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16
Nov

GM Bailout – Does GM now stand for General Mess instead of General Motors? Is Capitalism in danger of dying?

GM inside news is full of the GM Bailout.  What ever happened to “pulling yourself up by your own boot straps”? During the past few months, I have been amazed at the number of businesses out there that are standing in the soup line claiming that they need money to keep floating and I have to simply ask….WHY?

The next in line seems to be the ill fated, poorly managed conglomerates that are traditionally called “The BIG 3”. In their day, GM, Ford, and Chrysler had some great cars. I think about those beautiful classic Cadillacs’, the Pontiac GTO,  and the Olds Cutlass 442s. I think about the ’56 Ford T-Bird, the Ford Mustang and that hot-rod Lincoln. And I absolutely love to talk about the old Mopar cars such as the Plymouth ‘Cuda and the Roadrunner….and with the 426 Hemi engine, that was the bomb. Of course I also like airplanes, especially North American’s P-51 Mustang and Republic’s P-47 Thunderbolt. I put the airplanes in the last sentence to make a point later in this article.

I was in 1st grade in 1976, when my dad traded in a 1969 AMC Javelin for an AMC Pacer and that was about the time that Honda and Toyota started running circles around the domestic car manufacturers. The first picture posted above is of my oldest brother in that Javelin but I don’t think that we ever took a picture of the silver egg (Pacer) on wheels. Oh, and the silver Pacer also had monkey puke orange interior. Unless you had a horse attached to that Pacer, you were not guaranteed of getting to your destination without breaking-down. It was very poor quality and very quickly AMC’s Pacer concept died. Today, you don’t see a Pacer too often and the reason is that they were not built right and they did not make American Motors Corporation any money. Now, if AMC had continued to pour money into the Pacer concept, the stock holders would have had a melt-down….Because it does not make sense to continue producing a  car….regardless of the number of people that are given a job to build it, if it does not sell and make money.

It would be just like those airplanes that I spoke about earlier in the article. During their day, they were a very powerful foe and were a legitimate threat against our adversaries in both WWII and the Korean War. But when the turbine jet engines came up in full scale production, those Pratt and Whitney radial engines in the Thunderbolt and that massive V12 Rolls Royce Merlin engine that was in the Mustang, could not compete and required a significant amount of additional maintenance compared to the jet. Today, both Rolls Royce and and Pratt & Whitney make jet engines and they are still competitive. The market, driven by technology, improved and both companies responded correctly. If they had refused to adjust their product from piston engines to jets, that Pratt and Whitney jet engine would not be in the SR-71 Blackbird and those Roll Royce jets would never have powered the Concord for so many years at those unbelievable speeds across the ocean. Likely, both engine manufacturer’s aircraft propulsion divisions would have died.

Today, when we look at GM, Ford, and Chrysler,  we are looking at an antique. Their engines are behind the Asian and European automobile competition, their body styles are outdated, and the presence of the unions and required union contract benefits are quickly absorbing their liquid assets. The last figure that I heard indicated that a union employee working in a big 3 car manufacturing facility was being paid, with the value of benefits included, around $77.00 per hour.

What does the future hold? Well, Ford, GM and Chrysler want a loan (at tax payer expense) and they currently show no indication of any type of reform regarding management or union re-organization. Just the other day a Ford executive said they need the money, but basically stay out of our business….What arrogance. Meanwhile, American Honda, Acura, BMW, Toyota, Mazda, Nissan, Hyundai, Mercedes, and soon-to-be Volkswagen are all manufacturing vehicles here in the US and providing American families a good paycheck and benefits without the interference of the UAW. In addition, while they are not setting sales records, they are also not asking for a tax payer funded loan. Oh, another important thing….Have you thought about how many of the BIG 3 vehicles are assembled in Canada and Mexico compared to the imports car manufacturers that assemble their product here in America? Who actually is providing the U.S. jobs?

My prediction. The powers that be will give our tax money to the “domestic car manufacturers” and in less than 5 years they will still be in major debt and will still be producing the same old stuff…If they are still in operation. The BIG 3 are under contract with the union to make a certain number of vehicles, regardless of if they are selling or not. They will continue to produce a surplus of these vehicles and the market will be drowning in them. So, my prediction is if you buy a Ford, GM, or Chrysler product, you are taking a major risk. Depreciation on that vehicle will be sharper than ever before and if you finance one, you better get GAP insurance....Because while financed, you will likely owe considerably more on it than what it is worth.

I agree with buying American and I do it every chance that I can. A few years ago I purchased a John Deere 4310 tractor that was built in America and Accurate Automotive’s Service Department just bought a new brake lathe over one that was $2000 dollars cheaper because the cheaper one is made in China and the one we chose is made in Iowa. When buying a Honda or Acura vehicle always look at the first digit of the serial number for the source of production. If the serial number (VIN) starts:

  • Number   1     It was produced in Ohio
  • Number   2     It was produced in Canada
  • Number   3     It was produced in Mexico
  • Number   5     It was produced in Alabama
  • Letter       J      It was produced in Japan

At www.accuratecars.com we care about America and always want to be viewed as the best place to purchase and service Honda and Acura vehicles in Nashville and Middle Tennessee. We are committed to being the best at business efficiency, customer service, and providing a great product (both in sales of used cars and the maintenance / repair of Honda and Acura automobiles). American Honda  has provided North America with some great products and continues to grow the economy. With cars, trucks, vans, suvs, marine engines, outdoor power equipment, robotics, and even jet engines; North American Honda has taken the position of lead or get out of the way. That is Capitalism…It is alive and a North American division of a company still has it. I guess the “melting pot” isn’t just to describe our population of people anymore. It also includes companies that originated in foreign countries and assimilated to the American spirit of business ownership and “standing on your own two feet” Now that is American and I am a fan.

 

7 Responses to “GM Bailout – Does GM now stand for General Mess instead of General Motors? Is Capitalism in danger of dying?”

  1. 1
    logan Says:

    Maybe GM should include a DVD of ‘Pearl Harbor’ with each new vehicle.

    It was American manufacturing that helped the US win WWII. It also saved alot of American lives.

    Maybe, if it had gone the other way. Alot of these naysayers would not even exist. They would have no parents or grand parents.

  2. 2
    ebrian Says:

    I guess that Logan is saying that GM should include a copy of “Pearl Harbor” because Imperial Japan bombed Pearl Harbor on December 7, 1941.

    I have studied that time frame and looked at the many angles of the conflicts from 1935 thru 1945.

    My mother’s father and my wife’s grandfather served in World War II and both survived. My wife’s grandfather, who died in 1995; served as a bomber pilot in the European theatre. He flew big planes including the Boeing B-17 and the B-24 Liberator.

    With that said, both Japan and Germany picked a fight with us….A fight that America should have gotten involved in many months before December of 1941; when Japan was attacking China and when Germany was attacking Great Britain and invading Poland. But Roosevelt (who the labor unions had a very intimate relationship with) wanted to avoid a conflict of that magnitude….and we were ultimately attacked because the powers that be of that day turned a blind eye to the violence on foreign soils…..sort of sounds familiar doesn’t it.

    I wrote this post to give question to the obligation of the American taxpayer to fund failing businesses….Particularly the BIG 3 automakers being Ford, GM, and Chrysler.

    It does not take an economist to see that these automakers are not doing very well. They have continually built CRAP for over 30 years….Let me name a few: AMC Gremlin, AMC Pacer, Ford Pinto, Ford Maverick, Pontiac T1000, Chrysler New Yorker, AMC Eagle, several model years in the early ’80s of the Ford Thunderbird….I could go on and on.

    Some of these manufacturing blunders were a direct result of Union involvement. Like a parasite, unions sucked profit from these viable companies in the form of very high wages (including overtime), employee benefits that were unmatched in any other industry, and continuing to produce car lines that would not sell but would “provide and create job opportunities”…..That “create jobs” part sounds real familiar doesn’t it?

    The Japanese manufacturers came into America and made a name for themselves as having cars that were not only more reliable, but were also considerably more fuel efficient….Which became very important in the ’70s during the oil embargo.

    Today, many of these foreign car manufacturers are producing their vehicles HERE in the United States. Perhaps we should ask the State of Ohio if they think that they should have American Honda (for assembly of both Honda and Acura) as a factory in their state? Or maybe we should ask the State of Kentucky if they wish Toyota would go back to Japan? Hey Logan, I believe that I saw you to be a resident of Middle Tennessee….Why don’t you ask your neighbors if the Nissan assembly plant belongs in Smyrna and that beautiful and massive Nissan office building that was constructed in Cool Springs should be torn down? And what about the State of Alabama? The State of Alabama has a Honda assembly plant, a Hyundai assembly plant and a Mercedes assembly plant. Oh, and don’t forget that here in TN, we are about to start building Volkswagens’ down near Chattanooga.

    Incidentally, NONE OF THE ABOVE FOREIGN MANUFACTURERS CURRENTLY HAVE UNION INVOLVEMENT AND THEY ARE NOT ASKING FOR FEDERAL TAX DOLLARS TO FLOAT THEIR BUSINESS BECAUSE IT IS SINKING….

    While these foreign manufacturers have moved to U.S. locations and assimilated their labor guidelines and their vehicles to American standards, and while these same foreign owned manufacturers help employ millions of American workers in both manufacturing & supply; the Domestic (BIG 3) manufacturers seem to have moved away. They are assembling their vehicles in Mexico, Canada, and Brazil….All of a sudden, the American car manufacturers are not as much American as they used to be.

    Why do you think that the American car manufacturers moved assembly to other countries?

    Answer: Because of infection of the union involvement in their assembly plants on American soil.

    What do you think would happen to our U.S. economy if the foreign car assembly plants left America?

    Finally, if you think GM should give a copy of “Pearl Harbor” to every client…I firmly believe that history is something that should not be forgotten. While you are giving out movies, give out a copy of “Tucker” also…..With fuel injection, disc brakes, the engine in the rear, and a center headlight that steered with the car; the Tucker was a car that was very very advanced for the 1950s era of automobiles. Without a doubt, it would have cost the BIG 3 a lot of money….Because they would have had to advance the quality and technology of their vehicles several decades before the Japanese made them do it in the ’80s. That is why there were only 52 Tuckers built. The Big 3 stopped The Tucker before it took hold of the car market.

  3. 3
    Logan Says:

    Hmm..the Tucker movie would make a great double feature.

    Lets see..30 years.

    AMC Gremlin, AMC Pacer, AMC Eagle were not original products of GM, Ford, or Chrysler.

    I think Chrysler obtained those vehicles after buying up AMC.

    The AMC Eagle is sort of considered to be 30 years ahead of it’s time. The first crossover SUV.

    Everything was crap 30 years ago. Toyota included. GM would test the Jap cars on their proving grounds and they would fall apart. What? The Honda CVCC? That was it from Honda, hardy bigger then a motorcycle.

    The Japan vehicles did offer better gas mileage at a critical time.

    “With that said, both Japan and Germany picked a fight with us….A fight that America should have gotten involved in many months before December of 1941.” I suspect, the idea of today going into any war, would still be the dragged out situation as described above.

    In 2008, GM sold 8.3 million vehicles worldwide.

    I am very familar with the Nissan headquarters in Franklin, TN. This facility is about 5 miles from where I live. Fact is, Nissan relocated from California to Franklin to basically reduced management headquarters headcount. Don’t wanna move to TN, uhh, no job.

    Nissan is in fact in line to obtain US funds to update the Smyrna TN factory. Part of the original $25 billion package.

    Tennessee, Alabama, Ohio. All offer tax breaks and huge incentives for automakers to locate to their states. The VW plant in TN cost roughly $200 million in state incentives. Same with Hyundai, Honda, Mercedes Benz, Toyota. Sounds like a bailout..

    Hyundai Mongomery, AL. Workers are working 3 day weeks. Too many cars. Fudged January 2009 sales reports. Hyundai is actually in a 3 year decline for January sales.

    Toyota San Antonio, TX. 3 months down. Employees come to work with full pay. Sounds like a GM jobs bank to me.

    Mercedes Alabama offers buyouts to all employees.

    Very recently, Toyota City Japan almost had a historic momment. ALL assembly lines were to be turned OFF. The press was ready with the headlines… At the last minute, Toyota keep 1 line running.

    China refuses to buy anything from Japan. Even today. They remember the war..

    As for junk?

    I own:

    2001 Cadillac DTS. 182k.
    2003 Saturn VUE. 148k.

    We just bought a 2009 Chevrolet Traverse.

    Other cars..

    1992 Pontiac Bonneville. 234k.
    1993 Cadillac SLS. 219k.
    1987 Buick Turbo. 226k.

    KKB.com just recently recommend 3 GM vehicles. The Chevrolet Malibu, Chevrolet Tahoe Hybrid, and the Chevrolet Traverse.

  4. 4
    ebrian Says:

    Hey Logan,

    I sincerely appreciate your interest in our blog posts and hope that you will continue to read them and comment on them as well.

    To start, I must tell you that I have owned many “American-Made” cars also….My first Pick-up truck was a 1969 Ford F100 with a 302 CID / 2BBL carburetor and a 3 speed FMX automatic transmission. I currently own two 1968 Pontiac Firebird convertibles (both have a 350 with a 2BBL carburetor and a 300 Hydromatic 2 Speed Transmission. I have owned a 1968 GTO Coupe that would pass everything but a gas station. The GTO had been modified before I purchased it and had a 421 CID with a Doug-Nash 4 plus 1 manual transmission. I currently own a 1996 Ford F350 with a powerstroke diesel. And finally, just last year I bought my mom her dream car at dealer auction….an all original 1956 Ford Thunderbird (with removable hardtop) with a 312 CID engine, with an automatic transmission.

    The last NEW car that I purchased was a 1992 Ford Thunderbird…It was with that vehicle that I pledged that I would never buy another new BIG 3 car again.

    Interestingly enough, the LAST BIG 3 vehicle that I purchased was a GMC Yukon and this thing was a piece of CRAP. I bought it with 38,000 miles on it and if I hadn’t been a technician, it would have put me in the poor-house. Intake manifold gaskets leaking coolant, blower motors making noise and not always working, a Delphi alternator getting red hot because the voltage regulator stuck, a water pump leaking coolant from the weep hole at only 50,000 miles, a fuel pump just quitting one night on the way to church and finally the automatic transmission going out because instead of GM using metal to make some of the internal hardware parts, they used a composite plastic. Do you know what composite plastics do when put in contact with oil based liquids, such as Dextron II transmission fluid….GM should have known. All of this was before the vehicle had 100,000 miles on it….And before you say that it must have been a lemon, I will let you know that a co-worker of mine had a Chevy Tahoe with the exact same issues and same parts to replace. PIECES OF CRAP…..Incidentally, I my first job out of school was as a technician at a local Chevy dealer in Nashville…Ole Jim Reed and I worked in the truck department. This was 1989 when I worked there. A decade later, I own the Yukon, and the same exact problems are happening with the Yukon that were taken place with the ’89 and ’90 K5 Blazers 10 years earlier….GM CRAP.

    Chrysler did buy AMC….What did the letters “AMC” stand for?

    “American Motors Corporation” used various parts from all three car manufacturers, including Ford, GM, and Chrysler didn’t they? In fact, the joke was that that AMC should have stood for “ALL MOTORS CORPORATION”

    As far as everything being crap 30 years ago….I must disagree. The reason is because of technology and Japan pushed the American car manufacturers to improve their quality. The Honda CVCC engine was a great concept of meeting U.S. Emissions standards through a combustion chamber design that eliminated the need of a catalytic converter and this engine was applied in all three Honda vehicles until 1983. The Civic, Accord, and the Prelude. In addition, Honda incorporated PGM-FI fuel injection in 1985, and VTEC in 1992.

    Meanwhile America was producing some real DO-DO which included:

    The installation of the ECU in the engine compartment on some of the first Chrysler products with fuel injection engines (you know, where it gets really hot…and we all know how well computers operate when they get hot).
    The Chevy 305 (JUNK)
    The 700R 4 speed automatic transmission (DO-DO)
    The Pontiac Grand AM (CRAP)
    The Quadra-Jet Carburetor (commonly referred to a “Quadra-Junk”)
    Crossfire Injection (ASK any GM Tech about this one)
    The quad-four engine….(This was GMs feeble attempt at a 4 cylinder DOHC multi-valve engine)

    In addition to the above….You said that you own a 2003 Saturn Vue. Does your Vue have a Honda engine in it? See link below:

    http://www.caranddriver.com/reviews/hot_lists/car_shopping/suvs_family_haulers/saturn_vue_v_6_awd_short_take_road_test

    Now, why would GM owned Saturn use a Honda engine over their own great GM engines?

    Now, for the war stuff in the ’40s…..A lot different from today, but we were already involved in the fighting weren’t we? First of all, we were already fighting Japan with the P40 Warhawk up in China….Remember General Chennault and his Flying Tigers? That was before December 7th.
    And we were also already supplying Great Britain in the war effort and we were also loosing merchant (Liberty) ships to the German subs while crossing the Atlantic.

    And the Allison V12 Engine, used in the P51 Mustang….Why did North-American change over to the Rolls Royce Merlin from the Allison Engine?

    Finally, you mentioned the INCENTIVES associated with the foreign car manufacturers…Do I think that is right? NO, I don’t. But it is reality that when a major company is looking to locate in specific regions, the powers-that-be are going to offer INCENTIVES to entice the businesses to their state.

    With that said, the BIG 3 are not asking for incentives….They are needing money to stay floating….like a man dying of emphazema needs oxygen.

    Whether or not we agree, I stand on the opinion that my federal tax dollars should not be used to keep GM, Ford, or Chrysler floating.

    WHEN they go out of business, the economy won’t fail because the public will still need cars and the market will answer that need….America did not fail when other car and truck manufacturers such as Studebaker and Marathon closed it’s doors.

    One thing is for certain, I would not buy a vehicle from a car manufacturer that was that deep in debt because usually that is when quality declines and the question will arise of “how long will my new car warranty be viable, before the bankrupt company completely fails”?.

    Got to Go……I appreciate your participation and thoughts on this subject.

    Ed

  5. 5
    logan Says:

    I guess we’ll have to agree to disagree.

    No, our 2003 VUE has the GM engine.

    What the article fails to mention is what they did was trade engines. Honda provided the V6 engines, in trade Honda got GM/Isuzu diesel engines.

    Chevrolet 305 junk? Hardly. Same engine as a 307, 327, 350. First introduced in 1955. The ‘small block chevrolet’ is junk? Get real. The Hot Rodders dream engine. Considered one of the best engines ever made.

    It would be easy to find on Google. The 1.4 million Toyota engines with oil sludge problems..

  6. 6
    ebrian Says:

    Oh Logan, I wouldn’t bring up GM diesel engines….I forgot all about that little General Mess. Having owned several GM products, did you ever own a GM product with the 350 gas engine that General Motors installed a set of diesel cylinder heads on and marketed as a 5.7 liter diesel engine? This engine was in several oldsmobile products, the Pontiac Bonneville, and I think it was also in some Cadillac products….Talk about a piece of CRAP, and everyone knew it. GM marketed a gasoline engine block with diesel heads on it, knowing that it would fail before it came off the assembly line! In addition to the engine being a piece of crap, the GM engineers designed the air intake for the engine so low that many of these engines suffered broken rods because they sucked up water when being driven in hard rain storms where water was standing less than a few inches…. This happened to a co-woker that my dad knew. He had one of these GM 5.7 Liter diesels and went under a railroad bridge during a quick summer storm over on Murfreesboro Road (where the Thermos plant used to be). The water that had accumulated under the bridge was deep enough that the engine “sucked up” water thru the intake ….Imagine that, not even a GM engine could compress a liquid.

    As for Honda trading for some Isuzu diesels. I honestly don’t know why a love affair exists between Honda and Isuzu. One of the worst things they ever did was badge the Isuzu Rodeo and the Isuzu Trooper II as Honda and Acura products back in the ’90s before they built built the Honda Pilot and the Acura MDX. But, this was 2004 when Honda “made the trade” for some Isuzu diesels….Five years later, has Honda ever offered a diesel engine in one of their U.S. vehicles? Sounds like that Isuzu diesel has been stuck in R&D to me.

    Ed

  7. 7
    ebrian Says:

    I never said that the Japanese car manufacturers didn’t have issues with their products…It was around the same time that Toyota / Lexus was having oil sludge problems with one of their V6 engines, that Honda / Acura was having some issues with the 2nd gear not getting adequate lubrication in the automatic transmissions associated with vehicles equipped with Honda’s V6 engines.

    The difference between the BIG 3 and these manufacturers is that Toyota and Honda not only recognized the problem, but admitted the problem by extending their warranties out to protect the consumer. In both of these examples, the Japanese car manufacturers extended warranty coverage to well over 100,000 miles on the odometer and even offered an avenue for customer reimbursement in the event that the consumer had already paid for a repair in an out-of-pocket transaction. Even though Toyota and Honda warranties had no obligation to cover these failed parts, they chose to take care of their car buyers.

    Would any of the Big 3 have done that? We both know the answer to that is an absolute “NO”.

    Now, we can sit here and debate these issues all day long, or we can look at the market to get an idea about consumer confidence. I decided to go back and look at the original price of a 2003 Honda Pilot EX-L and a 2003 Chevy Trailblazer LT EXT 4WD. By the capacity for passenger seating, and 4WD capibility; these are two comparable cars. I evaluated current market value with an average of 15,000 miles per year x6. In 2003 the Honda Pilot had an MSRP of $30,520 and the Trailblazer had an MSRP of $33,645.

    Today, NADA says these vehicles have a clean retail of $10,750 for the Honda Pilot and $8,625 for the Chevy Trailblazer. Again, this is based on 90,000 miles on the odometer….See links below:

    http://www.nadaguides.com/usedcars.aspx?LI=1-21-1-5013-0-0-0&l=1&w=21&p=1&f=5014&m=1195&d=6039&y=2003&c=18&vi=50985&z=37167&da=-1&mi=90000

    http://www.nadaguides.com/usedcars.aspx?LI=1-21-1-5013-0-0-0&l=1&w=21&p=1&f=5014&m=1035&d=6006&y=2003&c=18&vi=50656&z=37167&da=-1&mi=90000

    Now, compared to the Pilot, here we have a Chevy Trailblazer that was $3000 more when it was new and worth $2,000 less when it is 6 years old with average miles accumulated.

    Sounds like the used car market doesn’t trust the “American Made” Chevy Trailblazer that is built in CANADA as much as a Honda Pilot that is built in ALABAMA.

    We have gotten way off subject, but it’s a good debate. I still say that GM does not deserve Federal taxpayer money to keep them floating.

    Ed

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