General Motors

I'm curious as to people's ideas about General Motors.

I've said many times that the problem with selling cars is that they are forced to make cars that people don't want. When people don't buy them, well duh!

Not only that, the cars they must make more of, which are small basic types, cannot compete with far Eastern brands which have only recently begun building cars here -- with fewer unions and lower operating costs which make their cars less expensive. Again -- disadvantage.

So -- here's my plan for saving General Motors. Basically if I were the CEO this is what I would propose:

1. Drop the stimulus money. If the government wants to give GM money to stay alive, it may do so, but on OUR terms. We will tell them OUR plans, and if they don't like it, then they can keep their money, and maybe use it to pay off all the unemployed workers that result if GM goes under. But DO NOT take marching orders from a government that hasn't the slightest idea how to build a car, much less how to make a profit doing ANYTHING.

2. Deal with the unions. Now -- I want to make it clear that I'm not anti-union. I have no problem with people coming together and collectively asking management or other governing bodies to make changes or address concerns. But when the UAW is demanding tremendous benefits and large salaries that outdo those of management, while competitive companies have a marketing advantage by spending less on such, the top brass at GM needs to tell the UAW they either must make concessions or start filling out applications at Toyota. The union can remain, but management must have a say in this as well. If not, fire them all and start over on new terms.

3. Demand the US Government relax its CAFE standards and other mandates. Indeed we're all for safe, fuel-efficient cars, but if it means no more carmakers then the idea doesn't fly. I don't want to hear about gas shortages when it's illegal to drill for it -- even in vast wastelands of Alaska or in coastal waters where other countries ARE drilling. Efficiency and alternative fuels are a wonderful idea, but GM can't design such animals without the ability to make money. Leave GM be; new innovations will come -- and they will come faster and better without Big Brother breathing down their neck.

4. If Big Brother does not relax its standards, STOP SELLING CARS IN THE USA. Actually a total stoppage is not an option, but a partial one is. Some GM models, essentially the compacts and maybe a few others, CAN comply without too much fuss. Plus, GM has contracts to fulfill with its dealers to provide products that these dealers can sell. So SOME cars will continue to be built and sosld -- but a LOT of models can be dropped. Keep making them; sell them in Canada, Mexico, Australia, and other places where they are selling presently, but stop selling the noncompliant models in the USA. When Americans start seeing desirable cars being sold elsewhere in the world, approval of US government's handling of this will decrease. By the way, this is not a new concept; when various safety mandates were being pushed in the 80's, Volkswagen pulled up stakes and stopped selling Beetles in the USA. They were still being sold elsewhere -- go to Mexico; they're everywhere. In fact Mexicans don't like the New Beetle as much as the old one.

5. Here's the big clincher: Start offering refurbishing kits and services for older cars!!!! Yes indeedy, if you have a 57 Bel-Air, you can take it to your local Chevy dealer for refurbishing. The dealer will rebuild the car mostly as original, but with certain changes such as modern disk brakes, computerized ignition, seat belts, and other updates -- ones that make sense and the market will be expecting. Of course make the kits available for the public, so if you want disk brakes on your 57 custom, you can buy it from Chevy and put it on yourself. Make such products and services available for several popular models, such as most 55-and up full size Chevy's, Chevelles, Novas, Cadillacs, etc. Basically keep the GM cars on the road, by going around Big Brother's new-car mandates, and make plenty of money selling parts/kits/services for all their cars. Believe me; ALL GM cars of the 50's, 60's, 70's, 80's, up through today will be more popular than ever.

I'm sure the government will try and stick mandates on refurbishing, but bear in mind it won't be easy -- you'll have every used car dealer and every service garage up in arms. When it's all said and done the Government might require say, disk brakes on all cars, but cannot require that all cars must be a 2009-or-up model with its CAFE standards. At least without MAJOR negative reaction at the voting booths.


Sound like a plan?

Its difficult for a company as huge as GM to adapt to change, or wind down, whichever the case may be. That same problem affects many of the old traditional big companies from airlines, to steel, etc. I don't have much hope for them in the future in anything resembling their present form.

That said, I'd much rather see them take the initiative themselves to reconstruct the company rather than see the gubmint propping up what is basically a dinosaur skeleton with taxpayer dollars which is most likely only prolong the inevitable outcome.

I like your #5 remark. Clearly its not the type of thing that would help in this case but its a fascinating thing from an entrepreneurial standpoint. I recall my Uncle back in the 70s bemoaning the fact that his old mid-60s station wagon was on its last legs. He would have gladly paid the price of a new car to have it all fixed up like new.

But there again, thats propping up the old dinosaur! It just isn't feasible to make a new purse out of an old sow for run-of-the-mill cars. I wish it were !!!

Yes, it's mostly something to think about. What will happen is what will happen. But you must admit, there are some things in there to really think about.

One such thing is the notion that politicians, or some government-appointed czar or committee, knows more about how to make a car than General Motors does. This is laughable. It is even more laughable to entertain the idea that the government can tell ANYBODY how to make a profit. This nonsense to me is VERY personal. Going back a number of years I worked for two companies. The first, I got in trouble rather frequently because I had my own way of doing things. I actually got a host of corporate awards for performance; customers were very happy, I was well-loved throughout the region, but I had problems with management because I was consistently overbudget (they paid no attention to the profit), and just plain didn't do it "their way." I was fired, and they seemed pretty happy when I was kicked out the door.

I went down the street to their competitor. They weren't hiring. But -- I had quite a reputation among customers, and when the sales manager found out I was applying he pulled a lot of strings - and I was in. The company was not doing well, but I had a good manager. Plus, a large number of customers followed me and signed up with my new company. But one day my manager got tired of things and quit, and I did not get along with my new manager -- who of course followed corporate rules to the letter. A short time later I was laid off.

I've been running a business after-hours. Suddenly it became full-time. I decided, why work for nut-cases like this when I can work from home and do things MY way? Three years later I'm doing fine and both of those companies are bankrupt.

The next point is the fact that, all accusations of "Greed" aside, the main purpose of ANY business is to make money, and all decisions are based on how to make as much money as possible. If you hire employees, it's not for charitable purposes or anything of the sort -- it's because his services can help the company make more money. If it doesn't, he is let go. This person's pay is also based on what he's worth. If you have a good employee and you don't pay him enough, he'll split and go elsewhere. Such things as experience, tenure, training, etc., all factor in to determine an employee's worth. But the bottom line is making money. That includes the CEO. If he makes a million dollars, it's because the board has determined that he's indeed worth that much. If the pressure is constantly on him to forfeit his salary and donate it to some lower-paid employees, he may do it for awhile -- but if YOU were in such a position would you work for nothing and donate everything, or quit and become CEO of another company, elsewhere? So the CEO quits and some lower-paid dufus takes his place and runs the business bankrupt. That fixes things, doesn't it?

The third point is this: Back in the 50's, 60's, and somewhat into the 70's, Detroit made cars based on what people WANTED to buy. Cars of the mid-1970's took a nosedive in performance and overall likability. Why? Because all the carmakers of Detroit suddenly got stupid and forgot how to make a decent car? (All four companies at the same time no less) Or could it have something to do with a tsunami of government mandates, dictating everything from the shape of the taillights to placing sensors in the seats so that you can't start your car until the grocery bag next to you fastens its seat belt? Engines had so much plumbing added, with a resulting nosedive in performance, that it took twice as much engine to provide half the horsepower. THEN people wondered why they guzzled gas. Today's cars are so small that families have given up and bought trucks instead -- hence the SUV. Now we have mandates on SUV's as well. Where are people going? Ahem, they're fixing up their old cars instead of buying new ones. Oh, some of it's to save money in these "tough times", but a lot of it has to do with the lack of appeal in new cars. In the car collector world, the hot ticket right now is resto-rods. This is an older car that looks original but has had newer hardware added. Put in disk brakes, add electronic ignition, or even stick a 35 Chevy body on a Mustang chassis; the point is to keep an old car but make it a modern driver, with modern conveniences and safety features.

GM could refuse the bailout money, stop building cars dictated by the government, and go into business preserving its older cars. It could make money, customers would be happy driving cars they LIKE for a change, and it would indeed stick it to the politicians.

I'm a fan of old cars myself. My main vehicle is a 86 Isuzu Trooper. Its roomy, I can wear a cap and it not rub the roof What few little sensor things it had are non-functional now and it doesn't beep at me. No automatic locks or other similar annoyances.
I wish I could keep it forever but the Rust Gods have other plans for it. I dread the day when I have to buy a newer model because there really is no modern equivalent.

Gary Tayman wrote:If you hire employees, it's not for charitable purposes or anything of the sort -- it's because his services can help the company make more money. If it doesn't, he is let go. This person's pay is also based on what he's worth. If you have a good employee and you don't pay him enough, he'll split and go elsewhere. Such things as experience, tenure, training, etc., all factor in to determine an employee's worth.

Unfortunately that is no longer how it is done. You are right when you say that the purpose of any company is to make money. The problem today is that they want to pay as little as possible to the rank and file so that they can make a bigger profit, and give the CEO's a bigger bonus. And especially in the current economy, when they know there are plenty of cheap replacements (cheap, because they are starting at the bottom of the pay scale.)

This is especially prevalent in the airlines. I work for one that is non union for the ground staff. The pay isn't too bad, but that's only because they have tried to get a union in a couple times, so the company decided to keep pay a little better than it had in the past. The problem however is job security. I've seen some damn fine agents get fired over stupid crap, while others do worse and stay on. The difference is the ones that got fired were the higher senior ones, AKA the more expensive employees.

The problem today is that they want to pay as little as possible to the rank and file so that they can make a bigger profit, and give the CEO's a bigger bonus

That, is exactly what killed Circuit City, laying off of more experienced employees to hire "cheaper" labor. As a result, customer service tanked, and people stayed away in droves. But, I'm sure the ceo got his bonus for "saving" the company money.......

Maybe I should rephrase this slightly . . .

IN A SUCCESSFUL BUSINESS, when one hires employees, his/her salary is based on performance, and the procedures of doing such do not become embedded in a sea of beaurocracy . . .

Indeed, companies I have worked for have certainly placed bonuses where they are not necessarily due, and have raped others of their benefits which has resulted in their leaving the company. Ultimate result: bankrupt.

I have indeed seen practices that -- let's just say they have become pet peeves of mine.

1. "The company needs to save money because the market has slowed a little. So, more work and responsibility will be placed on the workers, and they must adhere to higher standards. By the way, no pay raises this year. Since everyone will be pressured more, there will be some who just can't handle it; they'll have to leave. We will be left with the "good" workers, making us a meaner, leaner company that can do more." I wish I had a nickel for every time I've heard this, and I wish I could slug the originators of this with a baseball bat. This is positively the most stupid, idiotic, way of doing things I've ever seen! If you make the job harder while rewarding them with an inflationary pay cut, you have essentially blamed the workers for the market slowdown and are placing additional burdens on them to fix it. What will happen? The "Good" workers, who can find work anywhere, will do just that, leaving the company with what's left. I have never, ever, ever, EVER seen this practice result in anything other than additional cuts with more of the same, until it ultimately falls apart.

2. "We're providing computers and new gizmo-loaded cell phones to everybody to make our work easier." Easier for THEM maybe, and now you see where your pay cut is going. Starting in the 90's and still going strong today, it seems the solution to every corporate problem is either new cell phones or new computers. Used to be that our customers were laid out on 3x5 cards. If someone called with a concern, the card is pulled and a dispatcher would assign a representative to tackle the problem. Once finished, a quick sumary is written on the card and it is placed back in the stack. But then, along comes gizmo software, which tracks this by computer. does the same thing from your screen, without cards. But then along comes version 2, which also tracks parts inventory. So now you must give dispatch additional information regarding parts usage, with numbers so they can immediately be reordered. With version 3 you can track mileage and time traveling. With version 4 you can track the sources of the parts; and on and on it goes. Before long you have to spend 30 minutes providing information on mileage, time, parts, phone usage, and everything else from soup to nuts -- just so this same computer can spit out forms full of gobbledygook to track your performance -- thus proving you're not due for a pay raise. Instead of a quick phone call and a stack of cards, you spend hours keying in data so that some computer can regurgitate it and spit out forms full of worthless information.

3. This is a BIG peeve: "when servicing equipment for customers, you need to spend time with the NEW stuff -- don't waste time and parts on the older units, as we want customers to trade them in. If a machine is over 5 years old, just do what little it takes to get it going and leave it." On EVERY machine, there is a book with recommended maintenance procedures. Follow this procedure and the machine will run more reliably and will cost less to service in the long run. The procedure is the same whether the machine is new, 1 year old, 5 years old, or 100 years old. If you skimp on maintenance on an older machine, it will generate more service calls at greater expense to YOUR company. Plus, most customers know when their machine is getting old, and will most likely trade it in. The question is, will they buy their next machine from YOU? If you take care of them, yes. If you skimp, probably not.

4. #3 can be expanded to the entire company procedure. If a company has a plan to make money, and money is being made, fine. If a company runs into a problem, it might be because of a market condition change, but more likely it's because some manager changed the plan for making money. A plan to make money is just that -- a money making plan. If a company suddenly finds itself in a bind, you should not change any procedures unless it has been proven to have caused the problem. If you're a little tight this month, you can reduce advertising, cut an employee, skimp on service, etc., and you'll find yourself even tighter next month. This is what gets me, as a recipe for disaster: if a company has trouble due to some government mandate, the same government blames THEM for the problem, then bails them out with money, and begins dictating how to run that business. The people that created the problem are now the ones in charge to fix it. But then, since when has the government had the experience to run a bank, to build a car, to construct a home, or to do ANYTHING? Since when has the government made a profit? Such control will seal your doom.

I agree with you Gary. I'm not anti-union and was a union member for 25 years, but when GM workers have things in their contract, such as- If you get laid-off or a plant closes, you receive FULL pay and benefits for THREE YEARS! Who else on this planet gets perks like that? GM has said that $1,650 of each and every car goes to employee medical and retirement plans. That doesn't include wages.
One thing is for sure; they can't surviv the way things are now.

Timaaay! wrote:I agree with you Gary. I'm not anti-union and was a union member for 25 years, but when GM workers have things in their contract, such as- If you get laid-off or a plant closes, you receive FULL pay and benefits for THREE YEARS! Who else on this planet gets perks like that? GM has said that $1,650 of each and every car goes to employee medical and retirement plans. That doesn't include wages.
One thing is for sure; they can't surviv the way things are now.

This is but one of the MANY problems that the UAW has created for GM. This is the main reason why foreign cars, built in the US, have a price advantage over domestic vehicles. But as you know, many manufacturing plants for everything from cameras to TV sets have moved overseas. Why? The simple, basic reason is that it is cheaper to build a product overseas and ship it here than it is to build it here. So what's the difference -- taxes? Wage and benefit requirements? Most likely a combination of a lot of things -- but I can tell you this: raising taxes on businesses will only serve to send MORE of them out of the country. Think about this when you go rah-rah-ing over the next tax-the-rich law.

But the other big thing to look at is the fact that automakers -- Detroit, Tokyo, or wherever -- cannot build the cars that people want. I believe the most popular car model out there right now is the Toyota Camry. I've driven it -- it's small, it's not very powerful, it's styling is plain, it's a "nothing" car based on what interests me. However it's popular because it's fairly inexpensive, has a reputation for running reliably, and makes for a practical commuter car with good gas mileage.

Now suppose for a moment, you are at the car dealer and are given a choice: a Toyota Camry or a large Cadillac sedan. Both cars are the same price, both cars come with full service warranties, and the dealer promises that with either one, you will have free gas for life. Which one would you choose?

Indeed, back in the 40's and 50's, Crosley, Willys, Nash, and others made economy cars that got 35-40 miles per gallon. We BOUGHT the big cars however. Some Valiants, Falcons, Novas, etc., became popular as second cars, but the family car was always the big one. Looking back, these are dream cars. The availability of big cars outside the US, plus refurb kits for rebuilding older GM cars, will prove to the world that we indeed prefer big cars, and that the reason we don't buy new is because the automakers can no longer build them. Gas is a whole -nuther topic, but if GM makes the older cars available by rebuilding, it WILL make money. Rebuild shops, many of which are my customers, are running red hot at the moment -- many are backed up with work for two years. Yes, people love older cars; some just for show, but more and more they are drivers.

I believe a majority of people agree with the notion of tax the rich. The new administration has vowed to tax everyone who makes over 250K. The problem is that this would include an estimated 80% of small businesses. These are the very people who keep this economy running, provide jobs, and help our communities. Ireland taxes business at 12% while we tax them at around 35%, the second highest in the world. With the new taxes looming, if I were to own a business, I'd consider moving overseas and believe some surely will.
I owned a small business for several years and couldn't agree more with your premise that those who pull their weigh should be rewarded while those that don't need to be penalized. This is the problems with the UAW, the NEA and others. It's a shame.

Timaaay! wrote:I believe a majority of people agree with the notion of tax the rich. The new administration has vowed to tax everyone who makes over 250K. The problem is that this would include an estimated 80% of small businesses. These are the very people who keep this economy running, provide jobs, and help our communities. Ireland taxes business at 12% while we tax them at around 35%, the second highest in the world. With the new taxes looming, if I were to own a business, I'd consider moving overseas and believe some surely will.
I owned a small business for several years and couldn't agree more with your premise that those who pull their weigh should be rewarded while those that don't need to be penalized. This is the problems with the UAW, the NEA and others. It's a shame.

The "Tax the rich" nonsense is just that -- nonsense. Not that there's a problem with asking someone who's well off to provide a larger share, but the problem is in asking more, and more and more, and still more, using class envy as a tool to get people behind it. When the top 2% of the nation pays something like 65% of everything, THEN is lambasted for not paying enough, there is a real problem. If they are given a break of so much as a penny, the liberals yelp "Tax Breaks For The Rich!" and scream bloody murder. Not only does this diminish the incentive to BECOME rich (and stay in the USA), this practice increases unemployment. This is the part that people just don't seem to understand. If I had 20 million dollars, I'b build a large home -- employing contractors. I'd buy a boat -- employing boat builders. I'd buy other merchandise, keeping the economy going. Then I'd increase my business, employing more workers as needed, and providing employment. Poor people can't do that.

As it is now, my business is doing well, and I'm considering getting help from someone who has recently been laid off. But it's a strain -- if taxes go up I can't do this.

The alternative to free capitalism is -- yes the word that doesn't seem so bad anymore -- socialism. Indeed, there are no rich or poor people, everyone works and everyone is happy. We all get along -- or so goes the rosy-painted picture. Have you ever worked at a job where it seems you do all the work, while others sit around and play video games on their computers all day? Then you find that there are no raises, so basically there is no reward whatsoever for working harder? Of course the end result will be that you eventually also quit working so hard, and the office no longer becocmes productive at all. THAT is socialism, and THAT is also why it doesn't work. In places where it has been tried, such as East Germany, Cuba, former USSR, the end result is that EVERYBODY's poor.

Gary, "the top 2% is paying 65%?" I would argue that figure seems impossible. How can that much wealth be concentrated in 2% of the population? If 2% is wealthy enough to pay 65% of the tax burden then the remaining 98% should have no problem paying 35%. But any 2% who pays 65% cannot be the top 2% if they bare 65% of the tax burden...unless they are absolutely, incredible wealthy.

The math part of this is giving me a headache. Let me just add that it is not the other 98% paying the remaining 35% of the total taxes. You have to subtract the % that pay no taxes at all. If that is the bottom 30% then the middle 68% pay what the top 2% don't. And of that middle 68% quite a few pay a minimal amount, leaving not such a huge pool of taxpayers to cover what the richest don't pay.


-Phil

New data released by the IRS offers interesting insights into the the federal income tax burden. The new data shows that the top-earning 25% of taxpayers earned 67.5% of the nation's income, but they paid more than four out of every five dollars collected by the federal income tax (86%). The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns. (the top 2% pay 58% of all taxes.)
The bottom 50% pay 3.7% of all income taxes. The top 1% is paying more than ten times the federal income taxes than the bottom 50%!

Here's the figures from the NTU. The top 10% of wadge earners pay the following:

2001; 64% of all taxes.
2002; 65% of all taxes.
2003; 66% of all taxes.
2004; 68% of all taxes.
2005; 70% of all taxes.
2006; 71% of all taxes.
2007; 73% of all taxes.
And it's estimated that in 2009, the top 10% will pay 84% of all income taxes!