'As goes GM, so goes the economy', about to play out to its logical conclusion? A tiered collapse?? First they default on their bonds, to 'soften the blow', and 'prep the ground' for a bailout of some sort, by removing as much of the liabilities (holders of stock and bonds) as possible?? ...not to mention their pension liabilities, walk away and compel the PBGC to 'make up the difference at .50 on the dollar'.
its all happened already in the UK 1. Overpaid greedy under-performing bosses more interested in lining their own pockets 2. stroppy Unions - well who wouldn't be . Just look at the difference in wages between top and bottom 3. second rate under-competitive products Austin and Morris got togethor here 30 years ago and failed completely even with massive government handouts. Sold to BMW for $20 who gave them away in disgust same problems and some people should learn from other's mistakes- easy really
Think we all might be driving Tata Nano's in the next few years. Choice of engines: Gas, NG or Compressed Air. India's revolutionary $2500 car. http://tatanano.inservices.tatamoto...ption=com_content&task=view&id=237&Itemid=208 GM, Ford, chrysler etc can not compete with the koreans, japanese or indians in the low end volume consumer marketplace. The government can save the automakers by awarding big fat contracts to manufacture government / military vehicles.
Corporations exist and operate for the sole purpose of maximizing profits for their shareholders. It would be in the best interest of the shareholders for GM to liquidate and distribute its proceeds to its shareholders. Stop the bleeding today... shut down and close the doors. The sahreholders should receive $15 a share post liquidation distribution.
"The current veteran UAW member at GM today has an average base wage of $28.12 an hour, but the cost of benefits, including pension and future retiree health care costs, nearly triples the cost to GM to $78.21, according to the Center for Automotive Research." Is this stat wrong?
The "current veteran" makes $28.12. The average wage is closer to $23. I didn't realize the total package was that ridiculous though. $78.21? I can't get my head around that. I know a lot of people who work in the trades for union contractors that don't make nearly that much. And they're doing tougher work that actually requires a brain. I also know a lot of engineers who don't make nearly that much. I'd be curious to know exactly how much of that money goes to the union.
I don't see how 78 bucks an hour can be correct. The company I work for has the following labor burdens. We employ about 1400 people in the industrial construction field. Heathcare- 4.25hr. Workmans comp. 2.50hr. composite avg. General Liability- .80hr. composite avg. Vacation- About 2.00hr composite Retirement(401K) - About .75 hour composite. There are other items like consumables, training, safety , etc. that add up to a buck or two total. Our total burden is about 13 bucks an hour plus wages. Now I know GM's heathcare, vacation and retirement is more but it can't be that much more. I'd guess their man hour burden to be about 55-60 bucks an hour. Just a guess though.
Unions aren't entirely bad. How about the incredibly bad overleveraged gamble to push SUVs and trucks on consumers? Talk about complete lack of money management. The autos have had 20 years to get their act together, and still the best they can come up with is to cut costs with their suppliers. The japanese makers are more flexible in their production, have better quality and have made better strategic decisions. The labor cost is only one part. I heard something very interesting about unions, and it begs to think about it. It's a fact that during the industrial revolution in the mid 19th century, the workers were living in appalling conditions. Marx wrote his book for a GERMAN communist revolution, where do you think his ideas came from? The situation on the street. Ever heard of the luddite movement? British textile workers destroying their more efficient machines that resulted in job loss. Yet 100 years later and working a factory job was a very respectable living, you could afford a house, car, family, everything! What happened? They said that it's the UNIONS that created the middle class. Those socialist, communist movements during the late 19th century through decades of work created better living conditions. Those jobs were once low class, 12 hour a day exploitation, and they moved to something better. The economy didn't implode either, people had greater purchasing power. Now for the last 50 years the opposite has happened, unions are a dirty word, everyone is against them, and with decreasing purchasing power how can we be surprised the economy is in dire straights. We shouldn't fear the eventual movement for unions that will take place in low class jobs all across the country.