If Wagoner goes...

[gasoline]

Bob Lutz goes.

And GM would be screwed.

People are saying Wagoner would have to go if GM gets a bailout. Wagoner's one good move is Bob Lutz and Bob Lutz saved GM's automotive (not financial) craw.

Anybody who is not a fanboy of other companies would know this.

Anyways, that is just my two cents.

http://www.autoblog.com/2008/11/14/autoline-on-autoblog-with-john-mcelroy/

Last year's UAW contract was truly historic in that it will completely remove the health care cost burden off the Big Three. Though they have to give the union the money to assume this burden, they're paying 40% less than it would otherwise cost them. After 2010 they stop paying billions in health care every year and start dropping that money to the bottom line.

Moreover, there will no longer be any pensions for new hires. They'll get 401k's instead. Again, massive cost savings going forward.

On top of that the UAW workforce takes big pay cuts, and new hires come in at a wage rate that is roughly the same that Toyota, Honda, Nissan, et al, are paying their American workers. In other words, the Big Three can finally compete with the transplants from a labor cost standpoint. That means they can now make small cars in America without losing money on every one they make.
The Big Three can finally compete with the transplants from a labor cost standpoint.
Another benefit of that new labor contract is that the Big Three are no longer pressured to keep building cars and trucks in the face of weak demand. Under the old labor contract it was cheaper to build cars and slap big incentives on them than it was to not build them in the first place. Now, they can build to actual demand, and they're running on much tighter inventory.

That means they'll be able to slash their incentives. Every $1,000 that General Motors cuts from incentives will drop roughly $4 billion to the bottom line. And GM has an average of $3,500 in incentives!

Plus, the Big Three are taking out a huge amount of overcapacity, roughly two million units. To fulfill demand in the future their plants will have to run at full capacity, and that's when car companies literally become cash machines.

What this means is that when the economy finally starts to recover and the car market begins to grow again, GM, Ford and Chrysler will be in an extremely competitive position, one they haven't been in for more than 40 years.

And that's why those who say giving them a bailout is just throwing good money after bad are dead wrong.

Those of you who have been following the industry carefully would see a clear difference in what has been coming out lately.

And Ford is not far behind at all. They have had a similar parallel shakeup--though not as extensive and promising.

Letting them go under would be a disaster. People aren't really qualified to be car enthusiasts if they do not understand how this would explode beyond car manufacturing into software, supercomputer tech, scientific research and on and on.
GM is the world's single largest purchaser of steel. Outright.
Thousands upon thousands of suppliers would go under.
Look at how Delco and Continental went into bankruptcy and they are the largest suppliers (and this was before all this madness).

GM and Ford did not create the credit crisis.

A collpse would be bad, bad bad.

Chrysler ha proven that money loaned can be repaid with profit. There is a precedent here and it is a good one.

If you want to balk, balk at GE and AIG getting money--not the car industry. The military implications (for one) would be devastating, especially when there is Russia and Iran to worry about.

[gasoline]

Oh, and there is no coming back from chapter 11. None.

Line up ten of your friends who would ever buy GM or Ford again if warranties go to crap in bankruptcy court.

If an airline goes under it comes back as a different name. Nobody cares because airlines come and go and flights don't cost $20,000 on average.
They also don't require follow-up care and service.

Not to mention that one airline gone bankrupt might have a few thousand lights a day.

Gm sells what? A few million cars a year? 6 million? multiply that by 5 years for the number of pissed-off warranty-holders.

[ifcar]

It's a myth that you lose your warranty if your car's automaker files for bankruptcy protection.

[gasoline]

That one won't fly with consumers. And who will make the replacement parts?

All they have to do is be afraid.

[ifcar]

To start, it's wrong to say "there's no coming back from Chapter 11." Yes, if an automaker disappears completely, there will be problems for people who bought their products. But bankruptcy doesn't mean disappearance.

And there would be plenty of third-party parts suppliers, just as there are now.

[hotrodalex]

If they go bankrupt, it just means they restructure. They still honor warranties and make replacement parts.

[gasoline]

To start, it's wrong to say "there's no coming back from Chapter 11." Yes, if an automaker disappears completely, there will be problems for people who bought their products. But bankruptcy doesn't mean disappearance.

And there would be plenty of third-party parts suppliers, just as there are now.

We're not talking about an airline now. This is a car company.
There is an entire industry built up around supplying these companies with components, not to mention testing, materials, systems etc.

If Delco gets into so much trouble while GM is up and running, and Delco is so large (ditto Continental), what happens to them when GM does into bankruptcy protection?
What happens to thousands of much smaller suppliers?

And if they fold, what would happen to Ford and company?

A bankruptcy just has to send people scampering. That is all it has to do. It doesn't have to be "true" that GM won't honor warranties, people just have to think it is true. Not to mention how the resale values of millions of cars would plummet.

Then there is the dealer network. How do they survive a pared-back GM, and how does this affect customer service?

All this has to be factored in. These are $20,000 objects with intense service needs, not $200 plane tickets (where they can rename the airline and nobody would know a thing).

[ifcar]

"Line up ten of your friends who would ever buy GM or Ford again if warranties go to crap in bankruptcy court."

Warranties aren't "going to crap." Yes, perception would be down, and resale would be down. That's not what you said.

[gasoline]

"Line up ten of your friends who would ever buy GM or Ford again if warranties go to crap in bankruptcy court."

Warranties aren't "going to crap." Yes, perception would be down, and resale would be down. That's not what you said.

You are correct. I was going off news reports that said people would run in fear that their warranties would not be honored.

[SVT666]

The problem with Chapter 11 is that it requires GM to secure interim financing to get through the bankruptcy period.  That will be next to impossible to find.  Especially if Ford and Chrysler need the same protection.

[Secret Chimp]

There's not much to be done for the Big 3 short of undoing the reputation they've built for themselves as "it's a worse car but we're discounting the hell out of it!" over the last two decades, which I don't think you can just manage your way out of.

[sportyaccordy]

There's not much to be done for the Big 3 short of undoing the reputation they've built for themselves as "it's a worse car but we're discounting the hell out of it!" over the last two decades, which I don't think you can just manage your way out of.

Especially in an economic downturn, where people aren't buying cars anyway. Who would want to mess around w/a car from a bankrupt automaker during a down turn?

[FlatBlackCaddy]

Well i must be a fanboy of "some other brand"

Wagoner is a disaster, bob lutz came out with a few OK car(compared to the rest of market), the confusion often comes from the fact that the cars he designed are OMFG awesome super homerun car compared to past GM shit. As i mentioned in the past taking credit and high fiveing yourself for suprassing your own shitty past(and not the entire competition) is not a good sign of success.

To my knowledge the two big things bobby hangs his hat on is a parts bin overweight solstice and the "ground breaking" tweener that is the CTS. Too heavy and slow to challenge a 3 series, and it doesn't have the engines or prestige to match the 5. What a car...

Once again, bob lutz came out with cars tha BLEW away past gm cars and rocked the worlds of gm fanboys around the world. To the rest of the automotive community all they did was start to show sign of the anus finally releasing its grasp on gm's brainbox. Good cars for sure, but don't confuse good for class leading, game changing or groundbreaking.

Personally i don't see how lutz and wagoner going would harm gm any further, they are worthless at this point. A complete flushing of upper management would atleast show drastic change and maybe give the general public alittle boost in its outlook for GM's future. With rick and bobby on board GM will never change IMO.

[the Teuton]

I would pull an Enron and buy back all of GMAC if I could, dump all of my assets in that company (in some kind of limited liability partnership, of course) and declare bankruptcy.  I'm not sure if that's legal, but it'd be a good way to start over again fresh with some liquid capital.

[gasoline]

FlatBlack,
Not even Car and Driver agree with your folly:

http://www.caranddriver.com/reviews/hot_lists/high_performance/features_classic_cars/gm_standard_of_the_world_once_more_feature/(page)/1

Plus they did what everyone was telling them to do all along:

--Slash dealerships (something they couldn't do much about legally. They still pried and consolidated Buick Pontiac and GMC).

--Upped quality, which according to JD Power they did spectacularly. They then introduced one of the longest warranties in the business (5/100,000).

--Renegotiated wages and benefits. They even forced the UAW to renegotiate healthcare before the contract was up.
They got massive concessions which are to begin in 2001.

--Better design. (Ed Welburn has destroyed the other here.) Cadillac, Buick, GMC, Chevrolet they have done it.

--Better interiors. No question about it. In one iteration alone they are miles better; in many cases better than the competition.

--Stop fleet dumping to up resale values. They have consistently worked towards this even at a loss of market share.

--Cut brands. They shut down Oldsmobile in 2004 at a cost of about $2 billion.

--Better fuel economy (they worked on this too).

And they did all that in only 7 years while trying to keep things afloat and battling 9/11 and oil prices and CAFE.

This short attention span is what makes Wall Street so volatile. Everybody wants the CEO to make a profit this year. Nobody wants to really restructure--and that is in less labor intensive industries like banking and retail. We have not even gotten to car-manufacturing with tooling and development costs and machinery and suppliers and government testing and regulation and billion-dollar single-product budgets and on and on and on...

Wagoner was pure genius to survive all that and Lutz (well, I am a Lutz fan so I won't go there out of fairness. He e-mailed me himself once.)

[GoCougs]

Dumping Wagoner at this point would be a death knell.

They've chartered their course, and have made significant gains.

You simply can't turn around an automaker within one model generation.

[280Z Turbo]

Dumping Wagoner at this point would be a death knell.

They've chartered their course, and have made significant gains.

You simply can't turn around an automaker within one model generation.

I fear that the UAW will never let GM be competitive ever again.

[dazzleman]

Very interestinf information about the UAW contract from last year.

The problem with all of this is that it's very late.  Can GM be saved at this late date?

I'm ambivalent about helping GM.  Philosophically I'm opposed.  But I wonder if we'll end up regretting letting go of our industrial base.  Our economy is starting to look pretty hollow these days, and there are national security implications.

[280Z Turbo]

I think it will be British Leyland all over again.