Big Three Bailout

[roni]

Originally Posted by Doggiemom

Yes, let them file chapter 11 bankrupcy, restructure, take pay cuts, pay freezes, furloughs, etc.....just like the airlines did/have done/are doing

Made the same point Steve made in a previous post, from the same NewsHour discussion.

[horizon200]

Originally Posted by ryberg

Actually, they took up precisely the situation wrt bankruptcy and the airines in that very same NewsHour discussion. (Click on it if you want to see it.) Shields' point was that it's fine for the airlines because buying a ticket is a one-time thing involving much less money, but it's not fine for Detroit in part because you won't make a major long-term purchase like buying a car if you don't have the confidence that the company will still be around for the warranty and services and that parts will still be manufactured and available and so on.

Steve

Originally Posted by roni

Made the same point Steve made in a previous post, from the same NewsHour discussion.

But big picture wise, that doesn't make sense. If we bail them out, then we will be paying twice for a vehicle...once when e purchase and second when we use taxpayer monies to pay their salaries and pensions.

I just really think this one is ill advised.

[roni]

Originally Posted by horizon200

But big picture wise, that doesn't make sense. If we bail them out, then we will be paying twice for a vehicle...once when e purchase and second when we use taxpayer monies to pay their salaries and pensions.

I just really think this one is ill advised.

It may be.

You want to bet a depression on it?

Another 2-4 million people out of work will have a large governmental cost also. Which will be higher financially (unemployment comp/food assistance/mortgage assistance/foreclosures/etc..) and in human terms (increased alcohol/drug abuse/depression/suicide/mental heal costs/physical health costs etc...)

If the Chrysler model is followed, it is structured as a loan with stringent conditions. Might work, might not work.

Above my pay grade, but I tend to fall on the side of reducing costs and paying equal attention to the human costs and the total cost of each proposed action.

[ryberg]

Originally Posted by horizon200

But big picture wise, that doesn't make sense. If we bail them out, then we will be paying twice for a vehicle...once when e purchase and second when we use taxpayer monies to pay their salaries and pensions.

I just really think this one is ill advised.

Why would we by paying twice for a vehicle? Funding the bailout with taxpayer money doesn't affect the vehicle price, except maybe in keeping it more competitive...

Mind you, I'm not taking the position that the bailout should go ahead, just adding that they did comment on that point, too, and explicitly pointed out what they saw as important differences between the Detroit situation and the airlines. And those make sense to me. I wouldn't buy a car from a company that was in such trouble. However we regularly buy tickets on Frontier.

Steve

[sctx]

I think Toyota, Honda, Ford, and VW can produce all the cars needed to cover the market. Two or three competitors will have to fall before the industry can stabilize and turn profits across the board. Demand based production will become the norm and not just a Toyota trade "secret", the days of going to a lot and having your choice of 100 different versions of a Chevy Silverado are gone.

[NiceTom]

Originally Posted by horizon200

No doubt there will be fallout impact...but I would venture to say those machine shops where parts are made will pick up other work as competition steps in to replace the big three.

Yes, I'm sure that long-term, someone is going to be there supply the 13 million vehicles that GM can't make a profit on, but shorter-term, there will be alot of pain as many of those suppliers go belly-up. There is a possibility that the fallout will be the end of the Ford and Chrysler too.

[ryberg]

Originally Posted by sctx

I think Toyota, Honda, Ford, and VW can produce all the cars needed to cover the market. Two or three competitors will have to fall before the industry can stabilize and turn profits across the board. Demand based production will become the norm and not just a Toyota trade "secret", the days of going to a lot and having your choice of 100 different versions of a Chevy Silverado are gone.

I don't follow the industry, but I was not under the impression that Toyota or Honda were not turning a profit. Indeed that was yet another point in that discussion: it's not an across-the-board problem, making cars successfully in America, it's a Detroit corporate culture mismanagement whatever problem.

Steve

[horizon200]

Originally Posted by ryberg

Why would we by paying twice for a vehicle? Funding the bailout with taxpayer money doesn't affect the vehicle price, except maybe in keeping it more competitive...

Mind you, I'm not taking the position that the bailout should go ahead, just adding that they did comment on that point, too, and explicitly pointed out what they saw as important differences between the Detroit situation and the airlines. And those make sense to me. I wouldn't buy a car from a company that was in such trouble. However we regularly buy tickets on Frontier.

Steve

If you (the taxpayer) pay for the bailout isn't that increasing the "cost" of the vehicle? Think very broad here. Right now you are just buying the vehicle. your tax dollars don't go to that company...if we bail them out, the tax dollars go to them as well. Maybe not the price of a vehicle per taxpayer, but certainly a premium!

[Doggiemom]

Originally Posted by ryberg

I wouldn't buy a car from a company that was in such trouble. However we regularly buy tickets on Frontier.

Steve

Just curious Steve...why??? Is this because Frontier has the lowest airfare even though they are in chapter 11?

[sctx]

Originally Posted by ryberg

I don't follow the industry, but I was not under the impression that Toyota or Honda were not turning a profit. Indeed that was yet another point in that discussion: it's not an across-the-board problem, making cars successfully in America, it's a Detroit corporate culture mismanagement whatever problem.

Steve

the point is, that in an overly competitive market, it is extremely difficult for any company to turn a profit...... doesn't matter to me, kick VW, Honda, and Toyota out of the country and then bail out the "Big 3"

[RonH]

Originally Posted by horizon200

Correct me if I'm wrong, but isn't there a saying about "don't look a gift horse in the mouth"?



I know there are staunch union advocates on this board...but here's an example of just why the auto industry is in a shambles! A union that has the gall to say they are "open" to options when they want Government handouts to keep their business running?????

Maybe when I file my taxes this year, I will just send in a note saying I'm "open to discussing various options"!

Your right. And this is coming from a union guy. I've been arguing with my fellow "uaw brothers" that the track they are taking will come back bite them in the ass. I'm not uaw, but a skilled educated trade. I don't know anyone's work history, but I have worked in several of the different big 3 car plants around Indiana. I have seen the laziness and abuse of their jobs that uaw workers perform. I'm sure it was like this in Michigan too. You are right Horizon, that is a bunch of BS to speak of "open" to options. I really wonder how many more jobs the uaw is willing to lose to finally get to point that their union is way behind the times here.

[ryberg]

Originally Posted by horizon200

If you (the taxpayer) pay for the bailout isn't that increasing the "cost" of the vehicle? Think very broad here. Right now you are just buying the vehicle. your tax dollars don't go to that company...if we bail them out, the tax dollars go to them as well. Maybe not the price of a vehicle per taxpayer, but certainly a premium!

Different argument. I mean unless you're arguing that the bailout will make people so angry at Detroit automakers that they will actually make that connection and then forgo buying from them, even if the price is the same, or even a bit less, than it would be with Honda or Toyota. I would not hold my breath on the idea that people will do that, partly for the reason mentioned immediately below...

Originally Posted by Doggiemom

Just curious Steve...why??? Is this because Frontier has the lowest airfare even though they are in chapter 11?

They do often have low airfare, yes. It's also because we're located in Denver and the flights to/from Cancun are direct and at least sufficiently frequent, though, in our case.

Originally Posted by sctx

the point is, that in an overly competitive market, it is extremely difficult for any company to turn a profit...... doesn't matter to me, kick VW, Honda, and Toyota out of the country and then bail out the "Big 3"

Not saying we should kick them out. Just saying that this does not all in all appear to be an auto industry problem, but rather a Detroit car manufacturer problem. Unless the Japanese just being characteristically stoic and half killing themselves, business-wise, in order to scrape by and hope to come out among the survivors on the other end, or something...

Steve

[sctx]

Originally Posted by ryberg

Not saying we should kick them out. Just saying that this does not all in all appear to be an auto industry problem, but rather a Detroit car manufacturer problem. Unless the Japanese just being characteristically stoic and half killing themselves, business-wise, in order to scrape by and hope to come out among the survivors on the other end, or something...

Steve

I'm not either, I'm just being realistic in saying that the market is over saturated with competitors at this time and that is not healthy for the market

[horizon200]

Originally Posted by sctx

I'm not either, I'm just being realistic in saying that the market is over saturated with competitors at this time and that is not healthy for the market

Which is why I say natural competition will step in and fill the void if the Big Three go away.

I would prefer to see a restructure of their companies, but, they made their bed.....

Nobody tried to bailout Packard or Cord, Consolidated or Curtiss aircraft, or the myriad other large companies that went away.

[Bumper]

Goodness knows I'm no big supporter of unions - I think most of them have outlived their usefulness - but they certainly don't shoulder all, or even the biggest part, of the blame for the current situation. A significant portion of the problem must be laid at the feet of the incredibly bad management that allowed trade organizations to hold the entire industry up to ransom. The complete lack of foresight and discipline demonstrated by the auto industry as a whole was inevitably going to lead to where it is now. Their unwillingness to adapt and innovate has led to their death knell. Perhaps it's time - or well past time - that everyone, at every level, all around the table, learn to live with the notion of reduced expectations. Just because some was, doesn't mean it is, should be, or will be. Gone are the days when GM's annual sales exceed the Gross National Product of most of the countries in the world. I believe that just as the current economic crisis signals the long overdue "adjustment" that has been needed in economies around the globe, the auto industry is merely symptomatic of the ills that have to be addressed. Will there be rationalization, consolidation, death and destruction? Almost certainly. Who will be left standing when the smoke clears and the dust settles? Hard to say. Will we be better for the exercise? I'd like to think so, but it will be painful.