Domestic Auto Industry, What will "really" happen?

[David]

Amen to that. I like that line of thinking. If we're going to throw billions of dollars at it, let's not make incremental changes to the existing model but start over and build it from scratch in a way that really benefits our country long term. I think there'd be a lot of momentum behind such a plan, too, with the right leadership.

[chrisolson]

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).

I'm not sure I see the distinction between the aftermath of that meeting and Chapter 11 ...

[SageRider]

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).

I'm not sure I see the distinction between the aftermath of that meeting and Chapter 11 ...

In the first instance, The involved parties resolve the issue themselves.

In the second instance, Someone else does it for them.

[chrisolson]

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).

I'm not sure I see the distinction between the aftermath of that meeting and Chapter 11 ...

In the first instance, The involved parties resolve the issue themselves.

In the second instance, Someone else does it for them.

Ok, but how do the results differ ...

[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.

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.

I don't know how to compare the overall scope either but Japan, Germany, etc. all have a universal health care system. Employers may contribute some kind of supplemental insurance but that cost is low due to the government subsidizing high-cost procedures and lifelong illnesses. It costs GM $1500-$2000 per vehicle in employee healthcare costs, more than the cost of steel per vehicle. Foreign manufacturers have some decided cost advantages in this area.

 

This is just an aside and I'm not trying to hijack the discussion to healthcare issues, but let's just say that if we want to rebuild non-competitive industries in this country there are other things we should be focusing on beyond corporate jets.

 

 

[rob1100r]

***HIJACK***

 

How about buying GM stock now? When they bail em out it is bound to go up....was $1.70 earlier today went as high as $4.00!!!

 

***END OF HIJACK***

[SageRider]

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).

I'm not sure I see the distinction between the aftermath of that meeting and Chapter 11 ...

In the first instance, The involved parties resolve the issue themselves.

In the second instance, Someone else does it for them.

Ok, but how do the results differ ...

The first will never happen. To many selfish interests involved to care about the whole.

The second might have a chance.

[John Ranalletta]

To believe this relatively small task is impossible is admitting we have no one capable of leadership in the US.

 

Certainly explains the Nov 4 results to me.

 

Where are Henry Fonda and Jimmy Stewart when we need them?

[Lets_Play_Two]

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).

I'm not sure I see the distinction between the aftermath of that meeting and Chapter 11 ...

In the first instance, The involved parties resolve the issue themselves.

In the second instance, Someone else does it for them.

Ok, but how do the results differ ...

The first will never happen. To many selfish interests involved to care about the whole.

The second might have a chance.

 

I listened to a press conference held by the president of the UAW. His entire mantra is to keep giving to the workers, protect the pensions and the health care benefits. The perks of the executives pale in comparison to the union benefit costs. I don't believe the unions will buy into anything but more of the same and they will try to strong arm the senators and congressmen on whom they spent a lot of reelection money. Chapter 11 will save a lot of jobs but at a lower cost. Right now we are looking at pouring more money down the same rat hole.

[David]

How about buying GM stock now? When they bail em out it is bound to go up....was $1.70 earlier today went as high as $4.00!!!

 

You'd have to be comfortable that they will achieve a turnaround without bankruptcy, as the last people to be paid in those situations are the shareholders. You might be smarter to buy on the bond side for pennies on the dollar.

 

I think I'll go buy a latte instead.

[SeanC]

Amen to that. I like that line of thinking. If we're going to throw billions of dollars at it, let's not make incremental changes to the existing model but start over and build it from scratch in a way that really benefits our country long term. I think there'd be a lot of momentum behind such a plan, too, with the right leadership.

I like Tom's line of thinking as well, but the whole "right leadership" thing just ain't gonna happen with these bailout plans. The leadership will consist of the same UAW commissars, industry execs, bureaucrats and congressmen.

 

Or maybe we could appoint Ed Begley Jr. as Auto Industry Czar.... Imagine returning the industry -- nay, our entire economy -- to the promised land via Trabant EV-1s.

[John Ranalletta]

He's just doing his job. He's not evil and he's just as interested in the mfgrs' success as anyone. I used to negotiate labor agreements with a variety of unions. One never negotiates in the press, but one uses to press to communicate with one's constituents, not the other side. His job is to manage the expectations of thousands of UAW members; and, he can't give ground unilaterally and publicly. If he did, he should be fired.

 

This vilification of unions crap has just got to stop. They don't have anything they weren't given. I'd argue their members are more scared than militant and want a solution.

 

Oh, if we're going to start really punishing people for making bad judgments, how 'bout those people who build in areas that burn over every few years? Wouldn't it be smarter to cancel their homeowners' insurance and let 'em burn?

 

 

[SageRider]

They don't have anything they weren't given...

 

Seems more accurate:

"They don't have anything they didn't get through coercion..."

[StuGotz]

easy now Sage....

 

MB>

[pokorskij]

Just asking, but does anyone know how much the federal government spends on farm subsidies each year?

 

Or

 

How much does the always bankrupt airline industry benefit from the federal dollars spent on air traffic control and other aviation subsidies?

 

See those subsidies are so in bred most don't even think of them anymore.

 

And those subsidies are just that, at least the auto companies are looking at loans that might be paid back.

 

Doesn't mean I favor an auto bailout, but there are a lot of ox out there that could be gored.

 

 

The best answer is not to let politicians make decisions in areas they have no knowledge of, but if that happened they wouldn't make any decisions. Maybe that is the answer.

[John Ranalletta]

They don't have anything they weren't given...

 

Seems more accurate:

"They don't have anything they didn't get through coercion..."

Nonsense. The sole weapon that each side wields is the ability to shut down the work. Traditionally, shareholders have been much less willing to take that hit than union members.

[Twisties]

Just asking, but does anyone know how much the federal government spends on farm subsidies each year?

 

Or

 

How much does the always bankrupt airline industry benefit from the federal dollars spent on air traffic control and other aviation subsidies?

 

See those subsidies are so in bred most don't even think of them anymore.

 

And those subsidies are just that, at least the auto companies are looking at loans that might be paid back.

 

Doesn't mean I favor an auto bailout, but there are a lot of ox out there that could be gored.

 

 

The best answer is not to let politicians make decisions in areas they have no knowledge of, but if that happened they wouldn't make any decisions. Maybe that is the answer.

 

With all due respect, as yours is a point I've made many time myself in other contexts (support of Amtrak), but don't forget the subsidies the auto industry already enjoys:

 

Roads, Bridges and other infrastructure courtesy of the taxpayer.

 

Free use of the commons for disposal of it's waste, primarily all the air pollution that Whip would like to kill us out here in the West.

 

Oil industry subsidies for fuel to run the beasts.

 

 

 

 

[Burt]

....enter the 40th year of a long rebuilding process for the Detroit Lions.

Actually, its closer to 45 years.

[pokorskij]

While the family owners of the Ford Motor Company and the Detroit Lions are related, remember a very important point. Rumor has it taht the Ford family that runs the the automotive company used the Lions as as method the keep William Clay Ford (Lion's owner) occupied and out of the the car business.

[Burt]

While the family owners of the Ford Motor Company and the Detroit Lions are related, remember a very important point. Rumor has it taht the Ford family that runs the the automotive company used the Lions as as method the keep William Clay Ford (Lion's owner) occupied and out of the the car business.

I wish they had used the automotive company to keep him out the Lions' business.

[steve.foote]

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

 

Or, they're greatly overestimating the downside of doing nothing.

[Twisties]

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

 

Or, their greatly overestimating the downside of doing nothing.

 

I think people are seriously under representing the degree to which globalization is influencing this matter. The conversation to this point seems parochial to me.

 

 

[azkaisr]

Jan it is, which is why I still think that to make this work you have to leverage the one thing that is still done here better than anywhere else. Inovate the industry and move it someplace new. I know that many of the world's greatest minds still want to live here. Put them to work on a problem, let them get it right and use the power of industry and government to break down barriers to making it happen. Not sure with the media, the partisanship and just our short attention span that we will do it, but I think we could. It could be a great moment or one that makes us a second rate power for our kids.

 

Only time will see

[smiller]

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

Or, they're greatly overestimating the downside of doing nothing.

Well, to repeat John's earlier response... I actually hope that you're right, but unfortunately the preponderance of the data sure doesn't seem to be pointing that way.

[Dave McReynolds]

One never negotiates in the press, but one uses to press to communicate with one's constituents, not the other side.

 

That's why it seems to me like both sides are just posturing. How can the union go back to its people and say, "You know all those retiree health benefits we negotiated for you? Unfortunately, we just agreed to give them all back." Same thing for management, "You know how we negotiated in good faith for our labor contracts? Well, unfortunately, there have been a few unexpected turns in the road, and now we're going to have to renegotiate them."

 

Neither of those is an easy thing to do. Seems to me that it is a lot easier on everyone if a bankruptcy court judge just hands down an order and says that a lot of things are going to have to be renegotiated. The the unions can go to their people and say, "We were forced to do this," and management can say, "We were forced to do that". I almost think that, regardless of what they might be saying, they would almost prefer that approach. Not in the sense that they would really prefer not to get a $28 billion bailout, but in the sense that if they have to make some hard choices, it's an easier venue to make them in.

 

Clearly, $28 billion baleout or not, U S automakers cannot be competitive in today's environment with the baggage they are carrying. Not today, tomorrow, or the next day. If we are going to have a continuing automotive industry, it must be reorganized so that costs are comparable with its competitors costs. I don't see how that could ever be accomplished voluntarily.

[bakerzdosen]

FWIW, GM is ending all retiree health benefits effective Jan 2009 - as my father and grandfather learned earlier this year.

[keithb]

I heard a caller on talk radio today that worked for GM or Ford for 26 years and now has been receiving benefits longer than he worked in the auto industry and the guy is 84 years old. It is pretty damn hard to sustain an industry when you are subsidizing thousands of workers who produce nothing. Kinda like the FED Governmnet eh? It appears this gravy train has certainly reached the end of the track.

[ghaverkamp]

I heard a caller on talk radio today that worked for GM or Ford for 26 years and now has been receiving benefits longer than he worked in the auto industry and the guy is 84 years old. It is pretty damn hard to sustain an industry when you are subsidizing thousands of workers who produce nothing. Kinda like the FED Governmnet eh? It appears this gravy train has certainly reached the end of the track.

 

Well, it's not impossible if they responsibly invest the money in order to sustain the benefits. It is impossible if they decide not to properly fund their pension plans at the time the employees work for them.

[Twisties]

I heard a caller on talk radio today that worked for GM or Ford for 26 years and now has been receiving benefits longer than he worked in the auto industry and the guy is 84 years old. It is pretty damn hard to sustain an industry when you are subsidizing thousands of workers who produce nothing. Kinda like the FED Governmnet eh? It appears this gravy train has certainly reached the end of the track.

 

I would guess that you could search out and find just about any anecdote you'd like. Was there anything presented on anything informative, like averages or % of total costs?

 

One way or another, someone is going to pay for that healthcare. Funding it through corporations has always been absurd. In any event, it is only the amount after medicare/medicaid, e.g. "supplemental" that GM would be paying I presume.

[Lawman]

I heard a caller on talk radio today that worked for GM or Ford for 26 years and now has been receiving benefits longer than he worked in the auto industry and the guy is 84 years old. It is pretty damn hard to sustain an industry when you are subsidizing thousands of workers who produce nothing. Kinda like the FED Governmnet eh? It appears this gravy train has certainly reached the end of the track.

 

Well, it's not impossible if they responsibly invest the money in order to sustain the benefits. It is impossible if they decide not to properly fund their pension plans at the time the employees work for them.

 

Seems to me our much maligned health care system shares part of the blame here for extending lives to such a length that it's putting a strain on the pension systems..I'm optimistic though. That problem too may be corrected with a universal health care system...

[Whip]

I heard a caller on talk radio today that worked for GM or Ford for 26 years and now has been receiving benefits longer than he worked in the auto industry and the guy is 84 years old. It is pretty damn hard to sustain an industry when you are subsidizing thousands of workers who produce nothing. Kinda like the FED Governmnet eh? It appears this gravy train has certainly reached the end of the track.

 

I heard that same conversation.......long live the king.!!!

 

 

[StuGotz]

who's the "king"?

 

MB>

[steve.foote]

who's the "king"?

 

We could tell you, but then we would have to...

 

 

...well, you know.

[Whip]

who's the "king"?

 

We could tell you, but then we would have to...

 

 

...well, you know.

 

 

[smiller]

who's the "king"?

 

We could tell you, but then we would have to...

 

 

...well, you know.

Admit that you get your information from him..?

[Whip]

who's the "king"?

 

We could tell you, but then we would have to...

 

 

...well, you know.

Admit that you get your information from him..?

 

 

 

Him.......Who??????

[steve.foote]

Has anyone here given any thought to where the bailout money is coming from? Is it coming from you? How about you? How about you, over in the corner?

 

Folks, the fact is that the United States is in debt to the tune of 20-30 trillion dollars ($10.6 trillion that we're willing to admit to). In the few months that we have been attempting to "bailout" various institutions, we've managed to bag another $2.5 trillion, and counting. The fact of the matter is, THIS ISN'T OUR MONEY. We blew our wad years ago.

 

For crying out loud, we're robbing our kids. And for what? So we don't have to be inconvenienced with a market correction?

 

Our generation has so mismanaged the fiscal state of this country, we don't deserve to emerge unscathed. If we really want to leave a legacy for the next generation, we need to dig down deep and find the courage to honestly deal with our problems. Passing it on to future americans is cowardly and dishonorable.

 

It's time we all confront the man in the mirror and ask him if he is really doing the best he can.

[Whip]

Has anyone here given any thought to where the bailout money is coming from? Is it coming from you? How about you? How about you, over in the corner?

 

Folks, the fact is that the United States is in debt to the tune of 20-30 trillion dollars ($10.6 trillion that we're willing to admit to). In the few months that we have been attempting to "bailout" various institutions, we've managed to bag another $2.5 trillion, and counting. The fact of the matter is, THIS ISN'T OUR MONEY. We blew our wad years ago.

 

For crying out loud, we're robbing our kids. And for what? So we don't have to be inconvenienced with a market correction?

 

Our generation has so mismanaged the fiscal state of this country, we don't deserve to emerge unscathed. If we really want to leave a legacy for the next generation, we need to dig down deep and find the courage to honestly deal with our problems. Passing it on to future americans is cowardly and dishonorable.

 

It's time we all confront the man in the mirror and ask him if he is really doing the best he can.

 

 

"Hope I die before I get old"

 

The WHO

[smiller]

Folks, the fact is that the United States is in debt to the tune of 20-30 trillion dollars ($10.6 trillion that we're willing to admit to). In the few months that we have been attempting to "bailout" various institutions, we've managed to bag another $2.5 trillion, and counting.

$20-30 trillion? $2.5 trillion? Are those figures accurate? Guess I'd better check with The King...

 

 

[Twisties]

Folks, the fact is that the United States is in debt to the tune of 20-30 trillion dollars ($10.6 trillion that we're willing to admit to). In the few months that we have been attempting to "bailout" various institutions, we've managed to bag another $2.5 trillion, and counting.

$20-30 trillion? $2.5 trillion? Are those figures accurate? Guess I'd better check with The King...

 

 

I think they might not be too far off if you allow for all the internal borrowing, e.g. raiding of the Social Security Trust Fund, and whatever else goes on. Then keep in mind the whole slew of expenses that are "off the budget". these are going to the debt, but you never see them when see a figure for "deficit". I hadn't heard those numbers, but they don't surprise me at all.

[smiller]

Yes, the numbers can be anything that you want them to be. Depending on which blog you read the bailout cost is anywhere from $700 billion to $5 trillion. Or, for a yardstick, about the same as the war in Iraq.

 

 

[StuGotz]

We did have a surplus at one point...remember when?

 

It wasn't that long ago.

 

Like it or not, change is coming. I've already looked in the mirror.

 

And turned off the radio.

 

MB>

 

 

[Joe Frickin' Friday]

It is pretty damn hard to sustain an industry when you are subsidizing thousands of workers who produce nothing. Kinda like the FED Governmnet eh?

 

Oh man, don't get me started on THOSE guys...

[motoguy128]

Just asking, but does anyone know how much the federal government spends on farm subsidies each year?

 

Or

 

How much does the always bankrupt airline industry benefit from the federal dollars spent on air traffic control and other aviation subsidies?

 

See those subsidies are so in bred most don't even think of them anymore.

 

And those subsidies are just that, at least the auto companies are looking at loans that might be paid back.

 

 

Good point. I was able to find info on the 2002 Farm Subsidies Bill. It allocated 16.5 Billions annually. So 25 billion for the Auto Industry isn't unresanable, but I fear it's a drop in the bucket. The economy isn't going to rebound in 12 months.

 

Also, the subsidies go to individual farmers which would be best described as small businesses. I'd rather see 25 billion go towards small businesses in rural communities or even urban areas than large mismanaged corporations that have allowed foreign competition to get the best of them over the last 4 decades despite swinging big sticks and making all efforts to block their entry into the US market. The pretty much baited the Japanesse to build factories here. Their arrogance has led to their downfall.

[motoguy128]

I think I just heard a subject for a new topic... "So what happens when the US goes Bankrupt?" Soooo.... do we take a page out of the irban jungle and use our military to start "robbing our neighbors"? Start selling off our assets? Any Macroeconomic's experts?

[Ken H.]

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

Ken has a good job.

 

Besides, Canada is not immune to the effects of the big three. Especially eastern Canada where a lot of mfg. plants of all three are.

[Ken H.]

more long term modes of mass transportation.

What!?! Give up personal transportation!?! You SOCIALIST you!

[Ken H.]

hijack

 

Seems to me our much maligned health care system shares part of the blame here for extending lives to such a length that it's putting a strain on the pension systems..I'm optimistic though. That problem too may be corrected with a universal health care system...

Actually life expectencies are longer in Canada with UHC than in the USA without. Men in CA 77.8 yrs. vs 75.2 in the USA. Women 82.6 vs 80.4.

 

/hijack

[Ken H.]

Nobody has any money to buy cars. The home equity piggy bank is dry.

 

Or at least a lot less people do than before.

 

But via one way or another we’re going to ‘rescue’ the big three because they being able to continue to build cars is a vital industry to the US economy.

 

I have but one question – What are they going to do with them all?

 

[steve.foote]

We did have a surplus at one point...remember when?

 

It wasn't that long ago.

 

Like it or not, change is coming. I've already looked in the mirror.

 

And turned off the radio.

 

MB>

 

I assume you are talking about the surpluses during 1997-2001 which totaled $559 billion. Considering they were the first budget surplus in 30 years (since 1967), at that rate, it would only take us 569 years to eliminate the “official” debt as long as the interest rate were kept at zero percent and we didn’t add another dollar to the national debt. I can see why you are so excited about this.

 

Just curious, but which branch of government do you believe has the constitutional authority to raise, borrow and spend money? I’ll let you do your own research on that one, but, can you guess which party held power during that period? (Hint: It was the 105th, 106th and 107th congresses).

 

Perhaps if you were to listen to the radio more often, you might already know these things. :wink