Comments on: Assuming The Feds Are Going to Bail Out General Motors…or Even If They Aren’t

By: JP Farrell

JP Farrell — Sun, 05 Apr 2009 22:48:38 +0000

Good post. It is clear that broad-based restructuring of industry economics is required to create a competitive U.S. auto industry. The Presidential Task Force made clear that “legacy costs,” which would include health care costs, were part of the problem. They also hinted that bankruptcy proceedings might need to be part of the program, for that would allow GM to get out of onerous contracts, including that with the UAW. Does the UAW administer the current health care funds as unions do in other industries? If so, they would be highly resistant to losing control of those health care funds, even for retirees. Bankruptcy could solve that problem, providing federally subsidized health care to Medicare-eligible retirees, evening the playing field with foreign automakers, who enjoy such public benefits. See http://jpfarrell.blogspot.com/2009/03/general-motors-surrenders.html

By: alewis

alewis — Tue, 02 Dec 2008 21:45:47 +0000

Your point is that the people who run these companiee are incompetent Luddites and you have a great vignette to prove it. No argument here. I am not taking sides on the bialout question, just saying that if they do it they ought to do it intelligently

By: TeodorTodhe

TeodorTodhe — Tue, 02 Dec 2008 19:59:27 +0000

Hi,
few years ago Wall Street Journal published an article on the 20th anniversary of one of Toyota’s plant in USA. The article was about the history of how Toyota decided to open the first manufacturing site here and the effects of that move. The surprising point about that move was not the fact that Japanese had decided to use the most expensive workforce in the world to make their cars. It was something else. The parking lot of finished cars. All who were present on that inauguration day including people from American automakers were surprised for not seeing anywhere the parking lot for the “cars needing rework”. Apparently cars needing rework occupied quite a great space and it must have been something noticeable in the parking lots of all automakers, and apparently a constant fixture of such plants. Not for Toyota though. When asked the Toyota staff answered that they did not need such space because they did not have cars to be reworked. There is a lot of literature on the topic but one I read few years ago is Lean Manufacturing, an interesting book about the differences in the processes of car manufacturing between Japanese, American, European and other automakers.

Few years ago, Charlie Rose had invited Luca de Montezemolo, at the time the CEO for Ferrari. During the interview de Montezemolo spoke about the Ferrari cars. I remember two culminating points in that interview. One was when he said that Ferrari will continue to produce as many cars as the demand minus 1 is something I did not like very much (he can do whatever he wants, though, to keep the prices of cars high as long as they do not break any antimonopoly laws). The other interesting point was when he described how they improved the performance of the car. That was entirely a data driven process. He explained how for example various computers measured the traction force when the car was speeding and during curves and also the stability on the road and other things that were very technical. Based on the recorded data they made improvement in braking systems, types of tires, etc.

The point I want to make is that Ferrari, Japanese cars, and the demise of American automakers are not accidents. While Ferrari and Japanese apply modern methods in doing things American automakers are still centuries behind. The key is the application of quality improvement techniques that not everyone likes to hear about and some people seem such reluctant to accept.

My other point here is that it is not the health benefits causing the demise of American Automakers. It is the brains of top executives. Today (December 2, 2008) the three top executives of automakers are going to Washington to try to make their case for dollars they need from the Federal government. Guess what one of them is doing. DRIVING. In a hybrid model!!! Like hybrids (introduced by Toyota at least 5 years ago) are something that is going to be the solution. Go figure the creativity of such people.

By: saramcg

saramcg — Fri, 21 Nov 2008 18:33:20 +0000

this is EXACTLY what’s wrong with these people and why we shouldn’t bail them out. They fly to the hearings in private jets with some parthetic excuse about the safety of their employees (commercial jets are way safer) and they can’t make changes like this on their own. Do all that stuff and then come see me about giving you my tax dollars

By: peterkovacs

peterkovacs — Thu, 20 Nov 2008 16:49:05 +0000

I do NOT want my moeny used to bail out people who make more money than most. This HMO thing is a perfect example of why not. I’m sure there are many others. I would like to hear a defense from a union person on why they shouldn’t have to have the same healthcare most of the rest of us have

By: panther

panther — Thu, 20 Nov 2008 11:06:34 +0000

I am in a Medicare HMO. No reason why they can’t be in one too. I can see all my doctors and go to either major hospital. I don’t understand what makes auto employees so special that they can’t do on my taxpayer nickel what I do on my own

By: alewis

alewis — Wed, 19 Nov 2008 20:00:07 +0000

glad you asked. Medicare pays for the Medicare HMOs. GM only pays for the small sliver which Medicare HMOs charge the member. With regular fee for service, that “sliver” is a huge chunk of money. hence the savings opportunity by moving to an HMO.

By: Alan Grundberg

Alan Grundberg — Wed, 19 Nov 2008 19:54:11 +0000

I don’t get it. If GM can for the supplemental policies, why can’t they pay for the Medicare HMOs directly? Is there an easy way for people to figure out what the difference in cost would be?