GM, Chrysler demand another $40 Billion - Page 6 - Mercedes-Benz Forum

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post #51 of 132 (permalink) Old 02-18-2009, 11:51 PM
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Didn't know that...

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What will happen to Hummer dealers when GM stops making Hummers? - By Juliet Lapidos - Slate Magazine
General Motors and Chrysler submitted "viability plans" to the Treasury Department on Tuesday in an effort to obtain additional loans and credit lines. GM will pare its lineup to four main brands—Chevrolet, GMC, Buick, and Cadillac—converting Pontiac into a niche marque and probably phasing out production of both Saturns and Hummers. What will happen to car dealerships that sell the discontinued lines?

They'll get bought out. Dealers are not car-manufacturer employees—they're franchise owners protected by "franchise laws." Although these laws vary somewhat from state to state, they tend to favor the rights of dealers over Detroit. Such laws restrict, say, Chrysler's power to open a new Jeep dealership close to an existing one or to shut an old one down without due cause. Colorado law, for example, holds that manufacturers may not "terminate or refuse to continue their franchise agreements with retail dealers unless the manufacturer or distributor has first established good cause for termination or non-continuance of any such agreement." In practice, this means manufacturers have to part with a lot of cash.

If GM's Oldsmobile phaseout from 2000-04 is any indication, it won't be easy for the company to shed brands. GM initially offered Oldsmobile dealers between $1,600 and $3,100 per car sold in their best sales year from the past three years, plus extra for "special circumstances"—like if a dealer recently made improvements to his showroom. But many dealers weren't satisfied and sued GM for damages. Ultimately, it cost the automaker more than $1 billion to ax what was at the time the oldest American car marque.

Stung by the Oldsmobile experience, it's possible GM will take a more aggressive approach this time around. Not all states have laws on the books regulating how manufacturers must handle the discontinuation of a brand. And GM is protected by the federal commerce clause, which includes provisions safeguarding a manufacturer's right to stop producing an unprofitable good. Saturn and Hummer dealers who are worried that they won't fare as well at the bargaining table, or in court, can pre-empt the brand discontinuations and give GM notice that they're turning in their franchises. In that case, GM would probably have to buy back the current year's models, plus unused parts and signage.

It's been reported that before resorting to buyouts for Saturn dealers, GM may try to sell the brand. In that case, franchise owners might stay in business, peddling Saturn vehicles made by Indian or Chinese manufacturers. This alternative would allow GM to avoid costly buyouts—but it's possible no company will step up to purchase the rights to the brand.

Car dealerships have more clout than manufacturers at the state level because local legislatures are eager to keep revenue from sales. In the 1990s, automakers tried selling cars online. The plan, initially, was to sell cars directly to consumers, then use dealerships as distribution centers. Naturally, dealerships fought back: Their lobbies pressed local governments to pass or enforce laws requiring manufacturers to sell cars only through state-licensed dealers.
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post #52 of 132 (permalink) Old 02-19-2009, 12:24 AM
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How does re-start manufacturing is going to help us NOW? And what manufacturing are we going to kick-start? Automobiles? That's a lost cause. OK, let's assume they start cranking tens of millions of new cars out tomorrow from the GM/Ford/Chrysler plants, who is going to buy them with current credit crunch? Massive layoffs from private to public sectors all across the board, you think people waking up in the morning and think going out to buy a new car?

So what are we going to start manufacturing? Not steam boat I hope. As you said, many things are already being manufactured overseas, so to re-start our manufacturing facilities, first we have to tear up the contracts and shut down overseas operations. Well, when those overseas cheap laborers lost their jobs, do you think they are going to buy what we produce here? The cycle continues and hope you get my idea.

This is a global economy. There is no easy solutions. As I said, the longer we muddle in old ideas, the deeper the hole we going to dig ourselves into. Like it or not, manufacturing is not the answer.
First, NOW means "next two years", not "now through April".

Yes this is a global economy. You need to look at the trade restrictions that most countries put on foreign goods coming into THEIR countries. They support their industries much more than we. We have a Trillion per year trade imbalance. That is a tremendous number of jobs here in the US. As for folks who make $1.25 per hour or $3.60 per day losing their jobs, exactly what US products do you think they are running out and buying right now?

Automotive: I don't think the US Auto industry is dead. It is morphing, but not dead. As folks realize much of their offshore purchases helped contribute to the current problems you will see a shift from the Kia and Hyundai tier brands to equivalent US brands.

Computer Services A move to bring Middle Class work back to US from China, India, Brazil will go a long way to reintroduce a million displaced middle class professionals who have lost work in the past decade.

Clothing We have full capacity to bring everything from blue jeans to underwear back into production in this country.

Chips/Screens/Printers We have nearly zero production of commodity technology products in the US. I live 4 miles from a 1 million sqft empty plant floor that used to make Lexmark printers. They are now made in Mexico and China.

Screws, rivets, pins, threaded fasteners, springs These basic manufacturing products used to sprinkle the Midwest. Many are now gone as product is made in China. You can also correlate the quality of finished product on many items to that shift. [as an example, I am buying a four post lift for my shop. The one single piece of advice I have been given is REPLACE the Chinese bolts/nuts and screws.

I can list different types of manufacturers all night long. The list is nearly endless, from lightbulbs to airplanes.

Most companies have multiple contracts with multiple plants. There is no singular supplier that has to have a contract "torn up". The liquid nature of the biz usually means nothing is over 12 months at the most anyway.

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post #53 of 132 (permalink) Old 02-19-2009, 12:28 AM
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This is what I think the break down will be:

The General:
GMC - Dead
Humvee - Dead along time ago
Pontiac - Alive and strong
Cadillac - Will hang in there
Saturn/Opel - Will be for a looong time
Chevrolet - Will always be here
Buick - Well like it's clients on it's way out

Chrysler:
Dodge - Here to stay
Chrysler - Gone
Jeep - Here to stay

Ford:
Ford - Good and strong as can be
Lincoln - Strong, but we'll see
Mercury - Gone
I more see that, for GM we will see a rebranding to GM. Then the best of each marque will be picked. I think GMC will be the only truck they make, Caddy will stay pretty intact along with Chevrolet I don't see Pontiac or Buick remaining as brands. Saturn is a toss up.

My bet on Chrysler is that it will fold by years end. I would not be surprised if the Brickyard 400 is their swan song.

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post #54 of 132 (permalink) Old 02-19-2009, 12:33 AM
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Didn't know that...
Those who tout the Bankruptcy reorganization option will see a viable exit strategy for companies like GM to just shut lines down with NO obligation to their dealer net. Only ones they would make deals with would be the multi-marque dealers.

McBear,
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post #55 of 132 (permalink) Old 02-19-2009, 12:33 AM Thread Starter
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Originally Posted by mlfun View Post
Car dealerships have more clout than manufacturers at the state level because local legislatures are eager to keep revenue from sales.
Ha! Car dealers and Realtors own state legislatures coast-to-coast!

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post #56 of 132 (permalink) Old 02-19-2009, 06:19 AM
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Originally Posted by mcbear View Post
First, NOW means "next two years", not "now through April".

Yes this is a global economy. You need to look at the trade restrictions that most countries put on foreign goods coming into THEIR countries. They support their industries much more than we. We have a Trillion per year trade imbalance. That is a tremendous number of jobs here in the US. As for folks who make $1.25 per hour or $3.60 per day losing their jobs, exactly what US products do you think they are running out and buying right now?

Automotive: I don't think the US Auto industry is dead. It is morphing, but not dead. As folks realize much of their offshore purchases helped contribute to the current problems you will see a shift from the Kia and Hyundai tier brands to equivalent US brands.

Computer Services A move to bring Middle Class work back to US from China, India, Brazil will go a long way to reintroduce a million displaced middle class professionals who have lost work in the past decade.

Clothing We have full capacity to bring everything from blue jeans to underwear back into production in this country.

Chips/Screens/Printers We have nearly zero production of commodity technology products in the US. I live 4 miles from a 1 million sqft empty plant floor that used to make Lexmark printers. They are now made in Mexico and China.

Screws, rivets, pins, threaded fasteners, springs These basic manufacturing products used to sprinkle the Midwest. Many are now gone as product is made in China. You can also correlate the quality of finished product on many items to that shift. [as an example, I am buying a four post lift for my shop. The one single piece of advice I have been given is REPLACE the Chinese bolts/nuts and screws.

I can list different types of manufacturers all night long. The list is nearly endless, from lightbulbs to airplanes.

Most companies have multiple contracts with multiple plants. There is no singular supplier that has to have a contract "torn up". The liquid nature of the biz usually means nothing is over 12 months at the most anyway.
Bear, I like the note about the RAW MATERIALS. Too many people don't realize how many jobs have been quietly farmed out overseas for these critical items! I would like to see a build sheet for one of GM's vehicles, because I would bet that 50% or better of the raw materials are imported. If you don't believe me, go to your nearest Harley dealer, check 5 items they are selling in their shop and tell me what it says on the back!!

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post #57 of 132 (permalink) Old 02-19-2009, 06:23 AM
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Originally Posted by mcbear View Post
Those who tout the Bankruptcy reorganization option will see a viable exit strategy for companies like GM to just shut lines down with NO obligation to their dealer net. Only ones they would make deals with would be the multi-marque dealers.
Things are looking bad for my Kaiser-Fraiser/Hudson dealership Grand Opening.

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post #58 of 132 (permalink) Old 02-19-2009, 09:09 AM
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I really wonder if Chrysler et al will make it thru in any form.
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post #59 of 132 (permalink) Old 02-19-2009, 09:12 AM
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I really wonder if Chrysler et al will make it thru in any form.
I, for one, hope so. The price of parts for my 300 probably just doubled

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post #60 of 132 (permalink) Old 02-19-2009, 11:59 AM
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If we are going to consume manufactured goods, we need a manufacturing base in this country to produce them. Outsourcing jobs is a practice that has been sold to us as part of "the global economy" that we are all also told is the future and is inevitable. Carried out to the extreme, every job in the US, from grunt to the CEO of every company, from the head of every government agency to the lowest level employee in that agency, including soldiers, sailors and pilots, can be filled cheaper by some poor chumps in less developed countries. Are the corporations serving us or are we serving them? The pursuit of lower cost by exploiting others may make all kinds of short term business sense, but who put short term business priorities at the head of the line of national priorities?

We must have a manufacturing base that produces automobiles as long as automobiles are in demand by American consumers. Same with electronics like TVs, stereos, computers, computer peripherals, and so on. Our economic system, and our government SHOULD favor, overtly, those who provide manufacturing jobs for American citizens. It is, in the end, a matter of national security.

mcbear mentioned fasteners. The cost of suitable quality fasteners for military applications is made more expensive by the lack of a commercial fastener industry in this country. And the day we depend on China for fastener supplies for our missiles, air craft and ships in the military is the day we truly become a paper tiger. Simple shit. Transistors, and now as there is a move toward electrically powered systems, devices like IGBTs, IGCTs and such will power large military platforms. If they are made in China alone we are boned. If we sustain a military only capability in this country, the cost will be prohibitive.

National security depends on a robust domestic manufacturing base. Economic security depends on a robust domestic manufacturing base. People who find their company's short term profit forecasts a higher priority than our national security are little more than greedy shitbirds that don't deserve to be making those decisions because they have not demonstrated the personal integrity to be given the responsibility.

Manufacturing and engineering and research and development all go hand in hand. Shipping manufacturing jobs overseas should only be allowed when it meets specific national security and economic security goals that are specifically published. Just like ITAR controls defense articles and technologies from being promulgated outside the US, we need a specific set of rules that establish when and how a company can legally move manufacturing jobs offshore.

Yeah, it is protectionism. Because it should be apparent to you now that we need to be protected from MBA students making big bucks on short term priorities that trade our national security for bonuses. They are selling the country to the low bidders.

Jim
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