Auto Bailout Discussion

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tyen
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Auto Bailout Discussion

Unread post by tyen » Fri Dec 12, 2008 10:57 am

Without some changes GM, Ford and Chrysler WILL be downsizing drastically.

What do you all think about the bailout situation? We've seen enough to finally see there are three basic positions concerning this situation:
a. Provide the multi-billion dollar bailout with requirements/benchmarks for the company to meet, etc.
b. Provide the multi-billion dollar bailout with requirements/benchmarks for the company to meet AND for the UAW (United Auto Worker's Union) makes concessions, etc.
c. Screw the bailout in general, let the companies in question downsize.

If there's another you see happening here, by all means... post it.

I would lean towards C myself because I think the unions are the cause of this mess. Let the industry downsize and let the union see the fruits of their labor... less workers employed.

There is one alternative I know won't likely happen, but I'd love to see it:
d. Provide the multi-billion dollar bailout with requirements/benchmarks for the company to meet BUT 80% of the money is provided goes towards hiring new workers and for their training with the requirement that they will not be part of the UAW.

Yup... I want to break the UAW union. This thing has gotten too big and is actually causing the downfall of the entire segment of the industry their constituents work for.

Then something needs to be done about the pensions these companies have to payout at the moment... not sure on that one yet.

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Re: Auto Bailout Discussion

Unread post by Megelvagor » Fri Dec 12, 2008 11:22 am

I don't know anything about the UAW or their involvement in this, as I haven't been following this very carefully.

All I've been told is that the American auto industry had this coming when in the early 90's they decided to concentrate on developing larger and larger vehicles with poor fuel economy, and the Japanese and Germans chose to pursue other options.

However, that is from environmental professors, so I'm sure I'm going to get lashing from someone about that statement.

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tyen
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Re: Auto Bailout Discussion

Unread post by tyen » Fri Dec 12, 2008 11:43 am

Yeah... not a shocker that the trends you're talking about are not exactly true...
For example: http://www.edmunds.com/toyota/sequoia/review.html
Or: http://www.edmunds.com/nissan/armada/review.html

Plus GM has been working on the fully electric "Volt" for a while now and has full lineups of hybrids.

The one thing that could be argued about trends is the American companies definitely explored the whole "flex-fuel" concept much more aggressively than their foreign counterparts. But that's not a shocker, that was subsidized by the government (shocker it was a waste and not worthwhile hmm?)

It's true this mess has been coming for a long time... and I'll even agree that poor decisions on part of the auto companies is to blame... what was the poor decision though? You guessed it - it was caving into the UAW during during strikes and negotiations over the years. They should have told them to pack sand and hired new workers at the going rates.

What we're seeing is what happened to the Albertson's grocery stores, but on a larger scale: The union representing the Albertson's workers organized a strike. The company caved. Months later the company downsized and close numerous stores. Entire regions closed because they could not afford the compete under the new pay requirements.

Perhaps the CEOs and Executives of these auto companies should strike. Let the union figure out how to pay their constituents. All three of these companies are bleeding cash anyway.

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Re: Auto Bailout Discussion

Unread post by Megelvagor » Fri Dec 12, 2008 1:29 pm

Those SUVs are good examples of the Japanese trying to cash in on the SUV market, yes. But on the whole, Japanese (and German to a lesser extent) companies have concentrated much more on cars with fuel efficiency and hybridization over size, sport utility, and social appeal.

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Re: Auto Bailout Discussion

Unread post by tyen » Fri Dec 12, 2008 2:55 pm

I don't know about Ford or Chrysler (isn't Chrysler owned by Mercedes or someone in Europe now though... *scratches head*) but GM has just as many models of Hybrids as Toyota... and Toyota as just as many SUV models available as GM.

GM also leap frogged Toyota in hybrid sales for a bit because they invent the dual-mode hybrid. Toyota has since released their own version.
They're both racing to make their full plug-in model market ready as well (Volt for GM scheduled for late 2009 pushed to 2010, Plugin Prius for Toyota scheduled for 2010).

The one vehicle line that would support your point is probably Hummer... but those have been getting smaller and... again... were propped up by government subsidies.

So I don't know where you're getting your slant on this...

The one thing we can probably agree on though regarding GM specifically (?) is they could probably stand to cut some of the lines completely... they probably don't need a Chevy TrailBlazer AND the Chevy Equinox... they both Small to Medium SUVs. I don't know how it all plays into costs, but they also have multiple lines of Commercial aimed vans and trucks where Toyota does not seem to have that.

I think that stuff is fairly non-sequitor though... I think the heart of the cost equation problem is the pension plans :/

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Re: Auto Bailout Discussion

Unread post by Akarat » Fri Dec 12, 2008 7:34 pm

I'm personally stuck between B and C.

I would hate for the national debt to increase anymore than it has to, but at the same time I feel bad for those that will be laid off. Seems like those auto-workers are, in some way, losing a way of life that their parents and grandparents had lived (Not sure if what I said was just a load of BS).

If it has to be choice B, then those regulations and restrictions better be strict ones. Additionally, I think it would be fair to fire all the people on the management boards. Additionally, the UAW definitely needs to make A LOT of concessions.

The part of me that supports choice C has the attitude that those union workers are being paid too much. Furthermore, if what I said is true (the first paragraph) then I have nothing to really say to those union workers except, "Did you really think you could be paid as much as you currently are, while receiving other benefits, and think that it would last forever?"
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Re: Auto Bailout Discussion

Unread post by Megelvagor » Fri Dec 12, 2008 8:57 pm

http://www.greencar.com/features/fuel-economy/
Only three are American.

http://www.edmunds.com/reviews/list/top ... ticle.html
Not a single American car.

http://www.forbes.com/2008/05/02/effici ... peed=20000
Two American cars: truck and SUV. Ford has been the only American company to show innovation comparable to foreign auto makers, and it's only in a few categories.

http://seattletimes.nwsource.com/html/p ... ars05.html
"Chrysler CEO Bob Nardelli promised his company, recipient of a previous government-subsidized rescue loan in the 1970s that it repaid, would reimburse taxpayers by 2012 and would devote itself to manufacturing 'fuel-efficient cars and trucks that people want to buy.'" Now they acknowledge it, and our going to learn from their mistakes.

http://www.motorists.org/blog/the-16-mo ... -new-cars/
Three American cars.


So you tell me, you REALLY think American auto makers have been competing in the field?

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Re: Auto Bailout Discussion

Unread post by Trebor » Fri Dec 12, 2008 10:58 pm

Ok not a lot of structure to this post, just a bunch of thoughts.

pay cuts...some kind of change to the union...

GM's big problem is that they dug themselves a hole with having an amazing retirement package a long time ago and now having tons of people on retirement drawing from it. They pay out millions a year to the retired.

I didn't read the previous posts...but what about the fact that a large portion of GM/Ford manufacturing is in mexico/canada? The Toyotas in this country are something like 85% built in the U.S. How about the fact that Toyota has never performed lay-offs?
http://www.cnn.com/2008/US/12/12/americ ... newssearch

My concern with a bailout package is that it it will just delay the problems and not fix them. How can they possibly turn things around w/ it?

Whats going on w/ the hydrogen fuel cell? One of the American car companies was leading the way (I thought GM) and now i hear nothing about it. If the government could back the production and implementation of fuel cell, that would be huge. It would be costly at first but it's a major technology.

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Re: Auto Bailout Discussion

Unread post by Boozer » Sat Dec 13, 2008 9:20 am

C. without a doubt.

The UAW needs to be tought a lesson in economics, you can't pay people full wages to produce nothing and expect to sustain it. There are UAW workers that have been retired and been pulling 80% or better of their wages and benefits for longer then they ever even worked. Furthermore there are programs that the UAW negotiated into their contracts to pay hundreds of thousands of workers full wages and benefits while they were layed off. The average cost to produce vehicles in a company full of UAW workers is something like $73 dollars an hour. Toyota and Honda and all those companies that aren't unionized, produce vehicles at somewhere around $45 an hour, there's no way the big 3 can compete with that. Meanwhile the government's cafe (corporate average fuel economy) standards and the oil price bubble killed the SUV market which was the cash cow of the big 3 for a long time. The oil price bubble burst, so what's left now to hinder the bounce back of the big 3? Well it's the cafe standards and the UAW.

Make no mistake about it, the auto bailout WILL happen, mark my words. Even if we have to wait for Obama to get into office for it to happen. I'd venture a guess that the airline industry is next.

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Re: Auto Bailout Discussion

Unread post by tyen » Sat Dec 13, 2008 12:09 pm

Megelvagor wrote:http://www.greencar.com/features/fuel-economy/
Only three are American.

http://www.edmunds.com/reviews/list/top ... ticle.html
Not a single American car.

http://www.forbes.com/2008/05/02/effici ... peed=20000
Two American cars: truck and SUV. Ford has been the only American company to show innovation comparable to foreign auto makers, and it's only in a few categories.

http://seattletimes.nwsource.com/html/p ... ars05.html
"Chrysler CEO Bob Nardelli promised his company, recipient of a previous government-subsidized rescue loan in the 1970s that it repaid, would reimburse taxpayers by 2012 and would devote itself to manufacturing 'fuel-efficient cars and trucks that people want to buy.'" Now they acknowledge it, and our going to learn from their mistakes.

http://www.motorists.org/blog/the-16-mo ... -new-cars/
Three American cars.


So you tell me, you REALLY think American auto makers have been competing in the field?
Ok... you're changing your argument now. I thought we were talking about what the auto makers have been concentrating on since the early 90s, not what they've been successful with...
YES American auto makers have been competing in the fuel efficiency field (and losing) since the 90s.

Are you really implying that American auto makers losing out to competition is because they've not even been competing? That's ridiculous...

We agree they're losing out... back to topic: The reason why is they've been cutting costs at every corner. It shows up in the quality of parts they use for their cars and it undoubtedly impacts research and development efforts.
This chart is for 2005/2006, but its telling... US Auto R&D budgets have been gradually decreasing.
http://www.spectrum.ieee.org/images/dec ... Dchart.pdf

Thus why they're behind in the efficiency ratings. The competition has simply made a more efficient engine.

They cannot afford more... why? What's different?

They're paying employees today from decades past.

That's it. The competition does not have this restraint. Thanks to the union.

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Re: Auto Bailout Discussion

Unread post by Hodd » Sun Dec 14, 2008 12:36 am

C
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