Let G.M. go bankrupt

#1

Post by soundsop » Sat, Nov 08, 2008, 7:43 AM UTC

Let G.M. go bankrupt
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Re: Let G.M. go bankrupt

#2

Post by mdasen » Sat, Nov 08, 2008, 1:56 PM UTC

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly.

The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on payroll earning more than many computer programmers who are simply idle - they don't do anything, don't show up to work, etc. The average labor cost per hour for GM's manufacturing is over $70/hour.

While GM has made significant mis-steps in their management, the fact is that no management no matter how brilliant they were could compete when they have labor costs like that.

Re: Let G.M. go bankrupt

#3

Post by Dilpil » Sat, Nov 08, 2008, 2:40 PM UTC

mdasen wrote: post #2

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly. The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on…

Not that I don't believe you, but some sources for that would be nice. I've suspected this was true, but I've never seen a real in depth analysis and explanation of it.

Re: Let G.M. go bankrupt

#4

Post by patrickg-zill » Sat, Nov 08, 2008, 2:47 PM UTC

Does anyone know for sure, what happens to the benefits and pensions of GM retirees, should GM go bankrupt?

My understanding is that the plan is fully funded and is a separate entity at this point; thus no change for those already retired.

Re: Let G.M. go bankrupt

#5

Post by jeroen » Sat, Nov 08, 2008, 2:56 PM UTC

Dilpil wrote: post #3

mdasen wrote: post #2

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly. The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on…

Not that I don't believe you, but some sources for that would be nice. I've suspected this was true, but I've never seen a real in depth analysis and explanation of it.

From 1996: http://query.nytimes.com/gst/fullpage.html?res=9507E1DE1239F...

"The company estimates its hourly cost of labor at $43"

2005: http://www.npr.org/news/specials/gmvstoyota/

"Average Labor Cost per U.S. Hourly Worker $73.73"

I can't find anything more recent.

Re: Let G.M. go bankrupt

#6

Post by Kilimanjaro » Sat, Nov 08, 2008, 3:35 PM UTC

Let * go bankrupt

That's what capitalism stands for.

Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed.

Re: Let G.M. go bankrupt

#7

Post by dallasrpi » Sat, Nov 08, 2008, 3:43 PM UTC

If GM and Ford go bankrupt Detroit will resemble that movie "Escape from NY"

Re: Let G.M. go bankrupt

#8

Post by cjenkins » Sat, Nov 08, 2008, 3:49 PM UTC

patrickg-zill wrote: post #4

Does anyone know for sure, what happens to the benefits and pensions of GM retirees, should GM go bankrupt? My understanding is that the plan is fully funded and is a separate entity at this point; thus no change for those already retired.

I believe they would be protected under the http://www.pbgc.gov/ at the very least. I'm not sure how it is structured in GM's specific case though.

Re: Let G.M. go bankrupt

#9

Post by vaksel » Sat, Nov 08, 2008, 4:09 PM UTC

the problem is that GM is just too big to be profitable, and its just not competitive anymore. Hell GM is the biggest manufacturer in the world yet its losing money left and right.

Re: Let G.M. go bankrupt

#10

Post by jbert » Sat, Nov 08, 2008, 4:20 PM UTC

Kilimanjaro wrote: post #6

Let * go bankrupt That's what capitalism stands for. Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed.

> Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed.

There's an interesting issue there, though. Given:

1 - in general, higher risk => higher reward (if the risk comes off ok) 2 - fast growing competitors can dominate a market, wage a price war or buy slower-growing companies

Isn't there a potential problem that companies which are sensibly prudent can be simply out-competed by those which don't hedge against low-probability devastating events?

i.e. the natural state of the current economic system could be said to favour companies which grow more quickly by accepting risks which mean they cannot survive in the long term?