Weekly Roundup: A Tale Of Two Cities Edition

It’s the Christmas season in Northern Ohio, but the blessings of the holiday will not fall evenly on all God’s children. In Toledo, they are preparing for the arrival of the Gladiator. Since September, FCA has been preparing a third shift for the plant based on Wrangler volume alone; Gladiator makes it a certainty. More than one thousand new workers will find their lives permanently changed by membership in the UAW and a job assembling one of the most steadily popular nameplates in the auto biz.

A few hours to the east, the workers at the General Motors plant in Lordstown are preparing for a closure on or about the first of March. At the Los Angeles Auto Show, while FCA showed off the Gladiator and Honda announced the discovery of a previously-unknown gap in its tall-wagon lineup that would be immediately and profitably filled by a shrunken Pilot, GM announced the corporate equivalent of a high-school girl cutting off all her hair and putting on Goth lipstick because her boyfriend dumped her for someone thinner. Lordstown is just one of the several plants being closed on short notice. Their products will die with them. The vast scale of the ignorance and wastefulness on display is breathtaking to behold; the brand-new CT6 V-Series, equipped with a massively expensive bespoke engine evocatively yclept “Blackwing”, is dead on arrival. Pause, if you will, to admire the stupidity verging on genius here; it was already a nearly impossible task to sell an S63AMG competitor with a Cadillac badge on the grille, so GM simply went the rest of the way by declaring in advance that the car would be discontinued. Thus the CT6 V-Series ticks every possible box in the disaster checklist: hideously expensive, undersized, impossibly complex, terrifying in the contemplation of future maintenance expenses and resale value, abandoned by its parents at birth.

GM’s nonentity of a chairperson, the inscrutably useless Mary Barra, allowed as how perhaps Mr. Trump had killed the plants with a “billion dollars” worth of tariffs on steel and aluminum. The press repeated her blather as fact, perhaps forgetting that Ms. Barra had been on Hillary’s shortlist for vice president and could be again. Not considered by anybody on Twitter or in the automotive press: why the tariffs were deadly for GM but seemingly livable for everyone else, particularly since the company makes a relatively low percentage of its vehicles in the United States. While Honda adds Alabama production for the Passport and says nothing about the effect of tariffs, GM takes its ball and goes home to Mexico.

Left unsaid in all of this: while GM chases Korean electric dreams and Chinese autonomous hopes with blank-check naivete, while Chevrolet wastes God knows how many million dollars on astoundingly stupid garbage like their Call Me Out application, and while the firm bets the farm on a new generation of trucks that appears designed to increase the resale value of their predecessors — FCA takes the time to design and build vehicles that people actually want to buy. My suggestion: GM should approach Honda about building Passports at Lordstown. Or they could build Jeeps there, the same way that Ford was reduced to building the Willys quarter-ton truck during WWII because their own design didn’t cut the mustard.

It’s trite in this business to say that product matters, and it isn’t always as true as we’d like it to be, but there are times that you just have to face the cruel fact that auto companies can live or die on the strength of what they put on the showroom floor. It doesn’t matter so much for Ms. Barra, who will continue to earn approximately twenty-two million dollars a year — about an eighth of the Lordtown workers’ salaries in total, by my rough calculation — regardless of her ineptitude, and it does not matter at all for Sergio Marchionne, dead at America’s retirement age. Rather, it is the blue-collar families of Ohio who will thrive or suffer in the year ahead, through no fault of their own. Has it ever been any other way? In the meantime, however, as the holidays approach, let us hope that God blesses us, every one.

This week I discussed Early Installment Weirdness and took a tour of Watkins Glen history in the sublime new Miata.

67 Replies to “Weekly Roundup: A Tale Of Two Cities Edition”

  1. Mopar4wd

    GM has done well financially under Barra. She seems determined to run GM on the finical side with little concern for the manufacturing side and product side. That said she has seemed to make that work for new GM longer then past accountant leaders. This seems like a typical slash in burn in anticipation of a recession. Which based on history seems probable. While I don’t think she has gone about it a smart way that’s what it looks like to me, trying to make sure GM can weather a storm it did not in 2008.

    On the Tariffs. FCA actually has been public about being hurt by Tariffs around the same time GM started at the start of the summer. https://www.cnbc.com/2018/07/25/reuters-america-update-3-tariffs-cause-gm-fca-to-trim-2018-profit-forecasts.html
    I think the wide spread nature of the tariffs was a mistake but we will just have to wait and see.
    But they do seem to have caused serious issues with BMW’s US production and possible Volvo production on top of the GM issue.

    Reply
    • Tyler

      I assume there is a dark conspiracy theory out there that the tariffs and NAFTA 2.0 are actually the immigration fix. Increase the cost of producing in China, decrease the comparative costs of producing in Mexico, create incentives for desperate Venezuelans and Central Americans to resettle in company towns on the border.

      One has to assume GM knew exactly what would happen when the NA plants were tooled for sedan variants of the new platforms. Perhaps the timeframe was somewhat more in doubt than the outcome. When does the bell toll for Kansas City and the Malibu?

      Re: Gladiator … Sergio openly speculated about export costs and the future of Wrangler assembly at Toledo Supplier Park any number of times. Whether he was serious or just extorting further concessions from local government is an fair question. Suffice it to say that making the JL in Ohio was by no means perceived as a certainty, and TSP getting another variant of it is a major win.

      Reply
      • MrGreenMan

        Like Jeremiah told them they could be saved if they repented right up until the Babylonians knocked on the door:

        The Malibu could still be saved. Put the big V6 engine in it; there is no longer anything higher up the food chain to protect. We don’t even need AWD, since everyone knows GM can’t figure out how to do AWD.

        Make the Malibu cheap, cheerful V6 fun again.

        Reply
  2. JustPassinThru

    Mary Barra. Former marketing flunky, promoted to CEO.

    Because, VAGINA!

    The closest I can think of, to this waste, was when Robert McNamara, who hated cars by the American tastes of the time…as Lido said, “He wore those granny glasses and he wanted us to make granny cars”…McNamara, deliberately arranged the Edsel line’s death, before the camo coverings were pulled off the first ones on Day 1.

    Doesn’t matter. Government Motors was a doomed project from the start – only the vanity that would come from an AA politician, popular for his skin hue, not his ideas…only vanity could lead him to believe he could do, what VAZ-Lada, what Zastava (Yugo), what government-owned Renault and what government-seized British Leyland could not do.

    Have a government…government, inherently inefficient, unstable, subject to the whims and brays of those who should rightly be told to shut up…have government, reorganize, take over, and launch an automobile company.

    Run by government priorities. Identity politics and addiction to the teat of government money.

    I hold no animus to the low-level employees…but I feel little love, either. They lived higher off the hawg then I ever did, even in my best Conrail years. Their days were numbered – and if they couldn’t see that, most outsiders could.

    So it’s gone. In Mary Barra’s trained eyes, GM will become a FASHION company – and will buy their product, buy or, with legacy processes, make, the product that’s selling for the moment.

    Rick Wagoner, who was a management genius only next to Mary Barra…did EXACTLY the same thing in the mid-00s, cutting back small-car production to produce more big, honkin’ trucks.

    And we are, IMHO, on the cusp of a major economic realignment. One GM, and Mary, will not survive.

    Reply
  3. Frank Galvin

    Uh..@Just Passing Thru, your best Conrail years? You’re referring to the Consolidated Railroad Company formed by the US government because Penn Central and several other RR were operating in perpetual bankruptcy. This was government RR before government motors, which was then spun off to Norfolk Southern and CSX. Stones, glass houses, etc.

    Reply
    • JustPassinThru

      Yes.

      First, Conrail had been a private – AND PROFITABLE – railroad for ten years before I hired on.

      Second, Conrail’s success as a government entity was unique, and had never been seen before – and probably never will be, again. There’s a book documenting it – “The Men Who Loved Trains,” forget the author. It was pure serendipity – that the Penn Central, the primary predecessor railroad, was such a dumpster fire, no one in the rail industry wanted to touch it. So Conrail’s government-oversight directors had to reach out of the industry – and found a cadre of young men, interested in railroading, educated and enthusiastic. They saw it as a chance to try things differently, and they had the enthusiasm of zealots.

      Even with that, Con-Rail (as it was called then) couldn’t advance until the carrot and the stick were applied. The carrot, was the passage of the Staggers Act, which partly deregulated the railroads. Describing the silly micromanagement which led to the industry’s collapse, would take a series of articles – but Staggers cut much of that away.

      The stick was the Reagan Administration’s decree, that Conrail would be sold, profitable or not, intact or in pieces or as real estate. With the new liberation that Staggers gave, it gave management the focus of condemned men – a corporate culture that remained to the mid-1990s when I was there, right to the end.

      Third, government subsidies didn’t rescue either the Penn Central, nor the Erie-Lackawanna, nor the New Jersey Central, nor the New Haven railroads. All of them had been on the receiving end for some years, before Congress realized it would not work.

      Applying the Conrail model to the auto industry would be along the lines of the creation of British Leyland, which was formed by consolidation mergers and then nationalized.

      But automobile manufacture is a consumer-product business – not an industrial-service business, as is railroading.

      You may note, five years before Con-Rail was created, Amtrak was formed. Which had none of the success and remains an unprofitable, inert operation to this day. Exactly what nearly every government-subsidized or owned or run business comes to.

      Reply
  4. Dachs

    I don’t know that there is a car company in the world that has not depended on some governments teat, at one time or another. We live in an extremely complex world, and everyone eventually will take a misstep. The question is whether the mistake will kill you or if society should bail you out. Another GM bailout is inevitable. Just a question of when. Probably the only mistake greater that bailing them out again is not doing it. As Reaganomics and Milton Freedman teaches us government debt does not really matter. You have to pay your debt, to the government it’s just a number in a spreadsheet. The Capitol Hill Childcare paper is fascinating regarding how human intuition about money is just wrong.

    Reply
  5. George Denzinger

    To be technical, these auto assembly plants are not assigned a new product. That doesn’t mean that they won’t get another product, but I have a feeling this GM playing hardball with the Trump administration and (somewhat) with the UAW/Unifor.

    In the aftermath of the Great Financial Crisis (GFC), every talking head and auto business critic shouted at GM: “Be more like Toyota”. With the Automotive Task Force forcing them to shed brands and the conditions of the loan guarantees forcing them to shed excess capacity (it wasn’t enough and still isn’t). It appears GM focused most of it’s efforts in the US on Chevrolet and developed a line up that mirrored (then) Toyota’s.

    It worked for a while, but the concentration of small car models in Chevy’s line up started to mess things up. Two car lines that were awfully close to one another with a smaller one that would never gain much traction in our market didn’t make sense. A bigger Impala introduced into the burgeoning SUV market in retrospect didn’t seem wise, either. I’m not saying that this line up was a direct result of the government’s involvement during the restructuring years, but I have to imagine that it takes a lot of time to get these things to market. Not so much to remove them however.

    In light of the “SUV über alles” conditions we have today, they’ve cut the slowest selling models in the line up. Pre-bankruptcy GM would have tried to press on regardless, post-bankruptcy GM does the logical thing. It sucks for the workers horribly, but if we’re honest, very few of us are indispensible any longer. Even fewer of us are immune to this kind of thing in any business. My friends and relatives at home in Northeast Ohio, if this sticks and Lordstown is mothballed, are going to be in for a world of hurt.

    If a recession of any magnitude is really coming, this may also be seen as a “genius” move, like Ford restructuring their debt in 2006 (2007?) ahead of the GFC. Maybe the sh!t will hit the fan, I don’t know. But, there’s more to be seen as we lurch into the new year. Cars as a whole have been on a downhill slide in terms of sales, for everyone. No wonder Honda introduced a new CUV at the LA show; I have a feeling, they will also follow the Sergio formula of sales success: MOAR SUVs.

    The media and our President seem to have forgotten the huge sums spent to update many of the GM facilities in and around the Great Lakes region in the time since the GFC. These same entities also seem to forget that other manufacturers have opened new facilities in Mexico, too.

    “Rather, it is the blue-collar families of Ohio who will thrive or suffer in the year ahead, through no fault of their own. Has it ever been any other way?”

    Speaking as a child of a blue collar family of Northeast Ohio, no it never has been any other way.

    Not to worry, we’ll survive.

    Reply
    • Athos

      As per GM’s press release, the sites have been unallocated. Make of that what you want.

      There are 2 additional plants in the pipeline, which have yet to be named.

      Reply
  6. Jeff Zekas

    Hey Jack, in your article about the new Mazda Miata, you mention how the new generation Miata adopted the Skyactiv engine. What about long term reliability? According to Scotty Kilmer, a mechanic for over 40 years, he has seen MANY customers have major problems, even engine failures, with Mazda Skyactiv motors. Why no mention of this? Maybe journalists shouldn’b be so quick to drink the Miata koolaid?

    Reply
    • Mike

      I have a Skyactiv Mazda and it had been very reliable – trading anecdote for anecdote with you. By all accounts tgeveeitch in 2012 onwards has gone well with the platform, engines and transmissions. No Kool aid needed, just look at quality and reliability scores.

      Reply
    • Jack BaruthJack Baruth Post author

      I can only speak to what i’m seeing in competition, which is that the engines are fine but the transmissions are real trouble.

      Reply
  7. Ronnie Schreiber

    Ford built lots of jeeps, and Willys gets a lot credit for it, but the WWII era jeep was primarily designed by American Bantam, who didn’t have the political muscle of Ford and Willys when it came to getting the contracts to build them in quantity. It’s understandable that Willys has been identified with the MB jeep as the company did not resume passenger car production after the war, instead using the public’s familiarity with the military jeep to market civilian versions and trademarking the Jeep brand name. Ironically, while the MB helped Willys survive as a vehicle producer, it effectively killed Willys as a brand. Kaiser bought Willys in 1953 and renamed it Kaiser-Jeep ten years later.

    I didn’t realize it, but at the time, the VP of engineering for American Bantam was none other than Harry Miller, of Indy 500 and Offenhauser engine fame.

    Reply
    • George Denzinger

      I was under the impression that Ford was ordered by the US Government to produce the Jeeps as Willys didn’t have enough capacity to fill the demand.

      Reply
      • Ronnie Schreiber

        Ford lobbied hard to get the contract, and ended up building 280,000 jeeps.. American Bantam had the capacity to build 200,000 jeeps but other than the initial contract for 1,500 demonstration vehicles that all three companies got, they didn’t get actual production contracts.

        Reply
        • George Denzinger

          I knew American Bantam got shafted hard in the war contracts. I had no idea that Ford lobbied for the contract. So much for Henry the First not profiting from war and all that…

          Reply
          • Ronnie Schreiber

            Henry Ford famously participated in the “Peace Ship” effort to stave off the first World War (in my old age I’m beginning to think that those who opposed U.S. involvement in that particular conflict may have been correct – Wilson used the war to implement a lot of bad stuff). After the U.S. entered the war he got contracts to build ships for the U.S. Navy at his new Rouge facility. When questioned by the press for this seeming hypocricy, Ford said that he was a patriot and that once the country was at war, he would support the effort. By that time, the exploding popularity of the Model T mass produced at the Highland Park plant made it clear that Henry was going to need a bigger factory. The fact that through the military contract he’d be able to get the government to finance initial development of the Rouge complex, I’m sure had nothing to do with compromising his pacifism.

          • rnc

            If I remember correctly, no American business or individual exactly profited from the war as the tax rate for income over $1 million was 99% during that time (to remove profit taking). Now as a car company, getting $ allocated to build/tool a plant to build something that when the war was over could easily be converted to producing civilian goods, that would be worth lobbying for. (Jack wrote a article about GM and some mashup plane, that was along those lines, may go back and reread the comments on that one again)

    • TTDaley

      Ronnie,
      Miller did the Combat Car, Probst was Engineering Head at Bantam? Miller did work there in some capacity, though. Got to search my bookshelves…

      Reply
      • Ronnie Schreiber

        It’s possible the source I read was wrong. Lots of misinformation and partial information gets repeat online.

        Reply
  8. ScottS

    For the record, I am on board to see how tariffs and renegotiated trade deals work out for the U.S. economy and U.S. workers. The results of the three to four decades of globalist, free trade policy are crystal clear and resulted in a hollowed out United States middle class and burgeoning dependency class fueled by uncontrolled illegal migration. Barra and many other corporate leaders are following the example of the deep state and waiting out what they consider a one-term administration and they are planning business-as-usual strategies for a globalized economy where nearly everything of real value is made somewhere else.

    While sales of cars continue to tank in the U.S. the Chinese are providing some relief showing a strong appetite for luxury cars including those by Cadillac. In order to supply that market, GM and other US and EU companies are selling their souls to the devil so to speak and building plants in China were their “partners” have the controlling interest and will end up owning the IP and technology. How will they use these donated resources in the future? Well, the future is actually here.

    There was much news about GM’s committment to invest $16 billion in China but comparatively little reporting the $6.6 billion slated for investment in U.S. plants (those that produce trucks and SUVs). Goods produced in China for domestic consumption are subjected to a ~17% VAT while the VAT is rebated to the producers if the goods are exported. Automobiles imported to China are subject to a 25% terriff while exported autos are (think Volvo and Buick). It this activity is countered by the U.S. Government there will be no middle class left in this country.

    Reply
  9. Ronnie Schreiber

    Less than two years ago Mark Fields was running Ford, Carlos Ghosn wasn’t in a Japanese jail, and Sergio Marchionne was alive. What’s Johan de Nysschen doing these days?

    Are we allowed to ask if Mary Barra has her current job because Barack Obama ultimately wanted a woman in charge of GM after he had Rick Wagoner fired?

    Reply
    • JustPassinThru

      Are we allowed to ask that?

      No. We are not. Asking such an impolitic question, leads to hysteria, personal attacks, flame wars…doxing…physical confrontations at homes.

      Individual discussion via the Internet has become a tool of “Liberal” politics.

      Reply
    • stingray65

      I think it is safe to say the Obama administration’s “management” of the GM bankruptcy was mainly about about scoring political points and not about what was best for GM or the country. Protecting the UAW and scalping the bondholders who had legal rights to be first in line for the dispersal of assets was one, forcing GM to make the never profitable Volt was another, and insisting on a female at the top – qualifications be damned – was another. These problems would have been avoided entirely, however, if GM had actually had some management talent at the top between about 1975 and 2008.

      Reply
      • dejal

        GM and Ford have had a lot of legacy management people.

        Maybe they deserved the positions, but there was a lot of Animal House “Flounders” working for those companies.

        Ford, I can kind of understand with that stupid way (but not for the Fords) the stocks are handled.
        GM? I have no idea why they have or had 2nd and maybe 3rd generations getting the important jobs.

        Reply
  10. Cliffg

    A few billion years ago Mark Steyn surmised that GM was a pension fund with a sideline in making cars, and RF wrote several articles about the impending death of GM. Even after the government/courts allowed a rather peculiar bankruptcy (hint: don’t try this yourself) that allowed GM to spin off most of the negatives, they don’t seem to have learned anything. I don’t know the answers for GM, but I am not sure that current management even knows what questions to ask. And that might be a real good place to start.

    Reply
    • JustPassinThru

      Allowing GM to come to the natural end of its unnatural rebirth, would be a good start.

      One definition of Free-Market Capitalism is “Creative Destruction” – poor ideas fail; good ideas and good organizations also fail when better ideas and organizations replace them.

      Clears the underbrush. Not unlike a natural forest-fire…burns out the deadwood; leaves the healthy trees to resume, in soil that’s revitalized.

      Let GM go. Let the Japanese, or Korean, or even Chinese, buy up what of it still has potential. And if wages on the lines fall, it will only be because the previous situation is artificial.

      Yes, that, too, is harsh – and necessary. Artificially propped wage scales, like artificially-propped businesses, lead to harsher eventual consequences. True wealth only comes from the overall function of a society’s economy – which was why Japan, in its first postwar years, was desperately suffering from hunger, even among the Executive Class.

      They worked hard and only then could reap the reward. As did we; but we’ve been soft and fat and inefficient and living on our credit card – on jiggered economic statistics and financial manipulations. Like subprime auto loans to buy expensive cars made by unionized workers who think brute labor is worth hundreds of thousands a year.

      Reply
  11. Dachs

    Letting GM die sounds good, until you realize that making and selling cars is really hard. Most likely no new company would spring up. The market place would just end up with fewer companies, fewer and worse paying jobs and less competition. Regulations at all goverment levels would have to change, and there is no guarantee that the market would embrace the new products. I would vote for any political candidate that would embrace, but I doubt half the people reading this would share my enthusiasm.
    The only car maker I see embracing a different approach is perhaps Mazda with their Mazda 3 redesign of the various engine and transmissions. But even they don’t apply it to the Mazda 6. Being brave does not really pay.

    Reply
    • JustPassinThru

      Car companies REPEATEDLY sprung up.

      Just postwar, we had Kaiser…King Midget…Briggs & Stratton played with a hyper-economy car. Bricklin. Myers (Manx). Yugo. DeLorean, of course.

      What keeps them out, today, is the cost of entry.

      What makes the cost of entry high, are government regulations.

      You can argue for them, and there is some merit, to some degree. But they raise the cost of entry; and THEY are much of why the smaller companies went out of business. What was the degree of separation, how many weeks, between the announcement that Studebaker would close its Hamilton plant, its last…and the Federal Motor Vehicle Safety Act of 1966?

      Did you also fail to note that once it was passed, Kaiser Industries entered into talks with AMC…who knows what the original plan was, if Kaiser wanted to buy a larger engineering base and established auto line. Didn’t matter, because Henry Kaiser’s death meant Kaiser Industries would have to be broken up to pay Estate Tax.

      AMC wasn’t big enough. Maybe you don’t remember; but in 1978, there was public discussion if AMC would just discontinue its poor-selling car line and focus on Jeep. AMC CEO Gerald Meyers rejected that – I couldn’t see why, at the time. Now I know. The cost-per-unit of emissions and safety compliance, on a low-volume line like Jeep was, then, made the numbers impossible.

      Chrysler combined forces with AMC – and even that was not enough. Now, even FCA and VW group, are having difficulties.

      Keeping a failed business huffing air in and out, through the respirator of government subsidies, doesn’t restore health, most times. It keeps the zombie carcass rotting in plain sight. Again, an example might be British Leyland.

      Nor does taking apart a failed business, impact the market much. It might end some impulse purchases, true. But people will still need autos and still desire certain style and cache elements in them. Chevrolet can provide them if Chevrolet is made by the current cast of idiots, or if it’s made by managers assigned from its corporate parent, Hyundai. Or, God forbid, Daewoo. Or, to scrape the bottom of the barrel, Suzuki.

      Reply
      • bullnuke

        It could be argued that that high cost of entry for the smaller manufacturers post-WWII was charged by the US Big 3 with the price wars of the late ’40s to early ’50s. Now that same US Big-3 (okay, maybe 2.5) is floundering with the high cost of maintaining relevance in the current market as it slices away product and off-shores its business.

        Reply
        • JustPassinThru

          Niche manufacturers have always been around

          …prior to crushing regulation.

          MG…would never have been a mass-market line. Didn’t matter, in the unregulated age. Once extreme-science emission controls were required, and technology-sharing forbidden (antitrust-law interpretations) Morris Garages’ line needed support.

          Even the whole of nationalized British Leyland could not provide that.

          The problem was not the mass market or those who controlled it. The problem was regulations that put fringe-market players OUT of business.

          Reply
  12. John C.

    Here is how Lordstown might have been saved. Instead of expensively redoing the Cruze for 2016 do a lighter redo that cost way less. Stretch the old cars wheelbase a few inches and slightly longer overhangs front and rear. This essentially gives you a modern enough A body,82-96. Ditch the optional 1.4 turbo in favor of the optional 60 degree V6, the high value one. Promote it as a fleet car with a different grille and name, say Nova. Let the Cruze be the retail version and let a fancier version go to Buick as the Skylark/ ex Verano. Get some work rule savings from the UAW in exchange for another shift at Lordstown. Then promote it as time to ditch your Asian appliance and make put the mid west back to work

    You might say this sounds crazy, but it would have cost less than what they did so could it have really ended worse. With our Japanese friends giving us more and more CVTs and Turbos it will be hard for them to make the longevity argument and if it failed, at least GM was making something they could be proud of and something unique on the market.

    Reply
    • JustPassinThru

      If anything could have been done to make the Cruz or that class of car more saleable or strengthen the bottom line, is open to debate. Underneath the “shifting demand” there are sick social trends, as we move from an entrepreneurial and capital economy, into a crony-corporatist-mercantile economy. Debasing the money supply through the FED and major banks was brilliant – the price inflation that will come of money-supply inflation, is delayed some years. Meantime, the money-changer class was flush with cash; and those who were not in the river of New Dollars but who had aspirations, could get low-rate auto loans.

      Here in a Montana college town, I see the social connection of these high-up diesel Bro-Dozer trucks. Every man-jack who wants to advertise (he thinks) his virility, has to have one. So of course they’re quite popular with USFS and NPS employees, of which we also have many. Nothing shows the manliness of a spaghetti-armed government bureaucrat, better than an open-piped, lifted Cummins-Ram, rolling coal.

      So, once again, a car, a TYPE of car, has become a perceived badge of status. That is not sustainable, not with the debt load the monthly-payment public carries; but GM (and Ford) will run out of time trying to preserve some rationality and long-term thinking (car markets, not Save-The-Planet) before the Financialization Bubble pops.

      As for the Japanese CVTs and other probable missteps: IMHO, the Japanese manufacturing environment has become mature. They are where GM was in the 1970s; and now they are taking their customers for granted and paying less attention to what made their products so popular. Specifically, engineered durability.

      It will go badly for them, just as the German products are no longer engineered for long life but only performance as new machines.

      Reply
    • Carmine

      Crazy would be mild way of describing how bad this idea is……no matter what, in every GM thread there seems to be that one guy that thinks setting the clock back to (1982-1972-1962….you pick the year) will be the answer…….

      Reply
      • Danio

        Just dust off the dies for the ’86 Celebrity and voila! After all, it was one of the top selling cars that year!

        Reply
          • JustPassinThru

            Sure.

            All we need is a GOVERNMENT ORDER. DEMAND it, for THE PEOPLE.

            Because, of course, government can figure out how to use resources SO MUCH BETTER.

            Look up the definition of “fascism.” Then look up what “Antifa” pretends to stand for but does not.

    • gtem

      I share the sentiment of this proposal John, but GM was basically already doing some version of that with the W-Impala with the 3.6L, Malibu Classic, etc. They’re solid cheap sedans that are gobbled up on the used market here in the Midwest in working/welfare class neighborhoods, but it’s not what could save GM’s sedan plants unfortunately.

      I wish GM was less reflexive to short term investor wants (ie Barra wants to keep her job as long as possible), and if they did want to shift from sedans, that they shift plants over to make more Equinoxes and whatever else, maybe bring the Envision from China to a UAW plant. They have to be pretty darn tone deaf to pull this move right now, not after all the previous help, not with Trump as president, not when the economy is hot.

      Reply
      • John C.

        The me too cars just didn’t work. They don’t make it to the coastal areas any more than Impalas. Nor do they work in the heartland because after all they are either Daewoo or Opel. Grand Ams, Cavaliers and Cieras sold well enough in the heartland to justify the large domestic factories and the dealer volume that is necessary to keep everything from racing to the bottom and getting hollowed out. You say this was a while ago and couldn’t happen now. To that I would point to the 11-14 Chrysler 200 and Avenger. Priced well, styled…well distinctively, with a sturdy four for power and a V6 for power, Sold way better than the foreign package that replaced it, just like it happened with the G6 for the Grand Am and the Cobalt for the Cavalier. Furthermore if there is a heartland resurgence, GM better have something beside pickups and the fine folks of Daewoo. The first generation Cruze was at least quiet and substantial enough to be the basis of something that could have worked given the X to A body treatment, While also not piling on the corroding debt that trophy projects do.

        Reply
  13. Paul M.

    How much did GM spend on the Cadillac fiasco? It seemed funny to me that years after ATS and CTS introductions, the instrument gauges in regular versions of those vehicles looked like those in a 1980s Beretta.
    Or how much did they spend on hybrid technology and Volt?

    Is that not all under current regime? They created great handling vehicles(Caddy and Camaro), brand new platforms, and then poof. How much of that money could have been spent on something equivalent to a Wrangler? Or a small truck? Or extending their hybrid technology and electric technology to other vehicles and brands (well i guess they did that in that overpriced Caddy coupe and then gave up)?

    And now, they are spending a ton (I assume) on new mid-engine Corvette. Is Bowling Green plant not in jeopardy? If after all this money spent, the new mid-engine Vette is a failure would they shut down that plant? Why even come out with a new re-designed Vette when C7 is serviceable?

    Seems to me a lot of money was wasted and is being wasted all because of decisions of the current leadership at GM. Is any one in charge?

    Reply
    • jcain

      The instrument clusters on those Cadillacs are classic GM. Save a few dollars on something that seems innocuous on a spreadsheet but literally stares the driver in the face all the time and ruins his or her impression of the car. That, CUE, and the awful plasti-chrome kept me from considering an ATS when I was shopping a few months ago. Ended up with an A4 Quattro which I’m sure is worse dynamically but at least gives the impression of attention to detail.

      Reply
  14. Colonel Bat Guano

    So, if you’re a laid off GM worker, simply move across the state and build Jeeps instead. Actually, savvy workers should have seen this coming and quit in advance. The 2008 bailout of GM was just delaying the inevitable.

    Reply
  15. SexCpotatoes

    Weird how this article focuses on GM, and doesn’t mention Ford also saying they lost $1B and counting on Aluminum due to tariffs. I don’t know if it was Aluminum and Steel to get to $1B of extra money they had to pay for nothing, or if it could be $1B each for Aluminum and for Steel. But you don’t ever mention Ford’s announcement that they’re axing 10% of their workers, or around 20k workers globally. Toyota even announced the tariffs would raise the price of a Camry by at least $1800.

    But those 12 laid off guys at that one steel factory are happy that you helped restart their two furnaces, NOT the 4-6-10-12 NEW STEEL PLANTS/FACTORIES BEING BUILT that Trump claims at his hate rallies.

    Just about everybody who wants and can afford a new car has one, and many of them are locked into 7-8 year loans to be able to afford the payments. These are just Braxton Hicks Contractions, the real pain is coming, globally, for all the automakers.

    Reply
    • Athos

      Everyone has lost with the tariffs. I used italics because at this point I’m not sure if they have been signed into law or not.

      Ze Germans have also lost, with their US-built luxo-SUV-barges being retained at Chinese customs as retaliation, because reasons.

      Reply
      • DougD

        I think Magnitude 7 Aluminum of Missouri is a bit of a winner here. Former Noranda smelter that was closed and is gradually being restarted. Good folks there, hope they can make a long term go of it.

        Are the politicians who are pressuring GM to keep their excess production capacity open also going to pressure us to buy their vehicles? After Barra’s appointment it’s our turn. Your Cruze allotment is 2 !! Pay on the way out !!

        Reply
    • Jack BaruthJack Baruth Post author

      What fascinates me about your position here is that I am certain you would cheer if the government levied a few billion in extra taxes on citizens. But you recoil at the idea that someone somewhere is inconveniencing a Chinese steel company. Why do you hate America?

      Reply
      • SexCpotatoes

        What fascinates me about *your* position here is that you are cheering that the government *has* levied a few billion in extra taxes on citizens. Not only are people having to pay more for everything made with aluminum and steel (even the domestically-produced stuff by who knows if they’re foreign-owned companies jack their prices to just under what the taxed/tariffed steel costs). Tariffs are taxes. The job losses from this are going to be horrific (the last time steel tariffs were enacted, it cost US 200k jobs https://en.wikipedia.org/wiki/2002_United_States_steel_tariff#Impact ). All the while MAGA redhats are patting themselves on the back “We’ve made America Great Again, aren’t you tired of all this winning? I sure am.” I haven’t forgotten linking you a story via twitter about how Upper Midwest Farmer Bankruptcies were on the rise, and you literally claimed I was ‘bitching because the price of foodstuffs are going down.’ I would quote you on that word for word, but it seems you deleted the tweet. I don’t know anyone alive or not suddenly anorexic/jobless/without the money for food in this country whose grocery bills have been going DOWN, as you claimed.

        I’ve been reading the book ‘FEAR: Trump in the White House’ by Bob Woodward and it’s a terrifying look into Trump’s decision-making process and his who-gives-a-damn-about-the-people policies. Staff literally had to steal letters off his desk to keep him from signing them and doing irreparable harm to our country, one of the most notable ones having to do with the South Korean Missile Defense system THAAD? which would give us advance warning and chance to shoot down any ICBMs within 17 seconds if North Korea launched them. Next best place for the system is Alaska, which would add at least 15m10s to that launch detection time. It’s just plain demented to argue against keeping to our international agreements especially in THAT example. Why do *you* hate America!?!?

        In my opinion the book is much fairer to Trump on the Mueller investigation than I think he deserves. It’s also meticulously sourced drawing on all kinds of documents and interviews, and inside access to the White House during the beginning of Trump’s presidency. From the Note To Readers: “When I have attributed exact quotations, thoughts or conclusions to the participants, that information comes from the person, a colleague with direct knowledge, or from meeting notes, personal diaries, files and government or personal documents.” Woodward offered to release the pertinent audio files if any of the people interviewed for the book tried to deny or publicly release statements contrary to the interviews they gave him. I think it would make a great gift for any Trump supporter in your life.

        Reply
        • Jack BaruthJack Baruth Post author

          Funny how the comprehensive system of tariffs employed by China hasn’t led to the country’s total collapse. Guess Xi Jinping never read FEAR: THE ORANGE MAN BAD STORY.

          Reply
  16. Athos

    IMHO, the horse is bolted. Two of the Detroit 3 will slowly move away from their core expertise of manufacturing car into less capital intensive industries like… “AI” based mobility, “AV”, etc… to become tech companies. One may have a better chance at survival than the other.

    The third one has a pulse on its customers and is building product that people actually wants to buy. Sadly said product is struggling to bring the bacon outside NA for several reasons.

    The auto industry is in for life-changing changes within the next 10 years, and the NA OEM landscape may look substantially different to what it is nowadays.

    Now, this is 100% speculation and I may be utterly wrong. But, this is the interwebZ and opinions are like…

    Reply
  17. Danio

    They’re just doing what FCA did two years ago and Ford recently announced they would do. You can bet other automakers will be doing too as CAFE makes it more and more difficult to sell “cars” profitably.

    The Cruze and Impala sold relatively well until recently and even still sell in significant numbers. The concern isn’t whether “people want to buy them” as a apparently a largish group of people still do. I’m no GM fanboy, but even I think the cars in question are pretty good for what they are. The real issue is that with per unit losses are guaranteed on Cruze and Volt at least, selling more would cause greater losses.

    The real hubris in the GM situation lies in how this was dealt with in a reactionary way while the writing was on the wall for some time. The glaring overcapacity concerns that basically force the closure of 5(!) plants int he same time frame, where FCA and Ford plan to close none is pretty stunning. It had to be done, but their failure to act earlier forced them to do the deed in the worst possible political climate. The damage to their reputation will go on for a long time.

    Reply
  18. Ryan C

    Since the Roundup serves as a sort of open thread, what’s a good present for a musically-inclined teen about to get his first electric guitar? My instinct is to buy an effect pedal for the kid, if you can suggest one that isn’t junk and isn’t too much (I like this kid, but not THAT much…); budget is ideally under $50.

    Reply

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