Sunday, June 17, 2007 

GM Death Watch: It Ain't Gonna Happen!

I have been enjoying reading the news these past few days, perhaps in a perverse sort of way. Pundits and prognosticators are all forecasting the pending doom of the worlds largest automaker as if the approaching layoffs and restructuring are signaling the venerable automakers end. Certainly, GM has some problems big ones but the company isnt likely to go away or even file for bankruptcy. The news isnt all that it seems to be on this subject eitherGM will survive and likely thrive in the decades ahead.

Okay, I am not crazy. Could GM go away? Of course, as could any poorly managed company. Yes, executives are overpaid and so are union workers. ThereI said it. GM has been taking it on the chin from Asian automakers for three decades now and their U.S. market share continues to dwindle. Still, it isnt doomsday for the general. Far from it. Here are some things that I believe GM is attempting to do to as they restructure.

Reduced Legacy Costs GM won an important battle with its unions to force workers and retirees to pony up more money for their share of rising healthcare costs. Before you cry foul most Americans are paying heavily for their health insurance, while most autoworkers pay little or nothing. Reportedly, GMs legacy costs add $1500 to the price of every vehicle. Hardly a way for any company to compete, right?

Divisional Trimming GM axed Oldsmobile and is, supposedly, looking at whether Pontiac or Buick should go next. Saturn looks safe, primarily because of the divisions excellent dealer network while Chevrolet is the household name for so many car owners and is, therefore, untouchable. Cadillac is once again doing well and is competing effectively against Mercedes, BMW, Lexus, and Infiniti. Cadillac easily outsells rival Lincoln more than 2 to 1.

Captive Imports I mentioned in a related article that Chinas Chery Automotive Company will be importing a line of vehicles to the US commencing in Summer 2007. With a starting price as low as $6995, there is no way that GM can compete with them. Neither can Ford, Toyota, Honda, or Nissan for that matter. So, what is the option? Import one or two ultra low priced lines of cars from Korea via the companys Daewoo division. Currently, the $9995 Chevy Aveo is the low price king in the US. This Daewoo built model is being overhauled and the new model should arrive in the US in about one year. Expect the price to drop as GM prepares for Cherys onslaught. Expect GM to pressure their unions for further give backs as American highways are soon flooded with cheap Chinese imports.

Operational Spread -- The US auto market is the most lucrative in the world. Expect GM to strengthen luxury brands including Cadillac and Hummer as many of these vehicles bring in profits of ten thousand dollars or more per vehicle. Gas prices are coming down and Americas thirst for profitable trucks and SUVs has hardly been quenched. Still, look for GM to do a few hybrids, add some more diesels, and continue researching hydrogen production.

Union members should be alarmed by all these looming changes. Cutbacks will happen but they will only be wider and deeper if union opposition remains so strong. Yes, the unions could kill off the general, but that would be suicide for the workers. Better to pick whatever battles you can win and hope for the best.

The general isnt dead and it hardly is dying despite everything you read and hear [personally, I believe GM is beating the were getting clobbered drum to squeeze out more give backs from the unions]. Globalism is changing the way business is done and it would do all of us good to wake up to that factlike it or not.

 

Lewis Hamilton Wins His First F1 Drive

Well its been a main topic for any British Formula One fan since half way through last season when it was clear that Lewis Hamilton was going to dominate the GP2 series, would he race in a F1 car in 2007? Silverstone was a turning point for any doubters with a great win in front of his home crowd. Many thought the race was better than the following Formula One race.

Lewis who has been nurtured by Mclaren for some time now has eventually been given his dream and will be sitting in a Mclaren Formula One car in 2007. Ron Dennis the chief of Mclaren has gone against his normal recruitment rule, in that they only employ drivers who have proven their worth in a F1 car. There was little doubt that Lewis would get a drive at some point, the questions were would it be in 2007 and would it be in a Mclaren or in a team further down the grid.

Hamilton will partner Alonso current world champion, second year in a row who is moving from Renault. There could be no better training environment, a competitive team and your teammate being the best driver in the world. Clearly this maybe why Mclaren felt they could risk a first timer in their second car, knowing Alonso will be going for a third championship. There are some who have so much faith in Hamilton that they think Alonso will have to raise his game to stay ahead of this driver who is still only just 21 and the first ever black driver.

Hamilton will be the third British driver on the grid confirmed for 2007 with Jenson Button and David Coulthard. Jenson may start to lose a bit of popularity if he does not increase on his win rate of one. There are already rumours that Lewis Hamilton will become the next British Champion hope. David Coulthard will be driving a new Red Bull car for 2007 and with almost a new team around him and a competitive driver, Mark Webber as his teammate, he is in a better position since leaving Mclaren to win another race.

There is no doubt that the arrival of Lewis will give a breath of fresh air to the British f1 scene, 3 drivers all in relatively competitive cars although it has to be said that Mclaren did not win a race last year, something that has not happened for many a year. Honda eventually got their first win with Jenson after a rocky start and will looking to have a better start from the leanings of last year.

Melbourne will be the first race of the 2007 season with masses of changes on the grid. For the first time in 15 years, Michael Schumacher will not be there and so there is a natural place to replace him although Alonso probably thinks he has that sewn up.

I, like many other Grand Prix fans will be planning to up early in the morning to witness the birth of a new era with new drivers, changes in teams and of course the absence of probably the best driver the world has ever known Michael Schumacher. The season of 2007 looks to be even better than 2006.

About me

  • I'm denisedceqtx
  • From New York City, Minnesota
  • I was born in Copenhagen, Denmark. After I graduated from Copenhagen Business School in 2005, I moved to Chicago, USA.
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