« Ted Stevens is no Longer a Useful Political Punching Bag | Main | $7,470,720.00 »

Why General Motors and Chrysler Need to Declare Bankruptcy Immediately

I have written several times now why it's in GM's best interest that they declare bankruptcy. I have provided general reasons why. Steve Priestap, my husband, offers specifics why filing Chapter 11 is best for not only GM and Chrysler, but for any American corporation the Obama administration may target in the future.

*******

The problem with selling your soul to the devil is that eventually the devil shows up and wants his due.

The current government takeover of General Motors, to the extent of the hiring and firing of corporate officers and the gratuitous guaranteeing of auto warranties, is an almost perfect illustration of why Chapter 11 of the Bankruptcy Code exists. There is little doubt that GM is in need of the relief that is offered by Chapter 11. It's the only way they can scare off the devil, which in this case is represented by the Obama Administration.

I've been a bankruptcy attorney for over 16 years in Ohio and Michigan, so naturally I have represented numerous members of the UAW. I have always been amazed at the generous retirement and health benefits that these workers were receiving. Some of them had been retired for decades and thus no longer contributing anything to the company they worked for, yet were still receiving a retirement check of several thousand dollars a month and very inexpensive health care. Much like the Social Security System, this is a formula that only works so long as a company is continuously generating a large cash flow. The moment the money spigot begins to sputter, this overly generous structure collapses like a house built on quicksand. Of course, the retirees and current workers are not sympathetic to the idea that benefits that they feel entitled to, and in some sense are, may have caused this financial calamity, but until the Big Three find a way to make these costs manageable it is doubtful that they can become viable in the long run.

The only way to achieve this goal responsibly is in Bankruptcy Court. Unfortunately, the Obama administration's current approach of essentially acting like a court-appointed receiver and taking over the company is not only a dangerous precedent for excessive government, it is a very sloppy and imprecise way to reorganize a company. There are already indications that this "pre-packaged bankruptcy" (a better term would be "Executive Branch Receivership") is going to be driven by political considerations and not the rule of law. One example: does anyone really expect the Administration, whose biggest supporter in 2008 was probably the UAW, to deal objectively with bloated worker and retiree benefits? Of course not. Obama will bend over backwards to accommodate his favored group at the expense of the company's long term health. In other words, all sorts of considerations will be in play that have little to do with what's in the company's best interest. There is also a serious question as to whether the President even has any constitutional power to do things like guarantee warranties and run companies -- a legal entanglement that's probably waiting to happen.

Conversely, bankruptcy courts are bolstered by over two hundred years of well established rules of procedure and common law. Bankruptcy professionals and judges are far better equipped to deal with the issues that will arise, and they can do so without regard to political considerations. If GM seeks Chapter 11 relief, they will in effect be turning over control of their company to a bankruptcy judge, but there is a big difference: the judge is an expert and will have as his primary goal the survival of the company and the best possible outcome for its creditors. Since the judge doesn't need to worry about whether the UAW likes him, he can order its contracts with the company to be re-negotiated, and will have final approval as to whether such agreements are in the best interests of the company. Does President Obama, or anyone in Congress, have any expertise in reorganizing a huge multinational corporation?

There may be legitimate concerns about whether consumers will want to buy cars from a company in Chapter 11 because of shaky warranties, but I think these fears are misplaced. In the first place, warranties issued after the filing would be post-petition obligations and thus outside the scope of the bankruptcy. Warranties issued prior to the bankruptcy could be effected, but these would likely be priority claims: that is, GM would have to honor them in order to have a feasible Chapter 11. The only way those warranties become endangered is if the company goes out of business under Chapter 7, but even if that happens I suspect that the assets that would be distributed to claimants in the liquidation could be used to satisfy the warranties. GM would simply need to make sure people understood all this, and provide plenty of incentives for vehicle purchases.

The fact is that there are enormous benefits available to GM or Chrysler should they enter Chapter 11. Their assets are protected, they maintain at least a reasonable amount of control over their own company, their fixed payments on most debt are suspended pending confirmation of a reorganization plan (saving billions annually in interest charges), and they will be able to obtain operating funds under what is known as debtor-in-possession financing. DIP financing provides lenders with super-priority status in a Chapter 11 and usually gives them secured status as well, which makes these deals very attractive to lenders. These loans have an extremely low default rate. I suspect that DIP lenders would be practically begging to loan money to asset-rich GM.

Bankruptcy courts exist for a reason. Companies that are able to turn a profit, but are crippled by long term debt and contractual obligations, are logical candidates for Chapter 11. The inordinate fear that the officers of GM and Chrysler apparently have of the bankruptcy court is not only misplaced, it is probably suicidal. If they want to save their companies, they will politely tell the Obama Administration that it has no business telling them what to do, that they still have rights under the Bankruptcy Code and the Constitution, and will immediately exercise those rights by filing Chapter 11. If they fail to do this and instead participate in some sort of ad hoc government-sponsored reorganization, they will not only be making a poor business decision, they will be helping to set a very bad precedent for every business in America.


TrackBack

TrackBack URL for this entry:
/cgi-bin/mt-tb.cgi/35160.

Listed below are links to weblogs that reference Why General Motors and Chrysler Need to Declare Bankruptcy Immediately:

» small dead animals linked with Save Yourselves, While You Still Can

Comments (34)

"Their assets are protected... (Below threshold)
jpm100:

"Their assets are protected, they maintain at least a reasonable amount of control over their own company, their fixed payments on most debt are suspended pending confirmation of a reorganization plan (saving billions annually in interest charges), and they will be able to obtain operating funds under what is known as debtor-in-possession financing. DIP financing provides lenders with super-priority status in a Chapter 11 and usually gives them secured status as well, which makes these deals very attractive to lenders"

There is no credit to be had. If they was, GM would have leveraged it just like Ford did 2 years ago.

The government is the only entity that could take the role of DIP.

And hows that Delph Chapter 11 coming? That was a quick in and out wasn't it? Its only been about 2 years and running.

jmp100, You don't ... (Below threshold)

jmp100,

You don't know what you're talking about. It would be easier for GM to get financing in Chapter 11 than it would be outside of it. Who will give them financing now? No one. But in Ch. 11, finance companies know they'll get their money because of the super-priority status.

Yes, Delphi's chapter 11 is taking a while. Owens Corning's lasted 6 years. GM's will last for several years, too. That's the nature of Ch. 11.

As I said, you don't know what you're talking about.

Well He was after all a com... (Below threshold)
914:

Well He was after all a community organizer so as far as expertise, you could not get a more experienced multinationalist.

Kim,Right...... (Below threshold)
jpm100:

Kim,

Right...

He were are potentially in a prolonged recession with significantly reduced car market. And lenders, who haven't been lending are going to line up for GM.

DIP will only be the government.

If lenders want to make a b... (Below threshold)

If lenders want to make a buttload of money, they will line up to offer DIP financing

The biggest threat to capit... (Below threshold)
MPR:

The biggest threat to capitalism is Obamalala and his goons. When the Chinese and Swedes are lecturing Obamalala on the wreckless spending spree he is on, you know something is wrong. If he threatened to run my company, I would dive into Chapter 11 or dissolve the company faster than he can spend a trillion of taxpayer dollars.

All the posts on Wizbang to... (Below threshold)
Arthur:

All the posts on Wizbang today - they were April Fools jokes, right? Right??

Kim:I see one issu... (Below threshold)
James H:

Kim:

I see one issue your husband has not addressed. Couldn't a Chapter 11 bankruptcy turn easily into a Chapter 7 proceeding? If that happens, you could see significant damage to the economy.

Wreckless speckulation.... (Below threshold)
bobdog:

Wreckless speckulation.

Anytime a company goes into... (Below threshold)
Steve Priestap:

Anytime a company goes into Chapter 11 there are legitimate concerns about getting enough DIP financing, and possibly ending up with a Chapter 7 conversion. These same concerns would exist with a GM filing, although in my opinion they would be remote. The problem is that if they go down the road of a government takeover and "prepackaged bankruptcy" they are basically surrendering the company to a process that will be built on political shifting sands, and not the well established procedures of bankruptcy court. There is no such thing as a "prepackaged bankruptcy", so the Administration would in effect be making it up as they go along, and there is no precedent to use as a guide. The problem with a lot of things that have no precedent is that there's a reason for this: they're bad ideas. Chapter 11 may not be a great option, but it beats the hell out of the alternatives.
As far as the economy, of course it will have a short term devastating impact, but eventually that impact will recede, because ultimately the demand for cars will revert to form.

Steve:Thank you fo... (Below threshold)
James H:

Steve:

Thank you for answering my question re: Chapter 7. For a while, I've favored some form of managed bankruptcy for the automakers. "Managed" not in the sense that the feds woudl micromanage the companies, but rather "managed" in the sense that the federal government would act to mitigate the economic fallout from Chapter 11, particularly to suppliers and to workers, and perhaps provide some sort of incentives to prevent a Chapter 7 scenario.

Conflicting with this scenario somewhat is another idea that ran through my head -- what if GM and Chrysler were allowed to proceed to Chapter 7, but valuable portions of their IP, particularly including next-generation vehicles, were channeled into some kind of SPE -- either partially government-owned or not -- with the express goal of leapfrogging to the next generation of vehicle technology, whatever that next generation might be?

Again, I'm not sure if that's a good idea or bad idea. It's just one of several that I threw at a wall spaghetti-style.

On a side note, I was incredibly surprised to hear Obama say the feds would guarantee Chrysler and GM warranties. I assumed they contracted with a warranty company to handle that.

Steve, trying to explain th... (Below threshold)
Zelsdorf Ragshaft III:

Steve, trying to explain the reason of law to those who bought into Obama BS is a waste of time. Anyone who would vote for B. H. Obama, with his vast executive experience and displayed competence as a legislator. His choice of close associates and his religious mentor is probably sure "The One" we have been waiting for, like the second coming of Stalin, is correct in all he espouses. Not.

There's another element: ma... (Below threshold)

There's another element: management doesn't want bankruptcy, and for two reasons: existing shareholders (who management in theory works for) would be wiped out, and, more important, at least to management, management loses its ability to control the agenda in bankruptcy (the usual edge management has in bankruptcy would not apply in this politically charged situation). So 'GM' will never choose bankruptcy, it has to be forced on them and by creditors who wouldn't be getting paid.. but these creditors don't want bankruptcy as their debt holdings would be greatly reduced and converted into equity... which in a 'normal' situation might be okay, but not here where everybody knows the unions (as one of the largest creditors of the automakers) will end up with at the least, veto power... and everybody knows giving unions power is a sure way of ensuring the company never makes a return on its equity.

I don't see any future for ... (Below threshold)
Mac Lorry:

I don't see any future for GM and Chrysler regardless of government loans or bankruptcy. The problem is the culture at the highest levels of management. Technology intense companies that are driven by short term profits can't compete in the long run with similar companies that are driven by market share. The different goals (short term profits vs. market share) result in fundamentally different decisions that ultimately effect the capability and quality of the products.

When increased market share is the goal, top management is made up of engineers, logistic, quality, and manufacturing experts who focus on producing the best products for the money. When short term profits are the goal, top management is made up of administrators, accountants, and lawyers who focus on producing the highest profit margin products. Over time consumers gravitate toward the best products for the money.

Consumer Reports (CR) has an article in their April 09 Annual Auto issue titled "Most bang for the buck" The highest rating goes to models that combine good performance and reliability with low owner cost over the first five years. In rating 300 models, CR lists 41 models in 9 categories that give the consumer the most bang for the buck. What's telling is that not a single model from the Detroit three makes the list. That's true even though there are categories for Upscale cars, Sporty cars, Minivans, Small SUVs, Midsized SUVs, and Pickup trucks.

To save big manufacturing companies in the U.S. we need to change the culture so that what counts is market share, not short term profits. In such a culture the MBA would be considered of less value than any four year degree in engineering or science.

Mac: the problem for the (n... (Below threshold)

Mac: the problem for the (not so) Big 3 is that they've been trying to eke out a living without really addressing the core issues, akin to a construction worker with a bum hand who tries to work around his injury instead of taking time out to get his injured hand fixed. One could applaud the effort while simultaneously criticizing the lack of perspective.

To save big manufa... (Below threshold)
To save big manufacturing companies in the U.S. we need to change the culture so that what counts is market share, not short term profits. In such a culture the MBA would be considered of less value than any four year degree in engineering or science.

Who's we?

These are decisions only management can make. Each individual company must make its own decision about how to structure itself and then let the chips fall where they may. Under no circumstances should some outside big brother entity determine what a company's mission or vision should be.

Mac Lorry -- On a ... (Below threshold)
James H:

Mac Lorry --

On a personal level, I can attest to some of what you're saying. I've owned several cars over the past decade and a half, including a Subaru hatchback (my "college car," provided by parents), a Ford Escort, a Plymouth Neon, a Toyota Corolla, and now a Subaru (again). Of all those cars, the Neon was easily the biggest nightmare, with recurring head gasket problems that nearly put me in the poorhouse.

By contrast, the Corolla and the new Subaru both ran well, and I'll probably hang onto the new Subaru at least through the middle of next decade. Because of my experiences, I've more or less abandoned Detroit-made cars as unreliable compared to Japanese automakers' products.

My last experience with a domestic automobile was a Pontiac Sunfire I rented during a vacation in Florida. The damn thing came close to overheating multiple times during my trip. Detroit automakers lost me a long time ago, and it would take a lot to convince me to try their products again.

The other argument for bank... (Below threshold)
Son of a Pig and a Monkey:

The other argument for bankruptcy over the "not-so-invisible hand" of Obama is his nonsense about the Big 3 being responsible for "weaning" US drivers off oil-dependence. They should be out to make good cars that people want, and make money out of it. Period. (And that's obviously not going to be easy)

Kim,Who's... (Below threshold)
Mac Lorry:

Kim,

Who's we?

"We" is the United States.

These are decisions only management can make. Each individual company must make its own decision about how to structure itself and then let the chips fall where they may. Under no circumstances should some outside big brother entity determine what a company's mission or vision should be.

No, it's the United States' culture that puts the wrong emphasis on what success is, and it's that wrong emphasis that puts the wrong people in top management positions and it's these wrong people who make the wrong decisions and its those wrong decisions that results in inferior products. Obama putting different bean counters in positions of top management is no different then firing a shotgun into the air outside a chicken coupe. Yes, you rearrange the roost, but they're still all chickens and all they know how to do is lay eggs.

I don't see much hope for so-called domestic auto companies because the top management of the government is also a bunch of bean counters. What the U.S. has to do is roll up it's sleeves and get down and nerdy.

Mac, When you say ... (Below threshold)

Mac,

When you say the United States, do you mean the government? The people?

Define for me the United States culture. Then tell me how to control it. And then tell me who will control it.

You will have as much luck dictating culture as capturing the wind.

So what is a domestic ca... (Below threshold)
Mac Lorry:

So what is a domestic car company? Chrysler was mostly owned by Daimler (German) for the last decade and now it's in negotiations trying to sell up to 49% ownership to Fiat (Italian). GM is publicly held (part of the S&P index), so it's ownership is global. Many models made by the Detroit three contain parts manufactured outside the U.S. and even assembled outside the U.S. (mostly Mexico and Canada)

Looking at Consumers Reports (CR) highest rated Minivan in their "Most bang for the buck" article you find the Honda Odyssey at the top of the list. According to the window sticker 70% of Odyssey's parts come from domestic sources and it's assembled in Alabama. Honda (ticker symbol HMC) has been listed on the New York stock exchange since 1976, so it's globally owned just like GM is. BTW, CR lists Honda as the number one auto manufacture with Subaru second and Toyota third (ticker symbol TM). The highest rated Detroit manufacture is Ford at number 12 on that list. Chrysler and GM come in last and next to last on that list, respectively.

If Honda, Toyota, Subaru, and Hyundai can manufacture high quality cars using domestic parts and labor, then the only reason Detroit can't is because of top management. Anyone familiar with the works of Edwards Deming knows this to be true.

Mac:The following ... (Below threshold)
James H:

Mac:

The following is inaccurate:

If Honda, Toyota, Subaru, and Hyundai can manufacture high quality cars using domestic parts and labor, then the only reason Detroit can't is because of top management.

Foreign carmakers' US plants tend to be in right to work states in the South. Because of this, they do not face the expenses incurred by the Detroit automakers because of union contracts.

I will not argue that union contracts are the sole factor contributing to Detroit automakers' decline, but it is entirely possible they are a factor.

Its because the auto... (Below threshold)
Joe:


Its because the automakers continued to build huge gas guzzlers!!! - WRONG IDIOTS !!!

The program, called "Jobs Banks," has been around for 24 years. Some of the employees at jobs banks choose to do community service, but others do crossword puzzles and watch TV all day -- or just stare at a wall. If you're a laid-off auto worker, it's what comes with your pink slip, thanks to a deal struck in 1984 between the United Auto Workers and the Big Three carmakers.

Rewarding laziness proves failure again !!

Why is this a surprise ??!?!

Kim,When ... (Below threshold)
Mac Lorry:

Kim,

When you say the United States, do you mean the government? The people?

It's both, but mostly the U.S. business culture. I'm not bad-mouthing capitalism, only the focus on short term profits.

Define for me the United States culture. Then tell me how to control it. And then tell me who will control it.

It's best described as the "Wall Street" culture where all that counts is money and the only memory is short term. The U.S. system is not and has not been a "free" market in the last 100 years . There has always been regulations that govern the market. Wall Street exists to help capital find opportunity, but in it's current form it highly susceptible to economic parasites that extract capital based on real or artificial fluctuations. Companies can be greatly damaged by such parasites, and in defense, top management is selected more for it's ability to manage it's presence on Wall Street than manage it's products.

So who can control it, well my first choice would be to elevate me to the rank of Chief Supreme Great Grand Ayatollah of the U.S. and let me fix it. Apart from that insanity the solution is to change the laws governing Wall Street and other stock exchanges. In the past the U.S. didn't want to do that because of the fear that capital would just go off shore. However, the rest of the world is now eager to enact global regulations for all stock exchanges. Now is the time to act, but this is likely one crisis the Obama administration will waste.

"The autos failed because ... (Below threshold)
joe:

"The autos failed because they continued to build gas guzzlers!"

WRONG !!

The program, called "Jobs Banks," has been around for 24 years. Some of the employees at jobs banks choose to do community service, but others do crossword puzzles and watch TV all day -- or just stare at a wall. If you're a laid-off auto worker, it's what comes with your pink slip, thanks to a deal struck in 1984 between the United Auto Workers and the Big Three carmakers.

Rewarding laziness proves a failure again!

This isn't rocket science.......

I will not argue t... (Below threshold)
Mac Lorry:
I will not argue that union contracts are the sole factor contributing to Detroit automakers' decline, but it is entirely possible they are a factor.

It's a factor in cost, but not design, materials nor quality. The reason Detroit manufacturers are at the bottom of CR's quality lists is the fault of top management. Customers are willing to pay for quality, so if Detroit made top quality cars and trucks they wouldn't be so far done in sales and there would be hope that they could come back to profitability once the economy starts to grow.

Again, Mac, you are inaccur... (Below threshold)
James H:

Again, Mac, you are inaccurate. Design, materials, and quality are also part of the cost of a vehicle. Superior design costs money because superior engineers cost money, as do superior tests. Superior materials cost more money. Quality depends on design and materials, which are both costs.

Add in the cost of labor and if you produce a top-flight product, you have top-flight costs. If you want to price competitively with somebody who has lower labor costs, you have to cut costs in other areas. Such as materials, design or quality.

James H,That's a m... (Below threshold)
Mac Lorry:

James H,

That's a myth that Edwards Deming worked most of his life to disprove. Take a look at the link I provided in post #21. The proof of Deming's work is in CR's list of top auto manufacturers. Producing top quality products actually costs less when modern methods are used. The trick for top management to understand those methods and instill them in the workforce.

KimYour article is t... (Below threshold)
Arnie M.:

Kim
Your article is the most intelligent one I have read on this whole issue. Thanks.

Labour, Chapter 11, quality... (Below threshold)
Arctic_front:

Labour, Chapter 11, quality, Wall Street, all very valid points made by all.

I think something that is encompassed by all of these points, but hither-to unsaid is consumer confidence.

It took decades of arrogance for the Big 3 to squander the market share they once enjoyed.

Filing for chapter 11 will ease the financial hemorrhaging they are all feeling, but it won't make car buyers herd into the dealerships. To make money they have to sell cars consumers can trust. Decades of bad experiences won't sell cars. A fine example was the Saturn brand. By telling people that they were somehow 'different' didn't actually prove they were. Saturn was still a GM brand. Same management was calling the shots. Plastic bodies didn't rust, but poor quality and poor management still held sway. Face it, if the Saturn business model was so different, and likewise successful, it would have proven a blueprint for the entire GM line. It wasn't, and isn't.

The person who suggested that the key was market share is, in my opinion, correct. If you aim for market share, you are thinking long-term success. It takes time to earn market-share. It demonstrates a willingness to think long term.

No matter how 'cheap' a product is at purchase, poor quality erodes confidence and unwillingness to be a repeat customer.

Durable goods like automobiles are hefty expenditures that consumers try to make as less frequently as possible. They expect value for the dollar. Quality of domestic cars became so predictably bad that people stopped buying them and started leasing them. A Pontiac or a Chrysler may be inexpensive to buy, but they became liabilities as soon as the warranty expired. That became the business model the Detroit brands exploited. For shame.

I drive an American-built Toyota. It's domestic content is as high if not higher, than a GM or Chrysler. It took American labour to assemble it, keeping an American employed. It was also built by non-union labour. Do I lament the plight of the CAW/UAW? Not for a nanosecond. I am now driving my second Toyota truck built in the same plant. The second truck is as identical as they could be, right down to the colour. To say I was happy with the first one is echoed by my choice of the second. Both identical save the year of manufacture. Did the first one have issues, being the first batch of a new model? Yes it did. Paint issues, squeaks and other problems. Toyota made good on every one of the issues. So when it was time to get another vehicle, I didn't hesitate to buy another Toyota. This will be my 5th Toyota. Only my second domestically produced Toyota. The previous were all built in Japan.

My point.... if there is one, is this: I will spend my money on a good product. The fact these last two were built by American labour is just a bonus. A pleasant relationship with my local dealer plays a part in this too. Buying a product that doesn't carry a burden of grief, confrontation and poor quality carries the day. Price really didn't come into the picture as I could have bought a comparable product built in the same factory by GM for thousands less. I never even test-drove the GM version. I wasn't even interested in a comparison.

"Buy American" is as hollow of a refrain as can be. "buy quality" is much more appropriate. American goods used to be able to claim the quality moniker. Now they implore us to buy 'American' out of guilt. Sad, very sad.

As some of you may gather by my spelling, I'm a Canadian. Canada has a big stake in the Big-3 as well. We also have Honda and Toyota plants as well. They are suffering lower sales figures as well. They employ people too. The only difference is they are non-union, and they are not about to go bankrupt. So tell me? What are they doing so differently, or for that matter, wrong? The answer is a clue as to what needs to be changed in Detroit.

Its getting tiring the comp... (Below threshold)
jpm100:

Its getting tiring the complete flat out lies about American Content and the employment situation.

For the same marketshare the Japanese companies employ less than a quarter of people. They simply do less here. Honda may be a little better but they represent far from the majority. You would probably find far less if you can extricate the sales, parts, and service operations that need to be here to support their dealer network from the employment numbers they like to quote.

Its getting tiring... (Below threshold)
Mac Lorry:
Its getting tiring the complete flat out lies about American Content and the employment situation.

Go take a look at the window stickers at a Honda or Toyota dealer. If it's a pure import it will state the entry port. If it's assembled in the U.S. it will state where it's assembled, the total percent of domestic content, where the engine was manufactured and where the transmission was manufactured. If you think these figures are complete flat out lies, bring a lawsuit (like the UAW wouldn't have already done that).

For the same marketshare the Japanese companies employ less than a quarter of people.

If true, that explains a lot about what's wrong with U.S. auto manufacturers. They not only follow an archaic philosophy they're 30 years behind the times in manufacturing technology. Little wonder why they can't compete in terms of quality. Ford may be the sole exception.

They simply do less here.

Simply not true. Toyota has 11 plants in the U.S. and was close to opening another before the recession hit. Even BMW has a plant in the U.S. where they build some of the sport models.

Like many people I buy a product to meet my needs. Even if a car is in warranty when it breaks I still have the hassle of getting it fixed, so long term reliability is very high on my list. For more than ten years Consume Reports (CR) sends out it's product questionnaire each year to many of its subscribers and gathers data on the vehicles subscribers own or lease. CR takes no advertising dollars nor receives any funding from any manufacture (unlike JD Powers), so there's no financial influence that could bias their ratings. Yes, subscribers could lie on the questionnaire, but the sample is so large (1.4 million in 2008) that a few biased subscribers are statistically insignificant. I've reported some of their findings in above posts if you are interested. Actually go a buy the April 09 issue and see for yourself.

The call to buy American is one that appeals to patriotism and the well being of our nation. That appeal has it's greatest effect on conservatives and many of us have went out of our way to find products Made in America. However, in buying cars from the Detroit three we're supporting the UAW, which works against conservatives in every election. The UAW does this out of selfish motives, yet wants others to buy inferior products out of a sense of patriotism. Conservatives have been suckers for this for too long and I for one won't buy a vehicle the UAW profits from. Conservatives only need to follow their own self interest and the UAW will become extinct.

GM's labor and retirement c... (Below threshold)
DocScience:

GM's labor and retirement contracts add several thousands of dollars to the cost of each vehicle compared to Honda or Toyota.

They are a legacy of a company which just assumed it would always control >50% of the market.

Since GM cars have to compete on price, that means that those thousands come out of the car itself.

Cheaper materials, cheaper seats, a cheaper engine, cheaper switches, cheaper everything.

And cheaper/older factories, tooling, manufacturing and quality technology.

And the same need to save money has drained the profit and reinvestment from GM's suppliers who are routinely low balled by GM.

GM simply can't compete with that kind of disadvantage... even if the company wasn't led by idiots.

Let them fail, When is a co... (Below threshold)
Militarymale:

Let them fail, When is a company that makes so many bad choices going to stop getting bailed out. They didnt plan for bad times and pocketed the benifits and excesses for years and live in luxury homes and have plenty of excess. Let a up and coming company by the assets and move on. Support the small business plan the executives and management in GM have already shown they cant do the job right. Maybe the next company will plan for a recession and have measures in place instead of laying off thousands. Get them out of the tax payers pocket, tired of paying for idiots and failures. Especially for a company that isnt 100% american its my money i dont want it used outside of the USA i earned that right.

Use it for benifit of our country not another otherwise why pay it.




Advertisements









rightads.gif

beltwaybloggers.gif

insiderslogo.jpg

mba_blue.gif

Follow Wizbang

Follow Wizbang on FacebookFollow Wizbang on TwitterSubscribe to Wizbang feedWizbang Mobile

Contact

Send e-mail tips to us:

[email protected]

Fresh Links

Credits

Section Editor: Maggie Whitton

Editors: Jay Tea, Lorie Byrd, Kim Priestap, DJ Drummond, Michael Laprarie, Baron Von Ottomatic, Shawn Mallow, Rick, Dan Karipides, Michael Avitablile, Charlie Quidnunc, Steve Schippert

Emeritus: Paul, Mary Katherine Ham, Jim Addison, Alexander K. McClure, Cassy Fiano, Bill Jempty, John Stansbury, Rob Port

In Memorium: HughS

All original content copyright © 2003-2010 by Wizbang®, LLC. All rights reserved. Wizbang® is a registered service mark.

Powered by Movable Type Pro 4.361

Hosting by ServInt

Ratings on this site are powered by the Ajax Ratings Pro plugin for Movable Type.

Search on this site is powered by the FastSearch plugin for Movable Type.

Blogrolls on this site are powered by the MT-Blogroll.

Temporary site design is based on Cutline and Cutline for MT. Graphics by Apothegm Designs.

Author Login



Terms Of Service

DCMA Compliance Notice

Privacy Policy