The Big 3

[John Smith]

that article fails to mention the "fucking of all vendors" aspect of Chapter 11.

 

And many of the vendors are small businesses. My inlaws once got screwed out of a fairly significant amount of money when a customer field for bankruptcy shortly after recieving a shipment. I think they may have ended up getting back 7 cents on the dollar years later. It effectively ended their business.

[Guest Jules]

And many of the vendors are small businesses. My inlaws once got screwed out of a fairly significant amount of money when a customer field for bankruptcy shortly after recieving a shipment. I think they may have ended up getting back 7 cents on the dollar years later. It effectively ended their business.

Yep. We had one for ~70K in 2007 and another for ~10K this year. They lie and try to re-assure you so they can continue to receive product, then they fuck you. It really sucks. Chapter 11 filing of any of the Big 3 would end several small businesses as you describe.

[MattZ]

ZenL is fine with that.

[Guest Jules]

He doesn't know what he's talking about on this one.

[cryptique]

Just to play devil's advocate, though ... isn't it a bit of a flawed business model to be so narrowly focused that the collapse of one of your customers would take down your own business?

 

I mean, I realize it's not that simple -- someone has to make parts for the automakers, and maybe that line of work doesn't lend itself to diversification -- but on a fundamental level, isn't this basically true?

[Guest Jules]

Just to play devil's advocate, though ... isn't it a bit of a flawed business model to be so narrowly focused that the collapse of one of your customers would take down your own business?

 

I mean, I realize it's not that simple -- someone has to make parts for the automakers, and maybe that line of work doesn't lend itself to diversification -- but on a fundamental level, isn't this basically true?

Yes. Unfortunately, though, there are many companies heavily/primarily weighted on the automotive side, and working on those design projects (if design responsible) tends to leave little time for diversification into other industries. Also, many companies do a poor job of watching their receivables, so they don't notice when a customer isn't paying as fast as it used to; signs of trouble, etc. So, yes somewhat of a flawed business model, and you need to know how to play the automotive game and be careful. Everyone thinks they want to supply automotive, but they don't know what they're getting into.

 

(Also, without the automotive industry, many of these companies wouldn't come into existence in the first place. They go as the Big 3 go. Call it flawed, I guess, but it can be really good too.)

 

For example, we were working (for the last year or so) on a design program for a 2010 Ford vehicle. They canceled the program in November. At the time, they owed us ~200K in tooling costs. It took 3 or 4 weeks of haggling, threatening to not work on other projects, etc. to get paid.

[Guest Jules]

depending on the negotiated terms, the vendor might also have to return money received from the bankrupt customer in the previous 90 days or something. It's really remarkable.

[ZenLunatic]

A fake economy is not maintainable. We cant just keep buying cars and homes and expect property values to always rise. We have to learn to change and adapt.

 

Yes, a collapse in an industry will take down many businesses. America needs restructuring, we dont need more houses or cars. We dont need fancier things. We cant live the way we used to anymore. We need to find a way to make our country work and make money.

 

This will not happen if we prop up bad businesses. There will be job losses and companies going out of business. This is what happens and is happening. It isnt fair when somoeone goes bankrupt and doesnt pay you you're money but there is no other way. You cant just take money from the public for that loss. All companies have risk, that risk has to be there or else it's not real.

[tugmoose]

This one's for Detroit, and any one else who's struggling.

[Analogman]

Chrysler says to shut down all production for month

 

1 hr 49 mins ago

 

DETROIT (Reuters)

[ZenLunatic]

Full pay and benefits for a at least a full month during the holidays. Thats a nice gift. Good time to look for a new job.

 

Car demand is down and wont go back to where it used to be for a long time so dont expect to have a thriving car market when the bailout comes. Things are happening the way it should so far, hopefully the government doesnt screw things up too much.

[John Smith]

If i'm not mistaken these companies usually shut down for ten days or so around the holidays anyway. They have mantenance time and retooling etc... so the shut down is really the extra couple of weeks. Or am I wrong here? CAT usually shuts down for that period and it's a regular thing. BTW CAT is cutting their workforce now too.

[cryptique]

GM (or is it Ford) shuts down for two weeks every Christmas, but it'll be three weeks this year.

 

Not sure what the duration of Chrysler's usual holiday shutdown is.

[lamradio]

My father is a purchasing manager for Bosch. They supply car parts, primarily brake systems to all of the car companies.. They are getting two weeks off for Christmas (it's always been one week in the past).. They are also cutting back the hours on the assemly line workers.

 

And the big one, they are offering every employee voluntary severance packages. He said that this is just the beginning and soon they are going to cut jobs and salary... There has been a 42% drop in production.. Not looking good for my pops..

[austrya]

My ex works for Ford and he's off from the 19th through the 5th for the holiday, like he is every year and then he's off for the following week (or maybe two) as a lay off.

[Guest Jules]

A fake economy is not maintainable. We cant just keep buying cars and homes and expect property values to always rise. We have to learn to change and adapt.

 

Yes, a collapse in an industry will take down many businesses. America needs restructuring, we dont need more houses or cars. We dont need fancier things. We cant live the way we used to anymore. We need to find a way to make our country work and make money.

 

This will not happen if we prop up bad businesses. There will be job losses and companies going out of business. This is what happens and is happening. It isnt fair when somoeone goes bankrupt and doesnt pay you you're money but there is no other way. You cant just take money from the public for that loss. All companies have risk, that risk has to be there or else it's not real.

Wow it's like you know everything or something.

[bjorn_skurj]

Wow it's like you know everything or something.

Maybe he is Adam Smith posting from the next world.

[explodo]

Wow it's like you know everything or something.

He is right. Completely unrealistic, but right.

[Edie]

A fake economy is not maintainable. We cant just keep buying cars and homes and expect property values to always rise. We have to learn to change and adapt.

 

Yes, a collapse in an industry will take down many businesses. America needs restructuring, we dont need more houses or cars. We dont need fancier things. We cant live the way we used to anymore. We need to find a way to make our country work and make money.

 

This will not happen if we prop up bad businesses. There will be job losses and companies going out of business. This is what happens and is happening. It isnt fair when somoeone goes bankrupt and doesnt pay you you're money but there is no other way. You cant just take money from the public for that loss. All companies have risk, that risk has to be there or else it's not real.

 

There are so many contradictions in this statement, I don't know where to start. And frankly, I am not going to explain it to you.

[lamradio]

There are so many contradictions in this statement, I don't know where to start. And frankly, I am not going to explain it to you.

 

Well he is right in a lot of ways.. As hard as it is to realize that my Dad could lose his job because of the failing auto industry, it needs to happen... There does need to be a lot of restructuring.. Just like how we can't always depend on Mommy and Daddy to come bail us out when we grow up.. If they did, we would never learn anything...

[mfwahl]

I kind of like Spitzer's idea on the auto bailout. Have them fight over it and not everyone gets one. Whoever has the best plan for reform wins. We can't just give them a bridge fund to continue what they're doing, but at the same time we can't lose the infrastructure and our economy may not be able to handle the hit if they fold.

[tugmoose]

Wow it's like you know everything or something.

Ridicule the messenger/ignore the message. I like it.

[mfwahl]

Cha-ching!!

 

$17.4 billion out of TARP to carmakers.

[Spawn's dad]

In the end we'd be healthier if the auto industry were allowed to collapse. As a nation we might finally have an impetus to move away from a service oriented economy that will ultimately destroy us.

[Edie]

Economies are driven by innovation.

 

Collective exhale - for now - in Detroit today.