Mitt Romney on the Detroit Autos

[2centsworth]

http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2




IF General Motors (http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org), Ford (http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?inline=nyt-org) and Chrysler (http://topics.nytimes.com/top/news/business/companies/chrysler_llc/index.html?inline=nyt-org) get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.
First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW (http://topics.nytimes.com/top/news/business/companies/bayerische_motoren_werke_ag/index.html?inline=nyt-org), Honda (http://topics.nytimes.com/top/news/business/companies/honda-motor-co-ltd/index.html?inline=nyt-org), Nissan and Toyota (http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?inline=nyt-org). Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.
That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.
Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.
The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers (http://topics.nytimes.com/top/reference/timestopics/organizations/u/united_automobile_workers/index.html?inline=nyt-org), said to my father, “Getting more and more pay for less and less work is a dead-end street.”
You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.
The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.
Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.
Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.
The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

[baseline bum]

Sounds good in theory, but how are we going to force their hands into firing all the top dogs running Detroit into the ground? Surely their board isn't going to fire itself. Just as surely their board will never accept a bail-out that calls for them to fire each other. Even with that, Detroit's management isn't an isolated case, and this shortsighted slash-and-burn philosophy of short term success at the expense of the future is what has been taught for years in business schools and what has dragged our country down the toilet.

[doobs]

Sounds good in theory, but how are we going to force their hands into firing all the top dogs running Detroit into the ground? Surely their board isn't going to fire itself. Just as surely their board will never accept a bail-out that calls for them to fire each other. Even with that, Detroit's management isn't an isolated case, and this shortsighted slash-and-burn philosophy of short term success at the expense of the future is what has been taught for years in business schools and what has dragged our country down the toilet.

Please understand the difference between the board and management. The board exercises a supervisory role, for the most part; basically, the board hires and fires the professionals who actually manage the corporation. Regardless, the board exists to serve the shareholders, and, as such, the law imposes a fiduciary duty of the board. And the shareholders ultimately elect the board.

Anyway, Romney is right. If you bail out the auto industry, you'll only be rewarding their dysfunction. The best way to reform these companies is to make them reform themselves. Without federal bailout money, some companies will fail, but the good ones will address their problems and, ultimately, thrive.

[baseline bum]

Please understand the difference between the board and management. The board exercises a supervisory role, for the most part; basically, the board hires and fires the professionals who actually manage the corporation. Regardless, the board exists to serve the shareholders, and, as such, the law imposes a fiduciary duty of the board. And the shareholders ultimately elect the board.

Anyway, Romney is right. If you bail out the auto industry, you'll only be rewarding their dysfunction. The best way to reform these companies is to make them reform themselves. Without federal bailout money, some companies will fail, but the good ones will address their problems and, ultimately, thrive.

Which one is the good one? None of them will survive without continued corporate welfare, and none of the three deserve to.

[MannyIsGod]

And how is any of this going to happen without the bailout? Once GM declares bankruptcy its all over. Who's going to buy a GM car when they're about to go under? Hell, I wouldn't buy a GM car NOW so maybe they're just flat out fucked.

[Drachen]

And how is any of this going to happen without the bailout? Once GM declares bankruptcy its all over. Who's going to buy a GM car when they're about to go under? Hell, I wouldn't buy a GM car NOW so maybe they're just flat out fucked.


I think that this is the point. He is saying that there will be a post-bankrupcy bailout to get them the bankrupcy financing they need to get them back on their feet. With all the bloated contracts gone, they could focus on developing better cars (to their credit at least ford has been doing this and several of their models have been elevated to having higher scores then their Japanese counterparts, imagine what they could do with $2000 more/car in features or R&D). It won't be an easy road back, but they could come back stronger.

[implacable44]

I think that this is the point. He is saying that there will be a post-bankrupcy bailout to get them the bankrupcy financing they need to get them back on their feet. With all the bloated contracts gone, they could focus on developing better cars (to their credit at least ford has been doing this and several of their models have been elevated to having higher scores then their Japanese counterparts, imagine what they could do with $2000 more/car in features or R&D). It won't be an easy road back, but they could come back stronger.

The first thing they need to do is boot the union - $76/ an hour to build a car - get the heck out of here.

[doobs]

Which one is the good one? None of them will survive without continued corporate welfare, and none of the three deserve to.

That may be true. In which case, screw 'em. Precisely why we shouldn't bail them out.

[Anti.Hero]

Fire everyone and let the government run everything.

[AZLouis]

And how is any of this going to happen without the bailout? Once GM declares bankruptcy its all over.

This article suggests otherwise...

http://online.wsj.com/article/SB122688631448632421.html


Why Bankruptcy Is the Best Option for GM

Chapter 11 would better preserve the valuable parts of the company than an ad hoc bailout.

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

Consider the costs of tackling GM's problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of "change," GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

GM's solution is to ask the federal government for the cash that will allow it to do all of this piece by piece. But much of the cash will be thrown at unproductive commitments. And the sense of urgency that would enable GM to make choices painful to its management, its workers, its retirees, its suppliers and its localities will simply not be there if federal money is available. Like AIG, it will be back for more, and at the same time it will be telling us that it's doing a great job under difficult circumstances.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn't be easy but, unlike trying to bail out GM as it is, it wouldn't be impossible.

The social and political costs would be very large, but if GM fails after getting $50 billion or $100 billion in bailout money, it'll be just as large and there will be less money to soften the blow and even more blame to go around. The PBGC will probably need money to guarantee GM's pensions for its white- and blue-collar workers (pension support is capped at around $40,000 per year, so that won't help executives much). Unemployment insurance will have to be extended and offered to many people, perhaps millions if you include dealers, suppliers and communities dependent on GM as it exists now. A GM bankruptcy will make addressing health-care coverage more urgent, which is probably a good thing. It would require job-retraining money and community assistance to affected localities.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won't be able to carry the weight of GM's past.

GM CEO Rick Wagoner says "bankruptcy is not an option." Critics of a bankruptcy say that GM won't be able to get the loans it will need to guarantee warranties, pay its operating losses while it restructures, and preserve customers' ability to finance purchases. While consumers buy tickets from bankrupt airlines, electronics from bankrupt retailers, and apartments from bankrupt builders, they say consumers won't buy cars from a bankrupt auto maker. But bankruptcy no longer means "liquidation" or "out of business" to a generation of consumers used to buying from firms in reorganization.

GM would guarantee warranty support with a segregated fund if necessary. And debtor-in-possession (DIP) financing -- loans that provide the near-term cash for reorganizing companies -- is very safe, because the DIP lender has priority over all other claimants. In normal markets, it would certainly be available to a GM that has assets to sell, including a viable overseas business. Such financing is probably available even now.

In any event, it would be lined up before a filing, not after, so any problems wouldn't be a surprise. As a last resort, we could at least consider a public DIP loan to support a reorganizing GM with a good chance to survive -- as opposed to subsidizing a GM slowly deflating.

The fate of Daewoo -- the Korean auto maker that collapsed in 2000 after filing for bankruptcy, leaving about 500 dealers stranded in the U.S. -- is often cited as "proof" that a GM bankruptcy won't work. But Daewoo was headquartered in a part of the world where bankruptcy still carries a major stigma and usually means liquidation. Daewoo's experience is largely irrelevant to a major U.S. company undergoing a well-publicized positive transformation, almost certainly under new management.

GM as it is cannot survive without long-term government life support. If it gets that support, it can't change enough and won't change fast enough. Contrary to Mr. Wagoner's brave declaration, bankruptcy is an option. In fact, it's the only option that merits public support and actually has a chance at succeeding.

[Drachen]

This article suggests otherwise...

http://online.wsj.com/article/SB122688631448632421.html


here here!

[2centsworth]

Let them reorganize. They are not going to disappear because there is money to be made. Plus, even if they did disappear, that would create a huge opportunity for another stronger domestic auto company.

[boutons_]

GM in bankruptcy would still needs tons of cash.

Lenders aren't lending to each other, never mind roadkill like GM.

The US would still have to be the main lender, the "debtor-in-possession". And the taxpayer would be on the hook for the GM pension obligations, as it was for bankrupt Delphi.

But bankruptcy does seem to the best way to force the changes that GM has refused to and/or been unable to make.

But a lot of people, esp dealers and employees, are gonna get smashed in the mouth.

Then there's Ford, and Chrysler, and, and and ... ?

[baseline bum]

Won't GM have erased most of that disparity with Japanese automakers' hourly wages by 2010 due to turning over all retirement benefits to the UAW? GM's final payment into the UAW's retirement fund in 2010 ends their responsibilities for retirement benefits. Basically it seems like GM is just trying to get us to make their payment to the fund. It doesn't look like they're going under in the long term because of the UAW.

[Tully365]

This whole debate is annoying because US auto makers have for a very long time been almost allergic to innovation, efficiency, and ordinary common sense. GM could have produced sensible cars that appeal to millions of people, and instead focused on gluttonous napolean-complex monstrosities like the Hummer. If we as a country had simply followed the lead of Presidents Ford and Carter on this issue, I think the current crisis would be far less devastating than it is.

http://www.energybulletin.net/node/9657

http://query.nytimes.com/gst/fullpage.html?res=940DE2DF1038F932A2575AC0A96E9482 60

http://www.boston.com/news/nation/articles/2007/07/30/new_rules_weighed_for_auto_efficiency/

[2centsworth]

Won't GM have erased most of that disparity with Japanese automakers' hourly wages by 2010 due to turning over all retirement benefits to the UAW? GM's final payment into the UAW's retirement fund in 2010 ends their responsibilities for retirement benefits. Basically it seems like GM is just trying to get us to make their payment to the fund. It doesn't look like they're going under in the long term because of the UAW.

Link? I'm not an expert on this particular situation, but I haven't read where GM pay-up all retirement benefits, including healthcare cost. If that's the case, I would imagine that would be an astronomical number close to $100 billion or so.

anyways, a link would be cool.

[boutons_]

Gambling Debts: GM and Credit Default Swaps (http://oxdown.firedoglake.com/diary/1884)


http://firedoglake.com/

==========

Chinese Want To Buy the Big 3 Automakers (http://www.huffingtonpost.com/jane-hamsher/chinese-want-to-buy-the-b_b_144920.html)

http://www.huffingtonpost.com/jane-hamsher/chinese-want-to-buy-the-b_b_144920.html?view=print

wow

[baseline bum]

Union panel approves GM contract (http://articles.latimes.com/2007/sep/29/business/fi-gm29)

September 29, 2007 in print edition C-3

General Motors Corp.’s new contract with the United Auto Workers was unanimously approved Friday by a panel of union officers, clearing the way for a vote by rank-and-file members within 12 days.

Under the four-year agreement, GM will put $29.9 billion into a retiree health trust fund that takes effect in January 2010, according a union summary. GM will continue to pay retiree healthcare costs at the current rate, estimated to total $5.4 billion, until the fund takes over, the UAW said.

The deal, highlighted by the retiree fund, included other provisions that GM Chief Executive Rick Wagoner said he required to close a $25-to-$30-an-hour labor gap with Toyota Motor Corp. In exchange for the concessions, UAW President Ron Gettelfinger gets job guarantees and pay improvements for his workers.

“The UAW took care of their membership; GM took care of their shareholders,” said Richard Block, a labor professor at Michigan State University. “The people who will be voting on this will be pretty happy.”

About 175 officials from UAW locals voted on the accord at a meeting of the union’s National Bargaining Council in Detroit. The vote in favor was unanimous, Gettelfinger said. He said he expected the union’s 73,000 GM members to approve the deal as well.

Detroit-based GM declined to comment.

The union said the average worker would gain $13,056 over the life of the agreement, based on a 2,080-hour year and 10% overtime. That includes a $3,000 bonus in the first year with a 3% bonus in the second year, 4% in the third and 3% in the fourth. An assembly worker’s hourly rate will rise to $28.85 at the end of the fourth year from $28.12.

GM, the largest U.S. automaker, and the union reached the agreement Wednesday after a two-day strike. If ratified in votes scheduled through Oct. 10, it would replace a four-year contract that expired Sept. 14.

[2centsworth]

So $40 billion to pay-up healthcare for retirees. What are the healthcare cost for current employees? Then take into account retirement benefits. It doesn't seem like my $100 billion figure was too far off.

[baseline bum]

I misread it. Apparently a lot of reducing that $25/hour gap is also in offering buyouts to current workers covered under the original plan and not paying those ridiculous benefits with their new generation of hires.

[Bigzax]

fuck em.

[Anti.Hero]

They quit making the Hummer H1 Alpha :(

[doobs]

What role, if any, have CAFE standards played in the decline of the Big 3?

[Drachen]

What role, if any, have CAFE standards played in the decline of the Big 3?

The lax enforcement of CAFE standards have KILLED the Big 3. If the standards would have been increased and more stringent, they would not be losing market share to the car companies that made fuel efficiency a priority (and are still healthy by the way).

[boutons_]

the useless current CAFE standards are what the Big3 wanted, and they fought/bought aggressively against more aggressive CAFE standards, which should be part of any rescue plan.

[baseline bum]

If you ship this country's jobs to Mexico, you lose the right to come put your hand out and beg for help from the same taxpayers you screwed over.

[Aggie Hoopsfan]

Is it right to tax the average worker making $28.50 to bailout workers whose labor cost is over $73 an hour?”

http://www.cnsnews.com/public/content/article.aspx?RsrcID=39499

[ducks]

Fire everyone and let the government run everything.

you want them to change your diapers to?

[Heath Ledger]

If anyone should be bailing out the auto industry it should be the Oil companies. They have laid in bed with them for many years turning a blind eye to fuel economy and pumped out all of those 9mpg suv's.

If they collapse so be it, let someone else scoop them up and restrucutre them, even if its Toyota. Businesses fail all the time, why should they get a get out of jail free car? Just because they have been around for a long time?

[boutons_]

"They have been steadily losing money for a generation. Their predicament has nothing to do with today's credit crunch or the stock market crash. It has to do with their being incorrigible foul-ups. Their record for money-losing is beyond comprehension. David Yermack, professor of finance at New York University's Stern School of Business, has calculated (http://online.wsj.com/article/SB122669746125629365.html) how much capital the car companies have destroyed over the last few decades.

He writes (http://online.wsj.com/article/SB122669746125629365.html), "General Motors and Ford...between them...destroyed $110 billion in capital between 1980 and 1990.... GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998. As a society, we have very little to show for this $465 billion."

http://www.alternet.org/module/printversion/107789

[Thunder Dan]

we will pay regardless, either it's bailing them out, or it's paying through higher taxes to help out the people left unemployed and uninsured. It's silly that some of you think that the collapse of these 3 will not affect you at all

I guess nobody understands that the estimated 3,000,000 people that will lose their jobs will now be collecting unemployment, and the million or so other folks that were receiving pensions and benefits now will apply for other government services funded by YOU.

And the banks that were just bailed out..where do you think a large portion of their profit comes from? Car loans

and you think Toyota and Honda are good and cheap now? wait until they have no competition and their prices tags skyrocket, and quality goes down once their workers start demanding higher wages.

[MannyIsGod]

we will pay regardless, either it's bailing them out, or it's paying through higher taxes to help out the people left unemployed and uninsured. It's silly that some of you think that the collapse of these 3 will not affect you at all

The point I made in another thread is that its going to be more expensive to let them fail and people don't realize that. Its a rock and a hard place situation and someone needs to make some correct judgement as to which way is the best to take.

I'm going to admit the the audacity of these fuckers to show up in private jets really pissed me off yesterday.

[Thunder Dan]

it's also funny to see government officials scold business men about not running a business properly- if this country were a business it would have failed about 50 times by now

[MannyIsGod]

Say what you will, but I think right now an 8 year old with a lemonade stand has a right to scold these fuckers.

[Thunder Dan]

The point I made in another thread is that its going to be more expensive to let them fail and people don't realize that. Its a rock and a hard place situation and someone needs to make some correct judgement as to which way is the best to take.

I'm going to admit the the audacity of these fuckers to show up in private jets really pissed me off yesterday.

It's their lifestyle and that is part of the problem- it's not just their CEO's, it's every CEO. They don't know struggle. They have lived the life way too long to see the other side.

That said, I'm for dismissing the CEO's but what does that solve? GM has very favorable deals with the Unions that will start in a year and a half, that is a big step, but they can't get to that point the way things are right now.

I honestly don't know what to do, it's not my job, I'm just not one of those people that sees "bailout" and "$25 billion" and instantly revolt against it. If 3,000,000 more jobs are lost, it will just spiral down into EVERY single sector in this country. People I guess can't understand that. These people are just like you and I. They eat out, they buy Christmas gifts- everything. You think times are tough now... if these companies fail you will see giant companies go under that you never saw coming.

[boutons_]

"It's silly that some of you think that the collapse of these 3 will not affect you at all"

The Treasury would be creating money, at it is for the financial sector robbery, selling debt to foreigners (if it can). The interest, in real money, must be paid(exported) on time, no defaulting, or the foreigners would not buy the debt in the first place.

Same story with the bogus GWOT, which is totally financed by debt, not by raising taxes.

The Repug/conservative ideology is to bankrupt the federal govt (exorbitant bullshit spending + tax cuts) so the govt will forced to cut spending later. Moving spending from taking care of citizens, infrastructure, research, etc. to spending on bullshit wars and subsidizing the MIC.

[MannyIsGod]

I think large numbers have been tossed around so much that people just don't get the ramification of 3 million people losing their job for any period of time over the next year. Its huge, and no matter what we won't recover it fully and it will take a while for the economy to absorb that; especially when you consider the state things are currently in.

I think CEO compensation right now is simply out of control. CEOs are simply not that valuable to the company. Its gotten out of control and one of the biggest problems we face today is short term stock price manipulation for the gain of these individuals at the cost of long term viability for the companies in question.

I don't know how to solve the problem because its main root is the apathy of shareholders - many of whom don't care more than watching that stock price go up. I'm just so disillusioned with free market economics right now that I'm not sure how to think of all these situations.

[Thunder Dan]

All I'm saying is that GM CAN make money- I don't know about the others, but GM makes profits in other countries. The problem they have here is the union's legacies are sucking them dry. They are a business that can make money if they can get that mess sorted out. I have no idea how do do it, and I'm not for just telling 100,000 65 year old men they no longer has medical insurance.

I also know that I live 3 hours from Michigan, and that is way to close if these companies fail. I can't imagine what will happen, but I read an article that says that state will turn into a 3rd world country. Southern Michigan has (I'm guessing) about 80% of their population that depends on the auto industry in one way or another. That includes stores where people that work for these companies shop.

I really think this is the problem with America right now. Nobody gives a shit about others. It's easy to sit in Texas and say "well I'll still have a job, so I don't care" but these are people like you and me- it could be us on the other end.

[DarkReign]

If you ship this country's jobs to Mexico, you lose the right to come put your hand out and beg for help from the same taxpayers you screwed over.

:tu

Fuckin-a.

[baseline bum]

All I'm saying is that GM CAN make money- I don't know about the others, but GM makes profits in other countries. The problem they have here is the union's legacies are sucking them dry. They are a business that can make money if they can get that mess sorted out. I have no idea how do do it, and I'm not for just telling 100,000 65 year old men they no longer has medical insurance.

I also know that I live 3 hours from Michigan, and that is way to close if these companies fail. I can't imagine what will happen, but I read an article that says that state will turn into a 3rd world country. Southern Michigan has (I'm guessing) about 80% of their population that depends on the auto industry in one way or another. That includes stores where people that work for these companies shop.

I really think this is the problem with America right now. Nobody gives a shit about others. It's easy to sit in Texas and say "well I'll still have a job, so I don't care" but these are people like you and me- it could be us on the other end.

It's easy for you to tell someone in Texas, well, you should pay for my area's fuckups. Sucks that it's going to pull the plug on a dying state, but there's no way a free market can work when badly run companies can get free money to allow them to continue their backwards ways. Aside from that, fuck GM; they couldn't give a shit about this country seeing the way they have gone running to Mexico at the expense of the American worker for the past 20 years. We don't owe shit to GM.

[Drachen]

we will pay regardless, either it's bailing them out, or it's paying through higher taxes to help out the people left unemployed and uninsured. It's silly that some of you think that the collapse of these 3 will not affect you at all

I guess nobody understands that the estimated 3,000,000 people that will lose their jobs will now be collecting unemployment, and the million or so other folks that were receiving pensions and benefits now will apply for other government services funded by YOU.

And the banks that were just bailed out..where do you think a large portion of their profit comes from? Car loans

and you think Toyota and Honda are good and cheap now? wait until they have no competition and their prices tags skyrocket, and quality goes down once their workers start demanding higher wages.

I think the point is that in the long run it would be cheaper to absorb the cost of the unemployment for these 1.5M-3M workers so that we can allow GM to go bankrupt, reorganize, get a completely new business model, and continue operating as a profitable company. The reason for this is that of these 1.5M-3M people many (but not all of them) will be able to come back when GM gets out of bankrupcy. Not only that, but the 1.5M-3M people arent even necessarily going to lose their job since GM will continue operating. This is the number of people who will be AFFECTED by ALL of the Big 3 filing. The reason why some people prefer this route is because they feel that it is a lot cheaper to absorb the cost of supporting these people temporarily to produce a leaner, more profitable company (hello, we are probably getting nothing in taxes from GM, et al), than it would be to have to throw 25B every few years (not to mention the plethora of other industries that will come asking for cash) at these companies because thier business model is in little shards.

Lastly I do want to say that while your point about Hondas, Toyotas, et al may hold some water (less comp, higher prices), but A. I think this will correct itself relatively quickly as there are companies that are healthy that don't even sell cars in the US, and of the one's that do they will see an opportunity, and ramp up production to fill the void and take market share (VW for example). Also, if as you say 3M people are losing their jobs in the auto industry, there is no way that the workers at the Honda and Toyota plants make peep about higher wages knowing that there is a glut of experienced workers on the market. That is just economics 101 supply and demand.

[boutons_]

The big problem with bankruptcy is where is GM going to get the loans/cash to operate?

The govt would still have to loan, or guarantee, the cash to GM.

[Drachen]

The big problem with bankruptcy is where is GM going to get the loans/cash to operate?

The govt would still have to loan, or guarantee, the cash to GM.

I think that would be fine, I wouldn't mind loaning money to a leaner company that is better prepared to compete and has a chance to turn a profit. I would much rather do that then to GIVE money to a company for no other reason than to temporarily glue together a shattered company that is obviously a day late and a dollar short.

[2centsworth]

The big problem with bankruptcy is where is GM going to get the loans/cash to operate?

The govt would still have to loan, or guarantee, the cash to GM.

Start liquidating assets. Bankruptcy will force the hand of the UAW or watch the company disappear. With interest expense savings and cost reductions, Gm should come close to closing the $3billion per month hole.

[spurster]

1. Allow bankruptcy so that any change is on the table.

2. Government bailout through buying shares.

3. After you get government control, hire Mitt Romney to fix it. Well, hire somebody who will remake these companies in the style of successful auto companies like Toyota, Honda, etc., and the CEOs and the union be damned.

[DarkReign]

Auto state senators reach bailout deal (http://detnews.com/apps/pbcs.dll/article?AID=/20081120/AUTO01/811200430)

[8ft.tall.tejano]

i say move em to a "at-will" state....um...like TEXAS...to save the cost of the unions....make them completely redesign the products that they have to compete better w/japanese automakers so americans will actually buy them...

[kwhitegocubs]

Uggh, I don't like the UAW, but at-will is bullshit.

[8ft.tall.tejano]

yea...i mean is it really such a bad thing to think that your boss will fire you if you don't do your job...and you can't get overpaid without having any real skill...
no one likes to be held responsible for their own actions...

[boutons_]

Waxman Topples Dingell For Energy And Commerce Chair

http://www.nytimes.com/2008/11/21/us/politics/21dingell.html=


A huge victory for environmental progress.
A huge defeat for Big3 automakers.

[kwhitegocubs]

Overpaid and paid fairly are obviously different. Without unions a lot of low skill workers won't be paid fair, living wages. Hate to break it, but everyone isn't blessed with the skills of an engineer or the brainpower of a doctor. If you work to the best of your potential you shouldn't be screwed either. Unions originally performed this balancing task admirably, but many unions like the UAW have gone too far and helped bring about their demise (along with the brainless executives and short-sighted managers).

By the way, do you really think Toyota and Honda would be paying even as much as they do if it werent for the UAW and having to be mildly competitive on wages with them?

[Bender]

my Hyundai Elantra only cost $13800. I don't see how detroit can compete with companies like Hyundai when Detroit has to deal with the UAW.

[DarkReign]

I am routinely surprised by members here at ST revealing what kind of cars they drive.

I wouldnt drive a Hyundai/Toyota/Honda if those companies paid me to. Theyre well engineered and cheap, but ugly as hell in my opinion.

[boutons_]

Democrats Ask Automakers for Way Forward

WASHINGTON — Democratic Congressional leaders said on Thursday that the executives of America’s foundering automakers had failed miserably in persuading Congress or the public that $25 billion (http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/auto_industry/index.html?inline=nyt-classifier) in aid from the government would be well-spent and they gave industry leaders 12 days to come back with a plan showing otherwise.

http://www.nytimes.com/2008/11/21/business/21auto.html?pagewanted=print

[Bender]

:lol
I'm not embarrassed about Hyundai Elantras... it was cheap, and its been great for 4 years so far.

Before I bought it, I also test drove a Mini Cooper... man, what a great ride... base price was $18,500 back then though, I couldn't afford that back then.

Now, I would not drive a Honda.

edit: maybe my next car will be one of these:

http://news.cnet.com/i/ss/2007/0730_Mini_Cooper_S_Clubman_Slideshow/MiniCooperClubman_1_440.jpg
(http://www.miniusa.com/#/learn/FACTS_FEATURES_SPECS/Top_Features-m)

[Heath Ledger]

[QUOTE=boutons_;2913324]"It's silly that some of you think that the collapse of these 3 will not affect you at all"

The Treasury would be creating money, at it is for the financial sector robbery, selling debt to foreigners (if it can). The interest, in real money, must be paid(exported) on time, no defaulting, or the foreigners would not buy the debt in the first place.



Do you realize near 50 percent of the taxes collected by Uncle Sam each year go towards paying interest to our national debt and or loans from the Chinese?

Fucking disgusting. That # is only growing each year.

[boutons_]

Yes, I read a long time ago how many $Bs go to paying cold cash on the national debt.

The Repug/neo-c*nt bullshit war in Iraq is adding a few $T to that debt, and 100s of $Bs cold cash to pay just the interest on that debt. EXACTLY as planned by the Repug/neo-c*nt cabal to destroy the US govt.

[AFBlue]

A very sensible piece from a guy who knows alot about the business.

As much as I don't like his personality and admit there's probably an agenda, I completely agree with his assessment.

The companies I feel bad for are the suppliers who are mostly/solely dependent on these automakers for their business....oh well.

NO TO AN AUTO BAILOUT!

[word]

GM pensioners....the single largest buyer of Viagra. That's right, when you buy a GM car, you're paying for some lazy fat bastards hardon.

[2centsworth]

GM pensioners....the single largest buyer of Viagra. That's right, when you buy a GM car, you're paying for some lazy fat bastards hardon.:lmao

[kwhitegocubs]

Shouldn't "well engineered and cheap" trump "ugly"?

Isn't that, perhaps, part of why GM, Ford, and Chrysler are like lambs led to the slaughter? Because they were, for many years, far less well-engineered?

Then again, I have a 1950 Chrysler Royal (well-engineered and not ugly), a 1984 Pontiac Sunbird Conv. (not well-engineered and aesthetics debatable, though I love it), and a 2000 Daewoo Nubira (middling engineering but pleasing small-car aesthetics).

[word]

I had a Pontiac Century I put 200,000 miles on and sold it for a grand.

If there is one lesson to be learned from GM, is that you can't give people health benefits like that. Hopefully our government takes the que.

[8ft.tall.tejano]

Overpaid and paid fairly are obviously different. Without unions a lot of low skill workers won't be paid fair, living wages. Hate to break it, but everyone isn't blessed with the skills of an engineer or the brainpower of a doctor. If you work to the best of your potential you shouldn't be screwed either. Unions originally performed this balancing task admirably, but many unions like the UAW have gone too far and helped bring about their demise (along with the brainless executives and short-sighted managers).

By the way, do you really think Toyota and Honda would be paying even as much as they do if it werent for the UAW and having to be mildly competitive on wages with them?

i'm not anti-union, i've seen the good they could do for underskilled workers...
in different industries, i.e., service, telecom, plumbing, electrical, it can be a great system...i usually vote democrat, so i even usually give the party of unions my support...but when you take a business model that was built around the industrial age, and don't make any serious changes for the better at it, it becomes less competitive...the burden on business/share holders gets passed on to the consumer(one of the few times i almost agree w/trickle down business, they'll pass on the cost, but never pass the profits) and so the consumer turns elsewhere...so if the govt took care of the basic human needs that they should, like healthcare, retirement, education, and disability then the unions and companies wouldn't need to...

so....

if other states like texas can use this to their benefit, i'm all for it, which would force the other states to follow suit or lose business' then population...which is why we grow and the housing/credit bust is having less of an affect on us...

[kwhitegocubs]

Hmm, well I totally agree about your reasoning. With universal healthcare, a huge portion of the overhanging UAW benefit-based debt would be unnecessary.

[Nbadan]

Shouldn't "well engineered and cheap" trump "ugly"?

That business model has become very successful for Hyudai...

[kwhitegocubs]

I actually liked the look of their Sonatas.

Hyundai has actually been making cars of exceedingly good quality, and their Alabama plant is extremely efficient. It helps that their SUVs take less man-hours to assemble than most GM cars.

[Nbadan]

I drove one for 200K+ miles in college with very little problems...not too bad for a 'disposible car'....

[ducks]

I am routinely surprised by members here at ST revealing what kind of cars they drive.

I wouldnt drive a Hyundai/Toyota/Honda if those companies paid me to. Theyre well engineered and cheap, but ugly as hell in my opinion.

because looks will keep them running forever

[ducks]

Democrats Ask Automakers for Way Forward

WASHINGTON — Democratic Congressional leaders said on Thursday that the executives of America’s foundering automakers had failed miserably in persuading Congress or the public that $25 billion (http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/auto_industry/index.html?inline=nyt-classifier) in aid from the government would be well-spent and they gave industry leaders 12 days to come back with a plan showing otherwise.

http://www.nytimes.com/2008/11/21/business/21auto.html?pagewanted=print the have no plans now
do you think they can come up with one in 12 days when they have been failing for years

[kwhitegocubs]

I'd bet they can come up with a plan in 12 days. It isn't that hard to see the myriad areas where they are inefficient.

The difficulty will be in implementing the drastic changes.

It's dealing with the complacency and short-sightedness of all the parties involved that have ignored these solutions. That's what boggles the mind.

[jochhejaam]

I'd bet they can come up with a plan in 12 days. It isn't that hard to see the myriad areas where they are inefficient.

The difficulty will be in implementing the drastic changes.



When you factor all of the ancillary jobs that are dependent on the Big Three, you're talking roughly 10 million jobs.

Part of the solution will be the Union's willingness to renegotiate their contracts and that's going to be a tough sell. Negotiating a lower wage and benefit package beats the alternative of not having a job.

Does anyone know if their health care premiums covered in full after retirement? If so, that needs to change; I'm a union worker (AFSCME), and after retirement there is an escalating cost for Medical coverage. I'm not sure how much, but in talking with a recent retiree, it's around $50 a month the first year, and I was told it goes up to around $200 a month by the 4th year.

[johnsmith]

That business model has become very successful for Hyudai...

What the fuck is a "Hyudai"?

[DarkReign]

GM pensioners....the single largest buyer of Viagra. That's right, when you buy a GM car, you're paying for some lazy fat bastards hardon.

What the fuck do you know? People that spent 30 years working for one company are now "lazy, fat bastards"?

Fuck you, you ignorant prick.

[DarkReign]

because looks will keep them running forever

It was just an observation, you walking, talking example of a failed public school system.

[Extra Stout]

I'd bet they can come up with a plan in 12 days. It isn't that hard to see the myriad areas where they are inefficient.

The difficulty will be in implementing the drastic changes.

It's dealing with the complacency and short-sightedness of all the parties involved that have ignored these solutions. That's what boggles the mind.

No, it isn't that hard for a competent businessman to see the myriad areas in which GM is inefficient, but GM isn't run by competent businessmen. It is run by accountants.

[boutons_]

GM alone is burning through 2-3 $B/month. $25 won't go very far, even with reduced expenses.

If they propose a plan in 12 days, it will be an insult to intelligence, exactly like Paulsen's 3-pager was, with NO intent of it being followed, and no intent by Congress to provide effective oversight.

Congress and business leaders are engaged in a fucking smokescreen charade, a dog-and-pony show signifying nothing.

[2centsworth]

No, it isn't that hard for a competent businessman to see the myriad areas in which GM is inefficient, but GM isn't run by competent businessmen. It is run by accountants.

difference between showing inefficiencies and showing how to fix those inefficiencies.

The solutions are what I'm most interested in.

[CavsSuperFan]

I posted this in the Club...

It is a widely held belief that the Oil Companies & Tire Companies are in collusion with the auto makers to keep big gas guzzling cars on the road…Public rails have been eliminated from many big cities in the 1950’s…Higher mileage standards are always fought by the powerful conglomerates…

So if this is even slightly true, why doesn’t GM, Ford & Chrysler ask Exxon, Conoco Phillips, Goodyear or even Saudi Arabia for bail out money…Why should the U.S. Taxpayer be on the hook for all of this?

[Thunder Dan]

I drive a 08 Malibu and love it- I get 26-30 mpg with my daily driving. I traded my 2002 Trailblazer in that I put 150,000 miles on without doing anything but changing the oil and putting new tires on it.

[MannyIsGod]

I'd rather have a Camary or Corrolla. Both get better millage and both are flat out better cars imo. I'm sure the Camary costs more but I think the Corrolla is cheaper.

[Thunder Dan]

I'd rather have a Camary or Corrolla. Both get better millage and both are flat out better cars imo. I'm sure the Camary costs more but I think the Corrolla is cheaper.

yeah well I could do that or I could just ship $20,000 and send it to Japan. I have too much pride in my country than to drive a rice burner

and the Malibu gets better gas millage than the Camery

[kwhitegocubs]

Actually, the new Malibu's are of comparable quality now. Of course, mpg is definitely the area where the Big 3 always seem to lose. The 4-cylinder Malibu is only rated at 22/30, which is worse than my first car - a 1987 Pontiac 6000 with a 4-cyl. was.

It's supposed to be GM's "savior" car, sort of like what Taurus was to Ford in the late 80s and early 90s.

[kwhitegocubs]

The Camry gets similar mileage - 21/31. However, the Camry Hybrid is rated 33/34, while the Malibu hybrid is a weak 24/32.

[Thunder Dan]

Actually, the new Malibu's are of comparable quality now. Of course, mpg is definitely the area where the Big 3 always seem to lose. The 4-cylinder Malibu is only rated at 22/30, which is worse than my first car - a 1987 Pontiac 6000 with a 4-cyl. was.

It's supposed to be GM's "savior" car, sort of like what Taurus was to Ford in the late 80s and early 90s.

I have a Malibu 4-banger and I can assure you that I got 34 mpg when I drove from Cleveland to Chicago a couple weeks ago. It has a computer in it that tells you what you are getting

[MannyIsGod]

Actually if compare the four cylinder models its pretty much identical. However, if you want a six cylinder of each vehicle the Camry has a clear edge. And if we compare the Hybrids, its not even close.

Oh, and your so such an automotive patriot my man.

[Thunder Dan]

The Camry gets similar mileage - 21/31. However, the Camry Hybrid is rated 33/34, while the Malibu hybrid is a weak 24/32.

and you also pay $4,000 more for it than you do the Malibu, and $4,000 buys alot of gas

people can't seem to wrap their heads around paying more for a car they think will save them money i.e. see the Toyota Prius

[MannyIsGod]

I have a Malibu 4-banger and I can assure you that I got 34 mpg when I drove from Cleveland to Chicago a couple weeks ago. It has a computer in it that tells you what you are getting

So then I am to be assured that you have also driven a Camry on that route the same way in order to make sure that it doesn't get better mileage right?

[baseline bum]

I posted this in the Club...

It is a widely held belief that the Oil Companies & Tire Companies are in collusion with the auto makers to keep big gas guzzling cars on the road…Public rails have been eliminated from many big cities in the 1950’s…Higher mileage standards are always fought by the powerful conglomerates…

So if this is even slightly true, why doesn’t GM, Ford & Chrysler ask Exxon, Conoco Phillips, Goodyear or even Saudi Arabia for bail out money…Why should the U.S. Taxpayer be on the hook for all of this?

Plan B?

[baseline bum]

people can't seem to wrap their heads around paying more for a car they think will save them money i.e. see the Toyota Prius

Most people who buy Prius probably aren't doing it to save money, because they're not cheap.

[Thunder Dan]

the Toyota Camry Hybrid starts at 26,170, the Malibu Hybrid starts at 22,180

you do the math

[MannyIsGod]

and you also pay $4,000 more for it than you do the Malibu, and $4,000 buys alot of gas

people can't seem to wrap their heads around paying more for a car they think will save them money i.e. see the Toyota Prius

Buying a Prius means you better drive a lot of miles in order to save money at the pump. A shitload of miles. I'll give you that much.

If you want to save money at the pump a Corrolla or Yaris from Toyota is the way to go. I'd also buy a Honda Fit. I wouldn't buy an American vehicle for that. I've had a Ford in the past, and their crappy quality was enough to steer me away.

[MannyIsGod]

the Toyota Camry Hybrid starts at 26,170, the Malibu Hybrid starts at 22,180

you do the math


And whats the resale value on either? Do the math.

[Thunder Dan]

And whats the resale value on either? Do the math.

do you know why foreign cars have a higher resale value than American car companies? hint, it has nothing to do with quality. And the Malibu Hybrid will hold it's value because it escapes this case

[kwhitegocubs]

Heh, well if cost is the prime objective, you wouldn't buy a new car ever. I mean, buy a car with just 10k and you save 30%.

I bought a Daewoo Nubira with 16k miles for $3 grand. Gets 33mpg highway and runs smooth.

The stupid part for ALL of these manufacturers is how they attempt to ring out HP instead of MPG. I mean even the fours for these cars have 160-190hp. Why not stick a little 1.6L that gets 110hp. No one actually needs the power to reach 120 miles an hour.

[MannyIsGod]

How well will that Malibu Hybrid hold its value if GM goes under? Why a car has a higher resale value is irrelevant. I don't care WHY Joe is going to pay more for my car, I just care that he is.

I'm not sure if theres a way for me to measure how much more people will pay in repairs for domestic vs foreign cars, but I know my personal history and how it shapes my shopping.

You just keep trying to paint this picture of GM cars being on par with Honda and Toyota and I don't see it. Honda and Toyota have always had better mileage and its been my experience that the overall quality of the vehicle has also been higher. If GM is finally catching up, then thats good, but they have to actually prove it first and no one here is sure if they're going to get that chance.

[Thunder Dan]

How well will that Malibu Hybrid hold its value if GM goes under? Why a car has a higher resale value is irrelevant. I don't care WHY Joe is going to pay more for my car, I just care that he is.

I'm not sure if theres a way for me to measure how much more people will pay in repairs for domestic vs foreign cars, but I know my personal history and how it shapes my shopping.

You just keep trying to paint this picture of GM cars being on par with Honda and Toyota and I don't see it. Honda and Toyota have always had better mileage and its been my experience that the overall quality of the vehicle has also been higher. If GM is finally catching up, then thats good, but they have to actually prove it first and no one here is sure if they're going to get that chance.

The reason that escapes your mind is that it is because foreign automakers will not allow their cars to be sold in fleets and rentals the way that American companies do. If foreign companies did this they would have to hire more US workers than the bare minimum they do now to get tax breaks. So they skip out on this (which cheats America) and they paint the picture that their cars are higher quality which explains their higher resale- but that is not the case, it's because they have less cars sold here in a model year.

If they had to produce more cars, that means they will have to hire more of these "expensive Americans" (the assholes that work and pay taxes). The more people they hire, the more expensive their cars get, and they might actually have to pay a US Tariff if they import more, or a tax if they hire more.

They are cheating you or tax dollars they SHOULD be paying, but they are cheating the system by

[clambake]

quality is what killed them to begin with.

[Thunder Dan]

Everyone knows this right? Toyota and Honda built plants here so they could get out of paying tariffs set up by our fore fathers. They hire the bare minimum of workers to get around those, and if it comes time to expand they expand in Japan because they take care of their own homeland first...something we obviously don't do. They pay their corporate taxes to Japan, not the US. That money goes to Japan, not the US

[DarkReign]

Honestly, the more I hear from Congressmen and people with their fly-by-night opinions of the RustBelt makes me think less and less of them.

[MannyIsGod]

The Honda Accord is a mainstay on the Car and Driver top cars list. Is that because they don't allow fleet purchases?

[MannyIsGod]

Everyone knows this right? Toyota and Honda built plants here so they could get out of paying tariffs set up by our fore fathers. They hire the bare minimum of workers to get around those, and if it comes time to expand they expand in Japan because they take care of their own homeland first...something we obviously don't do. They pay their corporate taxes to Japan, not the US. That money goes to Japan, not the US

Then we should remove the tariffs, not buy from GM. I don't see how this is in any way a bonus for GM.

Its not cheating the system. Buy not offering fleet sales they are limiting their income. They've obviously made a judgment that paying the tariffs would be worse than what they bring in, so they've made a business decision. Its not like GM doesn't do business overseas as well.

[Thunder Dan]

Then we should remove the tariffs, not buy from GM. I don't see how this is in any way a bonus for GM.

Its not cheating the system. Buy not offering fleet sales they are limiting their income. They've obviously made a judgment that paying the tariffs would be worse than what they bring in, so they've made a business decision. Its not like GM doesn't do business overseas as well.

they do very well overseas doing the same thing Honda and Toyota do here, but the difference is Japan puts so many tariffs on US Cars that they won't sell over there- they don't want GM and Ford doing what Honda and Toyota are doing over here.


It's funny because my family owns a Chevrolet store, a Cadillac/Saab store and a Toyota/BMW store and my own father, who actually owns a Toyota franchise, won't let me buy a Toyota because of these reasons. BMW's don't cheat the system like the Japanese, which is why I don't have a problem with people buying BMWS, MBs or Audis

[MannyIsGod]

they do very well overseas doing the same thing Honda and Toyota do here, but the difference is Japan puts so many tariffs on US Cars that they won't sell over there- they don't want GM and Ford doing what Honda and Toyota are doing over here.


It's funny because my family owns a Chevrolet store, a Cadillac/Saab store and a Toyota/BMW store and my own father, who actually owns a Toyota franchise, won't let me buy a Toyota because of these reasons. BMW's don't cheat the system like the Japanese, which is why I don't have a problem with people buying BMWS, MBs or Audis

I know where your coming from man. And I'm no fan of the Japanese tarrifs, but Japanese cars HAVE been better on many fronts. I can't pull up the consumer reports stuff to show it since I no longer have a subscription, but its the truth.

[kwhitegocubs]

So your father makes money off of EvilToyota vehicles, but won't allow YOU to purchase one?

[boutons_]

GM's savior:

"G.M. says the car, which is scheduled to arrive in showrooms two years from now, will be able to travel 40 miles on a charge, but it will also have a small gas engine to extend the range to as much as 640 miles using both the battery and gasoline (the 1.4 liter, four-cylinder engine is intended to run a generator that will power the car and recharge the batteries once they are depleted). It is expected to cost about $40,000.

To some, the Volt will remain a niche vehicle until its cost drops sharply and its range rises dramatically.

“If you’re the affluent individual who wants to make a statement, it’s one thing,” said Ron Pinelli, president of MotorIntelligence.com (http://motorintelligence.com/), an industry analysis firm. “If you’re Joe the Commuter, you’re not going to spend $40,000 on an electric car. It’s insane.”

http://www.nytimes.com/2008/11/22/business/22volt.html

The other is very cheap gas so GM can keep pumping out high-margin SUVs and trucks, if fat-ass Americans have enough $$.

"Who Killed The Electric Car?"

[boutons_]

Lessons of the 1979 Chrysler loan guarantee

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/11/23/national/w081356S05.DTL&type=printable

If the Big3 plan in a few days isn't aggressive and painful enough (anybody think these candy-ass, super-wealthy, over-paid, short-term execs give a sh!t about their companies?), let them go into bankruptcy and re-org.

[boutons_]

http://graphics8.nytimes.com/images/misc/logoprinter.gif (http://www.nytimes.com/)
http://graphics8.nytimes.com/ads/spacer.gifhttp://graphics8.nytimes.com/ads/fox/printerfriendly.gifhttp://graphics8.nytimes.com/adx/images/ADS/18/82/ad.188290/tw_88x31.gif (http://www.nytimes.com/adx/bin/adx_click.html?type=goto&page=www.nytimes.com/printer-friendly&pos=Position1&sn2=336c557e/4f3dd5d2&sn1=921f9ead/4c47680e&camp=foxsearch2008_emailtools_810909e_nyt5&ad=wrestler_120x60_InTheatersDec17&goto=http://www.foxsearchlight.com/thewrestler/)


November 24, 2008

Big Three’s Troubles May Touch Financial Sector

By ZACHERY KOUWE and LOUISE STORY (http://topics.nytimes.com/top/reference/timestopics/people/s/louise_story/index.html?inline=nyt-per)

To the long list of troubles plaguing the financial industry, add three big ones — make that Big Three ones.

The foundering Detroit automakers owe more than $100 billion to their bankers and bondholders, and Wall Street is starting to wonder how much of that will be paid back.

http://www.nytimes.com/2008/11/24/business/24auto.html?pagewanted=print

=======

ooops! Paulsen doesn't give a sh!t about workers, but he'll cover the Big3 debts to his financial buddies with taxpayer dollars.



http://www.nytimes.com/adx/bin/clientside/1c643ef3Q2FoA@4fLc1fmUAUG0Q2BU0Q5B3Q5BcmQ2B

[Centaur of the Sun]

It's getting to the point now where we need to just let these ass holes fail.

Restructure your business model, cut the fat, reduce redundant car models, offer cars people will actually want to buy, and call it a day.

The loan will be likened to putting a lifelong crack addict in rehab for a week and thinking he'll be ok. You need to put that fucker in a locked room with a bed and a bucket and make him go through withdrawals. It's gonna hurt like a mother fucker but everyone's better off (except the drug dealer) in the end.

[DarkReign]

It's getting to the point now where we need to just let these ass holes fail.

Restructure your business model, cut the fat, reduce redundant car models, offer cars people will actually want to buy, and call it a day.

The loan will be likened to putting a lifelong crack addict in rehab for a week and thinking he'll be ok. You need to put that fucker in a locked room with a bed and a bucket and make him go through withdrawals. It's gonna hurt like a mother fucker but everyone's better off (except the drug dealer) in the end.

Thank God it isnt your life/job in the balance, huh? That must be a nice view you have where putting 5 million people out of a job is likened to heroin addicts and poor analogies to Leonardo movies.

But lets give Citigroup ~300 billion. Theyre way more important.

[baseline bum]

Thank God it isnt your life/job in the balance, huh? That must be a nice view you have where putting 5 million people out of a job is likened to heroin addicts and poor analogies to Leonardo movies.

But lets give Citigroup ~300 billion. Theyre way more important.

Do you think those jobs are going to be safe if we keep pumping money into a company run by shortsighted morons who have proved time and again to be huge failures? This auto bailout will be nothing but a time delay on the death of GM if taxpayers keep rewarding incompetence.

[DarkReign]

Do you think those jobs are going to be safe if we keep pumping money into a company run by shortsighted morons who have proved time and again to be huge failures? This auto bailout will be nothing but a time delay on the death of GM if taxpayers keep rewarding incompetence.

Much like our financial institutions?

I am not entirely pissed at people objecting to an auto bailout, so much as I am disgusted with politicians and their sudden tightening of the purse strings.

I am anti-bailout-anything to be clear.

But the recent slamming of the suto industry and the people affected in general is starting to piss me off. As if we are all just $28 an hour union fucks more concerned with where we can sleep inside the plant than actually working.

Its the broadbrush approach being spearheaded by the likes of Southern politicians who have nothing but horrible things to say about American car companies. As if they dont subsidize Toyota/Honda plants being built in their states.

Who does Toyota pay their corporate income taxes to? Honda? BMW? Volkswagon? Etc.

It is not the US government (you know that). Yet these fucking retards hold up these companies as some sort of beacon of hope, that they are soooo kind as to actually employ Americans in the assembly of their vehicles.

Yet, American companies cant export to their countries due to the rest of the worlds protectionist policies.

So watching politicians suck the dicks of foreign companies isnt exactly my idea of honest criticism. Its blatant pandering benefitting only themselves.

Dont bailout the auto companies, I really dont care as a matter of principal (I should be endorsing it, but I cant). But when a majority of the country sees an opportunity to slam dunk the RustBelt and they have the audacity to do it with a smartass smile and a kick in the ass, dont worry....we'll be moving to your states taking your manufacturing jobs soon enough.

Then we'll see who is the lazy, backward fucking retards of the country.

[clambake]

Dont bailout the auto companies, I really dont care as a matter of principal (I should be endorsing it, but I cant). But when a majority of the country sees an opportunity to slam dunk the RustBelt and they have the audacity to do it with a smartass smile and a kick in the ass, dont worry....we'll be moving to your states taking your manufacturing jobs soon enough.

Then we'll see who is the lazy, backward fucking retards of the country.

:tu Dr bringing the hammer down.

[Wild Cobra]

I'd rather have a Camary or Corrolla. Both get better millage and both are flat out better cars imo. I'm sure the Camary costs more but I think the Corrolla is cheaper.

I hope you're not in favor of bailing out the car companies. I don't blame you for buying the brands that have a better price vs. quality. However, you now have no room to ask for leniency on the US makers.

Personally, even though more money, I have always bought USA brands. Some have been built in Canada and one in Mexico, but always GM, Ford, or Chrysler. My one exception was about 30 years ago when I bought a Fiat convertible. It was just the right price at the right time, used, and in need of repair. I think I paid $100 for it. Sold it for much more after fixing the engine.

I support the US manufacturing industry when I can, but I cannot bring myself into rewarding bad management and excessive union control with a bailout.

[Wild Cobra]

And whats the resale value on either? Do the math.

Thunder Dan, Manny is right on this. American cars just don't retain the retail value used. You may pay a few thousand extra when you buy one, but it retains that few extra thousand and then some for trade in value. Then the import names that are in fact cheaper are more valuable three years later. Again, trade-in value.

[Extra Stout]

Rather than throw $25 billion at automakers, which at their rate of cash burn only buys them a few more months of life, why not just buy GM outright and then proceed with a Chapter 11-like reorganization? I think GM could have a viable business if its legacy costs get restructured and the beancounters get whacked.

I wish I could say the same for Chrysler, but anything the government might do with them is just putting good money after bad. I don't think Chapter 11 is even an option for them -- Chapter 7 is all that remains.

[DarkReign]

Thunder Dan, Manny is right on this. American cars just don't retain the retail value used. You may pay a few thousand extra when you buy one, but it retains that few extra thousand and then some for trade in value. Then the import names that are in fact cheaper are more valuable three years later. Again, trade-in value.

Yeah, but do you understand why they have a higher resale value?

[Wild Cobra]

Yeah, but do you understand why they have a higher resale value?

I'm not sure what the experts say, but they are built better for the same money and lost longer, at least historically. Historical trends do not mean current trends are equal, but people remember history.

There are actually many reasons. One that I don't think most people realize are the different ways the cars are developed. In Japan for example, they can focus on a new product without the ten year mandatory repair parts storage. When they get a model they like, they can then beef up the structure for US crash standards. Their cost of development is far cheaper than ours.

[Extra Stout]

Yeah, but do you understand why they have a higher resale value?
The consumer-based reason is that the imports have a higher perceived value.

Another reason that applied until GM and Ford changed their strategy was that in order to keep volumes high they sold a lot of units to fleets, for example rental car companies. The fleet customers keep the cars for a couple of years, then sell them. This creates an oversupply of two-year-old used domestic cars, which depresses price. The loss of resale value erodes their retail customer base, which makes them even more dependent upon fleet sales. It's a vicious cycle, one from which GM and Ford tried to extricate themselves.

Chrysler embraced fleet sales wholeheartedly as GM and Ford pulled back from them. This makes sense for Chrysler since no retail customer in his right mind would buy one of their products, while fleet customers care mostly about price as opposed to quality.

(This doesn't take into account the loss of business some rental companies suffer as renters steer clear of them in order not to be stuck in a POS Chrysler.)

[Wild Cobra]

Another reason that applied until GM and Ford changed their strategy was that in order to keep volumes high they sold a lot of units to fleets, for example rental car companies. The fleet customers keep the cars for a couple of years, then sell them. This creates an oversupply of two-year-old used domestic cars, which depresses price. The loss of resale value erodes their retail customer base, which makes them even more dependent upon fleet sales. It's a vicious cycle, one from which GM and Ford tried to extricate themselves.


I never noticed that side of it before, but it makes perfect sense that you are correct.

Thanks for the insight.

[DarkReign]

The consumer-based reason is that the imports have a higher perceived value.

Another reason that applied until GM and Ford changed their strategy was that in order to keep volumes high they sold a lot of units to fleets, for example rental car companies. The fleet customers keep the cars for a couple of years, then sell them. This creates an oversupply of two-year-old used domestic cars, which depresses price. The loss of resale value erodes their retail customer base, which makes them even more dependent upon fleet sales. It's a vicious cycle, one from which GM and Ford tried to extricate themselves.

Chrysler embraced fleet sales wholeheartedly as GM and Ford pulled back from them. This makes sense for Chrysler since no retail customer in his right mind would buy one of their products, while fleet customers care mostly about price as opposed to quality.

(This doesn't take into account the loss of business some rental companies suffer as renters steer clear of them in order not to be stuck in a POS Chrysler.)

I was going to mention the fleet sales, but you put a far more finer point on it.

Damn, ES.

When I went to Hawaii, our rental was a 2008 Sebring (on both islands). What an absolute wreck of a vehicle. Horrible car in every imaginable way.

[boutons_]

GM asks FAA to block public from viewing movements of corporate jet

General Motors, under fire for flying its chief executive to Washington for hearings on an auto bailout on its corporate jet, has asked the FAA to block the public from being able to track its plane.

http://rawstory.com/news/2008/GM_seeks_to_keep_public_from_1128.html