We the people lose 10 billion on GM deal

Discussion in 'Too Hot for Swamp Gas' started by g8orbill, Dec 10, 2013.

  1. chemgator

    chemgator Well-Known Member

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    You have to balance that against the opportunity to get rid of two of your biggest competitors. Problems with the nation's economy would have a minor temporary effect on Ford, getting rid of GM and Chrysler would have a major, long-term effect on Ford. Ordinarily, you take the major long-term positive effect and deal with the minor short-term negative effect. There must have been something else that caused Ford to support GM.

    This is the business world. You know, dog-eat-dog? Brutal competition? Without the union and supplier issues, it is an absolute no-brainer. You keep your mouth shut and hope the other companies go under, or at least, have so many problems that it renders them non-competitive for a decade or more. And because Honda in particular was using some of the same suppliers that GM and Chrysler were, and kept quiet during the bailout, I tend to believe that the union issue was the primary motivator for Mulally to support a bailout for GM and Chrysler.
  2. HallGator

    HallGator Administrator VIP Member

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    Sorry, don't buy it. They needed the supply chain open just like GM and Chrysler did first off. Then there would be no guarantee the collapse of those giants would not have a strong domino effect on their own company in many other ways not the least of which would have been the possibility of a huge loss of jobs. I think he saw the best thing for the American automotive business overall was best for his own business and the health of the American economy was strongly tied in to their own fiscal strength.
  3. fredsanford

    fredsanford VIP Member

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    Nothing to see here but a lot of whining about a missed opportunity to union bust.

    Let 'em eat cake.
  4. asuragator

    asuragator Well-Known Member

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    It's odd to me that someone would think a corporate leader of such large a corporation would only care about his own corporation's economy --as if Ford's prosperity isn't tied to the prosperity of the economy in which they operate. This is not Carl Icahn we are talking about. No offense, but it seems more that you are just trying to shoehorn an anti-union argument into this discussion when there is no evidence that is what was driving Mulally's support but a bunch of evidence suggesting he was reacting to the very crisis because it threatened Ford's future as well.
    Last edited: Dec 12, 2013
  5. gatorpa

    gatorpa Well-Known Member

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    Still no answer on a $ value for what a living wage is.
    So please stop using the term until you can tell us what it is.
  6. chemgator

    chemgator Well-Known Member

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    If you don't realize and completely understand that it was the union that bankrupted GM and Chrysler, then I can't help you.
  7. HallGator

    HallGator Administrator VIP Member

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    I'm not going to take up for the UAW here but one of the big reasons they were in such bad shape is the crap cars they were building. The design was bad, the looks were bad, they performed badly, and in general they produced a bunch of junk. Shared blame I can go along with but to lay it solely at the feet of the union is not correct.
  8. chemgator

    chemgator Well-Known Member

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    I work in manufacturing. I understand a little about how unions work. I'm guessing you don't.

    You have to understand it was the union that caused GM and Chrysler to make low quality cars. Quality is not something created with a slogan on a wall--it takes a combined team effort with a lot of communications between workers, engineers, and management. One of the primary objectives of unions is to eliminate direct communication between management and workers. In today's manufacturing environment, you absolutely need this communication to improve quality. GM and Chrysler cannot compete with the Toyotas and Hondas of the world as long as a powerful union is in place, looking to create disruptions that help give them an edge in negotiations. And with management being distracted by all the union disruptions, how can you blame them for poor designs? Unions are a cancer on a company--they do nothing to make the company more competitive.
  9. busigator96

    busigator96 Premium Member

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    but there is nothing more american than low quality, high priced products!!!
  10. HallGator

    HallGator Administrator VIP Member

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    Then you would be guessing wrong. I am not unfamiliar with unions although I don't claim to be an expert on them either.

    The cars that Detroit turned out were poorly thought out and poorly designed. If you don't want to believe that then I really don't know what to tell you. The unions just added to the existing problem. To blame GM and Chrysler's problems on the unions alone is really just not wanting to see what is in front of you.

    If Unions were solely to blame then why wasn't Ford in as bad of shape as the other two?
  11. chemgator

    chemgator Well-Known Member

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    Ford started quality programs in the 1980's that blunted some of the union's objectives. "Quality is Job 1" was one of their slogans. The union would never let Ford fully implement any quality programs, of course, so they had to settle for a bastardized version. In my opinion, that was the main difference between Ford and the other two, plus maybe slightly better management. And Ford wasn't that far behind the other two when it came to approaching bankruptcy; hence, the need for the $5B loan.

    There is nothing about the designs of the GM and Chrysler cars that were any worse than what Ford was turning out. In fact, as far as looks go, Chrysler consistently put out better looking cars than the other two. GM now makes the highest quality and some of the highest regarded cars of the Big 3--and that's with modified versions of the same designs as they were using five years ago. They didn't become brilliant car designers overnight.

    The difference between Ford and the other two was quality, which is primarily a manufacturing issue, caused by friction from the union. The union did not add to the problem--they were the problem.
  12. HallGator

    HallGator Administrator VIP Member

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    You can choose to believe what you want to. However if you refuse to believe management had a big part in the demise of those companies then I feel you are deluding yourself.
  13. chemgator

    chemgator Well-Known Member

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    There is no question that the management of the Big 3 automakers left something to be desired.

    But if you don't believe that union activities don't distract management from their normal responsibilities, then you are deluding yourself.
  14. umcpgator

    umcpgator Active Member

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    jdrgator likes this.
  15. asuragator

    asuragator Well-Known Member

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    If I go to my boss and ask for a ridiculous salary or pension and he or she agrees even though it puts the company at greater risk during economic down times, is it really my fault? Or is it my boss' fault for conceding? Unions get blamed by many because they are easy targets, but the obsession with them for some blinds them to more complicated picture.
  16. chemgator

    chemgator Well-Known Member

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    It is very different when you as an individual go to your boss and ask for ridiculous salary or benefits, versus an entire workforce doing that AND stating that they will shut the plant down if they don't get it. One person can be replaced very easily. An entire workforce is not so easy to replace. Hiring a new workforce would take weeks, and training them would take months. And the company is not making any money during that time. How many companies have the cash reserves to withstand that kind of financial hit? A medium-sized chemical plant typically pays $50k - $100k a day in interest on loans (they borrow money at 8-10%, not 3.5%)--when the plant is down, they still have to make these payments. And the plant still has to pay the bills for utilities, non-union salaries, rail car rentals, and other fixed costs. No one cuts you a break because you're having union problems.

    The problem with salary and benefits with unions is that the unions are smart enough to negotiate these things during the best possible economic times, when the company is making lots of money. There are two reasons for this: the company has extra money sitting around, and the threat of a strike is huge when you have the ability to shut the plant down and stop the flow of money. The agreements are ironclad, right up to bankruptcy, so the union holds the company to the agreements when times go bad.

    And the problem with unions goes way beyond salary and benefits, especially if they are powerful unions. The primary goal of a union is to maximize dues. This requires maximum number of employees, and it requires those employees to be satisfied that the union is "fighting for them". Maximizing the number of employees is easy enough--the standard procedure is to specify each worker's job in the most specific terms possible, prevent cross-training, and make sure no employee does anything not on his list of responsibilities. If you can have one janitor tasked with operating a broom, and one with operating a mop, that makes sure you have two people employed instead of one. And if management asks the sweeper to mop something, you file a grievance. An engineer picks up a broom to do something not on his list of approved activities? Grievance. To resolve the grievance, the union rep has to sit down with upper management until they apologize and agree to chastise the person who caused the problem. And if the process craters and creates a huge mess on the factory floor, all the manufacturing workers have to stand around for hours and watch the one sweeper and one mopper clean up the mess (or, the union will tell you, you can hire more sweepers and moppers). This, BTW, is how you get workers sitting around in the back room playing cards, waiting until they are needed to work.

    Keeping the workers satisfied that you are fighting for them is more complicated. First, you have to make sure that everyone knows there is a fight. The enemy is not the company down the street making the same products--it's the management of your own company! "The management is trying to deny you the salary and benefits that you so richly deserve! Management must be evil and greedy to do this to you. We're here to protect you and fight for your rights." The first thing that they do is stop all communications between management and workers. All communications have to go through the union leadership. The union negotiates with management to determine what the workers do and how they do it, and they come back to the workers and tell them what to do and what not to do. This results in a very bureaucratic organization (like GM) that cannot easily make improvements to the process or even address current problems with the process. This leads to lower quality products. And if management balks at the way things are being done, the union can simply shut the plant down for a few months.
    Last edited: Dec 13, 2013
  17. gatordowneast

    gatordowneast Well-Known Member

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    Unions have promoted an "adversarial" relationship with management for a long time. As a result, for many years, union workers looked at their employer (and even their customers) as the enemy. Hard to believe...but true.

    A few years ago my father in law bought a new Pontiac (remember that brand) from one of the Coggin dealerships. After driving it for a week, there was a rattle in the door. He returned the vehicle and the service dept tried one fix after another. He must have returned the car 3-4 times. Finally, service removed the entire door panel. They looked inside the door sheet metal and found a soda pop bottle with a note in it. The note said "you finally found me."
  18. chemgator

    chemgator Well-Known Member

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    I guy I worked with had a relative who was an executive with Chrysler, who absolutely could not believe there was ever any question about the quality of Chrysler cars. After all, he drove a Chrysler every day, and he had no problems. It did not occur to him that the fact that the company replaced his car with a new one every year, and sent a replacement out if his new car broke down had anything to do with his view of quality.
  19. tegator80

    tegator80 Well-Known Member

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    At the heart of the matter, yes it is all about management. The unions were born from the industrialists who chose to ignore the hazards of their work environment. There is a reason that there are many successful companies that unions are trying to organize but can't get past the initial stages: the employees don't see enough of a concern in their work environment to try something else. Now does that mean they are making a killing? Usually not but they do not see where the conditions are abhorrent. And that is all about quality management.

    The problem with unions are that they are NOT about the employees, they are about themselves.They do represent the employees, not unlike your elected officials representing you in passing laws. But the employees, once they get used to the idea of a separate representative and an adversarial relationship, begin to expect continued movement towards "equality." And that is the death knell of companies in a world economy. The only way unions work in the long term is if the costs can rise with impunity. Build more expensive cars or reduce quality to maintain costs and you go out of business.

    That is why the future in union membership (other than the NLRB hijacking) is in the public sector. They will ultimately break the private sector jobs that are based on union pay scale.
  20. HallGator

    HallGator Administrator VIP Member

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    They are both at fault. You simply cannot lay the blame at the feet of one and not the other. This seeming belief that unions are the sole cause behind the demise of these great companies goes beyond mind-boggling.

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