The Plot Thickens

[Mr.Krinkle]

GM CEO sees more alliances

Wagoner says escalating costs will drive collaboration but declines to comment on possible Chrysler bid.

http://money.cnn.com/2007/03/06/news/compa...on=money_latest

General Motors Corp. Chief Executive Rick Wagoner said escalating costs would mean more industry alliances and mergers but declined to say if the world's largest automaker would bid for rival DaimlerChrysler's struggling Chrysler Group.

Wagoner said the costs of developing the next generation of automobiles, especially the replacement for the traditional internal combustion engine, meant that the industry would be driven toward deeper collaboration.

"You're going to have to see manufacturers work together in some fashion ... It could be eventually supply agreements. It could be, I suppose, in some cases mergers, if the case is big enough," he said, but he declined comment on Chrysler.

GM has had some success in past collaborative tie-ups and outright acquisitions, Wagoner said, citing the automaker's decision to buy the assets of failed Korean automaker Daewoo in 2002. "That's worked out great for us," he said.

GM (Charts) is being challenged by Toyota Motor Corp (Charts) in terms of its global sales this year and could be overtaken in the view of many analysts as the industry's top player.

Wagoner said a "dramatically" undervalued yen was conferring an unfair advantage on Japanese automakers who still export heavily from home.

"Think in terms of 90 to 100 (yen to the dollar) as the market base of the currency," he said.

The yen has strengthened against the dollar in recent sessions, a trend Wagoner said could accelerate if more investors opt to unwind carry trades in which investors borrow the Japanese currency to take advantage of low yen interest rates and invest the cash elsewhere for greater returns.

"It will be interesting to see ... if the Japanese government sticks to their now-stated position that they don't plan on intervening in the currency markets," he said. "I'm skeptical but would love to be proven wrong."

Wagoner said he believed more European automakers and governments had come around to GM's view that the Japanese currency has been "artificially weak."

Edited March 8, 2007 by VenSeattle

[Z-06]

I always believed Rick to be a far sighted man with less words and more actions.

He certainly can be a very good chess player who likes to play close ended games (strategic).

All he needed last year was some time to prove himself and get rid of Ghosn and Kirky boy off his back, and he did it subtly.

Last year when he interviewed Automobile, I liked some of his answers and how good and tacitly he declined to comment on caustic issues.

I think he is up to something big and good for GM.

Give him some more time, there will be no talk of Toy being number one.

[gm4life]

I agree with the wise person above. My sons teacher knows Mr. Wagoner somewhat personally and says he is an absolute delight and a very friendly down to earth man. Trust me this lady my sons old teacher is a great judge of character.

[BigPontiac]

Another interesting perspective:

GM could sweep its estimated $50 billion retiree health care liability into Chrysler's and negotiate a deal with the United Auto Workers union to take on the cost at a discounted rate. GM, Cole said, could save billions of dollars on its health care liability by buying Chrysler.

"If that were done, you could, I think, make a pretty good case that GM would be the ideal suitor," he said.

link to complete article

[vrazzhledazzle]

I would calculate the advantage that every individual Japanese carmaker has over American carmakers and figure exactly how much of it is due to a weak YEN and how much is due to the healtcare costs/liabilities that American companies have to deal with because of fu^k^ng Unions.

Then I was impose the devalued YEN advantage each Jap automaker has on EVERY CAR THEY IMPORT to level out the playing field and give that money to GM, Ford, etc. for R&D costs or to simply put on the hood of their cars to counter the effect of healthcare costs.

Of course, the government would have to care enough about the US auto industry to do that.

Actually, it would only be fair if this is done with all Jap imports.

[bcs296]

Of course, the government would have to care enough about the US auto industry to do that.

Good joke.

[Duncan]

I would calculate the advantage that every individual Japanese carmaker has over American carmakers and figure exactly how much of it is due to a weak YEN and how much is due to the healtcare costs/liabilities that American companies have to deal with because of fu^k^ng Unions.

Then I was impose the devalued YEN advantage each Jap automaker has on EVERY CAR THEY IMPORT to level out the playing field and give that money to GM, Ford, etc. for R&D costs or to simply put on the hood of their cars to counter the effect of healthcare costs.

Of course, the government would have to care enough about the US auto industry to do that.

Actually, it would only be fair if this is done with all Jap imports.

Unions are there for a reason - so that companies can't simply up and change the rules on their employees whenever they feel like it. However, unions need to remember that everyone is ultimately in this business to make money, not solely to keep workers happy.

I would agree about the UAW needing to pressure the foreign makers (and it's not just the Japanese - remember that BMW and Hyundai have plants here now) to get on board. Every other country in the world negotiates a deal for their workers from the outset, so why have we been so eager to bend over for the foreign auto industry?

Oh, that's right. Because, like you said, our country's government couldn't give two-tenths of a $h! about the auto industry, even though it's still a major factor in the GDP and GNP every year. Instead, we'd rather worry about the oil companies (who ultimately funnel more and more money OUT of the country every year than they really bring in) or the telecom industry (which basically lobbies for complete deregulation, and generally gets it).

I'm all for supporting companies and industries that actually produce something useful. I think it's a good philosophy - it's seemed to work pretty well for Warren Buffett, after all. Maybe our government will figure that out someday, too.

[thegriffon]

There should be sales taxes on every product (imported or domestic) that will go toward healthcare for everyone, and allow the PBGC to assume every current company pension while providing 100% of benefits. That way pension contributions are protected even as the performance of industries and companies changes. The unions should be using their politcal power and organization to get this through. That way new companies and industries without legacy healthcare and pension costs don't gain an advantage of those that do simply because they are "new", and it will also encourage companies to set up manufacturing operations.

[enzl]

There should be sales taxes on every product (imported or domestic) that will go toward healthcare for everyone, and allow the PBGC to assume every current company pension while providing 100% of benefits. That way pension contributions are protected even as the performance of industries and companies changes. The unions should be using their politcal power and organization to get this through. That way new companies and industries without legacy healthcare and pension costs don't gain an advantage of those that do simply because they are "new", and it will also encourage companies to set up manufacturing operations.

Something needs to be done, but handing more money to the gov't to (mis)manage isn't the way to get things done.

Also, Sales Taxes are regressive in nature, meaning those who can least afford it get the largest impact.

If you'd like to raise some money, let's go ask Exxon-Mobil to hand back some of the $40 billion they earned last year...start with the money that hasn't been paid on Oil and natural gas & other Federal natural reasource leases that our esteemed president hasn't raised an issue about. It's OUR money, uncollected, pure and simple....

[GXT]

I would calculate the advantage that every individual Japanese carmaker has over American carmakers and figure exactly how much of it is due to a weak YEN and how much is due to the healtcare costs/liabilities that American companies have to deal with because of fu^k^ng Unions.

Much of the healthcare costs/liabilities are due to the lack of socialized medicine in the US.

Then I was impose the devalued YEN advantage each Jap automaker has on EVERY CAR THEY IMPORT to level out the playing field and give that money to GM, Ford, etc. for R&D costs or to simply put on the hood of their cars to counter the effect of healthcare costs.

Of course, the government would have to care enough about the US auto industry to do that.

Actually, it would only be fair if this is done with all Jap imports.

Personally, I'd rather not pay more for things. The PS3 is too expensive already.