Should the US Government (Taxpayers) Bail Out the Big Three?

[Scott Calabro]

Originally Posted by iank2112

Except American, Delta, United and US Air seemed to get free handouts from the
government all of the time to keep them afloat after the aforementioned
airlines went out of business. And yet Amtrak funding gets cut and threatened to
be eliminated completely on a regular basis.

Ian

I don't agree with those "Handouts" either.

S

[David Briggs]

No easy answer here, it cost more to manufacture anything here in the US.
There are lots of reasons why but I think that too many foriegn companies are given a free pass with the Free Trade iniatives and our home grown companies are taxed and regulated to death.
When a product can be manufactured in South Africa (or China, India etc), where everything has to be shipped there and assembled and then shipped back to the US and still cost less that making it here where we have the materials, workers, plants and the market some thing is very wrong.
People should be incentized to buy US and US companies should receive tax breaks for building new plants and creating jobs.
Job creation is what is going to lift us out of this mess, more working, more consumers =
more tax revenue, better social programs, more pride in US.
We need to keep more of our productivity here and export less technology and fewer jobs.
Not every one in the US needs to be doing service work, the jobs that pay well are in making products that people all over the world can use, we should stop ceding those jobs and skills to the rest of the world.

[SpyderMike]

The big 3 are failing because the build crap we don't need or want. Let the friggin oil companies bail them out...they have the most to lose.

The big 3 have had plenty of time to build what is needed for us customers...they have been poorly managed by dinosaurs. Let them die and turn into oil.

Mike

[Ron Earp]

The UAW Isn't Buying Detroit's Blues

Old Union article from 2005 discussing UAW salaries when talks were underway. $60 an hour for a line worker!

Nowadays it seems around $27-$30 hour, but pensions are included, and good health insurance. At a 2000 hr work week that is $54000 to $60000 per year gross. Toyota's non-union worker earn more but I understand they don't have the long term pension/health benefits that were put in place 15,20,30 years ago that really take their toil on a company.

What the wages are now is important, but the legacy and the impact of wages/benefits of previous years is what brought this situation on.

[Ian K]

The agreements hammered out by the UAW and the Big Three come into effect in 2010.
The Big Three are asking for about $25 billion loan to hold them over until those new
contract come into play, and with the hopes that the economy will turn around. There
will be some slimming down as well, so that if car buying picks up again in 2010, the Big
Three will be more streamlined and fit the current market needs.

Bankruptcy is not really an option, even Chapter 11. Consumers would be very wary
about buying a vehicle from a manufacturer under Chapter 11, concerned about
warranty and resale value. Also, given the current credit crunch, filing Chapter 11
would require them to find backers to finance them during the reorg - that will be
no small task. If the Big Three fail, not only will the approximately 1.6 million jobs tied
directly the them become unemployed, but 1.4 - 1.7 million jobs tied indirectly will
also be out of work in the first year. And, add to that, about 2 million people who
have their health insurance provided directly by the Big Three will be left high and
dry.

Ian

[chuck smith]

I am not sure what congress is supposed to do about gas prices as someone else suggested, except perhaps encourage more oil exploration. The big three are broken and more of my and your money is not going to change that. A fundamental change in philosophy is needed from top to bottom. How is it that Toyota, BMW, Nissan,Mercedes, all companies with production in the US remain so solvent? How is it that they changed the American mindset to view their cars as better? Why do you not hear outrage from their employees about poor wages and working conditions.

[Bill Musarra]

I say let them file bankruptcy. Here are my reasons.
1. The unions have been causing the majority of the problems supported by the government who the unions support with their lobbyist.
2. Most forget that when they file for bankruptcy, they are allowed to keep working while they work out the reorganization. Nobody looses a job.
3. With bankruptcy, the contracts that are in place with the unions are dissolved and have to be re negotiated. That will set the bar for wages and benefits for all the union members, and you can bet that they will be more in line with the industry standard(read not U S).This will also open the door on management salaries as well. The unions fear this the most along with loing the power they currently hold on the congressional members in their pockets.
4. When you have the wrong business model and you blindly follow it until run into the ground, you will go straight into bankrupcy, forcing you to adopt a new model that is fitting the times. I know Delta because they were Atlanta based. They did lose a good nuimber of jobs, because they had to become more efficient and get rid of the long time employees making way too much. Everyone that goes through bankrupcy has to cut their cost. Some will get hurt but they are better for it. Look at Delta today. They reorganized, rebuilt, changed their business model. They were originally modeled to go after the business raveler. When the fuel crisis hit the fan in the 80s the business traveler stopped traveling. Technology saw this and came up with the virtual meetings etc. and the companys saved money. Discounter airlines sprung up and gave them a run for their money. Guess who lost.... Delta, because they wouldn't chanbge their business model. They thought the business traveler would come back when all the dust settled. Guess who was wrong..... Delta again. As a result they filed for bankrupcy when they tried to change with the merging of ????? I forget, but the fact is that they tried too late with no working capital. They had sustained loses for too long and for too much.
The flying public loved Delta. They gave great service, were on time more than an other airline, and continued to use Delta during the reorganization. Delta was able to make their comeback like gangbusters. Delta has just become the largest airline in the world with their latest purchase.
The big three, or at least GM can do the same if they get their house in order under bankrupcy protection. When you hear about Delta now, you don't hear a thing about the unions like you use to.
The unions are the loudest on the bailout because they have the most to lose.
Maybe this is an easy solution. Let the UAW bail out the automakers with a majority stake in the ownership. Let's see how they run the company then???????

Bill

[Al Jones]

Think about it - if any one of the big three goes down the tube,Fran wil be one of the big three in Michigan! A.J.

[Ian Anderson]

I recon it will be like Rover
Sold to / merge with others
Be asset stripped by the financiers
Go into receivership
Be sold to China

Then China will make you cars and sell them back to USA
China is then securing their workforce jobs for the future and buying he technology that has been developed elsewhere.
Meantime USA will lose the jobs

I don't know if it is correct to bail them out but the alternative is not pretty!

Ian

[fostereast]

I think it's more complcated than the front end question.

Example: How much would it cost to put all those people on unemployment, welfare and medicaid/medicare, and then give them Soc Sec... that they did not pay into.

Also, as long as our government turns a blind eye to the BS China gets away with in slave labor, environmental destruction and artificially manipulating its currency, we can't compete.

Also the big three have had 40 years of turning a blind eye to these union issues and it can't be fixed easily as lowering new guys' wages.

JMO

[David Sturch]

Just to let you guys know. I retired from GM of C about a year and a half ago and I am getting worrried. One in seven jobs is associated to the auto industry. The big three have been around for a hundred years and have a large base of retirees. The Japanese manufacturers in North America do not. The cost of building and wages are on parr with with just about everyone except in Mexico. They pay about US 2.50 an hour there. The labour costs are about 7-12% of the price or cost of the vehicle. The quality and wages are the same as far as I'm concerned for Domestic and Foreign Vehicles. Mind you the Management is a lot lighter in the Japanese and Korean Manufactures. Part of the problem is US Health care cost and benefits and many retirees have lost those aready and the finacial sector colapse manly based on greed. So buy the cars your neighbors help build.

[Brian Hamilton]

I have a great idea. This will help Ford. My friend and I were talking about it just a little bit ago. Ford needs more economical and fun cars. They are sending the turbo Focus to Europe with nothing even close to that here in the US. Australia has FPV vehicles, Ford just lost out on Police fleet contracts since they discontinued the Crown Victoria. Why not bring over the FPV Falcon or GT and get that fleet contract back? There are many MANY poor decisions made by management that have caused this problem and now it's effecting everyone negatively. If Ford goes out of business, what kind of new engines will we be putting in our toys?! 5.7L Toyota V8's?

[Freewheel]

Originally Posted by Conquest351

I have a great idea. This will help Ford. My friend and I were talking about it just a little bit ago. Ford needs more economical and fun cars. They are sending the turbo Focus to Europe with nothing even close to that here in the US. Australia has FPV vehicles, Ford just lost out on Police fleet contracts since they discontinued the Crown Victoria. Why not bring over the FPV Falcon or GT and get that fleet contract back? There are many MANY poor decisions made by management that have caused this problem and now it's effecting everyone negatively. If Ford goes out of business, what kind of new engines will we be putting in our toys?! 5.7L Toyota V8's?

In Australia, as far as anybody can tell, the local wings of Ford and GM are turning black numbers.

Ford is more vulnerable, because Ford USA refuses to let them export the Falcon (never made in LHD) to anywhere other than New Zealand (although after the embarrassment of the Capri in the last 80's that's understandable, but times have well and truly changed). Ford Australia will be closing it's engine shop in 2011 (I think) and importing engines from the US - if there are any left to import.

Holden, aside from exporting complete cars to Europe, the US and the middle east, has a long history of indigenous engine design & manufacture (including a legendary v8) and builds the ecotec 6 cylinder engines for GM, SAAB, Opel & Vauxhall and was developing a related 12 until recently.

Both Ford and GM (and toyota for that matter) have profitable divisions here, it must be said, with substantial local government support and production capacity. The platform developed for the latest commodore was supposed to be the base for the entire world's GM RWD cars of the next decade, but who knows whether they'll build any now?

Somewhat selfishly therefore, my answer is no - they can become importers of quality Oz made products instead!

[David Sturch]

Freewheel,
We in Canada were in the black too. We helped developed a lot of processses in paint when I was in the Paintshop in Truckplant in Oshawa(closing soon). Processes that are used by every manufacturer today.(waterborne base ,clear)(Bink Sames cansiter delivery system now owned by Fanuc) The problem is they are American Owned Companies. All the shots are called out of Detroit no matter what country your in.
Dave

[Freewheel]

Originally Posted by A-tomic

Freewheel,
We in Canada were in the black too. We helped developed a lot of processses in paint when I was in the Paintshop in Truckplant in Oshawa(closing soon). Processes that are used by every manufacturer today.(waterborne base ,clear)(Bink Sames cansiter delivery system now owned by Fanuc) The problem is they are American Owned Companies. All the shots are called out of Detroit no matter what country your in.
Dave

Aye, the devil on the shoulder told me it would all go to ruin care of the receivers.


My neighbour is a helicopter guy (who lusts after P4's as well - has a very nice model collection) and he tells me that Bell (run from Dallas) moved their production to Canada and have refused to invest in significant airframe development since the 70's. They therefore still make airframes based on the Huey (1958 or so), the Jetranger (1966) and something else that has it's origins in 1975ish. They built 2 of the west's most common choppers and now they're now in big, big trouble.

[Kalun D]

This poll is titled wrong, it's not a bailout. The banks and mortgage companies, that's a bailout, read giveaway. And they won't even say who they're giving it to.

The big 3 thing is a loan, just like Chrysler in the 80's and they paid it back in 3 years with interest.

The unions are only part of the problem. The costs of health care are big and poor management. Detroit management is top down, they don't listen to anybody. The Japanese are just the opposite, they encourage everyone to participate right down to the person on the line, who is the expert at what he does.

That and the CEO's have gone for the short term profits at the expense of long term and the long term is here. They ignored coming energy problems and kept cranking out the gas hogs without any new R&D, the Japanese are 10 years ahead on hybrid technology.

Another big problem is tariffs. Our goods sold in China have a 20% tariff across the board, we have ZERO tariff on their goods sold here. Japan is similar. How can you compete with that?

ALL YOU UNION BASHERS NEED TO MOVE TO CHINA, they don't have any Unions there, you guys won't mind working for $1.00 per hour right? The Unions are the reason this country is great for the middle class. They represent the working mans voice, you have no voice any other way.

Without Unions we wouldn't have the 5 day, 40 hr week, or overtime pay, or any benefits.

[Al Jones]

Kalun - In reference to your 1st paragraph.It was mentioned on tonight's news (both ABC AND Fox so we don't have anyone screaming left or right wing) that, of the 700 billion allocated for the 'bailout',half of it has now been distributed to the banks without one mortgage saved(yes,folks,I know some loans were made that should not have been) but more on the money's actual purpose, no loans are being generated from it.They're just sitting on it, while Paulson keeps telling us to stay patient and AIG has another party on us.

[domtoni]

From Automotive News 18 November 2008.

Note the concluding paragraph.

Dom

THE AUTO INDUSTRY BAILOUT


Mulally: Inaction on auto aid threatens U.S. economy


Wagoner: 'We will repay the taxpayer's faith'


Harry Stoffer
Automotive News
November 18, 2008 - 3:00 pm ET
UPDATED: 11/18/08 3:50 p.m. EST


WASHINGTON -- Ford Motor Co. CEO Alan Mulally warned today that a government failure to aid the auto industry would create "tremendous risks to our already fragile economy."
Avoiding those risks is in the "public interest" that Congress would serve by providing emergency loans to automakers, Mulally said.
Mulally called on Congress "not to think of individual companies but rather of the industry -- and the economy -- as a whole."
The remarks came in prepared testimony Mulally was scheduled to deliver today to the Senate Banking Committee. The committee is holding a hearing on legislation that would provide $25 billion in loans to automakers and suppliers.
Similar bills before the Senate and House would provide the loans, but their fate is uncertain. Votes are expected this week.
Also scheduled to testify today's hearing are General Motors CEO Rick Wagoner, Chrysler LLC CEO Bob Nardelli, UAW President Ron Gettelfinger and Sen. Debbie Stabenow, D-Mich.
No guarantees
In his prepared statement, Mulally said he has heard a lot of criticism of the Detroit 3 in recent weeks -- mainly that the companies have a business model that no longer works, and that they must be restructured.
He contended that Ford is pursuing a "complete transformation of our company" -- closing plants, shedding employees, introducing more fuel-efficient models, negotiating a cost-saving labor agreement and selling assets to raise cash.
Wagoner's prepared testimony outlined similar restructuring steps. He said: "What exposes us to failure now is not our product lineup or our business plan or our long-term strategy. What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II."
Wagoner said GM has cut its North American costs by $9 billion, or 23 percent, since 2005. He said GM's new UAW contract will bring another $3 billion to $4 billion in savings by 2011.
Next year, Wagoner noted, GM will offer 20 models in the United States that get 30 mpg on the highway. "We've moved aggressively in recent years to position GM for long-term success," he said.
Mulally's said Ford executives "are hopeful that we have enough liquidity based on current planning assumptions and planned cash improvement actions, but we also know that we live in tumultuous economic times in which rapid and unexpected change seems to be the norm rather than the exception."
He suggested that Ford might weather the current downturn without emergency aid, but said there is no guarantee.
Mulally said the failure of any of the Detroit 3 could bring down the entire industry, including suppliers and dealers, and affect as many as 3 million jobs. "There are very few isolated events in our industry," he said.
He noted that even import-brand automakers have suffered amid dramatically declining sales -- a drop equal to about 5 million vehicles annually.
GM has warned that without financial help by year end, it soon would lack the minimum amount of cash it needs to sustain operations.
In today's remarks, Wagoner pledged that if government helps automakers through the crisis, "We will repay the taxpayer's faith and support many times over, for many years to come."
Cerberus will 'forgo any benefit from the upside'
Also today, Chrysler LLC Chairman Bob Nardelli said in his testimony that Cerberus Capital Management LP, Chrysler's majority owner, would "forgo any benefit from the upside that would, in part, be created from any government assistance Chrysler LLC may obtain."
Nardelli also said Chrysler, the only privately held volume carmaker, is "willing to provide full financial transparency and welcome the government as a stakeholder."
Without immediate assistance, "Chrysler's liquidity could fall below the level necessary to sustain operations," he said. Such a scenario would mean Chrysler might not be able to meet its $20 billion annual health care obligation, its $2 billion annual pension contribution to retirees, $7 billion in current payables, $35 billion in future supplier business and the $6 billion in wages it pays 56,600 direct employees, Nardelli's testimony stated.
Brad Wernle contributed to this story

[Rick Muck- Mark IV]

Originally Posted by Conquest351

Ford just lost out on Police fleet contracts since they discontinued the Crown Victoria

Huh? THe Crown Vic is still built, I just delivered a Police Department several. In fact, the CVPI (Crown Victoria Police Interceptor) is in the product cycle through the 2011 model year. The Civilian, non-fleet Crown has been discontinued (you gotta buy a Mercury Grand Maquis instead, and you must move to Florida and wear white belts and shoes, but that's another issue) so keep watching your 6 for that grille........................

[Wilby]

Lets pretend, i'm a happily married man with a wife and 2 kids,i'm doing pretty well for myself making mid 6 figures.I go out and buy a house of our dreams 5000sf maybe,couple of cars maybe a nice Benz for the wife an F car for me plus a Land Rover for family transportation.Then run up about 10k on the old platinum card and then.....the unthinkable,stock prices drop,oil prices skyrocket, out of work due to downsizing,can't find a job that will pay any more than 50k and i'm upside down in major debt.Now, due to these rather bad decisions on my part,YOU are asked to bail me out,pay for my problems, and by doing this you will be helping out AMERICA,afterall i am an American citizen,taxpayer and overall a nice guy.Now, we all know money grows on oak trees so its readily available,so lets help ol' Joe out,it won't cost us the taxpayer anything,and we'll feel better just knowing we helped out a fellow American and we know that when Joe is back on his feet he will return the favor,right?
Maybe a little oversimplified,but to me this is my take on bailing out the big 3.Let them fall,scrape their knees a little,get back up and build cars America needs at a price Americans can afford,bring the union wages back in line so the cars are more affordable and we won't have to send the work elsewhere to have it done by people whose yearly salary is the same as some UAW workers weekly salary.Hope i haven't ruffeled some ones feathers,just my $0.2 worth.
Bill