Gm Needs Money What Are The Real Effects

[henryalleman]

Hello Henry. Vic is far better versed than I on economic matters and it will be interesting to hear his reply. However, since I've lived most of my life in Detroit I'd like to add my viewpoint from that perspective. All of the issues you sited above are certainly needed and important (minimum wages, healthcare, retirement benefits), the problem IMHO is that unionization in the U.S. (often, perhaps usually) quickly surpasses needed, reasonable basic worker protection/benefits, then rapidly over time establishes and propagates inappropriate excess (e.g. $80/hr/auto worker costs as others on TV have cited). As you know, unions are highly political, always promising more and more to the membership, often not hesitating to bring a company to it's knees as a threat. This spiral is what eventually leads to company/product/industry non-competitiveness, job loss/exportation and/or excessive prices. I am extremely interested to see how Obama's team deals with this dilemma. How does he maintain labor union support while simultaneously spurring economic competitiveness for American businesses? By widespread subsidizing? By the "nationalization" of certain benefit programs like you mentioned? Curious to know your ideas of a possible effective yet compassionate economic strategy.

Lopburi 99;

in one of my previous contributions I wrote that I don't know how the Unions in the US operate.

I only know, having a Union background as an elected representative that Unions in the EU has seen as a partner by the employers. In the EU its a standard procedures that their are regular meetings on company level. Its even mandatory. When a company face economic difficulties the Unions are always consulted to help to find solutions. its not uncommon that Unions help to find way's to cut costs.

Already a few years GM like to reorganize his plants in the EU, and tried to play the game of black mail to taking away production or give the production of new models to plants saying that another plant accept lower labour costs.. They lost this game, because the Unions are EU organized. Now its even so that plants in other EU countries even accept to give some of their production capacity to other plants. Every 2 or 3 years their are held meetings on a national level between the the different industries and the Unions to set up a framework to set the maximum of new raises of wages and social benefits. This is a binding contract for the next 2 or 3 years.When its impossible to make such agreement the Ministry of labour steps in to try to smooth up things, If this fails the Government set the new maximum. All of the participants avoid that the new maximum wages don't put them in disadvantage position with the labour costs of the neighbouring countries.

Than its up to the different industries to negotiate this on company level with the Unions. And its not seldom that Unions accept to lower their demand much lower than the agreed maximum, because the company is in difficulties. Also when a company like to relocate his production or some part of it, it will be discussed with the Unions, to find a way to ease the pain for the employees.

In Europe,its widely accepted that a company not only have to make profit but also have an social obligation towards their employees. maybe this the big difference between the Anglo sackson and continental European way of organizing a society.

That's why in European eyes Obama is a right wing politician. And in US people eyes even the most right wing European party is socialist. That's why the US system of privatised health care retirement, unemployment and schools system is for Europeans pure horror. While for the Americans our state organized system of the same subjects is almost communism.

But I hope you don't mind my remark when I say that the total free US market system collapsed and created an worldwide financial crises. And it did not prevent the brake down of the US automobile industry.

BTW Volvo Ghent (FORD) just start a new production line for new models for export to the US, even GM Antwerp set up new models for the US market. And this despite strong labour Unions. That's why I wrote that the brake down of GM, Ford and Chrysler is not because of the US labour Unions.

[Lopburi99]

Lopburi 99;

in one of my previous contributions I wrote that I don't know how the Unions in the US operate.

I only know, having a Union background as an elected representative that Unions in the EU has seen as a partner by the employers. In the EU its a standard procedures that their are regular meetings on company level. Its even mandatory. When a company face economic difficulties the Unions are always consulted to help to find solutions. its not uncommon that Unions help to find way's to cut costs.

Already a few years GM like to reorganize his plants in the EU, and tried to play the game of black mail to taking away production or give the production of new models to plants saying that another plant accept lower labour costs.. They lost this game, because the Unions are EU organized. Now its even so that plants in other EU countries even accept to give some of their production capacity to other plants. Every 2 or 3 years their are held meetings on a national level between the the different industries and the Unions to set up a framework to set the maximum of new raises of wages and social benefits. This is a binding contract for the next 2 or 3 years.When its impossible to make such agreement the Ministry of labour steps in to try to smooth up things, If this fails the Government set the new maximum. All of the participants avoid that the new maximum wages don't put them in disadvantage position with the labour costs of the neighbouring countries.

Than its up to the different industries to negotiate this on company level with the Unions. And its not seldom that Unions accept to lower their demand much lower than the agreed maximum, because the company is in difficulties. Also when a company like to relocate his production or some part of it, it will be discussed with the Unions, to find a way to ease the pain for the employees.

In Europe,its widely accepted that a company not only have to make profit but also have an social obligation towards their employees. maybe this the big difference between the Anglo sackson and continental European way of organizing a society.

That's why in European eyes Obama is a right wing politician. And in US people eyes even the most right wing European party is socialist. That's why the US system of privatised health care retirement, unemployment and schools system is for Europeans pure horror. While for the Americans our state organized system of the same subjects is almost communism.

But I hope you don't mind my remark when I say that the total free US market system collapsed and created an worldwide financial crises. And it did not prevent the brake down of the US automobile industry.

BTW Volvo Ghent (FORD) just start a new production line for new models for export to the US, even GM Antwerp set up new models for the US market. And this despite strong labour Unions. That's why I wrote that the brake down of GM, Ford and Chrysler is not because of the US labour Unions.

You've provided some interesting union comparison information.

"In Europe,its widely accepted that a company not only have to make profit but also have an social obligation towards their employees. maybe this the big difference between the Anglo sackson and continental European way of organizing a society."

Definitely a big difference. Many (if not most) large American companies "pay lip service" to the importance of their employees, but are much more focused on satisfying relentless investor demand for increasing stock value. Often employees are laid off or permanently released during even a short sales down period -- like overstocked bin items. I know, it happened to me personally. Small businesses in general are considerably more loyal. That said however, if a company's products cannot compete over time in quality and price, survival for the company and it's employees is not possible. This is a fundamental truth.

"But I hope you don't mind my remark when I say that the total free US market system collapsed and created an worldwide financial crises."

I don't mind any poster's remark unless it is offensive or mean-spirited. Regarding yours Henry, I started the "The U.S. Financial Crisis - Capitalism Gone Wild?" thread which ran for a long time so we clearly share some viewpoints.

Edited November 18, 2008 by Lopburi99

[lannarebirth]

From the "they just don't seem to get it" files:

http://abcnews.go.com/Blotter/WallStreet/s...5739&page=1

[bingobongo]

pain is coming to Siam, and this will effect the entire supply change from the plastics providers, tire makers, audio component providers, even the cute thai girls that prance about during car shows...............and do you really think they will restart as the economy worsens?

Merry Christmas

GM To Halt Thai Operation Mid-Dec To Jan- Spokesman

http://money.cnn.com/news/newsfeeds/articl...40_FORTUNE5.htm

Edited November 19, 2008 by bingobongo

[midas]

From the "they just don't seem to get it" files:

http://abcnews.go.com/Blotter/WallStreet/s...5739&page=1

Well they are obviously not serious are they...............

Are things so bad now that its everyone for their own as they head for the lifeboats ?

[VegasVic]

I remember hearing the phrase before "As GM goes, so goes the country." Tragic and unbelievable.

IMO GM will go bankrupt regardless of what the government may decide to do, and all your friends' income and equity attributed to GM will be wiped out. GM will not be the last big company to fold. Unemployment will soar and further fuel the credit and price collapse. The government will not be able to fund retirement plan insurance schemes, much less medicare and social security. Or service it's debt. Or make good on FDIC guarantees. ~60% of state budgets are upside down with obvious consequences to services. To tragic and unbelievable I would add criminally negligent and ugly. And it's just beginning.

yes its easy to forger all these " add on's "

Even in the best of times the labor union related costs were slowly bleeding many large and small (not just the auto industry) companies to death, leaving a void quickly filled by foreign and/or non-union businesses. Now with the economic collapse, the final nail is being driven first into the coffins of many unionized companies. The day of reckoning is here.

One wonders if this could be the beginning of "The Era of America's Great Union Purge"? Unions aren't affordable anymore in many industries, I would argue.

Sadly with Obama in the White House and and the democrats controlling both houses of Congress, the Unions will have a "seat at the table" and a very strong voice

[VegasVic]

I don't know how the Unions in the US operate but in Europe the Unions are not regarded as the enemy by the companies, but rather as a partner, for their mutual benefits. A small example; the GM plant in Antwerp had to reduce their costs with 50 million Euro, and ask the Unions to participate in finding a solution. Well in 3 days the 50 million was find, without any social conflict.

I will not go on much further on this subject because this isn't the meaning of TV forum, but I only like to emphasize that its not the Unions fault that GM and other US car producers are in the present deplorable situation.

Furthermore I would like to notice that it is GM Detroit who is in financial problems, The economical situation of GM Europe or FORD Köln for the matter is less problematic( and they have very strong Unions, even EU organized). The successful VW company has even the Union Deutsche Metal as a shareholder, and they have one of the highest salaries, redundancy premiums and social protection benefits in Europe.

So blaming the Downfall of US car producers and other industries as an Unions fault is a bridge too far.

No, its not really a bridge too far, but there is plenty of blame to go around! There were plenty of greedy and lazy automotive executives over the past 30-40 years, but it is substantially a problem with arrogance in not changing the product mix quickly enough and of course the out of control union wages, and more importantly retirement and health care benefits (legacy costs) Are you suggesting that its stupid to have a minimum wage? And that health care and retirement provisions are not neccesary? Do you really believe that the survival of the fittest is till the best way to have an prosperous economy? IMHO humans are not tools that you can trow in the garbage bin when not needed anymore. What should happen is that the big 3 should go into chapter 11 reorganization, where sadly the common shareholders will get screwed but also the union retirement benefits can be changed and the healthcare laidoff on the government If the retirement benefits and healthcare was not privatised but organized by the government not any retiree would be affected by it.(this is what Obama wants, so he will get it). The U.S. government will likely do a bailout, with conditions on union pay and benefits as well as ececutive pay and overall compensation. There will also be an increased CAFE standard and a massive retooling effort towards CNG, and hydrogen fuel cell-multifuel vehicles. The changes will take place a warp speed, because quite frankly they have to! On the other hand the Big 3 could just go chapter 7 and dissappear all together and the worldwide recession would then become a worldwide depression Stay tuned in, its just starting to get interesting!

Hello Henry. Vic is far better versed than I on economic matters and it will be interesting to hear his reply. However, since I've lived most of my life in Detroit I'd like to add my viewpoint from that perspective. All of the issues you sited above are certainly needed and important (minimum wages, healthcare, retirement benefits), the problem IMHO is that unionization in the U.S. (often, perhaps usually) quickly surpasses needed, reasonable basic worker protection/benefits, then rapidly over time establishes and propagates inappropriate excess (e.g. $80/hr/auto worker costs as others on TV have cited). As you know, unions are highly political, always promising more and more to the membership, often not hesitating to bring a company to it's knees as a threat. This spiral is what eventually leads to company/product/industry non-competitiveness, job loss/exportation and/or excessive prices. I am extremely interested to see how Obama's team deals with this dilemma. How does he maintain labor union support while simultaneously spurring economic competitiveness for American businesses? By widespread subsidizing? By the "nationalization" of certain benefit programs like you mentioned? Curious to know your ideas of a possible effective yet compassionate economic strategy.

Lopburi, You seem to have a good handle on the situatuion, Henry apparently hasn't a clue about what is going on talking about a minimum wage, when auto workers base pay is 5-6 times the minimum wage! It comes down to basic competitveness, the big three have a $82/hr. cost per worker vs. Toyotas $47/hr cost. Since it doesn't look like the Republicans are likely to vote for a big three bailout, what will likely occur is that Congress will approve a bridge loan that will take the big three through Febuary, and then Obama and the new Congress can deal with it! My guess is that there will be a prepackaged Chapter 11 where the legacy costs will be trimmed back, the BOD and some CEO's will be kicked out, maximum executive compensation will be set at some multiple of the lowest paid workers wage, and a new and reasonable labor contract will be hammered out that will make the big three much more competitive. The loan that the government extends will have very generous terms for the first 2-3 years so that the car companies can get a running start! I wouldn't be at all surprised to see Congress set more stringent CAFE standards and give the big three quotas on alternative fuel vehicles as well. Lopburi, I will leave it to you to try and educate henry about the out of control wages, retirement and healthcare costs that have been built up over the past 40 years in the U.S. automotive industry, I simply don't have the time or the patience to respond to an assinine statement like "are you suggesting its stupid to have a minimum wage"

[hyperdimension]

Two-month shutdown for GM

Rayong workers kept on but pay cut 25%

SANTAN SANTIVIMOLNAT and NAREERAT WIRIYAPONG and VICHAYA PITSUWAN

General Motors will temporarily close its automobile manufacturing plant in Rayong in the face of the difficult market facing the local industry and the US parent's severe financial problems.

Given that existing supply is in excess of demand, automobile production would be suspended in December and January, spokesman Chartchai Suwanasevok said yesterday.

"Since we foresee that the production until the end of this year through early next year is enough to meet the demand, we have decided to cease production temporarily," said Mr Chartchai, the outgoing director of public relations for Thailand and Asean.

The eight-year-old Rayong plant has an annual capacity of 130,000 units, manufacturing Colorado pickups, Captiva SUVs, Optra sedans and Aveo compact cars. Capacity utilisation this year was estimated at 100,000 units. Most of the output is exported.

For the almost 2,000 workers at the plant, their current status as GM employees will be intact but their monthly pay will be cut by 25% during the work suspension. About 1,000 white-collar staff working for GM and Chevrolet Sales Thailand will not be affected.

According to the industry figures compiled by Toyota Motor Thailand, Chevrolet Sales Thailand, the GM distribution arm, continued to perform well in local vehicle sales this year. The highest growth was seen in February when sales rose 71.3% from the year before.

But the sales fell in September by 3.2% year-on-year to 1,754 units and by 47.9% to 1,172 units in October. The Colorado pickup is Chevrolet's most popular model and its sales, like those of other pickups, were affected by record-high diesel prices earlier in the year.

Chevrolet hopes the Bangkok Motor Expo, starting at the end of this month, will help boost its vehicle sales.

Mr Chartchai said exports by GM Thailand were also healthy earlier in the year but the slowdown in the region and elsewhere had started to hurt shipments abroad. Currently GM exports Colorado pickups to Australia as its key market and Optra sedans to Asean.

He said GM Thailand also foresaw that GM's production next year would be reduced as a result of expected lower demand. As a result, the company announced on Nov 14 that it was laying off 258 workers at the Rayong plant.

Today is the deadline for workers to accept voluntary early retirement. The company said the attractive incentives meant the number of workers targeted was nearly met.

Toyota Motor Thailand, the country's biggest carmaker, also confirmed this week that its output next year would be lower than this year's estimated 570,000 units because of expected lower demand in Thailand and abroad.

The announcements by the two locally based companies come at a time when Thailand's automotive industry is starting to feel the increasing effects of the global recession. More pain is on the way, according to the industry consultancy CSM Worldwide.

Local production is expected to fall by 16% to 1.2 million units from 1.4 million this year as domestic sales decrease to between 580,000 and 590,000 units from 670,000 units, according to Hajime Yamamoto, director of CSM's Bangkok office.

In a paper prepared for the Thailand Automotive Industry Association (TAIA), CSM estimated Thai vehicle exports would fall by 15% to 650,000 units next year as orders from abroad fell.

"Thailand will be the hardest hit in Asean, as production will drop by at least 110,000 units for 2009 and it may have a long-term impact as some projects may be delayed or cancelled," Mr Yamamoto said.

Eco-car projects in Thailand were likely to go forward, although Toyota and Tata Motor may look to delay their investment plans.

Seven automakers have been vying to make eco-cars in Thailand with a combined capacity of 783,000 units starting from 2010.

Adisak Rohitasune, a vice-chairman of the Federation of Thai Industries, estimated local auto production would fall 12% in 2009.

"The local automotive industry has been affected by the global economic slump. But I am confident that the situation will not be as bad as the 1997 crisis, when local demand fell by more than half," said Mr Adisak, also a senior vice-president of Asian Honda Motor.

According to CSM, in the first 10 months of this year, light vehicle sales worldwide dropped by 1.9% year-on-year to 53 million units with North America losing 12.6%. In October alone, annualised sales in the US went down 28% along with the 16.9% decrease in the Thai market.

Edited November 20, 2008 by hyperdimension

[kiakaha]

For anyone who doesn't think this is Thai related remember Chevrolet has assembly plant here.

CNN had an interview this morning with a part of Obama's economic team. One of those was the Governor of Michigan. Most of the assmbply plants have been located there for years in Detriot. She talked about the loss of 400K jobs.

I think that is huge understatement, maybe in the assembly plants. But think about what goes into cars. All the nuts, bolts, tires, wheels, wires, connectors, glass, plastic. Those are all produced from Raw mateials not at the assempbly plants but other company's and manufactors a very far reaching list of entities. 400K in job losses is no where near, what the real loss will be. That will hit Thailand hard.

I really don't see that the banks are losing up the purse strings yet, matter of fact read that the Brits a had a little chat with their banks about passing on the savings to the consumer. Seems well over due in the states to me. The American banks seem to be working on the something for nothing theory still.

This is in the real world now, me I don't agree with the government bailing these entities out, not because I don't recognize the importance. But wasn't the idea in bailing out the banks to get them to loan?

Me I think it's time to grab these bankers by the collar drag them into an office and flat tell them. Loan and do it at fair rates. Or your on your own. We will fund banks that loan to help the real economy.

This something for nothing junk is what got us in trouble in the first place.

I do believe that is my second rant this week, time for a chill pill

General Motors Says It May Run Out of Operating Cash This Year

By Jeff Green and Mike Ramsey

Nov. 8 (Bloomberg) -- General Motors Corp., seeking U.S. aid to avoid collapse, said it may not have enough cash to keep operating this year and will be ``significantly short'' by the end of June unless the auto market improves or it adds capital.

Available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June, the largest U.S. automaker said yesterday as it reported a $4.2 billion third-quarter operating loss. Merger talks with Chrysler LLC were suspended.

``Things are clearly deteriorating more quickly than people expected,'' said Jill Fields, who manages $2 billion in high- yield debt as managing director at Babson Capital Management LLC in Springfield, Massachusetts. ``They're either going to need aid or they're at risk for filing'' for bankruptcy.

GM's outlook and Ford Motor Co.'s $7.7 billion cash burn added urgency to automakers' pleas for government help after a quarter in which U.S. industrywide sales plunged 18 percent. The companies are asking for $50 billion in new loans, a person familiar with the plan said.

Chief Executive Officer Rick Wagoner, Ford's Alan Mulally and Chrysler's Robert Nardelli renewed the push for assistance in meetings with U.S. House and Senate leaders in Washington on Nov. 6. Wagoner said GM also has been in contact with the staff of President-elect Barack Obama.

``We have sufficient liquidity to continue on plan,'' Mulally, 63, said in an interview with Bloomberg Television. Dearborn, Michigan-based Ford reported an operating loss of $2.98 billion.

Ford rose 4 cents to $2.02 in New York Stock Exchange composite trading, paring the shares' decline this year to 70 percent. Detroit-based GM fell 44 cents, or 9.2 percent, to $4.36. The stock has tumbled 82 percent this year.

$73 Billion in Losses

Yesterday's cash forecast was the bleakest yet from GM, which has lost almost $73 billion since the end of 2004. Using $6.9 billion in cash last quarter pushed GM closer to the $11 billion minimum it says is needed to pay bills.

A bankruptcy filing ``would be a disaster far beyond General Motors and a sad chapter in American history,'' Wagoner, 55, said in a Bloomberg Television interview. GM said on Oct. 24 that bankruptcy ``is not an option.''

Should GM take such a step, the result would be 2.5 million jobs lost in the first year among automakers, suppliers and related businesses, according to a Nov. 4 report by the Center for Automotive Research, based in Ann Arbor, Michigan.

Bailout Optimism

A U.S. rescue package for GM, Ford and Chrysler is likely before President George W. Bush leaves office in January, said Dennis Virag, president of Automotive Consulting Group in Ann Arbor.

``Either the federal government provides money for a bailout and lets the industry retool, restructure, and move ahead, or the industry dies,'' Virag told Bloomberg Television.

Babson Capital's Fields said GM and Ford bonds already are trading at ``bankruptcy levels,'' so the automakers are relying on ``a political decision'' to avert that fate. She wouldn't say whether the holdings she manages include GM or Ford debt.

GM's 8.375 percent bond due in July 2033 fell 4.3 cents to 24 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 34.83 percent.

Ford's 7.45 percent note due in July 2031 dropped 3.5 cents to 34 cents on the dollar, yielding 22 percent.

Chrysler Talks

While GM didn't specify any prospective partners in saying merger discussions were being halted, the biggest U.S. automaker had been in negotiations on a tie-up with Auburn Hills, Michigan-based Chrysler, people familiar with the plans said.

Consideration of a strategic acquisition was ``set aside'' to focus on ``immediate liquidity challenges,'' GM said.

GM's per-share operating loss was wider than the average estimate on an adjusted basis of $3.94, based on 10 analysts surveyed by Bloomberg.

Including a non-cash, $4.9 billion one-time gain related to unloading retiree medical bills, GM had a net loss of $2.5 billion, compared with a $38.9 billion year-earlier loss on a tax-accounting charge. GM's auto sales in the U.S., its largest market, fell 21 percent.

GM's cash use in the fourth quarter should be closer to the levels in this year's first and second quarters, when it was about $3.6 billion, Chief Financial Officer Ray Young said on a conference call.

GM said it is trying to boost cash by $20 billion by the end of next year, an increase from a July 15 plan for $15 billion.

Asset sales, a part of the strategy, have been hampered because potential buyers can't get financing, Chief Operating Officer Fritz Henderson said. GM's Hummer brand of sport-utility vehicles is among the businesses on the block.

Ford's Loss

Ford also said it was accelerating savings programs including a 10 percent reduction in salaried-job costs, expanding on a 15 percent slash this year; deeper cuts in production; and a smaller capital-spending budget.

The per-share operating loss of $1.31 was wider than the 93-cent average of 10 analyst estimates compiled by Bloomberg. Revenue plunged 22 percent to $32.1 billion.

The loss for Ford excluded a gain for shedding future retiree medical bills under a new union contract. Including the gain, Ford had a net loss of $129 million, or 6 cents. The net loss a year earlier was $380 million, or 19 cents.

Ford's U.S. auto sales tumbled 25 percent in the quarter.

To contact the reporters on this story: Jeff Green in Detroit at [email protected]; Mike Ramsey in Detroit at [email protected].

Last Updated: November 8, 2008 00:01 EST

If they just cut Tiger Woods' sponsorship fee, they'll be cashed up again

haha..my crystal ball has spoken :

http://www.sportsline.com/golf/story/11129926

[LaoPo]

haha..my crystal ball has spoken :

http://www.sportsline.com/golf/story/11129926

...and now the CEO's... flying to Washington DC in their private jets to talk to the commission....and beg for more cash

http://www.reuters.com/finance/stocks/offi...officerId=55982

LaoPo

[henryalleman]

I don't know how the Unions in the US operate but in Europe the Unions are not regarded as the enemy by the companies, but rather as a partner, for their mutual benefits. A small example; the GM plant in Antwerp had to reduce their costs with 50 million Euro, and ask the Unions to participate in finding a solution. Well in 3 days the 50 million was find, without any social conflict.

I will not go on much further on this subject because this isn't the meaning of TV forum, but I only like to emphasize that its not the Unions fault that GM and other US car producers are in the present deplorable situation.

Furthermore I would like to notice that it is GM Detroit who is in financial problems, The economical situation of GM Europe or FORD Köln for the matter is less problematic( and they have very strong Unions, even EU organized). The successful VW company has even the Union Deutsche Metal as a shareholder, and they have one of the highest salaries, redundancy premiums and social protection benefits in Europe.

So blaming the Downfall of US car producers and other industries as an Unions fault is a bridge too far.

No, its not really a bridge too far, but there is plenty of blame to go around! There were plenty of greedy and lazy automotive executives over the past 30-40 years, but it is substantially a problem with arrogance in not changing the product mix quickly enough and of course the out of control union wages, and more importantly retirement and health care benefits (legacy costs) Are you suggesting that its stupid to have a minimum wage? And that health care and retirement provisions are not neccesaryneccesary? Do you really believe that the survival of the fittest is till the best way to have an prosperous economy? IMHO humans are not tools that you can trow in the garbage bin when not needed anymore. What should happen is that the big 3 should go into chapter 11 reorganization, where sadly the common shareholders will get screwed but also the union retirement benefits can be changedhealthcareelaidoffe laidoff on the government If the retirement benehealthcarehealthcareed by it.(this is what Obama wants, so he will get it). The U.S. government will likely do a bailout, with conditions on union pay and benefits as well as ececutive pay and overall compensation. There will also be an increased Cececutiveard and a massive retooling effort towards CNG, and hydrogen fuel cell-multifuel vehicles. The changes will take place a warp speed, because quimultifuely they have to! On the other hand the Big 3 could just go chapter 7 and dissappear all together and the worldwide recession would then become a wdissappearepression Stay tuned in, its just starting to get interesting!

Hello Henry. Vic is far better versed than I on economic matters and it will be interesting to hear his reply. However, since I've lived most of my life in Detroit I'd like to add my viewpoint from that perspective. All of the issues you sited above are certainly needed and important (minimum wages, healthcare, retirement benefits), the problem IMHO is that unionization ihealthcare (often, perhaps usually) quickly surpasses needed, reasonable basic worker protection/benefits, then rapidly over time establishes and propagates inappropriate excess (e.g. $80/hr/auto worker costs as others on TV have cited). As you know, unions are highly political, always promising more and more to the membership, often not hesitating to bring a company to it's knees as a threat. This spiral is what eventually leads to company/product/industry non-competitiveness, job loss/exportation and/or excessive prices. I am extremely interested to see how Obama's team deals with this dilemma. How does he maintain labor union sObama'swhile simultaneously spurring economic competitiveness for American businesses? By widespread subsidizing? By the "nationalization" of certain benefit programs like you mentioned? Curious to know your ideas of a possible effective yet compassionate economic strategy.

Lopburi, You seem to have a good handle on the situatuion, Henry apparenLopburin't a clue about what is going on talkingsituatuioninimum wage, when auto workers base pay is 5-6 times the minimum wage! It comes down to basic competitveness, the big three have a $82/hr. cost per worker vs. Toyotas competitvenessince it doesn't look like the Republicans are likelToyotaste for a big three bailout, what will likely occur is that Congress will approve a bridge loan that will take the big three through Febuary, and then Obama and the new Congress can deal with it! My guess iFebuarythere will be a prepackaged Chapter 11 where the legacy costs will be trimmed back, the BOD and some CEO's will be kicked out, maximum executive compensation will be set at sCEO'sultiple of the lowest paid workers wage, and a new and reasonable labor contract will be hammered out that will make the big three much more competitive. The loan that the government extends will have very generous terms for the first 2-3 years so that the car companies can get a running start! I wouldn't be at all surprised to see Congress set more stringent CAFE standards and give the big three quotas on alternative fuel vehicles as well. Lopburi, I will leave it to you to try and educate henry about the out ofLopburil wages, retirement and healthcare costs thahenrye been built up over the past 40 years in the U.healthcareive industry, I simply don't have the time or the patience to respond to an assinine statement like "are you suggesting its stupid to have a minimum assinine

vegas vic I don't understand that you still put a blame on the Unionsdowvegas victhe 3 sisters. You still keep denying the fact the they produce cars that nobody want anymore. How otherwise you can explain that VOLVO open a new production line in Ghent(Flanders) who will produce news SUV solely for the US market. That GM Antwerp also open a new production like exclusively for the new Astra solely for the US market.

And I guarantee you that the labour costs are much higher in Flanders than in the US. In fact one of the highest in the world. And its not only the labour cost who is determinating put that productivity is even of an higher importance. You also don't seems to know that the last 20 years that Opel Russelheim (GM Europe) saw al his profits drain away to support the GM losses in the US. Its also Opel Russelheim who payed for the investments in new Chevrolet plants in Asia.

The 3 Russelheime in deep problems due to bad managment. Did you also see the senate commitee where they blamed the 3 CEO came with their own privat jet to Washington with a cost of 80 000$, and when they asked them to put their hand up if they will return with an commercial flight, all 3 sit like a statue and don't move a finger.

And why you never asked yourself the question why the American public prefer a Beamer, Lexus and a Benz over an Cadilac or an Lincoln? Are they so much cheaper or have they just abetter quality and knowing much better what the customer likes.

ITS BAD MANAGMENT WHO BRING THEM IN PROBLEMS NOT THE UNIONS. But blaming the Unions is far more easy than have an introspection about the way US industry is managed.

Just imagion if the US did the same investments in their industry as they did in their military industrial complex and an multi billion $ war, maybe things could be different, and also if the society and government did not have to depend on borrowed money. And the only way to keep the money flowing, was to create junk loans and questionable financial products and the short therm managment tactics to push up the shares so the could have bigger bonusses.

All of this created an international crises and economical downfall, NOT THE UNIONS.

[Mosha]

The GM CEO makes $40,000 per day. I don't think he needs bailing out. At least he shouldn't. If he feels so strongly about saving the company, perhaps he could donate his salary to the cause.

Not forgetting his corporate jet.

[kiakaha]

haha..my crystal ball has spoken :

http://www.sportsline.com/golf/story/11129926

...and now the CEO's... flying to Washington DC in their private jets to talk to the commission....and beg for more cash

http://www.reuters.com/finance/stocks/offi...officerId=55982

LaoPo

well that's kinda last weeks news. the tiger deal came after the corporate jet fiasco.

current news on that front is :

http://wot.motortrend.com/6365508/governme...flap/index.html

[meom]

I don't know how the Unions in the US operate but in Europe the Unions are not regarded as the enemy by the companies, but rather as a partner, for their mutual benefits. A small example; the GM plant in Antwerp had to reduce their costs with 50 million Euro, and ask the Unions to participate in finding a solution. Well in 3 days the 50 million was find, without any social conflict.

I will not go on much further on this subject because this isn't the meaning of TV forum, but I only like to emphasize that its not the Unions fault that GM and other US car producers are in the present deplorable situation.

Furthermore I would like to notice that it is GM Detroit who is in financial problems, The economical situation of GM Europe or FORD Köln for the matter is less problematic( and they have very strong Unions, even EU organized). The successful VW company has even the Union Deutsche Metal as a shareholder, and they have one of the highest salaries, redundancy premiums and social protection benefits in Europe.

So blaming the Downfall of US car producers and other industries as an Unions fault is a bridge too far.

( What should happen is that the big 3 should go into chapter 11 reorganization, where sadly the common shareholders will get screwed but also the union retirement benefits can be changed and the healthcare laidoff on the government (this is what Obama wants, so he will get it).

"The problem is that under Chapter 11 US law, it takes time for the company to get the protection of a bankruptcy court. Until that time, which may be weeks or months, the company would need urgently ‘bridge financing’ to continue operating. This is known as ‘Debtor-in-Possession or DIP financing. DIP is essential for most Chapter 11 bankruptcies, as it takes time to get the plan of reorganization approved by creditors and the courts. Most companies, like GM today, go to bankruptcy court when they are at the end of their liquidity.

DIP is specifically for companies in, or on the verge of bankruptcy, and the debt is generally senior to other outstanding creditor claims. So it is actually very low risk, as the amount spent is usually not large, relatively speaking. But DIP lending is being severely curtailed right now, just when it is most needed, as healthier banks drastically cut loans in the severe credit crunch situation.

Without access to DIP bridge financing, GM would be forced into a partial, or even a full liquidation."

Interesting times indeed.

[nickh]

Bangkok Post

Wednesday February 18, 2009,

GM Thailand axes 790 workers

By: SANTAN SANTIVIMOLNAT Published: 18/02/2009 at 12:00 AM

Thailand is laying off 790 workers after its offer to production staff of temporary leave on 75% wages failed to help allay the effects of the economic downturn.The company recently introduced a voluntary retirement programme offering production staff 11 months in severance pay, in line with the labour law, plus another 15,000 baht.

Outside the GM Thailand main factory in Rayong. -

From GM Thailand website The layoffs at GM are a blow to the local automotive industry following similar actions by a number of Japanese car makers including Toyota and Mitsubishi.

The US car maker earlier shut its factory in Rayong for two months to avoid an inventory buildup in the face of weakening orders from home and abroad.

Local orders until last month were down 56% compared to the same period last year.

Since only 700 workers came forward to join the voluntary retirement programme, forced layoffs have been introduced for another 90 staff.

Some 50 workers who were forced to resign have lodged a complaint with their union demanding action against GM Thailand's management.

GM Thailand's Rayong plant employs about 3,000 workers.The company has issued a statement saying the layoffs were unavoidable after it fell victim to the economic downturn.

It said the economic crisis was affecting all industries, including the automotive sector, and GM had to restructure its operations to get through the slump.

"Unfortunately, this restructuring plan is affecting the organisation in terms of reduced human resources,"

the company said in the statement.

"That's why we have had to implement the voluntary layoff programme. Production staff joining this programme would receive payment packages in accordance with the labour law."

However, with the crisis we're all facing, the company may have to implement another restructuring option if the voluntary programme doesn't yield sufficient reductions.

"Nevertheless, all employees who resign under any options of the restructuring plan will surely receive compensation packages consistent with the requirements of the Thai Labour Act."

Staff have been told layoffs were happening worldwide and in all industries.

It said the temporary leave programme turned out to be an unrealistic solution to the problems faced by the company as employees received only half or less of their salaries over a short period.

http://www.bangkokpost.com/news/local/1181...xes-790-workers