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GM CEO Rick Wagoner, seen on ther far left, is desperately trying to keep his company in business slashing brands and focusing on small cars. However, without a loan GM will likely go out of business by the years end. Chrysler may soon follow. However, 61 percent oppose the bailout in a recent survey, with only 31 percent supporting it.  (Source: AP)
Some familiar brands meet possible demise at the hands of the bad economy

The big U.S. automakers are desperate to stay in business.  While Toyota and Honda have seen similar sharp losses in the form of 30 to 40 percent drops in vehicle sales, the U.S. automakers -- GM, Ford, and Chrysler -- have been hit the hardest.  Their executives realize the need to restructure and have announced large changes, including cutting their own salaries and compensation to $1/year.  GM and Ford are also selling their private jets, a source of much criticism.

All three automakers are looking for money from the government to stay in business. In fact, GM says that it will run out of money before the end of the year, so the bailout money is needed right now.

One major obstacle to a bailout plan passing Congress is public antipathy to an automaker bailout.  A recent CNN/Opinion Research Corp. survey indicates 61 percent opposed the bailout, while only 36 percent support it.  CNN Polling Director Keating Holland says one key reason is because people don't believe an automotive bailout would help them.  According to Holland, "Only 15 percent say that they would be immediately affected if the auto companies went bankrupt.  Seven in 10 say that a bailout would be unfair to American taxpayers."

The public opinion marks a shift since November, when over half of those polled supported an auto bailout plan.  In total 70 percent of Republicans oppose the bailout, with 62 percent of independents and 55 percent of Democrats also opposed.  Many of those surveyed cite the automotive CEOs use of private jets as a major reason they changed their mind.

Aides to Senate Majority Leader Harry Reid are already saying that he doesn't think he has the votes needed to pass a bailout. However, GM and the other two automakers are going their best to convince Congress to save the industry from collapse.



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without a loan...
By Marlin1975 on 12/4/2008 11:10:00 AM , Rating: 5
"without a loan GM will likely go out of business by the years end."

What idiot wrote this? They will not go out of business. They will and should file for bankruptcy, Ch 11. They are able to cut names and kill dealerships with less cost. Regroup and maybe if smart fire all upper MGT and bring in some fresh blood that is not full of the failure that is there now.




RE: without a loan...
By Motoman on 12/4/2008 11:13:58 AM , Rating: 5
Exactly. None of the big 3 are "going out of business" - they can go #11, or at the very worst will get bought up by other (read: successful foreign) automakers, perhaps large investors, who will reorganize, trim the crap off, and put the brands back on track.

Yes, many, many people will lose jobs, and that sucks. But, there's simply no way that the big 3 are going to be "gone."


RE: without a loan...
By austinag on 12/4/2008 11:24:11 AM , Rating: 1
Normally I'm the first guy to say if a company can't turn a profit that's their problem. But in the case of the American auto industry, a lot of the overhead they have to carry was put there by the government and unions. Not their own business decisions. If the US government let the auto industry build cars that people wanted instead of what they decided was best for us (yes, I'm talking to you Ralph Nader) they might not be in this mess.


RE: without a loan...
By MatthiasF on 12/4/2008 12:18:19 PM , Rating: 5
And how many people would be dead because folk like Ralph Nader didn't call the auto industry on being more concerned with the marketing of their cars than their safety? How safe would our roads be today without these safety concerns and more than twelve times the number of cars on the road on highways holding volumes unheard of when Nader began his crusade? How can you blame safety requirements that were put in place more than three decades ago?

The real issue is the same issue Nader fought against in the 60s. The car industry is willing to build and sell a car that puts people at risk to make more money. Case and point, Sports Utility Vehicles. These behemoths are not only an inefficient blight on our nation's energy resources but a huge risk to everyone else on the road, either by making it impossible to see around their height or their inherent dangers from increased weight, causing more road/tire wear, maintenance issues rarely brought up to consumers and more deadly car crashes.

American car companies pushed these things down the public's throat so they could make two and three times the profit margins. Now that the economy can't support their inefficient and expensive nature, suddenly more than half of all their factories which were specifically tooled to build them are worthless.

It's the bed they made for themselves and they should wallow in it. No bailout.

Let them go into Chapter 11, sell off some of their factories and let a new breed of car companies evolve from the mess that meets consumer and resource demands, instead of the accounts and executives far removed from reality.


RE: without a loan...
By TheSpaniard on 12/4/08, Rating: 0
RE: without a loan...
By MPE on 12/4/2008 12:28:17 PM , Rating: 4
Free market made them build big SUVs and big trucks... guess what... those are the same cars now killing their bottom line. Not CAFE standards.

So there goes the free market argument.

Not to mention, Japanese cars have been able to meet and exceed CAFE standards and still can turn a profit.

Bottom line is, it is not the CAFE standards that killed them - it is pure business decisions and union concessions.


RE: without a loan...
By FITCamaro on 12/4/08, Rating: -1
RE: without a loan...
By arrowspark on 12/4/2008 1:52:56 PM , Rating: 5
High Gas prices and CAFE standards are not killing their bottom line. Toyota and Honda also have to deal with CAFE and high gas prices and yet you don't see them on the verge of bankruptcy so your argument doesn't mesh. The Big 3's lack of business flexibility and agility is the problem. Unlike their American counterparts, the Japanese automakers had the wisdom to not put all their eggs in the SUV and truck basket.


RE: without a loan...
By Motley on 12/4/2008 2:34:04 PM , Rating: 1
That would be a great argument if it was true. Unfortunately Toyota and Honda are asking the Japanese government for similiar things. So while they need to meet the same requirements, they are indeed asking for the same things.


RE: without a loan...
By arrowspark on 12/4/2008 2:39:20 PM , Rating: 5
Please provide link to news article that discusses that. As of 11/26 Toyota's long-term foreign and local debt ratings are AA, which is leaps and bounds better than any of the Big 3, and a far cry from needing a bailout.

http://news.yahoo.com/s/nm/20081126/bs_nm/us_autos


RE: without a loan...
By mindless1 on 12/7/2008 8:16:09 PM , Rating: 3
It's fairly well known that the Japanese devaluation of the Yen essentially subsidizes at a tune often exceeding $4000 per automobile. If American automakers had that don't you think their *profits* and thus debt ratings would be quite a bit better?

In more recent times the sharp rise in gas prices did work in Toyota's favor since their niche was a little smaller more efficient, even more reliable cars. On the other hand, a repair here and there may not make an American automobile cost more in the long run, those going cheap when they buy tend to go cheap on routine maintenance as well which effects actual vs perceived reliability especially when contrasting the last few years of automobiles instead of those made 15+ years ago.


RE: without a loan...
By eyebeeemmpawn on 12/4/2008 12:55:15 PM , Rating: 4
quote:
Free market made them build big SUVs and big trucks... guess what... those are the same cars now killing their bottom line. Not CAFE standards.


Is this the same free market that has the Prius in its 9th year of sales here in the US??? Why struggle with a challenging business problem when everyone else is headed to Washington to stand in line for a corporate hand out? Hooray for corporate socialism! oops, I mean capitalism :)


RE: without a loan...
By Suntan on 12/4/2008 1:06:24 PM , Rating: 5
So what was the total production volume of the prius compared to the F150 during that time?

What is this year's production of the prius compared to any of the "mainstream" vehicles this year?

Lastly, how much of Toyota's total ROI is provided by the Prius?

If you answered: "much less", "much less" and "very little" then give yourself a star.

Hooray for arguing something that sounds good but is not really useful when the facts are added in...


RE: without a loan...
By BZDTemp on 12/4/2008 2:29:59 PM , Rating: 3
I think you forget that Toyota is most sold car in the world. The Prius may just be a niche thing so far but it also a tool used by Toyota to learn about a new kind of car. It's not all about how much money one model makes.

The real problem of the big three is that what they make is only really selling in the home market. Very few US models gets outside the US and those that do sell in tiny numbers. And this on the same time where car makers from Europe and Asia are selling so many cars in the US they even build factories on US soil.

Sure Ford also makes Ford cars in Europe but then it's different cars than in the US. Except when they take a European model like the Focus and sell it in the US. The same thing goes for GM and Chrysler. At one time the big three was rich so they bought up European car makers (SAAB, Volvo, Opel...) and shares in Japanese companies (Mazda for example) but they never managed to really use the know how gained to make US cars attractive to the world.

Today the world does not need soccer moms to drive SUV's the size of monster trucks and the big three has therefore little to offer. At best they could close the domestic factories good for trucks only and concentrate on letting the rest build the European and Asian designed cars. (This is of course a simplification but not much)


RE: without a loan...
By mikefarinha on 12/4/2008 1:11:23 PM , Rating: 2
I think it is technically called "Crony Capitalism"


RE: without a loan...
By TheSpaniard on 12/4/2008 4:52:26 PM , Rating: 2
their inability to adapt and provide what people want is whats costing them...

now people want fuel efficiency and they said ok... how about a hybrid SUV@~20MPG when people were thinking hybrid compact@>45MPG

they didnt follow people did not buy... + overproducing things people arent buying


RE: without a loan...
By mindless1 on 12/7/2008 8:24:03 PM , Rating: 3
I agree, people didn't want their smaller cars so much but they did have some and would have shifted production if that's where their profit was. That doesn't have much to do with the situation right now though, now we have a recession plus a recent surge in gas prices to account for their troubles.

What if gas stays as low as it is now for the next 3 years? In that case, some trimming of fat might allow them to become profitable again if the recession eases up.


RE: without a loan...
By MatthiasF on 12/4/2008 1:51:03 PM , Rating: 1
Competition for safety standards didn't start until well after the crusade began in government to regulate it.

The government represents consumers, acting as a proxy for their demands, so yes, this is a free market and it does work.

Let the free market continue and let these morons fail so that the industry at large can become better.


RE: without a loan...
By Reclaimer77 on 12/4/2008 8:29:31 PM , Rating: 5
quote:
The government represents consumers, acting as a proxy for their demands,


Ahahahah ! AHAHAHAAH !!! Oh god, stop !!!

*pounds table*

AHAHAHHAAHAHH !!!!!!!!!

*wipes tears*

Wheewh.. oh man. That was a good one.


RE: without a loan...
By acer905 on 12/4/2008 12:29:11 PM , Rating: 3
quote:
American car companies pushed these things down the public's throat so they could make two and three times the profit margins

Do you not know the law of supply and demand, demand drives supply, not the other way around. The US auto makers produced large SUV's because people wanted them, and increased the price because they were selling so well.

However, i agree that they need serious restruturing, ditch the UAW, fire at least half the management, and start paying everyone reasonable wages.


RE: without a loan...
By MatthiasF on 12/4/2008 1:46:46 PM , Rating: 4
You are simplifying a complex thing down too far.

You need to factor in Marketing.

If a company gets the public to buy widget A instead of widget B which is cheaper, the company makes more money even if the public only needed widget B.

The auto industry heavily marketed SUVs, not just in TV advertisements but movies, music videos, etc.

Then you also have to factor in government regulations.

Automobile manufacturers used a loophole in light truck safety standards to create SUVs. They then lobbied for tax legislation for credits to people who bought vehicles in this class. Thus, offering a tax incentive to those who buy them AND avoiding the cost of meeting safety concerns revolving around the size of the vehicle.

In effect, they put hundreds of thousands of cars on the road that aren't safe, guzzle gas and fleeced the American taxpayers all to make a quick buck.

They knew it wasn't going to last forever, but they did it anyway and in the course of them doing so they lost a significant advantage in their own local economy.

Talk about incompetence.


RE: without a loan...
By Reclaimer77 on 12/4/2008 8:49:59 PM , Rating: 2
quote:
The real issue is the same issue Nader fought against in the 60s. The car industry is willing to build and sell a car that puts people at risk to make more money. Case and point, Sports Utility Vehicles. These behemoths are not only an inefficient blight on our nation's energy resources but a huge risk to everyone else on the road, either by making it impossible to see around their height or their inherent dangers from increased weight, causing more road/tire wear, maintenance issues rarely brought up to consumers and more deadly car crashes.


OH good grief. The way you Church of Later Day SUV Bashers over dramatize everything is just retarded.

quote:
American car companies pushed these things down the public's throat so they could make two and three times the profit margins.


Huh ? You mean people weren't actually buying what they wanted to buy ? This statement of yours is so wrong, on so many levels, its just pathetic.

I'm not in favor of the bailout for all the right reasons. It sounds like you, however, are just so irrationally disgusted by SUV's you oppose the bailout just for spite.

Grow up please.


RE: without a loan...
By crimson117 on 12/4/2008 12:32:34 PM , Rating: 2
Agreeing to be a Union shop is in fact a business decision. You can choose to snuff the Union, but it often means you have lots of trouble finding enough non-union workers to fill your plants.

Still, some companies do make that choice and some come out okay - look at Wegman's, a mostly non-union supermarket that still rates high on the Fortune Magazine employers' list:

quote:
In New Jersey, the supermarket faced criticism by the United Food and Commercial Workers for not being unionized. About 4 percent of Wegmans employees are in a labor union, according to a union estimate.

But Wegmans has long countered that it puts employees first, a claim that may have contributed to Wegmans' position at No. 2 on Fortune Magazine's list of 100 Best Companies to Work For.

From http://philadelphia.bizjournals.com/philadelphia/s...


RE: without a loan...
By Gzus666 on 12/4/2008 4:25:21 PM , Rating: 2
Wegmans is an outstanding example of what proper management and treating their employees well turns into. I don't get the joy of shopping there anymore since I live in Texas now, but when I lived in Rochester NY (their hometown), that was the only grocery store I ever went to and they were outstanding.

Who would have guessed that treating your employees well and running a fit business would lead to a profit? Detroit is run by monkeys. Businesses take notice, if you want to do well, run like Wegmans.


RE: without a loan...
By walk2k on 12/4/08, Rating: 0
RE: without a loan...
By cmdrdredd on 12/4/2008 11:03:07 PM , Rating: 1
quote:
Normally I'm the first guy to say if a company can't turn a profit that's their problem. But in the case of the American auto industry, a lot of the overhead they have to carry was put there by the government and unions. Not their own business decisions. If the US government let the auto industry build cars that people wanted instead of what they decided was best for us (yes, I'm talking to you Ralph Nader) they might not be in this mess.


I'm sick of this tree gugger liberal "green" movement. Sure it's nice to say you don't have an environmental impact in a negative way, but common. The cars look like shit, are slow as hell, and are limited. BORING is the word. The Unions...don't get me started. Toyota has no unions but they build better cars that are rated more highly and come out cheaper sometimes with a better warranty.


RE: without a loan...
By MrBlastman on 12/4/2008 12:02:30 PM , Rating: 3
It is so easy to say "they will not be out business" without looking at the implications and fallout from this mess.

Yes, they should be forced to restructure.
Yes, the unions should give in.
Yes, bankruptcy will force them to take action.
Yes, not as many jobs will be lost as thought.

But...

What about the retiree's of GM who worked their whole lives with the assumption they would have a pension waiting for them in retirement. What also about the retiree's of GM who hold GM bonds, along with other people who hold these bonds. Hint: They aren't very wealthy.

These are the people who will be hurt the most - they stand to lose at least half, if not all of their pension - and the bondholders stand to lose 90% at a minimum. Can we really sit back, knowing that, and say - NO, they should not get a bailout and it really will not be painful?

Do these retiree's deserve to lose everything? I would say - no.

However, I think they should cut out all non-qualified employees currently working for GM from the pension and render them permanently ineligible. I would then have them open up a 401k savings program or open up a restructured pension program that is affordable to GM. The pension is the real bear on their shoulders - it needs to be fixed, without costing those whom depend on it currently.

Some things are not night and day - there is a grey line many of the time and this is one of them.


RE: without a loan...
By walk2k on 12/4/2008 12:46:52 PM , Rating: 3
Retirees won't lose everything. The government already has programs to help out pension holders, and I do think this is one area where the taxpayers should help. I believe the cap is something like $49k/year, but most retirees should be able to live on that, plus their own savings and retirement plans which they SHOULD have, if they planned their retirement well.

What I don't want is taxpayers footing the bill for these $150k+ pensions (that should have NEVER been agreed to in the first place).

As for bond and stock holders (if there are any left) - tough cookies, they gambled and lost.


RE: without a loan...
By surt on 12/4/2008 1:13:35 PM , Rating: 2
Why shouldn't 150k pensions be legal? You have to pay your employees a competitive wage, the pension is part of your pay package. What you're advocating is that it is ok to retroactively lie to employees about what you are going to pay them to do the work, after they've already done the work! They can't take back the years of work, you shouldn't be allowed to take back promised pay.


RE: without a loan...
By HighWing on 12/4/2008 12:50:44 PM , Rating: 3
quote:
What also about the retiree's of GM who hold GM bonds, along with other people who hold these bonds. Hint: They aren't very wealthy.


While I would agree with you that it is not right that those people should have to suffer because the company went bad, the simple fact however is that it would be that persons own fault. No banker, stockbroker, or any retirement planner would tell you to put your entire retirement plan in one account/company. In fact they would tell you to diversify in the event of this very situation.

Ergo it's your own fault if your entire retirement plan was in one of these 3 companies.


RE: without a loan...
By MrBlastman on 12/4/2008 2:26:28 PM , Rating: 4
Think of a Pension as being on the lines of a 401k. They are similar in goal but different in execution. Pensions are company funded, 401k's are primarily participant funded with company matches.

Both allow investment of the money within the vehicle. Both can also contain company stock within certain restrictions. Both are also considered primary vehicles for people to save for their retirement.

It would be bad to put the bulk of your money in your own companies stock. Pension managers are aware of this and they do not do so typically. Participants in 401k's have also hopefully learned this lesson.

The difference in this situation is - the investments - and holdings in the pension, have not fallen in value. The problem lies in funding the pension, which is being operated in a semi-ponzi scheme methodology currently (much like how Social Security works). They promised a large sum of money to employees if, in return, they worked their lives at the company sacrificing opportunity outside the company.

Back before 401k's, most Americans depended on a Pension to retire. Granted, many companies were notorious for screwing employees out of their pension by firing them a year before they were eligible. This is what lead to the creation of ERISA and 401k protection, which segregated 401k assets from the firm and put in place measures such as a fidelity bond. It also required companies to be fair in their treatment of participants within the plan.

Any planner or person in finance will commonly tell people to max out their contributions to a 401k dependent on their situation. A pension would fall into the same category except they are funded a different way. They are supposed to be there and whether you like it or not, people depend on them to be there when they do retire.

For you to simply say - oh well, that is their own darned fault, let them lose everything - is wreckless thinking. They should have diversified outside of the company, yes, but to just turn a blind eye to them and say big deal is not the kind of thinking we need those that are responsible for deciding the fate of this mess to base their chief decision solely on.

It is not an easy decision. It is not a painless one. It is not just "not a big deal."


RE: without a loan...
By buckao on 12/5/2008 1:28:35 PM , Rating: 2
Not to mention the fact that, 30 to 40 years ago, which is when most of these retirees began working for GM, wages were definitely not as high as they were now, leaving most working-class families unable to invest in the stock market, if they even knew anything about the stock market at all. Maybe they invested in government bonds back then, but the yields on them aren't very high. Also, most families were only single-income back then, because the mother stayed home to raise the kids and take care of the household. If all of these pensioners lose their GM pension and health-care benefits, several things will happen:
-They will have to go on Medicare, shifting the health-care burden to taxpayers.
-Many will no longer be able to afford their rent/mortgage/taxes, increasing foreclosures in an already crippled housing market. In states like Florida, with a large number of retirees, this will drastically affect tax revenue, precipitating cuts in basic services all across the state, which will increase the hardship for the retirees even further.

Most of these people worked hard their entire lives; they fought our wars, they raised an entire generation and put them through college, and they built this country through their work in industry. They did everything they thought they were supposed-to. We can't abandon them.


RE: without a loan...
By Hardin on 12/4/2008 12:19:43 PM , Rating: 2
I'm not so sure even a foreign car company can save them. Look at Chrysler. For the longest time it was Daimler Chrysler, but even Daimler couldn't help Chrysler.


RE: without a loan...
By Hiawa23 on 12/4/2008 1:55:30 PM , Rating: 1
I don't know about going out of business but they said if they don't get the loan they will not be able to run their business passed 2008. I think something has to be done for these guys. I am usually not for bailouts or whatever you want to call this loan for years of greed, & pushing the gas guzzlers, but you can't let the American companies go under along with the 1-3millions jobs & everything else tied to em. I work for Goodyear Tire, & I am sure what happens to them will directly affect my company. I don't know what to feel, but I know something has to be done, maybe putting in place strict guidelines, for the loans, & have always bought Japanese cars, but I am excited for all the fuel efficient projects they have in the pipeline that, if the balls bounce right will rejuvenate the industry & our country. You can't just let all those manufacturing jobs go. Like I said I don't know how to feel or have any answers but America is a much better America if our Auto companies are doing well, than the other way around.


RE: without a loan...
By 16nm on 12/9/2008 2:09:23 PM , Rating: 2
Would you buy a car from a manufacturer filing for chapter 11 bankruptcy protection? I would not. Besides, the devil's in the details. They, or GM at the least, could have to shut their doors. Ford looks relatively OK as they have some cash on hand and with GM out of the picture, they would do better.

Gettelfinger -- the most powerful man in Detroit -- sucks! I would love to see him lose his job. I would love to see the UAW close its doors.


RE: without a loan...
By DASQ on 12/4/2008 11:20:25 AM , Rating: 2
True, they are merely out of cash by the end of this year.


RE: without a loan...
By mikefarinha on 12/4/2008 12:53:13 PM , Rating: 2
That is their own fault...

I've been a Toyota guy since I bought my first car (97 Celica) 8 years ago... which I still drive daily.

If all things were equal I would absolutely love to 'buy American.' But there is nothing less American than these 3 car companies. Their unions are little more than legalized mobsters and the executives are little more than 'old money royalty.'

IMHO Toyota and Honda are much more American than the big 3.


RE: without a loan...
By JasonMick (blog) on 12/4/2008 11:21:50 AM , Rating: 3
GM says they will "go out of business". Read the source article. Straight from their mouth, not mine.

This is likely due to the strong possibility that they may not be able to qualify to file Chapter 11 if their assets are deemed insufficient as some analysts have discussed. I'm no financial guru, but from the analyst chatter I've heard, this is a real possibility.


RE: without a loan...
By DASQ on 12/4/2008 11:25:47 AM , Rating: 2
I followed the links and it just relinks to two DT articles, and finally one that says 'GM, Ford, nearly out of cash'???

The CNN article just says "The auto companies say that if they don't receive government assistance, they could go into bankruptcy."


RE: without a loan...
By JasonMick (blog) on 12/4/2008 11:30:25 AM , Rating: 3
Sorry, this article was longer, but I chopped it in half. Here's the source on that:
http://money.cnn.com/2008/12/03/news/companies/tay...

It's a comment GM has made multiple times since October, though, if you've been following it.

I tried to soften it slightly by saying "might" whereas GM says it "will (go out of business)". Hope that clears it up for you.


RE: without a loan...
By Expunge on 12/4/2008 12:18:50 PM , Rating: 2
See you try and soften it, yet you are going with the media and using the term "bailout." It is not a bailout where we tax payers give them the money and expect nothing in return. It is a low interest LOAN.

But I guess loan doesn't sell as many headlines as bailout.


RE: without a loan...
By mikefarinha on 12/4/2008 12:58:02 PM , Rating: 3
Well, in all honesty a loan implies that it will be paid back... these companies can barely turn a profit. The ugly truth is that these 'LOANS' will not be paid back in our life-time... if at all. It has been shown for the last 30 years that these companies don't know how to be successful.

If I, as an American citizen, am going to be forced to give a preferential government loan to a company, or companies... they had better damn well be able to pay it back. I don't see that happening.


RE: without a loan...
By mindless1 on 12/7/2008 8:32:27 PM , Rating: 2
Why? When you pay taxes for government programs that don't benefit you personally, do you expect those programs to regenerate funds that are funneled into programs that do benefit you?

They are just a group of people doing something that benefits society, offering customers a choice. If we say they are inefficient at it and waste money, again refer to what I wrote above about government spending (in general, is it especially efficient and conservative?).

The bottom line is what benefits the people. The US auto industry buys far more US parts, employs far more US citizens. If less money stays in the US, US workers go unemployed, and we pay more for welfare with less coming in, how is that progress?

Remember something, even if they make a bad choice or waste money it's money staying in our economy and that is a very important difference.

Even if they don't pay it back, it gets spent here in the US so others' income and expenditures are taxed. BIG difference.

Nothing positive will come of letting any of the big 3 US automakers go out of business (if this is really the situation which is questionable).


RE: without a loan...
By omnicronx on 12/4/2008 1:59:53 PM , Rating: 2
I think people also fail to realize that if any of these big three file for chapter 11, buyer confidence is going to drop considerably. 5-10 year warranties (warranties in general really) no longer mean squat, the quality of vehicles by a bankrupt company many also come into account.

I expect 2 out of 3 of these companies to go bankrupt if there is no bailout. I also expect one out of those two to go completely out of business or merge with one of the other companies. Right now its not looking good for Chrysler and GM, as it seems Ford does not even want the bailout money if they can help it.


RE: without a loan...
By Yawgm0th on 12/4/2008 12:39:53 PM , Rating: 2
Filing for Chapter 11 bankruptcy will most likely kill the business. They are already unable to turn a profit in the current market, and restructuring doesn't magically make their cars profitable, and would likely result in cuts that hamper their ability to return to profitability. Filing for Chapter 11 means they will get virtually no sales and may very well never return to profitability. I, for one, won't buy a car from a company going bankrupt. Warranties and parts need to be available.

If they file for bankruptcy, it will likely be for Chapter 7. These guys aren't going to survive Chapter 11.

There's also the greater concern for the economy as a whole. If one automaker fails, it is largely predicted that the others will fall. Be it Chapter 11, Chapter 7, or an even more dire solution, it is widely predicted that it will cause the other two to go down.

Assuming that is true, we are taking a huge increase in unemployment. depending on the extent to which they fall, we're talking millions of jobs guaranteed to be lost. The projected effect on the auto industry and its auxiliary industries is millions more. Conservatively, we're looking at unemployment increasing 1-2%. That's bad. More realistically, we could see it unemployment hit 10% or more. The effect that has on our economy could turn this recession into a depression. That's not necessarily going to happen, but it's very possible.

I'm all for free market capitalism and having a failed business fail. I really think in principle, we should let them fail, and I feel the same about the financial institutions we're bailing out. But what's practical and what's ideological don't mix when it comes to the economy. It's easy to say "let them file for bankruptcy," but it's not that simple. If we want to come out of this recession anytime soon, we have to be proactive. If Detroit goes down in flames, it will be bad for everyone, regardless of where we lie in the economic ideology spectrum.

I don't know if writing them a $25+ Billion check and hoping for the best is the solution, but I know bankruptcy isn't a good one.


RE: without a loan...
By AgentPromo on 12/4/2008 2:38:41 PM , Rating: 1
Except you forget that if GM or others go out of business you can expect to see the following ad in your local papers:

"Due to massive increase in demand for our vehicles, Honda is now hiring 2,750 new machinists, 8,0000 new worker etc..."

Its not as if a few of the big ones go under that everyone stops buying cars, they simply shift their purchase to another automaker, which then becomes stronger.

All this bad times for the "big 3" comes from the reality that new car sales dropped from 16 million a year to 12 million a year, and coupled with the economic slowdown....there is not enough room for all the companies to exist profitably. Let the market sort it out. Maybe if one fails fast enough, the increase in demand at the others will help them get through this.


RE: without a loan...
By Yawgm0th on 12/4/2008 3:09:24 PM , Rating: 2
No, once again it's not that simple. If they fail, that's many, many people who can no longer afford to buy new cars, what with having just lost their jobs. Additionally, the fall of the domestic auto manufacturers will greatly hurt foreign-owned auto manufacturers for the same reason. They will become less profitable in the U.S. even with a theoretical increase in sales.

It's just a bad time to be in the automotive industry right now. If the credit market were up to snuff, they would take loans and probably return to profitability before 2012. With the credit crisis where it is, they will likely fall, probably taking much of the industry down with them.

quote:
Let the market sort it out. Maybe if one fails fast enough, the increase in demand at the others will help them get through this.


In many industries and during better times that is a very reasonable approach. But that will not work with the auto industry. If (when, if they don't get a big load) Chrystler fails, it will damage the rest of the industry substantially. Ford and GM will almost certainly go down with Chrystler, and everyone will have a tough time. Demand will drop even further as unemployment skyrockets, and the other manufacturers will not see sufficient sales increases from less competition to make up for the increased costs.

Again, normally the market would sort this out. The automakers would get loans and probably return to profitability. If Chrysler fell, everyone else could survive and probably gain from it in the long run. But the intense deregulation of the credit market and its subsequent collapse put us in the situation where companies -- in particular the domestic auto manufacturers -- simply can't get the loans they need. Instead of coming out ahead in a few years, we are in the position where we risk a major collapse if we cross a fingers and let the market go to work.


RE: without a loan...
By mindless1 on 12/7/2008 8:42:34 PM , Rating: 2
No, it is a fact that fewer US workers per vehicle are employed by Honda or Toyota, they have marketed this "invest in the US" idea but still import a large % of automobiles.

It is also a fact they source fewer parts from the US for these cars even if they are assembled here. Further, the wages aren't so great, shifting a few millions of people from being able to support a family to going bankrupt themselves is not helping the economy either.

You fail to see that when a purchase shifts to another automaker, it means fewer US jobs and less money staying in OUR economy.

Lastly, this is not a matter of the market sorting itself out. Japanese currency devaluation is a large part of what gave a couple of imports an edge. What if GM had offered every automobile at $4500 less than they did, do you deny that would sway a very large number of potential customers? That's how their government helped them succeed in our market, but if we don't help our own companies succeed in their own market, we lose the market and there's nothing stopping Honda et al from just closing US factories and importing more and more again.

Competition is good, even if more people like one alternative more than the other. It's not the market that is deciding these US automakers are in trouble so it shouldn't be the market that sorts it out. Look deeper at what has happened and remember there are plenty of American trucks and SUVs on the roads.


RE: without a loan...
By ICE1966 on 12/6/2008 3:50:24 AM , Rating: 2
I would rather see the Big 3 get some money than all of these banks. At least these companies employ people who work and pay taxes.

Part of the problem exist in the way the big 3 do business, they are not flexible to market changes. The next thing is these worthless unions are sucking them dry, which is a travesty. Unions have no place anymore except to demand higher wages than should be payed for the jobs being performed, and to take money from workers in the form of dues. I get tired of going to a dealership of one of the big 3 and see cars that are priced way above what they should be sitting on thier lots. the quality of thier cars need to go up and the price needs to go down, plain and simple. if you were to take the unions alone out of the equation you would probably see up to a 20% drop in the price of cars, possibly even more.


Surprised
By DASQ on 12/4/2008 11:04:53 AM , Rating: 4
For once, the American public is in favour of the correct choice!




RE: Surprised
By tayhimself on 12/4/2008 11:13:57 AM , Rating: 2
Its a tough choice. Andrew Ross Sorkin argued against the Detroit bailout really well on th NY Times (last month) http://www.nytimes.com/2008/11/18/business/economy... He has a really good controlled bankruptcy plan, but a lot of the comments are really good arguing the problems with it.
There is a lot of pain that could be caused to hardworking Americans and their families because of this and that needs consideration. I don't really think either choice is clearly better.


RE: Surprised
By DASQ on 12/4/2008 11:22:41 AM , Rating: 2
Unfortunately, those hardworking people and their families are just in a bad position at a bad time. They are just working for the wrong people.

You can't expect to work for a failing company and not fear for job security and the welfare of your family. The nature of an economy and being employed.


RE: Surprised
By Topweasel on 12/4/2008 11:40:51 AM , Rating: 3
All of them? All 3 Million employees of all tiers. If One of these companies goes bankrupt it means the can't afford to pay their bills. If One of these guys isn't paying their tiers it causes a chain reaction. None of these companies are going to be able to get loans to hold them over for these guys to get restructuring done. Trust me they need their loans not for themselves but to make sure the whole industry (not the big 3) can survive. The crumbling of all of these companies will drag to a alt anything even close to manufacturing (metal processing, secondary transportation, agriculture vehicles, construction vehicles) all of those industries are allowed to thrive because the companies that supply them also supplies the OEMs and the big 3.

The adverse reaction to losing that many jobs will cause a wide spread layoff's, due to the 10-15% drop in spending, across the country. Keep in mind all of this is an issue not because of poor foresight (though it didn't help)or crappy manufacturing (hasn't been an issue for almost 10 years). This immediate issue is that lending companies aren't lending to them or the buyers of their vehicles till god knows when because of the lead up to the 700 billion dollar bail out.

Chrysler awhile back got a loan like this to help with the hard times they solely were going through. Guess what they worked themselves up to profitability and paid back the loan very quickly.

Which brings up a major point.

This is not a bailout. They are not begging for a handout. They are begging for an emergency loan since the loaning market is screwed up and needed a 700 billion dollar handout.


RE: Surprised
By theapparition on 12/4/2008 11:46:28 AM , Rating: 2
Exactly.

This is not a handout. It is an investment by the country on it's manufacturing and security future. An investment with oversight, and one that if sucessful, will pay back dividends to the American taxpayer.

Failure is not an option here.


RE: Surprised
By Gzus666 on 12/4/2008 11:51:18 AM , Rating: 2
quote:
Failure is not an option here.


Yet they will most likely find a way to fail again anyway. Face it, they don't know how to run a business anywhere except into the dirt. The fact that they might even give money to Chrysler scares me, that company needs to be drug outside and shot already.


RE: Surprised
By Suntan on 12/4/2008 12:28:31 PM , Rating: 2
quote:
Yet they will most likely find a way to fail again anyway. Face it, they don't know how to run a business anywhere except into the dirt.


Gee, you make it sound like they are the latest “Pets.com” that has had a short, intense burn of money for the very limited time they have been around.

If memory serves, these companies have been around a while, they have a very long history of providing jobs, as well general national support (let’s not forget that little period when all the factories stopped producing cars so they could crank out fighter aircraft to protect your parents from the Kaiser.) They clearly do have a proven history of being a profitable and contributing member of Americana. Yes, they are currently out of favor right now for a couple of different reasons, but it is not the same to say that they are continual failures and not worth keeping around.

I know its really easy to sit around with your 10 second memory and blame the big 3 for not selling cars that people want to buy *right now* but keep in mind that the F150 was still the best selling vehicle up until a year ago. In short, they were selling vehicles people wanted to buy. The market changed very quickly (admittedly they were not prepared to deal with such a quick change) and now everyone turns around and demonizes them as perpetual failures that are a pox on the land.

-Suntan


RE: Surprised
By Topweasel on 12/4/2008 1:31:19 PM , Rating: 2
Again I don't know why you think this applys just to the Big 3 it doesn't millions of job by people who work for companies that either support the company directly or indirectly will die. These are companies that didn't do anything wrong, these are companies that don't have 100 million dollar CEO's. Are you really saying all of these people (people you will have to support with your taxes anyways) should lose their job because for the first time in GM's 100 year existence they are struggling, that 100 years of previous evidence isn't enough to prove that they are a stable company that can return to profitability? Or just because you don't like Chrysler as a business. I don't like GM cars but man I am still rationale.


RE: Surprised
By AgentPromo on 12/4/08, Rating: 0
RE: Surprised
By Bateluer on 12/4/2008 11:58:42 AM , Rating: 2
Chapter 11 Bankruptcy does not constitute failure. Its an reorganization, a restructuring, and an acknowledgment that they screwed up.

This is exactly the situation that Chapter 11 was created for, to prevent a business from going under, to protect the jobs it provides, and allow them to become a successful business again.


RE: Surprised
By theapparition on 12/4/2008 12:16:22 PM , Rating: 3
But you know so little on the big business picture.

First off, there is a lot of evidence that Chapter 11 will not be an option for GM. However, let's assume that it is.

Chapter 11 allows the suspension of loan repayments and restructuring. That's a good thing. But would you as a supplier now accept net 90 terms from a company that does not have a legal obligation to pay in that 90 day term. So you are in fact loaning them money, that you may not ever get paid back. This could be disastrous for suppliers, and GM will instantly find itself with part supply issues.

Similarly, would American consumers (1 in 5 currently buy GM products) be apt to buy from a company where future warranty claims and support may be non-existent?

If you looked at GM's plan, which I assume you didn't read, they have actually restructured fairly well, and appear to be in a labor competitive position with Toyota. It is only the current lack of sales that has hurt profitability. Toyota, Nissan and Honda, both of which suffer similar lack of sales are hurting as well, but haven't been burdened with 108 billion cash spent recently on restructuring labor and pension plans. If GM survives this economic recession and credit crunch, I'm confident it can emerge as a profitable entity.


RE: Surprised
By Bateluer on 12/4/2008 12:55:40 PM , Rating: 3
You are right, I did not look at the plan they submitted to Congress. I have issues with Congress deciding which businesses fail and which succeed using tax payer money. This is not how a free market system is supposed to work. At no point in history has a government successfully managed a profitable business, the US government is particularly inapt at market enterprise.

People aren't buying GM vehicles now, their sales have been dropping steadily, the credit crisis made the matter worse certainly. Toyota and Honda saw their sales drop as well, but unlike GM, they make cars that people actually want to purchase and they are still turning a profit. Unlike GM, Toyota, Honda, Nissan, etc, don't pay their laid off employees to twiddle their fingers either.

As far as the warranty issue goes, there are plenty of places where you'll be able to take your GM vehicle for repair work. Even if the warranty is affected, which is likely won't, you'll still be able to to it to Joe's Auto and have it repaired. Part's suppliers aren't going to spontaneously combust when GM goes into Chapter 11. Because there are GM vehicles on the road, there is a market for their parts and products. They'll be fine.

Chapter 11 is the right move for GM. My tax dollars should not go to prop up flawed business tactics.


RE: Surprised
By FITCamaro on 12/4/2008 1:14:45 PM , Rating: 2
quote:
Unlike GM, Toyota, Honda, Nissan, etc, don't pay their laid off employees to twiddle their fingers either.


Again. Union. Bankruptcy will get rid of that. Of course the UAW is saying they'll get rid of that right now to help GM and Ford.


RE: Surprised
By arrowspark on 12/5/2008 8:39:33 AM , Rating: 2
That doesn't go far enough. The UAW should give back to the Big 3 all the money that was paid to union workers over the past 3 decades for the sole purpose of twiddling fingers in a room for 8 hours.


RE: Surprised
By theapparition on 12/4/2008 4:45:00 PM , Rating: 2
quote:
You are right, I did not look at the plan they submitted to Congress.

Than stop commenting on things you have no idea about.
If you look at the report, GM's business plan is in there, and discusses how they plan to come out of this mess.

quote:
People aren't buying GM vehicles now, their sales have been dropping steadily, the credit crisis made the matter worse certainly.

People aren't buying any vehicles now, not just GM. Toyota and Honda have warned that they may not turn a profit. Even so, 20% of the cars sold this year in this country are a GM product.

quote:
As far as the warranty issue goes, there are plenty of places where you'll be able to take your GM vehicle for repair work.

Really? For free right? Because that's what it cost now for a warranty repair. Do you even understand the difference?

quote:
Because there are GM vehicles on the road, there is a market for their parts and products. They'll be fine.

OK, let's see how you do as a business when 75% of your product line is gone and your relegated to legacy part production. Sounds like some doors getting shuttered to me.

quote:
Chapter 11 is the right move for GM. My tax dollars should not go to prop up flawed business tactics.

You have no idea of GM's proposed business tactics (since you didn't read that report). If the economy was sound and car sales were as expected, GM would be turning a profit now. The economy caught many business off guard (and that rests solely on Management's missteps<--I'm not giving them a blank check).

Chapter 11 should be the last resort.

Far more of your tax dollars go to prop up an extreamly flawed business that has no business plan or strategy for profitability. Social Security. Before worrying about a loan to automakers, you should be far more concerned with your own retirement future.


RE: Surprised
By mikefarinha on 12/4/2008 1:03:47 PM , Rating: 2
In Chapter 11 the courts absolves the company of its debt and in turns gives each creditor partial ownership in the company... That would be a god-send for these American Titanic's. The creditors would then have a large say in how the company is run... this is why the executives don't want chapter 11, they don't want things to change. They are just as bad as the Unions.


RE: Surprised
By Ringold on 12/6/2008 3:57:13 AM , Rating: 2
quote:
But would you as a supplier now accept net 90 terms from a company that does not have a legal obligation to pay in that 90 day term.


Almost had a good point, except for debtor in possession financing that would take place. The government could provide that if a bank didn't want to at nearly zero risk, and thus suppliers would not have an issue with the points you raise, because either banks or the government would insure that they would be getting paid.

As for whether or not people would buy from a bankrupt company, many people suggest a pre-packaged bankruptcy to speed the process through, thereby lessening the stigma.

Regarding their restructuring plan, you're right, it's not bad, but may not go far enough. Regarding a return to profitability, I believe that with all the liquidity pumped in to banks and markets by the Federal Reserve we will have an inflation problem within months or a year of exiting this recession. The Fed will have no choice but to raise rates and induce a second recession, just like what Volcker had to do in the 80s. Can GM survive the current recession with this bailout? Many people think they need more. Can they survive what many believe will be a second follow-on recession that will cause interest rates on their potential customers car loans to go through the roof? That's a grim, grim picture.


RE: Surprised
By InvertMe on 12/4/2008 11:45:19 AM , Rating: 2
Now they just need to take the money back from AIG and everyone else who has gotten bail out money - then return the damn loan.

Americans can suffer for a while until they learn how to fix their businesses.


Whatever
By ksherman on 12/4/2008 12:26:26 PM , Rating: 2
When I first head about the bailout, I was really against it. I (still) think that GM's best option really is Chapter 11, where they can restructure and reorganize. They really need that regardless. But now when we have a Congress that issues $700 billion for bailouts of the banking system and the Fed dishes an additional $800 billion dollars to buy out loans and crap, and a President Elect planning a massive stimulus package etimated to be upwards of $500 billion, we should just give them their money. We are throwing billions around like it the new million, I say just give them the money. Its a drop in the bucket compared with what is being dished out.

Word.




RE: Whatever
By puckalicious on 12/4/2008 12:34:40 PM , Rating: 2
IT'S NOT A BAILOUT!!
I'm getting very tired of everyone calling this a bailout. Wall Street got a bailout. Hundreds of billions just handed over with no oversight, no terms of repayment. The auto companies are asking for a LOAN that will be repaid with interest, just like Chrysler did in the 1980's. And the amount of money requested is less than 5% of the money Wall Street received. Why does everyone have their panties in a bunch over this?

Ksherman you have the right attitude at least. Word.


RE: Whatever
By FITCamaro on 12/4/2008 12:39:45 PM , Rating: 2
But the problem is that without declaring bankruptcy, they will not be able to kick out the unions. They'll continue paying insanely high wages and benefits. So in the end, nothing will change.

I don't want to see them fail either. But I think a structured bankruptcy is the best way to go. There is already talk of this. The problem is that Democrats want to give these loans. Why? Because they support unions and unions support them.


RE: Whatever
By Suntan on 12/4/2008 12:58:08 PM , Rating: 2
Two comments:

1) they will not have to keep paying high union costs, it has been held as common fact in financial circles for the last couple years (since the last union agreement) that (GM at least) just needed to be able to limp along until 2012 until the majority of its new union deals went into effect. The problem is that the dryup of available lending hit them before they could make it to 2012.

2) Bankruptcy in and of itself will not alter union relationships. You can't just walk into a room and say, "We're in bankruptcy, you guys have to work for half your old pay now." Just because you have legal recourse to break your current contracts, doesn't mean you are going to get new, longterm favorable contract to replace them.

For these two reasons, I do not see how GM going bankrupt gives them advantageous bargianing power that would be enough to offset the negitive customer stigma that is associated with purchasing products from a company in bankruptcy.

-Suntan


RE: Whatever
By fishbits on 12/4/2008 3:11:35 PM , Rating: 2
"You can't just walk into a room and say, 'We're in bankruptcy, you guys have to work for half your old pay now.'"

While true, I'm willing to wager that in a deep recession you can find PLENTY of people willing to do manual labor for $20/hour + a more standard bennies package of nice med/dental, 401k+matching and vacation. Those who refuse to work without much, much sweeter deals than that and insist on an adverserial relationship with their empoloyers can check by periodically to see if anything opens up.

I think it would be relatively easy to overcome a stigma by saying "We've made mistake, and we're tightening our belts and budgeting wisely, just like most families have to. This is going to let us sell you great American-made cars at a much more reasonable price." I really don't believe that Americans who are struggling to hold onto their jobs have trouble understanding a company letting go average workers who insist on outlandish benefits, and unions who then hand the money in the stick price to politicians.


RE: Whatever
By surt on 12/4/2008 1:21:11 PM , Rating: 2
It is a bailout because there is no realistic possibility of the 'loan' ever being repaid.


RE: Whatever
By Motley on 12/4/2008 3:25:30 PM , Rating: 2
Everyone has their panties in a bunch over this because anyone who looks at it realizes that it's a terrible investment. If it was a reasonable investment then you'd have banks throwing their money at them. They aren't.

It's a bailout because no financial institution worth a crap thinks their "plan" is going to work.


RE: Whatever
By Reclaimer77 on 12/4/2008 8:42:51 PM , Rating: 2
quote:
IT'S NOT A BAILOUT!!


A MASSIVE chunk of taxpayer money that will never be paid back. You call that a loan ?

NO, its a bailout.


RE: Whatever
By cmdrdredd on 12/4/2008 11:17:58 PM , Rating: 2
quote:
IT'S NOT A BAILOUT!! I'm getting very tired of everyone calling this a bailout. Wall Street got a bailout. Hundreds of billions just handed over with no oversight, no terms of repayment. The auto companies are asking for a LOAN that will be repaid with interest, just like Chrysler did in the 1980's. And the amount of money requested is less than 5% of the money Wall Street received. Why does everyone have their panties in a bunch over this? Ksherman you have the right attitude at least. Word.


It doesn't matter, THEY CANNOT AND WILL NOT REPAY THE SO CALLED LOAN. They can't do it. In the last 3 decades they have done nothing but bad, bad things to their image and profitability.


RE: Whatever
By arrowspark on 12/5/2008 8:36:37 AM , Rating: 2
Lou Dobbs said last night that the combined net worth of the Big 3 was like 17 Billion Dollars. The loan amount the Big 3 are asking for is enough to buy them twice over. They will never be able to repay the loan, at least not in my lifetime they won't


Even the table..
By whirabomber on 12/4/2008 12:12:09 PM , Rating: 1
Allow GM/Ford/Chrysler to disband the UAW, give every worker their own contract based on the foreign domestic manufaturers (toyota, honda, etc). Give state tax breaks/no taxes, near free land, and a zero international border inspection pass like the states do for toyota, honda, etc. Make the japanese manufatures deflate their mpgs (Consumer reports the average over inflation of mpgs in japanese car companies at 8%, with hybrids poking near the 10% over inflation). Make the japanese cars CAFE compliant (only domestics are affected by CAFE). Make it easier for the domestics to sue ninja bloggers who post wildly inaccurate claims about how bad the big 3's cars are (Ford is 3 in international quality, btw, GM is 5-?, Chrysler = dead last).

The main reason the big 3 moved production out of the US is because there is no strangling unions to deal with. Everyone says the big 3 is responsible for their situation but unfortunately, they didn't have a lot of choice. If workers were on strike and your company was loosing over $5 million a day, it wouldn't take long before any agreement seemed reasonable. As Japanese domestic industries have no union clauses, a strike at a plant could easily be take care of by firing a bunch of workers as most labor laws revolve around the workers being in a union.

The big 3 have been painted into a corner by greedy states (employed voters are happy voters), the push to make NAFTA a success (the big 3 were encouraged to move factories abroad), and by giving Americans what they wanted - big gas guzzlers.




RE: Even the table..
By FITCamaro on 12/4/2008 12:21:12 PM , Rating: 2
Well said. I didn't know that Japanese manufacturers were not held accountable for CAFE standards though. Is this correct? If so, it is wildly unfair.


RE: Even the table..
By whirabomber on 12/4/2008 12:48:00 PM , Rating: 2
From http://www.nhtsa.dot.gov/CARS/rules/CAFE/overview....

Are import vehicles treated the same as domestics when it comes to CAFE?
The rules are different for passenger cars and trucks. There is a statutory “two-fleet rule” for passenger cars. Manufacturers’ domestic and import fleets must separately meet the 27.5 mpg CAFE standard. For passenger cars, a vehicle, irrespective of who makes it, is considered as part of the “domestic fleet” if 75% or more of the cost of the content is either U.S. or Canadian in origin. If not, it is considered an import.

Beginning in 1980, light trucks were administratively subjected to a similar two-fleet rule. However, given changes in market conditions (the “captive import” sector of the fleet had become insignificant), NHTSA eliminated the two-fleet rule for light trucks beginning with MY 1996. Therefore, there are no fleet distinctions, and trucks are simply counted and CAFE calculated as one distinct fleet of a given manufacturer.

------

Well in theory, I was wrong, but in a "me not wrong" world like America... I could say that Japan could make 3mpg cars all they want in Japan and sell them only in Japan hence avoid being counted towards the "import fleet" 27.5mpg requirement. The US can't hide their big guzlr(tm) production vehicles like that. I also am guessing that is why Japanese car manufactures haven't be enthusiastically perusing the big truck market.

Ok, so technically I could be considered wrong on the CAFE point.


RE: Even the table..
By arrowspark on 12/4/2008 2:24:38 PM , Rating: 2
Uh the original poster made it sound like CAFE was a lopsided unfair rule, it is not.

All car makers who sell in the US must adhere to CAFE for the vehicles they sell in the US or pay a fine.

Vehicles that the big 3 manufacter to be sold in a foreign market are not counted. Vehicles manufactered by foreign automakers to be sold in foreign markets are not counted.

Only vehicles that are manufactured, domestically and overseas, to be sold in the US are counted.

from NHTSA website

"Corporate Average Fuel Economy (CAFE) is the sales weighted average fuel economy, expressed in miles per gallon (mpg), of a manufacturer’s fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 lbs. or less, manufactured for sale in the United States, for any given model year. Fuel economy is defined as the average mileage traveled by an automobile per gallon of gasoline (or equivalent amount of other fuel) consumed as measured in accordance with the testing and evaluation protocol set forth by the Environmental Protection Agency (EPA)."


RE: Even the table..
By FITCamaro on 12/4/08, Rating: 0
RE: Even the table..
By arrowspark on 12/4/2008 6:19:42 PM , Rating: 2
It is not stupid. CAFE is there to provide for a minimum level of air quality for people to breath in the US.

CAFE and high gas prices are only market challenges that serve to separate the weak companies from the better ones. Those companies that can innovate and develop more streamlined prcesses or business models to cope with those challenges will have a competitive edge and put pressure on the competition. All this whining (yes, it is whining) about how GM, Ford and Chrysler can't make a profit and compete with foreign automakers under high gas price and CAFE conditions only further reinforces the fact that they are weak companies that do not deserve a bailout and should be allowed to go bankrupt.


RE: Even the table..
By FITCamaro on 12/5/2008 7:56:56 AM , Rating: 1
Incorrect. CAFE standards were established to do one thing. Reduce our dependence on foreign oil.

GM, Ford, and Chrysler can't compete because they have to pay far more in labor costs. It has nothing to do with high gas prices or CAFE standards.

Also don't forget that as far as the whole hybrid thing goes, GM, Ford, and Chrysler didn't push hybrids as much because the government told them to push the use of ethanol. Now that ethanol has been exposed as the waste of money that it is, the government is yelling at the big 3 for not producing hybrids?

And they didn't have the cash to drive the development of both due to their higher labor costs. Not to mention all the other incentives import automakers are getting here from states. Plus the subsidies Honda and Toyota get from the Japanese government. Toyota was given quite a bit of money to develop the Prius. Hardly a fair marketplace.


RE: Even the table..
By arrowspark on 12/5/2008 8:31:23 AM , Rating: 2
How many excuses can you possibly make for GM, Ford and Chrysler? It's their own fault for agreeing to outrageous UAW demands such as the Job Bank and other things that force them to pay people for zero productivity. They deserve to go bankrupt and the UAW can go down with them for being so greedy.


RE: Even the table..
By ICE1966 on 12/7/2008 12:26:58 AM , Rating: 1
I agree, dissolve the UAW. You don't give a person a contract to work, you give them a job. A job in which they get reasonable benefits, and reasonable pay. a job where they come in and do the work, no complaining or bitching all the time about things that do not matter. unions have long over inflated pay for its members by strong arming the automakers into contracts, almost unbreakable contracts. There is no reason for someone putting seats in a car making $50-$70 bucks an hour, it's not rocket science. I believe that if you look you will find that wages and benefits payed by the Big 3 is a major reason as to why they cannot make any money. I have visited unionized plants of Ford motor company in Batavia and Sharonville, and its a joke in what I saw. because of the unions, people only had to do certain jobs, and those jobs only. I could not get one person to move some pallets for me because they were on the wrong side of a 4inch wide yellow line on the floor. I had to wait for the other person to get back from lunch in order to get these pallets move. thats absolutely crazy, and there is no excuse for such crap. In my mind, you do the job or task you are asked to do, as long as you are certified. The person on the forklift on the other side of that 4inch wide yellow line was more than qualified to move 5 empty pallets. Unions are a problem.

The Big 3 need to rethink the way they do business also, getting rid of unions will only fix part of the problem, albeit, a large part. Americans need to wake up and realize that we no longer make it better of do it better than everybody else. those days are gone but we can get back to it. just change the way we think and execute our businesses.


Here we go again.
By fishbits on 12/4/2008 11:31:25 AM , Rating: 5
Congressman: "From the perspective of one of the nation's top CEO's, how stupid is it to pay $70/hr for manual labor?"
CEO: "Unbelievably stupid. Some might say maliciously so, crossing over from stupidity to outright sabotage."
Congressman: "OK, we can agree on that. Going forward then, can we get you to make affordable vehicles that people actually want, and make a profit producing them like other companies do?"
CEO: "We're trying to avoid resorting to that. And do keep in mind, in many cases we have to make the cars you mandate we make, no matter how unpopular. Like $40k compacts."
Congressman: "Err... be that as it may, what entitles you to taxpayer money to cover the ineptness of your business."
CEO: "Kickbacks."
Congressman: "Excuse me?"
CEO: "You give us the taxpayer money, we hand it to the UAW, the UAW then funds and staffs your election efforts. Remember?"
Congressman: "Move that we recess..."




RE: Here we go again.
By Gzus666 on 12/4/2008 11:37:03 AM , Rating: 2
I laughed and died a little more inside at the same time...


RE: Here we go again.
By Suntan on 12/4/2008 12:38:09 PM , Rating: 2
That is a good one.

But let’s not forget also how all the government wonks (viewing lucrative deals to set up refining factories in their Midwest states) jumped all over themselves to approve ethanol as an acceptable means of meeting various efficiency and clean air mandates.

Ethanol was a crock when they first proposed it, bordering on pork barrel for the states that grow crops, and it has proven to be so now. The problem is that it gave the auto companies an easy way out 5 years ago, and only helped to set them up for a harder bounce now.

I don’t recall seeing any of those congressmen critically asking each other if their wonderful ethanol project was as clever as asking CEOs about their method of transportation for getting to DC…

-Suntan


Can unemployed people afford to buy new cars?
By cyberguyz on 12/4/2008 3:02:31 PM , Rating: 2
One thing these megacorps seem to forget is that when they purchase their parts from foreign sources, they are cutting off the domestic job market at the knees. With the economy in the current state it is in, companies are scrambling to cut costs by offshoring everything possible. The problem with that is that when all but a few of the the jobs are offshored they have effectively made their customers unemployed.

Unemployed people can't buy cars.

How many parts in these cars are made in China, Taiwan or Indonesia? If those parts were made domestically more people would actually have jobs and can afford to buy their vehicles. Take a real close look at your car sometime and you will see how much of its parts really are made outside of North America. What do you figure the job market would be like if these companies were FORCED to buy these parts from domestic sources?

Perhaps any bail-out of these companies should include a stipulation that all components these vehicles are wholly made from be from domestic sources.




By mikefarinha on 12/4/2008 5:24:06 PM , Rating: 2
Maybe we should revert to having everything be hand crafted too... that would make even more jobs! Down with the machines!


By arrowspark on 12/5/2008 8:45:20 AM , Rating: 2
The counter point to that is that labor costs in the US are more expensive because the cost of lving in the US is higher than China, Taiwan, and Indonesia. As a result car parts will be more expensive, making the car themselves more expensive. SOME people in the US who work in in the upstream industries for car parts will make more money, but car prices will be raised for EVERYONE across the country. Unless of course the manufacturers are willing to suck it up and take the hit of the extra labor costs, which I doubt.


No Bail Out
By TxJeepers on 12/4/2008 12:01:30 PM , Rating: 2
I wish nothing bad on anyone supporting their families.

Ford, is actually stating it has the money to make it through next year...yada, yada, yada...and only wants the bail out money as a safety net if they are wrong. LOL.

I say let them go Chapter 11. I say replace management at many levels. I say grow some balls and stand up to the UAW and stop the bleed it causes American car makers.

Mr. UAW, we are renegoitating the contract and we are cutting out this, this and that. Bottom line, we are going to pay reasonable wages and provide reasonable benefits, similar to many other industries and that is that. Oh, you don't like it, you are going to go on strike. OK, here is a copy of the Chapter 11 papers, knock yourself out.

Management / UAW - Fix these and American car makers can once again become giants and compete with Toyota and Honda, WORLDWIDE.




RE: No Bail Out
By wempa on 12/4/2008 12:55:12 PM , Rating: 2
Amen to that. Unions are complete BS. There are laws in place now to protect workers. Unions should go away so these workers are forced to actually keep themselves competitive in a market like everybody else instead of getting automatic raises and benefits just because of time spent at a job.


Conspiracy Theory
By acer905 on 12/4/2008 12:36:54 PM , Rating: 1
GM, Ford, And Chrysler need to survive!
The Japanese people are very proud people and are still upset about the outcome of WWII!
They have been patiently planning for years to overthrow the US!
The US also has many enemies that are willing to team up with the Japanese!
As soon as all American manufactuing completely dies, The Japanese, and their secret allies are going to declare war on the US
They will use their American Toyota plants, which have been secretly gathering parts for years, to build many tanks and weapons of war.
Because the US no longer has any manufactung plants, we will not be able to build any new tanks to battle them.
The Japanese will use this advantage to totally take over the US, forming a vast empire to rule the earth!




RE: Conspiracy Theory
By arrowspark on 12/4/2008 2:05:41 PM , Rating: 2
That's the dumbest thing I've read all week.


RE: Conspiracy Theory
By FITCamaro on 12/4/2008 2:16:35 PM , Rating: 1
It was a joke you moron.


Flawed business models
By edogwv on 12/4/2008 12:40:38 PM , Rating: 2
These guys need to throw in the towel and start over-

Imagine the great car buying experience of thinking, you know... I paid for this car twice.. The first time with tax payer dollars to bail out a failed business model.

Why don't they just call it Government Motors?

Will we have to pay taxes on the new cars we buy if they are already paid for with tax dollars ?




RE: Flawed business models
By Suntan on 12/4/2008 1:18:44 PM , Rating: 2
Good grief.

Do you have any idea how much of what you buy goes that way already? Do you think you have bought any food with corn as an ingredient where you haven’t already paid for it in tax handouts?

-Suntan


I told you guys....
By Mithan on 12/4/2008 12:52:54 PM , Rating: 2
I told you guys a new Greater Depression is coming and most of you will be unemployed and starving in tent cities, and you refuse to believe me.

This is the BEGINING of the end of Western Civilization.




RE: I told you guys....
By InvertMe on 12/4/2008 1:32:15 PM , Rating: 2
quick everyone go get a gun a fire wildly into the air! The end is near!!!


4 Day Work Week.
By Floorbit on 12/4/2008 1:55:42 PM , Rating: 2
Most of the stuff being said about 'bailing out'the automakers is pure opinion. Nothing of steady analysis at all. A made for media agenda crunch. I just dont listen to it. Because soon you realize your attention is being played,by statistic and static.
The problem is that the economics that is being done,is eighteenth century economics. The flow of goods,is not a relevant venue to create tax money to run the government completely. It never will be. It could be said that 'Reagonomics will be victorious',but that is only a small formula of positives and negatives. Or you could put money into big government projects,and be an untold slave to your credit cards,and bankers. Willing to sleep on your pillow for you.
No single entity does for someone like you can do for yourself. Take a day off. Everybody. Government too. Nobody has time for themself these days. No time for dreaming,no time for study,no time to keep themselves in charge. Entreprenural and private enterprise can deal with themselves. Trade will take off configuratively.
Then boo hoo. Wall street can ball a little more. Blah. Bunch of weenies. There is too much power to the ideals of interest rates. It too like Reagonomics is only a formula in a sea of them. The Congress has got to send the signal to the problem and ban variable interest rate loans. Since if the fed needs to vary that part of the economy. They dont take the horses with them when they do.
Media mavens need to stop chasing storm clouds.Creating only the problems that can be answered the next day. We may take weeks,months years to answer our on questions. At least we can think of them without choking on ourselves. Why this problem doesn't help them. I dont know.
Give us a four day work week. Ban variable interest rate loans. Leave us alone. Buy some cheap stocks. And gather your dividends. For companies that have something a value can believe in on its own. Its a great time to buy stock.





RE: 4 Day Work Week.
By Floorbit on 12/4/2008 1:59:42 PM , Rating: 2
BTW: If somebody sais 'Consumption Tax'. Tell them to eat cake.


Pot, Kettle
By IcePickFreak on 12/4/2008 2:35:05 PM , Rating: 2
I just find it funny the US government grilling anyone over excessive spending.

When do we get to ask Congress to work for $1 a year, at least until social security is paid back?




RE: Pot, Kettle
By FITCamaro on 12/4/2008 2:49:24 PM , Rating: 2
Don't forget to suspend their pensions for full pay.


Two points
By djc208 on 12/4/2008 11:58:56 AM , Rating: 3
I have mixed feelings about this "bailout". However there are two points here which I think need to be repeated. The news I have seen states that the $25-billion is not "new money" but would be paid from the $700-billion bailout plan already approved. So in that sense you're not spending more, just choosing if you want to give some of it to them [the big three].

The second is that they want a LOAN. Not a handout, it may be more favorable than any bank loans they could get, but then again most of the bank loans would probably just be the banks handing the same bailout money to the big three at a higher interest rate.

Technically the banks that have gotten money haven't been given "free" money. The government is buying into these banks in order to let the company re-loan that money and try and get back to business.

If handled smartly (and say what you want but you don't get to be treasury secretary by being bad with money), they could actually earn back more than the money spent. It's not likely with our government but possible.

The conspiracy theorist in me worries that while a big deal is made on spending it, any repayments or even profits from this will "dissapear" into the government vice actually re-paying this debt.




By jimbojimbo on 12/4/2008 12:16:27 PM , Rating: 2
The problem is that they had them all this time while driving the company into the dirt. They should have been sold long before they started begging for money. All the execs should have taken pay cuts to prevent this as well. They did absolutely nothing to prevent the situation and giving them money is just enabling this attitude.




No to Bailouts
By 325hhee on 12/4/2008 12:36:33 PM , Rating: 2
First the govt gives money to banks, for issuing bad, extremely high risks mortgages, just to make the sale and to make the stock holders happy. First off, I live in NYC, I do not own a house. If you live in the city, there are no houses to really own unless you have more money than you know what to do with. Why are my tax dollars paying for someone else's home, and giving the banks money for giving out loans to people who want to own a million dollar house, and only makes $20k a year. Let the banks suffer.

Same thing with cars, NYC, a lot of people do not own cars, I sold my Jeep a while back, but I was able to afford it, till gas prices went insane. Again, tax dollars from people who don't own cars to bail out auto makers? Screw that, tell them to get a bail out from Exxon who made 26+ Billion dollars in PROFIT to bail their butts out. Leave our tax dollars out of it. And stop making the govt print out more useless paper. Our money is going to become a joke if the govt prints out more currency than they have to back it up.

Since when does the govt bail stupidity and greed? I know a number of people that are going to either lose their jobs, or take a pay cut. Where's our bail outs for those that will lose their jobs, are you going to give every unemployed legal citizen person in America a 1 Million dollar bail out? Of course not, and we the tax paying citizens should not bail out greedy corps that only cares about the profits and not the ramifications.

These CEOs making 30 Million a year should with their 200 Million dollars golden parachute, should bail themselves out and start cutting out stuff in house, and get in their plants and make cars themselves.




I would like them to go under....
By The0ne on 12/4/2008 1:14:56 PM , Rating: 2
but there are so many companies and people affected by it. But then again, without them doing much to change what they've been doing it might repeat itself all over again. Still, quite of a lot of people that would be unemployed even more if they don't get a bailout.




By arrowspark on 12/4/2008 2:04:49 PM , Rating: 2
Yes if the bailout goes through, the Big 3 owes america almost 5 million cars. At bulk pricing I say $7000 is a very generous price for a crappy Ford or GM car. And they better not have transmission problems within 2 years like all their other crappy cars.




Rub-a-dub-dub
By dxf2891 on 12/4/2008 2:41:05 PM , Rating: 2
The old nursery rhyme, Rub-a-dub-dub, three men in a tub was actually a social commentary on the inability of the two to survive without the third. No butcher, no meat and you can't eat. No baker, no bread and you can't eat. No candlestick maker, no light and heat. Without the Big 3, it's possible your bank or your dry cleaners may fold. Or your local theater or maybe your Chuck E. Cheese because of the ones that are folding in the markets that depend in some way, shape or form on the auto industry. Perhaps sales will decrease at Best Buy and there by cause store closures. These loans are not for the survival of the Big 3 Automakers, but for the survival of the American economy.




By fflintstone on 12/4/2008 2:53:39 PM , Rating: 2
Loan the automakers a pile of money for the specific purpose of developing relatively low-price/high-efficiency vehicles. Make the loan conditional on union concessions which would remove most of the feathers from their overstuffed bed. Tie the interest rate and payback terms on the loan to performance on the price/efficiency goals. Seems like that would serve the legitimate national interests of maintaining a healthy automotive industry without rewarding past incompetency or incurring all of the fallout from a bankruptcy. It also sidesteps the union problem by having them "voluntarily" agree to new terms.




You mean....!!!!
By cscpianoman on 12/4/2008 5:39:52 PM , Rating: 2
You mean the people's voice might actually be heard on this one? Whoa! I think I just saw a pig fly!




GM CEO Rick Wagoner
By obiwankenobi on 12/4/2008 9:47:26 PM , Rating: 2
However, without a loan GM will likely go out of business by the years end - GM CEO Rick Wagoner, the new prophet of doom! this line sounds familiar. before somebody said we need to invade iraq to get rid of weapons of mass destruction. during the reign of the big 3, when somebody tried to pass legislation to make cars more efficient, they sent everything they got including the kitchen sink to congress just to block anything that will make their cars and trucks more efficient. now with high fuel prices and nobody is buying their products, they come begging to rescue them (with an attitude, corporate jets, anyone want a ride?)these arrogant management deserve to have their companies to go under.




trouble
By pile on 12/4/2008 10:03:48 PM , Rating: 2
If they go down we all go down. One of the biggest problems is the unions. The automakers employee's make way to much money. I used to work at a bar near some auto plants. These guys would come in for lunch get hammered and go back to work. Some wouldn't even go back. they would have their friends clock them in and out at the end of their shift. If they got caught drinking on the job they couldn't even be fired. the automakers would have to pay them to go to rehab. I know there is more problems then the workers, but i wish i had no one to answer for.




Errrh - let the go bankrupted
By nofumble62 on 12/4/2008 11:16:01 PM , Rating: 2
and start over. Don't waste any money on them.




Bailout
By Smokey48 on 12/5/2008 5:57:41 AM , Rating: 2
Question: Why should taxpayers in the other 49 states pay $multi-billions to bail out people in Michigan?

Nobody is going to bail me out if I lose my job.

Will taxpayers bail you our if you lose your job?

This is Schumpeter's "creative destruction." A couple of centuries ago Luddites smashed spinning jennies because manual thread spinners thought they would lose their jobs and starve.

What really happened: the new technology created more and better jobs. Workers had to maintain the machines, and their skill and knowledge resulted in higher pay. A much bigger market was created. Unemployment fell. People were better clothed. The world was more prosperous.

Detroit is the Luddite of the new millenium. Bailing it out is bad for all the other Americans who will have to pay those $billions to prop up companies that can no longer compete.




This is so fraked up
By rocky1234 on 12/5/2008 12:23:10 AM , Rating: 1
So some would have them file chap 11 how is that gonna help all it does is frak over all of the companies they owe money to then these companies end up suffering because GM & Ford & dodge took the easy way out.

If these three go out of business or even one of them then the shit fest will trickle all the way down to the small guy.

Yes they need to cut the cost at the top by cutting lose a lot of the big wigs in the big three & get rid of the unions & start paying these workers a normal wage. Then again every industry needs to do the same as most peoples wages are getting way out of hand & it is slowly killing our economy.

The out of country car makers can afford to make cheaper cars because they are able to pay cheaper wages which then is passed on to the consumers.





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