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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
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Replying to: joel0622 (Dec 06, 2008 6:17 am) Ford Motor Co. CEO Alan Mulally said his company doesn’t immediately need loans but is supporting GM and Chrysler to prevent a failure and the consequential collapse of the domestic parts supply base. Ford says it may need $9 billion if one of its rivals doesn’t survive. It's like an options package where all you want is Bluetooth but you need to pay $4,500 for the Premium Package with all the other goodies. If GM or C goes, you pay. If you pay them the $25B, I'm good! Get it? He does not have to take the $1 compensation because the taxpayers keep everything alive. Regards, OW
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Replying to: berri (Dec 05, 2008 5:15 pm) This is a very unlikely scenario, that has been thrown out by proponents of the bailout, who have $34B to gain - may I add, to scare the general public who has little business and market understanding. It is thrown out so the common man polls in favor of the loan, and Congress is pressured into a bad decision. The fact is that GM or Chrysler might go bankrupt first. Say if that's GM; the result is that GM loses it's market-share of 25%. The other manufacturers have spare capacity as their sales are down about 30-40%. What happens? The business is transferred to the other manufacturers, and this HELPS THEM, and they may become profitable again. Suppliers to Ford and Chrysler would see an increase in business, and would hire additional shifts, or bring back any laidoff workers. IF GM, Ford and Chrysler get loans they still will layoff many hundreds of thousands of people, simply because either way customers are going to buy 10M vehicles next year. The auto industry will employ enough people to make and sell 10M people next year, no matter if it's corporate entity A, B, C, and D or owned by stockholders W, X, Y, and Z. That means either a few companies and suppliers go out of business, or everyone cuts back some. Either way you have to cut suppliers and plants, and employees in the entire auto industry to get from 16M to 10M vehicles. It's just your choice to waste $34B to keep jobs at A, B, and C instead of spending $0 letting the market decide which corporations survive. |
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Replying to: circlew (Dec 06, 2008 8:10 am) They could all never hit another lick for the rest of there lives and never be worried about money.
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Replying to: joel0622 (Dec 06, 2008 8:24 am)
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Replying to: berri (Dec 06, 2008 8:53 am) Because the UAW has contracts, you can't just lay off the ones you need to. So you go get concessions. Everybody keeps their jobs in the near term, but their benefits are reduced. Much of the costs are retiree costs which are not the issue with the Wall Street crowd. |
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Replying to: jimbres (Dec 05, 2008 3:10 pm)
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Replying to: lemko (Dec 06, 2008 9:31 am) China is our rival - not our enemy. There's a big difference, which anyone old enough to remember the Cold War can explain to you. Anyway, if you want to revive the American auto industry, you should be solidly in favor of bankruptcy for the Big 3. Perhaps Ford doesn't yet need it, but GM & Chrysler certainly do. Toss the dead brands (Pontiac & Dodge, for example) overboard & bring in fresh management to lead what's worth saving (Cadillac, for example). That just might trigger an industry rebirth.
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Replying to: jimbres (Dec 06, 2008 10:15 am) China was actually our ally during WW2. They saved some of our fighting men. Yes we are competing with them and trading with them. We buy more junk from them than they buy from US. Who's fault is it that we cannot get enough Nintendos and Gameboys? I look for China to buy a lot of the property sold in the liquidation of the Big 3. |
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GM should convert from a For-profit organizaton to a Charity not-for-profit organization. Heck, even charity organizations seems to be have done better 
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Since we appear to be on this path to socialism, I have a proposal. GMs market cap is $2.5B. They want over $10+B to survive (that's well over four times what the market thinks they are worth!). If the Feds are going to loan that money, that's way more than buying GM, right? So why don't the Feds require the following: 1 - use $2.5B to buy out all shareholders. Then the government owns GM. 2 - Replace Wagoner and the entire board. Obama can appoint new management, he's done pretty well with his cabinet. 3. New management works to turn GM around. 4. Government sells GM stock back to the market in the future, or GM fails and the government eats it. At least we would get rid of the useless Wagoner and the Board. |
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