Edmunds.com | Inside Line | Auto Observer Your Account | Help | Directory
You are here:
![[F]](http://a332.g.akamai.net/f/332/936/12h/www.edmunds.com/media/townhall/webxicons/site.gif){kind=small}
Forums
Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
3958 messages, Last post on Oct 02, 2009 at 4:52 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
|
Replying to: berri (Dec 05, 2008 4:33 pm) All 3 are not going to go out of business the same day. Ford can last at least a year longer than GM. The company that currently owns Chrysler, can either fund them, or sell them. not to mention many auto parts vendors going under. If a vendor is dependant on only GM for it's income, that was a bad business decision. In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down. GM will need to cut jobs, with or without a bailout. They are simply building way more cars than they can sell (at a profit). Discounting cars to the point of loosing money on each one, just to get rid of them, will not work anymore. They have no more money to waste. At least I hope they don't get more. You say "Impact every business soon". Well, are we going to bailout every company that has financial trouble? Where do you draw the line? |
|
|
Replying to: berri (Dec 05, 2008 4:33 pm) I doubt the difference is as great as you think. Even if they get the loans there are going to be massive job losses. If they don't get the loans and one or more go under, the best parts are going to survive in a consolidated or purchased company. And the US will continue to buy as many cars as it needs, regardless of the fate of individual companies. |
|
|
Replying to: berri (Dec 05, 2008 5:07 pm) My best case scenario for 2011 is this: 1. Ford survives. 2. Chrysler is gone. 3. GM is forced to make massive cuts and changes (more than their current plan). They replace Wagoner, get rid of their high cost structure, strip down to 40% of current size, and the new management REALLY gets going on competitive new products. We have a smaller but viable auto industry again and can grow in a competitive environment with excellent products. My worst-case scenario is as follows: 1. Congress gives $34B bridge loans. GM makes token incremental efforts to restructure. Wagoner stays. UAW makes token moves to suspend (not eliminate) jobs bank. 2. Chrysler muddles along for another year before going belly up. 3. GM continues to lose market share, Wagoner comes back to the trough at least two more times, to the tune of almost $100B total. 4. GMs market share continues to drop, even in an economic recovery. GM continues to make reactive incremental cuts. By 2011, GM is either dying or actually finally goes BK after draining the taxpayers of $100B. Becuase of GMs mediocre continued presence, Ford is badly strained because of the weakened competitor in GM that has been artificially kept on life-support for 3 years too long.
|
|
|
Replying to: tlong (Dec 05, 2008 6:09 pm) |
|
|
Have owned many US & foreign cars & trucks and can't agree with those who would bury GM, Chrysler & Ford. And I'm disgusted with the behavior of our showboating politicians jerking around these easy targets after they've given away tons more of OUR cash to far less deserving financial companies. One of their major competitive disadvantages is that the superior UAW negotiated benefits must be paid out of the profits from each car sold. Nobody else has benefits like UAW workers and retirees - not even gov't workers & retirees. I say the Big 3 have done the right thing for their employees. All the other non-union automakers, among others, are passing along these health benefits to the taxpayers for their employees and retirees lacking such gold-plated coverage. That's a subsidy of sorts. I guess my point is that GM, Ford and Chrysler employees cost taxpayers nothing, because their employer has done right by them. They are even paid during layoffs - where else does that happen? Everybody else who is laid off gets paid unemployment - at the public expense. While I would love to have such benefits, I certainly don't jealously criticize companies that provide them to their employees. These few companies happen to be doing the right thing - both to their employees and to the taxpayer who saves the cost of paying those benefits. I know people who work full time who still qualify for food stamps and gov't health programs - that's a subsidy to that irresponsible employer. A bridge loan, with lots of conditions (especially on corporate perks, pay and parachutes) seems appropriate. When the economy improves, there will be plenty of demand for those trucks. I'd rather see my tax dollars used to help companies that make something than companies that sell paper. |
|
|
Replying to: morin2 (Dec 05, 2008 6:58 pm) Call me cynical - I probably am - but what you see as "the right thing", I view as a calculated attempt to buy labor peace & then stick us, the consumers, with the bill. Rather than stand up to the UAW, Big 3 management took the path of least resistance: give the union what it wanted & then build the settlement cost into the price of new cars. Both management & labor pegged the rest of us as a bunch of passive suckers who would meekly pay whatever they decided to charge us. After all, what choice did we have? What were we going to do about it - buy imports? Much to their surprise - and eventual chagrin - that's exactly what we did. They - big 3 management & labor - badly miscalculated, & now they're running to the government for help. They couldn't win us over in the showrooms, so now they're asking the government to hold us down while they pick our pockets. It's too bad that management didn't do the right thing for customers & shareholders 30 or 40 years ago by walking away from the negotiating table & telling labor, "Go ahead & strike. We'll wait you out." Customers, shareholders & employees would all be better off today if management had shown some courage. I'm angry at the UAW, but I'm far angrier with management. |
|
|
Replying to: morin2 (Dec 05, 2008 6:58 pm) According to a recent post by '62, the laid off still take unemployment and then the jobs bank kicks in *after* the unemployment is exhausted. |
|
|
Replying to: jimbres (Dec 05, 2008 8:05 pm) I agree wholeheartedly. As far as berri saying the state pays unemployment. Look at your W2 for SUCI. You pay State Unemployment Compensation Insurance. You are paying for that not the state. The state and Federal government do not PAY for anything. We the tax payers pay for all services rendered. The Jobs Bank was gotten by thug tactics used by the UAW. Big 3 just has Stupid management that buckled instead of locking them out when they had the chance. As recently as last year.
|
|
|
Replying to: morin2 (Dec 05, 2008 6:58 pm) So having to sell cars for less than it cost to build them, is doing the right thing? Why do you think nobody else has benefits like these. They would like to stay in business, and make money. I guess making a profit is not important, as long as the union is happy, right? What kind of benefits will they be getting when the automakers go bankrupt? |
|
|
|
|
Replying to: gagrice (Dec 05, 2008 8:22 pm) However I agree with you about stupid management. I see why they agree back when they had 90% of the market but as market share and profits dropped this benefit should have been the first to go. I am a pro union guy, and I think some changes in the governance of unions are long overdue. |
|
You are here:
Forums
Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
