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GM Had a Better Idea
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FORD LUCK, GENERAL MOTORS
PLUCK
Re: G. Tracy Mehan, III’s Ford
Is a Better Idea:
I am getting tired of reading about how great Ford is (it is, but that is beside point) simply because it had the fortune (or misfortune) to be in far worse shape than GM before the economic tsunami smacked ALL of the worlds auto producing elite.
Ford went to Wall Street a few years ago, leveraged and mortgaged all of its assets, including the blue oval and the glass house, to raise the capital it needed to survive, let alone survive the severe economic downturn.
Ford got its money, good for it.
When GM went to the street to do the same GM was told “Sorry, no money to lend…have a good day.”
GM was out of cash. That tends to happen to large auto companies when sales volumes worldwide are cut in half due to the recession. The choices were now to either beg the government for a loan or go out of business. Liquidate. Now that may have seemed like a good idea to all the pure capitalists in the world, but GM going under would have had catastrophic effect on the Michigan economy and huge effects on the USA and world economies. Not exactly prudent in the middle of a huge recession. Ford and the rest of the “model” car companies (i.e. Toyota — not such a great model after all, eh?) would have been in serious trouble as well, because most of the suppliers would have went belly up when GM quit paying the bills.
It wouldn’t have just effected Michigan either — California? Smug, arrogant, Prius driving fools, Guess which company buys the most from your Silicon Valley? It ain’t Toyota.
We shipped billions of dollars to Katrina victims, Billions of dollars to bail out Greece, hundreds of billions to rebuild Iraq and Afghanistan, but to save the world’s largest automaker, a victim more of economic circumstances than of “poor management” as the pundits like to decry, well, we just can’t do that, can we? That would be a crime. How many tax dollars have Iraqis or New Orleans contributed to the U.S. Treasury over the years vs. what GM has “contributed”? How many of you smug east coast pundits were part of the “arsenal of democracy”, helping us win WW2? But when GM needs a hand, sorry, what have you done for me lately?
Yes, GM made mistakes — most of these mistakes can be attributed to basically creating the middle class in America, for God’s sake, to deals made long before global competition shrank market share — in hindsight, bad business, at the time, taking care of your workers. No one was complaining then.
GM has plenty of outstanding vehicles, the best fleet from A to Z in the world; gas miser cars to full fledged SUV’s/Trucks. GM sold the most vehicle worldwide in April, even with the “Government Motors” shadow hanging over their heads — you don’t do that unless you have the products. The government didn’t just come in from on high and develop these vehicles, they were in the hopper long before they stepped foot here.
Yes, GM overpaid workers (held hostage by the UAW) and provided health care and pensions to its retirees — shameful actions, no doubt, but guess who gets to pay for all that now (taxpayers). Congratulations.
Look at Ford’s balance sheet — it owes as much money as GM — except it owes it to creditors, GM owes it to the taxpayers.
Since the taxpayers had to bail out most of the money lenders on Wall Street, de facto, Ford owes the same people (us) for the money it borrowed.
So crucify GM all you want and praise Ford to the high
heavens for its “luck” of being on the brink of bankruptcy when
there was still private money to be borrowed.
— Mark
Bruni
Shelby Township,
Michigan
BLINDED BY HATE
Re: R. Emmett Tyrrell, Jr.’s
The Times Square Surprise:
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Twitter Trackbacks for The American Spectator : GM Had a Better Idea [spectator.org] links to this page. Here’s an excerpt:
Douglas| 5.7.10 @ 9:14AM
I think it's, "would have GONE belly up," not "would have WENT belly up." Otherwise, some good points.
ColoradoWest| 5.7.10 @ 9:57AM
They should have all stood or failed on their own.
I could give a whit whether GM, Ford or any other company full of overpaid union bolt screwers survives...let 'em find real work at real wages.
But I've done my part...I love my Nissan.
Alan Brooks| 5.8.10 @ 2:21AM
Do you love God as much as your Nissan?
Bohred| 5.8.10 @ 10:01AM
Punch-punch-punch-punch!
Pedophile!
Alan Brooks| 5.9.10 @ 11:07PM
Whatever you say, Borat.
Barb Lutz| 5.8.10 @ 1:58PM
I'd say Ford has better products than Nissan right now, but Nissan is pretty good too.
Mcbain| 5.9.10 @ 5:41AM
Actually Ford bought out most workers and rehired new ones at $14 an hour, about $11 dollars less than Toyota. Also, the 3 domestic companies spend about $18 billion in R&D in the USA as opposed to Nissan, this results in a big boost to our economy and good paying jobs for tens of thousands. When you buy a foreign car you are basically boosting jobs and R&D in other countries. Just because some foreign companies assemble some of their products here does not mean a thing. Your rarely see a foreign engine or transmission plant in the US where technical expertise is required and nurtured, only auto assembly plants. If we only assembled computers here while foreign countries had all of the R&D and innovation, you would not think that was so great.
toyota man| 5.7.10 @ 11:39AM
Its a shame that there is sympathy for GM. Its kind of like saying we shouldn't have thrown Ted Bundy in prison because he was such a good kid when he was yonger. Yes, GM may have been a wonderful company during WWII but they became the poster child of glut and excess and they should have failed! I will never own another one of their cars.
Adam Wade| 5.7.10 @ 12:24PM
No, GM going belly-up would not have catastrophic effect on the US economy. The problem is the US, and world , car markets are at overcapacity, even before the Great Recession. Simply put, Ford, GM , Chrysler are all set up to make more cars than they can sell. The only cure for this is somebody has to fall off the log, or everybody has to cut way back. If the DAMN Government would get out of the way, let the free market do its job, some one would take over GM and Chrysler, can the current management, streamline the companies, lay down the law with UAW, get wages and benefits inline, maybe move a few plants down south to Right to Work states, and restore the companies to profitability. Or, some other company would take over GM's plants and its market share. Its how the free markets work, and the market need to be left alone to work. In my hometown, Boeing just broke ground on a new facility that will employ over 3000 people with good jobs and great benefits (middle class mind you). Boeing announced the new facility after the workers at an existing Boeing plant here voted to derecognize a union. Mark, you and everybody else need to admit it's the unions and their intransigence that are stangling the Michigan economy, as well the economies of California, Greece, Spain, and unfortunately if nothing is done the US as well.
Mcbain | 5.9.10 @ 5:44AM
Yes, if they would have failed, most of their sales would have passed on to Ford which would have been even better off.
dave_in_socal| 5.7.10 @ 12:51PM
Wow Mr Bruni!! What a load. Spoken like a true union apologist. Here's a few more options your warped mind failed to mention. GM goes to the unions and tells them all members take a pay and benefits cut, all work rules are suspended or they start firing a couple thousand workers a day. Or, GM files for bankruptcy protection(which they in fact did), gets all union contracts voided and then streamlines operations immediately by laying off union deadwood and paying everyone left a realistic wage. Someone who puts 4 bolts to secure a bucket seat does not warrant a "middle class wage". As for GM producing "outstanding" cars that is another load so big I don't see how you can walk with that in your pants. You should join the Obama administration. I am sure you will fit right in with the crap throwing monkeys that work there.
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Thom| 5.7.10 @ 8:48PM
Mr. Bruni your mindset is very reminiscent of a conversation I recently had with a former GM mid level manager. Your talking points were essentially the same as his, etc. GM created the “middle class” and he loved the “Union” since every time they got a raise he got a bigger one…..
Let’s deal with the facts and the real world for a moment. My wage and benefit cost are right in the money for my category of work “Management and Technical” or around $55.00 an hour cost to my company. Nearly 40 years in the business and five plus years of college to go with that. It wasn’t until the early 21st century that I could even catch up with the “floor” wage paid to the high school day labors you find at most UAW plants. If you think paying someone right out of high school $28.00 an hour to start and having a combined Wage and Benefit cost of around $73.00 an hour is middle class you are completely ignorant of the actual middle class wage and benefit cost in this Nation. If you still think what passes for the average wage and benefit cost at a typical UAW plant is “middle class” you probably think the $40,000 GM Volt is a middle class vehicle too. You’d be dead wrong there again.
Given that “government motors” formerly “Give’me Motors” and “Crying Baby Motors” along with Ford started losing money years before the situation in 2008 arose (about 6 years for GM and 3 for Ford if I’m not mistaken) it might be useful to grasp what set the stage for all three domestic automotive companies at about the same time trending towards bankruptcy. Others have touched upon the obvious, over capacity. Over capacity in the form of excess plants, and UAW members costing $73.00 an hour wage and benefit cost to keep those plants producing a single shift of work guarantees a very high fixed cost per vehicle sold. All three domestic producers have been on a declining market share for nearly 4 decades now and have maintained the same business model that needed millions of Americans to buy large overpriced, gas consuming trendy vehicles with high profit margins in order to subsidize their loss leaders which were what should have been their staple product, the passenger car. Not being able to produce a quality, reliable and economical car that the “average” wage” earner could afford was a sure bet the first time something came along and made the high priced upper end vehicles less affordable would be fatal. What caused all three domestic producers to tank in first half of the last decade (2000-2005) Mr. Bruni while the bulk of the import designs weathered the storm for the most part? Honda made a profit in 2008 in the midst of Give’Me Motors and Crying Baby Motors going flat out bankrupt after multi year losses and no change in their business model and practices. What tanked all three domestic producers Mr. Bruni? Simple answer, a dollar increase in the price of gasoline and diesel coupled with a shift in the market to more affordable vehicles which carry a much smaller profit margin. With nearly $2000.00 in labor, healthcare and pension cost in each UAW produced vehicle the idea that you can stay in business producing $17,000 to $20,000 economy cars and $20,000 - $25,000 midsized like those designed in Asia and much of it produced here in non union plants is shear fantasy. When the domestic producers business model collapsed due to a simple trend shift because of a dollar a gallon increase in the early 2000s and the market place could no longer afford the trendy $30, 40, 50.000 dollar SUVs, mini vans and pickup trucks the lie that had been the domestic producers life blood for decades disappeared almost overnight. Add to this that almost all local, state and Federal government fleet purchases are virtually mandated to be domestic production if not designed and the rosy picture you paint is even more of an illusion. “government” has been subsidizing a failed business model for decades and now owns two thirds of the problem and is still paying those same over priced “day labors” a wage for non work to meet demand that isn’t there.
When you roll it all up Mr. Bruni, all three domestic producers have been living a lie for decades and betting on “government” to bail them out as it had done before. Well they got part of that right but the customer base has finally got wise to the con of producing crap and paying crap producers an average of $18.00 an hour in Wage and Benefit more than people who spend years in college. If you are still confused about what makes the middle class Mr. Bruni try consulting the IRS tax payer stats and break downs. The average UAW wage and benefit cost is not middle class by a long shot and their W&B cost scale right up to the top where that $25,000,000 a year CEO adds a couple gallons of gas to the cost of each vehicle.
Simply put Mr. Bruni if GM, Chrysler and Ford can’t produce quality products the real middle class making real middle class wages can afford to own and operate they need to go away. They’ve all had four decades to figure out what works well for the Asian producers. It is not particularly an American virtue to run away for competition as all these three have done for decades but it is consistent with the mindset you find overwhelming in the UAW and the government of the States where they are centered to live a lie and expect someone else to pick up the tab. I suspect that has run its course for “government motors” outside of local, state and Federal government purchases to subsidize a failed business model and products that the average American simply can’t afford to own any longer.
Fred Tope| 5.8.10 @ 1:56PM
Thom's post is pretty much right on. And, now Ford is making best-in-class products. That's why they're succeeding. It's pretty simple. Make a good product, and people will buy it. Ford has obviously benefited from Toyota's pr disaster, but product is the key.
Mcbain| 5.9.10 @ 6:25AM
I disagree with a number of your points or think they are misleading. Ford bought out most of their higher wage employees and replaced them with new hires earning $14 an hour, about $11 less than Toyota. Saying someone makes a combined wage and benefit of $73 is incorrect as it includes the legacy costs paid to retirees. It would be like saying a private in the army earns $100 thousand a year because you would be adding up all of the wages, and medical costs for active soldiers and all the pensions and medical benefits for all retired military personnel, surviving spouses etc. and dividing the total costs by the number of active military. Just because the transplants do not have significant numbers of retirees is no reason to bash a company that does. What are you going to say in 20 years about Honda et al when South Dakota entices China to build a plant and they do not have any legacy costs and Honda does? Will Honda then be seen as greedy etc.? As for not being able to produce a quality reliable and economic car, Ford has quality equal to or better than Toyota according to Global Quality Research and Consumer Reports, has more 5 Star safety rated cars than any manufacturer, has hybrids that get Best in class fuel economy. Ford Fusion, 41 mpg, 700 mile range, $27000 and is a 4 passenger mid size car. You should get some up to date facts before you vent your spleen. I would love to get a reply.
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WhiteBikerTrash| 5.8.10 @ 9:20AM
The major point is entirely missed! The "Bail Out" was of the UAW through GM and Chrysler!
Even through bankruptcy GM and Chrysler would have survived, but the UAW would have been left in the wreckage, cast off!
MS office 2007 | 5.8.10 @ 10:55AM
Obama does NOT have an ostrich strategy. His actions are purposful, deliberate and intentional, consistent with the neo-communist, Marxist ,hate America-firster he is.
birther1957| 5.8.10 @ 11:33AM
I will never buy from anyone or anything that I have bailed out because the government owns it not me. I say abolish the government and Where's the damm Birth Certificate?
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George Brandt| 5.8.10 @ 1:54PM
I'll give Mr. Bruni points for creativity, but this letter is a bunch of hooey. GM had plenty of years to get its' house in order, and failed to do it. Ford may have had some luck, but they did it. And, the attempt to paint a recipient of a bank loan as a recipient of the bailout is garbage. Under this tortured logic, we're all recipients of the bailout. Hooray for me and my Wells Fargo mortgage! I've been bailed out! Oh wait, I, like Ford, still have to pay the damn thing ...
Lullaby's, Legends and Lies| 5.8.10 @ 7:03PM
Obviously, Mr Bruni works for GM in some manner or another, otherwise, he wouldn't have been able to write that letter with a straight face. I've got bad news for Mr Bruni, GM is "dead" to the average American car buyer. We know the truth, from the lies, and we're sick of the lies, and I'm not going to drive a lie again for the rest of my life. And to put your new CEO, who was handpicked by the current administration, on TV to talk about paying back the Government loans five years ahead of schedule, with interest, is just the final nail in the coffin for this Union Dinosaur, that was once a proud American Company. Take a look around at your State Mr Bruni, this is what the "great" Unions have brought you, a once Great City, Detroit, is now a third World disaster.
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Richard Baker| 5.9.10 @ 6:02PM
Regardless of the whiners above, Ford is making a substantial profit about a year earlier than expected and has a product line that the buying public seems to want. Plus, Mr. Mulally made many correct business decisions. Isn't that just awful?
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Alan Brooks| 5.9.10 @ 11:10PM
"Ford is making a substantial profit about a year earlier than expected..."
Good to hear, a private auto company is so rare it ought to be in a museum someday.
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