Apparently the Big 3 can build cars as cheap as the Japanese except for the fact they have all these legacy costs from previous commitments to their workers. Union has made major concessions and wages will be competitive with the Japanese, but not till 2010... leaving the Big 3 at a huge competitive disadvantage until then. Even after 2010, the retiree costs will prevent them producing at the same costs as the Japanese.

I would hope a judge would protect those benefits to the maximum extent possible, but the reality is they are going to have to be cut. That is, the 25B is not enough to cover these costs into the future.... leaving the Big 3 exactly where they are now two or three years down the road. It's a cost of doing business their competitors don't bear.

I've come to the conclusion that any company seeking a bail out should get as much as they can show they need, but the CEO and board of directors should have to accept that they will pay 100% tax on everything they make over, or outside of (no tax shelters allowed), minimum wage for the rest of their lives, payable retroactively for the last five years. The only way to stop a tsunami of bailout requests is to make this punitive.

Who thinks Toyota, Honda and Nissan vehicles are cheaper than their GM counterparts? Prices seem to have been nearly the same for a long time.

On the other hand, private jets aren't cheap.

The market forces the competitive price, with the difference being that the Japanese can make a profit at that price, and the Big 3 cannot absent supplementing their income with sales of large SUVs which has higher mark ups. Toyota's profit on a vehicle averages only $1300... very, very thin profit margin.

Two other factors to consider. GM is making money in the foreign markets, it's only their US production that is losing money (because of labor costs). And, lest we all forget, Chrysler is a foreign owned company... e.g. no different that Toyota and Honda. Would we bail out Honda and wouldn't that all be like competing with ourselves?

If the Big 3 would be competitive by 2010, then I think I might be leaning toward a bailout. But, they won't be.

GM is a foreign company too. Their stocks are bought and sold world wide, and much of their production is outside the US. Blaming US workers is just a smoke screen designed to divert attention from awful management.

What's worse is the message this sends to companies and their employees alike: US workers need to accept lower wages. That of course will lower consumer buying power, which is 70% of GDP. The result will be worse problems than we have now.

This might be a good place to air an idea.

Once upon a time, managers of a company making a widget were engineers who understood the widget. Then we got this MBA schtick and the doctrine that a person who can manage, can manage anything.

So perhaps -- I don't know, just wondering -- these GM types used to be managing a Twinkies factory or something, don't really understand cars and don't listen to people who do (but don't have a MBA). If this is not the case, I beg their pardon.

I knew a "Managers can manage anything" type once. He had been very decently competent at his non-managemental job, but then decided he was a Natural Born Manager. And a lousy one he turned out to be (cf. the Peter Principle). He once spent 20 minutes explaining to me why he didn't have time to do something that would have taken him 20 seconds. Everyone quit on him.

Can we create a Nobel Prize for workplace sociology and give the first one to Scott Adams?

This is part of globalization, and it's the same reason why IT resists the Mac. With globalization, it's not important what system is better. What's important is that you can interchange them.

By turning everything into a commodity, corporations gain a huge advantage over both labor and consumers. Labor loses because they can be replaced by pennies per hour labor in some poverty stricken country. Consumers lose because they don't have real choices in the market; they have to buy the same crap that everyone else is selling, so corporations only have to compete via marketing.

One thing I really like about Apple is their willingness to upset this paradigm. They do it with the Mac OS, the iPod, and now the iPhone, and all three have angered the established players, not because of their success, but because they don't play the globalization/commoditization game. It makes them the outsider in business though, and I think it's the main reason they have very little support in the enterprise.

This is not about cheap foreign labor.... again, GM is paying $20 an hour in labor costs MORE than Toyota is paying US WORKERS. (This changes in 2010 following a re-negotiation of the UAW contract, after which labor costs will be comparable but with a slight edge to the Japanese.)

There is an old joke (or more likely a true story) about the CEO interviewing prospective accountants by asking what 2+2 is and hiring the one who answered "What do you want it to be?" I don't trust top management to begin with, and when I see a suit tell Congress that this is not about their products, I lose whatever trust I might have had in them.

Maybe I'm missing something. If you can link to a vehicle GM sells that gets better than 40 mpg city and highway, then that would go a long way towards convincing me that labor has something to do with GMs problems.

Until they do provide such a vehicle, the reason GM can't make the same profit margin on smaller cars is that they aren't providing value in that segment of the market. It is not, nor has it ever been, enough to simply make a small car. The value in a small car is in its efficiency, and that is something GM executives know nothing about.

I would certainly agree that labor costs is only one of the Big 3's problems.

I would agree that labor costs are the least of their problems.

The primary problem is that fewer and fewer people want to buy their cars. Why? Because for the most part they're crap. That's not labor's fault; they put together what they're given -- it's a design decision.

In the too little, too late category: GM has 20 models in the 2009 line up that will get over 30 mpg (highway I presume). The Big 3 produce 70 percent of the vehicles sold in the US. GM is the second larger producer of vehicles in the world and only a tad behind #1 Toyota. Somebody thinks they're not all crap.

They are behind in the fuel efficient/green vehicle production. Who cares, gas is under $2 a gallon.:)

I drive a Toyota, but it was my second choice. Couldn't get a deal on the Pontiac Grand Prix GTP I really wanted because the dealer wanted to make way too much on it... yet another problem the Big 3 will have to deal with.

:eek: Sudden case of amnesia?

Gas will be under $2 gallon just long enough for most people to forget how quickly it went beyond $4 a gallon. Fortunately for everyone except the Big 3, it seems the gas ploy doesn't seem to be working this time.

My wife drives a 5-year old Honda Accord (never had a problem), her third in 20 years after two bad experiences with GM cars. After owning two Plymouths that gave me grief in the 70's, I've owned a Toyota, a Datsun, a Mazda truck, a Honda CRV, and now (because I tow a boat) a Honda Pilot (5 years old). Neither of us have any had any trouble with these cars and in every case we've kept them for years. We've never looked back, so it's not a new problem for the big 3.

I've owned GMs going back to '54, my first car. Never had an engine or transmission problem, though earlier models were prone to rust. I loved the '60 & '65 Super Sport and the Corvair Monzas..... but don't get me started on the Fords.

My first new car was a Plymouth, then I had a Dodge, and they convinced me to try Toyota. My next new car will be all electric, get over 200 miles per charge, and have easily swappable batteries for longer trips, as well as the capability to recharge over time via solar panels. Oh, and it won't cost more than a new car today. If US wages drop more, it will have to cost less.

While I'm waiting for that, I'll keep my Toyota running or replace it with a used one. If GM can produce what I'm looking for, I'm willing to give them another shot, but they'd better be the first.

if the UK government were clever...... (which they are not) they would capitalize on this whole situation and push millions into the 'green british car industry' (just as the old british car industry has died a death)
We have amazing engineers, technology and production capabilities at the exact same moment in time when the general public are crying out for green/energy efficient cars... AND the traditional combustion car industry is on its knees..

The UK could get back to doing what it does best.... innovate!

If a UK company with UK government backing produced a cheap, good looking, hydrogen powered car... it could sell in the tens of millions.... even be the next 'mini'

just my 2 pence...

As for Ford, GM and Chrysler.... they only have themselves to blame... they have been making terrible cars for ever.... Ford and Vauxhall (UK arm of GM) have been very undesirable since the mid 90's in the UK, and Chrysler's have never taken off in the UK... no matter how cheap the sell them!

Yet another analysis of Ford, GM, and Chrysler: 6 Myths About GM, Ford, and Chrysler in US News & World Report

My sense of this is that if we build cars that use half as much gas, the price of gas will double. OPEC will maintain their cash flow as long as we are dependent on them for energy. We need a near complete break with oil.... a big enough break to put OPEC out of the driver's seat.

After the beating AIG took in the press, I would have really thought the CEOs would have been savvy enough not to fly their private jets in to beg for money and get themselves embarrassed. I was wrong; their egos have no bounds.