GM in trouble

General Motors has been facing some major issues this past year. The outrageous gas prices killed its forcasts on sales of trucks and SUVs. This was unfortunate due to how much money GM had put into these two lines recently. However this is not necessarily the company's biggest concern. GM is trying to rewrite its health care benefits. According to a new plan, GM would be able to cut $3 billion a year (pretax) for hourly retirees. This would result in an annual savings of $1 billion/year. This would be extremely beneficial and may even assist in saving the "life" of GM considering the $1.3 billion lost in the past quarter. To top off the company's struggles, its stock hit a 23-year low last week at $22.74/share. When facing such issues, I believe it to be of great importance to bring in economists and have them do studies which will assist in the decision making process. Accountants and financial workers will know what needs to happen concerning the financial side, but an economist can help the company see consumer trends which will point the company in the right direction concerning the production of a product that will sell.


Anonymous said...

I don't think that economists would help much. Most of their forecasts are about as useful as used toilet paper. You know why economists are here? To make the weather man look good.

Dr. Tufte said...

Kinda catty, don't you think? Especially given the expertise in other business fields at forecasting the past rather than the future.

GM doesn't need economists now. They need economists to be sent back in time to talk to their managers about the incentives they are setting up. GM's healthcare cost problems go back to poor negotiating decades ago.

Anonymous said...

its because of all the been counters that causes these problems in the first place and not listerning to the people on the front line that know what works