>Check my profile, I drive a Mazda3, which is based on the European Ford Focus (pretty much is a Focus, just Mazda-tuned and skinned).
I may be mistaken, but the Mazda3 platform is shared by volvo S40 and the european ford focus.
I think I am not....here you go
"The Mazda3 platform (C1) has also given rise to several vehicles, including two Mazda3 variants (sedan and five-door), the European Ford Focus, the Volvo S40 sedan, Volvo V50 wagon, and the Mazda5 six-passenger compact minivan. Is the CX-7 another use of the Mazda3 platform? Partially."
Also "The Mazda6 platform (CD3) has to be one of the most promiscuous of all in recent automotive history, spawning not only variants of its own (wagon, five-door, Speed6), but also an array of Ford Motor products (Fusion, Milan, Zephyr, Edge, etc.). Is the CX-7 another use of the Mazda6 platform? Partially."
This is a whole other discussion as to what is and what isn't an American made car. It is not so much as to where the parts come from or the final assembly point but where does the final dollar fall and why is the process so one sided.
And one of the other benefits overlooked about trade between nations is it brings a better chance of peace, than war.
Good point. I'm old enough to remember when most Americans saw "Red China" as our probable World War III enemy. Would we run out of nukes before they ran out of soldiers? That's what we worried about in the early 1960s.
Today, we worry about how deeply indebted we are to them. I'm not happy about that, but I'll take today's worries over yesterday's.
Let no one doubt that the lobbiesest from foreign auto makers have not done a great job of getting their auto makers to have Congress refuse these loans!
I think Senator Shelby from Ala is doing the job of protecting his state's parochial interests in protecting the transplants in his state and region of the country and in a condescending and arrogant manner. He seems like a nasty SOB but he must bring home the pork.
Personally, I think we need to provide some "interim" loan financing until the Detroit 3 issues are resolved one way or the other over the next several months. I'm not a fan of government involvement in business, but I'm also a realist about what's best for the country short term. The last thing we need is massive auto related unemployment right now on top of the already ugly jobs situation. Its going to be a serious recession as it is, add all the impact from a sudden Detroit 3 collapse and we may be headed for a depression. The transplants won't quickly take over the plants. Heck, they won't even be able to meet all of the replacement demand if GM, Ford and Chrysler fold. Not only do they not locate in union areas, but high unemployment will affect their business as well, not to mention many auto parts vendors going under. In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down. The Detroit 3 may not be the answer to our auto needs long term, but let's not shoot ourselves in the foot short term.
Let me understand something which I am asking the more connected posters to expound on since they are closer to the D3 than I am as a long time customer.
Congress approved funds of $25B to help D3 meet fuel efficiency rules in September. Since then, sales plummeted for the entire global auto industry. The LEADERS of the D3 are on a second try to get any funding to survive the New Year.
The economy in the meantime plummets to 30 year records and some first time ever records. Next week congress will most likely approve stop-gap funding with strings attached, I assume out of the $25B fuel-efficiency funds which will need amending to release.
Time is short. I believe in December, the economy will at least mimic November in the current trend in a slew of categories.
OK, enough BS. My question is:
Does anyone really believe all of the D3 will make it out of 2009?
I agree that higher unemployment would be bad. Here's the question. Would it be better to take this 34 billion dollars and employ these people repairing our infrastructure e.g. or use it to keep them working at their current jobs for another year? Whether or not you're a fan of government jobs programs you've got to agree that if the result is something that benefits everyone it's better than throwing the money down a hole.
Today, we worry about how deeply indebted we are to them. I'm not happy about that, but I'll take today's worries over yesterday's.
Amen to that. It is easier to make more money than it is to survive a nuclear war. I would look for the Chinese to buy up the pieces of GM. They love the Buick in China. They will soon pass US as the number one car buying nation. They will need the capacity.
Does anyone really believe all of the D3 will make it out of 2009?
Only if the UAW makes "real" and meaningful concessions. Then I can see Ford making it and GM only if they do some quick and massive restructuring. Chrysler is probably through unless Ceberus puts up more money and I think that should be a condition for any government loans there. Having said that, I think the question becomes more like will any of them make it through 2011? That may be more doubtful, but by then hopefully the economy is rolling again and can better absorb the Detroit 3 collapse, or at least the failure of GM and Chrysler.
Would it be better to take this 34 billion dollars and employ these people repairing our infrastructure e.g. or use it to keep them working at their current jobs for another year?
Very good observation. I think that is what Obama has in mind. His stimulus package is asking for $136 billion to start immediately repairing roads and bridges around the USA. He claims each billion spent will put 40,000 people back to work. Just $34 billion would employ 1.360,000 people. Far more than the Big 3 represents. Those workers will stimulate the buying of whatever cars are left. Problem solved. May the best products come out on top for all of US.
You have a good point. The only problem is that a sudden collapse will roll down to the vendors and that will affect the transplants ability as well. It will also cause a sudden supply imbalance leading to quickly higher prices. I think you've got to take a bit of time to shut down D3 so that the transplants can adjust and resolve these related problems in a more orderly manner. Meanwhile if Detroit turns it around, so much the better for supply and demand, but longer term D3 is probably not essential provided the US can develop or expand other industries to absorb the D3 job losses.
I thought that was what i said..based on the Euro Focus...beyond that it's semantics and I was arguing with someone who can't read a profile and figures I've lived my life in Toyotas or something. Sorry but I HATE Toyotas and had to defend myself. :shades:
He seemed like one of those people who buys the flag, not the vehicle. That's his choice, but one must remember how many of these American car companies came to be: through bankruptcies, mergers, and acquisitions. Anyone remember Packard? Hudson? American Motors/AMC? They never got bailed out. They failed or got bought. Even if, for example, Chrysler went bankrupt, there's still the matter of the Viper, and the Caravan. Hey, VW might buy Chrysler to secure their minivan source, since they're selling a version of it now. And there's plenty of people who wouldn't want to see the Viper go away...potential buyers of whom some are rich enough to be potential buyers for the design and rights. Same story with GM and the 'Vette. Can you imagine a car nut, like, say, Jay Leno allowing one of those famous names to die off?
GM or Chrysler going BK would be rough, but not the end of the world like some would want us to think.
And yes, I always insist on separating Ford out, because Ford is in a VERY different financial and market position from the other two these days.
This is a whole other discussion as to what is and what isn't an American made car. It is not so much as to where the parts come from or the final assembly point but where does the final dollar fall and why is the process so one sided.
Yes, the "Buying American Cars, What Does It Mean?" forum has been going on for a number of years now. :P
Since the profit margins on vehicles are well under 10% (0% at the D3), that means most of the car costs stay in the country of assembly/sale. For example:
Sales price - $10,000 (just for round numbers) Profit to automaker in home country - no more than $1000, likely much less Money to dealer, transport truck company, paint shop, parts shops, assembly plant, parts suppliers located in the USA - $6000 Money to outside the country for non-US made parts (lets say $3000).
Note that all cars, both Detroit badged and others, have many parts from outside the US - transmissions, fuel injection parts, spark plugs, radios, etc. The differences in parts sourcing between US and foreign nameplates is not all that great anymore.
When we talk about "My country" let's make sure we are talking about U.S jobs and are not using "My country" as camouflage for "UAW".
Its going to be a serious recession as it is, add all the impact from a sudden Detroit 3 collapse and we may be headed for a depression. The transplants won't quickly take over the plants. Heck, they won't even be able to meet all of the replacement demand if GM, Ford and Chrysler fold.
All 3 are not going to go out of business the same day. Ford can last at least a year longer than GM. The company that currently owns Chrysler, can either fund them, or sell them.
not to mention many auto parts vendors going under.
If a vendor is dependant on only GM for it's income, that was a bad business decision.
In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down.
GM will need to cut jobs, with or without a bailout. They are simply building way more cars than they can sell (at a profit). Discounting cars to the point of loosing money on each one, just to get rid of them, will not work anymore. They have no more money to waste. At least I hope they don't get more.
You say "Impact every business soon". Well, are we going to bailout every company that has financial trouble? Where do you draw the line?
I'm not a fan of government involvement in business, but I'm also a realist about what's best for the country short term. The last thing we need is massive auto related unemployment right now on top of the already ugly jobs situation.
I doubt the difference is as great as you think. Even if they get the loans there are going to be massive job losses. If they don't get the loans and one or more go under, the best parts are going to survive in a consolidated or purchased company. And the US will continue to buy as many cars as it needs, regardless of the fate of individual companies.
Having said that, I think the question becomes more like will any of them make it through 2011? That may be more doubtful, but by then hopefully the economy is rolling again and can better absorb the Detroit 3 collapse, or at least the failure of GM and Chrysler.
My best case scenario for 2011 is this:
1. Ford survives. 2. Chrysler is gone. 3. GM is forced to make massive cuts and changes (more than their current plan). They replace Wagoner, get rid of their high cost structure, strip down to 40% of current size, and the new management REALLY gets going on competitive new products.
We have a smaller but viable auto industry again and can grow in a competitive environment with excellent products.
My worst-case scenario is as follows:
1. Congress gives $34B bridge loans. GM makes token incremental efforts to restructure. Wagoner stays. UAW makes token moves to suspend (not eliminate) jobs bank. 2. Chrysler muddles along for another year before going belly up. 3. GM continues to lose market share, Wagoner comes back to the trough at least two more times, to the tune of almost $100B total. 4. GMs market share continues to drop, even in an economic recovery. GM continues to make reactive incremental cuts. By 2011, GM is either dying or actually finally goes BK after draining the taxpayers of $100B. Becuase of GMs mediocre continued presence, Ford is badly strained because of the weakened competitor in GM that has been artificially kept on life-support for 3 years too long.
There is one big risk at Ford. They are very heavily leveraged. If demand keeps going down they may be in trouble before all this new product comes on line. My bet is that if Congress puts aside money, they will have to use some of it by the end of 2009 or early 2010 to bridge the gap until the new stuff is available. If they make it I think they can become a formidable competitor to the transplants down the road.
Have owned many US & foreign cars & trucks and can't agree with those who would bury GM, Chrysler & Ford. And I'm disgusted with the behavior of our showboating politicians jerking around these easy targets after they've given away tons more of OUR cash to far less deserving financial companies.
One of their major competitive disadvantages is that the superior UAW negotiated benefits must be paid out of the profits from each car sold. Nobody else has benefits like UAW workers and retirees - not even gov't workers & retirees. I say the Big 3 have done the right thing for their employees. All the other non-union automakers, among others, are passing along these health benefits to the taxpayers for their employees and retirees lacking such gold-plated coverage. That's a subsidy of sorts. I guess my point is that GM, Ford and Chrysler employees cost taxpayers nothing, because their employer has done right by them. They are even paid during layoffs - where else does that happen? Everybody else who is laid off gets paid unemployment - at the public expense. While I would love to have such benefits, I certainly don't jealously criticize companies that provide them to their employees. These few companies happen to be doing the right thing - both to their employees and to the taxpayer who saves the cost of paying those benefits. I know people who work full time who still qualify for food stamps and gov't health programs - that's a subsidy to that irresponsible employer.
A bridge loan, with lots of conditions (especially on corporate perks, pay and parachutes) seems appropriate. When the economy improves, there will be plenty of demand for those trucks. I'd rather see my tax dollars used to help companies that make something than companies that sell paper.
I say the Big 3 have done the right thing for their employees.
Call me cynical - I probably am - but what you see as "the right thing", I view as a calculated attempt to buy labor peace & then stick us, the consumers, with the bill.
Rather than stand up to the UAW, Big 3 management took the path of least resistance: give the union what it wanted & then build the settlement cost into the price of new cars. Both management & labor pegged the rest of us as a bunch of passive suckers who would meekly pay whatever they decided to charge us. After all, what choice did we have? What were we going to do about it - buy imports?
Much to their surprise - and eventual chagrin - that's exactly what we did. They - big 3 management & labor - badly miscalculated, & now they're running to the government for help. They couldn't win us over in the showrooms, so now they're asking the government to hold us down while they pick our pockets.
It's too bad that management didn't do the right thing for customers & shareholders 30 or 40 years ago by walking away from the negotiating table & telling labor, "Go ahead & strike. We'll wait you out." Customers, shareholders & employees would all be better off today if management had shown some courage.
I'm angry at the UAW, but I'm far angrier with management.
I guess my point is that GM, Ford and Chrysler employees cost taxpayers nothing, because their employer has done right by them. They are even paid during layoffs - where else does that happen? Everybody else who is laid off gets paid unemployment - at the public expense.
According to a recent post by '62, the laid off still take unemployment and then the jobs bank kicks in *after* the unemployment is exhausted.
I'm angry at the UAW, but I'm far angrier with management.
I agree wholeheartedly.
As far as berri saying the state pays unemployment. Look at your W2 for SUCI. You pay State Unemployment Compensation Insurance. You are paying for that not the state. The state and Federal government do not PAY for anything. We the tax payers pay for all services rendered. The Jobs Bank was gotten by thug tactics used by the UAW. Big 3 just has Stupid management that buckled instead of locking them out when they had the chance. As recently as last year.
One of their major competitive disadvantages is that the superior UAW negotiated benefits must be paid out of the profits from each car sold. Nobody else has benefits like UAW workers and retirees - not even gov't workers & retirees. I say the Big 3 have done the right thing for their employees.
So having to sell cars for less than it cost to build them, is doing the right thing? Why do you think nobody else has benefits like these. They would like to stay in business, and make money. I guess making a profit is not important, as long as the union is happy, right? What kind of benefits will they be getting when the automakers go bankrupt?
ah, the employer pays for unemployment and the rate is often set by how often they lay off(the more you lay off the bigger the tax and the more people you hire the bigger the tax). Every state has different ideas, so it depends on which state you live in. Also employers are allowed to pass this cost along to their workers. So some people pay unemployment taxes out thier pay checks and others do not. However it is your employer that is responsible for paying the tax.
However I agree with you about stupid management. I see why they agree back when they had 90% of the market but as market share and profits dropped this benefit should have been the first to go. I am a pro union guy, and I think some changes in the governance of unions are long overdue.
BEFORE the financial mess Detroit was losing market share. And that's not a problem that was going to turn around very fast. Even assuming they get some bridge loans, even assuming that those bridge loans get them back to some kind of stable situation, they're still going to be fighting to turn around the persception, fair or not, that they build an inferior product. The legacy of the K cars seems to be pretty hard to shake off. :surprise:
Funds would come from previously approved environmental legislation
Harry Stoffer
Automotive News | December 5, 2008 - 12:15 pm EST
WASHINGTON -- Democratic leaders of Congress indicated this evening they have reached agreement on a bailout plan for the Detroit 3.
The accord is designed to provide short-term loans to General Motors, Ford Motor Co. and Chrysler LLC to prevent an industry collapse and allow a comprehensive restructuring of the companies early next year, House Speaker Nancy Pelosi, D-Calif., said in a statement.
Congress is scheduled to vote on bailout legislation next week.
Democratic leaders also have reached agreement with the White House on the plan, a senior congressional aide told Reuters. The package totals between $15 billion and $17 billion, the aide said, speaking on condition of anonymity.
Pelosi suggested she was willing to fund the emergency loans out of a $25 billion package already approved to help automakers retool for fuel-efficient vehicles. Pelosi and Senate Majority Leader Harry Reid, D-Nev., had previously opposed that approach, which is favored by the Bush administration.
Under the agreement, Pelosi said she would demand "a guarantee that those funds would be replenished in a matter of weeks" and that automakers would not delay work on improved fuel economy.
The loans would allow the Detroit 3 to maintain operations until President-elect Barack Obama takes office Jan. 20.
Taxpayer protection
At hearings this week, GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli said that without a combined $11 billion in emergency loans by year end, they would not have enough money to meet their financial obligations.
That funding was part of a $34 billion request for loans and credit lines.
Pelosi said that "Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected."
The New York Times quoted Reid as saying he expected House and Senate "votes next week on a responsible plan to help the millions of Americans who rely on a healthy auto industry for their livelihoods.”
But Reid added: “We will need support and cooperation from Republicans to determine what that vote happens and whether it will succeed."
Ford said in a statement Friday night that it is "encouraged" by the promise of congressional votes next next week.
As recently as Thursday, Pelosi and Reid had insisted that the Bush administration make the emergency loans to the Detroit 3 out of a $700 billion rescue fund for financial institutions. The administration said it did not have that authority.
Consensus built for an interim rescue package after more than five hours of testimony today before the House Financial Services Committee.
Committee Chairman Barney Frank, D-Mass., said he was “more optimistic than before” that GM and Chrysler would get enough federal loans to live until next year when the Congress and the Obama administration can take up a more complete rescue measure.
That package could be completed with stringent government oversight, milestones and possibly equity rewards for the risk of lending the money, Frank said.
He said failure to act immediately would be an “unmitigated disaster” for an already-fragile U.S. economy.
Ford Motor Co. CEO Alan Mulally said his company doesn’t immediately need loans but is supporting GM and Chrysler to prevent a failure and the consequential collapse of the domestic parts supply base. Ford says it may need $9 billion if one of its rivals doesn’t survive.
The Detroit 3 CEOs and UAW President Ron Gettelfinger testified to Congress for a second consecutive day Friday.
Responding to lawmaker questions, Chrysler’s Nardelli said a $4 billion interim package would suffice for his company. Wagoner said GM needs about $4 billion by January and up to $10 billion through March.
I like that part too. Good for my Ford stock. :shades: Ford's pretty well along on their reorganizing and "right-sizing." GM's still trying to decide what size is right (instead of creating a flexible infrasructure), and Chrysler is still trying to decide to put the Viper engine in the 300c or in the Charger. :P
Ford WILL have a supply problem if one of those others goes belly-up...they'll probably need the money to keep enough suppliers afloat long enough. Personally I like the idea of giving suppliers a bailout if GM or Chrysler fails, rather than giving it to GM or Chrysler. That opens the field for any car company to survive on their own merits (Ford), a newcomer to come in and start up (say Tesla, just as an example) AND for parts to still be available if GM and Chrysler fail (face it, we're gonna need those, which means we'll end up paying to keep the suppliers afloat anyway).
Under the agreement, Pelosi said she would demand "a guarantee that those funds would be replenished in a matter of weeks" and that automakers would not delay work on improved fuel economy.
NO Problem Pelosi, just keep those printing presses rolling. You have an ironclad retirement for life with your fancy pension plan.
So it should be a MERRY CHRISTMAS for Detroit, with a $15 billion handout from the struggling tax payers. It will be interesting to see how they repay our generosity. Will management and the UAW pull in their belts and put their greedy tendencies on hold?
I like the idea of giving suppliers a bailout if GM or Chrysler fails, rather than giving it to GM or Chrysler.
PARTS is PARTS. Where would any automaker be without parts? That makes a lot more sense than giving cash to a parts assembler that has proven they do not know how to build cars that are wanted or make money.
And I'm disgusted with the behavior of our showboating politicians jerking around these easy targets after they've given away tons more of OUR cash to far less deserving financial companies.
Whatever Congress or the Executive branch have done last week or 5 years ago, is irrelevant to the present and deciding what is right and fair? To add to errors by committing the same errors/biases is not correct.
These few companies happen to be doing the right thing - both to their employees and to the taxpayer who saves the cost of paying those benefits.
They were forced into a contract by the unions. How the Big3 and their unions use their money is their business - they decide. If they wish to give it all away in pay, bonuses, stock options, Job Banks, and excessive pension pay and benefits that's they're business. They have made those choices over many years. Now that that they have burned thru all their money, they want taxpayer $ to continue on! :mad: THAT is the problem I have with it. They screwup, and everyone else (on average) who does not make as much or expect that sort of pension is being asked, or should I say forced to pay for them! :mad:
I'd rather see my tax dollars used to help companies that make something than companies that sell paper.
You mean your Social Security funds and your descendants lower standard of living w/higher taxes. Because any $ loaned that is not repayed is tacked onto our $11,000,000,000,000 national debt. The federal government does not have limitless $; it is funded by people who invest in Treasuries and such. If the government continues to act like the Big3 and use it's reserves in give-aways to people and corporations, the U.S. government ends up in a similar position as the Big3 today. When the government is so far in debt, and the average consumer is so far in debt, there will be no recovery for many, many years. That may be now.
We need to end bailouts and giveaways; and STOP using the jealousy arguments of "they got this last year and were wasting $ in Iraq, ... ". We need to stop government spending anytime we can.
Ford Motor Co. CEO Alan Mulally said his company doesn’t immediately need loans but is supporting GM and Chrysler to prevent a failure and the consequential collapse of the domestic parts supply base. Ford says it may need $9 billion if one of its rivals doesn’t survive.
It's like an options package where all you want is Bluetooth but you need to pay $4,500 for the Premium Package with all the other goodies.
If GM or C goes, you pay. If you pay them the $25B, I'm good!
Get it? He does not have to take the $1 compensation because the taxpayers keep everything alive.
The only problem is that a sudden collapse will roll down to the vendors and that will affect the transplants ability as well.
This is a very unlikely scenario, that has been thrown out by proponents of the bailout, who have $34B to gain - may I add, to scare the general public who has little business and market understanding. It is thrown out so the common man polls in favor of the loan, and Congress is pressured into a bad decision.
The fact is that GM or Chrysler might go bankrupt first. Say if that's GM; the result is that GM loses it's market-share of 25%. The other manufacturers have spare capacity as their sales are down about 30-40%. What happens? The business is transferred to the other manufacturers, and this HELPS THEM, and they may become profitable again. Suppliers to Ford and Chrysler would see an increase in business, and would hire additional shifts, or bring back any laidoff workers.
IF GM, Ford and Chrysler get loans they still will layoff many hundreds of thousands of people, simply because either way customers are going to buy 10M vehicles next year.
The auto industry will employ enough people to make and sell 10M people next year, no matter if it's corporate entity A, B, C, and D or owned by stockholders W, X, Y, and Z. That means either a few companies and suppliers go out of business, or everyone cuts back some.
Either way you have to cut suppliers and plants, and employees in the entire auto industry to get from 16M to 10M vehicles. It's just your choice to waste $34B to keep jobs at A, B, and C instead of spending $0 letting the market decide which corporations survive.
Ya he is probably home right now telling his wife to clip coupons and explaining to his kids that Santa ain't coming this year because Daddy might have to work for a $1
They could all never hit another lick for the rest of there lives and never be worried about money.
Because the Wall Street workers don't have contracts, a bunch of them are just let go.
Because the UAW has contracts, you can't just lay off the ones you need to. So you go get concessions. Everybody keeps their jobs in the near term, but their benefits are reduced. Much of the costs are retiree costs which are not the issue with the Wall Street crowd.
Heck, I'd take the 1960s scenario over the current one any day! China is now BOTH a military and economic enemy - and it is our Wal~Mart dollars that are building up both their economy and military to the detriment of ours. I recall our enemies saying that America will sell them the bullets they will use to kill us. Heck, we did more than that! We sold them the capability of making those bullets as well! Of course, what will the Chinese have to destroy if we go to war with them - a bunch of rusted-out abandoned factories, ghetto cities, and an impoverished demoralized population? Heck, if the Chinese scouted out places like Camden, Chester, and vast areas of Philly, they'd think we had already been hit!
China is now BOTH a military and economic enemy - and it is our Wal~Mart dollars that are building up both their economy and military to the detriment of ours.
China is our rival - not our enemy. There's a big difference, which anyone old enough to remember the Cold War can explain to you.
Anyway, if you want to revive the American auto industry, you should be solidly in favor of bankruptcy for the Big 3. Perhaps Ford doesn't yet need it, but GM & Chrysler certainly do. Toss the dead brands (Pontiac & Dodge, for example) overboard & bring in fresh management to lead what's worth saving (Cadillac, for example). That just might trigger an industry rebirth.
China was actually our ally during WW2. They saved some of our fighting men. Yes we are competing with them and trading with them. We buy more junk from them than they buy from US. Who's fault is it that we cannot get enough Nintendos and Gameboys?
I look for China to buy a lot of the property sold in the liquidation of the Big 3.
GM should convert from a For-profit organizaton to a Charity not-for-profit organization. Heck, even charity organizations seems to be have done better :sick:
Since we appear to be on this path to socialism, I have a proposal.
GMs market cap is $2.5B. They want over $10+B to survive (that's well over four times what the market thinks they are worth!). If the Feds are going to loan that money, that's way more than buying GM, right? So why don't the Feds require the following:
1 - use $2.5B to buy out all shareholders. Then the government owns GM. 2 - Replace Wagoner and the entire board. Obama can appoint new management, he's done pretty well with his cabinet. 3. New management works to turn GM around. 4. Government sells GM stock back to the market in the future, or GM fails and the government eats it.
At least we would get rid of the useless Wagoner and the Board.
1 - use $2.5B to buy out all shareholders. Then the government owns GM
I love it !! And offer Cerberus $500M for Chrysler. I bet that's the best offer they'd get.
But instead of running the 2 corporations as is, the corporations are declared bankrupt and liquidated. The government sells off the assets, with U.S. assets being sold to people who guarantee to reopen the auto plants - manufacturing autos or something else.
On a related subject, this is supposedly Armageddon for GM and Chrysler. What sort of schedule do you think the execs. of GM/Chrysler and the suppliers, and the union are maintaining. I mean are they working round-the-clock on deals to sell Hummer, Opel, Chinese operations, Saturn? Do they have their lawyers writing new union proposals? I mean are they taking this as a life and death situation?
Makes sense economically but probably can't happen politically.
Wagoner seems to have been slow on the button, but in all fairness he inherited a lot of this mess. I think they are grooming this guy Fritz Henderson? they brought back from Europe to allow Wagoner a graceful exit in the near future after he wraps up the govt money.
I say the Big 3 have done the right thing for their employees.
Call me cynical - I probably am - but what you see as "the right thing", I view as a calculated attempt to buy labor peace & then stick us, the consumers, with the bill.
Rather than stand up to the UAW, Big 3 management took the path of least resistance: give the union what it wanted & then build the settlement cost into the price of new cars. Both management & labor pegged the rest of us as a bunch of passive suckers who would meekly pay whatever they decided to charge us. After all, what choice did we have? What were we going to do about it - buy imports?
Much to their surprise - and eventual chagrin - that's exactly what we did. They - big 3 management & labor - badly miscalculated, & now they're running to the government for help. They couldn't win us over in the showrooms, so now they're asking the government to hold us down while they pick our pockets.
It's too bad that management didn't do the right thing for customers & shareholders 30 or 40 years ago by walking away from the negotiating table & telling labor, "Go ahead & strike. We'll wait you out." Customers, shareholders & employees would all be better off today if management had shown some courage.
I'm angry at the UAW, but I'm far angrier with management.
In my view the UAW did what it was supposed to do in our Capitalistic system, i.e. fight tooth and nail for every single dollar in wages and benefits that it could get Management to agree to pay. Detachedly this is what they were supposed to do.
As you correctly note it's mostly past management's fault for not being stronger in telling the UAW to 'Go Screw'. "We will put you on the streets and decertify you if you even begin to think the word 'STRIKE'." Managements past didn't act like good Capitalists in fighting tooth and nail on behalf of the stockholders. They though that they were doing the right thing by keeping the peace and keeping the profits flowing from continued production of trucks and SUVs but they lacked the foresight that 2008 might arrive some day.
Mulally confirmed yesterday exactly what you said. He said that the D3 since the middle of the last century were of the opinion that 'If we build it they will buy it'. This credo permeated everything they did from crappy cars to bad service to over production to not having a view of the risks in the futre ( Prius, unbelievable fuel prices, death of SUVs ). That's why the three of them were there in front of Congress begging forgiveness for their sins....and for a little bite to eat and a warm cot to sleep on.
You have a good point. The only problem is that a sudden collapse will roll down to the vendors and that will affect the transplants ability as well. It will also cause a sudden supply imbalance leading to quickly higher prices. I think you've got to take a bit of time to shut down D3 so that the transplants can adjust and resolve these related problems in a more orderly manner. Meanwhile if Detroit turns it around, so much the better for supply and demand, but longer term D3 is probably not essential provided the US can develop or expand other industries to absorb the D3 job losses.
This is mostly inaccurate and I'll explain why with a simple example. I was a direct supplier to the D3 for a long time. Every GM truck, every Chrysler auto, all Jeeps and all Mustangs and Crown Vics used our steel. Major supplier...
So here is the example which disproves your fears... Goodyear.
As a major corporation and OEM supplier Goodyear supplies every vehicle maker. They supply the most to GM likely simply because GM is the biggest, then Ford, then Toyota, etc, etc, etc. Say GM goes belly up and 2.5 million units of production are taken out of the supply side. Goodyear loses its GM business..that's bad.
But hey what's this? Ford's and Toyota's and Nissan's orders are suddenly surging and now Goodyear has to change the destination of their shipments from say Lansing to San Antonio or Dearborn. What they lost at GM they find that they have gained at Ford and Toyota.
Why? Because the buyers of those GM vehicles didn't suddenly ascend into heaven. They are still here in the US buying vehicles. Only now they are buying Fords and Toyotas and Nissans and Hondas and maybe but not likely Chryslers.
Nothing changed at the Goodyear level.
Another fear mongering balloon is shredded and falls to earth with a THUDDD.
Wagoner seems to have been slow on the button, but in all fairness he inherited a lot of this mess.
Wagoner is an inbred idiot. He may have inherited a mess. He did not change the direction. He continued to make the same mistakes of his inbred predecessors. He had so many opportunities to bust those UAW stranglehold contracts, and for the sake of keeping the constant flow of money into his pocket, he signed on the line. Anyone could see it was not going to be self sustaining much longer. He lost about 20% of the US market share during his 14 year tenure. His multi billion dollar losses are too many to list here. Think FIAT or as we said when we were kids Found In A Toilet. That is where Wagoner has put GM In the TOILET.
Another fear mongering balloon is shredded and falls to earth with a THUDDD.
I can't see it any other way. GM's losses are Ford, Toyota and Honda's gains. Michigan's losses are Alabama's gain. Been that way forever. Survival of the fittest. Any other way and you weaken the country.
I can't see it any other way. GM's losses are Ford, Toyota and Honda's gains.
And that's why GM should be allowed to fail. Ford is making much better moves and the market should reward them for that. If the US props up GM then Ford has beaten their competition but their competitor is artificially allowed to survive. Ford deserves the reward for better performance.
for the bailout: to save the economy, somewhat to have american technology to improve the neighborhood to offer engineering advancement in america to keep middle class households to maintain support for 650,000 retirees to keep a million people off the unemployment rolls
against the bailout: 1. Japan has slight edge in percieved quality. Only the strongest should be allowed to survive 2. some of our American money might not be harvested and sent to japan 3. we can keep on arguing instead of moving on to the 28 bigger problems facing the US economy 4. what's in it for me? 5. my Honda runs great so nobody should ever need another car company 6. I want my neighbor who works for the Big3 to go into foreclosure so my house value can drop
When you take a look at many American cars today, these aren't bad products. They're just not as good as Audi, Volkswagen, Mercedes or Lexus—the list goes on and on. When you see some of the stuff that Pontiac in particular has been doing for the last 20 years—it's insulting. And the interiors especially are insulting....
I don't understand it. We can build the greatest fighter planes on the planet. It's not like technology is the problem. There is no reason why there should be this kind of separation between Europe, Japan and us.
Everyone wants to make the product issue about price. But I had a MINI Cooper S for a couple years. That car was sturdy and it looked good. It was smart, it was fast and it was fun. And that's a relatively inexpensive car...
If it's a coin toss between buying American or buying foreign, we'll buy American every time. If it just comes down to the exact same product at the exact same price, we'll buy an American car because we're patriotic. We'll do the right thing, but not if it costs more and not if it's a subpar product. What the American Big Three have forced us to do is start being unpatriotic, so we ended up buying cars from other manufacturers.
Remember Audi's problems? Audi was a joke 10 years ago. ...And Audi picked themselves up from the ashes. How? Started making good cars. Well, I think that's your answer.
Comments
I may be mistaken, but the Mazda3 platform is shared by volvo S40 and the european ford focus.
I think I am not....here you go
"The Mazda3 platform (C1) has also given rise to several vehicles, including two Mazda3 variants (sedan and five-door), the European Ford Focus, the Volvo S40 sedan, Volvo V50 wagon, and the Mazda5 six-passenger compact minivan. Is the CX-7 another use of the Mazda3 platform? Partially."
Also
"The Mazda6 platform (CD3) has to be one of the most promiscuous of all in recent automotive history, spawning not only variants of its own (wagon, five-door, Speed6), but also an array of Ford Motor products (Fusion, Milan, Zephyr, Edge, etc.). Is the CX-7 another use of the Mazda6 platform? Partially."
http://www.autofieldguide.com/articles/060606.html
Good point. I'm old enough to remember when most Americans saw "Red China" as our probable World War III enemy. Would we run out of nukes before they ran out of soldiers? That's what we worried about in the early 1960s.
Today, we worry about how deeply indebted we are to them. I'm not happy about that, but I'll take today's worries over yesterday's.
I think Senator Shelby from Ala is doing the job of protecting his state's parochial interests in protecting the transplants in his state and region of the country and in a condescending and arrogant manner. He seems like a nasty SOB but he must bring home the pork.
Personally, I think we need to provide some "interim" loan financing until the Detroit 3 issues are resolved one way or the other over the next several months. I'm not a fan of government involvement in business, but I'm also a realist about what's best for the country short term. The last thing we need is massive auto related unemployment right now on top of the already ugly jobs situation. Its going to be a serious recession as it is, add all the impact from a sudden Detroit 3 collapse and we may be headed for a depression. The transplants won't quickly take over the plants. Heck, they won't even be able to meet all of the replacement demand if GM, Ford and Chrysler fold. Not only do they not locate in union areas, but high unemployment will affect their business as well, not to mention many auto parts vendors going under. In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down. The Detroit 3 may not be the answer to our auto needs long term, but let's not shoot ourselves in the foot short term.
Congress approved funds of $25B to help D3 meet fuel efficiency rules in September. Since then, sales plummeted for the entire global auto industry. The LEADERS of the D3 are on a second try to get any funding to survive the New Year.
The economy in the meantime plummets to 30 year records and some first time ever records. Next week congress will most likely approve stop-gap funding with strings attached, I assume out of the $25B fuel-efficiency funds which will need amending to release.
Time is short. I believe in December, the economy will at least mimic November in the current trend in a slew of categories.
OK, enough BS. My question is:
Does anyone really believe all of the D3 will make it out of 2009?
Regards,
OW
Amen to that. It is easier to make more money than it is to survive a nuclear war. I would look for the Chinese to buy up the pieces of GM. They love the Buick in China. They will soon pass US as the number one car buying nation. They will need the capacity.
Only if the UAW makes "real" and meaningful concessions. Then I can see Ford making it and GM only if they do some quick and massive restructuring. Chrysler is probably through unless Ceberus puts up more money and I think that should be a condition for any government loans there. Having said that, I think the question becomes more like will any of them make it through 2011? That may be more doubtful, but by then hopefully the economy is rolling again and can better absorb the Detroit 3 collapse, or at least the failure of GM and Chrysler.
Very good observation. I think that is what Obama has in mind. His stimulus package is asking for $136 billion to start immediately repairing roads and bridges around the USA. He claims each billion spent will put 40,000 people back to work. Just $34 billion would employ 1.360,000 people. Far more than the Big 3 represents. Those workers will stimulate the buying of whatever cars are left. Problem solved. May the best products come out on top for all of US.
He seemed like one of those people who buys the flag, not the vehicle. That's his choice, but one must remember how many of these American car companies came to be: through bankruptcies, mergers, and acquisitions. Anyone remember Packard? Hudson? American Motors/AMC? They never got bailed out. They failed or got bought. Even if, for example, Chrysler went bankrupt, there's still the matter of the Viper, and the Caravan. Hey, VW might buy Chrysler to secure their minivan source, since they're selling a version of it now. And there's plenty of people who wouldn't want to see the Viper go away...potential buyers of whom some are rich enough to be potential buyers for the design and rights. Same story with GM and the 'Vette. Can you imagine a car nut, like, say, Jay Leno allowing one of those famous names to die off?
GM or Chrysler going BK would be rough, but not the end of the world like some would want us to think.
And yes, I always insist on separating Ford out, because Ford is in a VERY different financial and market position from the other two these days.
Yes, the "Buying American Cars, What Does It Mean?" forum has been going on for a number of years now. :P
Since the profit margins on vehicles are well under 10% (0% at the D3), that means most of the car costs stay in the country of assembly/sale. For example:
Sales price - $10,000 (just for round numbers)
Profit to automaker in home country - no more than $1000, likely much less
Money to dealer, transport truck company, paint shop, parts shops, assembly plant, parts suppliers located in the USA - $6000
Money to outside the country for non-US made parts (lets say $3000).
Note that all cars, both Detroit badged and others, have many parts from outside the US - transmissions, fuel injection parts, spark plugs, radios, etc. The differences in parts sourcing between US and foreign nameplates is not all that great anymore.
When we talk about "My country" let's make sure we are talking about U.S jobs and are not using "My country" as camouflage for "UAW".
All 3 are not going to go out of business the same day. Ford can last at least a year longer than GM. The company that currently owns Chrysler, can either fund them, or sell them.
not to mention many auto parts vendors going under.
If a vendor is dependant on only GM for it's income, that was a bad business decision.
In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down.
GM will need to cut jobs, with or without a bailout. They are simply building way more cars than they can sell (at a profit). Discounting cars to the point of loosing money on each one, just to get rid of them, will not work anymore. They have no more money to waste. At least I hope they don't get more.
You say "Impact every business soon". Well, are we going to bailout every company that has financial trouble? Where do you draw the line?
I doubt the difference is as great as you think. Even if they get the loans there are going to be massive job losses. If they don't get the loans and one or more go under, the best parts are going to survive in a consolidated or purchased company. And the US will continue to buy as many cars as it needs, regardless of the fate of individual companies.
My best case scenario for 2011 is this:
1. Ford survives.
2. Chrysler is gone.
3. GM is forced to make massive cuts and changes (more than their current plan). They replace Wagoner, get rid of their high cost structure, strip down to 40% of current size, and the new management REALLY gets going on competitive new products.
We have a smaller but viable auto industry again and can grow in a competitive environment with excellent products.
My worst-case scenario is as follows:
1. Congress gives $34B bridge loans. GM makes token incremental efforts to restructure. Wagoner stays. UAW makes token moves to suspend (not eliminate) jobs bank.
2. Chrysler muddles along for another year before going belly up.
3. GM continues to lose market share, Wagoner comes back to the trough at least two more times, to the tune of almost $100B total.
4. GMs market share continues to drop, even in an economic recovery. GM continues to make reactive incremental cuts. By 2011, GM is either dying or actually finally goes BK after draining the taxpayers of $100B. Becuase of GMs mediocre continued presence, Ford is badly strained because of the weakened competitor in GM that has been artificially kept on life-support for 3 years too long.
One of their major competitive disadvantages is that the superior UAW negotiated benefits must be paid out of the profits from each car sold. Nobody else has benefits like UAW workers and retirees - not even gov't workers & retirees. I say the Big 3 have done the right thing for their employees. All the other non-union automakers, among others, are passing along these health benefits to the taxpayers for their employees and retirees lacking such gold-plated coverage. That's a subsidy of sorts. I guess my point is that GM, Ford and Chrysler employees cost taxpayers nothing, because their employer has done right by them. They are even paid during layoffs - where else does that happen? Everybody else who is laid off gets paid unemployment - at the public expense. While I would love to have such benefits, I certainly don't jealously criticize companies that provide them to their employees. These few companies happen to be doing the right thing - both to their employees and to the taxpayer who saves the cost of paying those benefits. I know people who work full time who still qualify for food stamps and gov't health programs - that's a subsidy to that irresponsible employer.
A bridge loan, with lots of conditions (especially on corporate perks, pay and parachutes) seems appropriate. When the economy improves, there will be plenty of demand for those trucks. I'd rather see my tax dollars used to help companies that make something than companies that sell paper.
Call me cynical - I probably am - but what you see as "the right thing", I view as a calculated attempt to buy labor peace & then stick us, the consumers, with the bill.
Rather than stand up to the UAW, Big 3 management took the path of least resistance: give the union what it wanted & then build the settlement cost into the price of new cars. Both management & labor pegged the rest of us as a bunch of passive suckers who would meekly pay whatever they decided to charge us. After all, what choice did we have? What were we going to do about it - buy imports?
Much to their surprise - and eventual chagrin - that's exactly what we did. They - big 3 management & labor - badly miscalculated, & now they're running to the government for help. They couldn't win us over in the showrooms, so now they're asking the government to hold us down while they pick our pockets.
It's too bad that management didn't do the right thing for customers & shareholders 30 or 40 years ago by walking away from the negotiating table & telling labor, "Go ahead & strike. We'll wait you out." Customers, shareholders & employees would all be better off today if management had shown some courage.
I'm angry at the UAW, but I'm far angrier with management.
According to a recent post by '62, the laid off still take unemployment and then the jobs bank kicks in *after* the unemployment is exhausted.
I agree wholeheartedly.
As far as berri saying the state pays unemployment. Look at your W2 for SUCI. You pay State Unemployment Compensation Insurance. You are paying for that not the state. The state and Federal government do not PAY for anything. We the tax payers pay for all services rendered. The Jobs Bank was gotten by thug tactics used by the UAW. Big 3 just has Stupid management that buckled instead of locking them out when they had the chance. As recently as last year.
So having to sell cars for less than it cost to build them, is doing the right thing? Why do you think nobody else has benefits like these. They would like to stay in business, and make money. I guess making a profit is not important, as long as the union is happy, right? What kind of benefits will they be getting when the automakers go bankrupt?
However I agree with you about stupid management. I see why they agree back when they had 90% of the market but as market share and profits dropped this benefit should have been the first to go. I am a pro union guy, and I think some changes in the governance of unions are long overdue.
Congress nears accord on Detroit 3 bailout
Funds would come from previously approved environmental legislation
Harry Stoffer
Automotive News | December 5, 2008 - 12:15 pm EST
WASHINGTON -- Democratic leaders of Congress indicated this evening they have reached agreement on a bailout plan for the Detroit 3.
The accord is designed to provide short-term loans to General Motors, Ford Motor Co. and Chrysler LLC to prevent an industry collapse and allow a comprehensive restructuring of the companies early next year, House Speaker Nancy Pelosi, D-Calif., said in a statement.
Congress is scheduled to vote on bailout legislation next week.
Democratic leaders also have reached agreement with the White House on the plan, a senior congressional aide told Reuters. The package totals between $15 billion and $17 billion, the aide said, speaking on condition of anonymity.
Pelosi suggested she was willing to fund the emergency loans out of a $25 billion package already approved to help automakers retool for fuel-efficient vehicles. Pelosi and Senate Majority Leader Harry Reid, D-Nev., had previously opposed that approach, which is favored by the Bush administration.
Under the agreement, Pelosi said she would demand "a guarantee that those funds would be replenished in a matter of weeks" and that automakers would not delay work on improved fuel economy.
The loans would allow the Detroit 3 to maintain operations until President-elect Barack Obama takes office Jan. 20.
Taxpayer protection
At hearings this week, GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli said that without a combined $11 billion in emergency loans by year end, they would not have enough money to meet their financial obligations.
That funding was part of a $34 billion request for loans and credit lines.
Pelosi said that "Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected."
The New York Times quoted Reid as saying he expected House and Senate "votes next week on a responsible plan to help the millions of Americans who rely on a healthy auto industry for their livelihoods.”
But Reid added: “We will need support and cooperation from Republicans to determine what that vote happens and whether it will succeed."
Ford said in a statement Friday night that it is "encouraged" by the promise of congressional votes next next week.
As recently as Thursday, Pelosi and Reid had insisted that the Bush administration make the emergency loans to the Detroit 3 out of a $700 billion rescue fund for financial institutions. The administration said it did not have that authority.
Consensus built for an interim rescue package after more than five hours of testimony today before the House Financial Services Committee.
Committee Chairman Barney Frank, D-Mass., said he was “more optimistic than before” that GM and Chrysler would get enough federal loans to live until next year when the Congress and the Obama administration can take up a more complete rescue measure.
That package could be completed with stringent government oversight, milestones and possibly equity rewards for the risk of lending the money, Frank said.
He said failure to act immediately would be an “unmitigated disaster” for an already-fragile U.S. economy.
Ford Motor Co. CEO Alan Mulally said his company doesn’t immediately need loans but is supporting GM and Chrysler to prevent a failure and the consequential collapse of the domestic parts supply base. Ford says it may need $9 billion if one of its rivals doesn’t survive.
The Detroit 3 CEOs and UAW President Ron Gettelfinger testified to Congress for a second consecutive day Friday.
Responding to lawmaker questions, Chrysler’s Nardelli said a $4 billion interim package would suffice for his company. Wagoner said GM needs about $4 billion by January and up to $10 billion through March.
Ford WILL have a supply problem if one of those others goes belly-up...they'll probably need the money to keep enough suppliers afloat long enough. Personally I like the idea of giving suppliers a bailout if GM or Chrysler fails, rather than giving it to GM or Chrysler. That opens the field for any car company to survive on their own merits (Ford), a newcomer to come in and start up (say Tesla, just as an example) AND for parts to still be available if GM and Chrysler fail (face it, we're gonna need those, which means we'll end up paying to keep the suppliers afloat anyway).
NO Problem Pelosi, just keep those printing presses rolling. You have an ironclad retirement for life with your fancy pension plan.
So it should be a MERRY CHRISTMAS for Detroit, with a $15 billion handout from the struggling tax payers. It will be interesting to see how they repay our generosity. Will management and the UAW pull in their belts and put their greedy tendencies on hold?
PARTS is PARTS. Where would any automaker be without parts? That makes a lot more sense than giving cash to a parts assembler that has proven they do not know how to build cars that are wanted or make money.
Whatever Congress or the Executive branch have done last week or 5 years ago, is irrelevant to the present and deciding what is right and fair? To add to errors by committing the same errors/biases is not correct.
These few companies happen to be doing the right thing - both to their employees and to the taxpayer who saves the cost of paying those benefits.
They were forced into a contract by the unions. How the Big3 and their unions use their money is their business - they decide. If they wish to give it all away in pay, bonuses, stock options, Job Banks, and excessive pension pay and benefits that's they're business. They have made those choices over many years. Now that that they have burned thru all their money, they want taxpayer $ to continue on! :mad: THAT is the problem I have with it. They screwup, and everyone else (on average) who does not make as much or expect that sort of pension is being asked, or should I say forced to pay for them! :mad:
I'd rather see my tax dollars used to help companies that make something than companies that sell paper.
You mean your Social Security funds and your descendants lower standard of living w/higher taxes. Because any $ loaned that is not repayed is tacked onto our $11,000,000,000,000 national debt. The federal government does not have limitless $; it is funded by people who invest in Treasuries and such. If the government continues to act like the Big3 and use it's reserves in give-aways to people and corporations, the U.S. government ends up in a similar position as the Big3 today. When the government is so far in debt, and the average consumer is so far in debt, there will be no recovery for many, many years. That may be now.
We need to end bailouts and giveaways; and STOP using the jealousy arguments of "they got this last year and were wasting $ in Iraq, ... ". We need to stop government spending anytime we can.
It's like an options package where all you want is Bluetooth but you need to pay $4,500 for the Premium Package with all the other goodies.
If GM or C goes, you pay. If you pay them the $25B, I'm good!
Get it? He does not have to take the $1 compensation because the taxpayers keep everything alive.
Regards,
OW
This is a very unlikely scenario, that has been thrown out by proponents of the bailout, who have $34B to gain - may I add, to scare the general public who has little business and market understanding. It is thrown out so the common man polls in favor of the loan, and Congress is pressured into a bad decision.
The fact is that GM or Chrysler might go bankrupt first. Say if that's GM; the result is that GM loses it's market-share of 25%. The other manufacturers have spare capacity as their sales are down about 30-40%. What happens? The business is transferred to the other manufacturers, and this HELPS THEM, and they may become profitable again. Suppliers to Ford and Chrysler would see an increase in business, and would hire additional shifts, or bring back any laidoff workers.
IF GM, Ford and Chrysler get loans they still will layoff many hundreds of thousands of people, simply because either way customers are going to buy 10M vehicles next year.
The auto industry will employ enough people to make and sell 10M people next year, no matter if it's corporate entity A, B, C, and D or owned by stockholders W, X, Y, and Z. That means either a few companies and suppliers go out of business, or everyone cuts back some.
Either way you have to cut suppliers and plants, and employees in the entire auto industry to get from 16M to 10M vehicles. It's just your choice to waste $34B to keep jobs at A, B, and C instead of spending $0 letting the market decide which corporations survive.
They could all never hit another lick for the rest of there lives and never be worried about money.
Because the UAW has contracts, you can't just lay off the ones you need to. So you go get concessions. Everybody keeps their jobs in the near term, but their benefits are reduced. Much of the costs are retiree costs which are not the issue with the Wall Street crowd.
China is our rival - not our enemy. There's a big difference, which anyone old enough to remember the Cold War can explain to you.
Anyway, if you want to revive the American auto industry, you should be solidly in favor of bankruptcy for the Big 3. Perhaps Ford doesn't yet need it, but GM & Chrysler certainly do. Toss the dead brands (Pontiac & Dodge, for example) overboard & bring in fresh management to lead what's worth saving (Cadillac, for example). That just might trigger an industry rebirth.
China was actually our ally during WW2. They saved some of our fighting men. Yes we are competing with them and trading with them. We buy more junk from them than they buy from US. Who's fault is it that we cannot get enough Nintendos and Gameboys?
I look for China to buy a lot of the property sold in the liquidation of the Big 3.
GMs market cap is $2.5B. They want over $10+B to survive (that's well over four times what the market thinks they are worth!). If the Feds are going to loan that money, that's way more than buying GM, right? So why don't the Feds require the following:
1 - use $2.5B to buy out all shareholders. Then the government owns GM.
2 - Replace Wagoner and the entire board. Obama can appoint new management, he's done pretty well with his cabinet.
3. New management works to turn GM around.
4. Government sells GM stock back to the market in the future, or GM fails and the government eats it.
At least we would get rid of the useless Wagoner and the Board.
I love it !! And offer Cerberus $500M for Chrysler. I bet that's the best offer they'd get.
But instead of running the 2 corporations as is, the corporations are declared bankrupt and liquidated. The government sells off the assets, with U.S. assets being sold to people who guarantee to reopen the auto plants - manufacturing autos or something else.
On a related subject, this is supposedly Armageddon for GM and Chrysler. What sort of schedule do you think the execs. of GM/Chrysler and the suppliers, and the union are maintaining. I mean are they working round-the-clock on deals to sell Hummer, Opel, Chinese operations, Saturn? Do they have their lawyers writing new union proposals? I mean are they taking this as a life and death situation?
Wagoner seems to have been slow on the button, but in all fairness he inherited a lot of this mess. I think they are grooming this guy Fritz Henderson? they brought back from Europe to allow Wagoner a graceful exit in the near future after he wraps up the govt money.
Call me cynical - I probably am - but what you see as "the right thing", I view as a calculated attempt to buy labor peace & then stick us, the consumers, with the bill.
Rather than stand up to the UAW, Big 3 management took the path of least resistance: give the union what it wanted & then build the settlement cost into the price of new cars. Both management & labor pegged the rest of us as a bunch of passive suckers who would meekly pay whatever they decided to charge us. After all, what choice did we have? What were we going to do about it - buy imports?
Much to their surprise - and eventual chagrin - that's exactly what we did. They - big 3 management & labor - badly miscalculated, & now they're running to the government for help. They couldn't win us over in the showrooms, so now they're asking the government to hold us down while they pick our pockets.
It's too bad that management didn't do the right thing for customers & shareholders 30 or 40 years ago by walking away from the negotiating table & telling labor, "Go ahead & strike. We'll wait you out." Customers, shareholders & employees would all be better off today if management had shown some courage.
I'm angry at the UAW, but I'm far angrier with management.
In my view the UAW did what it was supposed to do in our Capitalistic system, i.e. fight tooth and nail for every single dollar in wages and benefits that it could get Management to agree to pay. Detachedly this is what they were supposed to do.
As you correctly note it's mostly past management's fault for not being stronger in telling the UAW to 'Go Screw'. "We will put you on the streets and decertify you if you even begin to think the word 'STRIKE'." Managements past didn't act like good Capitalists in fighting tooth and nail on behalf of the stockholders. They though that they were doing the right thing by keeping the peace and keeping the profits flowing from continued production of trucks and SUVs but they lacked the foresight that 2008 might arrive some day.
Mulally confirmed yesterday exactly what you said. He said that the D3 since the middle of the last century were of the opinion that 'If we build it they will buy it'. This credo permeated everything they did from crappy cars to bad service to over production to not having a view of the risks in the futre ( Prius, unbelievable fuel prices, death of SUVs ). That's why the three of them were there in front of Congress begging forgiveness for their sins....and for a little bite to eat and a warm cot to sleep on.
In a
This is mostly inaccurate and I'll explain why with a simple example. I was a direct supplier to the D3 for a long time. Every GM truck, every Chrysler auto, all Jeeps and all Mustangs and Crown Vics used our steel. Major supplier...
So here is the example which disproves your fears... Goodyear.
As a major corporation and OEM supplier Goodyear supplies every vehicle maker. They supply the most to GM likely simply because GM is the biggest, then Ford, then Toyota, etc, etc, etc. Say GM goes belly up and 2.5 million units of production are taken out of the supply side. Goodyear loses its GM business..that's bad.
But hey what's this? Ford's and Toyota's and Nissan's orders are suddenly surging and now Goodyear has to change the destination of their shipments from say Lansing to San Antonio or Dearborn. What they lost at GM they find that they have gained at Ford and Toyota.
Why? Because the buyers of those GM vehicles didn't suddenly ascend into heaven. They are still here in the US buying vehicles. Only now they are buying Fords and Toyotas and Nissans and Hondas and maybe but not likely Chryslers.
Nothing changed at the Goodyear level.
Another fear mongering balloon is shredded and falls to earth with a THUDDD.
Wagoner is an inbred idiot. He may have inherited a mess. He did not change the direction. He continued to make the same mistakes of his inbred predecessors. He had so many opportunities to bust those UAW stranglehold contracts, and for the sake of keeping the constant flow of money into his pocket, he signed on the line. Anyone could see it was not going to be self sustaining much longer. He lost about 20% of the US market share during his 14 year tenure. His multi billion dollar losses are too many to list here. Think FIAT or as we said when we were kids Found In A Toilet. That is where Wagoner has put GM In the TOILET.
I can't see it any other way. GM's losses are Ford, Toyota and Honda's gains. Michigan's losses are Alabama's gain. Been that way forever. Survival of the fittest. Any other way and you weaken the country.
Totally disagree. He's been in charge in North America for fourteen years. Just how long do you think he should be given?
And that's why GM should be allowed to fail. Ford is making much better moves and the market should reward them for that. If the US props up GM then Ford has beaten their competition but their competitor is artificially allowed to survive. Ford deserves the reward for better performance.
to save the economy, somewhat
to have american technology
to improve the neighborhood
to offer engineering advancement in america
to keep middle class households
to maintain support for 650,000 retirees
to keep a million people off the unemployment rolls
against the bailout:
1. Japan has slight edge in percieved quality. Only the strongest should be allowed to survive
2. some of our American money might not be harvested and sent to japan
3. we can keep on arguing instead of moving on to the 28 bigger problems facing the US economy
4. what's in it for me?
5. my Honda runs great so nobody should ever need another car company
6. I want my neighbor who works for the Big3 to go into foreclosure so my house value can drop
When you take a look at many American cars today, these aren't bad products. They're just not as good as Audi, Volkswagen, Mercedes or Lexus—the list goes on and on. When you see some of the stuff that Pontiac in particular has been doing for the last 20 years—it's insulting. And the interiors especially are insulting....
I don't understand it. We can build the greatest fighter planes on the planet. It's not like technology is the problem. There is no reason why there should be this kind of separation between Europe, Japan and us.
Everyone wants to make the product issue about price. But I had a MINI Cooper S for a couple years. That car was sturdy and it looked good. It was smart, it was fast and it was fun. And that's a relatively inexpensive car...
If it's a coin toss between buying American or buying foreign, we'll buy American every time. If it just comes down to the exact same product at the exact same price, we'll buy an American car because we're patriotic. We'll do the right thing, but not if it costs more and not if it's a subpar product. What the American Big Three have forced us to do is start being unpatriotic, so we ended up buying cars from other manufacturers.
Remember Audi's problems? Audi was a joke 10 years ago. ...And Audi picked themselves up from the ashes. How? Started making good cars. Well, I think that's your answer.