JIT is a thing of the past. Lean enterprise is very well present at most large scale manufacturers (late 80s movement). Hardly a novelty and is a necessity for business today. A couple of points:

1) These are great companies and are leaders in the industry. You do not see the years of investment, valuable innovation and progression in R&D that does not materialize in their products/into commercialization. Some of these things are at the most fundamental level. There are years of heritage and capability; they hold a comparative advantage and provide a net benefit gain.

2) To the conspiracy theorists: You should have bought GMs electric car in 1998...when it lacked the 'bling and muscle', maturity in technology and reliability. During the years of great SUV sales everyone had praise for these firms. Just look during the past 8 years at how many Yorkdale Parasitic Shop-a-holic MILFs that looked like they were climbing down a step ladder from the pitt of a fighter jet...the Navigators, Durangos, Explorers, Escalades, X5s etc. When fuel prices were cheap, no one said a thing. GM even paid lofty dividends. Consumers drove choice and demand.

3) These companies can be profitable operations. It's not to say that consolidation should be disregarded. Casually looking...GMs cash flow from operations was positive (and not just attributable to depreciation & amortization).

4) There will always be a trade off between robustness, reliability, quality, cost and time to market.

5) Chrysler's experiment in the 80s (Lee Iacocca era) yielded great returns for the government. Good government partnerships can bring on great results. Secured loans (with guarantees), the right direction and coordination can turn these companies into global leaders again. I have full faith in Alan Mulally (Ford's current CEO). He was Boeing's VP of Commercial Aircraft and led the development of the 777 and the 787, so he has a very high pedigree for quality. I don't see why a similar arrangement can't be achieved as the they did with Freddie & Fannie (preferred stock with warrants).

6) Current market conditions have also contributed to their situation. You've cut out the consumer (high borrowing costs), and more likely than not, their working capital is constrained...likely to have become costlier (hence the Treasury's establishment of a commercial paper/credit facility)...no sales...clearly liquidity issues. No market for their receivables either... for ABS. The consumer is sick. Credit market is sick.

quote:

Originally posted by SSSanchez I don't see why a similar arrangement can't be achieved as the they did with Freddie & Fannie (preferred stock with warrants).

Interesting post.
But the F&F rescue is quite a bit different - those were government backed lenders. The car companies are not, and therefore the gov't responsibility is nowhere near the same.

Regarding JIT, did you forget about GMs bloated dealer network? Or perhaps the car lots that sit along the 403 outside Ford's plant? Those aren't part of a well functioning JIT system.

quote:

Originally posted by Skipper Interesting post. But the F&F rescue is quite a bit different - those were government backed lenders. The car companies are not, and therefore the gov't responsibility is nowhere near the same. Regarding JIT, did you forget about GMs bloated dealer network? Or perhaps the car lots that sit along the 403 outside Ford's plant? Those aren't part of a well functioning JIT system.

Fannie & Freddie were perceived to be 'backed' by the full faith of the U.S. government. They were also publicly traded: classic principal-agent problem. GMAC is equally a large lender. A short term loan is not being 'socialist'. It's fully repayable. It's just secured and guaranteed. Here is another example: Chinese government lent Huawei (one of Nortel's former suppliers) $6 billion line of credit a few years ago to go off and achieve scale. The same thing will be needed for new trendy enviro-weenie cars.

There are Japanese & European cars piling by the tonnes too in Long Beach. It's also dependent on location, size and cost. It could well be to their benefit to utilize that space versus elsewhere. It's not to say that their inventories (atleast on the distribution side) do not need improvement. There are transients. JIT is not seamless and varies with the scale of the supply chain and complexity technology (e.g., circuit boards versus cars).

I have a hard time believing that an emergency loan will be enough to do the kind of restructuring that needs to be done for these companies to be viable in the long term.
Might as well take a match to that $25B as far as I am concerned.

unions protect lazy people.

quote:

Originally posted by miljan unions protect lazy people.

There are plenty of non-unionized individuals that also get affected. The trouble is, if there a large displacement of employees, what are you going to do with them? I'm one for free markets. However, you must also sympathize with individuals that have depended on a stable livelihood. It takes enormous resources to provide immediate training and new skills for opportunities that may not even exist. If Marie in No-name-town, NFLD works at a fish processing plant cleaning out fish guts her entire life (a woman in her mid 50s) and you shut the plant down, she'll suffer with some severe consequences. I'm speaking of bare necessities.

Don't forget that the Eurozone auto manufacturers have asked for �60 B too.

Sad thing that 1 out of every 10 of us is directly affected if they are not bailed out... some experts have even sauid 1 in 7.

My company is bracing itself to the extreme, and it's all about saving costs right now, bailout or no bailout.

LOLing @ the car exec (forget which one) that was quoted in the globe as saying "I don't even want to look at Wall Street tomorrow, it's going to be a disaster!" Meanwhile the markets look like they'll be closing up on the day.

Way to bet the wrong way! AGAIN!

quote:

Originally posted by Skipper LOLing @ the car exec (forget which one) that was quoted in the globe as saying "I don't even want to look at Wall Street tomorrow, it's going to be a disaster!" Meanwhile the markets look like they'll be closing up on the day. Way to bet the wrong way! AGAIN!

It wasn't an exec. It was Sen. Reid.

canada should seize the opportunity and get their deal in now. Basically the canadian government can look like the good guy and in the process, guarantee jobs stay in canada before the US turns around with the next deal and demands the same thereby screwing us. But we will probably be canadian and wait to see what our big brother does.

Stupid move

quote:

Originally posted by Jayx1 canada should seize the opportunity and get their deal in now. Basically the canadian government can look like the good guy and in the process, guarantee jobs stay in canada before the US turns around with the next deal and demands the same thereby screwing us. But we will probably be canadian and wait to see what our big brother does. Stupid move

That would be quite the gamble on the off-chance that the US doesn't throw these guys a lifeline. Our domestic production can't use all the parts that are made here since a good chunk of them go south of the border.

It's also a gamble throwing money down the hole in the likelihood that these companies can't get their shit together and solve their union / systemic / cost / over production issues. They will continue to bleed money like it's going out of style without major changes. Would you bet on them making those changes? They've had what, the last 5 years or so to make those changes where the common perception was that the big trucks and SUV's wouldn't last and remain profitable?

The chose to grab the profits while they could at the expense of developing a quality, marketable, and affordable product that people would want. In addition to that, the fac that they shit the bed in the 80's with garbage cars did nothing to earn them any enduring brand loyalty into the 90's and 2000's when their whole business model was built on the concept of brand loyalty (multiple GM brands making essentially the same cars under different badges, same with Ford / Mercury and Chrysler / Dodge)

This government buyout plan would make more sense to Sweden to buy Saab from GM and Volvo from Ford - both are only made in Sweden and pretty unique brads even if there is some compnent sharing. Germany could buy Opel from GM and do much the same.

Ford already has Mazda and Volvo up for sale.

wheres the market right now?

quote:

Originally posted by NuERA I guess this is what happens when you keep making cars that nobody wants. Now where are the keys to my dodge ram?

lol!


(so glad i drive a yaris!)

quote:

Originally posted by exstasie You also have to look at profit margins. Sure, you could sell 10000% more cars then you're competition, but if you're selling all of your cars at a loss, then it isn't to smart is it.

This historically (up to new realities they're facing now) has been what they've been facing.

All NA car companies have NEEDED to have their small (and usually shitty) compact cars, bc all the companies are held to minimum regulations on such things as fuel economy for example. The shitbox Aveo helps compensate for the Silverado (for example). too often w/ the Big Three, they never treated the compact/subcompact market seriously in their business plans... they were used for meeting certain requirements re: their overall fleet (such as the aforementioned minimum avg fuel economy their fleet had to maintain in america)

thus, yes, they sold their compacts at a loss essentially, bc they MORE than made up for it w/ their massive SUVS, trucks and full-sized sedans. that's where the money was so thats what they built (w/o trying to find ways to make the cheaper, more fuel efficient and practical cars cost-efficient to produce and sell in the north american market)

hahah, now, years later, its the reason for their downfall. how ironic.

bailout would be passed long time ago but they need to crush union first as soon as union gives up bailout will be there in nano second

Bush granting 17B in LOANS with steep debt covenants, to be paid out of the bailout money and repaid in 3 months. Big 3 must prove they are financially viable at that time.

Ford isn't asking or getting anything...GM is getting the bulk of it.

I may have misheard...but they don't have to be repaid in three months, do they? I thought they just had to have a viable proposal/plan in place by March 2009...?

I'm soooooo pleased to see that this isn't a handout and comes with MAJOR conditions (including the companies and unions addressing the wages and putting them on par with foreign car makers).

quote:

Originally posted by MarkT I may have misheard...but they don't have to be repaid in three months, do they? I thought they just had to have a viable proposal/plan in place by March 2009...?

They have to prove that they have resturctured and can be viable companies... or repay the loans by the end of March.

quote:

Originally posted by miljan unions protect lazy people.

Yes.

Unions were a good thing to have 60-70+ years ago, but these days with labour laws as they are and all the protection that your average worker has, unions are completely redundant.

Crush them all. As far as I'm concerned, "unionized" is synonymous with "inefficient."

i have a major GM dealership network as a client. spoke to them this morning and they were relieved at this morning's news, but you can expect at least 10 GM dealerships will go under in the next 12 months. feel sorry for them

quote:

Originally posted by Skipper Bush granting 17B in LOANS with steep debt covenants, to be paid out of the bailout money and repaid in 3 months. Big 3 must prove they are financially viable at that time.

the plan that failed at the senate was better then what they just passed less restrictions, no overseer "car czar", no forced restrictions on bondholders and union....pff weak!

quote:

Originally posted by devnull the plan that failed at the senate was better then what they just passed less restrictions, no overseer "car czar", no forced restrictions on bondholders and union....pff weak!

Those are all things that are absolutely necessary to prevent this from being another handout.

quote:

The loans do not include the concept of a so-called "car czar" to oversee the automakers, although it does say that a designee of the President would determine if the automakers are making the changes necessary for them to be considered viable.

quote:

"We do not feel it is appropriate for government to dictate the specific terms of negotiations between management and labor or management and dealers or management and creditors," the official said.

http://money.cnn.com/2008/12/19/new...sion=2008121909

I still see them going into chapter 11 before the loans are due.
Does chapter 11 legally protect them from having to pay back the loans while they are restructuring?

Powered by: vBulletin
Copyright © 2000-2021, Jelsoft Enterprises Ltd.