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That makes a lot of sense to me. I was at the Honda dealer this week and the Acura dealer is across the street. I would have liked to have peeked into an Acura, but I wasn't going to walk over there.
Honda, Toyota and Nissan made a conscious decision to keep their luxury brands separate from their mainstream brands so as not to dilute the luxury image. How many ES owners would have paid the extra dollars if they thought they were getting a gussied up Camry?
If all the people involved would just see sense, accept reality, and reduce their compensations and benefits to industry norms (including executives), 2 of the domestics would probably be OK without either a bankruptcy OR a bailout.
It would be interesting to see the hourly rate of all the different types of employee positions at GM, Ford, Chyrsler - high, middle, low level management, engineers, accountants, assembly line, etc. On a spreadsheet. Beside the flat hourly rate, (all salaried gets converted to hourly), also see the total rate with all benefits.
Congress should have access to all of these details before a bailout/loan. Every single employee should "first" be willing to adjust their compensation to lower than Honda/Toyota as part of their commitment to help their company before Congress gives any loan. When/if these companies start to be profitable, then compensation can be adusted upward accordingly.
As for the article on GM and Ford eliminating brands - I would disagree with some points
This was a clever marketing tool when first invented. Chevy owners would move up to an Olds, Pontiac owners could move up to Buick, Ford owners going upscale could get a Mercury and eventually a Lincoln. Today the idea is dead for the Big 3, but there are dealers that have contracts, and you just can't decide to drop a line of cars, without compensating the dealers selling that line. Cost GM a lot to get rid of Oldsmobile. So, we can say the Big 3 should have fewer nameplates, but it is easier said than done. They could also close down 2/3rds of their dealers, but can't for the same reason.....Chapter 11 is looking better all the time!
If Ford and Lincoln are combined at the dealer level (as they were, ironically, prior to World War II), then dealers will have Fords to appeal to the mass market, and Lincolns to appeal to more traditional, upscale buyers.
Problem is that upscale buyers will expect more attention than an ordinary Ford dealer might provide. Could a Ford dealer compete in customer satisfaction with a Lexus, Infiniti, Acura, BMW, etc dealer? Would a present owner of a Lexus ES350 consider a Lincoln brand if he/she had to go to a Ford dealer for service?
Ford, GM, and Chrysler need to sit down with the unions, suppliers and banks, and need to say "This is how much is coming in, and that's how much can go out; we need to adjust our budget to make that work."
You're the optimist if you think that approach would work. The Unions don't care, their mission is to bring management to their knees, always. Suppliers are already on the skids and can't reduce prices any more. Banks, contrary to what Congress will tell you (like they actually understand anything) are under pressure from both the Government and their stockholders to "resolve" their bad loans, which usually does not mean working with anybody, it means foreclose.
The only solution is Bankruptcy and reorganization in a painful way - they cannot go on like they are and succeed. The situation is grave indeed.
"GM spends an average $72 an hour on labor, including wages, health benefits and pensions. Non-union Toyota plants spend $42 an hour. Toyota hasn't been building cars here long enough to be stuck with the hospital bills of nonagenarian retirees. The company has plenty of elderly veterans back home -- the Japanese are the longest-lived people in the world -- but guess who pays for healthcare in Japan? The Japanese government. As a result of providing its workers with health benefits that everyone in this country should be getting, American automakers pay over $2,000 more in labor costs on every car they make. The best way to overcome a nut like that is to build big vehicles that you can sell for a big profit.
Were Detroit automakers shortsighted? Absolutely. As shortsighted as a 21-year-old who drops out of engineering school and takes a job in a warehouse to support his ailing parents. American automakers sacrificed innovation to keep building SUVs and trucks that would pay their legacy costs right away."
Thanks for the post. Didn't want to post anymore because my posts didn't specifically address the thread's topic. My last post was truncated upon the preview stage. Had rambled on about our mortgage interest limited by the VA to 15.5 percent, fbi stickers on neighbors houses- '87 recession, mortgage balance twice the then value of the houses. Last year those old foreclosures were stilled being turned at more than twice the original purchase price. We didn't trade up. We didn't take out one equity loan after another.
Your statement is copied below. "Inflation occurs when too much money is chasing the same number of goods. So much wealth has evaporated over the past year that these injections of cash won't replace it."
"Do your favor..." the topic. Why not, it doesn't matter. What killed the trucks that Detroit was counting on for cash to turn around their businesses-oil speculation as exposed by Ed Wallace and recognized globally.
Historic view over the fullness of time about what's happening.
Expanding your example, too much money (printing presses running day and night) chasing too few goods (production down, prices dropping to clear old inventory to change a payable liability with a credit to cash). On the h3 forum some time back posted how much is that puppy in the window, dried vacuum packed figs, jars of pickled okra, or a wheelbarrow of green paper.
Who is manipulating the economies and why. Where did the trillions go. To China (holds one trillion of our paper) for our consumptive society. Maybe econuts and treehuggers are somewhat correct. Wish I could remember the Friday? night PBS show here that quoted a lady in India? that stated quality growth and the enrichment of life for all can be had without destruction of the planet. Years ago I use to say, aggressive europeans came here, took and plundered this country. American natives lived her for a long time (yes, they probably had tribal wars) and left us clean water and deep rich prairie soil (which we let blow away).
Americans were told to consume to keep the consumptive society going but at the same time the unions and working classes were being sent further down the ladder, why. Then borrowed money was used to keep the illusion alive.
So, a loan, a gift, it is only green paper and if hyper-inflation follows this deflation? then cheap wheelbarrow loads can be used to return the green unless the green chits have to be exchanged for the new amero chits or is that soylent green.
The sad part is a couple idiot Congressmen had to point out the facts to these losers. It does not take a college degree to know you don't go to borrow money in a vehicle that is higher on the food chain than the party you are borrowing from. Our family comes looking for a handout they drive one of their old beaters hitting on half the cylinders and belching smoke. Then I feel sorry for them and thankful for what I have.
Ok, but what about the Jets that Reid and Pelosi get to have at the taxpayer's direct expense! Don't you think it's a bit hypocritical for congress to point this out when they have their own jets? Why doesn't Congress take a 10% cut in their salaries and their lifetime pensions? How come pur Public Servants never have to share the pain?
The Unions don't care, their mission is to bring management to their knees, always.
That has been the normal policy yes; but you're missing the fact that the rules of the game have now changed. What I mean is that when the unions and management used to fight over wages there were several possible outcomes - the union could win or management, and the result was a little more or less one way or the other.
So typically let's say the negotiation (lose/win) came down to "is it $30/hr or $31/hr" and GM's was "keeping 35% marketshare, or 34%" because of the wage cost. NEITHER had much to win or lose, compared to now.
Now if the union does not want to negotiate, what will happen is not a $1 shift or so. The decision now for the union IS "$20/hr or $0/hr with no GM no pay for pensions or health care!!" So there is a big difference.
And you assume bankruptcy with a reorganization is sufficient. It may be but it may eliminate 60-80% of the company. It all depends on the specifics of the bankruptcy. An outright breakup and sale of assets may be the best thing for some of the plants and people. At least the good products, plants and people would then have a chance at new owners and operation.
For example: If GM wants to put the Bowling Green plant up for sale, give me the trademark for the Corvette, I'll get the backing and guarantee to keep it running, offering the workers a job. Or I'd buy Hummer for cheap, restart the plants w/o the UAW wages and processes, no legacy pensions, reducing the MSRP say by 1/3, put some diesels in them to increase mpg (I bet VW has some extra capacity right now to provide the engines), and increase the volume at lower price-points, and make some money.
Ok, but what about the Jets that Reid and Pelosi get to have at the taxpayer's direct expense!
Because one thing appears wrong, does not make another wrong, right. Because you steal, I can steal too? What kind of logic is that?
Why doesn't Congress take a 10% cut in their salaries and their lifetime pensions?
Does any Congressman get a salary for being in Congress equal to the salary of the CEO's of the Big3? Look that up and tell us what each gets paid; doesn't need to be exact.
How come pur Public Servants never have to share the pain?
Yes I do agree with you somewhat. The public sector is usually immune as they have the power to keep increasing our taxes, or running future generations into an increasing, crushing debt.
But that is still no excuse for allowing others the same unfair benefit. We need to start setting the example that whether you are a CEO, a Congressman, or a banker, you are not entitled to excessive pay and privileges. I just see that we need to start making these people face that "The Buck Stops With You" for your organization and its actions/situation, and go the other way.
So instead of A got this deal, so B should too, why can't we moderate what B gets, and use that as a public example to force A to be more of an ethical-model. Lets push to improve ethics, not make them worse!
what about the Jets that Reid and Pelosi get to have at the taxpayer's direct expense!
I think you have to know what I think of the 110th Congress. The worst in the History of the USA. Those two are the ringleader idiots. I about had the big one when she insisted on having her own 747 to haul people cross country in. I would have given her a Cessna 150 with half a tank of gas.
I'm no nationally recognized economist by any stretch of the imagination, but I do know that every stupid financial decision that I have ever made was paid for by me, and no entity, governmental or otherwise, bailed me out. I couldn't just print more money to take care of the problem, either. Maybe it's time that the foxes that are watching the hen house in Washington should let businesses, banks, etc. stand or fall on their own, just like the rest of us poor slobs. JMO.
How closely do you want the loan strings to tie Ford or GM to consolidating their luxury brands with the rest of their offerings?
I don't think consolidating luxury brands is going to do a lot. GM probably has at least 3 more brands than they need. Ford could kill Mercury and no one would care. Unless they address some of their real cost issues (e.g., the jobs bank and way too many dealers), they are never going to make it. And as a retiree from a tier 1 supplier, I think that would be a shame and a disaster.
"Ok, but what about the Jets that Reid and Pelosi get to have at the taxpayer's direct expense! Don't you think it's a bit hypocritical for congress to point this out when they have their own jets? Why doesn't Congress take a 10% cut in their salaries and their lifetime pensions? How come pur Public Servants never have to share the pain."
What part of "Pelosi and Reid" are not the ones asking for loans or bailouts do you people don't understand! There is no correlation between the Congress jets and the Big Three jets. Congress is not asking for a loan or a bailout. At least not yet. Get off the jet thing and focus on the tasks at hand.
> Congress is not asking for a loan or a bailout. At least not yet. Get off the jet thing and focus on the tasks at hand.
Actually the way Congress gives themselves entitlements is a national problem and disgrace. Beyond salary and retirement, beyond not being responsible for improper actions (aiding the FannieMae and FreddieMac improper loans), they live large on our money. If wevdon't want to talk jets, perhaps limosines and special treatment in DC is more suitable for congress. Having people who had their morning delivery to the Capitol Hill try to minimize the importance of the (overpaid) executives because they flew in on jets is hilarious hypocritical. Do we think Nancy and Harry carpooled in a DC taxi to get to the Hill that morning?
Have you noticed that these low lifes we are bailing out on Wall Street seem to always be on the news shows gleefully trying to talk up oil prices? We bail them out while they screw Americans over. Maybe we should ship them all over to the oil countries so they might appreciate their country more than their greed for even more money. I find Wall Street more and more disgusting!
"....So instead of A got this deal, so B should too, why can't we moderate what B gets, and use that as a public example to force A to be more of an ethical-model. Lets push to improve ethics, not make them worse! "
Well, if "A" is a worker in Michigan, and "B" is a worker in Alabama, and A's house costs twice what B's does because that's the fair market value of their house (lets say both houses are 1100 sq ft ranches on 1/2 acre), why should A have to settle for B's wage???
If A's company moves to Alabama to compete, how does the USA benefit??? If B's wage is moved up to at least be comparable to A's (standard of living wise, not necessarily dollar wise), then does B not have more buying power???
>I saw Nissan is pulling out of auto shows. These can't be that expensive for a company that size, so I'm wondering if they are getting into the same cash crisis as Detroit?
Better safe than sorry. No need to expend money that is not going to help immediately. Something that GM should learn.
>If you take a minute to watch this amazing state of the art Ford plant in Brazil you will see what the Big 3 are capable of. Listen to the last few words too - Ford would love to build this plant in Detroit but the UAW won't allow it.
The amazing fact is that GM and Ford, both are doing pretty well outside the US. Wonder why??
What needs to change is the compansation in the E band Groups. They are so well over paid that it appalling. (E band is from Grade 12 on up). The E band pensions also need to change ASAP. FORD NEEDS TO STOP PAYING PENSIONS THAT ARE EQUAL TO THE BASS PAY OF EVERY PERSON FROM THE PLANT MANAGERS ON UP. If your in the E Group and your pay is $500,000.00 a year, your pension will be $500,000.00 a year as long as you have held that job for 18 mo. THIS IS THE SAME ALL THE WAY UP TO THE TOP AT FORD. They need to have the same pensions that the workers have on more no less. When times are good they (the e band) get rich and the rest may get a 3% raise over 3 years. When times are bad they still get rich and push the rest out and make us give up our jobs, and cut the pay rates. The public thinks that the hourly are over paid when its the E Band thats steeal the company blind. Its not j ust the bonuses its every thing. We all need to cut but they can fly around and blow money all the time.
Why is it that the top never gives up a thing when we are in trouble.
They always pull from the first line supervision, from middle managment and the UAW but never from the E band group.
Its time that they start giving up as much as the rest of us have done.
They are not the FORD family. They work for Ford Mo Co the same as all the workers do.
How is it that they can push some one out of a job and F up his credit and none of them have to pay for what they have done to a company that was one of the best just seven years ago? The start of this started back then.
Yes, i have seen it with my eyes and they want to keep this up so that they (CEO"S) can keep making what they make. They are always cuting the pay to the workers but not to them.
When the old man Ford was around he made sure that no CEO was paid as much as they are paid today. He understood that you could not pull all the margins out and that you had to leave some room for others to make some money. When this was done every one made some money and every one was happy. To day the people at the top dont think this way and thats why we are in trouble to day. Corp Greed is the way of today. What ever they make as a bass pay is what the pension will be. Thats not right they need to have the same as every one that works for them. Wake up and see whats truly going on and not what you think is the truth. I am not a UAW man but i see and have seen this for years and its BS and needs to stop.
How soon we all forget what the American auto industry did for us.
In the time of WW II it was the auto industry that stopped making cars and started making what the USA needed to win the war.
Yes and this was done with no strings attached. Buy the way don’t the us autoworkers use the American banks? Why no string for the banks? What did the banks do to help win the war?
If we loose the auto industry how do we change over to do the same today?
Do we buy what we need from Japan?? Will they make this stuff for us? Will they sell to us? Or will they watch us fall?
Or have they started this war on the American auto industry as a pay back on the US. A pay back for what was done to them in WW II.
So keep buying *from Japan** and help them buy out the American flag.
You will end up standing up to the **Japan Flag.** instead of the USA.
We came to this country because it was the land of opportunity but today’s generation has no loyalty to America.
This is the start of the end if things don’t change soon.
Wages to cost of living is always a consideration when looking for a place to saettle and work. Some places are better than others. You come to San Diego and look for a decent house expect to pay about $400k for the house you just described at todays prices. A $20 per hour job has no problem getting filled. Most do not work for minimum wage. I think Wally World starts at about $8.75. McDonald's about the same. An autoworker is only slightly above a WalMart job. So $15 per hours should be plenty. Now if you are a machinist in a manufacturing plant that may be different.
You are expecting the car maker in Michigan to build a car for more than the car maker in Alabama. They both have to sell their products in the same markets. The auto maker in Michigan cannot compete against the automaker in Alabama. The fact it cost more to live in Michigan is irrelevant to the marketplace. Not the persons problem buying a new car.
You want the automaker in Alabama to pay his workers more so the competition in Michigan has a chance to survive. How stupid would that be? The guy buying the car in Florida is only interested in how much car he gets for the money. If GM can no longer be competitive they need to pack it up and go to automaker Nirvana with Packard and Studebaker.
No, Thank you for what you and all of yours have done for me and mine.
I came to this great Country in 1958 and i love it. Yes i have gone home now and then to see the family but this is truly the best country in the world. It was you that made it posible for me to help this country be what it is today. We need to remember the past and that will help go where we need to be.
GOD LOVE US ALL AND HELP US SEE WHAT WE NEED TO SEE.
I disagree with you here gaggy. An automaker deserves to make way more than the lazy bums working at wally world. It takes more brains and physical ability to assemble a complex automobile that to stack boxes of cereal on shelves. And they do this with minimal breaks and great attention to detail. Try doing this for 8-12 hours straight and tell me they don't deserve at least 25-30 dollars an hour.
Or have they started this war on the American auto industry as a pay back on the US. A pay back for what was done to them in WW II.
So keep buying *from Japan** and help them buy out the American flag.
You will end up standing up to the **Japan Flag.** instead of the USA.
Really? Payback? Are you serious? If all Americans thought this way, we would still be driving cars with 80's technology. Without competition, the Big 3 would have had no reason to improve their product. I think the Big 3 assumed most Americans would continue to buy their cars, out of loyalty, no matter how much better the imports were. They were wrong. You can limit your car buying choices to "American only", but I want the best car I can get for my money, regardless who makes it.
my youngest son is 23 and getting ready to graduate from college but is working full time at a local fitness center getting paid $15.00 an hour to get sweet young things and older sweet things in shape. Not a bad gig if you can get it. I hope once he graduates he applies to one of the local pro teams as a professional trainer. I hear the cheerleaders need the kinks worked out once in a while after a long overtime game.
Try doing this for 8-12 hours straight and tell me they don't deserve at least 25-30 dollars an hour.
Why don't you try hanging sheetrock or installing roofing all day in 100 degree heat. Those guys are lucky to get $12 to $15 per hour with the foreman maxing out at $20. That is where housing costs are high. Workers deserve what the market will pay for a given job. I worked construction as a teenager in High School on weekends and evenings. I never got over minimum wage $1.25 per hour. Same as the guy pumping gas or bagging groceries. That included plumbing, electrical and carpentry. I am glad for the experience. I also could see where the job was going and went to work at the phone company when I graduated. You have an awfully high regard for assembly line work. That is the reason so much of it has gone overseas. I think there are people all over the world that would be more than happy to install lug nuts for a heck of a lot less than the $15 starting pay in Detroit.
Bailing GM and the UAW out of featherbedding contracts is not going to happen. There needs to be some reality checks on all sides of the GM equation. I am also for sub million dollar caps on executive pay.
I think some of the US public has figured out the first bailout that congress ended up playing games with to enlarge after two weeks since it was an emergency that had to be done TODAY is really a boon to the financial industry buddies.
"....The fact it cost more to live in Michigan is irrelevant to the marketplace. Not the persons problem buying a new car."
Well, it does become relevant in some ways. While the insurance industry is different from the auto, when a disaster happens like Katrina or the 1989 SF/ OAK earthquake, or the yearly wildfires and mudslides in CA, insurance companies will pay to rebuild and FEMA will give grants to rebuild in the same place, even though it is known that these disasters will happen again.
Then, up here in RI, where we have had 2 minor hurricanes in the last 40 years no major tornadoes, no earthquakes, no disasters, a company like MetLife stops selling homeowners insurance here because they see an elevated risk. That DOES impact me, as it is one less choice I have, and other companies can use that as leverage to raise rates. My HI has gone up over 20% since Katrina. Why?? So somebody can rebuild their house in tornado alley, only to have it ripped down in 5 years by another????
Well, if "A" is a worker in Michigan, and "B" is a worker in Alabama, and A's house costs twice what B's does because that's the fair market value of their house (lets say both houses are 1100 sq ft ranches on 1/2 acre), why should A have to settle for B's wage???
Very simple. Worker A and B have no control, the consumer decides. Worker A can either work 2X faster, have 2X better quality, or just convince the market their product is worth their extra pay.
It would be a nice world if everyone could decide what they will accept.
I don't get the connection of why people around the world building products and accepting wages and competing against each other is similar to some mathematician at an insurance company determining you're in a high risk area for hurricanes. Metlife hasn't raised my homeowners rates; though I'm sure some of my tax money has gone to help others rebuild, and would go to help you rebuild.
If the people of AL can build a car for $15K that is the same as the car built in Detroit at $18K, then the people of Detroit better either lower their expectations, or find something else to do.
>Well, if "A" is a worker in Michigan, and "B" is a worker in Alabama, and A's house costs twice what B's does because that's the fair market value of their house (lets say both houses are 1100 sq ft ranches on 1/2 acre), why should A have to settle for B's wage???
This reeks of Socialism.......I have seen and experienced it myself. In fact I have gotten higher wages because I worked in a Metro, doing the same job for the same company that worker B did doing it in a small town with lower living expenses. It felt good. Gave me an incentive to not move away from the Metro, and in other cases, gave an incentive to the guy B to move to the metro. A pay raise for doing nothing more. But that is the small picture. The big picture is that it raised the corporate expense. Following which, the company relocated it's metro operations to the small town!!!!
The Big 3 will need to make drastic changes, to survive. I don't think a bailout/loan will allow/force these changes. The management of these companies will never agree to make these changes, since the first change on the list would be resigning or reducing their own pay. A bailout/loan will never work, and they will only be back for more next year. I would agree with government assistance for a Chapter 11 re-organization, because that's the only way the Big 3 will ever become profitable in the future. The Big 3 executives claim they are making the changes necessary, but it's way too little, and way too late.
I heard that the insurance companies got together and agreed to raise rates in low risk areas to help them recover from the gulf coast losses from hurricanes.
I can fully understand your point on insurance costs under all different circumstances. I cannot for the life of me understand why a company would write a policy in a location like New Orleans that is below sea level and has frequent Hurricanes. It galls me that the Federal government, my taxes, are used to bail people out of those places when they knew going there it was super high risk. So our benevolent government does do a lot of things with our tax money I am appalled at. I think bailing out GM is like rebuilding in a flood plain like NO. TOTAL WASTE OF MY TAX DOLLARS.
Following which, the company relocated it's metro operations to the small town!!!!
Wouldn't you consider that good business sense? My son in law was moved from San Diego to Indiana. They gave him a small raise. His cost of living is about half of what it was here in San Diego. So he is starting to get ahead after 6 months. Where they were always struggling here to make ends meet. The company has much lower cost of doing business. So everyone is happy.
Maybe if GM would have closed every old outdated plant when the UAW struck them, they would not be crying for US to give them money. I have NO sympathy for the ignorance at GM over the last 30+ years. Toyota and Honda have given them a close up picture of how to run a successful business and they continued to do it their way. Well let them get out of this mess Their way...
"Workers deserve what the market will pay for a given job. "
Exactly! I think we've already determined that. The UAW total compensation package what's killing them. Not the hourly wage. Have you seen what the Postal Service workers make? Try walking in their shoes some day. I'm not for bailing out GM and the UAW but their business practices need major overhaul. And I also agree with capping the CEO's pay/ it's obscene what some of these guys make for running companies to the ground. Where do I sign up for one of them jobs?
Postal workers are the next to get pink slips: Does this sound familiar? Half the states and cities are in trouble. Much due to paying retiree health benefits. Especially those that retire before age 62.
The agency asked Congress last week to allow it to dip into a trust fund to pay for its retirees’ health care. In addition, the agency plans to cut 100 million work hours this fiscal year, its board of governors announced last week. Both steps illustrate the Postal Service’s dire financial condition: It lost $2.8 billion in 2008, despite slashing nearly $2 billion in expenses. Experts say the 2008 numbers underline the need for more sweeping changes. And they say the next Congress will have to make a tough choice: Either allow the Postal Service to operate more like a business, which could mean numerous facility closures and the end of Saturday delivery, or hand out billions of dollars in subsidies to keep the Postal Service solvent.
A postal reform law passed by Congress two years ago accelerated the Postal Service’s financial woes by requiring it to fully fund its retiree health care accounts within 10 years. That means the Postal Service owes $7.7 billion this fiscal year toward its health benefits. Most of the money, $5.4 billion, goes into a trust fund that’s used to pay future benefits; the other $2.3 billion pays the Postal Service’s contribution toward insurance premiums for current retirees. “We no longer believe that payment schedule can be maintained, and we’re seeking relief from some of our health benefit payments,” said Alan Kessler, chairman of the board of governors. “But this relief will not fix our underlying issues.”
might that mean that the price of a stamp could go up to 88 cents?
BTW-internet news from late last night said that Obama is not for giving the automakers a handout, I mean bailout, I mean loan. At least without some kind of definite plan for his Administration.
Which popped my mind to this thought: wait a minute, Obama's not President yet!
Obama can afford to waffle. He knows the Unions have very short memories and will just look for the big D on the ballot in 4 years. When I heard him saying that the Big 3 need to get their ducks lined up if they wanted help I thought he was a Republican. He is talking 180 degrees out from his Socialist handout campaign rhetoric. I think he is giving W the strength he needs to turn down some Congressional bailout with no strings attached. It also means that GM will be bankrupt before Obama sobers up after his inaugural ball. That is unless Wagoner is just lying through his teeth. C11 is the best thing that could happen to GM. A real chance to get rid of all the deadweight from 50 years of poor management decisions. That includes stupid UAW contracts they signed. Until digging deep into this. I did not realize GM was not making enough to justify staying in business when the UAW went on strike in 1998. A CEO with any balls would have locked the gates and sold off all US properties dealing with the UAW workers.
I'm not convinced that a Ch. 11 can be put together that'll work and that'll keep people buying Detroit cars.
Plus Ford isn't in as bad of shape as GM and Chrysler yet. If those two go banko and actually get concessions and survive, that'll leave Ford at a big disadvantage.
I'm not convinced that a bailout is going to help the Big 3 much either though.
Perhaps the focus should be on consumers somehow. Buy a car and get a rebate to stimulate the economy and let the consumer choose who survives. Maybe get a bigger kickback for buying a car from a US company with content made in the US.
And toss us a bone for trading in and scrapping a gas guzzler or polluter.
Oh yeah, a Subaru and a Nissan are parked in my garage.
Comments
Honda, Toyota and Nissan made a conscious decision to keep their luxury brands separate from their mainstream brands so as not to dilute the luxury image. How many ES owners would have paid the extra dollars if they thought they were getting a gussied up Camry?
How closely do you want the loan stings to tie Ford or GM to consolidating their luxury brands with the rest of their offerings?
It would be interesting to see the hourly rate of all the different types of employee positions at GM, Ford, Chyrsler - high, middle, low level management, engineers, accountants, assembly line, etc. On a spreadsheet. Beside the flat hourly rate, (all salaried gets converted to hourly), also see the total rate with all benefits.
Congress should have access to all of these details before a bailout/loan. Every single employee should "first" be willing to adjust their compensation to lower than Honda/Toyota as part of their commitment to help their company before Congress gives any loan. When/if these companies start to be profitable, then compensation can be adusted upward accordingly.
This was a clever marketing tool when first invented. Chevy owners would move up to an Olds, Pontiac owners could move up to Buick, Ford owners going upscale could get a Mercury and eventually a Lincoln. Today the idea is dead for the Big 3, but there are dealers that have contracts, and you just can't decide to drop a line of cars, without compensating the dealers selling that line. Cost GM a lot to get rid of Oldsmobile. So, we can say the Big 3 should have fewer nameplates, but it is easier said than done. They could also close down 2/3rds of their dealers, but can't for the same reason.....Chapter 11 is looking better all the time!
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Problem is that upscale buyers will expect more attention than an ordinary Ford dealer might provide. Could a Ford dealer compete in customer satisfaction with a Lexus, Infiniti, Acura, BMW, etc dealer? Would a present owner of a Lexus ES350 consider a Lincoln brand if he/she had to go to a Ford dealer for service?
You're the optimist if you think that approach would work. The Unions don't care, their mission is to bring management to their knees, always. Suppliers are already on the skids and can't reduce prices any more. Banks, contrary to what Congress will tell you (like they actually understand anything) are under pressure from both the Government and their stockholders to "resolve" their bad loans, which usually does not mean working with anybody, it means foreclose.
The only solution is Bankruptcy and reorganization in a painful way - they cannot go on like they are and succeed. The situation is grave indeed.
Were Detroit automakers shortsighted? Absolutely. As shortsighted as a 21-year-old who drops out of engineering school and takes a job in a warehouse to support his ailing parents. American automakers sacrificed innovation to keep building SUVs and trucks that would pay their legacy costs right away."
Detroit isn't dead yet (Slate - sometimes the link flakes out to the premium version)
Your statement is copied below.
"Inflation occurs when too much money is chasing the same number of goods. So much wealth has evaporated over the past year that these injections of cash won't replace it."
"Do your favor..." the topic. Why not, it doesn't matter. What killed the trucks that Detroit was counting on for cash to turn around their businesses-oil speculation as exposed by Ed Wallace and recognized globally.
Historic view over the fullness of time about what's happening.
Expanding your example, too much money (printing presses running day and night) chasing too few goods (production down, prices dropping to clear old inventory to change a payable liability with a credit to cash). On the h3 forum some time back posted how much is that puppy in the window, dried vacuum packed figs, jars of pickled okra, or a wheelbarrow of green paper.
Who is manipulating the economies and why. Where did the trillions go. To China (holds one trillion of our paper) for our consumptive society. Maybe econuts and treehuggers are somewhat correct. Wish I could remember the Friday? night PBS show here that quoted a lady in India? that stated quality growth and the enrichment of life for all can be had without destruction of the planet. Years ago I use to say, aggressive europeans came here, took and plundered this country. American natives lived her for a long time (yes, they probably had tribal wars) and left us clean water and deep rich prairie soil (which we let blow away).
Americans were told to consume to keep the consumptive society going but at the same time the unions and working classes were being sent further down the ladder, why. Then borrowed money was used to keep the illusion alive.
So, a loan, a gift, it is only green paper and if hyper-inflation follows this deflation? then cheap wheelbarrow loads can be used to return the green unless the green chits have to be exchanged for the new amero chits or is that soylent green.
Ok, but what about the Jets that Reid and Pelosi get to have at the taxpayer's direct expense! Don't you think it's a bit hypocritical for congress to point this out when they have their own jets? Why doesn't Congress take a 10% cut in their salaries and their lifetime pensions? How come pur Public Servants never have to share the pain?
That has been the normal policy yes; but you're missing the fact that the rules of the game have now changed. What I mean is that when the unions and management used to fight over wages there were several possible outcomes - the union could win or management, and the result was a little more or less one way or the other.
So typically let's say the negotiation (lose/win) came down to "is it $30/hr or $31/hr" and GM's was "keeping 35% marketshare, or 34%" because of the wage cost. NEITHER had much to win or lose, compared to now.
Now if the union does not want to negotiate, what will happen is not a $1 shift or so. The decision now for the union IS "$20/hr or $0/hr with no GM no pay for pensions or health care!!" So there is a big difference.
And you assume bankruptcy with a reorganization is sufficient. It may be but it may eliminate 60-80% of the company. It all depends on the specifics of the bankruptcy. An outright breakup and sale of assets may be the best thing for some of the plants and people. At least the good products, plants and people would then have a chance at new owners and operation.
For example: If GM wants to put the Bowling Green plant up for sale, give me the trademark for the Corvette, I'll get the backing and guarantee to keep it running, offering the workers a job. Or I'd buy Hummer for cheap, restart the plants w/o the UAW wages and processes, no legacy pensions, reducing the MSRP say by 1/3, put some diesels in them to increase mpg (I bet VW has some extra capacity right now to provide the engines), and increase the volume at lower price-points, and make some money.
Because one thing appears wrong, does not make another wrong, right. Because you steal, I can steal too? What kind of logic is that?
Why doesn't Congress take a 10% cut in their salaries and their lifetime pensions?
Does any Congressman get a salary for being in Congress equal to the salary of the CEO's of the Big3? Look that up and tell us what each gets paid; doesn't need to be exact.
How come pur Public Servants never have to share the pain?
Yes I do agree with you somewhat. The public sector is usually immune as they have the power to keep increasing our taxes, or running future generations into an increasing, crushing debt.
But that is still no excuse for allowing others the same unfair benefit. We need to start setting the example that whether you are a CEO, a Congressman, or a banker, you are not entitled to excessive pay and privileges. I just see that we need to start making these people face that "The Buck Stops With You" for your organization and its actions/situation, and go the other way.
So instead of A got this deal, so B should too, why can't we moderate what B gets, and use that as a public example to force A to be more of an ethical-model. Lets push to improve ethics, not make them worse!
I think you have to know what I think of the 110th Congress. The worst in the History of the USA. Those two are the ringleader idiots. I about had the big one when she insisted on having her own 747 to haul people cross country in. I would have given her a Cessna 150 with half a tank of gas.
Ford family being tested by auto crisis (Staightline)
I don't think consolidating luxury brands is going to do a lot. GM probably has at least 3 more brands than they need. Ford could kill Mercury and no one would care. Unless they address some of their real cost issues (e.g., the jobs bank and way too many dealers), they are never going to make it. And as a retiree from a tier 1 supplier, I think that would be a shame and a disaster.
What part of "Pelosi and Reid" are not the ones asking for loans or bailouts do you people don't understand! There is no correlation between the Congress jets and the Big Three jets. Congress is not asking for a loan or a bailout. At least not yet. Get off the jet thing and focus on the tasks at hand.
Actually the way Congress gives themselves entitlements is a national problem and disgrace. Beyond salary and retirement, beyond not being responsible for improper actions (aiding the FannieMae and FreddieMac improper loans), they live large on our money. If wevdon't want to talk jets, perhaps limosines and special treatment in DC is more suitable for congress. Having people who had their morning delivery to the Capitol Hill try to minimize the importance of the (overpaid) executives because they flew in on jets is hilarious hypocritical. Do we think Nancy and Harry carpooled in a DC taxi to get to the Hill that morning?
2014 Malibu 2LT, 2015 Cruze 2LT,
Well, if "A" is a worker in Michigan, and "B" is a worker in Alabama, and A's house costs twice what B's does because that's the fair market value of their house (lets say both houses are 1100 sq ft ranches on 1/2 acre), why should A have to settle for B's wage???
If A's company moves to Alabama to compete, how does the USA benefit??? If B's wage is moved up to at least be comparable to A's (standard of living wise, not necessarily dollar wise), then does B not have more buying power???
ones that are in dire need of money?
Better safe than sorry. No need to expend money that is not going to help immediately. Something that GM should learn.
The amazing fact is that GM and Ford, both are doing pretty well outside the US. Wonder why??
Why is it that the top never gives up a thing when we are in trouble.
They always pull from the first line supervision, from middle managment and the UAW but never from the E band group.
Its time that they start giving up as much as the rest of us have done.
They are not the FORD family. They work for Ford Mo Co the same as all the workers do.
How is it that they can push some one out of a job and F up his credit and none of them have to pay for what they have done to a company that was one of the best just seven years ago? The start of this started back then.
When the old man Ford was around he made sure that no CEO was paid as much as they are paid today. He understood that you could not pull all the margins out and that you had to leave some room for others to make some money. When this was done every one made some money and every one was happy. To day the people at the top dont think this way and thats why we are in trouble to day. Corp Greed is the way of today. What ever they make as a bass pay is what the pension will be. Thats not right they need to have the same as every one that works for them. Wake up and see whats truly going on and not what you think is the truth. I am not a UAW man but i see and have seen this for years and its BS and needs to stop.
In the time of WW II it was the auto industry that stopped making cars and started making what the USA needed to win the war.
Yes and this was done with no strings attached.
Buy the way don’t the us autoworkers use the American banks?
Why no string for the banks? What did the banks do to help win the war?
If we loose the auto industry how do we change over to do the same today?
Do we buy what we need from Japan?? Will they make this stuff for us? Will they sell to us? Or will they watch us fall?
Or have they started this war on the American auto industry as a pay back on the US. A pay back for what was done to them in WW II.
So keep buying *from Japan** and help them buy out the American flag.
You will end up standing up to the **Japan Flag.** instead of the USA.
We came to this country because it was the land of opportunity but today’s generation has no loyalty to America.
This is the start of the end if things don’t change soon.
You are expecting the car maker in Michigan to build a car for more than the car maker in Alabama. They both have to sell their products in the same markets. The auto maker in Michigan cannot compete against the automaker in Alabama. The fact it cost more to live in Michigan is irrelevant to the marketplace. Not the persons problem buying a new car.
You want the automaker in Alabama to pay his workers more so the competition in Michigan has a chance to survive. How stupid would that be? The guy buying the car in Florida is only interested in how much car he gets for the money. If GM can no longer be competitive they need to pack it up and go to automaker Nirvana with Packard and Studebaker.
I came to this great Country in 1958 and i love it. Yes i have gone home now and then to see the family but this is truly the best country in the world. It was you that made it posible for me to help this country be what it is today. We need to remember the past and that will help go where we need to be.
GOD LOVE US ALL AND HELP US SEE WHAT WE NEED TO SEE.
So keep buying *from Japan** and help them buy out the American flag.
You will end up standing up to the **Japan Flag.** instead of the USA.
Really? Payback? Are you serious? If all Americans thought this way, we would still be driving cars with 80's technology. Without competition, the Big 3 would have had no reason to improve their product. I think the Big 3 assumed most Americans would continue to buy their cars, out of loyalty, no matter how much better the imports were. They were wrong. You can limit your car buying choices to "American only", but I want the best car I can get for my money, regardless who makes it.
Regards,
OW
Why don't you try hanging sheetrock or installing roofing all day in 100 degree heat. Those guys are lucky to get $12 to $15 per hour with the foreman maxing out at $20. That is where housing costs are high. Workers deserve what the market will pay for a given job. I worked construction as a teenager in High School on weekends and evenings. I never got over minimum wage $1.25 per hour. Same as the guy pumping gas or bagging groceries. That included plumbing, electrical and carpentry. I am glad for the experience. I also could see where the job was going and went to work at the phone company when I graduated. You have an awfully high regard for assembly line work. That is the reason so much of it has gone overseas. I think there are people all over the world that would be more than happy to install lug nuts for a heck of a lot less than the $15 starting pay in Detroit.
Bailing GM and the UAW out of featherbedding contracts is not going to happen. There needs to be some reality checks on all sides of the GM equation. I am also for sub million dollar caps on executive pay.
I see the Citi bailout is getting bad press with the NY public:
link title
I think some of the US public has figured out the first bailout that congress ended up playing games with to enlarge after two weeks since it was an emergency that had to be done TODAY is really a boon to the financial industry buddies.
2014 Malibu 2LT, 2015 Cruze 2LT,
Well, it does become relevant in some ways. While the insurance industry is different from the auto, when a disaster happens like Katrina or the 1989 SF/ OAK earthquake, or the yearly wildfires and mudslides in CA, insurance companies will pay to rebuild and FEMA will give grants to rebuild in the same place, even though it is known that these disasters will happen again.
Then, up here in RI, where we have had 2 minor hurricanes in the last 40 years no major tornadoes, no earthquakes, no disasters, a company like MetLife stops selling homeowners insurance here because they see an elevated risk. That DOES impact me, as it is one less choice I have, and other companies can use that as leverage to raise rates. My HI has gone up over 20% since Katrina. Why?? So somebody can rebuild their house in tornado alley, only to have it ripped down in 5 years by another????
Very simple. Worker A and B have no control, the consumer decides. Worker A can either work 2X faster, have 2X better quality, or just convince the market their product is worth their extra pay.
It would be a nice world if everyone could decide what they will accept.
If the people of AL can build a car for $15K that is the same as the car built in Detroit at $18K, then the people of Detroit better either lower their expectations, or find something else to do.
This reeks of Socialism.......I have seen and experienced it myself. In fact I have gotten higher wages because I worked in a Metro, doing the same job for the same company that worker B did doing it in a small town with lower living expenses. It felt good. Gave me an incentive to not move away from the Metro, and in other cases, gave an incentive to the guy B to move to the metro. A pay raise for doing nothing more. But that is the small picture. The big picture is that it raised the corporate expense. Following which, the company relocated it's metro operations to the small town!!!!
Wouldn't you consider that good business sense? My son in law was moved from San Diego to Indiana. They gave him a small raise. His cost of living is about half of what it was here in San Diego. So he is starting to get ahead after 6 months. Where they were always struggling here to make ends meet. The company has much lower cost of doing business. So everyone is happy.
Maybe if GM would have closed every old outdated plant when the UAW struck them, they would not be crying for US to give them money. I have NO sympathy for the ignorance at GM over the last 30+ years. Toyota and Honda have given them a close up picture of how to run a successful business and they continued to do it their way. Well let them get out of this mess Their way...
Exactly! I think we've already determined that. The UAW total compensation package what's killing them. Not the hourly wage. Have you seen what the Postal Service workers make? Try walking in their shoes some day. I'm not for bailing out GM and the UAW but their business practices need major overhaul. And I also agree with capping the CEO's pay/ it's obscene what some of these guys make for running companies to the ground. Where do I sign up for one of them jobs?
The agency asked Congress last week to allow it to dip into a trust fund to pay for its retirees’ health care. In addition, the agency plans to cut 100 million work hours this fiscal year, its board of governors announced last week.
Both steps illustrate the Postal Service’s dire financial condition: It lost $2.8 billion in 2008, despite slashing nearly $2 billion in expenses. Experts say the 2008 numbers underline the need for more sweeping changes.
And they say the next Congress will have to make a tough choice: Either allow the Postal Service to operate more like a business, which could mean numerous facility closures and the end of Saturday delivery, or hand out billions of dollars in subsidies to keep the Postal Service solvent.
A postal reform law passed by Congress two years ago accelerated the Postal Service’s financial woes by requiring it to fully fund its retiree health care accounts within 10 years. That means the Postal Service owes $7.7 billion this fiscal year toward its health benefits. Most of the money, $5.4 billion, goes into a trust fund that’s used to pay future benefits; the other $2.3 billion pays the Postal Service’s contribution toward insurance premiums for current retirees.
“We no longer believe that payment schedule can be maintained, and we’re seeking relief from some of our health benefit payments,” said Alan Kessler, chairman of the board of governors. “But this relief will not fix our underlying issues.”
http://www.federaltimes.com/index.php?S=3821780
BTW-internet news from late last night said that Obama is not for giving the automakers a handout, I mean bailout, I mean loan. At least without some kind of definite plan for his Administration.
Which popped my mind to this thought: wait a minute, Obama's not President yet!
2021 Kia Soul LX 6-speed stick
Plus Ford isn't in as bad of shape as GM and Chrysler yet. If those two go banko and actually get concessions and survive, that'll leave Ford at a big disadvantage.
I'm not convinced that a bailout is going to help the Big 3 much either though.
Perhaps the focus should be on consumers somehow. Buy a car and get a rebate to stimulate the economy and let the consumer choose who survives. Maybe get a bigger kickback for buying a car from a US company with content made in the US.
And toss us a bone for trading in and scrapping a gas guzzler or polluter.
Oh yeah, a Subaru and a Nissan are parked in my garage.