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Originally Posted by BadThad  I don't think they will "die", but they will shink, merge or totally restructure. |
I think GM will be crushed to under 20% of their current workforce regardless of whether there's a bailout or not. It is debatable how many years of handouts they take with them on the way down, but they're already there. They are not viable moving forward, and even if a leader pops out of the ground to fix them (which is a big IF because I don't see any), the unions et al won't tolerate what needs to happen to succeed.
Pensions need to be eliminated entirely, the current workforce needs to be handed wage scales identical to the new employees tomorrow, and they need to slash their product lines probably wiping out half of their lines or more (including closing plants). Their parts suppliers need hits to contracts too and if they fold, make the part yourself.
Further, they need to be able to cut sticker prices on cars by probably 30% moving forward. I know they think their current prices are fine but I think they're wrong, the world moving forward is going to be a very cash and credit poor version of the world we have been living in. I don't think people are going to be able to pay $30k+ for a nuts and bolts car anymore in the quantities they used to.
Consumers' wealth is gone, their retirement portfolios are gone, their pensions or healthcare is probably questionable or gone, their stock portfolios are gone, their houses are underwater, their job is shaky including their hours, their credit lines have been cut, and they need to bring their savings rate up to historical norms from the negative rate it has been. Some have had their credit ratings ruined. Many of those things aren't going to change for years.
They need to get over what cars sold for in the past. Look at the PC industry, think they could sell a new PC for $5k because they used to do it in the past? Unlike cars, todays PC's are much better than they used to be, pretty nearly every couple years they improve significantly, and yet they still cost less. You see PC makers lined up for bailouts? It's just the nature of globally competitive business.
I heard a really great interview somewhere and he nailed it pretty well. Wish I could remember where I heard it. Anyway, this guy was saying, detroit really badly needs to convert to a demand pull industry instead of a supply push industry. It pretty much sums up what is wrong with detroit in one sentence, they need to be profitable as a consumer sensitive demand pull organization.
This means a rethink of everything from design to advertising to production scheduling to the dealership concept. Why produce millions of cars and put them out on lots to begin with? Think new buyers won't wait a month for a custom ordered one to show up with the next shipment to their region?
Speaking of dealers, let's not forget they can't get credit to finance their car lots either. Bailout or no bailout this industry is going to be in the hurt-locker.
Automakers 
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