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Automotive News & Views Does America Even Need Its Own Automakers?
1788 messages, Last post on Mar 03, 2009 at 2:18 PM
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Replying to: keepinon (Nov 14, 2008 4:30 pm) I could be convinced to provide some big loans if we really require the necessary reshaping: 1. Get rid of Wagoner and his direct reports. 2. Break the work rules and union contracts to allow for a more flexible industry. 3. Dump 50% of the models they make - they can pick them. Anything less..... they should just fail without a bailout. And we're primarily talking about GM here. |
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I favor government aid to the domestic auto makers, but with significant caveats. I believe it would be a mistake for the government to attempt to bail out the automotive sector without demanding concessions from labor that would essentially bring its costs in line with non-union ones. Some differences in the work rules could remain in place, so long as their economic impact is minor. This would be harsh for the auto industry workers, but anything less would be unfair to tax payers and workers in other industries. Also, anything less would ultimately fail since, in addition to manufacturing products that people choose to buy - a huge challenge, given current consumer preferences - the domestic auto industry must be cost competitive to survive. I think it would be very difficult, but perhaps not impossible in the current environment, for the Obama administration to demand the concessions from organized labor that are essential for the long-term viability of the domestic auto makers, but without them I believe any financial help would be doomed to fail. One could argue that it would have been easier for a McCain administration to play hardball with the unions, since they didn't enjoy much union support. On the other hand, there's the "it took a Nixon to go to China in the '70s" argument. It says that, because Obama had strong union support, he is in a better position to extract concessions than McCain would have been. He would have to use all of his considerable political skills to obtain the necessary compromises, though, and that's after he's persuaded Nancy Pelosi and others to side with him. At this point we don't even know if President elect Obama has the desire and will to demand major concessions from the unions, in exchange for government help. A major argument for throwing a lifeline to the auto sector is that its demise would increase unemployment. The degree of the increase is arguable, but more jobs would be retained, even with a shrunken domestic auto sector than without one. In addition, for a variety of reasons that are unique to this industry, including the long lead times required to design and introduce new products, the volatility of fuel prices plus the impact of the credit crisis, a good case can be made that the perfect storm has impacted autos more severely than other industries. Should Washington demand that the auto makers be forced to only produce green cars, as a condition for receiving aid? Absolutely not! Detroit has to produce cars that consumers want to buy, and despite a series of bad calls in the past, auto industry managers are more in tune with consumer needs and desires than politicians are. In addition to being bad strategy, it would be even a worse precedent to permit Washington to dictate auto design, beyond what it already does with safety, emissions and fuel economy standards. Further, management should be strongly encouraged, if not required, to reduce its compensation until the companies' viability is restored. For this effort to succeed, it's important that management lead by example. Finally, the demand for domestic vehicles needs to be stimulated. I would favor an appeal to patriotism in this time of need. To that end, the industry should mount a strong marketing campaign to encourage consumers to consider a domestic brand before they buy their next vehicle. It could be useful for the industry to appoint one or more respected, charismatic spokesperson to make its case with consumers.
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Replying to: Mr_Shiftright (Nov 14, 2008 2:33 pm) Innovation would skyrocket. Entrepreneurs would flood in. New and pioneering car companies -- or better yet, radical new ideas for urban human transport -- would flourish. New jobs would be created almost instantly. Few people are going to by a new car from a non-established manufacturer. Bankruptcy typically means a reorganization, I think this would mean that there would be a new GM and/or a new Ford that are freed from some of their current obligations and probably under new management. If instead, the bankruptcy is a liquidation, then it would seem likely that foreign manufacturers will ultimately buy up at least some of the assets and increase their US operations. For the consumer I would imagine liquidation would mean increased new car prices, due to less competition. |
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Replying to: jeffyscott (Nov 15, 2008 7:03 am) Yeah, and a LOT less choice, or in my case, no choice. Maybe you won't buy a Big Three car, but wouldn't you at least want the option? A world of Camcords would be like going into a Baskin Robbins and they have 31 flavors and they're all vanilla. |
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Replying to: hpmctorque (Nov 15, 2008 2:15 am) You mean like Oprah, Tom Hanks or DeCaprio? You will be hard pressed to find an Obama backing Celebrity that drives a Big 3 vehicle. "People look at the Prius like they looked at a Jaguar a few years ago." Reiner traded in his BMW, David sold his Lexus and Emanuel put away his Ferrari. And they're not the only ones. The list of Hollywood's hybrid-come-lately car owners reads like headlines on the cover of People Magazine: Cameron Diaz, Leonardo DiCaprio, Carole King, Billy Joel, David Duchovny, Patricia Arquette, Jackson Browne and Bill Maher, to name-drop a few. Larry David purchased three, including one for his character, "Larry David," to drive one on his HBO series, Curb Your Enthusiasm. "It works on every level," said David, who is married to a staunch environmentalist. "I'm doing something good, and my wife has sex with me more often." If you think driving a domestic vehicle is Patriotic, you can scratch most of Hollywood off the list. And most of CA for that matter. If it were not for big PU trucks and SUVs there were be NO domestics in CA. PS The ONLY celebrity type I hear pushing GM vehicles is RUSH LIMBAUGH..
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Replying to: lemko (Nov 15, 2008 7:16 am) Me? I am in my late 40s and never even owned a foreign car until my wife got a Jetta in 2005. But then, I also got a Mazda (though it is built with UAW labor in Michigan) in 2007. And, yes more choice is better. I think the best way to deal with this may be along the lines of what some others have posted to basically, in exchage for government help, get some of the benefits of a bankruptcy without it actually happening. Replace the management and/or drastically cut their pay, get some concessions from the union, etc...
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Replying to: lemko (Nov 15, 2008 7:16 am) I would have felt the way you do if this would have happened while I owned my Suburban. As far as I am concerned now, GM has NOTHING worth buying after my last GM vehicle. The other car makers have advanced in the last 10 years and GM has stayed stagnant or went downhill. At least in PU trucks and SUVs. |
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Replying to: gagrice (Nov 15, 2008 7:25 am) Bring on the Volt...
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Maybe I've been looking at the dark side of the collapse of the Big Three. Maybe I should think of the advantages I would gain if I were to break down and buy one of these glorious Camries. Let's look forward to the year 2015. GM collapsed six years ago. I pull into Sharkey McShyster's Toyota dealership next to the off-track betting parlor across from the "gentleman's club" and pawn shop. I trade my pristine but now worthless orphaned black 2007 Cadillac DTS Performance for a brand new Camry. I'm driving back to my place and thinking about the very wise purchase I just made. Since my car will no longer be the center of my world nor receive the lion's share of my attention, I gained many new advantages. Among them: Fuel Savings: No longer will I need to waste my money on premium fuel. I can go to Xavier's Brand X Gas in the bad neighborhood and fill up on his special economy blend which consists of a 50/50 mixture of kerosene and water with rocks, sticks, and bugs in it. Tires: When the OEM tires wear out, Pep Boys' Futuras will be sufficient. No need to spend my money on exotic brands like Goodyear, Michelin, or Pirelli. Insurance: Collision? I don't have no stinkin' collision! I don't need no stinkin' collision! Parts: Get the Great 'Yota feeling with genuine Wal~Mart parts! Ease of Parking: The Camry might actually be longer than my 1988 Buick Park Avenue, but it will be easier to park. Of course my neighbors won't like my sudden diminished driving skills as I hit whatever happens to be in front or back of me as I could care less about scuffing the Camry's bumpers. Smoking: For the first time ever, I and my passengers can smoke in my car! Eating: Ditto! Dogs: My friends with dogs will love me. Fido needs to go to the vet? Let me take him! Body Shop Repair: Heck, I won't need the expense of a body shop should I dent or wreck my Camry. I can just ignore the damage or pound it out with a ball peen hammer. Oops! I tore the metal! Oh, nothing a little Bondo and Krylon can't fix. Other tools required will be duct tape and bailing twine. Oil: Mobil 1 synthetic? Feh! The recycled stuff in the 5-gallon jug at the dollar store will be sufficient. Oh, cool! They sell filters too! Cleaning: Wow! Think of the hundreds of dollars I will save since I no longer need all those fancy waxes, polishes, soap, and other detailing materials! Think of the savings on my water bill since the rain will be sufficient enough to clean my Camry! I Can Suddenly Go Anywhere: What's that? you want me to drive down to North Philly at 2 AM and pick up some crack for you? No problem! My Relationship Will Improve: No longer will I hear my girlfriend complain about me showing the car more attention than her. In fact, I will be spending a lot more time with her as the car will no longer be a distraction.
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Replying to: jeffyscott (Nov 15, 2008 7:33 am) I see the Volt as another GM failure in the making. Congress has put $7500 on the hood of the Volt and any other EV meeting the 16 KWH battery criteria. I have a novel solution. Why not encourage Mitsubishi to build a huge factory in the US for their soon to be released MIEV? Build it in a state like Nevada that is hard hit by the Housing bubble. It meets the criteria to get a $7500 tax credit. They are supposed to sell in the $24,000 range with Li-Ion batteries. They have 100 mile range that should satisfy all but the longest commuters. $16,500 is about half of what we will be expected to come up with for the Volt. And GM claims they will lose money at the $40k price point. Why encourage GM to build cars that lose money? Are you listening Iluv? I am pushing your car. I like it myself and would buy at the expected price to run all my errands that do not require a PU truck. Congress needs to take a look before they throw our money away on domestics with no hope for the future. http://www.edmunds.com/insideline/do/Drives/FirstDrives/articleId=124867 |
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