No. Keep GM in the Dow. Their products are better than they have been in decades. The problems lie elsewhere. They are a classic victim of globalization.
The Japanese automakers do not provide pensions and health care to their workers. In Japan, their government provides these. In the US, their workers have to pay for their retirement and insurance. If GM had these advantages in the US, they would be doing well, like they are outside the US where the playing field is level.
GM is fixing these problems. Their pension programs are funded and capped, and they are pushing the health insurance over to a VEBA. They need to finish this very quickly to lower their costs down to Japanese levels. The same applies to Ford and Chrysler.
Longer term, we need to force a merger between GM, Ford, and Chrysler (and clean out all of the pension and health care obligations) to make one US automaker that is big enough and cheap enough to slug it out with the Japanese care companies.
Absolutely!! Replace them with a quality automaker like TOYOTA. Americans are getting smarter and are looking for cars that will last longer with fewer repairs. If in doubt, look at the ratings in consumer reports magazine (April issue) year after year.
No – GM should not be removed from the DJIA. As some of the other readers have astutely pointed out, the index is intended to reflect the American economy and the performance of the financial markets – good or bad. ‘Swapping out’ stocks that are not performing well undermines this function, and makes the whole thing irrelevant. The result would be an overstated index that provides a falsely attractive picture – that’s a real dis-service to the investment community.
The problems that GM is facing right now are not unique, they reflect the challenges and problems that many other companies are facing as well – And with $180 Billion in revenue, GM is certainly relevant (to both Wall Street AND Main Street), regardless of the low stock price.
This call by Paul La Monica to kick GM out of the Dow seems to be the latest example of the media ‘piling on’ and scapegoating the auto industry for the economic malaise engulfing the U.S. right now. The entire country was caught off-guard by the dramatic rise in energy and food prices – it’s not fair to make GM ‘the whipping boy’.
And to those of you that continue to ‘exercise your freedom’ and buy Toyotas, Hondas, Nissans: Please note that the growing profits from those companies benefit their home country – NOT the U.S. So keep it up – Very soon this great nation will no longer have a middle-class (which made America great in the first place), and will instead reflect a third-world model of inequality and poverty.
Funny how you can tell someone’s attitude from a single adjective. No one would ever deny that Hummers are large (even though the H3 is pretty small in large SUV comparisons), but to derisively label them as “monstrously-sized” gives an anti-GM bias that overshadows the more salient, financial portion of your argument.
The Hummer H2 is three feet SHORTER and only an inch or two wider and taller than a Ford Expedition EL Cargo capacity of an H2 is only 2/3 that of the Expedition…so size is relative.
While you may have had a point in saying that Hummer is up for sale (as all major corporations sell brands as market conditions change), what was the point in using the adjective “monstrously-sized”? Stick to the facts…
Perhaps every American should consider this when consider Toyota as a replacement for GM on the DOW.
Toyota Linked to Human Trafficking and Sweatshop Abuses
Toyota May Be a Shade Greener Environmentally but has badly stumbled with Human Rights Abuses
NEW YORK, June 18 — Today the National Labor Committee (NLC) is releasing a 65-page report, “The Toyota You Don’t Know” documenting serious human rights violations by the Toyota Motor Company, which will disturb most Americans.
“Celebrities like Julia Roberts, Leonardo DiCaprio, Brad Pit, Bill Maher and others have led the way in turning Toyota’s Prius into a symbol of concern for our environment,” said Charles Kernaghan, director of the NLC, “We hope that these same celebrities will now also challenge Toyota to improve its respect for human and worker rights. As a start, Toyota should cut its ties to the Burmese dictators and end the exploitation of foreign guest workers trafficked to Japan.”
* Toyota linked to human trafficking and sweatshop abuse: Toyota’s much admired “Just in Time” auto parts supply chain is riddled with sweatshop abuse, including the trafficking of foreign guest workers, mostly from China and Vietnam to Japan, who are stripped of their passports and often forced to work–including at subcontract plants supplying Toyota–16 hours a day, seven days a week, while being paid less than half the legal minimum wage. Guest workers who complain about abusive conditions are deported.
* Prius made by low-wage temps: Fully one-third–10,000–of all Toyota assembly line workers in Japan are low-wage temps who have few rights and earn less than 60% of what full time workers do.
* Unpaid overtime and “overworked” to death: Mr. Kenichi Uchino was just 30 years old when he died of overwork on an assembly line at Toyota’s Prius plant, leaving behind his young wife and two children. Mr. Uchino routinely worked 13 to 14 hours a day, putting in 106 1/2 to 155 hours of overtime–depending on whether work taken home was counted–in the 30 days leading up to his death. Toyota claimed that he had only worked 45 hours of overtime and that the other 61 1/2 to 110 hours were “voluntary” and unpaid. His wife had to go to court — which ruled that Mr. Uchino was overworked to death — to win a pension for their children.
* Ties to Burmese dictators: Toyota, through the Toyota Tsusho Corporation, which is part of the Toyota Group of Companies, is involved in several joint business ventures with the ruthless military regime in Burma. The dictators use these revenues to repress and torture the people of Burma.
* Toyota and the race to the bottom: Toyota is imposing its two-tier, low wage model at its non-union plants in the south of the United States, which will result in wages and benefits being slashed across the entire auto industry.
The National Labor Committee recently documented how the U.S.-Jordan Free Trade Agreement descended into human trafficking with tens of thousands of foreign guest workers held under conditions of involuntary servitude.
The Point of the DJIA is not to make it so that it goes up. It is to measure the performance of the U.S. markets and economy. You can’t just remove the stocks that poorly perform. GM is poorly performing which represents the performance of the broader markets.
Replacing GM with a tech company based solely on market cap shows that you don’t have a good understanding on the purpose of the index.
With or without GM how relevent is the DOW anyway. It was never intended to be a measure of the economy. It was a construct invented before computers intended to give an at a glance indication of how the NYSE as a whole was performing. It was designed to be relatively easy to calculate with low tech tools. Today it is a dinosaur locked in place by tradtion, not utility. Today there are a myriad of indices using high tech tools that provide better information because they are not tied to a format dating back decades.
I don’t know if it should be removed from the Dow, but GM is a great example of institutional incompetence. Year after year, decade after decade, CEO after CEO, they just keep making the same mistakes over and over and never learning from them. This isn’t the first time GM has thrown away a huge share of the market because they couldn’t provide consumers with cars they could actually afford to drive when the price of gas went up…it’s not even the second time. They sat on their hands for years making crappy cars when they knew the Japanese were making huge strides in quality, they’ve consistently failed to lower their operating costs in the easy, sensible ways Toyota does (Toyota only uses three kinds of rear-view mirrors on all their models, GM has something like 50), they continue to prop up way too many tired old brands while Toyota has just three and Honda two…it’s as if GM’s mission since 1965 has been to demonstrate to the entire world how to take a corporate empire and systematically DRIVE IT INTO THE GROUND.
Yes, because then maybe GM’s top management will finally wake up! It’s obvious that they’re not serious about turning the company around, since they’ve gotten rid of alot of talented engineers and product people (as ‘cost cutting’ moves over the last few years), but the company’s HQ is still full of VERY highly-paid HR executives, lawyers and other corporate pencil-pushers that do absolutely nothing that resembles actual work – And they certainly have nothing at all to do with designing, building or selling and servicing vehicles (Again, the people that do THOSE jobs are the ones they keep getting rid of!!).
Firing experienced ‘release’ engineers, and then rewarding some idiot HR executive for doing it, is an exercise in total stupidity. GM deserves the low stock price, and deserves to be removed from the Dow.
The bigger question is how relevent the DOW realy is and what it is supposed to measure. It is not a measure of the economy, it is not a good measure of the NYSE as a whole (which it was invented to be), it doesn’t indicate how large caps as a group are doing. There are now other indices that can do all these things better. I think this is made clear by looking at Index Funds. If the DOW was truly relevant we would see more large cap funds designed to track the DOW.
Heck yes, drop GM. And, agreed that the “American incorporation” concept of the Dow is out of date. Add Toyota.
The DJIA is a major index of the American economy and GM, as the nation’s largest automaker, is part of that equation. GM’s problems right now only reflect what’s happening in the economy.
What we seem to have here is an overexuberance of pessimism. I can’t understand how the stock of a $190 billion a year company with a dividend can trade so low. GM has a good product mix going forward; the biggest immediate problem they face is cutting their labor costs. The unions are showing no flexibility here; the day of the SUV is over. Perhaps a Chapter 11 filing would shake things up with the unions at GM, just as they do in the airline industry.
Unlike a lot of managers, I’m a pretty pro-union person, but to strike over loosing your job at a supersize SUV plant? That just shows a lack of common sense.
The union rules forced GM to make SUVs far longer than was really necessary. There was certainly also management greed on SUV profits and lack of foresight. Selling the EV-1 patents to Chevron was a horrible, short sighted mistake.
The key product GM needs to get to market is the Volt. They need to be putting everything into getting this plugin hybrid product to market before Toyota.
We have all been caught unprepared by the rise of oil and OPEC, once again. In this way, GM does reflect the state of the American economy and, in my opinion, should remain in the DJIA.
Toyota is definately starting to be the old GM. It must be something the biggest automaker, whoever that may be, sufferes from. Toyota’s entire lineup is nothing but boring appliances, and the average age of their buyers is skyrocketing. Toyota is turning into an old people’s brand real quick.
Anyone who has anything to do with the automotive business can tell you that as GM goes so does all of their suppliers. It would be a mistake to remove them from the DOW as GM affects many more people than are in their employ. Removing them would be like keeping gas prices out of the inflation calculations. Oh wait… that already happens doesn’t it. Oops, my mistake. Now inflation doesn’t mean anything to regular Joe’s. Why not the Dow?
Meh, better to just get rid of the DOW all together. Back in the day, glancing at the DOW in the newspaper gave you a quick read on how things were doing. You didn’t need to break out a magnifying glass to find what each of your holdings were doing in that sea of 3 point type.
Now any free website will show you a custom tailored track of exactly what you want to watch, day by day.
The Dow is not meant to measure market cap, it’s meant to measure the economy. There’s still no better gauge of the impending doom that faces American consumption and manufacturing than the bankruptcy of GM.
Toyota is the new (old) GM, the infatuated media just doesn’t realize it yet. Camry looks like it’s from 1999.. It’s always frustrating that the media tries to ride trends than looking at reality – GM has a better product than Toyota does now, maybe not 10 years ago, but does right now – and it does employee and impact more people than this short sighted writer understands. 33 year low – great time to buy. The media buys high and sells low; you make more $$ the other way.
LOL, If GM is taken out of the Dow what other company that had sells of 200 billion last year and probably 160 billion this year?
You have to remember GM is making money hand over fist they have cut their new hires from $52 an hour down to $12 an hour from just three years ago. They still own 1/3 of Toyota. They are still the most powerful company in America. Just because they used a shrewd we are going bankrupt strategy with the unions to get from $52 an hour to $12 an hour that does not mean they are really losing money.
They are moving from SUV’s built at a cost of $52 an hour for labor and sell for $30,000 to $50,000 tops to cars selling from $10,800 to $30,000 tops made with $12 an hour labor. Seems like they are going to do just fine. They have just cut out the $20,000 in labor and health care costs they use to have.
Plus if GM has been really losing money why do they have no debt and 32 billion in the bank?
I think it’s a great idea! That way the Dow won’t have that “drag” on it and it can appear everything is rosey again! If you don’t like the numbers, rearrange them until something better happens! I live at the beach, not in a vacuum!
Sure lets replace it with Toyota. Why not? Toyota is a US company, right?
I just passed a Toyota dealership with US flags hanging on all the Camry. I see US soldiers driving Tundras with US flags and Support out troop magnets on the tail gate. It’s too bad that 18,000 US citizens will loose their jobs this year alone from GM due to the market loss. People forget that the designers, engineers, marketers, supply management, accounting, administrators not to mention all the service and parts people all are required to run a manufacturing company. There are relatively few people on the assembly line. Just because your Toyota was built in America does not mean that the whole $30,000 goes into the US economy. Most of it goes right back to Japan to pay all of the Toyota World Headquarter employees salaries…. Those are the people in the US who are loosing their jobs. Frankly the loss of US auto jobs does not come close the number of Import auto jobs created. It is fast approaching a deficit.
I don’t care who you work for or if you own your own company. When 1% of the US work force losses their jobs that comes out of your pocket.
So Support the US troops by strengthening the US economy. First learn economics… then buy the best vehicles for your needs not just the hype.
If you give up on US manufacturing companies you give up on the strength of our economy and ultimately (if you live in the US) your own lively hood.
Absolutely not!, it is short sighted to even raise the question over a problem that every automaker is facing at the moment. GM is America
Oh, of course they should kick GM out of the Dow (said sarcastically). That’s been the philosophy for a long time now, get rid of the stocks in the Dow that are losers, and replace them with stocks that are on their way up. Since everyone watches the Dow as the indicator for how stocks are doing, this cons naive investors all across America (and the world) to believe that stocks in general are doing better than they really are. The Dow itself is a joke: It’s supposed to be the Dow Jones INDUSTRIAL average, a measure of this country’s proficiency at producing hard goods, or at least something tangible (e.g., software or entertainment). How many stocks in the Dow still reflect that? McDonald’s in the Dow, right, that shows America is good at feeding other Americans lots of high-calorie meals. American Express and bank stocks in the Dow show we’re good at shuffling money around (at least used to be, until recently), but certainly doesn’t show that we can actually PRODUCE anything. We, as a nation, are in trouble.
A better question would be, “Why doesn’t the GM Board of Directors get rid of the CEO and his staff?” These people (with the exception of Bob Lutz) are damn lucky they work at GM and not at other companies – Not only would they probably all have been fired already, most of them would never have made it to upper management in the first place.
It would make more sense to replace the senior executives with a bunch of trained monkeys – they could manage GM more effectively (couldn’t do any worse), and it would be much cheaper than the extravagant salaries and benefits paid to GM’s officers.