Auto Industry Bailout?

[AtomicCEO]

So explain whoes fault it is that there is $1500 dollars of health benefits in every GM vehicle. In a Toyota there are $125 dollars of health benefits in every vehicle.

 

Because Toyota makes cars faster with fewer people?

[CaP'N GRuNGe]

Nice try.

 

The ACTUAL Cruze

 

If you don't like the look of the new Fiesta or Kuga, that's your business, but they're both award-winning rides on sale in Europe now, and due to make their way over here for MY2011. The Fiesta is exactly the premium small car (think Honda Fit) nobody thought an American company could build, and the Kuga is everything the Edge was supposed to be but wasn't; a stylish midsize crossover that's a pleasure to drive and neither overly trucky nor overly vannish.

 

Peace

policy

 

You know what would solve a lot of the conceptions of GM products being "cheap"? Get rid of that damn chintzy bow tie logo thing. And this coming from an owner of two GM products.

[caddyman]

Because Toyota makes cars faster with fewer people?

So they make them 10 times faster? I don't think so....union costs might have a little to do with that figure.

[gsmayes]

It's easy for you guys to write off the big three when it isn't your state that would look like the third world if they were to collapse. How much are we spending in Iraq each month and what kind of tax breaks are we giving to oil companies earning record profits each quarter? I think 25 billion is a small price to pay to keep some actual manufacturing in this country. And the money wouldn't be used to run GM for another six months, they know they're business plan is flawed and for the last couple years they've made strides in retooling and buying out bad contracts. But, that takes money and with the current credit crunch they're not able to borrow the money needed to carry out their turnaround strategies. poopy, 25 billion is walking around cash for Henry Paulson.

[Ursa Majoris]

another good op-ed

Can't avoid agreeing with this. Bankruptcy is not the end of the world. Virtually all the major airlines have been through it and emerged stronger and better structured. Sure it's traumatic but propping up private business, however iconic, is a long-term mistake. The market can be relied on to satisfy demand. If NWA had turned up it's toes instead of merging with Delta, the Twin Cities would have been served by other airlines. The auto industry is no different. Why does it matter if cars are manufactured here by Toyota or GM? The taxes are much the same, as is the employment.

 

Worth noting that on the Dow Jones, only one company has existed throughout the life of the Dow. The other 29 are all newer and the original 29 no longer exist. Was that a bad thing?

[Ursa Majoris]

Article from the head of the UAW. While I don't agree with him, it's worth listening to the views of one of the major players in this episode.

 

It's not just for corporate Detroit. It's for workers and Main Streets across America.

 

By RON GETTELFINGER

 

It's time to stand up for the Main Street economy.

 

In the face of a global credit crisis and a worldwide economic downturn, U.S. auto sales have slowed to a crawl. As insecurity spreads throughout the economy, consumers are delaying major purchases -- and those who do visit auto showrooms are not finding credit available on reasonable terms.

 

The domestic auto industry simply cannot succeed in today's unstable economic environment without immediate help from the federal government. And the costs of failure are unacceptable.

 

This isn't just about three large Michigan-based companies and the 240,000 people who work for them, including 150,000 members of the United Auto Workers. It's also about thousands of car dealerships that are anchor businesses in cities and towns across America. It's about thousands of small and medium-size businesses -- employing millions of workers -- that provide parts, logistics, research, engineering and other goods and services to Chrysler, Ford and General Motors. If a major domestic auto company were to fail, a significant number of supplier companies would also be in jeopardy. This would quickly affect all the companies that produce autos in the United States -- including Toyota, Honda and Nissan -- because many of them buy parts and services from the same group of suppliers.

 

A major disruption in the auto-supply chain would quickly curtail production at auto plants, whether domestic or foreign-owned, throughout the United States. The cost of failure at even a single U.S. automaker would be millions of lost jobs and hundreds of billions of dollars' worth of lost sales and revenue spread across all 50 states.

 

In addition, more than a million retirees and dependents receive pension and health-care benefits from Chrysler, Ford and GM. If these companies are unable to meet their obligations, the human toll on retirees and their families will be devastating. It's also possible that the failure of these companies could impose severe costs on the federal pension guaranty program and public health-care programs.

 

In the face of a looming economic catastrophe, it's disappointing to see the Washington Post and some of its opinion writers indulge in old-fashioned Detroit-bashing -- especially since these observers seem to be writing about the domestic auto industry of the 1970s.

 

It is not the actions of our members that have caused the crisis in today's auto industry; the crisis is being driven by economic factors that have nothing to do with labor costs or factory performance. To the contrary, our contracts have put our employers in a position to compete.

 

The reality of today's auto industry is that union-made vehicles are winning quality awards and that union-represented factory workers are winning productivity awards. A Nov. 8 Post editorial claimed that unionized auto manufacturers pay "wages and benefits that far exceed those of non-union competitors," but recent labor negotiations with Chrysler, Ford and GM addressed this alleged wage and benefit gap.

 

Our 2007 labor negotiations with the companies transformed the domestic auto industry; when the agreements we reached have been fully implemented, they will largely or even completely eliminate the labor-cost gap between unionized auto plants and our nonunion competitors. One analyst has estimated that as a result of our contracts, GM will soon enjoy a labor-cost advantage over Toyota.

 

The various demands for cuts in the wages and benefits of active and retired autoworkers as a condition of federal assistance are curious -- and extremely unbalanced. To my knowledge, no one has proposed cutting the compensation of everyday active or retired bankers, bond traders, and office or building personnel who work at AIG, Bear Stearns or the numerous banks that have received billions in federal aid. Why is it only autoworkers who are singled out for this dubious honor?

 

Besides being unfair, government-mandated wage and benefit cuts make no economic sense. In the midst of the most severe recession in decades, the last thing we should do is take money out of the pockets of working families, since it is consumer spending that drives two-thirds of all U.S. economic activity.

 

President-elect Barack Obama has described auto manufacturing as "the backbone of the American economy," and bipartisan efforts are underway in Congress to provide strategic assistance for this critical U.S. industry. It's a good deal for U.S. taxpayers -- because the alternative is lost jobs, closed businesses and shattered communities, which would impose severe human and economic costs on all of us for many years to come.

 

Ron Gettelfinger, president of the United Auto Workers, wrote this article for the Washington Post.

Edited November 15, 2008 by Ursa Majoris

[AtomicCEO]

So they make them 10 times faster? I don't think so....union costs might have a little to do with that figure.

 

I think we're both right, along with several other things.

[evil_gop_liars]

Chinese Automakers May Buy GM and Chrysler

[AtomicCEO]

Chinese Automakers May Buy GM and Chrysler

 

See! Everything is going to be fine.

[detlef]

There was an interesting Op-ed in the NY Times comparing this to when Thatcher bailed out a major British Automotive Company that had just gotten lazy and behind the times. Turns out a bunch of money didn't fix that either. I took a quick look but couldn't find it.

[Furd]

There was an interesting Op-ed in the NY Times comparing this to when Thatcher bailed out a major British Automotive Company that had just gotten lazy and behind the times. Turns out a bunch of money didn't fix that either. I took a quick look but couldn't find it.

 

 

British Leyland.

[Jimmy Neutron]

I think this article gets it right

 

We can't just throw money at this problem. Existing management needs to go, the UAW needs to make major concessions (ore preferably just die) and retirees will need to take a serious cut in the crazy benefits they receive.

[CaP'N GRuNGe]

There's a silver-lining to that. The more American companies and land the Chinese own, the less likely they'll invade.

 

Yep. They'll just buy everything up and reduce our workforce pay and benefits to the level of the typical Chinese citizen. I for one look forward to our new Chinese overlords and the lead based toys and melamine laced food they will provide for us.

[AtomicCEO]

I think this article gets it right

 

We can't just throw money at this problem. Existing management needs to go, the UAW needs to make major concessions (ore preferably just die) and retirees will need to take a serious cut in the crazy benefits they receive.

 

It seems like it would be up to the workers to limit the unions, right? Why would they force a situation that they knew would kill their jobs? What benefit is there to that?

 

I don't want the government to intervene with the union any more than I want them to bail out the company. This is for union members to work out with the union, and for the union to work out with GM. But, I do know that the executives have far less to lose in this than the workers so you'd assume they would be the ones less motivated to change anything.

[muck]

Proposed bail out = $25 billion

 

GM Market Capitalization = $1.7 billion

Ford Market Capitalizatoin = $3.6 billion

Chrysler = privately owned

[wirehairman]

Just throwing this out there from Monday's Detroit Free Press to add a perspective from the other side.

 

6 myths about the Detroit 3

BY MARK PHELAN • FREE PRESS COLUMNIST • November 17, 2008

 

The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are six myths about the companies and their vehicles, and the reality in each case.

 

Myth No. 1: Nobody buys their vehicles.

 

Reality

 

General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.

 

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.

 

Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

 

Myth No. 2: They build unreliable junk.

 

Reality

 

The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

 

Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

 

Myth No. 3: They build gas-guzzlers.

 

Reality

 

All of the Detroit Three build midsize sedans the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic. A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.

 

Myth No. 4: They already got a $25-billion bailout.

 

Reality

 

None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.

 

Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs.

 

Reality

 

The domestic companies' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry. The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel economy ratings than Toyota and Nissan's full-size pickups.

 

Myth No. 6: They don't build hybrids.

 

Reality

 

The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.

Edited November 19, 2008 by wirehairman

[AtomicCEO]

That sounds like PR, wire.

[Azazello1313]

It seems like it would be up to the workers to limit the unions, right? Why would they force a situation that they knew would kill their jobs? What benefit is there to that?

 

that's sorta the $50 billion question, isn't it. maybe because they know the democrats will ultimately bail them out? and let's not kid ourselves, that is exactly who this bailout is aimed at. if the companies go into bankruptcy, there are assets there that will be bought and put to use by someone else. there will be new jobs, but all those old ridiculous union contracts will be kaput. the people with the most to lose here are the detroit corporate bureaucracy and the UAW. thankfully for both of them, they have bought lots of friends in washington.

[dmarc117]

The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

 

[Azazello1313]

Just throwing this out there from Monday's Detroit Free Press to add a perspective from the other side.

 

if they were really so great they probably wouldn't all be on the verge of bankruptcy.

[Furd]

Just throwing this out there from Monday's Detroit Free Press to add a perspective from the other side.

 

A few things that aren't myths that seem to be getting swept under the rug:

 

The Big 3 have too many people building too many cars with too many models and too many divisions. Its ungodly inefficient from every perspective - design, engineering, building, marketing, sales, etc.

 

Its chiefly for this reason that I am against the government giving them 25 bil or whatever unconditionally.

[westvirginia]

that's sorta the $50 billion question, isn't it. maybe because they know the democrats will ultimately bail them out? and let's not kid ourselves, that is exactly who this bailout is aimed at. if the companies go into bankruptcy, there are assets there that will be bought and put to use by someone else. there will be new jobs, but all those old ridiculous union contracts will be kaput. the people with the most to lose here are the detroit corporate bureaucracy and the UAW. thankfully for both of them, they have bought lots of friends in washington.

 

 

Winner, winner chicken dinner.

 

 

ETA: the pilots union nearly single-handedly killed Easter airlines. Does no one remember that?

Edited November 19, 2008 by westvirginia

[dmarc117]

the UAW spent too much money in this election. they will not concede a thing. they will get bailed out. good times.

[Azazello1313]

so consumer reports rates all vehicles, and it has a 2-tier recommendation. if you're a subscriber you can hit the link here. a rough eyeball guess would be that about a third of all models are recommended, with about half of those getting the full second-tier recommendation. here's a list of a few brands, how many models they have, and how many of their models got recommendations, then a percent:

 

buick - 3 models, 1 tier1, 0 tier2 - 33%

cadillac - 6 models, 1 tier1, 0 tier2 - 17%

chevrolet - 23 models, 2 tier1, 2 tier2 - 17%

chrysler - 9 models, 0 tier1, 0 tier2 - 0%

dodge - 17 models, 0 tier 1, 0 tier2 - 0%

ford - 20 models, 5 tier1, 5 tier2 - 50%

GMC - 10 models, 1 tier1, 0 tier2 - 10%

jeep - 6 models, 0 tier1, 0 tier2 - 0%

pontiac - 8 models, 1 tier1, 0 tier2 - 12%

 

acura - 5 models, 0 tier1, 3 tier2 - 60%

bmw - 11 models, 4 tier1, 3 tier2 - 64%

honda - 15 models, 3 tier1, 9 tier2 - 80%

hyundai - 14 models, 3 tier1, 5 tier2 - 57%

infiniti - 7 models, 0 tier1, 5 tier2 - 71%

lexus - 10 models, 5 tier1, 4 tier2 - 90%

mazda - 12 models, 7 tier1, 2 tier2 - 75%

nissan - 18 models, 6 tier1, 6 tier2 - 67%

subaru - 11 models, 4 tier1, 7 tier2 - 100%

toyota - 23 models, 6 tier1, 13 tier2 - 83%

[Azazello1313]

How about everyone from top-down takes a pay cut?

 

Make the first, say, $30k exempt so the dude barely getting by sweeping the floor can still put food on the table for his family. But after the exempt portion, everyone take a, say, 30% pay reduction.

 

Write that into the legislation, make it part of the bail out offer. That should bring some crazy union negotiated salaries back in line with reason?

 

I don't really want the government bailing them out regardless, but if they did, I wouldn't be opposed to what you describe. of course, the executives and the UAW could negotiate something like this just between themselves without government intervention and it would solve a lot of their problems. but they haven't, and they won't, and it will never be part of any legislation the democrats pass. much easier to just put your hand out and let all that money you spend in elections come back home to roost.

Edited November 19, 2008 by Azazello1313