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GM's ignition recall issue explained.

goducks10
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Explorer
41 REPLIES 41

BenK
Explorer
Explorer
Bean counters and when they pervaded automotive and ruined corporate America

Love this article and once found reference it often...and what used
to take me pages is boiled down to a one pager...

Who else should be blamed for the decline of America's two remaining automakers?

MotorTrend wrote:


From the November 2006 issue of Motor Trend

editor-in-chief Angus MacKenzie

Wall Street hasn't done Detroit any favors over the years. The Street is supposed to be the hard-nosed arbiter of success for corporate America, the white-hot cauldron of capitalism that's made this country's economy the most powerful in the world, the place where the money talks and you-know-what walks. (Though having allowed Enron to happen, Wall Street seems no longer to see the difference.) And, yes, Detroit has hardly covered itself in glory over the past 30 years. But I can't help wonder whether Wall Street should share some of the blame for the decline of America's two remaining automakers.

Let's be absolutely clear up front: Few people buy stock in a company for any reason other than they expect a return on their investment, and stockholders in auto companies are no exception. But in an era where screen jockeys zap billions of dollars a day through the ether at the touch of a computer keyboard, Wall Street's institutionalized ADD has resulted in a feverish short-term view of a business whose lengthy product cycles and huge investment costs are just too damned difficult to deal with.

Maybe that's why many of today's most successful automakers--Toyota, BMW, Porsche, to name three--are those who've never had to sweat a quarterly earnings call with a posse of skeptical Wall Street analysts looking for an opportunity to make a fast buck and ready to trash the stock price when they can't see one. To these companies, the concept of shareholder value has a very different meaning: "I don't watch (the stock price)," Dr. Shoichiro Toyoda once told Toyota North America president Jim Press. "I'm not going to sell my stock. If I worried about that, the decisions that I make wouldn't reflect the fact my name is on the back of every car."

Most Wall Street analysts will tell you Toyota, famously stingy with dividends, doesn't treat its shareholders well. But its stock is worth roughly four times that of General Motors. Go figure.

As Pulitzer Prize-winning author and journalist David Halberstam records in his book, "The Fifties," Bunkie Knudsen, who ran Pontiac and Chevrolet in the 1950s and 1960s, reckoned it all started to go wrong for Detroit when Fred Donner became president of GM in 1958. Knudsen was outraged that Donner would insist on talking about GM's stock price, and what the analysts on Wall Street thought about it, at his daily meeting with the heads of GM's divisions. Before Donner, those meetings were mostly about making cars.

Financial engineering quickly replaced product engineering as Detroit's primary business. GM and Ford essentially morphed into highly profitable finance companies with an auto business attached. That meant you could easily get a great deal on a new car. Only problem was, that new car wasn't always so great anymore. But the fat earnings on the loans and lease deals made the business look good and that kept the stock price pumped.

It's a sign of how entrenched this view of Detroit's business model has become that GM's decision to unload a majority share of its finance company, GMAC, earlier this year was treated by many as something akin to selling the family farm. But the sale is good news, because it means GM is shifting its focus back to its real business: designing and engineering cars and trucks. Meanwhile, over at troubled Ford, there are rumors the company may buy back its stock, now worth barely 15 percent what it was in 1999, and become privately owned. I hope the rumors are true, because Ford will then be free to concentrate on what it needs to do best: make cars and trucks.

Bunkie Knudsen, David Halberstam writes, believed in a simple concept: The people in Detroit had to make good cars, and if they did, the people in New York would take care of the stock. If only it were still true...




That was back then and now say the Japanese have caught up and/or
copied our corporate mentality of Bean Counter CEO's that manage
the bottom line...instead of their 'product'

Betcha if you ask any of the bean counters what their product is..exactly
that they won't know...
-Ben Picture of my rig
1996 GMC SLT Suburban 3/4 ton K3500/7.4L/4:1/+150Kmiles orig owner...
1980 Chevy Silverado C10/long bed/"BUILT" 5.7L/3:73/1 ton helper springs/+329Kmiles, bought it from dad...
1998 Mazda B2500 (1/2 ton) pickup, 2nd owner...
Praise Dyno Brake equiped and all have "nose bleed" braking!
Previous trucks/offroaders: 40's Jeep restored in mid 60's / 69 DuneBuggy (approx +1K lb: VW pan/200hpCorvair: eng, cam, dual carb'w velocity stacks'n 18" runners, 4spd transaxle) made myself from ground up / 1970 Toyota FJ40 / 1973 K5 Blazer (2dr Tahoe, 1 ton axles front/rear, +255K miles when sold it)...
Sold the boat (looking for another): Trophy with twin 150's...
51 cylinders in household, what's yours?...

Terryallan
Explorer II
Explorer II
Bottom line. The ignitions failed. GM knew it, people died. They didn't warn anyone, or have a recall, They didn't care.
Terry & Shay
Coachman Apex 288BH.
2013 F150 XLT Off Road
5.0, 3.73
Lazy Campers

travelnutz
Explorer II
Explorer II
When beancounters were put in control of American Corporations is when the problems began nationwide! The corporate boards used to have a balance between someone from manufacturing, design, engineering, and accounting but no longer. Beancounters run the show nearly 100% now and you see the results in many cheaply made products that are cheaper to replace with new as opposed to repairing the existing. The winner are the landfills and the loser is the consumer!
A superb CC LB 4X4, GM HD Diesel, airbags, Rancho's, lots more
Lance Legend TC 11' 4", loaded including 3400 PP generator and my deluxe 2' X 7' rear porch
29 ft Carriage Carri-lite 5'er - a specially built gem
A like new '07 Sunline Solaris 26' TT

Ron3rd
Explorer III
Explorer III
gmcsmoke wrote:
Bumpyroad wrote:
BenK wrote:


Wally World anyone? First to out source and capture significant market
share via 'cheapest at any cost' mentality...along with pure bean counter
management metrics (off shore, outsourcing, etc)


nonsense. Sam Walton bought made in the USA for many years and as long as he could compete continue doing so. finally got too expensive to make it in the USA with union labor, health benefit costs, etc. that he had to outsource to compete.
bumpy


lol who was walmart competing with? the mom and pops than ran out of business?

walmart moved to china to increase profits. GM nickeled and dimed suppliers to make a profit


Walmart just did what all the big box store did, and the mom and pop's got driven out of business. You don't want to pay 35 bucks for a shovel when you can get it at a big box for 30, right? Made in American means nothing to 99% of folks, they just want the cheapest price, period. Thus the rise of China. Unions like the supermarket unions for the most part have been busted by the WalMarts, Targets, Amazon, etc. Too many cheaper choices now.
2016 6.7 CTD 2500 BIG HORN MEGA CAB
2013 Forest River 3001W Windjammer
Equilizer Hitch
Honda EU2000

"I have this plan to live forever; so far my plan is working"

gmcsmoke
Explorer
Explorer
Bumpyroad wrote:
BenK wrote:


Wally World anyone? First to out source and capture significant market
share via 'cheapest at any cost' mentality...along with pure bean counter
management metrics (off shore, outsourcing, etc)


nonsense. Sam Walton bought made in the USA for many years and as long as he could compete continue doing so. finally got too expensive to make it in the USA with union labor, health benefit costs, etc. that he had to outsource to compete.
bumpy


lol who was walmart competing with? the mom and pops than ran out of business?

walmart moved to china to increase profits. GM nickeled and dimed suppliers to make a profit

mich800
Explorer
Explorer
You may not like the content of the article but it is true. Many blame the banking crisis on the downfall of the automotive industry. It was not. It was just the trigger. There were many years of kicking the can down the road and it was just a matter of time before the hammer fell. When you are hanging by a thread all it takes is some extra event to start the downward spiral. I am not just talking about GM but that is who I had to deal with the majority of the time.

goducks10
Explorer
Explorer
Bumpyroad wrote:
goducks10 wrote:
This sums up why GM did what they did.
http://money.msn.com/business-news/article.aspx?feed=BLOOM&date=20140321&id=17455509


a write up by MSN, no thanks.
bumpy


I'm sure Faux news will spin it to blame Obama:)

Bumpyroad
Explorer
Explorer
goducks10 wrote:
This sums up why GM did what they did.
http://money.msn.com/business-news/article.aspx?feed=BLOOM&date=20140321&id=17455509


a write up by MSN, no thanks.
bumpy

Bumpyroad
Explorer
Explorer
BenK wrote:


Wally World anyone? First to out source and capture significant market
share via 'cheapest at any cost' mentality...along with pure bean counter
management metrics (off shore, outsourcing, etc)


nonsense. Sam Walton bought made in the USA for many years and as long as he could compete continue doing so. finally got too expensive to make it in the USA with union labor, health benefit costs, etc. that he had to outsource to compete.
bumpy

BenK
Explorer
Explorer
mich800 wrote:
Noting new. I have been saying this for 15 years. I have sat down with GM on behalf of my clients listing the escalating raw material cost on some fixed priced purchase orders. There answer was always, too bad, if we change pricing for you we would need to do it for everyone. These stamping plants were closed within several weeks. This was proceed by mandates in the prior years where GM said the new price is 15% lower. We don't care how you do it but that is the price.


So true and add that it's not just the bean counter management, but
their customers too

Wally World anyone? First to out source and capture significant market
share via 'cheapest at any cost' mentality...along with pure bean counter
management metrics (off shore, outsourcing, etc)

"Cheapest at any cost" has the ultimate 'cost' to our society and
the way we live...along with the erosion of our societal values...we
are now so much a throw-a-way society
-Ben Picture of my rig
1996 GMC SLT Suburban 3/4 ton K3500/7.4L/4:1/+150Kmiles orig owner...
1980 Chevy Silverado C10/long bed/"BUILT" 5.7L/3:73/1 ton helper springs/+329Kmiles, bought it from dad...
1998 Mazda B2500 (1/2 ton) pickup, 2nd owner...
Praise Dyno Brake equiped and all have "nose bleed" braking!
Previous trucks/offroaders: 40's Jeep restored in mid 60's / 69 DuneBuggy (approx +1K lb: VW pan/200hpCorvair: eng, cam, dual carb'w velocity stacks'n 18" runners, 4spd transaxle) made myself from ground up / 1970 Toyota FJ40 / 1973 K5 Blazer (2dr Tahoe, 1 ton axles front/rear, +255K miles when sold it)...
Sold the boat (looking for another): Trophy with twin 150's...
51 cylinders in household, what's yours?...

rockhillmanor
Explorer
Explorer
You know it was all about the size of the hole in the key.

Too long of a hole and the weight of all what a lot of people put on their key chains tipped the key downward. Have you ever seen some of these kids keychains? Everything but the kitchen sink is on them.

All I know is back in the day and I go back a LOT of those days! I was told when I got my first car that no******on a keychain would be allowed in our household.

House key, car key. Which back then meant 2 car keys one for ignition and one for trunk. 3 keys, key ring and one of those miniature license plate dodads with your number on it that the VA mailed you for donations! (so it made it easier for a thief that found you car keys would know "exactly" which car it would start!) That's it.

Dad always said a lot of junk on a key ring puts too much weight on the ignition switch which over time loosens it. Was a mechanic and saw it happen all the time THAT many years ago.


This was the fix from GM. A plug to fit into the hole to make it round so key would not tip from all the weight the OWNER added to a key chain.
The weight being the owners problem IMHO. Just saying.

We must be willing to get rid of the life we've planned,
so as to have the life that is waiting for us.

mich800
Explorer
Explorer
Noting new. I have been saying this for 15 years. I have sat down with GM on behalf of my clients listing the escalating raw material cost on some fixed priced purchase orders. There answer was always, too bad, if we change pricing for you we would need to do it for everyone. These stamping plants were closed within several weeks. This was proceed by mandates in the prior years where GM said the new price is 15% lower. We don't care how you do it but that is the price.