The 'deal of all deals' is that Peugeot gets operating CASH and GM gets to have parts for their cars. By the year 2016 both manufacturers will be using the same internal parts for their manufacturing. It is a consolidation of manufacturing that will create 'sameness' between the two auto makers and not really achieve anything. Supposedly, by purchasing raw materials and possibly consolidating work forces (either in the USA or Europe has been decided yet) both will save money. GM never does the right thing for the people of the USA. Here we go again. Either way, it will Europe or the USA that will take an economic hit from this. Peugeot should have fired their CEO when they ran out of liquidity.
Why does that sound familiar?
So, while Phillipe Varin, CEO of Peugeot (above) should have been fired, now, both should be canned off the job.
I think it was Ford in 2008 that didn't need a bailout and borrowed all the monies it needed at 0% interest rates? Yes? Yep.
...As part of the deal, (click title to entry - thank you) GM intends to take a 7% stake in the French automaker. Peugeot intends to raise $1 billion in new capital.
The two companies are seeking efficiencies that will make them more competitive in Europe's car market.
GM's European business lost €700 million there last year and the company has said it's determined to turn it around.
The two companies said in a joint statement that they'll continue to sell their own vehicles independently and on a competitive basis. The deal will mean they can leverage a combined purchasing volume of $125 billion with suppliers....
So, let's see purchasing raw materials jointly is going to save them all that money?
Shhhh....
I don't think so. Raw materials are commodities and that is where all the Wall Street money is now. Not going to happen. GM now owns 7% of Peugeot, that's all. GM stockholders will get their share of ? Profits ?. And given Varin's track record. Like. What dividends?
As of right now Wall Street is coveting the deal and will suck the living life out of it.
So, by 2016, the two companies will have to downsize their manufacturing plants and consolidate parts to their vehicles. And don't tell me for one minute they don't know it.
Wall Street sees this as a matter of 'synergy.' "Sameness in energy." I think the outcomes are more than obvious. The synergy is the bargaining chip for investors. I think it is called 'investor confidence.' Which is why the market is over 13000.
No matter which way one looks at this it is consolidation. Raw materials is an excuse for outsourcing either to Europe or the USA. There are unions at both manufacturers, so its anyone's guess.
...Jean-Pierre Mercier, (click here) union representative at Peugeot's factory in the Paris suburb of Seine-Saint Denis, said 1,900 French manufacturing jobs would be cut, along with another 3,100 in areas like sales, information technology and research and development.
"The group's international development can't be carried out by cutting our jobs here given that we're the ones who created PSA's wealth," Mercier said on the sidelines of a works council meeting.
Hundreds of protesters demonstrated outside the meeting, which took place at Peugeot's Paris headquarters near the Arc de Triomphe....
What 'the deal' will do is pit the two unions against each other to keep jobs. It would be better if they spoke to each other long before the demolition happens. There is a way out of this for the unions and it surrounds the manufacturing of parts. I have mentioned on this blog before how non-unionized shops are being set up by heavy investment to undermine the sale of parts from manufacturers.
If Peugeot and GM can be convinced to not only manufacturer vehicles but maintain their own plants for parts it would continue to employ workers and insure quality. Now, that is a deal with a sustainable economic impact because we all know without employment their products are worthless if they can't sell them.
The challenges to any CEO is not about consolidation to find profits. That is the OLD WORLD. It is a profoundly bad habit. But, the real challenge to CEOs is to expand their market share by employing more people and recapturing the business that is rightfully theirs from the thieves of Wall Street and the Billionaires set on 'cheap profits' by selling mimiced parts and cheap knock offs like batteries.
Fisher Body was actually a valuable asset to GM because it was quality. Quality and employment at plants that supply it is the future of any corporation. For every employee with a sustainable job the market share increases. Consolidation is for failing corporations, not ones with a future. Unions insure the future of a company through strengthening market share and building consumer confidence.
Consumer Confidence IS in just a few words: "How do I know that I am getting what I pay for?" Reputation is a good beginning.
Consolidation of any aspect of a company cheapens it best returns. Consolidation profits are short term bonus returns and not the ensured longevity of the company. It is boom and bust. It is THE BUBBLE and not the stability.
AC Delco and Interstate Batteries have always competed. Interstate is an incredible battery and after the AC went dead in the GM, I always purchased interstate. They'll start anything, anywhere. I think it is called quality, Interstate batteries will start a rock rolling. Literally.
When there are independent parts manufacturing there is not only a change in the quality of the product, but, also a decrease in market share. Sure the independent blood suckers hire employees, but, they aren't necessarily employees, such as those in India and China and Iraq, that will purchase products. The independent blood suckers aren't paying union wages and shrink market share. They shrink market share even for their own products.
Relinquishing any market share for parts manufacturing is simply not good business. How can GM claim to be able to insure the best outcomes to their products if mechanics are not using GM parts? Why are manufacturers of major products simply shrugging their shoulders and giving up without a fight? It makes absolutely no sense from any standpoint.
Fisher Body was actually a valuable asset to GM because it was quality. Quality and employment at plants that supply it is the future of any corporation. For every employee with a sustainable job the market share increases. Consolidation is for failing corporations, not ones with a future. Unions insure the future of a company through strengthening market share and building consumer confidence.
Consumer Confidence IS in just a few words: "How do I know that I am getting what I pay for?" Reputation is a good beginning.
AC Delco and Interstate Batteries have always competed. Interstate is an incredible battery and after the AC went dead in the GM, I always purchased interstate. They'll start anything, anywhere. I think it is called quality, Interstate batteries will start a rock rolling. Literally.
When there are independent parts manufacturing there is not only a change in the quality of the product, but, also a decrease in market share. Sure the independent blood suckers hire employees, but, they aren't necessarily employees, such as those in India and China and Iraq, that will purchase products. The independent blood suckers aren't paying union wages and shrink market share. They shrink market share even for their own products.
Relinquishing any market share for parts manufacturing is simply not good business. How can GM claim to be able to insure the best outcomes to their products if mechanics are not using GM parts? Why are manufacturers of major products simply shrugging their shoulders and giving up without a fight? It makes absolutely no sense from any standpoint.
