US Car Manufacturers - Government Bail Out

[.OrgOwner]

So the major US car manufacturers go cap in hand to the US goverment looking for a multi billion dollar life line, first time round they rock up on their corprate jets and stay in the finest hotels. Seriously? Anyway they are back again and now asking for even more money and have even stepped down to traveling by hybrid cars. more laughter from the gallery. If it was not so serious it would be funny, the question is this: Should the US tax payers bail out these companies or should the laws of natural selection be applied the same as any other business. How do you give these companies billions of dollars and expect that it's going to be invested wisely? I'm sceptical.

[Weasle1000RR]

I say they eat it. It's their fault for continuing to raise prices on vehicles as the economy slowed and now has become stagnant. They priced themselves out of their own market. There are too many dealerships selling not enough cars. Either drop the prices to what the damn cage is actually worth, or die. Simple.

Oh, yes, and no multi million dollar bonuses, and corporate holidays.

i truly hope they give the money...if these companies fold that would mean thousands upon thousands of employees out of work...this would then mean thousands upon thousands of americans that are not using their dollars to stimulate the economy...then local economies begin to slowly collapse, towns die and then what?

I know that it sucks that it is our dollars that are going to used to bail these corporations out but the alternative is unconsciencable.

Before you say f--- these companies think about that.

[Red Rider]

Originally Posted by hondaseller

Before you say f--- these companies think about that.

The average American doesn't have a clue as to the complexities of the problem. It has nothing to do with "pricing themselves out of the market". Legacy costs, subsidized competition, and market factors all have brought the Big Three to this point. Amazing how the media latched onto their flying to Washington in corporate jets, yet very little was said about AIG executives spending much, much more on lavish corporate meetings AFTER they were granted a $150 billion dollar bailout. The banking industry was given $700 billion without presenting a proposal or any stipulations on how the money would be used. Even Citigroup was given billions carte blanche.

Be careful biting the hand that feeds you...

[.OrgOwner]

These are all valid arguments, I just wonder where you draw the line. How many people to Mcdonalds and Walmart employ? Would you throw those guys a lifeline as well?

It actually cost the big three more money to drive than to fly. The average executive that attended these hearings is making $2,000 + per hour!!! There is a reason why they have cooperate jets.

The carefully engineered energy crisis caught everyone by surprise, not just the big three. Add on top of that the fact that Honda and Toyota have been kicking their asses in small cars for years. Why throw tons of money in places you cant seem to gain any market share? The truck/SUV profits where so much more attractive less then a year ago. That being said, I do not totally disagree with the way these companies were being run.

However, I do not think throwing US taxpayers money at them will solve anything. Their current business models have failed, and show no signs of recovery. Lets let all 3 go bankrupt!!! Pools of investment money will pour in to buy assets for penny's on the dollar. Re-brand and restructure the entire industry. Let the new companies sift through old school upper management with a baseball bat. Only then should tax payer money be loaned to retool plants.

It important to note that only the profitable sectors will be allowed to operate after bankruptcy. Many blue collar worker will continue to build cars, although job loss will still be massive. The industry will then hire back little by little.

Scary to most, but the quickest most painless scenario I have seen of yet.

[Weasle1000RR]

But then we have to think about reparations from this. When was the last time the government did anything for free? With the stimulus of the banks and insurance companies, now government is mixed with the free market. The separation of the two has been an integral part of this capitalist economy. I believe that everything that government (taxpayer) money went into will be subject to control from capitol hill as they hold these attempted countermeasures over their heads. With the bailout of the auto industry, who's next? Big box stores that tanked on black Friday? Phone companies? Even after the $700 billion influx, banks have been cutting jobs by the thousands. It has done nothing to stem the tide of unemployment. I agree with mark2119, restructure is in dire need and I don't believe that giving them money to keep the lights on is going to change anything.

But, the world is supposed to end in 4 years anyway so, let it ride, eh?

[lanbrown]

Give them the money under several conditions.
1) The union as it currently is, has to go.
2) If you have any type of management position, you are fired.
3) Executives, you failed at your job and are fired. There will be no golden parachute for you.

Originally Posted by lanbrown

Give them the money under several conditions.
1) The union as it currently is, has to go.
2) If you have any type of management position, you are fired.
3) Executives, you failed at your job and are fired. There will be no golden parachute for you.

I think Ian's on the right track (as far as he goes). Whether we like it or not we have have to look historically at the US' big three and ask if they were competitive in the market place before this global meltdown. No, they weren't. Unions do have a lot to answer for, but they are not a lone in their blame. There are very simple reasons why the Japanese are so much more competitive.

Firstly, the Japanese corporates involve everybody in the decision making process. It stands to reason that the blue collar worker at ground level has a far clearer idea of which procedures or systems are slowing them down (or making them less productive), than the executive. Although, ironically, Japanese executives have a far better idea of what's happening at ground level than their American counter-parts because these workers are given the opportunity to voice their concerns and ideas directly to management. They even conduct test runs on new ideas to give them a chance to prove of disprove their worth.

Secondly, the Japanese don't stay with a design of anything for more than 5 years. The design is constantly being improved over a period of 10 years, by which time they start afresh. How many other manufacturers work like that? In addition, They set up factories all over the world and train the new guys so that "they get" the philosophy being employed. This upfront cost saves in shipping costs and international taxes. That alone makes a significant dent in the yearly cost per unit price.

Even if you look at these reasons in isolation (there are more), it's easy to see why a company in a county with much higher corporation tax than the US is still able to produce each unit more reliably and cheaper.

[.OrgOwner]

It's also my understanding that massive salaries at corpate level don't happen in Japan. The gap between the lowest and highest paid is not that great, imagine trying to sell that idea in the US....

Originally Posted by .OrgOwner

It's also my understanding that massive salaries at corpate level don't happen in Japan. The gap between the lowest and highest paid is not that great, imagine trying to sell that idea in the US....

Simple enough. Just bring back the true meaning of 'Performance-related Pay'!

on a sales and marketing note ( IMO )
gm and ford are both bloated pigs, and still run a policy of market cannibalization. ie chevy, pontiac, buick and olds all making the same car category and selling on the same market.

they need to trim it down to 2 or 3 brands tops.

ie : chevy and cadillac. those 2 brands cover pretty much all cateogries of cars for gm.

cadillac chevy
infiniti nissan
lexus toyota
accura honda
lincoln ford

there will be a lot of jobs lost but i believe this is what gm has to do to stabilize. less factories and strengthen their product line with quality, refinement and technology ( volt ).

[lanbrown]

Originally Posted by MACI4LIFE

on a sales and marketing note ( IMO )
gm and ford are both bloated pigs, and still run a policy of market cannibalization. ie chevy, pontiac, buick and olds all making the same car category and selling on the same market.

they need to trim it down to 2 or 3 brands tops.

ie : chevy and cadillac. those 2 brands cover pretty much all cateogries of cars for gm.

cadillac chevy
infiniti nissan
lexus toyota
accura honda
lincoln ford

There is no more olds. Ford has been getting rid of brands; they have four.

Originally Posted by MACI4LIFE

there will be a lot of jobs lost but i believe this is what gm has to do to stabilize. less factories and strengthen their product line with quality, refinement and technology ( volt ).

Until all management jobs are replaced by new people, they will continue to make the same mistakes. How did the Japanese get their market here? Yep, rising fuel prices. In 30 years the domestic manufacturers made the same mistake. This tells me it is not the people, but the culture. But if you replace them one be one, the culture will remain. Replace them all at once and there is no more culture.

GM is beyond help. Ford has realized they have made mistakes. GM has not.

Originally Posted by lanbrown

There is no more olds. Ford has been getting rid of brands; they have four.



Until all management jobs are replaced by new people, they will continue to make the same mistakes. How did the Japanese get their market here? Yep, rising fuel prices. In 30 years the domestic manufacturers made the same mistake. This tells me it is not the people, but the culture. But if you replace them one be one, the culture will remain. Replace them all at once and there is no more culture.

GM is beyond help. Ford has realized they have made mistakes. GM has not.

I agree that management has to re-evaluate their pay structure...also these companies need to dump their unions (i know that riots and fires will probably ensue)...as far as the technology they are slowly coming around, but to give them the finger on help would only devestate our already fragile economy.

The double edge sword would be if the goverment extends a helping hand and these companies misappropriate these funds again, then the goverment would step in and take total control...this would be very bad.

All I see is another american product taking a nose dive in our own country.

[lanbrown]

That is why I said give them the money on several conditions. See post #8. The executives would have to make a choice. Get fired and stay and be at a company that will go out of business. Either way, the result would be the same for them. Sure they might make a few bucks before the company goes under, but just imagine when they go to get a new job and the resume lists one of the auto manufacturers and that they were the ones to let the company go under. Probably not someone you would want to hire to make decisions.

BUILD a car/truck/suv/etc....that won't lose half it's value the first year. give me an option (it could be an option already, i don't know) of buying DIRECT----not using a dealer (when i have a pleasant experience w/ one i'll post up, but don't hold your breath) have GM,FORD,CHRYS garages that aren't connected to "the dealer" and charge a reasonable price to get work done.

I recently purchased a car i never thought i would purchase (a Hyundai Accent SE) so far i love it. i tried to get one of the "3" econo cars, but they were really proud of their cars (hence the reason to purchase a different brand) I really think my problem is with the dealers and Not the automakers themselves, but unfortunately that's who i have to deal with when buying new.

Short term: give them the money>>hope for the best. I just want my damn stocks to come back up^

[lanbrown]

Most brands require you to use a dealer. Honda does.

Hyundai is buying old Honda designs.

As for resale; one of the issues is fleet sales. Those hurt the resale value. Even Toyota is getting in on it and Hyundai is making a big push towards it as well. So expect your resale value to drop.

[bladeracer]

I haven't studied the situation at all but the last figure I heard was they wanted 34 billion dollars
That's over US$100 from every US citizen?
Just how many cars have GM been selling annually?
And how much money has been going into the executive salaries?
If they've been "earning" those sorts of figures (and if they couldn't see this coming and plan accordingly they most certainly weren't earning such saleries!) surely a huge dent could be made in the bills by the executives giving back everything they've already "stolen". The fact that they need 34 billion to dig themselves out of the hole they're in is proof enough they haven't been "earning $4000 per hour" - they've been stealing it for doing nothing constructive at all.
Of course, it's irrelevant to the executives if the company folds as they would've been dragging enough money out over the last few years to ensure they never need to work again anyway.
I heard a figure of three million out of work if they fold?
At an average of US$50K a year, plus insurances and expenses that go on top of paying somebody's wage it's probably something like 250 billion dollars a year in wages. Just how many vehicles are they selling that they can justify that sort of wages bill? That's like selling _ten million_ cars every year for $25,000 each - just to break even on wages without buying or manufacturing the parts, or building the factories to assemble them, or the dealer yards to sell them. Those numbers are probably way off but however much too high they are just makes more of a joke of why they need so much to bail them out.

Ian, The top executives in these corporations make millions a year. Do you think they give a rats ass if they get fired or not? They will continue to live large. They did say they would work for $1.00 a year "if" they got the bailout money. I think the Chrysler guy is already making $1.00 a year, but made millions a year before that. When they drove up to Capitol Hill in their cars that was a joke too. The one guys car can only go 40 miles before it needs to be charged. I'm sure he drove all the way from Detroit in that.

I think they should be allowed to fail. If the powers that be gives them this 34 Billion they will be back for more. Total cost I guess will be 150-200 Billion.