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Ford asks Washington for aid

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Yesterday, in a speech at the National Press Club, Bill Ford, CEO of Ford Motor Company, said that Washington, DC should provide incentives to the US auto industry so that they can invest in new innovations to provide more fuel-efficient vehicles.

See the US News & World Report article:

http://www.usnews.com/usnews/news/articles/051123/23ford.htm

and the BBC link:

http://news.bbc.co.uk/2/hi/business/4462130.stm

While I do not want to see the US auto industry completely collapse, to a certain extent, haven't they dug their own grave? Ford is CEO of the same company that has been marketing the Ford Excursion, an SUV the size of a small school bus and the SUV Bush owns at the Crawford ranch, and reaped billions (along w/ GM, et al) in profits building the environmentally destructive, fuel-inefficient SUVs for the last 15 years. This is the same industry that is producing vehicles that get fewer miles per gallon than they did 20 years ago (my first car was an '83 Olds Cutlass - not exactly a paragon of the environmental movement, yet more environmentally responsible than much of what's on the market today). Scientists have said that the technology is there, it's just a matter of implementing it. This is the same industry that has spent millions lobbying Congress and the White House to not raise CAFE standards. Perhaps, if they had put that money to better use, they wouldn't be in the position they find themselves in today. Toyota and Honda managed to bring hybrids to the market. Maybe they should hit up the oil industry to share some of their record profits instead of the taxpayers. Our deficit can't handle another hit like the Prescription Drug Bill billions give-away to the pharmaceutical industry or the billions given to the energy companies in the Transportation Bill. And, besides, if Detroit hadn't been building such gas-guzzlers for the last couple of decades, the Texas oil industry wouldn't be sitting so pretty right now - Detroit can argue it's their birthright! But, if Washington insists on more corporate welfare, they should give it to R&D start-up firms that can develop the technology in a manner that most serves the needs of the public, the environment and future generations and not just the needs of the automotive industry and federal government should insist on an aggressive increase in CAFE standards (otherwise, California, New York and other progressive states will do it for them).

Any thoughts?

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If all the big shots at these companies, who have been robbing the average worker forever, converted to minimum wage, or just plain quit, then I might be in favor of susidies.

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The Big 3 were selling so many SUV's because the demand was there. They did make good profits on these larger vehicles, but that was way offset by losses on smaller cars. None of the Big 3 have made consistently good profits for quite some time now. With that being said, I don't think the automakers should get any more help from the government. They are now selling products that fewer and fewer people want to buy, and they are unwilling to be bold enough to change that for fear of colosal failure. They should reap the consequences of those decisions. I think that their shrinking size may end up being a good thing, if it allows them to be more nimble, innovative and competitive.

My issue is that we'd buy a hybrid today, but they are way more expensive than the standard version of the same car. The Honda Accord hybrid is $10,000 more (pretty hard to justify). I know someone will say "isn't $10,000 worth it to help the environment and oil situation?" but if you don't have the extra $10,000, then what does it matter.

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It's clear that Ford (and GM) learned nothing from the 1970s. I've read that Honda executives are obsessed with fuel efficiency and have been for a long time. Such a concept is unknown in Detroit - why consider the future when you can sell H2s and Tahoes today? This is why they are losing market share.

Obviously the labor issues at Ford are big (too much money going toward benefits and wages compared to their competitors) but none of that matters if you cannot produce a product that sells. Honda and Toyota don't seem to need incentives to produce cars people want. It's ridiculous (but not surprising) for Ford to do this and I'm glad to see the feds have not given in - so far anyway.

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I think many countries indirectly subsidize their industries via having universal health care. The fact that America does not have universal health care passes the bulk of that cost onto the employers...which then adds to the cost of the product, which makes American manufacturers less competitive. If the government will not offer Universal Health care, I think that manufacturers of tradable goods are right to ask the government for tax breaks.

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If the government will not offer Universal Health care, I think that manufacturers of tradable goods are right to ask the government for tax breaks.

Are you aware that companies that offer health plans already recieve tax breaks? It's why many companies (especially small ones) offer ridiculously bad plans - it's still worth a tax break. To say they should get additional breaks is nonsense.

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I think many countries indirectly subsidize their industries via having universal health care. The fact that America does not have universal health care passes the bulk of that cost onto the employers...which then adds to the cost of the product, which makes American manufacturers less competitive. If the government will not offer Universal Health care, I think that manufacturers of tradable goods are right to ask the government for tax breaks.

Government tax breaks can't make up the losses from a product line that consumers don't like. Right now, gas guzzlers are the majority of the products that are coming out of American auto makers. That could have long since been planned for (our Asian competitors did it). Seriously... do we really need a $50K 500hp sport pickup truck?

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Government tax breaks can't make up the losses from a product line that consumers don't like. Right now, gas guzzlers are the majority of the products that are coming out of American auto makers. That could have long since been planned for (our Asian competitors did it). Seriously... do we really need a $50K 500hp sport pickup truck?

No one suggested that it would. My point is simply that nations with universal health care have a built in comparative advantage over American manufacturers whose product cost are bloated by high cost of health care. That

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No one suggested that it would. My point is simply that nations with universal health care have a built in comparative advantage over American manufacturers whose product cost are bloated by high cost of health care. That

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In addition to the perceived quality issue with American cars, the other inescapable issue is that they continue to build a mostly uninspired product line (as compared to their competitors) and the fact that the only way they've been able to move inventory is to deeply discount them or give 0% financing with thousands in cash back.

I don't agree with this. I think that Toyota's designs are the worst by a wide margin. Almost every car is a total bore and the ones that aren

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I have to agree that Toyota's linup is sucky at best. And their website stinks compared to other automakers. It's very cumbersome and difficult to build a car and price it out. Honda and Nissan, on the other hand, are much better. I've NEVER had to take a Honda into the shop, EVER. And we've owned three of them. I don't even know what the service department at the Honda dealer near us looks like :P Nissans that we have owned have had to go into the shop, but for small annoying problems than anything major. That's basically all we buy now. The quality issue with Honda is not perceived. They build an awesome automobile.

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Toyota, which is likely to overtake GM as the largest automaker in the world, makes close to 65% of the cars it sells in North America in North America. They pay competitive wages and offer competitive benefits (ie. health insurance), yet they are thriving to the point where they are planning to expand production here.

While the quality of American cars has improved to the point of practically equalling their Asian and European competitors, the perception problem was based in the reality that the quality was compromised for decades and to a certain extent, they've made their bed...Similarly, the hangover that they are experiencing now from their SUV binge of the last 15 years is a problem of their own making. In addition to the perceived quality issue with American cars, the other inescapable issue is that they continue to build a mostly uninspired product line (as compared to their competitors) and the fact that the only way they've been able to move inventory is to deeply discount them or give 0% financing with thousands in cash back.

Correct me if I'm wrong, but didn't Washington bail out Chrysler in the '80s? Is that the purpose of taxpayers, to bail out industry every time they screw up and fail to plan for the future? Hasn't corporate America been opposed to universal health care every time it has been proposed by Congress or an administration?

I think that it is the role of the government to recognize its vital interest and industries. You should understand the psychological impact of allowing companies like GM was once the largest company in the world and represented America strength through its high paying jobs, to collapse. The world would more and more see America as a falling economic power and seek to invest elsewhere and to dump those dollars they are holding as reserve currency. Economics is most profoundly a behavioral/psychological science where confidence or the lack there of, can make or break an economy.

I think the government does not necessarily have to bail out these companies for their mistakes (which all entities make by the way). However, the reverberating impact of the psychological fallout of the fall of these industries will eventually hurt the governments ability get revenues as such will hurt our economy and standard of living....which means lower tax revenues for the governments and its programs and wars.

PS....I don't think that it is wise to have so many of this country's assets and Jobs owned by foriengers. You might think that the Decline of GM, FORD is made up by the expansion of Toyota, Nissan and other foreign automakes with production in the US......but its not the same thing and it takes the control of ones fate out of their own hands and puts it in the hands of others. We are indepting ourselves to foreigners via loans, jobs and them buying up assets.

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I think that it is the role of the government to recognize its vital interest and industries. You should understand the psychological impact of allowing companies like GM was once the largest company in the world and represented America strength through its high paying jobs, to collapse. The world would more and more see America as a falling economic power and seek to invest elsewhere and to dump those dollars they are holding as reserve currency. Economics is most profoundly a behavioral/psychological science where confidence or the lack there of, can make or break an economy.

I think the government does not necessarily have to bail out these companies for their mistakes (which all entities make by the way). However, the reverberating impact of the psychological fallout of the fall of these industries will eventually hurt the governments ability get revenues as such will hurt our economy and standard of living....which means lower tax revenues for the governments and its programs and wars.

PS....I don't think that it is wise to have so many of this country's assets and Jobs owned by foriengers. You might think that the Decline of GM, FORD is made up by the expansion of Toyota, Nissan and other foreign automakes with production in the US......but its not the same thing and it takes the control of ones fate out of their own hands and puts it in the hands of others. We are indepting ourselves to foreigners via loans, jobs and them buying up assets.

I completely understand the psychological impact of the collapsing of local economies. I've seen it happen with the textiles industry among others in the South. I personally hate to think that WalMart has replaced GM as the largest company in America. I hate what that says about us as a society and an economy. And, I agree that it's not beneficial to allow foreign investors to own too many of our assets, but the reality of our economy is that foreign governments - most notably China - already have the ability to manipulate our economy by the shear fact that they have underwritten so much of our debt (witness the housing boom of the last few years).

My problem with the Big 3 is that they repeatedly shoot themselves in the foot. They refuse to learn from their past mistakes and now that they've dug their own grave they look to the taxpayers to save them. One of the Big 3 multi-nationals was my client for a year and a half. I met with senior VPs of several of the departments, the chairmen of each of their divisions, the CFO and CEO and was struck by what seemed to be their corporate mantra of timidity and always appealing to the lowest common denominator on every issue. They were incredibly short-sighted and were not willing to invest in long-term thinking but rather in short-term results (ie. putting money into SUVs and lobbyists on K Street to keep CAFE standard loopholes in place) instead of investing in alternative energy sources, more efficient engines, etc. I don't want to see Detroit go out of business, but at the same time, I have no confidence that they'll change from their status quo if they were to get a taxpayer bailout.

And, as far as falling tax revenues, the current administration and Congressional leadership does not seem to view that as a problem since they repeatedly spend astronomical amounts of money while cutting taxes and thereby strangling government revenue.

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I completely understand the psychological impact of the collapsing of local economies. I've seen it happen with the textiles industry among others in the South. I personally hate to think that WalMart has replaced GM as the largest company in America. I hate what that says about us as a society and an economy. And, I agree that it's not beneficial to allow foreign investors to own too many of our assets, but the reality of our economy is that foreign governments - most notably China - already have the ability to manipulate our economy by the shear fact that they have underwritten so much of our debt (witness the housing boom of the last few years).

My problem with the Big 3 is that they repeatedly shoot themselves in the foot. They refuse to learn from their past mistakes and now that they've dug their own grave they look to the taxpayers to save them. One of the Big 3 multi-nationals was my client for a year and a half. I met with senior VPs of several of the departments, the chairmen of each of their divisions, the CFO and CEO and was struck by what seemed to be their corporate mantra of timidity and always appealing to the lowest common denominator on every issue. They were incredibly short-sighted and were not willing to invest in long-term thinking but rather in short-term results (ie. putting money into SUVs and lobbyists on K Street to keep CAFE standard loopholes in place) instead of investing in alternative energy sources, more efficient engines, etc. I don't want to see Detroit go out of business, but at the same time, I have no confidence that they'll change from their status quo if they were to get a taxpayer bailout.

And, as far as falling tax revenues, the current administration and Congressional leadership does not seem to view that as a problem since they repeatedly spend astronomical amounts of money while cutting taxes and thereby strangling government revenue.

I don

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I used to drive Chevy's and Pontiacs in the 80's and early 90's. I swear they made those cars to break down. The Cavalier and Sunbird were horrible, and you know what, I bought a Civic after that and had no problems, then I bought a Jeep, which had problems, and now a Subaru, which has had problems. What does all this mean? It means all cars suck except that one little green Civic hatch-back....

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