GM's Challenges

At the beginning of 2006, I blogged about the investment opportunities for GM. Had I pursued it, the investment would have been excellent. But, it wasn't sour grapes that resulted in my year-end criticism of the management's deflection of Kirk Kerkorian's inputs. What he was attempting to fix, that Wagoner et al. are still in the throes of, is graphically illustrated here.

The structure of compensation creates significant differences between companies. GM pays cash compensation similar to Chrysler, but more than Ford, while paying benefits similar to Ford, but more than Chrysler. The net result is that GM pays out compensation per unit produced at a level roughly 25% greater than Ford or Chrysler pays out. This is only comparing GM to the domestic competitors; the contrast to foreign competitors is even more striking. Stay tuned; this will get really interesting.