I'm usually not one for guest blogging on this site, but a post from my friend Adam over at GM struck me as being rather important, so I'm posting it here. As I look at the earnings reports from companies, not just in the automotive sphere, I keep seeing the remarks such as "unprecedented" and "worst times we've ever seen." These certainly are uncommon times and as such may call for uncommon measures. I don't think that either Adam or I are trying to cram an opinion down anyone's throat, but rather, asking folks to consider the magnitude of what we are facing. By posting Adam's work here, I'm not endorsing everything he says, but rather giving you another perspective. Without further ado, here is Adam...
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As many of you know, I work for General Motors (specifically Chevrolet) here in Detroit, and if you've watched or read the news at all lately you know that GM, and the auto industry as a whole is having an extremely challenging time right now. We announced significant losses last week, and made it clear that we are burning through cash at an alarming rate. Last week, the CEOs of GM, Ford and Chrysler met with Congressional leaders regarding the automakers getting $25 billion in loans that would come out of the $700 billion Congress has already approved for the financial sector. While it's true that the government already approved a previous $25 billion in loans for the auto industry recently, that money can only be used for the research and development of more fuel efficient cars and trucks, and nothing more (plus all automakers, including the foreign companies have access to this cash). For GM a portion of that money will go to the development of the Chevy Volt (an electric car), more hybrids and increasing the fuel economy in current internal combustion engines. What we're asking for in this additional $25 billion in loans (not a bailout, we'll pay these back with interest) is a bridge to getting things turned around for the industry.
2010 is going to be a big year for us because that's when we'll be able to defer a huge portion of our healthcare costs over to the United Autoworkers Union. That's also the year the Chevy Volt and other important cars debut for us. So I'm simply asking for your help in contacting your senators and representatives to show your support.
Having traveled all over the country with this job, I know there are some serious hard feelings people have towards GM and the American auto industry in general. I know many people believe the government should just let the market work this out, and if GM and other automakers go under, so be it. I can tell you, however, that if this happened, the entire economy would experience catastrophic changes. You see, it's not just the people who work for these companies that are affected, but all those connected to them in some way: dealers, advertising agencies, public relations agencies, parts suppliers, rental car companies, etc. If people in these sectors lose their jobs, then they have less money to spend in the stores in addition to being unable to pay many of their bills (potentially leading to more home foreclosures). Here are a few facts on what would happen if the domestic auto industry collapsed:
- Nearly 3 million jobs would be lost in the first year alone – with another 2.5 million to follow over the next two years
- Personal income in the United States would drop by more than $150.7 billion in the first year
- The cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance
- Domestic automobile production would more than likely fall to zero – even by international producers, due to supplier bankruptcies
This is not me trying to use some cheap scare tactic to convince you of the need for these loans, these are facts. Furthermore, these numbers come from third-party sources, not from one of the Big 3 automakers.
In summary, I'm asking that you contact your senators and representatives to voice your support of these government loans to the automakers. My team at GM set up a Web site, www.gmfactsandfiction.com that addresses many of the rumors surrounding GM right now, as well as a link on how to get in contact with your political leaders.
Maybe you don't drive an American vehicle, and maybe you never will, but we are all impacted by the U.S. auto industry in some way. I hope you'll receive this e-mail in the spirit it's intended, and not as a political issue. Don't hesitate to contact me with any questions or concerns you have about this.
4 comments:
Thanks for posting!
My pleasure. Let's hope that brighter days are ahead!
Nor am I a blog poster, but in a nutshell, GM, Ford and Chrysler have been somewhat of a victim of the American shopper and our own government . Europe is a country built for small economic cars. Thus, that's what they made. Here at home in the U.S. we preferred large, high horse power cars...gas-guzzlers. In the late 1960's, our auto market began it's change. Single women started buying cars for themselves. They started by buying what their Dad's bought. Large high horse powers monsters that needed lots of maintenance, that unfortunately they were unable to do. That car eventually broke down and the next car that they bought was the Volkswagen which only needed gas and oil. But, by now this new market segment had learned some of the maintenance tricks. Now, another change came to the market. The Japanese cars, including Honda, Toyota and etc., which had been laughed at because the 'Made In Japan' moniker meant that the product was junk. After Dr. Demming took quality control to Japan, because the Big-Three didn't want to waste their precious, big profits on quality, Japans products now looked even better than the still big seller Volkswagen Beetle. So now you have the huge market share owned by the Big-Three being eaten away by Germany and Japan. Here I want to add that I too am a retired GM employee, but not aligned to their automotive effort. The perception that 'Foreign cars are better', soon became the harsh reality. The market share for the Big-Three got smaller and smaller before they realized what they had to do. In the 1980's, GM and the other American auto makers got it! They embarked on programs and processes to move their quality levels to that of the foreign automakers and they did too! But, by this point the perception that 'Foreign is better' became the truth for the shoppers in the market place. And that's where we are today. The Big-Three makes wonderful products, but that is that not what the buying public thinks. Now here is where I think that GM and the other domestics have been victimized. Every time that we have an 'Oil Crisis', the public which before now liked big cars, now wants small cars with excellent gas mileage. So the domestics start changing to accommodate and before you know the crisis is over and now they want Hummers and that sort. So in order to do both for the ever-changing customer, your product lines become many and varied. Something that I didn't mention before is that the foreign automakers are subsidized by their governments. Those governments also impose duties on the inbound American cars, which also has a killing effect on sales inside those countries. How do you make our countrymen and women understand that they are shooting themselves in the foot by not buying domestic brands? I don't know! Should you impose import taxes on those countries that impose import taxes on American cars? I don't know! Should we subsidize our Big-Three? I don't know! But, I do know that in this country, there are minds capable of solving this dilemma. I do know that you can't solve a crisis if you don't know the history and the how you got to where you are. I also know that automaker has a blue-collar feel to it. The big banks and insurance companies have a sort of white-collar feel to them. Why should our present government help out anything with a blue-collar feel? Because it's the right thing to do. If the auto industry flourishes, the middle-class, can flourish. Our present government should be so ashamed to quickly help out the financial industries with huge dollar gambles, when our base domestic industry asks for a comparably small L-O-A-N.
Assuming all of the Big Three emerge from this mess, product planning is going to be key across the board.
Right now, oilis down on account of demand destruction. But as we claw our way back to positive GDP, oil prices will inevitably follow suit.
While we are beginning to learn how to conserve, India and China are in their automotive renaissance; that means a permanent shift in global oil demand -- one that US automakers and consumers have to anticipate and plan for.
This is especially true for GM and Chrysler. Both doubled down on the SUV boom and neglected to keep pace with the Japanese in the compact and midsize segments.
Since tax dollars are inevitably headed toward Detroit, I think the taxpayer deserves some sort of assurance that the same mistake won't happen twice.
In my opinion, there's a critical lesson to be learned from this:
If consumer tastes are going to shift rapidly, automakers must keep pace.
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