Why we shouldn't bailout GM, Ford and Chrysler | Page 2 | FerrariChat

Why we shouldn't bailout GM, Ford and Chrysler

Discussion in 'General Automotive Discussion' started by sammyb, Nov 13, 2008.

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  1. Fred2

    Fred2 F1 World Champ
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    I see a real problem with the path that the country is on. It is nearly impossible to purchase ANYTHING made in the USA. When China decides that we are their *****, we will have no way to clothe ourselves, let alone defend the country.
    The next generation better get pretty good at kissing ass.
     
  2. rdefabri

    rdefabri Three Time F1 World Champ

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    Well, Boeing, Lockheed Martin, Northrup Grumman are still viable entities. And although they aren't nearly the size nor capacity of the Big 3, Harley Davidson is manufacturing concern, one that did build war time goods in the past. There is still a manufacturing base, although it is eroding, and while I don't worry as much about defending ourselves, I do agree it's an essential piece of American industry.

    THIS does scare me. Take a look at the estimates of obesity - almost 30% nationwide and growing. I view this as a metaphor for America becoming more pampered and less willing to tackle hard work, and a sign that the blue collar jobs are diminishing. Who will build houses? Who will fix your plumbing? Don't be shocked when we're left with a minimal amount of people to do those jobs, and you get stuck with a bill that you can't pay...simple law of supply and demand.

    Parallel this with the US oil industry. The US has become almost completely reliant on foreign oil. We have no new refineries, we can't drill anywhere in the continental US, yet we scream bloody murder when gas rises to $4.00 a gallon!!!! As nthfinity says, we can no longer self-sustain ourselves and we are completely at the mercy of countries like Iran, Russia, and Venezuela. Emboldened with petrodollars from our huge global consumption, and no domestic supply, Venezuela and Iran are now stock piling weapons that would have otherwise been unthinkable years past.

    CAFE is definitely a contributor to the failure. Toyota, Honda, Nissan, etc. let market forces dictate product. Regulation and restriction by the US Gov't caused the Big 3 to make fuel efficient vehicles of marginal quality and desirability just to meet the timelines.

    I do not want the Government to intervene without some contingencies. As I've said, I'd like to see the unions broken if any aid is to be provided. That is, we'll loan you the money if you declare bankruptcy and restructure draconian agreements.
     
  3. sammyb

    sammyb Formula 3

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    The WWII-esque manufacturing issue is at best a really good scare tactic. In the last week there have been numerous articles written about this exact issue. While the people, like Wesley Clark, who brought up this issue have absolutely no facts, figures, projections to back up their claim, those who have taken the opposite opinion have proof to show that this is a non issue.

    If there is money in it, American companies can begin converting immediately to support any "war effort". There are still plenty of manufacturing suppliers that are not directly tied to the Big Three to handle production of war machines. While the Big Three did plenty of war supplying during WWII, people will remember that smaller companies rose out of almost nowhere to the challenge. For instance, Kaiser, which still holds the record for building a military ship (at its shipyard in Portland, OR), wasn't even in business before the war. They even also had time to invent HMOs ;) then go into the car business. Bantam, which was an almost non-existent company at the time -- the US offshoot of the English Austin company got the original contract for Jeeps...(beating Ford.)

    As for CAFE standards, there is nothing about the legislation that has ever forced the Big Three to create crappy cars to meet the timelines. They have chosen during different eras to create crappy small, fuel efficient cars in between CAFE standard hikes, because there was no money in it. Again...please look at sales and profitability results -- in years directly following large shifts in Clean Air, CAFE, Crash Standards, the Big Three have had fantastic results. It has been good for business, mostly because the imports have chosen not to bring good competition here.

    Now do I necessarily agree with the protectionist effects of Clean Air, CAFE and Crash Standards? No, because I'm not a protectionist. From an entirely numbers point of view, it is nearly impossible for anyone to make a case that these regulations have not led to better products for consumers. (There were some products that were not good -- diesel Olds/Caddy, 8-6-4 Caddy.) But even at the worst performance levels for Corvette in 1975 due to higher standards, they were having record sales. It was the Clean Air Standards that lead to using FI again, which lead to higher tech engines, like the TPI and current hi-po smallblocks.
     
  4. TexasF355F1

    TexasF355F1 Six Time F1 World Champ
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    Nice statement.
     
  5. Teenferrarifan

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  6. parkerfe

    parkerfe F1 World Champ

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    The appropriate question is Why SHOULD we bail out GM, Ford and Chrysler? I say no...let them file Chapter 11 and reorganize or go belly up. Otherwise, they will just keep building crappy cars and pay wages far higher than the market will bear...
     
  7. 62 250 GTO

    62 250 GTO F1 Veteran

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    US companies are bought up everyday by "foreign entities" The US government stepped in when big oil companies were being bought up but outsourcing away from the US has been big business since the 90's and some companies have to do that to stay a float. "Getting rid of American employees... to stay a float". How did it come to this? Yikes.
     
  8. ShineKen

    ShineKen F1 World Champ
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    We don't necessarily get rid of American workers... we are simply shifting them from manufacturing to service/information oriented industries. The amount of the wage american workers get paid is all relative. Its the purchasing power of the dollar that is important. If americans can purchase goods manufactured elsewhere that prove to be reliable with great pricing, then why not?

    I don't understand how you can have a company that pays its workers a high salary or high wages, build cars that don't create enough demand to cover operating cost leading to a net lost of 5 billion a year, and then ask for more money to continue the same practices. Management's #1 priority should be looking out for investor's and profitability. Why should anyone in management command a high salary if they can't turn a profit or even care to turn a profit. Anyone can spend money. Give ME 25 billion dollars... Ill spend it for ya..
     
  9. 62 250 GTO

    62 250 GTO F1 Veteran

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    Throwing hundreds of thousands American workers out of a job and sending those jobs over seas, you don't see the problem with that? If it continues, Americans will have to buy nearly everything from over seas. With fuel prices rising combined with the poor economy that would create, the States will be a piss pot in no time. Sending jobs, companies and money to other countries is a problem. If a country can't sustain its own existence, then it will collapse.

    And for your point about
    If that was the case then no one would complain but that isn't the case. If a plant or business closes down, they don't "pop" open a new building down the street and fill it with former employees. Also going from creating and servicing a product to "information" about a product is about 25 steps backwards. Less money, not much skill required and anyone can do it meaning if someone over seas will do it for a dime less, then that business vanishes across an ocean too. Countries get strong, powerful and rich by taking money from other countries and leading the way for more dominance. Sending consumer cash to other places around the world means... you're sending your cash out of the country. How is that good at all?
     
  10. 288gt-uh-oh

    288gt-uh-oh Karting

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    This happend to Hong Kong when China opened its doors to cheap manufacturing...What happened? Hong Kong went to services and became even more profitable.
     
  11. ShineKen

    ShineKen F1 World Champ
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    Generally, "manufacturing" jobs usually pay less wages than "service/information" type of jobs because "most" manufacturing jobs don't demand a high level of education. An investment banker gets paid 10 times more than someone who makes a shoe. Why? Because there are simply more non-college educated individuals than there are college-educated individuals. Higher supply of less educated workers = less wages. Of course there are also lower wage service jobs that don't require as much work, however, service/information type of business are less likely to be shipped overseas because you need those services right here, right now. Getting a part manufactured for less labor cost is no different than building a robot that is more productive than 100 U.S laborers. You don't see anyone complaining about job losses from more efficient machines. As we progress in technology, the human race will inevitably move towards service/information type jobs.

    We live in a world economy. Everyone depends on everybody. We're not an island. There are some things other countries do better than we do and there are some things we do better than they do. That is why we trade amongst each other. It would be a pretty boring world or even USA if we didn't. That's the way its been and that's the way it will always be. We have to step up our game an continuously find ways to offer products, services, and information that other countries need to keep the demand for US dollar strong. One thing for damn sure is they aint buyin american cars and neither are americans (enough to keep the big 3 profitbale) so why force it?

    However, I do agree with you that service/information opportunities do not just "pop" up the next day to replace all the job losses. That is why I agree with the bailout... however... only temporarily until the economy strengthens. It definitely takes time to retrain individuals to move into other industries. My argument was more towards a gradual transition from manufacturing. An all at once job cut of hundreds of thousands of people will certainly be devastating. This is why the Obama campaign is trying to promote more green jobs.

    Our economy has always been based on building businesses that offer products and services that meets people's needs at certain price points. If a company cannot manage to do so and sustain profitability, there is no need for such a company. You are essentially overpaying people to build products and offer services that people don't need. I'm sure we can put our people to better use instead of wasting resources. If the big three were profitable, we wouldn't be having this conversation. But the market dictates that they cannot be... especially with their operating cost structure.

    I for one own a small manufacturing company that employs people in the U.S. My business model only makes sense because we offer products quicker, better, and with better service than our overseas competitors. These are things that my customers are looking for. If they were only concerned about the lowest price, we'd be out of business. My point is... we cannot forget basic economic business principals of meeting needs and sustaining profitability just to keep people working. As an investor, there has to be something in it for ME as well.
     
  12. Pantera

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    Because they are all bound to have a relapse in the near future.

    They must learn to manage!.
     
  13. nthfinity

    nthfinity F1 Veteran

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    And why aren't you scared? Where do we get Iron from? How many companies turned raw slag into Steel 15 years ago, and how many today? Do you know why? Where has the metal production gone to? China. Many manufactured parts are coming directly from China; and you clearly have no clue how many defective parts are being shipped signed, and sealed.... returned, sent back again, returned, sent back, and returned before eventually getting parts that aren't defective. Where is the acceptance for the Greenies (which you appear to be) for this ludicrous action when the cleanliness of Steel plants in the US were doing 15 years ago before being shut down by overbearing Gov. regulation satisfying the small, and insane environmentalists. Why aren't they crying for the US to reduce Carbon emissions of the world by supplying this?

    It's only a matter of time before these defective parts cause mechanical failure that causes the number of deaths due to the Firestone fiasco look puny.

    FYI, Corvette was using FI in 1957, as the hi powered smaller engine option. I don't disagree that over time, the industry needs to police itself to make their engines more powerful, more efficient, and cleaner burning. Today's engines are so nearly emission free. Until now the courts have decided that exhale is now a pollutant which can be controlled.

    Why was the corvette still a good seller? It's an icon, and at the time, the controls were quite easy to remove; and many states still had no vehicle testing mandated.

    The next evolution is seeming to demand that our sports cars are electric.

    People like you make me worry; and seem to fail to see that the car is the absolute personification of liberty... defining freedom.
     
  14. tundraphile

    tundraphile F1 Veteran

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    If you have 20 minutes, watch the Charlie Rose show from Wednesday about the Big 3 Bailout.
    http://www.charlierose.com/view/interview/9591

    My first impression of David Cole is that he is completely full of crap and is only hoping to protect his livelihood.
     
  15. sammyb

    sammyb Formula 3

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    I'm very familiar with the steel biz from the recycling side -- my family ran a scrap metal biz for over 90 years. (Good friends with the Schnitzers, which started what is now one of the largest scrap businesses in the world.) I'm not a "Greenie".

    If you are familiar with anyone who actually contracts with Chinese businesses, they'll tell you that it's common practice to specifiy quality at a certain price. Some American companies specify simply price, which is a disconnect from a culture standpoint, since the Chinese firms will make products at any price -- they'll just reduce the quality to hit the price target.

    Absolutely, as was the Chevy Bel Air and Pontiac Bonneville. The first production car with FI (which was also standard, rather than an option) was the Mercedes 300SL (debuted February of 1954.) The first British series production car with fuel injection (called PI there) was the 1968 Triumph TR5 (we got the TR-250 in America with twin Strombergs). In all of these cases, the fuel injection was mechanical and used for performance gains. By 1980 FI returned not as a power-adder, but as a way to better regulate fuel mixture for the purpose of reduced emissions.

    Cars are definitely a part of personal liberty. (I own six cars right now -- down from eight last year.) I fail to find any connection between not supporting a bail out of companies ill-equipped to pay them back (and better equipped to be taken over and still be in the car business -- producing vehicles in America with American labor) and how this somehow makes me a) a Greenie, b)doubt the value of vehicles. I'm an automotive journalist

    The question then is: why does it matter to you WHO OWNS the company that produces the car in America? GM and Ford are owned by foreign investors, and Chrysler was at one time was a subsidiary of a German company. All produce cars outside of the country with foreign labor. Did any of this affect your personal liberty?

    Keep in mind that just because a company is produced in America by an American company doesn't mean that they are 100-percent for doing what's in the best interest of American freedom. Henry Ford tried to personally stop WWI by leading a envoy mission against the direct will of the US Government. He then blamed the war on the "International Jew" legion who he believed tried to profit from the war. (Adolph Hitler had a full-sized picture of Henry Ford in his office.) GM sold fuel technology to the NAZIs just prior to WWII.

    So what cars do you own? I'd be happy to inform you how your purchases have undermined the cause of freedom and American way, because all companies (including those outside of the auto business) have done self-serving, questionable actions.
     
  16. Etcetera

    Etcetera Two Time F1 World Champ
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  17. Veedub00

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    they also stopped the escalators. Now they are stairs I guess. any way to save.
     
  18. nthfinity

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    Your statement is proven quite false.

    Chrysler:
    Overall down 47%

    GM:
    Overall sales down 41%
    Passenger cars down 39%
    Light trucks down 44%

    Toyota:
    Overall sales down 33.9%
    Passenger car sales dropped 32.3%
    Light truck sales fell 36.1%
    Sales of the Prius, Toyota's one-time hot-selling hybrid, dropped 48.3%

    Honda:
    Overall down 31.6%
    Honda brand sales slid 30.6%
    Acura division sales tumbled 38.9%

    Ford/Lincoln/Mercury:
    Overall down 31.5%
    Volvo down 46.5%
    F-series pickup down 18.9%

    Prius down nearly 50%, F-series down nearly 20%. Irony?
     
  19. 95spiderman

    95spiderman F1 World Champ
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    originally, i was in favor of bailout so long as big3 could reorganize with it and survive. get uaw to accept similar compensation as american honda, bmw, etc plants pay their workers. then consolidate by eliminating mercury, dodge, pontiac, buick, saturn, etc.

    now i read in ny times that it COST gm 4 billion dollars just to eliminate oldmobile due to state laws protecting dealerships and other issues! and if that was what it cost back then, plan on 8 billion per compay now? if thats the case, then i think big3 are doomed regardless. all those bailout billions will go completely to waste.
     
  20. nthfinity

    nthfinity F1 Veteran

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    I'm not in favor of the Wall St. Bailout, not then, not now. Wall st. does not make the world work; manufacturing, and agriculture do.
     
  21. parkerfe

    parkerfe F1 World Champ

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    I say let them all file Chapter 11 . A GM executive on the news last night said that it cost GM $100 billion a year to to pay health insurance and retirement benefits alone...that is before the first worker gets paid to build a car. If the taxpayers wanted to save the Big 3, we would have bought their crappy cars.
     
  22. tundraphile

    tundraphile F1 Veteran

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    If GM files for Chapter 11, the taxpayer will still be on the hook for a portion of their pension obligations due to a few stupid laws designed to appeal to the UAW, with federal guarantees on some of the benefits.

    Ford is now saying they might not need help, assuming neither Chrysler or GM go broke. How the failure of one of the others means they will be in trouble escapes me though, unless suppliers common to all would also go under.
     
  23. TexasF355F1

    TexasF355F1 Six Time F1 World Champ
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    I saw this morning in the last two years the head of Ford made $50mm, head of GM $6mm...and head of Chrysler...well we don't know.

    When both heads of Ford and GM said they'd work for $1 (obviously stock options etc), Chryslers head said, "I'm fine."

    Cost of using Private Jets last year:
    Ford: $900K
    GM: $45K
    Chrysler I have no clue.

    Just found the differences quite insane.
     
  24. Devilsolsi

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    And yet Ford says they can probably make it till 2010 without government assistance, where as GM might not make it to 09 without a bailout.

    Ford selling all their jets still seems a bit dumb to me though. They are a global company, travel will be required.
     
  25. tundraphile

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    If they did a cost analysis, most likely flying commercial will be far cheaper, albeit not as convenient.
     

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