Should the government bail-out include domestic automakers?

[Len_A]

Originally Posted by Setec Astronomy

One of the posters in this thread has been out of work for 14 months, probably thru no fault of his own, but a guy who got FIRED gets $200 million. Your assessment of "why give it to the people who screwed it up" fits pretty well with letting Paulson and Bernanke run the bailout when they were the ones in charge when it blew up.

Yep. Out for 14 months, and I didn't get fired. My company got bought out, and the new owner brought in his own management team. openings were skimpy to begin with, when I got laid off in September, 2007, but after the price of gas started to really spike upward, earlier this year, the openings really dried up. And since then, I'm hearing from the few people I have interviewed with, the employers are really getting picky on filling the openings. I've seen the same company run the same job posting in Careerbuilder and Monster three or four times, or more. One company I know ran the same help wanted ad eight times since last September.

Bob Nardelli, who ran Home Depot (almost into the ground), would not have been my choice to run Chrysler, but somehow he recruited Jim Press away from Toyota.

[Setec Astronomy]

Originally Posted by Len_A

Bob Nardelli, who ran Home Depot (almost into the ground), would not have been my choice to run Chrysler, but somehow he recruited Jim Press away from Toyota.

Isn't he the guy who bailed out of GE when he didn't get Jack Welch's job? I dunno, but if I'm a retail giant the guy I'm looking for to run my company (into the ground) is a guy who's spent his whole career building locomotives, power plants, jet engines, motors and washing machines.

[Len_A]

Originally Posted by Setec Astronomy

Isn't he the guy who bailed out of GE when he didn't get Jack Welch's job? I dunno, but if I'm a retail giant the guy I'm looking for to run my company (into the ground) is a guy who's spent his whole career building locomotives, power plants, jet engines, motors and washing machines.

Yea, he was at GE, and he bailed out on them when he didn't get promoted. He really did a number on Home Depot. A lot of internal turmoil. Until housing begins to crash and hurt all the home improvement stores, Lowe's was really eating Home Depot's lunch. Nardelli's policies really damaged customer service.

[Len_A]

From: My Way News - Bush wants $25B in loans released to carmakers

Bush wants $25B in loans released to carmakers

WASHINGTON (AP) - The White House is throwing support behind a plan to speed release of $25 billion in loans to troubled automakers but is rejecting a Democratic proposal to use money from a financial bailout for car companies. Spokeswoman Dana Perino says the Democratic proposal would lead to partisan gridlock because the $700 billion rescue package was never intended to help automakers and shouldn't be now. For that reason, she told The Associated Press that the White House is now actively asking Congress to accelerate loans it first approved in September.

Those loans were meant to help automakers build more fuel-efficient vehicles. The administration now supports allowing it to be used for more urgent purposes as the companies struggle to stay afloat.

[Len_A]

European Union might complain to the World Trade Organisation about U.S. plans to help its stricken car industry

"We are in the process of analysing the plan. The plan has not yet been presented yet. Of course, if it is illegal state aid, we will act at a WTO level," Barroso told Europe 1 radio.

[soccerjunky]

the the big 3 make hundreds of thousands of cars in a year for the MASSES. They are not a boutique manufacturer like the BMW's, MB, Porsche, Audi's, Vdub, infiniti, lexus type manufacturers who make tens of thousands of cars that are marketed to a higher income bracket. In order to make those cars affordable to the masses, the big 3 can't load them up with top grain leathers, and have 1micrometer gaps in body panels, etc etc etc. (however, GM does make a lot of innovations that beat the boutiques to market: MSRC, heads up display, PDC, onstar to name a few). If they did, the average american wouldn't be able to afford them, it's a simple concept.

Also, the US economy is heavily reliant on the big 3, 1 in 8 US jobs is in some way related to the automotive industry. It's everyone's right to be critical, but to be undeservedly critical of a US manufacturer that has come a long way in the last 10 years and is part of the foundation of the US economy is absolutely short sighted and ignorant.

Do I buy American exclusively ? Nope, I'm a car guy, every car has it's pros and cons for different lifestyles, but I won't completely disregard US brands because of historical stereotypes that no longer hold true for many models

[longdx]

I find the statement from the EU very ironic. France has assisted in essentially subsidizing its auto industry for years until they were able to be profitable (re: Renault, Peugeot, Citroen,. In Germany, Porsche, VW, Audi all have an interconnected relationship.

The essential problem with bailouts is that it rewards failure. IF the Big 3 receive such a bailout, then there needs to be stipulations of how the money is to be appropriated. The Big Three do not have a problem building reliable cars, its building cars in a cost competitive fashion (re: legacy costs). They have to overcome decades of shoddy workmanship, shady dealer networks, in a business model that relied of rebates/incentive rather than competitiveness to move metal.

[Len_A]

Originally Posted by longdx

I find the statement from the EU very ironic. France has assisted in essentially subsidizing its auto industry for years until they were able to be profitable (re: Renault, Peugeot, Citroen,. In Germany, Porsche, VW, Audi all have an interconnected relationship.

The essential problem with bailouts is that it rewards failure. IF the Big 3 receive such a bailout, then there needs to be stipulations of how the money is to be appropriated. The Big Three do not have a problem building reliable cars, its building cars in a cost competitive fashion (re: legacy costs). They have to overcome decades of shoddy workmanship, shady dealer networks, in a business model that relied of rebates/incentive rather than competitiveness to move metal.

And you have to conclude that any country with national health care, regardless of how you feel about it, and strong national pensions, to be a form of subsidizing their businesses. Yet, we can't make loans or loan guarantees? Are they kidding (and I'm first generation - my family is from Europe).

The so-called bailout is a bridge loan, to get them through to 2010, when the last provisions of their most recent contract kick in, and their labor rate drops to near Toyota levels. No one ever said it was a grant or a handout. If the feds can bailout AIG and AIG doesn't produce a thing, why shouldn't they loan money to three companies that manufacture?

[Len_A]

Originally Posted by soccerjunky

the the big 3 make hundreds of thousands of cars in a year for the MASSES. They are not a boutique manufacturer like the BMW's, MB, Porsche, Audi's, Vdub, infiniti, lexus type manufacturers who make tens of thousands of cars that are marketed to a higher income bracket. In order to make those cars affordable to the masses, the big 3 can't load them up with top grain leathers, and have 1micrometer gaps in body panels, etc etc etc. (however, GM does make a lot of innovations that beat the boutiques to market: MSRC, heads up display, PDC, onstar to name a few). If they did, the average american wouldn't be able to afford them, it's a simple concept.

Also, the US economy is heavily reliant on the big 3, 1 in 8 US jobs is in some way related to the automotive industry. It's everyone's right to be critical, but to be undeservedly critical of a US manufacturer that has come a long way in the last 10 years and is part of the foundation of the US economy is absolutely short sighted and ignorant.

Do I buy American exclusively ? Nope, I'm a car guy, every car has it's pros and cons for different lifestyles, but I won't completely disregard US brands because of historical stereotypes that no longer hold true for many models

Well said. Very well said.

And don't forget Ford's (and Microsoft's) SYNC - voice command over your nav, phone AND your music. Sweet.

[billium]

Originally Posted by Len_A

If the feds can bailout AIG and AIG doesn't produce a thing, why shouldn't they loan money to three companies that manufacture?

Len: This is my opinion. GM, Ford & Chrysler's business models have stunk for more than a decade. I don't have any of their profitability statistics at my fingertips, but none were profitable BEFORE the current worldwide financial meltdown occured. The current pullback in consumer spending/lack of financing has certainly accelerated their problems, but they didn't cause them.

AIG's (along with the major banks) problems were, arguably, caused by the financial crisis. Some say they were the cause. The arguement is that they were all viable businesses UNTIL the crisis and when (if) the financial crisis passes and financial markets return to a more normal condition, they will return to being viable businesses.

I'm just under 50 years old and have owned 1 Detroit manufactured car in the past 23 years. In my youth, I owned a GMC, a Ford and 2 Chevrolet pick-ups, and a Pontiac sedan and coupe. Detroit abandoned me, every one of those vehicles had multiple significant problems. In every single case, dealerships patted me on the head and sent me down the road. The GMC pickup, purchased brand new in 1979 (my 1st new car purchase), spent 87 days in the dealership's service department during my first year of ownership. I was told by the dealership's service manager and our region's service manager that burning a quart of oil every 400 miles "was within the acceptable range".

I've owned 16 Nissans, 3 Hondas, 1 Toyota, 2 Subarus, a BMW and 2 Benz since then. Biggest problem of the bunch, I had to replace a rear differential in a Nissan pickup at 132,000 miles.

In 2003, I decided to give Dodge another chance and purchased a new leftover 2002 Dakota club cab 4x4. I owned it less than a year. Multiple problems (none major) were capped off by a God awful rattle inside the dash (there from day one). The dealer finally agreed to track down the problem. When I picked up the truck a day later (they had to remove the dash to resolve), the technician showed me a large bolt (imagine something the size of a bolt used in the suspension or to attach the cargo bed to the frame) he found loose inside an enclosed area of the dash. When I asked how something that size fell inside the dash, he said it was intentional based on where it was found and the paint on it.

When Detroit builds stuff I'm willing to buy because of styling and quality, I'll vote to send my tax dollars there ONLY if senior management in all three are replaced. Until then, I don't see their business model changing, I don't see any of them as viable. I see any money loaned/given as simply stalling the inevitable.

[Len_A]

Originally Posted by billium

Len: This is my opinion. GM, Ford & Chrysler's business models have stunk for more than a decade. I don't have any of their profitability statistics at my fingertips, but none were profitable BEFORE the current worldwide financial meltdown occured. The current pullback in consumer spending/lack of financing has certainly accelerated their problems, but they didn't cause them.

AIG's (along with the major banks) problems were, arguably, caused by the financial crisis. Some say they were the cause. The arguement is that they were all viable businesses UNTIL the crisis and when (if) the financial crisis passes and financial markets return to a more normal condition, they will return to being viable businesses.

I'm just under 50 years old and have owned 1 Detroit manufactured car in the past 23 years. In my youth, I owned a GMC, a Ford and 2 Chevrolet pick-ups, and a Pontiac sedan and coupe. Detroit abandoned me, every one of those vehicles had multiple significant problems. In every single case, dealerships patted me on the head and sent me down the road. The GMC pickup, purchased brand new in 1979 (my 1st new car purchase), spent 87 days in the dealership's service department during my first year of ownership. I was told by the dealership's service manager and our region's service manager that burning a quart of oil every 400 miles "was within the acceptable range".

I've owned 16 Nissans, 3 Hondas, 1 Toyota, 2 Subarus, a BMW and 2 Benz since then. Biggest problem of the bunch, I had to replace a rear differential in a Nissan pickup at 132,000 miles.

In 2003, I decided to give Dodge another chance and purchased a new leftover 2002 Dakota club cab 4x4. I owned it less than a year. Multiple problems (none major) were capped off by a God awful rattle inside the dash (there from day one). The dealer finally agreed to track down the problem. When I picked up the truck a day later (they had to remove the dash to resolve), the technician showed me a large bolt (imagine something the size of a bolt used in the suspension or to attach the cargo bed to the frame) he found loose inside an enclosed area of the dash. When I asked how something that size fell inside the dash, he said it was intentional based on where it was found and the paint on it.

When Detroit builds stuff I'm willing to buy because of styling and quality, I'll vote to send my tax dollars there ONLY if senior management in all three are replaced. Until then, I don't see their business model changing, I don't see any of them as viable. I see any money loaned/given as simply stalling the inevitable.

I can understand the frustration with the Detroit 3, and their product decisions in the area of passenger cars, but the critics are as narrow minded and short sighted, as they are accuse the Detroit 3 management of being. None of the non-Detroit automakers try to do anything for the law enforcement sedan business; none of them pay a bit of.attention to the livery business either, and those two markets have no adverse effect on the resale value of regular passenger cars.

The market pushed the SUV's, by switching to them as large cars were downsized, not the Detroit 3 - otherwise, explain Toyota's and Nissan's multi-Billion dollar investment in big body-on-frame pick-ups and SUV's.

Your Dakota experience is unfortunate, but repair technician's conclusion have no validity for one very big reason - you bought it used. What did the prior owner put it through and what repairs were done before you got it?

Detroit's quality is questionable? Then why did VW select Chrysler for their minivan? The VW Routan is a Chrysler Town & Country, with VW trim and front end styling, built by Chrysler in their Windsor, Ontario minivan plant, with all parts coming from Chrysler's suppliers - LINK HERE. Furthermore, Nissan's Canton, Mississippi truck production ends in a few years, and Nissan switches their next pick up truck to Chrysler's Dodge Ram platform, styled by Nissan, but built in a Chrysler plant, starting in 2010 or 2011 assuming Chrysler makes it). Chrysler, in return, is supposed to ne getting their small and midsize cars from Nissan. LINK HERE

Complicating this whole situation is that ALL North American auto production shares the same group of financially distressed parts suppliers. Not only will a GM bankruptcy adversely affect the viability of those suppliers, threatening Toyota's, Nissan's and Honda's production. Long term, we have to have car production in the USA & Canada. We can not turn the second largest consumer purchase made into an import supply only product. Furthermore, if GM's failure brings down any suppliers, even for a few weeks, the domino effect of rising unemployment, even short term, will make the post 9-11 downturn pale ghostly white by comparison. We're ALREADY seeing rising unemployment in all sectors of the economy, and the same thing happening world wide (killing off the chances of our economy's export sector leading us out of trouble). Let GM fail, and the slow down, if not out right failure, of even a few suppliers, and all the ancillary businesses that depend on them - the gas stations, dry cleaners, office supply store, industrial products supply houses, grocery store, restaurants, etc., all start laying people off.

One GOP senator insisted on asking "When does it stop?", alluding to industries asking for help. My response is when does the government mistakes that froze the credit markets stop? If they, in government, had been properly minding the store, industry would have normal credit markets to get loans from, and not have to come to Washington for help. As it stands, the potential 3 to 5 million layoffs that would be triggered by a GM bankruptcy is either prevented by government now, or we deepen this recession to the point where it lasts a decade. Basic macro economics says that real wealth is the result of manufacturing. 3 million manufacturing and manufacturing related service jobs lost, is not acceptable.

[Len_A]

An interesting point-of-view. http://home.comcast.net/~Babies3/GM.htm