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I'm a designer in Michigan, with friends in the automobile business. I have observed the mismanagement of the American car business through my adult life as the executives in Detroit made mistake after mistake and frittered away market share. A great example was when GM started Saturn. For the same investment at the time, they could've purchased Toyota (you know, the guys who are bigger than anybody now, with brands like Lexus and Prius). I also have some experience working at Herman Miller, one of the most admired companies in America, by virtue of innovative product development, and progressive employee relations such as employee stock ownership and executive compensation linked to factory worker compensation.

Here's a proposal for fixing GM and charting a course for the future of companies like GM.

There are 565 million shares of GM stock. Yesterday, the stock traded under $2 per share. Think of that for a second. GM, with it's countless assets, it's considerable intellectual property, and it's legendary brands could be owned for $1.1 billion, or controlled for under $600 million. This is a pittance compared to the money controlled by the UAW pension fund.

The UAW can and should buy GM.

As an employee owned company, labor and management would engage in a cooperative arrangement, rather than an adversarial one. Imagine a situation where the guy on the line is invested in producing a quality car and reducing waste and maximizing profit and paying attention to the community. Imagine a situation where the guys around the board room table are being evaluated by the guys on the line. Would those board room guys still have chauffeurs who drop them off at their heated garages adjacent to their luxurious offices to dine for free in their wood paneled private dining room? Imagine a situation where every employee brings every ounce of his or her creativity and thoughtfulness to the job, and feels empowered to contribute it to the mix. Where every employee is a watchdog for making the enterprise work.

I'd like to work at that place. I'd like to invest in that place.

The UAW is inextricably connected to GM. The UAW will lose big if GM fails. Instead of just watching things unfold, why not actively create a situation where the UAW and its members win big if GM succeeds?

Why not take charge of this situation, install some competent leadership and fix this mess?

Originally posted to fooly on Fri Nov 21, 2008 at 11:24 AM PST.


What would you do to fix GM?

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| 43 votes | Vote | Results

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Comment Preferences

  •  would there be a conflict of interest (4+ / 0-)
    Recommended by:
    webranding, utopia, Nailbanger, Norbrook

    Doesn't UAW represent workers in all three automakers? I still like the idea, but this would have to be addressed. It would be great to see the evolution of a worker owned business. However, since US policy for a century now has had as one of its major objectives preventing worker control of any means of production, this would seem to be a non starter, I could see the Feds activiely opposing such a buyout, rather than supporiting it.

    Law is a light which in different countries attracts to it different species of blind insects. Nietzsche

    by Marcion on Fri Nov 21, 2008 at 11:27:51 AM PST

  •  You Mentioned You Are A Designer (3+ / 0-)
    Recommended by:
    JeffW, utopia, Norbrook

    so you know more than most that the design of a product is important. There is a reason folks like iPods and VWs. They're well designed.

    "We are what we repeatedly do. Excellence then, is not an act, but a habit." - Aristotle

    by webranding on Fri Nov 21, 2008 at 11:28:09 AM PST

  •  I just wish... (2+ / 0-)
    Recommended by:
    webranding, chrome327

    ...the members of the UAW had the money to do this...

    _Float like a manhole cover, sting like a sash weight!_ Joe Lieberman=Momzer!

    by JeffW on Fri Nov 21, 2008 at 11:28:40 AM PST

  •  My good man, (3+ / 0-)
    Recommended by:
    JeffW, utopia, Norbrook

    I believe you may have just described Toyota (minus the worker ownership).

  •  It is definitely work trying (0+ / 0-)

    I always see people say why this would never work in the auto industry.  But when its been tried at other industries its worth noting that the companies never did worse than the industry as a whole and some did better.

    "An army of principles can penetrate where an army of soldiers cannot." - Thomas Paine

    by Mister Gloom on Fri Nov 21, 2008 at 11:33:16 AM PST

  •  E.O.E., unless UAL is the model n/t (0+ / 0-)
  •  Have you checked what debt GM has (0+ / 0-)

    I would have no interest in purchasing GM for a Billion dollars because I would be on the hook for the untold billions they owe their creditors.  If the UAW wants to purchase GM they should.  That would funny to watch.

    •  No, But If I Was A Billionare (I Am Not) I'd Buy (0+ / 0-)

      GM in a heartbeat for the current market value. I mean does anybody really think with just average management they couldn't turn a profit?

      "We are what we repeatedly do. Excellence then, is not an act, but a habit." - Aristotle

      by webranding on Fri Nov 21, 2008 at 11:43:00 AM PST

      [ Parent ]

      •  I don't believe they could turn a profit (0+ / 0-)

        First, how do you pay off the roughly $45 billion in debt on there books?  Second, you would have to deal with the UAW to reduce wages and benefits (no easy task).  GM in 2008 has a profit margin of -13.24%.  That is a huge nut to crack.  To actually pay off your debt and turn a profit you would have to drastically reduce your size, pay, benefits, perks, and designs.

        I keep hearing here how cheap GM is (It isn't).  If it was true, it would be purchased a long time ago.  The problem anyone would have on the face of it is the $45 billion price tag for the debt you would inccur the day you bought it.  On top of that, you would also have the problem that GM actually has a negetive profit on it's assests.  

        Basically, you would be purchasing $45 billion in debt alone with a company that doesn't come close to turning a profit.  Most people and companies would look at that situation and realize that buying GM simply makes them bankrubt.

      •  You would actually need to be worth at least (0+ / 0-)

        $75 billion to purchase the company since you would have to be able to make payroll and pay off $45 billion in debt instantly.

    •  GM's Debt (0+ / 0-)

      You make a good point. I have no idea what the balance sheet looks like. I understand that a lot of the debt is for UAW pensions, so the UAW is very interested in making this work.

      One option would be to buy GM and then use bankruptcy protection to clear the decks for the future.

      •  It is exactly what they need to do (0+ / 0-)

        They need to use bankruptcy protection.  This will allow a judge to wipe off most if not all the pension obligation.  It would also allow a judge to force massive wage and benefit reductions.  This is the only way forward for GM.  I still would want no part in going through that.  There is just way to much risk involved.  Obviously investers realize this as well as no one is looking to purchase GM.

        •  CEOs too? first? only? (0+ / 0-)

          They need to use bankruptcy protection.  This will allow a judge to wipe off most if not all the pension obligation.  It would also allow a judge to force massive wage and benefit reductions.  This is the only way forward for GM.

          Is it that just the workers' contracts are voided?  Or am I wrong?  It seems clear that everyone's anger is directed toward the CEOs and management, and I'm curious if their salaries and perks could be voided and the workers left alone.  It seems the UAW has already had massive givebacks, that there's now a two-tier structure where new employees get paid much, much less than older ones.

  •  First fire the MBAs (0+ / 0-)

    The most overrated degree in higher education IMHO. (Full disclosure here: I have a degree in history and hope to resume work on my MPA.)

    Replace with PhDs from the upper echelons of the world's top engineering schools.  
    MIT, CalTech, Rose-Hulman (a little gem hidden away in Terre Haute IN), etc.

    Put them to work with Manhattan Project-like intensity on making sure every switch, every lever, every dial works with Swiss-watch precision.  Improve fit-and-finish.  No unsightly orange peel.

    Get the line workers involved.  Get stones and rid yourselves of the goldbrickers and the drunks that have swollen the ranks of the rank-and-file.  Work like your lives depend on it.

    Can we talk Gene Kranz out of retirement?

    Progressive Gearhead--supercharge change!

    by Albino 4 Obama 08 on Fri Nov 21, 2008 at 12:01:32 PM PST

  •  The Law of unintended consequences. (0+ / 0-)

    The U.S. Govt., has been subsidizing fuel at the pump forever, refuses to go with a single payer system, and world trade barriers have all contributed to the Big Three being in the spot they current occupy.  American consumers like big cars with a lot of horsepower (until gas gets to $4/gallon).  The Big Three, without sufficient markets to export to, has been forced to satisfy the consumer appetites (Trucks, SUVs, fleet/rental vehicles, and the large luxury car).  They are stuck with burgeoning healthcare costs (because they're a union shop-not a bad thing), and when the current administration allows speculatos to run rampant in the oil commodities market and crash the economy, their products lack utility (due to high gas prices) and they're on the verge of collapse.  

    To be honest GM doesn't need a loan.  Their creditors need to recognize that they've made bad loans, and convert them to equity stakes in the company.  Then if necessary, the U.S. Govt., can step in and provide debt financing. Yes, the current shareholder's interests will be dilluted, but I'm sure they would rather have 50% of something than 100% of nothing.  

    "Nothing is more powerful than an idea whose time has come." Victor Hugo

    by lordcopper on Fri Nov 21, 2008 at 12:29:36 PM PST

  •  The stock is worth a billion and a half (0+ / 0-)

    and the liabilities going forward are a 100 billion.

    Some sort of purchase (warrants?) agreement with a deal to guarantee the health and other obligations in the new year (which the whole economy in the US needs, not onlythe auto companies).

     This could work IF the pension plan and health care of existing and retired workers were subsumed by a single payer insurance plan,possibly underwritten by a new branch of AIG(owned by the US taxpayers right now).That obligation coverage would of course extend to Ford and Chrysler and other industries as well.

    The companies payout share would drop somewhat, and the profitability would come back.

    Now as to what they make.  The market for electrics would have to be guaranteed in terms of pollution targets,cap and trade for carbon based fuels,etc, and then the sales would be into a tilted playing field that is a "win win" for nearly all the players.

    NOT doing this means:  failure and collapse like a row  of dominos, a vastly deeper recession,the companies and their suppliers go away,  and it gets done by European,Japanese,and Chinese firms ultimately to their own benefit and we get it many years later. We don't do it now because the income hit on the wworking/middle class of industry collapse
    is so hard few of us will be able to  afford new cars. Vicious cycle to the bottom.

    So what is it going to be? We have the selfish narrow pigs (Republicans)claiming "Let them fail! Yes! That's the answer they must fail!"

    cast away illusions, prepare for struggle

    by Pete Rock on Fri Nov 21, 2008 at 12:52:25 PM PST

  •  Nationalize (0+ / 0-)

    Now I know that will drive freepers wild but hear me out!

    GM is involved with FAR too much of military resources to trust them to just survive this storm. If they were nationalized and converted to electric only. It would stop the excuses and ensure the military is supplied.

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