GM Suspends Dividend Payments..........

[FinanceDude]

Might be the beginning of the end. Art G, what does your crystal ball say??

 

[haha]

Do you mean the end of GM, or the end of the current market downdraft?

Ha

 

[FinanceDude]

Do you mean the end of GM, or the end of the current market downdraft?
Ha

End of GM..........at least until the bankruptcy courts rule.........

 

[al_bundy]

if GM ever goes Chap 11, it will be litigated for years to come

the only people to make money off it will be GM execs getting nice retention bonuses, lawyers, and the investment banks with their restructuring consulting fees

 

[FinanceDude]

if GM ever goes Chap 11, it will be litigated for years to come

How can you litigate 50 years or bad management decisions and a greedy union??

the only people to make money off it will be GM execs getting nice retention bonuses, lawyers, and the investment banks with their restructuring consulting fees

Per usual.........

 

[al_bundy]

i bet the unions will spend a fortune litigating their pensions, medical benefits, plant closings and whatever

i think the last strike was in 2006 and i remember reading that part of the contract was a promise by GM to keep some models around for a specified amount of time. can't remember the details but it amazed me that the UAW was telling GM which models to build and for how long

 

[StJohnsWood]

You make a garbage product and this is what happens. I was born in the 1960's and my perception of GM and Ford is JUNK. Shame on me but that's how I see both. I would never buy either.

 

[FinanceDude]

i bet the unions will spend a fortune litigating their pensions, medical benefits, plant closings and whatever

i think the last strike was in 2006 and i remember reading that part of the contract was a promise by GM to keep some models around for a specified amount of time. can't remember the details but it amazed me that the UAW was telling GM which models to build and for how long

I thought one of the rules of litigation is that the party being litigated has the WHEREWITHAL to pay for damages award against them. Tell me where GM has the money to pay damages on settlements against them??

Oldsmobile is a classic example. GM spent $5 BILLION retooling Oldsmobile to save the brand. They FINALLY got it right with the Aurora, except they were 15 years TOO LATE in doing it. I know three people still driving Auroras with the Northstar V-8s, all over 150,000 miles and holding up well.........

Management stupidity coupled with no spine in dealing with the UAW = recipe for disaster.............

 

[CaseInPoint]

You make a garbage product and this is what happens. I was born in the 1960's and my perception of GM and Ford is JUNK. Shame on me but that's how I see both. I would never buy either.

That's true of some of their products, maybe even most, but producing low quality isn't the problem.

The real issue is that unions and government regulations have forced companies like GM to turn into social institutions, carrying an unbearable burden of vacations, health care, and pension plans for their employees.

There's no way a company acting as a social institution can compete in a global market, where the competition isn't saddled with those burdens. If American businesses, like GM, were allowed to function as businesses, there would be no problem staying profitable.

 

[FinanceDude]

That's true of some of their products, maybe even most, but producing low quality isn't the problem.

The real issue is that unions and government regulations have forced companies like GM to turn into social institutions, carrying an unbearable burden of vacations, health care, and pension plans for their employees.

There's no way a company acting as a social institution can compete in a global market, where the competition isn't saddled with those burdens. If American businesses, like GM, were allowed to function as businesses, there would be no problem staying profitable.

That is true, and it will be painful for GM to reinvent themselves, and a lot of retirees will be hurt, but it must happen for them to compete with Toyota, Honda, and others.

Maybe Ford, GM, and Chrysler can combine and make a domestic "superautomaker"..............

 

[Marquette]

My coworker just had an idea... GM could pull out of the domestic market and only make cars for other countries.

 

[FinanceDude]

My coworker just had an idea... GM could pull out of the domestic market and only make cars for other countries.

They could make a killing in China and other developing countries. I often think of the hare-brained idea I threw at a factory guy back in the 90's.

I worked at a Pontiac dealer that had Chevy also. There were LOTS of similarities in the cars except the Pontiacs had stiffer suspensions, more chrome, and more gadgets.

I suggested GM should merge Pontiac and Chevy into Chevy. However, customers could order a "Pontiac package" for $3000-$5000 more, for which they would get speed-rated tires, stiffer suspension, dual chrome exhaust, a fancier chip for more performance, Pontiac badging, spoiler, luminiscent gauges, tach, etc.

I never saw a guy laugh so hard in my life..........

 

[al_bundy]

GM is doing pretty well in China, sales are growing 50% annually

 

[CitricAcid]

China is pretty much the only place where Buick sells...

 

[Art G]

Might be the beginning of the end. Art G, what does your crystal ball say??

What do I think? I think cutting out the dividend is a great idea. Watch the stock price rally now.

 

[Milton]

That's true of some of their products, maybe even most, but producing low quality isn't the problem.

Agreed that they have other, serious, problems ... but the bottom line is no manufacturer of products that few customers are willing to buy can have any future. A well-deserved reputation for shoddy goods is a key part of GM's difficulties.

The real issue is that unions and government regulations have forced companies like GM to turn into social institutions, carrying an unbearable burden of vacations, health care, and pension plans for their employees.... If American businesses, like GM, were allowed to function as businesses, there would be no problem staying profitable.

To the best of my knowledge, GM was not forced to do anything. It negotiated collective agreements of its own free will, without any governmental interference. And while I despise unions, one cannot blame the UAW for doing its utmost to feather the beds of its members.

 

[CaseInPoint]

Agreed that they have other, serious, problems ... but the bottom line is no manufacturer of products that few customers are willing to buy can have any future. A well-deserved reputation for shoddy goods is a key part of GM's difficulties.

You're right that a company cannot survive without sales. Seeing a drop in sales across all manufacturers, though, may tell us that the issue is not necessarily one of quality. For example, even Toyota, with its high-quality offerings has seen a drop in sales.

It's just a matter of time before car sales pick up, though, as older cars break down and repairs become more costly than the price of a new lease.

I do think that the era of large gas guzzlers is coming to an abrupt end, so the question will be whether GM can shift its manufacturing to smaller cars. That will take major restructuring (meaning many more layoffs and transfers). In the end, though, GM might have to cut off its cushy employee benefits to stay afloat.

To the best of my knowledge, GM was not forced to do anything. It negotiated collective agreements of its own free will, without any governmental interference. And while I despise unions, one cannot blame the UAW for doing its utmost to feather the beds of its members.

Well, union negotiations are basically legalized blackmail. Of course, I don't blame the unions themselves for doing their best for their members (and corrupt leaders), but it sure looks like big business can no longer afford unions altogether. Maybe GM will be forced to follow the Wal-Mart's model.

 

[Milton]

It's just a matter of time before car sales pick up, though, as older cars break down and repairs become more costly than the price of a new lease.

I guess that's true. While the experience of Cuba suggests that people are able to make cars last a long time if they have to, the Cuban climate is probably a lot better for old cars than that of the northern states and Canada, where generous winter salt usage is usually a problem.

I do think that the era of large gas guzzlers is coming to an abrupt end

Oh I do hope so. They're just BAD, on so many levels.

 

[samclem]

To the best of my knowledge, GM was not forced to do anything. It negotiated collective agreements of its own free will, without any governmental interference.

Various laws (i.e. government interference) tipped the balance against companies and toward unions in these negotiations. It's better in some places than others (e.g. "right-to-work" states here in the US typically are more evenhanded in their laws", but that's not where most GM operations are based).

 

[Midpack]

You're right that a company cannot survive without sales. Seeing a drop in sales across all manufacturers, though, may tell us that the issue is not necessarily one of quality. For example, even Toyota, with its high-quality offerings has seen a drop in sales.

I do think that the era of large gas guzzlers is coming to an abrupt end, so the question will be whether GM can shift its manufacturing to smaller cars. That will take major restructuring (meaning many more layoffs and transfers). In the end, though, GM might have to cut off its cushy employee benefits to stay afloat.

Toyota (-21% in June) sales have not fallen as much as Ford (-28%) or Chrysler (-46%) - and Honda actually sales increased 1% (even they don't know why). GM sales were off -18%. But the critical difference is Toyota and Honda have products in the pipeline now that will meet the needs of a buyer facing $4-7/gal gasoline near term. I suspect the pipeline at GM, Ford and Chrysler is filled with options like the recently introduced Escalade Hybrid ("Intelligent Indulgence" indeed) and the Camaro. And I'd be willing to bet Honda and Toyota will fare far better over the next few years than the 'big three' (doesn't have the ring it once did...).

 

[Milton]

Various laws (i.e. government interference) tipped the balance against companies and toward unions in these negotiations. It's better in some places than others (e.g. "right-to-work" states here in the US typically are more evenhanded in their laws", but that's not where most GM operations are based).

Then GM should have relocated its operations to a more company-friendly environment. It made the decision to stay in Michigan etc. Nobody forced it.

GM is a huge corporation (not for much longer!), with all kinds of resources. If it was tripped up by the union or local governments, it had the muscle to deal with those challenges ... it was just too lazy to do so.

Poorly designed and made products, incompetent self-satisfied management, overpaid coddled workers, brainless complacent shareholders: what a toxic stew. This is one company that should not be missed.

 

[Art G]

I think what's being lost somewhere in here is that most of the problems that are now stemming from union contracts were those agreed upon in the 80's.
I'd say in recent years, the unions in the auto business and airline business have been losing out on benefits.

 

[CitricAcid]

I thought the 'Big Three' meant Honda, Toyota and Nissan? Must be a generational thing...

 

[FinanceDude]

I thought the 'Big Three' meant Honda, Toyota and Nissan? Must be a generational thing...

They're still called: "The Japanese Automakers"............but I think they are the "New Big Three".........

 

[FinanceDude]

Toyota (-21% in June) sales have not fallen as much as Ford (-28%) or Chrysler (-46%) - and Honda actually sales increased 1% (even they don't know why). GM sales were off -18%. But the critical difference is Toyota and Honda have products in the pipeline now that will meet the needs of a buyer facing $4-7/gal gasoline near term. I suspect the pipeline at GM, Ford and Chrysler is filled with options like the recently introduced Escalade Hybrid ("Intelligent Indulgence" indeed) and the Camaro. And I'd be willing to bet Honda and Toyota will fare far better over the next few years than the 'big three' (doesn't have the ring it once did...).

Amount of brands is the problem:

Honda: Honda and Acura

Toyota: Toyota, Lexus, and Scion

Nissan: Nissan and Infiniti

GM: Chevy, GMC, Pontiac, Buick, Cadillac, (Oldsmobile back in the day)

I used to work at a GMC truck dealer. The ONLY difference between GMC and Chevy was the badging on the truck, and a little more chrome on the GMC. they were the SAME truck, how stupid is that??