How G.M. Plans to Spend Your Money

I'm curious to know how many buyers of GM cars are going to come from Mexico, China and South Korea. Are they depending on the markets were they make them to buy them? Because I hate to be the one to break the news but, Americans with out jobs won't be buying them. Unless of course they want to continue repros indefinately.

I wonder what John Kerry will think about this. Seems one of the centerpieces of his campaign, other than defending a tall tale that he went "75 klicks above the Do Lung bridge", was preventing outsourcing.
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And by the way, what have Dems done since 2006 to stop outsourcing?

Makes perfectly good sense . . . if you swallow the philosophy that, by definition, what's good for Wall Street is good for the American worker and the American economy.

Yeah, but afguy, who's in charge of this now? And let's not forget to whom "Wall Street" contributes a boatload of cash. "Wall Street" ain't exactly warm to the GOP.

and afguy, isn't the idea that, at some point, we have a viable GM that does not rely on routine injections of taxpayer cash? If their labor costs are going to stay the same, then something's gotta give, right? Looks like that something is job-creation in the US. By the way, can someone explain why labor costs aren't the primary reason why Honda can build cars in America at a profit, but GM cannot?

Maybe it means the costs of the American labor market are completely out of whack and the single best thing the Obama administration could do to promote job growth is institute universal health care and retirement.

I agree. This isn't a partisan political issue. It's a greed and power issue that, if anything, has been decidedly bi-partisan for a number of years.
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Their hooks are definitely "reaching across the aisle" and they are financially supportive of ANYONE who can be influenced.
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In case you haven't noticed, we are hard on corrupt politicians of all colors.

GM's F@$%&d! Too many products, too many dealers, weak brands, mediocre CSat scores, no stand-out products in the mass market. Building them in Korea and knocking maybe 2% off the cost of the product is like using your finger to plug a hole in a dyke; a stopgap at best. This decision probably means that GM expects to sell more of its products there in the future.

Sean D actually makes a good point. Canada can compete for job-creation because the government takes care of healthcare, so it's a backdoor subsidy (if you want to look at it that way) for manufacturers.
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Problem is, of course, that the Canadian healthcare system, for people who actually work hard, ain't so hot.

Of course, Sean D. doesn't answer why Honda can build cars here profitably and GM cannot.

...why Honda can build cars in America at a profit, but GM cannot?
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I grew up a Chevy fan... took a lot to sour me on them. I happen to think that Honda and Toyota sell cars in NA because they make darn good cars, because they learned and applied Mr. Deming's instruction in "Total Quality" to their manufacturing processes.
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The irony is that WE taught them how to make really good cars and then forgot the lessons ourselves. I think we started to re-educate ourselves but events overtook the industry.
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If you're expecting me to reflexively leap to the UAW's defense, don't hold your breath. I worked in the Saturn plant at Spring Hill, TN when they were building it as a contract (non-union)worker. As previously stated, I'm kinda of the "a pox on both their houses" belief when it comes to unions and management.
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I see the need but have also seen the abuses on both sides.

Direct labor costs account for 5-8% of the cost of a car. GM and the others need to make better cars so they can sell them for more.

A couple of points
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1. China is a big emerging market for car sales.
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2. In order for most big car companies to compete they are going to have to sell globally.
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3. The question shouldn't be whether or not GM has jobs overseas. The question should be will they add jobs here.
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4. We are loaning GM money so they stay in business and we don't lose 3 million jobs. Regardless of which jobs they send overseas we still can't allow those 3 million people to get tossed out into the job market during this recession.
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From the article
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According to the figures shared with lawmakers, the percentage of GM's U.S. sales of cars built in the United States dips from 67 percent in 2009 to 61 percent in 2012. Yet the company projects that by 2014 the percentage will rebound to 66 percent.

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snip

But company officials and industry analysts have long argued that, even putting aside the issue of labor costs, it makes logistical sense to build some cars in other countries, even if they are destined for sale in the United States.

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Take, for example, the Chevrolet Spark, a tiny car that GM sells in South Korea and elsewhere in Asia. In the next few years, the company plans to send some of those cars -- which are built in Changwon -- to the United States for sale.
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But since only about 5 percent of the car's market will be in the United States, the manufacturing will remain in South Korea.
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Analysts who study the auto companies and their global operation warn against allowing political passions to obstruct GM's efficiency.
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"If we start making political decisions with the auto industry, we're going to be in tremendous trouble," said Michael Robinet, vice president of global vehicle forecasts at CSM Worldwide.

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Bottom line this is about GM being viable period. If the best way for them to stay in business is to add some jobs overseas, it shouldn't be a political football. Because the alternative is GM goes out of business then whole communities will be affected.

Honda doesn't have the legacy costs. And it has a better product.

Notice how other posters keep coming back to the "they make a better product" point.
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For the record, my wife told me to go out and get a decent car to drive to work (teenage son is getting my old one). I bought a used 10 year old Lexus because it DID...NOT...RATTLE...AT...ALL! Toyota has had a reputation for indestructable drive trains for years.
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THAT's how you build loyal customers. Build a car that they will feel good about buying, even if it's that old.
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A word of advice - bury that concept of "planned obsolescence". It's kinda incompatible with getting your loyal customer base back.

I wonder what John Kerry will think about this. Seems one of the centerpieces of his campaign, other than defending a tall tale that he went "75 klicks above the Do Lung bridge", was preventing outsourcing.
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No, no, you're doing it wrong. That's 2004's playbook. Try this:
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"Barak HUSSEIN Obama and his buddy Will Ayers are trying to end the embargo against Cuba so that they can outsource AMERICAN JOBS to the Communists. I wouldn't be surprised if Hugo Chavez is in on the deal, too."

Honda can build cars here profitably and GM can't for a variety of reasons.
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1. No legacy labor costs. GM has more retirees they have to pay for than active workers.
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2. For years, Honda was ahead of GM on best practices and efficiency. It's actually cheaper to produce high quality cars than low quality cars because of reduced warranty and defective costs.
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3. Market segmentation. GM, because of its legacy labor costs can't build small cars as cheaply as Honda. So it can't compete in the cheap fuel efficient car market. So it got hit really, really hard by the spike in gas prices.
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4. Unionization. Honda's plants aren't union. GM's plants have been union for decades, and the union labor contracts are still influenced by a time period where there was less competition and more inefficiencies that were passed along to the consumer in the form of higher costs.

So, Sean, wouldn't the answer be, if making GM viable is the singular goal (rather than preserving the outdated labor cost structure and making GM viable), figuring out how to reduce said legacy costs, rather than subsidizing the outsourcing of American jobs. Look, I get why companies outsource. It's inevitable. But should the American taxpayer be subsidizing it, when there could be less of it if labor costs were brought in line? And should Dems be ok with this, given their stances?
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http://www.weeklystandard.com/weblogs/TWSFP/2009/05/pelosi_claimed_no_knowledge_of.asp
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Just another example of the situational principles of Democrats.

I think the big deal between GM and the UAW is that the UAW gets a huge shareholding in return for taking on some of the pension and healthcare burden. I'm curious to see how the UAW reacts when they have skin in the corporate game.

It will be interesting to see if the courts go for flipping the secured and unsecured debt in BK. That, up till now, has been a big-time no-no.

Things to bear in mind.
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People with jobs are reliable consumers. People without jobs are unreliable borrowers. If Mexican workers are willing to do assembly jobs at 7 dollars and hour I can't think of any good moral reason not to encourage them to do so. That the cars assembled in Mexico are made from parts that are purchased from other US companies is a factor that people tend to forget. It isn't just about keeping GM afloat. It's about the vendors further up the supply chain as well.

Paul, damn right. The only thing I'd add though is that the auto components business really is global. Even if Visteon (US company) is supplying electronics systems to GM, they will be buying Japanese LCDs, German Microcontrollers etc.

Tempting as it is to leap, arms flailing, into the "Somehow it must be the Democrats' fault" swamp, I think I'll just content myself with making an observation and a suggestion. Here in Maryland, GM has been running ads promising to take care of customers like never before. Presumably that means actually offering customer support, which can only be a step in the right direction. We can't afford to buy cars right now, but if we could, the promise of customer support would definitely be a factor, because unlike Toyota, Honda, Hyundai, Nissan and etc., GM cars have historically made that necessary. My suggestion, for what it's worth, is for GM to try to focus on a sort of market niche: Porsche and its European fellows have the hot, sexy car bit locked up, the Asian manufacturers pretty much own the dependable, durable car market, and Ford leads the world in the "burst into flames" model niche. Perhaps GM could corner the "unbelievably ugly, poorly designed and badly built" portion of the market now that AMC is long-dead and Chrysler is about to follow them into the junkyard of American automotive ingenuity. It would be a new path for them, but I'm sure their crack management/public relations team could set new standards in this area.

Just another example of the situational principles of Democrats.
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spob,
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Above is a pretty good example of why most just consider you a reflexive, right-wing troll much of the time. You come up with some good points then throw in a phrase like the above when the conversation really didn't call for it.
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Is this some kind of Tourette's condition with you? Something you really can't help doing?

Happy weekend one and all! TTFN.