I have nothing against Michigan (except that Tom Brady played in that state), but we need to let Detroit burn. The Det-3 have a horrendous business model, and its one that they have refused to change. Why else would they keep pumping out SUVs and other vehicles when the trend was pointing towards smaller/more efficient/green/reliable cars? I don't know if they have any financial analysts there, but someone missed something when GM posted something like a $40B loss last year. Theres a few things that I can't stand about the way that Ford/Chrysler/GM have been running their ships:
1) Inability to outsource manufacturing of parts and/or labor because of the auto workers union, which calls a strike every other day it seems
2) Great lack of foresight and refusal to react to current or hell, even projected, market trends
3) Employ a fixed-cost structure in one of the MOST regulated American industries (which are all regulated as it is), and do not have an alternative strategy for economic downturns (clearly)
Inability to outsource: These domestic auto companies get hamstrung because of the rules and regulations that business must follow in the U.S. If you brought up the idea of a labor union (similar to the UAW) in India, they'd probably laugh at you. Why? Because they'll do it for cheaper and half the bitching. I dont think Mahesh is going to give two sh!ts about getting his 2 15-minute breaks, a 30 minute lunch, and a 401k- he just wants to get paid so he can get his grub on. This is why, in my mind, outsourcing is brilliant- because you are doing the same work for a cheaper price. If we can look for deals on shoes/clothes/flights and go with the cheapest, why can't companies? (granted you're not using child labor) But I digress. Companies like the Det-3 are in a position where these unions won't let them go outside of our borders to manufacture. So they play it up in commercials as "built by the american spirit" or "made by americans for americans"... but all it does is screw them on the cost-side. I think if they had the ability to outsource, they could lower their labor costs, avoid a lot of regulations that domestic manufacturers would be subject to, and hell maybe even get better parts out of it.
Lack of foresight: Toyota hopped on the green trend fast and now has the leader in the Prius. Toyota is not pushing out SUVs or 40 ton trucks that can haul a small city out of quicksand. Toyota outsources for manufacturing. Toyota continues to improve its Camrys and Corollas, and if you notice, a lot of their cars LOOK like Lexus luxury vehicles. Toyota's cars are gas efficient and its parts are cheap and easy to find at any auto store. Toyota has a near 20% market share in the U.S. and virtually carries no debt and is sitting on a $20B cash reserve. The Det-3? GM and Ford had their debts rated as junk-bond status. They haven't picked up on the green movement like Toyota and Honda have. They keep pushing out the big cars and do not concentrate on fuel efficiency. I imagined the conversation about green cars went something like this:
GM research guy: Sir we have noticed that people are becoming more environmentally conscious and market research shows that we can greatly benefit financially if we start making our cars more fuel efficient and environmentally safe.
GM executive: LOL
Fixed-costs: GM has been notorious for its fixed costs, meaning when you are paying $20k for a car, included in that $20k is $1k for rent of a factory, $4k for Joe's health benefits, and $15k for the actual car itself. Since these costs are constant, GM needs to push out an assload of cars to stay above water. Then instead of trimming down the # of open factories, they keep them all open as much as they can. Are you serious? Instead of drastically closing down factories and creating a large ripple in the economy, why not cut down as you see necessary in the course of business? At least that way you'll give the workers enough time to re-assimilate themselves into the economy via another job. High five for the Det-3.
Filing for bankruptcy will be beneficial in the fact that for starters, we won't be dishing billions for a DOOMED business model. Also, other companies could pick up Det-3's assets and maybe make something better for the American consumer. What about consolidation? Combine Ford, GM, and Chrysler, create a shell company, combine assets and share debt, and for God's sake TRIM DOWN your car lines we don't need 620 models of the same crap. Why do i care if i get a Sebring or a LeSabre or an Escort if they are all in the same class? (i dont know if they are im just saying)
Det-3 is claiming it will depress the economy further if they are forced to go bankrupt. Granted, Det-3 and its subsidiaries' employees combined are probably over 1million, just a guess. That is a lot of workers to add to unemployed workforce, but they are very employable. You wanna talk about a real crisis, think what about happen if McDonalds went under- how many people would be unemployed? More than Det-3's I think. Plus all the 'slims would riot because we love those Filet-o-Fish sandwiches. See I even capitalized it because its that delicious.
