Friday, December 05, 2008
A hard look at General Motors' "restructuring plan"
Jim Manzi peers into the "restructuring plan" that GM hopes will serve as bait for government financing. His verdict is not pretty:
The point of this document was supposed to be the presentation of the plan to achieve these operational improvements. But there’s no there there. I guess somebody who’s never read a real business plan might mistake this document for one, but it’s a joke. It’s basically a list of assertions of amazing improvements, entirely discontinuous with actual performance to date, that they will achieve. What's missing is any real indication of how they will go about accomplishing this.
If you still think that General Motors is not terminal, read the whole thing.
5 Comments:
By 
, at
Fri Dec 05, 10:26:00 AM:
Ronald Reagan faced a similar problem in the 1980s when the US steel industry was on the verge of collapse, for many of the same reasons the auto industry is on life support. He decided not to let the market take its course and intervened, however he made aid dependent on the companies declaring bankruptcy so they could renegotiate labor contracts. The steel companies had to agree to retool and modernize. Tariffs and quotas were imposed on a temporary basis to make US more competitive on the domestic market during the transition. While the US steel industry still cannot match its lower labor cost competitors in Asia and Brazil, at least there is still a US steel industry. The existence of a domestic steel-manufacturing capacity was and is a national defense issue. Something similar needs to be done with the auto industry, but the Democrats are in the pocket of the labor unions. All this hemming and hawing from Democrat senators about the big three's requests are just window dressing. They will get the money, probably with few restrictions, similar to the bank bailout.
By , at
Fri Dec 05, 10:29:00 AM:
I'm not so sure they'll get this money. The Senate seems strangely reticent, suddenly.
By 
Brian L., at
Fri Dec 05, 12:04:00 PM:
I'm going to miss Saturn. I'm on my third, and have no idea where I'm going to take it for service once the retail chains are no more...
By , at
Fri Dec 05, 04:39:00 PM:
I listened to much of Friday's House proceedings on the auto bailout as background while I worked. I'm fascinated with the auto bailout as an important early tell on how Obama will deal with our economic crisis.
Obama wanted to payback the UAW by jamming a bailout where the UAW made no concessions, and have it done on Bush's watch. That's why Obama wants the bailout done now, rather than after January 20, so he can tag Bush and the Republicans if it fails ... and why Obama wants to use TARP money. That's why the mantra is "GM is going broke this month" ... to create the urgency ... and why "no kind of bankruptcy is an option" ... because any kind of bankruptcy opens the door to requiring UAW concessions.
Obama met with Bush weeks ago and asked Bush to deal with Detroit ... but in exchange for his help on Detroit, Bush wanted Obama to agree to trade treaties ... especially with Colombia ... so there was no deal. Someone leaked this to the press.
Since then, the Big Three and the UAW have been working in concert with Obama & Co, I'm convinced ... and overplayed their hand.
The companies should have been working a serious government supported "pre-packaged" solution from the beginning ... if only as a lever to force the UAW and dealers to make concessions. They need a real plan to deal with what will certainly be severely depressed US auto sales for the next several years ... but a real plan would require radical surgery. Instead they're pushing a plan that will likely result in the US paying out $100B or more to carry the Big Three over the next couple of years.
There were some interesting absurdities at the hearings:
1) It's absurd that GM's CEO can say that a GM bankruptcy isn't an option because it will spook buyers ... while at the same time he's screaming that GM needs a US bailout because it's broke.
2) Today Barney Frank said he'd write new special laws to facilitate a process ... a process that sounded an awful lot like a pre-packaged bankruptcy proceeding. Remember, you can't say "bankrupt" out loud ... it'll scare the children. Is it just me ... but I had the sense that Barney Frank was enjoying himself ... he sounded drunk on power as he essentially said ... "We're Congress ... we can write any kind of law we want ..."
3) Barney Frank also repeated his shtick about "the Two Americas" ... why should workers at AIG get paid more than those at GM ?... a comparative worth argument. No one called him on "equal pay for equal work." The UAW's last deal results in newer Big Three workers getting paid at about half the all-in rate of the UAW's historic members ... for doing the exact same job. I know of no other place in America with this kind of blatant wage discrimination.
I expect the Big Three will get a relatively small bridge loan this month and that Obama will have to deal with it as a priority. Barney Frank is already openly critical of Obama's not being out on this ... when instead Obama tried to be passive-aggressive behind the scenes.
It'll get interesting when Obama has to openly make hard choices for the first time .... Tune in soon ... same bat time ... same bat channel ...
Link
By Unknown, at
Sat Dec 06, 04:16:00 PM:
the fifteen billion passed by the leftist illuminati government to give to these companies is already ludicrous. I can't believe we're giving money we don't have to fund companies who pretty much deserve to go out of business.
