This is truely a great day in car history!!!!

http://www.msnbc.msn.com/id/29946290/?gt1=43001

THAT'S a surprise.

Well, clearly they need fresh ideas.

bring back the corvair.

It's not really a surprise, it's been clear that Obama hasn't been enamored with the progress of at least GM with its restructuring, and the CEO hasn't helped himself any.

"bring back the corvair."

Cue Ralph Nader ...

Its a historic day. But I have always thought a good solution to make Detroit better would be to force Wagoneer to chair Tesla motors, while taking Tesla motors management team and put them to work for Detroit. You would maybe not in the short term but long term see a huge improvement in the products that Detroit has as well as managed right.
http://www.teslamotors.com/

I don't know how I feel about it at all, really. I can follow the logic of " If you want our money, then you have to make some of our changes." But, I'm going to kind of wait and see what really happens with a move like this one being, uh, I started to say " suggested " but I think it's more akin to " demanded."

It's an odd position for everyone, I believe.

GM's gone through nearly all the money it received in December and it wants another $17 billion dollars. I can't conceive of offering GM anything until all parties make MAJOR concessions and show a road to profitability.

I'm not confident GM is up to the challenge, especially with an entrenched leadership team (even with the removal of its current chairman)that is part of a system that has been unwilling to make the kinds of changes that should have been made years ago.

Apparently the unions are failing to make the necessary accommodations also. They are having trouble accepting the fact the free ride is over.

If the UAW doesn't give up significant concessions, GM will go under much sooner than later. The union has to recognize that the survival of GM depends in large part on their willingness to take a hit just like the rest of those with a vested financial interest in the company.

Totally agreed.

Worth noting however, Unions are not THE problem. Very poor management is.

If GM had really been innovating as they should, then we would not be having this kind of discussion. And IF, we had not opened the door on so damn many trade agreements, the incentive to innovate would have been stronger, with a far more robust pool of tech and workers to pull from.

That kind of crap happens when we send our manufacturing technology overseas, and give tax cuts to do it. Man, that's just stupid, stupid, stupid.

Rather than do that, we should have scaled up and exported PRODUCTS. Much better deal.

Also on the bottom of the originally linked article, is one that says Hummer may fold for good:
http://www.msnbc.msn.com/id/29944975/

I hope so. No individual needs this kind of fascist crap.

Even more good news!!!!

http://www.msnbc.msn.com/id/29944834

I have purchased GM products in the past. I currently drive a 2004 Chevy Venture Van that I am generally happy with ... except that the maintenance seems really out of line for a 5 year old low mileage (82,000 miles) vehicle.

I recognize the potential impact on the industrial base and the economy of the country if GM was to go into bankrupcy and take with it a raft of suppliers. On the other hand, a Chapter 11 for reorganization would allow GM to go through that "reset" that all of economy needs to go through to get things back to a reasonable set of expectations. There is clearly too much automobile manufacturing capacity and some of the manufacturers who can't provide what the market is asking for should close capacity -- my question is... what can that capacity make that is in demand? Should some of that capacity be converted to making transit vehicles -- we are going to have to get used to a lot more ridesharing in the future -- the cost of transportation is going to be one of the huge sticker shocks after this reset. That cost is going to be experienced by commuters and for all of those goods which we take for granted.... relatively inexpensive out-of-season food products and high value products that now travel by air. The era of cheaper and cheaper electronics is probably coming to an end.

Maybe new blood will allow GM to build better cars? Why not lure some of the other car companies big wigs to GM?
I'm just saying.....

The all new GM...as per Drudge...Government Motors...more scary economics from the current administration that we will all regret someday.

As the government slowly takes over the operation of GM, is anybody going to ask the question "does anybody, just one single soul in the Obama administration have any business experience?"

If President Obama didn't step in, the possibly of GM existing a year from now would be questionable at best. Investors and others with a stake in GM could lose tens of billions of dollars. The company would probably be divvied up and sold in parts. Too, we would see massive job losses.

I’m not all that keen on keeping GM in business. Their management made really stupid decisions about long term solvency. Plus GM never seemed to negotiate with the UAW in a way that accurately reflected the long term financial position of the company. GM management reacted rather than engaged the market (especially domestically) and dealing with its labor costs. And in the end, GM is nearly $30 billion in debt and bleeding serious red.

As for finding someone to lead GM, I’m sure the Obama Administration and other stakeholders will propose someone with credibility to handle the task of leading GM through this transition. After a financial crisis in 1992, GM replaced its Chairman and brought in an executive from outside the auto industry to help lead the company. Again, it’s time to find an industry outsider to take the helm at GM.

It may be time for GM just to close it's doors. They've let things get so far out of hand over the past 30+ years in giving in to the UAW, that setting it up to survive is questionable. We may just be seeing good money going after bad.

The other alternative is Chapter 11 and nullifying the union contracts. In other words, start over. Their cars are now pretty decent and if they didn't have $3,000 tacked on to each car for retired workers, they'd be in a better position to survive.

That may not set well with the unions, but if they close it, the unions aren't going to have much. Basically, the unions have killed the goose that laid the golden egg. In saying that, I'm not excusing some pretty dumb management at GM.

Dammit, this isn't all about the unions!

Management didn't innovate, nor did it keep in tune with the needs of ordinary people.

When we started seeing significant competition from foreign auto makers, they retreated to the bulky larger vehicles. That brought improved business focus, which was not a bad thing, but without that R & D investment, it turned out to be a short term thing.

-->and in 89', the year my Toyota was made, it was capable of 35 - 40+ MPG with decent performance! That was very, very stiff competition, given the price it was sold for at the time. American cars, of that era were simply laughable for the most part, and that's coming home to roost now.

I owned a NEW American car from that time period, and it sucked huge. When it broke, I picked up several used American cars, and they all sucked. The used Toyota has gone from 130K to just a few miles shy of 300K miles, at an average cost of 12 cents per mile, inclusive.

And the lack of that kind of investment then investment can be pegged right on Wall Street, setting earnings expectations so high, and so consistent that making those investments would have punished the company. Now they are way behind, and it's costing a lot of people big.

IMHO, the best move for GM is to go private, work a deal with the Fed to pay them off, and invest in the company, without having to deal with market value pressure.

A smart, private owner that can put together a 10 year road map and execute on it will change that company for the better. We need great cars made here. We don't need the hassles getting there.

In that kind of environment, the union could share in that investment and reap the bennies in due time as well.

Public companies have a lot of disadvantages like this. And yes, I don't think very large, public companies are the best way to go on a whole lot of things, particularly those things that require regular investments in tech and process know how to continue to be competitive and sustainable.

The suppliers, by the way, should be looking to diversify huge. Single source businesses that are tied to GM are in serious trouble. There are lots of things that need parts and systems and engineering. Best start gearing up for that transition, or close the doors.

A local automotive supplier here has been in that transition for quite some time. It's paying off for them very, very well in that they are able to weather this storm. And they are a private company too, which permits that kind of investment, and that makes a huge difference over the longer term.

(this is part of what I do for a day job, so I have about 15 years of metrics on this stuff, watching over constrained public companies do stupid shit, just to make a quarter)

Agreed Deane, on the unions pushing a bit hard. That IS what they are supposed to do though. I can't help but wonder if management was making those investments, and asking the unions to share in them, if the situation wouldn't be much better today.

I suspect management was so hung up on quarterly profits that they weren't willing to take a strike. That was a mistake. It only prolonged the inevitable, which has finally arrived.

I suspect we'll see a form of Chapter 11. Obama set it up today when he said the warranties would be protected. The new CEO is making noise that it may take a Chapter 11. I think it's planned. They not only need to redo the union contracts, they also need to shed some debt.

Deane_johnson:
I suspect management was so hung up on quarterly profits that they weren't willing to take a strike.

Hence the reason they shouldn't have performance bonuses. They're hung up on profits, period. There's a whole lot more besides the UAW that brought this on.

The unions have started their usual cry baby crap.

http://finance.yahoo.com/news/Workers-say-Obama-treated-apf-14789941.html

"There's a whole lot more besides the UAW that brought this on."

You're right. GM management created a situation that was unsustainable by negotiating labor contracts tht are way out of wack. Now GM owes the UAW $20 billion for its GM-UAW healthcare retirees fund. There is no possible way GM can survive if they don't get MAJOR concessions from the UAW on this and other matters or the company will go into Chapter 11 where the union could potentially lose everything.

The animus between labor and management needs to end now because if the two parties can’t agree, they’re going to destroy the company.

They are allowing their hatred of each other to drive the argument. If they don’t start behaving like adults and find some middle ground, both groups are going to end up with nothing.

It would behoove both GM/Chrysler and the UAW to look at the relationship, and working environment between Toyota's US facilities, and their workers. Peace and harmony without the threat of fire and brimstone at every turn.

Both sides, IMHO, are to blame. It's going to take both sides to get GM and Chrysler out of this mess. If they don't, and soon, GM and Chrysler will cease to exist.

Members of my family have been at the union bargaining table before. (and that means not just as a sitting member, but directly negotiating with management) I got to be a part of that, reading stuff, considering options, doing math, and parsing legal stuff. Great fun! I learned an absolute ton. And I am proud to say this family member had NO formal legal training. We worked together, got some advice and basically pooled a lot of interested brains on the problem and thought it through.

(and that's really how a labor contract should go, IMHO)

The expectation is that both sides play hard ball. This means the union is going to ask for a really sweet deal. Management needs to push back on that, of course. That is how the whole thing was framed, and that seems appropriate. The expectation that is going to happen keeps emotion in check. It's a deal. Deals take work to happen, and that's just how it is.

When both parties are working hard, the result is equitable. When one or the other slips, it's not so equitable. This check and balance is totally American, IMHO. There is a burden then on both sides to take each other seriously.

In our case, management slipped by not considering the impact of one of the elements of the contract offered in exchange for some elements on their side. They really, really wanted that element, and the workers felt it was a significant negative trade on their part; and it was actually. That is when the homework began. They make the mistake of not taking the labor side seriously.

(they've not done it again since!)

Given their "we won't budge on this" position, the only real options were to concede, or deal in some other concession that compensated for this, or surrender a working labor contract.

Sure enough, "that's not fair!" was uttered by management about three months later, into a 3 year deal.

LOL!!!

It was actually said in post discussion that management didn't expect to have to be labor experts and that asking for that element (and I'm using element to keep a confidence) was "dirty pool". This management team was facing lay-people, with no official legal training, who could tap the union legal team, if they felt they needed to, while they were being represented with some fairly expensive counsel.

At one point, the key element to be offered in exchange came into being with contract papers all over the living room floor, interested people engaged in making sure it was a solid trade, thinking the options through, what their value was, and that was it.

The only consult with the union was to determine if the element was itself not a violation of labor law. (it wasn't) The rest of the deal was done at the table, with key union members dealing with management.

They sure didn't bitch about the lack of an expensive legal team on the labor side of things! Thought they were getting a nice deal too.

We honestly thought they would push back on that element, leaving us to then work out an equitable arrangement, but they didn't! They just left it in, and labor easily gave them the terms they wanted.

Let's just say employees were extremely happy for the next three years and call it good.

The point here is that these contract negotiations are for real. If GM is locked into some seriously negative contract terms, they probably deserve some of the blame for it! It's not ok to blame the union for pushing their side of the deal. That is exactly how it works.

And where emotions run high, the resulting deal will not be equitable either.

Talpdx has a great point! The two parties need to come together on an equitable arrangement, working from the current state of things, or agree that perhaps it's never, ever going to work.

The other part of the blame for that is Wall Street.

If GM were a private entity, those talks would be quite different. Being a public company, they are hobbled at the table, because the union has more perception of power in their strike than actual power. In a private company scenario, a strike does cost money, but it does not directly impact the overall value of the company. By contrast, a public company, forced into a coupla bad quarters can see a very significant impact on their value, and that has credit and other operating implications for them, thus the power of the strike is augmented over and beyond what it should be.

And this is why I think larger public companies are a bad idea generally. And the larger they are, the less I like them.

Where there are unions, management needs to be able to bring any and all options to the table, because the union will do the same. Having to meet market expectations and having their value tied directly to those, quarter over quarter, seriously impacts their ability to deal.

This is not the unions problem!

It is a corporate problem, and a Wall Street problem. Wall Street does not like unions because they present as a check on the absolute max profit! Duh!! Factor out unions and they can just set quarterly expectations that are tied to the value of the company and through those compel corporate management to exploit everybody and everything to the max, thus delivering the optimal value back to the share holders.

Sounds good, until one sees that optimal means the lowest labor rate possible, with the fewest bennies possible, and the most work time possible. Not so sweet now, is it?

Wonder how those Wall Street fat cat analysts would feel if company after company worked to go private, thus cutting them out of the picture?

With those clowns gone, or largely diminished, the labor / management equation then is fairly well balanced, leaving both parties to come to the table and leave with an equitable arrangement. That is how it should be.

Nobody gets all of what they want, but should feel pretty good about what they got, and have an interest in seeing the arrangement continue.

The other thing that private companies can do, that public ones have a very hard time doing is making regular profit investments back into the business. This is how a company remains competitive and the business model sustainable.

GM did not do this, and now it's paying for it in several ways, and so will the union.

Both should be pissed at Wall Street for controlling the dynamic in the way they so often do.

Note that contracts are mutable things, unless they are Wall Street contracts.

Big ass double standard there!

My post above is in contradiction to my earlier one up thread. That's fine. I've been thinking about the dynamics of this, and that results in a different opinion.

(just to avoid the "but you said this" deal, I suspect might come my way.)

Having actually sat at the table across from management, I can tell you that second guessing what goes on in there is an unexact science.

I've seen management actually laugh at the employees we represented and threaten to do activities that were illegal, never mind doing any good faith negotiating. I can easily picture members of the bargaining unit striking just to drive a company into bankruptcy.

Who knows what went on (or is) going on behind those doors. Clearly the union knows it needs to compromise to save jobs, but they have a right to give up their jobs and bankrupt the company because after all, they're ones most effected by GM's mismanagement over the years.

Sort of like Eastern Air Lines when new owner/asshole Frank Lorenzo came in. All he did was f*ck with the employees, so in return, the unions crashed his airline. Because of his mismanagement, the FAA (then GOP controlled) prevented him from ever owning an airline again.

If GM employees want to smash up GM, we'll have to let them.

"Good faith negotiating"

In the court of public opinion, I think it would set the union movement back if it were seen as obstructionist if it choose not to bargain in good faith. Unions are not held in the highest regard and I think in this case, it would be easy to paint the UAW as the villain.

I fully recognize that GM management hasn’t done itself any favors in decades. Seriously, H. Ross Perot had it figured out years ago when he was on the GM Board of Directors and complained publically about how the company was managed. It has allowed its domestic market share to slip away and made contractual commitments to its union members (and union retirees)that would eventually lead to this point. In its own way, it sort of like a corporate Ponzi scheme. But I cannot believe the union didn’t see this coming.

I think it would set the union movement back if it were seen as obstructionist if it choose not to bargain in good faith.

You're probably right, but again, the anger of the employees may cloud their judgments that they may even go against the recommendations of their own union leadership.

But I agree with your statement that its unlikely the union didn't see this coming. GM isn't Eastern Air Lines.

Now that Obama fired Wagoner, the ball is in the union's court to decide the outcome of GM. Since I don't work there, I won't tell anyone which way they ought to go (vote) but I do hope whatever happens helps turn our economy around.