What are your thoughts on it? I believe the $$ for the auto makers should be part of the $750b bailout that is already in motion. The boards should be replaced by economic czars who have a track record of success. I'm not a fan of bailouts but since the money has already been set aside we might as well use it for an industry that employs millions of people either directly or indirectly.
Nope. No bailout. I hear K-Mart is in trouble also. Lets bail them too. No one bailed out AMC. Werent jobs lost then? Why not have them join forces? The United Motor Corp. One CEO. And what do you tell them if you do bail them out? ''Ok, heres the money now spend it wisely. Dont waste it on cotton candy and gimmie bears. Because thats all your getting.''. Because that wont be all they get. If they screw up again, they will get another check. ''Well you gave us some before.''. They will have no responsibility, no accountability. and Im surprised you of all people would want the government to place who they want in charge of who runs these companys. Now thats socialism.
I disagree that the auto makers current problems are totally a result of years of mismanagement. People stopped buying their cars, to the current extent, because of prevailing economic conditions, primarily increasing gas prices and the uncertainty of how far they will climb. The quality of the product has never been better. In fact, I believe JD Power results will be released this week proving the quality of US automobiles is better than most imports. Having a car is a necessity but trading every couple of years is a luxury- a luxury most people will have to forgo when everything else gets tight. If you want to trace the roots of the problem even more, you don't have to go any further than the unions that have held the mfg hostage for the past 40 years & forced them into paying unrealistic wages. Why are US cars manufactured in Mexico? Union pay demands! The average GM hourly employee makes what, $33 an hour? Toyota (non-unionized) pays $18 an hour?
Let them go into bankrupcy...after that, the government can decide whether to assist them if they have problems getting the financing or whatever needed to come out of Chapter 11. Without reorganization, we would just be throwing money at a problem with no solution.
I'm merely advocating taking this money out of the money already allocated in the bailout. The auto industry is a bit unique because there are only 3 players in the US and so many people are employed directly & indirectly by, as well as retired from, the industry.
They have no rational plan to regain profitability. All that 25 billion does, without Chapter 11 restructuring, is postpone the inevitable.
No bail out. Let them sink. THEN and only then, offer help. The 3 CEO's all flew in seperate private jets from the same city to the same city for a meeting to say how they are running out of cash? Give me a freakin break. I am at odds with my family over this, but after reorganization, the old contracts and pensions should be ok. It is the new contracts and the business model that must be changed, it will not change if we throw dead money at them. The UAW pres comes out and states " There will be NO concessions" from the UAW, how freakin stoopid is that?. Hang him by his ankles and bring on the Mussolini method. Who do you think sank the big 3? The corporate bigwigs and the unions. The hard workers will suffer, and thats too bad.
Well, there certainly should be conditions placed on the loans but you guys are missing my point. Whether we agree or not, the Prez & the Congress have set aside $750b to bail out the banks (and those terms/conditions are sketchy at best). I just think that rather than just throwing that money at the banks for God knows what, why not loan it to the auto makers, given terms & conditions are met?
GM alone is losing $5 billion a month, Ford is losing about $2 billion and Chrysler has been on the brink for ages; long before the current economic crisis. They were sold in 1998 for 37 billion and resold in 2007 for 7 billion. $25 billion to the three of them isn't going to do squat without a total reorganization. The government can use that $25 billion to guaranty warranties and financing while they go through the Chapter 11 process.
Stu, you hit the nail on the head again. Newt Gingrich was just talking about this the other night and he said for the amount of money they're giving to AIG ALONE, they could have purchased AIG 5 times over. They could have bought Ford, GM, and Chrystler 4 times. That's how much money we're talking about here. That's only part of the bail out. I agree that the money should come out of the existing bailout if they're going to do it but there has to be a plan. The automakers were already given 25 billion dollars to re-tool and restructure. They now want an additional 25 to 50 billion. On top of the 700 billion that's been approved just for banks! Paulsen doesn't want to tap into that existing 700 billion. Apparently, they've blown through half of it already. It's going out the door and we don't even know what it's going to. I don't want to see the big 3 go under. Regardless of the physical impact it will have to the economy, the emotional impact could send the stock market to the 5 or 6 thousands, I believe. I read somewhere that between the big 3, and their suppliers, they employ around 3 million people! That's roughly 1/10th of the U.S. work force . But like Stu says, if they don't go bankrupt and restructure somehow, we're just putting off the inevitable for another day. No lesson will have been learned. The idea that the union won't make concessions is crazy. You either work together or get ready to stand in the unemployment line. Maybe most of the upper management needs to be cleared out as well. I heard on the radio the other day that GM pays a total of $2,600 in employee/retiree benefits per car that rolls off the line, where as Toyota pays $200 per car that comes off the line. That was never going to last long term. The unions felt that GM had the deep pockets so they went after them. Now they're not so deep anymore. They might have been fine when trucks were selling like crazy. But you can't survive an extended down turn with those kind of numbers and that's probably only the half of it.
Everyone with a brain saw this coming 10 to 15 years ago. They had more than a decade to make changes. Let them fall and give gov't support to small auto makers like Tesla (http://www.teslamotors.com/) motors and anyone else who has a workable model.
And think hard about what that really means. It means that every GM car has to have about $2500 less niceties in it compared to a similar priced Toyota. The US car won;t ride as nice, it will be put together with cheaper parts, it won't feel as nice, it won't be as quiet and on and on. Does anyone wonder why they can't compete?
And, btw, I don't blame the Unions totally either. The reason management caved to the unions is because they knew the repercussions wouldn't happen on their watch. The ballooning of pensions and health care costs and wages would be someone else's problem some other time after they made their millions. Now it is someone else's problem...ours.
The southern states Japanese manufacturers are not unionized and do not have the average $3000 or so per unit legacy costs. A floor sweeper may make $9 per hour VS a union $35 an hour UAW A journeyman toolmaker may make $30 VS a $65 UAW ( in my shop they make in the low $30's per hour- non union but specialists) A laborer or robot watcher may make up to $15, VS a $33 UAW it goes on and on
Good for the union guy. The downfall of the big three wont be the unions. It will be thie greed and disdain for the general public. some one here once posted they had a Toyota Tercel back in the 80s. He wrote it got 38mpg. I dont think anyone makes a compact car that gets near that now. Certainly not Ford or GM. And the joke of it is: why hasnt gas mileage improved in 20 years? Escalade after Excursion after Hummer. Well the gravy trian has stopped running for these guys. Shouldve learned your lesson when Chrysler was in trouble in the late 70s. So union workers make good money. So what? You think if they lowered the wage to 25 bucks per hour, Ford will be back in the black? NO! Con Ed uses union workers and they do ok. So does UPS. They got greedy and lazy, and now the have to pay for thier sloth. I guess its "What isnt good for GM is good for America.''.
