Domestic Auto Industry, What will "really" happen?

[motoguy128]

So from what articles I've read thsi week. GM could fall short on operating cash within just a few months or even weeks. When we look at the bigger picture on the ripple effect on the entire industry, what will happen.

 

My observation is that there's currenty about 30% over capacity right now along with large inventories carried over from earlier in the year. Even worse, the Detroit Three (GM, Chrysler, Ford) have combined lost 10% market share to the rest of the industry. So they have have even more over capacity compared to the other large US players (Toyota, Honda, Nissan, Hyundai) which have larger protfolios in cars rather than trucks.

 

So lets say GM and Chrysler fold first and declare bankruptcy. Does Ford benefit and gain enough market share to hang on?

 

Can somone explain how the Bankruptcy system works and how it impact suppliers? Are you basically asking suppliers to provide product without payment? I think most automotive suppliers are on the edge of insolvency as well.

 

What do somoe of hte experts on here think will happen?

[David]

What happens depends on whether they file for Chapter 7 or Chapter 11. The first is a liquidation in which the collateral is taken back by the loaning party and sold to satisfy the loan. The difference is what they're screwed for. The latter puts GM's operations under the guidance of a court-appointed trustee, who will in turn appoint people to run GM. Under the court's supervision, certain creditors will be paid and others will not. GM could apply to rescind all their obligations (except taxes), including union agreements.

 

The bankruptcy would certainly be a Chapter 11, under which they would secure "debtor in possession financing," safer for the lender, generally, and quite a bit more lucrative. Suppliers could choose to work with them or not--most do, and the trustee sees that they get paid.

 

At some point they can apply to emerge from the bankruptcy, which the debtors and the trustee would approve. Chapter 11 is essentially a way for them to start over from where they are, not from the beginning. Or they could turn it into a Chapter 7 and poof they're gone.

 

Chrysler is a dog without any future on their own. Ford is close behind. GM is worth turning around.

[Jake]

I presume many of the lawmakers are also debtholders in some fashion or another. Pretty easy to simply buy a Lexus instead of that Caddy, but no one wants those stinky corporate bonds right now, though everyone's got 'em. The investment community is holding their breath, and their faces are turning a bit blue.

[SageRider]

Chrysler is a dog without any future on their own. Ford is close behind. GM is worth turning around.

David,

Could you elaborate some on this statement?

(I'm asking to be educated here...)

[bendbill]

While I know nothing of bankruptcy or the auto industry, I heard an analysis from a former bankruptcy judge [arbitrator?] during an NPR broadcast yesterday. I regret I didn’t get the "expert's" name, but I remember his point:

 

GM is cobbled together in a more Byzantine fashion than Ford or Chrysler. Example: There are, he said, 7000 GM dealers in the US vs 1500 Toyota dealers. GM cannot become leaner because of contracts between its divisions: Chevy, Buick, Cadillac, etc. For instance, if the town Chevy dealer tries to combine with the Caddy dealership and the Buick/Olds dealer across town, a raft of inter-brand contracts hammered out over decades—and the firms of lawyers who service them--would be marching in and out of court. Perhaps over years and years, these contracts could be renegotiated. But GM has no time. Hence, the bankruptcy process is the best way to accomplish a restructuring quickly.

 

It sounded plausible, so I'm repeating what I heard.

 

 

[Lawman]

What do somoe of hte experts on here think will happen?

 

I'm wondering if they go into bankruptcy will it mean the employees will no longer get to travel on the huge private corporate jets while most people struggle to put gas in their cars?

[John Ranalletta]

I forget who said, "When the facts change, I will change my mind."

 

All the histrionics aside, I've come to believe we cannot let any of the auto firms fail, regardless how badly it smells.

 

The US economy is on the brink of total collapse. To allow the auto makers to fail NOW will put more stress on the financial system than it can bear.

 

GM has lost 75% of its market value in 6 weeks. That's not about a company being mismanaged, but all about a world and domestic economy on life support.

[Lawman]

U. S. auto makers have been sick for years..It's time to let the weakest die.

[John Ranalletta]

Ordinarily, I'd agree, however, if we throw a half million people out of work; default the bonds held by pension funds; bankrupt every auto associated business, we will experience a depression. Yep. I said the word. DEPRESSION. IMO, it's closer than many think.

[chrisolson]

There are others, but the primary reason the big 3 are running out of cash right now is because they are not selling product at a rate sufficient to sustain themselves. Why? Because credit is tight and will remain tight. Additionally, folks are leary of making a big purchase when they might loose their job.

 

Even if the industry is given a loan, these market conditions will not change significantly in the short run. So what will be accomplished?

 

Chapter 11 is a viable method to move the industry into a more stable (smaller) architecture. They already have 25 billion for new product development which, if they are better structured, should allow them to evolve a better / more competitive offering.

[Lawman]

 

Even if the industry is given a loan, these market conditions will not change significantly in the short run. So what will be accomplished?

 

 

Exactly! What will be accomplished is we'll still have the same problem in addition to the added debt that will be picked up by the taxpayer.. Better the automaker goes bankrupt than the country..

[Whip]

Ordinarily, I'd agree, however, if we throw a half million people out of work; default the bonds held by pension funds; bankrupt every auto associated business, we will experience a depression. Yep. I said the word. DEPRESSION. IMO, it's closer than many think.

 

I love ya John.

 

Ya think you may be over doin it a little/alot.

 

At this point it looks to me like all the idiots in Washington are doin is bailin out the UAW. The money isn't gonna do anything for GM. A well organized and restructured GM will be better for our economy than letting them continue with bidness as usual with our money. If the government really wanted to help GM. Cancel the CAFE standards, do away with any and all useless regulations. Suspend many of the OSHA and EPA rules. All the while letting a judge/outside officials come in and evaluate what needs to be paid and what doesn't. I would say give them a break on Corporate taxes and Capitol gains, but I'm not sure they have any. Though they may have somethin they own that could be sold. Some people are gonna lose part of their pensions and some venders prolly won't get paid, at least in the short term.

The UAW is gonna have to come to the table with an open mind and a softer voice. I think this could all be done in 6 months if anyone had any nuts. Then the next ten years will be a boom. If we give em money and then attach government over site strings to it they won't last 5 years. The government is not capable of over site in this or any other bidness.

 

There.....I feel better now.

 

Ya think they would let me handle it......it's just a couple more zero than I'm used to.

 

 

Whip

 

 

BTW....I don't believe we are any where near a depression. With or without GM filing for bankruptcy protection.

[David]

Chrysler is a dog without any future on their own. Ford is close behind. GM is worth turning around.

David,

Could you elaborate some on this statement?

(I'm asking to be educated here...)

 

Chrysler has very little brand equity, very few hot models, a small market presence, and hardly any innovation that's not smoke and mirrors (e.g., Hemi). What brand equity it does have (Jeep) could be sold as a stand alone. Ford is just a larger version of Chrysler.

 

GM, on the other hand, has true innovation and it's a more global company not as dependent on the US market alone.

[John Ranalletta]

So what will be accomplished?

Potentially, it could keep your 401k balance positive instead of zero.

[John Ranalletta]

BTW....I don't believe we are any where near a depression. With or without GM filing for bankruptcy protection.

...and, I sincerely hope you are correct; however, (IMO) the facts and world developments are not on your side of the argument.

 

[rob1100r]

 

Even if the industry is given a loan, these market conditions will not change significantly in the short run. So what will be accomplished?

 

 

Exactly! What will be accomplished is we'll still have the same problem in addition to the added debt that will be picked up by the taxpayer.. Better the automaker goes bankrupt than the country..

 

****You Nailed That One Right On...****

[John Ranalletta]

Daimler gutted Chrysler, which was profitable when they bought it. They brought nothing to the table, transferred engineering tasks to Germany and concentrated their efforts on fuel eating SUVs and trucks (which the market gladly bought).

 

Daimler still has a 20% stake in C; so, if C's stockholders benefit from a bailout, we'll have benefited out Daimler in the process.

[smiller]

So what will be accomplished?

Potentially, it could keep your 401k balance positive instead of zero.

Something serious must be about to happen... I'm actually in agreement with John...

 

Seriously, I think people are greatly underestimating the downside of doing nothing.

[motoguy128]

I would think that Ford is in the best position since it's a more streamlined organization with fewer models and strong ties to product pipelines for "good" fuel effecient vehicle designs from Mazda, Volvo and Ford Europe.

 

GM just seems to have a long road to consolidate internally.

 

Chrysler OTOH like others have said, is a lost cause. They lack a mainstream midsized car and any good cross over designs. Their build quality and refinement is still lagging far behind. they have little to offer. Their Dodge Caliber in it's first year came in most comparison tests against competition with 3 or 4 year old designs. That about sums up their problems. Besides Chysley got a bail-out in the early 80's. I don't think they should get a 2nd chance.

 

 

Back to one of my original questions however. If the issue is over capacity, even loans won't prevent massive layoffs. It would only prevent the companies from failing. So what have we really gained? IF GM fails first, would Ford benefit from it enough to avoid failing itself. This could be an opportunity to engage in a price war to grab enough market share and generate some cash flow to land a knock-out blow.

 

 

As for the private jets... while it does send the wrong message, I can only assume they also brought with them some advisors, lawyers and assitants. It only takes about 4-5 passengers to make a small private jet break-even compared to flying 1st class on short notice. Especailly when you consider the 2-3 hours saved negotiating airports along with security issues. These aren't very popular people right now. that alone justifies the cost. These are guys making $10MM or more a year. That's about $2600/hour if they work 80 hours per week with 4 weeks off. So saving 3 hours in travel time saved the company effectively $10,400. Operating a small or medium sized private jet flight from Detroit to DC I think costs around $10,000-15,000.

 

The one comment I haven't heard from someone in Congress... and it's a low blow, but honest... How come only the US automakers are begging for money. If it was simply a result of bad economic times and a bad business environment, why aren't Toyota, Honda and Nissan begging for money? Why are the 2 of the 3 larget auto companies in the world in a worse position than than the third? Do you bail out a company that has consitently made bad business decissions when there is a clear example right in front of you on how to "do it right". Even Toyota, Honda, and Nissan all missed the make on producing trucks and SUV's but never let themselves get hopelessly exposed in that market.

[John Ranalletta]

If the issue is over capacity, even loans won't prevent massive layoffs. It would only prevent the companies from failing. So what have we really gained?

Time

[SageRider]

Chrysler is a dog without any future on their own. Ford is close behind. GM is worth turning around.

David,

Could you elaborate some on this statement?

(I'm asking to be educated here...)

 

Chrysler has very little brand equity, very few hot models, a small market presence, and hardly any innovation that's not smoke and mirrors (e.g., Hemi). What brand equity it does have (Jeep) could be sold as a stand alone. Ford is just a larger version of Chrysler.

 

GM, on the other hand, has true innovation and it's a more global company not as dependent on the US market alone.

Thanks, David.

I understand Chrysler, but am still confused at your opinion of Ford vs. GM.

[Whip]

So what will be accomplished?

Potentially, it could keep your 401k balance positive instead of zero.

Something serious must be about to happen... I'm actually in agreement with John...

 

Seriously, I think people are greatly underestimating the downside of doing nothing.

 

IMHO ....You are overestimating your government and it's abilities to do anything right or with forethought. The events(700 B Bailout) of the last couple months should have taught us somethin.

 

When you set up a bunch of rules for everyone to play by, you shouldn't be able to change them to fit whatever voting block you are beholding to......UAW.

 

It's time for some pain so the country can gain.

 

The pain will be shorter and less harmful without the governments help.

 

What would Milton Friedman and Friedrich Hayek do???????????????

 

 

[John Ranalletta]

When you set up a bunch of rules for everyone to play by, you shouldn't be able to change them to fit whatever voting block you are beholding to......UAW.

While I agree with you regarding TARP, generally, using the money to shore up banks with good prospects for survival is preferable to the government buying crap loans from weak banks.

 

As a business owner, you create a strategic plan, but I'd bet you'd switch horses in a heartbeat when conditions change. TARP's origin and original purpose sucked, but lending money to sound banks was the least worst thing they could do with the money.

[Joe Frickin' Friday]

There are others, but the primary reason the big 3 are running out of cash right now is because they are not selling product at a rate sufficient to sustain themselves. Why? Because credit is tight and will remain tight. Additionally, folks are leary of making a big purchase when they might loose their job.

 

If this is the reason, then why are all the foreign car makers not in the same dire straits as the big three?

[Joe Frickin' Friday]

U. S. auto makers have been sick for years..It's time to let the weakest die.

 

It would be the "right" thing to do, from a moral-hazard perspective. But the consequences to the rest of the country would be pretty steep. Things are pretty bad right now, and if US automakers tank, they'll get a lot worse. Are we prepared to go there?

[Lawman]

Bailing out sends the wrong message. Corporate executives have come to expect too much preferential treatment. Their outragious salaries and bad business decisions at taxpayer expense via corporate welfare should be stopped. Just as the small businessman knows he and the free market are responsible for his destiny so should it be with the corporations. If we enter another depression, so be it. We survived one depression and I suspect were probably better for it. I doubt the human race is in jeopardy of extinction should we experience another. I suggest any depression we experience as a result of no bailouts will be less severe than one experienced after bailouts fail..

[CoarsegoldKid]

What will really happen? My stock in F and GM will likely be wallpaper. It was a risk, a roll of the dice, so I'll get back to you on that one. We don't get to vote but I'd vote for Chapter 11. The UAW needs to get real and so do the executives of the auto industry. If business as usual continues they will close. If that happens then I'd bet that Honda, Toyota, Nissan products will become much more expensive. The used car market may increase and mom and pop repair shops will do well. Manufacturers of US auto parts will continue to crank out replacement parts. Hundreds of thousands of people will be out looking for fewer jobs and traveling across the country to get them and parks will be crowded with hungry huddled homeless masses. I think. Oh, and the would becomes more gray scale, less vibrant color.

[David]

U. S. auto makers have been sick for years..It's time to let the weakest die.

 

It would be the "right" thing to do, from a moral-hazard perspective. But the consequences to the rest of the country would be pretty steep. Things are pretty bad right now, and if US automakers tank, they'll get a lot worse. Are we prepared to go there?

 

I am prepared, indeed. If I were to pick a US industry to bailout, likely the last choice I'd make is the auto industry. They've been plagued by shitty management and labor and branding and product development issues for decades, and a bailout will not fix that. Let it die.

 

So we do bail out the big three, then what? Airlines, a few large state governments (California), a big city here and there (NYC), aircraft manufacturers, a defense supplier, a large life insurance segment (Northwestern), yada yada.

 

Let's let it die and rebuild it the RIGHT way. Or, we could take the other approach so popular in Detroit: enter the 40th year of a long rebuilding process for the Detroit Lions.

[DavidEBSmith]

There are others, but the primary reason the big 3 are running out of cash right now is because they are not selling product at a rate sufficient to sustain themselves. Why? Because credit is tight and will remain tight. Additionally, folks are leary of making a big purchase when they might loose their job.

 

If this is the reason, then why are all the foreign car makers not in the same dire straits as the big three?

 

Well, according to the New York Times, all the Japanese makers except Subaru have lowered their profit estimates, and cars from Japan and Germany are piling up at the docks. The U.S. makers have fewer fuel-efficient models than the foreign makers so the U.S. makers are suffering more from the aftereffects of the summer's run-up in gas prices, but it's killing the demand for all large vehicles (Toyota may be being kept afloat by the Prius but the U.S. hybrids are only now hitting the market). I think there's less liquidity in the U.S. credit markets than there is overseas and that hits the U.S. makers harder.

 

The last point is the big concern about bankruptcy. If they can't get financing now, how are they going to get DIP financing?

 

All the auto makers are being hit by the same problems - credit crunch, high gas prices, drop in consumer spending - but they hit the U.S. makers harder because they're a few steps behind the foreign makers.

 

Of course, there will be some pundits who blame the auto unions for negotiating good benefits and pensions. Presumably if the auto makers go through BK they can shed those pesky obligations to the retirees and windows and orphans and become leaner and meaner corporations.

 

 

[motoguy128]

 

Let's let it die and rebuild it the RIGHT way. Or, we could take the other approach so popular in Detroit: enter the 40th year of a long rebuilding process for the Detroit Lions.

 

Funny how the parallels are so familiar. Bad management is the primary reason for the Lions issues and so is the automakers.

 

So if GM, Ford and Chrysler fail, in theory, the economy slows, Toyota, Honda nd Nissan can take advantage of NOT having contracts and cut workers wages, and increase production of their existing US made vehicles. I have to believe the the negative effects of the US makers failing will be isolated mainly to towns where their factories are located. I would support governemnt loans to allow their suppliers to retool to supply parts to for increased production of cars by Toyota, Honda and Nissan. Offer tax incentives for rehiring former UAW workers that are already trained for production lines. Long term, this might be a better strategy. Sure, the net profits will be lost to Japan, but how is that different than the US automakers which make no profits?

 

I think chapter 11 is their only hope. If they can't rebound from restructuring and renogotiating contracts, then it's time to say goodbye.

[Whip]

"Let's let it die and rebuild it the RIGHT way. Or, we could take the other approach so popular in Detroit: enter the 40th year of a long rebuilding process for the Detroit Lions. "

 

You leave my Lions outa this........they have a perfect record.

 

 

Maybe we can give Detroit to Canada........Ken may still need a good job.

 

[David]

I don't think that's considered a "perfect" record. (Says the Titans fan.)

 

Speaking of control, though, I find it interesting that Ford, unlike GM and Chrysler, actually has the voting block structure to effect change (different class of voting shares controlled by the family). They have not exercised it with Ford, just like they haven't with the Lions.

[motoguy128]

 

Of course, there will be some pundits who blame the auto unions for negotiating good benefits and pensions. Presumably if the auto makers go through BK they can shed those pesky obligations to the retirees and windows and orphans and become leaner and meaner corporations.

 

 

If you are unable to follow the rules of the free market economy and pay workers competitive wages to control you costs, then you will eventually suffer the ill effects of trying of not following the rules of a free market.

 

Hmmm... all 3 companies that are struggling are those with UAW contracts... all 3 that aren't, do not have unions.It's hardly a scentific comparison using sound statistical analysis, but it seems hard to ignore.

 

OTOH, I beleive there are some restrictions on worker pay and benefits in Japan and Europe, but they've managed to control their costs structures or at least their capacity.

 

Does anyone know if there are any good books that examine the differences in labor, infrastructure, R&D, purchasing and marketing & sales between Japan, US and German automakers?

 

[Whip]

They don't want the responsibility......in either case.

 

 

Wimps

[John Ranalletta]

There's a stench of machismo gathering around this issue. As an individual, I can survive a crash in the bunker with my entire family onboard and accumulate cheap assets at the bottom, but letting or causing it to happen would be irresponsible leadership.

[David]

There's a stench of machismo gathering around this issue. As an individual, I can survive a crash in the bunker with my entire family onboard and accumulate cheap assets at the bottom, but letting or causing it to happen would be irresponsible leadership.

 

So what, specifically, would be responsible leadership in relation to the big three? What type of bailout would you propose?

[motoguy128]

 

Maybe we can give Detroit to Canada........Ken may still need a good job.

 

 

We might need to throw in Buffalo and maybe even Seattle to get Canada to take Detroit off our hands. They already have the whole Quebec Province to deal with.

 

 

Speaking of Canada, they have many of Ford and GM's factories... and at least one Toyota factory. Maybe they need to pitch in some cash to save their factories. And think of all the Mexicans we'll put out of work? Maybe they need to pitch in too.

[Whip]

"There's not enough machismo gathering around this issue."

 

 

 

There, fix it for ya......

 

 

 

[smiller]

If this is the reason, then why are all the foreign car makers not in the same dire straits as the big three?

For one thing they do not have to pay for their workers' health care costs.

[beemerman2k]

Interesting that Mitt Romney is opposed to a bailout of the domestic auto makers:

 

http://news.yahoo.com/s/ap/20081120/ap_on_go_ot/autos_romney

 

I would have thought that with his ties to Michigan, he would support it. But he has no faith that a bailout would ultimately fix anything in Detroit.

 

He does, however, support a bailout of the Lions. He is working to move Jeff Fisher to the head coaching position in Detroit, and along with him, all his assistant coaches, starting lineup, and ownership.

 

Now that's one bailout that would definitely turn things around!

 

Wow, the Lions and the Titans have perfect records...who'd a thunk it!

[John Ranalletta]

I'm sure I'm not up to solving the problem; however, I'd suggest the first step of effective leadership is to attempt to restore confidence.

 

This situation carries much more threat to our wellbeing than the conflicts between Israel and its neighbors, yet, every leader we've had in recent history found it important to bring the constituents to the table to seek a solution.

 

Bush is hiding out in the WH and is just as willing to let this thing play out as some here. Doing so constitutes malfeasance and dereliction of duty. People realize the recent dog and pony show and the corporate jet bullshit is just that and they wonder why someone didn't step up and attempt to seek a meaningful solution, if only temporary.

 

I would bring the boards of the each company, the unions and major suppliers to the table. Each of them would have to bring the authority to cut a deal without going back for a vote. To them, I'd offer assistance in the form of loans predicated on their multi-lateral willingess to shave costs, merge, sacrifice and make definitive contributions (give backs).

 

It seems everyone has a hard on for the domestic car makers and they've made themselves easy targets, but that's yesterday. Today, even in the poor shape it's in, we have something. How is that better than leaving a smoking crater?

[David]

The only thing--and I mean that, the only thing--that has united the big three, their suppliers, and their union representatives is practically demanding a handout from TARP funds.

 

They have massive, foundational disagreement about what the auto industry as a whole needs, yet this is the ONLY thing that unites them. That tells me that they don't have a f*cking clue. They weren't united before the money was available, and they won't be united after it gets pissed down some other hole.

 

I'm a serial optimist and risk taker, so there's no joy in saying this about an industry. I just don't see any evidence of progress on their part. None. The closest thing I see to evidence of their willingness to face the music is what happens when they are dragged kicking and screaming to inevitable change.

 

I don't think we ought to kill the auto industry--I think we ought to let evolution take its course.

[upflying]

Here are my suggestions for GM, Ford and Chrysler.

1. Dump Mercury and sell Lincolns under the Ford name.

2. Dump Buick and Pontiac and sell the remaining models under a generic GM logo.

3. Dump the unprofitable Hummer line.

4. Dump the unprofitable Dodge Viper.

5. Sell off Ford owned Volvo and GM owned Saab.

6. Eliminate identical GMC and Chevrolet trucks. Sell trucks under one GM banner.

7. Eliminate badge engineering different but otherwise identical models such as the Pontiac Solstice and Saturn Sky.

8. Eliminate car TV commercials.

9. Dump manufacturer sponsorship in NASCAR.

10. Sell Corvettes through independent, boutique dealers.

 

[Jeepster]

The only thing--and I mean that, the only thing--that has united the big three, their suppliers, and their union representatives is practically demanding a handout from TARP funds.

 

They have massive, foundational disagreement about what the auto industry as a whole needs, yet this is the ONLY thing that unites them. That tells me that they don't have a f*cking clue. They weren't united before the money was available, and they won't be united after it gets pissed down some other hole.

 

I'm a serial optimist and risk taker, so there's no joy in saying this about an industry. I just don't see any evidence of progress on their part. None. The closest thing I see to evidence of their willingness to face the music is what happens when they are dragged kicking and screaming to inevitable change.

 

I don't think we ought to kill the auto industry--I think we ought to let evolution take its course.

David,

Having read your posts on this and other subjects,while not agreeing on all things. I have to say this mirrors my thoughts on this subject perfectly. Thank you.

[marcopolo]

Maybe we can give Detroit to Canada........

 

Not a chance; we don't want it.

 

On a more serious note, given that the North American auto industry has been fully integrated since the mid-1960s, we have a real problem here too with GM, Ford and Chrysler's Canadian operations. There is one difference, though, Canadians are still out buying cars because we have not had the same credit crunch as you've had. That said, the vast majority of cars made in Canada are exported to the U.S., and that includes cars made here by the Japanese companies.

 

I have to say that I have little sympathy for the Big Three. They missed the boat forty years ago when the Japanese arrived with small, fuel efficient cars that younger people bought. Those young people found them to be good value and, like me and most of my friends, never bought another Ford/GM/Chrysler. I don't know if it's quite the same there as here, but the Big Three lost entire generations of potential customers by producing poorly-designed, poorly-built and unreliable vehicles. They always seemed to be taking the short-term view, while the Japanese were taking the long-term view. Now the chickens have come home to roost.

 

This is not meant to start another debate, but car companies have a distinct advantage in Canada and that's our universal health care system. Workers' (and retirees') health care costs are not a burden on the car companies like they are south of the border.

 

I can't believe either your government, or ours, will stand by and let Ford/GM/Chrysler go down the tube. May be good economics, but it's not good politics.

[motoguy128]

If this is the reason, then why are all the foreign car makers not in the same dire straits as the big three?

For one thing they do not have to pay for their workers' health care costs.

 

I don't have any clear evidence but a quick search talks about co-pays and hints that they do have some form of healthcare....although I'm sure it's not as enclusive as UAW workers get. Typically, most production workers in any industry earning over $12/hour are given some form of health care benefits with employeer contributions.

 

The point being however, that if folks are willing to work for Toyota with less benefits, then Ford should be able to offer similar competitive benefits. If it was so misserable working for Toyota, Honda or Nissan, then the UAW would have been able to get them to join the union as well. The reality is that they offer them sufficient benefits to attract the quality of employees they need while staying competitive.

 

Don't forget, the US Automaker essentially challenged the Japanesse in the 70's by raising tarriffs to the point that they invested in US factories allowing them to compete on a level playign field. If Detroit had spent more more money on R&D instead of lobbyists, and negotiated more competitive contracts, they wouldn't be in this mess. GM's failure to maintain market share and carry the burden of retirees from the "golden years" has been a large factor.

 

I will conceed that generating a business model ot stay competitive in the face of shrinking market share is very very difficult. I suppose that's why the objeective is the NOT lose market share. It's hard to keep a business open with falling sales. Growing a business is easy in comparison.

[marcopolo]

Speaking of Canada, they have many of Ford and GM's factories... and at least one Toyota factory. Maybe they need to pitch in some cash to save their factories.

 

You're correct, we have GM/Ford/Chrysler and Toyota, Honda, Suzuki etc. For example, every Honda Civic sold in North America is made in Canada. There has effectively been free trade in vehicles between our two countries since the Canada-US auto pact was signed in 1965. Eighty-five percent of the cars and trucks we produce are exported to the U.S., and many of the cars sold here are produced in the U.S. They all enter duty free, so long as each vehicle has 50% North American content. The same is also true for the parts companies on both sides of the border.

 

Right now we have several Cabinet Ministers making the rounds in Detroit and Washington trying to figure out what you guys are going to do. Pretty hard to get a straight answer at the moment. I assume we'd also be talking to some people in Chicago.

 

If you guys bail out the Big Three, there's no way we're not going to assist them here in Canada.

[John Ranalletta]

If too few buyers enter showrooms and the ones who do can't finance their purchase with rational terms, none of your suggestions can have a positive effect.

 

BTW, transplants have had their quality problems, e.g. Toyota engine sludge, Tundra camshafts, etc. And, Honda Accord ride quality is not equal to some of the new Chevys.

 

Who's to say that absent some competition from domestics, they wouldn't raise prices and pay less attention to quality?

[John Ranalletta]

The concept that we have to break something to fix it is BS. The Phoenix doesn't always rise from ashes. Sometimes, all you get is smoke and ruin.

 

 

 

 

 

 

[azkaisr]

I have no answer that is different from anything said here. I don't blame the UAW alone, I don't blame the Management teams alone. They all need to change.

 

This is a time where you should be working on setting up alternative means of transportation. From Natural gas stations, to electric vehicles to more long term modes of mass transportation. It will cost a lot of money but in the end it will do more to bring manufacturing jobs back to the US.

 

Instead of having the Big 3 make the same crap, retool. It can be done very quickly and will employ a lot of smart people. The US did this in 1942 and by 1944 was producing war goods at a massive scale. The government played a productive role in this. It can be done. We just have to tell the population that for the next few years we need to do it. The people aren't afraid of it. My hope is that the people in charge may be smart enough to really do it this time.