On a lighter note, GM will need to reduce itself to four brands as part of the restructuring. Which four brands stay?
The candidates (cars sold in America):
Buick
Cadillac
Chrevrolet
GMC
Hummer
Pontiac
Saab
Saturn
I’m positive Chrevrolet and Cadillac will stay. So which other two?
Also, NASCAR must be shaking in their boots about all this, will this fundamentally change the face of American car racing?
Ironically enough, most auto workers around my neck of the woods work for the big Subaru plant. In some respects, “foreign” car companies have invested more in America than so-called domestic companies.
I’m sure you’re right. I certainly didn’t post that in an attempt to refute the importance of the auto industry, just to provide some perspective. There’s this narrative that a lot of people have bought into that “we used to build cars, but now the US economy is just Microsoft and McDonalds”
Both. And somebody would do something with the remains of Chrysler (or GM, or both). It’s not likely that their manufacturing facilities would just be bulldozed.
Thanks for digging that up James. VERY interesting stuff. Looking at the rest of the durable manufacturing numbers I’m wondering how much of that is occupied supplying the auto companies with metal, machinery, and electronic components.
Probably not much. Or to put it another way, if it’s more than 4.28%, then at least we know why the auto industry is in so much trouble.
Actually, it is on point. I’ve read several studies (and these studies are borne out by my extended family in the Rust Belt) that former auto-workers are harder to retrain & re-locate into new jobs. So the thinking is that when disaster hits, it’s going to hit even harder thanks to the “Mill” mentality, to use Rimbo’s language. The process of creative destruction will be slowed down.
But you’re right that in the short term it doesn’t matter one whit. Millions will be suffering. Hooray for toxic industries!
To have that capacity to make durable goods. Look, I’m dancing around it, but I’ll just come out and say, that I think it’s important to have some manufacturing base in the event such has to be mobilized for war.
Ah. Then yeah, I guess we’ll just have to agree to disagree. I can’t imagine that we’ll be so hollowed out that we would be simply unable to obtain war material from somewhere in the event of war. But I don’t have any data to back up my assertion.
Buick, Cadillac, Saturn, Chevy. Buick’s actually pretty big in China (growth market), Caddy and Chevy for obvious reasons (you’d fold all the trucks to Chevy from GMC). I kind of waffle if Saturn or Pontiac would be the remaining division, but IMO Saturn has enough differenation that you can keep it. I don’t think that Pontiac does.
Saab will get spun back off (or sold, not sure if it’s still part of GM), rest will get shut down. That in itself will be a huge fight, and it’ll drag on for awhile: Buick, Pontiac and GMC typically operate in the same dealership, and that’s where the majority of GM’s minority owned dealerships are concentrated.
I’m going to guess you haven’t even read The Grapes of Wrath, based on this; it has virtually nothing to do with what you’re talking about. People left Oklahoma because the alternative was starving to death, not because they were morons incapable of getting a new job. Farm income dropped 64% in the 1930s. I’ll leave “auto workers are too stupid to get new jobs” for others.
Well, there’s a reason they call it the military-industrial complex. We actually have companies that do that now. It’s not like the 1940s where we’re going to retask the local Camaro plant to build F-22s.
The problem is, this isn’t a “rough patch”. GM and Chrysler were losing money before gas prices shot up and people stopped buying trucks and well before the credit crisis. Toyota is going through a rough patch, GM and Chrysler (and maybe Ford, although I think they can survive) have been living on borrowed time for years. They made a lot of dumb, unsustainable decisions over the course of decades and the bill is coming due now.
In order to truly turn the business around, they would need a cultural shift and a change in business direction, and it might take a decade before they got out of the red. I just don’t see that happening. For one thing, if the government was willing to support them through a decade-long restructuring they would probably become dependent on the support and would never become viable as a standalone business.
I think the opportunity here is for someone else to buy up the infrastructure and create a new company. If the government wants it to be an American company they should take steps to make that happen, because otherwise it’s likely that every car made in America will be “foreign”.
What I’d really like to see is someone buy up some cheap plants and start building hydrogen fuel cell cars or high speed trains. But that’s just a dream.
I don’t think autoworkers are too stupid to get new jobs. Rather, retraining and marketing themselves, especially if they’ve been autoworkers for a decade or more, is an uphill task. They are going to face a tough job market that likes to hire young for the low cost, no matter how well the general economy is doing.
I can see why that makes sense, but from what I’ve heard Saturn has never made a profit in its entire history, so its value as a brand seems limited. In fact, keeping the brand around despite it costing the company money seems like a perfect example of what’s wrong with GM.
Ironically, Saturn has the best immediate “brand” impression on me. But I’m not a car owner. Heh.
You’ll be waiting awhile. Not a single person in this thread has argued this. Not one.
Point taken. If this is truly the case and auto capacity wouldn’t need to be converted for use, then maybe I am Chicken Little in this regard.
Now that’s something I could get behind.
I concur. I think GM is insane for even considering dumping the Saturn brand. I know 4 or 5 people who, in this terrible economy, have gone out and gotten Saturn Vues.
Rimbo’s post came off that way a bit, though I don’t think that was the intended effect by any means. I just think it’s less about autoworkers being inflexible about getting new jobs and more to do with the fact that there are no new jobs to get.
I read an op-ed piece somewhere that suggested that GM’s best bet would be to take the Toyota approach and narrow its offerings to two brands–a mass market brand and a luxury brand (i.e. Chevy and Cadillac). I think there’s some truth in the observation that the US auto industry has saturated the market with way too many brands. Supporting that many model lines increases development and manufacturing costs considerably, and the cars just end up cannibalizing each others’ sales.
That’s interesting. I’ve always taken these brands for granted without ever evaluating the necessity for so many “different” cars built on the same platforms.
All true. To be completely fair, the part of the country I’m from (Texas) has its own deep-rooted counter-productive anti-intellectual cultural problems: The “good ole boy” network and fundamentalist Christianity. Out here in SoCal, I think it takes the form of a kind of ingrained superficiality, where you are who you seem to be, you are who you are on TV. So it’s not to say that the Rust Belt is this terrible place; rather, it’s that all places have some kind of issue like this, and this one is theirs.
I am also describing an exaggerated version of it. I assume that most people do not fit the peculiar hardcore I described (although to e.g. Californians, even those who are moderate believers in such things might seem extreme). The point of the exaggeration is to highlight what I see as the characteristics of the culture that differ from what I’ve seen in other parts of the country.
HA HA!