Why GM CAN'T be allowed to fail...

[theman1990]

Essentially, if GM (or any of the 'big three') were to be allowed to fail, that it will spark off a domino effect that would take the entire industry down. Vendors who deal with all auto manufacturers will be losing one of their largest clients, causing them to fail as there is likely no way they can shift/change production fast enough to accomodate the increase in demand from the others that will take up GM's slack. Once they go under, too, then that will leave other auto manufacturers w/o parts they need and either forced to seek other vendors or fold, too.

Say company X makes a widget for each of the big 3, to the specs each one demands. Well X works at 100% to keep all 3 in supply, and suddenly GM is gone. Well 100% could still supply the other 2, but they use DIFFERENT widget parts and X can't just add more hours to the day to make their assembly lines turn out 33% more parts overnight, so now the otherBig 2 are backlogged causing layoffs etc... See how this *might* go?

Yes, if other companies can step in fast enough to fill increased demand for parts needed for the increase in vehicles made by the other companies left in GM's vacuum, then let them go. The question is, CAN that vacuum be filled fast enough?

Just food for thought...

 

[da3dalus]

Meh... screw 'em. They sucked EPICALLY at making cars for at least two decades and did nothing to turn things around when they could've.

With smaller operations like Fisker and Tesla popping up everywhere and offering what the people want, at prices they are willing to pay, that do what GM and all of the big three can't why do we need them.

Those companies are smart enough to TURN A PROFIT without my tax money.

This whole too big to fail this is propaganda and isn't based off anything... the "chain reaction" theory is no different than with any other business in this recession. People don't build houses, they don't need people at the CAT plant, people don't ship things, they don't need people at the UP shipping yard.

Why is the auto industry all of a sudden the one industry that is supposed to be saved? There aren't millions of other people losing their jobs in this "domino effect" everyday?

 

[robr]

The auto industry has no shot of turning it around with the unions in place. They need to file bankruptcy, reorganize and get rid of the unions. If they are willing to go to those lengths, get rid of the bonuses, big exec salaries and corporate jets and 1st class travel, then I can see perhaps loaning them a few billion. Otherwise, let them collapse. No private company has the right to survive if they can't operate a private business, regardless of how many people rely on the industry. There are too many large companies that can be said of, did anyone bail out Digital Equipment Corp's 200,000 employees or the entire industry of companies built around supporting them? Compaq picked up a bunch but tens of thousands were left looking for jobs, countless buildings shut down and lots of mom & pop shops all over the US suddenly left without any customers.

 

[Vega$ NSX]

Hmmm, I was thinking the exact opposite. GM and other monolithic automakers MUST fail. They are like overgrown trees in a dense forest blocking out the sunlight for any new growth. We need a forest fire to wipe out all the slow, backwards thinking, inefficient car company trees that have held back new growth, progress and efficiency. It’s a natural progression you see time and time again in life and nature. It’s natural selection at work. If we go in there and artificially manipulate this process, we disrupt the entire balance of nature and the business ecosystem. By not allowing GM to fail would actually be more detrimental. Think of it this way. If the US were analogous to a pack of animals, GM would be the slow, old, weak animal that can no longer keep up with the pack. In nature it would be taken down by predators and eaten. Thus the pack would continue to thrive, because the faster, healthier animals would insure a faster pack as well as breed, creating faster offspring. If the entire pack were to slow down to help the slower, older animals, then more of the pack would be eaten by predators, including faster animals that should be allowed to survive. By allowing GM to survive, it only breeds “slower animals” and makes the pack (the entire US) more susceptible to predators.

 

[tosugrad]

Let em fail.

 

[Briank]

With tightened lending and the home equity loans a thing of the past car sales will be down. Not much can be done until people get there debt paid down and see there home and stock values stabilize. GM made its bed over the last 20 years and now they have to deal with it. They could have set aside money to cover all the legacy costs but management choose to spend it and barrow money to operate. They also chose to ignore the small car market and make a killing on trucks and SUV’s.

 

[quack]

this is getting out of hand. let companies fail. If you're business loses money then guess what..you lose and if you depend on those companies you gotta change what you are doing or you lose too. who's next microsoft, google, power companies. This is just plain dumb now. everyone needs to get over bailing stuff out, go back to school and learn basic algebra. how much money does johnny make if he sells 3 apples for a dollar each if he paid 2 dollars for each apple, obviously plenty in 2009.

 

[john@johnhudakracing]

I don't buy that argument one bit. In a free market, businesses need pass or fail on their own merits, tax payer assistance should never be an option. The premise that because a company is big that "bad things might happen" or that "investors will be hurt" - hence they should be entitled to federal tax payer assistance - whereas smaller business should not, is just rhetoric to get into your pocket book.

The US Auto industry has been setting themselves up to fail for decades by not investing, diversifying, nor effectively managing costs all while facing increased regulation, competition, and the threat of cheap foreign labor. We are at the Nth hour, so I see little sense in delaying the inevitable at this point.

Sometimes you have to step backward before you can move forward.

 

[Cornfed NSX]

I'm not worried about gm there were one of the few changing their ways in this economy, ford and chrysler on the other hand not so much. I was looking forward to the Volt. The only problem I see is that if gm goes you will lose alot of car makers, GM has been the biggest automaker in the world for a long time running. I for one know they can make good cars, I own one. I think they are not in as much danger as most of the places looking for a bail out are. I think alot of them are seeing that they can get a handout and hell why not all they can do is say no.

GM needs to bring the small cars from overseas here just like ford does. There is no reason that they shouldn't and it will help them fit the bill for the MPG law.

 

[sahtt]

I don't buy that argument one bit. In a free market, businesses need pass or fail on their own merits, tax payer assistance should never be an option. The premise that because a company is big that "bad things might happen" or that "investors will be hurt" - hence they should be entitled to federal tax payer assistance - whereas smaller business should not, is just rhetoric to get into your pocket book.

The US Auto industry has been setting themselves up to fail for decades by not investing, diversifying, nor effectively managing costs all while facing increased regulation, competition, and the threat of cheap foreign labor. We are at the Nth hour, so I see little sense in delaying the inevitable at this point.

Sometimes you have to step backward before you can move forward.

You don't buy it because you don't buy garbage, especially if it's not at least made in italy. Recessions are the butchers of free market economies, but now how most people think. It's time to cut the fat-whether it's Stanford Financial, Madeoff with your money, or Generally Terrible Motors. Cut the fat and let productivity and efficiency return to our markets to replace over debtedness and scam artists.

If Obama actually backs up what he's being saying today, he'll earn my respect in this regard. If his goal is the betterment of this nation, he knows what he must do.

 

[NSX-Stalker]

If Obama actually backs up what he's being saying today, he'll earn my respect in this regard. If his goal is the betterment of this nation, he knows what he must do.

Obama's goal is collectivism. GM will be a prime example of government taking control of private industry.

 

[jond]

GM has not made a profit since 1994.
Bankrupsy is the only chance they have to break away from the UAW and survive.

If GM doesn't go bankrupt soon, they will not exist in 10 years.
The only reason they're still here is they're able to use the guise of the economy to get loans from the gov. Once our economy recovers, the gov is NOT going to keep giving them money and they will not go bankrupt, they will actually close for good.

The best thing that could happen to GM is to go bankrupt asap.


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[NSX GT]

The big 3 are still out of touch with reality and remain in the 70's mode. At the same time trying to bring back the retro 70's look because that's all they could produce that was good in those days. They still act as if the Japanese auto industry does not exist as a major competitor. That's why they suck.

 

[Mr Payne]

1. GM fails and 2-3% is wiped off of the US GDP.
2. GM fails and 1 million people are off of health insurance.
3. GM fails and 100K US employees are out of employment. Probably ~300K total including parts suppliers and dealer networks. Of course this doesn't count support services in Midwest.
4. GM fails and the Midwest becomes an economic deadzone.

 

[quack]

The big 3 are still out of touch with reality and remain in the 70's mode. At the same time trying to bring back the retro 70's look because that's all they could produce that was good in those days. They still act as if the Japanese auto industry does not exist as a major competitor. That's why they suck.

+1 i was thinking just today if they had the same designer team since the 80's

 

[sahtt]

1. GM fails and 2-3% is wiped off of the US GDP.
2. GM fails and 1 million people are off of health insurance.
3. GM fails and 100K US employees are out of employment. Probably ~300K total including parts suppliers and dealer networks. Of course this doesn't count support services in Midwest.
4. GM fails and the Midwest becomes an economic deadzone.

Bah humbug. GM fails, gets restructured through a sloppy Chapter 11, and most (>50%) of GM employees actually have ***sustainable*** and ***productive*** jobs.

 

[BD]

If GM files for BK, they can renegotiate UAW contract to their advantage. If that happens, UAW will no longer allow their members to go vote for mandatory democratic politicians during work.

If GM continue to get tax money, UAW will have their ways.

If UAW will have their ways, they will vote for people who pays them.

If they vote for people who pays them, they will always be in business paid for by the tax payers.

Get this... Obama want Fiat to buy Chrysler...

So if they do...

You can make fun of the F guys... Maseratti guys....:biggrin:

And yet, Italian Government put a stop to Ford's attempt to take over Ferrari back in the days, and now we're going to force Fiat to take our crappy car company.

 

[Mr Payne]

Bah humbug. GM fails, gets restructured through a sloppy Chapter 11, and most (>50%) of GM employees actually have ***sustainable*** and ***productive*** jobs.

I'm referring to them zeroing out. I'm all for a complete union renegotiation and cutting their ridiculous levels of overcapacity.

 

[sahtt]

I'm referring to them zeroing out. I'm all for a complete union renegotiation and cutting their ridiculous levels of overcapacity.

Despite what you may have heard Mr Payne, that's really the only feasible bankruptcy option (the later). The bond holders have pretty much lost all hope as of today. Obama can't take the heat of letting even most of GM's jobs being lost, but he also can't take the heat of pumping more cash into a furnace without at least trying to find some firewood.

 

[Mr Payne]

Despite what you may have heard Mr Payne, that's really the only feasible bankruptcy option (the later). The bond holders have pretty much lost all hope as of today. Obama can't take the heat of letting even most of GM's jobs being lost, but he also can't take the heat of pumping more cash into a furnace without at least trying to find some firewood.

Sorry, I was not referring to them zeroing the stock price and wiping out bondholders. I was referring to them ceasing all company operations. That would be absolutely catastrophic for the US economy.

 

[FrEsHaZzBuRu]

At NEC, GM is (or was) our #1 customer. We supply the microchips for a lot of their electronics parts. In the long term, we'll diversify and move on (90s bubble burst lead us away from memory and into auto); in the short term, we're laying off 25% (Santa Clara already made their moves last month, and at Roseville we prepare for July - no one is safe).

I do not wish failure on any company, but I do look down on selective government aid.

 

[LJSB]

For 20+ years I have been saying GM needs to change.

Too many models, too many silly options, too many colors, too many brands is what I have always said was a problem.

I see so many areas of opportunity that would make their company turn out better, more profitable, and easier to market products.

It's too late for them now and they will drag this country down under the water if we don't let go.

Bankruptcy is the best option.

Capitalism or Socialism? What's it gonna be America?

 

[jond]

1. GM fails and 2-3% is wiped off of the US GDP.

I'm not sure it counts as GDP when you take money from all the citizens and give it to GM every month.

3. GM fails and 100K US employees are out of employment. Probably ~300K total including parts suppliers and dealer
networks.

That used to sound like a big number. It does suck, but we lose 600,000+ jobs a month right now. What's another 100,000???

4. GM fails and the Midwest becomes an economic deadzone.

Really GM has already failed. They failed in 1995 when they stoped making a profit. The question really is would we rather have a country like Russia where the government makes the cars, or would we rather have the Midwest have to reinvent themselves as Toyota, Ford, Honda, etc workers?

GM hasn't made a profit between 1995 and 2009. They didn't make a profit during the economic boom. There is NO WAY they will make a profit in the next 10 years. And at 10 billion a month that they're burning through, they simply must be put down.


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[SilverStone05]

For 20+ years I have been saying GM needs to change.

Too many models, too many silly options, too many colors, too many brands is what I have always said was a problem.

I see so many areas of opportunity that would make their company turn out better, more profitable, and easier to market products.

It's too late for them now and they will drag this country down under the water if we don't let go.

Bankruptcy is the best option.

Capitalism or Socialism? What's it gonna be America?

Yep...they had no identity....nothing to make them stand out.

Let em fail.

 

[Dr.Honda]

GM's problems are less about its products than its enormous legacy costs. How many thousands of 55 year old able-bodied retired UAW workers must we support? The solution is simple but no one in Washington has the courage to suggest it. Cut pensions!, quit paying people to sit on their ass!
And while you're at it, raise the retirement age to 72. There's a whole generation of boomer's out there that think its their birth-right to put their feet up and coast on the backs of the rest of us until they die some 20-25 years later. If you've saved enough to retire at 65 (or younger) great, go for it! If not, too bad, keep working until you are 72. My grandpa kept working until he was 86, my dad's still working at 80.
Hey Obama, instead of redistributing my wealth, redistribute my work-ethic!