Lutz: Market threatens to kill one of Big Three

[Blue Oval Guide]

Lutz: Market threatens to kill one of Big Three

 

Intense competition and growing overcapacity could threaten the existence of one of Detroit's Big Three automakers, General Motors Corp. Vice Chairman Bob Lutz said Tuesday.

 

While Lutz dodged questions about GM's interest in buying the Chrysler Group, he said market conditions are conspiring to eliminate one Detroit automaker down the road. MORE.

[pcsario]

Funny how he forgets to mention overpaid executives, and their lavish perks. What a hypocrite.

Yeah, those are also costing them billions of dollars each year. Imagine all the potential savings there. :rolleyes:

[jpd80]

"We cannot, as an American auto industry, survive long-term with the legacy cost burden that we've gotten," Lutz said. The rising cost of pensions and health care for employees and retirees is a "burden" that could sink one of the traditional Big Three, he said.

 

"In today's fiercely competitive environment, where every bit of value in the car counts, you cannot prevail in this business if you have a $2,000 cost disadvantage versus your closest competitors."

 

OK, If GM sells 300,000 cars/year, is Lutz saying the "emploee burden" is $600M/year?

Fine, but where did the other Billions in losses come from?

Not so forthcoming there is he?

Edited March 7, 2007 by jpd80

[twintornados]

I don't want to sound like I am agreeing with Bob Lutz (because I don't) about the rising cost of pension and health care benefits, but any company can save millions but axing a few thousand employees, and that is a long term savings (annualized)...cutting a few overpaid execs is not that big a savings (one time shot) in comparison. It makes it very hard to justify these high compensation packages and they do not play well in the media. He claims a cost disadvantage of up to 2K from foreign competition. Instead of trying to lower benefits and demanding that the costs be borne by the employees....look to leveling the playing field....tarriffs from cars produced in counties that have little or no regulatory controls on their health care or environmental systems need to be implemented....

 

Every American loves to save a buck and given the opportunity, they will buy the cheapest thing they can get their hands on....they do not think of the long term results of those actions.

 

Other options include looking into the high costs of health care because weather or not these employees continue to work for these automotive manufacturers or get put on the street...someone will have to cover those health care costs and if the person is unemployed, how will they afford even the co-pays?

 

Pensions are sacred and should never be touched, again...here is a case where the companies look at the pension fund as an ATM machine and want to draw the money out of it for their own capitol gain...then complain that they cannot afford to pay the retirees...rubbish. Leave the pensions (the promise they made to a dedicated employee) alone.

[J-150]

Yeah, those are also costing them billions of dollars each year. Imagine all the potential savings there. :rolleyes:

 

 

 

that ultimately will not save them nor condemn them. Its a drop in the bucket.

[twintornados]

Pioneer,

The costs of health care and pension funding are not limited to the auto industry, the perk your father received was indeed a lavish perk, but those "losses" as you see them were merely written off at tax time as an operations expense, so in reality, it saved Ford some money by doing this. The crisis that our workers are facing is not limited to the automotive world.

[silvrsvt]

You have no idea what you are talking about. Do you know how lavish some of these perks can be?

 

Example: My father, when he worked for Ford was allowed two company cars at a time, replaced every six months. After that six months, he was given two more and the former were sold at auction. From what he said, they would sell at auction, depending on what model they were, between 8k and 15k below MSRP with less than 5,000 miles on them. Now, he was one LL6. Multiply that by thousands, and that's what ONE perk costs FMC every six months.

 

Like I said, you do not work in this industry, stop believing everything you read in the newspaper. There is a lot more going on behind the scenes you know nothing about.

 

 

Ever consider that a perk like that is a tax write off? Theres alot more there that doesn't readily meet the eye (much like your saying). Not to mention if you don't offer a good compensation package, your not going to get quality people out there. I'm sorry but its harder to replace an executive then it is to replace your run of the mill factory worker..

[jpage]

All very good points, and I agree with most of your comments. However, I don't believe the domestic manufacturers would discount their products if the health care burden was lifted, ie..national healthcare.

Their profit margins would get healthier, but they would still lose out to foreign automakers due to americans looking for a bargain. The squeeze on U.S. automakers is only going to get worse in the future. The only way these companies will have a chance at succeeding in the marketplace is through innovation. Building great " must have " products, stylish, fuel efficient, and not too expensive vehicles that are very well marketed.

Can or will they do what it takes to survive? That, ultimately is the question that will be answered within the next decade. And unfortunately, these actions can only be executed by our highly over paid and unamaginitive managements teams.

I'm praying for 25 and out.

[jpd80]

Has anyone grasped the irony of car makers in the USA:

- Ford and GM downsize plants and work force in USA, moving production to Canada and Mexico

- Toyota intends opening 5 more plants in USA and hiring American workers.

[silvrsvt]

Ever consider Ford Motor gets to write off some of the money it puts toward health care?

 

Doubtful since Health-care costs are killing nearly every single company that provides it...keep in mind that some places have anywhere from a 5-10% raise in health care costs every year...and you don't even put a cent into yours (last time I checked) I doubt Ford is getting a break anywhere...

 

Keep your blinders on, boys. It's only getting worse, and not for management.

 

Don't work for the auto industry, saw what the deal was with it when I did have the opportunity too...

[NickF1011]

Has anyone grasped the irony of car makers in the USA:

- Ford and GM downsize plants and work force in USA, moving production to Canada and Mexico

- Toyota intends opening 5 more plants in USA and hiring American workers.

 

No real irony in it. It's just a cheaper way for all companies mentioned for doing business. Toyota certainly isn't opening plants here just for the sake of making people feel warm and fuzzy. It's cheaper for them to build here.

[suv_guy_19]

No real irony in it. It's just a cheaper way for all companies mentioned for doing business. Toyota certainly isn't opening plants here just for the sake of making people feel warm and fuzzy. It's cheaper for them to build here.

 

 

That's right. Despite a high minimum wage in Ontario, Canada has free universal health care, so there is nowhere near the legacy costs, and in mexico you don't have to pay much or give anything.

[twintornados]

Pioneer...trust me...I know management is the main problem of why Ford and other corporations are in such dire straits at this time....but it is corporate greed that will sink those companies coupled with the unfair trading practices of our supposed allies fueled by our fellow Americans desire to get their hands on the cheapest things they could buy.

 

You want a recent comparison? Look at the electronics industry....in the 60's, Zenith execs were compensated at a higher rate than their automotive counterparts....look at the electronics industry today.....NOT ONE SINGLE AMERICAN COMPANY LEFT! Why? "I can get this one for less $$$...and....ehhh, its good enough." We have gone from a society that demands excellence to one that accepts something that is mearly good enough...

 

Console TV's were selling for $698 on up (my dad owned a TV store years ago) in the 60's, 70's and 80's.....then wham....cheap stuff galore pushed by giant chains just to gain market share and now....you can't even find consoles any longer, and look what your $698 can buy you today. But all those American factory workers in the American plants of Zenith, RCA, G/E, Magnavox?? Gone....probably working at a significantly less rate than they were before...but hey....your giant screen TV is so cheap now...you can throw it away when it breaks and go get another one...right?

 

I call it "The Wal-Mart Syndrome"

 

 

Ever consider Ford Motor gets to write off some of the money it puts toward health care?

 

I swear, to some of you management can do no wrong. If you only knew half of the things he has told me, you would wonder how the company has made it this far. The company cars are just the tip of a very large iceberg.

 

Keep your blinders on, boys. It's only getting worse, and not for management.

[mtl1977]

You have no idea what you are talking about. Do you know how lavish some of these perks can be?

 

Example: My father, when he worked for Ford was allowed two company cars at a time, replaced every six months. After that six months, he was given two more and the former were sold at auction. From what he said, they would sell at auction, depending on what model they were, between 8k and 15k below MSRP with less than 5,000 miles on them. Now, he was one LL6. Multiply that by thousands, and that's what ONE perk costs FMC every six months.

 

 

AWWW YEAH! I have some great stories about these lease cars...and Ford pool cars. How much time you got? :shades:

 

 

I hear they now have deductibles on the worst cases. hehe

 

 

Registering for senior year at Plymouth Salem, 1995. Pull up next to the people in the tennis courts at Canton High School. 1994 Mark VIII. "Excuse me, I have too much rubber!" And then the rear tires sizzle away...

 

Growing up, just about every friend had a dad with a company lease...or two.

Edited March 7, 2007 by mtl1977

[RichardJensen]

Yeah. And those guys are gone, and those perks are gone too. Ford's offices look like ghost towns.

 

You get perks, you abuse perks, you lose perks. That's the way it works.

 

Pioneer: You ought to know better than try and turn this into class warfare.

 

BTW, Lutz is nutz. There is no Big Three anymore. And Chrysler's already gone.

[BlackHorse]

Just a quick question. I hear Lutz and a lot of other execs and not just execs but many people talking about the legacy costs arising from UAW. They are all upset about how much its draining the company. They are concerned its going to drive GM or Ford or Chrysler or heck all of them out of business trying to pay for retirements and medical costs and so on. One thing is clear, they don't want to pay for it anymore, which begs the question. Who is going to pay for it? I have this suspicion that the next thing we will be hearing about is a huge government bail out. Which means that in the end the taxpayers will be paying for UAW retirement and medical costs and so on. Now I don't know that this is true and of course I don't have shred of evidence. It's just my gut feeling.

Edited March 8, 2007 by BlackHorse

[RichardJensen]

while the salaried personnel don't take their fair share of the concessions,

Come off it. Salaried personnel got worse buyout options. They had their pension unilaterally replaced by a 401(k), and then had the 401(k) match suspended. They had their healthcare package unilaterally adjusted to take more out of pocket, and salaried retirees got the shaft on healthcare before Ford NEGOTIATED a deal with the UAW for its retirees.

 

Don't try and pretend that white collar hasn't taken it as bad or worse than blue collar.

[RichardJensen]

Oh, yeah, and after you put your job ahead of your employer, what are you gonna do? Move somewhere else and try and get as decent a benefit package? Union electricians are a dying breed. Closed shop states are going away, and you think that giving Ford one last strike is going to do you any good? Whatever.

[Imawhosure]

Oh, yeah, and after you put your job ahead of your employer, what are you gonna do? Move somewhere else and try and get as decent a benefit package? Union electricians are a dying breed. Closed shop states are going away, and you think that giving Ford one last strike is going to do you any good? Whatever.

 

I am sorry pioneer. While I wish it were different, I have no choice but to agree with Richard on this point of view, unless I out and out lie to you.

[RichardJensen]

Yeah. Worse buyout options. :rolleyes:

 

Not only will he be getting a 130k buyout, he can deposit all of it in a tax deferred account, unlike hourly personell. His pension is replaced by a 401k? Then why does he get a $4100 a month pension on top of his buyout, PLUS the contributions he put into a 401k that was partially matched by the company? I agree that he has to pay more out of pocket for health care ($450 for him and his spouse), but since he receives over a thousand more a month than an hourly retiree, on top of his matched 401k, is it that much of a sacrifice?

 

Remember, he is salaried, and I am hourly. I see both sides of the story, unlike everyone else that just gets their information from a newspaper.

Very few people got that $130k offer. Far fewer than qualified for any of the 5 options Ford and the UAW cooked up. Also Ford didn't strip pensions from people with seniority. They simply dropped them for people of a certain level. Pfft. Gone. Your Dad got lucky. He had his years in when the crap hit the fan. White collar people your age and younger at Ford got the shaft. No pension, no 401(k) match, higher out of pocket for healthcare, and unlike you: no GEN to keep them from disappearing at a moment's notice with a big "Thanks for playing" and a letter of recommendation with about a 2 month shelf-life in a state with no bright prospects.