Should the government bail-out include domestic automakers?

[Awsomeshine]

I'd rather buy a Kia Sorrento ( have one on order) than a GM SUV any day of the week, they don't break down. Jobs , well tough; even here in the UK brit manufacturers are going to the wall as the domestic procuct is crap, only Japenese/Korean cars work.

I would never buy an American car again as the last one cost me a fortune in repairs, (Jeep) my wife's Toyoya is 8 years old and still under a toyota approved warranty, nil £'s in repairs with 150k on the clock.

[salty]

This is not meant to start an online war. And we will probably never know the truth on all sides.

But after watching, and i know a lot of it is way out there but also a lot makes sense. The Zeitgeist movies made me look at things in different ways. Good or bad it is something to think about.


Just a thought, but might a lot of this bailout money to all these companies, be Bush's last gift to the hierarchy?

[MotorCity]

Some info I found on the net:

Myth: The demise of the American auto industry won't really affect the American way of life.

fact: What happens to the U.S. auto industry matters on Main Street.

From plants to parks. From dealerships to driveways. From gas stations to grocery stores. What happens in the automotive industry affects each and every one of us. In fact, the collapse of the U.S.-based auto industry wouldn't just impact the more than 239,000 Americans directly employed by the Big Three. One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If a plant closes, so does its suppliers, the local stores, the hot dog vendors, and the local restaurants.

The effect would be devastating in ways of which you never have thought:

Nearly 3 million jobs would be lost in the first year alone – with another 2.5 million to follow over the next two years

Personal income in the United States would drop by more than $150.7 billion in the first year

The cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance

Domestic automobile production would more than likely fall to zero – even by international producers, due to supplier bankruptcies

The credit crisis that is affecting us all is wounding the U.S. auto industry in many different ways. Carmakers can’t get loans to restructure and to produce new advanced technology vehicles. Suppliers and dealers can’t get loans for routine business, and customers can’t get loans for new cars.



Myth: GM is going to go bankrupt

Fact: Clearly, GM faces unprecedented challenges related to uncertainty in global financial markets and weakening economic fundamentals in key regions. But bankruptcy protection is not an option GM is considering.

Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers. We believe speculation about a possible filing is exaggerated and unconstructive.




Myth: GM doesn’t make cars that people want to buy

Fact: GM cars and trucks have improved significantly over the past decade. Critics are taking note, and customers are responding.

In 2007, the Saturn Aura and Chevy Silverado won North American Car and Truck of the year.

In 2008, the Chevy Malibu was named North American Car of the Year, The Cadillac CTS was Motor Trend’s 2008 Car of the Year.

Customers have responded just as enthusiastically as the critics. Although total U.S. vehicle sales are down almost 13% so far this year, a number of GM cars and crossovers have enjoyed significant sales increases:

Saturn Vue +5%
Chevy Cobalt +6%
Pontiac G6 + 8%
GMC Acadia +8%
Saturn Aura +10%
Cadillac CTS +25%
Chevy Malibu +36%
Pontiac Vibe +39%
Buick Enclave +124%

Customers these days are watching their pennies, and they recognize the style, quality, value and fuel efficiency of new GM vehicles. As a result, GM market share has increased each quarter this year.

Myth: GM no longer matters to the U.S. or its economy

Fact: The U.S.-based auto industry remains a vital part of the economy. It generates more employment, annual economic output, exports, and retail business than any other industry. It directly employs a quarter of a million Americans, and supports another 5 million at dealerships, suppliers and service providers.

U.S.-based carmakers spend more on R&D than any industry – more than $12 billion annually. We also provide healthcare benefits to 2 million Americans, and support nearly 800,000 retirees and spouses with pension benefits.

In short, the economic impact of this industry is substantial, and reaches every state in the nation.

There is also the matter of national pride. GM is one of a handful of U.S.-based manufacturing companies that compete head-to-head with the world’s best in global markets. We are proud that we have become a truly global company, and proud that we are a leader in fast growing markets like China, Brazil and Eastern Europe. We are also proud that American brands like Chevrolet and Cadillac are known and admired around the world.

[Len_A]

Automotive News

AUTOMOTIVE NEWS EDITORIAL

The cost of GM's death

Automotive News | November 14, 2008 - 12:28 pm EST

If Congress thinks a bailout of General Motors is expensive, it should consider the cost of a GM failure.
Let’s be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW
in their place, ensuring future success.
No, even if GM could get debtor-in-possession financing to keep the lights on (which it can’t), Chapter 11 means a collapse of sales and a
spiral into a Chapter 7 liquidation.
GM’s 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM’s 1,300 suppliers will die.
Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of
America will close.
The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.
Criticize Detroit 3 executives all you want. But the issue today is not whether GM should have closed Buick years ago, been tougher with the
UAW or supported higher fuel economy standards.
In the next two to four months, GM will run out of cash and turn out the lights. Only government money can prevent that. Every other
alternative is fantasy.
The $25 billion in loans that Congress approved to partially fund improvements in fuel economy? Irrelevant. Dead automakers do not invest
in technology.
The collapse of the global financial system has crushed the American car market, dried up revenues for the Detroit 3 and highlighted their
weaknesses.
Each of the Detroit 3 is in crisis. But Ford, which borrowed big two years ago and thus has more cash today, may skip a bailout and the strings
attached. Cerberus, which bought Chrysler last year, doesn’t deserve money. Government cash might help sell Chrysler to a strategic owner.
Some Detroit critics want their pound of flesh: Throw the bums out and install a government czar. Treasury Secretary Henry Paulson won’t
use any of his $700 billion bank bailout money to help manufacturers. In any case, he’d need a guarantee that a bailout would make Detroit
“viable.”
Well, nobody -- not even AIG -- is insuring guarantees for viability.
The taxpayer needs protection and an upside. GM’s top management may need to go. Government-as-shareholder deserves a big voice.
Those details can be worked out.
The Detroit 3 CEOs and UAW President Ron Gettelfinger had better tell two critical congressional hearings next week what sacrifices they are
prepared to make.
But the stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing --
now.

Automotive News Automotive News -- In-depth coverage of the automotive industry with special features for subscribers...
2 of 2 11/14/2008 1:40 PM
PRINTED FROM:
http://www.autonews.com/apps/pbcs.dl...plate=printart
Entire contents ©2008 Crain Communications, Inc.

[Len_A]

GM collapse could spell disaster for Ford, Toyota, Honda:

GM collapse could spell disaster for Ford, Toyota, Honda

According to Automotive News, the failure of GM – or any other member of the Big Three – would send a domino effect through the industry, bringing down dealers, suppliers and even foreign automakers.

Because automakers and suppliers are so intertwined, the failure of one car maker has the potential to bring down several suppliers. In turn, those bankrupt suppliers would interrupt Ford and Chrysler’s supply lines, which would likely be enough to topple the already crippled automakers.

“If GM goes down, it will take down companies like Lear and Johnson Controls,” Wolkonowicz says. “That will shut Ford down, and it would shut down production at Toyota and Honda,” John Wolkonowicz, an analyst for Global Insight, told Automotive News. “They would go down like dominoes.”

[Len_A]

I guarantee that if any of the Detroit 3 file bankruptcy, it's game over for auto manufacturing of any kind in North America. And people can stuff the anti union rhetoric. Bottom line is that all the transplants have virtually no retirees and workforces that are on average, ten years younger than Detroit's, giving them a significant cost advantage that runs out for Toyota & company in 2010, if the Detroit 3 last that long. Assuming they last that long, the retire health care cost transfer to the union and GM, Ford & Chrysler's labor rate drops to that of Toyota. With union labor. And last year, nonunion Toyota workers made more money than the union labor at the Detroit 3, link here, so much for the anti union rhetoric.

Any of the Detroit 3 file for Chapter 11, two things are going to be certain to happen - first is the accelerated loss of customers. People will not spend $20,000 or more on a car from a manufacturer in bankruptcy and risk losing any warranty coverage or future parts availability. You may feel free to disagree, but you have to be delusional not to understand that.

Second, Toyota, Honda, and Nissan production in North America uses exactly the same suppliers as GM, Ford, & Chrysler. That group of suppliers are running on profit margins that are so thin,all are currently losing money and barely surviving on cash flow and lines of credit. You're forgetting who the expert is here. I live in the middle of this crap. Several of my neighbors work for some of those suppliers. A GM, Ford, or Chrysler Chapter 11 filing immediately means that the bills GM, Ford, or Chrysler owe those suppliers don't get paid until the bankruptcy court determines when and how much. That means several key auppliers are going to run out of money to pay for raw materials or make payroll or both, within a few weeks, and shut down. When that happens, they stop shipping to everyone. Most of the supplier factories supply more than one automakers, so a GM, Ford, or Chrysler failure means shutting down other automakers assembly lines, which start shutting down other suppliers (you're not going to ship parts to a closed assembly plant) and the dominoes start falling.

Yes, that's a real freaking genius move. Push the Big 3, any one of them, into bankruptcy reorganization. Do it, and you will have plants closing from not only the remaining two Detroit auto makers, but Toyota, Nissan, Honda, Mercedes, BMW, and Suburu, as well as the Suzuki'a joint venture plant in Canada. And you won't just be shutting them down here in the USA. Canada's and Mexico's go down at the same time.

That's what outsourcing of previously in-house made parts to outside suppliers, the Japanese auto maker's business model, has brought us to: American automobile manufacturing is a house of cards, built on a foundation of sand. Pull one, or shift the sand around a little bit, and it all comes down. United States Steel already announced major layoffs today. We're talking Lear, Johnson Controls, Metaldyne, Pilkington Glass, U.S. Steel (USX), Nucor, AK Steel Holding Corp, Goodyear, Cooper-Standard Automotive, Tenneco Inc., Hayes Lemmerz International Inc., Federal-Mogul Corp., Dana Corp, BorgWarner Inc., ArvinMeritor Inc., and about fifty other companies laying people off, for weeks to months while this sorts out. A year or more in some cases. All the companies that support the auto plants and the suppliers - office supplies, janitorial, snow removal in the winter, in the northern states, landscaping, uniform suppliers, safety products suppliers, industrial products supply houses, restaurants, dry cleaners, grocery stores - all "temporarily" laying employees off. Dealers with no cars to sell - same there. Parts for warranty and collision work held up by either bankruptcy courts or supplier shut downs. Mad Money's Jim Cramer's estimate, this past Monday evening, of 3 million layoffs is decidedly low ball.

And absolutely NO supplier gets replaced quickly. Even in an emergency, it takes MONTHS. Tooling is owned by the AUTOMAKER, not the supplier, but a supplier driven into bankruptcy has the bankruptcy court locking down the movement of that tooling until the court sorts it out, as evidenced by last years battle between Chrysler and Plastech Engineered Products, when Chrysler showed up with trucks to remove their tooling after Chrysler refused Plastech's price increase,and Plastech immediately filed for bankruptcy protection, and nearly shut down Gm, Ford and Toyota, along with Chrysler - seems those other automakers parts were being run on the same Chrysler owned tooling. A industry standard practice. Force a GM or Ford or Chrysler bankruptcy filing, you will have fifty suppliers filing for bankruptcy protection as well, and the courts are not set up to handle that. Everything will shut down.

But what do I know - the anti-Detroit people are so much more well informed. Go ahead, speak out against a bailout. 3 million layoffs will be within the first four to five weeks. By the end of the first three months, it will be more like 8 million layoffs and the slow down we saw right after 9-11 will seem like a Charleston garden party. If you think it won't hit your community, just look at the eight to ten closed dealers. Then imagine what happens to your community's economy if half, or more, of them shut down within a month.

[MotorCity]

Originally Posted by Len_A

We're talking Lear, Johnson Controls, Metaldyne, Pilkington Glass, U.S. Steel (USX), Nucor, AK Steel Holding Corp, Goodyear, Cooper-Standard Automotive, Tenneco Inc., Hayes Lemmerz International Inc., Federal-Mogul Corp., Dana Corp, BorgWarner Inc., ArvinMeritor Inc., and about fifty other companies laying people off, for weeks to months while this sorts out. .

You get it!!!

I work for one of the companies you listed above and I can echoe every word in your post!!!

[Len_A]

Originally Posted by MotorCity

You get it!!!

I work for one of the companies you listed above and I can echoe every word in your post!!!

GM, Ford, and Chrysler may only have 50% of the market, but they account for 70% of all the auto production in North America.

My neighbor works for Metaldyne. Metaldyne doesn't just supply the Detroit 3 and some of the non Detroit auto company USA plants. They supply all of them. He's already said that despite refinancing their debt, if any of Metaldyne's accounts receiveables get tied up for even a week or two, because of a GM or other Detroit automaker bankruptcy, they run out of cash for payroll and to pay for raw materials inside of two weeks. Then every other automakers plants get no Metaldyne parts. Game over.

[Mr. Clean]

Originally Posted by Len_A

I guarantee that if any of the Detroit 3 file bankruptcy, it's game over for auto manufacturing of any kind in North America....

I don't mean to pick on you LenA, as I know from reading elsewhere, you have a personal stake in this situation. But, this statement is more than a bit melodramatic and a check that you can't cash.

As for my opinion on the situation, Chrysler has been to the well once there should be nothing for them now. If you can't learn from past mistakes there is no reason to believe that things will be any different down the road. If that means they go under, so be it. Unlike you, I don't see this to be the end of the world. If GM is to receive any help, serious concessions must be made on their part.

[Len_A]

Originally Posted by Mr. Clean

I don't mean to pick on you LenA, as I know from reading elsewhere, you have a personal stake in this situation. But, this statement is more than a bit melodramatic and a check that you can't cash.

As for my opinion on the situation, Chrysler has been to the well once there should be nothing for them now. If you can't learn from past mistakes there is no reason to believe that things will be any different down the road. If that means they go under, so be it. Unlike you, I don't see this to be the end of the world. If GM is to receive any help, serious concessions must be made on their part.

That's funny since I just posted that one of my neighbors works for one of the affected auto suppliers, Standard & Poors just put fifteen others on credit watch, and Automotive News has been writing for two weeks, with no dissenting opinion from Toyota, Honda, or Nissan, that a Big 3 bankruptcy will also shut down their production.

There is nothing melodramtic about it. At the automotive industry summit this past summer, in response to a question about suppliers having problems with Detroit, replied "An supplier having problems with them (the Detroit automakers) will be a problem for us." And Toyota is having problems already, with a $336 million loss this past quarter in North America.

CNBC's Mad Money guru Jim Cramer just said this on Monday night as well, but hey, I don't know anything. Video: YouTube - Jim Cramer Mad Money November 10 2008 GM rescue? , More from Cramer on GM: Mad Money: Cramer: Why GM Matters So Much - Mad Cap Recap - CNBC.com

MotorCity just posted he works for one of the companies I listed, and backs up what I posted.

But hey, all you non Detroiters all know better. Same sh*t, diferent day.

[Mr. Clean]

LenA, I can tell by your posts here and elsewhere that you are very emotional and passionately believe in what you and others are saying. Unfortunately, or perhaps fortunately in some cases, passionately believing in something doesn't always make it so.

Originally Posted by Len_A

...But hey, all you non Detroiters all know better. Same sh*t, diferent day.

Sorry, but this just makes you sound bitter, and detracts enormously from any argument you might make. I believe that we are both in the same age group, though I am slightly older than you so I do understand your feeling of helplessness in a job loss scenario, but the Chicken Little/Sky is falling schtick is too too much.

[Len_A]

Originally Posted by Mr. Clean

LenA, I can tell by your posts here and elsewhere that you are very emotional and passionately believe in what you and others are saying. Unfortunately, or perhaps fortunately in some cases, passionately believing in something doesn't always make it so.



Sorry, but this just makes you sound bitter, and detracts enormously from any argument you might make. I believe that we are both in the same age group, though I am slightly older than you so I do understand your feeling of helplessness in a job loss scenario, but the Chicken Little/Sky is falling schtick is too too much.

The Automotive News is wrong? Guess we wait and see. In the mean time, more reading:

Delphi May Have to Liquidate if Ex-Parent GM Files Bankruptcy

Delphi supplies GM, Ford, Toyota, among others.

I've been out of work for fourteen months, barely getting an interview every six weeks. I may be assuming here, but I think you'd be a bit bitter as well. I've been an automotive supplier sales rep for twenty-five years - passionate has nothing to do with, and there is no Chicken Little here. What I say is based as much on a quarter of a century of direct industry experience. Is what you posted based on exact experience or is it an opinion, based on something else less tangible?