[GM] the saga continues...

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Uptown . Nov 20 2008 22:29. Posts 3557

I caught some grief from Highcard during my last blog when I talked about how GM going down would cause a recession, and honestly I really can't disagree with him. These companies are simply terribly ran, GM in particular. It all stems from terrible terrible deals struck with the union back in the 1960's (iirc).

The union of automotive workers (UAW) have ridiculous contracts with GM. Iirc GM was in deep shit during the 60's and were ran by inept monkeys, somehow thinking that signing these stipulations would be alright. I don't recall all the specifics, but here are a few.

- Continued wage increases with age, to the point where 45 year manufacturing plant workers who moved up the ladder somewhat over the last 25 years are paid 6 figures, oftentimes over 200,000 USD. That's more than PHD's make in corporate research labs!!!
- Huge difficulty firing unnecessary labor force.
- Benefits (health insurance etc) continues after retirement until death. (HUGE!!!!)

That's huge amounts of unnecessary money being spent -- basically for naught. I always hear about taking money from the giant corporations and giving it to the ordinary man, but seriously, there are limits to what you can do until the company itself goes busto. Think back to the airlines pre-9-11, and how overpaid the workers were in general, and how eventually everyone had to take 25-40% wage cuts for the company to even survive.

Because of GM's inefficiencies with its workforce, each car produced I believe costs $1500 more than a comparable vehicle made by Toyota. In this day and age, there is no way a company is going to be able to survive with such gross flaws in their operations.

GM sucks. There's no question about that really. But if it goes down, the estimate is roughly 10% unemployment. GM has no assets it can sell. It recently sold suzuki for a whopping 500M, which hardly helps their cause.

Ford, who will probably feel the effects of GM falling, will probably survive regardless, since they have 20B+ in cash, plus they can sell off volvo and a few other companies they own.

Now, I believe Obama pledged to rescue GM, since he needed the millions of automotive workers' votes. If GM falls before he is sworn into office, then he happily won't have to recue them - he can just say Bush didn't rescue them, and no one can really complain. (I'm completely fine with that too tbh) GM will go to bankruptcy court, and the judge will hopefully (ffs) order a negotiation with the UAW. And as a result, these improved terms should help out Ford as well.

If GM doesnt fall before Obama become president... they may very well be sent a resume package.

I'm not really even sure where I personally stand on this. I hate the fact that GM is a piece of shit company that makes piece of shit machines and has retarded compensation plans for its employees, but on the other hand them going down is going to make the market go kaboom and cause serious levels of unemployment. Sigh...

0 votes

Half Pot!

Last edit: 20/11/2008 22:31

tec27 United States. Nov 20 2008 22:54. Posts 173

What you have to understand is that with a bailout, a large amount of resources are diverted from other productive means. A $25 billion bailout for automotive companies (as has been proposed/promised) doesn't appear from nowhere. That money is taken from taxpayers, who would spend it/invest it in much more useful ways (and create useful jobs with it). Propping up a non-profitable company with that money, however, is just a waste of time, and delays the inevitable.

I agree that GM sucks, and it sucks largely because of the UAW. Unions act like vampires, moving from industry to industry and sucking them dry. They force higher prices for consumers, waste large amounts of money, and divert funds from everyone else to themselves (which is highly unethical, imo). Honestly, one of the best things we could do for the economy right now is to remove all the pro-union legislation.

GM dying would not make the market die. Its death would leave openings in the market for more job creation, absorbing a large part of the unemployed. While that job creation would not be immediate, it would follow soon after.

A fairly short article on the subject that I think is pretty good: http://mises.org/story/3202

JYang United States. Nov 20 2008 22:58. Posts 2669

sick bad beat for people that work there all their lives and is about to retire

Moffa United States. Nov 20 2008 23:14. Posts 617

On November 20 2008 21:58 JYang wrote:
sick bad beat for people that work there all their lives and is about to retire

fuck that, they were offered an early out retirement package for 150k cash 3 years ago. if they didn't take it, too fuckin bad.

Dangerous, but worth the risk.

Highcard Canada. Nov 21 2008 02:53. Posts 5428

basically it boils down to the fact that every single worker had the option to do whatever they wanted with their lives. Some of those GM workers said "Hey look how much money I can suck out of GM by doing so little, this is perfect for my uber lazy and uncreative mind". They hear that it is killing the company, these half brained workers getting paid ridiculous sums of money and what is their response "too bad, we had an agreement". So what happens next is the kicker: the company goes bust. Now, every single one of those moneysucking faggot workers are crying "What about all the money I was promised" or "I worked so hard to earn this [whatever gm promised but the employee knew they couldn't afford], it's not my fault they are collapsing, this is not fair, give me all my money!". So do you expect me and you to go to the bank holding all these retards hands and giving over the money you worked hard for so these retards can get paid? Fuck No. With all the money they have been making, they could have easily created their own retirement funds and lived the good life. What GM needed to do years ago was file bankruptcy and wipe the slate clean of all these ridiculous UAW agreements. I hate GM's business plan as much as I hate the whiny little bitch workers.

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