How to Save GM
A simple bailout won't save GM and the US taxpayers definitely won't like saving the company either, I mean, MAYBE if the company made cars that DIDN'T SUCK they wouldn't need a bailout!
If GM wants to save themselves (even the biggest of bailouts won't help. When your business can't turn a profit because you can't sell cars, a blank check won't change that) they have to do some really really drastic things really really quickly.
- Cut executive pay and bonuses to less than $500,000/year.
I don't think the executives at GM will like this, but they don't have a choice. Making less money is better than making no money at all. Plus, a massive cut in pay might show the US taxpayer they're serious about saving GM and will sway opinion in favor of a low-interest loan (if it comes to that) - Sell several car divisions and combine all operations into 4 or 5 successful brands.
First, roll all European/Asian brands into their American equivalents. Understandably, there is going to be a sadness with the dropping of the brands, but it will pass like it did with Oldsmobile.
Second, destroy Hummer. I don't care how; spin it off, close its factories, whatever - just get rid of it.
Third, sell Saab. This is probably going to be the hardest from the shareholders perspective since Saab is a brand which is performing comparatively, but GM will be able to get some cash selling a successful operation. Fill the void with Buick, which is increasingly becoming a luxury brand.
Fourth, shutter a few American brands. This is going to be just as or more difficult than losing Opel. Unfortunately, if GM wants to survive it can't handle such a brand lineup. I would keep Cadillac, Buick, Pontiac, GMC and Chevy. Each of these companies has a slightly different market, so they wouldn't be competing with each other. As for Saturn, either sell it or roll it into the Chevy line. - Showcase the history of the remaining US brands. American car companies have something most European companies don't: history. Recently, US automakers have put a lot of emphasis on the muscle cars they made in a bygone era, but the brands, for the most part, have a history of luxury too. Showcase the finer side of your cars, they will sell.
- Market OnStar to other companies. GM has a good thing going with OnStar, unfortunately they kept it for themselves. Allowing for other companies (Ford, Toyota, Honda, etc) to use the system will bring in millions from additional subscriptions and technology licensing fees.
- Move a majority of manufacturing overseas or to Mexico. If there is one thing the American worker is good at, it is pricing himself out of the workforce market (thank you, Unions!) Undoubtedly people will whine about how the greedy-corporate-fat-cats just want more money, but simply put GM needs money to survive (even if it hurts their reputation), shipping manufacturing jobs overseas will allow GM to build their cars at an affordable rate.
- Do some good engineering for once! More importantly, if you have something good, don't kill it like you did with the EV1 and what it seems you're going to do with the Chevy Volt.
Doing quality engineering to create quality cars will be a huge boost for the company. In fact, if you had some quality cars you might not be in this situation to begin with!
These are only a few of the things GM must do to save itself. It will be tough, but it can be done. What will come out of GM's transition, no one can be quite sure. Hopefully, if they do not accept a bailout, GM will prove to be a leaner, meaner, company - the retirees which have their savings in stocks and pensions depend on it!
November 14th, 2008 - 21:03
“Undoubtedly people will whine about how the greedy-corporate-fat-cats just want more money, but, well that is the case. GM needs money to survive, shipping manufacturing jobs overseas will allow GM to build their cars at an affordable rate”
Well you were doing pretty good until that gem. Now very intelligent are you?
November 14th, 2008 - 21:09
Armchair quarterbacking is easy, but it’s very difficult to actually perform.
1. Sounds Easy, but many executives will not stay around if they are underpaid based on market rates. While some of these that they leave won’t be missed, many will.
2. They are rolling the brands together. GM is working hard to share platforms across many countries. Take the G8, which was developed in Australia, sold in the US, Middle East and China. Hummer is a worthy brand to SELL. Hummer can easily come a Jeep clone with someone with money. Saab has been doing nothing but losing money and should be sold.
The problem with shutting down the brands (like if they wanted to do Buick or GMC) is the dealers and franchise laws that Detroit are bound too. It costs GM *BILLIONS* just to shut down Oldsmobile.
4. Onstar has been used by other companies, Acura being one of them. The problem is that companies like Ford are NOT going to use OnStar if it’s directly linked to GM. It gives GM an unfair marketing advantage.
5. They are trying to move as much as they can to cheap labor countries, but the fact they are contract bound with UAW. They just cannot snap their fingers and move.
6. There has been no indication the Volt is on the chopping block. The fact remains, that many of the cars and trucks that GM has produced over the last 10 years (and certainly the last 5) are just as good — if not better — than the competition. Yes, GM made many crappy products in the 70s, 80s and much of the 90s. But many people cannot remove their blinders to see this.
But let’s be honest, GM deserves to be in the position they are in. Not listening to customers, letting bean-counters run the company for 30 years and working towards short-term profits and not for long-term goals has killed the company.
GM needs to file for C11.
November 14th, 2008 - 21:21
I agree with most of what you say however I have issue with number 5.
As an alternative I’d like to see the union codes rewritten with the executives from scratch in a manner that protects american workers but allows the company to be prifitable; protecting american jobs. The drastic thing that needs to happen; in my opinion, is for the govt. to let GM fall so they can get out from under the union workers inefficient control as well as be forced to become innovative and meet significantly raised economy and emissions standards.
If they fell and later started the company again from scratch they could benefit from new more efficient manufacturing layouts and practices, benefit from state tax and utilities benefits from creating new jobs, hire non-union personnel – and if the union wants to strike let them and eventually the workforce will come back when they get hungry and can’t find jobs in our 6.5% unemployment rate.
If you send jobs overseas GM and any other company that does so shouldn’t recieve a single tax deduction. Don’t penalize them but don’t reward them either. That directly and indirectly hurts our GDP and takes food from American tables. Bad move in today’s economy.
Everthing else you’re spot on.
November 14th, 2008 - 21:27
@bizkit, Updated. I was writing this while chatting on Facebook and since I didn’t expect anyone to really read this I didn’t proof it.
@brian, I did a quick fact-check and you’re right about the Volt. I *thought* I saw somewhere they were cutting the Volt due to the current budget crisis, but that project is safe.
Also, I’m not saying GM doesn’t deserve to be here, and likely the only thing to save their company will be a chapter-11. But there is the slim possibility they will end up in Chapter-7 since the loans GM needs to operate under Chapter 11 essentially unavailable due to the wall street meltdown. (CBSNews, and we all know how good they’re at fact-checking)
November 14th, 2008 - 22:59
Actually it is much much easier than that. Just start manufacturing cars the people want to drive…just go to Tesla and say “hey that’s a nice electric car you got there…we want to manufacture it for cost plus 15%” It’s that simple…mass produce a car the American people want.
November 17th, 2008 - 15:59
Farming out jobs to another country doesnot make sense. By lowering both management and production wages the big 3 could lower expenses. ie. 10.00 hr times 100,000 workers relates to 1 million/hr savings. Sure beats the alternative. Management doesnot deserve bonuses unless profits are made. Auto makers across north america must take responsilility or face reality.
November 23rd, 2008 - 18:25
Just visit the Vauxhal/Opel site and see the great work that the other Divisions are doing. Use these cars in Canada.
I would buy any one of those cars over the Toyohondas.
November 23rd, 2008 - 21:17
I JOE WOLFE have been a loyal customerfor over 30 yrs to GM I work for a shit hole outfit named delphi in kokomo indiana if I’d of known the stuff delphi was going to do to us I never would of come to work for this company after gm got out the place went to hell like I said im loyal to GM not delphi there not a loyal place of business but enough of me about delphi what I’m trying to find out is I don’t have alot of money but to save GM I’d give all of my 401k to try an save gm but in return if GM got on there feet again that I not be forgotten for helping the company I CARE FOR THE MOST I have other family members that work at chrysler but I’m not loyal to chrysler they wouldn’t even give me a chance but GM did an for that I’ll do what I can to help safe GM, plus I’M A DIE HARD CHEVY MAN but Ithink chrysler has a nicer truck since they’ve reinvinted there truck the looks alone are kick ass I’M A CONCERN buyer for GM I hate to see a foreign company take over something GM has worked so hard for the american people when the american people opened up nafta this country went to hell stick those forigen cars in there asses ILL ALWAYS BE LOYAL TO THE GOOD USA OF A AMERICAN 3 I’d buy any of the big 3′s before i’d give my hard earned money to those foriegn assholes thx JOE WOLFE
November 27th, 2008 - 15:06
Please read the message above, written by Mr. Jim Wolfe, and understand the intelligence of an U.S. car manufacturing worker. This guy can’t even write in English let alone put together a car.
Union has ruined Detroit and they deserve to go down. Let them fail and learn their lesson. We CAN create new smart and competent car manufacturing company from the ashes of GM.
We should not bail out GM…It is just like natural selection..Fittest will survive, GM will fail…
Happy Thanksgiving to Everyone,
Michael Seid
November 30th, 2008 - 12:46
I really like what you had to say here! It\’s about time! Would you mind if I placed a link back from my blog?
December 6th, 2008 - 03:43
Blaming the unions is class warfare. You are unfairly singling them out for wanting healthcare, retirement, and a better future for their children. Sound familiar? It used to be the American dream.
March 8th, 2009 - 14:21
Dear Sir and or Madam:
I would like to share an idea that I truly feel would stimulate this economy for the many ladders that accompany the Auto Industry.
Begin a used car rebate system – Have the government buy cars that is in the year range of 5 to 10 years old. Once the government purchases the vehicle it is automatically destroyed and the worry of these gas hog vehicles are disminished. Each person that chooses to sell their vehicle back to the government will receive a Voucher worth 2 times the Blue Book value of the vehicle is 10 years or older git 3 tines the blue book value that may only be used towards a new American Made Vehicle from one of the BIG 3.
This would help to stimulate the economy in a varity of ways from the Auto Dealers, Newspapers for advertising, Suppliers to Goodyear tires and evern back to the banks. If the dealer chooses to add incentatives to the voucher for a better deal, great. I would continue this program for at least 3 years to help rebound the negative effect that this impact has so to speak crippled the economy.
I feel that giving to the banks is only a visious cycle that will be on-going until we see a total coplase in the US economy, what will happen then when we possibly go to war run around naked and throw rocks and then sat down and pray! It is not that easy.