They said if the Big 3 go under millions of jobs will be gone and all the US plants of all the manufacturers would shut down due to the US suppliers going bankrupt.
They say if the Big 3 go down. Most everyone here feel only GM will go down making Ford stronger in the process. Less automakers going after the million+ PU trucks per year.
I would agree that all 3 going down would create havoc. I don't think GM liquidating will cause that much of a mess. They have lost money much of the last 40 years. They have never in that time frame made 5% profit. The low end of the Fortune 500 average is 5.5% over the last 20 years. Some day GM will have to face facts. They are a poorly run company and have been for decades. Time to toss the dirt on them. Give Ford a boost. I don't think Chrysler has much to offer other than Jeep. VW may buy their mini van as they are using them rebadged and selling ok.
So the experts are playing games with words. Have they given all the scenarios of just GM closing shop. Or is it all or nothing in their little minds?
So we still come to the same conclusion. You guys disagree with CAR and all the witness's at the congressional hearings.
They said if the Big 3 go under millions of jobs will be gone and all the US plants of all the manufacturers would shut down due to the US suppliers going bankrupt.
They are wrong. 62, I'll commit to you the following;
If the Big 3 go under (need to define that) and *all* the US plants of *all* the manufacturers shut down due to US suppliers going bankrupt, I'll send you a check for a steak dinner and let everybody on the forum know about it, ok?
If the Big 3 go under (need to define that) and *all* the US plants of *all* the manufacturers shut down due to US suppliers going bankrupt
You got to give the Big 3 CEOs credit. They are sticking to that scenario like glue. That is because none of them want to be left out of the bailout gravy. Ford says just guarantee us the money and we may not need it. GM says got to have it by Friday or it is curtains. The Chrysler guys says Jimmy whatcha gonna gimme. They probably all sit on different corporate boards together. It is the way business is done. they look out for each other in that realm that US bottom dwellers are not permitted.
To carry the CAR perspective just a bit further. What would happen if Congress said show us a plan where just GM files for bankruptcy. How many jobs lost and how well would the others fare? I have not listened to the hearings. I bet that was not discussed. Yet that is the most likely thing to happen. Nothing realistic about this bailout. It is just give us the money and we can keep going till we need more and more and more.
I believe GM held 23% of the US market the first of the year. What percentage do they have now. I will be real surprised if GM sells 2.5 million vehicles this year. GM is asking for $18 billion. That is over $7000 per car sold. Maybe the Feds should just give every tax payer a $7000 tax credit toward the purchase of any new vehicle and let Americans decide who lives and who dies.
Remember, bankrupt does not mean out of business. They have a choice to restructure their business models under the laws of one category of bankruptcy. The car manufacturers need to DOWN SIZE to adjust for volume.
This is a really, really bad move-throwing good money after bad.
Now that the Government will run the Big 3, we will see what market share develops.
WASHINGTON - A bailout plan for the failing U.S. auto industry could include a Cabinet-level oversight board and a provision to withdraw the money if the overseers decide the companies are failing to take steps to overhaul themselves.
The plan would draw the emergency aid from an existing loan program meant to help the automakers build fuel-efficient vehicles. The size of the package hasn't been finalized, but it is expected to be about $15 billion, several congressional aides said.
It would create a board composed of Cabinet secretaries from the departments of Treasury, Energy, Labor, Commerce and Transportation plus the Environmental Protection Agency administrator to oversee a broad auto industry restructuring. A congressional aide outlined the emerging measure on condition of anonymity because it is not yet completed.
In return for the money, the carmakers would have to agree to terms similar to those placed on banks that receive funds under the $700 billion Wall Street bailout: to limit their top executives' pay packages, cease paying dividends, give the government a chunk of future gains and guarantee that taxpayers would be reimbursed before any other shareholders, the aide said.
The bill under discussion would place the special investigator overseeing the bank rescue in charge of keeping tabs on the auto bailout.
The White House and Democratic congressional leaders are narrowing their differences over the auto bailout, but had yet to agree on specific legislative details, officials said.
Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, said Sunday that General Motors Corp.'s chief executive, Rick Wagoner, "has to move on" as part of a government-run restructuring.
"I think you have got to consider new leadership," Dodd said on CBS' "Face the Nation."
Remember, bankrupt does not mean out of business. They have a choice to restructure their business models under the laws of one category of bankruptcy. The car manufacturers need to DOWN SIZE to adjust for volume.
That is the issue, CAR and all the congressional witness's said that if any of the big 3 declare bankruptcy they will be out of business. No one will buy their cars. And it take down most all suppliers.
Hey, there is no use continuing this discussion on this point. I am surely not going to be able to change any of your minds with all the different experts not being able to change yours. And you certainly cannot change mine since I can see the facts and also know most of the suppliers are already on the verge, if not already, of bankruptcy.
I cannot wait until March to see what the government comes up with.
In return for the money, the carmakers would have to agree to terms similar to those placed on banks that receive funds under the $700 billion Wall Street bailout: to limit their top executives' pay packages, cease paying dividends
Done all that, what next.
The one thing I am worried about with this bailout will be that in March the government will see that the Big 3 have done basically all they can. And then they will say there is nothing else that can be done and stop the loans. Then again they may come to the conclusion that they have done all they can and therefore give them the money to tie them over until sales go back over 14 million. Perhaps they will take back the 100 billion GM has put into the pension fund and cover the retirees with the government pension fund? NOT
G.M. says it will be paying retirees about $7 billion a year for the next 10 years. The fund’s assets were worth $104 billion at the end of 2007, more than enough to cover its obligations of $85 billion. Since then, the assets have declined and the obligations have grown, each by undisclosed amounts. The company says it does not plan to add any money to the fund for the next three or four years.
If the Big 3 go under (need to define that) and *all* the US plants of *all* the manufacturers shut down due to US suppliers going bankrupt, I'll send you a check for a steak dinner and let everybody on the forum know about it, ok?
That would be great but you know my opinion is that if the big 3 go under no one will be buying steak dinners anywhere. So it is a pretty hollow promise. Unless of course I jump the pasture fence first and rip the meat off the last cows before the other guy does. :P
And if GM goes under I can probably let you guys know who I am so you can have my address.
They said if the Big 3 go under millions of jobs will be gone and all the US plants of all the manufacturers would shut down due to the US suppliers going bankrupt.
Correct, and I say they're full of it. Sorry, but that's like saying if McDonald's goes out of business, they'll take Burger King and Wendy's with them, as well as the entire American beef and ranching industry. How likely does that sound?
The one thing I am worried about with this bailout will be that in March the government will see that the Big 3 have done basically all they can.
I don't think that's much of a worry. I saw a part of Meet the Press on Sunday, and Obama made a statement that he doesn't think the Big3 CEO's are acting with the urgency needed. I don't think he's too happy with them - suspecting they are only doing the minimum necessary to get the loans.
Then again they may come to the conclusion that they have done all they can and therefore give them the money to tie them over until sales go back over 14 million.
What good will that do? GM hasn't made money at that sales level in years. With any cuts they do now in divisions and plants means less sales and revenue to pay their legacy costs. Personally I had bought 4 new GM products in the last 15 years; a) I won't buy another from a corp. that acts like a spoiled child and a welfare bum, and b) they'll still be on the verge of BK and their warranty worth little.
GM needs to take whatever BK steps they need to to devolve themselves of these legacy costs, the UAW, and the unprofitable models and/or divisions.
Then GM needs to reopen with what only the plants and employees for what they need. Mothball and hold onto a few of the better plants shutdown and sell the rest of the real estate. GM needs to restaff with non-union people making a total of $35/hr w/benefits. 90% of their workers would be full-time. 10% of the workers are temps., so that if business goes down GM can reduce costs next week. The factories would be run 2 shifts, if business picks back up to 15M units, 3rd shifts could be started, to meet the demand.
Discussing auto suppliers. I'm not surprised many are in bad shape. I took graduate business courses with people from Sylvania Lighting, and they had goals to improve quality each year and reduce costs each year. The Big3 kept squeezing the supplier profit.
So again we see that not only did the Big3 lose market-share over the years, lose their capital funds by overcompensating and spending, and then try to keep the $ loss down by squeezing the suppliers.
That's certainly incompetent; and imoral and unethical to think that others want to help subsidize them now after these years at the trough they all enjoyed.
The real answer is to use loans or direction buyins to the US automakers with some requirements. One of those should be to lower the requirements on the retirees money and benefits along with the highest of the UAW tenure folks. I hold no pen toward the UAW (IUE) folks who came it at the lower wages the last few years.
IF nothing is done to shore up confidence in what's left of the US automakers after some of their bad management steps (it's always easy to critique after the fact, so I accept that criticism myself realizing I wouldn't have made good choices in their shoes), we are not going to get buying started again in the auto stores.
The solution is to get the people who have money to start spending rather than hoarding it as they cower in fear with all the negative stories through the end of the presidential election meant to have a political goal in my opinion. Having been through many recessions, this just reminds me of the worst I've seen.
The one BIG factor is that the scare factor has come early, in my opinion politically driven to help elect one of the candidates, rather than later in the recession. Usually the nonfinancial media doesn't start talking about a recession and how bad it is until it's starting on the recovery side.
The rest of the story is that businesses because of different communication and atmosphere in the media and populace have started prophylactic layoffs. Usually businesses are caught with too many employees after the horse is out of the barn; hence we have the 700,000 figure for layoffs in November. That exacerabates the media frenzy and the panic in the people who could be spending.
We have to get people out spending and moving the money through our nonindustrial economy now. Stopping at a Kohls on Saturday there was lots of spending in a relatively desperate corner of Indiana hurt by industries who have gone through the last 15 years. That's optimistic.
A problem is that the money that went into the financial system has been misused because Congress and President diddled and daddled with the politics. I heard that Citi bought two Guatamalan banks after they received the first money meant to loosen up credit in this country. Our financial institutions aren't doing as they were supposed to do and there's no jaw-boning coming from the President or Congressional leaders because of their complicity.
We have to get confidence building despite the layoff panics and the media-driven panics. People need to know that it buy a car from one of the Big 3 and that company dissolves, that the warranty will be backed up somehow by the government and other car companies. That should include HoToy, since I hold the foreign companies to blame for the problems. That will start more car sales moving and move building of US brand cars.
know most of the suppliers are already on the verge, if not already, of bankruptcy.
So why aren't we bailing THEM out? All the "experts" keep pushing the critical point of not letting the suppliers go down, yet the only solution is to bail out the car salesmen?
One thing I can say: we're all making our opinions based on PREDICTIONS. All of us, yes that includes you Vette, because no matter how brilliant these experts are, they all make assumptions and predictions UNLESS they can see the future. Predictions go different ways, each taking his/her own. Should someone can actually see the future and manage to prove it I will change my mind.
The solution is to get the people who have money to start spending rather than hoarding it as they cower in fear ...
While people with money may be cutting back on luxury purchases a little, there are not that many wealthy people to make much of a difference. The problem with consumers not spending is with the 90% of the population who live check-to-check being broke, having gone deeper and deeper into debt on credit cards and equity loans on properties that had balloon values which weren't sustainable. When these people who were spending more than they were making hit their credit limits, and their home values started declining, then they started dragging down the finance industry that was fueling this. There is no quick recovery until people work down their debt. It's going to be painful because reduced spending means a slower economy. As a society we've ate and drank most of our week's groceries in 3 days.
People need to know that it buy a car from one of the Big 3 and that company dissolves, that the warranty will be backed up somehow by the government and other car companies. That should include HoToy, since I hold the foreign companies to blame for the problems.
LOL. The HoToy comment - true. But that is what competitors are supposed to do! You know Monopoly and all that! This is not the PeeWee soccer league where every team gets the same trophy. Competition - that's how the economy sorts out what the most efficient systems and products are - and thus best for society.
That will start more car sales moving and move building of US brand cars.
It may keep people from buying more non-Big3 vehicles. But it will not mean a net increase in vehicle sales. Anything that increases Big3 sales simply reduces sales of other auto manufacturers, which many are made here in the U.S. The only thing that increases auto sales is to get people out of debt, and stimulus checks help. But then that makes the U.S. debt worse, and just like consumers the U.S. government is going to reach a debt limit. When that happens there are no more bailouts and stimulus possible.
So consumers going into debt, pushing GM and its suppliers into debt, pushing the financial industry into debt, pushing the U.S. government further into debt, will cause a collapse.
One thing I can say: we're all making our opinions based on PREDICTIONS.
Yes, and one thing you can't do is collect data on something that has not happened yet.
The data we can look at is from historical events. As I said before the companies that were in the Dow 30, 100 years ago are no longer there. All gone - the biggest failed, merged, closed, BK ... The data shows us that the failure of a single company has not destroyed the U.S. economy. The data shows us that there are competitors in each industry who will quickly pick up the business of any failed-company. And the data shows us that each decade more and more people are employed, with workers going to other companies and industries as the economy changes.
Isn't this the second mea culpa GM has issued in what, a year??
General Motors today unveiled an unusually frank advertisement acknowledging it had "disappointed" and sometimes even "betrayed" American consumers as it lobbies to clinch the federal aid it needs to stay afloat into next month.
"While we're still the U.S. sales leader, we acknowledge we have disappointed you," the ad said. "At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster."
The unsigned open letter, entitled "GM's Commitment to the American People" ran in the trade journal Automotive News, which is widely read by industry executives, lobbyists and other insiders.
In the ad, GM admits to other strategic missteps analysts and critics have said hastened its recent decline.
"We have proliferated our brands and dealer network to the point where we lost adequate focus on the core U.S. market," the ad said. "We also biased our product mix toward pick-up trucks and SUVs."
I am getting so tired of GM "admitting" how bad it was "in the past", with poor design, bad marketing decisions, and below-average reliability, and then talking about how the lesson has really been learned this time. This has got to be like the fourth time they have done this in an advertising campaign since 1990, and that last time they did this was in 2007, wasn't it? And these are the clowns we are going to give away taxpayer dollars to (no-one here will convince me these are "loans" - loans are defined as money that has some potential of being repaid)?
If they had MEANT what they said the first time they said it, in the mid-90s, they wouldn't be in this mess today. And something more than 1/3 of Americans would be for giving them some money to tide them over in hard times.
I am getting so tired of GM "admitting" how bad it was "in the past", with poor design, bad marketing decisions, and below-average reliability, and then talking about how the lesson has really been learned this time.
This is precisely why new leadership (CEO in particular) needs to come to GM whether they go Chapter 11 or receive taxpayer dollars.
If December sales end up about like November, GM will finish the year just under 3 million in the US. You have to go back a long way to find an annual total that low for the General, probably 1958 (1982 was 4.5 million).
If December sales end up about like November, GM will finish the year just under 3 million in the US. You have to go back a long way to find an annual total that low for the General, probably 1958 (1982 was 4.5 million).
I think GM sold about 2 million cars in 1958. Roughly 1.1 million Chevy cars. ~122,000 Cadillacs. Buick, Olds, and Pontiac might have accounted for 800,000 among them.
How popular were trucks back then? Would GMC and Chevy trucks have been popular enough to pull off a million units combined? I'm guessing not, but anything's possible.
Trucks were something like 16-17% of total sales in the early '70s, so if we back that up a bit to 15% that makes something like 350,000 for GM in 1958, with maybe 250k of that being regular pickups?
Of course if I become indigent or the entire country collapses then all bets are off.
That's what I am worried about.
I really hope the government picks a auto czar/team that know what they are doing and really dig into where the money is going at the big 3. Fully independent.
I really hope the government picks a auto czar/team that know what they are doing
I hear he is trying his best to get Al Gore. That would send shock waves through the ivory towers of the Big 3. An EV in every drive AL. Ban all SUVs. And put the final nail in the GM coffin.
His top pick for director of EPA is now head of CARB. That should send real chills up Wagoner's spine.
I think the one that will be the end of the Big 3 is if the EPA becomes an extension of California Air Resources Board. They are trying to sue the Big 6 for putting out too much GHG.
>The HoToy comment - true. But that is what competitors are supposed to do! You know Monopoly and all that! This is not the PeeWee soccer league where every team gets the same trophy.
But in those games everyone plays by the same rules. They don't have a slanted playing field with government support for the team from back home (adults playing for the kids) and a different scoring system for one team over the other (currency valuation) and one team starting with a handicap (the retiree and healthcare expense that the other team doesn't have because of government funded healthcare).
>The problem with consumers not spending is with the 90% of the population who live check-to-check being broke, having gone deeper and deeper into debt on credit cards and equity loans on properties that had balloon values which weren't sustainable.
I see your point. I was speaking from the perspective of friends and family with whom we're familiar; they are comfortable and not living on credit but have mostly stopped spending on anything extra. :sick:
62vettefp: I hope you don't take any of this personally. I know I appreciate your input on this topic and many others. To me, this whole issue we are debating is just friends who disagree on a issue. Unfortunately we don't live close enough to have that beer and talk about the Cowboys choking yesterday.
I think the biggest problem is this argument has turned into the entire domestic automotive industry will fail instead of we have two companies, GM and Chrysler, that are in serious financial trouble. I didn't think we should have bailed out the banks and I don't think we should bail out GM or Chrysler. GM has lost money each quarter since 2004, during this time US car sales exceeded 16M. I know you have a personal stake in GM survival but it's time for an overhaul. GM needs a pre-packaged bankruptcy. GM talks to it's creditors, dealers and suppliers and negotiates new terms for their debt and closure and the government helps them through this process. Yes we will lose jobs, which is going to happen no matter what, but maybe we have a leaner GM that can be profitable in two years.
I think everyone is miscalculating the US market. i don't see 16M car sales for another 5-6 years, maybe. The reason we maintained such a high level is credit was easy, incentives were large and leases were highly subsidized. That is not going to be the case for while. Couple this with unemployment rising each month, not a lot of confidence out there to spend $25k on a new car when a $10k used car will do the same thing. I hate to see any company fail because of the job loss.
BTW, There is no hope for Chrysler. No money for them. Only choices are bankruptcy or sell. Cerebus made a bad investment plus there is nothing in the pipeline to save this company.
I think everyone is miscalculating the US market. i don't see 16M car sales for another 5-6 years, maybe.
We may never see 16m cars again. The Feds are close to following California with more mandates on what can and cannot be sold. Whether they are ready for prime time or not we have people of influence that want to force EVs onto the market. These are not going to be high profit margin vehicles due to high cost of materials. I look for people to keep what they have or buy used cars vs mandated vehicles.
They don't have a slanted playing field with government support for the team from back home.
The countries that we compete against have higher taxes to support their government health care, pensions, and lifelong employment - Germany and Japan we're mainly talking about here. They also have a higher-cost-of-living. Yet their auto-workers are paid less or the same as ours. So the playing field isn't slanted. The German worker is only getting "free" healthcare because they are paying for it in their taxes.
different scoring system for one team over the other (currency valuation).
Currency fluctuates like people on a see-saw, there is no long-term advantage of one economy over another. The Euro used to be $0.89, then $1.55, and now $1.25. The strength of the yen is no indicator of the health of the economy. Japan is now at about 30% of what their stockmarket was peaked at about 20 years ago.
I was speaking from the perspective of friends and family with whom we're familiar; they are comfortable and not living on credit but have mostly stopped spending on anything extra
Me too. I bought a car and house last year for cash. I've bought things for the house. But until the markets recover some, the only extras I'm buying is a trip to Hawaii which I have free airfare (due to miles). I'd rather sleep easy at night, and possibly retire early, rather than seeing my money go into a bunch of "stuff" that later clutters the garage and attic.
The problem with the Big3 can be summarized as: for too many years too many groups of people took too much money out of the company in various ways of compensation, while the corporation did not put enough effort into keeping customers happy in various ways.
I think the one that will be the end of the Big 3 is if the EPA becomes an extension of California Air Resources Board. They are trying to sue the Big 6 for putting out too much GHG.
I know this stuck in your craw, gagrice, but keep up with the news! That lawsuit was dismissed a long time ago (March maybe?).
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
That don't mean that Moonbeam has given up. And just the fact that they would bring such a stupid lawsuit says a lot about CARB and their mindset. We don't need that ignorance on a National level.
A bankruptcy by two of the Detroit 3 would result in a near immediate halt of all automotive and components manufacturing in the United States and would cost taxpayers $66 billion in two years.
Andrews said federal and state governments would pay for a Detroit automaker bankruptcy through lost tax revenues, lower property values in cities with auto plants, dealerships that are forced to close and increased unemployment payments. Also, the federal government would be forced to honor retirees' pensions.
Patrick Anderson, CEO of the Anderson Economic Group in Lansing, Mich., estimates the failure of two of the Detroit 3 would put 1.8 million people out of work.
Bankruptcy would cost automakers at least $5 billion in fees, plus another $1 billion for lawyers, Anderson said. In addition, consumers would steer clear of automakers in bankruptcy, making liquidation more likely.
"Bankruptcy judges have a lot of power," Anderson said. "But they don't have the power to tell people who to buy a car from."
I would like to see a legitimate study by people not so closely tied to the Big 3. There is no doubt in my mind that Michigan will be devastated if one of the Big 3 closed their doors. Naturally tax dollars will be lost with a downturn in the area. I don't believe for a minute that all automotive and component manufacturing will come to a halt. My understanding even the very closely tied Delphi makes a lot of parts for Toyota. I don't imagine any parts maker will close just because they are loyal to the General.
I would be hesitant to buy from a company in C11. I understand the lawyers fees. What are the other $5 billion in fees? We are talking companies that are BROKE. Where is the money going to come from to pay even the attorneys?
I would like to see a legitimate study by people not so closely tied to the Big 3
Are you saying Anderson is tied to GM?
Every study I see and my own experience says if the suppliers lose the big 3 business they will go under and stop supplying to all the marques. It would only take 1 key supplier to shut down the entire industry. Lets say the seat maker goes out (there are only 3 left I believe). This will shut down all the plants using their seats. Shut the assembly plants down for 3 weeks and all the other suppliers to those plants crumble. One way out of this is to have the government to bail out the suppliers to keep them in business.
FYI, BMW is looking for a German/France/US bail out to stay in business. BMW became the first European carmaker publicly to consider tapping Germany’s government- backed banking rescue scheme on Tuesday and said it might also seek US assistance.
Friedrich Eichiner, BMW’s interim chief financial officer, said the German premium carmaker had not made a final decision on whether its German finance operations should join the credit guarantee plan.
Carmakers in France and Germany are in principle eligible to tap the two governments’ banking rescue plans, according to government officials. Until now, no European carmaker has expressed a need to use the European rescue schemes.
However, BMW is in a more difficult situation than most of its rivals. It has been hit particularly hard by falling residual values of leased cars – a legacy of its aggressive leasing policy in the past.
>BMW became the first European carmaker publicly to consider tapping Germany’s government- backed banking rescue scheme on Tuesday and said it might also seek US assistance.
BMW get more assistance from the United States than they probably got for building their plant in SC? Total chutzpah.
Very interesting. Sounds like more could fall. I always wondered how they could be so sure of the value of a car following lease. VW may end up number one after all. Probably the widest diversity of all the auto makers. And far and away highest fleet mileage cars with all the small diesels. Some folks at Chrysler would love to see the demise of Daimler also.
Think about this. What would happen if NO cars were built in the USA for one year? I don't think it would be that big of a deal. We would buy used and keep the ones we have. At 16 million we were so far over the top of buying just for the sake of having a new car. We are not adding that many new drivers each year.
I don't see the collapse of the auto industry being as bad as 1 in 10 losing their homes. With nearly 10% of home owner 90 days in arrears or in foreclosure, the auto makers failing is not as high of a priority.
It can be shown that all automakers are global. That means if one automaker in the USA gets a bailout that is opening the door for any other automaker building cars in the USA. There is no difference in an auto worker losing his job in Alabama than in Michigan or Ohio.
How is giving money to a car maker to move into your state and provide jobs, worse than giving some sleazy sports team a big stadium so they will stay in your state? Personally I would like to see the cities tell the sports franchises you are not welcome in our city with all the crime and idiots you attract. Think Oakland Raiders. Giving tax incentives, land etc to entice business is GOOD business.
You're looking rather foolish on this you know. GM, Ford, and Chrysler are ranked #1, #2, and #3 on their clients listed. There are other auto manufacturers listed there too, as well as the American Automobile Manufacturers Assoc.
"[GM's] collapse would likely drag down suppliers that also do business with other automakers, potentially halting production of Toyota Camrys and Nissan Altimas across the South and Midwest just as it would shut down Buick and Cadillac assembly lines in Detroit."
The story quotes an analyst from Crowe Horwath LLP - the largest accounting firm in the United States with a practice dedicated to franchised dealerships.
"Results released from a survey conducted by CNBC and Portfolio.com confirmed what the heads of Detroit's auto companies testified to in Congressional hearings the last months: Consumers are reluctant to buy a car from an automaker in bankruptcy."
> I would like to see the cities tell the sports franchises you are not welcome in our city with all the crime and idiots you attract
We're together on that! Especially if you want us to pay for your stadium and then have you tell us how to do, what to do, and when to do with it after we build it.
"There isn't a supplier that doesn't touch GM in some way," said Erich Merkle, auto analyst with the consulting firm Crowe Horwath LLP. GM's demise would "shut down all of North American vehicle production for a period of time. It could even shut down other industries," he said. "You cannot let them (GM) collapse."
Crowe Horwath is tainted - look a couple of posts above.
Whether we talking Global Warming, loans, politicians, or scientists, one of the hardest things for people to understand is that you must be skeptical of these sources. Do not "believe" before you check them out, and then still have some skepticism left.
Because the effect of money, job security, and fame will all influence data used, and any analysis, TO THOSE WHO WILL GAIN, or fear of losing such.
Some wise person once said "Follow the Money", if you want to know if the view is probably tainted.
If politicians have received lots of $ from the UAW, if congressmen go to Big3 "conferences" in the Caribbean, or if magazines and consulting agencies receive business from the Big3, then be very suspect. $ corrupts all it touches.
People will say and do a lot of things to get their hands on that $34B + all the other installment there would have to be after that.
If someone knows of any company that collapsed, and brought down the entire economy, please post what that was.
The GM 3.6L DOHC V-6 engine has been named one of the winners in the Ward’s 10 Best Engines list. That engine is used in the Motor Trend Car of the Year Cadillac CTS and Wards says: the 3.6L V-6 is “flexible enough to proliferate through the auto maker’s CUVs (and): the advanced V-6 makes a hardy 304 hp on regular gasoline.”
Comments
They say if the Big 3 go down. Most everyone here feel only GM will go down making Ford stronger in the process. Less automakers going after the million+ PU trucks per year.
I would agree that all 3 going down would create havoc. I don't think GM liquidating will cause that much of a mess. They have lost money much of the last 40 years. They have never in that time frame made 5% profit. The low end of the Fortune 500 average is 5.5% over the last 20 years. Some day GM will have to face facts. They are a poorly run company and have been for decades. Time to toss the dirt on them. Give Ford a boost. I don't think Chrysler has much to offer other than Jeep. VW may buy their mini van as they are using them rebadged and selling ok.
So the experts are playing games with words. Have they given all the scenarios of just GM closing shop. Or is it all or nothing in their little minds?
They said if the Big 3 go under millions of jobs will be gone and all the US plants of all the manufacturers would shut down due to the US suppliers going bankrupt.
They are wrong. 62, I'll commit to you the following;
If the Big 3 go under (need to define that) and *all* the US plants of *all* the manufacturers shut down due to US suppliers going bankrupt, I'll send you a check for a steak dinner and let everybody on the forum know about it, ok?
I'm not too worried about losing this one. :P
You got to give the Big 3 CEOs credit. They are sticking to that scenario like glue. That is because none of them want to be left out of the bailout gravy. Ford says just guarantee us the money and we may not need it. GM says got to have it by Friday or it is curtains. The Chrysler guys says Jimmy whatcha gonna gimme. They probably all sit on different corporate boards together. It is the way business is done. they look out for each other in that realm that US bottom dwellers are not permitted.
To carry the CAR perspective just a bit further. What would happen if Congress said show us a plan where just GM files for bankruptcy. How many jobs lost and how well would the others fare? I have not listened to the hearings. I bet that was not discussed. Yet that is the most likely thing to happen. Nothing realistic about this bailout. It is just give us the money and we can keep going till we need more and more and more.
I believe GM held 23% of the US market the first of the year. What percentage do they have now. I will be real surprised if GM sells 2.5 million vehicles this year. GM is asking for $18 billion. That is over $7000 per car sold. Maybe the Feds should just give every tax payer a $7000 tax credit toward the purchase of any new vehicle and let Americans decide who lives and who dies.
bankrupt does not mean out of business. They have a choice to restructure their business models under the laws of one category of bankruptcy. The car manufacturers need to DOWN SIZE to adjust for volume.
This is a really, really bad move-throwing good money after bad.
WASHINGTON - A bailout plan for the failing U.S. auto industry could include a Cabinet-level oversight board and a provision to withdraw the money if the overseers decide the companies are failing to take steps to overhaul themselves.
The plan would draw the emergency aid from an existing loan program meant to help the automakers build fuel-efficient vehicles. The size of the package hasn't been finalized, but it is expected to be about $15 billion, several congressional aides said.
It would create a board composed of Cabinet secretaries from the departments of Treasury, Energy, Labor, Commerce and Transportation plus the Environmental Protection Agency administrator to oversee a broad auto industry restructuring. A congressional aide outlined the emerging measure on condition of anonymity because it is not yet completed.
In return for the money, the carmakers would have to agree to terms similar to those placed on banks that receive funds under the $700 billion Wall Street bailout: to limit their top executives' pay packages, cease paying dividends, give the government a chunk of future gains and guarantee that taxpayers would be reimbursed before any other shareholders, the aide said.
The bill under discussion would place the special investigator overseeing the bank rescue in charge of keeping tabs on the auto bailout.
The White House and Democratic congressional leaders are narrowing their differences over the auto bailout, but had yet to agree on specific legislative details, officials said.
Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, said Sunday that General Motors Corp.'s chief executive, Rick Wagoner, "has to move on" as part of a government-run restructuring.
"I think you have got to consider new leadership," Dodd said on CBS' "Face the Nation."
Regards,
OW
bankrupt does not mean out of business. They have a choice to restructure their business models under the laws of one category of bankruptcy. The car manufacturers need to DOWN SIZE to adjust for volume.
That is the issue, CAR and all the congressional witness's said that if any of the big 3 declare bankruptcy they will be out of business. No one will buy their cars. And it take down most all suppliers.
Hey, there is no use continuing this discussion on this point. I am surely not going to be able to change any of your minds with all the different experts not being able to change yours. And you certainly cannot change mine since I can see the facts and also know most of the suppliers are already on the verge, if not already, of bankruptcy.
In return for the money, the carmakers would have to agree to terms similar to those placed on banks that receive funds under the $700 billion Wall Street bailout: to limit their top executives' pay packages, cease paying dividends
Done all that, what next.
The one thing I am worried about with this bailout will be that in March the government will see that the Big 3 have done basically all they can. And then they will say there is nothing else that can be done and stop the loans. Then again they may come to the conclusion that they have done all they can and therefore give them the money to tie them over until sales go back over 14 million. Perhaps they will take back the 100 billion GM has put into the pension fund and cover the retirees with the government pension fund? NOT
G.M. says it will be paying retirees about $7 billion a year for the next 10 years. The fund’s assets were worth $104 billion at the end of 2007, more than enough to cover its obligations of $85 billion. Since then, the assets have declined and the obligations have grown, each by undisclosed amounts. The company says it does not plan to add any money to the fund for the next three or four years.
That would be great but you know my opinion is that if the big 3 go under no one will be buying steak dinners anywhere. So it is a pretty hollow promise. Unless of course I jump the pasture fence first and rip the meat off the last cows before the other guy does. :P
And if GM goes under I can probably let you guys know who I am so you can have my address.
Correct, and I say they're full of it. Sorry, but that's like saying if McDonald's goes out of business, they'll take Burger King and Wendy's with them, as well as the entire American beef and ranching industry. How likely does that sound?
I don't think that's much of a worry. I saw a part of Meet the Press on Sunday, and Obama made a statement that he doesn't think the Big3 CEO's are acting with the urgency needed. I don't think he's too happy with them - suspecting they are only doing the minimum necessary to get the loans.
Then again they may come to the conclusion that they have done all they can and therefore give them the money to tie them over until sales go back over 14 million.
What good will that do? GM hasn't made money at that sales level in years. With any cuts they do now in divisions and plants means less sales and revenue to pay their legacy costs. Personally I had bought 4 new GM products in the last 15 years; a) I won't buy another from a corp. that acts like a spoiled child and a welfare bum, and b) they'll still be on the verge of BK and their warranty worth little.
GM needs to take whatever BK steps they need to to devolve themselves of these legacy costs, the UAW, and the unprofitable models and/or divisions.
Then GM needs to reopen with what only the plants and employees for what they need. Mothball and hold onto a few of the better plants shutdown and sell the rest of the real estate. GM needs to restaff with non-union people making a total of $35/hr w/benefits. 90% of their workers would be full-time. 10% of the workers are temps., so that if business goes down GM can reduce costs next week. The factories would be run 2 shifts, if business picks back up to 15M units, 3rd shifts could be started, to meet the demand.
Discussing auto suppliers. I'm not surprised many are in bad shape. I took graduate business courses with people from Sylvania Lighting, and they had goals to improve quality each year and reduce costs each year. The Big3 kept squeezing the supplier profit.
So again we see that not only did the Big3 lose market-share over the years, lose their capital funds by overcompensating and spending, and then try to keep the $ loss down by squeezing the suppliers.
That's certainly incompetent; and imoral and unethical to think that others want to help subsidize them now after these years at the trough they all enjoyed.
IF nothing is done to shore up confidence in what's left of the US automakers after some of their bad management steps (it's always easy to critique after the fact, so I accept that criticism myself realizing I wouldn't have made good choices in their shoes), we are not going to get buying started again in the auto stores.
The solution is to get the people who have money to start spending rather than hoarding it as they cower in fear with all the negative stories through the end of the presidential election meant to have a political goal in my opinion. Having been through many recessions, this just reminds me of the worst I've seen.
The one BIG factor is that the scare factor has come early, in my opinion politically driven to help elect one of the candidates, rather than later in the recession. Usually the nonfinancial media doesn't start talking about a recession and how bad it is until it's starting on the recovery side.
The rest of the story is that businesses because of different communication and atmosphere in the media and populace have started prophylactic layoffs. Usually businesses are caught with too many employees after the horse is out of the barn; hence we have the 700,000 figure for layoffs in November. That exacerabates the media frenzy and the panic in the people who could be spending.
We have to get people out spending and moving the money through our nonindustrial economy now. Stopping at a Kohls on Saturday there was lots of spending in a relatively desperate corner of Indiana hurt by industries who have gone through the last 15 years. That's optimistic.
A problem is that the money that went into the financial system has been misused because Congress and President diddled and daddled with the politics. I heard that Citi bought two Guatamalan banks after they received the first money meant to loosen up credit in this country. Our financial institutions aren't doing as they were supposed to do and there's no jaw-boning coming from the President or Congressional leaders because of their complicity.
We have to get confidence building despite the layoff panics and the media-driven panics. People need to know that it buy a car from one of the Big 3 and that company dissolves, that the warranty will be backed up somehow by the government and other car companies. That should include HoToy, since I hold the foreign companies to blame for the problems. That will start more car sales moving and move building of US brand cars.
2014 Malibu 2LT, 2015 Cruze 2LT,
So why aren't we bailing THEM out? All the "experts" keep pushing the critical point of not letting the suppliers go down, yet the only solution is to bail out the car salesmen?
Predictions go different ways, each taking his/her own. Should someone can actually see the future and manage to prove it I will change my mind.
While people with money may be cutting back on luxury purchases a little, there are not that many wealthy people to make much of a difference. The problem with consumers not spending is with the 90% of the population who live check-to-check being broke, having gone deeper and deeper into debt on credit cards and equity loans on properties that had balloon values which weren't sustainable. When these people who were spending more than they were making hit their credit limits, and their home values started declining, then they started dragging down the finance industry that was fueling this. There is no quick recovery until people work down their debt. It's going to be painful because reduced spending means a slower economy. As a society we've ate and drank most of our week's groceries in 3 days.
People need to know that it buy a car from one of the Big 3 and that company dissolves, that the warranty will be backed up somehow by the government and other car companies. That should include HoToy, since I hold the foreign companies to blame for the problems.
LOL. The HoToy comment - true. But that is what competitors are supposed to do!
That will start more car sales moving and move building of US brand cars.
It may keep people from buying more non-Big3 vehicles. But it will not mean a net increase in vehicle sales. Anything that increases Big3 sales simply reduces sales of other auto manufacturers, which many are made here in the U.S. The only thing that increases auto sales is to get people out of debt, and stimulus checks help. But then that makes the U.S. debt worse, and just like consumers the U.S. government is going to reach a debt limit. When that happens there are no more bailouts and stimulus possible.
So consumers going into debt, pushing GM and its suppliers into debt, pushing the financial industry into debt, pushing the U.S. government further into debt, will cause a collapse.
Yes, and one thing you can't do is collect data on something that has not happened yet.
The data we can look at is from historical events. As I said before the companies that were in the Dow 30, 100 years ago are no longer there. All gone - the biggest failed, merged, closed, BK ... The data shows us that the failure of a single company has not destroyed the U.S. economy. The data shows us that there are competitors in each industry who will quickly pick up the business of any failed-company. And the data shows us that each decade more and more people are employed, with workers going to other companies and industries as the economy changes.
General Motors today unveiled an unusually frank advertisement acknowledging it had "disappointed" and sometimes even "betrayed" American consumers as it lobbies to clinch the federal aid it needs to stay afloat into next month.
"While we're still the U.S. sales leader, we acknowledge we have disappointed you," the ad said. "At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster."
The unsigned open letter, entitled "GM's Commitment to the American People" ran in the trade journal Automotive News, which is widely read by industry executives, lobbyists and other insiders.
In the ad, GM admits to other strategic missteps analysts and critics have said hastened its recent decline.
"We have proliferated our brands and dealer network to the point where we lost adequate focus on the core U.S. market," the ad said. "We also biased our product mix toward pick-up trucks and SUVs."
I am getting so tired of GM "admitting" how bad it was "in the past", with poor design, bad marketing decisions, and below-average reliability, and then talking about how the lesson has really been learned this time. This has got to be like the fourth time they have done this in an advertising campaign since 1990, and that last time they did this was in 2007, wasn't it? And these are the clowns we are going to give away taxpayer dollars to (no-one here will convince me these are "loans" - loans are defined as money that has some potential of being repaid)?
If they had MEANT what they said the first time they said it, in the mid-90s, they wouldn't be in this mess today. And something more than 1/3 of Americans would be for giving them some money to tide them over in hard times.
http://www.autonews.com/article/20081208/ANA02/312089881/1018
(registration link)
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
This is precisely why new leadership (CEO in particular) needs to come to GM whether they go Chapter 11 or receive taxpayer dollars.
You don't know me either! I stick to my commitments. Of course if I become indigent or the entire country collapses then all bets are off. :P
They're not quite that bad off, but 2.5m is a good guess for next year.
YTD through the end of November:
GM- 2,758,705
Buick Total- 128,288
Cadillac Total- 147,924
Chevrolet Total- 1,663,440
GMC Total- 347,213
HUMMER Total- 25,315
Pontiac Total- 250,902
Saab Total- 20,189
Saturn Total- 175,434
If December sales end up about like November, GM will finish the year just under 3 million in the US. You have to go back a long way to find an annual total that low for the General, probably 1958 (1982 was 4.5 million).
I think GM sold about 2 million cars in 1958. Roughly 1.1 million Chevy cars. ~122,000 Cadillacs. Buick, Olds, and Pontiac might have accounted for 800,000 among them.
How popular were trucks back then? Would GMC and Chevy trucks have been popular enough to pull off a million units combined? I'm guessing not, but anything's possible.
That's what I am worried about.
I really hope the government picks a auto czar/team that know what they are doing and really dig into where the money is going at the big 3. Fully independent.
What happened to GM's problems being the fault of the credit crisis, the housing crisis and the high gas prices being the culprit :confuse:
Where are the folks who blame the media? the biased import buyers? the unfair trade agreements? I thought GM's problems stemmed from Toyota and Honda?
I hear he is trying his best to get Al Gore. That would send shock waves through the ivory towers of the Big 3. An EV in every drive AL. Ban all SUVs. And put the final nail in the GM coffin.
His top pick for director of EPA is now head of CARB. That should send real chills up Wagoner's spine.
Don't count on Obama to save the Big 3.
But in those games everyone plays by the same rules. They don't have a slanted playing field with government support for the team from back home (adults playing for the kids) and a different scoring system for one team over the other (currency valuation) and one team starting with a handicap (the retiree and healthcare expense that the other team doesn't have because of government funded healthcare).
>The problem with consumers not spending is with the 90% of the population who live check-to-check being broke, having gone deeper and deeper into debt on credit cards and equity loans on properties that had balloon values which weren't sustainable.
I see your point. I was speaking from the perspective of friends and family with whom we're familiar; they are comfortable and not living on credit but have mostly stopped spending on anything extra. :sick:
2014 Malibu 2LT, 2015 Cruze 2LT,
I think the biggest problem is this argument has turned into the entire domestic automotive industry will fail instead of we have two companies, GM and Chrysler, that are in serious financial trouble. I didn't think we should have bailed out the banks and I don't think we should bail out GM or Chrysler. GM has lost money each quarter since 2004, during this time US car sales exceeded 16M. I know you have a personal stake in GM survival but it's time for an overhaul. GM needs a pre-packaged bankruptcy. GM talks to it's creditors, dealers and suppliers and negotiates new terms for their debt and closure and the government helps them through this process. Yes we will lose jobs, which is going to happen no matter what, but maybe we have a leaner GM that can be profitable in two years.
I think everyone is miscalculating the US market. i don't see 16M car sales for another 5-6 years, maybe. The reason we maintained such a high level is credit was easy, incentives were large and leases were highly subsidized. That is not going to be the case for while. Couple this with unemployment rising each month, not a lot of confidence out there to spend $25k on a new car when a $10k used car will do the same thing. I hate to see any company fail because of the job loss.
BTW, There is no hope for Chrysler. No money for them. Only choices are bankruptcy or sell. Cerebus made a bad investment plus there is nothing in the pipeline to save this company.
We may never see 16m cars again. The Feds are close to following California with more mandates on what can and cannot be sold. Whether they are ready for prime time or not we have people of influence that want to force EVs onto the market. These are not going to be high profit margin vehicles due to high cost of materials. I look for people to keep what they have or buy used cars vs mandated vehicles.
The countries that we compete against have higher taxes to support their government health care, pensions, and lifelong employment - Germany and Japan we're mainly talking about here. They also have a higher-cost-of-living. Yet their auto-workers are paid less or the same as ours. So the playing field isn't slanted. The German worker is only getting "free" healthcare because they are paying for it in their taxes.
different scoring system for one team over the other (currency valuation).
Currency fluctuates like people on a see-saw, there is no long-term advantage of one economy over another. The Euro used to be $0.89, then $1.55, and now $1.25. The strength of the yen is no indicator of the health of the economy. Japan is now at about 30% of what their stockmarket was peaked at about 20 years ago.
I was speaking from the perspective of friends and family with whom we're familiar; they are comfortable and not living on credit but have mostly stopped spending on anything extra
Me too. I bought a car and house last year for cash. I've bought things for the house. But until the markets recover some, the only extras I'm buying is a trip to Hawaii which I have free airfare (due to miles). I'd rather sleep easy at night, and possibly retire early, rather than seeing my money go into a bunch of "stuff" that later clutters the garage and attic.
The problem with the Big3 can be summarized as: for too many years too many groups of people took too much money out of the company in various ways of compensation, while the corporation did not put enough effort into keeping customers happy in various ways.
I know this stuck in your craw, gagrice, but keep up with the news! That lawsuit was dismissed a long time ago (March maybe?).
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Regards,
OW
Regards,
OW
Andrews said federal and state governments would pay for a Detroit automaker bankruptcy through lost tax revenues, lower property values in cities with auto plants, dealerships that are forced to close and increased unemployment payments. Also, the federal government would be forced to honor retirees' pensions.
Patrick Anderson, CEO of the Anderson Economic Group in Lansing, Mich., estimates the failure of two of the Detroit 3 would put 1.8 million people out of work.
Bankruptcy would cost automakers at least $5 billion in fees, plus another $1 billion for lawyers, Anderson said. In addition, consumers would steer clear of automakers in bankruptcy, making liquidation more likely.
"Bankruptcy judges have a lot of power," Anderson said. "But they don't have the power to tell people who to buy a car from."
I would be hesitant to buy from a company in C11. I understand the lawyers fees. What are the other $5 billion in fees? We are talking companies that are BROKE. Where is the money going to come from to pay even the attorneys?
I would like to see a legitimate study by people not so closely tied to the Big 3
Are you saying Anderson is tied to GM?
Every study I see and my own experience says if the suppliers lose the big 3 business they will go under and stop supplying to all the marques. It would only take 1 key supplier to shut down the entire industry. Lets say the seat maker goes out (there are only 3 left I believe). This will shut down all the plants using their seats. Shut the assembly plants down for 3 weeks and all the other suppliers to those plants crumble. One way out of this is to have the government to bail out the suppliers to keep them in business.
FYI, BMW is looking for a German/France/US bail out to stay in business.
BMW became the first European carmaker publicly to consider tapping Germany’s government- backed banking rescue scheme on Tuesday and said it might also seek US assistance.
Friedrich Eichiner, BMW’s interim chief financial officer, said the German premium carmaker had not made a final decision on whether its German finance operations should join the credit guarantee plan.
Carmakers in France and Germany are in principle eligible to tap the two governments’ banking rescue plans, according to government officials. Until now, no European carmaker has expressed a need to use the European rescue schemes.
However, BMW is in a more difficult situation than most of its rivals. It has been hit particularly hard by falling residual values of leased cars – a legacy of its aggressive leasing policy in the past.
BMW get more assistance from the United States than they probably got for building their plant in SC? Total chutzpah.
2014 Malibu 2LT, 2015 Cruze 2LT,
Think about this. What would happen if NO cars were built in the USA for one year? I don't think it would be that big of a deal. We would buy used and keep the ones we have. At 16 million we were so far over the top of buying just for the sake of having a new car. We are not adding that many new drivers each year.
I don't see the collapse of the auto industry being as bad as 1 in 10 losing their homes. With nearly 10% of home owner 90 days in arrears or in foreclosure, the auto makers failing is not as high of a priority.
How is giving money to a car maker to move into your state and provide jobs, worse than giving some sleazy sports team a big stadium so they will stay in your state? Personally I would like to see the cities tell the sports franchises you are not welcome in our city with all the crime and idiots you attract. Think Oakland Raiders. Giving tax incentives, land etc to entice business is GOOD business.
You're looking rather foolish on this you know. GM, Ford, and Chrysler are ranked #1, #2, and #3 on their clients listed. There are other auto manufacturers listed there too, as well as the American Automobile Manufacturers Assoc.
http://andersoneconomicgroup.com/About/Experience.aspx
Southern autoworkers also fearful of no bailout (Yahoo).
The story quotes an analyst from Crowe Horwath LLP - the largest accounting firm in the United States with a practice dedicated to franchised dealerships.
"Results released from a survey conducted by CNBC and Portfolio.com confirmed what the heads of Detroit's auto companies testified to in Congressional hearings the last months: Consumers are reluctant to buy a car from an automaker in bankruptcy."
Consumers Reluctant To Buy From Bankrupty Automaker, Survey Confirms (AutoObserver)
We're together on that! Especially if you want us to pay for your stadium and then have you tell us how to do, what to do, and when to do with it after we build it.
2014 Malibu 2LT, 2015 Cruze 2LT,
"There isn't a supplier that doesn't touch GM in some way," said Erich Merkle, auto analyst with the consulting firm Crowe Horwath LLP. GM's demise would "shut down all of North American vehicle production for a period of time. It could even shut down other industries," he said. "You cannot let them (GM) collapse."
OK does this one work for the domestic industry?
Regards,
OW
Whether we talking Global Warming, loans, politicians, or scientists, one of the hardest things for people to understand is that you must be skeptical of these sources. Do not "believe" before you check them out, and then still have some skepticism left.
Because the effect of money, job security, and fame will all influence data used, and any analysis, TO THOSE WHO WILL GAIN, or fear of losing such.
Some wise person once said "Follow the Money", if you want to know if the view is probably tainted.
If politicians have received lots of $ from the UAW, if congressmen go to Big3 "conferences" in the Caribbean, or if magazines and consulting agencies receive business from the Big3, then be very suspect. $ corrupts all it touches.
People will say and do a lot of things to get their hands on that $34B + all the other installment there would have to be after that.
If someone knows of any company that collapsed, and brought down the entire economy, please post what that was.