By the way…why should we be afraid of loosing the auto industry. How many electronics (used in everything from cars to lawn mowers) are manufactured here ? We have quietly lost most of out manufacturing base.
Expect your kids to graduate from college and move to another country in droves for employment opportunities, like the used to leave some states. It’s happening already.
why should we be afraid of loosing the auto industry.
I am just spitballing here, but although I am against the bailout, I am concerned for all the good folks who will lose their jobs. I can think of many reasons, but I think that one is the most compelling.
Yes, we should bail them out. What the heck, it’s a small amount of $$ in comparison to what Wall Street is getting. Plus, it will cost us much more in social services should the auto industry go completely under. Additionally, letting them fail would likely cause a bad recession to turn into another Great Depression.
Yes, GM, Chrystler, and Ford need to be shaken up. The problem here is its part of the overall scheme of things that are wrong. The reason the CEO’s of these places act the way they do is because that’s what they are trained to do. Your corporations can’t survive without good stock prices. So that’s what they are rewarded on.
That means the wahoos on Wall Street are calling the shots. Want to know what happens if GM announces they will invest a couple of billion in developing that new environmentally friendly car we all want? Wall Street will punish them by lowering thier stock price. Why? Becasue in the short term profits suffer.
Over the past 10 years the corporation I worked for has continued to be successful but their stock price never recovered from the 9/11 problem. Why? Because the lunkheads on Wall Street were putting their money in worthless paper.
We have let the bean counters of the world run the world. Big mistake.
I’d send these guys the bailout money but I’d send a management oversite team with it. And their job would be to focus on product development and product quality. There are plenty of techniques for doing this and they are well known. But they must be applied with an iron fist.
And lest all the foreign car fans on the forum who would happily let these guys go down don’t know it, Toyota has had its problems. They used to rust out like tin cans. Yes, the fixed it, but so have the American manufacturers worked on their problems. I can’t remember the dates right now, but Toyota was bagged by IRS at one point for invoicing cares into the US at higher rates and makeing their profits look small…$500,000 back taces collected there. You were hearing about their high quality at the time, but you could hardly find a mumrmur of this in the news.
I don’t know about Japanese government subsidies of Toyota, but I’d guess there were some. But I do know that our efforts to rebuild both Japan and Europe after WWII included tilting the playing field in their favor and probably still does. Our industries were 45 years old at the end WWII and 60-75 years old by the time foreign cars started to show up here. And they were all new, state of art, new worker plants. We gave them all a running start. They had markets at home. What that allows you to do is make excess inventory and sell them cheap here. That’s how they got a foothold. Now the charge you premiums for cars that aren’t that different.
So let’s belly up to the bar and give these guys a hand. Let’s stop whining about the terrible unions and remember you wouldn’t have paid vacations and holidays or medical coverage without them. Besides, we’re giving a trillion dollars to the Wall street crowd instead of jailing them…how about 2.5% of that, on the chance we might be able to save some American industry.
Bob in Cincinnati
We all seem to be forgetting that the reason the domestic auto industry is in financial trouble right now is not because its products or their quality. The banking and housing sector collapse has caused auto sales to tank in the last few months. With monthly sales in the U.S. falling by about half compared to this time last year, how could we expect any manufacturing company to survive?
Do we want to sacrifice a strategic and economic asset like the domestic auto industry, just because all of a sudden banks ran out of cash to facilitate auto loans or leases? To do that would be foolish, and it will make us even more dependent on foreign products.
Iacocca’s right hand man at Chrysler, Bob Lutz, is a certified “Car Guy”. Guess what he is doing today. He is the vice-chairman of GM! GM today has excellent products that are recognized for excellent performance and quality. The problem today is, banks not being able to give people loans or leases to get cars. Every car company in the world is suffering, including Honda an Toyota.
barathur; you seam to have missed the point in the previous 84 posts on this subject. Car manufacturing is a busines that depends on CONSUMER CHOICE at any one time. Long before the financial crisis, all three US car firms were losing money and market share because they basically did not produce the mix of car consumers wanted with the expected level of quality!! That is true whether you make cosmetics, appliances, clothes or whatever.
When gas was cheap they built big, thirsty SUVs and trucks, and almost abandoned the samll car market because their high cost structure made it difficult to make a profit there. Honda, Toyota and Nissan also make big trucks and SUVs and sold those while there was a market for them. Now they are sharply cutting back on that production and with their flexible manufacturing are quicklly retooling to make more proven, reliable and fuel-efficient small cars.
The Big 3 barely scraped through BEFORE the financial crisis; GM has lost $77 billion so far this year. A business analyst accurately stated that the “broken business model” of the Big 3 meant producing (whatever the management thought people wanted) for inventory and then relying on deep discounts to move the goods.
So, here we have the perfect storm, which allows Honda, Toyota, etc, as well as European manufacturers to fine-tune production to cope with changed customer demand, while the Big 3 are stuck with that hugh production capacity and inventory of vehicles people don’t want.
Interestingly, the Big 3 are doing much better overseas, relatively speaking. Their cost structure (no UAW) and product mix is much better suited to the local markets there.
If a person is dying of a failed heart, even replacing it will not fix the problem for long. It is the same with the car industry. You can pour money in for year after year and it still will not survive.
I say put Michael Moore in Washington in charge of changing the industry. He has all the answers and the brains and dedication to make it happen. He lives and breathes the car industry.
Let at least two -GM and Chrysler - go bankrupt. Ford could probably survive then.
The day after they go bankrupt NATIONALIZE all their assets, put new younger management in who have mostly not worked in the car industry, are not accountants and are used to managing change. Re-employ all the workers and set them to new tasks.
Like Roosvelt, it needs a National Plan. Make buses, train cars, light railway sets, alternative fuel cars, SMALL cars, electric cars, deisel cars, hydrogen cars.
Break it into 10 or so pieces in competition, GM was far too big. The industry must be DESIGN led not accountant led. Restrict salaries for top management to $5 million, thats what Toyota pay. Make them eat with the staff.
The government to hold the shares till conditions reach the point they become saleable.
That’s an INVESTMENT not a dead loss.
Even though I may wish to have my tongue yanked out with needle nose pliers, I say we have to bail them out when they submit a reasonable plan.
Agree…but not because the auto comps will somehow regain their past form. They are all due to extinction in their present form. We are just slowing done the inevitable and keeping related jobs going for a little while longer. Remember that most of those parts suppliers are contributing to global warming.
The internal combustion engine is a dinosaur that unfortunately, much of our economy is tied to. The last bastion of the IC will be the small engine for generators, outboards and lawn tools where they will continue to pollute long after the plug ins and electrics are the norm for cars.
"barathur; you seam to have missed the point in the previous 84 posts on this subject. "
He has his point of view. Just because it doesn’t match yours is no reason to degrade him. I think you should apologize immediately for being way too full of yourself.
Agree that Japanese cars “aren’t that different” from US cars. The major difference is design details, which you can’t see, and in the life cycle cost; if you add up the cost of all the parts that have to be replaced on an American car and compare those with a Toyota or Honda, you will probaly have a difference of $7000+ in extra repairs & maintenance on an US car over 300,000 miles. The difference in purchase price between a Ford Taurus and Honda Acord is less than $2000. I recently bought a Toyota Corolla, and it cost $700 more than an equvalent Ford Focus. The Corolla will live 200,000 miles I longer, I predict.
This the main reason Japanese cars have good resale value; they hold up better in the long run. On the other end of the scale, US cars are substantially better and longer lived that Fiats and Russian cras. Ask anyone in Havana, Cuba whether a 1959 Buick is a better car than a 4 year old Russian Lada.
With respect to subsidies, initally (in the 60s), the Japanese government gave the industries some support, just as they did in the 50s to the camera business to beat the Germans at their own game.
The point you seem to try to make is the same as the British excuse for poor product quality; they blame it on the lack of Marshall Aid from the US in the 1940s, which was given to Germany and other Europen countries to rebuild their industries, while Britain go nothing, since its industrial base was not destroyed.
When all is said and sone, the most important asset a country has is ITS PEOPLE; The Japanese, Koreans, and now the Chinese will work hard enough to put quality products on the market that provide real value to the consumer!
No!!! I care about the workers and small businesses that will be hurt if they go under, but we need to deal with this from the bottom up, not the top down. For example, the government could start employing laid-off auto workers to convert old cars to greener cars.
Detroit created their own problem. Not only have they been building SUV’s, but overall they build bad cars. When I think of a good car, I think foreign. Besides what is an American car? Some so-called American cars are actually built in Canada or Mexico, while Toyota and some other foreign cars are built in the U.S.
YES ABSOLUTELY BAIL OUT! BUT, BUT, WITH BETER MANAGEMENT.
Should we bail out Detroit?
No. We should bail out Baghdad. Detroit should be partitioned and we should establish a permanent military presence. They will welcome us as the true liberators.
Of course we should not bail out the auto industry. Where does it stop after that the airlines when the price of oil goes back up, Dept Stores who don’t have customer, but I guess since we are paling out wall street and the banks so why not the autos.
The best solution would be there partners in crime give them the money, the oil industry! Exxon could give them the full $25 billion and it would only cost Exxon them a quarter worth of earning, plus they would not have to repay it and it would not effect Exxon one bit.
Let’s face it, for past 30 plus years the auto industry, the unions and there Political leaders in Washington (thanks John Dingell) appose every increase in the fuel mileage and safety concern instead of fixing mileage problem. Thou we did get a seventh drink cup holder for an auto that could only hold six people. I guess that driver need a place to keep that hot cup of coffee.
Plus we can’t even talk about the tax breaks they got to sell big vehicle
If they where looking to get money to help get over the credit crises that everyone is facing that’s one thing, but looking for money to re-tool to make the right kind of engine or car that people want to buy when the price of oil is high.
What did Ford do with all there profits these past years? The purchase and sold for a loss Jaguar and Range Rover plus what they are losing on Volvo and Mazda. Why didn’t they spend some of that money retooling there plants for different types of auto? Instead the past couple of years they ship the jobs and work out of this country to save a buck. Ford has a car they are selling overseas first that get 56 miles to a gallon. Why not sell it over here now when the price of oil was $4 a gallon
GM enough said! Here a company that put they money on GMAC mortgage and sub-prime loans way to go. I guess you should have stuck to building autos.
If not now it going to be down the road. The auto industry in the MI-OH area is dead and has been dying for years. It time to let died in there mess. When the economy comes back the foreign can build new plants in the south.
If we need to loan them the money. I hope they don’t take any stock in these companies but, make the loan terms the same we get when we get a car from them. 9.5% but since they have bad credit the rate would be 15 to 20%, plus we could repo any time they miss a payment.
First, this idea should only be considered as a loan with very strict requirements and conditions - with no negotiating on those conditions.
For decades, CEO and upper management salaries and compensation in ALL of its forms have been an offense and profound insult to our nation. I cannot stress this point with enough enraged passion.
So, point #1. All CEO’s and upper management should be fired WITHOUT any severence. They have raped the economoy long enough. They can sit comfortably on the massive financial parachutes they have hoarded over the years. New CEO and upper management compensation must be reduced to numbers based upon market value for the actual skills and work they do. No massive severence packages, etc…AND NO END-OF-YEAR monster bonuses either!!!
#2. Sell off the private jets, which should easily bring in the “needed” 25 billion (just like the financials “needed” 850 BILLION right?), and don’t insult us further.
#3. NO ONE currently employed loses their job (EXCEPT the CEO and upper management who already have massive fortunes), and those who have been laid off are given retro-active severence to keep them going until they get new jobs.
#4. Government-appointed experts WHO HAVE BEEN FULLY VETTED by RELIABLE NON-PARTISAN industry-rating organizations are hired to aggressively regulate how and what these companies are doing - including their Human Resources policies and practices.
#5. If consideration of a loan is truly warranted after the compensation and jets have been returned, and the ENORMOUS bonuses have NOT been given, then at that point, the companies will have to do the following in exchange for any loan;
A. CEO and upper management salaries and compensation IN ALL FORMS, remain at proper market levels according to normal standards of the value of the actual work, experience, knowledge, degrees earned, etc, JUST AS THE REST OF US HAVE TO BE RATED.
B. Ownership of the companies fall to public hands, should they be unable to be profitable as they create the competitively-priced SAFE energy-efficient non-oil-dependent cars that the current market and environment demands.
C. The entire fleet offered by all of these companies will be completely non-dependent on oil by 2018. As we have an energy mission to be off of oil dependence by 2018, so the car companies must dedicate themselves fully to the task.
I have probably missed some important additional points, but these are definitely good ones to start with.
The completely “slanted-in-the-favour-of-the-haves” imbalance in ownership of wealth and property, and where the tax burden has been placed that we have been experiencing for such a long time has just become more repulsive, and it must be stopped.
Right now it looks like there will be a bailout if the business plans presented December 12 are to the satisfaction of the congress. But the money will come from $25 billion already earmarked for the industry to develop good environmental cars.
We will know by mid December what the future holds for the Detroit 3. My bet is still that the major surgery to restructure the industry will not happen and by late next year the reconing will come with the demise of 2 out of 3.
What we have here is a political problem for all those in Congress. They know that if they don’t do the Bail-out and the big three fail and thousands of jobs are lost due to the failure they (the Pols) will feel the wrath of the voters next time they run and they’ll also be out of work. On the other hand if they cough up the 25 big and they still fail they can roll their eyes and sigh, “We tried”. I think all bail-outs are evil. In our system failure is inherent. Those who do good business and good investment get the rewards. Those who jumped on this crazy idea of leveraging themselves through credit to gain wealth should not get any help. Why? So those of us who have lived and worked by the basic rules and now have funds to invest should get to play for a while. The Bail-out Using our money forces us instead to compete with ourselves! I can’t get the best price out there because the Gov. decided to take money from my future earnings and saddle with me with unwanted debt to force me to pay an inflated price for said product/investment.
The auto industry in the MI-OH area is dead, and has been dying for years. It time to let die in their mess.
While I did hear of the Easy Liberty plant for Honda closed down and layoffs at the Marysville plant, I’m not really sure about other maker’s plants around Ohio or Michigan