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astropin
SFN Regular
USA
970 Posts |
Posted - 11/20/2008 : 11:11:25 [Permalink]
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If the Detroit auto makers go down.....and it looks like they will, we will be heading into a full blown depression....IMHO.
People saying "let them fail" have no idea of the ramifications of that. I agree with chaloobi in this thread. Of course I am also a Michigander so I might be a little biased. Although I have no direct ties to the auto industry. If they go down it won't directly affect my business, but in a round about way I think it will effect EVERYONE in this country and possibly beyond.
I currently own three American cars. I have owned only American cars for the last 20+ years. I've had maybe one or two that were not so great, the rest have been great reliable cars.
My Dodge Durango is a pig, but it's been a great vehicle. Built like a tank and rides like a luxury car. I need a vehicle like that to tow my boat and plow my driveway and business....can't do those things with a fuel efficient car. I also need at least one 4x4 vehicle. The winters here get pretty crazy and a huge part of my business puts me on the road year round. I couldn't get where I need to in a car.
I'd be more than happy to get an electric vehicle (or hydrogen or whatever)....if it could do the things my Durango can, until then I'm stuck having at least one guzzling SUV in my garage. |
I would rather face a cold reality than delude myself with comforting fantasies.
You are free to believe what you want to believe and I am free to ridicule you for it.
Atheism:
The result of an unbiased and rational search for the truth.
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chaloobi
SFN Regular
1620 Posts |
 Posted - 11/20/2008 : 11:13:40 [Permalink]
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Originally posted by Kil
Okay, well... It blows my mind that after taking 700 billion from us, that is not being used as first advertised, yet, 25 billion of it will not be spent to keep that many people employed, including parts manufacturers, in the middle of an economic meltdown.
This is a big mistake. Perhaps during better times it may be the thing to do because a chapter 11 filing might not lead to a chapter 7 because it's easier to reorganize in a robust economy. But this is just nuts. Besides all of those people losing their jobs, which will put a serious strain on an already strained economy, they will be losing their benefits including health care, again, during a health care crisis. Whole towns and cities will go under. And what about home foreclosures and housing? The ripple effect will be massive.
I'm just shaking my head. And really, I don't care about GM's CEO's. Fuck them. We can deal with them later. As for the unions, my guess is they would be willing to cut back on some benefits, if that helps, because employment beats unemployment. No company, no union benefits.
I'm appalled at this short sightedness for what seems to me to be political reasons. Fasten your seat belts, this promises to be a bumpy ride...
My hope is that they can hold on until Obama becomes the president with a significant realignment in congress.
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A whole lot of people are going to have their lives completely fucked around because some asshole senators are either resentful of the UAW or put the principle of economic darwinism before the welfare of Americans that don't live in their districts. I just don't get it. There is just no comparison between the harm of loaning the money vs. the harm of not. |
-Chaloobi
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Dave W.
Info Junkie
USA
26020 Posts |
Posted - 11/20/2008 : 11:58:13 [Permalink]
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Originally posted by astropin
People saying "let them fail" have no idea of the ramifications of that. |
I'm not sure we have any real choice. Would even hundreds of billions in unconditional grants restore the trust between customer and vendor when it comes to a long-term investment like a car or truck?
If GM, Ford and Chrysler between them had 600,000 employees (as of July 21st, with Chrysler's employees estimated by substracting Daimler's 2008 figure from DaimlerChrysler's 2007 figure), then at $73 per hour (from earlier in this thread), a $25 billion gift would pay for 570 hours of re-training, each.
Shouldn't we be considering that option? Rather than trying to refloat the sinking auto industry, wouldn't it be better to retrain for some different industry? Support the workers, and not the corporations? |
- Dave W. (Private Msg, EMail)
Evidently, I rock!
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Kil
Evil Skeptic
USA
13476 Posts |
Posted - 11/20/2008 : 11:58:56 [Permalink]
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There is reason for hope:
Senators Reach Bipartisan Deal to Aid U.S. Automakers
Nov. 20 (Bloomberg) -- A group of U.S. senators reached a bipartisan agreement on aiding U.S. automakers as Congress was running out of time this week to help the cash-starved companies.
No details were available, Tara Andringa, an aide to Senator Carl Levin, a Michigan Democrat, said in an e-mail. Levin and colleagues Debbie Stabenow, a Michigan Democrat; George Voinovich, an Ohio Republican, and Kit Bond, a Missouri Republican, scheduled a 2:30 p.m. news conference in Washington.
Congressional leaders haven't said whether they support the plan, and both houses could run out of time to enact legislation with a lame-duck session due to wrap up tomorrow.
Senate Majority Leader Harry Reid yesterday refused to schedule floor time to debate a possible Bond compromise plan, though he said today Congress might return in December to finish its work.
``The desire is we complete all of our actions until we come back on Jan. 6, but that may not be possible,'' the Nevada Democrat said. ``It may be necessary that we come back after Thanksgiving.''
The Bush administration called on Congress to break its deadlock on a plan to bail out the Big Three automakers, saying a Republican measure would pass if put to a vote…. |
The compromise would expedite the use of the 25 billion already approved for more environmentally friendly cars to be used instead for the lucidity problem. It would also leave the next congress and president in charge of what to do next with the 700 billion…
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Uncertainty may make you uncomfortable. Certainty makes you ridiculous.
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Kil
Evil Skeptic
USA
13476 Posts |
Posted - 11/20/2008 : 12:17:23 [Permalink]
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Originally posted by Dave W.
Originally posted by astropin
People saying "let them fail" have no idea of the ramifications of that. |
I'm not sure we have any real choice. Would even hundreds of billions in unconditional grants restore the trust between customer and vendor when it comes to a long-term investment like a car or truck?
If GM, Ford and Chrysler between them had 600,000 employees (as of July 21st, with Chrysler's employees estimated by substracting Daimler's 2008 figure from DaimlerChrysler's 2007 figure), then at $73 per hour (from earlier in this thread), a $25 billion gift would pay for 570 hours of re-training, each.
Shouldn't we be considering that option? Rather than trying to refloat the sinking auto industry, wouldn't it be better to retrain for some different industry? Support the workers, and not the corporations?
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That may be the thing to do, but not right now. Retraining for what? We are sinking into a deep recession. Also, look at Gorgo's post about the 73 per hour figure. It seems that figure may be conflated.
I am not as convinced as you are that the American auto industry is toast, by the way. I think most Americans would like to see a thriving American auto industry, and would be willing to buy American if the product is right. And Dave, none of the auto manufacturers are selling a lot of cars right now because of the credit crunch and the fear of making big purchases, due to lost savings and job insecurity by consumers in general.
On paper it may look like the thing to do, but I don't think the option that you are proposing is realistic at this time. Perhaps it can be phased in during periods of downsizing. But not when we are looking at a huge loss of jobs in a short period of time in the middle of a recession. The structure for the kind of solution that you are suggesting doesn't exist.
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Uncertainty may make you uncomfortable. Certainty makes you ridiculous.
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Gorgo
SFN Die Hard
USA
5310 Posts |
Posted - 11/20/2008 : 12:42:35 [Permalink]
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| I guess I need to see the reasoning behind this because it seems to me that, while we can disagree about what to do, doing nothing isn't the right thing to do. Why rush to bail out the wealthy in the financial industry and not do something about this? |
I know the rent is in arrears
The dog has not been fed in years
It's even worse than it appears
But it's alright-
Jerry Garcia
Robert Hunter
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Dave W.
Info Junkie
USA
26020 Posts |
Posted - 11/20/2008 : 13:00:42 [Permalink]
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Originally posted by Kil
The compromise would expedite the use of the 25 billion already approved for more environmentally friendly cars to be used instead for the lucidity problem. |
That's the deal that NPR this morning suggested would be rejected by the House.
Interesting choice of Kilbonics there. "Lucidity" instead of "liquidity." I quite agree that there is a lucidity problem.
You also wrote:| That may be the thing to do, but not right now. Retraining for what? We are sinking into a deep repression. |
Retrain them all as debt counselors. Seriously, retrain them to do whatever they reasonably want to do, or give them $41,667 each to move to where a job is.| Also, look at Gorgo's post about the 73 per hour figure. It seems that figure may be conflated. |
Doesn't matter. $25 billion divided by 600,000 is $41,666.67. If the average hourly wage is only $50, then that means that $41K offers 833 hours instead of 570. If it's $100/hour, then the $41K is 416 hours. How much will unemployment insurance pay out, in comparison?| I am not as convinced as you are that the American auto industry is toast, by the way. I think most Americans would like to see a thriving American auto industry, and would be willing to buy American if the product is right. |
And if frogs had wings...| And Dave, none of the auto manufacturers are selling a lot of cars right now because of the credit crunch and the fear of making big purchases do to lost savings and such. |
I know that, too. The difference is that Toyota and Honda and many European carmakers aren't talking about closing up shop, so customers - when they can buy a car - can walk in with a feeling of confidence that if their new car breaks anytime in the next six years, the manufacturer will fix it for free. Right now, GM can offer a six-year warranty to everyone, but there is little trust that the company will be able to honor that warranty, even in the near future. I would have to consider the current situation to be the same as no warranty at all, and I'll do my car shopping elsewhere.| Oh paper it may look like the thing to do, but I don't think the option that you are proposing is realistic at this time. Perhaps it can be phased in during periods of downsizing. But not when we are looking at a huge loss of jobs in a short period of time. |
Over half a million people are facing 100% downsizing, Kil, if Congress doesn't do something. And one of the reasons that Congress is having problems doing something is that they distrust the car companies which would get the money. My concern is for the employees, instead. People who are capable of doing something other than making cars, so why not ensure that they have such a chance? Give them a bailout, so that they can either continue their careers with minimal disturbance, or else start a slightly different career with three months (or more!) of training at their current rates? Heck, employees without families to support could put at least a couple of years of state college under their belts with that much money.
How many people who build homes got bailed out at all? New home starts are down by 1.2 million or so (more than 50%) since 2006. How many people does it take to build a new home, anyway? I think the difference there is that those homes were all over the U.S., so we weren't looking at a single state with a disproportionately large load of suddenly unemployed people in it, like Michigan. |
- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
Visit Dave's Psoriasis Info, too. |
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Kil
Evil Skeptic
USA
13476 Posts |
Posted - 11/20/2008 : 13:20:38 [Permalink]
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Dave:
Interesting choice of Kilbonics there. "Lucidity" instead of "liquidity." I quite agree that there is a lucidity problem. |
Bite me.
Dave:
And if frogs had wings... |
As I said, I am not convinced that the auto industry is toast. You apparently are. Your solution is predicated on that outcome. Furthermore, your solution would almost guarantee that outcome.
I think the Ford and Chrysler brands will survive. I'm not as confident about the GM brand, but it has a chance. As it stands now, I am willing to give them that chance.
That may change later, but 25 billion out of 700 billion dollars, and the money that has already been allocated for their use, (which is the money that is now in play) to my way of thinking, is worth the gamble.
Time will tell…
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chaloobi
SFN Regular
1620 Posts |
Posted - 11/20/2008 : 14:20:58 [Permalink]
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I think Chrysler is definitely toast. It's just a matter of finding a buyer for the whole or the pieces if that's how it has to be. Cerberus has had enough.
GM's hurting because it's way to friggin' big in relation to it's sales and can't shrink itself fast enough. And with the sudden catastrophic drop in sales and the freeze up in credit, it's cash reserves were used up way faster than they had planned for and they had no ability to borrow and make up the difference.
Ford's doing better because Mulally's been in turn-around mode for two years now. They're ahead of the game by accident or very conservative planning on his part, or a little of both. The first thing he did was go out and mortgage anything of value in the company and get a big ass line of credit. That's been the life saver because if they tried to do that today, forget it.
All 3 auto companies got serious concessions from the unions and have reduced salary head count dramatically. But the savings from these actions don't appear for a number of years as the buy outs have up front costs and longer term savings. If the economy turns around in the next year or so, I think all three have the potential to be very profitable again. And so do they, but this hump they have to cross is a mountain - or canyon? - hence the bridge loans.
People who say "the auto companies are broke forever, why bother fixing them" don't really know what they're talking about. Some thoughts:
1. The Big 3 haven't had any Federal aid that I'm aware of since the Chrysler loans back in the '80s. I fail to see where the impression that they are chronically asking for help comes from.
2. The 25 billion in loans to retool for lower gas mileage was in response to the new CAFE standards. Because the government is demanding increased fuel economy, the theory is the government ought to help the companies with the huge cost burdens that come with meeting that demand. And again, these are loans, not gifts.
3. The big 3 do make and sell lots of small and mid-sized cars. Until recently they haven't quite figured out how to make a profit off those vehicles, though. The money makers are luxury cars and big SUVS and Trucks and since the market has been very strong for those until about 6 months ago, they made lots of them. Honda and Toyota do make money off their small and mid-sized cars but IIRC they can make them for something like $2.5k to 3k less than the Big 3. Part of the reason for that is the health care and retiree costs that the Japanese don't have. Call it socialism, call it government subsidy, but recognize it's an unfair advantage these companies have.
4. Ford especially, and with GM a little behind, has vehicle quality on par with Toyota and Honda, though the common impresson is the opposite. Chrysler, afaik, has pretty bad quality. But if you want a safe, quality vehicle you don't have to buy an import.
5. The dire financial condition of GM is really about a company that was working to right-size against fierce global competition and suddenly getting hit with the one-two-three punch of unprecedented rise in fuel cost, devastating drop in all vehicle sales due to a very severe economic crisis, and the freeze-up of any credit they could get to keep running through #1 and #2. I can't for the life of me figure out why anyone would think it improper for the government to step in and provide some loans so the company can make it through this crisis. Instead lets put half a million people out of work, kill a potentially viable manufacturing giant, and certainly worsen the worst economic crisis the country's seen since the 1930s. Crazy. |
-Chaloobi
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Dave W.
Info Junkie
USA
26020 Posts |
Posted - 11/20/2008 : 16:55:30 [Permalink]
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Originally posted by Kil
Time will tell… |
And 20 minutes after you posted that, NPR announced that Pelosi and the House Dems basically said, "not until December, at the earliest." In fact, Pelosi's words were "until they show us a plan, we won't show them the money." So the companies wanting these loans will need to present, before December 2nd, a plan for using the money to make themselves profitable again, and only afterwards will Congress be called back into session to vote yea or nay.
chaloobi is right: this $25 billion is not from the $700 billion. It's $25 billion that was supposed to be for something else, so if this new deal goes through, Detroit will have to make and pay back fifty billion (along with paying all their normal expenses) in the next umpty-ump years, as they receive the same loan money twice. Now, GM has lost money for the last three years, including $39 billion last year alone. Is that a bet we should make?
GM probably won't die as a brand, anyway. They appear to be doing very well in China and India. Even if they shut down in the US, perhaps they will come back to Detroit in a few years, as a foreign automaker. |
- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
Visit Dave's Psoriasis Info, too. |
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Dave W.
Info Junkie
USA
26020 Posts |
Posted - 11/20/2008 : 17:14:12 [Permalink]
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Originally posted by chaloobi
Part of the reason for that is the health care and retiree costs that the Japanese don't have. Call it socialism, call it government subsidy, but recognize it's an unfair advantage these companies have. |
Part of the reason they don't have the healthcare and retiree costs is because they chose to locate their American manufacturing plants in Southern right-to-work states, so they don't have to deal with the unions. If you want to call that advantage "unfair," or whatever, I guess that's your choice.
Toyota also only has a quarter of the dealerships that GM has, so while making a very competitive amount in sales in the US market, they've got a much lower overhead in terms of their sales force. Unfair?
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- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
Visit Dave's Psoriasis Info, too. |
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Kil
Evil Skeptic
USA
13476 Posts |
Posted - 11/20/2008 : 19:15:11 [Permalink]
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Dave:
And 20 minutes after you posted that, NPR announced that Pelosi and the House Dems basically said, "not until December, at the earliest." In fact, Pelosi's words were "until they show us a plan, we won't show them the money." So the companies wanting these loans will need to present, before December 2nd, a plan for using the money to make themselves profitable again, and only afterwards will Congress be called back into session to vote yea or nay. |
Yeah, I know.
What happens now:
Reid and Pelosi asked the Big Three to submit plans by Dec. 2 that will spell out how they will use the loan in order to become financially stable in the future. Congress will reconvene on Dec. 8 in another lame duck session to vote on the matter.
The automakers said they would comply with the Democrats' request, cheering the chance to state their case again.
"Ford welcomes the opportunity to provide our plan to Congress," the company said in a statement. "We have a great plan that will continue Ford's transformation into a lean, profitable company that delivers the safe, fuel-efficient, high-quality new products that our customers want and value."
Similarly, General Motors said it would be able to show Congress that it had a viable plan. "We will continue to work vigorously with the Congress and the administration during the next few weeks to address their concerns," the company said in a statement.
Chrysler did not immediately respond to a call seeking comment.
What remains to be seen is what any final bailout measure would look like. The Senate could adopt much of the compromise bill, which the Bush administration Thursday said it would support.
"While we need to review the language, this is an agreement the president could support," said Dana Perino, White House press secretary. "We encourage the Congress to pass it as soon as possible." |
Works for me...
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Uncertainty may make you uncomfortable. Certainty makes you ridiculous.
Why not question something for a change?
Genetic Literacy Project |
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chaloobi
SFN Regular
1620 Posts |
Posted - 11/20/2008 : 19:44:13 [Permalink]
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Originally posted by Dave W.
Originally posted by chaloobi
Part of the reason for that is the health care and retiree costs that the Japanese don't have. Call it socialism, call it government subsidy, but recognize it's an unfair advantage these companies have. |
Part of the reason they don't have the healthcare and retiree costs is because they chose to locate their American manufacturing plants in Southern right-to-work states, so they don't have to deal with the unions. If you want to call that advantage "unfair," or whatever, I guess that's your choice. |
I'm not just thinking of their US employees, but also their Japanese employees where much of it's staff is located. Note that Toyota does give decent benefits to it's employees in the south, but it's work force is very young and it doesn't have a lot of US retirees, so those costs are low. I don't think that's a fairness issue, of course. But again if the US had a sensible medical care and retirement system there would at least be competition that wasn't automatically lopsided in favor of newer players in the market.
| Toyota also only has a quarter of the dealerships that GM has, so while making a very competitive amount in sales in the US market, they've got a much lower overhead in terms of their sales force. Unfair? |
That's part and parcel of GM being too big for it's sales and the difficulties in trying to right size itself. I never said anything about GM's size issues being unfair, but that is it's biggest non-economic disaster problem. |
-Chaloobi
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Dave W.
Info Junkie
USA
26020 Posts |
Posted - 11/20/2008 : 21:35:20 [Permalink]
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Originally posted by chaloobi
I'm not just thinking of their US employees, but also their Japanese employees where much of it's staff is located. Note that Toyota does give decent benefits to it's employees in the south, but it's work force is very young and it doesn't have a lot of US retirees, so those costs are low. I don't think that's a fairness issue, of course. But again if the US had a sensible medical care and retirement system there would at least be competition that wasn't automatically lopsided in favor of newer players in the market. |
Well, Toyota isn't building cars in the U.S. at a loss. I mean, building them here, paying U.S. workers and U.S. taxes is obviously cheaper than building the cars in Japan and shipping them over. Or, the company obtains some other benefit that's worth the added expense.
What would have happened if GM tried to move its plants south during the good times? I bet the unions would simply have shut down all production up north, leaving GM no U.S. production at all for years (until the southern plants were built, staffed and started - all without help from long-term employees).
I guess you could say that the fact that we don't have good universal healthcare or government-provided pensions - thus priming the market for the formation of unions - is an example of the U.S. government being unfair to its own citizens.
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- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
Visit Dave's Psoriasis Info, too. |
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H. Humbert
SFN Die Hard
USA
4574 Posts |
Posted - 11/21/2008 : 00:25:59 [Permalink]
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Originally posted by Dave W.
Well, Toyota isn't building cars in the U.S. at a loss. I mean, building them here, paying U.S. workers and U.S. taxes is obviously cheaper than building the cars in Japan and shipping them over. |
I don't know for certain, but I'm guessing that's a result of imposed import tariffs, not undirected market forces.
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"A man is his own easiest dupe, for what he wishes to be true he generally believes to be true." --Demosthenes
"The first principle is that you must not fool yourself - and you are the easiest person to fool." --Richard P. Feynman
"Face facts with dignity." --found inside a fortune cookie |
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Killing the car companies
