Do the Automakers Deserve a Bail Out? 35 comments
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Call the Fed, my favorite burger joint down the street is experiencing distress. Yeah, I’ll take a double with cheese, hold the TARP.
Not really sure how Detroit sees this all working out. Does the UAW and the “big” three (two public, one private, all three collapsing) still think that they are entitled to some sort of government intervention? The new White House Administration has made it clear that they are ready to help Detroit, and Speaker Pelosi can’t be any more vociferous of her own 
intent. So the question is, where, oh where, will it end?
The automakers' priorities have been out of whack for quite some time now. You cannot help but laugh when you hear GM is the world's leading purchaser of Viagra. The Detroit News reported in 2006 that GM spent $17 million dollars on the “little blue pill”. Admittedly, this is a relatively small portion of the more than $5.6 billion per year that GM spends on health care for their employees (more than $1500 per car in 2006), but the Viagra problem is a symptom of an overall cost management illness.
Thomas Friedman, Pulitzer Prize winning columnist and author (”The World is Flat“), has some interesting insights into the situation in yesterday’s New York Times. He first recounts the history of our esteemed car companies and their insatiable appetite for funds to, … uh… innovate:
Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?
How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.
This included striking special deals with Congress that allowed the Detroit automakers to count the mileage of gas guzzlers as being less than they really were — provided they made some cars flex-fuel capable for ethanol. It included special offers of $1.99-a-gallon gasoline for a year to any customer who purchased a gas guzzler. And it included endless lobbying to block Congress from raising the miles-per-gallon requirements. The result was an industry that became brain dead.
Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].”
These are the guys taxpayers are being asked to bail out.
- Thomas L. Friedman, NYT, Nov. 11, 2008
Friedman has a great knack for showing readers where we have been in very understandable terms and examples. He continues on to propose that Steve Jobs take a year off from Apple (AAPL) to come create the first “iCar”, which no doubt will run on MP3’s available only from the iTunes store. He really may be on to something there.
When looking at our ratings and valuations on companies like Ford (F) and GM, it is really hard to reconcile the realities of Detroit with the opportunities to invest in depressed stocks. Well, maybe its not that hard. Right now, on a 13 week basis, GM and Ford are down around 70% each. The slide for GM has been an unrelenting death march from the high $80’s in 1999 to its present day. Ford’s decline from 1999 was a high price of $36 and change. Both companies have failed miserably to innovate or compete with their foreign counterparts.
Looking at the scatter plot chart, it is true that Ford and GM get a “Greatly Undervalued” rating right now from the Ockham methodology. We won’t drop coverage on them just because we think they are systemically broken (that’s Wall Street research). Instead, we basically sit here waiting to see if the government will again burn money by throwing it into the Detroit furnace. Please note, however, that when visiting our site, we slap an “ALERT” sticky note on both Ford and GM to highlight that our ratings can’t be viewed in a vacuum. While we advise doing a lot of homework on all companies, and think our clients need to look at multiple sources for their research, we also recognize that some truly deserving companies should be pointed out for the complete debacles they have become.
When looking at the major automotive manufacturers, we find Honda (HMC) and Toyota (TM) to be far more interesting (and they don’t get the yellow sticky note of death on our website.)
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This article has 35 comments:
www.gm.com/experience/.../
The most recent unfunded mandate from the Feds is estimated to cost the Big 3 about $100 Billion in just the next six years. To "help", the Feds agreed to 'loan' the Big 3 $25 Billion. (see the math here?)
So the government, representing the "common" folks should bailout GM and their compatriots--AND, AT THE SAME TIME--change some of the truly calamatous government regulations that have caused this mess. And remember, Nancy Pelosi has said that any aid to the automakers should come with strings, like no "golden parachutes".
Changes in the laws affecting the automaker should include:
1. Let the Big 3 shut down excess dealers and brands with no financial buyout (no golden parachutes).
Let the Big 3 get rid of the JOBS BANK and hourly employee buyouts (no golden parachutes).
Let the Big 3 get rid of the UAW.
Allow the Big 3 import small cars from low cost sources the same as the Japanese and Koreans do. NONE of these are is made in the US: Toyota (Yaris), Nissan (Versa), Kia (Rio), Hyundai (Excel) and Honda (Fit).
Also, anyone calling for the resignation of the Big 3 senior management without simultaneously calling for the resignation of the Union's Ron Gettlefinger and his leadership(?) team is deluded.
.
Id like to see you do my job. You wouldnt last one day and get your facts right no one and I mean no one in the auto industry makes $73.00/ hr I'll bet you've never even been in a factory or mill in your life. You people run your mouths all the time and spew information that you cant back up with facts. How about the 700 billion the fed is giving to the banks. I suppose you think that money is going to help all the poor bastards who are going to lose thier homes. Think again those CEO's are going to get bonuses and millions in pay while the little guy loses his home. Chech the price of a Toyota vs. american car and you'll see the price is almost the same so when you pay to much for your toyota how does that help the taxpayer? It sends all the profit and tax to a foriegn land real smart. You want to complain about something check out what your doctor makes a year and tell him/her that your not going to pay so much for that service. Or check the superintendant of your local school $100.000 plus and tell them it cost to much to educate your children. when are all you pathetic so called patriotic americans going to wake up? when there's no manufacturing base left in this country. Keep driving your Toyota's with your proud to be american stickers on the windows next to the american flag and think about Pearl Harbor or vietnam for a moment. WAKE UP!
On Nov 12 05:09 PM Michael Dortch wrote:
> We should not bail the automakers. These people put themselves in
> the ring of fire!!! Does anyone stop and help the little guy that
> pays way to much for a car or a truck!! Hell no they say sorry U
> LOSE!!! Help the people that needs the help frist the American Taxpayer.
> Is there a reason why a factory worker that has been doing to same
> job needs to make 73 a hour. He not learning anything new just where
> to put the bolt where it needs to go. My god you can teach a 12 year
> old to run these factorys now days.
They seem to be in a good place having record profits quarter after quarter.
Capitalism is about making what the public wants. With the low price of gas, no one wanted efficient automobiles and there was no market incentive to produce them. Gas was too cheap. Similarly, there was little to no incentive to spend the very significant $$'s to improve their factories. The auto industry is now caught by the same lack of capital that is bring down the banks. I do not see why we should treat the auto industry any different from any other industry that this trapped by the lack of liquid capital.
The ONLY reason why Japanese/Korean/Europe... cars cost more is because of tariffs - you know, a little thing that the government slaps on imports to keep the cost similar to domestic products?
Isn't it crazy that people are still willing to pay extra for imports while passing the junk coming out of Detroit?
BTW, no one is vouching for the TARP either. This column is specifying that Detroit is a money pit that the government would not be able to fix!
On Nov 12 05:39 PM mnlcoll wrote:
>
>
> Id like to see you do my job. You wouldnt last one day and get your
> facts right no one and I mean no one in the auto industry makes $73.00/
> hr I'll bet you've never even been in a factory or mill in your life.
> You people run your mouths all the time and spew information that
> you cant back up with facts. How about the 700 billion the fed is
> giving to the banks. I suppose you think that money is going to help
> all the poor bastards who are going to lose thier homes. Think again
> those CEO's are going to get bonuses and millions in pay while the
> little guy loses his home. Chech the price of a Toyota vs. american
> car and you'll see the price is almost the same so when you pay to
> much for your toyota how does that help the taxpayer? It sends all
> the profit and tax to a foriegn land real smart. You want to complain
> about something check out what your doctor makes a year and tell
> him/her that your not going to pay so much for that service. Or check
> the superintendant of your local school $100.000 plus and tell them
> it cost to much to educate your children. when are all you pathetic
> so called patriotic americans going to wake up? when there's no manufacturing
> base left in this country. Keep driving your Toyota's with your proud
> to be american stickers on the windows next to the american flag
> and think about Pearl Harbor or vietnam for a moment. WAKE UP!
>
> On Nov 12 05:09 PM Michael Dortch wrote:
Eleven (11) of the top twenty (20) selling vehicles in the USA are Detroit brands (6 from GM, 4 from Ford, and 1 from Chrysler). Yes, many are trucks, but tradesman, farmers, and cement workers need them to earn a living...and they would not rely on "junk" to do their jobs every day.
What's really crazy is that people like you post statements that are utterly baseless.
The UAW rank and file grudgingly approved a new contract in 2007 that takes away most of what they've gained in the past 50 years. Unfortunately, the new contract starts in 2010. It's unfortunate that the changes weren't made immediately.
Keep in mind that the old domestic auto industry has been shrinking for the past 30 years. Competition from the Asian and European transplants has increased quality and vehicle content while reducing price with respect to inflation. The D3 are producing better vehicles than they did in the 70's and 80's.
A bail out is not the answer. Loans to help stabilize the industry until the financial crisis is solved is what is needed. ALL of the Big Six automakers in the US had large decreases in year over year sales in October, not just the D 3. The problem won't be resolved until consumers regain their confidence. And no one knows how long that will take.
Look at the loan as a lifeline to keep the D3 afloat until the financial crisis levels off. Once everything has settled down, then pull the plug.
Accelerating the downward spiral we're already in will make it much more likely to cause a depression that even Helicopter Ben might not be able to save us from.
I'm worried about taxpayer money being used to pick winners and losers among private industry. How do we decide who to help and who not to help? Where was the bailout for, say, Circuit City? The banks were one thing because the government has authority in that area but where do we stop when we decide to help private industry? What if everybody comes forward with their hand out?
By the way, what about Chrysler? They are owned by a private equity company, why should the taxpayers loan them money. Shouldn't the private equity company raise money to help Chrysler since it's their investment? Isn't re-capitalization what they do? They just bought Chrysler I think that it's their problem. Chrysler certainly shouldn't get any government help until their parent company has given every last penny to the effort.
Detroit was on a path for RECOVERY and health this year based on aggressive cost cutting, white collar buyouts. natural attrition and launching new vehicle platforms that would produce higher profits with MUCH higher fuel econony even compared to the Japanese car makers.
Let's first recall how the gasoline prices were artificially inflated over the past year. There was no REAL change in demand and but there was a REAL change in supply by the foreign oil producers as far back as December 2006 when they cut output, which drove up prices. This past summer when gasoline prices max'd out at over $4.00 at the pump all the GREEN folks cried "the SKY is Falling, the SKY is Falling..." and the media just rode that wave along with the rest of the "believe anything" market. The investors that snapped up the futures contracts amidst a sharply rising market are to blame for the ultimate spike in fuel prices because they were able to sell them quickly for a profit. Then when the prices hit their high point as a result of Americans cutting fuel consumption, there were a ton of contracts flooded into the market. Now with over supply in the market, we have seen fuel prices drop like a brick to below $1.99/gallon (I am happy about this myself). So where are all of the GREEN folks today???? I guess they loved having an idicator that proved their falicy about the HUMAN race over consuming our natural resources to death.
So this spike in fuel is the culprit for killing the market. Had fuel prices not artificially spiked, we would not likely have this debate today. While I have long scratched my head at the actions of the Big 3 management, I can assuredly say that their efforts are well planned and executed, but this market condition has exceeded EVERYBODY'S worst case plans upstaged their efforts.
We can also blame our Democratic friends on Congress that allowed the Banks to go after subprime mortgages. Wall Street and its greed has more to do with the current condition than anybody. Yes, the Wall Street folks wanted a measly $700B to line their pockets, I mean bailout their ailing institutions just to keep things going, but Automotive which is the backbone of industry and drives and employs the majority of America is not worth it. Let's just throw those Automotive people on the streets... I DISAGREE!
The Big 3 negotiated $25B IN LOANS a few months ago with the government as a result of the worldwide crash. THESE ARE NOT HANDOUTS AS THEY ARE TO WALL STREET. They want access sooner rather than whenever Congress gets around to it.
There is no doubt that the Big 3 have not payed attention in past years to the needs and desires of consumers on the styling side, but you absolutely cannot say that just because the Japanese have a hybrid vehicle that it will save the USA! Americans have much more diverse needs and resources when buying a car than just fuel economy. So I disagree that they are behind the ball as both Ford and GM have hybrids AND very fuel efficient larger vehicles with the cylinder deactivation systems. Just because they don't pander to the GREEN folks, does not mean they are indifferent to fuel economy.
Why don't you ever blame John Q. Public for being the ones that BUY the big trucks? If they were NOT so popular and were so evil, than why have so many people bought them??? The answer is because the Big 3 does a great job on those vehicles and Americans LOVE THEM. Even Toyota and Nissan are on that bandwagon.
The comments in the blog above about prices being too high are laughable. If you look at the technology offered in the vehicles today vs. the price and then adjust it to 1984 or 1970 dollars, the value of a vehicle is off the charts today. Complainers also should look at their increased salaries since 1984 or 1970 and compare their vehicle choices and technology as a percentage of income and they would see that they are greatly better off now than before.
Be careful when you folks in the media write opinionated articles and mix Micro outcomes with Macro events and make statements that further pump up the uninformed, but happy to complain crowd.
Enough of the ill informed articles and comments pointing the finger at GM management and the other American automotive manufactures management for getting into a position where they need money to survive.
Point One: Huge Spike in the Price of Oil
The ongoing failure of the US economic system was NOT initiated by a failure of American automotive manufactures to sell vehicles, it was initiated by high oil prices. According to OPEC, oil prices should NEVER have been that high, hence, they were very likely high because someone was gaming the price of oil. This is called cornering the market. Who did this, and why did they do this? Someone needs to figure that out, but I would not be surprised if the motivation was unbridled greed. An alternative explanation could involve the influence of US Enemies. Enemies that control vast amounts of capital. Is the failure of the US economic system the October Surprise? No matter what, the oil pricing bubble should be thoroughly studied as a national security priority.
With respect to the American automotive industry, they made their business decisions on mathematical models that reflected a free market oil price. Oil prices went through the roof, and people could not afford to run large vehicles anymore. Sales began to decline.
Point Two: The US financial system meltdown.
Special interest groups wanted to increase the base of home owners in the US. This would be a natural objective for builders of new homes, and of course the banking/ mortgage industry. So through special interest political influence they made it easer for people to obtain mortgages. This substantially increased the demand for homes. It also increased the immediate risk of foreclosure. In order to dilute that risk over a greater period of time, the banking/ mortgage industry created a host of new financial instruments that made it easy to acquire a new home, with interest increases scheduled years into the future… and the beat when on…
People bought into these flimflam mortgages on the basis of what was happening to the market value of homes. Because a much larger portion of the population could now afford a new home, we had a housing shortage. Stepping up the plate was the banking/ mortgage industries hand-maiden, the housing manufacturing industry. Given the large population of new qualified potential home owners, they started manufacturing new homes as if there was no limit. After several years, the supply of new manufactured homes was more than enough to meet the current demand. So what did the home manufacturing industry do? They built more new homes. As supply continued to increase, market values started to drop. Meanwhile, the banking/ mortgage industry was starting to run out of even remotely qualified buyers, so they dropped the lending standards even more… and the beat when on…
Enter the Wall Street investment bankers who started buying the mortgages and packaging them as derivatives. The stock rating companies, pawns of the investment bankers rated the derivatives as investment quality, and the beat went on... Of course, artificial price inflation can't continue forever, so the inevitable happened. Housing values started to drop, and the number of foreclosures sharply increased..
The banking/ mortgage industry that created these flimflam mortgages is not stupid. No business in their right mind would do this because they would have to know that the risk for these investments was increasing. So how did they escape a major portion of these risky loans? Enter the next player in our story. The mortgages were sold to Fannie May and Fannie Mac. Loosely regulated pseudo government companies who's policies are influenced by political considerations often influenced by the special interest groups. They bought the paper, no questions asked. This freed up capital for the mortgage companies to create and sell yet more flimflam mortgages.
A Ponzi Scheme.
People that wanted to purchase homes did not create adjustable rate mortgages. When people came in the door wanting to buy that new house, and they were NOT qualified for a traditional mortgage, this bunch of bottom feeders sold them a flimflam mortgage plan. They told these people that housing value were going up. Of course the future home owner did not know that the people selling them these flimflam mortgages were the very people that were responsible for the creation of the speculative real estate bubble in the first place. They told these people that when it came time for the mortgage to adjust upward, all they had to do was refinance. It seems that the flimflam mortgage plan is actually a version of the Ponzi scheme. The idea was to sell a person using a low initial interest rate (THE HOOK). Then, when they introduced the fact that the interest rate would adjust after some period of time, they would point out that ONE) it could adjust downwards, or TWO) that if it did go up, they could just refinance the loan with the profits made due to the influence of the speculative bubble the mortgage industry created (THE SWEETENER). So money from a speculative refinance is used to pay down the original investment, leading to a less expensive mortgage.
So how does the American automotive industry enter into this mess. Simple, heavy industry needs capital to run. When the US financial markets collapsed, the availability of that capital, the life line of heavy manufacturing was gone. Add to that the effects of an artificially created banking/ mortgage/ housing industries speculative bubble, a bubble that is mostly the fault of the influence of special interest groups, the unmitigated greed of the mortgage and home building industry, and the unparallel stupidity of the pseudo government agencies, THE FANNIES, the American people end up in the position of being systematically swindled. Add to this the appearance of a large speculative bubble in oil prices of mysterious origins, and it appears that the American automotive industry along with the American people have been victims of a what appears to be a swindle on a grand scale.
None of my tax money, please!
1. Which country can boast that their brands occupy 2 of the top 3 spots for long-term reliability?
a. Germany
b. Japan
c. Korea
d. United States
2. As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?
a. Chrysler
b. Ford
c. GM
d. Nissan
e. Toyota
f. Volkswagen
3. Pick the brand from each group that has the highest initial quality.
a. Acura, BMW, Cadillac (all luxury makes)
b. Honda, Mercury, Nissan (all non-luxury makes)
c. Acura (lux), Chevrolet (non-lux), BMW (lux), Mazda (non-lux)
4. Which midsize sedan has the highest initial quality?
a. Accord (Honda)
b. Altima (Nissan)
c. Camry (Toyota)
d. Malibu (Chevrolet)
5. Which large sedan has the highest initial quality?
a. Avalon (Toyota)
b. Grand Prix (Pontiac)
c. Sable (Mercury)
6. Which midsize pickup has the highest initial quality?
a. Dakota (Dodge)
b. Ranger (Ford)
c. Tacoma (Toyota)
7. Which car is the most economical overall?
a. Aveo (Chevrolet)
b. Fit (Honda)
c. Prius (Toyota)
8. Which car did the LA Times describe as “a better car than BMW or Mercedes or Lexus or Infiniti”?
a. A6 (Audi)
b. CTS (Cadillac)
c. RL (Acura)
9. Which company makes the winner of the 2008 “Green Car of the Year” award?
a. Chevrolet
b. Honda
c. Toyota
10. Which car was selected by the North American automotive press corps as the “North American Car of the Year” for 2007?
a. Aura (Saturn)
b. Camry (Toyota)
c. Fit (Honda)
11. Which car won the same award for 2008?
a. Accord (Honda)
b. Altima coupe (Nissan)
c. Malibu (Chevrolet)
12. Which company had a luxury vehicle, a midsize sedan, and a large truck removed from the Consumer Reports recommended vehicles list in October 2007 because of mounting quality problems?
a. Chrysler
b. Ford
c. General Motors
d. Hyundai
e. Toyota
f. Volkswagen
ANSWERS:
1. Which country can boast that their brands occupy 2 of the top 3 spots for long-term reliability?
Answer: United States.
Per J.D. Power Vehicle Dependability Study, Mercury and Cadillac are in the top 3, along with Lexus. And in 2007, Buick was tied with Lexus for the top spot.
www.jdpower.com/corpor...
2. As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?
Answer: Volkswagen.
According to Business Week, Volkswagen had the most recalls at this time a year ago. The second worst was Toyota.
www.businessweek.com/a...
3. Pick the brand from each group that has the highest initial quality.
a. Answer : Cadillac (better than both Acura and BMW)
b. Answer: Mercury (better than both Honda and Nissan)
c. Answer: Chevrolet (better than Acura, BMW, and Mazda)
This is according to J.D. Power’s Initial Quality Survey.
www.jdpower.com/corpor...
4. Which midsize sedan has the highest initial quality?
Answer: The Chevrolet Malibu has better initial quality than any competitor, including the Honda Accord, Toyota Camry and Nissan Altima. The Ford Fusion also beat all 3 Japanese competitors.
This too is from the J.D. Power Initial Quality Survey, which also reveals that above average are American brands Mercury, Ford, Cadillac, Chevrolet , Pontiac, Lincoln, and Buick. Below average are import brands Acura, Kia, Nissan, BMW, Mazda, VW, Subaru, and Scion (and several others).
www.jdpower.com/autos/...
www.jdpower.com/corpor...
5. Which large sedan has the highest initial quality?
Answer: Again per J.D. Power, the highest quality large car is the Pontiac Grand Prix, beating the Toyota Avalon. Two other Detroit cars that beat the Avalon are the Mercury Sable and Mercury Grand Marquis.
www.jdpower.com/autos/...
6. Which midsize pickup has the highest initial quality?
Answer: The Dodge Dakota has the best quality for midsize pickups, proving that Chrysler too can beat the imports. Both the Dakota and the Ford Ranger beat the Toyota Tacoma.
www.jdpower.com/autos/...
7. Which car is the most economical overall?
Answer: Per Edmunds.com, the premier automotive analysis site, the most economical car in America, taking into account not only mileage but all costs, is the Chevrolet Aveo. The Honda Fit is #3 and the Toyota Prius is a distant #34.
www.edmunds.com/help/a...
8. Which car did the Los Angeles Times describe as “a better car than BMW or Mercedes or Lexus or Infiniti”?
Answer: “Cadillac makes a better car than BMW or Mercedes or Lexus or Infiniti, and that car is the 2008 CTS. No other car in the mass market dares so much as this expressive and audacious bit of automotive avant-gardism.” Dan Neil, LA Times.
www.latimes.com/classi...
9. Which company makes the winner of the 2008 “Green Car of the Year” award?
Answer: The Chevrolet Tahoe Hybrid is the winner of this award. How could a full-size SUV defeat the media darling Toyota Prius? Read the link below and you will discover, “What’s equally eye-opening is that the Tahoe’s 21 mpg city fuel efficiency rating is the same as that of the city EPA rating for the four-cylinder Toyota Camry sedan. ”
Did you catch that? A huge, full-size SUV from Chevrolet that gets the same city mileage as a 4-cylinder Toyota Camry!! Chevy obtained this remarkable achievement through the use of its 2-mode hybrid system, a technology that Toyota does not have.
www.greencar.com/featu.../
10. Which car was selected by the North American automotive press corps as the “North American Car of the Year” for 2007?
Answer: Not only was the Saturn Aura picked by the automotive press corps as better than the Honda Fit and the Toyota Camry, “When a panel of 47 journalists named the Saturn Aura the North American Car of the Year over the Toyota Camry, the vote wasn't even close, 205-89.” Chicago Tribune, 1/15/07
www.northamericancarof...
11. Which car won the same award for 2008?
Answer: GM again crushed the Japanese competition in 2008 when the Malibu received 190 votes to the Honda Accord’s 95. The Accord actually came in 3rd since GM’s other finalist, the Cadillac CTS, received 165 votes.
www.northamericancarof...
12. Which company had a luxury vehicle, a midsize sedan, and a large truck removed from the Consumer Reports recommended vehicles list in October 2007 because of mounting quality problems?
Answer: Toyota’s much publicized quality problems resulted in Consumer Reports actually removing from their recommended vehicles list the Lexus GS luxury car, Camry V6 sedan, and Tundra pickup. This demotion occurred in October 2007.
If you are one of the many Americans who gave up on Detroit’s cars because of a bad experience many years ago, it’s time to rethink your position. Rethink Detroit.
Detroit automakers: 79 U.S. jobs per 2,500 cars sold in America.
Foreign automakers: 33 U.S. jobs per 2,500 cars sold in America.
levelfieldinstitute.or.../
SHAME ON YOU!
WE NEED BUYNG POWER, NOT BORROWIN POWER.
SHAME ON YOU! ]
Turi;
My Dad is a WWII vet who fought the Japs in the Pacific. He drove American cars all his life and was loyal to Detroit. In his 80's, out of the blue he bought an American made Toyota Camry and he says it's the best car he's ever owned. He's had a lot of problems with American cars over the years. Some of the cars were good but some were just terrible. The last straw was a Chevy S-10 (a 2003 I believe) that had a defective transmission at less that 20,000 miles along with some other defects. I'm as American as the next guy but Detroit needs to work extra hard to get people to trust that their new cars are on par with some of the foreign makers. It's not the fault of consumers that Detroit made a lot of subpar vehicles over the years and drove their own customers away. I actually think that bankruptcy might be good for the Big-3 because maybe after they are reorganized people will believe that things are different and give them another chance.
Unfortunately there is no analgesic that will alleviate it.
You're probably too young to remember when the US was a cheap offshore resource for European nations burdened with expensive raw materials and labor. Later on (much much later) the NAFTA shafta was followed by the drip drip drip FLOOD of cheap Chinese imports.
As Carole King famously sang: "And it's too late baby, now it's too late. Though we really did try to make it".
I guess it doesn't matter though. You'll wake up tomorrow and get coffee from ur foreign coffee maker, watch the news on ur foreign made T.V., drive ur kids to school and go to ur service sector job in ur foreign car. When you get home at night, you can rest easy knowing that, even though the manufacturing foundation of this country is eroding from under our feet, you saved some short term money by buying that toyota prius. Congratulations! At least ur service sector job will always be there right? Whoops...just got outsourced to China? See ya in the unemployment line, Jackass!!!
GM's losses have been in the BILLIONS since 2005, and they've still been paying out $500m-$1.1B in dividends yearly. Sounds like brilliant management to me.
And as for your "patriotism" comment, I'm a two tour veteran of the Iraq war, and contempt for Detroit has nothing to do with loving you country.
We all know that a smaller version of these companies needs to survive but it will need to be done in a manner that will provide the best result. I would recommend a Chapter 11 with a government appointed receiver
that would also provide financing to help these companies houses in order.
Mgt - Removed, clearly they have not made the best decisions
Unions - live with less restricionts and fewer workers. this is capitalism not socialism. The remaining workers should get a fair shake and the workers that are departing need a good way to get back into new jobs too.
No easy answers here but capitalism requires that you succeed or fail.
We have to admit there is a problem and it needs to be fixed and innocent people will suffer. There is no getting around it. It happens in all American businesses.
We cannot keep throwing money at these companies with the same leadership teams and expect a positive result.
On Nov 12 11:34 PM John Cash wrote:
> This is a bad union contract bailout. Yes these companies should
> be allowed to declare insolvency. They are backward and corrupt,
> especially GM, where suppliers pay huge sums to bribe their way in.
> Ford stopped listening to its customers long ago. I never understood
> why. If they reorganize, they can reduce their contract obligations.
> If they fail, we can get along fine with the other car companies
> that manufacture in the US. They are mostly in non-union states and
> operate profitably. These other companies do not build riduculous
> vehicles like a hybrid Yukon that still have poor mileage. We will
> be back here in one year bailing out these loosers again.
On Nov 12 08:17 PM foolishmac wrote:
> Let them go to Chap 11 and have a bankruptcy judge clean house.
>
> None of my tax money, please!
I am writing in hopes of gaining your support for the American auto
industry in general and General Motors specifically. I would appreciate your
efforts in helping our industry with a bridge loan to help through this credit
crisis. I have put together some facts and thoughts that could be useful in
your decision making process. Right now the financial analyst have down
graded GM’s corporate rating to less than junk. Just 6 months ago this was
not the case. It’s a problem that feeds on itself. If GM can secure capital to
fund operations through 2009 they should be in a position to ride out the
current recession and auto sales should rebound back and cash flow would be in
the positive again. Some people say GM doesn’t build cars that people want
and that is just not true, up until this year GM was the largest auto manufacturer
in the world and sold the most vehicles, so that argument doesn’t hold water.
Also in 2010 GM has set up to move the retirement load from its books to
the UAW which will make GM’s overhead per car in line with other manufacturers.
The talk on the street is how uncompetitive GM is but if they can hold on until
2010 this will not be the case. What GM needs is a government backed loan for
operating capital to get through the next year, just like we did for Chrysler, and
when the business turns, as it will, then the loans are paid back with interest and
GM remains a private enterprise, just like Chrysler did. Once a plan is in place
and the financial analysts see that GM has a plan and sales come back with the cash
flow then the corporate investment rating will improve and the credit crisis should be
over and GM will take advantage of the private sector once again as it always has done.
There are some who say we should let private business live or die on their own but I disagree with this. We have become more and more a service based economy
and if we lose the auto manufactures we will have lost our manufacturing backbone.
If circumstances were to present themselves as they did during World War II and we
no longer owned or controlled a manufacturing base we may be reliant upon another
country for tanks and planes and that would not be a good position to be in. Plus up to
3,000,000 jobs are connected to the auto industry, mine being one of them, and this could
drive unemployment past 10% and increase and prolong the recession if GM were to go
under today. Our economy is based on consumer confidence and consumer spending. We need the leadership of this country to back GM, give people the confidence that everything is going to be all right and believe or not, it will.
Sincerely
Mitch Mayberry
Van Matre Buick Pontiac GMC Cadillac
Sales Mgr. and Business Mgr.
Do you think we should bail out those financial corporations who already pocketed our blood sucking money got rich and enjoying their sumptuous life? Why not automaker? At least they are making something Made in America and providing millions of jobs. You people...........if you don’t buy American car then you should be ashamed by yourself. How can they have money for doing research to innovate something? Pharmaceutical companies invest millions of dollar to do research and later on they suck money from us by selling their products with very high price. Nobody says anything. But when one auto-company innovate something……..later on everybody copycat within the very next year. Who is protecting their innovation like drug companies for 10years? And you are not paying much for their new innovations.
On Nov 12 05:09 PM Michael Dortch wrote:
> We should not bail the automakers. These people put themselves in
> the ring of fire!!! Does anyone stop and help the little guy that
> pays way to much for a car or a truck!! Hell no they say sorry U
> LOSE!!! Help the people that needs the help frist the American Taxpayer.
> Is there a reason why a factory worker that has been doing to same
> job needs to make 73 a hour. He not learning anything new just where
> to put the bolt where it needs to go. My god you can teach a 12 year
> old to run these factorys now days.
If the Electronic Car (documentary worth watching) offered so much hope for our environment but was squashed by the Big auto guys, why not incent posititive behavior. But stop paying off the corps.
How can we continue to bailout failed practices and simultaneously cut medical coverage for children and the disabled on the same day?!?!?
On Nov 12 05:52 PM User 297006 wrote:
> How about you get your fact straight?
> The ONLY reason why Japanese/Korean/Europe... cars cost more is because
> of tariffs - you know, a little thing that the government slaps on
> imports to keep the cost similar to domestic products?
>
> Isn't it crazy that people are still willing to pay extra for imports
> while passing the junk coming out of Detroit?
>
> BTW, no one is vouching for the TARP either. This column is specifying
> that Detroit is a money pit that the government would not be able
> to fix!
10000 jobs, $100 billion bailout ($10,000,000 per single job)
Approved
GM, Ford and Chrysler
240000 jobs, $25 billion bailout ($100,000 per single job)
Rejected
We may all be created equal, but it appears some people with Washington connections are created more equal than others.
I would argue that the #1 failure of GM, Ford and Chrysler was not contribute enough during the past two election campaigns.
On Nov 12 05:09 PM Michael Dortch wrote:
> We should not bail the automakers. These people put themselves in
> the ring of fire!!! Does anyone stop and help the little guy that
> pays way to much for a car or a truck!! Hell no they say sorry U
> LOSE!!! Help the people that needs the help frist the American Taxpayer.
> Is there a reason why a factory worker that has been doing to same
> job needs to make 73 a hour. He not learning anything new just where
> to put the bolt where it needs to go. My god you can teach a 12 year
> old to run these factorys now days.