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In Defense of Blackface Minstrelsy

Tuesday, 17 August, 2010

I’m sorry. That title should read: “In Defense of General Motors”. The confusion derives from the similar esteem among the class of people whose opinions are deemed relevant. If you don’t like my wordy pieces about automobiles, you may as well move on.

Within this post I shall discuss factors which appear relevant as to whether General Motors Company of Detroit, United States may become a viable, consistently profitable company. I intend to additionally address whether following the public offering of stock, whether that stock may be or could become a worthwhile investment. This is an opinion piece with factoids and morsels of data added for spice.

The article proceeds under the following assumptions:

  • General Motors Company is perceived by the public at large as either the successor or the very same organization as General Motors Corporation and its various divisions and subsidiaries.
  • Your humble narrator is concerned primarily with the business in GM’s largest market: North America. Sorting through what I know and what I think I know about the business elsewhere is simply impossible.
  • Although GM owns token amounts of non-automotive companies, these are not relevant to the affairs of the company as a whole. These are not likely to be sold, moved or generate notable revenue or costs any time soon.

I was forwarded an article on Friday which discussed how terrible it is that General Motors sells hundreds of thousands of cars every year to high-volume, repeat customers profitably and have done so since 1911*. That is, fleet sales. My correspondent appears to have fallen for the delusion common in popular economics media that GM’s fleet sales are somehow sales at absurd prices of products not otherwise salable. The fact of the matter is that these are volume sales which are typically ordered and planned months or even years in advance. They sell hundreds of thousands of vehicles every year in this way. It is an essential part of their business. Were GM to disappear tomorrow, considerable trouble would be caused by the absence of their vehicle and parts supply to these customers.

That Toyota and Honda do not participate in this kind of sales in the United States is not evidence of GM’s inadequacy, but rather that GM was in this business over fifty years before the first Honda automobile or post-Toyopet came to our shores. The buyers of fleets wanted known quantities into the 1980s. Toyota does have a less successful fleet sales organization.

It is worth mentioning in this context that among General Motors Company’s long-term fleet customers is American Honda Motor. Honda does not make trucks. Soichiro Honda was an admirer of the occupation-era GMC trucks with which he was familiar. If you would like to read typical internet commentary pissing all over the corpse of America’s industrial might, here’s all you can eat.

GM arranges for the disposition of vehicle trade-ins within this program. While many cars are auctioned regionally, some are returned to corporate service centers and Detroit itself. Those vehicles are then totally dissembled and assessed. Not to put too fine a point on it, but touch points and initial fit and finish aside, this is how you get a mid-size American car that achieves over 30 miles per gallon for 300K miles. Oh, you didn’t know this? You didn’t know you could get a Chevrolet Malibu or Buick Lacrosse and not have to fuck with it for a couple of decades? Perhaps that is because poor people, workers and the like buy these therefore unacceptable cars. Often used. It may not have the most fashionable technology or exclamation points for the salesmen, but when whats-his-name bought that BMW 5-series or Lexus LS/GS the car he really wanted was the Buick.

I grant that you see more GM vehicles broken down by the side of the road, but those cars are twenty or more years old. Most of the acceptable-brand vehicles at that age are long-since recycled. That Chevrolet, Pontiac, Oldsmobile, Geo, or Buick was being used by some twenty year old dude as a daily driver. Alas, durability and comfort mean nothing.

Unless Americans develop an aesthetic which eschews badges and branding nonsense, GM remains doomed. Unless [famous for being famous person] pulls up in a GM vehicle or is seen putting the kids or plying the Ikea booty into a GMC, Chevy or such, I can’t see it happening. I want to believe in a world in which the universally praised so far, Lordstown, Ohio built Chevrolet/Vauxhall/Opel Cruze becomes the default first-new-car purchase not unlike Toyota Corolla was in the 90s and beyond. I want to believe that the if-you-drive-it-you-buy-it GMC Terrain becomes the mom-mobile of the ’10s, like the 245, Caravan/Voyager, and Explorer before. Not only do I want to believe, I do believe. For the Novas that burned me, literally, the Cavalier with the inexplicable mounts which prevented replacement of the head gasket, and of course my well remembered ’68 Impala Hardtop that would not start in the summer without sitting for four hours …

I believe that General Motors, and by extension America and all the dumb asses who live there got the stuff. I don’t understand the Corvette, but by God I know what it means. I don’t want a mid-sized car with a four-speed automatic, but do appreciate that this is the used car I can afford today and it will run for a half-million miles. However …

It’s the people worth paying attention to who matter. If the nice, white people don’t buy into it, it may as well not exist. If Anderson Cooper doesn’t buy a Cadillac CTS why would anyone else? As long as GM broke St. Ronnie’s commandments about, uh, something, why participate? The imminent Chevrolet Cruze could sell in irrational numbers. The Terrain could become an annoying stereotype and it would not matter. The CTS or upcoming full-sized Cadillac could lead to people on all six continents where GM builds and sells automobiles to wonder why the Sonderklasse is allegedly worth the money. The company which builds these machines could provide unprecedented dividends. None of this matters.

What matters is how cool they are. This is the controller of the stock price. GM is terminally uncool. That anyone who attempts to take over the company will lose billions as they sell away the assets is of no consequence. GM broke the rules Whitey just made up and must be punished by death. When the moron capitalists understand the ramifications of their actions, it will be too late.

Understand that the trucks who deliver food to the stores where your servants purchase will not have service parts for a couple of years while that is sorted out. The mechanics who repair or tow your automobiles will not be able to get to the authorized service center. Forget about air conditioning, laundered clothing or delivery services for a few years. Yep, all GM fleet service customers.

As I type it looks like somebody wants to IPO GM before it is stable. The only rationale is to pump and dump. Good luck selling plants in a saturated market. Good luck selling brands in a market which does not care. When you can’t get anyone to sell you food Whitey, I won’t care.

*GMC established a department to cope with the needs of trucking companies in 1911. GM’s Fleet division descends from this.

  1. Graeme permalink
    Tuesday, 17 August, 2010 10:24

    All your whining about what GM is explains exactly why it had to be bailed out. It & the companies that provide parts etc. to it is the last bulwark of American manufacturing. The area is in enough trouble without the failure. The rest of the country is in enough trouble without the failure.

    How does the ‘Government Motors’ stigma help to make a case for the cars? At the first hint of success their competition is going to be reminding everyone who can be persuaded that this company received a bail out.

    I think most of the ‘Whitey’ types you mention understand why the bail out happened. Does the GM consumer?

    Interesting that you complain about celebrities not pimping the GM product, yet there’s a suggested post about Jay Leno meeting the Volt.

    The problem with this analysis is that it’s too emotional. The underclass you’re claiming won’t be able to serve ‘Whitey’ food is scrambling for a foot-hold right now, and both parties at the national level are colluding to import more cheap labor from the south to keep their wages down. There will be plenty of folks to serve, I assure you. Even if they’re buying Fords or Kias.

    In other news, I sampled Del Taco for the first time over the weekend. More about this later. I have to get ready for work. I will be riding my bicycle.


    • Tuesday, 17 August, 2010 19:31

      I did not appreciate the degree of my emotional involvement until re-reading this just now. That connection is remembering 1978 when Cub Cadet/IH, Ford Louisville Assembly, Kroger’s processing and distribution center, Reynolds Metals and several others either shut down or “right sized” operations. To people for whom the concepts of inheritance and investment simply do not exist this was very nearly tragic.

      “Government Motors” is a product of the News Corporation echo chamber and could be forgotten in a matter of weeks, as could Wal-Mart or Coca-Cola. Volkswagen doesn’t have the stigma of government ownership. I believe both Joe Sixpack and Kaitlynne Gated-Community is more concerned about immediate perceived value, peer pressure and financing and related gimmicks.

      I find myself wondering how much the IPO schedule is about absolutely avoiding the potential horror of an eventual car-guy CEO delivering a giant, prop dividend check to the holder of 60%. Perhaps this schedule is about financing in a way which is more abstract than this hillbilly can work out.

      I don’t think Whitey gets why the bailout was done. I don’t think they comprehend the idea of production, manufacturing and transportation. Forget about agriculture. It’s all an abstraction. Employment is based upon one’s ability to not wander too far outside the presumed rules or established fashion. Results are less consequential than fashion. (see: Carly Fiorina)

      When they get Leno or someone of similar acclaim in a vehicle I can go to Val Strough and buy or order today, it will count. It would help if he actually liked it.

      and I might be somewhat less bitter if my grocery stores and laundromats weren’t priced out of the neighborhood and replaced by diner cinemas and not-quite-adult-oriented businesses. At least formal bike lanes are on the main road, so I could ride the eleven-mile round trip to the grocery only getting killed a few times.


  2. Graeme permalink
    Tuesday, 17 August, 2010 21:19

    I think it all depends on who Whitey is, in terms of whether or not they understand why the bailouts were done.

    The IPO is a gimmick. American capitalism is all about stealing as much money as possible quickly & leaving the mess for someone else. Actually, that’s basically what our political elites are doing, too.

    What I find hilarious about the right is that they laud American capitalism, yet they’re quite willing to flush the entire system down the toilet when they don’t get their way. It’s unreal. The ignorance boggles my mind.

    Then again, I was floored that the prof. didn’t correct her misspellings on the blackboard on the first night of class in business school.

    I did have parental pressure that got me to quit bartending & get an MBA. That being said, I don’t actually use the MBA for other than personal amusement. My natural inclination is technology, not people, and not numbers, despite the fact I bulled my way through in 2 years with a concentration in finance while working full time at a job I fucking hated. So I’m going in a more natural direction, albeit stuck working in banks. Unlike much of America, I realize how lucky I am. I’m not really complaining. I have no right.

    But FWIW I don’t have an inheritance. Or I won’t, anyway. My parents are in the process of selling their only asset: their home of 33 years. What I did have was a stable home, a good education, and parents who nagged me to do what they couldn’t do themselves (they were both art majors).

    All that being said, I can’t believe how much I get paid to half-ass my way through work in corporate America. All the propaganda is just hilarious from the inside. I’m sure I’m just laughing at others’ justifications of their own behavior, while I justify my own…

    While I will never root for the underdog all the time (because I think a lot of underdogs are just stupid trash), I do think what’s happened over the last 30 years is total bullshit. We have hollowed this economy out. We’ve ground down labor from middle class consumers to the shit-out-of-luck poor. It’s insanity. Richard Trumka is a figure I’m watching with interest. I’d like to see the AFL-CIO get some traction.

    That’s a whole different topic, though it’s a direction you seem to want to head in. Or maybe I’m mis-interpreting your emotions?

    As for the biking thing, I have to say I like it. You are forced to pay full attention, and every intersection is a negotiation with your fellow man. Most of these interactions are positive, actually. As someone who assumes the worst, this is pleasantly surprising for me.


    • Monday, 23 August, 2010 10:19

      Mr. Hyena, yours is the most fruitful correspondence I’ve had in many years.

      First and foremost, I must apologize for the pre-emptive inheritance slur. This is a product of where I’ve been living and those with whom I associate. In Texas, one is either struggling to get out of the trailer park, Houston’s Fifth Ward or equivalent, the scion of someone corrupt, or brought down to do actual work because the native-born population can’t be bothered to remember to keep the lights on. Well into my thirties, certain decisions, like not buying a new car following my Ranger’s tenth birthday, would precede the well-meaning advice, “Can’t your family help?”

      I do not go out of way to associate with the generally upstanding people not unlike those with whom I was raised in Southwest Jefferson County. Because so many people have been treated as dumbasses by very nearly every enterprise with which they have contact, I suspect much of the present economic malaise, the increased savings rate and decreased outstanding accounts and so forth is caused by folks simply not bothering to participate. At least we’re getting a lot of that in the Minimall Capital of the World.

      The increased consumption of all “package” beverages but decreased ABC receipts in a town whose economy is based in no small part, Sixth Street &c., on regional tourism should be a giant red light on the dashboard. It isn’t of course, because condemning properties which mysteriously burn overnight and developing them into empty buildings is … cool I guess, because I cannot imagine how it generates revenue or offsets costs elsewhere. It continues today despite constant announcements that the RE market is just fine, not overbuilt and paying $3000 every month for a $600 apartment isn’t throwing your money away.

      The big disconnect is the assumption that The Company will always be there, and in Austin especially, that people won’t simply leave the jurisdiction. Another disconnect being demonstrating what is possible, and whether it could possibly make any money. Such as all those Austintatious $4 donut or cupcake food trailers financed with some dope’s retirement fund. If one builds thousands of $400K condos in a town lousy with $600 rental properties the kind of people who expect to pay that kind of money will surely materialize.

      People are leaving the jurisdiction, the banks, the malls; Blockbuster Video is closing their last remaining stores in the area on the first of the month. The radio is filled with an uncommon panic of local automobile advertising, as Texans, of all people, are keeping their cars longer and driving less. Well, the banking sector does play a role with the cars; I admit.

      Nobody knows what to do. At Ground Zero (well, here, Seattle and San Jose) of the internet economy no one can invision how to be productive. Every effort is directed toward some perverse idea of modernity, or coercing consumption of the same old crap under onerous terms. I, for one, have had it.

      That said, I’m probably going to end up buying a new or late model car next year. Dammit. On principle, the Spark is on my shopping list. If one chooses to think in terms of class warfare, it isn’t the kind of people likely to own guns who made the declaration.

      I just keep coming back to this.

      Hereby it is manifest that during the time men live without a common power to keep them all in awe, they are in that condition which is called war; and such a war as is of every man against every man. For war consisteth not in battle only, or the act of fighting, but in a tract of time, wherein the will to contend by battle is sufficiently known: and therefore the notion of time is to be considered in the nature of war, as it is in the nature of weather. For as the nature of foul weather lieth not in a shower or two of rain, but in an inclination thereto of many days together: so the nature of war consisteth not in actual fighting, but in the known disposition thereto during all the time there is no assurance to the contrary. All other time is peace.

      Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.

      P.S. It’s like paying attention behind the wheel is some kind of faux pas. If you can stick to the veloways, you’re pretty much safe. If you should so much as wander through an adjacent neighborhood, you are a target. The word around the campfire is that the PD is handing out tickets for not having a tail light on your bike, without regard to time of day or whether your bike has a tail light. Just when I think this town has reached bottom …


  3. Graeme permalink
    Saturday, 28 August, 2010 12:00

    I agree there is much pressure to do anything but pay attention when behind the wheel. Dense cities force people to do what they don’t have to do on the highway or in a suburban situation.

    As much as I enjoy the biking thing, it does scare the hell out of me.

    I don’t mind the inheritance slur. I got mine front-loaded in the form of private education. It’s a good deal that I appreciate now more than I did at the time (of course).

    When it came time to shoulder the burden & pay for private college, I balked & transferred back to U of L. It was a mistake. It’s all worked out, but there was a distinct difference in quality I didn’t appreciate until I was on the other side of it.

    When I started in the corporate world, I was making $23,000/yr. It was not a compromise I found worthwhile, and it caused quite a rift between my parents & me. It’s a rift that still hasn’t fully healed, I don’t think. I am forced to admit this now that my folks are suffering setback after setback.

    But so are stacks of other Americans who mistook the appearance of wealth for real wealth. Faking it ’til you make it is all-American, but it’s fraught with far more danger than the popular movies admit.

    The developments you mention are evidence that our captains of industry are no better. The business whizzes lauded by American mythology are fallible. And they seem to vote for the party that flatters them. I suppose everyone does.

    9/11 made me realize I’m more of a nationalist than of either party. What I see from the GOP right now is nothing more than the trappings of an incoherent, radical nationalism. It’s not shocking, and I don’t think it has real appeal beyond a certain segment of American consumers. Indeed, this politics doesn’t seem to be about winning. It’s about sales.

    The cynicism is enough to shock even me.

    This is a ramble. I admit it.

    I learned in Denver how much family money there is in the world. No one was from Denver. Everyone had moved in. You either had family money, or you served people who had family money. I think they’ve made a lot of improvements since I lived there (especially in terms of infrastructure), but I still don’t trust that economic situation. It’s the same continual building & crossing of fingers.

    The amazing thing about this, in the case of Denver, is that you can see this process from many different eras. The city is built up on concentric circles of erstwhile boom & bust. It’s all right there on obvious display. People don’t want to see.

    The modern American existence is based on action hero mythology. One man can do everything well. He can do anything, though he may delegate certain things to trusted genius associates if need be, especially if they’re beautiful. It’s INSANITY. I know this pegs me as a ‘coastal elite’ but its UNSUSTAINABLE.

    The bomb has gone off. The fallout will take years to settle. It’s going to be a wild ride.

    Frankly, I’m very pessimistic about commercial real estate. More and more people are working from home. I could be wrong, but between that trend at bigger companies & fewer people able to spend the money to take risks on those precious, boutique businesses… I just don’t see it.


  4. Graeme permalink
    Saturday, 28 August, 2010 12:12

    What I had meant to convey is that I’m not shocked by the beliefs or behavior of the GOP’s proles, but their cynical manipulation of said proles is what shocks me. Their willingness to ride such a tiger is amazing, both for its desperation and its money making potential.

    As someone truly inclined to be conservative when it comes to the humans, I am shocked they believe this can end in electoral victory & not blood and/or fire.

    No, I don’t believe the rich elites want real blood & fire. Yes, they do want the intimidating illusion of it.

    Anyway, I thought that needed clarification. I guess I’m totally off the subject of cars?

    You did mention the banks, and GM’s purchase of a finance arm will definitely get them more cars sold. High interest rate loans default, but that’s why the interest rates are high. Then the cars can be re-sold, generally. You’re right that it’s a niche that needs to be filled in the automobile segment. GM can be the Wal-Mart of the auto industry, and I don’t hate them for that. I hate them for fucking up what ought to be a cash cow.

    I know the past is the past, but they seem to me to be unable to get over their past. That doesn’t bode well for their future, in my opinion. If they’re content to work within the confines of their own strengths, I agree with you there is hope. I just will need to see it to believe it.

    Past performance is no guarantee of future results, but past is absolutely, certainly prologue. It matters.


  5. Sunday, 12 September, 2010 12:05

    Simply, one of the best article l have come across on this precious subject. I quite agree with your suppositions and will eagerly look forward to your forthcoming updates.


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