NationStates Jolt Archive

Poor GM. They were once an unstoppable mammoth with nearly half of the US car market, and a large share of foreign ones as well. A GM exec actually told Congress in the 1960s that they wouldn't lower prices because it'd put their competitors out of business.
Those days are over. Thanks to GM's long history of business arrogance, bureaocracy, organized labor, and overreliance on sales incentives, GM is sliding down the tubes, taking the American automotive industry, and thousands of jobs in the US and elsewhere, with it. Several good suggestions have been made, such as improving the GM image by cutting on brands. Indeed, they have made some strides in the right direction. The Cadillacs these days, for instance, are what I feel to be the best GM ever made.
Still, this would be a futile effort unless GM downsized its operations. Currently, it is far too expensive for GM to do that. For every UAW member they fire, they have to continually pay them wages for up to two years, in addition to pension benefits. The solution, therefore, seems obvious: that GM must battle the UAW for many concessions when their contract is renegotiated in 2007. But they need to be steep concessions, or else GM doesn't have a prayer of getting out of the rut that it's in. If it can't, the only option GM has is to liquidate itself. It's business expenditures are far too costly, and at the moment, only the service oriented, non-unionized GMAC is profitable, hardly enough to sustain the firm. The best they can do is put the prociets of liquidation into a pension fund to pay GM workers, and pay the remainder to shareholders. Better to liquidate it now and make money than to wait for GM to go bust, and incur a political and economic backlash.

The very respected magazine "Autocar" (who are actually celebrating their 110th anniversary in this weeks edition) here has sources which reckon they'll be filing Chapter 11 within 12 months.

And there goes the economy of Michigan.

:(

GM's biggest mistake was their retiree benefits, but they piled them on to placate the unions because they didn't have to pay for them in the present. GM simply cannot pull itself out of its current rut without taking down the unions and slashing benefits, and aggressively repositioning itself to low cost labor. If anything, the company is a classic example of how not to run a business in the global economy; it's the American brands that are ailing while the ones that repositioned themselves are thriving.

Viva le Ford.

:D

Best-in-class torque for gas trucks... woot.

And there goes the economy of Michigan :(

Yes, Michigan's going to be screwed, but the state's governments aren't blameless. The state's had at least 30 years since GM hit its first troubles to distance itself from high-cost, uncompetitive heavy manufacturing, but it tried to maintain the low-education-high-pay system of the past that doesn't work in a global economy rather than prepare for a future in which education and competitive economic policies reign supreme.

However, there is a bright spot in the IT industry for Michigan along with finance, but they have to encourage it (like they have started to) and get away from their staid and archaic economic thought.

Yes, Michigan's going to be screwed, but the state's governments aren't blameless. The state's had at least 30 years since GM hit its first troubles to distance itself from high-cost, uncompetitive heavy manufacturing, but it tried to maintain the low-education-high-pay system of the past that doesn't work in a global economy rather than prepare for a future in which education and competitive economic policies reign supreme.

However, there is a bright spot in the IT industry for Michigan along with finance, but they have to encourage it (like they have started to) and get away from their staid and archaic economic thought.
Michigan has a lot of biotech and hightech developing there, in addition to many smaller car parts manufacturers that may survive. But the economy of Detroit will really suffer. That may sound hard to believe, being how bad things are in that city right now, but they can get far worse. In fact, I think that city will see a very large population bust in the next few years. It may come back eventually (think New York ten years ago), but not with its incompotent city government and high taxes.

Michigan has a lot of biotech and hightech developing there, in addition to many smaller car parts manufacturers that may survive. But the economy of Detroit will really suffer. That may sound hard to believe, being how bad things are in that city right now, but they can get far worse. In fact, I think that city will see a very large population bust in the next few years. It may come back eventually (think New York ten years ago), but not with its incompotent city government and high taxes.

Well, when the mayor of the city is as incompetent as Kwame Kilpatrick (who has no problem spending tax money on expensive cars, clothes, jewelry and "city functions") combined with an entrenched union leadership that refuses to change, and high taxes combined with terrible schools and infrastructure, they are doomed unless they change.

However, looking at the statistics for the state also show that the major problems are concentrated in Detroit and Flint, with the rest of the state at or even below the national average unemploymeny.

Well, when the mayor of the city is as incompetent as Kwame Kilpatrick (who has no problem spending tax money on expensive cars, clothes, jewelry and "city functions") combined with an entrenched union leadership that refuses to change, and high taxes combined with terrible schools and infrastructure, they are doomed unless they change.

However, looking at the statistics for the state also show that the major problems are concentrated in Detroit and Flint, with the rest of the state at or even below the national average unemploymeny.
It's like that in every state. Most states with a big city or two have city economies in perfect isolation from the surrounding countryside, towns, and even their own suburbs. As you can imagine, right now, in most major dying cities, their suburbs are doing just fine.

It's like that in every state. Most states with a big city or two have city economies in perfect isolation from the surrounding countryside, towns, and even their own suburbs. As you can imagine, right now, in most major dying cities, their suburbs are doing just fine.

Especially Southern Ohio; the suburbs are literally booming with thousands of new jobs, schools, massive office parks and high-tech manufacturing plants, and then when you reach Cincinnati, it's more or less dead. For example, the city of Mason has unemploymeny of 2% while 20 miles away in Cincy it's 9 or 10%.

Mentor's the same way; we've got these huge new manufacturing plants being built while Cleveland is dead. Columbus is the exception, but Ohio State definitely affects that.

Especially Southern Ohio; the suburbs are literally booming with thousands of new jobs, schools, massive office parks and high-tech manufacturing plants, and then when you reach Cincinnati, it's more or less dead. For example, the city of Mason has unemploymeny of 2% while 20 miles away in Cincy it's 9 or 10%.

Mentor's the same way; we've got these huge new manufacturing plants being built while Cleveland is dead. Columbus is the exception, but Ohio State definitely affects that.
My state, New York is the same way. With the exception of NYC, which is on steroids, its cities are dying while the suburbs are flourishing. In one extreme case, Erie County, where Buffalo is the seat, went bankrupt. There were many factors, but the city definitly dragged the county down. I'm sure you know about how industrialized Buffalo was once. Well, they've lost Bethlehem Steel when they went bust, and they lost way more before that. One of their largest employers today, ironically, is GM. Go figure.

My state, New York is the same way. With the exception of NYC, which is on steroids, its cities are dying while the suburbs are flourishing. In one extreme case, Erie County, where Buffalo is the seat, went bankrupt. There were many factors, but the city definitly dragged the county down. I'm sure you know about how industrialized Buffalo was once. Well, they've lost Bethlehem Steel when they went bust, and they lost way more before that. One of their largest employers today, ironically, is GM. Go figure.

That's awful; the same thing happened in Cleveland with the steel bust in the 1980's. We were saved by the presence of a large amount of government employment (we've got the 4th district Fed HQ plus several Dept. of Defense facilities).

Industrialization in this area, like New York, always grouped together heavy manufacturing companies because they were often in cooperation, or at least were able to save on shipping costs because of the similar facilities required to supply the steel mills and auto plants. Unfortunately, these industries are also the ones most susceptible to economic changes and so drug each other down.