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Topic: Bailout of GM

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  1. #1

    Bailout of GM

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    OK folks. Another bailout, now for the auto industry?
    I think not!

    We're at about 7 trillion dollars and counting, how far do we go?

    This is absurd. Let them fold and someone will come along and fix it.
    That's the way things go.

    A couple of years ago I read a report that 2 leading Japanese auto makers were making about $1400 profit per unit. Great!
    In contrast, Ford was losing $400 per vehicle!!

    I haven't looked up the latest numbers but it's obvious the whole industry needs major restructure and if we can't build one here for a decent profit, forget it or.......let someone else have a go.

    One of my companies didn't do so well last year, can I have a few hundred grand so I can buy some yummy new sample libraries please?
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  2. #2

    Re: Bailout of GM

    Quote Originally Posted by Ernstinen View Post
    Hey, Chalfant!

    I just got back from a Thanksgiving "vacation" with 2 broken ribs and lung bronchosis, but may I venture into this problem?

    Ern
    Sorry to hear about your ribs and that Ern, holly crap Batman!
    I guess I won't complain that the damn kids came over and gave me the wicked flu, the bastards Kids!

    I just don't understand why we allow the auto makers to produce vehicles that DON'T get 50+ MPG, when we KNOW they can make em.
    Oh sorry, I forgot. In bed with the oil companies I guess.
    When all is said and done though I believe the public have the power in a free market. If we speak up and don't buy these gas guzzling vehicles they simply wouldn't make em!
    Maybe the buck stops with us?
    Anyway, what do I know.

    I just think we can't set a precident on bailing out everyone when our economy is so strained already. Where the hell is the money coming from.
    Well. The taxpayer, that's where. Haven't we already lost enough?

    Hope ya get better soon man.....
    2 X Intel i7 920 sys. 12 gigs Ram. XP & Win 7 64
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  3. #3

  4. #4

    Re: Bailout of GM

    Quote Originally Posted by Ernstinen View Post
    I read this today:

    GENERAL MOTORS
    Saab and Saturn brands will be sold or abandoned.
    Pontiac will become a niche brand within GMC/Buick/Cadillac.
    Hummer unit has been for sale since June (good luck!).

    FORD
    Considering sale of Volvo.

    CHRYSLER
    Combining Dodge, Chrysler, and Jeep dealerships under one roof as part of a plan announced in February.

    Not only would all three chief executives take a salary of just $1 next year, but the three automakers have also drastically reduced, if not altogether eliminated, bonuses and raises this year and next.

    Maybe they're FINALLY getting the message (10 years too late).

    Ern
    Well, all of those things are needed I guess. The cost of doing business in hard times or should I say when you let it get to that, as you did!

    I fear that congress will indeed accomodate them somehow.
    2 X Intel i7 920 sys. 12 gigs Ram. XP & Win 7 64
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  5. #5

    Re: Bailout of GM

    Quote Originally Posted by Reegs View Post
    http://www.teslamotors.com/

    Let's also not forget GM's (technically successful) foray:
    http://en.wikipedia.org/wiki/General_Motors_EV1
    Not a bad looking vehicle that Tesla, $100K, not too practicle though and electric cars aren't the answer of course.

    By all means we need to spend time and money on alternative fuels but the only viable one is solar. The panels have been the downfall due to cost but that will be solved in about 5-6 years.

    Solar. That's the future I think.
    2 X Intel i7 920 sys. 12 gigs Ram. XP & Win 7 64
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  6. #6
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    Re: Bailout of GM

    You can't bailout car companies unless they've been put into dire straights directly by bank failure surely?

    In the long run it's good that these automobile firms have to start slimming down - and maybe they will start to design more sensible cars in future.

    If governments start trying to buck markets - look out.

  7. #7

    Re: Bailout of GM

    I just left Detroit for Dallas. I spent 3.5 years there working for a company that designed and manufactured the trade show exhibits for all of the major auto shows including Detroit, LA, Chicago, NY, etc, etc. I can't begin to tell you what these companies spent on their exhibits. 3 years ago Jeep spent over 5 million dollars on their display for Detroit alone. GM decided to consolidate all of their divisions under one umbrella. The first year they did that it cost them over 20,000,000 and the next year (their 100th anniversary I think) cost them close to 40,000,000.

    Now this is all for the Detroit auto show alone. LA, Chicago, NY, etc all had their own budgets and properties. The funny thing about GM, Chrysler and Ford exhibiting in Detroit is that, aside from the international press at the show (which is one of the big reasons for the show) there is no one to really hawk the cars to. Detroit leads the nation in poverty and unemployment. If you happen to be gainfully employed there chances are it is by one of the "Big 3' anyway. So you will be obligated to already own a Big 3 automobile especially when you can buy it an employee discount.

    The unfortunate reality for the big 3 is huge. They are tied to very expensive union labor (I read an article about a forklift driver making over 100k a year), they no longer design and manufacture cars that anyone wants (Hummer, Navigators, Escalades, etc), their is a ton of global competition (and we haven't even begun to see Chinese and Indian cars permeating the market, but we may), they put benefit plans in place for workers, and retirees that are not sustainable (they have a job pool that pays you up to 95% of your wage when layed off, full health benefits for retirees, etc) they are led buy greedy, rich, so out of touch good old boys.

    I do have sympathy for the thousands of people that will lose their jobs if these guys go away. However, as with nature, there is a weaning out process that allows the healthy to survive and flourish while the weak and not so smart get phased out. It has happened to the dudes that made vinyl records, it has happened to the record companies, it has happened to Oberheim, Sequential Circuits, Ensoniq, etc. (I don't mean to say that the guys at Oberheim, etc are not smart just that their time in the sun had come and gone, they are in fact heroes of mine)

    Detroit has had a good run. A lot of people got a lot of money during the glory days. The reality was if you got a job "on the line" (working on the cars), you were set for life and could provide for a family. No amount of bailout money is going to bring back the glory days for those guys. Their business model doesn't work anymore.

    Letting these guys fail naturally would be the best thing for them. It would allow them to come back leaner and meaner and stronger to compete. If we bandaid the inevitable we'll just postpone the end.

    2 cents,

    Darren
    www.darrenpasdernick.com
    "Every time you play a wrong note God kills a kitten."

  8. #8

    Re: Bailout of GM

    Quote Originally Posted by dpasdernick View Post
    I just left Detroit for Dallas. I spent 3.5 years there working for a company that designed and manufactured the trade show exhibits for all of the major auto shows including Detroit, LA, Chicago, NY, etc, etc. I can't begin to tell you what these companies spent on their exhibits. 3 years ago Jeep spent over 5 million dollars on their display for Detroit alone. GM decided to consolidate all of their divisions under one umbrella. The first year they did that it cost them over 20,000,000 and the next year (their 100th anniversary I think) cost them close to 40,000,000.

    Now this is all for the Detroit auto show alone. LA, Chicago, NY, etc all had their own budgets and properties. The funny thing about GM, Chrysler and Ford exhibiting in Detroit is that, aside from the international press at the show (which is one of the big reasons for the show) there is no one to really hawk the cars to. Detroit leads the nation in poverty and unemployment. If you happen to be gainfully employed there chances are it is by one of the "Big 3' anyway. So you will be obligated to already own a Big 3 automobile especially when you can buy it an employee discount.

    The unfortunate reality for the big 3 is huge. They are tied to very expensive union labor (I read an article about a forklift driver making over 100k a year), they no longer design and manufacture cars that anyone wants (Hummer, Navigators, Escalades, etc), their is a ton of global competition (and we haven't even begun to see Chinese and Indian cars permeating the market, but we may), they put benefit plans in place for workers, and retirees that are not sustainable (they have a job pool that pays you up to 95% of your wage when layed off, full health benefits for retirees, etc) they are led buy greedy, rich, so out of touch good old boys.

    I do have sympathy for the thousands of people that will lose their jobs if these guys go away. However, as with nature, there is a weaning out process that allows the healthy to survive and flourish while the weak and not so smart get phased out. It has happened to the dudes that made vinyl records, it has happened to the record companies, it has happened to Oberheim, Sequential Circuits, Ensoniq, etc. (I don't mean to say that the guys at Oberheim, etc are not smart just that their time in the sun had come and gone, they are in fact heroes of mine)

    Detroit has had a good run. A lot of people got a lot of money during the glory days. The reality was if you got a job "on the line" (working on the cars), you were set for life and could provide for a family. No amount of bailout money is going to bring back the glory days for those guys. Their business model doesn't work anymore.

    Letting these guys fail naturally would be the best thing for them. It would allow them to come back leaner and meaner and stronger to compete. If we bandaid the inevitable we'll just postpone the end.

    2 cents,

    Darren
    Darren, you are so correct here. My fear is that we have a useless congress that very well may ok this bailout of up to 100 billion +.
    It won't be just 35 bil.

    Let there be a free market, let those that suffer, suffer or re develop or get bought out.

    We cannot afford another bailout, we can't even afford the 7 trillion we have already allocated for the financial markets, that was a huge, huge error.

    If we can't make an auto industry here work, then so be it.
    2 X Intel i7 920 sys. 12 gigs Ram. XP & Win 7 64
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    Both require just the right ingredients....

  9. #9
    Senior Member bigears's Avatar
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    Re: Bailout of GM

    This is from a story in the Wall Street Journal about America's other car manufacturers: Toyota, Honda, Kia, and Mitsubishi...


    America's Other Auto Industry There is such a thing as a profitable car maker in this country.

    Wall Street Journal
    DECEMBER 1, 2008


    The men from Detroit will jet into Washington tomorrow -- presumably going commercial this time – to make another pitch for a taxpayer rescue. Meanwhile, in the other American auto industry you rarely read about, car makers are gaining market share and adjusting amid the sales slump, without seeking a cent from the government.
    Some car makers in America still have reason to celebrate.
    These are the 12 "foreign," or so-called transplant, producers making cars across America's South and Midwest. Toyota, BMW, Kia and others now make 54% of the cars Americans buy. The internationals also employ some 113,000 Americans, compared with 239,000 at U.S.-owned carmakers, and several times that number indirectly.
    The international car makers aren't cheering for Detroit's collapse. Their own production would be hit if such large suppliers as the automotive interior maker Lear were to go down with a GM or Chrysler. They fear, as well, a protectionist backlash. But by the same token, a government lifeline for Detroit punishes these other companies and their American employees for making better business decisions.
    The root of this other industry's success is no secret. In fact, Detroit has already adopted some of its efficiency and employment strategies, though not yet enough. To put it concisely, the transplants operate under conditions imposed by the free market. Detroit lives on Fantasy Island.
    Consider labor costs. Take-home wages at the U.S. car makers average $28.42 an hour, according to the Center for Automotive Research. That's on par with $26 at Toyota, $24 at Honda and $21 at Hyundai. But include benefits, and the picture changes. Hourly labor costs are $44.20 on average for the non-Detroit producers, in line with most manufacturing jobs, but are $73.21 for Detroit.
    This $29 cost gap reflects the way Big Three management and unions have conspired to make themselves uncompetitive -- increasingly so as their market share has collapsed (see the nearby chart). Over the decades the United Auto Workers won pension and health-care benefits far more generous than in almost any other American industry. As a result, for every UAW member working at a U.S. car maker today, three retirees collect benefits; at GM, the ratio is 4.6 to one.
    The international producers' relatively recent arrival has spared them these legacy burdens. But they also made sure not to get saddled with them in the first place. One way was to locate in investment-friendly states. The South proved especially attractive, offering tax breaks and a low-cost, nonunion labor pool. Mississippi, Alabama, Tennessee and South Carolina -- which accounted for a quarter of U.S. car production last year -- are "right-to-work" states where employees can't be forced to join a union.
    The absence of the UAW also gives car producers the flexibility to deploy employees as needed. Work rules vary across company and plant, but foreign rules are generally less restrictive. At Detroit's plants, electricians or mechanics tend to perform certain narrow tasks and often sit idle. That rarely happens outside Michigan. In the nonunionized plants, temporary workers can also be hired, and let go, as market conditions dictate.
    All the same, Mitsubishi Eclipses and Toyota Corollas are made by UAW workers at plants in Illinois and California. In each case, unions have made concessions to ensure the jobs stay put. Honda makes the Civic and Accord in two plants in Ohio, which isn't a right-to-work state. But attempts to unionize foreign-owned factories have generally been unsuccessful, most recently at Nissan; their workers know too well what that has meant for their UAW peers. Since 1992, the Big Three's labor force declined 4.5% on average every year; the international grew 4.3%. According to the Center for Automotive Research, for every job created by the transplant producers, Detroit shed 6.1 jobs in the U.S., 2.8 of them in Michigan.
    Another transplant advantage: Their factories are newer and production process simpler. As a result, they can switch their assembly lines to different models in minutes. In response to the economic downturn, Hyundai decided to make more fuel-efficient Sonata sedans and fewer of the larger Santa Fe model at its Montgomery, Alabama plant, sparing steeper production cuts. Such a change would take weeks at UAW plants.
    It's true that at the foreign companies, strategic decisions are taken and much of the value-added design and engineering is done back home. But both U.S. and the Japanese and European companies have tended to move operations closer to large markets. The expansion of manufacturing in the U.S. has brought research and development. Honda stands out for designing some cars from the ground up in the U.S. The foreigners account for a small but growing chunk of the $18 billion in yearly development spending. And while headquartered overseas, the companies have millions of American shareholders -- either directly or through pension funds. Is Honda a Japanese or an American company nowadays? It really is both.
    As GM CEO Rick Wagoner recently wrote on these pages, the Detroit companies have finally begun to adapt to this real economic world. Last year Detroit struck a deal with the unions to unload retiree health obligations by 2010 to a trust fund set up by the UAW. The trio's productivity has improved as well. In 1995, a GM car took 46 hours to make, Chrysler 43 and Toyota 29.4. By 2006, according to Harbour Consulting, GM had moved it to 32.4 hours per vehicle and Chrysler 32.9. Toyota stayed at 29.9.
    Yet these moves born of desperation have come so late that the companies are still in jeopardy. Both management and unions chose to sign contracts that let them live better and work less efficiently in the short-term while condemning the companies to their current pass over time. It is deeply unfair for government now to ask taxpayers who have never earned such wages or benefits to shield the UAW and Detroit from the consequences of those contracts.
    There's no natural law that America must have a Detroit automotive industry, any more than steel had to be made for all time in Bethlehem, Pennsylvania or textiles in New England. Britain sold off all its car plants to foreigners and was no less an advanced economy as a result, though it was a healthier one. Detroit may yet adjust to avoid destruction in the best spirit of American capitalism. The other American car industry is a model for how to do it.

  10. #10
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    Re: Bailout of GM

    Quote Originally Posted by bigears View Post
    Britain sold off all its car plants to foreigners and was no less an advanced economy as a result, though it was a healthier one. Detroit may yet adjust to avoid destruction in the best spirit of American capitalism. The other American car industry is a model for how to do it.[/SIZE][/FONT]
    Yes - but now we have had a Labour government for 11 years and are about to go bankrupt as a country with our currency worth virtually nothing if they're not careful. We will all go broke soon and there's nothing we can do except demand an election fast.

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