The film, which is full of people who actually were involved in the bailout, paints a different picture. The unions were at least half the problem. The other half is that GM keeps making sub-optimal cars. Neither problem was fixed by the bailout.
No, GM did $10 billion of buybacks this year and now needs to "save" $6billion by firing workers.
The cost of firing those workers? They've permanently lost those workers, their families, and their friends as customers. Forever. So that some fat #$@#$ shareholders can have a few more bucks in their bank accounts.
The unions are the only thing protecting those workers and the thousands of jobs in the American supply chain that the executives are doing their best to destroy.
GM targets a cash reserve of $18 billion, and returns any free cash above that number to shareholders via dividends and an ongoing stock-repurchase program. Since 2012, it has returned about $25 billion.
Why you wouldn't take that 25 billion and invest it in AI and electric cars is baffling to me.
When a small startup fails, it's often the fault of the team.
When a large organization fails, it's almost always the fault of the leadership.
It strikes me as a real chickensh*t move how our captains of industry rush to claim credit and bonuses when things go right, but blame the workers when the executives can't live up to the guidance they gave to Wall Street.
The documentary shows that one of GM's main problems is that they are buried in sunk pension costs. They spend more on people who no longer work there than people who do.
Toyota isn't unionized, doesn't have any trouble attracting workers, and has a great reputation for quality. There was a time when unions were needed to improve working conditions, but that time has passed.
IMHO, it was a mistake to bail them out. I see why we did it, but it didn't fix the root problems.
Toyota is completely unionized. Toyota considers their workers to be one of the reasons for their quality.
More important, the executives knew about the pension liabilities when they accepted the job. It's been part of their planning and their guidance all along. Blaming the workers when those plans failed is cowardly.
Edit:
German automakers are also highly unionized. It doesn't seem to prevent them from making quality cars either. It really seems to me that executives blaming the workers is a US and UK thing. In many business cultures, it just makes the executive seem incompetent.
It wasn't a matter of not knowing them. They knew. They were negotiated by the unions. It was a matter of not having enough money to pay them. GM simply cannot sell cars at market prices and also pay all the pensions and higher wages that the union demands. It's not workable.
It would be great "creative destruction" if these plants could be replaced by another industry.
What needs to happen is a company, or an industry, needs to spring up that employs these thousands of displaced workers in places like Michigan and Ohio.
HN'ers, what kind of entrepreneurial ideas spring to mind? I'm drawing a blank here.
For an example, look at the Canadian town of Smiths Falls. The Hershey's chocolate factory closed in 2008. It was a painful loss for the town, a major industry just gone.
Now "Tweed" a Marijuana growing company had taken over the space. They've been hiring at a tremendous rate, and even are planning an expansion to the factory, with even more jobs to come. Seriously, even the battered housing market is picking up again.
It's not an opportunity that will last forever, but the companies that capitalize on it have to opportunity to make a mint and a whole pile of happy workers in the process.
Wind turbine manufacturing. It takes ~500 workers to build a wind turbine. Close enough to the Midwest and East Coast (Ohio for inland, Michigan is on the Great Lakes if you want to ship out the Intercoastal for offshore wind on the East Coast) for transportation ease. Transition out anyone on the manufacturing line to PMs or turbine techs who want to get outside or relocate.
To power all of the US with wind alone would take ~4 million turbines, not to mention repowering existing wind farms over time. That’s a lot of manufacturing left to be done, and it isn’t going out of style anytime soon.
Not at all. Read the article, GM themselves said they needed to free up cash after all the recent share buybacks.
"GM has said the job cuts and plant closings will free up $6 billion in cash, but the automaker has spent $10.6 billion since 2015 buying back its own shares"
This is a direct transfer of money from workers and worker obligations (like pensions, health insurance, etc) to shareholders. This has been happening a lot lately in several industries as Wall Street demands everyone buy back shares or get punished.
That's only looking at liquidity though, which isn't the only factor that goes into these decisions. It's plausible that they made these decisions because they weren't getting a good return on that investment.
Sure, maybe, but one fact doesn't really relate to the other. The fact remains that they just spent $10B on share buybacks, and they are now laying off thousands and closing a few factories because they want to save $6B.
Even if they waited a few more years, the optics are just really bad. Not that optics seem to matter like they used to, most companies just shamelessly do this now.
I could spend $10B retiring shared and also trim an underperforming $6B investment. They can both happen without it being a sinister equality gap event.
> they are now laying off thousands and closing a few factories because they want to save $6B.
This is the part that I'm saying isn't necessarily true. The fact that they will save $6B by shutting down these factories doesn't imply that saving $6B was the reason they did it. If you're saying that the stock buyback demonstrates that they clearly had the money to keep these factories open, even in the absence of an economic case for doing so.... Well sure, but if we're talking about better contributions to global utility they could have made than the stock buyback, subsidizing unproductive factories is a horrible use of this money, compared to donating to homeless initiatives or malaria nets or any of a billion other things.
Not really, they are trying to build more cars overseas (cheaper labor + developing markets for their cars) and they are expecting a global economic slowdown in the next couple years.
Except for the fact they haven't been building new factories overseas, their' reports to their investors points to automation, and they shut down many of their overseas factory. Maybe they are doing this in expectation of a slowdown and will move production overseas, but currently, they have done that.
You can look at their capital expenditure though. All of their M&A, research, and investment have been in electric cars and automation.
If there weren't going for this goal they are going about it in a strange way.
A terrific documentary on this topic is Live Another Day, about what really happened during the bailout.