Boycott General Motors

28 11 2018

 By Timothy D. Naegele[1]

There is reason to believe that General Motors is failing again, after having been bailed out by America’s taxpayers.  It stopped reporting monthly sales back in April of 2018, despite the fact that all of its domestic and foreign competitors had been reporting them on a regular basis. This was a drastic decision by GM’s management, which had reported such figures during the last auto sales crisis—described as the Crash of 2008.[2]

GM was on the ropes then. Chrysler and Ford were too, but company founder Henry Ford’s great-grandson Bill Ford and Boeing’s Alan Mulally[3]—who had become Ford’s president—put together a winning plan to save Ford without going into bankruptcy.  They hunkered down and sold off Aston Martin, Land Rover, Volvo, Jaguar, Ford’s dominant interest in Mazda, and consigned the Mercury brand to the dustbin of automotive history. In the process, their strategy succeeded impressively. Today, Fords are the largest selling vehicles in the United States; and the Ford F-Series trucks outsell all other vehicles.

Both GM and Chrysler went into bankruptcy; and with his Fiat conglomerate hanging by a thread in Europe, its gutsy chief Sergio Marchionne bought Chrysler, and the rest is business history.  Marchionne saved both of his companies.[4]  Today GM manufactures vehicles in 37 countries, and sells its core American automobile brands—Chevrolet, Buick, GMC, and Cadillac—through its U.S. dealers, some of which were put out of business following the last crash because they were deemed not to be buying enough cars from GM.[5]

It has been reported that the company plans to halt production at several of its American plants, and reduce its salaried workforce by 15 percent—or more than 14,000 employees—in a massive restructuring that will cost up to $3.8 billion. The Detroit automaker said “plants in Ohio, Michigan, Maryland, and Ontario will be ‘unallocated’ in 2019 and it will cease operations at two additional plants outside of North America by the end of next year.”[6]

This time, there must be no bailout for the company.  It must be allowed to fail and go out of business—which is exactly what GM did to many of its best dealers and their employees. In the process, long-time and loyal GM customers were hurt too, having been the source of monies to bail out the company.  No mercy was shown to any of them by GM’s management; and none should be shown to GM this time around.  This is true as well with respect to electric vehicles, and their taxpayer subsidies.[7]

 

Boycott GM

© 2018, Timothy D. Naegele


[1]  Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass). He and his firm, Timothy D. Naegele & Associates, specialize in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and Timothy D. Naegele Resume). He has an undergraduate degree in economics from the University of California, Los Angeles (UCLA), as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal (see, e.g., https://en.wikipedia.org/wiki/Commendation_Medal#Joint_Service). Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g., www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

[2]  See http://www.wsj.com/mdc/public/page/2_3022-autosales.html#autosalesE (“Auto Sales“); see also https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-14697 (“Is General Motors Failing Again?”) and https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-14324 (“The Passing Of An Auto Giant”)

[3]  See https://en.wikipedia.org/wiki/William_Clay_Ford_Jr. (“William Clay Ford Jr.”) and https://en.wikipedia.org/wiki/Alan_Mulally (“Alan Mulally”)

[4]  See https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-14324 (“The Passing Of An Auto Giant”)

[5]  See, e.g., https://en.wikipedia.org/wiki/General_Motors (“General Motors”)

[6]  See https://www.cnbc.com/2018/11/26/gm-unallocating-several-plants-in-2019-to-take-3-billion-to-3point8-billion-charge-in-future-quarters.html (“GM to halt production at several plants, cut more than 14,000 jobs”); see also https://www.freep.com/story/money/cars/general-motors/2018/11/26/ontario-plant-closure/2112539002/ (“GM closing Hamtramck, Lordstown, Oshawa plants, cutting jobs”)

[7]  See, e.g., https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-10525 (“The Swindle And Shame Of Global Warming: Electric Cars”)

It is clear that the boycott movement is growing.

See, e.g., https://www.google.com/search?q=Boycott+General+Motors&oq=Boyco&aqs=chrome.0.69i59j0j69i57j0l3.6839j0j8&sourceid=chrome&ie=UTF-8


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22 responses

28 11 2018
Ron Michaels

I agree with what you’ve said. I’ve written that the mechanics are misdirection and obfuscation designed to sneak under business scrutiny to hide the corrosion going on inside. Thanks for a great writeup. Good to hear from you. Coincidentally, checking the Board of Directors of GM pops out a list of folks who also would love the optics of showing up president trump and his “manufacturing in America” mantra. The presence of some of these people begs the question, “what is their experience in business and/or auto manufacturing and sales?”

>

28 11 2018
Timothy D. Naegele

Thanks so much, Ron. I agree with you.

A belated Happy Thanksgiving. 🙂

28 11 2018
H. Craig Bradley

SWISS CHEESE

I have a 1997 Chevrolet Lumina. While still mechanically sound, the paint is starting to peel-off. The plumber’s 2006 Chevy Van is also suffering the same fate. Chevrolet never was able to fix its paint defects since the 1980’s, but with zero percent interest, the FED was able to engineer profits for a otherwise “Zombie” Corporation.

How widespread is this phenomenon in American Industry today? I just read United Technologies is splitting itself into three separate corporations. This suggests that some of them will go to Mexico or just disappear in some manner. No MAGA. Just ongoing DECLINE.

Who will save the day?. Just read that 30% of all American consumers are still trying to pay-off the balance on their credit card from LAST Christmas ! We are simultaneously being told how well-off consumers are or how strong the economy is. I have my reservations on both accords.

Here is what I see: America is not growing, but China is. So, by 2030, we can expect 50 Million Chinese Affluent Chinese to hit the North American continent and go on a shopping spree buying whatever they want. So this time, we will import wealthy Chinese who will dominate the domestic consumer market, or specific segments of it most likely. The tastes of the American consumer will obviously be “outvoted”. Its a fete accompli. Not even China would buy GM today. How about Russia (Hugo)?

28 11 2018
Timothy D. Naegele

Thank you, Craig, for your comments.

I am not as pessimistic as you are about America’s future.

First, there was the Japanese “wave.” Then, the Chinese wave. America has withstood, and will withstand all of them.

Russia is a pygmy state. China has serious problems too.

28 11 2018
H. Craig Bradley

APPLES VS ORANGES

Japan is tiny compared to China. How many Billion Japanese are there? We saw the highly publicized trophy real estate the Japanese bought in the 1980’s. They leveraged a relatively small population using their currency and debt to appear larger than life, making a “big splash” in the process. The Media focused and amplified this real estate buying spree. When their bubble burst and they had to sell these properties at a loss, the media was silent.

The Chinese are different and smarter in the way they invest abroad. For one thing, its long term and its sustainable. Secondly, Chinese Tourists will be very specific and choosy in what they buy and where they go while visiting the U.S. The Media won’t pay attention unless you have former GM factory workers shinning shoes at The Ritz Carlton or pulling a rickshaw for wealthy Chinese in downtown L.A. or New York.

Come to think of it, one could stage such a scene and put it on Youtube and become a cult newscaster. Even if its not true, anything (story) is possible in today’s news media.

28 11 2018
Timothy D. Naegele

Thank you, Craig.

I have dealt with both the Japanese and Chinese over the years, and find them very similar . . . and largely sophisticated. But no more so than Americans.

I bought the largest minority bank in the U.S. for Chinese investors who were based in Hong Kong, which was quite an experience.

28 11 2018
Timothy D. Naegele

Emotional GM Workers Wipe Away Tears After Thousands Laid Off Ahead Of The Holidays [UPDATED]

Anger at GM plant closings

Valerie Edwards has written for the UK’s Daily Mail:

Heart-wrenching photos show General Motors workers wiping tears away after the company laid more than 14,000 people off without warning and just before the holidays.

In a massive restructuring, the auto giant announced Monday that it will cut 15 per cent of its workforce to save $6 billion and adapt to ‘changing market conditions’.

‘You’re going right into Christmas. You’re looking for celebration and that’s not there now,’ one GM worker told Today.

Another employee said through tears: ‘I’m just kind of hurting right now.’

One worker spoke of a workplace where people ‘were bawling their eyes out. I’ve never seen anything like it and we can’t get any answers’.

The moves include shuttering seven plants worldwide as the company responds to changing customer preferences and focuses on popular trucks and SUVs and increasingly on electric models.

The job cuts from GM’s current 180,000-strong work force will be particularly stinging in politically crucial areas of Ohio and Michigan, a region President Donald Trump has promised to revive.

Workers at the Ontario plant staged a wildcat strike to protest the closure.

Jerry Dias, president of Unifor, the Canadian labor union, said he ‘will vigorously fight again to maintain these good-paying auto jobs’.

Huston-Rough said the job cuts will be accomplished through ‘a combination of retirements, layoffs and work relocations’.

The job cuts will include a 25 per cent reduction in executive-level employees to ‘streamline decision making,’ the company said.

The plants will be officially closed by the end of 2019, but workers will gradually lose their jobs along the way, some as soon as the new year.

According to reports, the five North American plants concerned employ nearly 7,000, including 3,000 workers in the Ontario plant.

One woman said that she worries for ‘all of the people who have put in so many years of their lives and they don’t know what’s going to happen tomorrow’.

As workers continue to demand answers from GM, the company’s CEO, Mary Barra, said in a statement: ‘The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future.

‘We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.’

Trump expressed dismay at the plan and said he was ‘very tough’ with Barra when they discussed the reorganization.

‘I spoke with her when I heard they were closing and I said, “You know, this country has done a lot for General Motors. You better get back in there soon,”‘ he told reporters at the White House.

‘They better put something else in.’

Barra also met at the White House with Trump’s senior economic adviser Larry Kudlow, in what officials said was a previously scheduled meeting.

Trump’s aggressive trade policies have been aimed specifically at saving manufacturing jobs, including the renegotiation of the North American Free Trade Agreement, which took aim at rules governing auto trade to favor the US industry.

Still, GM will shutter three North American auto assembly plants next year: the Oshawa plant in Ontario, Canada; Hamtramck in Detroit, Michigan and Lordstown in Warren, Ohio.

In addition, GM will close two US propulsion plants — which produce batteries and transmissions — in Baltimore, Maryland, and Warren, Michigan, as well two unidentified plants outside of North America.

The company already had announced plans to cease operations at its Gunsan, South Korea plant.

While the company said in its quarterly earnings late last month that it saw costs jump by $400million due to Trump’s tariffs on steel and aluminum, a spokeswoman said the latest decisions ‘are not related to any recent trade or tariff decisions’.

The president threatened to punish GM following the company’s decision.

‘Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China,’ Trump tweeted Tuesday while a televised White House press briefing was going on.

‘The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including…. for electric cars,’ he continued.

Senator Sherrod Brown, an Ohio Democrat, lambasted GM’s move as ‘corporate greed at its worst’ and also took a swipe at the 2017 tax cut favored by Trump which was touted as a jobs winner.

‘The company reaped a massive tax break from last year’s GOP tax bill and failed to invest that money in American jobs,’ Brown said on Twitter.

In Canada, Prime Minster Justin Trudeau expressed ‘deep disappointment’ with the plant closure.

Wall Street cheered the actions, while US and Canadian leaders expressed outrage.

GM shares jumped after the announcement, closing up 4.8 per cent on the day. Analysts were generally upbeat about the news.

‘In contrast to times past, General Motors under CEO Mary Barra is trying to get ahead of a potential crisis by making cuts now,’ Michelle Krebs of Autotrader said in a client note.

While GM has been increasing its focus on highly popular trucks and SUVs, the company said it would also prioritize investment in ‘next-generation battery-electric architectures.’

In an investor call, Barra said some GM cars would no longer be available in North America, including the Chevrolet Cruze.

The closures also drew sharp criticism from the US and Canadian labor union representing GM workers, which accused the company of shifting production overseas at the expense of North American workers.

UAW, the autoworkers union, blasted GM’s decision, saying the company was just looking for cheaper workers, and vowed to fight back.

‘This callous decision by GM to reduce or cease operations in American plants, while opening or increasing production in Mexico and China plants for sales to American consumers, is, in its implementation, profoundly damaging to our American workforce,’ said UAW vice president Terry Dittes.

China has become an increasingly important market for the automaker and in the first nine months of 2018, it sold 2.7 million cars in China compared to 2.6 million in all of North America.

However, spokeswoman Julie Huston-Rough denied the charge, telling AFP that ‘these products will not be manufactured in other locations for the North American market.’

She also said the company remains committed to its facilities in Ohio, despite the closure of the Lordstown plant, with six other locations and 4,000 employees, as well has hundreds of suppliers and dealers.

See https://www.dailymail.co.uk/news/article-6435109/Emotional-GM-workers-wipe-tears-away-thousands-laid-ahead-holidays.html (“Heart-wrenching photos show General Motors workers wiping away tears after company laid off more than 14,000 people without warning, just before the holidays“) (emphasis added; videos omitted); see also
https://www.dailymail.co.uk/news/article-6445193/Hundreds-GM-workers-gather-solemn-prayer-Ohio.html (“Hundreds of GM workers gather in solemn prayer in Ohio“) and https://www.thetruthaboutcars.com/2018/12/union-set-to-waste-general-motors-in-canada/ (“Union Set to ‘Waste General Motors’ in Canada”) and https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-14697 (“Is General Motors Failing Again?“) and https://www.thetruthaboutcars.com/2019/06/did-gms-seat-belt-recall-fix-the-problem-feds-intend-to-find-out/ (“Did GM’s Seat Belt Recall Fix the Problem? Feds Intend to Find Out“) and http://www.businesskorea.co.kr/news/articleView.html (“GM Korea Desperate to Generate a Profit“)

Like the NFL that has been boycotted effectively, with much more to come, so too General Motors must be boycotted and forced to surrender or disappear.

GM and its auto brands are collapsing, while BMW contemplates an expansion of its operations in the United States.

See, https://www.reuters.com/article/us-bmw-manufacturing/bmw-chief-says-considering-second-u-s-manufacturing-plant-idUSKCN1NX00R (“BMW chief says considering second U.S. manufacturing plant“); see also https://www.wvgazettemail.com/opinion/readers_vent/readers-vent-nov/article_9d0e1d7b-daee-50f9-ad1a-2f5aab506f02.html (“General Motors is failing again. This is no one’s fault except those running the company. They make too many poor quality vehicles no one wants. . . . No one wants electric cars except Obama and his troglodytes. I’d never buy anything made by GM“) and https://naegeleblog.wordpress.com/2009/12/17/is-redemption-possible-for-tiger-woods/#comment-14749 (“Nothing Ever Changes With Tiger Woods, Or Colin Kaepernick“) and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/#comment-14614 (“The NFL Must Be Boycotted Forever“)

26 01 2019
Timothy D. Naegele

GM May Shut Down Cadillac [UPDATED]

For those who say this is impossible, just remember that Oldsmobile and Pontiac are long gone.

The Drive has noted:

[W]hat exactly does [GM President Mark] Reuss mean by saying Cadillac has “one chance?” He means there’s a great deal of importance on Cadillac succeeding in its short-term plan of becoming an EV leader and making the name “Cadillac” synonymous with luxury again. As far as what will happen if it fails in that effort, it’s hard to say. It seems unlikely that GM will ever shut down a brand as valuable and recognizable as Cadillac, but if it makes a bet this big and loses, the future could be ugly for the luxury brand.

See http://www.thedrive.com/news/26086/gm-president-says-cadillac-has-one-chance-at-an-american-comeback (“GM President Says Cadillac Has ‘One Chance’ at an American Comeback“); see also
https://www.thetruthaboutcars.com/2019/01/this-is-pretty-much-it-new-gm-president-acknowledges-cadillacs-last-chance-for-glory/ (“‘This Is Pretty Much It’: New GM President Acknowledges Cadillac’s Last Chance For Glory”) and https://www.change.org/p/demand-gm-to-put-an-end-to-racial-intimidation-in-their-workplaces/sign (“Tell GM to end racial intimidation in the workplace, create anti-harassment policies“)

If Cadillac is hitching its star to electric vehicles, it is truly doomed.

See https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-10525 (“The Swindle And Shame Of Global Warming: Electric Cars“); see also https://www.asburyauto.com/compare/2018-lincoln-continental-vs-2018-cadillac-cts/151378 (“J.D. Power and Associates rated the [Lincoln] Continental first among midsize premium cars in owner reported satisfaction. This includes how well the vehicle performs and satisfies its owner’s expectations. The [Cadillac] CTS isn’t in the top three”)

26 01 2019
H. Craig Bradley

GM = CRONY CAPITALISM

The history of GM post 1974 has shown them to be extremely resistant to change, innovation, or internal management reform. Not surprisingly, they have already lost more than half their market share since their heydays in the 1960’s. They failed to adapt and the UAW was adversarial towards management, as well. Eventually, they were forced to modernize but it cost many jobs in the end.

Today’s GM reflects a legacy history of missed opportunities but huge executive bonuses thanks to President Obama’s massive bailout with taxpayer funds. It was a real windfall for GM Executives and UAW workers alike. Not so good for shareholders, dealers, or even the public. GM closed down many dealerships, some of which were long term businesses who were profitable. They just did not care because the criteria was “political” not financial. GM became an example of crony capitalism to this day.

GM has failed to build cars the public wants and refine them into a quality car. They kept Sloan’s marketing emphasis bringing out new model after new model. Most did not sell well and were discontinued to this day. Paint jobs are of inferior quality. My 21 year old Chev. has paint peeling-off and exposing gray primer underneath. The plumbers two Chevy Vans are having similar paint issues, one is a 2003 van the other a 2006 van. Quality is slipping and so are sales.

The financial picture and economics of residual value and new car prices, along with rising monthly payments have been the deciding factor. You can sell junk to a indifferent consumer as long as they can buy one and refinance another one at about the same monthly payments, as has been the case for the last six years. Not any more.

Turns-out low lease rates or interest rates and high residual values helped subsidize today’s sales by pulling forward from the future. Now, the incentives have reversed and auto financing companies are losing money with huge drops in residual values on cars coming off lease. Many just go straight to auction today. Today’s new cars are pushing $40,000+. Not very many individuals will be buying any of them at those prices.

Another matter is the jump in sub-prime borrowers for new cars. When a prospective buyer wants to finance a car, the info. is forwarded to a number of banks ( Capital One, Alley Financial, Santander Bank). This business is very competitive. So, Santander bank comes back with their bid of lower monthly payments for a buyer with bad credit. In fact, Santander bank only does due diligence with 8% of its loan applications. The best terms are selected to close the sale.

Santander Banks auto loan dept. has 80% of their book stuffed with subprime car buyers. In fact, Second Look, L.L.C. a private credit analysis firm has estimated the default rate for this “traunch” of new car auto loans originating in 2015 will be about 15% by this year. I have noticed the lot at nearby Aames Associates gradually filling-up with repossessed cars in the past two years, while it was virtually empty until a few years ago. Their business is picking-up. The cycle has turned and we now have way too much global capacity, so GM is closing down several North American factories ( Ontario, Canada and in the U.S.). The entire domestic auto industry is in trouble and now, once again, must restructure. Obama bought them this many more years of life. Its over.

To compete, Ford must do like it has with its very successful and profitable F-Series Pickup Trucks. These pickups are workhorses and highly profitable, so instead of discontinuing them for a new model, they are refined each year getting better and better. Toyota and Honda have done this for years with their flagship passenger cars: Camry and Accord. GM will have to do likewise or become irrelevant in the future. SUV’s, Pickups, Corvettes and little else. How many factories do you need to produce 4 models? Not near as many. More robotics and you can see the future. No future.

26 01 2019
Timothy D. Naegele

Thank you, Craig, for your comments. I agree completely.

I bought a Chevrolet from a dealership that was excellent in terms of service. My son did the same; and after the GM bankruptcy, it shuttered the dealership because it was not warehousing enough cars, and was keeping its inventory lean.

I vowed there and then never to buy another GM product again. What they did to the loyal employees of this dealership was cruel, heartless and irresponsible. The dealership had an excellent reputation in the community.

I was involved legally (as an expert witness) with another dealership in the Midwest, which sold Ford products. I was very impressed with how Ford handled the matters. It was fair at each and every juncture, based on my limited observations.

26 01 2019
H. Craig Bradley

Another major consideration with the slow-down in U.S. Auto production:

The automotive industry and its ancillary service businesses ( including retail auto parts stores) comprises about 5% of total GDP. Its makes up, all together, about 3% of all U.S. Workers, as well. Aerospace comes in a distant second. The U.S. economy won’t tank just because of reduced revenue and auto sales. However, its part of the whole trend.

So, the more industries or service companies that see revenue declines (such as retail , the more the chances of a recession in the next few years or a multi-year period of scant economic growth from the current 2.8% annual GDP. This won’t cut it with a $ 950 annual Federal spending deficit for 2019 and $22 Trillion in National Debt with interest to be repaid. Neither party is serious about cutting overall govt. spending as far as I can see. As interest rates rise in future years, so will the interest to be paid each year out of the Federal Budget, rising exponentially in future years.

President Trump wants a wall but even more important strategically is a well equipped modern Navy. To fulfill this policy goal, President Trump promised adding 10 new Navy Ships to our aging fleet to patrol international sea lanes. China is building-up its Blue Water Navy diligently and quietly. If we can not get it done with the small window of opportunity under President Trump, then I foresee China directly challenging us in their regional waters and possibly in the South Pacific at large, as well.

We will probably be forced at some point to back-down if our Navy can not be kept state-of-the-art for the next 20 years. We must invest now. Where will the money come from? Do we have it?

Remember the moment of truth between President Dwight Eisenhower and Great Britain over the Suez Canal Crisis? President Eisenhower forced the British to withdrawal their troops from the Suez Canal area under threat we would sell-off their sovereign bonds. Not one American soldier was needed or sent to the Suez Canal. This is precisely how Great Powers die. No shots, just retreat, quietly. Nobody notices.

We are slowly dying. We are running out of time and we are a divided nation. We are not exceptional in view of history if we allow ourselves to be distracted by trivial and petty politics. The Communist Chinese are surely smiling. The last century was our century, but will this century remain the American (second) century or the Chinese Century? I am not so sure.

26 01 2019
Timothy D. Naegele

Thank you for these comments too, Craig. I understand, and agree with most of your points.

We have a limited window in which to close the gap with China, and sprint miles/years ahead. If it is not done during the Trump presidency, we may have lost the race . . . albeit China is years/decades behind us in many ways.

For example, it bought a dilapidated Soviet-era aircraft carrier, the Liaoning, which had been nothing more than a rusting hulk. Today, it is questionable whether the carrier is combat-ready.

See, e.g., https://en.wikipedia.org/wiki/Chinese_aircraft_carrier_Liaoning (“Chinese aircraft carrier Liaoning“)

I have described what I believe are the greatest risks to us and our allies in a recent series of comments.

See https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive/#comment-15839 (“Will The United States And Israel Cease To Exist?”)

26 06 2019
Timothy D. Naegele

Another Sign That GM Is Failing, Again: Ford Steps Up, GM Looks For Way Out [UPDATED]

Boycott General Motors

There are plenty of telltale signs that GM is failing again, as mentioned in the article and comments above. The demise of Cadillac may be the capper, but there are other signs as well.

Marc Stern has reported for TorqueNews:

If you were to look at recent actions of Ford and General Motors in the Takata airbag emergency, it would seem like the “Tale of Two Automakers.” Ford has doubled-down on getting things to 100 percent by next June on its Rangers and Edge SUVs, while General Motors wants to leave 6 million pickup and SUV owners in the lurch in the exploding airbag inflator recall.

Ford Steps Up, GM Looks For Way Out

Over the weekend, news reports came out that GM has asked the National Highway Traffic Safety Agency (NHTSA) if it can drop about 6 million pickups and SUVs out of the exploding airbag recall. The reason, says GM, is that the inflators in [its] vehicles had passed GM-initiated tests. The automaker also noted that the inflators are unique to its vehicles and so, by extension, are safe. This is the fourth time in four years for GM’s request.

Ford, on the other hand, has more than stepped up to the responsibility it has. Since 2015, the automaker has issued two recalls for its intermediate Ranger pickup. In the first, 400,000 2004-2006 Ranger pickups were recalled to fix faulty front airbag inflators. In the second, earlier this year, the automaker issued a “do not drive” recall. Ford Has Two Ranger Recalls.

In the “do not drive” recall, Ford told Ranger owners that they had to park their pickups and not drive them due to the risk. Ford said that it would provide tows into dealerships to make the repairs. Ford has identified a kernel of about 3,000 Rangers with a higher incidence of catastrophic failures. (Honda two years ago identified a kernel of its Civics and Accords that had failure rates of more than 30 percent with some as high as 57 percent, and the automaker had to issue a “do not drive” recall.)

Ford Steps Up As GM Explains Itself

According to a story that appeared in The Detroit Free Press, GM has argued that its airbag inflators – the component that blows up – are safe because they are unique to its vehicles. The automaker also tested about 4,000 inflators and had no bad deployments. This isn’t the first time GM has asked for this relief. The automaker has made this request before during the last few years.

Takata did not agree with GM’s assessment. Instead, airbag manufacturer said any components used in the GM airbags are defective, and so their airbags are defective. Takata had worked out a series of recall phase-ins that would cover all of the vehicles involved in what would turn out to be the largest safety recall in history.

GM, in its most recent exemption request filed this year, seeks to avoid the expense of providing its trucks and airbags – estimated at $1.2 billion. In contrast, Ford states that it is their plan “to achieve 100 percent accounting for Ford vehicles in the highest priority airbag recalls by June 3, 2020,” the automaker says in a statement on its website. The website presents airbag recall information comprehensively.

Ford Steps Up, GM Told To Fix Problem

Jason Levine, executive director of the Center for Auto Safety (CAS), emphasized that NHTSA has to do its job and tell GM to get pickups that might have the risk of having exploding airbag inflators off the road.

General Motors, for its part, said it had had 4,270 airbag inflators tested by Northrop Grumman. The automaker claimed that after the tests [there] were no bad deployments. Testers exposed the airbags to artificial environmental factors – heat, humidity, and the like.

General Motors and Ford are among 19 automakers involved in the massive safety recall. The recall may ultimately involve 55 million inflators and 37 million vehicles. To meet the needs of the negotiated withdrawal plan, GM would have to recall:

• 2010-2014 Chevrolet Silverado and Sierra HD models

• 2010-2013, 2010-15 Chevrolet Tahoe and Suburban SUVs

• 2010-2014 Cadillac Escalade SUV

• 2010-2014 GMC Yukon SUVs

Ford Steps Up As Recall Shown

So far, exploding Takata airbag inflators are responsible for at least 24 deaths around the world, including 15 in the U.S., and more than 200 serious injuries. The culprit in the blasts that caused these deaths and injuries has been Takata’s choice of airbag propellant, ammonium nitrate. The inflators, made at Takata’s Mexico fabrication plants, were not sealed well against moisture. This allowed moisture to get into the propellant and begin its deterioration.

Meantime, the same housings feel the heat, humidity from their location in that type of climate. As the propellant deteriorated, it became more powerful. When activated, the force of the blast created the degraded propellant was enough to smash each housing. The disintegrating housings created shards which can scythe through a passenger compartment causing injury and death.

See https://www.torquenews.com/3769/ford-has-stepped-takata-recall-gm-looks-way-out (“As Ford Has Stepped Up In Takata Recall, GM Looks For Way Out“) (emphasis in original)

Also, WIRED has reported:

[T]he explanations for software defects like those found in the Boeing aircraft and those found in vehicles may be similar. Advanced driver-assistance features like Tesla’s Autopilot and General Motors’ Super Cruise assume a human is paying attention to the road and is ready to take over if their automated lane-changing or forward-collision features fail. (These systems do have varying—and controversial—methods of ensuring that drivers are indeed paying attention.) But if a software bug prevents pilots or drivers from resuming control of the machine, “that’s a big problem that can result in fatalities” . . . .

Fortunately for anyone who flies into the sky in Boeing airplanes, it appears the 737 MAX is now getting the top-to-bottom safety and engineering review it needs. Let’s hope the same happens for all software that helps people get around.

See https://www.wired.com/story/boeings-737-max-cars-software/ (“WHAT BOEING’S 737 MAX HAS TO DO WITH CARS: SOFTWARE“)

This time, GM must be allowed to die, and not be propped up again by America’s taxpayers. After it was bailed out the last time, it turned around and screwed loyal dealers and their employees, as well as GM customers.

The chant this time must be: NEVER AGAIN.

Fool me once, shame on you; fool me twice, shame on me.

The boycott against GM and its products must continue, unabated!

26 06 2019
H. Craig Bradley

THE REASON WHY GM ALREADY FAILED

The reason GM has failed is primarily related to product quality and Service.

First, product quality. I own a 1997 Chev. Lumina Sedan. After 20 years, the paint just started to peel off, exposing the gray primer underneath. The value of this car ( Kelly Blue Book) is only about $700-$800 Wholesale. Private Party value in good condition: $1,400.

So, its not worth anything now, even though it runs fine and always passes the biannual smog certification, as well. The State of California ( DMV) pays a flat $1,500 to salvage a vehicle ( remove it from use ). In this case, the highest bidder is the State of California. Unfortunately, after 25 years, GM still can not properly apply a quality paint job at the factor. In comparison, Toyota or Lexus have no such problem.

Secondly, quality of service at GM dealerships. Quality and competence at many GM dealerships has proved since the seventies to be shoddy and spotty. Consequently, many dealerships have since gone out of business ( in my area) since 1980. All the Federal government did with their GM bailout is keep a sick and uncompetitive domestic automaker in business for longer than warranted. GM has become the proverbial “Zombie” Corporation. They should be allowed to fail and go out of business.

The one problem if GM fails and closes down is some communities are entirely dependent on domestic truck and auto sales. Small towns like Cedar City, Utah have only three auto dealerships- all Domestic: Ford, Chevrolet, and Cadillac. For practical purposes, there are no import dealerships outside of large cities such as Salt Lake City ( 3 hours away).

This could become a bigger problem for rural America. Foreign manufacturers only care about market size and revenue. Small rural communities are unattractive for most foreign car dealerships. They are unprofitable. We need a national policy to help-out with this market efficiency. However, another auto bailout for GM is not advisable. Perhaps a merger with another auto company with the stipulation they subsidize rural dealerships would be a possible solution, given the other economic realities. Think outside the box !

26 06 2019
Timothy D. Naegele

Thank you for your comments, Craig.

First, Toyota and Lexus products must be boycotted too. What Toyota did on a worldwide scale to bury the truth of its unsafe vehicles is criminal and truly mind-boggling. Its executives should be in prison now; and its co-conspirators in the United States (e.g., regulators, members of Congress who were effectively “bought off”) and other countries should have joined them.

See https://naegeleblog.wordpress.com/2010/01/04/toyota-and-lexus-vehicles-are-unsafe/ (“Toyota And Lexus Vehicles Are Unsafe”) (see also ALL of the extensive comments beneath the article)

Second, I agree completely that GM “should be allowed to fail and go out of business.” As I stated in response to your comments above, on January 26, 2019:

I bought a Chevrolet from a dealership that was excellent in terms of service. My son did the same; and after the GM bankruptcy, it shuttered the dealership because it was not warehousing enough cars, and was keeping its inventory lean.

I vowed there and then never to buy another GM product again. What they did to the loyal employees of this dealership was cruel, heartless and irresponsible. The dealership had an excellent reputation in the community.

I was involved legally (as an expert witness) with another dealership in the Midwest, which sold Ford products. I was very impressed with how Ford handled the matters. It was fair at each and every juncture, based on my limited observations.

Third, because Cadillac’s survival is in doubt, this may leave Chevrolet, GMC and Buick as GM’s remaining brands, serving small rural communities—along with Ford, which buckled down and survived after GM and Chrysler were bailed out. Now Ford is the largest selling brand in the U.S.; and Ford F-Series trucks are the largest selling vehicles in America, by far. Why GM kept the Buick brand is also mind-boggling, when it might have kept Pontiac that appealed to the youth market.

Fourth, cars and trucks can be bought online, and checked out online. A family member is shopping today for a used car for a teenager. Online shopping, with CARFAX reports on the quality and safety of the vehicle, make shopping easier than in the past.

28 08 2019
Timothy D. Naegele

Soon General Motors May Kill Off Cadillac

Neal E. Boudette has written for The New York Times:

Few American brand names have ever achieved the stature of Cadillac, which was once so closely identified with excellence and status that it became shorthand for anything that was top of the line. And few brands have fallen as far.

Cadillac rose to prominence a century ago as the pinnacle in General Motors’ “ladder of brands” — the ultimate destination as car owners prospered and moved up from Chevrolet, Oldsmobile and Buick to demonstrate their success in life.

But by the 1970s it struggled with quality and failed to keep up as the definition of automotive luxury shifted from big, spacious cars with tail fins to German-engineered performance sedans. Cadillac became known as a “grandpa” car brand. It now trails far behind Mercedes-Benz, BMW and Audi on a global basis, and ranks just sixth in luxury vehicle sales in the United States.

“It’s almost like the brand is stuck in time,” said David Placek, president of Lexicon Branding, a marketing firm that develops brand names and strategies.

General Motors has tried for more than two decades to restore Cadillac’s standing at the top of the automotive world, with little sustained success. In 2015 it moved Cadillac’s headquarters to the SoHo district of Manhattan, aiming to immerse those shaping the brand in the kind of upscale urban setting that is a prime target for high-end products.

The image-making, however, wasn’t backed up by new cars that turned heads in the crowded luxury segment. And Cadillac again missed a shift, rolling out sedans as consumers flocked to S.U.V.s.

“Moving to New York was wishful thinking,” Mr. Placek said. “To get their edge back, it has to be all about product development first.”

G.M. embarked on the latest turnaround a year ago, when it moved the headquarters back to Detroit and named a new Cadillac president: Steve Carlisle, a Canadian engineer who has been with G.M. since 1982.

“It takes several things to come together to be able to revitalize the brand,” Mr. Carlisle said while at the wheel of a CT6 sedan zipping along Interstate 96 near Detroit. “If you’ve been off people’s radar screens, which we were, they move on to other manufacturers. We have to get back on their screens.”

The challenges are daunting. Cadillac is now in the midst of another reboot at a time when Tesla’s products and other electric cars are becoming the standard for luxury vehicles.

In some ways, Cadillac doesn’t really compete with other luxury brands. Cadillac buyers most often trade in Chevys and Fords; rarely do they trade in German makes. Almost 40 percent of Cadillac buyers are over 65, compared with 20 percent for Audi, according to Cox Automotive.

Mark Reuss, G.M.’s president, has said Cadillac had one last chance to pull off a comeback. And under Mr. Carlisle, it is betting on technology, something that distinguished Cadillac in its glory days. Under his predecessor, G.M. spent heavily to develop engines to be used only in Cadillacs. One of them, a 550-horsepower V8, became available this year — at a time when electric vehicles are captivating luxury-car buyers. Now Cadillac is planning to phase out combustion engines in favor of electric models. Within six to 10 years, Mr. Carlisle said, Cadillac’s entire line will be electric.

Mr. Carlisle, who gives a distinguished look with a head of close-cropped, silver hair and silver goatee, demonstrated another one of the selling points he is counting on: the Super Cruise driver-assistance system. Using radar and cameras, it is able to pilot a car on divided highways. Drivers don’t even need to keep their hands on the wheel. As long as they look straight ahead — an infrared camera monitors the eyes — Super Cruise does the steering, braking and accelerating as needed.

Such systems could gain wide appeal because they can make driving safer, and can make long highway drives less taxing.

As the Super Cruise system slowed the CT6 to keep a safe distance behind a silver Chrysler, Mr. Carlisle ticked off what he sees as the progress that Cadillac is making. In China, now Cadillac’s largest market, its sales are strong and growing, although car buying there over all is beginning to slow. Two new sport utility vehicles have arrived in the lineup, addressing an urgent need.

Dealers are pleased with the additions. “We were on the short end of the stick for many, many years,” said Daniel Jobe, president of Capitol Cadillac in Greenbelt, Md. With the new S.U.V.s in showrooms, he said, “I think Cadillac is going to have a very strong second half this year.”

About two-thirds of those buying one of the new S.U.V.s, called the XT5, have never owned Cadillacs before, G.M. said. That suggests that the vehicles are broadening Cadillac’s appeal.

Mr. Carlisle said G.M. also now had a winning identity that it is trying to infuse Cadillac with. In a previous turnaround push, Cadillac tried to be an American version of BMW.

“We’re not trying to out-German the Germans anymore,” he said. “We have to find our own audience. When Cadillac has done its best, it is when we have represented the best of technology and innovation.”

One part of the plan is for Cadillac to add electric vehicles to compete with Tesla, which in just a few years has become one of the leading sellers of upscale cars. A sedan coming next year will have a digital backbone to allow G.M. to send some over-the-air software updates to the car, a feature that Tesla pioneered and has made a hallmark of its cars.

As Mr. Carlisle’s CT6 neared an interchange, he laced his hands back on the steering wheel and took back control of the car from Super Cruise. The system is not yet capable of navigating from one highway to another, but Mr. Carlisle said that will be added at some point.

The system has the potential to set Cadillac apart from other luxury brands, even Tesla. Competing systems require drivers to keep their hands on the steering wheel, which almost defeats the purpose of having the car steer itself. None have the infrared camera to ensure drivers keep their eyes on the road and can’t give in to the temptation to gaze at their phones or anything else.

While Tesla drivers are supposed to keep their hands on the steering wheel while using the company’s Autopilot technology, that system can continue hands-free operating for one or several minutes, depending on the driving conditions. Tesla acknowledges that Autopilot can have trouble detecting stationary objects like stopped or parked cars or highway barriers, and three crashes resulting in fatalities have occurred when Autopilot was engaged but failed to detect obstacles in the road.

The Center for Auto Safety, a nonprofit consumer advocacy group that tracks traffic accidents, said it was unaware of any crashes involving Super Cruise in the two years it has been on the market.

As we headed back to Detroit in the CT6, Super Cruise alerted Mr. Carlisle to take control of the car on a stretch of I-94. Drawing on data from digital maps, the system knew that the car was about to enter a construction zone, a confusing driving environment where a human should be in control. By the time orange barrels appeared along the side of the highway, Mr. Carlisle had his hands back in the 10-and-2 position.

Super Cruise “is the only system on the market that will tell you ahead of time that you have to take over,” said Jake Fisher, director of auto testing at Consumer Reports, which evaluated a variety of driver assistance systems last fall and scored Super Cruise above all others.

The potential of Super Cruise and future electric vehicles to reinvigorate Cadillac could be offset by long lead times that leave the strategy vulnerable to changes in the economy and consumer tastes, as well as competitors’ own initiatives. Cadillac’s first electric model, an S.U.V., won’t arrive for three years. By then, the market is likely to be crowded. Jaguar and Audi have just introduced their own electric S.U.V.s, and others are coming next year from Mercedes, BMW and Porsche.

“They have to establish what Cadillac stands for quickly,” said Erik Gordon, a business professor at the University of Michigan who follows the auto industry. “Otherwise, they’re still going to be looking at declining sales.”

And despite all the accolades Super Cruise has garnered, G.M. is doing little to take advantage of the technology. It is available only on the slow-selling CT6, as part of an options package that pushes the price to $78,000. The car’s sales have fallen 60 percent this year, and G.M. is considering halting production in January. The system will become available in a smaller sedan next year, the CT5. But S.U.V. models won’t get Super Cruise for another two years or so. That means the brand’s signature technology won’t be on its most popular models for some time.

“That’s just one of these unfortunate prioritization dilemmas,” Mr. Carlisle said, again sitting back, hands free, while Super Cruise piloted us down I-94. “Had we thought of it a little earlier, we would have gotten to it sooner.”

See https://www.nytimes.com/2019/08/27/business/cadillac-brand.html (“Cadillac’s Last Stand? Storied Brand Aims (Again) for Revival“) (emphasis added); see also https://naegeleblog.wordpress.com/2018/11/28/boycott-general-motors/#comment-17817 (“Another Sign That GM Is Failing, Again: Ford Steps Up, GM Looks For Way Out“) and https://naegeleblog.wordpress.com/2018/11/28/boycott-general-motors/#comment-15860 (“GM May Shut Down Cadillac“)

As indicated in my comments above these, the demise of Cadillac has been predicted for sometime now, and it may be simply a matter of time. Its death is approaching, rapidly.

GM shed Pontiac and Oldsmobile, and Cadillac may be next.

With respect to Tesla, it is destined for the dustbin of automotive history too, which cannot happen fast enough.

See, e.g., https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-19056 (“Teslas Must Be Banned From American Roads“)

28 08 2019
H. Craig Bradley

GM will be around as long as there are stupid customers or car buyers who still don’t know the difference or what real quality is. As long as seniors want some nostalgia and therefore a Cadillac, they GM make them and sell them. However, buyers may find they become money pits after about 50,000 miles.

GM still has political pull so they can get government fleet business and rental car fleet business to keep going. GM has moved to the China market for future growth. If China does not work out for them then GM may be in trouble. The individual retail customer is obviously not a high priority with GM.

28 08 2019
Timothy D. Naegele

I respectfully disagree.

I believe Cadillac will disappear; and any future bailouts for GM may not occur. Both Ford and Fiat Chrysler have shown how to survive, thanks to Bill Ford and Alan Mulally at Ford, and Sergio Marchionne at Fiat Chrysler.

See, e.g., https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-14324 (“The Passing Of An Auto Giant”)

No one has distinguished himself or herself at GM. It is like a rudderless ship lost at sea.

18 09 2019
Timothy D. Naegele

GM Under Fire From All Sides

Sylvan Lane has written in The Hill:

General Motors is facing political heat from both sides of the aisle in the midst of a high-stakes fight with striking autoworkers.

President Trump along with some of his top Democratic challengers are pressuring the company to quickly negotiate an end to the dispute after almost 50,000 employees walked off the job when talks failed between GM and the United Auto Workers (UAW) union.

Trump has long complained about GM’s ongoing disputes with its workers and bashed the company for shifting some U.S. production to Mexico. And the president is still smarting over GM’s closure of its Lordstown, Ohio, assembly plant earlier this year, which drew wide bipartisan condemnation.

Several Democrats looking to unseat Trump have also expressed solidarity with the striking GM workers, urging support for the UAW and condemning the auto company.

The controversy also comes as Trump and Democrats fight over the industrial states that drove GM’s success, where workers are asking the company to make up for offshored jobs, concessions in past negotiations and a costly taxpayer bailout.

Trump has called for a quick resolution to the strike and suggested the government could step in to settle the dispute.

“Here we go again with General Motors and the United Auto Workers,” Trump tweeted on Sunday. “Get together and make a deal!”

On Monday, he told reporters, “Hopefully, they’ll be able to work out the GM strike quickly.”

“We don’t want General Motors building plants outside of this country, and we’re very strong on that,” Trump added.

A cadre of Democratic presidential candidates, including former Vice President Joe Biden, Sen. Elizabeth Warren (D-Mass.), Sen. Bernie Sanders (I-Vt.) and South Bend, Ind., Mayor Pete Buttigieg (D), took stronger positions in support of UAW.

“A job is about a lot more than a paycheck. It’s about dignity and respect,” Biden tweeted Sunday. “America’s workers deserve better.”

Warren urged GM in a Sunday tweet “to come to the table and negotiate in good faith” with UAW.

“Auto workers deserve good wages, comprehensive benefits, and economic security. I stand with @UAW as they strike to get what they deserve,” Warren said.

The strike is only the latest fight in a long, contentious history between the auto giant and its workers.

“The history between the union and GM is not good, and I don’t just mean in the past decade,” said David Whiston, an auto industry analyst at Morningstar Ratings.

“GM is doing really well in the past few years and the union is saying, ‘We want to get paid and we want to make some things that aren’t right, right.’ ”

More than 48,000 GM employees walked off the job Sunday after UAW’s contract with the automaker lapsed without an agreement on a new one. The total stoppage of U.S. production, GM’s first since 2007, is expected to cost the company tens of millions of dollars each day while striking workers scrape by with a fraction of their normal pay.

After GM came close to collapsing during the 2008 financial crisis, a federal rescue package and UAW concessions in contract negotiations, such as a tiered compensation system for new hires, helped keep the automaker afloat. The company has since rebounded, bringing in $11 billion in profits last year despite the challenge of dealing with changing consumer preferences.

GM workers are now seeking a greater share of those profits, along with higher base pay and greater parity among full-time and temporary workers. UAW is also seeking to prevent GM from reducing the percentage of health care costs it covers for employees.

GM’s financial success and political turmoil comes at a challenging moment for U.S. automakers overall.

U.S. consumers have purchased significantly fewer sedans from GM and its domestic rivals, Ford Motor Co. and Fiat Chrysler, opting instead for SUVs and pickups. All three companies have responded by moving resources toward the booming light truck sector, along with electric and autonomous vehicles.

While GM is not the only company to lay off workers as it shifts gears, the company has drawn intense scrutiny for the way it has handled its restructuring.

GM announced on the Monday after Thanksgiving last year that it would idle four U.S. plants, ending close to 15,000 production jobs across industrial regions largely dependent on the auto industry. The news came five months after GM announced it would resume making the Chevrolet Blazer — once assembled in Wisconsin — at a production plant in Mexico.

“I don’t think anybody saw it coming outside of GM, and the fact that it was done during good economic times made some people probably feel it was unnecessary,” Whiston said of the U.S. layoffs.

“The union was already upset about the Blazer,” Whiston continued, “and once that November announcement happened, I thought that the chances of the strike was more than a remote possibility.”

Trump seized on news of the layoffs to bash GM in November, taking particular issue with the company’s decision to close the Lordstown plant in Ohio, a crucial state in the president’s electoral map.

Trump pressured GM to keep the Lordstown plant open or find another buyer to maintain the 1,637 hourly workers employed there. During a 2017 speech in Youngstown, Ohio — less than a 30-minute drive from Lordstown — the president urged GM workers not to move, pledging to bring auto jobs back into the state.

Efforts from Trump and other politicians in both parties ultimately failed, and the Lordstown plant went idle in March.

A lengthy strike could pose new economic challenges to the region as the costs of idled factories pile up for GM and local businesses. The Teamsters truck drivers union said Monday it will halt all deliveries of GM vehicles to dealerships during the strike. That decision takes an immediate bite out the company’s bottom line because GM counts revenue via sales to dealers, not retail sales to consumers.

Whiston also warned that a prolonged stoppage could pose economic issues for GM’s regional suppliers of small parts or tools.

“There’s plenty of companies throughout the Midwest, Great Lakes region, probably nationwide, that supply the auto industry,” Whiston said.

“If they’re not paying their suppliers because they don’t need to build cars,” Whiston continued, “that can take a serious … even fatal blow to the company.”

Those factors will only add to the pressure GM is already facing from Washington.

Rep. Dan Kildee (D-Mich.), whose district includes the city of Flint, which has seen the loss of thousands of auto jobs in recent decades, said it was time for GM to repay the workers who helped the company through difficult times.

“They turned to the U.S. government, they turned to the workers of the company and said ‘help us through this difficult time,’ ” Kildee said on CNN on Tuesday.

“I think it’s a reasonable argument to make that the workers ought to get something back.”

See https://thehill.com/business-a-lobbying/461859-gm-under-fire-from-all-sides (emphasis added)

As cited in my article above and the comments beneath it, the unraveling of GM began to become apparent when it stopped reporting monthly sales figures to the Wall Street Journal. Next, there have been rumors that GM would jettison its Cadillac brand. And now this.

What’s next for the troubled company?

Boycott General Motors

18 09 2019
H. Craig Bradley

MOVING TO CHINA

GM and the UAW are finally getting what they deserve. GM quality started declining steadily since about 2000, according to one mechanic. Apparently, some changes must have occurred in the EXO office. Now, Its on a path to failure.

All GM workers should find another employer or make a new career or if too old to learn new tricks, retire. Their old jobs are going away as GM closes down its U.S. facilities. A contracting economy is going to support fewer car makers than in past recoveries.

Sure looks like another financial crisis maybe in the wings. FED had to directly provide (print) money in the inter-bank “Repo” market for a second day and at higher than official interest rates too. Not enough money in our financial system to run the overnight facility.

If liquidity dries-up somewhere else, then a crisis can erupt. Only a matter of time anyway because all the existing debt in the system has destabilized it. We are headed back to more trouble. We did not learn anything in 2008.

18 09 2019
Timothy D. Naegele

Thank you, Craig, for your comments.

My views of the U.S. economy is nowhere near as dire as yours. With respect to GM, first it may jettison Cadillac, and then other major changes may be forthcoming. It seems to have “worn out its welcome” in Washington, and elsewhere in the country.

As I said previously, when it put excellent dealers and their fine employees out of business after the federal bailout, lots of us vowed that we would never buy, lease or rent GM vehicles again.

10 10 2019
Timothy D. Naegele

Another Solution For General Motors: Nationalize It?

Chris Kutalik—former editor and director of Labor Notes in Detroit and a union organizer, and now “deeply involved in Texans for Bernie and Labor for Bernie”—has written at the Jacobin:

Seven years ago, we owned General Motors (GM). With 49,000 autoworkers walking pickets to finally end the concessions, two-tier, and plant closings train of the last three decades, it’s mind-boggling to remember that the US Treasury owned GM for three years — and managed to do virtually nothing to benefit the working class with it.

We’re in a new period in which, thanks to the efforts of tens of thousands of socialists and Bernie Sanders’s presidential campaign, we are actively debating nationalizing the energy grid, a massive federal jobs guarantee, an even more massive retooling and public ownership of new green industries, and more. It feels like a political act in itself to remember the lost opportunities for leverage for struggles today.

It’s also a political act to remember just how massive of a giveaway both in money and power the Obama administration and the centrists of the Democratic Party participated in while controlling all three branches of the government from 2009 to 2012.

We have the chance over the next year to do a full-court press on several fronts — at the ballot box, in the streets, and now on the picket line — to organize around big ideas that can include not just nationalizing but socializing the auto industry again. The demand, if fulfilled, would save jobs, living wages, work conditions, and the planet at the same time.

The Nationalization That Wasn’t

Let’s back up a little. In March 2009, in exchange for $51 billion in bailout loans to the company, the US Treasury was given 500 million shares, 60.8 percent of the total market capitalization, of GM. The public, on the books at least, owned a permanent controlling interest in the country’s largest auto-manufacturer.

Yet immediately after announcing the GM takeover, the Obama administration — building off the giveaway bailouts of Bush’s last year in office — sent loud clear signals that it had zero interest in doing anything long-run (or socially redeemable) with that ownership.

“What I have no interest in doing is running GM,” President Obama said at the time. The president’s only goal, he said, was to get GM running at a profit again and then “to get out quickly” and that “the federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions.”

While demanding a massive and painful restructuring of the company, the government made good on its promise to do very little on the managerial side. It declined to rein in the managerial excesses, hubris, and power that led to the crisis. A thin layer of management accountability was sprinkled on top: executive pay at the top levels was frozen, use of corporate jets were forbidden. Slightly tougher fuel-efficiency standards were mandated and the overreliance on light truck and SUV sales was slightly curbed.

Worse from the perspective of working people, the Obama administration also pushed for and helped squeeze more concessions out of the United Auto Workers (UAW).

Fourteen plants were closed. The concessionary conditions of the 2007 Big Three auto contracts (which dropped second-tier workers below living wages at $14.50) were not just maintained but deepened. The government joined corporate critics in calling successfully for the end of the Job Bank, a pay cushion to dissuade layoffs and keep workers from going broke.

A scant year later, the Obama administration was already done with its ownership role. In 2010 the Treasury gifted General Motors LLC (the corporate entity that emerged from GM’s bankruptcy to replace good old General Motors Inc) the public’s majority interest in the company: 358 million shares were sold back at $33/share, dropping public ownership from 61 percent to 36.9 percent.

In December 2012, the Treasury department sold another 200 million shares at $27.25/share back to General Motors. Over the next year, it sold off chunks of its stock, until by 2013 it held nothing at all.

And amazingly it did it all at a loss, losing $10.8 billion in its rush to privatize at relatively undervalued prices.

The business press and the federal government knew at the time that it would take a loss from these sales. So why did it do it? In simpler terms, the Obama administration was so ideologically afraid of public ownership that it gave billions and ownership back to GM and its private shareholders at a steep loss. “The government should not be in the business of owning stakes in private companies for an indefinite period of time,” Timothy Massad of the Treasury Department said in explanation in 2012.

GM executives and Wall Street were thrilled that the right wing’s “Government Motors” smear could be lifted off the company’s back. The first restriction on the company lifted by the Treasury after it relinquished control was the ban on executives’ private jet use.

If the federal government had held that stock until today, it would be worth $18.7 billion, and we would still have public ownership of the largest auto-manufacturer in the country. But that didn’t happen.

Lean, Mean, Private GM

So, what did newly private GM do between then and now? For one thing, the severe restructuring and public giveaways of 2009–2012 restored its profitability for owners. From 2010–2016, it showed a net income of $50 billion, even reporting record profits in some quarters.

GM further extended its gains by paying almost nothing in federal income taxes in this period (a second layer of giveaways). According to GM’s corporate filings, by writing off its bankruptcy costs and other losses, the company has only paid income taxes in three of the past ten years. It additionally docked tax credits in several of those years.

Last year GM filed its highest tax bill of the decade: a mere $18 million (while paying out $552 million in foreign taxes the same year, ironically enough for the corporate devotees of offshoring).

GM has even managed to add a turd to its recent turn to “green manufacturing,” the one move that has drawn some praise from progressive environmentalist circles. Engine and transmission lines have been some of the most labor-intensive parts of the auto assembly line. Industry analysts estimate that the less complex pieces of electric vehicles require 30 percent fewer workers to assemble than fuel-consumption ones.

GM has explicitly tied its recent drive to close more United States and Canadian plants (a sticking point in the strike) to this “green” plan. According to a recent Wall Street Journal article: “The closed factories are the most visible sign of GM Chief Executive Mary Barra’s focus on redirecting capital to develop electric and driverless cars, capital-intensive bets with an uncertain payoff. GM plans 20 new electric models, mostly in China, over the next few years, funded in part by the plant closures and other moves aimed at boosting cash flow by $6 billion a year.”

Before the recent failed Big Three negotiations, the domestic auto companies seemed to be making moves to outsource most electric car parts to a constellation of nonunion parts suppliers (nearly all plug-in electric car batteries are already imported from Asian suppliers such as Panasonic and LG).

What Is to Be Done?

First and most urgently the current national strike against GM needs to be won. The revival of the mass strike by teachers across the country has strengthened the viability of winning large strikes. Despite its decades-long membership free-fall, the UAW has a whopping $750 million still in its (to date mostly unused) strike fund. Theoretically with strike benefits of $250/week per member, the union can stay out on strike for well over a year — while the company takes estimated losses of $50–100 million a week and had only a seventy-seven-day inventory of vehicles at the beginning of the strike.

The sclerotic and corruption-scandal-ridden UAW international leadership has a habit of snatching defeat out of the jaws of victory, but that’s still a hell of a lot of clout at the bargaining table. Solidarity efforts by other unions and strike support can and should be ramped up to build that pressure. Winning leads to broader political horizons.

Besides holding the line, now is the time to think again about the bold ideas. Michigan famously went to Bernie Sanders in an upset victory in 2016. The heartland of the auto industry has some political base for moving beyond the conventional range of answers.

A majority interest in GM today would be 728 million shares; meanwhile, its stock price has been falling as management refuses to settle with striking workers (standing at a total cost of $27.26 billion at the time of writing, a tiny drop in the bucket of the current $3.645 trillion budget).

Why not just stem the pain and buy back General Motors? Why not complete the nationalization (and dare we say socialization) of the company along deeper lines that benefit workers, consumers, and communities at large?

Government Motors Again?

What would a socialized General Motors look like?

Fueled by the new resurgent labor, political, and social movements in this country, the new GM could re-conceive a whole new arrangement of the firm. It could go beyond the previous pattern of management in full charge, government as silent partner, and the UAW upper leadership as a complicit “junior partner.” It could also surpass the traditional tripartite or state official–heavy boards of European social democracy, starting a long transition to more and more democratic, transparent, and directly accountable forms. (Indeed, any likely transformation would probably also need to entail a massive democratic, rank-and-file internal shakeup of the UAW leadership’s longstanding, corrupt Administration Caucus.)

The board could include directly voted on worker and community representatives. It could move beyond the phony participation schemes of team concept and lean production, and give workers increasing control of their own work conditions and production arrangements on the line.

In the short run, a new public GM could make good on many of the bold ideas for transformation coming out of this election cycle.

Want to hire more workers to reduce the layoff pressure? The company workweek could be cut to thirty-two hours allowing the firm to expand employment by 20 percent. (This measure alone would greatly offset the 30 percent loss of jobs from going electric). This isn’t a fringe new idea either, according to retired autoworker and author Dianne Feeley: “Before the ’79 economic crisis, the UAW talked about reducing the work week, as Germany was doing so already. But for us this took the form of having the right to take our birthday off and maybe a couple of new holidays rather than going to a real thirty-five-hour work week, but at least the objective existed. That got dropped and never heard of again!”

Need a pillar for Bernie’s federal job guarantee policy? How about a large manufacturer paying well over $15/hour as the employer of last resort. Want to cap gross executive pay? The new board could freeze management pay at a maximum ratio of nine times the lowest worker salary as the Mondragon industrial cooperatives do in Spain.

Public GM could also lean into the Green New Deal’s goal to transform manufacturing. While GM’s current management sees new production as only centered around small vehicles, it is missing entire burgeoning markets around electric buses, heavy trucks, and trains. China is leading the world in replacing fuel-burning buses with electric buses buying 80,000 such buses alone last year (99 percent of the world’s relatively untapped consumption). We could not only stop plant closings, but actually reopen plants as demand and production grows.

Winning a socialized makeover of GM is a daunting long shot. But we have a concrete example of just such an ambitious fightback and transformation strategy in the going on in Ontario. There, Canadian union and community activists are struggling not just to keep the large assembly plant in Oshawa open, but to have the community step in and transform the plant toward electric vehicle manufacturing and research.

In an era when we in the labor movement are finding ourselves backed further and further into the corner, why not be bold?

See https://www.jacobinmag.com/2019/10/general-motors-nationalization-uaw-strike (“Make GM Government Motors Again”)

With Cadillac on the ropes, and GM seemingly failing, extreme measures such as those being advocated by unionist and Bernie Sanders’ supporter, Chris Kutalik, are bound to gain traction in some quarters—just as Leftist plans to ban airplanes and gasoline-powered vehicles are high on their lists.

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