The real problem is making cars that people want and selling them. I'll give you a clear example with the history of Fiat :
Fiat is an Italian auto-maker that had a very bad decade, the cars weren't selling and their reputation was bad, when you tought about Fiat, the first image that came to you was a subpar car. After they attempted everything else (cutting costs, you guess how), they finally resolved to fire every single guy with a tie in the company, from the simple chief to the CEO, the WHOLE management that was pointing to the high cost workers, unions, etc. as the sole responsible for the demise of the company, all these people that refused to take responsability were fired and replaced by new heads, an unprecedented move.
Guess what ? It worked. Fiat is making a strong come back in Europe and their reputation is building up again. Their cars are not synonymous of subpar anymore, they sell, even if it takes a lot of time to restore confidence and change your image, their strategy is ultimatly working.
I believe GM could take a lesson or two here. The problem is when the management refuses to take responsibility of a failure, they aren't qualified anymore to excercise responsibility, and their real chances of saving the company, bailout or not, are very slim.
http://www.economist.com/displaystory.cfm?story_id=11090197 http://www.economist.com/opinion/displaystory.cfm?story_id=1...
GM's labor costs are high because of pension costs. They promised an entire generation of workers old-age benefits if they gave their life to the company, and now the company wants to eliminate that deal, because they simply didn't plan for it correctly (oh yeah...they also made crappy, fuel-inefficient products that nobody wants).
My grandfather was one of those pensioners. He retired from GM after over 30 years -- having sacrificed his hearing and his back to the job -- and the pension gave him a modicum of comfort until he died. His widow still relies on it to survive. There are thousands of other people just like them, who made a deal with the company in good faith, that the company would just love to revoke.
I think GM should be allowed to go into bankruptcy, but if they do, the judge would do well to fire or eliminate the salary of every executive who failed to plan for pension costs, resisted fuel-efficiency standards, eliminated new product programs, and otherwise destroyed the company. Then, perhaps they can think about cutting the pension benefits of the blue-collar guys who gave their health to a corporate machine.
Airlines, car makers, government, schools. Four sectors that are unionized, four sectors that are grossly inefficient, four sectors that are kept alive by taxpayer money.
"While GM often blames "legacy costs" such as retiree health care and pensions for its troubles, its Jobs Bank SHOWS THAT THE COMPANY HAS INFLICTED SOME WOUNDS ON ITSELF. Documents show that GM itself helped originate the Jobs Bank idea in 1984 and agreed to expand it in 1990, seeing it as a stopgap until times got better and workers could go back to the factories. The idea was to help train or find jobs for senior UAW employees who would "otherwise be permanently laid off" because of better technology or higher productivity. Ford later matched the plan for its UAW employees."
(emphasis mine)
I couldn't have linked to a better article to help make my point -- the management is so incompetent that they would rather have senior employees sitting idle than simply giving them retirement or severance packages. That kind of goofy, short-sighted thinking wasn't imposed upon GM management by the UAW.
While Porche is insanely profitable because it exploits the slave labour wages and conditions for German autoworkers?
"The company estimates its hourly cost of labor at $43"
2005: http://www.npr.org/news/specials/gmvstoyota/
"Average Labor Cost per U.S. Hourly Worker $73.73"
I can't find anything more recent.
"Average Hourly Salary for Non-Skilled, Assembly Line Worker: GM: $31.35/hour NOTE: Includes idle workers still on payroll and those on protected status."
Just clearing things up for people who don't understand that labor cost != wages.
The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on payroll earning more than many computer programmers who are simply idle - they don't do anything, don't show up to work, etc. The average labor cost per hour for GM's manufacturing is over $70/hour.
While GM has made significant mis-steps in their management, the fact is that no management no matter how brilliant they were could compete when they have labor costs like that.