It won't be an easy road, but it's definitely possible. 1.) Sell off or shut down unproductive brands - Saab, Buick, Hummer, etc - This not only gets rid of some of the red ink, but it raises cash 2.) Complete the sale of GMAC. They can't keep it afloat with their crdit rating anyway, and they need the cash 3.) Cut staff. Too many damn ppl running this company 4.) Break the unions. The healthcare benefits for plant workers are ridiculous. They aren't market and aren't worthwhile 5.) Higher rates will help their pension position dramatically. There are options out there, and there will deifnitley be govt support available if they need it. It's going to require the Company to slim down and refocus, but it can be done. Someone just needs to sack up and push through some of the changes.
Don't break the unions on healthcare. They deserve the health care they get. Taking that away from them effectively reduces their real wages by varying and sometimes prohibitive amounts.
Their effective real wages ARE too high. That's the problem. I mispoke a bit, though, b/c it's both the pensions and healthcare that are killing them. it's hard to really say without looking at the data, but I've seen enough from other auto companies that make me comfortable drawing the conclusion.
I was listening to the BBC last night while driving. They were discussing the idea of failing American pension plans in general with some American somebody I'd never heard of. According to him, the "famous CEO of a famous company whose names you would both recognize" told him that in the 80's activist shareholders absolutely killed management of this particular company on the grounds that they were keeping too much free cash around (including money donated to pension plans). They yelled so long and hard that the Company ended up cutting contributions and gave out big dividends. The speaker goes on to relate that the gentlemen with whom he was speaking believes it was his biggest mistake as CEO.
The wages that are too high are the wages of those in management. Let them lead by example and reduce their bonus packages, wages, and stock options, then I have no doubt the unions will be forced to act in kind.
Actually, the management already took a pay cut at GM, so I guess it is now the union's turn. And at the beginning of the school year, I was poking around with some corporate job opps. As part of that, I started the interview process with GM for post-MBA positions before the salary cuts happened in "management". I pulled out very quickly b/c their salary wages were at or below market for even corporate opportunites in NYC. And to be honest, given the shape that company is in, they need to be competiting with financial services firms for talent, so they should be paying a hefty premium for new hires. They definitely aren't. I most certainly wouldn't say their management is overpaid (as a whole...there may certainly be exceptions).
