- Your history
Secondhand car deal - Update 1
Klik hier voor fragment van het journaal op de VRT over GM.
The automotive team of Obama (whatever that may be), has come to some conclusions yesterday evening.
1. Chrysler cannot survive on a stand-alone basis
2. GM needs a new plan
And to hide the fact that this work should have been done before handing out the first billions, Obama has asked the CEO of GM, Rick Wagoner, to step down.It seems that the government is pushing GM towards a Chapter 11, or a full nationalisation, which would change the name of GM from General Motors into Government Motors.
Chrysler's problems can be solved when it forms a bigger group with for instance Fiat. GM on other hand, has to get rid of charges that will continue to make the company uncompetitive for the foreseeable future:
G.M. and Chrysler have almost exhausted the combined $17.4 billion in federal aid they have received since December. G.M. has asked for up to $16.6 billion more, and Chrysler has requested another $5 billion.
Bondholders are under pressure to convert two-thirds of the $27 billion owed them into G.M. stock, while the
United Auto Workers
union is being asked to substitute stock for 50 percent of their health care benefits for retirees. Both groups have resisted those changes.
The problems that have pushed GM in problems and towards a Chapter 11 have an awkward resemblence with those of the Belgian economy: excessive social costs, wrong choice of model(s) and a lack of competitiveness.
7 Comments
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Bart
On 30 Mar, 2009
I know, more or less from the inside, that they abhorred the idea of small European cars for the US-market for many years. Only minor changes for the US-market were needed. But no. A lot of hoopla and the usual dissent. Now, something many of us saw as a viable option years and years ago, is being presented as a solution. Now they should be moving on from this "solution" that should have been implemented years ago, and instead thrust the car-industry into the future... alas.
What a truly sick joke those execs are, finally for all to see. They have more than enough talent at their disposal, it's just the top who's truly over the top.
Sorry for the rant, but many suffered (and some still suffer) intellectually under their so-called management ;-)
"The problems that have pushed GM in problems and towards a chapter 11 have an awkward resemblence with those of the Belgian economy: excessive social costs, wrong choice of model(s) and a lack of competitiveness."
But who'll push Belgium to the drawing table to produce a plan? Patchwork Europe? -
Frank
On 30 Mar, 2009
If laying off Rick Wagoner with million dollar bonusses is the government's plan to save GM then government motors is going to do worse than general motors. Government seems to forget that fractional reserve lending, ridiculous credit standards and the whole securitisation model kept the GM bubble going for many years. Government is very much responsable for the demise of GM. They should have spotted the auto bubble years ago. But no, when the planes hit the twin towers in New York, the federal reserve advised americans to consume more and buy a SUV. "Consume your way to prosperity" is what got them (and us) in this mess. Goverment is as responsable as Rick Wagoner; they could'nt even save an elephant from a mouse. The solution of the problem is now in the hands of those who essentially created it. It's time to get really scared.
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frederic
On 30 Mar, 2009
When looking at what the companies are focusing there future on, the only one with a realistic plan seems to be Ford.
High tech downsized engines, good fuel economy, atractive to the consumer and easy in use.
GM have build low tech oversized cars and now they are suddenly going to leap towards the comlete electric car ? this is not only unrealistic but also stupid. In terms of true consumption a high tech engine is still way more fuel efficient then an electric car ( I have put some calculations way back in this blog about electricity poducing/transporting/storing, it's al a big waste) .
Also nowbody is waiting to buy a full electric car at the moment, not practical. Go for hybride then.
The only reason to save those big companies in my opinion to keep own car production in the future. Once the economy will be getting up it's feet, people are going to buy cars again. If they don't build cars themselve, they are going to import cars. And after all, isn't this the red marker on this Blog for some persons? Start producing ? stop importing everything ? start exporting ? So destroying those factory's by chapter 11 is also partly destroying the future.
This is why Obama wants to have a good plan for GM, a real reorganisation because they will need it in the future. -
Frank
On 30 Mar, 2009
@Frederic
Once the economy will be getting up it’s feet, people are going to buy cars again. If they don’t build cars themselve, they are going to import cars. And after all, isn’t this the red marker on this Blog for some persons? Start producing ? stop importing everything ? start exporting ? So destroying those factory’s by chapter 11 is also partly destroying the future.
This is why Obama wants to have a good plan for GM, a real reorganisation because they will need it in the future.
"Once" is going to be far far away in the future. Easy credit won't be back anytime soon so the car bubble won't be back anytime soon. They don't need to build more cars themselves because everybody is struggling to pay back the cars they allready own. The best thing for GM is a chapter 11. It's already broke anyway because the taxpayer is on the hook. Dismantle GM and build a new car company. Or better; let's give the taxpayer money to Tesla motor. Tesla has far more chance of repaying the taxpayer's investment than GM. That way, the US car industry can build something the rest of the world wants to buy once this deflation is over. Destroying GM is the best thing that could happen to the US car industry because companies like GM are the cancer of the US car industry. You only heal when you remove the cancer. -
Theo
On 30 Mar, 2009
Change and evolution are natural phenomenons which occur in life.
Darwin got his idea from economic and demographic theories, which where being developed at the time... note: during the industrial evolution and prior to Socialism.
Only change and evolution lead to innovation... as well as the natural phenomenon of adapting to the environment.
Any system which denies that and tries to control is based on self-delusion and will fail... it will not ensure sustainability but rather it will bankrupt itself.
This is true in everything and every possible science.
Without this principle we wouldn't even have the RAM Random Access Memory!).
Just like we are conditioned to believe in God the Creator, we (in Western Europe) are conditioned to believe that the Social security system is here for our own good; that it's being managed by someone with a God complex; that even at the End of the World, it will survive no matter what and we with it.
This self delusion prevents us at examining the causes and effect theory... we just choose not to want to know about how the Dodo and the Dinosaurs disappeared.
Socialism leads to paralysis... by negating Private Property, it also negates Private Responsibilities. -
bartb
On 31 Mar, 2009
I can only repeat what I said a few days ago : car companies have been kept alive too long, also through high debt, because everybody knew that in the end they would be bailed out by the government.
if there is excess capacity, it should go away in a normal economy by killing off the least profitable. And that's clearly GM, which is indeed a clear example of what will happen to Belgium. Toyota entered the country by building plants in cities with a lot of unemployement and therefore only hired non-Unionised workers. this means they can build the same quality cars (since it is mainly due to the way of producing, planning, component testing etc) 20% cheaper than GM could. So if you price your car 10% below that cost of GM, you can win marketshare easily AND get extra cashflow on top of your cost to invest more in R&D and win further market share. As simple as that.
So it's clear : let's do something about our social system ! It's great to have money to support people who really need it but we should activate all the unemployed by FORCING them a bit to do something (sorry socialists but that's the only thing that works in the long run), forcing them to at least get some education to get them back into the working circuit. In which country can you bring your children to kindergarten at a subsidised rate towards working people, not have to go to get a 'stamp' at social security (so showing you are looking for a job) and go out on work in the 'black' economy ? This is not sustainable at all. And financing this by taking money from people that work and have taken risk .... So in se you are limiting risk takers going forward, reducing your overall GDP growth and innovation and this in a world that is more and more globally competitive.
Let's do the opposite : force the governement to simplify the laws and like that reduce the number of civil servants needed, make some kind of 'service level agreements' to get their output up to a better standard (this is not against the civil servants, it's streamlining their businesses to make them more productive) and you will save money. pay down your debt (well done Mr Van Mechelen by the way or Flanders in general) and lower your taxes. Like that you make your country again interesting for investors.
And like Geert says in his book : make our economy more 'green', focus on innovation (everybody should be proud about Belgian biotech !).
