World wide effect of GM bankruptcy..

[E30 325i Rag-Top 2959]

I was talking to someone the other day about the whole Holden side of things, they said that the Australian Government wont let Holden go under. Apparantly the entirety of the Commodore VE V6's are made in Australian factorys, motor and all... Something like 1 Billion dollars was spent incorporating all the machinery and systems to produce the VE V6 Commodores.. maybe they will start to produce their own V8 Powerplants also. Now theres an expensive automotive computer system for ya!

The Austalien govt already subsidise the three ramaining manufacturers with millions of dollars each year. The biggest amounts tend to come from the State Governments, in return for investments in their reqion. That is why the Holden V6 engine plant is in Melbounre Vic., and the Commodore assembly plant is in Adelaide, SA. So every day a fleet of trucks loaded with V6 engines drive down the freeway, madness!

Yes, 1 billion dollars was spent on developing the VE Commodore, but that included only an update on the V6 and V8 engines, not a completely new power plant - that would have doubled the whole bill.

Due to the increasing complexity, and shorter life span, of modern vehicles, volumes need to be increased to spread the costs over as many car sales as possible. Unfortunately the 2.000 Commodores a month in Aussie and NZ will not pay for such development costs.

Yes, Holden will survive as a local manufacturer, the Aussie govt will have to dig deep, but it will be in a much different form. My belief is that they will build a local version of a GM mid-size world car (like the Camry for Toyota built in Melbourne). But the days of local developed Commodores would be gone, and for local suppliers this is likely to mean less parts being supplied, as many would come from the chosen world wide supplier.

Not a happy time in the OEM car world!

[topcat 11]

GM' bankruptcy was inevitable really.

for years they made and offered vehicles that heavy on fuel and the finish for them

was something left to be desired.

it was easy for the japanise menufactures to come to the table with quality

cars and when the cheap oil finally dried up (we all knew that had to happen at some point),

they lost a lot of sales.most intelligent managers would/could have seen the future develope

into the mess it is today

but maybe that was the plan all along.

smoke and mirrors i say

one thing i do understand is that in these times wealth is not lost,just transvered to fewer hands

[DRTDVL 0]

The biggest problem to the US car manufactures in terms on on going costs have been the unions and there causes like full medical cover for employees that have retired from work, etc... i think that along was costing Ford $500,000 a yr or something silly like that...

By declearing bankruptcy they will be clear of all of that union inforced crap... and can start with anew with much lower employee related operating expenses

[elmarco 56]

The biggest problem to the US car manufactures in terms on on going costs have been the unions and there causes like full medical cover for employees that have retired from work, etc... i think that along was costing Ford $500,000 a yr or something silly like that...

By declearing bankruptcy they will be clear of all of that union inforced crap... and can start with anew with much lower employee related operating expenses

A couple of years ago, I read that ongoing medical and benefits cost Ford over $1000 per vehicle they produced. That was around $2000 kiwi for every vehicle Ford produced in North America (around 5 million vehicles from memory) spent on people that didn't even work for the company any more! I'm all for employers looking after their employees really well and making it a place people want to work - but that was just plain ludicrous. The information came from Automotive News if I remember correctly - so it was fairly reputable.

Unfortunately, the American car industry has been hit with a series of crises that have ultimately taken their toll - many of them their own doing.

First there is the UAW and how they have held the big 3 to ransom over labour rates ($60 USD per hour for unskilled assembly staff is crazy - no wonder people never left!). Then there was the poor management (all 3 are guilty of this I think) and poor product quality. Then there was their combative supplier management - no supplier wants to give them the best technology and secrets because the know the first thing to happen is to sign a 5% cost reduction minimum for every year of production - if they get the job. If not, their design ideas have been shopped to the competition who will do it on the cheap - which leaves a nasty taste in the mouth. I have even been told by Holden what their target buy price on an item was - which amounted to around 80% of our actual production cost price. And they wonder why top line suppliers don't want to deal with them.

Then escalating fuel prices that for some reason nobody in Detroit saw coming (ironic as they all have companies in Europe and Asia and nobody in those areas would seriously consider something the size of an F150 as a family runaround/commuter). And now the credit crisis slowing sales to a crawl.

I am all for a strong US auto industry (and GM was the natural leader until recently with everything from locomotives, to software services and aviation) - it feeds so many other industries and so much technology development in other areas. And most importantly, it trains loads of engineers that move into other industries - which is what NZ misses out on. For those that have never seen the inside of the industry - it is a real eye opener in technology, scale, development process and thought process.

I am passionate about the industry and can't see either GM or Holden falling over completely. They are both too important to the development of technology and technical people. Now the question becomes what will the industry look like in 5 or 10 years? Hopefully not head office subcontracting everything to China Inc.

Edited June 6, 2009 by elmarco

[mrad01 0]

I am passionate about the industry and can't see either GM or Holden falling over completely. They are both too important to the development of technology and technical people.

If holden are important for technology in cars - I'll smash my head into a brick wall 8 times....

Let GM die.

[Grant 4]

The US$60 an hour rate for an assembly worker is one that has been thrown around but is not actually true (without the use of creative accounting).

This was calculated after all the employee benefits were taken into account (including retirement).

How the US salary etc works is that due to the fact that healthcare, education and retirement are not government subsidized like in NZ (retirement is to a degree), companies offer heavily subsidized insurance, retirement saving schemes, etc to their employees and these are known as benefits.

For example the company I work for has an extremely good benefit package. They subsidize my families health, dental and vision insurance 99% (I pay $18 a month for full coverage). This means that doctors only cost about 10 dollars to visit (compared to the US$300 I paid to have check ups done on my two kids prior to being employed), glasses and contact lenses are free, dental work costs only a few dollars etc. I also get a fully paid life insurance as a benefit. In addition I have a 401K (think kiwisaver) package where the company matches my contributions up to 6% of may salary (i.e if I put 6% of my salary into it, they will put another 6%). There are other benefits as well (unemployment insurance, workers compensation for injury etc). Therefore this costs the company $3 - 4k a month on top of my salary.

However most companies only cover up to about 70% at best.

The UAW workers had a benefits package similar to mine, therefore it cost the car manufacturers a lot.

However my point here is that the US$60 an hour included all of the benefits, and is one that is bandied about by those that are saying that GM etc have brought it all on themselves. The actual hourly rate that the worker gets (while still higher than the Honda and Toyota equivalents in the US manufacturing plants) is significantly lower than US$60 an hour.

I'm not saying that they are not overpaid (I think that they are), it is just not as overpaid as it is made out. Even a $10 an hour fast food worker, once benefits are added onto this brings their wage to about $30 an hour (assuming they have a good benefits package - which are rare in the service industry).

Cheers

Grant

[Grant 4]

What I have found to be interesting over the last few week or so, is that for an industry that is in such dire straights, GM is having no problems selling off the brands that they don't want.

Hummer to a Chinese company

Opel to a conglomerate (including a Canadian car parts manufacturer)

Saturn to Roger Penske (of US motor racing fame).

What is interesting is that the latest range of Saturn's are in fact mainly rebadged Astra's, Vectra's etc.

It also seems that Saab has a buyer in the works.

That just leaves Pontiac (which I assume will just disappear).

GM has already launched a new very extensive marketing campaign here with a "reinvention" theme (www.gmreinvention.com), and it is heavily biased towards smaller, higher mpg, greener cars. It also now only advertises the 4 brands that they are keeping.

Cheers

Grant

[topcat 11]

If holden are important for technology in cars - I'll smash my head into a brick wall 8 times....

Let GM die.

selling tickets?? i want to see this

[M3 Cab 0]

If holden are important for technology in cars - I'll smash my head into a brick wall 8 times....

Let GM die.

+1 let them go. Crap cars even worse service

[Greg111 13]

+1 let them go. Crap cars even worse service

The cars gone, let it go.

[elmarco 56]

If holden are important for technology in cars - I'll smash my head into a brick wall 8 times....

Let GM die.

I didn't say specifically cars (although this is what they are most known for). It goes a whole lot deeper than that - think software (EDS now owned by HP), think robotics for assembly, think logistics (how the hell do you move 6 million cars per year to where they need to be), think engineering skills that are true industrial processes and used in many other industries. And now think how many technical people a place like GM or Ford have trained over the years that are now working in other industries. GM even had their own university (which was one of the top technical schools a while back) - now called Kettering.

I stick by the statement - they are too important to allow them to fall over completely.

Yes Grant - the $60 USD per hour included benefits which I omitted. This is still a high rate for what is effectively unskilled labour.

The Chinese are a cunning lot - they have now bought themselves engineering expertise and experience. Oh, and a whole lot of brand collateral and recognition.

[Grant 4]

Along the technology lines. Also remember that GM own companies like Delphi, who are on the cutting edge of many automotive technologies.

[mrad01 0]

selling tickets?? i want to see this

Yep, I'll sell tickets!!!

First, show me how Holden (not GM) are important to automotive technology?

Radial Tuned Suspension? Magnetic Dampers (which others were doing). Putting a meathead big V8 into their shitty W427?

Oh pleazzzzzzeeeee!!!!

[E30 325i Rag-Top 2959]

Magnetic Dampers (which others were doing). Putting a meathead big V8 into their shitty W427?

The magnetic dampers were developed by a supplier, and then integrated into the vehicles at a later stage, plus it was with HSV, not Holden. The supplier wanted to work with Holden but they didn't reach agreement. A large amount of new technology is developed by suppliers, not the company with the badge on the bonnet, usually it is a case of who is prepared to take the risk or pay the most for the new technology.

Plus the W427 is also a HSV and not a Holden. It may sound pedantic but HSV is 100% independent of Holden as a business entity, even though they basically build-up Holden's car and sell it through the same dealers. Will be very interesting to see the HSV business plan if there is no locally built large car?

Holden's engineering was the GM world centre for RWD large platform development, which means all GMs big rear drive cars were developed at least partly by the engineering team in Aussie, including the North American only brands. Without the close ties to GM there is little to interest other car companies in buying Holden, unlike the other local manufacuturers mentioned previously, and adding to the list Opel & Vauxhall being sold to FIAT.

Yes GM will survive, with much blood-letting and help, and Holden along with them, but it will be interesting to see if they have learnt any lessons from all this.....

[mrad01 0]

Plus the W427 is also a HSV and not a Holden

HSV = **Holden** Special Vehicle. I suspect Holden have a few shares....

Without Holden, HSV just becomes SV and dies too...what a great day that would be!!!!

(Yes, Holdens are my least fav car...)

[Greg111 13]

HSV = **Holden** Special Vehicle. I suspect Holden have a few shares....

Without Holden, HSV just becomes SV and dies too...what a great day that would be!!!!

(Yes, Holdens are my least fav car...)

Don't worry mate, Holden won't die.

[kerrynzl 3]

A modern parable

--------------------------------------------------------------------------------

There has been a joke email floating around

Here it is:

A Japanese company (Toyota) and an American company (GM) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.

The End

[E30 325i Rag-Top 2959]

HSV = **Holden** Special Vehicle. I suspect Holden have a few shares....

Without Holden, HSV just becomes SV and dies too...what a great day that would be!!!!

(Yes, Holdens are my least fav car...)

Oh, is that what the H stands for, I always wondered! In that case, Holden must own some shares,

No matter what your customer service experience from their dealer, the loss of any major manufacturer in Australasia, let alone such a large one, is a loss of jobs and skills that will never be replaced in the region.

[Greg111 13]

Oh, is that what the H stands for, I always wondered! In that case, Holden must own some shares,

No matter what your customer service experience from their dealer, the loss of any major manufacturer in Australasia, let alone such a large one, is a loss of jobs and skills that will never be replaced in the region.

One hell of a lot of job loses, lets hope they get over this rather large hump and carry on.