Auto bailout shot down

  • Posted by a hidden member.
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    Dec 12, 2008 5:46 PM GMT
    Senate says "Nuh-uh."

    The big 3 really look like they're about to implode on themselves without a massive handout. Interestingly, Honda, Toyota, BMW, et al, are doing just fine. Thoughts and opinions?
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    Dec 12, 2008 6:04 PM GMT
    Ford's in better shape, may not go bankrupt if they don't get help. And now the White House may allocate some of the bailout money for the financial sector to the auto makers.

    That could provide enough of a short-term solution to keep them afloat until the new Congress and President take office in January, when more signifcant assistance is more likely.

    Blame for the problems aside, the collapse of the Big Three US automakers could be the trigger that takes us from recession to depression. It's the same argument that was used to save the financial institutions, despite their own flawed decisions.

    And frankly, all the US automakers did was carve out a market niche, based on consumer demand. They built big SUVs and pickups, what the public was buying, and they did it well. But their Achilles heel was 2-fold: gas prices, and the public's ability to afford pricier vehicles. When gas prices went up, as the rest of economy folded, their offerings went unsold.

    A strong manufacturing base is important to US economic health. We shouldn't cut off our nose to spite our face.
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    Dec 12, 2008 6:16 PM GMT
    Red!

    I could not agree with you more! The auto industry is the back-bone of our economy.

    There is also some Union busting going around! You think!icon_eek.gif
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    Dec 12, 2008 6:22 PM GMT
    Ducky44 saidRed!

    I could not agree with you more! The auto industry is the back-bone of our economy.

    There is also some Union busting going around! You think!icon_eek.gif


    Oh, absolutely! Part of the Republican agenda. Now I'm not a big fan of some of the stuff the UAW has done, their skirts are far from clean on this.

    But the proposal by the Democrats did reign-in the union somewhat, and call for phased-in reductions of pay & benefits. What the Republicans want is to break the back of the UAW, and all unions.

    And what the Republican media operation is doing is blaming all the auto problems on the unions. Little fault with the executives, it's all about the workers in their version. It's classic union busting at its worst, and playing "chicken" with the health of the American economy.
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    Dec 12, 2008 6:25 PM GMT
    Bush may use the TARP funding to get the big 3 into January. So things are not as bleak as they looked last night.
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    Dec 12, 2008 6:32 PM GMT
    SurrealLife saidBush may use the TARP funding to get the big 3 into January. So things are not as bleak as they looked last night.


    Yes, as I said above. And thank gawd Bush now seems focused on his legacy, so far as this crisis is concerned.

    He prolly doesn't want a GM & Chrysler bankruptcy happening on his "watch" (Ford being in lesser immediate danger). There's been enough financial disasters during the term of this President who claimed he was so smart & connected with business; having GM go under would be the ultimate nail in his legacy coffin.
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    Dec 12, 2008 7:02 PM GMT
    Some analysts are now saying that even with the bailout, Chrysler would/will go bankrupt, as the company has been unhealthy for ages...after all, that's why Daimler dumped them. As far as 'doing okay,' I read somewhere the other day that BMW, while scaling back production and altering product development plans slightly, maintains that it can survive the current market trend for roughly two years.

    Much as I don't like the idea of government bailouts (hey -- where's mine???), I like the idea of so many jobs (in so many economic sectors...there would be a tremendous ripple effect) going away even less. The bailout actually made sense, potentially: the idea of a 'car czar' to keep the companies accountable could have been a good idea...so long as the right person was in that position.

    The American manufacturers are going under because they've spread themselves too thin. Take GM, for instance: it's got too many divisions (Chevy, GMC, Pontiac, Buick, Cadillac, Saturn, Hummer, Saab, and until recently Oldsmobile -- and that's just in the US) selling too many models on too few platforms. How many cosmetically-altered versions of the same SUV does the American buying public need, anyway? It's not so many divisions that are the problem -- its that they all sell roughly the same vehicle with precious little that substantially differentiates them. A Cadillac Escalade, as nice as it is, is still a Chevy Suburban with designer sheetmetal at a $30,000 premium. The Chrysler Corporation has tried to differentiate its models somewhat -- and has only really succeeded with Jeep (though that brand's marketing message has become muddled recently too -- a seven-model SUV line? Really??). The rest of the Chrysler corporation is mired in brand identity issues: meaning, it really has no brand identity.

    Then look at the Japanese and European business models. BMW is BMW, and also has MINI, but a MINI is a distinct vehicle marketed far, far from any of its BMW cousins. Mercedes-Benz has Maybach. The Volkswagen group is large and its myriad connections are a little confusing at times, depending upon who's bought shares of whom, but Volkswagen, Audi, Porsche, and Lamborghini don't exactly have a lot of market overlap. Toyota has Scion and Lexus at opposite ends of the pricing spectrum, and Nissan and Honda have Infiniti and Acura, respectively.

    Size matters. As a case in point, remember the Mazda Millennia of the mid-nineties? It was supposed to be the pilot vehicle for an upscale line to rival Lexus, Acura, and Infiniti called Amanti. Mazda canned the Amanti plans at the last minute, staying small instead. Currently, it is one of the only brands anywhere actually watching its sales growing right now. And Ford is less in trouble, relatively speaking, because it had the foresight to sell of its Premier Auto Group (Land Rover, Jaguar, Aston Martin, and now rumored to be looking for a buyer for Volvo) and controlling interest in Mazda, and because in Europe, it's actually got desireable vehicles. Daimler recognized Chrysler as problematic, and dumped it years ago after a never-good merger. GM is trying to get rid of Hummer and is rumored to be considering drastic downsizing or disbanding of Saturn and Pontiac, and Chrysler apparently wants to sell off the Viper as its own brand. Too late, though...who's buying now?

    Long story short, the American automakers have had a faulty business plan for decades (Chevy Cavalier/Cadillac Cimmaron? The Chrysler cookie-cutter K-car?). It just took a confluence of unfortunate circumstances (record gas prices when most vehicle development was on large SUVs, etc.) to really highlight this fact.

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    Dec 12, 2008 7:19 PM GMT
    The big problem for the world's economy is not so much GM and Chrysler going into Chapter 11, it is the impact on the auto parts manufacturers. If they get into trouble then otherwise healthy car producers such as BMW and Volkswagen will have trouble getting parts to make their cars, and they too will start suffering. All of the advances in industry over the past 20+ years that for many years made the economy more efficient (e.g. derivatives, just in time inventory) are now coming back to haunt us all at once. And it all started with a housing bubble!
  • TallGWMvballe...

    Posts: 1925

    Dec 12, 2008 7:22 PM GMT
    Good points all !

    What can we do?
    What is the best, most viable plan at this stage?
    I wish someone knows.
    My take is that there needs to be a top down remake of the each of those companies including the unions.
    Zdrew is correct in many areas but how do we fix it ?

    I agree that we HAVE to make a herculean effort to save this backbone of our economy,


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    Dec 12, 2008 7:26 PM GMT
    I agree, SurrealLife...there are so many sectors of industry that would be effected by the after-ripple of GM and/or Chrysler going under.

    Chapter 11 bankruptcy for a car manufacturer is the equivalent of complete failure. Even now, part of the sales problem for these companies is consumer confidence -- if I buy a new Saturn Astra or Aura (actual good cars, sadly), will there be a service network? What happens if I lease it?

    As for the unions...that's another set of problems altogether.
  • Menergy_1

    Posts: 737

    Dec 12, 2008 7:45 PM GMT
    I just read elsewhere that GM is closing ALL it's North American plants through the end of January -- and filing for Chapter 11! Chrysler is said to follow.

    It was reported UAW refused to take the 20% wage reductions in the bail-out proposal (to be closer to pay by the Toyota/Honda/MB/BMW factories here). So UAW workers will take a complete pay cut, it seem (100%) and before Christmas...!
  • GQjock

    Posts: 11649

    Dec 13, 2008 12:50 AM GMT
    You wonder why the republicans torpedoed this bill?

    Don't scratch you head too long

    (Tennessee is home to a Volkswagen plant and Nissan’s North American headquarters, while Alabama and Georgia have Honda and Kia Motors Corp. factories. These Southern states have all worked hard to keep the foreign companies from going to Detroit and other Northern states (where unions still exist), by providing huge state taxpayer subsidies.)
    http://washingtonindependent.com/21981/why-southern-republicans-oppose-the-bailout

    Every weasley little vote from the republicans who voted no on this has a BMW or a Mercedes or a Volkswagen or a Toyota plant in their state
    who they gave BILLIONS of dollars in tax right offs to
    one of the reasons they have knuckle draggers graduating from their schools down there because they gave all the money to the foreign car companies
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    Dec 14, 2008 2:36 AM GMT
    Ford will live on, chrysler and GM will inevitably merge together come march 31, 2009.

    and the AWU needs to give in on it's demands and settle with $45/hr like Toyota.
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    Dec 14, 2008 2:57 AM GMT
    I was reading today that one of the major differences in costs between GM and the foreign car makers here in the US is their retirement and retiree insurance packages they are paying out. The Foreign car companies haven't existed here long enough for this issue to come into play. GM line workers I understand are making an average of $60,000 grand a year. I don't begrudge them that at all, that is not that much in todays market. especially when I read that the GM head man is knocking down close to $10,000 and hour. And the repugs said nothing about that did they??? >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>I'm in high hopes that forced retooling to build smaller cars with requirements for much higher miliage cars will save these companies, and set off a booming business in a future market clamoring to get high miliage vehicles. Its possible !!!! We've got to head in this direction anyways, so now under this situation is the best time to start !!!
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    Dec 14, 2008 2:59 AM GMT
    Auto bailout shot down? Serves the Big 3 right!! After making shitty cars on too few platforms for so many damned years, they should've known this & now they're reaping what they sow. However, if they made a better, more quality (make "base" models loaded a standard feature), then I would consider buying a domestic car. Wait till Obama gets into office. All of this shit that Bush has created will come back to bite him. It is rather funny that the imports are doing fine, come to think of it, you don't hear about them needing a bailout/handout!
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    Dec 14, 2008 3:30 AM GMT
    As late as this summer, I was reading that their plan was to start selling small cars... but for the same prices as the big SUVs. Apparently their business models don't work for any reasonably priced cars. So they want us to give them cash to subsidize their operation AND buy their products at double their actual value. It's not gonna work.
  • coolarmydude

    Posts: 9190

    Dec 14, 2008 2:16 PM GMT
    Isn't it ironic, that Republicans successfully got Obama to agree to wait out increasing taxes on those making over $250,000 because of the economy, but yet they still expect the blue collar worker to take pay cuts in this same sour economy. Such hypocrisy!!!
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    Dec 14, 2008 2:29 PM GMT
    There is a bright side to all of this. This is a perfect opportunity for fat lazy Americans to get re-acquainted with their legs.
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    Dec 14, 2008 2:44 PM GMT
    GQjock saidYou wonder why the republicans torpedoed this bill?

    Don't scratch you head too long

    (Tennessee is home to a Volkswagen plant and Nissan’s North American headquarters, while Alabama and Georgia have Honda and Kia Motors Corp. factories. These Southern states have all worked hard to keep the foreign companies from going to Detroit and other Northern states (where unions still exist), by providing huge state taxpayer subsidies.)
    http://washingtonindependent.com/21981/why-southern-republicans-oppose-the-bailout

    Every weasley little vote from the republicans who voted no on this has a BMW or a Mercedes or a Volkswagen or a Toyota plant in their state
    who they gave BILLIONS of dollars in tax right offs to
    one of the reasons they have knuckle draggers graduating from their schools down there because they gave all the money to the foreign car companies

    I agree with Pat Buchanan's view (excuse me.....*hack*) that Republicans are shooting themselves in the foot risking losing all those jobs in the swing states (MI, IN, OH) while their Southern states with the foreign manufacturers will remain safely conservative.
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    Dec 14, 2008 2:47 PM GMT
    realifedad said I was reading today that one of the major differences in costs between GM and the foreign car makers here in the US is their retirement and retiree insurance packages they are paying out.

    I think the underlying health care burden is not being discussed enough, either. I believe I read the US car companies allocate about $1,400 per car to current and retiree health care costs. Consider a union employee who starts at 18 and retires with full benefits at 48 and still gets benefits for the rest of his/her life. That's a big burden.
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    Dec 14, 2008 3:36 PM GMT
    GQjock said
    (Tennessee is home to a Volkswagen plant and Nissan’s North American headquarters, while Alabama and Georgia have Honda and Kia Motors Corp. factories. These Southern states have all worked hard to keep the foreign companies from going to Detroit and other Northern states (where unions still exist), by providing huge state taxpayer subsidies.)

    Every weasley little vote from the republicans who voted no on this has a BMW or a Mercedes or a Volkswagen or a Toyota plant in their state

    Well, let me hasten to add that GM's Saturn plant is also in Tennessee. And the Volkswagen plant was just announced, but doesn't yet exist.
  • Menergy_1

    Posts: 737

    Dec 14, 2008 4:11 PM GMT
    1969er said
    realifedad said I was reading today that one of the major differences in costs between GM and the foreign car makers here in the US is their retirement and retiree insurance packages they are paying out.

    I think the underlying health care burden is not being discussed enough, either. I believe I read the US car companies allocate about $1,400 per car to current and retiree health care costs. Consider a union employee who starts at 18 and retires with full benefits at 48 and still gets benefits for the rest of his/her life. That's a big burden.



    Don't know if it's accurate/true, but I read elsewhere that "legacy cost" figure is more like $4000 per car from the Big 3, not $1400!
  • CuriousJockAZ

    Posts: 19129

    Dec 14, 2008 4:21 PM GMT
    I just don't get it...what is wrong with them being forced into filing Chapter 11 and reorganizing? Isn't that what they need anyway? When is this "Bailout Bonanza" going to end? Heck, maybe we should ALL just get bailed out and get handed a few million. Now THAT I could support icon_lol.gif
  • HndsmKansan

    Posts: 16311

    Dec 14, 2008 4:22 PM GMT
    I agree with Red_Vespa with his opinion as to the probable result.

    I'm middle of the road with my own opinion. I find it aggravating that the "big 3" come "hat in hand" to the american taxpayer. Its way over the time they should have made prudent changes and they had better make them now, or fall flat in my opinion.

    However a prudent reorganization should be the order of the day and assistance (with verified goalsetting) makes sense to me. I'm also frustrated by those in the senate who would rather have them fail and offer nothing.
  • CuriousJockAZ

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    Dec 14, 2008 4:26 PM GMT
    HndsmKansan saidI'm also frustrated by those in the senate who would rather have them fail and offer nothing.


    I don't think anyone wants them to fail, I think there is just a difference of opinion as to which path to take to help them eventually succeed. I'm not convinced that bankruptcy, so they are freed from some of these ridiculous union contracts, isn't the better route to go, since most agree that the bailout is only a band-aid anyway.