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Ask YC: To save GM or not?

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Re: Ask YC: To save GM or not?

#21

Post by iigs »

noodle wrote: post #2

let them die, imo. keeping them on life support will just be a drain on everyone. bailing them out will just allow them to continue to be a terrible company. instead, use that money to fund grants and initiatives and prizes to incentivize new companies or GM itself, provided results are produced. that way, the industry will move forward. a bailout would almost definitely result in stagnation for many years. imo, ofc.…

Everybody's mad at the financial institutions for spending their bailout money on bonuses and other seemingly irresponsible things. Because these companies are not bankrupt, they're not able, as far as I know, to renegotiate much of anything they've committed themselves to contractually.

From inane Union concessions (job bank) to executive compensation and stupid parts contracts, the domestics are shackled with the cumulative damage from decades of mismanagement. Bankruptcy is the tool they need in order to actually recover from the mistakes they made.

When you start talking about dissolving large scale manufacturing enterprises, however, there are people that start asking who will build the tanks in the next large war. I don't understand the military aspect of that but I suspect if all of the plants go foreign owned they'd just be nationalized in the event of a crisis. Maybe the bailout is the nationalization and they're just thinking ahead -- I don't know.

Re: Ask YC: To save GM or not?

#22

Post by jdavid »

mdasen wrote: post #17

Is it really that GM has failed to innovate? Let's look at the numbers: GM======================================Toyota $1,525 in healthcare per vehicle $201 in healcare per vehicle $73.73 avg cost of a labor hour $48 avg cost of a labor hour 34.3 hours to build a vehicle 27.9 hours to build a vehicle Loses $2,331 per vehicle Makes $1,488 per vehicle So, let's just alter GM's healthcare and labor costs to Toyota's lev…

Have you ever heard of JIT Manufacturing? or just in time manufacturing? The process was DEVELOPED by the Japanese in the 80's to compete with the American giants.

The Japanese do not produce a car, until they know it is needed. It took the American car companies decades to catch on, and even then labor unions prevent the auto industry from moving from human labor to machine labor, which can be cheaper than even a Chinese laborer.

We can produce cars cheaper than Japan, we just don't want to sacrifice millions of jobs doing it. Where the Japanese have found a way to move forwards. Labor unions have had such a grasp on the airlines, education, and the auto industry its no wonder that we need to consider bailing these industries out. They are the most socialist industries in the country.

If we need to save these industries, I do think we need to use government funds, but shouldn't they be economic development funds? Rather than cash that will be burned on failed employment standards?

Re: Ask YC: To save GM or not?

#23

Post by Retric »

mdasen wrote: post #17

Is it really that GM has failed to innovate? Let's look at the numbers: GM======================================Toyota $1,525 in healthcare per vehicle $201 in healcare per vehicle $73.73 avg cost of a labor hour $48 avg cost of a labor hour 34.3 hours to build a vehicle 27.9 hours to build a vehicle Loses $2,331 per vehicle Makes $1,488 per vehicle So, let's just alter GM's healthcare and labor costs to Toyota's lev…

I think the most important part of that is the "34.3 hours to build a vehicle vs 27.9 hours to build a vehicle". Even if their heathcare cost per hour is the same they can't compete with Toyota. GM would be better off outsourcing their entire car production to Toyota than to keep trying to build cars. Just let them die.

Re: Ask YC: To save GM or not?

#24

Post by jdavid »

justindz wrote: post #10

One idea I heard on C-SPAN this morning was to chop them up and take the bailout money to instead build something like 12 hardcore engineering outfits to build cars of the future, then get startup people to pitch for an opportunity to run those outfits and/or commercialize them down the road. I don't have any capacity for analyzing the pros and cons to this, but the idea of focusing on starting from innovation rather…

I was just thinking this morning that if we had 10 or 12 companies that were all competing against each other maybe a few of them would have made some different decisions about what markets to search for.

I think breaking up the company is a good idea if we bail them out. It will spread out the risk and allow the companies to focus on a core market. It will also spread out the risk.

I think it makes sense if each plant was a separate car manufacture. Let them each decide what cars they want to make and give incentives for cars that have over 50mpg, and cost less than $15k. In times like these its time to start a revolution, and the car industry is a good place to start.

Re: Ask YC: To save GM or not?

#25

Post by dbrush »

As far as I see it... In Michigan the auto companies underpin so many other industries and fields that if the big three fail we'll be looking at the current foreclosure epidemic as a vacuum cleaner relative to the black hole that will ensue. I very much doubt that anyone in the position to decide will let the auto companies fail.

In Silicon Valley it's, "Start a startup!"

In Michigan it's, "Join the union or!"

Re: Ask YC: To save GM or not?

#26

Post by Retric »

aidenn0 wrote: post #8

If GM goes bankrupt, there will be massive unemployment and closed factories. This sucks. On the other hand, this is a good environment in which to be a manufacturing company with cash on hand. If GM can't turn a profit, they need to make room for someone who can.

When a company goes bankrupt nobody needs to be fired the next day. A judge can restructure the company and toss out specific contracts such as executive bonuses, union pay, and debts. Look at Delta Air lines as an example of this http://en.wikipedia.org/wiki/Delta_Air_Lines.

Re: Ask YC: To save GM or not?

#27

Post by mtw »

jdavid wrote: post #22
mdasen wrote: post #17

Is it really that GM has failed to innovate? Let's look at the numbers: GM======================================Toyota $1,525 in healthcare per vehicle $201 in healcare per vehicle $73.73 avg cost of a labor hour $48 avg cost of a labor hour 34.3 hours to build a vehicle 27.9 hours to build a vehicle Loses $2,331 per vehicle Makes $1,488 per vehicle So, let's just alter GM's healthcare and labor costs to Toyota's lev…

Have you ever heard of JIT Manufacturing? or just in time manufacturing? The process was DEVELOPED by the Japanese in the 80's to compete with the American giants. The Japanese do not produce a car, until they know it is needed. It took the American car companies decades to catch on, and even then labor unions prevent the auto industry from moving from human labor to machine labor, which can be cheaper than even a Ch…

JIT ftw! (it led to agile development)

Re: Ask YC: To save GM or not?

#28

Post by mdasen »

jdavid wrote: post #22
mdasen wrote: post #17

Is it really that GM has failed to innovate? Let's look at the numbers: GM======================================Toyota $1,525 in healthcare per vehicle $201 in healcare per vehicle $73.73 avg cost of a labor hour $48 avg cost of a labor hour 34.3 hours to build a vehicle 27.9 hours to build a vehicle Loses $2,331 per vehicle Makes $1,488 per vehicle So, let's just alter GM's healthcare and labor costs to Toyota's lev…

Have you ever heard of JIT Manufacturing? or just in time manufacturing? The process was DEVELOPED by the Japanese in the 80's to compete with the American giants. The Japanese do not produce a car, until they know it is needed. It took the American car companies decades to catch on, and even then labor unions prevent the auto industry from moving from human labor to machine labor, which can be cheaper than even a Ch…

I agree to an extent with what you've said. I think labor is a balance. GM had it swing too far toward labor. However, if you're an auto worker, there's likely only one employer in your town which gives that employer undue power. Ideally, there are many employers that demand the same skill set that you can get a job with. In that case, you have the choice of many firms and the firms have the choice of many workers and it works out pretty well.

Since there are only a few auto manufacturers and the likelihood that there's more than two in your commutable distance is low means that auto manufacturers have the power necessary to abuse their workers without unions.

However, unions became ultra-effective in many places demanding things like pay even when plants aren't used and benefits fit for a king. GM agreed to that because, at the time, the auto industry was really just Ford and GM and the unions were sticking it to Ford too and so it didn't matter so much. That's changed, but the UAW won't face the post-80s reality.

Having workers have no power is bad. Having companies have no power is bad. Having each group have equal power works pretty well.

Re: Ask YC: To save GM or not?

#29

Post by sanj »

The best idea I've heard (can't find source right now) is for the gov't to BUY $100B worth of cars over the next 4 years, replacing their own fleet.

A big chunk of that (the $25B floated) could be handed over now in order to design a fuel efficient, safe car with appropriate eco-awareness (hybrid, flex fuel, all electric). This is similar to how military contracts are structured.

The bidding could be thrown open to any company that uses American labor to get the job done: it has to be built here. But Honda/Toyota/etc. are welcome to take part.

If GM can't build the "car of tomorrow" with $25B in startup, they should fail.

Re: Ask YC: To save GM or not?

#30

Post by bdotdub »

noodle wrote: post #2

let them die, imo. keeping them on life support will just be a drain on everyone. bailing them out will just allow them to continue to be a terrible company. instead, use that money to fund grants and initiatives and prizes to incentivize new companies or GM itself, provided results are produced. that way, the industry will move forward. a bailout would almost definitely result in stagnation for many years. imo, ofc.…

I hear ya. Let them go bankrupt. I believe that there is no reason why we should be saving them because of their inability and refusal to adapt and change.

The fact that these US automakers have blocked legislation to make cars more fuel efficient because the profit margins are gigantic is ridiculous. They are wholly responsible for their failure while other car makers around the world are creating better cars and not, you know, going bankrupt.

Isn't Chapter 11 bankruptcy made exactly for this?

The trouble now is the loss of jobs and the effect it will have on our economy. I have some trouble with this, but I also feel like these people could be better used creating and working at companies that progress their products, and not produce the same SUV across all of their lackluster brands.

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