Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask YC: To save GM or not?

news.ycombinator.com

Post reply on HN
Print view View original

31–40 of 74 posts

Re: Ask YC: To save GM or not?

#31

Post by KWD »

Whatever is done, you cannot reward the current management. They need to suffer the consequences of their failure. (More so the case for Chrysler and their ownership by Cerberus). As I heard someone state this morning, why believe that the management team that created the problem will be able to solve the problem.

IMO, GM needs a major overhaul from their pre-1980 ways. Besides labor unions that were mentioned, they also have an overextended dealer network. Their desire to focus on so many brands with just re-badged cars (they even neutered Saab with this approach) needs to be changed. The Toyota/Lexus, Honda/Acura, and Nissan/Infiniti models show a much better approach.

Re: Ask YC: To save GM or not?

#32

Post by blackguardx »

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…

People latch on to little tidbits and think that they are the reason for GMs downfall. For example, the statement: "GM pays people not to work." Inevitably unions will be blamed somewhere along the line as well. There is more to this story than meets the eye.

GM is a factory with a semi-skilled labor force. They produce very expensive goods. Because of this, they don't produce at maximum output all the time. If sales numbers slump one month, they cut production. To cut production, they have to cut their workforce. When they cut their workforce, they don't want to fire someone that has a lot of experience because they may just need him/her next month when sales pick back up again. So they pay this person to keep up a relationship until they need him/her back at work. They may not even pay this person his/her full rate.

Consider that while one car's sales are dwindling, another's might be picking up. Well, a person putting doors on a Chevy Malibu can probably do the same thing on a Chevy Trailblazer. In this case, the worker isn't paid to be idle, he/she just switches car lines.

Even if the worker is paid to be idle, you shouldn't blame the worker or the union. A contract requires two parties. The auto manufacturers made these agreements with the unions, knowing the consequences full well. Why blame a person for wanting nice pay and benefits?

Also, if the auto manufacturers wanted to renegotiate to save themselves, the unions would support it. In the past, the US auto manufacturers have renegotiated union contracts to cut pay. After all, what good is a union if its members have no jobs?

Re: Ask YC: To save GM or not?

#33

Post by redorb »

yeah when I heard anyone under 10 years will get a $100k "your fired" fee, and over 10 years gets $140k ... I just shake my head and realize the damage the UAW has done.

These are mostly un-skilled labor, who have "thugged" there way into skilled labor pay

Re: Ask YC: To save GM or not?

#34

Post by thrill »

biohacker42 wrote: post #15

Let them die, but don't let them die now, because now things are bad enough as it is. Think of it as a bail out of everybody else. We're going to spend 3,4, maybe 5% of annual GDP to get through this mess. Might as well use some of that to kick the GM can down the road a bit.

"Let them die, but don't let them die now, because now things are bad enough as it is."

Ah - so let them continue to lose $2000 per car for a couple more years, because that'll make things better - meaning what's eventually left is worth even less to whomever finally buys it (likely the taxpayer it seems).

Re: Ask YC: To save GM or not?

#35

Post by bcostlow »

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…

The only way to cut GM's health care costs are to cut loose the 406,000 retirees--and their dependents--who get health care via GM pension plans.

Of course I find it interesting that if I can't make the mortgage due to circumstances I didn't predict, too bad. I can't even discharge that during personal bankruptcy anymore, it's pay the whole freight or get out.

GM entered a set of contractual obligations, didn't predict a future where they could not meet those obligations, and now wants the taxpayers to bail them out, or they get to file Chapter 11 and cut the retirees loose. Taxpayers still pay because those retirees will need more government aid and cost of care write-offs which raise health care costs for everyone else.

All this would be moot if the US health care system were not employer-based, in which case the playing field would be level already, with a big fat 0 for both firms.

I'd also like to see how the $73.73 figure is calculated. The actual wage gap between the two is about 3 bucks an hour (same link) but the total labor cost gap is more than $25 an hour. Does that include healthcare (in which case it was counted twice). If not, that's awful high. Maybe pension obligations? That's way high. Using the quick 50% of wage cost--a common HR WAG when you don't have hard numbers--Toyota should be around $40, so they are high at $48, but GM should be around $46, and they're above $73.

GM also sells a lot of cars not because they're people's primary choice, but because prices for an equivalent car are lower, or the financing is better. Considering GM is losing money per car at this point, I hardly think those lower prices are GM's choice.

Re: Ask YC: To save GM or not?

#36

Post by bcostlow »

Retric wrote: post #26
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 .

Yeah, except GM is so shaky, and credit markets so tight, there is serious concern that they could enter a 'restructuring' bankruptcy, but end up in a liquidation, because they won't be able to secure bridge and exit financing needed operate while in bankruptcy and to actually restructure their debt.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...

Re: Ask YC: To save GM or not?

#37

Post by khill »

tc7 wrote: post #18
ovi256 wrote: post #7

Earlier quoted context omitted.

If only there were 200 million smart people in the US! By definition, 50% are below average.

So? The 'average' IQ could be 200, which would make a lot of 'below-average' people still really smart. :)

"Think of how stupid the average person is, and realize half of them are stupider than that." - George Carlin

Re: Ask YC: To save GM or not?

#38

Post by steveplace »

Well if the gov't wants to act as a private equity firm, so be it. Buy them and then chop them up and sell to other companies. Their parts are worth more than the whole.

Also, if you want any sort of green-innovation in the car industry, they have to go.

Re: Ask YC: To save GM or not?

#39

Post by nostrademons »

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…

Innovation isn't just product quality. A lot of the most significant innovations come from process improvements - which is why it takes so much less time and cost for Toyota to produce a vehicle than GM.

As for health care, we'd all be a lot better off if the health care system in the U.S. had some process innovations. However, there's so much bureaucratic red tape that not many people want to tackle that job.

Re: Ask YC: To save GM or not?

#40

Post by nickmolnar »

If the government could bend the rules and allow them to renegotiate labour contracts and healthcare without declaring bankruptcy, that should be option #1.

If these companies are still straddled with the nightmare of these obligations, no amount of government money will save them in the long run.

Government run "innovation initiatives" are fraught with the same problems as a government owned company (moral hazard, non-market competitive landscape, distorted incentives) and should be considered equally inefficient. Nothing can match the innovation that could be achieved by allowing these companies to be broken apart (a process that began 30 years ago when Toyota started achieving success using standard, outsourced, intermediate goods). Breaking these companies up would create a competitive framework for smaller players to enter. Think about what could happen if you could start a car company without having to hire a single assembly-line worker? It would be like giving the car business a set of APIs.

Post reply on HN