Restructuring of GM and Chrysler

General Discussion
21

Uncle Turbo has it…
I don’t believe that GM’s original proposals include anything new, including slow plodding progress to keep share holders happy and continue using first generation Toyota technology in their hybrids.

GM has shown sparks of innovation and quality control second to none in it’s military,industrial and heavy equipment production, and I would like to feel that the govt. expects that same approach in the domestic car market. Making an outstanding Chevy Malibu that’s still a traditionally powered car is not what’s going to save the industry. Offering products that NO one else does, will.

Most of the success experienced by surviving auto companies will depend upon innovation, not duplication…Lee Ioccoca saved Chrysler initially and gave them a survival time of over 20 years with his forward thinking products. It’s time GM did the same. Make something NO ONE else does well…not Toyota “hand me downs” or products that feed their reputation for poor quality or safety.(Corvair/Vega/etc.) They’re capable of so much better.
How much longer do we have wait for the Volt…there could be two more generations of Prius before we see one.

22

If a few laws were changed, golf cart companies could put car companies out of business in a short time. Little four wheelers could rule the roads. We may not recognize our country in a few years.

Technically, this is available now. The US DOT has a classification for “low speed” electric cars that are essentially upgraded golf carts. They have a range of 40 or 50 miles, top speed of 25 MPH (legally, some go faster), and minimal lights and safety equipment. These are legal to drive in many states, but they only seem to be popular in retirement communities.

One of the bigger manufacturers is a division of Chrysler.

I could easily commute to work with one of these. None of the roads I use is posted higher than 35MPH, and the distance is 4 miles each way, but few people want to use these for commuting. I use a motorcycle . . .

23

Just to throw Fuel on the discussion, here is Top Gear’s James May on what he calls the “most important car in a hundred years”. It also addresses some of the “problems” with Battery powered EVs.

24

Opel is in the USA already. The cars are named “Saturn”.

25

More hydrogen nonsense. First, the car probably costs Honda well over $100,000 to make. Second, there is no ready source of hydrogen, and no way to distribute it. Straight EVs are far more practical and realizable in the next 5-10 years, and may be a better answer, period.

26

Any new technology is expensive. The FCX Clarity is available for a 3 year lease at $600 per month.

http://www.iihs.org/research/hldi/composite_intro.html

And straight EVs aren’t the least bit practical. Metal ion batteries aren’t available yet that will provide a couple hundred mile range. You might do it with lead-acid batteries, but I suspect that they would cost a lot and they certainly would be very heavy. That extra weight means more batteries just to move the batteries. It it were practical, it would be available today.

27

That $600/mo payment has nothing to do with the actual cost. Sure, batteries have a way to go, but the distribution network is in place, the technology is in place, the batteries just need a bit of development. The fuel cell vehicles are much futher from techinical maturity. And remember, the FCX is a hybrid, with batteries, too.

28

As I read the current GM plan (todays info). The good GM assets will be spilt off into a new company with major government input and the bad will be “terminated” in some way.

Would it not be a suprise and a great one at that if something good came from a FIAT Chrysler combo? I do ask why is FIAT even thinking about touching Chrysler? Chrysler need to find a “nich” that they can excell at. Something they can use their manufacturing and engineering capabilites to make a NEW product. Being a major player in the automotive world seems to be a strech for them at this time.

How about Chrysler being the manufacture of a U.S. built ion battery? Sure the deal is complex (technically,financialy,politicaly) but we have to find a job for that capacity. Is any idea to odd when compared with all the questionable spending going on?

29

This is almost an exact replay of Renault buying AMC in the seventies!! Renault wanted to sell cars in North America, and the Jeep was the only worthwhile product in the AMC stable. They built a shiny new plant in Canada (now a Chrysler plant), and their “Alliance” cars failed miserably!

This time, Fiat wants to re-enter the North Amercian market and the Jeep & minivan are the only products Chrysler has that are worth keeping. Chrysler does have some very good manufacturing plants in Canada and the US; probably better than those of Fiat.

Fiat has space-efficient small cars and very good small DIESEL engines. If Chrysler could build these car with a US reliability upgrade (something Renault did not bother doing) they would be Obama’s darling.

As they say, it’s deja vue all over again , to quote Yogi Berra.

30

I spent 23 years in the manufacturing sector including senior management and I don’t have nearly enough information or knowledge of the auto industry to make a guess.

But in truth I wonder if Obama has. His area of expertise is constitutional law. If I with all my training and experience would need time and research to render a guess I have to wonder how he’s doing so. This is, after all, a business plan. Is he relying on Geitner’s judgement?

I have serious reservations about the feds assuming they have enough knowledge to be judging the restructuring plan of a major manufacturer. I also have serious reservations about whether they should…or should even be using tax dollars to attempt to “manage” major areas of the provate sector.

I have to wonder what Obama was teaching in his constitutional law classes.

31

The mark of a smart politician or statesman is to corral the best brains in the country around you and then LISTEN. And then have the wisdom the pick the best options, not the most politically expedient. And then make it happen; damn the torpedos. I believe Obama is doing that to the best of his ability.

Having said that, Winston Churchill, a journalist turned politician, was farsighted enough to establish BP in the early 1900s (Anglo-Iranian Oil Company) and convert the Royal Navy to burn oil instead of coal. He spurred on all sorts of new warfare technology, the tank in WW I, in WW II radar, etc., and fully supported, with Canada, the development of the first nuclear bomb.

Obama, as a Democratic president, is between a rock and a hard place. The status quo is unsustainable, and the unions have to bite the bullet. GM management has been weak to develop a forceful business plan, take on the unions and the bond holders, and if you are giving out tax dollars to save a very important industry you have to take charge! And quickly!

Chrysler has run out of credit and will shut down two plants by the end of the week, more next week, not because of lack of demand. They just cannot pay their suppliers who are on a COD basis now with the manufacturers.

I dare say there is enough knowledge on this panel to do a much better job than Rick Wagenor has done.

Agree that the government has no long term business in the car sector. Volkswagen and Renault were both state owned at one time, and the respective governments privatized these busineses as time went on. The government of Lower Saxony still owns a good chunk of Volkswagen, but does not interfere in its running.

Car manufacturing is not rocket science. But it requires some very hardnosed decisions to fix a broken business model and preserve as much of the North American based industry as possible. We all know now that a market share of 15-20% is the best GM can hope for, and it has to trim its workforce and plant capacity accordingly.

When Margaret Thatcher, the daughter of a small shopkeeper in England, became prime minister she took on the mine workers and other unions, as well as he owners, to restructure British industry which was on its way to oblivion.

The native British car industry was beyond salvaging, so the US based companies(GM and Ford) were encouraged as well as Japanese car makers were invited to set up business there. The result was that a good level of production was retained, and the Nissan plant in England is one of the world’s most efficient.

Obama thoroughly understands the term “broken business model” and also knows what makes Japanese and Korean companies successful.

Unlike George Bush, he is not in anybody’s pocket and has to make some decisions that are unpopular with those who elected him.

32

You may be right about there being enough knowledge here to do a better job than Waggoner did. However he was adamantly against chapter 11, which his replacement is actively considering and it looks like the administration may support.

I personally tried to bring a manufacturing concern out of chapter 11 (as a part of a small team) and it has implications well beyond the obvious. Normally orders are placed and put into manufacturing (preferably a JIT system), a balance is maintained with the supplier, and as product is produced and delivered the net 30/60/90 gets paid, using loans to span the gap between that and the reciepts against the product deliveries.

With chapter 11, suppliers won’t even set up their millers without payment up front. You then have the lag time of their sequence plus the time of your processes before you can even hope to sel product and bring in revenue, and the cash is already out the door…which means you need more loans to fill the larger gap and keep the operation running. In this case, backed by our tax dollars.

My real problem is that I don’t think our tax dollars should be used to prop up private sector companies or that our politicians have any business involving themselves in the operations of the private sector beyond regulations to protect the innocent from the vultures.

In understood the original question in the thread. But I think the real question, the one beyond the scope of a business plan, is a much bigger one. To me it becomes a constitutional question. Where exactly do the powers of the executive branch end? They are, after all, limited. Are they usurping the powers of Congress to manage our tax dollars? Are they bypassing the legislative powers of the senate to regulate private industry? Are they violating prohhibitions against abrogating legal contracts?

And, final question, is diving headlong way beyond the deficits of our wildest nightmares really going to help the economy…or weaken it?

33

I dunno, but I bet if we spent a trillion dollars, we’d find out from someone.

34

Don’t forget the Ram trucks. The car mag testers like them better than the Ford and GM products. I know you aren’t talking quality because you mentioned Jeep.

35

“In understood the original question in the thread. But I think the real question, the one beyond the scope of a business plan, is a much bigger one. To me it becomes a constitutional question. Where exactly do the powers of the executive branch end? They are, after all, limited. Are they usurping the powers of Congress to manage our tax dollars? Are they bypassing the legislative powers of the senate to regulate private industry? Are they violating prohhibitions against abrogating legal contracts?”

Do you think Congress is going to get in his way? I don’t. Since the Democrats control both houses, the administration’s efforts probably match their wishes. I image that Obabma is smart enough to check the “weather” before making pronouncements.

OTOH, we could just let the upper Midwest die. Think of the millions on unemployment for decades. I’m not being an alarmist. That would surely come to pass. My mother was from a steel town in Western PA. The mill shut down almost 40 years ago and they still haven’t recovered. Most men are construction workers that might get home over the weekend. These days they probably spend a lot of time at home - on unemployment. That’s two generations and counting.

You want fries with that?

36

Battery technology has almost stood still in the last 100 years. The Lead Acid battery of 100 years ago is basically the same as the lead acid battery of 20 years ago (there have been some marginal improvements recently however).

As to how this fits in with the electric car:
A good battery now only has about three times the energy density of a good battery from 1910.

Once you take into account the massive increase in energy demand (radio, heater, AC, power stearing, etc.) the increased speed, and increased mass of modern cars, it’s shocking that they can still hit the same numbers for distance on a charge that they did 100 years ago.

It’s also worth pointing out (because you brought it up) that average speed isn’t the real issue, it’s peak speed. Driving you car at 80 mph for 30 minutes and sitting in a traffic jam for 30 minutes takes more energy then driving at 40 mph for an hour.

37

Li-ion batteries to run a car would be horrendusly expensive.
A gallon of gas has about 40 kW-hours of energy in it.
Lithium Ion battiers cost about 20 cents per watt hour. That means that the lithium ion battery equivalent to a gallon of gas is about $8000. Now, it’s a little better then that in reality because electric motors are about 3x as efficient as gas engines, but you’re still looking at many thousands of dollers in batteries to make an electric car. Nickle Metal Hydride batteries (which I belive is what the prius uses) are roughly the same price, which matches up nicely with the claim I saw somewhere (in this thread?) that a Prius can go ~40 miles on a battery pack (which costs a few thousnd dollers).

38

The first chain saw was litterly the first in the world. The world uses a huge number of batteries right now, increasing the demand is going to drive prices up, not down, as people start fighting over limited resources. There isn’t enough lithum production right now (or planed for the future) to cover using it to make car batteries. Just about any battery technology that attempts to gain widespread use to power cars is going to drive the prices of its consitutent parts up.

39

REDUCE, REDUCE, REDUCE.

Reduce the numbers of vehicles being made. If that means some divisions go away, then so be it.

Eliminate the dealership model all together. Close down all dealerships, and replace them with mega-sized regional corporate stores selling vehicles “Wal-Mart style” (high volume, low profit margin). Incorporate the Saturn one-price model, but keep the prices realistic. Then, in order to stay close to the customer and provide a way to allow them to touch and feel the product, open local service stores that primarily handle service, but also carry a minimal representation of the product line for test drives, etc. I’d stock these stores with a passive sales team and run them sort of like a high-tech library with simulators and other cool high-tech marketing tools. Make it a place people get excited about visiting, instead of a place where the dregs of society make a dishonest living.

Lastly, eliminate the unions at all costs. It’s been a nice run for them, but the party is over…

40

The trucks are OK, but the market is glutted with trucks (too many models), and it’s a matter of viable market share. As for Jeeps, the NAME is the most important asset; the quality could be improved of course. Europeans think the Jeep is a real icon; I know as a kid in Europe those military Jeeps meant all things good.