high, pay concessions usually do no good. They're supposed to, but they don;t. In fact, they are usually the beginning of the end. I live in a blue-collar town, grew up in one as well -- seen it time and time again. The employees give, they give a little more, and then the company leaves anyway. Oftentimes the municipality kicks in: tax breaks, sweet deals, etc. It only postpones the inevitable. They always leave anyway; never fails.

Wish I knew the answer.

[triguy46]

23. Unfortunately, organized labor is going to take the blame...

for high costs because of wages, health care and pension costs. Of course, a Union contract is between labor and management and it is a fact that GM signed those, agreeing to the long term costs. They were just in a dream world in which they really believed we needed Chevys disguised as buicks/pontiacs/oldmobiles/gmc, etc.

here's another take on lower labor costs: US costs reflect the cost of employer based health care insurance. In the rest of the world, that expense does not exist for manufacturers, it is an entitlement granted by the government as a benefit to their citizenry. If we could shift employer based health care premiums to national health insurance, or, gave it to employees who on a sliding scale had to pay for health insurance through the tax system, we would begin to approach a more level field.

Unfortunately, though, GM cars tend to be crap, so cost savings prob won't work anyway.

[hogwyld]

26. They are crap

Used to be, people bought Japanese cars because they were cheap and reliable. The big 3 didn't listen and continued to produce crap. But there was no incentive to try harder as the UAW had high wages in place whether the product was good or bad. That business model will not work in the new global economy. Whether we like it or not, Big Change is coming.

[olddad56]

29. Is there a better way for a corporation to rid itself of employee pensions

[geniph]

30. GM probably shouldn't have put all their eggs

into the giant-SUV-planetmobile basket, thereby proving they had not learned the lessons of the 1970s.