The Big 3

[ZenLunatic]

Point 1: You clearly don't know me. Moreover, I am in the USED car business, by and large.

 

Point 2: Do you really have the stomache to find out what it would be like if the big three went out of business here? As has been stated by those who actually know something about the car business, Chap 11 is not really an option for a maker of an item that people buy for use for 4+ years. Would you buy a GM vehicle if it were in Chapter 11? Right. And "massive restructuring and downsizing" is worse than it going away completely?

 

Point 3: I would tell you to go F yourself, but I am above that. Really, I am.

 

Also, here are a couple of senators looking at the big picture. What a surprise.

 

When I said "you", I was more referring to the person who wrote the article you posted. Main point: I think people who want the bailout of the auto industry is mostly in the auto industry and fighting for their own livelihood. Thats all good and fine, but that doesnt make it right.

 

I have the stomach to find out what it could have been if we never bailed out the banks so the auto company is small potatoes.

 

I would not buy a US car before, now, or after bailout. The cars suck and a bailout wont change that. If you think people wont buy from a Chpt 11 company, why would they buy from a company in the mist of it and currently taking a huge bailout? The only thing changing is that the tax payers are paying for all the losses of the company instead of the company. If the US car companies somehow survive this, it will be such a different company, it will pretty much be a new company anyways so the US auto indusrty is gone as we currently know them already.

 

Everyone is asking for handouts, well it just cant happen. This bailout thing has to stop.

 

If you want to discuss, please dont get offensive.

[ZenLunatic]

What is the status of union contracts if GM, etc., goes into Chapter 11? Are they still in effect?

 

If GM goes Chapter 11, they can run without the restraints of union contracts to help re-org the business. This could be a way to emerge a new company with a different structure. Why not let this happen?

[Moe_Syzlak]

If GM goes Chapter 11, they can run without the restraints of union contracts to help re-org the business. This could be a way to emerge a new company with a different structure. Why not let this happen?

Because they don't have the capital to re-emerge (likely). If the financial services industry weren't also in disarray, this might be without question the best bet. But as it stands, it's not that simple.

[ZenLunatic]

Because they don't have the capital to re-emerge (likely). If the financial services industry weren't also in disarray, this might be without question the best bet. But as it stands, it's not that simple.

 

They need to manage their way out of this mess through retooling in chapter 11 like everyone else. If they cant, they dont belong to exist. Do you think after the auto industry gets the bailout money, people will see the company differently? Will people actually start buying US cars more now? So what change will bailout bring except keeping the company alive for a bit longer and wasting tax payer money?

 

So we will find out this week. Meetings tues and weds. Auto makers asking for money from govt. Interesting to see how much money will be given and at what conditions.

[Good Old Neon]

How?

 

Do you think that the majority of the autoworkers would trade their current negotiated health insurance for some govenment provided plan?

 

Well, if all three collapse, they may end up with neither - job or health insurance.

[Edie]

The perfect shit storm of the market today is the issue. They could survive any one of these, or even two, but all three at the same time are a catastrophe.

 

1. Meltdown of the capital market -- they can't borrow money right now by selling stock -- they are too "risky"

2. Meltdown of the consumer credit market -- they can't sell cars as fast. This includes the leasing market, which has largely disappeared since residuals are almost impossible to predict

3. Rapidly shifting consumer demand -- Yes they were addicted to the big profit truck/SUV, and you can say "their cars suck" but remember that until August, the Ford F150 was the top seller every single month for 20 years, and until this year, GM was still the number one car maker in sales. People traded in these vehicles the first time it cost north of $100 to fill up their tanks -- where they went to auction, only to sell for 25-60% less than they were a year earlier, wreaking havoc on the wholesale markets and messing up leasing for all vehicles. They cantilevered their product mix to SUVs in the same way AIG cantilevered their risk portfolio to credit swaps. AIG gets bailed out -- why not GM?

 

And that initial $25B loan in Sept was to help the big three retool and get more economical vehicles on the road faster. Which will be moot if they are gone in six months.

[Good Old Neon]

This has been a fascinating discussion -- there's a feature in this weekend's WSJ that espouses "just say no" to the big 3 -- I'm sorry I didn't happen upon it sooner.

 

I find it intriguing that not only the United States, but the world, finds itself at a juncture in energy, infrastructure, environment, finance, health and manufacturing/production. The cartoon about the dinosaur is apt because as a civilization we are as close to sealing our doom as can be, and may have already witnessed our own terminal disease -- unless we can rescue ourselves in the 11th hour and 59th minute. Capitalism has brought us here economically as much as the dichotomy of democracy vs. communism has brought us here politically. In each case, we've hurdled down the same blind road, doing everything it takes to maneuver every unexpected curve, rather than assessing whether we're even on the right road.

 

I watched a program recently on PBS about the great depression, and what we couldn't realize before but are fast being forced to appreciate is how capitalism hurdled us into that economic abyss, how those who profited from the process were utterly helpless, grabbing at financial gears like the engineer of a runaway train. And what ensued was as socialist a time as any "democracy" had seen.

 

The idea of bailouts, to oversimplify, seems a reward, a mulligan, to those whose greed, and absence of ethics and integrity who sought the uncontrolled momentum and headlong direction.

 

Not a great example, but I thought about the dot-com bomb at the turn of the century. Those lost in the rush for fool's gold didn't deserve to be bailed out. It's not comparison to the auto industry; save for the fact that innovation resurrected the IT industry and brought back profit and advancement from the ashes.

 

While considering the rest of the world and our place in it, you have to be wearing some pretty stout blinders not to realize that our biggest world competition is heavily subsidized. Free trade has been a laudable goal but it seems we've taken the biggest beating trying to level the playing field, while bungling our own industries with intermittent protectionism mixed with loopholes that allow our manufacturing to squirt to cheaper markets.

 

Whatever the U.S. government does financially will likely get industry moving again; but before it gets a push, we'd better damn well make sure what direction we want to apply momentum towards.

 

Rather than bail out an existing auto industry, why not let the existing one fail and subsidize, or contract, to retool the industry to build alternative vehicles -- electric cars -- hell cable cars. Reward innovation, put people to work, let the country benefit to affordable access to the fruits of its labor and investment.

 

Upward redistribution of wealth indeed. I think the emperors have done a great job of convincing us not only of their new wardrobe, but have got us wearing it and wondering why we're still cold.

 

Well said

[bjorn_skurj]

I am really on the fence over whether there should be an auto industry bailout. The national defense aspect needs to be considered as well. If we do end up nationalizing it, like we did Wall Street, we should make them build hybrids that completely undercut Honda and Toyota in price and quality. No more of this SUV shit, unless they are hybrids. All they do is eat up gas and encourage their owners to think they are better than other people.

[ZenLunatic]

The perfect shit storm of the market today is the issue. They could survive any one of these, or even two, but all three at the same time are a catastrophe.

 

1. Meltdown of the capital market -- they can't borrow money right now by selling stock -- they are too "risky"

2. Meltdown of the consumer credit market -- they can't sell cars as fast. This includes the leasing market, which has largely disappeared since residuals are almost impossible to predict

3. Rapidly shifting consumer demand -- Yes they were addicted to the big profit truck/SUV, and you can say "their cars suck" but remember that until August, the Ford F150 was the top seller every single month for 20 years, and until this year, GM was still the number one car maker in sales. People traded in these vehicles the first time it cost north of $100 to fill up their tanks -- where they went to auction, only to sell for 25-60% less than they were a year earlier, wreaking havoc on the wholesale markets and messing up leasing for all vehicles. They cantilevered their product mix to SUVs in the same way AIG cantilevered their risk portfolio to credit swaps. AIG gets bailed out -- why not GM?

 

And that initial $25B loan in Sept was to help the big three retool and get more economical vehicles on the road faster. Which will be moot if they are gone in six months.

 

I have to disagree with you on "Rapidly shifting consumer demand". Honda and Toyota have been following consumer interest for years by making high reliability cars that are great on gas mileage, nothing new. When it comes to cars, the thing most people look for is resale value. Check the resale value of american cars to foreign cars on the whole for the past decade. It shows the story. Also, isnt there a fundalmental business problem is you are #1 in sales and you have huge money problems? How is that issue going to be addressed?

 

Yeah GM made bad business decisions and risks and now facing the consequenses of those just like AIG. You do have a point when it comes to bailing out GM is fair because of what they did before. They never should have bailed out AIG or anyone and in doing that they set a bad precedence. We have to stop this type of thing now rather than later.

[Good Old Neon]

I am really on the fence over whether there should be an auto industry bailout. The national defense aspect needs to be considered as well. If we do end up nationalizing it, like we did Wall Street, we should make them build hybrids that completely undercut Honda and Toyota in price and quality. No more of this SUV shit, unless they are hybrids. All they do is eat up gas and encourage their owners to think they are better than other people.

 

Which is why I find Ford

[ZenLunatic]

I am really on the fence over whether there should be an auto industry bailout. The national defense aspect needs to be considered as well. If we do end up nationalizing it, like we did Wall Street, we should make them build hybrids that completely undercut Honda and Toyota in price and quality. No more of this SUV shit, unless they are hybrids. All they do is eat up gas and encourage their owners to think they are better than other people.

 

Undercutting Honda and Toyota in price and quality. Now thats a US car company I want, can GM and Ford even get there with where they are now?

 

Just because the Big 3 fails doesnt mean there will be no US car company ever. Someone is bound to buy up the pieces and build a company from the ground up that can compete effectively. There is alot of opportunity here for the right businessman.

[Lynch]

I work in the RV industry in Canada, and I find out tomorrow if I will have a job or not after Christmas. They are laying off 90-99 people, nearly half our workforce. This is the hardest hit we have ever been, and we have been around almost 45 years.

[MattZ]

I work in the RV industry in Canada, and I find out tomorrow if I will have a job or not after Christmas. They are laying off 90-99 people, nearly half our workforce. This is the hardest hit we have ever been, and we have been around almost 45 years.

 

Good luck, Lynch. Fingers crossed for you...

[IRememberDBoon]

So now that the Republicans sent the entire economy into the toilet they want to flush whatever's left?

 

I mean is it even worth talking about??

 

Every day or two the Republicans have some new stupid fugging clarion call that was brought to their attention by whoever and now all of the sudden they are worried about that subject and know all about it.

 

sit back ladies. whatever The President Elect wants to do about the Big 3 is what we will do. I'll leave the judgement on the facts up to him. The decision making process with input from experts. all i know is republicans should just shut up. WE havent even started yet. Your time to cry will come soon and im sure it will be loud.

[mfwahl]

I work in the RV industry in Canada, and I find out tomorrow if I will have a job or not after Christmas. They are laying off 90-99 people, nearly half our workforce. This is the hardest hit we have ever been, and we have been around almost 45 years.

Good luck, hope all goes well.

[ZenLunatic]

So now that the Republicans sent the entire economy into the toilet they want to flush whatever's left?

 

I mean is it even worth talking about??

 

Every day or two the Republicans have some new stupid fugging clarion call that was brought to their attention by whoever and now all of the sudden they are worried about that subject and know all about it.

 

sit back ladies. whatever The President Elect wants to do about the Big 3 is what we will do. I'll leave the judgement on the facts up to him. The decision making process with input from experts. all i know is republicans should just shut up. WE havent even started yet. Your time to cry will come soon and im sure it will be loud.

 

 

From what I've been hearing, GM cant wait until Obama is president. They maybe gone by year end or else they would just wait.

[JUDE]

Which is why I find Ford

[Edie]

I have to disagree with you on "Rapidly shifting consumer demand". Honda and Toyota have been following consumer interest for years by making high reliability cars that are great on gas mileage, nothing new. When it comes to cars, the thing most people look for is resale value. Check the resale value of american cars to foreign cars on the whole for the past decade. It shows the story. Also, isnt there a fundalmental business problem is you are #1 in sales and you have huge money problems? How is that issue going to be addressed?

 

Yeah GM made bad business decisions and risks and now facing the consequenses of those just like AIG. You do have a point when it comes to bailing out GM is fair because of what they did before. They never should have bailed out AIG or anyone and in doing that they set a bad precedence. We have to stop this type of thing now rather than later.

 

What has been driving the market for US vehicles is cheap loans with no down payments, so people have been trading up to negative equity for years. So many people are underwater on their auto loans -- I think we have a stat that more than 35% of people who have a car loan are upside down (though don't quote me -- I need to look it up). So now they can't trade them in because they can't get another loan -- so traffic is way down in dealerships across the US.

 

And you are right about T and H being smart and manufacturing and selling high quality, high mileage vehicles. However, I can argue that SUVs and trucks last longer than passenger vehicles on average. I have the stats to prove it (its my job).

 

T and H also sell trucks and SUVs -- and they are taking a bath on them too. They just have been smarter about their product mix as the big 3 ceded the small/midsize passenger vehicle market years ago so they could own the bigger profit SUV truck market -- which they had to in order to pay their US workers in plants around the US.

 

 

Just because the Big 3 fails doesnt mean there will be no US car company ever. Someone is bound to buy up the pieces and build a company from the ground up that can compete effectively. There is alot of opportunity here for the right businessman.

 

Do you know how a car is made economically -- and how long engineering just one vehicle takes? This is not a "pick up the pieces and start over" kind of thing -- like a bank.

 

I work in the RV industry in Canada, and I find out tomorrow if I will have a job or not after Christmas. They are laying off 90-99 people, nearly half our workforce. This is the hardest hit we have ever been, and we have been around almost 45 years.

 

Vibes man.

[mountain bed]

I work in the RV industry in Canada, and I find out tomorrow if I will have a job or not after Christmas. They are laying off 90-99 people, nearly half our workforce. This is the hardest hit we have ever been, and we have been around almost 45 years.

Lynch, we're sending vibes from the flatlands your way.

[Spawn's dad]

The textile industry far eclipsed the auto industry as the largest manufacturing industry in the country. We let that go

without a whimper. Fuck, few probably even realize all their clothes, bedding, towels, curtains etc etc are all made

in China and Pakistan and India.

 

The idea that we can compete against foreign companies on unlevel compensation and environmental

restrictions fields is utterly ridiculous. It costs ways more to do the same thing domestically as it does

offshore.

[jimmyjimmy]

Which is why I find Ford

[Good Old Neon]

You do realize that a segment of the population actually uses trucks to haul stuff and not just to drive around feeling manly right?

 

I'd own a Aveo if I could haul a bunch of 2X6's and some drywall, but it's not really feasible.

 

My dad spent his life pouring foundations, my brother is a mason, both of them are (was in my dad

[Duck-Billed Catechist]

The textile industry far eclipsed the auto industry as the largest manufacturing industry in the country. We let that go

without a whimper. Fuck, few probably even realize all their clothes, bedding, towels, curtains etc etc are all made

in China and Pakistan and India.

 

The idea that we can compete against foreign companies on unlevel compensation and environmental

restrictions fields is utterly ridiculous. It costs ways more to do the same thing domestically as it does

offshore.

What, they don't have environmental restrictions or pay fair wages in Japan? Well, they do have universal healthcare--that's got to be the major difference. Plus, a lot of the Japanese cars are made here.

 

The US automakers are not competing against third world countries.

[Spawn's dad]

What, they don't have environmental restrictions or pay fair wages in Japan? Well, they do have universal healthcare--that's got to be the major difference. Plus, a lot of the Japanese cars are made here.

 

The US automakers are not competing against third world countries.

 

My point was really speaking to the fact that we gave up on manufacturing along time ago, and the damage is done. If you did your research

you'd see that yes, Japan, Korea and other Asian countries don't have the same environmental restrictions we have here, and that the manufacturing

and labor are, as a whole, cheaper there. If you don't think our cars are eventually coming from third world countries you're simply delusional.But wtf do I know? I just saw the countries lsargest mfg industry go offshore.

[Duck-Billed Catechist]

My point was really speaking to the fact that we gave up on manufacturing along time ago, and the damage is done. If you did your research

you'd see that yes, Japan, Korea and other Asian countries don't have the same environmental restrictions we have here, and that the manufacturing

and labor are, as a whole, cheaper there. If you don't think our cars are eventually coming from third world countries you're simply delusional.But wtf do I know? I just saw the countries lsargest mfg industry go offshore.

Without knowing too much about it, I'd wager that both US and Japanese automakers source a good deal of their parts from third world countries. But that's different than competing with the third world countries.