The Big 3

[ZenLunatic]

In actuality, the "crisis" that has hit the big three hit the crisis point over the summer. Before that, they were doing OK -- restructuring and retooling for more fuel efficient cars -- and not in this severe cash flow position they are in now (GM and Chrysler are worse off than Ford right now). The double punch of the fuel prices then the credit crunch has reduced the number of new cars forecast to be sold this year from 15+M to 11M -- nearly 1/3 fewer.

 

That's why they are asking for low cost loans -- to get them through the first Q of next year (while making huge cuts -- Chrysler cut another 5K jobs with more to follow from the others). I agree that the UAW has to give here too.

 

Anyway, deflation is a huge worry now. Let's say that if one of the big three decided to sell the land their offices are on and lease them back. The value of the property isn't enough now to do that. Same with selling off GMAC (which they would have to reduce their share of it to less than 33% in order to gain bank status BTW) -- they can't get much for it. And raising money on the private market just isn't possible right now. Who would have believed that a scant 6-12 months ago....

 

 

So, thats a start of what we need. They definitely need to cut jobs, plants, and dealers. Cut salaries. I think also cut many full product lines. Keep only the best selling ones. Slim and lean operations. UAW needs to be completely redone. Let's hear those plans to start.

 

How can you justify the not selling because of low price of your assets that can be sold off when you are in the midst of going bankrupt? If its sellable and you need money, you have to sell whatever the price. Would you rather go bankrupt with all those assets and lose everything at once?

[MattZ]

Yes, but there's no point in preserving those jobs if they're no longer part of the industry's success. At this point, it's hard to argue that they are (and quite easy, in fact, to argue that they're exactly the opposite).

 

I understand wanting to save as many jobs as possible, but sometimes industries die. The steel industry basically died, and the country survived. The dot-com boom died and thousands of jobs died with it -- we're still here.

 

Tough times happen. It's insanity, though, to prop up an industry that's no longer viable just to keep the unemployment numbers down. It sucks, but it's reality.

 

If there are superfluous jobs or jobs that don't fit into the new model, those jobs won't/can't exist. I have never suggested that the goal is to "save every job." You are right that some industries die, but this industry is not dying. This industry is hobbled by poor management, poor product, and poor/crippling obligations to existing and former employees. We have explored the chicken/egg problem with this. People are still driving cars and will continue to drive cars. Why not work within a royally futzed up system to lessen the burdens that we've acknowledged, while incentivizing the companies properly, all the while saving unknowable jobs and helping the country on its path to energy indepedence? That path starts with cars.

 

I hate to say it, but it sucks to be them. I know that sounds callous, but nobody wins if we keep this particular patient on life support long past its viability. Out of this calamity will come new opportunities. There will be considerable pain, but people will recover and move on. It's happened before; it'll happen again.

 

Honestly, I'm growing a bit fatigued by all the "what about all the jobs?"

 

Why does the patient have to die, though? Instead of the carnage that comes, maybe things can be done to ease the transition (with concessions from the unions, the taxpayer, the companies themselves) that allows/enables the Big 3 to create the kind of product that everyone agrees we need them to be producing? I realize that everyone (me included) has little faith that management knows its foot from its elbow. That doesnt mean that the situation isn't more complicated and the collateral damage far greater than just unemployment at the Big 3.

[EL the Famous]

We all effect one another, but how you handle what happens in your life it is soley on you. You cant blame anyone for the way your life turned out but yourself or you'll never understand.Maybe you need to get a smaller place. Friends and family will help out.

 

ZenLunatic, Life Coach

 

wow.

[cryptique]

Why does the patient have to die, though?

Actually, what I failed to make clear in my post (it got lost during some editing) was that I favor bankruptcy over bailout. I think it's the best way for the automakers to recover. Yes, bankruptcy brings its own issues, but it makes it easier for the industry to solve some of its most crippling problems.

 

So, yeah, I don't think the patient has to die -- but I think throwing $25 billion at it won't prevent it from doing so, while bankruptcy gives it a chance to come back.

[ZenLunatic]

My friends and family can't help out if they're all out of work too. Nice of you to make that offer on their behalf though.

 

I'm not blaming anyone. You blamed me (and countless others) for not having saved up enough money to be unemployed indefinitely, as if it's as easy as just deciding to have that money.

 

 

Hey, if all your friends and familes are out of work and moneyless, then we can talk. Although people should save money, its not just that, its more about thinking that a job taken away is like a right taken away. Just dont think that there's anything less cause you have less money. Money comes and goes. Dont forget the secret of the sea.

[MattZ]

I think throwing $25 billion at it won't prevent it from doing so

 

Is anyone suggesting this?

[EL the Famous]

Hey, if all your friends and familes are out of work and moneyless, then we can talk. Although people should save money, its not just that, its more about thinking that a job taken away is like a right taken away. Just dont think that there's anything less cause you have less money. Money comes and goes. Dont forget the secret of the sea.

 

ZenLunatic, Life Coach on Acid

[cryptique]

Is anyone suggesting this?

Guys by the name of Wagoner, Mulally, and Nardelli.

[MrRain422]

Hey, if all your friends and familes are out of work and moneyless, then we can talk. Although people should save money, its not just that, its more about thinking that a job taken away is like a right taken away. Just dont think that there's anything less cause you have less money. Money comes and goes. Dont forget the secret of the sea.

 

Who said anything about a job being a right? I'm not upset that I lost my job because I think that I was wronged, I'm upset about it because I don't want to be out on the street. Can you really not see the difference?

 

You're talking about philosophy while I'm talking about being able to afford to eat tomorrow.

[MattZ]

Guys by the name of Wagoner, Mulally, and Nardelli.

 

No they aren't.

They are asking for loans (which would be paid back) or equity infusions (which is an investment by Joe Taxpayer in the business). Neither of those count as "throwing money" at the industry. At least in my book. No one is suggesting that we just write a check to the businesses to do with as they please and pay back if they please.

[cryptique]

No they aren't.

They are asking for loans (which would be paid back) or equity infusions (which is an investment by Joe Taxpayer in the business). Neither of those count as "throwing money" at the industry. At least in my book. No one is suggesting that we just write a check to the businesses to do with as they please and pay back if they please.

Oh, I know that. I don't think $25 billion will help, whether it's a loan or a gift. And I seriously question their ability to pay back any such loans, which to me means that providing those loans would be equivalent to throwing money down a pit.

[ZenLunatic]

Who said anything about a job being a right? I'm not upset that I lost my job because I think that I was wronged, I'm upset about it because I don't want to be out on the street. Can you really not see the difference?

 

You're talking about philosophy while I'm talking about being able to afford to eat tomorrow.

 

You were the one defending the auto industry because the people in Detroit losing their jobs and how it was wrong to let it happen because of the the jobs. Anyways.... cant you move to a smaller place to save money? I dont know your situation.

[ZenLunatic]

ZenLunatic, Life Coach on Acid

 

Drop Acid not Bombs.

[MrRain422]

I dont know your situation.

 

EXACTLY

 

You were the one defending the auto industry because the people in Detroit losing their jobs and how it was wrong to let it happen because of the the jobs. Anyways.... cant you move to a smaller place to save money? I dont know your situation.

 

When did I defend the auto industry? I defended their employees who had nothing to do with the industry's failures. Not the same thing.

 

And no I can't just move. I have a lease.

[EL the Famous]

since money ain't a thing, i suggest zen lunatic pay your rent until the economy rights itself.

[mfwahl]

Mr Rain, you're not trying hard enough.

 

Isn't there something between a bailout and bankruptcy. From what I've read, bankruptcy won't work for this industry, but I certainly don't want to just give them money. It seems like this could be an opportunity to make some great changes to the industry while using their existing infrastructure.

 

I'd like to see the CEO's have to downgrade their homes and take a massive pay cut. I'd like to see the industry do well, too. I definitely have to read more on this, but I don't think bankruptcy is a good idea short term or long term.

[Guest Jules]

Honestly, current situation aside, those CEOs deserve every penny they make. It's like running the government. I don't think most people understand the sheer size of these companies.

[ZenLunatic]

When did I defend the auto industry? I defended their employees who had nothing to do with the industry's failures. Not the same thing.

 

And no I can't just move. I have a lease.

 

 

What is there to defend there? I dont blame the employees for the failure either, no one does, its the leaders of the companies. The leaders of the companies ran it into the ground.

[ZenLunatic]

since money ain't a thing, i suggest zen lunatic pay your rent until the economy rights itself.

 

i like you EL the Famous, lets dose together.

[MattZ]

Honestly, current situation aside, those CEOs deserve every penny they make. It's like running the government. I don't think most people understand the sheer size of these companies.

 

I agree with you in principle, but can you really say "current situation aside"?

[Spawn's dad]

[ih8music]

Honestly, current situation aside, those CEOs deserve every penny they make. It's like running the government. I don't think most people understand the sheer size of these companies.

They deserve to be richly rewarded for a difficult & stressful job, but I would hesistate to say they deserve "every penny they make." In the 60's & 70's the average CEO made 20-30 times as much as the average non-mgmt worker. That ratio is now something like 400:1. You can't tell me that the job of a CEO has somehow gotten 20x more difficult since the 70's.

[MattZ]

You can't tell me that the job of a CEO has somehow gotten 20x more difficult since the 70's.

 

Yes he can.

 

EDIT: not trying to be obnoxious -- corporations are much bigger, with more employees, more complicated, etc. Not to mention, revenues are probably 20x. I am not trying to start a debate about whether the wealth should/shouldn't be spread around among the other employees more, but just pointing out that yes, with a more global economy, many of these companies are much more complicated than they've ever been. Compare the GE of today with the GE of 30 years ago. Come on, it's not even close.

[Guest Jules]

I agree with you in principle, but can you really say "current situation aside"?

You're right. I guess I don't quite know how to say it. My point is that I understand it's hard to justify their salaries when the companies they are supposed to be running are crumbling financially. They're flying to DC on their private jets to ask for help. It doesn't look right, and it's bad PR. Overall, though, these are extremely sharp guys with enormous responsibilities that are difficult to even fathom. I don't think that is overstating anything.

 

They deserve to be richly rewarded for a difficult & stressful job, but I would hesistate to say they deserve "every penny they make." In the 60's & 70's the average CEO made 20-30 times as much as the average non-mgmt worker. That ratio is now something like 400:1. You can't tell me that the job of a CEO has somehow gotten 20x more difficult since the 70's.

Actually, it probably has, not that it is necessary to justify the salaries and perks.

[MrRain422]

Enormous salaries are one thing, but I think it's pretty crazy when they get huge bonuses while laying off thousands upon thousands of workers.