What "mistakes" did the BIG 3 make?

I don’t follow the news as much as I should, maybe this was covered recently…but, in listening to Bill O’Reilly’s radio show today, there was a blurb/commercial, highlighting the GM CEO’s comment…that…‘we are here because we made mistakes.’ (here, meaning near bankruptcy)

So, what mistakes did the big 3 make? Why isn’t Honda and Toyota going through this…or Suzuki, and Mercedes?

I personally do not like american cars…I owned a Ford a few years back, and it broke down nearly at the 36,000 mile mark. Just wouldn’t start up. Sorry, that’s not acceptable. I will never ever buy a Ford, GM, Chevy…anything like this again. Now, that is my story, I know many people who love american cars.

I also know that when lenders stopped lending, after the foreclosure crisis hit, people stopped buying cars. So, supply and demand…there just wasn’t as much of a demand.

Are there more mistakes than this? The GM CEO sounded like he was taking more ownership of the mistakes though…that the outside factors played a part…but what other ‘mistakes’ were made that caused the problem, do YOU think or know about?

I think they tried to ride the “bigger is better” wave for too long, and they got hit hard when people started looking for smaller cars. I have no statistics to back that up, but that is my general impression.

Agreed not to mention at least from what I have heard many of their cars quality wise just aren;t that good. And with the economy bad in addition to people wanting more fuel efficent and often times smaller cars, many were probably also looking for a car they wouldn;t have to replace in 2 to 4 years. Course I realize that some people have had great luck with american cars. I know my mom for instance never has so I am very wary of them.

Thank you for your replies. I hadn’t thought of the the SUV crisis.:blush:

So, why are we as taxpayers bailing out private businesses who made bad judgement calls? Bad business models? Yes, there were other mitigating circumstances…but, they have been tanking for a while…the banking problem just sent them over the edge. I think they should APPLY for a loan like everyone else does and restructure. Lower substantially the bonuses etc that the mgmt elite are making, and get back to making GOOD, AFFORDABLE cars.

I just don’t agree with our money going to help private companies stay afloat.

Toyota, Honda, and other Japanese cars, as well as cars from other non-US makers, are nationalized companies and as such are protected by their governments. Their employee in their home countries have nationalized healthcare, etc., and their workers here in the US are all in states that do not have unions and thus wages are lower. The Big Three do not have such protections.

However, the Big Three did make mistakes. As noted above, they tried to ride the big vehicle wave even after it had crashed. For a while in the 70s and 80s, they were putting out real lemons and although they’re putting out a lot of top-rate cars now, their image has never recovered. And top that off with bloated upper management salaries, mid-century style pension-packages that are not sustainable in today’s economy, and the concessions given to the UAW (such as the ridiculous jobs bank at GM), and there are many places over the years where the Big Three could have reined themselves in but didn’t.

However, they are asking for a $25 billion loan- a loan that they expect to pay back with interest. So far our government has given $1.5 trillion to Wall Street. Who knows if we’ll see that money again? It doesn’t make sense to me not to give the loan to the Big Three.

  1. The top execs could not imagine a world without their companies. Well, they can now.
  2. Really poor quality and service. I bought a new Pontiac Phoenix some years ago. The back bumper fell off and the service guy said it must something I did. This kind of stuff was very frequent. My children and my children’s children will NEVER buy a GM product again.
  3. They focused on short term profit and did not understand or care about long term trends and a changing consumer environment.
  4. They focused on styling and marketing, not engineering and innovation.
  5. They thought that they could buy labor peace since they would always always be dominant. Labor and management were antagonistic rather than partners. For a brief while, I worked in the office of a GM plant (not in Detroit). Occasionally I had to go into the plant for inventory or other matters. Once I was counting tail pipes and to get a better count I moved a few, The Union complained and from that point on, I had to call a union member over if I needed to move anything. I couldn’t even touch a box of bolts. This is absolutely no exaggeration.

They tried to cope by creating the Saturn line with different sales approaches, manufacturing approaches, better customer service, a separate management insulated from the Detroit culture, etc. They did well for a while but, like the Borg, Saturn was assimilated into the main GM corporate culture. This why a bail-out will just not work. Really dramatic change is necessary and I think only a re-org under bankruptcy law will save GM. By the way, I think Ford will survive w/o a bailout.

All the companies you named don’t have to pay for health coverage, because it is covered by their government. Detroit, however, has to pay very high health insurance premiums for its workers. This raises the cost of American cars and makes them less competitive with foreign cars.

The way I see it, the $$ taxpayers gave to Wall Street will big one big huge waste if the automakers go under. The foreclosure/loan default rate will skyrocket due to massive unemployment and the banks will not recover.

IMO, it’s either you save them both or don’t try to save either at all because they both depend on eachother too much.

I don’t like gov’t bailouts anymore than the next guy, but I think this is a very unique situation that calls for it. Well, it’s not really a “bailout”. It’s a loan.

The labor unions have bankrupted the car companies. In case you haven’t noticed, all foreign car plants being built in the US are being built in right-to-work states which are predominately in the South. Ford can build a car about as efficiently as Toyota, the problem is that Ford’s labor costs (as well as GM’s and Chrysler’s) are significantly higher so there is no way they can compete economically. Until that issue is addressed there is no solution that will make the big three competitive.

This is not exactly a secret.

workforce.com/section/00/article/24/96/64_printer.html

Ender

Yeah, you’ve pretty much restated what I said. Your point?

The union has been the downfall of the American auto industry. How many times over the past 6+ years have the big three gone to the union and told them that they MUST reduce head count, MUST reduce output, MUST reduce expenditures, or there would be serious consequences??? Countless times. And every single time the union comes back with this arrogance of “no concessions”. Well - they are getting exactly what they were told they would get if they didn’t come to the table when asked previously.

There is massive corruption and abuse in the union - if ANYTHING needs restructuring that’s where it needs to happen.

I wonder if anyone has asked Gettelfinger – “You can choose, your workers can take a significant reduction in wages & benefits and keep working, or they can loose everything and not work again for a generation. What will you choose?” - I’ll bet you he would say it again — no concessions. :mad:

~Liza

But how much lower are starting wages supposed to go? I hadn’t personally realized how much of the labor costs are really going toward retiree expenses. I would say that cuts should be made there, but the retirees were promised these benefits, and have budgeted for them. If we yank those, what happens to all of them? There is no easy answer here, not for the UAW or for anyone.

From this morning’s Detroit Free Press:

The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That’s like assuming you get your parents’ retirement and Social Security benefits in addition to your own income.

Hourly pay for assembly line workers tops out around $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There’s no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they’re working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis.

(Source: freep.com/article/20081205/COL14/812050400/?imw=Y)

Your comments about foreign companies are incorrect: they are not nationalized, they are private business just like ours nor does the health care of their own countries matter when their factories are in the US. The problems were caused by labor negotiations between the unions and the companies where labor always had the ability to cripple a company and was basically able to extort the wages and benefits that have now led to the bankruptcy of the US auto industry.

Ender

I agree with you to a point, however, it is also important to note that workers in foreign countries are paid terrible wages, and their health insurance is covered by their government. We do not have socialized health care, so the Big 3 are paying it. When a company doesn’t have to pay health insurance premiums for its employees, PLUS wages that are not living wages, of course it will do better financially when you compare it to a company that pays better wages and offers health care. Perhaps if we had a nationalized health care system, they’d be in a better position to compete.

I would disagree.

The “bigger is better” is pretty much a red herring. The Big 3 have had a complete line up from the dinky Aveo to full size Hummers.

And Toyota itself recently introduced a full size pickup (the Tundra), so if being on that wave is a bad thing, Toyota is equally at fault.

As for the qualtity, Ford is actually the quality leader over Toyota, including a Lincoln plant that has the least number of defects than any other plant in the WORLD.

just-auto.com/article.aspx?id=91560&lk=nd02

The biggest ‘fault’ is that they have an older, more expensive workforce. The combination of pension payouts due and the health care costs of retirees and an older work force mean that the Big 3 have labor costs of about $1500 per car more than the foreign OEMs.

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