Should the USA Auto Industry be bailout?

I wasn’t going to join, considering how most people “hate bailouts”, but some statements are out of line:

I am often told I’m crazy for buying American made cars, because foreign cars are built much better. Hell, I bet the streets would be lined up with people willing to do the same job, maybe a better job for half of what these people make now, plus the great health care and pensions they make and then they go on strike for MORE ???????

Union jobs like these make the middle class in this country. Your way of thinking is a slippery-slope and is exactly where the illegal immigration problem comes from. There are always people somewhere who will do the job for less, this doesn’t mean that people should get paid less. Ever wondered why McDonalds workers don’t have union? Ever wondered why McDonald employees often don’t speek English or don’t give 2 sh$ts? Do you want your car made by someone who doesn’t speak English and lacks basic education? And before you say it’s silly, you already eat chicken which has been processed by illegal immigrants, beef processed by illegal immigrants, vegetables picked by illegal immigrants, etc.

Unions are the only reason big corporations share a small percentage of the profits with its workers. And don’t be foolish to think that lower wages will result in lower prices for the consumers, no, it would simply mean more profit for the company and higher stock price. You want to know what the world looks like without unions? Just read on Industial England.

Also, don’t give me the “Asians make better cars” line. All asian cars are junk and I will never own an Asian car, period. I have owned European and US cars and I have NEVER been on the side of the road. With basic maintanance US cars will go a long way before major break-down. I have a ’96 Tahoe which I don’t think about selling, even though I don’t need it. This SUV has 200K+ miles and sits in the driveway collecting dust, but starts instantly, works without a problem and all I have done is change the alternator once, breaks, tires and fluids. Good luck doing so with Asian SUVs.

There are also many benefits to SUVs, especially if you live north of Kentucky. Where I reside currently, I would not trade my SUV for a car no matter what, I just need the SUV. And middle-class families have no problem driving gas-guzzlers, the problem is there are less and less middle-class families, thanks to the idea that corporations can pay their workers less and enjoy the profits from labor-cost cutting.

Finally, YES, give them the bail out and then some. I would much rather see my taxes going to hard working families and keeping their jobs preserved, so they can go in turn and buy products and services and keep the overall economy afloat, than buying a bunch of airplanes from Lockheed Martin, building bridges to nowehre, studying bears’ DNA and a whole set of “projects” with the money going to rich-people-getting-richer. I will pay my taxes regardless; my tax dollars will be spent regardless; I would rather see them getting spent on the well-being of hard-working people!

From http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm

GM’S PLAN A SOFT LANDING
Remember the old ad slogan, “This is not your father’s Oldsmobile”? Well, this is no longer your father’s auto industry — but GM is still run as if it were. Fifteen years ago management struck a deal with unions that made it all but impossible to close auto plants or lay off workers without incurring massive costs. GM also agreed to cushy retiree benefits that put it at a severe disadvantage. Much of what ails GM today flows from that accounting reality and its inability to increase the business at home. The need to keep those plants running, to generate cash, and to feed a sprawling web of aging auto brands compromises car design and results in too many models that sit for years without an update. The bedrock principle upon which GM was built — offering a car to feed every market segment — has degraded into a series of contrived brands, most with little identity, and bland, overlapping product lines.

has degraded into a series of contrived brands, most with little identity, and bland, overlapping product lines

I somewhat agree with you, the difference between a Yukon and Escalade is only in the headlights. But what’s more iconic an Escalada or a Highlander?

Fifteen years ago management struck a deal with unions that made it all but impossible to close auto plants or lay off workers without incurring massive costs. GM also agreed to cushy retiree benefits that put it at a severe disadvantage.

Are you saying that workers don’t need job security, benefits, good pay?!? The problem with the automakers, farmers, service and almost any other industry came after the US markets became open to the world, wihout any preconditions. I am all for competition, as long as it’s on the same playing field. A worker in the US gets paid $5K and one in China gets paid $50. In the real world these two must meet somewhere and it’s not going to be in the middle, considering China has 1 billion work-force and US has about 100 mill. Add to this Inidia, South Korea, Latin America and you got yourself an enourmous disadvantage to the US worker.

@Stupid 187913 wrote:

I somewhat agree with you, the difference between a Yukon and Escalade is only in the headlights. But what’s more iconic an Escalada or a Highlander?

Are you saying that workers don’t need job security, benefits, good pay?!? The problem with the automakers, farmers, service and almost any other industry came after the US markets became open to the world, wihout any preconditions. I am all for competition, as long as it’s on the same playing field. A worker in the US gets paid $5K and one in China gets paid $50. In the real world these two must meet somewhere and it’s not going to be in the middle, considering China has 1 billion work-force and US has about 100 mill. Add to this Inidia, South Korea, Latin America and you got yourself an enourmous disadvantage to the US worker.

I didn’t say that I was quoting an article from business week from 2005

I have owned American cars in the past and only a select few foreign cars are in the top spot for quality and have done so with smart business practices.

Brad

When ever I hear those arguments I come back with the fact that you don’t have to look at the rest of the world to see how to be successful making cars, just look at how the other automotive companies in the US do it down south. :sarcasm: They are not crying and begging for a bailout.

The auto industry brought this upon themselves and are 10 or more years behind others. If you run a business into the ground then don’t expect folks making 1/4 of the pay you do to feel bad, sorry for ya or want to save you.

This is a free market, you either survive or fail on your own and not expect to get a handout when you mess up. I know the economny has an influence, but it’s tough on everyone and no one should get special treatment.

When ever I hear those arguments I come back with the fact that you don’t have to look at the rest of the world to see how to be successful making cars, just look at how the other automotive companies in the US do it down south. They are not crying and begging for a bailout.

Whan you make this argument. keep in mind:

a.) the foreign automakers still import the bigger chunk of their cars from overseas.
b.) An auto manufacturer only designs and assembles the vehicle. The parts are made by “suppliers”, which could be in the US or could be in China. If you order your car seats from the US, let’s say a car seat will cost $1,000, but if you order the same car seat from China, it will cost $300.
c.) the Big 3 still make profit in Europe (although not sure about Chrysler), despite the fact that there they face extra competition from French and Italian cars. European car buyers are also much more picky, since cars generally cost more and the gasoline is twice as expensive.

Those are good points, but the majority of the public feels as do I, is that giving them money will only delay the inevitable. Can’t believe that people don’t see that. They started trying to be good to late. Why in the heck do we have to wait until 2010 to get a NEW type of car?

The managment needs to be fired, end the fancy perks of the past, wasteful UAW contracts needs to be re-negotiated, and end some of the crazy job bank ideas that keep folks that don’t work on the payroll.

Once they get serious about surviving then they may get some help.

Just figured I throw this link out there:

http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=autos_autos+–+lifestyle+subindex+page_top+stories

@Stupid 187996 wrote:

Just figured I throw this link out there:

http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=autos_autos+–+lifestyle+subindex+page_top+stories

Interesting article but excuse me for asking: They had this ground breaking insight that diesel hybrids are not cross market compatible after they produced the car? What does that say about management?

What I hate most about this crisis is that the people around the world have to bail out those who have been reckless and incompetent. It shouldn’t be like that but it almost looks like it cannot be completely avoided if the entire system is to be salvaged.

A few points regarding the labour cost argument. I don’t think this is the main problem. German or French labour costs are far higher. In Germany the biggest auto workers union has gotten a 4% wage increase across the board for all it’s workers only a week ago! A German or French auto worker earns €40-€80/hour depending on seniority. In France they have an economy wide 35 hour working week. In Germany it’s tied to the Unions and VW had 35 hour work weeks and a stop to lay offs as well. Plus they all get paid overtime and often receive 13 pay checks per year. One is a bonus at year end! The difference is that they have national health care and pensions.

I think the main two reasons that led to the failure of the big 3 are innovation (or lack thereof) and mismanagement.

here is some high end smarty pants advice on the bailout question http://faculty.chicagogsb.edu/luigi.zingales/research/

Since they are from the Uni Chicago one might think that they may have some good communication channel with Obama maybe? I hope so.

@slotplayer 187705 wrote:

the big 3 already have 25 billion in the energy bill. but they didn’t get it yet. From my understanding they want another 25 billion.

RIght and Congress had agreed to (change) the requirements for the use of that money, but decided not too.

Which is why I mentioned the statement above. The truth is that Paulson has the power to give $25bn to the auto industry and he can also give $25bn to the FDIC chairman, but he refused. NOT because he couldn’t use the the money for that he refused to use it for anything other than the banks.

EDIT: Just heard that the CEO at GM has agreed to Sell his two jets. That’s a good start. ” title=”” class=”bbcode_smiley” />