Professional Documents
Culture Documents
CONTENTS
1 2 3 4 5
DISCUSSION
million Americans have spent more than six months out of work Two million have been unemployed for more than two years Three million people to be registered as long term unemployed in UK.
Local governments have cut essential services including public safety and education
For example:
Americas four largest oil companies have gained $300 billion excess profits.
The average annual salary of New York Banker earn $390,000 annually.
Several unions
Companies are wallowing in cash, but average workers dont have money to spend. Investment decisions, wage rates and government policies are determined largely by people in canopy economy.
CONSEQUENCE OF CANOPY
The well run , successful companies are indeed investing not in people, and not at home. CEOs see far better opportunity in
The extreme wealth was gained not through superior productivity, but via
EXAMPLES:
GE, Boeing, Caterpillar, Ford, GM and Apple
now have on average, about 60%of their sales overseas. Finally it created the financial oligarchy get so amazingly rich particularly during the crisis period. Consequently the new power structure that rules America and lead the world to financial tsunami.
EXAMPLES:
Caterpillar: the heavy equipment manufacturer Caterpillars recent major acquisitions and investments are in China, India and Brazil.
Apple: there are 70 000 employees worldwide including its retail stores. But the largest supplier, Foxconn, a Taiwanese Company, has 1.3 million employees.
GM, Ford and IBM have the same profile. $ 2trillion in cash sitting on American corporate balance sheet, about $ 1 trillion is actually parked overseas
The head office is located in Renaissance Center in Detroit, Michigan, for more details about GM see General Motors (2012b).
On June 1, 2009 General Motors Corporation (old GM) announced its bankruptcy under Chapter 11 and was subsequently reorganized into its descendant, officially named as General Motors Company (new GM).
The company was managed like an institution. It was highly risk-averse, chronically slow to change, endlessly bureaucratic, and contemptuous of competition. General Motors was losing its positions on all important markets relatively to other automakers. In U.S., traditionally known as the core market, GM was selling less and less cars even since 2000 (The New York Times, 2009) and lost one third of its position, covering 28,1% share in 2000 and only 19,8% in 2009.
The extent of these costs was unsustainable in long term, the estimated loss during years 2004 2007 caused by lay of motivation could have reached $50 billion. It is more than the profit of GM during 90s.
The average time it took to GM to assemble a car was 46 hours, Ford needed 38 hours, while Toyota only 29 hours. The extra costs connected with health and pension insurance added to the cost of every car made in U.S. are quantified to be around $1500 (Canis et al. 2010).
GM was unable to rival neither the quality nor the efficiency of other market players, Toyota.
It is example of rigidity of GM and unwillingness to accept new trends and to respond to market needs. 2008 Macroeconomic development after the crisis squeezed the demand for new car.
Obamas presidency agreed on providing financial help, which in the end reached $50 bil.
From todays point of view this legal action could be assessed as successful. GM is producing cars making a profit again trying to get rid of the features that (at least partly) caused its bankruptcy.
What we know is that the process of restructuring is not finished yet, but by now it can be labelled as successful, most important steps is to eliminate inefficiencies.
Questionable is the position of U.S. government, which should fulfil its declaration and divest itself GMs shares as soon as possible.