For $7.99 a month, you can have "airbag live gold" which automatically deploys the airbags during a crash. A great idea!
On what planet?
Wanna buy a buggy whip, a cassette player, or a 5.25" floppy disk drive? All marked up 100%, but still good prices.
Revenue (ttm): 180.41B
180 Billion dollars revenue suggests to me that they already understand the basics of the auto industry.
Stock Price History: 52-Week Change: -74.19%
I wonder if their owners would agree with you.
So while the unions are certainly a big part of the problem, the responsibility is ultimately with management. It is ALWAYS management's fault.
It doesn't matter if it is GM or a start up, it's management. If you are considering going to work for a startup, the management should be the most important factor in your decision.
GM's management could have changed the company culture to be as efficient and productive as Toyota's. It's not like Toyota made a secret of how it works.
GM could have seen the decline of proven and easy to access oil reserves, and the rise of the middle class in the BRIC countries and done the math. They are in the car business, so they ought to have seen what's coming.
But no, crap giant gas guzzlers. The unions didn't do that, it was management.
As for Toyota-style management? It's difficult to do with strong, uncooperative unions. Want to replace 100 workers by robots? Not happening. Want to give workers decision making power, tempered by accountability for their decisions? The union demands more money for the decisions, and thinks that "accountability" means "talk to the steward."
There is a reason Toyota builds factories in Kentucky instead of Detroit.
http://www.nytimes.com/2007/09/04/business/04uaw.html?_r=1&#...
I'm not saying GM made no mistakes, but unions did play a huge role.
That is silly. The capital markets are structured in a way that incentivizes short term returns to the detriment of long term growth. Everyone saw this coming. No one cared.
Whether this is a bad thing or a tolerable thing is an open question. What are the consequences of the death of the American auto industry? The management, employees and investors thrived for decades after this deal was made. It was not secret, so investors were able to price auto industry assets fairly over time. Now, pensioners effectively own a good chunk of the company so they will do just fine. There are no big losers.
Except the people of Detroit. The people of Detroit suffered to be sure. It may have been wise for the City of Detroit to acquire a sizable fraction of the companies so it could have a voice in long term planning. It may also have been wise for the city to actively encourage diversification.
It is not reasonable to expect leading companies to retain their position for centuries. Companies are simply machines that output wealth from humans and material. Machines, as a rule, grow obsolete.
That being said (and to counter my own point), the first Toyota Prius came out in 1997, and I don't think I need to tell everyone what gas cost then.
General Motors established its pension in the “treaty of Detroit,” the five-year contract that it signed with the United Automobile Workers in 1950..."
And as for the contract, presumably it was also signed by management, not just the union.
"When GM offered the UAW more lavish benefits, it did so in order to induce the UAW to accept less generous wages. The money that GM paid in the 1990s and 2000s to fund pension and retiree health bnefits was offset by wages that GM did not have to pay in the 1960s, 1970s, and 1980s. Lowenstein appears to want to live in a world in which GM (a) gets a break on its wage costs in the 1960s, 1970s, and 1980s; and can do so (b) without having to pay any money to fund pensions in the 1990s and 2000s."
Bad management screwed GM, not not the Unions. GM ought to have set aside the money saved on wages to meet these future obligations. That they did not do so is just one of many examples of their management incompetence.
It was twenty years before GM saw competition from the Japanese (in the wake of the oil crisis), and it's hard for us to see six months out in our own companies. Any rational shareholder, were they so smart, could have dumped GM in 1973. And, really, 1950 to now is two whole generations (generally defined as 30 years). Fiduciary duty means a "reasonable person" standard. While, yes, it would have been better now if they had the government take on these obligations then, it's clearly not unreasonable for GM to have decided otherwise.
Second, and more interestingly to me, is that it was in GM's interest to bear health care costs. GM needed to attract and retain skilled labor (which is why they compensated them so well in the Treaty of Detroit). Bearing healthcare costs, as a flush company with two full decades of prosperity ahead of it, provided a competitive advantage in attracting and retaining labor versus other fields that these workers could have gone into, such as plumbing, construction, or the like.
I'll leave the historical nature of the Big Three's political biases to others.
Huh? Seems to me that this just proved that the market is a better provider of "social insurance" in the form of products people want (i.e., medical care at market prices) than anything collective offered by either the unions or the government. Hasn't this guy ever heard of Social Security and it's looming insolvency? Why don't the same arguments apply? Just think...how much easier it would be for the government to prop up the financial sector temporarily (not that I'm for that...just following the argument here) if it didn't have 3 limbs tied behind it's back by SS/Medicare/Medicaid?
The stock price is a different story. This article misses something important. Was there some massive cover-up with GM's financials? No. The debt due to pensions and such is not new information. If the stock buyers and analysts didn't adequately project a meaningful market price based on GM's published financials, who is to blame? Unions? No, the stock should be priced lower if thats whats on the books. Don't blame unions for bubble markets and the unfounded position that stock prices and company value should always grow.
