GM reinvention commercial

If your reinventing yourself you want to keep all the old bits don't you?
Not!

 

I liked the part about, "This is not about going out of business, it's about getting down to business."

 

It's always been tough for GM to make many changes as they are marketing driven (at least with their idea of who the market is). Toyota is much more a engineering driven company, as you could infer from their advertising campaigns One reason why Rick Wagonner had to go, in order to help change the mindset.

What always surprises me is that everyone says that they'll have to make dinky little cars now. Never thought something the size of the Prius was considered dinky. Also, people should remember that SUVs were never looked at with fuel efficiency being part of the equation. It was all about taking a $30,000 vehicle and putting $25,000 worth of stuff on the vehicle like On-Star, XM Radio, DVD Navigation, DVD screens for the back seat, backup cameras, etc. that they can get a great margin on because of all the legacy costs they had to deal with. You just can't allocate all of that stuff to a smaller vehicle.

If the engineers at GM are given a chance to look at making SUVs more fuel efficient, that would have a great impact on their overal MPG, instead of trying to produce a lot of smaller vehicles. I think you could have a vehicle that seats 8 with all the frills that gets 30-40 MPG, they just have never looked at doing that before.

 

That's what this has always been about. By getting the government to "force" them into bankruptcy, GM will come out the other end with no debt, no labor contracts (although the burden of labor is more hype than reality, as labor is only 10% of the cost of the vehicle these days), no supplier contracts, and they will flush all existing stocks down the toilet. Not to mention the government will set them up with billions in new operating capital.

So, after this "reorganization" they will have no payments, no cost of money, fat operating capital and be able to renegotiate all contracts for labor and parts at lower rates. Will all these savings be passed on the the comsumer in cheaper car prices? Right...NOT!!!

If I were Ford I'd sue to the supreme court for the government messing with free trade. If I owned GM stock I'd start a class action suit for the government messing in FTC business and making my stock worthless so GM Management could get richer. If I were in the market for something GM built, I'd boycot GM for pulling this stunt at the expense of millions of stockholders.

As a Management Scientist, however, I have to admit this is one of the slickest "legal" scams yet perpetrated on a free market - this is, without a doubt, the best example of what Free Enterprise Capitalism is all about. If this succeeds, it will go in textbooks and be taught for years to come as Outstanding Capitalistic Management.

 

The ad has a sad undertow . . . kind of like watching the last brontasauras getting stuck in the la brea tar pits.

 

The scariest things is the US is in the exact same predicament. Too many obligations and not enough income.

 

Free trade???????????????????????????????? Tell me one place on earth that free trade exists? China? Japan? the EU?

 

Oldest remains in Rancho La Brea tar pits date back 38,000 years. Most dinosaurs died out in a mass extinction 65 million years ago.

To me the only thing sad about this is the total crock it all is. In reality GM will come back debt free and rich from taxpayer money.

I'd be gald, as an individual, to "reinvent" myself if I could file bankruptcy, keep everything I own, and get an infusion of cash from the government to "start over." Heck, I'd even let the bankruptcy court have my 2006 Silverado pick-up and my wife's 2006 Impala LTZ (since I owe more on them than I can sell them for) - basically the same as GM getting rid of Hummer and Saturn. I'd come out the other end with a 3 year old Townhome and a Prius free and clear, and cash from the government. I believe we'd all take such a choice to reorganize our lives. That's what GM is REALLY doing.

 

ound:

Of course, you're absolutely right. That doesn't stop them from teaching whatever it is we have as "free trade." One thing my Masters in Capitalism (uh, Management) has taught me is to be afraid of our current system, and MORE afraid of a "free trade" system. I'm working on my PhD to see how this story ends...

 

First, even in quotes, the government in no way "forced" or forced GM into bankruptcy. Your statement may have been sarcasm, in which case I appologize.
This is no scam, it is called bankruptcy. There is nothing new about it, businesses have been doing so for many decades (heck, centuries for all I know).
It is not free enterprise capitalism as the financier of the reorganization is not a bank or other source of funds, it is government sponsored. Government sponsored capitalism perhaps, but certainly not free enterprise capitalism.

 

What is a management scientist?

 

That worked fine as long as somebody else, eg China, was willing to fork over money for IOU's. Seems I recall Turbo Tax Geitner getting laughed at while in China, when he suggested the US was a "safe" investment

I've never heard of any individual being able to "spend" their way out of a hole. I've lived my entire life based on the principles of "The Millionaire Next Door," so did my folks, and it literally paid off many times over

It's a fantasy that a nation can keep spending far more than it takes in, as a "normal" operating procedure. It's a fantasy for individuals to expect to put zero down, and have an ARM on a $350,000 home, with no long-term consequences

Time was, by the time a couple was aged 45-50, they were expected to be "free and clear." Now we have Boomers rapidly approaching retirement, with mortgage and credit card debt over their heads

The only question right now, is will this depressed economy extend into the foreseeable future, or will it suddenly fall off a cliff?

 

Try heavy drinking. That seems to work for me

 

It think it will improve mildly over the next 2 years (except for unemployment) and remain steady for 5-8 years and then the US will fall off the cliff unless MAJOR changes are made.

The US is turning into a nation of "share croppers" with China, Japan, etc owning the farm.

 

65 mil, only if radioactive decay into lead has remained constant ... and there's evidence to the contrary ... but thanks for the factoid anyway. As for GM being debt free ... everything has its consequence. It's really a question of who gets the last chair, in this game of musical chairs. For example, let's say that every union contract was wiped from the slate, along with all retirement pensions. Yes, corporate GM would be wealthier, and many of those on pensioners would then be on welfare ... and again, you & I (vis a vis taxes) pick up the tab. Think it through. That's the part they didn't mention in the "new GM" commercial.

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Millinea, actually. The early jewish tribe's law called it, "The Year of Jubilee" when all debts were extinguished. Nothing ever changes ... just the ads get fancier.

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The government isn't responsible for wiping out GM's stock value. GM's stock price used to be $90 per share in 1997. Remember the government didn't step in until GM fell to $4/share back in November 2008 after Wagoner's infamous corporate-jet testimony before Congress.

And the management isn't going to be rewarded for the bailout-- Remember TARP funds come with the $500,000 salary cap for CEOs and managers, and Wagoner was given the well-deserved boot without a golden parachute.

Ford has no ground to sue because they can also receive the same treatment from the Government if they went Chapter-11.

 

It was HEAVY sarcasm on my part. The press is making this sound like the government took over GM and forced the bankruptcy. That's a cover so the people won't figure out that GM is doing this to "get out of jail free."

It's Unconstitutional for the government to own controlling interest in a US Corporation (there have been legal decision precedents to this from the Supreme Court). But I guarantee, management textbooks will write this as the best of Free Enterprise for future study. I know, I've read my share of management textbooks.

Someone who studies the science of management (as opposed to the social study of inept management that business school teaches). I have a Bachelor Science degree in Business Management, and a Masters in Management (which is also a Science and not an Arts degree) and am working on my PhD in Management (again, a science and not an arts degree). I research scientific methods to improve the management of people and systems - my specialty happens to be management of software development projects.

We're on the same page here - I fully agree with this, and it is part of what I've been arguing. Through bankruptcy, GM will come out economically viable, and, as always, the retirees and taxpayers will pick up the cost (as we did for Enron and others). The only difference here is that GM is much smarter than Enron execs and did this "legally" - the legality of the US Government owning controlling interest in them for a period of time notwithstanding, but even that forces the legality issue on Obama's administration since he has publically fronted all this for GM.

By supporting the GM bankruptcy, the government is at least partially responsible for wiping out what residual value GM stock currently has - and for, in the end, wiping out the retirements of all those past GM employees.

The Board of GM is looking at the long term. Once GM comes out of this, with new stock, I predict that the new stock will be worth considerably more than the current stock value, seeing as how the New GM will have no debt, be free of those pesky retirement obligations, and have negotiated all new agreements (at lower values). GM will come back in much better shape than they are in right now, which was the whole point of the exercise. That's where the money comes in, but it will be a few quarters down the road.

I believe Ford, in part, kept out of this for the very reason of being able to claim interference in the market (which the Supreme Court did, indeed, deem Unconstitutional when FDR tried different tactics that led to similar results). The government will probably be made to pay Ford compensation for this - heck, that all may be part of a back room agreement that already exists! Oops - my conspiracy theory side is starting to show...

 

Is it still all about Chevy and apple pie? LOL.

 

Residual value is just residual. Very residual. Remember GM's stock price lost 95% of its value during the period between 1997 and 2008, before the Chapter-11 wipeout of the very small amount of residual value left. You cannot blame the government for the vast 95% majority of the value lost-- The chapter 11 wiped out just 5% of the stock's original 1997 value.

And if a company ran out of money and cannot pay the pensions of its past employees, whose fault is that? You cannot say that's the government's fault either.

Government seizure of failing businesses has plenty of precedent. Look at the FDIC takeovers of failed banks back in the 1980s during the S&L Crisis-- Many of which were publicly-traded institutions. It would not have been done if that was unconstitutional.