Thursday, June 04, 2009 - Posts
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Chooch Test: From a piece in Green Car Reports defending the Obama task force against right-wing criticism--and crediting Obama with subtle mastery in rescuing Detroit:
If more dollars are requested, then Obama will have betrayed the principle he articulated the day GM filed. He was quoted in The New York Times saying the government would take a hands-off approach to managing GM and divest its stock as soon as possible.
Even pithier, he said his three goals were, "To get GM back on its feet, take a hands-off approach and get out quickly." [E.A.]
I'll settle for that. If Obama doesn't request more money for GM--even if the Feds never get their $50 billion back-- and GM survives he will have succeeded. If GM needs more to survive, he will have failed, by his own lights. Good to emphasize the marker he's more or less laid down. ... P.S.: Same goes for Chrysler, although Chrysler was always pretty obviously doomed. GM was not. ...
P.P.S.: Here's the LAT on GM's future product plans:
Among the new vehicles the automaker hopes will get the new GM off to a strong start are the redesigned Buick LaCrosse sedan; the SRX crossover and CTS sport wagon from Cadillac; the GMC Terrain and Chevy Equinox crossovers; the Chevy Cruze, GM's new global subcompact; and the reintroduction of the classic Chevy Camaro muscle car.
Do you see any "game changers" in there? I don't. Maybe the LaCrosse will be a solid hit--at least in China! But it's a bit strange-lookin'. And how many veteran Buick owners kept on buying Buicks because they trusted the dealer down the street--who won't be there anymore? The idea that these people will switch dealers and not also switch brands may be one of the rosy assumptions underlying the bailout plan. ....
Update: Robert Farago of The Truth About Cars notes that the projections of GM's financial adviser, the ones that show a profit of $3 billion in 2011, assume "a six million new car sales jump in the next two years." That's not pessimistic! Farago flatly predicts [E.A.]:
New GM won’t last much more than a year without a fresh federal funding infusion.
It's on. Someone will be wrong. My bet is that it's Obama. ... 3:56 P.M.
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The NYT's David Leonhardt punctures General Motors' comic overoptimism, but in at least one respect seems to share it. He asserts that, as part of the bailout/bankruptcy deal ,
Orwellian work rules that sapped productivity and creativity have been removed.
Really? Here's the concession agreement between GM and the UAW. This is what looks like the relevant provision on work rules:
Work Practices
The National Parties discussed locations that haven't reached new local agreements and those that have ratified local agreements, but haven't achieved General Motors' 2007 competititve operating agreement rating of ninety-three (93) percent or more. Those locations that currently have ratified local agreements that meet the rating will not be subject to the following:
As soon as practicable, but within thirty (30) days of ratification, the National Parties will assist and engage the locations with the implementation of modifications, comparable to General Motors' 2007 competitive operating benchmark, needed to achieve a minimum ninety three (93) percent rating. Additionally, the aforementioned locations efforts to achieve the goal will be completed as soon as possible, but no later than December 31, 2009.
The National Parties will be responsible to review the progress of each location every thirty (30) days to ensure compliance by the completion date.
Maybe all these words have meaning to insiders that's not apparent to outsiders. But it sure looks like 1) Some union locals are holdouts in GM's campaign to get rid of inefficient work rules. (The power of union locals, even in the face of the UAW national leadership, has always been a problem when it comes to streamlining work practices); 2) Under the new agreement, the work rules haven't "been removed." Rather, the parties have pledged to complete the tooth-pulling process of negotiating their demise by the end of the year. It's a target, not a fait accompli. And what happens if that target isn't reached (as, apparently, the earlier targets weren't reached)? The deal doesn't say. ...
P.S.: Note that the agreement doesn't commit plants that have achieved the 93% "rating" to making further improvements. One big secret of Toyota's success, of course, is that its factories are continually looking for "modifications" that further increase productivity, without worrying about whether those modifications violate "local agreements." Standing pat at 93%, whatever it means, doesn't seem like the way to beat Toyota.
P.P.S.: Leonhardt also writes:
G.M. cars haven't been as good as their rivals. If you've ever experienced the joy of being told that your rental car is a Toyota Corolla rather than a Chevrolet Impala, you know this.
I dunno. I think I'd rather have an Impala, assuming costs are equal. It's a bigger, more luxurious car. It's not going to break down during a brief rental! It's just not a car you'd buy for yourself. ... If Leonhardt had compared the Corolla with its actual same-size GM competitor, the unpleasant Chevy Cobalt, he'd have an unassailable point. ... 1:25 A.M.
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