Should the US bail out US auto manufacturers?

[Gard]

Was watching the news tonight and they were commenting that the CEO of GM makes 15 million a year, while the top 32 executives at Toyota make 20 million COMBINED. Absolutely pathetic . To put the icing on the cake, all 3 (GM, Ford, Crystler) CEOs were asked if they would be willing to take pay cuts to help the companies pull through this and all 3 stated that they thought their pay was "fine as it is." Now THAT is out of touch with reality! The more these clowns open their mouths, the deeper of a hole they dig themselves.

[sean]

Now, I heard that the bailout is actually a loan, not a handout. In that light, I would be much more in favour of it than for a straight handout.

[monsoon]

........ The perdicament with Hummer is that the US Military purchases them and so far, the only 2 companies (one from India and another from the UAE) that have expressed any interest have been scared away from making an offer by the fact that they consider the chances of approval of the sale by the government to be low. Now I can see them asking them for help from Congress in getting them out of franchise agreements. We have way too many dealerships out there, so its time to prune it down some. The market is way too saturated with them.

[monsoon]

Sigh... AM General does not produce the H2 or H3. GM does not produce the H1.

[Neo]

Here is an interesting graph that was in The New York Times yesterday:

http://www.nytimes.com/2008/12/03/business...mp;ref=business

I find this interesting considering the high oil prices that were abundant for months just prior to November. I'm curious what the numbers are compared to October 2008. Obviously GM is doing something right with some of their models, but should be say that Toyota is doing something terribly wrong to have such poor figures for their most economical model, the Prius?

[Charlotte_native]

Obviously GM is doing something right with some of their models, but should be say that Toyota is doing something terribly wrong to have such poor figures for their most economical model, the Prius?

[Neo]

I don't know if this has anything to do with it, but earlier this year myself and my partner went to buy a Prius. They had two on the lot which we test drove, but they were already purchased and were waiting for pick up, they already had a waiting list for the 5 they were receiving that month. We could have ordered one that would have been in a couple of months later. We didn't order one and haven't gone back. Just suggesting that it could be more of a supply issue than demand.

Wouldn't that mean that Toyota is producing ~48.3% less of the Prius over November of 2007? I doubt that is the case considering the waiting lists for these things (which these numbers may question).

[Gard]

Wouldn't that mean that Toyota is producing ~48.3% less of the Prius over November of 2007? I doubt that is the case considering the waiting lists for these things (which these numbers may question).

[ohioaninSC]

If the automakers are only seeking loans, then force the banks that received the bailout money to loan to them.

My problem w/ this right now is that this will just delay the inevitable. Until these companies make major changes, they will continue to hemorhage money. Let them file for Chapter 11 Bankrupcy, & allow them to restructure, then give them a loan. They need to completely rid themselves of all the legacy costs though and the UAW should take those on now instead of waiting. That would put the UAW into a much better light imo, and would help these companies out immensely. What boggles my mind is that the auto companies here in the south (Toyota, BMW, Honda, Nissan, & others) seem to be profitable w/out needing these loans, and I think it's mainly b/c of these legacy costs.

[Neo]

What boggles my mind is that the auto companies here in the south (Toyota, BMW, Honda, Nissan, & others) seem to be profitable w/out needing these loans, and I think it's mainly b/c of these legacy costs.

I believe the fact that these companies also have much newer facilities than the big three as well. It is much easier for those with newer facilities to go with the demand of the market than it is for those with older facilities. I am by no means defending them though. I believe that, with some effort, the big three could adjust to consumer demand much quicker than they are today...they simply don't want to.

Unless they're blind though, they had to see this coming their way for several years. Unions have gotten ridiculous and something should have been done about it long ago. This isn't the 50's or 60's anymore and profit margins are much smaller these days. They simply can't sustain their way of doing business with those costs and until they do something about this root problem they will inevitably fail...with or without the government's assistance.

[monsoon]

The problem with GM and Ford is not how much their workers get paid. They could cut worker pay by 50% and they still will have the same issues they have now. The problem with GM and Ford is they are still operating their businesses as if they have 50% of the market and a clueless management where hanging on to empires is more important than meeting customer needs.

The airlines made exactly this same argument several years ago. The end result was they used the bankruptcy laws to dump all their employee obligations onto the taxpayers and in returned promised cheaper better service. Look at what we really got. It costs more than ever to fly and the service stinks. They even make you pay for a can of soda now. Their problem is they are running an unsustainable model just like Ford and GM and that problem was never addressed while they were allowed to blame it all on their employees and unions.

[Charlotte_native]

The problem with GM and Ford is not how much their workers get paid.

...while they were allowed to blame it all on their employees and unions.

[runawayjim]

The problem with GM and Ford is not how much their workers get paid. They could cut worker pay by 50% and they still will have the same issues they have now. The problem with GM and Ford is they are still operating their businesses as if they have 50% of the market and a clueless management where hanging on to empires is more important than meeting customer needs.

The airlines made exactly this same argument several years ago. The end result was they used the bankruptcy laws to dump all their employee obligations onto the taxpayers and in returned promised cheaper better service. Look at what we really got. It costs more than ever to fly and the service stinks. They even make you pay for a can of soda now. Their problem is they are running an unsustainable model just like Ford and GM and that problem was never addressed while they were allowed to blame it all on their employees and unions.

[suburban george3]

The proposed bailout has collapsed. The Senate was wanting swift wage reductions from the UAW, but they refused until 2011. I would say Chrylser will declare bankruptcy poste haste with GM not far behind. Tomorrow will be a blood bath on Wall St.

MSNBC article on Detroit Bailout Collapse

[monsoon]

....What boggles my mind is that the auto companies here in the south (Toyota, BMW, Honda, Nissan, & others) seem to be profitable w/out needing these loans, and I think it's mainly b/c of these legacy costs.

[runawayjim]

Almost without exception everyone of these plants built in the South were put there after these companies received HUGE public subsidies from the state governments. South Carolina, for example, has given hundreds of millions of dollars to BMW to build cars in Spartanburg. Cars I might add, the average person in SC can't afford to buy. there is something wrong with that. If they had not done this, BMW would have gone elsewhere. It's a double standard.

[tamias6]

US Senate shoots down Auto bailout due to failure of repubs and dems to agree on the details of the bailout package and a refusal of the UAW to set a date of when they would let union salaries come down to parity with that of workers for foreign owned non union US auto plants. However Bush say he will step in by loaning money from the Troubled Asset Relief Program. But unfortunately this would mean that the big three would only have to meet little if any conditions to get the money.

CNN article

[sean]

However Bush say he will step in...

[tamias6]

Well now that is confidence inspiring...

I just don't see how borrowing/printing money in order to bail out failing business is in our national interest. I'll paraphrase a notion attributed to Thomas Jefferson: paper is not money, rather it is the ghost of money. paper is poverty.

[Gard]

Just read that Chrysler is closing ALL 30 of its plants for a minimum of 1 month...

Smart move IMO. Prevents that addition of more unsold inventory to their books.

[suburban george3]

Just read that Chrysler is closing ALL 30 of its plants for a minimum of 1 month...

Smart move IMO. Prevents that addition of more unsold inventory to their books.

[dpbaker]

Well now that is confidence inspiring...

I just don't see how borrowing/printing money in order to bail out failing business is in our national interest. I'll paraphrase a notion attributed to Thomas Jefferson: paper is not money, rather it is the ghost of money. paper is poverty.

[runawayjim]

It isn't in our national interest unless people are spending that money cyclically. I other words, if the money ends up in banks rather than remaining in circulation for a constant flow of goods and services, it could lead to dangerous inflation.

UAW needs to be busted and upper management at these companies needs to be totally revamped . If the Bush Admin. was smart, it'd give just a few billion - let them survive until Jan. 20th - then let the new Democrats decide what to do and how to handle the problem.

[monsoon]

I personally would not want to be so cavalier in shutting down companies that are going to put more than 3 million people out of work, the people who are actually adding value to society, and millions more in support companies. There is a plant here that is non-unionized, where they are starting to lay off people in droves, just before Xmas, because the big 3 are no longer buying the parts they manufacture.

I personally would not want to be so cavalier in shutting down companies where the alternative means we are completely defendant on foreign companies for all of our transportation needs. I keep saying that we are suffering now because too much of this has happened and people don't seem to realize that you simply can't run a society and an economy like this. They will own us, which is not a place I want to be.

Am I suggesting that Ford, GM and Chrysler should not make changes? No. But you don't cure an sick relative by shooting them.

Through out this entire economic mess ranging from millions being laid off from companies, bailouts being given to banks, and so forth, nobody has gone after the corrupt CEOs and their executive management that have caused all this mess. Instead we continue to beat up on the workers with layoffs and cries "Lets Bust the Unions!!!". Geez. So far that solution hasn't worked so well and I dare say that when everyone is unemployed, there will be an understanding at who is really responsible for these issues.

[Charlotte_native]

I personally would not want to be so cavalier in shutting down companies that are going to put more than 3 million people out of work