View Full Version : Should We Bail Out the U.S. Auto Industry?
Well, should we? My instinct is to say "no," then turn around, spit, and shout, "Hell no!"
Does anybody want to make a cogent argument that we should?
Strike For The South
11-11-2008, 23:52
I will drive up there and dismantle the factories myself.
Care to give a link? I'm afraid this story hasn't made it to the UK.
Gregoshi
11-11-2008, 23:56
I will drive up there and dismantle the factories myself.
In your Chevy pickup? :laugh4:
CountArach
11-11-2008, 23:57
Australia is going througha similar thing at the moment and we have decided to bail them out. I'm torn on this - there are a lot of jobs at stake, but on the other hand I loathe Corporate Welfare. I would not mind if there was a partial-nationalisation as part of the deal, that way the people get more out of it once this recession is over with. Also, doing something like what Obama is suggesting whereby the manufacturers have to produce cleaner, more efficient cars would be a great step. If those two things were met, I would support this. Until then it just seems like bailing out the wrong people.
@ PBI - http://www.nytimes.com/2008/11/11/us/politics/11auto.html?partner=rss&emc=rss
Part of me says yes. The Chrysler bailout was actually profitable to the taxpayer back in the day, and the impact on employment should they fail would be huge. But this has been on the horizon for a while now, and I'm thinking Detroit deserves to burn. For years, they scratched, clawed, and lobbied against changes that would have made them more competitive today.
Had this been isolated or six months sooner), I would say yes. Everyone knew it was coming, and GM/Ford would have been better candidates in my mind for a bailout than AIG and the FMs (and the bailout is going superbly there ~:rolleyes:). I'm just don't think we (the taxpayers) can afford it now. But I'm sure our new overlords (and their union backers) will find a way. It's been a while since we've had a tariff war, let's fund the bailout with a 25% tax on foreign cars. :idea:
Should We Bail Out the U.S. Auto Industry?No, absolutely not. They're already getting $25 billion as an incentive to make cars that they should've already been making to begin with, and now they want $75 billion more? Forget it.
Let them go bankrupt- that doesn't mean they'll go out of business, it means they'll have to restructure their business, renegotiate their contracts... basically figure out ways to be profitable that don't involve going to the federal government, hat in hand.
Of course, the "renegotiate their contracts" item is the exact reason why they will get a bailout. The Democrats owe the unions too much not to give them this. Yet another industry that we'll be told is "too big to fail"..... :shrug:
Care to give a link? I'm afraid this story hasn't made it to the UK.
Sorry, there's so much out there I had a hard time deciding on a single link to post.
Motley Fool: Why We Shouldn't Bail Out Detroit (http://www.fool.com/investing/dividends-income/2008/11/11/why-we-shouldnt-bail-out-detroit.aspx)
AFP: Struggling U.S. Carmakers Say They Can't Wait for Obama Presidency (http://afp.google.com/article/ALeqM5hKFtNGB38DWtGoGPbhcWc2Ly4HDA)
LittleGrizzly
11-12-2008, 01:37
Unsure on this.... edging towards CA's general position... the goverment must get something out of the money... and cleaner and effecient cars....
What if anything do you get from the $25 billion ?
or is it just a blank cheque with a note saying please don't fire anyone...
ICantSpellDawg
11-12-2008, 01:41
I don't know.
A failing economy is like the story "alive". Everybody was struggling with life and starvation. Because a few people died early on, the others were able to nourish themselves on the flesh of the dead and gain back some of their energy to tide them over until they were rescued.
Zombie Apocalypse
I own a crap load of GM shares. I hope Ford goes out of business so that GM can then feast on the corpses of their market share, assembly lines and, of course, their workers delicious corpses. In every industry we, deep down, hope for a nuclear holocaust to happen to the competition. If they would only die, we might live.
Then again, Ford people are saying the same thing about us and there is always the risk.
Louis VI the Fat
11-12-2008, 01:45
I own a crap load of GM stocks. Yeah, me too. Got lots of them.
When you buy a sandwhich here they wrap 'em in paper made of GM stocks. :book:
ICantSpellDawg
11-12-2008, 01:46
Yeah, me too. Got lots of them.
When you buy a sandwhich here they wrap 'em in paper made of GM stocks. :book:
Hehehe. they have already sent me through college with no debt, and bought me a 2005 Altima, so I can't complain.
They were purchased 30 years ago.
Strike For The South
11-12-2008, 02:02
In your Chevy pickup? :laugh4:
My F-150 which will be paid off here soon enough due to my diligence as stock boy. If I can do it so can they!
Mangudai
11-12-2008, 02:22
The auto companies deserve it more than AIG. But, we're probably throwing good money after bad. Think they will be profitable two years from now? I doubt it.
seireikhaan
11-12-2008, 02:47
*sigh
On the one hand, I'd really rather that a company fail who deserves to fail.
On the other hand, the economy can only take *so* many shocks, before all confidence in the markets completely dissolves. Either way, its a bad deal for America.
Gregoshi
11-12-2008, 03:44
My F-150 which will be paid off here soon enough due to my diligence as stock boy. If I can do it so can they!
My wife drives an F-150. Good for you on the payoff! :thumbsup:
Crazed Rabbit
11-12-2008, 04:29
Well, should we? My instinct is to say "no," then turn around, spit, and shout, "Hell no!"
Does anybody want to make a cogent argument that we should?
Exactly.
Every time we bail out one of these ******* the rest get the idea they'll be saved too.
The motley fool article you linked makes very good points why we definitely should not. Nationalization is stupid too, because then the government will be in charge of (and even more loath to change) the completely obsolete business model.
CR
Seamus Fermanagh
11-12-2008, 05:08
Why is this a question?
Michigan voted heavily for Obama, as did Pennsylvania and a good chunk of the old "rust belt."
In short, where labor unions still retain some strength of numbers, the Dems did very well.
The Dems will, shortly, have an easy majority in both halves of Congress and a Dem president.
The question is NOT should it, but will it happen this year or early next.
Tally up the cost and move on, this one's a done deal.
Of COURSE we shouldn't -- but its no longer up for evaluation.
Strike For The South
11-12-2008, 05:10
Why is this a question?
Michigan voted heavily for Obama, as did Pennsylvania and a good chunk of the old "rust belt."
In short, where labor unions still retain some strength of numbers, the Dems did very well.
The Dems will, shortly, have an easy majority in both halves of Congress and a Dem president.
The question is NOT should it, but will it happen this year or early next.
Tally up the cost and move on, this one's a done deal.
IM TO YOUNG TO HAVE ULCERS
Divinus Arma
11-12-2008, 05:13
Here is where you see how far left I have become in recent months. This is a letter I sent to Reid, Pelosi, Biden, Obama, My Congressperson and both Senators:
Dear *****,
Regarding the American Auto Industry, the Democratic Congress has an opportunity to solve a myriad of serious problems simultaneously. Among these are dependence on foreign sources of energy, lagging American share of the automobile market and an industry on the verge of failure with vast economic repercussions, and global warming.
There exists a straightforward solution which our government may seize upon to change the course of direction and reshape the national dialogue.
American automakers seek a government funded bailout. It is here proposed that this bailout be provided with the following condition: A consumer-use vehicle must be offered that virtually eliminates the need for gasoline. This vehicle must be initially affordable to more than 50% of all Americans.
Imagine our country leading the world in green technology, away from fossil fuels, and towards energy independence. Imagine an American auto industry reinvigorated, leading domestic and global sales.
But what will be the choice of fuel? As many as possible. A vehicle that may be recharged and/or refueled with as many options as possible allows for the market to determine which fuel is most cost-effective. Energy stations may replace gasoline stations, offering ethanol, quick charge hydrogen, or even compressed air (http://www.mdi.lu/english/produits.php).
This is an opportunity that can not be wasted. Please redirect our auto market and provide the capital to allow America to lead the world once again.
Respectfully Yours,
Bob Goldthwait, MBA
HoreTore
11-12-2008, 11:09
Absolutely not. The american auto industry is chrashing and burning for a reason, they produce inferior cars nobody wants. if you decide to give them money now, you'll just face the exact same situation in a few years.
The only way to turn things around is to produce better cars that people would want to buy. Like the cars Toyota, BMW, Mercedes, etc, are making.
If you do decide to save them, make sure you buy them, so you can fire the idiots currently running things and hire some competent people, and pocket the future profits.
Hehehe. they have already sent me through college with no debt, and bought me a 2005 Altima, so I can't complain.
Again I am reminded how nice it is to live in a country where an education at the very best university costs about 10 bucks :laugh4:
Ironside
11-12-2008, 17:07
IMO there's three more or less valid different options.
Either hell no as Lemur so elequently put it. Most valid, as the market won't change and the companies will die later on anyway unless they change and feeding them goverment money won't change that. If they don't, then so be it, Sweden doesn't have a shipyard industry anymore for a reason.
It's also possible with nationalisation, if the intended goal is to force a change (or going with DA:s example). If successful then probably the best option, but probably the least certain option as the companies can fail anyway. Of course, this is the US so the odds for it to even be considered....
Or bail them out as you consider the loss of jobs to great atm (there's a chain effect that will ripple through the suppliers). Keeps the fired ones that can't get a new job quickly out of welfare. As this is supposed to somewhat valid option, that means to you do it and counts with it to be delaying the problem, that the companies will fail later on. Should they not, then you're happy that things turned out much better than expected. Hoping for something more is going into La-La-land.
Respectfully Yours,
Bob Goldthwait, MBA
Loved you in Shakes The Clown. :yes:
From what I've heard and read about, one of Detroit's biggest problems (apart from the crappy cars) is the benefits the employees get. How much do corporations pay into the national health care of, say, Japan? Is socialized medicine, in effect, a corporate subsidy?
Here is where you see how far left I have become in recent months. This is a letter I sent to Reid, Pelosi, Biden, Obama, My Congressperson and both Senators:Yeah... we already gave them $25 billion for that. They want more.
LittleGrizzly
11-12-2008, 17:22
Is socialized medicine, in effect, a corporate subsidy?
I remember this being mentioned the other day.... it is kind of ironic how a national health service actually helps business by not pursuing them directly for thier own employee's health care...
Ironside, out of those option 2 would be my personal choice (though not goverment run, just a shareholder) with Div's plan being paticularly good, option 3 is the way it is going to go, i just don't see anything else happening, option 1 probably being preferable to option 3 but not as good as 2....
Ser Clegane
11-12-2008, 17:23
Is socialized medicine, in effect, a corporate subsidy?
Not necessarily as one way or the other somebody has to pay for "socialized" healthcare. This might be via the taxes that the companies pay or - like in Germany - they pay their share of the mandatory public health insurance for each individual employee (in Germany employer and employee each pay 50% of the cost of the health insurance).
university costs about 10 bucks
And soon the value of GM stocks will be just enough to pay for that - go figure :beam:
TevashSzat
11-13-2008, 00:11
No, the biggest problem with the automakers is that worker wages and benefits are way too high compared to those of competitors. Unless the US automakers suddenly rise to the top of the auto industry and drive out the Japanese and Europeans, I see no way for them to compete well unless they address their fundamental problems first
Louis VI the Fat
11-13-2008, 01:52
As with so many of America's economic problems, they are the result of the mismanagement of billionaire CEO's and conservative governments, most notably, and starting with, Ronald Reagan.
American cars are :daisy: and everybody knows it. Poor design, poor quality, unreliable, gas-guzzling. For three decades now, one can buy a Japanese car that costs half the money and is twice as reliable. The workers are there to screw on bolts, so the management alone is responsible for this. However, I never hear them talk about lowering their billionaire wages. Instead, the management whines about unionised wages and pension schemes.
The odd thing about the crisis of the Big Three, is that they are not outcompeted by foreign manufacturers, but by foreign companies operating and manufacturing cars within the US. This is the legacy of Ronald Reagan, the man who together with the billionaire CEO's is responsible for the demise of the Big Three.
When the Japanese first started to outcompete Americn companies, Reagan donned himself in an American flag and urged Americans to 'buy American!!1!'. Patriots bought it hook, line and sinker. This had a devastating impact on the competetiveness of the American automobile industry. It allowed Detroit to stick to their motto 'Small cars mean small profits'.
Worse yet was Reagan's Voluntary Restraint Agreement. This placed 'voluntary' import restrictions on Japanese imports. This had two devastating effects. First, demand for foreign cars kept rising, the supply stayed the same. with absolutely soaring profit margins as a result for foreign companies. The bill was footed by American families. Secondly, if the Japanese couldn't export, they had to manufacture domestically (in the US). This they could easily afford from those huge profits the Voluntary Restraint Agreement allowed them. While Detroit slept, lulled into a false sense of safety by their close alliance with Washington, the Japanese companies ninja'd them and beat them from within.
Currently, most foreign companies operating within the US pay the same union wages and benefits as the American companies do. Yet Toyota produces better cars, with higher profit margins. Their huge lead in design and production has been maintained while Detroit slept, their pockets are much deeper now so they can maintain their lead. And the result of all this we see now.
So I say no bailout. Cars bought in America are still produced in America. So the workers are perfectly secure in their employment. They can simply switch company.
Any bailout therefore is a bailout for the CEO's, the people who destroyed America's industry and who rewarded themselves for it by forever higher, excessive salaries, sometimes into the thousands more than the average manual labourer.
Divinus Arma
11-13-2008, 06:27
Any bailout therefore is a bailout for the CEO's, the people who destroyed America's industry and who rewarded themselves for it by forever higher, excessive salaries, sometimes into the thousands more than the average manual labourer.
No offense, my friend, but do you realize who owns these large companies? They are publicly traded.
I own GM and Ford. So do many retirees. So does just about anyone invested in S&P500-following fund vehicles via 457s and 401ks. (These are American private retirements that are established by an employing organization, sometimes with matching funds.)
Alexander the Pretty Good
11-13-2008, 07:51
Don't forget the union bosses, Louis. Or the congressmen and Senators the Big 3 bought out.
Crazed Rabbit
11-13-2008, 07:52
Absolutely not. The american auto industry is chrashing and burning for a reason, they produce inferior cars nobody wants. if you decide to give them money now, you'll just face the exact same situation in a few years.
And because they caved in like sissies to their unions, and are now paying the cost ( about $1500 per car for health care for GM, compared to ~$150 per car for the Japanese companies).
Even buying - nationalizing - these companies won't make them successful, because they operate a fundamentally flawed business models makings cars nobody wants at really high prices because of legacy costs. It'd be like the government buying out kerosene lamp makers after the invention of the lightbulb.
CR
HoreTore
11-13-2008, 08:13
It'd be like the government buying out kerosene lamp makers after the invention of the lightbulb.
Then buy their lamps and start making better lightbulbs ~;)
Louis VI the Fat
11-13-2008, 14:50
Don't forget the union bosses, Louis. Or the congressmen and Senators the Big 3 bought out.I am just trying to get the most out of my recent sharp left turn. ~;)
In fact, more of it:
Lingering effects of irresponsible Union demands and the legacy of high retirement schemes for former employees hurt the US automobile industry. However, I think I'll put some more blame at the Big Corporations and Conservative politicians.
US car manufactures haven't been able to compete with foreign competitors in the small, lean and budget car markets for decades. So the only way to keep profits up was by outcompeting foreign car manufacturers in the Big Car segment. A virtual American monopoly. Detroit's single recent contribution to global automobile innovation: the SUV.
In an unholy alliance with conservative politicians and Big Oil, Washington and Detroit have given US industry fifteen years of respite. Detroit build the big gas guzzlers, Washington kept US gas taxes the lowest in the western world, Big Oil stimulated gas guzzling. The measures were SUV's, foreign entanglement in oil producing regions of the world, anti-environmental measures. 'Kyoto', Iraq, and a bankrupt industry are the result.
Washington HAS been trying to bail out the US auto industry in this way. It proved unsustainable, as has been predicted all this time. Gas prices have soared, the market for SUV's has collapsed, the Big 3 are on the verge of collapse, huge environmental damage has been done.
'Plunder' seems to best describe conservatives and big business. A plunder of the future - environmental costs for the next generation, debt costs for the next generation, unsustainable industry models to be solved by a future generation. While this took place, average wages for CEO's soared from fifty times that of an average employee to 500, 600, 700 times the average wage. In the face of all this, the unions tried to bargain a small share of the plunder for the employees. This they did indeed receive. However, I don't think I would ascribe Big 3's current crisis to the irresponsibility of the unions.
Good article today by the Freakanomics dude (http://www.nytimes.com/2008/11/12/opinion/12friedman.html?em).
I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?
How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. [...]
Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].”
These are the guys taxpayers are being asked to bail out.
Hosakawa Tito
11-13-2008, 17:08
'Plunder' seems to best describe conservatives and big business. A plunder of the future - environmental costs for the next generation, debt costs for the next generation, unsustainable industry models to be solved by a future generation. While this took place, average wages for CEO's soared from fifty times that of an average employee to 500, 600, 700 times the average wage. In the face of all this, the unions tried to bargain a small share of the plunder for the employees. This they did indeed receive. However, I don't think I would ascribe Big 3's current crisis to the irresponsibility of the unions.
The biggest part of legacy costs for US companies is health care benefits. Most foreign workers health care is subsidized by their government. This puts US companies at a huge competitive disadvantage. The rest of your statement is on the money.
These are the guys taxpayers are being asked to bail out.
That's the problem with this bailout. Many taxpayers want to save these auto-workers jobs *Joe Assembly Line*. However, handing a wad of cash with no strings attached to the same management bozos that screwed the US auto industry over, and over-paid themselves in the process is unacceptable to me. The worst offenders should be fired and the rest can take a huge paycut if they want my tax dollars. Stop fighting fuel efficiency/environmental/alternate fuel innovations or end up on the trash heap of companies that failed to change with the times. Too bad my equally idiotic & corrupt political representatives don't have the integrity to see past their own personal welfare to force the issue....:shame:
Goofball
11-13-2008, 19:23
The only possible argument I can think of for bailing out the US auto industry is that it can almost be considered a strategic industry. That is, you want to have a homegrown industry capable of making tanks, hummers, and other things that drive around and go boom.
It's the same reason we Canadians keep throwing taxpayer $$ at Bombardier Inc, because we want to know that we have a homegrown industry capable of making things that can fly around and go boom.
A weak argument, but an argument nevertheless.
CountArach
11-13-2008, 22:31
The only possible argument I can think of for bailing out the US auto industry is that it can almost be considered a strategic industry. That is, you want to have a homegrown industry capable of making tanks, hummers, and other things that drive around and go boom.
Yes just what America needs - an even greater war economy...
Gregoshi
11-13-2008, 23:09
Yes just what America needs - an even greater war economy...
Of course, how else are we going to sell war machines to our potential enemies allies? :greedy:
Tally up the cost and move on, this one's a done deal. Of COURSE we shouldn't -- but its no longer up for evaluation.
All is not lost (http://www.nytimes.com/2008/11/14/business/14auto.html?_r=1&hp=&adxnnl=1&oref=login&adxnnlx=1226618485-dyAxAUo/rdy/2L4RJ9cflw), my friend.
The chairman of the Senate banking committee said on Thursday that he did not believe there would be enough Republican support for efforts to aid floundering automobile manufacturers, raising doubts about whether Congressional leaders will call the House into a lame-duck session next week.
“Right now, I don’t think there are the votes,” the chairman, Senator Christopher J. Dodd of Connecticut, said, adding that he personally was in favor of using money from the $700 billion financial rescue program to help General Motors, Ford and Chrysler. But Mr. Dodd said he did not believe such a bill would get through the Senate.
“I don’t know of a single Republican who’s willing to support,” Mr. Dodd said. “So I want to be careful about bringing up a proposition that might fail in light of the fact the authority exists, and under an Obama administration there seems to be a greater willingness to deal with the issue. So there are some political considerations to be made.”
And this, of course, is why we need for the Republican Party to not implode, and not wander off into a corner by becoming the White Christian Identity Party. We need those loveable wingnuts.
Once again, The Onion (http://www.theonion.com/content/video/in_the_know_should_the_government) has us all dead to rights.
Crazed Rabbit
11-15-2008, 01:20
Good article today by the Freakanomics dude (http://www.nytimes.com/2008/11/12/opinion/12friedman.html?em).
Good article indeed, but I don't think he wrote Freakonomics. (http://freakonomicsbook.com/)
All is not lost, my friend.
What about when the dems get more seats in January? I bet this will still be an issue then.
CR
I'm honestly a bit torn.
First, I don't want to see our economy slide more down the crapper. The only people who are really suffering are the lower and middle classes, esp. the middle class. It still annoys the living hell out of me that these billionaire corporate fatcats aren't held accountable when they drive a business into the ground. It all screams of more Enron, when tens of thousands of workers lose just about everything they have, and the people at the top plunder what they can and exit stage right, meanwhile their buddies on capitol hill publicly condemn the situation yet do nothing to hold those responsible accountable. I don't know if I'd put the majority of the blame at the union's feet, but I have read enough lately to be convinced to move off of my more neutral position on them. I still think that the idea is good, even if the execution is poor lately. Lastly the US government has made it damn hard to import cars into the US for decades to try and create an artificial advantage for US auto manufacturers.
On the other hand, we are a capitalist society. That part of me is screaming to let em burn for not learning to adapt to the market. Good leadership is having a vision, knowing when and how to change, how to adapt to and overcome adversity, and reading the market and demand correctly. I've seen very little of that from US auto makers over the past years.
As an aside, from Lemur's quoted article:
Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].”
That's hilarious. The Prius comment is both priceless and sad. The global warming bit though I don't care about, even I'm a bit convinced the whole global warming thing is somewhat of a crock after reading quite a bit about it.
Good article indeed, but I don't think he wrote Freakonomics. (http://freakonomicsbook.com/)
You're right, of course; he wrote The World Is Flat. My bad.
What about when the dems get more seats in January? I bet this will still be an issue then.
Yuppers, but that will be months from now and the situation may be changed. As long as they aren't shoveling our money into a hole right now I'm happy and hopeful.
rasoforos
11-15-2008, 05:47
I think its a no brainer
If we go back to some good old Keynesian economics and throw all the extra bits away, we see that it all comes down to peoples' expectations...
...now what will people think if Ford Chrysler and GM, the proud giants of the US motor economy, fail? Their expectations of a recovery will severely diminish. You might even get bank runs and stuff...
I think it is vital that the US starts working on a more mixed model of economy. They should bail em out but also influence their production and sales policies because due to isolationism these companies have lost their global competitive edge. More proper cars, less huge problem-ridden dinosaurs of a car and an emphasis on foreign sales.
Facing a recession is all about moderation. If u bail everyone out then everyone will fail or be careless (example: The Japanese bank sector during their 10 yr old recession). However if the government refuses to help then people will just panic, start saving their money under their mattress so to speak, banks will collapse and jobs will be lost.
Lord Winter
11-15-2008, 08:43
Facing a recession is all about moderation. If u bail everyone out then everyone will fail or be careless (example: The Japanese bank sector during their 10 yr old recession). However if the government refuses to help then people will just panic, start saving their money under their mattress so to speak, banks will collapse and jobs will be lost.
I can see that the arugment working with the bank bailouts, but with Ford and GM? No way. Yes, they employ thousands of people. Well the short term game outweigh the precedents like you talked about of a government saftey net? Its time we actually trust in capitalism or else we need to change to socialism. Which, I'm not even sure our government could handle at this point. Lets start showing some fininical responsiability for once instead of gambling with companies that have long been obsolete.
CountArach
11-15-2008, 09:38
Its time we actually trust in capitalism or else we need to change to socialism.
Trusting in a failing system, I can see that working:rolleyes:
Lord Winter
11-15-2008, 09:43
Its just our implantation of it, not the system its self. Socialism transfered over to america would have equal problems. The only question there is. is which system does less damage.
CountArach
11-15-2008, 11:10
Its just our implantation of it, not the system its self.
I must, respectfully disagree.
Socialism transfered over to america would have equal problems. The only question there is. is which system does less damage.
Keynesian Interventionism isn't such a bad system and represents the middle ground. I am betting that is what Obama starts to implement.
rasoforos
11-15-2008, 14:11
I can see that the arugment working with the bank bailouts, but with Ford and GM? No way. Yes, they employ thousands of people. Well the short term game outweigh the precedents like you talked about of a government saftey net? Its time we actually trust in capitalism or else we need to change to socialism. Which, I'm not even sure our government could handle at this point. Lets start showing some fininical responsiability for once instead of gambling with companies that have long been obsolete.
They employ tens of thousants of people, and if you count all their suppliers (both US and World) then you have hundreds of thousants people. Considering that some companies rely almost 100% on contracts from these big firms , it is quite possible that a chain reaction of firm failures will occur. The modern economy is so interconnected that the impact will be global.
As for capitalism. We gotta stop thinking that capitalism means no government interference. The 'invisible hand' never works and Dubya certainly didnt turn socialist when he bailed out those companies. Modern economic theory takes failed markets into account (i.e. health) and there is no capitalist country in the world today that doesnt implement at least a minimal level of market control.
Lets hope we ll come out of this unscathed and with low low property prices :)
They employ tens of thousants of people, and if you count all their suppliers (both US and World) then you have hundreds of thousants people.
Actually, GM directly employs 100,000 people all by itself, so your numbers are off by a factor of ten. If we let these companies die as they deserve, the consequences are going to be huge.
Good article on the situation from the Economist (http://www.economist.com/business/displayStory.cfm?source=hptextfeature&story_id=12601839).
Another good article (http://www.tnr.com/story_print.html?id=a4893b49-36df-4784-9859-2dfa3a3211bf):
In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.
That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation. The company would close its doors, immediately throwing more than 100,000 people out of work. And, according to experts, the damage would spread quickly. Automobile parts suppliers in the United States rely disproportionately on GM's business to stay afloat. If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations. From Toledo to Tuscaloosa, the nation's assembly lines could go silent, sending a chill through their local economies as the idled workers stopped spending money.
Banquo's Ghost
11-15-2008, 14:35
Once again, it is shown that the Achilles Heel of free market capitalism is the "too big to fail" corporation.
These behemoths are not subject to market forces any more than governments are. Just as governments are traditionally awful at making market-based decisions, so are monopolies and giant multi-national corporations. Both tend towards corruption and greed, because there is never the accountability - the decision makers are never the ones to suffer.
In my opinion, throughout the Western world, this collapse is a good chance to allow these dangerous creatures to die off like the dinosaurs they are. Let the market work, and take the pain. Remove the cotton wool of incorporation and limit by law the size of companies and their market share. Require that boards have an equal proportion of independent, private shareholder members to institutional investors, and that remuneration committees are composed entirely of individual private shareholders.
Then the market will work as a real market, and government, having set the regulation framework, can remove itself from the business of business.
rory_20_uk
11-15-2008, 14:52
Good article from the Economist.
The workers need to understand that they are competing against Korean, Chinese and Indian workers. They have to cost less per unit of production. No, it's not nice, but that's reality. The 1970's are over: Britain has realised that striking doesn't work, the rest of Europe is building more, and they're a drop in the ocean compared to the far East. Trying for isolationism might work, but will make exports extremely difficult to sell.
I think that the government should take a large holding in the company, and if there's a way of taking most of the value from the head of the companies' salaries so much the better. The seeds of failure were sown with the packages that the workers received 30 years ago: extremely generous health and almost impossible to sack. When anything else starts to go wrong, having a fixed, expensive work force limits all possibility for evolution.
Dinosaurs did adapt, just not to the massive shock to the system. about 90% of all life on the planet was destroyed, and it took a long time to recover. Destroying the world and hoping the pieces will make a better whole at some future juncture seems... daft.
To force boards to take on directors who have a tiny minority of shares (one British bank has 4% of private ownership) is not workable.
Employing a management consultancy company who specialises in human management to decide on salaries would be better than expecting Joe Public to understand that making the top tiers work for £60k a year means that either the company moves off shore, or there's a brain drain of able talent.
~:smoking:
Banquo's Ghost
11-15-2008, 14:59
Employing a management consultancy company who specialises in human management to decide on salaries would be better than expecting Joe Public to understand that making the top tiers work for £60k a year means that either the company moves off shore, or there's a brain drain of able talent.
I can guarantee you that management consultancies are an integral part of the problem. If you end up in that career, you will understand just why. They don't do what you think they do.
Lord Winter
11-15-2008, 21:07
They employ tens of thousants of people, and if you count all their suppliers (both US and World) then you have hundreds of thousants people. Considering that some companies rely almost 100% on contracts from these big firms , it is quite possible that a chain reaction of firm failures will occur. The modern economy is so interconnected that the impact will be global.
As for capitalism. We gotta stop thinking that capitalism means no government interference. The 'invisible hand' never works and Dubya certainly didnt turn socialist when he bailed out those companies. Modern economic theory takes failed markets into account (i.e. health) and there is no capitalist country in the world today that doesnt implement at least a minimal level of market control.
Lets hope we ll come out of this unscathed and with low low property prices :)
I'm not advocating a Lazzie Faire approach I'm advocating a more though out approach. Do we bail out the airlines when they go under? What about any other major companies. In theory I could accept a bailout if:
1. It would actually make the company competive, instead of merely delaying the inevitable.
2. The funding was there.
3. The company going bankrupt would do more harm then any potential side effects the bailout would result in.
Overall I think we can all agree on 2 but three and mainly one aren't as straight forward.
Alexander the Pretty Good
11-16-2008, 00:39
Seeing as the Big 3 not only benefit from protectionism but also hold sway over Congress in determining regulation, it seems a little silly to me to say "obviously capitalism doesn't work" - because they weren't competing.
As for the government taking over, that will first and foremost socialize for debt (we obviously don't have enough ~:rolleyes:). How quickly will the nationalized Big 3 go from producing cars no one will buy to actually competitive ones? If the problem is management, where will the government come up with the hundreds or thousands of managers necessary? I suspect that much less managers are necessary, but to do so would require a radical paradigm shift, one I doubt the government is ready to do - what's the manager to employee ratio in the beauracracy, I wonder?
As for the thousands of people who could lose their job - either they're going to end up on welfare directly or effective welfare if we nationalize these companies, so I don't see it as much of a choice. Why didn't we nationalize the .com burst? ~:rolleyes:
Wesley Clark makes the national defense argument (http://www.nytimes.com/2008/11/16/opinion/16clark.html?ref=opinion):
More challenges lie ahead for our military, and to meet them we need a strong industrial base. For years the military has sought better sources of electric power in its vehicles — necessary to allow troops to monitor their radios with diesel engines off, to support increasingly high-powered communications technology, and eventually to support electric propulsion and innovative armaments like directed-energy weapons. In sum, this greater use of electricity will increase combat power while reducing our footprint. Much research and development spending has gone into these programs over the years, but nothing on the manufacturing scale we really need.
Now, though, as Detroit moves to plug-in hybrids and electric-drive technology, the scale problem can be remedied. Automakers are developing innovative electric motors, many with permanent magnet technology, that will have immediate military use. And only the auto industry, with its vast purchasing power, is able to establish a domestic advanced battery industry. Likewise, domestic fuel cell production — which will undoubtedly have many critical military applications — depends on a vibrant car industry.
To be sure, the public should demand transformation and new standards in the auto industry before paying to keep it alive. And we should insist that Detroit’s goals include putting America in first place in hybrid and electric automotive technology, reducing the emissions of the country’s transportation fleet, and strengthening our competitiveness abroad.
This should be no giveaway. Instead, it is a historic opportunity to get it right in Detroit for the good of the country. But Americans must bear in mind that any federal assistance plan would not be just an economic measure. This is, fundamentally, about national security.
rory_20_uk
11-16-2008, 18:27
It's $2 BILLION a month that is being lost NET (by GM). Far too little, far too late.
The only way is if the negotiation massively reduces worker's pay and benefits - so the companies make a profit on the cars they produce.
~:smoking:
Kralizec
11-16-2008, 21:57
If country leaders want to sell the message that capitalism as such isn't about to collapse, they shouldn't start collectivising failing businesses. These companies have problems that are very much structural and the current recession just pushes them over the edge. Capitalism is all about corporations going under, that's the basic premise of competition.
Some existing company might take over part of the production line and put them to good use. If not, it's kind of sad because demand for scrap metal is declining. But it still beats keeping crappy companies on life support for years until they need even more of it.
HoreTore
11-16-2008, 22:27
If the problem is management, where will the government come up with the hundreds or thousands of managers necessary?
Steal them from Toyota, of course :idea2:
Employing a management consultancy company who specialises in human management to decide on salaries would be better than expecting Joe Public to understand that making the top tiers work for £60k a year means that either the company moves off shore, or there's a brain drain of able talent.
*looks at GM*
I'd say a "brain drain of able talent" is just what they need right now....
King Jan III Sobieski
11-16-2008, 22:50
People argue that we should, because they're massive employers and so forth. But I pose two questions:
First, where do you drawn the line? Don't employees of Ma and Pa businesses (including the Ma and the Pa) - people who are most likely only making $7/hr - have just as much right to earn a living, regardless of how large or how meager that living may be? Why don't we bail out all of the small businesses around the country, too? Which would lead to another question - why don't we bail out all the one-man (or one-woman) operations...yeah, that's a can of sticky worms...
Secondly, haven't other corporations (namely, the airlines, K-Mart, etc.) gone into bankruptcy? They're still around, aren't they???
CountArach
11-16-2008, 23:08
First, where do you drawn the line? Don't employees of Ma and Pa businesses (including the Ma and the Pa) - people who are most likely only making $7/hr - have just as much right to earn a living, regardless of how large or how meager that living may be? Why don't we bail out all of the small businesses around the country, too?
Losing a small business has a negligible effect on the economy - you only get 10 or so people filing for Unemployment benefits. Whereas if these businesses go under you end up with a hundred thousand minimum going under. Yes, they everyone has the same right to earn a wage and be employed, but when the knock-on effect of a small business falling is non-existent then I don't there is an issue compared to when a massive corporation falls.
Remember that if this massive corporation falls then the small business may fall as well, depending on what their company sells - they might work on manufacturing the leather that goes into the seating for example. Once their major customer is gone, so are they.
Secondly, haven't other corporations (namely, the airlines, K-Mart, etc.) gone into bankruptcy? They're still around, aren't they???
They were bought out by competition.
Strike For The South
11-16-2008, 23:22
They were bought out by competition.
K-mart wasn't
rory_20_uk
11-16-2008, 23:22
But there are thousands of small businesses going under.
Supporting these behemoths - who were not competing in the good years - has to be paid for. The damage to the economy in the medium term is likely worse, as the underlying business is utterly flawed.
When there's a hole in the petrol tank, the answer isn't to pour more fuel in the top and hope that it all works out in the end.
~:smoking:
CountArach
11-16-2008, 23:28
K-mart wasn't
Oh wait, I misread what wiki said. My mistake.
King Jan III Sobieski
11-17-2008, 15:30
K-mart wasn't
Neither was U.S. Airways. They were looking to buy up the competition after they had $$$ problems.
And certainly I appreciate your comments, CountArch. I know that the big businesses like GM inevitably have a considerably larger effect on the economy than Bob & Janes Fruit Market in MyTown, Alaska. But the libertarian in me has to ask, when will it stop? If we help the "Big 3", then there will be cries for government oversight (and, dare I say, almost rightfully so - the government is acting as a lender, so they theoretically should be able to see where "their" money is going). But then, either we'll have all of the Big 3's suppliers/subordenants (i.e. U.S. Steel, auto parts manuf., etc.) receiving government money, or the government will find some way to dip it's Zeus-like finger into everybody's business. (Don't mean to sound too Orwellian, but it is a legit. concern.
TevashSzat
11-17-2008, 21:04
Also, if you bail out smaller businesses, won't they have a greater chance of changing their ways and become more profitable than these lumbering corporations who take forever to change?
The big 3 have known their troubles for years now and they are still slowwwwwwly changing their company to fit their new position within the auto industry. What makes you think that bailing out the big 3 will in the end be more effective and efficient than bailing out maybe ten or a hundred thousand small businesses?
ICantSpellDawg
11-19-2008, 17:58
I've been thinking about this quite a bit lately - most likely because I have a long standing, crap-ton of GM shares - but I don't know enough about economy to make a solid call or formulate a base opinion.
Like everyone else, I know that people who fail repeatedly and waste their money or the money of investors shouldn't ask others to bail them out. I also know that if companies invested in massive and expensive to operate gas guzzlers for the past 10 years that they should pay the ultimate price.
But I also recognize that manufacturing is becoming more and more scarce in the US; though the allure of the service sector, inane regulation and an irresponsible foreign trading policy.
The industry has had water up to its neck for some time, but the credit crunch and over-summer gas prices have finally pushed to water to the most critical level. I recognize that, If allowed to file chapter-11, that they are in deeper trouble than we might realize.
Who would buy an investment from a company that was in chapter 11? Sure, you might buy airline tickets for $500 a pop, but you wouldn't expect the jet to fall out of the sky when the company went under. Warranties would be voided and cars would be more expensive - not something they can afford when up against more stable competition from abroad.
But - I've fallen on the side of letting them file chapter-11 - Whose to say that we couldn't still bail them out after they file? Aren't the major drawbacks to chapter-11 being felt now? Who would buy GM or Ford in this climate anyway? They may as well be bankrupt as far as value against competition is concerned.
I have an unassuming knack for voting against my interests. My stock is near worthless - I'm glad I cashed a bit to buy a car last year.
Hopefully GM gets their "Volt" out sooner rather than later. 40 miles on a fully charged battery without even tapping gas reserves. I'll buy.
Here is an article by Mitt Romney on his take.
Let Detroit Go Bankrupt
By MITT ROMNEY
Boston/Link (http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2&pagewanted=print)
IF General Motors (http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org), Ford (http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?inline=nyt-org) and Chrysler (http://topics.nytimes.com/top/news/business/companies/chrysler_llc/index.html?inline=nyt-org) get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.
First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW (http://topics.nytimes.com/top/news/business/companies/bayerische_motoren_werke_ag/index.html?inline=nyt-org), Honda (http://topics.nytimes.com/top/news/business/companies/honda-motor-co-ltd/index.html?inline=nyt-org), Nissan and Toyota (http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?inline=nyt-org). Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.
That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.
Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.
The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers (http://topics.nytimes.com/top/reference/timestopics/organizations/u/united_automobile_workers/index.html?inline=nyt-org), said to my father, “Getting more and more pay for less and less work is a dead-end street.”
You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.
The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.
Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.
Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.
The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.
Erm ...? (https://forums.totalwar.org/vb/showthread.php?t=109615)
Banquo's Ghost
11-19-2008, 18:19
Threads merged.
:bow:
ICantSpellDawg
11-19-2008, 18:21
Threads merged.
:bow:
Thanks - I didn't see it.
CountArach
11-19-2008, 20:24
If we help the "Big 3", then there will be cries for government oversight (and, dare I say, almost rightfully so - the government is acting as a lender, so they theoretically should be able to see where "their" money is going).
Deregulation is what us got into this problem in the first place - it sure as hell isn't going to get us out.
LittleGrizzly
11-19-2008, 20:40
What about that romney article... seems like good thinking to me, ill admit im no expert on businesses but his calls for more energy effecient vehicles and his attack on the american car industry for making big gas guzzlers is only going to get applause from me, i have to say what i have heard about Romney has been mainly good (he's a republican ?! :wink:), i would like him to be given a place in goverment by Obama
Clarify something for me though... as there seems to be some disagreement here, are foriegn companys outcompeting american companys in america with the same level of employee pay ? (pensions healthcare ect.)
Alexander the Pretty Good
11-19-2008, 21:11
Deregulation is what us got into this problem in the first place - it sure as hell isn't going to get us out.
Really? Deregulation lead to the Big 3's labor problems and poor design choices?
Crazed Rabbit
11-19-2008, 21:32
Really? Deregulation lead to the Big 3's labor problems and poor design choices?
Funny, ain't it? It's always the problem of capitalism or deregulation, not idiotic choices by the company's managers and unions, not endless protectionism from Michigan congressmen.
are foriegn companys outcompeting american companys in america with the same level of employee pay ? (pensions healthcare ect.)
No, foreign companies generally have far less cost per care in terms of retiree benefits and the like. Detroit chose a moronic business model and they now want to be bailed out by the taxpayers; they want to take our money through the government because they can't get it by offering products.
Yes, these firms going bankrupt could have terrible consequences. But it wouldn't necessarily be the end of them; they could recover.
But bailing them out would be much worse; it'd be throwing huge stacks of good money after a very very poor business model. The bailout money won't change the systemic, fundamental flaws. It wil only tide the companies along for a while until they need more money.
So let them fall and get the pain over quickly, instead of prolonging the agony, and wasting huge amounts of taxpayer money, and telling people we'll bail out idiots in business if they happen to be really big idiots.
CR
Seamus Fermanagh
11-19-2008, 22:58
Not "could" Rabbit, "would."
I agree with you that the bailout is wrong and that the best long-term result involves letting them fail, but don't "misunderestimate" the fallout. If the companies are not bailed out then we lose 2 of the three. Then we'd have economic collapse in Michigan (already teetering), and major economic hits in PA and a bunch of other places. The DOW would drop well below its current level, and would stay there for months. Unemployment would quickly push 10% and would further depress the consumer economy. Moreover, given the limited venture capital out there, no US companies would form to fill the void -- most of the market share would be absorbed by foreign firms.
Since, however useful that all sounds to an economist, it sounds like "MY VOTERS WILL KILL ME" to the politicos of the region, we can bet on a bailout with some sense of certainty.
ICantSpellDawg
11-19-2008, 23:07
Not "could" Rabbit, "would."
I agree with you that the bailout is wrong and that the best long-term result involves letting them fail, but don't "misunderestimate" the fallout. If the companies are not bailed out then we lose 2 of the three. Then we'd have economic collapse in Michigan (already teetering), and major economic hits in PA and a bunch of other places. The DOW would drop well below its current level, and would stay there for months. Unemployment would quickly push 10% and would further depress the consumer economy. Moreover, given the limited venture capital out there, no US companies would form to fill the void -- most of the market share would be absorbed by foreign firms.
Since, however useful that all sounds to an economist, it sounds like "MY VOTERS WILL KILL ME" to the politicos of the region, we can bet on a bailout with some sense of certainty.
I believe that a bailout will happen. Michigan has a Democratic Governor, the Mayor of Detroit is a Democrat, Democrats control the congress absolutely and the President-elect is a democrat.
Michigan and Ohio won't forget a democratic government that left them to die when they bailed out wall-street. Kiss those votes goodbye in 2012.
Divinus Arma
11-20-2008, 05:46
The bailout is a much higher stakes game than the American public realizes. This is the first potentially-fatal assault on employee collective bargaining power. If the automakers are allowed to go bankrupt, it will send a strong message to the public that unionization leads to bankruptcy. Several cities and counties are considering bankruptcy as an answer to re-nig on union agreements. The UAW is on the chopping block and your teachers, firefighters, and cops are next in line.
The union is an easy target: "greedy" employees who want medical benefits, strong wages, and a secure retirement. Politicians and talking heads can easily make an emotional appeal to the majority of workers who don't receive these benefits. Why should these "lazy" employees get a pension? You don't get benefits, neither should they! When managers and pundits successfully make this argument, anti-union sentiment prevents YOU from getting the opportunity to join a union and receive these same benefits. All hard-working Americans deserve the right to medical care, a living wage, and a secure retirement. Instead, we are given a 401k, employee-pay medical (or none at all), and bare minimum pay.
So while unions are an easy target, we ignore that management failed to recognize industry-revolutionizing influences on the marketplace. American automakers were blind to the national security necessity of energy independence, they failed to recognize trends in climate change, and they dealt with rising gas prices by offering discounts. Meanwhile, our enemies supply us with fuel, we are on the precipice of environmental catastrophe, and global demand has and will continue to force a dwindling supply of oil to become ever more precious and expensive.
These industry threats were not simply ignored, but change in response was actively fought against. The Big Three lobbied and screamed against legislation that would force them to create more fuel efficient vehicles that consumers have been demanding. Meanwhile Big Oil posts quarter after quarter of record breaking profits. I wonder which political party G.M., Ford, and Exxon all donate to?
The only way we stakeholders can have a voice and ensure our well-being in the face of wealthy and powerful managers is through collective bargaining. Without it, ambitious, wealthy, and unaccountable managers can assault employees individually and we are powerless. Only a union has the power to negotiate worker rights with dignity. Waitresses, mechanics, computer technicians, cashiers, etc; We all deserve the opportunity to work in a career that will pay our mortgages, secure our retirement, and ensure the health of our families.
And that is my mish-mash in defense of unions against Mitt douche.
EDIT: BTW, I see no bailout today folks. Just a blame game and a failure of leadership.
Strike For The South
11-20-2008, 05:49
I guess change isn't regulated to just the president, eh brotha:inquisitive:?
Right, the bailout has not happened yet, and it may not happen at all, certainly not in the rob-the-piggy-bank and walk away whistling form that Detroit execs might like.
Whenever I hear people going on about the intrinsic evil of unions, I always think, "Hey, Volkswagen deals with unions. Toyota deals with unions. Daimler-Benz? Union shop. Honda? Unions out the wazoo. So why are American auto unions so much more evil? How did we mess up a system that works adequately everywhere else?"
Divinus Arma
11-20-2008, 06:05
I guess change isn't regulated to just the president, eh brotha:inquisitive:?
We can take it to the union thread if you'd like to discuss the issue my friend. I just thought I would throw out an argument against RETARDED management that couldn't engage in even the most simple of strategic planning analyses. A straightforward weighted SWOT would have identified most of these factors. They either failed to conduct thorough industry-factor based strategic planning or they ignored these fcators with a groupthink mentality.
Either is a failure of management. Turn not the blame on the unions. The employees don't decide what to research, build, and market.
edyzmedieval
11-20-2008, 09:22
http://news.yahoo.com/s/ap/20081120/ap_on_go_co/auto_bailout_what_s_next
I think we're in for a massive economic landslide in the beginning of 2009...
Either is a failure of management. Turn not the blame on the unions. The employees don't decide what to research, build, and market.No they don't. But their higher per car expenses could encourage the management to stick to higher profit margin vehicles like SUVs, while competitors, sensing shifting demand, more easily moved towards smaller, more fuel efficient cars.
Whenever I hear people going on about the intrinsic evil of unions, I always think, "Hey, Volkswagen deals with unions. Toyota deals with unions. Daimler-Benz? Union shop. Honda? Unions out the wazoo. So why are American auto unions so much more evil? How did we mess up a system that works adequately everywhere else?" Do we blame to UAW for being "greedy" and demanding too much, or do we blame management for being stupid and giving it to them? Either way you slice it, it's the same result. :shrug:
No they don't. But their higher per car expenses could encourage the management to stick to higher profit margin vehicles like SUVs, while competitors, sensing shifting demand, more easily moved towards smaller, more fuel efficient cars.
Hmm, in the case of GM I know a huge part of their expense is health care. In this sense, the Germans, Japanese and Koreans have us at a disadvantage, since they are all single-payer healthcare systems. In other words, they spread the cost of healthcare across their entire society, instead of socking it all to employers.
Do we blame to UAW for being "greedy" and demanding too much, or do we blame management for being stupid and giving it to them? Either way you slice it, it's the same result. :shrug:
A difference of emphasis, surely, and a difference in understanding what has to change. Management of the big three should be replaced across the board, preferably with people from outside the automotive industry. They're stuck in a toxic circle of incompetence and stale thinking. If they can't work out how to make a profit from selling high-mileage cars they should get the boot.
Let the companies go bankrupt and instead spend the 'bailout' money they requested on providing living expenses and re-training to the people who lose their jobs as a result. Very few people seem to care about the companies themselves, it's the employees we're worried about. So, let's help the employees and let the companies rot.
The loss of all vehicle production from Ford and GM will result in increased production from other companies such as Toyota and Honda. Encourage those companies to open new factories and get them to hire the workers who get laid off from Ford/GM. Help the employees weather the inevitable intermediate period of unemployment until these new jobs open up with federal money and health insurance benefits. Don't give a dime to the companies themselves.
rory_20_uk
11-20-2008, 17:11
Many american workers don't enjoy the healthcare benefits of the car companies. One reason for this is there isn't the money to pay for them.
These companies either need to massively reduce their overheads or go to the wall. It will be a good lesson for the unions too.
~:smoking:
Hosakawa Tito
11-20-2008, 18:12
Here's a big part of the problem and good reason why this bailout should be denied. Entitlement mindset. (http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html)
"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.
This is a common problem that permeates most corporations and governments. When it comes time to "streamline", "bite the bullet", "share the pain", etc... Upper management gives up nothing.
Even if they secure this $25 billion dollar loan, without significant debt reduction relief, GM is like $48 billion in the red, they won't avoid bankruptcy long anyway. They will, however, be able to take a few more $20,000 plane rides, for safety reasons of course.~:flirt: my :daisy:.
Strike For The South
11-20-2008, 20:47
Why should we save a company that is leaving the USA anyway?
Why should we save a company that hasn't sold 1 of its 8 private jets
I see the men testify and my blood boils. I would really like to throw these east coast nancy boys under a combine.
I would really like to throw these east coast nancy boys under a combine.
Ummm ... do we need to talk about where Michigan is, or am I missing something here?
Strike For The South
11-20-2008, 21:03
Ummm ... do we need to talk about where Michigan is, or am I missing something here?
East coast=Not Texas how do you not know that?
Many american workers don't enjoy the healthcare benefits of the car companies. One reason for this is there isn't the money to pay for them.
These companies either need to massively reduce their overheads or go to the wall. It will be a good lesson for the unions too.
~:smoking:
Spot on, my friend.
I have been against the outrageous benefits unions, who work for the auto manufactures, have been receiving as many of you have read in previous posts. I am absolutely 100% NOT against a loan to the auto manufactures. On the contrary, it is drastically needed. If they fail, midwest America fails and the rest of America feels the enormous impact.
What I would like to see happen is a direct loan to the auto makers WITH the conditions that they cut some of their union overhead and give us a clear plan to profitability. I am against simply giving them a free ride for a little longer only to see this problem arise in the near future.
I see the men testify and my blood boils. I would really like to throw these east coast nancy boys under a combine.
I've lived in Virginia, Pennsylvania, and Michigan. I can tell you 100% that lumping people from Pennsylvania and people from Michigan in the same category won't be a pleasant experience.
Strike For The South
11-21-2008, 00:37
I've lived in Virginia, Pennsylvania, and Michigan. I can tell you 100% that lumping people from Pennsylvania and people from Michigan in the same category won't be a pleasant experience.
I can tell you 100% a Texan doesn't care
I can tell you 100% a Texan doesn't care
Says a lot about Texas doesn't it? :balloon2:
That's alright though. We know most of you are socially backwards anyway. ~;)
Strike For The South
11-21-2008, 01:00
As goes Texas So goes America
Seamus Fermanagh
11-21-2008, 05:50
Div' is making a good point folks.
I am NOT a fan of unions and unionism (largely because I think many unions have become too ossified in their approach, just as DA makes good points about some of the dumb actions of management), but DA is spot on about one thing.
IF the "Big 3" declare bankruptcy, they will NOT close shop, stop building cars, sell everything and pass out the money pro rata to the stockholders (which is what we think of, psychologically, when we say bankrupt because we're thinking of what we'd have to do with our own small business if we had one). They'll chapter 11, sell off some of the least profitable physical plant/product lines and gut every existing union contract and vendor contract for pennies on the dollar. One of the three might get eaten up by a European or Asian car firm once its leaned out, but the remaining car companies would not "go under." THEN they'll "emerge" from chapter 11 re-formatted, but probably doing the same old :daisy: that set them up for disaster in the first place. Their corporate cultures are thoroughly entrenched. Change will NOT be easily made.
What we want to see happen is the kind of turn-around Harley was forced to make. We won't be seeing that.
Though they've never been government organs, I think there is a lot of similarity between the big 3 and Fannie & Freddie. Too big and pervasive to really be market responsive, but big enough to engender a major recession all by themselves when the wheels come off the cart.
rory_20_uk
11-21-2008, 14:57
All the heads of the companies attended flying in on their private jets. Are they really so blind as to not realise that this might not be the best way to show you've learnt from your mistakes and are penetant?
~:smoking:
All the heads of the companies attended flying in on their private jets. Are they really so blind as to not realise that this might not be the best way to show you've learnt from your mistakes and are penetant?
~:smoking:
They could have at least jetpooled. ~D
A straight bailout would be just another raid on the Treasury. It won't fix anything and just maintain them until next year when they will ask for more money. Chapter 11 would be the best bet, and to keep operations going at that point I wouldn't the Fed loaning money in exchange for ownership or other real collateral.
It's kinda hilarious to watch. The UAW is pushing hard for the bailout, because it knows what will happen to their contracts if Chapter 11 happens. So they are leaning on their pet Democrats for access to the $25 billion already granted for retooling. The green-party Democrats (including Pelosi) are refusing because they want to push for cleaner cars. The Big 3 execs are clearly out of touch with the average US citizen. It sorta looks like the Republicans just want the Big 3 to go down. And Bush can't wait to get out of the White House. All we need now is an affair between Wagoner and Gettelfinger's wife and some popcorn, and we have a proper drama to watch.
No Bailout. Bailout cash will just go into feeding the cancerous tumor known as UAW. The big three should be allowed to go bust, declare bankruptcy, shed the shackles of labor unions and re-emerge as better, leaner, more competitive companies. The government should only guarantee that it will not allow the big three to die in case they go bust. No bailout though.
Seamus Fermanagh
11-24-2008, 23:32
No Bailout. Bailout cash will just go into feeding the cancerous tumor known as UAW. The big three should be allowed to go bust, declare bankruptcy, shed the shackles of labor unions and re-emerge as better, leaner, more competitive companies. The government should only guarantee that it will not allow the big three to die in case they go bust. No bailout though.
So, in your opinion, the "Big 3" should make a more-or-less blatant effort to bust the UAW and to force vendors/creditors to settle for modest losses or break-even payments while the government issues the Big 3 a "get-out-of-jail-free" card?
Have you taken a look at the makeup of Congress lately? :inquisitive: What about Obama's new team suggests to you that this could occur?
So, in your opinion, the "Big 3" should make a more-or-less blatant effort to bust the UAW and to force vendors/creditors to settle for modest losses or break-even payments while the government issues the Big 3 a "get-out-of-jail-free" card?
Have you taken a look at the makeup of Congress lately? :inquisitive: What about Obama's new team suggests to you that this could occur?
The way I see it, the big three cannot be competitive with UAW tied around their necks. Yes, their CEOs had zero foresight, but even with good foresight they'd be at a severe disadvantage when squaring off against, say, toyota. The UAW has served its purpose, it is now nothing more than a leech.
Seamus Fermanagh
11-24-2008, 23:44
The way I see it, the big three cannot be competitive with UAW tied around their necks. Yes, their CEOs had zero foresight, but even with good foresight they'd be at a severe disadvantage when squaring off against, say, toyota. The UAW has served its purpose, it is now nothing more than a leech.
I'm not much of a fan of unionism (at least in its current iteration) either. My objection to your point is two-fold. The Big three taking on the UAW is one thing -- government support for same is another (and one I don't want to see). Secondly, I don't think we're going to see anything aside from a bailout -- the political winds are changing in early January and that will tell the tale.
I'm not much of a fan of unionism (at least in its current iteration) either. My objection to your point is two-fold. The Big three taking on the UAW is one thing -- government support for same is another (and one I don't want to see). Secondly, I don't think we're going to see anything aside from a bailout -- the political winds are changing in early January and that will tell the tale.
I just hope they file for bankruptcy before January 20.
Kralizec
11-25-2008, 21:40
Here is an article by Mitt Romney on his take.
Let Detroit Go Bankrupt
By MITT ROMNEY
Boston/Link (http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2&pagewanted=print)
IF General Motors (http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org), Ford (http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?inline=nyt-org) and Chrysler (http://topics.nytimes.com/top/news/business/companies/chrysler_llc/index.html?inline=nyt-org) get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.
First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW (http://topics.nytimes.com/top/news/business/companies/bayerische_motoren_werke_ag/index.html?inline=nyt-org), Honda (http://topics.nytimes.com/top/news/business/companies/honda-motor-co-ltd/index.html?inline=nyt-org), Nissan and Toyota (http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?inline=nyt-org). Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.
That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.
Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.
The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers (http://topics.nytimes.com/top/reference/timestopics/organizations/u/united_automobile_workers/index.html?inline=nyt-org), said to my father, “Getting more and more pay for less and less work is a dead-end street.”
You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.
The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.
Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.
Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.
The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.
Managed bankruptcy- I like. I agree almost entirely with Mitt Romney right now...
Conversely, I disagreed with him at the beginning of this year when he was pandering to Michigan voters by vowing to save the (already endangered) car industry.
:thumbsdown:
CountArach
11-25-2008, 23:20
The myth of the $70 per hour wage has been dispelled (http://www.portfolio.com/views/blogs/market-movers/2008/11/18/the-return-of-the-70-per-hour-meme).
The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers.
Now that GM's healthcare obligations are being moved to a UAW-run trust, even that fictitious number is going to fall sharply. But anybody who uses it as a rhetorical device suggesting that US car companies are run inefficiently is being disingenuous. As of 2007, the UAW represented 180,681 members at Chrysler, Ford and General Motors; it also represented 419,621 retired members and 120,723 surviving spouses. If you take the costs associated with 721,025 individuals and then divide those costs by the hours worked by 180,681 individuals, you're going to end up with a very large hourly rate. But it won't mean anything, unless you're trying to be deceptive.
rory_20_uk
11-25-2008, 23:28
Cut it how you will:
The companies are utterly inefficient, even compared to other car manufacturers in the USA.
Branches of these companies are doing well abroad.
~:smoking:
TevashSzat
11-26-2008, 00:40
The average GM assembly-line worker makes about $28 per hour in wages
And that is low?? You look at the average biologist with a PHD and he'd be lucky to be able to make $10 bucks an hours starting out. They may not reach $30 an hour in the academia unless they've worked for like a decade
Edit: Okay, it may be shorter than a decade, but it will take a while
Lord Winter
11-26-2008, 00:42
Its about 58,000 a year which isn't terrible but its not good either, and no one eversaid that those were starting positions. Besides the average yearly earnings for a professor are 96,000.
TevashSzat
11-26-2008, 01:19
Its about 58,000 a year which isn't terrible but its not good either, and no one eversaid that those were starting positions. Besides the average yearly earnings for a professor are 96,000.
The thing is that there aren't many professors compared to those with Phd's. The thing is, the average academia starting position is like $20,000-$30,000 a year and that is often for people who have spent seven or eight years in higher education and spend a ridiculous amount of money while doing so too
Lord Winter
11-26-2008, 02:23
I have trouble beleiving the 20-30 thousand number for a starting position. Overall though no one's denying that Acedmia are under paid. Its compltely irrelevent what a biology PHD can earn, (besides aren't pharmiciutical jobs starting position much better then even the AVERAGE, position of a GM employee.) The fact is that comperisions to one spefic and narrow feild proves nothing about what an GM employee should be payed. Has the Union hurt GM? Yes. Should benifits and pay be cut to help save the company, yes let the market take over. But to talk about 58k as a massive salery is grossly overstating the problem.
TevashSzat
11-26-2008, 04:17
I have trouble beleiving the 20-30 thousand number for a starting position. Overall though no one's denying that Acedmia are under paid. Its compltely irrelevent what a biology PHD can earn, (besides aren't pharmiciutical jobs starting position much better then even the AVERAGE, position of a GM employee.)
Well, 20-30 thousand is what a postdoc or a technician would get paid, which would be the starting position for biology related academia.
Regarding pharmaceutical positions, they usually are hardly starter. They tend to require several years of previous experience within a laboratory before the employers will even bother reading the rest of your resume.
What I am trying to say, I guess, is that relative to the effort put in by academia in regards to education and such, GM workers most likely get paid much better. They don't necessarily have to have a bachelor's degree or something even higher, yet they have great benefits compared to those who do (again, not counting for the perhaps 5% of academia who actually become professors or bosses themselves)
As such, its no wonder that the big US automakers are now suffering so greatly. Previously when they controlled a much greater market share within the US, that problem would be more easily masked by higher profts, but now when times are getting alot tougher, it can no longer be ignored and needs to be addressed better
They don't necessarily have to have a bachelor's degree or something even higher, yet they have great benefits compared to those who do
Yeah, but one of the most expensive benefits — health care — is fully subsidized in other countries. Honda does not have to worry about how to pay for retiree healthcare benefits in Japan.
The longstanding agreement between government and business to have employers take on the burden of healthcare is breaking down, but I guess that's grist for a different thread. Let's just accept that single-payer healthcare is a net competitive advantage for manufacturers, mmmkay?
The longstanding agreement between government and business to have employers take on the burden of healthcare is breaking down, but I guess that's grist for a different thread. Let's just accept that single-payer healthcare is a net competitive advantage for manufacturers, mmmkay?
Well, theoretically the manufacturers would most likely being more in corporate taxes in those other countries, but I'm willing to assume you are correct.
CountArach
11-26-2008, 04:48
Well, theoretically the manufacturers would most likely being more in corporate taxes in those other countries, but I'm willing to assume you are correct.
Nope, America has one of the highest Corporate Tax rates in the world.
Nope, America has one of the highest Corporate Tax rates in the world.
read the last part of what you just quoted :beam:
CountArach
11-26-2008, 09:01
read the last part of what you just quoted :beam:
Oh I know, I just like rubbing it in :wink:
Goofball
12-10-2008, 23:17
EDIT: Removed hotlinked picture that also contained bad language. BG
:clown:
Lemur's disease. You were beaten to the punch by the carrier himself. ~D
https://forums.totalwar.org/vb/showpost.php?p=2080336&postcount=31
Goofball
12-10-2008, 23:40
Dammit!
Seamus Fermanagh
12-11-2008, 02:56
Watch the language. There are impressionable....I mean there are genteel...er...oh bother.
A blogger comments (http://www.debatableland.com/the_debatable_land/2008/12/delaying-detroits-death.html) on the now-infamous mock ad ("You didn't buy our ***** cars, so now we're going to take your money anyway").
The perception that GM and Ford and Chrysler build crappy cars is just another obstacle to recovery. And of course it's a perception that, even if out of date, is predicated upon the bitter memories of the crap cars they really did build. Turns out it takes a while for that perception to fade. One more reason why you shouldn't crap on your own brand. So the current crisis, driven by poor management and stupid unions, is also built upon the junk they spent years selling to gullible consumers taken in by the faux-patriotism of "Buying American".
So does this mean I can stop feeling guilty for buying a used BMW?
KukriKhan
12-11-2008, 17:06
A blogger comments (http://www.debatableland.com/the_debatable_land/2008/12/delaying-detroits-death.html) on the now-infamous mock ad ("You didn't buy our ***** cars, so now we're going to take your money anyway").
The perception that GM and Ford and Chrysler build crappy cars is just another obstacle to recovery. And of course it's a perception that, even if out of date, is predicated upon the bitter memories of the crap cars they really did build. Turns out it takes a while for that perception to fade. One more reason why you shouldn't crap on your own brand. So the current crisis, driven by poor management and stupid unions, is also built upon the junk they spent years selling to gullible consumers taken in by the faux-patriotism of "Buying American".
So does this mean I can stop feeling guilty for buying a used BMW?
Only if it was assembled in Louisiana, and is fueled by recycled water, and will biodegrade in 10 years or less.
:laugh4:
rory_20_uk
12-11-2008, 18:09
Here in the UK Ford's cars (Fiesta / Focus / Mondeo) are generally viewed as good, solid cars - if without any cachet of other more costly brands.
In the real world I'd probably get a Fiesta or a Focus... But I'd want a Nissan GT or a Mitsubishi Evo X.
~:smoking:
A blogger comments (http://www.debatableland.com/the_debatable_land/2008/12/delaying-detroits-death.html) on the now-infamous mock ad ("You didn't buy our ***** cars, so now we're going to take your money anyway").
The perception that GM and Ford and Chrysler build crappy cars is just another obstacle to recovery. And of course it's a perception that, even if out of date, is predicated upon the bitter memories of the crap cars they really did build. Turns out it takes a while for that perception to fade. One more reason why you shouldn't crap on your own brand. So the current crisis, driven by poor management and stupid unions, is also built upon the junk they spent years selling to gullible consumers taken in by the faux-patriotism of "Buying American".
So does this mean I can stop feeling guilty for buying a used BMW?That reminds me of the stories you'd hear about workers tagging cars on the assembly line that were for 'one of the boys'- implying that special care would be taken in building that car. What did that say about ones that weren't 'for the boys'? :sweatdrop:
I love how Bush can still push the Democrats around in Congress (getting them to cave on a) bailing them out with the greenifying loan instead of a new one, b) the upper limit of purchasing oversight, and c) the lawsuits on emissions), but the GOP Senators absolutely refuse to cooperate with him. Bolten and Cheney tried to drum up support, and probably turned even more of them against his plans. All of which leads me to believe that they are correct in opposing the bailout. :yes:
Hosakawa Tito
12-11-2008, 21:43
A blogger comments (http://www.debatableland.com/the_debatable_land/2008/12/delaying-detroits-death.html) on the now-infamous mock ad ("You didn't buy our ***** cars, so now we're going to take your money anyway").
The perception that GM and Ford and Chrysler build crappy cars is just another obstacle to recovery. And of course it's a perception that, even if out of date, is predicated upon the bitter memories of the crap cars they really did build. Turns out it takes a while for that perception to fade. One more reason why you shouldn't crap on your own brand. So the current crisis, driven by poor management and stupid unions, is also built upon the junk they spent years selling to gullible consumers taken in by the faux-patriotism of "Buying American".
So does this mean I can stop feeling guilty for buying a used BMW?
And I remember as a lad, 1960's to early 70's, that the label "Made in Japan" meant that product was junk. Now I drive one, and gladly too. GM, the former & proud "Arsenal of Democracy" brought low by their own stupidity. :turtle:
The lessons of history, confirmed by evidence immediately before me, show conclusively that continued dependence on relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is a violation of the traditions of America.
How we have forgotten the founding beliefs of this country. Will we bail everything out? Who will bail us out? Can nothing fail, must we continue to shore up the status quo, if nothing can be allowed fall how will anything be able to grow? Somebody come find me, I am lost and I cannot find my country.
Louis VI the Fat
12-12-2008, 02:09
Here in the UK Ford's cars (Fiesta / Focus / Mondeo) are generally viewed as good, solid cars - if without any cachet of other more costly brands. Same for Ford over here. And for Opel (=Euro GM)- I wouldn't want to be caught dead in an Opel, but there's no denying they're good value for money. Chrysler, I can't think of any Chrysler marques on top of my head, I am not sure what their relationship with Mercedes is either.
Ford and GM make fine, reliable cars for the lower to middle markets. Not particularly sexy, but every bit as competitive as Renault, Volkwagen, Seat or Honda.
Strangely, none of the cars the Detroit Three produce in Europe, or better: for Europe, seem to suffer from the problems of their American cars. They are small, reliable, fuel efficient, good value for money. Solid brands.
CountArach
12-12-2008, 02:22
My family owns an older model Ford Falcon. Its actually quite a nice car.
TevashSzat
12-12-2008, 04:02
Same for Ford over here. And for Opel (=Euro GM)- I wouldn't want to be caught dead in an Opel, but there's no denying they're good value for money. Chrysler, I can't think of any Chrysler marques on top of my head, I am not sure what their relationship with Mercedes is either.
Ford and GM make fine, reliable cars for the lower to middle markets. Not particularly sexy, but every bit as competitive as Renault, Volkwagen, Seat or Honda.
Strangely, none of the cars the Detroit Three produce in Europe, or better: for Europe, seem to suffer from the problems of their American cars. They are small, reliable, fuel efficient, good value for money. Solid brands.
The problem is, I believe, that the Big Three's cars were once inferior in quality to those of Japanese automakers. Even though this gap has now dissapeared, there is still customer loyalty towards these Japanese automakers. If you conduct a poll regarding American or Japanese car quality, (in the US at least) the general result is a public misconception of superior Japanese cars
Tribesman
12-12-2008, 05:27
Here in the UK Ford's cars (Fiesta / Focus / Mondeo) are generally viewed as good, solid cars - if without any cachet of other more costly brands.
But if you take a look at the American versions of those cars or the transit which has always been a good seller then you see that a major selling point is missing in their home market .
Proletariat
12-12-2008, 05:33
It's funny. Small, nimble and efficient Japanese cars like the Accord, Civic, Camry and Corrolla gained popularity here over the last ten-fifteen years, so the geniuses designing them went and changed them to large compact cars for the American market
rory_20_uk
12-12-2008, 12:48
Aaaah, the bailout didn't go through. Finally some painful but much needed surgery is going to happen.
~:smoking:
CountArach
12-12-2008, 13:05
Aaaah, the bailout didn't go through. Finally some painful but much needed surgery is going to happen.
~:smoking:
America hasn't got the guts for Socialism.
rory_20_uk
12-12-2008, 13:11
Luckily the brains to avoid it.
In the big three there are viable companies, but it's going to take the Knife of the Chapter 11 court to cut all the flab off, and for both managers and staff to shake off the complacency that seems to have been present for at least the last 30 years.
Cash hadnouts will probably lead to a car industry based on the 1970's British model where money goes in one end and almost valueless junk comes out the other - as if the government is paying, there's no need to innovate or evolve.
~:smoking:
KukriKhan
12-12-2008, 15:06
Aaaah, the bailout didn't go through. Finally some painful but much needed surgery is going to happen.
~:smoking:
Either that, or GWB will use some of the $700B Congress gave him in September, to shore up GM & Co through the winter.
Just a matter of which checkbook gets used.
If that tactic fails and GWB denies the Big 3 altogether, I expect they'll lay everybody off through January, when the new Prez & Dem Congress will "fix-it". A tough winter in Detroit this year.
America hasn't got the guts for Socialism.
Yes, would be better if all the workers from the dead companies got some unemployment benefits until they find a new job.
Tribesman
12-12-2008, 17:58
Yes, would be better if all the workers from the dead companies got some unemployment benefits until they find a new job.
Hey don't forget Medicaid if they lose their company health insurance :2thumbsup:
Come to think of it . If the companies go bankrupt does that mean that the federal government has to pick up the bill for all the current and former employees pensions too under the federal pension guarantee program ?
That reminds me of the stories you'd hear about workers tagging cars on the assembly line that were for 'one of the boys'- implying that special care would be taken in building that car. What did that say about ones that weren't 'for the boys'? :sweatdrop:
a similar thing but in reverse used to happen in Rover factories, they were called "friday afternoon specials"
Aaaah, the bailout didn't go through. Finally some painful but much needed surgery is going to happen.
I hope it doesn't get revised and passed through in the next couple weeks. That's money better spent on public works. If the company(ies) completely fail it's because of their own lackadaisical approach rather than anything else. How can improvements in US Industry be made if the government pops on a band aid and the corporations ignore what has led to their downturn? :wall:
HoreTore
12-13-2008, 16:19
Here in the UK Ford's cars (Fiesta / Focus / Mondeo) are generally viewed as good, solid cars - if without any cachet of other more costly brands.
Those models are built in Germany, aren't they?
And anyway... The 2000-2001 model(or somewhere around that time) Mondeo's where delivered with rust straight from the factory... Ford always rank high when a new model is released. It takes a couple of years to discover the horrendous list of flaws it has...
There's a reason we call Ford "Fiks Og Reparer Daglig"(Fix and repair daily) here...
Oh, and I drive a nice, efficient '92 Carina II, and there are 3 generations of Toyota standing in my driveway(my carina, an avensis and a prius), so I guess I'm more than slightly biased... :smash:
Crazed Rabbit
12-13-2008, 17:39
Funny thing; certain models Ford makes in Europe are small and fuel efficient. But they can't sell them in America because they don't meet diesel emissions standards.
CR
Louis VI the Fat
12-13-2008, 19:11
Funny thing; certain models Ford makes in Europe are small and fuel efficient. But they can't sell them in America because they don't meet diesel emissions standards.Got a link?
I am getting ever more fascinated by the workings of the automobile industry now. Google gave me some numbers of what I argued a few posts ago: over the last few years, Ford has now climbed to the largest market share for non-French manufacturers, out-competing its Japanese and European competitors. Funny.
~+~+~+<>+~+~+~
I don't really understand all those global car-conglomerates. Ford-Mazda, Renault-Nissan, Daimler-Chrysler etcetera. Also, with production being globalised, with global parts-suppliers, I wonder whether one can even still speak of 'American' or 'Japanese' manufacturers. Tyres from Malaysia, windsheelds from Mexico, German design, Japanese brand, assembled in Spain. That's what one buys.
~+~+~+<>+~+~+~
Meanwhile, Germany and France are preparing to bail out (parts of) their automobile conglomerates. The EU is trying to prevent it. Google for those interested.
Tribesman
12-13-2008, 19:40
Funny thing; certain models Ford makes in Europe are small and fuel efficient. But they can't sell them in America because they don't meet diesel emissions standards.
Funny thing ; the models Ford makes in europe have smaller more efficient engines than when the same model is marketed in America , and thats the petrol versions not diesel .
Got a link?
What he means that if you get a random europeon model that comes in capacities if 1.4 to 2.0 then the 1.4 has a pretty good rating on emissions while the 1.6 does slighty better but the 2.0 does slightly worse .
Now if you compare it to the same model in america which comes in 2.0 and 2.4 then the 2.0 gets the same amount of emissions as it does in europe as its an identical engine unit and the 2.4 gets slightly worse .
That is why the european models cannot meet the American emissions standard:yes:
Louis VI the Fat
12-13-2008, 20:35
if 1.4 to 2.0 then the 1.4 while the 1.6 does 2.0 which comes in 2.0 and 2.4 then the 2.0 gets the 2.4 gets slightly worse ~:confused:
Got a link?
I am just asking for links because I am intruiged now why the Big 3 are failing in America and performing well in Europe.
Tribesman
12-13-2008, 21:46
Got a link?
What ? you mean like links to the VCA & EPA plus links to Ford and Ford(uk) websites.:inquisitive:
No I don't have any of those :laugh4::laugh4::laugh4::laugh4::laugh4:
However if you do somehow find those links you seek just fill in the fields for model and engine and it gives you the full run down on performace(environmental) plus of course category by country . I would suggest some other european sites but the English work better for their mix of imperial and metric like the Americans and in this case there isn't the usual British/US imperial mix up as a mile is a mile in both cases and metric is what it is .
Crazed Rabbit
12-13-2008, 22:15
Got a link?
I am getting ever more fascinated by the workings of the automobile industry now. Google gave me some numbers of what I argued a few posts ago: over the last few years, Ford has now climbed to the largest market share for non-French manufacturers, out-competing its Japanese and European competitors. Funny.
~+~+~+<>+~+~+~
I don't really understand all those global car-conglomerates. Ford-Mazda, Renault-Nissan, Daimler-Chrysler etcetera. Also, with production being globalised, with global parts-suppliers, I wonder whether one can even still speak of 'American' or 'Japanese' manufacturers. Tyres from Malaysia, windsheelds from Mexico, German design, Japanese brand, assembled in Spain. That's what one buys.
~+~+~+<>+~+~+~
Meanwhile, Germany and France are preparing to bail out (parts of) their automobile conglomerates. The EU is trying to prevent it. Google for those interested.
Ford says here importing there 60mpg+ diesel car (http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=rss_topStories_ssi_5) isn't economically feasible, because of the amount they'd need to sell to recoup the investment needed and current American government idiot's attitudes against diesel.
Here's a short rundown (http://www.businessweek.com/autos/autobeat/archives/2008/09/can_diesel_ever.html) of factors going against diesel in the US right now.
CR
Tribesman
12-13-2008, 22:32
Ford says here importing there 60mpg+ diesel car isn't economically feasible
What a surprise , absolutely nothing about the nonsense you claimed about emissions regulation apart from government worries that American customers won't take proper care of their own cars .
Note of course the "fashion" thing , the same sort of "fashion" that says don't buy diesel as says buy a small succesful model of car but put a bigger crappy engine in it .
I am just asking for links because I am intruiged now why the Big 3 are failing in America and performing well in Europe.
Well Louis I suppose its a fashion thing :laugh4::laugh4::laugh4:
Askthepizzaguy
12-13-2008, 22:56
No, absolutely not. They're already getting $25 billion as an incentive to make cars that they should've already been making to begin with, and now they want $75 billion more? Forget it.
Let them go bankrupt- that doesn't mean they'll go out of business, it means they'll have to restructure their business, renegotiate their contracts... basically figure out ways to be profitable that don't involve going to the federal government, hat in hand.
Of course, the "renegotiate their contracts" item is the exact reason why they will get a bailout. The Democrats owe the unions too much not to give them this. Yet another industry that we'll be told is "too big to fail"..... :shrug:
I agree with Xiahou.
The bankruptcy might force the unions to renegotiate their contracts. Those unions are just as greedy as their corporate masters. The difference between American automaker's pay under a union and American worker's pay and benefits working at a nonunion company is staggering.
Sorry, but we can't afford it. I never once was part of a union, and some places, like Wal-mart, would tank if there were a worker's union. They can sell things cheaply because of the lack of a union. With a union, stuff at Wal-mart would cost as much as stuff from the convenience store, and that would further depress the economy as the working and middle classes would see their everyday expenses soar.
Automakers have a skilled, technical job that must be very challenging and tedious. As such, they deserve more than the minimum wage, and that's what the market says too. But the market says automakers cannot support insane wages and bloated extras, that's one of the reasons they can't sell a decent competitive car. And they are competing against other American workers who get paid less. The market has spoken, and it says they've taken too much from the pot and now they have to pay the piper.
If you were to bail them out, it would be criminal. Who would benefit? The stockholders, who have contributed nothing to this economy. Taxpayers would be bailing out stockholders, and when the company turns around, the stockholders would benefit, and the taxpayers would not. The companies would still be run by the same people persuing the same policies and the union contracts would continue, using taxpayer money.
If I went to the federal government and I asked for a raise, when I was a pizza delivery man, and they said yes, the federal government would be subsidizing an nonessential worker. Instead of lazy people getting up off their ass or grabbing a pizza on the way home from work, they use taxpayer dollars to fund a person who carries one small item miles and miles to a private home and back. For that money, we could have FREE TAXI SERVICE across the united states.
That's a metaphor for what we are about to do, and it's a blunder.
We bailout the failing auto industry and expect nothing in return, and what will happen? The industry will just fail once more and ask for more money. And we'll never get it back. And what else could we be spending the money on?
HOW ABOUT THE PEOPLE LOSING THIER HOMES ACROSS AMERICA? I'd rather bailout the families who are facing foreclosure, by paying the banks directly for their mortgages every six months, and in exchange, the federal government can own a percentage of their home, to be turned back into a liquid asset upon the home's eventual sale, which could end up turning a profit if home prices go up.
It's the same concept, socialism, but we get something for our trouble, and those who are behind or unemployed stay in their homes and don't go out on the streets, and don't suck up money from other welfare programs like food stamps, which if they were in an apartment they would need.
It's called investing in people who need temporary help. They would need to find a job, of course, and work towards regaining the entirety of their homes. But the big financial companies we just bailed out decided to reinvest the money and people are still losing their homes. Instead, we could just bailout the mortgage holders themselves, and they can pay the banks what they owe them, and owe the government a percentage of their home for every six months of mortgage bailout. The mortgage companies no longer have bad loans, the homeowners keep their houses, and the government and the taxpayer get compensation for their assistance.
Or you could take the auto bailout money and invest it in my college education, to be paid back with interest, after I graduate.
Or you could use it to cure cancer or feed hungry people in Africa. I don't care. Throwing money at the auto industry and expecting nothing in return is downright retarded.
Crazed Rabbit
12-13-2008, 23:25
What a surprise , absolutely nothing about the nonsense you claimed about emissions regulation apart from government worries that American customers won't take proper care of their own cars .
Note of course the "fashion" thing , the same sort of "fashion" that says don't buy diesel as says buy a small succesful model of car but put a bigger crappy engine in it .
Dum de dum
California, especially keen to regulate CO2 emissions, only recently approved some low-sulfur diesel cars for sale in the state.
Selling it to the American public and resistant regulators will require an effort that involves cooperation among automakers to source engines and pollution control devices in North America and market he benefits of low-sulfur diesel and help by the Federal government to provide more generous tax credits to get the attention of consumers.
Maybe you should give it a rest.
CR
Tribesman
12-14-2008, 00:17
Dum de dum
Errrrrr... a few states isn't the United States rabbit and a 4 year old ban that is being reversed doesn't explain a 100 year history .
Maybe you should give it a rest.
maybe you should stick to facts
But they can't sell them in America because they don't meet diesel emissions standards.
banning diesel cars in a few states is not banning because they fail to meet diesel emissions standards it is just banning diesel cars in a few states.
Mangudai
12-14-2008, 03:39
oops double
Mangudai
12-14-2008, 03:49
Diesel is about $1/gallon more expensive in the US than gasoline, not $.40 as the article claimed.
The US actually has tougher regulations than Europe when it comes to particulate emissions. Refining costs are higher.
http://en.wikipedia.org/wiki/Ultra-low_sulfur_diesel
The US taxes diesel fuel at a higher rate because it is used mostly in heavy trucks that take a heavier toll on roads.
The EU has been taxing diesel less than gasoline to get consumers to switch.
Also note that diesel fuel has 10% more energy than gasoline per gallon, because it's denser. And Diesel produces releases more CO2 per unit of energy.
I'm not anti-diesel in small cars, but it doesn't make as much difference as some people claim. Natural Gas (methane) is the cleanest and cheapest vehicle fuel.
Crazed Rabbit
12-14-2008, 03:52
Errrrrr... a few states isn't the United States rabbit and a 4 year old ban that is being reversed doesn't explain a 100 year history .
And how many car manufacturers are going to market cars they can't sell in California? And I didn't say a few states constituted the whole of the USA.
banning diesel cars in a few states is not banning because they fail to meet diesel emissions standards it is just banning diesel cars in a few states.
Right. And they're just doing that because they don't like the styling of the diesel cars. Nothing to do with the emissions.
The thing is, Europe has a better attitude on this than the US; the major oil refiners recognize diesel is going to be the main fuel in 20 years, even in the US. But various levels of government in the USA are resisting it. So Ford can make a good diesel car in Europe, but it faces greater hurdles in the USA.
CR
Mangudai
12-14-2008, 08:05
From the American Lung Association
WHY IS DIESEL EXHAUST AN AIR POLLUTION PROBLEM?
Diesel exhaust is a mixture containing over 450 different components, including vapors and fine particles. Over 40 chemicals in diesel exhaust are considered toxic air contaminants by the State of California. Exposure to this mixture may result in cancer, exacerbation of asthma, and other health problems.
For the same load and engine conditions, diesel engines spew out 100 times more sooty particles than gasoline engines. As a result, diesel engines account for an estimated 26 percent of the total hazardous particulate pollution (PM10) from fuel combustion sources in our air, and 66 percent of the particulate pollution from on-road sources. Diesel engines also produce nearly 20 percent of the total nitrogen oxides (NOx) in outdoor air and 26 percent of the total NOx from on-road sources. Nitrogen oxides are a major contributor to ozone production and smog.
http://www.lungusa.org/site/pp.asp?c=dvLUK9O0E&b=36089
HoreTore
12-14-2008, 13:16
And how many car manufacturers are going to market cars they can't sell in California? And I didn't say a few states constituted the whole of the USA.
Right. And they're just doing that because they don't like the styling of the diesel cars. Nothing to do with the emissions.
The thing is, Europe has a better attitude on this than the US; the major oil refiners recognize diesel is going to be the main fuel in 20 years, even in the US. But various levels of government in the USA are resisting it. So Ford can make a good diesel car in Europe, but it faces greater hurdles in the USA.
CR
Who cares about diesel? They've mostly been selling gasoline fords here, so I can't really see why diesel emissions matter...
And anyway, when it comes to diesel, VW and their blue motion engine clears the table anyhoo...
So Bush has decided to loan GM and Chrysler $13.4 billion from the TARP fund. Ford has said it doesn't need the money yet.
http://money.cnn.com/2008/12/19/news/companies/auto_crisis/index.htm?cnn=yes
I like the restrictions (3 year loan, repayable in 30 days if the companies are not viable by March 31, 2009). This loan pretty much empties the first installment of TARP, so if the Fed needs more, Congress will have to approve it and hopefully will add in a little more oversight before releasing it (and Paulson is asking for it today (http://www.washingtonpost.com/wp-dyn/content/article/2008/12/19/AR2008121901033.html?hpid=topnews)). I'm guessing that Bush didn't want the bankruptcy of GM on his watch, and punts it down the line to Obama.
Lord Winter
12-19-2008, 19:36
Well it could have been worse, but I still think one if not two (possiablely all) of the big three will fail.
Alexander the Pretty Good
12-19-2008, 20:11
They shouldn't be using that money to bail out auto companies because it isn't intended for them. It's rapidly turning into a trillion dollar slush fund.
If Congress says no money for something, that's supposed to be the final word. At least if we're going to agree to maintaining a pretense of being a democratic republic, and not just a dictatorship with a plutocratic symbolic legislative branch.
Seamus Fermanagh
12-19-2008, 23:07
They shouldn't be using that money to bail out auto companies because it isn't intended for them. its an even more egregious than usual waste of our tax dollars to prop up an industry that badly needs to be reformattted It's rapidly turning into a trillion dollar slush fund.
If Congress says no money for something, that's supposed to be the final word. At least if we're going to agree to maintaining a pretense of being a democratic republic, and not just a dictatorship with a plutocratic symbolic legislative branch.
Modification mine, to label the fund correctly. :smartass:
Hugh Hewitt approves (http://hughhewitt.townhall.com/blog/g/586b99ca-3031-4e0c-9b3e-8242eacb6c1c) of the Detroit bailout. That means it's probably the worst idea evar. A blogger comments (http://andrewsullivan.theatlantic.com/the_daily_dish/2008/12/uh-oh-1.html):
I don't find any of the assurances that the car companies will ever start making money persuasive. And the Bush gambit is of a piece with the rest of his legacy: a carefully wrapped ticking bomb that will explode over us slowly over the next decade. From Iraq to Afghanistan to Gitmo to the doubling of the national debt: it is a legacy of reckless, stupid governance by an irresponsible president trying to cover his *** on the way out.
Alexander the Pretty Good
12-20-2008, 03:43
Seamus - I agree with your corrections, but there are reasons to oppose the way it's being done even if you support it this bailout in principle. No one should be happy with this development.
Pity it passed. Since I'm against it by principle. Economically irresponsible. However, I can understand why it passed. The auto-industry employs a lot of people, letting them go bust now, as the market currently stand could be disastrous. The unemployment shock of releasing thousands of workers would hardly help the economy. However, the industry, as it currently stand is in no position to actually make a positive, real GDP growing, action. No, the government will have to let them go eventually, but hopefully when they do the market may have recovered somewhat and international Auto-Companies, either Japanese or European will have the capital to reinvest and rebuild them, better than they were before.
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