4 ms·

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the

by mdasen 18y ago

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly. The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on payroll earning more than many computer programmers who are simply idle - they don't do anything, don't show up to work, etc. The average labor cost per hour for GM's manufacturing is over $70/hour. While GM has made significant mis-steps in their management, the fact is that no management no matter how brilliant they were could compete when they have labor costs like that.

Dilpil 18y ago
Not that I don't believe you, but some sources for that would be nice. I've suspected this was true, but I've never seen a real in depth analysis and explanation of it.
- jeroen 18y ago
  From 1996: http://query.nytimes.com/gst/fullpage.html?res=9507E1DE1239F936A15755C0A960958260 http://query.nytimes.com/gst/fullpage.html?res=9507E1DE1239F... "The company estimates its hourly cost of labor at $43" 2005: http://www.npr.org/news/specials/gmvstoyota/ http://www.npr.org/news/specials/gmvstoyota/ "Average Labor Cost per U.S. Hourly Worker $73.73" I can't find anything more recent.
  - nihilocrat 18y ago
    From the NPR source: "Average Hourly Salary for Non-Skilled, Assembly Line Worker: GM: $31.35/hour NOTE: Includes idle workers still on payroll and those on protected status." Just clearing things up for people who don't understand that labor cost != wages.
peakok 18y ago
This is an analysis you won't find outside of the U.S. Typically, the car industry is known for having strong union labors in a lot of other countries (especially in Europe), and while auto makers are always in trouble during recessions, no European one is nowhere near the critical condition of GM. The real problem is making cars that people want and selling them. I'll give you a clear example with the history of Fiat : Fiat is an Italian auto-maker that had a very bad decade, the cars weren't selling and their reputation was bad, when you tought about Fiat, the first image that came to you was a subpar car. After they attempted everything else (cutting costs, you guess how), they finally resolved to fire every single guy with a tie in the company, from the simple chief to the CEO, the WHOLE management that was pointing to the high cost workers, unions, etc. as the sole responsible for the demise of the company, all these people that refused to take responsability were fired and replaced by new heads, an unprecedented move. Guess what ? It worked. Fiat is making a strong come back in Europe and their reputation is building up again. Their cars are not synonymous of subpar anymore, they sell, even if it takes a lot of time to restore confidence and change your image, their strategy is ultimatly working. I believe GM could take a lesson or two here. The problem is when the management refuses to take responsibility of a failure, they aren't qualified anymore to excercise responsibility, and their real chances of saving the company, bailout or not, are very slim.
- eru 18y ago
  Sources?
  - bjelkeman-again 18y ago
    These two stories at the Economist may help: http://www.economist.com/displaystory.cfm?story_id=11090197 http://www.economist.com/displaystory.cfm?story_id=11090197 http://www.economist.com/opinion/displaystory.cfm?story_id=11089887 http://www.economist.com/opinion/displaystory.cfm?story_id=1...
timr 18y ago
I'm tired of reading posts by internet libertarians, blaming the GM employees for the sins of the company. GM's labor costs are high because of pension costs. They promised an entire generation of workers old-age benefits if they gave their life to the company, and now the company wants to eliminate that deal, because they simply didn't plan for it correctly (oh yeah...they also made crappy, fuel-inefficient products that nobody wants). My grandfather was one of those pensioners. He retired from GM after over 30 years -- having sacrificed his hearing and his back to the job -- and the pension gave him a modicum of comfort until he died. His widow still relies on it to survive. There are thousands of other people just like them, who made a deal with the company in good faith, that the company would just love to revoke. I think GM should be allowed to go into bankruptcy, but if they do, the judge would do well to fire or eliminate the salary of every executive who failed to plan for pension costs, resisted fuel-efficiency standards, eliminated new product programs, and otherwise destroyed the company. Then, perhaps they can think about cutting the pension benefits of the blue-collar guys who gave their health to a corporate machine.
- Prrometheus 18y ago
  Nice anecdotes, but they also have rooms where workers they don't need and can't fire come in and sit for 8 hours everyday. The unions are a millstone around their neck. Airlines, car makers, government, schools. Four sectors that are unionized, four sectors that are grossly inefficient, four sectors that are kept alive by taxpayer money.
  - eru 18y ago
    Any sources for the 'sitting rooms'?
    - benzim 18y ago
      http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm 15,000 workers are paid to do nothing.
      - 18y ago
mgb 18y ago
>is the unreasonably high labor obligations While Porche is insanely profitable because it exploits the slave labour wages and conditions for German autoworkers?
- eru 18y ago
  Porsche does not pay pensions directly.

by mdasen 18y ago

Dilpil 18y ago

Not that I don't believe you, but some sources for that would be nice. I've suspected this was true, but I've never seen a real in depth analysis and explanation of it.

jeroen 18y ago
From 1996: http://query.nytimes.com/gst/fullpage.html?res=9507E1DE1239F936A15755C0A960958260 http://query.nytimes.com/gst/fullpage.html?res=9507E1DE1239F... "The company estimates its hourly cost of labor at $43" 2005: http://www.npr.org/news/specials/gmvstoyota/ http://www.npr.org/news/specials/gmvstoyota/ "Average Labor Cost per U.S. Hourly Worker $73.73" I can't find anything more recent.
- nihilocrat 18y ago
  From the NPR source: "Average Hourly Salary for Non-Skilled, Assembly Line Worker: GM: $31.35/hour NOTE: Includes idle workers still on payroll and those on protected status." Just clearing things up for people who don't understand that labor cost != wages.

peakok 18y ago

This is an analysis you won't find outside of the U.S. Typically, the car industry is known for having strong union labors in a lot of other countries (especially in Europe), and while auto makers are always in trouble during recessions, no European one is nowhere near the critical condition of GM. The real problem is making cars that people want and selling them. I'll give you a clear example with the history of Fiat : Fiat is an Italian auto-maker that had a very bad decade, the cars weren't selling and their reputation was bad, when you tought about Fiat, the first image that came to you was a subpar car. After they attempted everything else (cutting costs, you guess how), they finally resolved to fire every single guy with a tie in the company, from the simple chief to the CEO, the WHOLE management that was pointing to the high cost workers, unions, etc. as the sole responsible for the demise of the company, all these people that refused to take responsability were fired and replaced by new heads, an unprecedented move. Guess what ? It worked. Fiat is making a strong come back in Europe and their reputation is building up again. Their cars are not synonymous of subpar anymore, they sell, even if it takes a lot of time to restore confidence and change your image, their strategy is ultimatly working. I believe GM could take a lesson or two here. The problem is when the management refuses to take responsibility of a failure, they aren't qualified anymore to excercise responsibility, and their real chances of saving the company, bailout or not, are very slim.

eru 18y ago
Sources?
- bjelkeman-again 18y ago
  These two stories at the Economist may help: http://www.economist.com/displaystory.cfm?story_id=11090197 http://www.economist.com/displaystory.cfm?story_id=11090197 http://www.economist.com/opinion/displaystory.cfm?story_id=11089887 http://www.economist.com/opinion/displaystory.cfm?story_id=1...

timr 18y ago

I'm tired of reading posts by internet libertarians, blaming the GM employees for the sins of the company. GM's labor costs are high because of pension costs. They promised an entire generation of workers old-age benefits if they gave their life to the company, and now the company wants to eliminate that deal, because they simply didn't plan for it correctly (oh yeah...they also made crappy, fuel-inefficient products that nobody wants). My grandfather was one of those pensioners. He retired from GM after over 30 years -- having sacrificed his hearing and his back to the job -- and the pension gave him a modicum of comfort until he died. His widow still relies on it to survive. There are thousands of other people just like them, who made a deal with the company in good faith, that the company would just love to revoke. I think GM should be allowed to go into bankruptcy, but if they do, the judge would do well to fire or eliminate the salary of every executive who failed to plan for pension costs, resisted fuel-efficiency standards, eliminated new product programs, and otherwise destroyed the company. Then, perhaps they can think about cutting the pension benefits of the blue-collar guys who gave their health to a corporate machine.

Prrometheus 18y ago
Nice anecdotes, but they also have rooms where workers they don't need and can't fire come in and sit for 8 hours everyday. The unions are a millstone around their neck. Airlines, car makers, government, schools. Four sectors that are unionized, four sectors that are grossly inefficient, four sectors that are kept alive by taxpayer money.
- eru 18y ago
  Any sources for the 'sitting rooms'?
  - benzim 18y ago
    http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm 15,000 workers are paid to do nothing.
    - 18y ago

mgb 18y ago

>is the unreasonably high labor obligations While Porche is insanely profitable because it exploits the slave labour wages and conditions for German autoworkers?

eru 18y ago
Porsche does not pay pensions directly.