Detroit automakers' rescue stalls in Senate

Valid points, but even if jobs are lost, what are the ramifications of the now, can the economy handle the losses.

Although I do agree that these corporations might go overseas, The job losses all at once might send a riple throughout the world wide economies which we might never recover from.

Just my opinion on this one.

Ok, so we bail them out.. then what? They still go on producing cars that NOBODY WANTS TO BUY! They will then, just as they are doing now, drive themselves into the ground and end up in the same situation just more in debt.

If they want the bail out, they should cut production to a reasonable level - and yes, jobs will be lost, but many, many less jobs then if the big three totally collapse. They need to stop making cars that people are not buying, cut jobs that are no longer providing the services they need, and start thinking of ways to run a business - not a leech on our economy.

People cannot afford new cars right now, they cannot afford to get them serviced, and they cannot afford any other amenities that may go along with the automotive industry. This goes for ALL companies right now. People are not buying, we are in a deep recession and this is part of it. If any company wants to be viable, they need to figure out ways to cut costs - which sadly means letting people go, creating less goods, and so on. This in turn will effect all other industries that depend on the auto industry to buy their goods as well. But, the S has already hit the fan, and its either some people feel the sting of what our leaders have done to us, or MANY more feel a horrible, long lasting, depression that will be the end of our economy as we know it.

Business isnt to create just to waste money, its to supply a service to a customer. If half the amount of customers are now coming, you need to scale down to half of your operations. When things pick back up, you adjust accordingly. Is it really that difficult?

This bailout will just allow them to practice horrible business and only prolong the collapse that is inevitable if they continue down this path.

I feel really bad for people that are going to be affected by this.. but I would rather have one million people out of work then ten million plus.

Originally posted by FoxStriker
Valid points, but even if jobs are lost, what are the ramifications of the now, can the economy handle the losses.

Although I do agree that these corporations might go overseas, The job losses all at once might send a riple throughout the world wide economies which we might never recover from.

Just my opinion on this one.

Ramifications? Jobs will be lost regardless, a tremendous number of them, and we'll have at least $25 BILLION added to our our national debt. That debt has to be paid back.

Can the economy handle pumping $25B into a company hemorrhaging $2B per month? Let's assume all the money goes to GM - that's just one year of funding to keep them in the exact position they're in now assuming their sales don't drop at all during that year.
What good does that do? That doesn't inspire confidence; that doesn't make people want to buy cars.
But since we're talking about 3 companies here, each company would probably get $8.33B; that's four months of life for GM. By around April of '09 they would have to figure out how to stop the $2B/m bleed, increase sales, and cut spending drastically just to stay alive. How does that help keep people employed? It does nothing but delay what is really, truly inevitable.

Whether the bailout happens or not, the jobs will be lost. Either the bailout does happen and the autos cut massive jobs to trim spending, or the bailout doesn't happen and the autos file for Ch. 11 and cut massive jobs. At least under Ch. 11 they'd be forced to reorganize and would stand a chance at remaining viable.

This is not a matter of the Big Three going overseas. They're doing it, they've been doing it, and they'll continue doing it.
See here, here, and the link in my previous post. The IHT article, in particular, is interesting in that it was published two years ago, before the worst of the economic conditions kicked in.

Is this how we want our taxes spent?

reply to post by anachryon


They are asking for 25Billion from the Bailout Money, that money is already being misused as we speak, yes jobs will be lost on way or another. The money they are getting they do have to pay back.

But does anyone see the market crashing? and I mean really crashing, as in those big three have thousands of contracts and sub contracts, they don't make all the parts, its a domino affect.

I see people saying to let them burn, but who will burn with them.

Those 3 are our automakers, if they go bankrupt, they'll be bought out by foreign investors.

You make a valid point, but as I read your article, read the one I put, the only way they will consider giving them the money is if they start make gas efficient cars, god willing they monitor the money they give them, and it doesn't go into the hands of tyrants.

But what about just about 3 trillion that has already been spent? and for what, save the banks that put us in this mess with their dirty lending practices.

Hell, those 3 make cars.... they make cars.... they don't put people in the hole, although be it, car sales people can be pushy, still.

but I can tell my point is a hard to reach one, and I agree with some points on your side of the spectrum, but personally I wouldn't want to see the ramifications of our commercial and industrial industries start collapsing, those have always been the backbone of our economy

This is pathetic. General Motors couldn't turn a profit 2 years ago when it was the best car-market in American history. They couldn't get with the program. Now they beg like defeated men?

Have they no honor? Have they no shame?

Originally posted by FoxStriker
But what about just about 3 trillion that has already been spent? and for what, save the banks that put us in this mess with their dirty lending practices.

Hell, those 3 make cars.... they make cars.... they don't put people in the hole, although be it, car sales people can be pushy, still.

The central part of your thesis seems to be, in my understanding, that since the banks received money, the autos should too. If I'm wrong, I apologize in advance!

Fool me once, shame on you. Fool me twice...

Up until 2006, GM wholly owned and operated a little service which was involved in exactly what started this ball of poo rolling downhill.
GMAC. General Motors Acceptance Corp. Car financing. Mortgage financing. Subprime mortgage and car financing. Insurance. Banking. All the good stuff.
They sold 51% in '06 to try and raise money because, well, they were failing 2.5 years ago. They continue to own a 49% stake in GMAC.

Chrysler - a privately owned company - is owned by investment giant Cerberus Capital Management. Cerberus is the entity that bought 51% of GMAC. Cerberus buys troubled businesses, including quite a bit of real estate and banking assets.

Ford owns and operates Ford Motor Credit Co, a lending facility that finances Ford auto purchases.

Hmmmm. So they're not just simple automakers. They're in the banking/lending business too, and from my perspective it looks like they dabbled in the same ugly lending that got everyone from IndyMac to WaMu in trouble.

Why the hell can't they access funds that banks can access then??
Oh wait. They can.
But they're still descending on Congress to ask for more money?

C'mon now.

reply to post by anachryon


I'll lay it down on the line, at this point I've made it sound like I'm pro bailout, I'm not.

I just don't want to see all those people lose their jobs. If what you say is true a Chapter 11 still wont help them survive, just buy time for the inevitable, at that point what the hell is the point.... over 2.5 million jobs will be lost and thats just if GM goes down....

The way I see it, the banks and the feds have released over 3 Trillion for banks and firms to no actual results, just to relax investors to keep them investing, they're buying time to get over this hump although I really doubt it will work, the actual losses are still mounting and will continue...

These losses have not gone 360 degrees yet not even 90.... The losses taken still have to hit other industries.... Not even the people know that the worst is yet to come.

I hate the idea of the bail out, but I came from the Mortgage Industry, I saw how many people where displaced, how bad it can get when an industry collapses, its sucks... no jobs, people I know lost all their savings, 20yrs worth.

I don't know about you but I don't want other people to go through the same thing, and yes you do have valid points, but what your talking about is the corps. which I do agree have caused similar problems, but please read the original article I posted, they would have to pay it back with intrest.

Please read this article regarding the big 3.

www.freep.com...

I don't want people to be displaced, to lose everything they have worked for. I don't like the idea of a bailout, but if the same thing that happened to the mortgage can be avoided, I would say go for it, I know a lot of people that work for or associated with the auto industry, They're peticular jobs skills will be very difficult to transfer to other industries which are in the processes of firing people not hiring.

Originally posted by FoxStriker
I just don't want to see all those people lose their jobs. If what you say is true a Chapter 11 still wont help them survive, just buy time for the inevitable, at that point what the hell is the point.... over 2.5 million jobs will be lost and thats just if GM goes down....

I don't either. I really, really, really don't want to see anyone lose their job.
I've been laid off once this year thanks to this economy, was able to get another job, and am now down to working barely part time plus doing consulting work. Believe me, I don't want anyone to have to go through this.
Unfortunately, the way I read the numbers, nothing in this world is going to save those jobs. The credit bubble is over. There is no demand for 17M units/yr. There probably isn't demand for 10M units/yr. No amount of money pumped into the Big Three will change that. The jobs are gone...thousands of them.

Please read this article regarding the big 3.

www.freep.com...

I drive a Chevy. Before that I drove a Chevy. Before that, I drove another Chevy into the ground. Before that I drove a Ford.
I don't want to see GM die. I like their cars.
I just don't see any way for them to survive under their current business model. Will pumping $3T more into the companies solve all their problems?

reply to post by FoxStriker


I very much disagree with your statements on this, and I have worked in the industry. The problem is that the Big three have become unsustainable, too much overhead means they cannot build a quality product. That overhead has gone into things that are utter wastes, which there is no way they can reverse other then though cutting jobs, salaries, benefits, and pensions. Even friends of mine who still work in the industry don’t see any way to save these companies. If you hand them more money, do you think that they will change their practices, or continue with business as usual, and need more money down the road? Do you think that employees will be willing to lower their wages to save the company, work harder (in some cases just actually do some work period), or decease their benefits? Heck no, none of that will happen!

If they need money they should be going asking for a handout from their buddies at BIG OIL who helped put them in their current situation. I bet those billion dollar profits from the Oil Companies can go a long way to helping their friends the auto manufacturers dig out of their problems. If not them, then the only solution left is to let them go bankrupt, and allow other companies to spring up in their places. Companies who don’t have the overhead and can start fresh out of the box with a quality product geared at the current market and world situation. Besides all of this I think you HIGHLY overestimate the number of people who this will effect, many of whom will lose their jobs in cutbacks anyway.


[edit on 11/20/2008 by defcon5]

I am very torn on this.

On one hand, I've seen those three CEO's sit there and refuse to give up their lifestyles, while claiming they've made significant cutbacks in spending (yes, cutbacks for the workers. I'll bet senior staff are still getting their company cars, bonuses and $M pay!)

The government are refusing to tell you all what your money is being spent on, and even how much it really is.

It certainly looks like the government is robbing you blind, giving all that cash to... who knows?

Part of me thinks "Do not give them anything, let the greedy corporations sink!"
But another part of me says they they have no choice if they don't want to see at least another 3 million unemployed.

The big question is really, is it too late anyway? Are these corporations already going to sink and are those people already going to be unemployed?

I also wonder if this might be what is actually needed to force change. Maybe we need a massive global economic collapse the likes of which we have never seen? Maybe that's the magic "reset button" that will cause the people to finally hold these corporately-controlled governments accountable to the citizens they work for?

If it does go through and they are given that money, every American should be out in the streets demanding that you be told every little detail about it. Who gets what, when, why, and for how long. You need to make sure these greedy criminals don't just walk away with blank cheques, they need to be watched closely, and you need to be able to watch those who are watching it even more closely.

It is all crazy, but the craziest part is that so few Americans seem to care about where their money is going.
You have an issue that affects ALL of you, and yet it faces no argument, no questions, no protests at all as far as I can see.

It really is astounding how apathetic American culture has become.

Nice post Defcon.

I agree that the big three is again in serious trouble and for many of the same reasons some of them got bailed out the previous times. Either way massive restructuring will be required with or without bailouts to refocus product lines as well as to make these companies at least somewhat competitive with both Asian business practices as well as their generally 'superior' ( or shall i say better targeted) product lines that puts the emphasis on reducing overall cost while making the cars both more efficient and environmentally friendly.

Not sure if your a counterpunch reader but either way i found this article there and it mentions their unrealistic wages and entitlements that makes me cringe considering what many Americans are working for these days. Would you agree that if these companies get's 'bailed out' it should follow the Scandinavian model ( well the sensible model ) where the government buys stock and can thus gain a means to truly affect change at the public's behest and allowing itself to turn a profit in the long run?

www.counterpunch.org...

Stellar

reply to post by StellarX


Thank you Stellar,
You as well. Nice to see we agree on something for a change.
You are correct about that article, but it is stuff I was already aware of having been a contractor for one of them for a number of years. That was the point I was trying to nicely make in the above post about waste and excess. The employees of those companies are solely responsible for their downfall, IMHO. Many of them are second generation employees who thought that the Motor Companies were a never ending bucket of money, and they treated them about that way. This is why I am saying that the only way its going to get better is to clean house completely. You can bet that folks with 10 years in, who have been grossly overcompensated for the work they do, are not going to give that up lightly. They are certainly not going to decide to come in on Monday after the company gets that money and work any harder then they have for the last 10 years for less money. Sorry, but people and life just does not work that way. Guys pushing brooms, or specialized union mechanics who sleep and play cards all day make more money then folks out there with college educations that save peoples lives everyday, and that is outrageous. They get up to a month of vacation time a year, plus sick time, personal time, and most of those companies shut down for 4 weeks out of the year to do “retooling”. Its funny how “retooling” always happens to fall the weeks of Christmas/New years, and Easter. Never ending pensions that paid out almost what they made at the time of retirement, just add to the outrageous overhead these companies allow. Several people I know retired from the Auto Industry as multi-millionaires, and we are talking about regular employees, not executives. Moreover, let me tell you that is only the tip of the iceberg on the waste these companies have no problem with generating.

The only way to handle the situation, and possibly save the company is to do what Lorenzo did with Eastern Airlines when their people started pushing them over the “cost effective” limit. Clean house, and hire new people who are happy to do a great job for a reasonable amount of compensation, or bankrupt it. I don’t feel badly about this in the slightest, if the employees of these places want to wine about it, then they can look squarely in the mirror to lay blame. They bit the hand that fed them, quite literally.


[edit on 11/20/2008 by defcon5]

Read this please

www.freep.com...

Myth No. 1
Nobody buys their vehicles.

Reality

General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.

Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

Myth No. 2
They build unreliable junk.

Reality

The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

Myth No. 3
They build gas-guzzlers.

Reality

All of the Detroit Three build midsize sedans the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic. A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.

Myth No. 4
They already got a $25-billion bailout.

Reality

None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.

Myth No. 5
GM, Ford and Chrysler are idiots for investing in pickups and SUVs.

Reality

The domestic companies' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry. The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel economy ratings than Toyota and Nissan's full-size pickups.

Myth No. 6
They don't build hybrids.

Reality

The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009
p://www.freep.com/article/20081117/COL14/811170379

Somebody knows something somehwere . . .

Ford stock absolutely tanked this morning, down to $1.01. In the last half hour, it has jumped to $1.65 . . . a swing of more than 30 percent.

GM stock, which also swirled the bowl this morning at $1.70 has nearly doubled in value in the last h alf hour to $3.25.

Now, in scanning the news pretty much all day for news on the automotive sector as part of my job, I can unequivocally note that there has been absolutely no good news reported anywhere.

I'm scratching my head and wondering what the hell is going on . . . is there some behind closed doors quid pro quo thing going on amongst our senators and congresspeople?

Anyone hear anything?

reply to post by GoalPoster


GM closed at 2.79 and opened at 2.53, then plummeted to 1.70 got up to 4.00 bucks. But looks like its stabalizing, its around 3.00 dollars now.

Same with Ford....

but your right, seems kinda weird for the fluctuations, you know our markets, rumors are as common as the air we breath

reply to post by GoalPoster


Found this, hopefully it helps

biz.yahoo.com...

This is just rediculous. The CEOs flaunting their wealth and asking for taxpayer bailout. What would they use this money for? Build more cars like the General Motors EV1, recall them, take them out into the desert and destroy every last one of them. This is about breaking the Unions in preperation for a global economy. nothing else. They don't care about the working class and how many are out of work because of this. They live in their own world with more money they they can ever spend in a lifetime. Their lives are not about working and making a living, it's about power.

[edit on 20-11-2008 by TamtammyMacx]

I think 25 billion is a kick in the bucket compared to cost of unemployment insurance and retraining of 3 million people, were looking at 250,000 jobs in Canada that will be lost if the auto industry tanks, Chrysler has asked the Canadian government for 1 billion today, I think they can pretty much get what ever they ask for, kinda got us by the short and curlys,

I have read the posts. A couple of questions:

What has wall Street produced for 700 Billion?

What does the auto industry produce?

I think the 700 Billion is a load of bunk. I see the auto industry as being overly fat when compared to Japan and they do share components across manfacturer lines. However white collar management is as fat as the unions; how many brand manager, advertising and marketing execs, communication managers, call center personel etc for one division is replicated across the entire company. Just on the Average Consumer side: Toyota: Lexus and Toyota. Nissan: Infinity and Nissan. Honda, Acura and Honda. Ford and Chrysler: Three divisions. GM: six domestic Divisions: Saturn, Chevrolet, Pontiac (which has a toyota in its line up), GMC, Cadillac and Buick.

With regards to the Unions: most unions were brought about by poor and greedy management in the first place. Well run companies do not need them.
They need to cut white collar workers, reorganize to get rid of a lot of Union pork, and consolidate for maybe one regular car/truck division and one luxury division. My rough numbers would be 6 divisions coming to two would eliminate at least 10 50K a year jobs at 4 divisions for 2 million dollars, or what, 1/4 of what they are asking

reply to post by TamtammyMacx


Enjoyed reading your post and i think you just about right on the mark with this being yet another attack on organized labor. At a time when the US government sinks tens of billions of dollars a month into Iraq you know they have suspicious motives when they refuse to save a good proportion of 250 000 jobs. Obviously something MUST be done about the health care costs ( 30% of payroll) and possibly even salaries but to let the auto industry fail without help when AIG and other shadowy financial 'services' 'industries' gets bailed out is too obvious a attack to ignore.

Bailing Out the Automakers ---Why Detroit is Different

Stellar