"Memo to Detroit: Make better cars":
Scrappleface on a Detroit bailout:
“Here’s my proposal to rescue U.S. automakers,” said Rep. Pelosi. “Memo to Detroit: Make better cars.”
"Memo to Detroit: Make better cars":
Scrappleface on a Detroit bailout:
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So why not bail them out by buying out their pension plan in exchange for stock? If they still can't compete, sell the stock to Toyota as part of a takeover; if they can now compete, sell the stock to investors to recoup the money.
It's socialist, but better than throwing money down a rathole. This way the problem might actually be solved.
Why our politicians won't actually say stuff like this is the real question in my mind. Oh, for someone to be bold and speak obvious truths - why it so absurd?
once upon a time people would buy an American or Japanese car becuase they knew the parts were readily available and anyone could fix it.
but now you can buy even Korean models that can be fixed anywhere and have 10yr/100k warranties. go Hyundai!
One suggestion for Detroit: cut the number of employees on the company payroll who are paid to exclusively do union work, e.g., handle grievances, safety meetings, diversity meetings, etc., by half. That should fix the cost element.
The economy didn't crash and burn because the U.S. TV industry was out-competed. In fact, the unemployment rate is much lower today than when the last U.S. TV was produced. Imported TV's were both cheaper and better. By letting competition work, tens of millions of consumers got a better deal.
Wasn't it the Luddites who smashed spinning jennies, believing that their jobs were at risk? What happened, though, was an increase in employment; the new factories needed skilled workers to run and maintain the machines, leading to both higher employment and higher pay.
Unemployment insurance is the safety net. Like anyone else who loses his job, there are other jobs. Bailing out auto workers is being discussed only because of their numbers. But other workers who become unemployed have just as tough of a time. And no one is bailing out them.
Schumpeter called it "creative destruction." Letting inefficient industries fail is necessary to avoid an ossified economy producing substandard products.
And sometimes there is a true turnaround, as when Harley Davidson petitioned Congress to lift protective tarriffs. Harley had an attitude adjustment, an epiphany, and decided they could take on the Japanese imports toe to toe by producing quality motorcycles. Look at how successful Harley is now.
It is possible for U.S. car companies to do the same thing. But it will never happen unless their only option is to sink or swim.
Well, yes. But I think my proposal is the only way to ensure that cars continue to be produced in Detroit on a large scale (thus not ruining a large sector of the regional economy) while not setting ourselves up for a repeat performance of the bailout in a couple years.
Ultimately, with this as with the mortgage crisis, we're in deep trouble unless we bail out one or another undeserving party, so rather than debate which party is more deserving, we should just do the bailout that makes us least likely to have to do another bailout anytime soon.
Michigan: Obama by 16% Senators Levin and Stabenow, both Democrats. Most of Michigan represenatatives are democrat. Unions are one of the biggest donors to the democrats in the country. Do I need to continue?
When I was in the market for a new car 3 years ago we did not seriously consider any US models. The choice was Honda, Toyota, or Hyundai. I have owned 4 cars now and 3 of the 4 were toyota and 1 was hyundai. I have never had any major problem with any of them, except for the '79 Toyota corona that I got as a hand me down in high school with around 120,000 miles on it that had not been maintained well by the previous owner and it did not give me any real trouble until it hit around 140,000 miles.
Contrast that with the Ford explorer my parents bought in the early 90's that started falling apart before it hit 100,000 miles. The interior door handles and locks were made of cheap plastic and all fell apart and all had to be replaced.
Blame the unions for sky high wages, but also blame the management for lack of foresight. They have been whining about their problems for 20-25 years, and still haven't reformed their businesses? Seeya!
Coerced? In what way?
My understanding is that the union and management agreed to contract that govern such issues as wages, health care, pensions and the like.
If GM management signed contracts that were not in the best interests of the company's long-tern viability, then shouldn't they they be held responsible?
Apparently, it has never occurred to these brain trusts to make high-end sedans that get reasonably good gas mileage. It's also never occurred to them to make even mid-range sedans that last forever and get good mileage. Forget seat warmers - Americans, if you want to get more than 15 mpg, you'll have to crank the windows down by hand.
Of course, as a Volvo driver, I also have a very long rant about the lack of longevity of all cars not manufactured in Sweden.
If the UAW overreached in their demands on the company, they should also be held responsible.
I am wondering what the effect of the bankruptcy on the pension funds would be? What would be the cost to the pension guarantee trust?
The Numbers are VERY much in dispute, and vary depending on who you talk to.
The actual wages that the assembly line workers are paid average about $27 an hour. Unskilled workers earn less, down near $20, and the highly skilled ones earn into the mid $30's.
When you add in the value of the healthcare packages they recieve through fund matching, you add maybe another $10 an hour. But those aren't taxed
They contribute into a pension fund that's taken out, and again matched.
What anti-union activists like to do is compute their "wages" to include not only all of the matched funds as "part" of their basic hourly wage, but they add some value for supposed future receipts for pensions and post-retirement healthcare.
Further, the big albatross around the neck of GM is not current worker payments, but maintaining the pension fund and healthcare expenses for already retired workers under pension agreements negotiated 30 years ago when they had a near monopoly.
Are some of their union benefits too generous for such a competitive market? Yeah probably. But UAW workers are NOT getting paid these ridiculous amounts you see tossed around in any reasonable sense of the word. They're getting a few dollars an hour more than their counterparts at non union factories, and they get better healthcare plans)
Unions are one problem GM has, but they're not the only problem, or even the biggest problem.
I agree. Hold them responsible. If those contracts put them at a competitive disadvantage, tough. Let them go bankrupt. Let the UAW members lose their jobs.
Americans want history about as much as they want Chryslers.
[/sarcasm]
OTOH they are just contracts. GM can breach and pay damages or go bankrupt and walk away from them. If Washington is so worried about the fall out, put a safety net under the workers/retirees. Otherwise, GM will turn into the AIG of the automotive world.
More appropriately, if GM's executives gave in to over-reaching demands, they should be fired.
I think the union's position would be similar to the football coach who said, ""It's not my job to keep my team from scoring; that's the other coach's job."
Yes, exactly, but thats the third rail that no one wants to touch, you can't tell a semi-skilled assembly worker that what they do just plain isn't worth that much.
GM's immediate problems are being caused by some loans that call for immediate payback if it looks like GM might not continue to be an ongoing concern. Once the idea gets around taht maybe it mnight shut down the people in charge of certifying that GM will continue begin to get afraid even of criminal prosecution. That's sort of been the lesson of Enron ansd other accounting scandals.
It would cost GM a tremendous amount of money to downsize. They wouldn't break even for two years or something. Ford and Chrystler have similiar problems apparently..
It's been said they should go bankrupt (and what's wrong with that if the bankruptcy aws are the solution to unsustainable mortgages) except that it should be a pre-packaged bankruptcy that keeps it in business.
A bankruoptcy would allow GM to modify or shed contracts. Of course then other people would have problems - but it has been argued they could be helped too.
And of course the bankruptcy laws also might be slightly modified or some other law changed to prevent any horrendous shutdown.
Meanwhile it si interesting what Obama said. (Whether this is more tahn a clver turn of phrase and makes sense in the actuial situation I don't know) He said he wanted to give a bridge loan to the automakers, but it shouldn't be a bridge to nowhere.
Midnight Rambler:
This is essentially the thesis of The Reckoning , by David Halbersham ((c) 1980). An interesting Ph.D. dessertation would be how accurate Halbersham's predictions were -- IMO, they were very accurate and essentially explain the current problems of what used to be called "the Big 3 auto makers."
I bought my first new car in 1972 - A Chevy Vega; it started to rust out from the inside within 2 years (even though I was a sucker &paid extra for the Undercoating). Chevrolet did replace two quarterpanels and the hood under warranty, but when the back quarterpanel and hatchback started rusting through, Chevy was done &told me it was "out of warranty." My friendly Chevy Dealer was sympathetic, so he offered me a good deal to trade my Vega in on a new 1977 model, after assuring me that "Chevy has solved the rust problems." Well, yeah, my 1977 Vega never rusted through, but when I had to put the third new clutch in the car before it hit 40K miles, Chevy's only response was "It's out of warranty, and the clutches keep going bad because you don't know how to drive a stick." It's like I completely forgot how to drive after driving the stick on my '73 Vega for 75K miles with never a problem? I swore off GM entirely until my wife (now Ex-wife) insisted in 1982 on buying a new Buick - her Father was going to get an excellent deal on it. That Buick lasted less than three years before constant mechanical problems made it just too expensive to keep. In the third year (with barely 50K miles on it) it spent more time in the shop than in my garage. My next two cars were Mazdas - a Mazda 626 that I drove for over 180,000 miles without ANY major fixes - I only replaced that because it was totalled when another driver blew a stoplight and totalled it. My Mazda 929 did have one major mechanical problem -- I had to replace the transmission at 166,000 miles; I drove it for another 40,000 miles after that before trading for a Ford Explorer, and the Ford Explorer has been a POS since it was new - 5 safety recalls (including the Firestone Tire fiasco), constant problems, fights with Ford over their extended warranty, and lost time waiting at the dealership dealing with rude and arrogant Service Managers. Sorry Ford, Sorry GM -- I don't give a rat's a** if you were to GIVE me a new car, the only way I'll ever deal with you again is if YOU paid ME to drive your product. NOW, the best Big Auto Bailout I can think of is for the Feds to pay for the bulldozers necessary to raze their factories.
As Henry Ford said, "History is bunk."
I think the country as a whole should hoist a collective middle finger at these swine, and buy foreign cars.
At the very least, I should like to have a post card of the car my tax dollars are buying, but I shall never drive.
Nitwits.
Giving a chunk of tax revenue to the automakers only perpetuates the problem of the greedy UAW, who have bled all of the profit out of the industry, and left the companies drowning in debt. It is reasonable and fair to require UAW members to work for wages comparable to what Honda, Toyota, Hyundai, BMW and Mercedes employees in the United States earn. Bankruptcy is not "unthinkable", as characterized by Rick Wagonner with his hand out reaching for the public treasury, it is the solution to the problem that will restore the US auto industry.
If Pelosi and Reid give the UAW a chunk of taxpayer revenue, it will remind people why they used to vote Republican.
Wasn’t that the whole point of Social Security and Medicare – to provide a safety net for retirees in the form of regular checks and health care? I’m not a fan of either program and think at the very least they should be means-tested with an increase in the retirement age, but they already exist and the retired workers are more likely than not eligible and already receiving benefits. That IMO is more than enough.
I chose this path knowing full well that I won't make as much money as, for example, an MBA. That still doesn't take away from the fact that there are some manual labor jobs that are overpaid. I personally recognize my career path is not the most profitable, but try telling that to blue collar workers with no college degree who thinks he deserves every cent of his bloated paycheck and pension system.
To be fair, I also considered Volkswagen.
Otherwise, I've owned nothing but Japanese cars (Nissan and Subaru, all but the latest bought used) and every one of these has served me well and faithfully into the hundreds of thousands of miles. My last three cars have been Subarus. I'm currently in my eighth year and over 100,000 miles on a Subaru Forester that I bought new in 2000. Aside from standard maintenance and a few expected replacements (tires, clutch, brakes, timing belt, CV boot) I've never had a problem. The car runs as reliably today as when I bought it and has only one miniscule spot of rust on a scrape that was put there by a vandal. I doubt any owner of an American car can say the same. Let the Big Three and their union workers fall into the bankruptcy that they've worked so hard to achieve.
If the company could have counted on always having a huge market share as it did up until the 80's, then the pension legacy cost would be averaged over twice the number of cars and thus be half as much per vehicle.
Problem is that they didn't have a contingency plan for shrinkage. Selling fewer units makes the cost per vehicle increase, causing the vicious downward spiral of increasing per unit cost and decreasing sales.
How did the Big Three ever let unions obtain wages and benefits for the unskilled to be higher than for their engineers? (had I taken the job in 1986 as a ford engineer at 32,500 it would have been less than a starting assembly job then.)
A 2008 Focus and Malibu is quite comparable (in turn) to a Civic/Corolla and Accord/Camry in reliability but not in resale value for precisely that reason.
I'm inclined to suspect that GM really is a bank, and that's why the government wants to bail them out like it's bailing out the other banks. This brings up a truly frightening thought. How many other disguised banks are out there needing a bailout?
GM's board signs off on a contract that is not in their shareholders' long-term interests. However, unless you can prove this beyond a reasonable doubt, there's nothing much shareholders can do. Besides sell.
UAW management signs off on a contract that is not in their members' long-term interests. When the axe starts falling, expect the higher-ranking folks in the union to be last to go.
Do you think that Wagoner and Gettelfinger are worried about their own health care or keeping a roof over their heads? Nope.
Currently, labor, as a percentage of a new car's cost, is less than ten percent. The difference, in percentage cost, between UAW and non-union manufacturing plants in the US is relatively small if it is a foctor at all.
A much larger problem for the Big 3 (which have been around a lot longer than the Honda and Toyota US operations) is pension and health care costs -- there now are over twice as many retirees as there are current employees. (If we had a national health insurance, this would be one less funding obligation for the automakers.)
But to address your contention that Chapter 11 would be a good way for the automakers to get out from under union contracts, maybe so, but that wouldn't solve the immediate problem -- cash. The drying up of credit has hurt the automakers on two fronts: cash flow and retail sales. Thus, your suggestion of going into Chapter 11 will probably lead directly to Chapter 7.
Time was the union had one heck of a lot of power. Even well off VPs at the auto companies could have their lives ruined by the union. The unions controlled local government, suppliers, most of state government. That was up through the end of the 80s.
A lot of the reason that the big three fled Michigan and Ohio was to get away from the stranglehold that the union had on life here.
Back until the 90s everyone knew the name of the president of the UAW locals. They were more powerful and more important than the mayors of their cities.
One of the primary reasons for the lottery in Michigan was to break the connection between the unions and the mob. Before the lottery, the union was in partnership with the mob to run the numbers game in the plants. The union got the mob access in different ways. As long as the mob was taking money, they also delivered drugs and were heavy into loansharking to the workers.
The lottery really cut back on that, but for a while the UAW was very tight with the mob. The mob helped the union back. Not as much as you would think, because they were paying the bargaining committeemen for access, but they helped.
Buick City didn't close because GM didn't want to re-tool, it closed because GM would rather have to hand hold uneducated Mexicans who can't read or hold a tolerance instead of keep playing the political games in Flint, Michigan.
For those that don't know, in 1980 Flint Michigan, a small city, had 80,000 hourly GM workers/union members. In just one city.
I've had to sell most of my cars after a few years because of moving internationally, but even 10-year-old used cars have worked reliably, without excessive maintenance, and more than adequate comfort and safety features, at least for me.
I've had a lot of different kinds of cars, from a desert-equipped Peugot to several Hondas--starting back with the chain-drive Civic in the 60s. I haven't had the opportunity to run any of them into the ground yet, though I'm working on my 13-year-old Sable.
I have read others who say that Ford has improved its quality a lot over the last 10 years. Good for them if true. But I am not going to risk my money on it. They have already burned my parents once and next to my house payment my car payment is my biggest expense so forgive me if I do not go back to them. Toyota has yet to give me any trouble with a car before 140,000 miles and I will keep going back to them until that changes. My camry is almost 8 years old and at about 87,000 miles right now and it has not had a single problem.
Cite please. I'm honestly interested in how one computes that figure. TIA.
Um, we already do have a national health insurance system for retirees, it’s called Medicare.
Um, we already do have a national health insurance system for retirees, it’s called Medicare.
I'm not familiar with the details of the UAW plans, but I suspect the increased costs are from under-65 retirees and generous above-Medicare benefits to over-65 retirees.
Speaking from personal experience, last year I was in the market for a compact car. My main criteria was reliability--I hate, hate, HATE having to leave work to get my car fixed--and price. So I logically wound up getting the car that topped the category--a (used) Honda Civic. Sort that page by the "Overall Quality" column, and note that the top 5 models are all foreign brands. GM's Chevy got slot #6, but only gets a score of 3 as opposed to the top four models' score of 5.
This is not some vague public notion or decade-old memory, these are (presumably) industry-standard objective ratings. What good is it for the Big Three to complain about perception bias when they demonstrably fail to outclass their competition?
So yes, I think "make better cars" is an appropriate solution. And as an American willing to buy American when it makes sense to, I am literally ashamed that our nation of tinkerers and car enthusiasts could not whip up the technical know-how plus business savvy to produce cars that blow away foreign competitors.
Gee whiz! And I hear there's a national pension plan that's called Social Security.
A question: does this ranking still stand when you take into account the price (== resale value)? My experience was that, given a price point well below what the new car sells for, US compacts (Ford/Saturn) do compete with 2nd tier Japanese (Nissan/Mazda) and both outperform Hondas and Toyotas. The reason apparently being that people tend to hold to well-maintained Civics and Corollas and/or ask a lot for them. A $5,000 Civics and Corollas I was able to scare up in Dallas area were a sorry lot indeed.
For Chrysler maybe, but Chrysler is going to be liquidated anyway. GM certainly has enough value to go through a Chapter 11 reorg and emerge stronger, leaner, and meaner. Don't you think Toyota would pay well for Corvette?
So the union and management can get current improvements to the workers' income and benefits and pay currently, and demonstrate future benefits which are not paid currently.
It pays negotiators to load up the future. It pays everybody in the system to load up the future. When the future bills come, they're not around. Not to the point they can be fired, since they're retired or dead, even.
Have had very little trouble with American products in the last twenty years. Two Fords now, '02 and '04 Taurus with just under and somewhat over 100k.
Because I'm 6'2", many of the foreign cars, except for the expensive end, are simply not suitable.
"I think the union's position would be similar to the football coach who said, ""It's not my job to keep my team from scoring; that's the other coach's job.""
Um, the other team is Hyundai, Toyota, et. al., not their own freaking company. The players and coaches do indeed have an adversarial aspect to their relationship. If that's the whole relationship, however, they both lose.
Gettelfinger
He's the man, the man with the Midas touch
A spider's touch
Such a cold finger
Beckons you to enter his web of sin
But don't go in
Golden words he will pour in your ear
But his lies can't disguise what you fear
For a golden girl knows when he's kissed her
It's the kiss of death ...
From Mister Gettelfinger
Pretty girl, beware of his heart of gold
This heart is cold
Golden words he will pour in your ear
But his lies can't disguise what you fear
For a golden girl knows when he's kissed her
It's the kiss of death ...
From Mister Gettelfinger
Pretty girl, beware of his heart of gold
This heart is cold
He loves only gold
Only gold
He loves gold
He loves only gold
Only gold
He loves gold
I'm not sure why it took so long for U.S. automakers to figure out that lots of consumers like me want AWD in their mid-sized vehicles, yet they've known this for years in Japan - where it barely ever snows.
That's the problem. For most Americans, buying a car is a Big Deal. Particularly given the cost of repairs, which are a surchage on the price &can't be financed like the purchase price.
I wouldn't be able to afford the luxury of trying out a less expensive American car.
It is worth pointing out here that Toyata has opened up several non-union plants in the US over the last few years and except for the ones in Indiana, all of them are a long way away from Detroit. San Antonio has a Tundra plant and Mississipi, Alambama, Kentucky, and West Virginia have plants as well.
The UAW is so pervasive among Ford, Chrysler and GM that management hasn't been able to oppose them for years without going into backruptcy, which is now the only way to reform Detroit. A better system would only allow single-company unions, and thus expose each union to the corrective effect of competition. The UAW is now powerful enough to coerce Congress into subsidizing them. This is a watershed moment in America.
GM's apparent argument is that Chapter 11 will deter potential buyers. Wouldn't an unpopular bailout have the same effect?
That is a definite possibility.
The take in this town (which doen't really have many good things to say about GM in particular) is that sales did fall off the cliff - for every single mfg'r - not just the domestics; that the continued ad hoc response to the financial industry melt down does not dispel uncertantity and thus contributes to the problem it is trying to solve; add the "waiting for Obama" senario if congress doesn't pass bailout money for the industry this week and the continued uncertantity will kill the companies, from a Green Belt story:"3 million jobs associated with the automaker would be lost. The federal government would also lose an additional $150 billion in annual tax revenues associated with GM. That will certainly make the $25 billion price tag (although probably only $15 billion will go to GM) much more palatable."
While I am not a fan of some of the decisions management has made over the last 40(!) years, they made them for better or, for now, for worse. The present facts around these bad decisions are that one third of the nation's health insurance recpients is an industry legacy and a legacy cost. The transplants have their governments to thank for providing thier health care and for the cost advantage per vehicle that it gives them in North America*(*actually, Canada provides health care but the industry there is suffering the same low wage transfer of business to Mexico (primarily) and other low wage cost countries).
As for high milage vehicles - GM has over 30 vehicles that get more than 30mpg - more than any competitor foreign or domestic. The fact is high milage vehicles are not that hard to make, but the trade offs are several that the American consumer has been unwilling to make. Can you "blame" a company for making someting people want? Or should they make things people won't buy? You can perhaps critize them for not marketing high mileage well as a feature, but they spend millions every year researching consumers wants and desires. Sure the consumer is fickle and they maybe should have abnticipated that, but if you were CEO would you bet your job on it? The European high mileage vehicles are largely the result of their going to a new diesel. The American consumer got a bad taste in its mouth from the last time Detroit, rushing to meet CAFE standards but still providing the "power" Americans wanted, came out with an inadeqately vetted diesel that smelled, was unreliable and did not have a lot of gas stations that carried diesel (government policy again - both the rush impose by CAFE and the lazze faire (sp) attitude about letting Big Oil do what it wanted - no mandates for them). Detroit has embraced the new diesel - it is a huge improvement- but the American consumer hasn't got there yet. Time will tell. Among the current higher mileage trade offs are safety. Smaller vehicles get better mileage. The over the road trucks in North America carry the majority of freight, government policy has encouraged this. Over the road trucks are huge! Consumers are not going to want to be around these in a small (economical) car, they feel better in their SUV, the bigger the safer. Europe and the rest of the world does not have the abundance of big Peterbilts on the road because their roads aren't built to accomodate them (again government policy, thank you President Eisenhower).
The unions or union contracts are actually not an issue any more. The new CBA has a two tier wage that is at $14.00 / hour for new hires. Job banks have been pretty much wiped out except in the skilled trades areas. Efficiencies as measured by J D Power are almost the same for U.S. Manufacturers as the transplants. And, by the way, the unions (their strength owing to government policy) were so strong in Detroit (geographically, the Midwest, the East and California) that the transplants decided to build their assembly plants, not where skilled workers resided, but in the South, were animous to unions was and is, very common.
Ch 11 actually does have some thing it could do for the industry if done right as a prepackaged, in and out, experience. GM in particular has too many nameplates. Getting rid of Olds was a half measure. Bankruptcy would let them eliminate several nameplates, the biggest "problem" in that area is the thousands of dealers that have their livihoods and life savings tied up in the dealership and bankruptcy would make navigating all the state Dealer Protection Acts (government policy) easier.
I don't know if several billions will do it or not - GM has effectively been insolvent since 2004- but the unprecedented drop in sales does threaten 3 million ! jobs 3 million jobs - not people jobs. How many peolpe does that threaten? And for whatever it is worth the auto industry did not start the financial crisis. It started with government regulated banks that stopped trusting each other - the TED spread went to what -7%!
So yeah, I reluctantly and with mixed thoughts about the wisdom of it, think a bailout is in order.
As I previously said, GM has more carlines that get over 30mpg than any otherautomaker, it was not a stroke of genius that the asians only have small cars it was timing, their past focus was on small cars to support their domestic market (not nearly as many trucks in asia due to demand in asia with $5 gas), in fact, they were/are inthe process of buidling trucks, the asians are just late to the game. They originally came with what they had, not what they wanted. the big three are maybe behind on getting the first hybrid to market, but have passed asians in technology and getting them to market, ford escape hybrid, escalade hybrid, the volt will beout soon, etc. consumers don't want small cars, given the choice and low gas prices, they would want trucks, who wouldnt want a bigger car if gas was cheap? those that can will still buy trucks/suv's. gas shot up to $4 in less than a year, it takes over 3 years to get a car to market. small enginers have been in development and are being rolled out, the big three were prepared/preparing for this, it just hit quicker than expected - by anyone. as for efficeny of automotive, automotive is like no other industry, do you have any idea how hard it is to get 16,000 different parts to work properly and fit together to build a car? how many years of development and collaboration goes into that? it's a giant puzzle with moving parts made to 1/10th of a mm or tighter tolerances. to say the automotive industry isinefficent is just wrong, lean manufacturing comes from automotive, other industries, ie, healthcare, farming, airlines, etc are hiring people from autmotive to improve their efficiences. automotive may be screwed up in some areas, but find another industry that can coordinate 16,000 + parts and put them together to get a working machine in less than 1 hour (time of an assembly line from start to finish as a ballpark) and kick them out a rate of better than one per minute? all while maintaining less than one day of inventory on the floor? think about coordinating that and tell me it is an inefficent industry? the us autoindustry is the world leader in efficency. It should not be discarded like just another retailer. So yeah, give it some money and time and cross your fingers.
At least the assembly line workers are making something useful. (/snark)
The Sen. Shelby certainly has a conflict of interest when voting on any rescue legislation, given the fact a Big Three bankruptcy certainly benefits the foreign auto companies in Alabama.
As noted above concerning the electronics industry, America is destined to become a economic colony of Japan, China, Korea, Brazil, and Europe; unable to sustain heavy industry or manufacturing of any kind. Without the military orders, aircraft manufacturing would have been long gone (a substantial number of the subsystems for Boeing's commercial jets are made overseas and assembled here.)
You cannot compare a Big 3 bankruptcy with the airlines. There is no continual revenue stream of paying passengers; the Big 3 must pay for all the inputs into car manufacturing with the hope of selling the car at the very end. If it is not sold, they lose everything they have spent on that vehicle.
The social costs will be very high; even if it is a Chapter 11 reorganization thousands will be laid off; more mortgages will go unpaid and into default, driving the housing market deeper into a depression; the government will take over billions in pension obligations; and unemployment will skyrocket as suppliers and dealers are forced to shut down. Given that the world auto market is in decline, it is doubtful that the foreign auto makers will absorb laid off workers. The domestic auto industry will essentially die, to exist only with niche players for decades to come.
Memo #2: Stop forcing the companies to bargain with unions, so they can pay market compensation.
Memo #3: Get rid of the parasitical environmental, land-use, workplace et al. regulations -- all of which suck money and talent away from productive activities.
You didn't mention UAW work rules vs Toyota/Honda/BMW plants in the US. Do we bail out and still keep the rules?
A lot of good points and I do understand the complexity of the issue. The speed in which this issue is debated does neither side credit.
"As for high milage vehicles - GM has over 30 vehicles that get more than 30mpg - more than any competitor foreign or domestic."
That is more a reflection of GM's badge engineering focus and obese dealer network. What's a Saturn? What's a Buick? What's the difference between a Tahoe and a Yukon? How much "R&D" goes into those differences?
I'm too close to this issue to be objective, but there are A LOT of issues that need to be addressed before GM has any hope of being a viable company. It has a manufacturing, distribution, and retiree base designed for when it sold 1 in 3 cars in the US. That won't ever happen again, not just for them, but even for Toyota/Honda. Until I see a serious plan that gets GM down to a 10% market share and actual plans on selling cars to paying retail customers rather than retired employees, Avis and the federal gov't, this bailout looks DOA.
As for:
"the big three are maybe behind on getting the first hybrid to market, but have passed asians in technology and getting them to market, ford escape hybrid, escalade hybrid, the volt will beout soon"
The Chevy Volt? I think that represents everything that is wrong with GM. Hype, PR hype, and more PR hype. Toyota will be out with a plug in hybrid at the same time or soon than the Volt. Meanwhile, GM will claim a 40 mile range and Toyota an 8 mile range. You know what? They'll both be the same - except the Volt will go 40 miles downhill in the desert while the Toyota will go 8 miles in Ontario at 30 below zero. Which customers will have a better experience?
You didn't mention UAW work rules vs Toyota/Honda/BMW plants in the US. Do we bail out and still keep the rules?"
Well come on now. A democrat prez elect and a democrat congress is going to try and get the UAW to do something any fool can see makes sense? Sure, and David Bonier is going to start reading from a differnt play book (other than the UAW's that he has carried for 40 years) if he is to be the so called auto czar. It just isn't going to happen. In fact I fear it will get worse with check off and card signing off premises to unionize the transplants.
I said I had mixed attitudes on this and for the current administration to leave this one up to the next, stikes me as deliberate deriliction of duty, like they are even hoping the union gets obvious and publicaly recognized special treatment, so they can carp about it in the next campaign.
The union movement, with the big exception of public emplyoees unions has been in a steady decline in this country and I assume the Repubs know this and see it as an issue: Dems, the party of government v Repubs, the party of the taxpayer.
Anyway, the work rules have been negotiated down big time and I asume that will continue. A story along those lines: One of the OEMs wanted to sell one of their parts plants to a supplier. Supplier(in the due diligence negotiations with the UAW at the plant) said "I don't need 37 people getting paid wages and not working (Meaning the UAW stewards that wander the plant (when they are there) to "help out" to "check on things" "I don't need any" The negotiations were not pretty but ended with "I can live with 3, my people or yours"(the supplier was blending his work and workforce into the plant, BTW,there is some marginal utility in such a position). The negotiators settled on 4 or 5 (I can't remeber) so this is one way work rules are changing quickly. And the last contracts all got a lot more room for managment to make changes if they have the courage.
Big plants are difficult to manage. One of the great industry quotes is from Henry the Duece about their Woodhaven Stamping plant, a monster sized stamping operation where you could get lost for a long time and that had a ton of "lost" UAW workers: "The best thing about (Woodhaven Stamping) is that the f'n Russians copied it!"
So yes I don't expect wisdom on that issue or anything knocking the UAW, at least not from congress or the incoming administration. But also keep in mind teh JD Power stuff- the Detroit plants are now nearly universally as effcient at manufacturing as the transplants, so I am not sure the work rules or the difference in them are that big a deal as they once were.
"Javert, I think you are describing India."
I put the over/under on 15 years for that statement having an entirely different meaning than your intention.
As for the product, 40 miles versus 8? Well who in their right mind would buy either one? Really the consumer wants at least 200 miles per tank or plug in or whatever. Hyrids I suppose are sort of there, but until there is a major breakthrough in battery technology these electric vehicles are nothing more than a toy. I rode in a complete battery car from the GM Tech Center 20 years ago (Thanks to my neighbor who was a chief engineer for the company) and battery technology hasn't really changed that much in all these years.
They are in fact ahead of the curve on highbreds in technolgy and will be there shortly in production, but I still think the general interim solution will be the new diesel. They need to start selling the consumer on it. It is a proven technology (Europe) and is far more reliable than a nnbrand new hybred technology ar the toy car electrics.
Legacy costs. Whar can I say? That is the problem. But really, the government does have or had a role in this. Nearly every listed company in the country in the 50' and 60's had defined benefit plans and health care. It was cheap as a percent of labor cost and everyone did it. Sure the actuaries were warning you about the long term, but hell, in the long term it was always someone elses problem. IBM had one of the most generous employee benefit programs ever and when they hit a bad patch they changed the benefits down- some said renigged on promises made-but they were not a union workforce. So what should Gerstenberg (GM CEO in 70s) have done? He should have cut back. What did he do instead? When he had the UAW on its back (they even mortgaged Black Lake, their retreatto the Teamsters, He rolled over and even uncapped COLA. So yeah, GM management made a lot of mistakes over the years - not just in product. But what do you do NOW. That is the question. I would love to write the legislation in a bailout but I don't think labor or managment would like it.
I should have thought that with this historic election, we would have put this sort of shocking, illegal, and insensitive language behind us, once and for all.
All this, just to enable us to get to work! I could see if this WAS work, but it's merely a means to an end. You would think that after about 5000 years of civilization, we would have figured an easier and cheaper way to get to work, or to run our errends, but for some reason, we Americans want the most expensive, wasteful and polluting way possible to conduct our daily lives. Oh, and we somehow decided that the best way to accomplish this was to transfer billions of wealth to countries that don't really like us.
Who thought up this brilliant system? Who is accountable? I guess no one. But we demand more of the same. Perhaps we should quit blaming Detroit, the unions, the Japanese, and start looking in the mirror: If WE didn't allow cars to dominate our economy to the degree that they are, then we wouldn't be in this mess, or it would be a lot easier to solve if we were.
But, as usual, everyone blames the people they dislike anyway.