Auto bailout
Prominent Member
Joined: Dec 1999
Posts: 2,282
Which begs the next question:
If the public can't tell the difference between the word "Bankruptcy" and the phrase "Going out of business", and a new vehicle is the 2nd biggest purchase anyone will make, how do you do a bankruptcy without watching sales do an abrupt halt, effectively wiping out the potential of any good restructuring plan before it's even started??
On the news today, it showed the problem with Chrysler wasn't a lack of demand, it was that people couldn't get financing and that many are waiting to see if Chrysler "goes bankrupt". This was the words of a potential Chrysler buyer, not me or some anti-bankruptcy proponent.
The first auto company that reaches the evening news as going into bankruptcy is the first automaker to nail it's coffin shut.
Hell, even though I know what bankruptcy is, I'm not about to spend my hard earned $25,000 to $35,000 buying a brand new car from a company that's bankrupt until the dust settles and I know it's not going into liquidation.
I don't think there's too many people here who would either.
If the public can't tell the difference between the word "Bankruptcy" and the phrase "Going out of business", and a new vehicle is the 2nd biggest purchase anyone will make, how do you do a bankruptcy without watching sales do an abrupt halt, effectively wiping out the potential of any good restructuring plan before it's even started??
On the news today, it showed the problem with Chrysler wasn't a lack of demand, it was that people couldn't get financing and that many are waiting to see if Chrysler "goes bankrupt". This was the words of a potential Chrysler buyer, not me or some anti-bankruptcy proponent.
The first auto company that reaches the evening news as going into bankruptcy is the first automaker to nail it's coffin shut.
Hell, even though I know what bankruptcy is, I'm not about to spend my hard earned $25,000 to $35,000 buying a brand new car from a company that's bankrupt until the dust settles and I know it's not going into liquidation.
I don't think there's too many people here who would either.
I don't know why this is so hard to understand... I really don't.....name ONE car manufacturer who's gone into and come out of bankruptcy.
Chapter 11 would be an instant ticket to Chapter 7.
Also, why is it so damned hard to believe that GM, et. al. are NOT worth saving?
I hate that we've become a country of short attention span, quitters...heaven forbid our forefathers would have had the attitude that most have today toward hard work and the value of saving something that has real value for our country and our future.
Registered User
Joined: Sep 1998
Posts: 4,320
From: Memphis
Wow... stay classy.
In case you'd like to stoop so low as to educate me (you certainly seem to have the words per minute to do it) can you give me a breakdown of GM's average US assembly labor cost of $73 to, say, Honda's $43? Is that extra $30/hr really something you can contribute all to retirees? I know it's not but since you're the man throwing out the rolling eyes, I figure I'll leave it up to you to bestow your wisdom upon "losers" like me.
In case you'd like to stoop so low as to educate me (you certainly seem to have the words per minute to do it) can you give me a breakdown of GM's average US assembly labor cost of $73 to, say, Honda's $43? Is that extra $30/hr really something you can contribute all to retirees? I know it's not but since you're the man throwing out the rolling eyes, I figure I'll leave it up to you to bestow your wisdom upon "losers" like me.
Registered User
Joined: Aug 2000
Posts: 38
From: Scranton, PA
I guess the fact that we'd experience the collaspe of a major industry affecting up to 3 million jobs during a major recession, taxpayers being stuck with hundreds of billions of dollars in pension liabilities, and that the issues of each manufacturer is very clear and therefore can be fixed isn't enough reason for the Feds to step in, huh?
Banned
Joined: Jul 2001
Posts: 3,604
From: Milton, FL
Apparently there is no such thing as a free market anymore. Obviously fudge-ups are now rewarded. If GM, Ford and Chrysler failed, you don't think another company would get into the auto game or perhaps the increased market share which would then be held by the foreign car companies would cause them to produce more vehicles thus enabling them to hire the unemployed domestic auto workers? Tax payers will front the bailout this time and we'll be there to give again in three months. Remember: This is only a loan IF the companies can repay the money. Based on their track record, I'm very skeptical.
more likely would be that toyota and honda would see their most rapid growth ever
Registered User
Joined: Dec 2003
Posts: 126
From: New Orleans, LA
Wow... stay classy.
In case you'd like to stoop so low as to educate me (you certainly seem to have the words per minute to do it) can you give me a breakdown of GM's average US assembly labor cost of $73 to, say, Honda's $43? Is that extra $30/hr really something you can contribute all to retirees? I know it's not but since you're the man throwing out the rolling eyes, I figure I'll leave it up to you to bestow your wisdom upon "losers" like me.
In case you'd like to stoop so low as to educate me (you certainly seem to have the words per minute to do it) can you give me a breakdown of GM's average US assembly labor cost of $73 to, say, Honda's $43? Is that extra $30/hr really something you can contribute all to retirees? I know it's not but since you're the man throwing out the rolling eyes, I figure I'll leave it up to you to bestow your wisdom upon "losers" like me.
Taken from this article.
http://www.nytimes.com/2008/12/10/bu...BLSW/lmdlDAW5A
B
Last edited by 96SSConv#2033; Dec 19, 2008 at 06:57 PM.
Registered User
Joined: Aug 2001
Posts: 2,400
From: Michigan's left coast
Well, in this case, the government did indeed define it has having a "net positive present value". That, however, begs the question - are we going to use Generally Accepted Accounting Principles, or fuzzy federal government math?
Registered User
Joined: Dec 1999
Posts: 753
From: Annapolis Md. USA
It looks like the current plan GM and Chrysler brought to the table does not support it making a profit any time soon, so it is no wonder why the govt does not just want to throw money at something that will only keep alive a business that eventually will die no matter what. I am not sure why anyone here would believe they will pull through by throwing money in the current state. GM has proven they can't cut down into a lean company on it's own as it has had literally years to do it. They have progressed, but as usual they are too late to the game.
I do not see GM's current plan getting them out of eventual bankruptcy even with a bailout. And I also believe a govt backed bankruptcy will go a long way to keep the public from being scared in buying from a company who declares chapter 11. It is not like it would be a total chaos the sky is falling, knowing the funding will be there when re-organizing...unlike a normal chapter 11.
One thing I do agree with is there needs to be loans to sell cars no matter what goes on, and as of right now that seems to be the biggest problem for everyone right now.
Unions also needs to get rid of the jobs bank, rid of the 80% pay when not even working etc and have their longer term employees get paid the same as its competitors. New hires being the only ones on the new pay scale is not enough. I wish I could see actual statistics on what percentage of current employees are part of the new hire wage system, and also how many are sitting around in the job bank, or getting paid currently for not working.
GM needs to downsize period. Due to the current contracts, I can't see GM being able to do ANY downsizing with the UAW standing in the way. Bankruptcy seems like the only answer to me. I sure as hell am not even close to being an expert with this stuff, but common sense tells me if GM could not get this done in the last several years, how in the world can we think downsizing can be done in the next few months when it is most needed before they run out of cash?
I do not see GM's current plan getting them out of eventual bankruptcy even with a bailout. And I also believe a govt backed bankruptcy will go a long way to keep the public from being scared in buying from a company who declares chapter 11. It is not like it would be a total chaos the sky is falling, knowing the funding will be there when re-organizing...unlike a normal chapter 11.
One thing I do agree with is there needs to be loans to sell cars no matter what goes on, and as of right now that seems to be the biggest problem for everyone right now.
Unions also needs to get rid of the jobs bank, rid of the 80% pay when not even working etc and have their longer term employees get paid the same as its competitors. New hires being the only ones on the new pay scale is not enough. I wish I could see actual statistics on what percentage of current employees are part of the new hire wage system, and also how many are sitting around in the job bank, or getting paid currently for not working.
GM needs to downsize period. Due to the current contracts, I can't see GM being able to do ANY downsizing with the UAW standing in the way. Bankruptcy seems like the only answer to me. I sure as hell am not even close to being an expert with this stuff, but common sense tells me if GM could not get this done in the last several years, how in the world can we think downsizing can be done in the next few months when it is most needed before they run out of cash?
Registered User
Joined: Sep 1998
Posts: 4,320
From: Memphis
This may help a little.
Taken from this article.
http://www.nytimes.com/2008/12/10/bu...BLSW/lmdlDAW5A
B
Taken from this article.
http://www.nytimes.com/2008/12/10/bu...BLSW/lmdlDAW5A
B
Ford is show there, but Ford's costs per hour are the lowest... GM is at 73.xx and Chrysler at 75.xx.
Also from what I remember of what I read, Toyota was at 47, Nissan at 42, and Honda at 43... nobody was at 49. I wonder if you compared GM (a bit higher) to a more normal japanese total cost of say 44/hr where the additional discrepancies would come in?
Registered User
Joined: Jan 2008
Posts: 204
From: Filthydelphia, PA
GM needs to downsize period. Due to the current contracts, I can't see GM being able to do ANY downsizing with the UAW standing in the way. Bankruptcy seems like the only answer to me. I sure as hell am not even close to being an expert with this stuff, but common sense tells me if GM could not get this done in the last several years, how in the world can we think downsizing can be done in the next few months when it is most needed before they run out of cash?
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Joined: Aug 2000
Posts: 38
From: Scranton, PA
Registered User
Joined: Mar 2005
Posts: 3,123
From: Melbourne, Australia
Given the state of the auto industry, I believe the Bush plan is quite reasonable.
What would be wrong for union workers to earn the same as the foreign owned automakers and be governed by similar work rules?
What would be wrong with union retirees accepting GM stock instead of cash?
If the problems were endemic to just GM, then Ch11 might be a self-deserving fate. But the potential impact is more far reaching and impacts suppliers (I haven't heard too much criticism leveled at suppliers, just 'incompetent' automakers). I'm surprised people are choosing to ignore these basic facts.
Given the government has ignored the plight of the auto industry for too long, it is now making the necessary adjustments, albeit at odds with proponents of the free economy.
Anyways, tax payers are always having to cover funding shortfalls for projects that are behind schedule or over budget... and I've never known for any government to ask its citizens for advice on how to spend its tax payer money. Life goes on...
What would be wrong for union workers to earn the same as the foreign owned automakers and be governed by similar work rules?
What would be wrong with union retirees accepting GM stock instead of cash?
If the problems were endemic to just GM, then Ch11 might be a self-deserving fate. But the potential impact is more far reaching and impacts suppliers (I haven't heard too much criticism leveled at suppliers, just 'incompetent' automakers). I'm surprised people are choosing to ignore these basic facts.
Given the government has ignored the plight of the auto industry for too long, it is now making the necessary adjustments, albeit at odds with proponents of the free economy.
Anyways, tax payers are always having to cover funding shortfalls for projects that are behind schedule or over budget... and I've never known for any government to ask its citizens for advice on how to spend its tax payer money. Life goes on...
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Joined: Mar 2005
Posts: 3,123
From: Melbourne, Australia
Registered User
Joined: Nov 2000
Posts: 2,139
From: Commerce, mi, USA
...I guess the fact that we'd experience the collapse of a major industry affecting up to 3 million jobs during a major recession, taxpayers being stuck with hundreds of billions of dollars in pension liabilities, and that the issues of each manufacturer is very clear and therefore can be fixed isn't enough reason for the Feds to step in, huh?
It's hard for alot of people to get their arms around the fact that the legacy costs, pensions of retirees of the auto industry, simply isn't going to go away. It isn't going to be cut. It isn't simply going to be part of any negotiations, it is legally binding...and most important..... BY LAW... is either going to be funded by either the union via the auto manufacturers or it is going to be picked up by the Federal Government.... meaning taxpayers... meaning you and me!
This is in stone guys. Legacy costs are permanent & somebody is going to pay.
So the issue becomes this....and to you guys still stuck on socking it to the unions, only this:
Do you want those pensions paid by you and I as taxpayers, or do you want to make sure the auto industry is solid enough to fund those pensions without it coming out of our pockets??
It's hard for alot of people to get their arms around the fact that the legacy costs, pensions of retirees of the auto industry, simply isn't going to go away. It isn't going to be cut. It isn't simply going to be part of any negotiations, it is legally binding...and most important..... BY LAW... is either going to be funded by either the union via the auto manufacturers or it is going to be picked up by the Federal Government.... meaning taxpayers... meaning you and me!
This is in stone guys. Legacy costs are permanent & somebody is going to pay.
So the issue becomes this....and to you guys still stuck on socking it to the unions, only this:
Do you want those pensions paid by you and I as taxpayers, or do you want to make sure the auto industry is solid enough to fund those pensions without it coming out of our pockets??
I'm not keen on another 'bailout' (really it's a bridge loan)... but the President's package will save Americans from a lot more trouble we would have to face if we did nothing and let an entire industry collapse.
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Joined: Dec 2008
Posts: 203
From: U.S.A.
I've been reading through a lot of these government bailout threads; in fact it was a search engine on the subject of the government bailouts that brought me to the site.
Many of you seem very knowledgeable and I’ve appreciated the give and take although I don’t believe the personal attacks are appropriate.
I am very much opposed to the government stepping in and bailing out failed companies no matter what their size and my position hasn’t changed since the initial bailouts back in the early fall.
I also understand the possible risk involved to our economy if the Detroit portion of the automotive industry should fail.
I wouldn’t be so concerned aout the government stepping in if I believed that GM and Chrysler would truly make an effort to restructure them selves but I fear that by the time March has come around, they will simply be asking for more money. With the new administration in place, they are likely to not only get more but will less conditions attached as well.
GM in particular is so deeply in debt that I simply don’t see how they can survive unless a majority of the debt is just forgiven which is probably why none of the traditional lenders were willing to lend any more.
I wish I had the answer and I’m glad it wasn’t I that had to make the decision the President announced last Friday.
Many of you seem very knowledgeable and I’ve appreciated the give and take although I don’t believe the personal attacks are appropriate.
I am very much opposed to the government stepping in and bailing out failed companies no matter what their size and my position hasn’t changed since the initial bailouts back in the early fall.
I also understand the possible risk involved to our economy if the Detroit portion of the automotive industry should fail.
I wouldn’t be so concerned aout the government stepping in if I believed that GM and Chrysler would truly make an effort to restructure them selves but I fear that by the time March has come around, they will simply be asking for more money. With the new administration in place, they are likely to not only get more but will less conditions attached as well.
GM in particular is so deeply in debt that I simply don’t see how they can survive unless a majority of the debt is just forgiven which is probably why none of the traditional lenders were willing to lend any more.
I wish I had the answer and I’m glad it wasn’t I that had to make the decision the President announced last Friday.
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