GM in "intense" preparations for bankruptcy

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Union labour is only 10% or less of the cost of a car(google direct labour).The numbers quoted most often ($70) are everything from pensions ,medical to TP in the washrooms, e v e r y t h i n g.
The UAW has already opened their contract twice and may do so again,but with so little of the costs being labour it will not mean [censored],GM is toast no matter what anyone does, they are too big for the size of the current car market.They need to slash 1/2 of their divisions yesterday.The tough part is every division has a bunch of VP's and other dead weight who are part of a buddy network that cant seem to make the tough decisions(fire themselves),Thats why the CEO is gone -trying to break the logjam.
 
Originally Posted By: 21Rouge

Our car was built this past Friday and literally as we speak this brand spankin' new GM vehicle is on a train winding its way to north of the 49th
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. I expect to take delivery within about 10 business days....not sure what to think
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. I am hoping those fine men and women at Spring Hill
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did their best assembling our car in these difficult times.



What model is it?
 
So if GM does go bankrupt does that mean they will no longer be obligated to all the retirees in the form of pensions and benefits?
 
GM is still paying for the labor that went into building my 57 Chevy. Toyota and Honda aren't. Bankruptcy may be the only way out of it.
 
Originally Posted By: TurboLuver
So if GM does go bankrupt does that mean they will no longer be obligated to all the retirees in the form of pensions and benefits?


at worst the pension obligations get shifted to the government where they will be reduced but the people will still get something.
 
REAL cost of labour, to produce and assemble EVERY little part...10% of total cost??? Gimmie a break.
 
Originally Posted By: rationull
Originally Posted By: 21Rouge

Our car was built this past Friday and literally as we speak this brand spankin' new GM vehicle is on a train winding its way to north of the 49th
08.gif
. I expect to take delivery within about 10 business days....not sure what to think
21.gif
. I am hoping those fine men and women at Spring Hill
34.gif
did their best assembling our car in these difficult times.



What model is it?


AWD Traverse
 
Originally Posted By: Audi Junkie
REAL cost of labour, to produce and assemble EVERY little part...10% of total cost??? Gimmie a break.


Labor in manufacturing usually runs anywhere between 10 and a little over 20 percent. It's not that much of the total product. That's why I'm always so [censored] when I see jobs leave the country. It only benefits a handful of people who had plenty to begin with. And all the bullsh1# about only low skilled jobs are leaving the country only have to look as far as the computer industry. We were going to get a Motorola microchip mfg plant in Richmond. The footers were being poured and all of the sudden stopped in 1998 (I'm assuming when the Chinese trade thing was passed).
 
Originally Posted By: TurboLuver
So if GM does go bankrupt does that mean they will no longer be obligated to all the retirees in the form of pensions and benefits?


It's quite possible! What would probably happen is that the government pension garantee corp would take it over. The pensioners would get some benefits, but it probably wouldn't be pretty.

(Quite frankly, what GM (and so many other companies, GM is just the biggest and ugliest example) did with this ought to be illegal- for years and years, they have leveraged their cost of production against the future. It's great that they offer good benefits to their workers- but they did it wrong. They basically created a Ponzi scheme whereby the workers of the past (the current retirees) are being paid off by the sacrifices of the current workers, and the shareholders of the past got paid off in exchange for the shareholders of now. GM created a scenario where they would have to keep expanding, or have to reduce costs so much, that it was unsustainable. It's not fair to anyone involved.

Defined benefit plans ought to be illegal. It should have to be defined contribution. If a company wants to offer retirement benefits, they should have to book the cost when it is incurred- while the employee is working. Or, from the other perspective, the FULL cost of producing a car needs to be reflected at the time it is produced. The cost of labor should include the wage + the contribution to the retirement plan. Any other way is dishonest and as we are learning, doomed to failure. And it's going to keep happening as other companies see their retiree costs skyrocketing.


Originally Posted By: Audi Junkie
REAL cost of labour, to produce and assemble EVERY little part...10% of total cost??? Gimmie a break.


Well, yes and no. A friend of mine works for a GM supplier. (He is not enjoying his job right now...) According to him, the number of man-hours for final assembly of a car is something like 19. But because of outsourcing, much of the labor that goes into the vehicle is obscured. When they buy a door assembly, the labor that goes into that doesn't count against them.

But yeah, labor as a pure component isn't all that large of a percentage of the cost of an item being produced. I worked for a retail food giant as a manager for a while. During a Saturday lunch rush, labor might run 5%. Which seems crazy small. But when you account for the labor that went into the whole day, setting up in the morning, closing down in the evening, it gets to 10% pretty fast. When I first started in management, I was shocked at how low it was. But then I started getting the P&L statements and seeing the budgets. Costs in manufacturing (which a restaurant is, on a very small scale) are unbelievable. Just imagine what it costs to get a payroll out. To install timekeeping systems. To fill out the forms! It's crazy. Oftentimes, in an average restaurant, the difference between a profitable month and a loss month was literally counting minutes on every shift of every daypart, the difference between turning the equipment on at the last possible second, and not wasting product.

Same with manufacturing. The cost of setups, of holidays, of breakdowns, of training start to add up.
 
Quote:
(Quite frankly, what GM (and so many other companies, GM is just the biggest and ugliest example) did with this ought to be illegal- for years and years, they have leveraged their cost of production against the future. It's great that they offer good benefits to their workers- but they did it wrong. They basically created a Ponzi scheme whereby the workers of the past (the current retirees) are being paid off by the sacrifices of the current workers, and the shareholders of the past got paid off in exchange for the shareholders of now. GM created a scenario where they would have to keep expanding, or have to reduce costs so much, that it was unsustainable. It's not fair to anyone involved.



One of the problem is that people are well living longer than people expected to, which is just compounding the problem.

Also I think the union want the defined benefit instead of defined contribution. I know at least the white collar workers have been on defined contribution for years.


I wish i could remember where I read about the union wanting the defined benefit stuff. What I am getting at is my memory could be faulty on that one. Though I can't see why the union wouldn't have pushed to switch to defined contributions if they wanted it and I can't see gm turning something down like that which would remove future obligations from them.


I would also like to point out that social security is run the same way.
 
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Originally Posted By: Audi Junkie
REAL cost of labour, to produce and assemble EVERY little part...10% of total cost??? Gimmie a break.

Yup in Canada where we have medical costs shared ,its around 7%.
Thats assembly line labour.


Whats a matter we break your toy.Its easy to hate workers, but we shouldn't
 
Originally Posted By: hone eagle
http://www.oliverwyman.com/content_images/OW_EN_Automotive_Press_2008_HarbourChart08.pdf
Here is the harbour report.hours to build x hourly rate around $750 for a compact


Looks like Corvette holds the US record at 42.06 hours. Makes some sense. It's limited production in an old facility with little automation.
 
Originally Posted By: XS650
Originally Posted By: hone eagle
http://www.oliverwyman.com/content_images/OW_EN_Automotive_Press_2008_HarbourChart08.pdf
Here is the harbour report.hours to build x hourly rate around $750 for a compact


Looks like Corvette holds the US record at 42.06 hours. Makes some sense. It's limited production in an old facility with little automation.



The Bowling Green plant is not really an old plant. It was built in 1981 and revised 3x (for C4 production in 1983/4 and for the C5 in 1997 and then for the XLR which is built there too). Most other GM plants including the one I work at now was built in the 1950's but modernized over the years. There is the same amount of automation in BG as in most any auto plants. I know - worked there and still have buddys there.
 
Originally Posted By: wapacz
Originally Posted By: TurboLuver
So if GM does go bankrupt does that mean they will no longer be obligated to all the retirees in the form of pensions and benefits?


at worst the pension obligations get shifted to the government where they will be reduced but the people will still get something.



Probably like what happened with Bethlehem Steel.
 
Originally Posted By: hone eagle
http://www.oliverwyman.com/content_images/OW_EN_Automotive_Press_2008_HarbourChart08.pdf
Here is the harbour report.hours to build x hourly rate around $750 for a compact



I'm proud to see my GM Plant as the Benchmark for large SUV's.
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Not all of it ,there will always be a GM.Parts of it, the dead weight divisions will have to be pruned.I'd like to see it go on in some form or another.
Someone start a thread ,what goes and what stays
GMC - go chev truck are enough
Hummer -go just because
Saturn -go my sister will be ticked
Pontiac - go I dont know ,Iam torn

Proly a billion$ worth of VP's and excutives alone.
 
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