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Re: Detroit - Look at Boeing
The last post reminds me I worked in a situation like GM - management was part of the problem - labor was part of the problem. So many situations there seemed straight out of Dilbert. It took a long time, but they had their day of reckoning.
Like a number of other members, it's highly frustrating to see this jumbo jet known as GM in a slow-motion crash with upper management bailing out with golden parachutes, not making a serious attempt to save it. :angry: Since GM seems to be bent on doing what they have been doing in recent years, all the alternatives seem bad. Toyota buying some of the GM plants seems like the lesser of the evils.... |
Re: Detroit - Look at Boeing
Originally Posted by Wolfman
I don't know how you can say that Chrysler did wrong. They paid those loans from the government back with interest. Chrysler was also turning a healty profit prior to the takeover by Daimler Benz. The period of losses after the buyout was very much the result of the newly formed DC restructuring the Chrysler brand. While there is still obvious work to do in the name of improving the products, much of their efforts have had positive results.
True, it repaid its debts without invoking the government guarentees. But in the process it became shark bait. If DaimlerBenz hadn't gobbled them up, someone else would have. (And in one sense, that may have been the only "out" for Chrysler even after they had addressed their short range problems.) I have always been and still am a "union person." I do agree that the unions - like the managements they deal with - are still in the first two-thirds of the twentieth century. Admittedly, it is difficult for a union to go to its members and say they have to give up most employer-paid health benefits and that there will be have fewer jobs. But is it that much more difficult for the union than management telling their stockholders that profits are way down? One of the social shifts in the last thirty years or so is that previous solutions to problems are now part of the problem. It will take a cooperative relationship between union and management (rather than the contentious one that previously existed) to meet twenty-first century business environments. Together they can do much more than either can do separately. |
Re: Detroit - Look at Boeing
Originally Posted by John M. Dwyer
True, it repaid its debts without invoking the government guarentees. But in the process it became shark bait. If DaimlerBenz hadn't gobbled them up, someone else would have. (And in one sense, that may have been the only "out" for Chrysler even after they had addressed their short range problems.)
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Re: Detroit - Look at Boeing
Originally Posted by AZCivic
They aren't related, even in some sort of alternate universe of understanding. The loans were repaid 15 years prior to the Daimler-Benz merger/buyout.
If the older auto companies are in the trouble they are in today because of trying to apply old (half-century old!) business ideas to new situations (at least in part), then that principle applies to Chrysler weaking itself for a "long time" into the future with the loans - even when those loans are paid off. I do not buy the principle that two events are unrelated because they occured at different times. I also do not accept that fifteen years is a long period of time for a corporation. |
Re: Detroit - Look at Boeing
History and the passage of time are irrelevant. Look at KMart. They came out of bankruptcy and a year later they purchased Sears. How? Because KMart had greater intrinsic value than Sears, even just a year after going bankrupt. Let's take a look at GM from a finance standpoint.
Many people calculate the "worth" of a company as it's market capitalization. GM's right now is around $13 billion. Does that mean the company is only worth $13 billion? Well sort of. In theory, you could buy all the shares of the company at today's price for about that amount, but in practice, you'd be unable to do so because not every buyer is willing to sell at the same price. That's part of why buyout deals are generally at a much higher price than the current trading price when the deal was announced. Now if you dig a little deeper, you could look at something like the Enterprise Value on Yahoo's Finance page. It's pretty funny for GM, really. You see a market cap of 13 billion and an enterprise value of 275 billion. All the people who've said "Toyota makes so much money they could buy GM with a year or two of earnings!" obviously don't understand the difference between market cap and enterprise value. GM is an inherently valuable company even if they went bankrupt and had an effective share price of zero. Chrysler was no where near as big a company and was valued much less than Daimler-Benz at the time. That's the part that mattered. Chrysler was perfectly healthy at the time of the merger/buyout and they honestly could have resisted the offer if there was enough pushback from the company's leadership and shareholders, which there wasn't at the time. Officially, it was never a buyout, it was a merger. That's how DB was able to afford to make it go through. DB just happened to be the one that retained leadership of the combined company, making it similar to a buyout in terms of the end result. It was only because Chrysler's management actively wanted to participate in the merger that it was able to happen. |
Re: Detroit - Look at Boeing
Originally Posted by AZCivic
History and the passage of time are irrelevant. Look at KMart. They came out of bankruptcy and a year later they purchased Sears. How? Because KMart had greater intrinsic value than Sears, even just a year after going bankrupt. Let's take a look at GM from a finance standpoint.
Many people calculate the "worth" of a company as it's market capitalization. GM's right now is around $13 billion. Does that mean the company is only worth $13 billion? Well sort of. In theory, you could buy all the shares of the company at today's price for about that amount, but in practice, you'd be unable to do so because not every buyer is willing to sell at the same price. That's part of why buyout deals are generally at a much higher price than the current trading price when the deal was announced. Now if you dig a little deeper, you could look at something like the Enterprise Value on Yahoo's Finance page. It's pretty funny for GM, really. You see a market cap of 13 billion and an enterprise value of 275 billion. All the people who've said "Toyota makes so much money they could buy GM with a year or two of earnings!" obviously don't understand the difference between market cap and enterprise value. GM is an inherently valuable company even if they went bankrupt and had an effective share price of zero. Chrysler was no where near as big a company and was valued much less than Daimler-Benz at the time. That's the part that mattered. Chrysler was perfectly healthy at the time of the merger/buyout and they honestly could have resisted the offer if there was enough pushback from the company's leadership and shareholders, which there wasn't at the time. Officially, it was never a buyout, it was a merger. That's how DB was able to afford to make it go through. DB just happened to be the one that retained leadership of the combined company, making it similar to a buyout in terms of the end result. It was only because Chrysler's management actively wanted to participate in the merger that it was able to happen. Perhaps what it comes down to is our perceptions. I feel that there is no doubt thatDaimlerBenz did a classic takeover of Chrysler. You seem to feel that it was a merger with the bigger "partner" having more and better management - so that is the way it worked out. I support my perception with things you reject and you support your perception with things I reject. Neither of us is bound to accept the premise of the other, of course, but this may explain why we see things in such different lights. I offer the following: Let us agree to disagree. (And in the fullness of time, who knows but we both might come to see that the larger picture includes some of both of our perceptions.) |
Re: Detroit - Look at Boeing
Originally Posted by livvie
I guess I'm in the minority but I hope that GM dies a miserable death. I don't know what the exec are thinking when they can't seem to get anything right.
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Re: Detroit - Look at Boeing
Originally Posted by AshenGrey
It sucks, but that's the fundamental flaw in unconstrained Capitalism: money only flows in one direction - from the poor to the rich.
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Re: Detroit - Look at Boeing
Originally Posted by AZCivic
Really? I didn't realize "the rich" don't ever spend any money. Here I was thinking that when they built a $10 million mansion, they provided $10 million worth of jobs to all the construction workers, electricians, architects, plumbers, framers, glass companies, refrigeration/heating workers, appliance companies, artisans, carpet and flooring companies with jobs. Gosh, never did I know that they actually stole money from all those people while enslaving them to build their giant homes. Oh wait. No, actually you're the one that's wrong.
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Re: Detroit - Look at Boeing
May I suggest a complete re-reading (or reading) with an open mind by all parties of A Wealth of Nations by Adam Smith? :)
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