Should the government bail-out include domestic automakers?

[MSOsr]

[quote name=`Len_A`]I`m sorry to say this, but "today`s news" has been full of inaccuracies.



Last year, Toyota factory employees made more money than their UAW counterparts, link here. Honda, Nissan, BMW, and Mercedes employees are comparable to the Detroit 3. ch-tentative-contract-deal"]link here[/URL]



There is an interesting concept.....BONUSES based upon performance! The employees got bonuses because things went well...too bad that concept doesn`t apply to executives and UAW workers.



If UAW workers had their pay reduced by the cost of warranty repairs attributed to their production line, think they might do a better job? So long as the execs and the union workers are paid regardless of performance, where is the incentive?



Mike

[BigAl3]

wow... looking at that chart, Ford ain`t looking too good... :nervous2:

[Lenny]

Sure, this one was posted on Sunday:





What do you account to the clear failure of the big three to make money on their vehicles?



I also read that Rick Wagoner of GM got a 64% salary increase for GM`s great 2007 performance of a $39 Billion loss.



Here it is:





Not just sour grapes at GM as Ford carries a bag of suck too.







Hard to understand that companies who are performing poorly give their chiefs exorbitant salaries.



Now I didn`t bring up any of that baggage you posted about about the UAW and the CAFE standards. My point was simply that the big three are losing money on every car and their Asian big three competitors are clearly not. These are published and verifiable numbers. I could find no more current numbers for profitability available. If profit formula have changed I`d be anxious to see them but looking at the last few months it is clear that sales of the big three have suffered a much greater loss than the Asian big three so I tend to think that profitability has not changed much.



To check on just how well managed GM has been I went and looked back at GM`s stock performance over the past 5 years and compared it to Toyota and the DOW.



So why do GM and Ford chiefs seem to get outrageous salary increases while they seemingly run the companies into the ground then ask for bailouts?

The profit per car changes as soon as the retiree health care kicks over to the union in January, 2010.



Last quarter, Toyota lost $336 million, so even they aren`t making money now - estimate I saw yesterday on sales was that we`re down now to around the 10 million unit annual level. At that level, no one is profitable. My information comes from Automotive News, which you need a subscription to, or else I`d link to it. I found a reprint, link here



Fitch Ratings has now put Toyota on "Ratings Watch Negative" because of their exposure in the USA. Link Here



As far as executive compensation, just about every union in manufacturing has been complaining bitterly for years. You & I can join the crowd.

[Lenny]

wow... looking at that chart, Ford ain`t looking too good... :nervous2:

With Toyota`s loss last quarter, they aren`t looking too good either. A lot of people in the industry expect Nissan to suck this last quarter as well. If I had to make an educated guess, I`d say Honda still makes money this quarter, but barely. BMW and Mercedes production in the USA loses money this quarter, as well. That`s my guess.

[Lenny]

It pisses me off that most Americans think that it`s ok to let the US auto industry go under, and with it will have no affect on them at all. It pisses me off that most Americans didn`t think twice or have any objections on a basically no strings attached bailout for Wall Street and the financial firms, but yet when our US auto industry is asking for a LOAN people are all against and thinking that that it`s a bad thing. It pisses me off that most people seem to not be concerned with an industry that is the economic backbone of our contry.

Man, you aren`t kidding. I know I posted this before, but I`ll post this again. One) Most of the suppliers used by the Japanese and German transplants are also used by the Detroit 3, and are disproportionately dependent on the Detroit 3. Period. A Chapter 11 by any of the Detroit auto companies will tie up enough of the money coming back to the suppliers to pay previous bills, that it will push several suppliers into Chapter 11. Except one - Delphi. Delphi has been in Chapter 11 for years, and has been unable to secure the financing to get out of Chapter 11. A GM Chapter 11 pushes Delphi into liquidation - Chapter 7, at a time when there isn`t the financing easily available to buy off pieces of Delphi. Delphi, in addition to being GM`s biggest supplier, is one of Toyota`s. And contrary to the uninformed, rocket-scientist keyboard jockey`s posting "send them into chapter 11" all over the internet, and contrary to the know-nothing politicians in Washington, DC, auto suppliers can not be replaced in a short period of time. Automobiles are complicated machines with 6000 to 14,000 parts. Shortage on one key part, you`re S.O.L. - you don`t build cars. Period.



That`s going to happen to every single transplant assembly, stamping, engine and transmission plant in North America after a Detroit C11 filing. When depends on which supplier goes down first. Last time I posted that, one Autopian said I was playing Chicken Little and in a later post, made a "spoken like an industry insider" crack. My response today is "tough". Damn right I`m an industry insider. Two family members, my sister one of them, work for European owned auto parts makers (Bosch and Trelleborg Automotive). They said the same thing I did. A neighbor across the street from me works for Metaldyne. He said the same thing I did. Another neighbor is an engineer for Eberspacher Automotive (exhaust systems) - says the same thing. Neighbor of one relative works for Nissan`s engineering center here in Farmington, MI - says they, Nissan, are nervous for two reason - one, what I`ve posted here, and two, the Japanese nationals working here have expressed a concern that all Japanese automakers will get blamed for Detroit`s problems. They`re still paranoid.



Two, the layoffs caused by the disruptions in the auto industry, even is most are as short as several weeks to a few months, it will absolutely deepen this recession, and that will affect every state. All of them.



Three, auto manufacturing is 20% of all manufacturing and Detroit is 70% 0fthat 20%. 14% of all manufacturing. How the hell does a Detroit 3 banruptcy NOT affect all of the economy?



But, hey, all the keyboard jockeys are right, and those of us speaking out in favor of the loans are wrong. Bullsh*t. We`re wrong when hell freezes over.

[Lenny]

[quote name=`Len_A`]I`m sorry to say this, but "today`s news" has been full of inaccuracies.



Last year, Toyota factory employees made more money than their UAW counterparts, link here. Honda, Nissan, BMW, and Mercedes employees are comparable to the Detroit 3. ch-tentative-contract-deal"]link here[/URL]

There is an interesting concept.....BONUSES based upon performance! The employees got bonuses because things went well...too bad that concept doesn`t apply to executives and UAW workers.



If UAW workers had their pay reduced by the cost of warranty repairs attributed to their production line, think they might do a better job? So long as the execs and the union workers are paid regardless of performance, where is the incentive?



Mike[/QUOTE]How do you figure are the UAW members of the Detroit 3 are responsible for the warranty costs? They don`t design the vehicles. They do the jobs according to engineerings designs. Not to mention that the suppliers make the parts that cause most of the warranty and recall problems, not the automakers themselves or their employees. These days, whether it`s a Detroit automaker or a transplant, the suppliers do most of the design work as well, on those parts.

[Setec Astronomy]

So why do GM and Ford chiefs seem to get outrageous salary increases while they seemingly run the companies into the ground then ask for bailouts?

I think that could be applied to all the financial co`s in the bailout, and tons of other companies too. The CEO of Lehman got grilled over it in front of Congress last month. I don`t know why there isn`t more outrage, really, unless people just can`t comprehend how large these salaries are, or that they just inured to them from the salaries of sports and entertainment figures, considering the National median annual income is $40,690.



Even if you make $100K/year, and worked from when you were 20 to 70 years old, you`d only make $5 million over your lifetime, and virtually all of these CEO`s make that in ONE YEAR. And those would be the lowest paid CEO`s. Think about that for a minute...even if you make a very decent salary, these CEO`s will make way more in one year than you will in YOUR ENTIRE LIFETIME. I used to think it was kind of justified when an athlete made 1 or 2 million in a year, because their career could be very short, but this executive compensation is just completely out of control.

[Lenny]

I think that could be applied to all the financial co`s in the bailout, and tons of other companies too. The CEO of Lehman got grilled over it in front of Congress last month. I don`t know why there isn`t more outrage, really, unless people just can`t comprehend how large these salaries are, or that they just inured to them from the salaries of sports and entertainment figures, considering the National median annual income is $40,690.



Even if you make $100K/year, and worked from when you were 20 to 70 years old, you`d only make $5 million over your lifetime, and virtually all of these CEO`s make that in ONE YEAR. And those would be the lowest paid CEO`s. Think about that for a minute...even if you make a very decent salary, these CEO`s will make way more in one year than you will in YOUR ENTIRE LIFETIME. I used to think it was kind of justified when an athlete made 1 or 2 million in a year, because their career could be very short, but this executive compensation is just completely out of control.

You`re 100% right - it is totally out of control. I wish I had the answer, but I don`t.



And what puzzles me is all the "outrage" over what other middle class Americans make, and yet the same people shrug their shoulders when the subject of executive compensation comes up.

[Bunky]

For a mere 3 months of normal Iraq spending, I would rather waste my money here than give it to Iraq and Halliburton.

[salty]

How many have seen the Zeitgeist movies? They`re a free download. Makes you wonder about a few things. The first ones starts slow, for about 10 min.





Zeitgeist - The Movie

[Lenny]

For a mere 3 months of normal Iraq spending, I would rather waste my money here than give it to Iraq and Halliburton.

I hadn`t even thought of it in those terms. Good point.

[MSOsr]

For a mere 3 months of normal Iraq spending, I would rather waste my money here than give it to Iraq and Halliburton.

Are you just pointing out the small amount of money we`re talking about lending the Big 3? Or are you talking about taking the money going to the war and giving it to the Big 3, even if it causes us to lose the advantage we`ve gained to date? Make 4000 GI deaths meaningless? Just to save $?



I don`t want to misinterpret your post.





Mike

[Lenny]

Are you just pointing out the small amount of money we`re talking about lending the Big 3? Or are you talking about taking the money going to the war and giving it to the Big 3, even if it causes us to lose the advantage we`ve gained to date? Make 4000 GI deaths meaningless? Just to save $?



I don`t want to misinterpret your post.





Mike

I think Bunky is talking about how comparatively small the amount of loan money requested is, in comparison to the amount we`re spending on the war in Iraq.No one is talking about dishonoring our servicemen and women in any way.



I will say that it`s frustrating to see billions of dollars go to rebuilding Iraq, when the Iraqi`s have about a $100 billion surplus from selling oil, and then regardless of who is responsible for what company`s past mistakes, we have some of our fellow Americans get uppity about preventing other Americans from becoming unemployed.

[MSOsr]

The dollars don`t bother me so much; it`s just the thought of them being spent "the way we`ve always done it". That`s why I thought a bankruptcy trustee or someone similar should be on board to make sure the money is being used wisely.



What do you think about loaning the money to the Big 3 and having Mitt Romney be in charge of authorizing spending of the money/contracts? Didn`t he bring Staples back from the dead?





Mike

[Lenny]

The dollars don`t bother me so much; it`s just the thought of them being spent "the way we`ve always done it". That`s why I thought a bankruptcy trustee or someone similar should be on board to make sure the money is being used wisely.



What do you think about loaning the money to the Big 3 and having Mitt Romney be in charge of authorizing spending of the money/contracts? Didn`t he bring Staples back from the dead?





Mike

Absolutely, Mitt Romney would be a great choice. I don`t remember about Staples, but I do remember his work on the winter Olympics.



The Detroit 3 have not had a case of "the way we`ve always done it" in so long, I can`t even remember. Every year there are new programs to cut non-vehicle related costs, new programs partnering with their suppliers, etc.



The way new product is coming in at Ford, I know they don`t have a case of "the way we`ve always done it".