Should the government bail-out include domestic automakers?

[Len_A]

Here's a typical Detroit autoworker neighborhood.

YouTube - Bridge Loans TAW.mov

[MotorCity]

Originally Posted by Len_A

As if my situation of being out of work fifteen months hasn't been bad enough, now my wife lost her job with Michigan's largest law firm. Her practice group's biggest client, Chrysler, has been demanding give-backs on the flat fee contract, like any other vendor, and workload has diminished, and they have to have a head count reduction. The other practice groups in the firm have a hiring freeze.

Chances for finding a new paralegal position is very slim, because those openings have evaporated just like outside sales jobs for me have gone down.

What we're going to do now, we're just too stressed out to think clearly. We would love to bail on Detroit, but like I posted earlier, a page or two back, dumping this house will be next to impossible.

Sorry to hear the Mrs lost her job....

[Lumadar]

Originally Posted by Len_A

Here's a typical Detroit autoworker neighborhood.

YouTube - Bridge Loans TAW.mov

Interesting video. Thanks for sharing.

(I too wear New Balance, LOVE those shoes!!! )


***I just went to Ford.com and noticed some very interesting new media there.

Check it out.

The Ford Story: A different route - Ford on the credit crunch, recession and more fuel efficient vehicles | Ford Vehicles

[Len_A]

Originally Posted by Lumadar

Interesting video. Thanks for sharing.

(I too wear New Balance, LOVE those shoes!!! )


***I just went to Ford.com and noticed some very interesting new media there.

Check it out.

The Ford Story: A different route - Ford on the credit crunch, recession and more fuel efficient vehicles | Ford Vehicles

I have a rough idea where that neighborhood is - nothing more than forty year old homes, most of them under 1700 square feet, nothing fancy. Certainly not a neighbor with high incomes.

Ford has a far better turn around plan than GM or Chrysler, but a GM or Chrysler Chapter 11 filing would hurt Ford as well, since all three share 90% of the same suppliers. In fact, a GM bankruptcy would disrupt Toyota's North American production as well as Mercedes, but the opponents of the loans are too uninformed and too prejudiced against Detroit to see the whole auto industry for what it is.

[FlowRate]

This article may shed some light on the matter. I'm very much a fan of Austrian economics... (the economics that work)

Why Should a Failing Automaker Receive a Bailout? by Wilton D. Alston

[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.

I had to go back a ways in this thread to find this, and answer it back. Not answer it back with my own words, but the words of the CEO of the third largest auto parts supplier in the United States.

THE AUTO INDUSTRY BAILOUT

JCI exec: Detroit 3 bankruptcy would 'implode' supply chain

David Barkholz
Automotive News
December 4, 2008 - 1:34 pm ET

A bankruptcy of even one of the Detroit 3 would cause an already distressed supply base "to implode," Johnson Controls Inc. President Keith Wandell told Congress today.

Testifying in a Senate Banking Committee hearing on a $34 billion automaker bailout request, Wandell said a Detroit 3 failure would cause a cascade of failures among suppliers, particularly smaller female- and ethnic minority-owned companies.

Johnson Controls makes seating, batteries and interior parts.

Wandell said Toyota, Nissan, Honda, Mercedes and all carmakers manufacturing in the United States "are deeply concerned about the viability of the U.S. supply base."

A bankruptcy of one carmaker, he said, would likely cause parts interruptions at all the others.

Wandell said the interdependency of the supply base was driven home during the bankruptcy and eventual liquidation this year of Plastech Engineered Products Inc., formerly the largest minority-owned auto supplier in the world.

He said if Johnson Controls and others hadn't stepped in and bought Plastech's assets, as many as 52 vehicle assembly plants would have risked parts interruptions.

And Plastech, with sales of about $1.4 billion in 2007, was small compared with the supplier chaos that would occur with a Detroit 3 bankruptcy, Wandell predicted.

In a bankruptcy, months of receivables for parts already delivered would be tied up in court and be uncollectible, he said.

Johnson Controls, of Milwaukee, makes seating, batteries and interior parts and ranks No. 7 on the Automotive News list of the top 100 global suppliers with global sales to automakers of $18.50 billion in fiscal 2007.

What, he's a bit melodramatic, too?

[FlowRate]

The thing is, markets and businesses need to "implode" to maintain a healthy economy...

[Len_A]

Originally Posted by FlowRate

The thing is, markets and businesses need to "implode" to maintain a healthy economy...

Bullsh*t. Spoken like someone who doesn't understand, in the slightest, the depth of the problem. Auto manufacturing is 20% of all manufacturing, and is 10% of all economic activity, and that doesn't count the effect auto and auto parts retailing has on the service sector of the economy. A depression, or even a deep recession is counter productive to a healthy economy.

[Mr. Clean]

LenA, as with all of your "sources" I must say they are all so.........unbiased.

I see now that the new "demands" are for $34 billion. A real sign that they had no plan when they first arrrived. Even with the upped ante, not one of them will commit that if they get their wishes that in 6 months they won't be back asking for more (remember Chrysler). I have a real problem handing over taxpayer dollars to a management team who drove the car into the ditch. I have not yet seen anything tangible which would give me confidence that they are capable of 1) driving out of the ditch and 2) keeping it on the road for the long term.

And as I mention Chrysler, which is a privately owned company (Cerberus Capital). Why on earth would the taxpayers be asked (again) to bail them out? Let them go out on their own and either seek another investor or financing from the private sector.

I'm in now way wanting the U.S. auto manufacturing industry to completely disappear, but I think we are all beginning to see that it can't continue in its current bloated form.

[Len_A]

Originally Posted by Mr. Clean

LenA, as with all of your "sources" I must say they are all so.........unbiased.

I see now that the new "demands" are for $34 billion. A real sign that they had no plan when they first arrrived. Even with the upped ante, not one of them will commit that if they get their wishes that in 6 months they won't be back asking for more (remember Chrysler). I have a real problem handing over taxpayer dollars to a management team who drove the car into the ditch. I have not yet seen anything tangible which would give me confidence that they are capable of 1) driving out of the ditch and 2) keeping it on the road for the long term.

And as I mention Chrysler, which is a privately owned company (Cerberus Capital). Why on earth would the taxpayers be asked (again) to bail them out? Let them go out on their own and either seek another investor or financing from the private sector.

I'm in now way wanting the U.S. auto manufacturing industry to completely disappear, but I think we are all beginning to see that it can't continue in its current bloated form.

Let them disappear then. Hope you like the idea of, at the very least, a very deep recession. I said the problems will negatively affect even the transplants, and it will. Let's see how you know-it-all keyboard jockey experts like the idea of foreign ownership of a larger percentage of our manufacturing base, with even more imports into the USA.

And to be blunt, the "unbiased" slam is so full of crap, it's not funny. Go try the Wall Street Journal - you find the same report, but JCI's CEO's comments in more detail, with no one from WSJ able to repudiate it. If you weren't completely biased, you'd find out that virtually every major dealer chain, state and national, is in favor of this loan program. That includes the dealers in your part of Texas as well. I challenge you to find a major dealer principle in Texas who is against this.

[Mr. Clean]

LenA, to be blunt I've grown weary of your little name calling here and on at least on other forum. I've read ad nauseum posts by you about how "special" you are, and how we "keyboard jockeys" have no business even having an opinion on the matter. Yes you are right and we are wrong. Gee what were we thinking that with our taxpayer money that we should require some accountability. Your posts grow more antagonistic to those of us who disagree. For as you said

I'm right, anyone else who feels the loans is wrong and bankruptcy is the right idea is wrong. Discussion, as far as I'm concerned, is closed.

[Len_A]

Originally Posted by Mr. Clean

LenA, to be blunt I've grown weary of your little name calling here and on at least on other forum. I've read ad nauseum posts by you about how "special" you are, and how we "keyboard jockeys" have no business even having an opinion on the matter. Yes you are right and we are wrong. Gee what were we thinking that with our taxpayer money that we should require some accountability. Your posts grow more antagonistic to those of us who disagree. For as you said

Telling me the domestic auto companies should disappear is antagonistic. Let the mods lock the threads if those of us who depend on manufacturing for an income can't voice our opinions. All of you critics crab about your tax money used to give the Detroit automakers a bridge don't take into consideration that those of us who have worked directly for the Detroit 3, or in a supplier or support industry to the Detroit automakers, had a portion of our federal tax dollars sent back to Kentucky, Indiana, Tennessee, Alabama, Mississippi, and Texas, for various federally supported programs that in turn were used to give, not loan, but give huge tax breaks to the transplants to build their manufacturing operations in those states. Detroit's manufacturing base is older, and more often retooled rather than rebuilt, and when it's rebuilt stays general close to the old location, so they have not benefited as much from state and federal subsidized give-aways. How much did Texas give to Toyota for the San Antonio truck assembly plant, and how much did Texas fork over for the adjacent supplier park? Where did those tax dollars come from? Were those of us in the Detroit based industry subsidizing our own competition, and doing it through our own government?

To be blunt, and if you want to talk about a fair discussion, answer those questions, please. No, I and everyone who posts in favor of the loans have to hear ad nauseum about how bad Detroit is, how crummy the workers are, and how they shouldn't get any money. While our tax dollars are diverted to incentives for foreign owned manufacturers, who in their home countries enjoy far more government support, than our domestic manufacturers ever have had. Where do you think the initial working capital to improve their products came from? And to ask for a loan is made to sound like a bailout, when it's a loan, and in most cases collateralized - where's AIG or Citi Groups collateral?

And you're weary of my posts and accuse me of being antagonistic? Maybe I'm wrong, but I see multiple signs of a double standard.