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Monday, February 16, 2009

GM to Stop Making Cars

GM is taking what has to be one of the most innovative approaches to the business of manufacturing automobiles. They are just going to not make them.

GM COO Fritz Henderson admits,

"…The fact of the matter is, right now we're losing money on pretty much every car we make…So you can imagine how much money we'd save if we just stopped making them."

I think I'm going to start a business that is in the business of making nothing, then ask the government for billions of dollars to bail me out. All I need is for a million other people who say that they depend on my business.

When did the light come on that GM has been "losing money on pretty much every car we make", as Henderson said? Years!

Al l the automakers have been bleeding billions of dollars for years, so these losses are nothing new. The only reason the light is being shined on this subject is Uncle Sugar is running out of money. Up to this point, the automakers have used the government, i.e. the taxpayer, as their own personal piggy-bank. The not-so-dirty-little-secret is this has been done at the behest of the unions.

If you want to know how good lobbyists are, consider that the Fed has been giving billions of dollars to an industry that hasn't shown a profit in years. But that's nothing when you consider that the Fed is now giving billions of our dollars to companies to not make a product.

What's next, paying farmers not to farm? Oops, our government has done that too.

From the Washington Post:

"Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post."

Only our government would consider something so asinine, and here the Liberals are back at it.

Henderson says the rest of the "fix" for GM, aside from receiving billions of taxpayer money to not make cars, will be "to sell showrooms and fixtures." Sell this stuff to whom? Folks this is a guy who is earning millions of dollars to come up with these ideas, these "jewels". Is there any wonder GM is in trouble?

Henderson goes on to say that GM could switch to manufacturing vacuums, clothes dryers, and lawn mowers. I love this strategy. Move from a focused strategy of losing money manufacturing one product, and shift that strategy to losing money on three products.

There is gold at the end of the rainbow in this strategy, however…for the unions. I can see it now, the United Vacuum's Union, United Dryers' Union, and the United Mowers' Union.

Here's the wrap:

The automakers are supposed to present their plans to the Fed to justify the money they have received. Bankruptcy remains a consideration for the automakers, even after receiving our money.

So next time you see somebody with a UAW hat on, be sure to remind them that you have carried their heavy butt for decades. The idea that many of these people get paid almost their full salary when laid off, I find beyond belief.

That is until I learned that GM is receiving money to not produce autos.  So workers are paid not to work, to which in turn produces nothing.  Ok, now I get it.

That's my rant!

© 2009 Kevin Jackson – The Black Sphere All Rights Reserved

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52 comments:

Pamela said...

My girlfriend that lives near Detroit sent me an article years ago that detailed what people laid off from GM get. She was furious about it.

I admit I have been in my cave the past couple of weeks. I had heard about the nightmarish stimulus package. I am amazed to hear that GM could get funds when they decided not to make cars. I have no words for that. Sheesh.

John Kubicek said...

Kevin, as always, you are right on. Great column!

Isn't it wonderful that people could make something from doing nothing? And have you thought about the fact that those that do that (many of them work on Capital Hill and in the White House) come down so hard on poor Bernie Madoff-with-our-money? Hey, the poor schlug was just trying to duplicate the economics of this government.

The Black Sphere said...

Pamela, Sheesh is right. Shows what happens when the inmates take over the asylum!

The Black Sphere said...

John, Madoff should get a parade in comparison to the Liberals in Congress and Obama.

Anonymous said...

InRussetShadows

This whole bailout is sounding more and more Bolshevik every day.

Anonymous said...

macdesire

that's why you should think about a ford for your next car ....
Ford does not take a dime of the bailout money.....

Dr. Dave said...

Yup...the transformation to a complete nanny state is almost complete. Gee...better go pull that surrey out of the barn and hitch up the dogs (can't afford no horse...the gov't took too much from my check last year).

Kate said...

I do nothing. Can I can paid for it too?

The Black Sphere said...

Kate - Absolutely! Just keep doing nothing, and you will be handsomely paid.

Kate said...

Cool. Been thinking about buying a little truck. A FORD. I can use my income for doing nothing to pick up one....with no sweat off my hiney. :)

Rose-Bud said...

Hey Kevin,
I was thinking on the way to pay my SCE&G bill this morning...when/how is the gov. gonna get their hands on the operations of the utility companies? Lords knows their CEOs make more than $500,000 a year, and their rates raise each year, bleeding low/middle income paychecks dry. I am all for free enterprise, but I am worried when they fall, for sure we will be in the throes of socialism. Or did I miss something and they already are? What type of bailouts can they ask for? I'm a thinker, ya know, and thinking minds want to know.
Also, I have a brother who works for a big printing co. outside Chicago, and he is always bragging how their union makes the company pay them for 8hrs of work when they are actually doing 2 hours of work on a 8 hr shift. He usually takes his laptop to work so they can watch movies or sleep until the shift ends. He has no worries about being laid off cause the union will make sure he is paid most of his salary while he sits around at home and does nothing, if he chooses. The good thing is that he has a type A personality, with a nervous energy which he used to start a small business, and work a part-time job. LOL

Sabra said...

Slightly off-topic, and I suppose I could research this and find it out for myself, but when is your book finally coming out? Will I be able to get it during our visit to the States in August? I highly doubt we're going to get the chance to see anything you write on our library shelf. We've got books by Hillary, Bill, Nancy Pelosi - a slew of New York Times' writers - but nothing of a conservative nature [well, except for one writer - but that is a fluke]. I have changed my vote from "maybe" to "definitely!" Your piece on Obama Eating Crow did it for me.

The Black Sphere said...

Rose-Bud, the utilities are government for the most part. Their lobbyist will make sure they get theirs.

The Black Sphere said...

Sabre - Glad you will get the book when finished! The likelihood is I will have to sign it and send it to you, as they won't carry it in the book stores. We will make it happen however.

WebSmith said...

Our domestic car maker problems are a result of institutional investors, other wise known as corporate raiders and the same people who are taking trillions in supposed bank bailouts, meddling in sound business practices in order to strip the companies of the capital they needed in order to invest in technology and meet their commitments to their work force.

They are not a result of unions or bad management as the corporate media would have you believe.

corporate raiders

Ron B said...

Meanwhile......back on the ranch, the U.A.W., GM and Chrylser concessions talks have broken off. Saying that the proposals were unfair to the workers. So maybe if they have no job then that would be fair! Ohh wait. They still would get paid! That won't work! This is why these companies should have been allowed to go into bankruptcy to rid itself of these contracts that do nothing to help GM compete.

They are suppose to present their "viability" plans tomorrow. Henderson just presented the best plan for GM. Do nothing! Produce nothing! Lose less! I definitely would not buy a vacuum cleaner nor lawn mower from this company.

Kudos to Ford for not taking any money.

A name change is in order for one of these companies.

GM is now Government Motor Corporation

The Black Sphere said...

Web, your comment has validity, but don't even think that the unions are not a major part of the problem...they are.

The Black Sphere said...

RonB, excellent post, my friend. Glad I gave you "Knight" status for my blog!

Ron B said...

Should I change my moniker to Sir RonB? LOL

drjim said...

This reminds me of an old joke told by Russians. In regard to their state-run "economy", they always said "Yes, it works quite well. We pretend to work, and they pretend to pay us".
This sure isn't the USA I was born into 57 years ago!

Dirk said...

The unions have been a major part of the problem for years & years. Around 1990 or so, there was an article in the Atlanta Journal-Constitution about a GM worker who was laid off in Michigan, moved to Duluth, GA, bought a house, & was getting paid his full salary for TWO YEARS without producing so much as a gemclip. The automakers should have been allowed to go bankrupt to get rid of these bad contracts & reogranize. I think the reason we hear such howling at the idea (other than the unions having a fit) is most people equate bankrupt with out of business.

Dirk
THE FIRST AMENDMENT, NOT POLITICALLY CORRECT II
http://tsalagiman2.blogspot.com/

The Black Sphere said...

@SirRonB - 'Nuff said!

The Black Sphere said...

drjim - We won't know that US for some time!

Diane said...

I consider the relationship between the unions and the democrats as another "pay to play" scheme. I guess ya gotta be from Chicago to be that well trained though. Oh wait, I nearly forgot, our new president and a huge part of his adminstration is from Chicago. Oh yes, and I also nearly forgot, the unions paid during the election to get him elected along with all of their other representatives. See, it works!

The Black Sphere said...

My peeps, well you make me a proud Papa! Great comments, and as sarcastic as ever. I love you all!

Rosemary said...

I never liked GM cars anyway. Seriously. Chevy=blah
I am more of the Ford/Mazda kind of girl.
My sister in law (hubby's sis) worked for GM in Lansing for many years (100 maybe) and she just retired. She gets a nice chunk of change from them. She loves unions and voted for... yes indeedie, BHO.
Oh an she used to offer us her huge discount of a car purchase over the years... blah never found one I liked. Good bye GM.
No, I do not want a GM toaster either, lol... GM vacuum cleaner haha. Both would be ugly, just like their cars.

Personally, I am really worried about everything... and why the heck hasn't BHO signed this stupid bill if he thought it was so immediately important and life threatening???? people are suffering... well, the sand mousies are in Nancy's district are certainly suffering.

Great blog entry today Kevin!

Julie said...

Oh man, all that time wasted in school and then working my butt off. I went into the wrong profession, imagine getting paid not to work, I thought only politicians got that perk.

The Black Sphere said...

Julie - Shame on you for being successful!

Anonymous said...

PuterPrsn

Yep, we do pay farmers not to farm. All you have to do is show that you've grown [whatever crop is least needed] for a couple of years and lost or broke even, and so now they'll pay you NOT to plant. A great way to allow fields to fallow for a long while. Rather than change to a cash crop, we'll pay them to not do anything.

How can an urban person get in on this? I want some bailout, too! I can do nothing with the best of 'em - maybe even better!

Anonymous said...

Harabeck

Wait, are people taking this seriously? I know it's not the onion, but come on, they aren't the only ones that can do satire. Look what comes up when you google this:

Anonymous said...

govsucks

Why make cars when you can just get the federal government to steal from people for you.
I can promise you right now that I will NEVER buy a car from any American company that used the federal government as an instrument of plunder.

Anonymous said...

glenshaw26

The UAW dumped the "jobs bank" program where the laid off workers still get 95% of their pay back in December. C'mon Black Sphere, you're better than that.

The Black Sphere said...

@glenshaw26 - Wow, we've had 2 months for that to affect things!

Anonymous said...

dupswapdrop

Hey in the small town I live next to, the Chevrolet dealer is renting out 200 acres just to park new cars on, and these are brand new cars from 2005 and on. Maybe GM should have a sale?

drjim said...

It's not just the American automakers that are sitting on huge inventory. I work in Long Beach on what used to be the old Navy base. It's mostly holding pens for containers now, and places for the foreign automakers to off-load their cargo before it gets sent to dealers. EVERY car lot is full to the gills, and the foreign companies are renting any open space they can find to store cars.
It's bad all over, and even the "poor" longshoremen are complaining about not getting enough hours!

The Black Sphere said...

Well all I can say is I'm biding my time to get a really nice car on the cheap!

madmath1 said...

GM is going to paid to produce absolutely nothing. Isn't that the definition of government (Bureaucracy). After all, I never met a bureaucrat that every did any productive work. We're not buying their cars because they're crap. The only GM car I ever owned was in the shop more than in my garage. Now they think we'll buy their toaster (which I don't need), Dryers (I can get on craigslist and will last longer), and lawn mower (I have a gardener thank you). Yes, instead of being paid for not making one item, we can get 3 times the money for not producing 3.

This concept of paying for not producing has been one of the most insane concept to ever enter economics. How can a society benefit for NOTHING? It's old fashion communist price control. The results, no suprise in all cases in history, is scarceness. Get ready to have more of less with shortages and higher prices.

Since I've been laid off as a teacher, where's my 95% for not teaching children. After all, how is this different when I was in the classroom and wasn't allow to teach them? They weren't even really required to learn. Now I have more peace and less stress for the children to learn nothing.

The government is the enemy of productiveness and now they're gaining more power in the business sector of our economy. No government has ever produce anything (contractors have, but not the actual government itself) and nationalizing industries will infect the industries with the same unproductive mentality. Perhaps the government just want us all to buy VW's.

John said...

We've got the "farmers" getting paid out here too. It's called CRP (Conservation Reserve Program). In our small (2500 people) county in Washington State on the Palouse (Go Cougs!) the guvm'nt gave out $3.8 Million in 2006. The biggest scare of these "farmers" is that the government will end the program and ask them to grow wheat again. Then the "farmers' will have to actually spend some money to make their currently unused equipment work.

John

The Black Sphere said...

John - Thanks for the confirmation, so people see that I don't make this stuff up!

CFitz said...

All I can think of is Sienfeld & this conversation is actually taking place between Henderson & the Feds instead of Jerry & George...

GEORGE (Henderson): Yeah. I think we really got something here.
JERRY(Feds): What do we got?
GEORGE(Henderson): An idea.
JERRY(Feds): What idea?
GEORGE(Henderson): An idea for the show. (cars)
JERRY(Feds): I still don't know what the idea is.
GEORGE(Henderson): It's about nothing.
JERRY(Feds): Right.
GEORGE(Henderson): Everybody's doing something, we'll do nothing.
JERRY(Feds): So, we go into NBC, (Uncle Sugar) we tell them we've got an idea for a show (car) about nothing.
GEORGE(Henderson): Exactly.
JERRY(Feds): They say, "What's your show (car) about?" I say, "Nothing."
GEORGE(Henderson): There you go.
JERRY(Feds): I think you may have something there.

But according to many who voted for BO they won't have to do anything now that he has been elected. They are all expecting their $$$, cars & houses within the next year!

Oppo said...

Thank your lucky stars that our elected officials don't have their own private lobbies as effective as the UAW's.

I mean, can you IMAGINE a politician being paid a hefty fee and gathering all sorts of benefits, all for DOING NOTHING?

I, for one, am glad we don't live in THAT world.

...Heh.

Larry said...

Actually, I think we would all be better off if the politicians DID do absolutely nothing.

The Black Sphere said...

Cfitz - Very clever to use the Seinfeld episode, and so apropos!

The Black Sphere said...

Larry - It is a FACT that the US is better when there is "gridlock". This is a scary time, when the Dems can run buck wild on the American taxpayer!

Anonymous said...

I wondered five years ago why GM couldn't make a profit when every other business with a front door was raking in millions... every quarter, GM reported they ALMOST made money.. and once or twice, they'd claim a few million in profits when other companies made billions.. their problem has always been unions and bad decisions.. and considering that nobody is buying new cars right now, the worst decision of all is keeping them in business.. but hey, as long as unions keep voting Democrat, we're going to keep paying them to vote that way..

More and more I think I"ll to go the country, raise chickens, grow carrots, live off the land.. and stop earning anything that can be taxed.. just call me Atlas..

Big Dave

iamfelix said...

We're getting a little off-target with some of the GM comments here. Full disclosure: I'm a 28-yr. seniority, (low-level) GM salary employee, a blue collar job.

I heard this guy on WJR 760AM (local radio)this morning. He made a lot of sense, and cited this article. If you check WJR's website later, I think it's likely that they'll have audio of his comments, under the Paul W. Smith show.

Some random comments, solely from me:

1. The employee discount for cars is NOT huge - Used to be somewhat larger, but was never princely. I've had people ask, "They practically give you a car, right??" Um, no.

2. I think the jobs-bank is still in existance, but am not sure. There IS NO jobs bank for salaried employees - if they give you the (puss 'n') boot, out you go. Same for the very large number of contract employees that all the Big 3 have been using over the last couple decades. The contract help (think Kelly Services and other tech houses) exploded as a frantic effort to keep costs down, and to not hire a lot of direct employees into a business that has always been fairly cyclical, only to be forced (as they are with the UAW hourly) to throw them into said jobs-bank with a downturn of the economy.

3. A very big percent of GM's (and Ford, and Chrysler) woes are due to government regulation. Every nickle that goes into ever-increasing fuel economy, emission or safety standards mandated by government is a nickle that can't be spent on styling, plant or machinery updates. There are only so many nickles. And, as far as the union, who do you think is the ultimate arbiter of how the Big 3 must deal with the union? Think the Federal Govt. .... And think of the new push for unionization regs. and demands by ... the Federal Govt.!

Sorry so long.

The Black Sphere said...

iamfelix - Thanks for the comment and clarity.

iamfelix said...

LATER: My suspicion was right - The Wm. Holstein clip was posted at WJR. You can find it HERE.

Chip Head said...

The financial results for the Ford Motor Company operations outside North America from 2006 through the 3rd quarter of 2008 include: South America with a net profit of $2.848 billion, Europe with a net profit of $2.842 billion, and Asia Pacific and Africa with a net loss of $90 million.

The bottom line for Ford management for their operations outside North America since 2006 is a net profit of $5,600,000,000.

So why the problems in North America? How about the National Industrial Recovery Act of 1933. During the New Deal this legislation gave unions vastly increased legal standing in dealing with employers. The foreign auto plants in the U.S., for the most part, are located in right-to-work states, thus unionization less likely.

The Black Sphere said...

Chip - Great post my friend. Folks we have smart people in "the sphere", and Chip proves it. It's what I have been saying, UNIONS. This is a great example, proof by numbers!

iamfelix said...

Great comment, Chip - It's pretty much the same for The General. The overseas markets have been subsidizing NAO (North American Operations) for a long time. I just didn't have all the stats - nice work!

Anonymous said...

offon

Someone should be responsible for this ...and of course pay.