GM/Chrysler. OK, so now what?

[Matt Harwood]

I wonder if janitors really are assembling Hondas and Toyotas at their non-union US factories...

I don't think it's the union that keeps people in manufacturing plants doing their jobs. Where I work, it's non-union, but my boss can't tell me to go out onto the factory floor and start soldering together circuit boards, and the guy who loads the pop machines can't sit down at my desk and get to work. Management is completely unrelated to the union. The implication that only a union guy can put cars together properly is nuts--that guy wasn't born knowing how to screw together a dashboard. Hell, with the union behind him, he doesn't even have to be good at it, unlike a non-union guy who can be fired for sucking at his job.

The UAW has a stranglehold on domestic auto makers. Sure, GM hired the UAW for the new engine plant. If they hadn't, the UAW guys at, say, the plant that supplies water pumps or engine management systems might have a problem with it and cause a shutdown anyway. The way things are now, domestics can't work without unions, and that's just how unions like it. The unions won't cooperate with non-union shops--you can't deny this doesn't happen.

I'm not against unions. I am against unions existing for the sole enrichment of themselves and being parasites on their own industry. They're going to have to compromise sooner rather than later, and give up these ridiculous benefits to which they've become accustomed. With GM getting a federal bailout and falling on hard times, I'd guess it's only a matter of time before a federal court renders GM's contracts with the UAW null-and-void. What then?

I've said it before: The UAW seems willing to ride their gravy train right to the end of the line, where there will be a spectacular crash that kills everyone.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">New car launches never go well, but after much trial, problems get straightened around. The idea of using batteries, controllers, and electric motors, is still very strange to most assemblers. The dangers and materials are totally different from conventional cars, so expect lots of service bulletins. </div></div>

This is just not acceptable in today's climate. GM doesn't have time to get problems straightened out after cars are in customers' hands. There's no excuse for not getting it right on day 1. How many millions of miles of testing do they do? It's not like they draw the thing, have the guys down in the shop throw it together, then ship it out the door with their fingers crossed. Making excuses is what got the industry in trouble in the first place.

[HurstGN]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Matt Harwood</div><div class="ubbcode-body">I've said it before: The UAW seems willing to ride their gravy train right to the end of the line, where there will be a spectacular crash that kills everyone.

</div></div>

We see this happening here in Pittsburgh. Our transit union (bus drivers) is in negotiations with the Port Authority (public transportation) for a new contract. Currently, they pay NOTHING for healthcare. 0! And the negotiations are demanding they still pay 0 for healthcare. They claim they've earned it. Meanwhile, my tax dollars, and yours too via federal funds, are paying for these clowns to insist on this benefit that nobody else gets. I'm filling in my healthcare form this week for next year, and I'll pay 5% more for healthcare than I did last year.

Add to that the union is insisting on a 4% pay increase per year for the next 4 years. WTF?! Have you seen the way the economy is going?

And it's not just the unions...management has their share of the blame too. Back to our Port Authority here...they're boring 2 parallel tunnels under the Allegheny river to connect downtown Pittsburgh to the North Side of Pittsburgh at an initial cost of $485 Billion (with a B dollars). Why not put up a bridge? Well, somebody must have seen a TV show on the big dig in Boston and thought it was a cool idea....so we have tunnels being bored. They have gone way over budget already, and the contract to install rails and electric was just bid. The low bidder of the only 2 bids places was for $85 million. Port Authority didn't like the bid saying it was more than they expected, so they think they'll open the bids again. Yes, a fiasco like I've never seen. Using mostly federal funding, along with state and local funding. When all this started, and some costs were made public, we did the simple math. Cost of new tunnels divided by the number of anticipated riders multiplied by the number of years expected to pay off the tunnels and we came up with a fare of over $20 per rider. This didn't include cost overruns, inflation, maintenance of the system....nothing else. And with these kind of numbers, management decided to forge ahead with the project. Oh, you ask how beneficial is this project...well, a 5 minute walk across a bridge and you've accomplished the same thing. And if you think there aren't bridges to walk over, look for the "3 sisters" bridges on-line. We have 3 identical bridges over the river where these tunnels are being bored.

Add to this saga, Allegheny county is paying a 10% poured drink tax on alcohol to raise funds for the Port Authority, and this has raised over $40 million this year. Yea, it's alot of money. The sad part is, if the parties can't negotiate a contract soon, the Port Authority may be bankrupt and all this is for not.

So here we see the union trying to grab every dollar they can, management spending the tax dollar like drunken sailors (apology to any drunken sailors, no offense meant to you) just because management didn't earn the tax dollars handed to them, and all the little guys involved for not making SOMETHING happen to stop all of this. And I sit here, paying my bills, my taxes, and watch somebody else [censored] away all my hard work. It just pisses me off how nobody is accountable anymore.

I don't know where the fix is for GM or Chrysler, but i do know I'm tired of working my a$$ off for somebody else to take my money and bail out some big company that ruined it for themselves. If the govt gives any money to GM or Chrylser, I want my new car for free out of the deal. I paid for it!!!

[Dave@Moon]

Dan, the entire North Shore Connector Project including the tunnel is currently budgeted at $435 <span style="font-style: italic">million</span>. Even the latest stories on the project in Pittsburgh's infamously conservative <span style="font-style: italic">Tribune-Review</span> cop to that figure. Why you continue to attribute the extra 3 orders of magnitude to the cost of this project is unsaid.

Meanwhile the North Shore Connector is in fact one of the least expensive public transportation projects (per mile) currently under construction anywhere in the U.S. by a factor of between 2 and 8 times. And the tunnel was in fact <span style="text-decoration: underline">less</span> expensive than building a bridge or using any existing bridge. The Port Authority really can't be faulted for this one to any degree that I can see. ( Port Authority's North Shore Connector FAQ page )

Once again, <span style="font-style: italic">would the world look like this if what you believe to be true and fact were indeed true and fact?</span>

[Guest Skyking]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dave@Moon</div><div class="ubbcode-body">

It's really depressing. </div></div>

No, what's really depressing is what they did with the EV-1!

.........and in the video, they can't even answer the question with any sence.

[Guest simplyconnected]

I agree, Skyking. Everyone expresses opinions but nobody has viable solutions.<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: HurstGN</div><div class="ubbcode-body">I paid for it!!!</div></div> That's exactly the point. We're all in this together, and we're all paying for it. How many bridges to nowhere, has Washington financed? Didn't Washington just give $810Bn to bail out the un.. Wait a minute, there was no union involved in any of that. And didn't Washington just approve loans to the US auto industry for $25Bn? Wait a minute! Washington didn't give a dime to the UAW, or to any of the workers. They gave loans to the US auto corporations.

Matt, I have agreed with a lot of what you've said over many hundreds of posts, but you are missing much about the relationship between the UAW, corporations, and the workers (salaried & hourly). Your notion that salaried workers are in no way related to the union, proves you don't believe we're all in this together. Maybe you own your company, or have never worked for the big three, but I have. Any time a salaried guy gets laid-off, they can't believe it and feel the company 'didn't take care of them.' Hourly employees expect layoffs, and they come too regularly.

This is capitalism and corporations see their work force as a necessary, expensive, cost. There is no love but there is gratitude on both sides; they are certainly inter-dependant. When orders come, they hire. When sales slump, they lay-off EVERYBODY, hourly and salary. Being the boss's son in the UAW won't buy you a free "you don't get laid-off" card (but it might with salary or in a non-union shop).

How much does Gov. Ed Rendell and Allegheny County Chief Executive Dan Onorato make? Better ask for concessions from them, first. They agree on contracts with their bus drivers, then ask for concessions because retirees' long awaited pensions might put the authority into bankruptcy. How is that a union problem? Let's deplete YOUR pension after you work many years to build it. The way I see this, these faithful retirees earned their pensions many years ago. Now, taxpayers want to relinquish it? Watch what you ask for, because you are next! There goes your Social Security upon YOUR retirement, because we don't want Socialism ruining our Republic.

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: HurstGN</div><div class="ubbcode-body">Meanwhile, my tax dollars, and yours too via federal funds, are paying for these clowns to insist on this benefit that nobody else gets. </div></div> If that's true, your bus drivers can include their military time for their pensions. I have heard of that in New York too, but we don't get that in Detroit. It may be that Uncle Sam is footing part of their pension costs.

[Guest imported_Thriller]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Matt Harwood</div><div class="ubbcode-body">I wonder if janitors really are assembling Hondas and Toyotas at their non-union US factories...

</div></div>

I can't speak for US factories, but I did get to tour a Honda plant in Alliston, ON in 1990 or '91. They were building all the Civic hatchbacks for North America there. Honestly, a lot of details escape me, but I do recall being impressed (possibly in part because I'd never seen an assembly plant before). The plant was also exceedingly clean.

Contrast that with the tour of the Flint Engine North plant in 2003. Granted, an engine assembly plant isn't the same, but I was horrified by the fact that I saw line workers smoking at their station. Of course, I come from a socialist country where back then already smoking was being outlawed in workplaces as a workplace health and safety issue.

Both tours were informative, interesting, and exciting. I'd love to have a car with a 3800, but the thought of cigarette ash in the engine before leaving the plant makes me second-guess that.

[Guest DaveCorbin]

Dear Simplyconnected:

IF you read my post carefully, you will notice that I said "managed" which is a verb in the PAST tense.

You might want to recheck your information about Local 57, which WAS the IH local at the Fort Wayne Truck Assembly Plant unti the plant closed in about 1982.

Since I was the assistant plant engineer for the last modernization of Fort Wayne in 1964, and the Corprate Manufacturing Engineering Manager who conducted the Fort Wayne machinery auction in 1982, I drew the tough assignment of watching several thousand folks I knew lose their jobs. It wasn't fun.

In 1964, I signed the invoice for the new main conveyors for the assembly lines. It was in excess of $800,000 then. It brought $5000 in 1982. That hurt, too.

As a IH retiree, I'm a beneficiary of the "Shy vs. Navistar" decision,which basically gave 1/2 of the company to the retiree medical and pension plan. That's the kind of tough choices the UAW, GM, and Chrysler face. That's AFTER the value of the SEPARATE pension fund exeeded the value of the company in 1979. Take it from a guy who saw it up close and personal to this day on BOTH sides, it ain't going to be pretty.

Regards, Dave Corbin

[Rawja]

Again with the UAW?

Look, GM would be just fine......pension obligations, healthcare, profitability all of it; IF it still controlled 40% of the market.

Declining market share is what has killed the "Big Three", nothing more and nothing less.

IMO, the blame lies with the automakers themselves, they simply did not make products that were desirable enough (be it styling, quality, performance, reliability or whatever) to maintain their share of the market.

Blaming the guys that screwed together the vehicles or their workplace representation I think misses the point entirely.

[Matt Harwood]

Rawja, don't they go hand-in-hand? Declining market share is the mechanism that hurts a company's finances, but keeping it viable despite that fact is about managing manufacturing costs. It certainly isn't the workers' fault that GM's fortunes have declined, but they're in that boat now--if they want to save themselves, they'd better start rowing.

The present situation is dire, and the UAW seems unwilling to compromise their historically spectacular benefits packages. A lot of guys are second- and third-generation UAW members and know what their fathers got and expect the same. I always hear guys say they've EARNED those benefits. What, I don't work hard, too? What have they earned that I haven't? I've been fired, laid off, done back-breaking manual labor, invested my own time and money in someone else's company, put in long hours for crappy pay. What benefits should I expect because I earned them this way? In any other industry, nobody <span style="font-style: italic">expects</span> benefits just because they work hard. And honestly, all a company owes you is a paycheck for your time.

The UAW and the domestic automakers are partners, like it or not. It's just that one partner is unwilling to compromise. It seems that they would rather have no pie and kill the pie maker instead of having half a pie.

[Guest ZondaC12]

I can't wait for thanksgiving I want pumpkin pie!!!!!!!!!!

*sorry* couldnt resist....

[Reatta Man]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rawja</div><div class="ubbcode-body">Look, GM would be just fine......pension obligations, healthcare, profitability all of it; IF it still controlled 40% of the market.</div></div>

Rawja,

I think your statement is right on, and it is a lot of the reason why I think a GM/Chrysler merger is, or at least has the potential to be, a 'glass is half full' situation. GM had about 27% of the market in September, and Chrysler had about 11%. Together, those numbers almost hit 40%.

Also, keep in mind that GM had 40% of the truck market for 2007, while Chrysler had 20%. So, a merger brings 60% of the market under one merged company; those are market share numbers not seen since the 1960s.

While some so-called experts tout both company's money troubles right now as a reason to NOT do the merger, keep in mind few if any people think merger while companies are doing very well; some even promote the idea as too expensive to buy a company that is doing well.

Keep in mind that both companies are doing well in terms of quality, GM has huge inroads to foreign markets (China, Russia) that Chrysler doesn't have, and the two companies together as domestic partners would stand a much better chance of surviving the tough times than either company could apart or with a headquarters in a foreign country.

I would like to see this merger happen since it would at least give a chance for both companies to combine their strengths and lessons learned. Sharing platforms, parts sources, engineering and design staffs and dealer networks would eventually serve the new company well.

Regardless of which Uncle Sugar gets elected president, and what happens to the price of oil, the tough market of today will eventually come around. A strong GM/Chrysler with a good product mix will be in the right place at the right time to catch more market share rather than less when people are ready and able to start buying cars in significant numbers again. Keep in mind that most fortunes are made by decisions made long before the cash registers actually see the profits; they are made when plans are being made for future results.

[Guest BJM]

But you are talking about a "microstatistic when you say a combined market share is 40%, as in today. BUt this has been eroding for years and fails to take into consideration that model lines will continue to be cut, cultures will have to be merged (ask Chrysler how well that worked with Daimler)

The identity of Chrysler would be muddied and eventually those loyal to the brand (what few there are left) could not differentiate the two. GM powerplants would be put into Chrysler bodies etc, just as Jeep has all Mopar powertrains now.

All it would be is badge engineering at it's worst and Toyota, Honda, Nissan would eat their lunch. market share 40%? Check back in 5 years.

[Guest Skyking]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rawja</div><div class="ubbcode-body">

IMO, the blame lies with the automakers themselves, they simply did not make products that were desirable enough (be it styling, quality, performance, reliability or whatever) to maintain their share of the market.

</div></div>

This is what I'm so sick & tired of reading about. You people sound like broken records. I'll put my 8 year old Dodge & Buick up against any Toyota, Honda & Nissen for comfort, ride and dependability. America's brainwashed!! Get over it!

[Reatta Man]

Bryan,

I think the elimination of Oldsmobile and Plymouth showed BOTH companies that eliminating models or brands is a BAD idea.

Buick is a very good example. They went from Skylark, Century, Riviera, Lesabre, Regal, Park Avenue and Roadmaster to two sedans and a sort-of crossover. Is ANYONE surprised their market share eroded?

Olds was killed off because they were 'only' selling about 250,000 cars per year. Wonder what GM would give to have an additional 250,000 units sold per year now?

If they do merge, they need to tie the beancounters hands behind their backs, gag them and put tape over their eyes. THEN set about to sell what they have already spent billions developing, not slash models and trim lines.

[BUICK RACER]

You folks have maded some great comments, all I can say is this is very scary for Michigan, current and retired employees of both companies and for the US and Canada combined, maybe even the world, and it looks like it might just happen! The ripple effect across the country to the service and retail industry has totally been disregarded in my opinion.

[Guest John Chapman]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: BUICK RACER</div><div class="ubbcode-body">You folks have maded some great comments, all I can say is this is very scary for Michigan, current and retired employees of both companies and for the US and Canada combined, maybe even the world, and it looks like it might just happen! The ripple effect across the country to the service and retail industry has totally been disregarded in my opinion. </div></div>

Ah, Michigan! Poster child for progressive, liberal politics, taxation policy, union dominance, and social programs... dare we follow? Change you can believe in!

Cheers,

JMC

[Dave@Moon]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: John Chapman</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: BUICK RACER</div><div class="ubbcode-body">You folks have maded some great comments, all I can say is this is very scary for Michigan, current and retired employees of both companies and for the US and Canada combined, maybe even the world, and it looks like it might just happen! The ripple effect across the country to the service and retail industry has totally been disregarded in my opinion. </div></div>

Ah, Michigan! Poster child for progressive, liberal politics, taxation policy, union dominance, and social programs... dare we follow? Change you can believe in!

Cheers,

JMC </div></div>

We're reduced to using simple geography as an excuse for political pontificating now?

Quick, somebody mention Idaho. I just want to see what will happen.

[Guest John Chapman]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dave@Moon</div><div class="ubbcode-body">We're reduced to using simple geography as an excuse for political pontificating now? </div></div>

Life comes at you fast, Dave, pay attention.

Simple geography, stark reality. Pontification only on Sunday.

It is a poinant example of creating a third world state from one that wasn't one thirty years ago by application of socialist fundamentals. The results of the 'politics' of all genre called out results in exactly what Roberta described. It's a shame it's going to take the failure of our country's signature corporations to drive the point home... but, wait... we'll do the same thing again, this time on a national basis.

Remember, register frequently; vote early and often!

Cheers,

JMC

[Rawja]

Nonsense John. Michigan, like any region heavily dependent upon a single industry, suffers when that industry is in decline or leaves the region. In Michigan it's cars, NYC is dependent on finance, Florida- tourism, Silicon Valley-tech, and I'd suspect your area would be hurting if the Navy moved its bases (read: gov't teat) and its attendant defense contractors elsewhere. The notion that "liberal" policies somehow are to blame is laughable.

What I was trying to say was that what was financially crippling GM was supporting a 40-share retired workforce with a 20-some-odd share of current revenues.

GM failed to provide vehicles that consumers desired. If you want to attribute that to "brainwashing", "unfair Japanese" or the alignment of Jupiter..enjoy, but it misses the point entirely. The "inerrant" free-market has spoken, and it rationally chose what it liked best.

I have an obsessive relationship with my Buick Reatta and thought when it came out that it was the neatest thing since sliced bread (and still do). That Buick's predicted annual volume of 20,000 units a year was never realized (actually only about 21,000 were made over the 4 year run) the fault of brainwashing? The Japanese? Social programs? Dumb consumers? The UAW? Without getting into Reatta-specifics suffice it to say that it was not desirable enough to find buyers for whatever reason and it failed, costing GM a fortune. That I find it preferable to any number of current vehicles is a moot point. My ass couldn't fill 20,000 Reatta seats a year no matter how much I might like the car (and I couldn't afford to buy even one back then anyway).

If anything I've been "brainwashed" by GM. Hell, I even had (and loved) a Cimarron.

If you looked at Dave's link to Frontline, Toyota developed the Prius (and Honda, the Insight) because they actually believed that the domestics would follow through on their highly-public promises to market ultra high-mileage passenger cars and didn't want to be left behind in the marketplace. In the "good old days" just 8yrs ago (not a political allusion) when gas was a buck and change a gallon it seemed silly to expend so much effort for high MPG, but they brought 'em to market anyhow and when market forces changed, they were well positioned to reap the rewards. GM was caught flat-footed (yet again) marketing 6800 lb 12c/19h MPG inefficient vehicles and will bear the onus of that short-sighted strategy.

It's also interesting to note that not only was Toyota developing and marketing the super-duper Mileage Prius, but they were also simultaneously making bigger and bigger SUVs, so either way the market went they were prepared. Clever, huh?

I'm sad to say it, but GM (and Chrysler) have too many brands, too many models and too many dealers, doubly so if combined. I say this as a GM fanatic and an ardent admirer of Chrysler. If China wasn't such a strong market for 'em, I believe Buick would already be dead. I don't see how any of Chryslers' divisions other than Jeep would survive a merger and it truly saddens me that such iconic brands are to die, and it downright freaks me out that the once mighty GM is in the state that it is in, but the domestics have nobody to blame but their own short-sighted policies and the burden of their past sins. I say this as someone who has an emotional affinity for their products and who only buys American cars, but I and you(s) by definition are a minority in the marketplace. The majority has spoken, and they simply prefer the offerings of other manufacturers. Sad, but inarguably true.

Here's hoping that whatever is left of the domestic industry emerges from this period of troubles better, stronger, more efficient and nimble. Eventually you have to learn from your mistakes or they'll be your undoing.

[Aaron65]

Well said, Roger. It makes me sick the position the Big 3 are in, and I only drive American (OK, maybe antique British or Italian if the right one came along)...many mistakes along the way and bad breaks too.

[Reatta Man]

This discussion reminds us of just how vulnerable the car biz is to factors they can't control.

If gas goes radically up or down, it affects the large or small line of vehicles. Yes, Toyota built the big and small vehicles, partially helped by having more of a worldwide footprint than many other companies.

Many people don't fully appreciate the affect of fuel prices on car sales. For example, if food or electricity prices go up, it doesn't affect the sale of refrigerators. But, cars and houses are often driven by interest rates, the cost of raw materials and the cost of fuel.

Roberta, you raised a good point about how this GM/Chrysler talk is frightening for people in Michigan. What are people in your state saying, and what sort of comments are you hearing from other GM workers?

Joe

[Guest Reatta1]

Been following this with interest and what I'm picking up here reminds me a lot of what happened to the steel industry in Pittsburg a bunch of years ago. Imported steel was much cheaper and the high labor and production costs of domestic steel fell victim much the same as the domestic automobile is doing now to imports. Of course the fact that so much of GM will not build a decent variety of choices that appeal to the entire public hasn't helped their case. Brand and model recognizability was very evident up untill basically the 70's but now is practically non existant. The general migration to the current 'look alike' generation of cars we have now doesn't do much for me, and I consider myself a fairly typical car buyer, so it probably doesn't do much for any other 'typical' car buyer. The big three's focus on big trucks and SUV's of the past ten years or so is also a large part of why they were caught with their pants down. They were profitable but suddenly became cost prohibitive to operate and are now an albatross around their necks. Now they are struggling to get out from behind the '8' ball. Time will tell how it turns out. Unfortunately, alot of it will be at taxpayer expense.

[Dave@Moon]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The big three's focus on big trucks and SUV's of the past ten years or so is also a large part of why they were caught with their pants down.</div></div>

The whole point on that score is <span style="font-style: italic"><span style="text-decoration: underline">why</span></span> they chose that extremely limited route, and how they now come back from it.

Chrysler has had this disease the longest, consistently issuing new models that were perfectly suited to the market of 5-10 years ago. This has gone on to varying degrees since 1949, and was most obvious in the muscle car era where they issued the pinnacle of muscle cars right when no one wanted one. Look at what they have today, and excellent line of rwd 20 mpg full-size cars perfect for 1998....and essentially a bunch of crap (inferior mid-size cars, inefficient trucks, and old models like the PT Cruiser<span style="font-style: italic">[Can you believe they still make that?]</span>). What's their new model for 2009?....a bigger-then-ever full size truck line.

What are their future plans?....none. All work on new models after 2010 has been halted, a move not made (at the end of life or before) by AMC, Studebaker, Packard, Hudson, or any other car company in history that I can recall. There will be no 2011 Chrysler cars or trucks no matter what happens, unless they happen to be badge engineered products of a new parent company. Anybody want to open a new "Eagle" dealership?

They're being bought by GM for Jeep, a short term parts business, and for the real estate. Nothing more. --Oh, except maybe to rid the market of a competitor. That may be why you're not hearing of interest in Chrysler by a presently healthy company like Toyota or Hyundai.

[Guest BJM]

Dave,

If what you suggest about no new Chrysler models past 2010 is true, and I am not saying it isn't - I don't know one way or the other - then there should already be a mass exodus of engineering and styling talent out of Mopar.

You are the 1st to suggest this "no new models" point that I know of. Granted, I do not read the trade mags anymore but I do glance and such and that would be big news.

That's only 2 years away by my Iowa math. Product planning is 3-4 years. There are some huge things they have to tackle - such as hybrids and electrical cars. We'll see -

JEEP, who cares?

[Matt Harwood]

I've also heard that there will be no new products after 2010.

From this week's rant at Autoextremist.com:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">It is clear that GM is in direct talks with the White House about receiving an early injection of money - from either the $25 billion already promised to the Detroit 3 or the $700 billion financial institution bailout package - in order to ease the financial blow to employees and dealers<span style="font-weight: bold"><span style="font-style: italic"> as a result of its acquisition of Chrysler from Cerberus. And that agreement may in fact have already been made.</span></span> (Emphasis added)

The alternative? There is no good alternative. If GM were able to acquire Chrysler (although the financial wherewithal for GM to do it completely on its own just isn't there) straight up, the immediate cessation of most of Chrysler's operations and the brutal dismissal of 90 percent of its employees - not to mention the utter devastation to thousands of dealers across the nation - would plunge this country toward economic disaster on top of an already deepening recession.

</div></div>

[Dave@Moon]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">If what you suggest about no new Chrysler models past 2010 is true, and I am not saying it isn't - I don't know one way or the other - then there should already be a mass exodus of engineering and styling talent out of Mopar.</div></div>

I'm not surprised that most haven't heard this, since it was buried in the news the day GM announced huge losses and Chrysler laid off 25% or it's white collar workers. (How many of them do you suppose were engineers and designers?)

The story appeared in several outlets. Here's the story in the <span style="font-style: italic">New York Times</span> Business edition:

Options are scarce for Chrysler if merger talks fail.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">One reason for Cerberus to press for a quick deal is that the private equity firm has effectively cut off investment on Chrysler's vehicle development beyond 2010, analysts said.</div></div>

[Dave@Moon]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">...and launching the Eagle brand was a complete waste of time and money.</div></div>

Most analysts agree that it was a deliberate waste of time and money done in order to avoid even greater costs similar to GM had in breaking up Oldsmobile. It's easier to get a dealer force to quit than to buy them out.

Anybody want to guess why there's effectively only 3 models left in the Buick line at this point?

[Rawja]

I think the strength of the Buick brand in China will save it. It's the number one brand over there y'know.

Part of the Buick's appeal in that market (besides the historical) is its "Americanness" even though many of the Buicks there aren't based on American Buicks. Closing down Buick here in the states and making it a China-only brand is simply too risky to the value of a very very lucrative brand over there. I'd expect that even if Buick continues losing money and market share here, the offsetting value of Chinese Buick sales will keep it alive even if only for foreign marketing purposes.

Or it could just be wishful thinking....

[Guest John Chapman]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rawja</div><div class="ubbcode-body">Nonsense John. </div></div>

Excuse me???

Rawja, I agree with your initial and much of your response, even the not so subtle 'government teat' remark.

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rawja</div><div class="ubbcode-body">The notion that "liberal" policies somehow are to blame is laughable.</div></div>

My point is that the train wreck of draining demands and benefits set up by the unions has been exacerbated by ill-conceived government policies. We seem determined to repeat this pattern on a national basis to systemic failure. I chose 'liberal'. You might prefer the less prejudicial term 'progressive' or the more prejudicial 'socialist'. The label is secondary to effect.

To wit, in Michigan, with a failing economy and industry in a nose dive, the The Michigan Business Tax (2007) was enacted. I'll leave it to you to read and decide if this was a functional policy. The liberal government that put it in place is fact. Estimates vary, but initial analysis is that it basically doubles business tax while providing credits for favored business activities.

Are we laughing yet? If so, the policy preparations of our current Congressional leadership should have you wetting your pants. Here we sit wondering why the big three move to the south and to 'offshore' operations.

JMC

[Guest imported_Thriller]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: 'Reatta1'</div><div class="ubbcode-body">Brand and model recognizability was very evident up untill basically the 70's but now is practically non existant. The general migration to the current 'look alike' generation of cars we have now doesn't do much for me, and I consider myself a fairly typical car buyer, so it probably doesn't do much for any other 'typical' car buyer. The big three's focus on big trucks and SUV's of the past ten years or so is also a large part of why they were caught with their pants down. </div></div>

I'm not sure whether or not I'm a typical car buyer, but I do know my needs and can figure out most of my wants.

In 1999, we were looking at getting a minivan...we looked at all available at that time. We decided on a Pontiac Montana with the 8 passenger configuration. There was one in the city with a brown interior (which we didn't like). It turns out the dealer had one on order that was to our liking, so we wound up with it.

In 2000, I was looking for a full size, extended cab pickup truck...around here, nobody carried 2wd...I wound up basically ordering one.

In 2002, as the lease on the Montana was coming up, we decided to get another...ordered.

In 2005, I was looking at replacing the truck...the dealer had to go about 400 miles to find one that met my criteria (which I don't think were outlandish).

Late in 2005, we decided to replace the Montana with an SUV...we looked at a few and decided on the Rainier (many were too small for our family and we didn't want the full size). V8 Rainiers could be had, but I-6 Rainiers were hard to come by...again, one had to be brought in from another dealer. When we picked up the Rainier, there was a crowd around it at the dealer and there had always been someone looking at it since it was brought in and cleaned up. Basically, in our conversation, it came to the dealer sold only a couple of them, but was it a chicken and egg situation? If they had one on the lot, perhaps they would have sold dozens.

I'm saying all this just to reiterate some thoughts on product mix. Some people don't car much and will buy brand X for whatever reason, real or imagined. Others will buy what they need and want, but will either have to wait or order what suits them. That doesn't necessarily work well in an impulsive society.

Product mix is critical in my opinion. If you don't have anything to make the looks of a vehicle stand out, it better win a bunch of awards and have a strong marketing campaign. Unfortunately I'm not seeing that from GM. Get aggressive with marketing the good points and make the comparisons with the competition. Arm consumers with information and let them decide. Then, if the business fails, it can be blamed on product. At least Chrysler has some pretty distinguishable product design (you aren't about to confuse a 300, Magnum, Charger, etc. with anything else out there). GM has been putting some styling into Cadillac, but the perception at least is that they are out of the price range as they are luxury cars.

Put the product head to head...if you don't come out ahead in at least some areas, either redesign the product or sell it for less than the competition.

Another thing is to perhaps think back to the 30s...folks without money didn't spend. Today, people without money borrow. It used to be that you would only borrow for big ticket items that you need (I mean really, who needs to make payments on a TV set...better to not have one then). Perhaps the same thinking should apply to GM...if you can't afford to buy, then don't. I don't see where it makes any sense to buy Chrysler if they need government funding to do so. Either you can afford it and it's a good business decision, or not. If not, don't buy. If Chrysler is going away without a buyer, then the competition will still go away for GM without the added liabilities of severance / pension / dealer buyouts / etc.

Just some ramblings....

[Reatta Man]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Thriller</div><div class="ubbcode-body">

Another thing is to perhaps think back to the 30s...folks without money didn't spend. Today, people without money borrow. It used to be that you would only borrow for big ticket items that you need (I mean really, who needs to make payments on a TV set...

</div></div>

Some retailers are having to admit that peopole were borrowing too much and now may not be able to borrow as much or have access to credit, so they have brought back (drum roll, please) LAYAWAY!

Maybe GM needs to offer a layaway program; lock in a 2009 or 2010 car and start paying for it BEFORE you pick it up. They could use layaway to pay towards a down payment or even the entire car.

What a concept; have a car 30, 40 or even 100% paid for before you get it!

Roberta: know anyone at GMAC that would listen to creative financing suggestions?

Joe

[Guest BJM]

Wow Joe that doesn't sound too bad on paper. I was thinking about putting a bike on layaway this week but it was only $350. Now, that's the rub. Does someone really want to send GM thousands of dollars for them to invest?

I'm not saying I might not consider it, but you aren't really "laying away" a car (or else it would depreciate) and you are basically buying "futures" in a car - which, if I am correct, GM, Ford, Chrysler - they are changing their minds a lot lately. The Camaro keeps getting pushed back and after an initial run of Dodge Challengers, that car will be gone.

[Reatta Man]

Bryan,

I'm more thinking of people getting back to buying what they can pay for vs. buying on emotion, which is almost always a bad decision.

If GM locked in a price on, say a 2010 Chevy Silverado for delivery in December 2009, and then offered the same rate on the money as the GMAC bank does on a CD, then someone could see their money actually grow AND get ahead of any price increases between now and then. Looks like win/win to me.

And, GM could have access to millions of dollars for a very reasonable interest rate AND have guaranteed sales in the near future. Of course, for people to latch on to this idea, they would have to embrace the idea of planning their purchases beyond their next paycheck.

If some smart bean counter at GMAC crunched the numbers just right, they could actually set it up to where your layaway payment is virtually identical to your monthly payment, a customer would be in a better position to stay ahead of negative equity (being upside down in the car/truck) and be more likely to have real equity when they choose to trade the car in down the road.

Of course, we could just stay with ever-changing rebates, huge depreciation in the first 2 years of ownership and people buying crap they can't afford......

I know that is sarcastic, but it really does point to the fact that some smart person is going to virtually have to reinvent the idea of buying major items like cars on credit.

Joe

[Mark Shaw]

Peter,

Layaway programs only work to lock in sale prices or special deals. The only way car companies will get people without credit to buy new cars is to offer significantly better pricing up front to make a layaway program work.

"Save to buy" is what most people will have to do when they cannot get credit. Anyone can set up their own bank account and just pay themselves until there is enough to make major purchases. No GMAC, no layaway commitment, no problem....

This thread is no longer just about GM/Chrysler. Perhaps a new thread is in order....

[Guest Skyking]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Mark Shaw</div><div class="ubbcode-body">

This thread is no longer just about GM/Chrysler. Perhaps a new thread is in order.... </div></div>

Yea, maybe start one about America going bankrupt. That's what's really happening.

[Reatta Man]

Mark,

Yes, this forum is really not focused just on GM and Chrysler, just like many of the very, very popular threads wander and weave from time to time.

The fact is, unless you are talking solely about a part unique to a make and model, it is somewhat hard to keep a thread ONLY on the original subject. Does the future of GM and Chrysler affect the hobby of restoring and collecting Buicks? Just ask the owner of a Packard or Studebaker about how much fun it is to restore and support their cars and the ownership of a defunct brand.

[BUICK RACER]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Reatta Man</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Thriller</div><div class="ubbcode-body">

Another thing is to perhaps think back to the 30s...folks without money didn't spend. Today, people without money borrow. It used to be that you would only borrow for big ticket items that you need (I mean really, who needs to make payments on a TV set...

</div></div>

Some retailers are having to admit that peopole were borrowing too much and now may not be able to borrow as much or have access to credit, so they have brought back (drum roll, please) LAYAWAY!

Maybe GM needs to offer a layaway program; lock in a 2009 or 2010 car and start paying for it BEFORE you pick it up. They could use layaway to pay towards a down payment or even the entire car.

What a concept; have a car 30, 40 or even 100% paid for before you get it!

Roberta: know anyone at GMAC that would listen to creative financing suggestions?

Joe </div></div>

Joe, I don't know anyone at GMAC, maybe 10yrs ago, in the office around the corner, back when I was buying and selling a company truck every year, from '94-'98, that office closed sometime ago, and the only GMAC, I know is through the dealer, and I used the bank for the last truck I financed and used by bank account to buy my current '06 outright!

besides half of GMAC or so, works for the same people as Chrysler, now!

[LINC400]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Skyking</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rawja</div><div class="ubbcode-body">

IMO, the blame lies with the automakers themselves, they simply did not make products that were desirable enough (be it styling, quality, performance, reliability or whatever) to maintain their share of the market.

</div></div>

This is what I'm so sick & tired of reading about. You people sound like broken records. I'll put my 8 year old Dodge & Buick up against any Toyota, Honda & Nissen for comfort, ride and dependability. America's brainwashed!! Get over it! </div></div>

I have to disagree with that. In 2006, my mom wanted a mid to full size 2 door from GM. She had a Buick and wanted another Buick. But they didn't make a 2 door. Neither did Cadillac, no more Oldsmobile. Even Mercury, Lincoln, Chrylser and Dodge didn't have one. She ended up with a 2006 Monte Carlo SS. The whole idea of GM was that you start out with an inexpensive Chevrolet and work your way up to a Cadillac at retirement. She was pissed that she had to drop down from a Buick to a Chevy, but it was the only way she could get a 2 door.

I suppose everyone will say that 2 doors are not popular anymore. Maybe not, but every time a new 2 door was introduced, they would be all over the place for the first few years. Unfortunately they made them basically unchanged for 9-10 years. If you are supposed to buy a new car every 3-4 years like the automakers want, this means you would buy the same exact car 3 times in 10 years. I don't know about anyone else, but I would like to have a different car when I buy a new one. Yet the foreign automakers seem to be able to update their 2 doors whenever the update their 4 doors. The main reason my mom bought a Monte Carlo over a Toyota or Honda is simply because she didn't wanta foreign car. Now the Monte Carlo is discontinued with no replacement. So I guess anybody that wants one now buys a Honda or Toyota. Apparently 70,000 units a year for Chevy with a car that shares most major components with the Impala was not good enough.

Look back to 1996. GM discontinued the Roadmaster, Cadillac Brougham, and Caprice to free up space for making more SUV's. I have worked near the airport for the last 15 years. 15 years ago the limousines were 60/40% Cadillac and Lincoln in favor of Cadillac. Now since they Brougham is discontinued, you are lucky if you see 1 Cadillac limo for every 200 Lincolns. How stupid of Cadillac to desert a market that gave them much needed prestige. The same with the Caprice/ Crown Vic in the police and taxi field. Now there are only Crown Vics. I guess 100,000 Caprices a year was no good either. And of course 30,000 each of the Roadmaster and Brougham to satisfy their traditional buyers and give Cadillac some extra prestige with a car that shared most things with a Caprice was not needed either. Now Ford wants to drop the Town Car as well. Brilliant, 50,000 a year in sales is no good either. Ok so maybe limos aren't a big market, but why keep a market that is 99% a domestic monopoly? Give that to Lexus too.

How about Buick? Right now they have 2 cars and 1 suv. This is supposed to draw people into showrooms? It sounds to me like they are getting ready to discontinue Buick. About to go under is not the kind of feeling I want when buying a new car. Then what, anyone who wants an upper middle class car that would have bought a Buick or Olds can buy a Toyota or Lexus and GM can cry some more? Why not, they have already tried to make the Lucerne a Lexus wannabe. I haven't seen very many of them on the road. Maybe that is because people that buy Buicks want something that looks like a Buick, not a cheap Lexus clone.

What about Pontiac? For years GTO enthusiasts were hoping for a modern version of their beloved car. What did they get? The original iconic American muscle car was based on an Australian Holden? The first ones didn't even have the traditional hood scoop and GM finally added it after consumer complaints. Ok the performance was there, but who wants to pay $40,000 for a car that you have to look twice at to realize that it isn't a Cavalier?

How about Chevy? Ford unveiled the retro Mustang and has had a huge hit with it. Dodge took a while, but finally put the Challenger into production. Where is the Camaro? I keep hearing it is coming out soon, but have yet to see one. They would have had a huge hit with that car if they had introduced it 2 or 3 years ago. Now with gas prices of $4.50 a gallon still fresh in everyones memory, who wants a gas guzzling muscle car? Previously I really didnt care about gas mileage, but who knows if gas will be back to $4 or even $5 next summer. I don't know if I'd be looking at one now.

The American auto industry just keeps focusing on one type of vehicle hoping that that one will be the big breadwinner. First 4 door sports sedan, then minivan, then suv. Yet the foreign companies manage to have something for eveyone and do so profitably. 30 years ago Japanese car manufacturers had nothing but econoboxes and little pickups. Now they have a full range from little high mileage cars to hybrids to luxury cars and big suvs and minivans. How come they manage to do it, and all the U.S. companies have forgotten how?

Maybe your Dodge and Buick are comfortable and reliable. I personally hate the idea of buying a foreign car, but if U.S. automakers can't build what I want, what choice do I have?

[Matt Harwood]

Interestingly enough, GMAC is majority owned by the same guys who own Chrysler (Cerberus). Cerberus has finally admitted that they know exactly nothing about the car industry and are in way over their heads with Chrysler, which is why all this is happening. It appears that their strategy at this point is to strong-arm GM into removing the Chrysler anchor from around their necks. You may have noted that GM is actually giving their dealers kickbacks to use financing sources OTHER than GMAC, despite the fact that GM still owns 49% of it! That's because Cerberus has made it virtually impossible for most buyers to finance a new GM car through GMAC (minimum of a 700 credit rating required).

It doesn't take a very astute observer to see that the intent is this: "Hey, GM, if you take Chrysler and give us the rest of GMAC, we'll call it even and start financing your cars again."

I think LINC's observation about the dwindling selection of models from GM is related to their economies of scale problems. It's more expensive in some cases for them to <span style="font-style: italic">not</span> build cars in certain factories with union contracts and other factors. But if they can't sell the cars they're building with that excess capacity, it's a double-lose proposition. You have to remember that there's a break-even point on every car line they build. They may very well build 90,000 of a particular model and still lose money on it because the plant that builds it is idle half the time, or the volume doesn't justify the R&D costs. So it's easier to abandon a car line than to continue to produce it unprofitably.

That's why a smaller GM may actually be able to build a greater variety of higher-quality cars. Trying to be all things to all people with every car line has made them outgrow their market share. In the '50s, GM could build just about anything and know that people would buy it. By the time the '80s and '90s rolled around, they had that same mindset, but their market share had shrunk and they had nowhere to sell all those extra cars that nobody was buying.

I'm left wondering this: Why isn't Toyota swimming around Chrysler like a shark? They have the cash to buy the entire thing at a fire sale price. At that point they can start building Toyotas with Chrysler badges on them and avoid the looming tarriffs on imported cars (or to take advantage of the $2500 tax break on every domestic-brand car someone recently proposed) by calling them Chryslers and building them in Chrysler factories. Even though they would technically be a foreign car company, it would be pretty hard for anyone to say that Chryslers being built in America were imports.

Chrysler<span style="font-style: italic"> is</span> going to die. The only question is whether it will be a lingering wasting sickness or a merciful euthanasia.

[Guest Skyking]

LINC, good point well taken...........