GM, Chrysler were a mess: Car czar
Some O
http://www.theglobeandmail.com/report-on-business/gm-chrysler-were-a-mess
-car-czar/article1331827/
� We were shocked, even beyond our low expectations, by the poor state
of both GM and Chrysler. Looking just at the condition of GM's finances
and Chrysler's new-car pipeline, the case for a bailout was weak.
GM's board of directors was �utterly docile in the face of mounting
evidence of a looming disaster� and former GM chairman and chief
executive Rick Wagoner set a tone of �friendly arrogance� that permeated
the company, Mr. Rattner wrote.
� Chrysler was poorly run during its alignment with Daimler AG, and
larded up with debt, hollowed out by years of mismanagement, Chrysler
under (private equity firm) Cerberus never had a chance.�
� Chrysler was poorly run during its alignment with Daimler AG, and
larded up with debt, hollowed out by years of mismanagement, Chrysler
under (private equity firm) Cerberus never had a chance.�
----
A reader comment:
> Not only did you and I pay for the car we did buy, now we pay for the car we
> didn't buy!
A (Chrysler employee) reader comment:
> 10/21/2009 8:05:36 AM
> Gardiner Westbound brings up a good observation.
>
> I was one of those thousands of engineers involved in shaving nickels and
> dimes here, there and everywhere. The emphasis was less on the part design
> than the part cost and the process cost. But as always there were exceptions.
> Back in the day I sat next to the engineer responsible for the release of the
> PT Cruiser liftgate handle.
>
> He himself was a good engineer. I offer no criticism of him as he did what he
> was told but the VP of Engineering in that platform broke her nail on the
> original liftgate handle concept and wanted something different. the Studio
> came up with that Chrysler emblem with the soap dish opening. Mounting that
> design to the car was a nightmare and the cost between the original concept
> and this latest design was $10-12 dollars a car, depending on whether they
> used black or premium paint. I kid you not.
>
> I asked the engineer how the hell he got away with it and he said management
> would not go against executive orders; it would stall their careers
> otherwise. As I said he did what he was told even though the sheer stupidity
> of spending money in the wrong place was obvious. Bottom line was this: the
> look of the handle would help sell the car. Anyone want a PT Cruiser now?
> There are thousands of stories out there to illustrate what really goes on in
> the d3 environment and that one instance crystallized for me how Chrysler
> really operated.
> [Recommend This Comment] 69
> [Disapprove This Comment] 4
A GM reader comment:
> 10/21/2009 8:34:08 AM
> Part of the problem for GM especially, was that with the higher profits
> coming through GMAC, the manufacture of the product became a means to the end
> of providing a credit vehicle to make a higher return. If you can make 10%
> return on the credit instrument and only -8% loss on the vehicle, you have a
> net gain of 2%. The problem occurred when they had to sell off GMAC in order
> to provide copious quantities of cash, as the net gain became a large net
> loss.
> People brought up in the same corporate culture, such as Wagoner, are often
> incapable of seeing the changes needed to correct the problems, and lack the
> diversified knowledge required, to know how to make those changes. When
> Wagoner and his cohorts descended on Washington, without rudimentary cash
> flow projections, as they never had to realistically do so before with the
> banks, they showed their inability to make the decisions necessary for the
> survival of GM.
> To shave off $10 savings on a car's production, and then market the vehicle
> with $4,500 to $10,000 cash back incentives, shows how crazy things had
> become. The $10 savings became a shoddy product which in turn required
> further incentives to get people in the showrooms. This is just bad
> management and destined to failure.
> [Recommend This Comment] 43
> [Disapprove This Comment] 0
MoPar Man
> � Chrysler was poorly run during its alignment with Daimler AG,
"alignment" ?!
Alignment ??
Is that the politically-correct translation for take-over / rape?
> and larded up with debt
Ford is also larded up with debt
> hollowed out by years of mismanagement, Chrysler
> under (private equity firm) Cerberus never had a chance.
While the management decisions made by Cerberus were nothing to be proud
of, it was the credit-crisis that knocked Chrysler on it's back and
forced it into bankruptcy. The reality might very well have been that
Cerberus could have done nothing during it's few years of owning
Chrysler that would have prepared Chrysler to weather the financial
storm that started in Q3 of 2008.
Why was there a credit-crisis in the first place?
Because of an artificially low interest rate policy from the Fed that
was needed to prevent the US federal debt from spiraling out of control
because of the mounting costs of the invasion of Iraq, as well as a push
by the Bush administration to increase the rate of home ownership in the
US among the lower-class ethnic demographic, mainly in the south and
west, by enacting rules that forced banks to sign risky mortgages along
the lines of a quota system as never before.
Investment dollars flowed away from low-interest gov't T-bills and into
risky mortgages and derivative products and fueled a bubble that
couldn't be sustained.
The Bush gov't thought it could have two things at once: High gov't
borrowing at absurdly low rates, and a healthy economy based on
investment flows into real estate driven by insolvent borrowers. If you
want to prosecute a foreign "war", you need a healthy economy back
home. That's been the rule for thousands of years. The Bush whitehouse
thought it could cut a few corners and distort a few fundaments and pull
it off - they failed miserably, and left the US a destroyed, smouldering
heap of rubble. 10 years of economic stagnation and an unemployed
society bordering on anarchy is the legacy of George W Bush. And just
wait until 150,000 mentally dammaged (if not physically dammaged) adult
men come home from their foreign "war" and try to cope with life at
home, in the economically and socially wrecked and scared landscape that
is the USA today.
hls
"MoPar Man" <Mo...@Man.com> wrote in message
> Ford is also larded up with debt
Could be, but that cherry has not yet been popped, while GM and Chrysler
lie moaning.
Joe Pfeiffer
>
> � Chrysler was poorly run during its alignment with Daimler AG, and
> larded up with debt, hollowed out by years of mismanagement, Chrysler
> under (private equity firm) Cerberus never had a chance.�
A very good summary, except that "poorly" is an astonishingly mild term.
--
As we enjoy great advantages from the inventions of others, we should
be glad of an opportunity to serve others by any invention of ours;
and this we should do freely and generously. (Benjamin Franklin)
Josh S
> While the management decisions made by Cerberus were nothing to be proud
> of, it was the credit-crisis that knocked Chrysler on it's back and
> forced it into bankruptcy. The reality might very well have been that
> Cerberus could have done nothing during it's few years of owning
> Chrysler that would have prepared Chrysler to weather the financial
> storm that started in Q3 of 2008.
The hedge fund Cerberus doesn't build up companies, they make the most
short term money out of them regardless of the consequences to the
company.
Cerberus did nothing for Chrysler except leave with what they could take.
Also during that time Chrysler's mid sized cars were (still are)
undesirable to many, including me.
Chrysler realizes that and here they are only advertising their trucks,
which are still desirable.
Canuck57
> Why was there a credit-crisis in the first place?
Because people, businesses and governemnts are broke. That is the short
answer.
The longer answer is that the government encouraged banks to leverage
up, giving the government the latitude to set interest rates lower than
market rates.
Market rates are:
inflation + risk + costs + taxes + profit
About 3+ years ago to lend money had a negative return, tell tale sign
of a recession/depression. Debtor denial ruled. So money started
drying up. I would have to be one stupid person to lend you money if my
return was only 1%. Because inflation at the time, real inflation was
closer to 3%. And I have to pay income tax on the 1% and have costs.
Then I am assuming risk in that you will not pay me back and welch on
the debt. So if I lend you some of my money, I actually incure a value
loss. So people stopped lending money.
Then the liberal ponzi house of cards burse. As people refused to lend
money at rediculas rates, leverage went to obscene levels and just a few
bankruptcies caused the banks to crash. Careless management by
government and bankers.
But government being so far in debt to a point of dysfunction, about $12
trillion, low rates mean cheaper debt and more money to spend on
ocrruption. 1% interest on $12T is a whole lot less than 9% on $12T.
But it also comes with unemployment, tighter credit, pay as you go.
Yes, governemtn caused it, the biggest denialist debtor of them all.
Yet I am sure many a stupid will vote for the same representatives that
went for the quick ponzi scheme. Predominantly Lib-Democrats in
congress and the senate didn't do anything to stop it.
Smart companies made sure their debt was reduced going in, and are doing
quite well. But neither GM nor Chrysler were smart. Just pigs at the
trough, including the unions.
There is a credit crisis as with bad credit the USA is trying to
artificially keep interest rates below market value. At some point
either the government will go bankrupt of the currency will fail. Take
California IOUs. Prime example. But the fed can create inflationary
which they have done since at least Sept 2008 when even DC couldn't
borrow money any more.
In Canada, BC, Ontario and Quebec can't fulfill old bond issues, Ontario
has one perpetually open since Sept 2008 and can't borrow.
All because the risk-reward is far out of whack. Denialist largest
debtor number one, government, thought its statism was more important
than your job and wealth.
Canuck57
GM today only exists as a funnel to consume taxpayers debt funded
wealth. A venue for Obama to pay off very rich and powerful insiders
who held a lot of GM & Chrysler debt.
Canuck57
> Some O <S...@nospam.net> writes:
>> � Chrysler was poorly run during its alignment with Daimler AG, and
>> larded up with debt, hollowed out by years of mismanagement, Chrysler
>> under (private equity firm) Cerberus never had a chance.�
>
> A very good summary, except that "poorly" is an astonishingly mild term.
I would agree. incompetantly and corrupt with a heavy does of dilbert
dysfunction and denial.
It kind of amazes me that the much smaller Enron fiasco sparked off SOX,
yet not one executive or board member of GM or Chrysler is being
charged. Yet GM, like Enron has had convictions on misrepresentation of
financials just like Enron.
Stinks of consiracy and corruption for sure.
MoPar Man
> Cerberus did nothing for Chrysler except leave with what they
> could take.
I believe that Cerberus lost a ton of money on their Chrysler investment
when all was said and done.
erschro...@gmail.com
GM and Chrysler debt was pretty much wiped out by bankruptcy.
Joe Pfeiffer
> In article <4ADFA7C1...@Man.com>, MoPar Man <Mo...@Man.com> wrote:
>
>> While the management decisions made by Cerberus were nothing to be proud
>> of, it was the credit-crisis that knocked Chrysler on it's back and
>> forced it into bankruptcy. The reality might very well have been that
>> Cerberus could have done nothing during it's few years of owning
>> Chrysler that would have prepared Chrysler to weather the financial
>> storm that started in Q3 of 2008.
> The hedge fund Cerberus doesn't build up companies, they make the most
> short term money out of them regardless of the consequences to the
> company.
> Cerberus did nothing for Chrysler except leave with what they could take.
I keep reading that claim, but Cerberus owns several manufacturing
companies (Blue Bird, NABI, and several aerospace firms), and so far as
I can see from the moves those companies have made since Cerberus got
them, they seem to be trying for long-term viability.
Putting Nardelli in charge of Chrysler still seems like a major
aberration to me; does he have any manufacturing experience at all?
> Also during that time Chrysler's mid sized cars were (still are)
> undesirable to many, including me.
> Chrysler realizes that and here they are only advertising their trucks,
> which are still desirable.
--
hls
"Joe Pfeiffer" <pfei...@cs.nmsu.edu> wrote in message
> Putting Nardelli in charge of Chrysler still seems like a major
> aberration to me; does he have any manufacturing experience at all?
He did have some manufacturing experience with GE. He had a degree
in business, and took an MBA afterward ( not that that is any
positive recommendation)
He was a total washout with The Home Depot.
He was voted one of the "Worst American CEOs of All Time" one
one occasion.
'Good ol' boys dont need to know nothing...they just run the biness'
Joe Pfeiffer
> "Joe Pfeiffer" <pfei...@cs.nmsu.edu> wrote in message
>>
>> Putting Nardelli in charge of Chrysler still seems like a major
>> aberration to me; does he have any manufacturing experience at all?
>
> He did have some manufacturing experience with GE. He had a degree
> in business, and took an MBA afterward ( not that that is any
> positive recommendation)
Ah, OK -- somehow I'd completely spaced GE. So he did have something
relevant on his resume.
> He was a total washout with The Home Depot.
>
> He was voted one of the "Worst American CEOs of All Time" one
> one occasion.
After his HD fiasco, I would have thought he'd be permanently blackballed...
> 'Good ol' boys dont need to know nothing...they just run the biness'
--
Canuck57
Possibly, but then the governmetn isn't coming clean on how much of our
money they pumped into GM. GM on on of their last public financial
statements stated a gross liabilities of $177 billion. Now I know they
wrote off a lot. People who lent GM money and creditors sure took one
hell of a bath.
CF
them because they DON'T look like the Japanese/Korean crapmobiles. BTW,
I have a 2007 Caliber and a 1941 Windsor. Both very good cars, though I
do prefer the Fluid Drive!
tj Frazir
standard.
250 MPG at 277 HP and 71 HP at 400 mpg.
steam power 4 cylinder water rocket dives a slide vane rotor with a
inner-cam wheel.
Spam away
Gravity...@webtv.net (tj Frazir) wrote:
Your 8 year old should grow into a job at future Chrysler, when he goes
through school of course.