The Big 3

[ZenLunatic]

So they are destined for failure. Should we help them out? And if we do, in what capacity?

 

You gotta take that these three companies employee a huge amount themselves and also support the a big part of our manufacturing industry to boot. Failure in these companies do mean a gigantic change. The problem is they are out of money and without more, they will die soon. It makes sense we do something, but what is that something.

 

Lets start off with American cars suck. After my first GM car, my second being a Honda, I never bought another US car again. The image and reputation is out there that US cars are far behind in quality from foreign cars. This isnt something you can change easily especially not with a govt bailout. It will take a major overhaul and much tested time to gain back some trust. So much so, I think its better to completely start a new company. Let's let these failed business models die and the leaders of the companies to suffer their fate of bad business. This should open the door for new business leaders to learn from their mistakes and make a workable company. There will be suffering during the failure and rebuilding, but it is survivable. If we use any money on the auto industry, it should be to help people through this process and help facilitate it.

 

What we can't do is throw billions at the auto industry and say fix yourself and hope that they change. At the very least, I think some heads should roll from the top of these companies. Maybe new leadership can do it, but I'd like to know major changes are taking place if we put money into them.

[remphish1]

I am concerned about the hundreds of thousand of people employeed by the big 3. Not sure in what capacity we should help but it seems unfair to bail out Fannie, Freddie, AIG and not the car industry. Either all or nothing right?

[cryptique]

The fate of the U.S. auto industry was sealed several decades ago when they made horrible decisions about healthcare and pensions. It was only a matter of time before their healthcare and retiree costs destroyed them; the current economic climate is merely hastening what was destined to happen eventually anyway. I'm not sure the current leadership at those companies can be blamed for the underlying problems -- though they haven't helped matters much, if at all.

 

I fear that pumping billions of taxpayer dollars into the industry will only prop it up for another year or two, after which all that cash will have been lost, which is to say, wasted.

 

I dread to think what will happen to this part of the country if the "big three" go belly up. So much of the economic well-being of southeast Michigan is tied up in the auto biz -- without those jobs, and the jobs at affiliated industries all over the area, and the jobs at businesses that rely on automotive workers (restaurants, etc.), not to mention the money that GM and Ford (in particular) have pumped into local arts and other organizations ... it's going to be a smoking black hole 'round these parts. Detroit, which is already a hellhole, will only get worse. Home values will plummet even more spectacularly than they already have, which will have ripple effects that touch even those of us who have no connection to the auto industry.

 

In short, it's going to suck big-time for everyone ... but I don't think government money is going to prevent the collapse of the industry, so I can't say I favor any kind of taxpayer-funded "rescue" plan.

[Good Old Neon]

I

[ZenLunatic]

I am concerned about the hundreds of thousand of people employeed by the big 3. Not sure in what capacity we should help but it seems unfair to bail out Fannie, Freddie, AIG and not the car industry. Either all or nothing right?

 

The question to you is where do you draw the line? What is all? What is about the credit card, airline, and other companies? Who deserves how much and where will the money come from?

 

And I never was into saving the banks.

 

More arguements on this issue:

[ZenLunatic]

In short, it's going to suck big-time for everyone ... but I don't think government money is going to prevent the collapse of the industry, so I can't say I favor any kind of taxpayer-funded "rescue" plan.

 

That's pretty much it. It's a waste of money to prop up these bad companies.

 

What people need to see is that its not the end of the US auto industry but the end of the Big 3 which was run very poorly. Its the restructuring of the US auto industry. New business models and leader that work and make money. Dont you want an efficient US car company that can compete with the foreign names?

[Good Old Neon]

The question to you is where do you draw the line?

 

It would appear as though the line is drawn around individuals who find themselves in trouble financially

[austrya]

Living in SE Michigan, my parents, my uncles, my ex, my friends, etc, all work at Ford. I'd love to see them all be able to save their jobs, their healthcare, their pensions, but I don't know how realistic that all is.

 

A lot of help I am though, seeing as I drive a Honda (72% built in the US).

[remphish1]

The question to you is where do you draw the line? What is all? What is about the credit card, airline, and other companies? Who deserves how much and where will the money come from?

 

And I never was into saving the banks.

 

More arguements on this issue:

 

 

It is so hard to draw a line I really feel they shouldn't have bailed out anyone....but we are already on the slippery slope....it is going to be hard for the government to say no when all of these essential industries line up for a handout....

[MattZ]

ZenL - I am arguing with you over in the election thread. I can't argue with you in two places.

 

EDIT: Also, everything that I am reading suggests that Chrysler will go under. And I will take a stab at arguing here too: there's no reason why the government couldn't provide a bailout while insisting on certain changes. Either requiring Ford and GM to merge, or replace leadership, or mandate changes in products, etc. We can argue another time about whether we want the government to do things like that (or even if they'd be any good at it), but it's not like the government has to write a check and sit on the sidelines while the companies continue to run themselves into the ground.

 

EDIT2: it would be easier for the govt to let Chrysler go under (politically) because it's a private company...

[cryptique]

"multitasking"

[mfwahl]

One thing for sure is universal healthcare needs to be part of this solution.

[solace]

What about the possibility of Honda & Toyota buying out GM & Ford, converting all of the assembly lines to their models over a few year cycle?

 

Far fetched, yes, but as it's been pointed out... the execs at these American auto companies have their heads so far up their asses, i don't know if bailing them out will have any real impact on steering them in the right direction. Why not let the car companies who ARE doing things right, both for their workers, and environmentally with their cars, etc. take over and allow most all GM & Ford employees to keep their jobs. they shouldn't have to pay for the ineptitude of their top brass.

 

As pointed out, most of Honda's sold in the US are assembled here anyway, I think we need to lose the stigma of Foreign vs. Domestic cars and realize that good cars are good cars, no matter where they are made. If hardly any decent domestics are being made, tough shit, that's their fault. I say embrace the companies who have gotten it right over the last 20-30 years and move forward.

[Moe_Syzlak]

I think the difference between the auto industry and the financial industry is, it appears, that the collapse of the financial industry would have stemmed the flow of capital drastically impacted just about every facet of our economy. There is no doubt that is employers as large as the Big 3 were to collapse, we would all feel some impact, but not near the impact of of the financial industry. That said, ECON 101 says less productive aspects of an economy must be released to provide resources for more productive aspects. Imagine if we had bailed out the horse drawn carriage industry when the auto industry was taking over. I did my thesis on something very similar. My case study was on a small town in Colorado. That town had been totally reliant on gypsum mining. The government bailed out the company multiple times before it eventually collapsed despite the bailouts. There was certainly a rough time for the town, but eventually the town ended up flourishing. In my interviews of townspeople and local politicians, they were all petrified of losing that mining company, but once it happened, they said it was the best thing that ever happened to the town. Point being, if the auto industry is failing, it might fail regardless of bailouts. And, in the end, that might be better for our economy as a whole. I used to work in the auto industry and let's not forget that there are literally hundreds (thousands?) of smaller auto parts companies out there. Many of the parts in "American made" cars are primarily comprised of foreign made parts. And many foreign cars are comprised of many American made parts. It would be a hit, to be sure, but many auto workers would still find employment.

[mountain bed]

One of my best friends works for Chrysler here. Well, maybe "works" isn't the right word. He was laid off in February '07 - and still draws a check at 90% of his base. Which puts him at about $35/hour for sitting at home. For nearly 2 years. I cannot for the life of me figure out how the company can do this and still remain solvent.

 

I don't know what this has to do with this thread, but the story still leaves me scratching my head. It does seem to me that all parties concerned have had it so good for so long that they've run the industry into the ground, rather than adapt to the times. It's not 1965 anymore. These companies could have been retooling their operations for a more economical, earth-friendly vehicle during the first oil crisis 30 years ago but they just buried their heads in the sand. Really a shame.

 

If there is a bailout I guess it should come with a number of mandatory regulations so we don't find ourselves in the same situation as the banking industry (golden parachutes, etc).

[bobfrombob]

I just leased a Kia. I did a bunch of research and the only car in the price range and configuration I was looking at, with good reviews, and made by one of the big 3, was the Pontiac Vibe. Out of about 5 or 6 on the list. And it turns out you can't lease a Vibe. The big 3 really killed themselves in the 80s when they were making crap cars at crap prices. What I don't understand is how they never really turned it around when it was clear that the products offered by companies like Honda and Toyota were changing the market.

[ZenLunatic]

ZenL - I am arguing with you over in the election thread. I can't argue with you in two places.

 

EDIT: Also, everything that I am reading suggests that Chrysler will go under. And I will take a stab at arguing here too: there's no reason why the government couldn't provide a bailout while insisting on certain changes. Either requiring Ford and GM to merge, or replace leadership, or mandate changes in products, etc. We can argue another time about whether we want the government to do things like that (or even if they'd be any good at it), but it's not like the government has to write a check and sit on the sidelines while the companies continue to run themselves into the ground.

 

EDIT2: it would be easier for the govt to let Chrysler go under (politically) because it's a private company...

 

 

Lets move the auto industry bailout talk here, cause I think it's a more specific topic.

 

I think as citizens, we should be know how the govt is spending our money and as of now, we have nothing more than us bailing them out. I'm not hearing anything from the govt about plans of retool or restructuring. All I'm hearing is that we need to inject them with $25- $50 billion fast. Where are the conditions?? And I dont feel its the job of the govt to run a car company and thats what we need. A good business man to restructure the business and industry. Let the market take care of that.

 

I think GM is in the most time sensitive struggle so they will probably the first to go.

[moxiebean]

One of my best friends works for Chrysler here. Well, maybe "works" isn't the right word. He was laid off in February '07 - and still draws a check at 90% of his base. Which puts him at about $35/hour for sitting at home. For nearly 2 years. I cannot for the life of me figure out how the company can do this and still remain solvent.

 

I don't know what this has to do with this thread, but the story still leaves me scratching my head. It does seem to me that all parties concerned have had it so good for so long that they've run the industry into the ground, rather than adapt to the times. It's not 1965 anymore. These companies could have been retooling their operations for a more economical, earth-friendly vehicle during the first oil crisis 30 years ago but they just buried their heads in the sand. Really a shame.

 

If there is a bailout I guess it should come with a number of mandatory regulations so we don't find ourselves in the same situation as the banking industry (golden parachutes, etc).

I'll freely admit that I know almost nothing about how the US auto industry works, but aren't the unions just as much to blame?

[austrya]

The main reason I won't buy a car from Ford, Chrysler, or GM is because of the resale value.

 

I bought a 2005 Dodge Grand Caravan in January 2005. I got a good deal, $0 down and 0% financing. When I wanted a new car in Feb 2008, I went back to the same Dodge dealership and wanted to lease something that would fit my whole family (4 kids, 3 still in boosters/carseats) and the only option they had was a mini van, which was fine with me. So they drew up the best deal they could. I still owed too much on my van 3 years later so they wouldn't pay that off. The cheapest they could get me into a lease for was well over $500 and that was with $500 down and a $500 security deposit. That was for a plain jane Dodge Grand Caravan. It didn't even have tinted windows in the back. GM and Ford didn't have anything at the time (except for the Suburban or a full size van) that would fit the family, so I decided to check out Honda.

 

I got an awesome 2008 Honda Pilot, fully loaded, 4x4, DVD player, etc for about $100 less per month than their best offer. I could have gotten an even better deal if I didn't owe so much on my piece of crap Dodge Grand Caravan that was literally falling apart only 3 years after owning it. I have had my Pilot for a year and a half. I've had absolutely no problems with it at all. Every domestic car I've owned has been in the shop for at least something during the first year.

[mountain bed]

I'll freely admit that I know almost nothing about how the US auto industry works, but aren't the unions just as much to blame?

Sadly, I would say yes. I did say in the first post "all parties concerned".

 

I'm a firm believer in the necessity of unions, and I respect them for what they've been able to do historically. But (as Mr. Dylan has said) "it sure was a good idea until greed got in the way".

[moxiebean]

Sadly, I would say yes. I did say in the first post "all parties concerned".

 

I'm a firm believer in the necessity of unions, and I respect them for what they've been able to do historically. But (as Mr. Dylan has said) "it sure was a good idea until greed got in the way".

yup - there's certainly no shortage of blame to go around.

 

BTW: a couple of years ago npr did a story on the auto worker's Jobs Bank program. Don't know if the program is still in place, tho.

[ZenLunatic]

I'll freely admit that I know almost nothing about how the US auto industry works, but aren't the unions just as much to blame?

 

Thats a big component too that can be fixed through total restructuring.

[MattZ]

I think as citizens, we should be know how the govt is spending our money and as of now, we have nothing more than us bailing them out. I'm not hearing anything from the govt about plans of retool or restructuring. All I'm hearing is that we need to inject them with $25- $50 billion fast. Where are the conditions?? And I dont feel its the job of the govt to run a car company and thats what we need. A good business man to restructure the business and industry. Let the market take care of that.

 

I agree with a lot of what you are saying. As I've said, the worst thing that can happen in capitalism is when companies believe (rightly or wrongly, mind you) that they are too big to fail. And I don't think the auto industry is the same as the banks.

 

I didn't mean to suggest that the government should step in and run the auto industry -- just that a "bailout" for the auto industry doesn't have to be a quick injection of $25BN with nothing else. There are options between the two extremes (nothing vs. a blank check). One of the reasons that I voted for Obama is that I think he will be smart and careful about what he considers. There is a dangerous precedent here. But there is also opportunity here. Netiher extreme and neither ideology is the answer.

[mfwahl]

I think there is great opportunity here. I think the government will have to do something to save the auto industry and will be able to move ahead with a green agenda becayse . I think a lot of the problems we're experiencing now are going to allow Obama to do good things he wouldn't have been able to otherwise. Instead of corporations controlling the government, we may see that get turned around to some degree, see the government making serious demands.

 

But if people were calling Obama a socialist during the campaign....

[ZenLunatic]

I agree with a lot of what you are saying. As I've said, the worst thing that can happen in capitalism is when companies believe (rightly or wrongly, mind you) that they are too big to fail. And I don't think the auto industry is the same as the banks.

 

I didn't mean to suggest that the government should step in and run the auto industry -- just that a "bailout" for the auto industry doesn't have to be a quick injection of $25BN with nothing else. There are options between the two extremes (nothing vs. a blank check). One of the reasons that I voted for Obama is that I think he will be smart and careful about what he considers. There is a dangerous precedent here. But there is also opportunity here. Netiher extreme and neither ideology is the answer.

 

 

If there was an option between the 2 that makes sense I would consider it, but none is out there. It seems to be money first, then lets see what we can do. Then it could be too late. You cant throw money into something without a good plan. Look at AIG. I dont believe we do nothing, but nothing is better than a blank check or what is out there now. Doing nothing is the best option at this point.

 

I voted for Obama too. I think when it comes to world views including wars and also the environment, he is great. When it comes to the economy, I think he's more of the same. He's no different than what any other politican worried about politics instead of the future of our country. He's really only looking ahead maybe a year or two with his plans and ideas.