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GM on the critical list


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I've been hearing about GM for the last month or so a LOT on NPR. Today they mentioned that GM's share price is down to 1943 - as in WWII - levels. Scary. Part of me thinks, "Well, they've had it coming", but really, NOone truly wants GM to fail. Cars and history aside, it would be just an enormous loss in terms of jobs and the economy.

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This may sound bad but bankruptcy could be the best thing for GM, they could loose the Unions (I expect UAW to be no more after all of this). drop money loosing brands (IE Hummer, Saturn, and Buick). and completely rebuild there dealer network. They need to sell Saab. They need to get back too there roots. have each brand have its own Identity. Chevrolet's can be entry level cars and trucks. then Pontiac, then Cadillac. and have GMC be fleet only.

I'm currently looking for a new car and I have literally have been yelled at because I not considering any American cars. I'm looking at a Scion tC, Mazda 3, VW Jetta, and a Subaru WRX. My only must is a manual transmission so that crosses a lot of cars off my list.

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The old saying is build it and they will come. The trouble is they built it and no one wanted it. I don't want to see any of the car companies go out of business . They never listen to their customers and what they want. What point do we no longer except their excuses for poor performance and say no more welfare for corporations ? Yes there would be a huge job losses if they went under and that would be sad. These companies know because there are so many jobs on the line that we will bail them out. I think it is time we say no to them. Who bails you out when you don't do your job and lose your income? Please tell us why you will not buy a American car gasman. You will probably make my point for not buying American.

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man but if they failed then ford would go down as well

and boom no more american cars

which would make us depend on japan for their pieces of junk

and then boom they will raise the prices and we will as a country fail

so they should bail the big three out to secure jobs and the country

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I didn't say I won't buy an American car. I keep forgetting there is an 'American' car I am going too look at, its a Saturn Astra. but how American can you call a car built in Belgium.

I currently own an domestic truck, and its good. not great though. I rode in a Cobalt. and it was originally on my list but I really didn't like it. built quality was light years ahead of the Cavalier it replaced but for the money there is better out there. I like upcoming Cruze but I can't wait till almost 2011 for it.

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First Chrysler, now GM! :huh:

I don't even know where to begin with the mistakes GM has made since the '70's, as well as the other car makers. I don't know if it was arrogance on their part------thinking that "well that's the way we've always done it" mentality, or just plain naive thinking that the American consumer would always put up with junk!

Harry, you're right-------GM was on top of the heap post WWII, all through the '50's and '60's.

I can't help but think the government itself had a big hand in getting GM to where it is now. What with all the safety regs, emission mandates, etc, GM (as well as the other makers) have had to fight the government on all fronts to stay in business.

Now it's ironic that GM is looking to the same government that foisted all these regs on them-------to bail them out with BILLIONS of our dollars!

I know styling can be subjective...................but here's a thought------when (or if) the carmakers go back to styling their cars as American cars, and not import wannabees, then they might see some turnaround in their fortunes. ;) They've made some strides, but much more work needs to be done..............but hurry------time's running out! :lol:

Just my 2¢.

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It's bad news. Ford's stock is worse, but overall not nearly as bad of situation as GM.

GM's stock will be worthless when they, which they will, fail to repay their current bonds. The major problem with GM finances is they have no open lines of credit any longer. i.e. all loans are secured now. Ford doesn't have this same problem, so when they run out of money, which they are doing rapidly, they cannot function any longer because virtually all their current assets are already collateral for loans they already have and cannot pay back.

The most likely senerio is GM defaults on their bonds, goes bankrupt, and gets a Gov bailout - but this means all their stock is worth $0.00.

Worst case is GM Defaults on their bonds, goes bankrupt, and GM assets get's sold off. This still means GM stock is worthless.

Their first biggest mistake was having someone from the food industry who knew nothing of the auto biz running GM for 20+ years. They did finally get a "Car Guy" in but it was too late for them... the damage was already done.

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Racing teams get bent out of shape when the sanctioning bodies change the rules every couple years. All that developement money down the tube.

Same thing with auto makers. C.A.F.E. standards have forced US companies to build cars people don't want, then more government regs cause fuel prices to go through the roof for no good reason.

Think about where SUV's came from. There were no more big car platforms left in the late 80's, yet families needed big cars to do the things families do. The economy was good so people bought loaded up Suburbans. That was great for the big three, they were already making highly profitable trucks. But the belly-achers complained, got the C.A.F.E. standards raised causing the Big 3 to engineer new SUV's.

Big bucks have been spent and lost trying to guess the next trend of the buying public. It dose not help that the Government is trying to button-hole people into the RIGHT cars.

Sorry, I just hate seeing more government restrictions ruin more industries here in the US. Who will be next to fall?

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GM will probably file for Chapter 11 bankruptcy. There assets will be protected from creditors, but there will be little or no money for development or NASCAR sponsorships and assistance. A court somewhere will hold GM management's feet to the fire and cut fat out of the budget. It will be the end of low production, high profit margin cars like the Solstice/Sky type vehicle. They will probably eventually emerge from bankruptcy as a very different company.

If Ford doesn't go into bankruptcy, they will also emerge as a different company. Times will be tough as long as the economy remains stagnant. During the Great Depression many car companies ceased to exist or were bought up by others. Look at a list of car manufactures in the mid 20's, then compare that to the late 40's. There were substantialy fewer in the post WWII world. Some merged and others disappeared.

Even in the relative prosperity of the 50's and 60's car companies died away. Notice that at that time is when Kaiser, Studebaker, and Henry J all disappeared. GM, Ford, AMC, and Chrysler were all doing fairly well at this time. Its all about management and producing what the customers want to buy.

Trucks and SUV's took off in the 90's because that is what customers wanted. When gas took its rapid climb this year, the market for large vehicles disappeared. Small, fuel efficient cars and hybrids are in demand now, if you can find someone who can to buy one. A used car dealer near me has probably 40 or 50 pickups and SUV's on his lot that he can't sell. The only bright side is that if he can hang on and not lose his shirt, when the economy improves and there are few trucks to buy, he'll be sitting pretty, however, I'm not going to buy into his business anytime soon.

Gary

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man but if they failed then ford would go down as well

and boom no more american cars

which would make us depend on japan for their pieces of junk

and then boom they will raise the prices and we will as a country fail

so they should bail the big three out to secure jobs and the country

WE as a country wil not fail, just because GM MIGHT go down the toilet

sure its your opinion japan is a piece of junk..but despite your hatred towards them, they make some of the best selling cars in the world.. and thats not so easy to come to do.

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WE as a country wil not fail, just because GM MIGHT go down the toilet

sure its your opinion japan is a piece of junk..but despite your hatred towards them, they make some of the best selling cars in the world.. and thats not so easy to come to do.

Actually, with Porsche buying VW, which owns Audi, Bentely, SEAT, Lamborghini, Skoda, and Spyker with a Joint venture with FAW, Porsche is set to be the biggest manufacture in the world surpassing Ford GM and Toyota.

Last year when Toyota passed GM with selling 2.54m vehicles world wide The VW "brand" did 2.11m 2007 (2.21m through july 2008 - 2.24 for Toyota during the same period) and is reporting +10-30%gains this year and the VW group is on pace to do 4.81m for 2008.

With Toyota loosing market share and VW gaining in most markets including the US VW will pass Toyota this year.

Edited by CAL
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Racing teams get bent out of shape when the sanctioning bodies change the rules every couple years. All that developement money down the tube.

Same thing with auto makers. C.A.F.E. standards have forced US companies to build cars people don't want, then more government regs cause fuel prices to go through the roof for no good reason.

Think about where SUV's came from. There were no more big car platforms left in the late 80's, yet families needed big cars to do the things families do. The economy was good so people bought loaded up Suburbans. That was great for the big three, they were already making highly profitable trucks. But the belly-achers complained, got the C.A.F.E. standards raised causing the Big 3 to engineer new SUV's.

Big bucks have been spent and lost trying to guess the next trend of the buying public. It dose not help that the Government is trying to button-hole people into the RIGHT cars.

Sorry, I just hate seeing more government restrictions ruin more industries here in the US. Who will be next to fall?

To me THAT is the main problem right there, I feel that the government should give the Big 3 that money just because of what they have to spend to make cars that are being foisted on us because of those ###### regulations!

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I didn't say I won't buy an American car. I keep forgetting there is an 'American' car I am going too look at, its a Saturn Astra. but how American can you call a car built in Belgium.

I currently own an domestic truck, and its good. not great though. I rode in a Cobalt. and it was originally on my list but I really didn't like it. built quality was light years ahead of the Cavalier it replaced but for the money there is better out there. I like upcoming Cruze but I can't wait till almost 2011 for it.

Well the profit goes to Detroit (using the same logic as all those who say, that the profits of an American build Japanese car go to Japan ;^)

I work for GM in Antwerp, Belgium and we build dam good cars (Opel/Vauxhall/Holden/Chevy/Saturn, Astra) hopefully we won't be shut down due to the current crisis.

Luc

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Oh no, here he goes again.

After spending over 30 years in the automotive business, I can tell you that everyone in the business knew GM as “Arrogant and Out of Touchâ€. And that is a quote. They never listened to the dealer body, which was at “ground zero†of the retail business. GM always knew better. As we went into the 1970’s with the American auto companies spitting out market share to Europe and Japan, GM was in complete denial. They always had the attitude, “we are GM, and they will buy itâ€. Sorry not so. All through the 1970’s and 80’s, GM was the “Wizard of Redundancyâ€. Every brand repeated each others line of cars with a slightly different grill and taillight combo. In the 1990’s GM threw Oldsmobile (which in the 1980’s had the number one selling line of cars in America, the Cutlass) to the wolves in favor of Saturn which lost money on every car they sold. Rather than take a hard line with the unions which were crippling (along with under funded health care and retirement funds) them, they chose , as usual, poor management practices and put the problem off to another day…guess what, that day is here.

As much as they do not desire it, the government, also making many poor decisions, will bail out GM, because the argument is that GM is too important to America to allow to “go awayâ€. The old saying is, “As goes Detroit, so goes the countryâ€. Obama, has already said, we will bail out the auto industry. So here we go down that very slippery slope of one, rewarding bad behavior with more bad behavior, and two, we, my friends are taking giant steps toward Socialism.

We are headed down the exact same road that the British went down in the 1960’s and 70’s, as they lost their way on the way to socialism. Our, WE, our government will own the banks, the healthcare (Insurance) and the automobile industry. This is a losing plan, but the die is cast. The one thing you will be able to say to your grandkids, besides, “I remember when…..†is that you had a ringside seat to the end of Capitalism.

I know you think this is an extreme view, but look at the facts. We gave the banks a Trillion dollar bailout, which will grow; we are giving AIG (ins.) a massive bail out and next will be an auto manufacturer bail out. These are “bailouts†of money American just does not have. We are just “Printing†more of it. It will become virtually worthless. Do you guys see this! Our dollars are becoming worthless and that will bring deflation. Deflation will kill our economy, at least, what ever is left of it. More bad behavior by our pitiful elected leaders who have to bow at the alter of “Payback Timeâ€. The Obama campaign raised over six hundred million dollars during his campaign….most of that from very powerful entities, mainly like one Mr. George Soros, a committed hard Lefty who wants a one world, one government and one currency vision for the world…sit tight my pretties, its coming eat your lunch!!

I know many of you are thinking I’m crazy, how did I get to this point talking about the GM problem? Well, the problems are all tied together and they all lead to a place you don’t even want to think about, so you (who do not believe this is. coming may be just like GM)…refuse to see the problem coming so you keep your head in the sand. Look, here is the point of this rant… Government go us into this mess, it is the American economic force that should be “bailing us out†. Government intervention into the business world will stifle their ability to get out of this mess. The hole is just getting deeper. Look, if your kid is failing in school, would you think it is wise for you to do his homework? No, he has to do the hard work in order to survive. Same is true of our business world…learn to survive or die…there can be no other way….natures’ law of the jungle…the strong survive.

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Well said Peter!!

The problem is the printing presses won't be able to print the money fast enough!

You think the auto market is bad...................they haven't gotten to the coming problem in the commercial real estate market yet! ;)

Fasten your seat belt folks, it's gonna be a very bad 3½ years...............and not because of who was/is in office. :lol:

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Bill, you are so right, the Commercial Real Estate market will go the same way as the Home Real Estate market is going…down…down…down. The problems are so out of control. Look, here in New York, they just spent billions on a new Yankee and Giant stadium. WHY???? Greed, that is why. Does a baseball player really desire twenty five million a year to play a kids game? Why do we (not me, definitely, not me) pay hundreds of dollars to attend one baseball of football game? As Crazy Eddie, long gone now after jail time, was fond of saying…its Insane!!!!†Everything needs to come back down to reality.

I want to point out that even though I mentioned Obama by name, he is not the specific problem. It matters not who is in the White House; it is the philosophy of our “entire body†of elected officials. Everyone one is “holden†to the powerful and wealthy that paid for their campaign. I have said this many times before…we now have a government “Of the wealthy, by the wealthy, for the wealthyâ€. Think about this, the McCain and Obama campaigns together raised over one point two billion dollars just to run for the Presidency. When you factor in the local, state and other federal elections, the dollar amount is staggering……this is not big business…..this is HUGE business. We are all held captive by elected leaders who for the most part have their own, and their financiers’ interests at heart. We, the American people take a back seat to this entire process. Look, I did not vote for Mr. Obama, but he is our (my) President and I want him to succeed very much. I fear that there are too many dark forces at work behind the scenes for that to happen, but I can hope.

As a very wise friend of mine continues to remind me, “Hope is not a strategyâ€. He is right, we need a plan and leaders who have OUR best interests at heart. People who are not controlled by the money behind the campaign by really want this country to continue to be the beacon of prosperity and progress in the world today . We have created a system that is just not working the way the founding fathers envisioned….remember that thing about being “of the people, by the people, for the people†Well its gone, sold to the highest bidder, just like a sale on Ebay.

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Lots of things have contributed to GM's woes. They carry a considerable load of retirees that are living longer than anyone there expected, paying out huge amounts in pensions and other benefits. The labor unions have lost some of their influence since the mid 1970's but still are a factor.

Then you get to them building cars that are not what people want. Losing Oldsmobile was probably a smart move overall, maybe Buick could go too? Even though I like Buicks in general. I bought a used car in May. I tried very hard to buy an American car and wrestled with it for close to a year before I bought a Nissan product. Even the car salesman steered me away from the Malibus and other cars I was looking at. Ford had nothing that I liked. I did like a couple of Chrysler products and test drove an Avenger, but I liked the Nissan over that as well.

What about bailouts? The US government did AMC a favor by having them supply fleet cars for many official usage. They did tend to rust out and fall apart faster than anyone expected. In the end, AMC, exit - stage right. Does GM now offer a car that would be fleet-worthy or would the bailout be a one shot deal or would it involve other breaks? I guess we'll have to wait and see.

Bob

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Oh no, here he goes again.

After spending over 30 years in the automotive business, I can tell you that everyone in the business knew GM as “Arrogant and Out of Touchâ€. And that is a quote. They never listened to the dealer body, which was at “ground zero†of the retail business. GM always knew better. As we went into the 1970’s with the American auto companies spitting out market share to Europe and Japan, GM was in complete denial. They always had the attitude, “we are GM, and they will buy itâ€. Sorry not so. All through the 1970’s and 80’s, GM was the “Wizard of Redundancyâ€. Every brand repeated each others line of cars with a slightly different grill and taillight combo. In the 1990’s GM threw Oldsmobile (which in the 1980’s had the number one selling line of cars in America, the Cutlass) to the wolves in favor of Saturn which lost money on every car they sold. Rather than take a hard line with the unions which were crippling (along with under funded health care and retirement funds) them, they chose , as usual, poor management practices and put the problem off to another day…guess what, that day is here.

As much as they do not desire it, the government, also making many poor decisions, will bail out GM, because the argument is that GM is too important to America to allow to “go awayâ€. The old saying is, “As goes Detroit, so goes the countryâ€. Obama, has already said, we will bail out the auto industry. So here we go down that very slippery slope of one, rewarding bad behavior with more bad behavior, and two, we, my friends are taking giant steps toward Socialism.

We are headed down the exact same road that the British went down in the 1960’s and 70’s, as they lost their way on the way to socialism. Our, WE, our government will own the banks, the healthcare (Insurance) and the automobile industry. This is a losing plan, but the die is cast. The one thing you will be able to say to your grandkids, besides, “I remember when…..†is that you had a ringside seat to the end of Capitalism.

I know you think this is an extreme view, but look at the facts. We gave the banks a Trillion dollar bailout, which will grow; we are giving AIG (ins.) a massive bail out and next will be an auto manufacturer bail out. These are “bailouts†of money American just does not have. We are just “Printing†more of it. It will become virtually worthless. Do you guys see this! Our dollars are becoming worthless and that will bring deflation. Deflation will kill our economy, at least, what ever is left of it. More bad behavior by our pitiful elected leaders who have to bow at the alter of “Payback Timeâ€. The Obama campaign raised over six hundred million dollars during his campaign….most of that from very powerful entities, mainly like one Mr. George Soros, a committed hard Lefty who wants a one world, one government and one currency vision for the world…sit tight my pretties, its coming eat your lunch!!

I know many of you are thinking I’m crazy, how did I get to this point talking about the GM problem? Well, the problems are all tied together and they all lead to a place you don’t even want to think about, so you (who do not believe this is. coming may be just like GM)…refuse to see the problem coming so you keep your head in the sand. Look, here is the point of this rant… Government go us into this mess, it is the American economic force that should be “bailing us out†. Government intervention into the business world will stifle their ability to get out of this mess. The hole is just getting deeper. Look, if your kid is failing in school, would you think it is wise for you to do his homework? No, he has to do the hard work in order to survive. Same is true of our business world…learn to survive or die…there can be no other way….natures’ law of the jungle…the strong survive.

Finally someone that sees it the way I see it. Seams that a lot of folks on here have blinders on and just love too give are money away to folks that won't change their ways anyhow. When a company is run into the ground from poor management lets reward them for it. I think not. The first thing they should do is strip all CEO's and the board members of their assets and cash . They are the ones that never lose anything ,no punishment or consequence for their bad decisions. I think if that were implemented We would not see this happen very much.

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Oh no, here he goes again.

After spending over 30 years in the automotive business, I can tell you that everyone in the business knew GM as “Arrogant and Out of Touchâ€. And that is a quote. They never listened to the dealer body, which was at “ground zero†of the retail business. GM always knew better. As we went into the 1970’s with the American auto companies spitting out market share to Europe and Japan, GM was in complete denial. They always had the attitude, “we are GM, and they will buy itâ€. Sorry not so. All through the 1970’s and 80’s, GM was the “Wizard of Redundancyâ€. Every brand repeated each others line of cars with a slightly different grill and taillight combo. In the 1990’s GM threw Oldsmobile (which in the 1980’s had the number one selling line of cars in America, the Cutlass) to the wolves in favor of Saturn which lost money on every car they sold. Rather than take a hard line with the unions which were crippling (along with under funded health care and retirement funds) them, they chose , as usual, poor management practices and put the problem off to another day…guess what, that day is here.

As much as they do not desire it, the government, also making many poor decisions, will bail out GM, because the argument is that GM is too important to America to allow to “go awayâ€. The old saying is, “As goes Detroit, so goes the countryâ€. Obama, has already said, we will bail out the auto industry. So here we go down that very slippery slope of one, rewarding bad behavior with more bad behavior, and two, we, my friends are taking giant steps toward Socialism.

We are headed down the exact same road that the British went down in the 1960’s and 70’s, as they lost their way on the way to socialism. Our, WE, our government will own the banks, the healthcare (Insurance) and the automobile industry. This is a losing plan, but the die is cast. The one thing you will be able to say to your grandkids, besides, “I remember when…..†is that you had a ringside seat to the end of Capitalism.

I know you think this is an extreme view, but look at the facts. We gave the banks a Trillion dollar bailout, which will grow; we are giving AIG (ins.) a massive bail out and next will be an auto manufacturer bail out. These are “bailouts†of money American just does not have. We are just “Printing†more of it. It will become virtually worthless. Do you guys see this! Our dollars are becoming worthless and that will bring deflation. Deflation will kill our economy, at least, what ever is left of it. More bad behavior by our pitiful elected leaders who have to bow at the alter of “Payback Timeâ€. The Obama campaign raised over six hundred million dollars during his campaign….most of that from very powerful entities, mainly like one Mr. George Soros, a committed hard Lefty who wants a one world, one government and one currency vision for the world…sit tight my pretties, its coming eat your lunch!!

I know many of you are thinking I’m crazy, how did I get to this point talking about the GM problem? Well, the problems are all tied together and they all lead to a place you don’t even want to think about, so you (who do not believe this is. coming may be just like GM)…refuse to see the problem coming so you keep your head in the sand. Look, here is the point of this rant… Government go us into this mess, it is the American economic force that should be “bailing us out†. Government intervention into the business world will stifle their ability to get out of this mess. The hole is just getting deeper. Look, if your kid is failing in school, would you think it is wise for you to do his homework? No, he has to do the hard work in order to survive. Same is true of our business world…learn to survive or die…there can be no other way….natures’ law of the jungle…the strong survive.

As a college student (Business Administration, if you can believe that!) in the late 1960's, one of the things we had to do was read and analyze case studies, which included the then Big Three automakers, plus AMC and the then-late Studebaker.

With History as my minor, I was struck by several things surrounding the American auto industry at that time, even wrote a couple of papers in which I postulated my concerns, and gave my conclusions based upon my research at the time (wish I knew where at least one of those was!).

One was the story of Chrysler Corporation to that point in time (Chrysler was truthfully, in the late 1960's, fast becoming the "sick man" of the domestic auto industry, they could barely eke out a profit, at least by the standards set by Ford and GM). My research pointed toward a watershed event, the many months-long strike that Chrysler endured in 1950-51, with both company and union intractible in their demands and counter demands. Chrysler permanently lost all hope of ever challenging Ford again, for the position of #2 in the industry, which they had been a couple of times in their past, and had been able to come close to passing Ford several times in the 30's. In addition, a long-running battle between competing factions of the stockholders/Board of Directors caused no end of animosity and uncertainty in the ranks of management, and to a certain extent, out on the factory floor as well. Basically, it was an all-out fight between the staid old engineers-turned-higher management, and their staid old thinking as to building cars to THEIR specs, rather than truly listening to customer demand and expectations (wrapping 1941 Plymouth and Dodge chassis with new postwar bodies, rooflines set so as to not knock the dress hat off the head of the Chairman, coupled with truly dowdy styling). The challengers, led by a maverick executive backed by a huge proportion of stockholders, sought to unleash Virgil Exner, et.al., bring Chrysler products truly into the 1950's, and they did win out. Finally, after years of trying, Chryco cars had V8's across the board (Plymouth a full 23 years after Ford, but still to offer the same old flathead 6 as standard equipment, basically a 1930 engine, in the midst of the jet age), truly automatic transmissions 15 years after GM's Hydramatic, a full 5 yrs after the first Ford-O-Matic. But, in doing so, the new management team spent the groceries and half the rent, and then pushed the introduction of the absolutely trend-setting 57's so fast, so far ahead of any realistic development schedule, and at such expense that cost cutting, coupled with warp speed development lead to shiny new cars that were litterally rusting out within mere weeks of reaching the dealerships. The damage to Chrysler's public image was horrendous. Sticking with such a trendy fad as huge tailfins, as much due to the lack of capital to come up with something really new to replace the "Forward Look", even with tremendously improved styling by 1963, further damaged Mopar's reputation. In the early-mid 60's, it took a particularly brave baby boomer buying his first new car, to be seen in a Mopar, no matter how well they performed. The damage of all this carried forward, all the way to Chrysler's near bankruptcy in 1980-81.

Studebaker, in the mid 1920's the #3 automaker, was beset by a Board Chairman and President (Albert Erskine) who tried to prop up the stock price by declaring dividends quarterly as the Depression deepened 1930-33, to the point that he bankrupted the firm (one of the longest receiverships of any major corporation in the US--1933-1940). While the new Champion was the car that saved the company from ultimate liquidation, and their time of greatest sales was still in the future, Studebaker, after the debacle of 1932-33, never had the capital to develop truly marketable cars, their period of greatest sales coming during the postwar "sellers' market". Complicating all this was a refusal of management to investigate ways of financing new, modern plant and equipment. So, as the postwar "seller's" boom gave way to the increasing competitiveness of the 50's, Studebaker was stuck with factory buildings way outdated (their main assembly plant in South Bend was built in 1919, impossible to expand or truly upgrade, some of the outbuildings dating from the late 19th Century. In the midst of the postwar boom, Studebaker management gave the UAW the most lucrative contract (both in terms of wage rates and work rules) in the industry, which saddled them with production costs making the legendary '53 Starliner HT a solid $500 more to produce than if say, Chevrolet had produced the very same car. Hardly a recipe for both profitability and competitive pricing. The rest, as they say, is history--in December 1963, regular production on South Lafayette Avenue in South Bend stopped for all time, and two years later, the Studebaker marque vanished into the never-never land of orphan cars.

The list went on and on and on--Pierce Arrow, Packard, Peerless, Hupp, Graham Paige, and so forth.

What has happened, in all these cases, it seems to me, is that the original innovators, those so-called auto industry pioneers, such as Ford, Olds, Chevrolet, Dodge Brothers, Walter Chrysler, Charles Nash, John N Willys, all were ultimately replaced by more or less itinerant executive types, who today come to work with briefcases carrying a small pad of their resume's, just in case a better deal someplace else turns up, and with pitifully little true interest in the products they are honcho'ing the mass production of. Henry Ford was the genius behind every Ford car from 1903 through 1932 (his robust health began to give way by 1933), he had the vision, he gained the power to do with as he saw fit with the capital his company had (the richest property in the entire industry as of 1932), and incredible customer satisfaction. GM took that over in the middle 30's, only to see subsequent generations of Board Chairmen and Corporate Presidents wither away a company known in the 50's and 60's as much for its steady profitability (almost yearly back then, 10% net after tax profits--or about the same profit percentage after tax that Exxon enjoys right now--only nobody truly objected back then). When men the likes of John DeLorean left GM in the 70's, management decisions became more and more the province of executives trained in "administration", which is a glorified way of saying "accountant" in most cases. The bean-counters arrived.

Couple all this with the trend from the late 1970's through today--make the stock price go up, stockholders are happy, quarter to quarter--product, quality, service go hang. And all that had to be on a quarterly (every 3 month) basis--the death of any sort of long-term vision by professional managers is pretty much the "kiss of death" to their careers--please the stock analysts, at all costs. While the warning signs, continual wage and salary escalation, along with as-we-know-now unsustainable benefit packages, all were quite visible years ago, management and labor chose to ignore the simple fact that such could not continue on forever, and now we are seeing the results of that.

Bean counters, even in the face of all this, insisted on shaving costs almost draconianly--their attitude is, for every dollar per car shaved off, a Million or more in increased positive cash flow (profit), the customer go hang when such became simply cheapening the product, rather than improving or maintaining the breed.

So here we are in 2008--our three remaning US-based automakers, each one, singularly, too large to let fail, but perhaps too expensive to prop up for long in any serious matter. I don't envy Congress or our incoming President in this, no matter what they will do, it's going to be "damned if they do, damned if they don't.

Art

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I just started reading a book that I think should be required reading for anyone, even remotely interested, with American politics and our place in the world. It is entitled “A post American World†written by Fareed Zakaria….now before you get crazy about the authors’ name, he is an American, born in India. Fareed is the editor of Newsweek International and has written a few books, most recently, ‘The Future of Freedomâ€. Fareed clearly gets it. He has tremendous insight into the workings of International business and politics and quite frankly he paints a very real and profoundly disturbing picture of what lay ahead for America in a world where we are no longer the preeminent economy and political powerhouse. Asia is rapidly overtaking North America as the future of growth and prosperity.

He feels that we, and I agree with him, will follow in the footsteps of The Netherlands (1600’s), Spain (1700’s), England (1800’s) from the pinnacle of world power to second class status. Remember, those who do not learn the lessons of the past, are bound to repeat the failures of the past. As I said in an earlier post today, we are following in the British business model. The British Auto Industry, first taken over by the government and now for all practical conversation is gone, destroyed or sold off to others….we appear to be following that pattern here and now. This is very scary stuff, I think we are heading into…a perfect storm of political and economic failure and we may not ride it out without taking on a ton of water. We all may need to get a copy of the Rosita Stone software and learn to speak Chinese like that Michael Phelps commercial.

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I don't understand all the hand-wringing and debate. The answer should be clear to everyone.

We live in a country whose economic/political system is based on capitalism. In a capitalistic economy, a business either succeeds and turns a profit... or if they can't do that, they close up shop. In other words, you're either in the game... or you get out. That's how capitalism works. That's how it's worked here for the past 230 years.

In a socialist country, the government runs the economy.

Seems like a no-brainer to me. Sure, if GM goes belly-up, a lot of people will be looking for work. But is it fair to demand that everyone else (that is, all of us US taxpayers who do not work for GM or gain any benefit from them) to be unwillingly made their savior by propping up a failing business with our tax dollars? It doesn't matter HOW GM got here... bad management, poor product planning. The point is, they're on the verge of collapse, mostly as a result of their own ineptness and shortsightedness. And don't tell me US regulations killed GM. EVERY car sold in the US has to meet those regulations, not just the cars that GM builds! Honda, Toyota, Nissan, Hyundai, Kia, VW, BMW, Mercedes, etc. all seem to be able to deal with US regulations...GM should have been able to as well.

Either we are a capitalistic society... or a socialist one. Time to decide, America... because you can't be both.

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I don't understand all the hand-wringing and debate. The answer should be clear to everyone.

We live in a country whose economic/political system is based on capitalism. In a capitalistic economy, a business either succeeds and turns a profit... or if they can't do that, they close up shop. In other words, you're either in the game... or you get out. That's how capitalism works. That's how it's worked here for the past 230 years.

In a socialist country, the government runs the economy.

Seems like a no-brainer to me. Sure, if GM goes belly-up, a lot of people will be looking for work. But is it fair to demand that everyone else (that is, all of us US taxpayers who do not work for GM or gain any benefit from them) to be unwillingly made their savior by propping up a failing business with our tax dollars? It doesn't matter HOW GM got here... bad management, poor product planning. The point is, they're on the verge of collapse, mostly as a result of their own ineptness and shortsightedness. And don't tell me US regulations killed GM. EVERY car sold in the US has to meet those regulations, not just the cars that GM builds! Honda, Toyota, Nissan, Hyundai, Kia, VW, BMW, Mercedes, etc. all seem to be able to deal with US regulations...GM should have been able to as well.

Either we are a capitalistic society... or a socialist one. Time to decide, America... because you can't be both.

Well said
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Art, your obvious deep insight into the Auto Manufactures is “dead on the moneyâ€. GM is at a critical time in their history, begging for financial life support. I believe Chrysler, as we once knew it is about to “flat line†and die on the table. Parts, kind of like an organ donor, will be transplanted into other healthier recipients. Nissan is working to get the Dodge Ram pickup as we speak, Volkswagen already has the Mini Van technology, purchased from Chrysler for their Mini Van. Tata of India has expressed interest in Jeep, so parts may live on, but I doubt Chrysler as a whole will.

Ford, clearly is in the best position. They are the only of the 3 who own 100% of their finance arm, Ford Credit, they have a big and profitable European operation, and are about to infuse much of that product into the US market. Ford stock at $1.90 is most likely a smart buy right now. GM stock most likely will be worthless, and Cerabus (mis spelled I know) will be lucky to get anything from the sale of some of the Chrysler name and assets.

What a mess. Poor management and personal greed have lead us here, and I am seriously concerned that the rest of our “Bubble†economy is in similar shape. On second thought, “Concerned†is not strong enough a word to describe my feelings…â€Down Right Scared to Death†is closer to it.

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