**GM preparing for bankruptcy**

[galaxy xr8]

Originally Posted by Dave_au

Stop getting so emotional over it, simple macroeconmics suggests that Australia should stay out of car manufacturing and most manufacturing altogether, and it's unlikely that the industry will be viable in the long run.

Demand forces over the next 20-30 years will probably force production to go offshore as it is anyway, the belief everywhere in finance, banking and accounting is that fundamentally our automotive industry system is flawed against global competition and purchaser preferences and it's a losing battle.

According to the Australian Newspaper back in 2008, the automotive sector receives 55 per cent of all government support for the manufacturing sector, despite employing only 2.5 per cent of the sector’s workforce.

Look at the history of the last 20-30 years of automotive manufacturing in Australia and see how it's in such a dire state, we have had Nissan, Chrysler then Mitsubishi, Leyland, Mazda, Mack Trucks all exit, and that's just a few.

Finally someone that has some common knowledge in the industry.

I'm sure those that have posted about my comment on a certain CEO's feeling's have the sense and experiance behind them to back up such statement's.

[Wally]

Originally Posted by kypez

I probably going to get fried for this but why cant they go bankrupt? Why does the company need to survive. Govt's bailing them out could use the money to give to the competition to bring them up to being able to service the extra demand as a result of the fall of the other company. Production lines can be refitted for the other company's product. Jobs and components will be safer than a failing company given help that is not certain to succeed anyway.

In Aust and US, why cant Ford/Toyota get the funding to expand their resource. Yes, they cant do it now, but with that much money, I'm sure its possible... isnt it?!

If GM fails, let it. Why give them a strut up?! Give the competition a pat on the back for having the foresight and reward them, not reward the failing company.

Also, doest this mean that the US/Aus govt will be biased towards GM as they are majority stake holder?! how is that fair to competition when Ford has done the hard work and made sacrifices to stay viable?!

I think you would only need to do a straw poll on this forum to get an idea of how many would switch to commodore if ford shutdown local production... I would suspect "when hell freezes over" would rank right up there. A similar poll, with branding reversed, on LS1 Forums would probably yeild the same response. This may not be representative of the general population, but an indicator nonetheless.

Australia has a tradition of giving traction to business' through grants and tax incentives, Ford, Toyota and Holden are not orphans when it comes to handouts.

If it wasn't for the parent companies, chances are both Falcon and Commodore would probably be FWD by now, if they existed at all. The successive Govts have been trying to dismantle oligopolies not create them, thus keeping three players in the mix is considered a better proposition for consumers and all things economic.

[Paxton]

Originally Posted by Dave_au

Mack Trucks all exit, and that's just a few.

Mack Trucks are made in Brisbane, with Volvo.

Where was Mazda's Australian Factory again, because I can't remember.

[Wally]

Originally Posted by galaxy xr8

I know of a certain CEO of one of the major 4 bank's in Aus to which my Partner had a one to one meeting with the other week, and talked exstensivley to him about such topic's and according to him,
He believe's that Australia should not have an auto car industry, it is not viable.

The four pillars was a Paul Keeting policy to prop banks and ensure competition. It would be absurd of tha CEO to think his industry is not assisted by Federal interventions. Even in the current malaise, the govt stepped up and put guarantees in place to stop runs on banks, offered better cash rates, etc. Banks in Oz are not the bastions of free market, they are protected species.

[vztrt]

Originally Posted by Wally

The four pillars was a Paul Keeting policy to prop banks and ensure competition. It would be absurd of tha CEO to think his industry is not assisted by Federal interventions. Even in the current malaise, the govt stepped up and put guarantees in place to stop runs on banks, offered better cash rates, etc. Banks in Oz are not the bastions of free market, they are protected species.

Yeah I was wondering if the CEO remembered that before he made a statement about the car industry.

[SB076]

Originally Posted by Dave_au

Stop getting so emotional over it, simple macroeconmics suggests that Australia should stay out of car manufacturing and most manufacturing altogether, and it's unlikely that the industry will be viable in the long run.

Demand forces over the next 20-30 years will probably force production to go offshore as it is anyway, the belief everywhere in finance, banking and accounting is that fundamentally our automotive industry system is flawed against global competition and purchaser preferences and it's a losing battle.

According to the Australian Newspaper back in 2008, the automotive sector receives 55 per cent of all government support for the manufacturing sector, despite employing only 2.5 per cent of the sector’s workforce.

Look at the history of the last 20-30 years of automotive manufacturing in Australia and see how it's in such a dire state, we have had Nissan, Chrysler then Mitsubishi, Leyland, Mazda, Mack Trucks all exit, and that's just a few.

It not a case of being emotional over it - Australian manufacturing is still the largest employer of Aussie workers (last time I checked the industry employed 1.25 million aussie workers) If Australia does exit manufacturing what do you suggest the people currently manufacturing do?

Why do you think the automotive industry is flawed in this country? Is it because of the manufacturers themselves? Is it due to differences between how we are governed compared to other countries? Or is it simply our standards of living are higher than elsewhere.

[Dave_au]

Originally Posted by Paxton

Mack Trucks are made in Brisbane, with Volvo.

Where was Mazda's Australian Factory again, because I can't remember.

Sorry thinking of the Laser CKD assembly line that was at Homebush in NSW until 1992.

Also from memory there was a truck manufacturer that pulled out of Australia in the early 2000s - I thought this was Mack, might need to confirm whether they went from manufacturing to building CKDs.

[Dave_au]

Originally Posted by SB076

It not a case of being emotional over it - Australian manufacturing is still the largest employer of Aussie workers (last time I checked the industry employed 1.25 million aussie workers) If Australia does exit manufacturing what do you suggest the people currently manufacturing do?

Probably go on welfare as there would be limited other opportunities.

We've spent the last 2 decades to become ultra focused on mining; the mining of raw resources is what Australia is globally efficient at, it's more just no one has actually taken a moment to think in the last 10 years what would happen if the commodity prices fell (what we're probably going to see shortly if global manufacturing demand doesn't pick up) or in 100-150 years when our mining resources are depleted beyond economic efficieny to mine.

Digressing, there is also an irony that we export Iron-ore to China and Japan where it gets processed into various forms of steel and then we import it for our own production. One would have thought that the smart money would have been on vertical intergration from our mining abilities to processing the steel; I'd rather see this country exporting steel rather than exporting ore.

Why do you think the automotive industry is flawed in this country? Is it because of the manufacturers themselves? Is it due to differences between how we are governed compared to other countries? Or is it simply our standards of living are higher than elsewhere.

The question everyone needs to ask themselves is what is the key driver for success of local manufacturing; pretty much every product we make here either has an imported cheaper comparable product to compete with.

The argument about standards of living and manufacturing does come in to play in some degree when we compare our manufacturing and competitiveness with countries such as Thailand, India, Mexico and obviously China, but this is not the case when we compare manufacturing with the likes of Korea, Japan, Canada, United States (ignoring the big 3, Toyota, VW and Mercedes have US plants in the south which are highly successful)

[SB076]

Originally Posted by galaxy xr8

Finally someone that has some common knowledge in the industry.

I'm sure those that have posted about my comment on a certain CEO's feeling's have the sense and experiance behind them to back up such statement's.

What qualification does the bank CEO have on automotive manufacturing? My concern with the CEO, is the comment Australia shouldnt have an automotive industry - what puts him in a postion to state what industries continue and which dont? Do they realise that many of their customers would be Automotive manufactures?

[6t6m]

Maybe i'm being cynical but how come I havent heard any news of the GM bankruptcy on the television news?... It is one of the largest companies in the world and yet the australian media dont seem to think it is worth reporting.... Maybe I'm one eyed but i just think that if it was Ford declaring bankruptcy it would be headline news

[galaxy xr8]

Originally Posted by SB076

What qualification does the bank CEO have on automotive manufacturing? My concern with the CEO, is the comment Australia shouldnt have an automotive industry - what puts him in a postion to state what industries continue and which dont? Do they realise that many of their customers would be Automotive manufactures?

The banking industry does not soley focus on your, ma and pa (fiqure of speach) of Australia with home loan's, this is a small peice of the pie, there is far more involved focusing point's out there where monies is concerned, I think a CEO of a major bank would have a strong posistion to make a statement about the GFC and the industries that are being affected.

[vztrt]

Originally Posted by Dave_au

We've spent the last 2 decades to become ultra focused on mining; the mining of raw resources is what Australia is globally efficient at, it's more just no one has actually taken a moment to think in the last 10 years what would happen if the commodity prices fell

Prices went back to 07 levels. Problem with 08 is we had a mining bubble.
Japan and China still want huge discounts on our minerals.

Also even in our current situation mining has been reducing our account deficit to a level that hasn't been seen in decades.

Originally Posted by 6t6m

Maybe i'm being cynical but how come I havent heard any news of the GM bankruptcy on the television news?... It is one of the largest companies in the world and yet the australian media dont seem to think it is worth reporting.... Maybe I'm one eyed but i just think that if it was Ford declaring bankruptcy it would be headline news

You getting news coverage from the 80's or something? It's been on every news channel today.

[SB076]

Originally Posted by Dave_au

Probably go on welfare as there would be limited other opportunities.

Do you think the welfare system could handle an addtional 1.25 million on unemployment - do you think this could lead to a class system with the haces and the have nots? That would lead to all sorts of problems.

Originally Posted by Dave_au

We've spent the last 2 decades to become ultra focused on mining; the mining of raw resources is what Australia is globally efficient at, it's more just no one has actually taken a moment to think in the last 10 years what would happen if the commodity prices fell (what we're probably going to see shortly if global manufacturing demand doesn't pick up) or in 100-150 years when our mining resources are depleted beyond economic efficieny to mine.

Australia is not globally efficient at mining - we simply have the goods that others want pure and simple we have an abundance of natural resources and are willing to sell them to the world. Note recent job losses in the mining industry.

Originally Posted by Dave_au

Digressing, there is also an irony that we export Iron-ore to China and Japan where it gets processed into various forms of steel and then we import it for our own production. One would have thought that the smart money would have been on vertical intergration from our mining abilities to processing the steel; I'd rather see this country exporting steel rather than exporting ore.

Australia does process Iron-ore - (Bluescope and OneSteel), due to politics (rebates, government incentatives - its typically cheaper to process Iron-Ore overseas

Originally Posted by Dave_au

The question everyone needs to ask themselves is what is the key driver for success of local manufacturing; pretty much every product we make here either has an imported cheaper comparable product to compete with. .

Its not just manufacturing very few industries are imune from overseas competition.

Originally Posted by Dave_au

The argument about standards of living and manufacturing does come in to play in some degree when we compare our manufacturing and competitiveness with countries such as Thailand, India, Mexico and obviously China, but this is not the case when we compare manufacturing with the likes of Korea, Japan, Canada, United States (ignoring the big 3, Toyota, VW and Mercedes have US plants in the south which are highly successful)

Having limited knowledge on manufacturing in Japan, Canada and the United States I would suggest that their in a worse situation than us at the moment (from my limited contacts) US and Japan in particular are not fairing well. Dont know much about Korea, but would suggest the Korean car manufacturers are doing well (but not many can say that)

[vztrt]

Originally Posted by SB076

Australia is not globally efficient at mining - we simply have the goods that others want pure and simple we have an abundance of natural resources and are willing to sell them to the world. Note recent job losses in the mining industry.

Actually we are efficient at mining.

[Dave_au]

Originally Posted by SB076

Do you think the welfare system could handle an addtional 1.25 million on unemployment - do you think this could lead to a class system with the haces and the have nots? That would lead to all sorts of problems.

I was being sarcastic; regardless our manufacturing will end up like NZs with-in 50 years unless there is a significant policy shift.

[JPFS1]

Originally Posted by Dave_au

The question everyone needs to ask themselves is what is the key driver for success of local manufacturing; pretty much every product we make here either has an imported cheaper comparable product to compete with.

The argument about standards of living and manufacturing does come in to play in some degree when we compare our manufacturing and competitiveness with countries such as Thailand, India, Mexico and obviously China, but this is not the case when we compare manufacturing with the likes of Korea, Japan, Canada, United States (ignoring the big 3, Toyota, VW and Mercedes have US plants in the south which are highly successful)

The initial investment, then the ongoing investment (or lack of) made by the parent companies many moons ago is what has influenced Australia's manufacturing industry (and out dependence on them). Our facilities have somewhat been neglected when compared to the latest from Europe, NA and Japan, but on the whole, we are far ahead of the likes of China, India etc. The product coming out of those facilities are still having hand spot welds applied etc. Yet we are forced to compete with them in our market, so of course it's going to be a tough ask. But our competitiveness shouldn't be measured against these manufacturers, but more so against the Euro's and Japanese, in which case we are gaining in leaps and bounds.

The changes that seem forth coming in the auto world could see further investment here as we are seen to be very high on skill yet more competitive in the labor force than say Europe/N.A.

Let's not forget that Ford AUS is the centre of excellence for the WHOLE of Asia-Pacific region. That means that Ford AUS has a HUGE amount of work on their plate for very little resourcing which is a distraction to our local product development timelines which has been seen in Territory. I can't see this changing anytime soon, and I can see further investment in Australia so that the product remains competitive.

[SB076]

Originally Posted by vztrt

Actually we are efficient at mining.

I stand corrected

The banking industry does not soley focus on your, ma and pa (fiqure of speach) of Australia with home loan's, this is a small peice of the pie, there is far more involved focusing point's out there where monies is concerned, I think a CEO of a major bank would have a strong posistion to make a statement about the GFC and the industries that are being affected..

Granted but what knowledge does the CEO have of the automotive industry? The CEO from your comments hasnt made a statement as such of an industry that has been affected by the GFC, they have stated that an industry should not continue.

[6t6m]

yeh after i said that i went out and it was on the news... clearly just havent been with it today

[Steve]

There was speculation the funding could be under threat after GM global boss Fritz Henderson told US media none of the US Government's estimated $US50 billion of emergency funding would be sent overseas.

Mr Reuss said Holden would match the Australian Government's $150 million "three-to-one" with the money coming from General Motors' Asia-Pacific operations.

"The rest of this is coming out of General Motors. We're part of the Asia-Pacific region and there's money flowing from the company in making that investment," he said.

Where exactly is this money coming from? This would have to be coming either from the US government or from other sources, ie. China?

[section]

lol this has gone off track.

[King Nothing]

Originally Posted by Dave_au

The argument about standards of living and manufacturing does come in to play in some degree when we compare our manufacturing and competitiveness with countries such as Thailand, India, Mexico and obviously China, but this is not the case when we compare manufacturing with the likes of Korea, Japan, Canada, United States (ignoring the big 3, Toyota, VW and Mercedes have US plants in the south which are highly successful)

That would be because of economies of scale. Those markets are far, far larger than ours and their export potential is bigger (particularly Korea). They can amortise costs over a much larger number of cars compared to our tiny local market, made even tinier by the closing of Pontiac.

Originally Posted by Dave_au

Digressing, there is also an irony that we export Iron-ore to China and Japan where it gets processed into various forms of steel and then we import it for our own production. One would have thought that the smart money would have been on vertical intergration from our mining abilities to processing the steel; I'd rather see this country exporting steel rather than exporting ore.

My brother is a civil engineer, he was telling me that for a major construction project, the job was initially priced using australian steel. The client asked how much for chinese steel. The quality was significantly lower, so much so that they required ~20% extra steel for the same job. However, even with the extra steel, the chinese stuff was in the order of half the price. And that includes shipping it over here. There's no way we can compete with that.

Originally Posted by Dave_au

Stop getting so emotional over it, simple macroeconmics suggests that Australia should stay out of car manufacturing and most manufacturing altogether, and it's unlikely that the industry will be viable in the long run.

Demand forces over the next 20-30 years will probably force production to go offshore as it is anyway, the belief everywhere in finance, banking and accounting is that fundamentally our automotive industry system is flawed against global competition and purchaser preferences and it's a losing battle.

According to the Australian Newspaper back in 2008, the automotive sector receives 55 per cent of all government support for the manufacturing sector, despite employing only 2.5 per cent of the sector’s workforce.

Look at the history of the last 20-30 years of automotive manufacturing in Australia and see how it's in such a dire state, we have had Nissan, Chrysler then Mitsubishi, Leyland, Mazda, Mack Trucks all exit, and that's just a few..

Again, there is no way we can compete with both the economies of scale and the lower standards of living that many other manufacturers enjoy. I can't comment for sure, but my guess is that it is better for our economy to subsidise manufacturing to support all those who work in it, than to let all those people out of work and on welfare. Do you think the finance and service sectors will be able to support them all, let alone give them all jobs?

Besides, we are not the only country to protect our manufacturing through government intervention. One that springs to mind was the Thailand-Aus FTA. From memory, there was an agreement on automotive trade where tariffs where removed. However Thailand just jacked up taxes on cars with engines over xL, a bracket which our product fell into. The result? A massive disparity in sales between the two countries.

[vztrt]

Originally Posted by King Nothing

However Thailand just jacked up taxes on cars with engines over xL, a bracket which our product fell into. The result? A massive disparity in sales between the two countries.

3 Litres. Priced our Terri out of the market. Hopefully there would be a market with the Diesel variant.

[Dave_au]

Originally Posted by King Nothing

That would be because of economies of scale. Those markets are far, far larger than ours and their export potential is bigger (particularly Korea). They can amortise costs over a much larger number of cars compared to our tiny local market, made even tinier by the closing of Pontiac.

And thats why I'm saying the local automotive industry won't be viable going forward.

[SB076]

Originally Posted by Dave_au

And thats why I'm saying the local automotive industry won't be viable going forward.

We will have to wait and see - a lot of things change - I was talking to someone with knowledge of Chinese manufacturing and they were suggesting the no. of factories closing down over there was increasing and that some were taking advantage of cheaper labor in Vietnam. Not many people expected GM to be in this much trouble 5 years ago.

Anyway probably need to get this tread back on topic - I think its a positive for Holden not to be included in the Chapter 11 proceedings and also that GM have not tried to dump them or sell them (as they have with their other brands) Holden must have some tricks up its sleeve, otherwise I am sure GM would have jumped at the chance to get rid of it.

[Daymoe]

What phases me is that the media keep saying Holden will be fine, including the CEO of Holden and they keep talking about the Cruize like its Jesus. They've got some money from the Australian Government, fine, but I doubt its enough to start the production? Also, where do they get the idea that Holden is fine when the CEO of General Motors/Who ever is in charge hasn't said anything about Holden's future?

An Interview with the CEO of Holden and Tony Eastley on 774 this morning, Tony kept saying that Holden hasn't made a profit since 2004 and the CEO kept replying "How can you generalise that when he haven't posted our latest margins?".

[Daymoe]

Just on channel 9 HD "Holden is safe". Show me the facts.

[Wally]

Originally Posted by Daymoe

Just on channel 9 HD "Holden is safe". Show me the facts.

I haven't seen the filing yet, but it supposedly does not include any operations outside the US as part of court supervison.

Reading the financial market reports over the months, Holden have taken on a bit of a sweetheart status amongst the various international pundits on how GM should have been running their business in the US. Some even going so far as to suggest GM wouldn't be in such a mess if they had properly promoted the Australian product into the market and taken cues from it.... everyone's an expert in hindsight.

I wonder if Kevin had a word with Obama on his victory tour?

[Wally]

One of the Filings:

http://phx.corporate-ir.net/phoenix....ZW5r&ListAll=1

[z80]

Remember that GM manufactured cars that no-one wanted, that's the core problem

BIG thirsty cars.

GM Holden have still NFI why Toyota Yaris sells so well.....

If Ford can get over the 4/5/6 litre mentality hurdle then it will flourish.



But I suspect not.

[GT69]

Originally Posted by z80

Remember that GM manufactured cars that no-one wanted, that's the core problem

BIG thirsty cars.

GM Holden have still NFI why Toyota Yaris sells so well.....

If Ford can get over the 4/5/6 litre mentality hurdle then it will flourish.



But I suspect not.

Whats wrong with the next generation 9litre 403kw Commodore?
OMG are you saying throwing money at huge capacity engines isnt the way of the future?

Remember it was the american market the screwed them. After 60 years of huge SUV's with big blocks, people wanted something different, either way GM and Ford would have been left high and dry. The only difference is Ford saw it coming while GM keep steaming ahead (my perception) And the same to a degree in Australia, Ford cut supply to better match sales, Holden didn't.

I think Toyota have a very diverse range....granted personally i see them as very bland vehicles. They have a big name everywhere you look, in every market. And there ALL Toyota cars. There not re-badged other cars like the Astra. But yet the 'cruze' is their savour? how so exactly? I just cant see it happening.

In 3 years time GM will be back to its old ways. Because the yanks will want a big SUV or truck again. When that happens, they wont even remember this :