A possibly absurd solution to the GM problem

[ThomWV]

If the market capitalization of GM is currently less than 2 billion why not lend that to the UAW to buy it and then lend them the additional money necessary for 1 retooling for a brave new model and then sit back and let them by and run the company? Lend it to them at 1% and defer interest accrual and the first payment for 5 years to give them time to get on their feet. Dirt cheap bail out (by today's standards) and hardly something that anyone could call union busting; or maybe it would be the death of unions - one way or the other.

Hail to the Chief.

[KharmaTrain]

1. Can Unions Run A Company?

A serious question. I've seen a few where the employees took over and with mixed results. This happened to United Airlines in the 90's (after they nearly went bankrupt) and the union was forced to cut salaries and eventually the company was sold, again, to private interests.

Some will cite that one of the union's biggest failures over the past 40 years has been getting too cozy to management. By making the unions the masters you're putting the recovery on their shoulders and with little room to failure. Also, remember, that market cap isn't cash on hand, that's the value of the company...much of that "wealth" is sitting in back lots rusting with no buyers.

I'd rather take that money and give grants to smaller companies, predicated on them having union representation that would help seed a brand new and more competitive and vibrant auto industry. Bigger isn't better, no matter who owns or runs the company.

Cheers...

[ThomWV]

2. They bought up and ran steel plants in the "Rust Belt"

I think it was US Steel that was bought out and run by its workers, but for all I know they went down the tubes too. That is why I included the part about retooling. If they just took over what is there now they would certainly fail - after all, its is improved product, if anything, that will save the company when all the bullshit is said and done.

[KharmaTrain]

4. Kinda Like Buying Someone Elses Lemon

I follow where you're coming from and why I ask...I'm not so sure a worker-owned GM would help them out of this mess created by their management. If anything, I see giving them a lead role now as a set up for their failure. If its to stay viable, GM won't be retooled and the market won't recover for at least a year if not longer. Someone's gonna have to float the money to keep it going until new models are out and some kind of incetive program is put in place to stimulate sales. In the duration, it's gonna be touch and go...and would letting unions become bosses turn them into scapegoats if the company doesn't turn around fast enough or gets tagged with decisions not of their making, but ones they've had to abide with.

[ThomWV]

5. Dam good points - when you need management hire a manager

When you need something welded hire a welder, when you need someone to manage a welding company hire a manager. You're right of course on the potential for setup too because no matter where the industry's problems originated or on who's watch they grew its still going to be the last guy there that gets the blame and if he's wearing a union hat then that's just more ammunition for the facists.

[TreasonousBastard]

7. I seem to remember that was Wheeling-Pittsburgh Steel...

which is now owned by the Russians.

[ThomWV]

10. I believe you're right, didn't Weirton Steel do the same thing?

[TreasonousBastard]

12. Yeah, they did, and that may be the one I was thinking of...

I just vaguely remember some watercooler discussions about one of the steel companies our Pittsburgh office dealt with back in the 80s. We dealt with both of them, and a few others, and the industry was in serious turmoil back then. Weirton was the Big Daddy of employee ownership back then.

Weirton, btw, eventually went belly up and the pieces were sold off. No idea if employee ownership had much to do with it, or it was just caught up in the industry consolidations.

[liberal N proud]

3. Why not?

[KharmaTrain]

6. Tell Me...

Its not that management has all the answers, but rule by committee can be just as problematic. Do you select one person to run the company...and then is it someone from the union? Someone with no previous management experience? Will all management decisions have to be done in committee or open to a rank and file vote?

I'm very pro-union and want to see the auto industry restructured...and IMHO, this means breaking up the too big to fails...a long overdue overhaul of a company that failed in the marketplace and history has shown is in no real hurry to change. Instead, these companies broken up with assets being sold to American-only companies that must honor existing union contracts.

Not that a union can't run a company, but it does put it in an awkward position...and when it comes to the company making a profit or benefits for the workers, will a union-selected boss decide differently than a private sector one? Again, I have questions and doubts. I'd prefer for the unions stand firm for protecting workers jobs and rights...not try to solve the problems others created.

[liberal N proud]

8. Many organizations are run by committee

[KharmaTrain]

9. GM Isn't Quite An Organization

It's not the local food bank...this was the largest corporation in the country (and at one time the world). It's not a job you give anyone the keys to...especially with so much riding on the line.

I'm strongly in favor of having UAW and other unions represented on a management council or new board of directors, but as the one who has to lead this company back to solvency, it's gonna need someone with a lot of business smarts who can operate without having every decision second guessed.

[Statistical]

11. Buying the company isn't the problem.

It is a solution to a non-existent problem.

"Buying the company for $2Bil" simply removes the existing shareholders and makes GM employees shareholders.

It does nothing to solve the problems @ GM.

1) GM has HUGE HUGE HUGE debt obligations. GM assets Everything including stuff like the "value" of a GM and goodwill is 91Billion. Every car, every part, every factory, everything. The company is worth 91 bil. However GM owes 177 Billion in debt. The company is nearly 90 BILLION in the whole. If you gave (not a loan just a gift) GM $90 Billion the company would have a net worth of $0.00.

2) GM will need an unbelievable amount of money. GM burn rate is now about $3B per month. Likely GM will need $30B - $50B just to stay afloat over next year or so.

3) GM is far to large. I know people on DU don't want to here this. They believe GM can continue to expand, continue to keep its workforce, continue to build more and more plants forever. It can't happen. GM will shrink. Period. GM has a workforce and operating budget that is more in line w/ a 40% marketshare of 20 million vehicles. Total the market is 9 million vehicles and GM marketshare is 19%. GM needs to be cut in half. Likely far more than that. How popular will the Union be when the Union is making decisions to fire people? How likely do you think the Union will be able to make those kinds of calls.

4) GM needs to kill brands. GM has too many brands and doesn't have the marketshare to support them. If it were up to me I would kill everything except Chevy & Cadillac. Both of those brands have value. Bring back GMC as truck ONLY brand (i.e GMC Truck) for higher end trucks. Sell Saturn and sorry I know this will piss everyone off but put the rest in the trash heap. Once again this is a problem for the Union. If union announces that they are killing Pontiac how do you think the workers at the Pontiac plant will like that? Would be sad to have Union members striking against Union bosses.

There is NO GOOD answer to GM. GM essentially died 5 years ago. GM used its good credit rating to live on debt. If there had been a credit crisis in 2003 instead of 2008 then GM would have failed then. GM has essentially been like an unemployed worker living off credit cards. As long as the credit card doesn't come back declined they were able to survive another day. The CC is now declined.

Long term GM will either be another medium sized auto company (maybe 5th or 6th wordwide) or it will fail.