Auto bailout

[SgtSpike]

I know Allen already has some strong opinions on a possible bailout of the US automakers, but what does everyone else think?

Personally, I read an article on MSN.com that made sense about how demand is going to fall for autos in the US. We have risen to almost having one car per person here, and that number has got to top off eventually. If it stopped right at one vehicle per person, and the current rate of scrapping cars continues, demand will be a measely 6.5 million new vehicles/year in America. Compare that to the 9 million/year of years past, and you can see why automakers are having and will continue to have a problem.

Also, I don't like bailouts of companies that make bad decisions, because it's only going to encourage more companies to take bigger risks, only to come crying back to the government when their risks aren't working. Make the automakers go through bankruptcy, don't give them any cash, and maybe they (and other companies) will learn something for next time they are thinking about expanding beyond their means.

 

[dgfbckle13mqra4]

the current CEO of Ford, alan mullaly, is doing a great job to shape up the FoMoCo. he was just put in place too late and fed to the dogs. but, he has greatly reduced costs. and me, being a counterman for a ford dealership, am all for the bailout. i dont know about GM and Chrysler, but i know that ford CAN turn things around relagtively quickly. its just a matter of getting the right tooling from mexico and europe into the united states to build the more efficient car models that are currently in those 2 countries.

once we get the proper tooling into the US, we will be able to work on the emission standards of those vehicles and get the ball rolling, getting these new vehicles into the hands of the consumers.

 

[SgtSpike]

the current CEO of Ford, alan mullaly, is doing a great job to shape up the FoMoCo. he was just put in place too late and fed to the dogs. but, he has greatly reduced costs. and me, being a counterman for a ford dealership, am all for the bailout. i dont know about GM and Chrysler, but i know that ford CAN turn things around relagtively quickly. its just a matter of getting the right tooling from mexico and europe into the united states to build the more efficient car models that are currently in those 2 countries.

once we get the proper tooling into the US, we will be able to work on the emission standards of those vehicles and get the ball rolling, getting these new vehicles into the hands of the consumers.

Yeah, one thing that I've heard is that no one on the auto side is willing to change. The workers obviously still want to stay unionized (is Ford union as well?), and the companies want to stick with their current strategies. IMO, they need to work on DOWNSIZING. It'll be a long time (if ever) that domestic auto-makers will have the same demand they've had for the past 5 years.

But that's good to hear that Ford's new CEO is making changes. They seem to be doing the best out of the big 3.

 

[Alien Allen]

It is a double edged sword. The economy is so in the tank the Big 3 can not tread water. The impact of this is hard to figure but it will be very significant. There would be a ton of people put out of work. I forget the numbers but the percentage of people that have jobs relating to building cars is pretty staggering.

I recall when Chrysler was bailed out their were complaints about that. But they did pay it back. I think this bailout would need some strings as I have mentioned. If it is done right. Unlike the Banking bailout. I think they could be saved.

I do have strong opinions because Michigan has been in a recession for 3 years ongoing. When the Big 3 struggles we get hurt real bad. I went thru the tough times in the early 80's but that was nothing like this. I honestly think MI would go bankrupt if this house of cards falls. Where does it end if MI needs a bailout from the feds?? Hopefully somebody smart will come up with a plan that is workable. Sure would need to be better than the banking bull shit bailout.

 

[Wookiegirl]

yeah cuz us handing out money to the banks has helped so much.

Seriously, are we going to borrow more money from the chinese so that we can give automakers money too?

Let's just go to the magic money machine and make MORE MONEY so that our dollar continues to be about as valuable as a sheet of toilet paper

 

[dgfbckle13mqra4]

people that work directly for ford are union. but the people that work for the dealerships, like myself, are not union.
trust me, ford is downsizing. A LOT. layoffs are happening left and right. ford is buying out dealerships left and right to reduce expenses. downsizing is definately happening, on a huge scale.

 

[dgfbckle13mqra4]

yeah cuz us handing out money to the banks has helped so much.

Seriously, are we going to borrow more money from the chinese so that we can give automakers money too?

Let's just go to the magic money machine and make MORE MONEY so that our dollar continues to be about as valuable as a sheet of toilet paper

if the big 3 go down, everyone is going to feel their asshole being stretched.
hundreds of thousands of jobs will be gone. MORE stress on the economy due to hundreds of thousands of people needing government aid to be able to put food on the table. i think the bailout would end up costing a lot less than if the big 3 went under.

 

[SgtSpike]

if the big 3 go down, everyone is going to feel their asshole being stretched.
hundreds of thousands of jobs will be gone. MORE stress on the economy due to hundreds of thousands of people needing government aid to be able to put food on the table. i think the bailout would end up costing a lot less than if the big 3 went under.

True, BUT, maybe it is time we learned a hard lesson. If we bail them out now, how are we going to control more companies from over expanding and taking huge risks and making bad business decisions in the future? If we continue rewarding bad business practices, bad business practices will continue and we're going to have the same scenario 5, 10 years down the road with a different industry.

 

[Alien Allen]

it is not hundreds of thousands but into many millions that would be put out of work.

the hundreds of thousands would be the workers at the plants.

you have that ten fold in people that work at shops that make the parts. or the machines that make the parts. such as a place a buddy of mines father had. they made a machine that would make a crank or a cam shaft. you stuck the steel in one end and 40' down the line out comes the completed shaft. multi million dollar machine.

 

[Tim]

5,000,000 jobs would be directly affected if the big 3 went down. They are the number one purchaser of American steel. They purchase $160,000,000,000 in American products a year in the production of their cars...

So yeah, it will hurt everyone if they are allowed to go into bankruptcy.

It's amazing that the government drops their pants to give $700 billion to the financial industry but balks at a $25 billion loan to the big three when it will help American workers.

 

[Tim]

True, BUT, maybe it is time we learned a hard lesson. If we bail them out now, how are we going to control more companies from over expanding and taking huge risks and making bad business decisions in the future? If we continue rewarding bad business practices, bad business practices will continue and we're going to have the same scenario 5, 10 years down the road with a different industry.

But their financial problems right now aren't due to huge risks and bad business decisions. It's directly related to the fact that the financial markets are failing, the fact that people aren't spending money right now, the fact that unless you have 720 credit score you aren't getting a car loan... that's the problem right now

 

[Alien Allen]

But their financial problems right now aren't due to huge risks and bad business decisions. It's directly related to the fact that the financial markets are failing, the fact that people aren't spending money right now, the fact that unless you have 720 credit score you aren't getting a car loan... that's the problem right now

That is something some are missing. They would be in the tank no matter what due to the collapse of the economy and the credit melt down.

In my case there are 3 vehicles I would have purchased for work. This last year has been so bad after 2 prior lousy years that I don't dare take out that amount in loans. Even if I could get the credit. The winter is the worst for our business and already I have tapped into earnings from last year. Multiply my situation by a few million and it is easy to see why they are in trouble.

 

[Mikewastaken]

It's not fair to japanese auto makers, has anyone heard them crying?

They wouldn't be in this mess if they didn't :

A. Pay their workers $34 an hour (CAD) plus benefits, there are a million people in Canada that would do the same job quality for half that.
B. Stop making crappy cars. It's not that they are ugly, or anything, it's the quality. If GM could pour their soul into economy cars like they do with the Z06 Vette, they'd have the best cars in the world. Instead they have one kick ass car, and 20 low end, non reliable, poor quality vehicles.

 

[Alien Allen]

I think the bashing on quality is over stated

I have had very good cars in the last 20 years

Easy to blame the Big 3 for the wages and benefits. But at the time I bet everybody except union haters like me thought they got what they deserved. Now the union wants no concessions. And they might get away with that since the democrats are so beholden to unions.

 

[Mikewastaken]

Yes, very good cars, can you compare the quality of a let's say Cavalier 2.2 to a Honda 1.6.

More reliable, with the same amount of power, and less gas.

 

[Tim]

It's not fair to japanese auto makers, has anyone heard them crying?

They wouldn't be in this mess if they didn't :

A. Pay their workers $34 an hour (CAD) plus benefits, there are a million people in Canada that would do the same job quality for half that.
B. Stop making crappy cars. It's not that they are ugly, or anything, it's the quality. If GM could pour their soul into economy cars like they do with the Z06 Vette, they'd have the best cars in the world. Instead they have one kick ass car, and 20 low end, non reliable, poor quality vehicles.

Are you aware that the Japanese government subsidizes the Japanese auto industry? This is the case with many of our competitors. It's NOT a fair playing field.

And the US has closed the gap in quality cars. We are on par with the rest of the world when it comes to making a quality product. It's not like it was in the 70's and 80's

 

[Tim]

I think the bashing on quality is over stated

I have had very good cars in the last 20 years

Easy to blame the Big 3 for the wages and benefits. But at the time I bet everybody except union haters like me thought they got what they deserved. Now the union wants no concessions. And they might get away with that since the democrats are so beholden to unions.

But it's not just the US auto makers that deal with unions. Just about every auto manufacturer around the globe has a unionized workforce. But there is a huge cost that the US automakers are dealing with that the rest of the world isn't.... Health care. In just about every other country, they have single payer healthcare (state run) and that's a huge cost savings for them. Forget the argument of whether single payer health care will work in the US, just on a business standpoint alone, we are less competitive with other countries since US companies must foot the health care costs for it's employees. I know in my company alone, to cover the 7 of us in the front office is over $75,000 a year. And we have 15 union guys in the shop that we pay $14 for every hour they work to cover their benefits and retirement. That's a huge chunk of change.
15 guys X 50 Hours/week X 52 weeks X $14 = $546,000/year

 

[Mikewastaken]

I need an actual source that Japan helps out Toyota, Nissan and Honda. It's not that I'm calling you a liar, it's just new news to me

 

[SgtSpike]

5,000,000 jobs would be directly affected if the big 3 went down. They are the number one purchaser of American steel. They purchase $160,000,000,000 in American products a year in the production of their cars...

So yeah, it will hurt everyone if they are allowed to go into bankruptcy.

It's amazing that the government drops their pants to give $700 billion to the financial industry but balks at a $25 billion loan to the big three when it will help American workers.

Just because we let the automakers go bankrupt doesn't mean they're going away. It's called chapter 11 bankruptcy... just like the airlines had to go through. The airlines had many millions of jobs at stake too, but we didn't see them groveling for a handout from the government then did we? Nope, they went bankrupt, got their act together, most people were able to keep their jobs, and the companies are doing much better today because of it.

This is exactly what needs to happen to our domestic auto manufacturing.

But it's not just the US auto makers that deal with unions. Just about every auto manufacturer around the globe has a unionized workforce. But there is a huge cost that the US automakers are dealing with that the rest of the world isn't.... Health care. In just about every other country, they have single payer healthcare (state run) and that's a huge cost savings for them. Forget the argument of whether single payer health care will work in the US, just on a business standpoint alone, we are less competitive with other countries since US companies must foot the health care costs for it's employees. I know in my company alone, to cover the 7 of us in the front office is over $75,000 a year. And we have 15 union guys in the shop that we pay $14 for every hour they work to cover their benefits and retirement. That's a huge chunk of change.
15 guys X 50 Hours/week X 52 weeks X $14 = $546,000/year

I don't think universal healthcare would make that much of a difference in the total costs. I'd bet anything that it has more to do with the fact that the workers are unionized and require such high wages on top of health care that is making the difference. Think about it though... if the US had nationalized healthcare, who would be paying for it? The workers and the companies, all through taxes. Not only would the workers want more wages to make up for the fact that they have to pay more in taxes to provide for healthcare, but the company itself would be paying for healthcare through taxes, so it'd still be a hit on them. Finally, the company would be helping to pay for healthcare for the "47 million" Americans currently not covered. Really, I think it would actually cost them MORE for healthcare if it was nationalized than what it costs them now. It's all just speculation on my part, of course, but I believe the statement you made was speculation as well.

EDIT: Rereading through what you said, you seem to have proof to back it up that high healthcare/retirement costs are one thing that is causing all the trouble for the automakers. Really, I'd say $14/hr for benefits is absurd, and the only reason they are getting paid that much is because they are union. Take away the union, problem solved. I really don't know much about unions, or why they even exist in the first place, but they always seem to be selfish organizations whose only aim is to take money from the company and give it to the workers. Let the free market of labor demand and supply figure that out... if you put floors on wages or benefits, then you get problems, which is exactly what the automakers are going through.

Anyone know why unions aren't just abolished by the automakers?

 

[Alien Allen]

Spike,

there is no comparison between the airlines and the auto companies.