billium said:
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.
