GM bankruptcy

[Kulaf]

You can't make good product if you don't have money for R&D into new processes and such

which led to a lack of funds for R&D

I checked, and until the last couple years GM outspent Toyota on R&D. So, it doesn't appear that lack of R&D spending is the reason GM produced inferior cars over the decades. Nice try, though. Funny that you got the Wingnut to parrot you on that being a main reason the company failed.

I would be interested in seeing those figures. Source them please.

[Ddrak]

Fallakin,

The problem with the $80 number is it's adding apples to oranges. It's taking the total outgoing payments of GM and dividing them by the current head count, which is stupid because the outgoing payments aren't distributed over the current workers (they are distributed to retired workers). Reducing current worker pay doesn't do crap to the overheads, so it's just the Heritage Foundation being the lying bastards they typically are.

Linking to heritage.org is about as useful as linking to peta.org.

The real issue with the $80 is that GM screwed up by trading current costs for future ones, and persisted with this behavior for 30+ years only to find it now caught up with them making them uncompetitive. Management at the time probably saw Chrysler and Ford doing the same and thought they'd all be in the same boat, without ever thinking a foreign company without the overhead would come in as strong competition.

Dd

[Lurker]

I would be interested in seeing those figures. Source them please.

Numbers going back to 1992 can be found at the DIUS R&D Scoreboard.

Here's a summary of the data. All numbers are in millions of pounds.

R&D data.GIF

and a graph (Toyota had no numbers for 1994 - 1997 for some reason. the 1993 number is used for graphing purposes)

R&D graph.GIF

It wasn't lack of R&D spending that caused GM to put out inferior products.

[Kulaf]

Too bad. I was hoping for a lot more detail on how it was spent rather than just totals. GM has many divisions and I know lumped Onstar in their R&D budget.

[Klast Brell]

Long term reliability of the vehicles is a factor that should not be overlooked when comparing sales figures of American Vs Japanese cars.

[Lurker]

Yeah, we all listed "better cars" as a main reason. Kulaf claimed that the cars were better because GM coudn't spend on R&D because the union was sucking up that money. The totals prove it wasn't lack of R&D funds that led inferior cars. GM had plenty of money devoted for R&D, they likely didn't spend it wisely. I would guess GM had the same focus with R&D money that they did with their product lines, which was no focus at all.

[Fobbon Lazyfoot]

You know, I get the feeling that if the situation was reversed, and Toyota was the one having the hard time, then people (especially economic conservatives) would be saying "whelp that sucks, welcome to capitalism". Since it's an American company, though, they get bought out by the government. I thought American's "invented" capitalism? Why do we sell out when we get beaten at our own game?

Just seems like another case of historical irony, I suppose.

[Embar Angylwrath]

There weren't many fiscal conservatives on this board arguing for the socialization of the car industry. (We're there any at all?) The usual suspects on the left reacted in knee jerk fashion in htat throwing money at the problem was the best way to handle it. But I think we've seen that play out now, and we all recognize that throwing money at the problem did nothing but delay the inevitable and cost taxpayers billions.

[Lurker]

What? We discussed this months ago and everyone agreed, including you I think, that a government financed Chapter 11 restructuring was the way to go. Nobody was for throwing money at the problem. The loans they got from the government prevented a liquidation of the companies saving taxpayers billions and allowing them time to prepare for Chapter 11.

Once again you are talking out of your ass.

[Embar Angylwrath]

What? We discussed this months ago and everyone agreed, including you I think, that a government financed Chapter 11 restructuring was the way to go. Nobody was for throwing money at the problem. The loans they got from the government prevented a liquidation of the companies saving taxpayers billions and allowing them time to prepare for Chapter 11.

Once again you are talking out of your ass.

How does a company going through bankruptcy cost the taxpayers billions? Companies go through BK every single day, and it doesn't cost taxpayers squat.

That's talking out your ass...

[Lurker]

Without the loans last year they would have had to cease all operations and liquidate, and you know it.

Without the government providing the financing they couldn't have gone through Chapter 11 bankruptcy and they would have had to liquidate, and you know that too.

And when a company that big with that many outstanding pensions liquidates, the government picks up the tab... and that's on top of all the unemployment benefits and medical benefits and lost tax revenues.

You are smarter than this Embar.

[Partha]

You are smarter than this Embar.

Really? Could have fooled me.

[Embar Angylwrath]

Without the loans last year they would have had to cease all operations and liquidate, and you know it.

Without the government providing the financing they couldn't have gone through Chapter 11 bankruptcy and they would have had to liquidate, and you know that too.

And when a company that big with that many outstanding pensions liquidates, the government picks up the tab... and that's on top of all the unemployment benefits and medical benefits and lost tax revenues.

You are smarter than this Embar.

Not fair to claim it will cost taxpayers money AFTER we give them taxpayers money. The key to avoiding a hit to taxpayers is to not give them money in the first place. And you're assertion that GM would have to be liquidated (not always a bad thing, anyway) is conjecture.

[Lurker]

Not fair to claim it will cost taxpayers money AFTER we give them taxpayers money. The key to avoiding a hit to taxpayers is to not give them money in the first place.

When did I say anything about the cost being the loan money from last year? Pensions, unemployment, health care, lost tax revenue. Those items would have cost tens of billions with no chance of recovering any of it, and have nothing to do with the loans that prevented liquidation and gave time for controlled restructuring.

You sure are dense when you want to be.

[Embar Angylwrath]

Not fair to claim it will cost taxpayers money AFTER we give them taxpayers money. The key to avoiding a hit to taxpayers is to not give them money in the first place.

When did I say anything about the cost being the loan money from last year? Pensions, unemployment, health care, lost tax revenue. Those items would have cost tens of billions with no chance of recovering any of it, and have nothing to do with the loans that prevented liquidation and gave time for controlled restructuring.

You sure are dense when you want to be.

If your argument is that BK costs taxpayer money due to the reasons citred above, then why wouldn't you advocate for a gub'ment bailout of all companies in financial trouble...

[Lurker]

I wasn't talking about all bankruptcies anymore than I was talking about all companies. Stop.being.stupid.

And can you make up your mind, Embar? Did we bail out the auto companies or "socialize" them? And here I thought we were just financing the Chapter 11 restructuring and taking a temporary equity stake to protect our investment.

Here's a nice article from the liberal socialist WSJ that might explain things to you better than I've been able to.

[Embar Angylwrath]

I wasn't talking about all bankruptcies anymore than I was talking about all companies. Stop.being.stupid.

And can you make up your mind, Embar? Did we bail out the auto companies or "socialize" them? And here I thought we were just financing the Chapter 11 restructuring and taking a temporary equity stake to protect our investment.

Here's a nice article from the liberal socialist WSJ that might explain things to you better than I've been able to.

We did both. We loaned them money, (bailout), then converted that loan into equity (socialized the company)

Tell me you know the difference. The US just didn't provide a clearinghouse for the BK process.. they bought the majority of the company.

[Kulaf]

Yeah, we all listed "better cars" as a main reason. Kulaf claimed that the cars were better because GM coudn't spend on R&D because the union was sucking up that money. The totals prove it wasn't lack of R&D funds that led inferior cars. GM had plenty of money devoted for R&D, they likely didn't spend it wisely. I would guess GM had the same focus with R&D money that they did with their product lines, which was no focus at all.

I didn't say it was because GM couldn't spend money on R&D......I said it was because they didn't spend money on R&D into new maufacturing processes. That is the reason I wanted to see a break down into what their R&D money was actually spent on. Secondly I never said that any "union was sucking up that money". I said there were other factors in their losses. The only time I even made mention of union workers was when I was being a bit snarky in replaying to Klast's assertions that GM's losses were because the money was... "Spent on Stock options and all the other executive compensation. Spent on redecorating the executive offices."

[Lurker]

Embar, we did exactly what you agreed we should do back in November.

===

Kulaf,
I think you strongly implied that they didn't have money for R&D. We'll leave it at that.

[Embar Angylwrath]

Please show me where i advocated the US purchasing the majority of GM. What you linked to was a position that isn't what's being discussed here. My backing for government through a BK was predicated on the company actually deciding to go through a BK, and THEN the government helping. Not a trial run loan to see if GM could make, and then the conversion of that loan to ownership.

The US bought GM, so really, what the government did was use taxpayer money to buy a troubled asset that they will now sell off at a discount, and get less than what they paid for it. We bought a company, only to devalue it and sell it back. That makes no sense.