Sunday, November 2, 2008

Is it wrong to want an old friend (General Motors) to die?

Any one who knows me, knows what a great fan I am of cars. And given the choice, American cars. To be more specific, cars that were built by G.M. . So why do I want to see all three of the Big Detroit Three pass on?

I don't know what it is in our DNA or our up bringing, that will make us choose a car company, and stick with it. My Father had a few Ramblers in his stable, maybe because of there connection to the Hudson's he use to race. My Mother likes Buick's and Oldsmobile's. My sister, Stacey once told me that if she ever bought a new car, it most likely would be another Lexus. Her husband, Doug, likes Audi's. My sister Reva, has, last I checked, a fondness for Subaru's. My wife, Sharlene and my daughter, Michelle, have decided too be strictly in Chrysler's court. And last but not least, my brother Steve could talk a while, about his Porsche or his Jeep.

For me it's a Chevy or a Pontiac. The Pontiac is easy to explain. The first car I ever bought was a 1970 Pontiac GTO with a Ram Air IV engine, producing over four hundred hoarse power at the crank. I bragged about this car more than I think I drove it. Even with the price of muscle cars falling faster than my income, that car would, in poor condition, be worth ten times what I paid for it. I know, because I looked.

Chevy's I can't explain.

With such a great love for American cars, you would think that I would be all for a government bail out for these really sick company's. It's because history repeats it's self.

Twenty years or more ago, Jaguar, one of England's finest sports car builders, found themselves in the same spot that G.M., Ford and Chrysler are in, today. The quick history goes something like this; Company can't make payroll, government loans money. Car maker goes father into receiver ship. Government takes over company. Cost skyrockets while quality goes downhill fast. Government sells to private investor's who reverse coarse and then sell to foreign investors.

There is a reason that the currant Democratic government has a interest in saving the big three, but it is not what you would think. In fact, it is the very reason that these auto makers are in trouble. Unions.

About ten months ago, while visiting my sister Stacey, Stacey let me read some of the trade magazines for the auto industry (at the time she was working for R.L. Polk, the company that provides data for the auto industry, to help them decide which direction the company should go). Most of the articles were about G.M. and how it needed to provide more hybrids to survive. The articles were right, without really knowing why. Unions.

If you break down any manufacturing company, like G.M., you have many departments, but really just three areas that differ, one from another. Manufacturing, research and development, and the bean counters.

Among the bean counters you have the marketing department. For years, I watched G.M. do what I would call substandard marketing when it came to there small cars and trucks. G.M., who if they were a country would have the fifth largest national gross income, in the world, can't sell a single Colbalt to anyone under the age of thirty, in the state of California, I think not. They put all there eggs into the truck/suv market for a reason. Unions.

OK I'll let it out of the bag, why I think that it is unions that are the demise of the big three. I have heard all kinds of figures tossed out, between 65% and 95% of the cost of a Detroit vehicle is labor. For years, all three of the US automakers have made one bad contract with the unions, after another. Guaranty's that pay will be there, even if there is no work. Add to that, health care packages that lasted till death and the generals troops were set for life. I use the word, "were", for a reason.

Here is how I see it, doing some simple math. It takes about the same amount of labor, to build a Cadillac DTS as it does a Saturn Aura. Still four wheels, four doors to attach, one front wheel drive train, same amount of airbags, seats front and back, one stereo and the list could go on and on. If your labor doesn't increase by much and your materials end up costing approximately 10% more, how can you justify (not that I think you should justify) a price tag that is 200% more, for the Caddy?

I have a friend in the auto finance business, that explained to me, that on small American cars, the money was being mad on car loans. In order to compete with non union shops, like Toyota, G.M. was satisfied with producing small cars for rentals and big cars and trucks, for the money. Financing cars of all sizes was very lucrative, back when there was money to loan. Last night I heard that GMAC was so short on cash, you need a credit score of 740 or higher to get a loan. Is it any wonder that G.M. sales are half of what the were a year ago?

Why would hybrids have helped if G.M. could have gotten them out sooner. Because crazy people have money too. In theory, the general could have put those folks who are sitting at home, collecting a pay check, back to work on the assembly line, because of the extra labor involve in building a hybrid. No more dollars spent on labor, but you can add around $10,000.00 to your price tag.

For the record, I am not a fan of hybrids. I think that G.M.'s eight cylinder engine that runs on four cylinders when on the highway makes more since to me. And with a very little engineering knowledge, a lot more should be done with cold/hot air intakes and free flowing exhaust systems. One good O'l boy, who's nick name is Smokey (I can't remember his real name) got 52 mile per gallon out of an old Pontiac Fiero, back when the factory was pushing to get 28. That puts the hybrids real world numbers to shame. Some think that this is were the hundred mile per gallon carborator rumor started.

Anyway, the car could never be put into production, because it didn't use a catalytic converter. It didn't need one.

So why do I what to see my favorite car company go away? Because there are so many "car guys" at G.M. . The Chevy ecotec engine, for example, has won the four cylinder drag racing competition, for eight years in a row. There was a time when Corvettes were banned from Firestone road racing, because the were so far ahead of the competition, I.E. Porche, ect.. I could go on and on about all the men and women at G.M., who are doing it right, but why? There are so many wonderful thing that these car guys could do, with small cars, big cars, trucks and suv's, if just given the chance.

But as history has shown us, G.M. will go the way of the Jaguar, and maybe in thirty years or so, we will see cars that can compete on the market place. If there is still a market place. The Democratic party has always got the union vote and now we will see if they return the favor. No matter how bad it gets, they will always say that it's the fault of the previous Republican President's, failed policies.

To get to the point, no were has the combo of Government and industry worked. But this country just voted for change. So can I say it, the more things change, the more they stay the same.

Boyd

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