> I agree that the company should not be expected to pay for work not done, but these payments are essentially part of the benefits package agreed upon when the employee started working.
Those benefits packages were done under extreme coercion from the unions. The management of GM basically just deferred these costs.
Things such as pension funds should not be handled by the employee (IMHO). You should get your full salary (with benefits included) and make your own choice what funds you will use for medical aid/retirement.
Also - on a side note (of topic), these companies should be allowed to fail. They are easily replaceable and most motor manufacturing already happens in lower cost countries in any way.
Aren't there companies that are much more important pillars of the world economy that deserve a bailout more (e.g. AMD).
I don't think you've ever worked in the auto industry - most cars are not built outside of North America. In fact, I can't think of a single car that is built in a radically cheaper country like China that's currently on the American market.
You get imports from Japan, Germany, the UK, etc, but those are hardly cheaper manufacturing grounds.
The only major "cheap" source of cars is Mexico, and in general consumers have reacted badly to this sort of cost-cutting (the massive drop in the Mercedes-Benz C-series build quality after moving to Mexico has resulted in an exodus of buyers to other brands, same goes for VW).
By and large the cars you buy today, even ones from Toyota and Honda, are built in the US or Canada, both of which are hardly cheap when it comes to wages and benefits.
And keep in mind that Toyota and Honda are suffering greatly right now. I have many colleagues in the auto industry, and Toyota has already scaled back production in a major way - the demand is simply no longer there. IMHO the American public is waking up from decades of the suburban dream, and car ownership is something that will decrease in importance in our culture as time goes on, especially as new spending in mass transit kicks in and the urban culture takes center-stage.
I can't tell if you're joking or not.
GM paid dividends up until last year, decades after it was known that they had large health care obligations. Divert a couple years of dividends in keeping their side of the bargain, and GM is in good shape. GM management made a deal they were unwilling to keep.
AMD employs 15,000. GM directly employees 240,000 and suppliers employ millions more. These companies are not easily replaceable. If they were, another company would have replaced them by now. Setting up an operation of that magnitude requires decades of experience and huge capital expenditures.
> GM paid dividends up until last year, decades after it was known that they had large health care obligations.
If you look at the post I said that GM did not take into account their future obligations. Their profits was nothing more than fancy bookkeeping.
> GM management made a deal they were unwilling to keep.
I agree with you on the point that GM should never have made those lavish packages and kept their salaries in line with the market (or relocated their factories).
> These companies are not easily replaceable. If they were, another company would have replaced them by now.
There are numerous companies that can replace the big auto companies. Toyota and Honda has been slowly replacing GM is most of the world markets (including the US). If either GM goes into bankruptcy and gets split up/sold off (e.g. Opel gets sold etc...). It would not be a bad thing.
> Setting up an operation of that magnitude requires decades of experience and huge capital expenditures.
Setting up a car manufacturer is not that impossible in the market. Over the past years there were 10s of new car manufacturers that started (and some failed). A good example is some Chinese companies such as GWM, Cherry. There is also no reason why existing car manufacturers can not grow to fill the gaps that GM leaves (as they have done for a long time – e.g. Hyundai, Honda, Toyota, etc...).
> AMD employs 15,000. GM directly empl
Starting a new x86 processor manufacturer would probably be impossible. The x86 is a patent minefield (to which only AMD and Intel have cross licenses to use each other's patents). Setting up a new generation fab can cost more than $5 billion.
And if AMD goes Intel will have a monopoly. Both Chrysler, GM and Ford can disappear and there still will not be a monopoly.
Setting up a car manufacturer is not that impossible in the market. Over the past years there were 10s of new car manufacturers that started (and some failed). A good example is some Chinese companies such as GWM, Cherry. There is also no reason why existing car manufacturers can not grow to fill the gaps that GM leaves (as they have done for a long time – e.g. Hyundai, Honda, Toyota, etc...).
Historically, downturns have been the best times to invest (obviously!)
Aren't there companies that are much more important pillars of the world economy that deserve a bailout more (e.g. AMD).
Haha. I agree that there are more deserving companies, but I would argue that none of these companies should be bailed out. Take your medicine and be done with it. IMO the bailouts are doing more good than harm.
Those benefits packages were done under extreme coercion from the unions. The management of GM basically just deferred these costs.
Things such as pension funds should not be handled by the employee (IMHO). You should get your full salary (with benefits included) and make your own choice what funds you will use for medical aid/retirement.
Also - on a side note (of topic), these companies should be allowed to fail. They are easily replaceable and most motor manufacturing already happens in lower cost countries in any way.
Aren't there companies that are much more important pillars of the world economy that deserve a bailout more (e.g. AMD).