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gc





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PostPosted: Mon Sep 03, 2007 2:28 pm    Post subject: Reply with quote

Quote:
"Ontario's success also is tied to a Canadian $500 million fund the province created to attract automotive projects. In the past year alone, Ford, GM, Toyota and others have committed to Canadian $5 billion in new investments in the province."


That quote doesn't show the breakdown for each company, but even if Ford has invested in Ontario, I'd be willing to bet that they have taken more money out of Ontario in recent years than they have put in. After all, their North American plants are losing money, their plants in the rest of the world are making money.

Quote:
Which part? I should qualify that I'm not an expert on the automotive industry. I'm a sportscar enthusiast and I help administer a major Corvette related forum. I've watch GM's slide with dismay...


I asked how the "corporate and union culture" is affecting GM. In other words, why they are hurting GM. In response you said: "The corporation is top-heavy with bean counters who are all playing the 'blame game'". What exactly do you mean by that?
SFrank85





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PostPosted: Mon Sep 03, 2007 5:52 pm    Post subject: Reply with quote

The union workers are getting paid more than they are worth. Of course Ford is making money in other countries because they are not overpaid union jobs.
gc





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PostPosted: Mon Sep 03, 2007 6:01 pm    Post subject: Reply with quote

SFrank85 wrote:
The union workers are getting paid more than they are worth. Of course Ford is making money in other countries because they are not overpaid union jobs.


According to Mac, Toyota (un-unionized) wages and benefits are comparable to GM, Ford, etc.
Mac





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PostPosted: Mon Sep 03, 2007 10:47 pm    Post subject: Reply with quote

gc wrote:
According to Mac, Toyota (un-unionized) wages and benefits are comparable to GM, Ford, etc.

Don't take my word for it. Use the power of Google-fu like I do... Click!!Click!!Click!!

Wages and benefits are part of the cost of doing business but unions negatively affect productivity. That's what I meant about union culture.

As for bean counters... for the past couple of decades, GM shifted from having a strong leader with vision and the engineering background to make it practical to being run by committee. I'm sure there's reasons for this change but it's meant the GM product line, with a few exceptions, has been lackluster.

When the foreign makers improved their quality dramatically, it took GM decades to "get it right" and their product line still isn't anything to rave about. Do you think the foreign makers are sitting still? GM is still playing catch-up for most of their product lines. Why? They're trying to control costs as they improve quality. That's kind of like moving the deckchairs on the Titanic...

The proof is in the sales. GM has been losing marketshare and the foreign makers have been picking it up. Toyota recently passed GM as the largest vehicle manufacturer in the world and they're still growing.

How has GM responded? Did they focus their product line? Nope. They just kept producing the same ho-hum products and depended on customer loyalty to get them through. That just doesn't cut it.

After all these years, GM still doesn't have an excellent subcompact to counter the Corolla or the Civic. The Cavalier sucked. The Cobalt that replaced it is a decent little car but it's not excellent and in that category, it needs to be excellent.

GM used to be the most innovative car maker around but bean counters and committee have killed that spirit. That's not the unions fault; that's the corporate management's problem and until they dig their collective heads out of the sand, the slide will continue...

-Mac
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PostPosted: Tue Sep 04, 2007 10:27 am    Post subject: Reply with quote

The thing also about it is that Toyota can afford it right now, while GM can't because it is on the downturn.
gc





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PostPosted: Tue Sep 04, 2007 1:27 pm    Post subject: Reply with quote

Mac wrote:
Wages and benefits are part of the cost of doing business but unions negatively affect productivity. That's what I meant about union culture.

As for bean counters... for the past couple of decades, GM shifted from having a strong leader with vision and the engineering background to make it practical to being run by committee. I'm sure there's reasons for this change but it's meant the GM product line, with a few exceptions, has been lackluster.

When the foreign makers improved their quality dramatically, it took GM decades to "get it right" and their product line still isn't anything to rave about. Do you think the foreign makers are sitting still? GM is still playing catch-up for most of their product lines. Why? They're trying to control costs as they improve quality. That's kind of like moving the deckchairs on the Titanic...

The proof is in the sales. GM has been losing marketshare and the foreign makers have been picking it up. Toyota recently passed GM as the largest vehicle manufacturer in the world and they're still growing.

How has GM responded? Did they focus their product line? Nope. They just kept producing the same ho-hum products and depended on customer loyalty to get them through. That just doesn't cut it.

After all these years, GM still doesn't have an excellent subcompact to counter the Corolla or the Civic. The Cavalier sucked. The Cobalt that replaced it is a decent little car but it's not excellent and in that category, it needs to be excellent.

GM used to be the most innovative car maker around but bean counters and committee have killed that spirit. That's not the unions fault; that's the corporate management's problem and until they dig their collective heads out of the sand, the slide will continue...

-Mac


And how does receiving corporate welfare remove the incentive to be innovative? Shareholders don't just want their company to stay in business, they want to make as much money as possible. Right?
Mac





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PostPosted: Tue Sep 04, 2007 2:40 pm    Post subject: Reply with quote

gc wrote:
And how does receiving corporate welfare remove the incentive to be innovative? Shareholders don't just want their company to stay in business, they want to make as much money as possible. Right?

Now you want me to explain human nature? Corporate welfare removes the incentive to create solutions in the same way regular welfare removes the incentive to get a job. Yes, they go through the motions but there's no fire in their bellies.

Shareholders aren't involved in the day-to-day operations of the company and they don't force change directly but when management executives find every non-private company meeting jammed with angry shareholders, they make changes or they'll find themselves unemployed.

-Mac
gc





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PostPosted: Tue Sep 04, 2007 2:48 pm    Post subject: Reply with quote

Mac wrote:
Now you want me to explain human nature? Corporate welfare removes the incentive to create solutions in the same way regular welfare removes the incentive to get a job. Yes, they go through the motions but there's no fire in their bellies.


How so? If you had a choice between receiving, let's say, $1,000 a year from the government or working hard to make $100,000, which would you choose?
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PostPosted: Tue Sep 04, 2007 5:34 pm    Post subject: Reply with quote

gc wrote:
How so? If you had a choice between receiving, let's say, $1,000 a year from the government or working hard to make $100,000, which would you choose?

That is not a realistic comparison.

-Mac
gc





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PostPosted: Tue Sep 04, 2007 6:18 pm    Post subject: Reply with quote

Mac wrote:
That is not a realistic comparison.

-Mac


Ok, then if you had the choice between the government paying you just enough money to stay out of bankruptcy or the choice to potentially make millions of dollars, which would you choose?
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PostPosted: Tue Sep 04, 2007 6:39 pm    Post subject: Reply with quote

gc wrote:
Ok, then if you had the choice between the government paying you just enough money to stay out of bankruptcy or the choice to potentially make millions of dollars, which would you choose?

The choice to make millions of dollars is already there with a corporation the size of GM (they are, after all, the world's second largest vehicle manufacturer) yet they've failed to embrace that challenge. How would adding corporate welfare somehow inspire them?

-Mac
gc





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PostPosted: Tue Sep 04, 2007 6:43 pm    Post subject: Reply with quote

Mac wrote:
The choice to make millions of dollars is already there with a corporation the size of GM (they are, after all, the world's second largest vehicle manufacturer) yet they've failed to embrace that challenge. How would adding corporate welfare somehow inspire them?


I'm not trying to say that corporate welfare is going to inspire GM to try to make millions of dollars. It was you who was trying to argue that corporate welfare would take away the incentive to make millions of dollars. Since you agree that the choice to make millions of dollars is already there, despite the fact that they are receiving money from the government, I take it you agree with me on that point?
Mac





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PostPosted: Tue Sep 04, 2007 6:51 pm    Post subject: Reply with quote

gc wrote:
I'm not trying to say that corporate welfare is going to inspire GM to try to make millions of dollars. It was you who was trying to argue that corporate welfare would take away the incentive to make millions of dollars. Since you agree that the choice to make millions of dollars is already there, despite the fact that they are receiving money from the government, I take it you agree with me on that point?

There is a difference between choice and incentive.

-Mac
gc





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PostPosted: Tue Sep 04, 2007 6:57 pm    Post subject: Reply with quote

Mac wrote:
gc wrote:
I'm not trying to say that corporate welfare is going to inspire GM to try to make millions of dollars. It was you who was trying to argue that corporate welfare would take away the incentive to make millions of dollars. Since you agree that the choice to make millions of dollars is already there, despite the fact that they are receiving money from the government, I take it you agree with me on that point?

There is a difference between choice and incentive.

-Mac


So, you're saying GM has no incentive to try to make millions of dollars? Or they do have the incentive, in which case you agree with me?
Mac





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PostPosted: Wed Sep 05, 2007 12:36 am    Post subject: Reply with quote

gc wrote:
So, you're saying GM has no incentive to try to make millions of dollars? Or they do have the incentive, in which case you agree with me?

None of the above. You were trying to ascribe a position to me which was inaccurate and I tried to clarify as succinctly as possible.

The executive committee should have the incentive to create success but, like most committees, they spend more time talking than taking action and when they do take action, it's indecisive action at best. If they can score some corporate welfare, they can represent that to the shareholders as being evidence of their shrewd business practices.

Corporate welfare is usually in the form of tax incentives or other forms of regulatory dispensations (rather than cash), the shareholders see the executives as being skilled negotiators for having gained concessions and approvals from governments. It is, in a way, a form of success.

The executive committee aren't choosing to fail but the net result of their efforts is exactly that. Do they lack incentive to succeed? They shouldn't but they do. Why? Part of the reason is corporate welfare. Another part of the reason is their form of compensation and how they're insulated from the company's success (or failure).

Is there a solution? I'm not sure. Is the problem that GM has too many strong executives (unwilling or unable to cooperate) or that they lack leaders with vision? I lean toward the latter.

-Mac
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