The New York Times reports that President Bush has revealed his bailout plans for GM and Chrysler. The Gray Lady says the loans “include roughly the identical requirements in that bill, which had been approved by the House.” More specifically [via Bloomberg]: “Under the terms of the plan, if the companies can’t demonstrate financial viability by March 31 the loans will be called and the money must be returned… The government’s debt would have priority over any other debts. In exchange for the money, the automakers must provide warrants for non-voting stock, accept limits on executive pay, give the government access to financial records and not issue dividends until the debt is repaid. The government will have the authority to block transactions larger than $100 million. The automakers much cut their debt by two thirds in an equity exchange, make half of the payments to a union retirement fund in equity, eliminate a program that pays union workers when they don’t have work and have union costs and rules competitive with foreign automakers by Dec. 31, 2009. The requirements could be modified by negotiations with the union and debt holders.” The bottom line…
$13.4b straightaway, $4b in February. If the Prez gets his way, the bailout bonanza will come from the Treasury Department’s Troubled Asset Relief Program (TARP)– despite the fact that Bush had warned Congress against any such move, as the funds were earmarked for banks and other lending institutions.
So why no bankruptcy? The Commander-in-Chief noted that consumers would be “unlikely to purchase cars from a bankrupt manufacturer.”
And here’s something odd. “Government officials will examine all financial statements and records of the car companies.” You mean they haven’t already? The Prez wants to fork-out $17.4b without knowing the exact size of the hole into which he’s throwing US. taxpayer money? How great is that? Anyway, reaction from ChryCo was as swift as it was pre-packaged.
In an open letter to their saviors, ChryCo CEO Bob Nardelli thanked his friends in Washington and opted for a surprisingly strident tone with the company’s suppliers. “We are… mindful that they are going through a difficult period as well. But we must cooperatively find ways to further reduce our costs while maintaining normal operations. We will ask our suppliers to maintain their commitment to reasonable trade terms and normal fulfillment of orders for as long as the federal loan is outstanding.”
Business as usual, then? Yup.
“The bridge loan allows us to meet cash needs, pay our suppliers, continue developing great products and move forward with the restructuring and streamlining of our organization that we began in 2007. This restructuring will reduce the number of personnel layers while increasing managers’ span of control, enabling us to reduce costs, make faster decisions and do our jobs effectively with fewer resources.”
So where are GM’s promises, promises, promises? Right here!
“This will allow us to accelerate the completion of our aggressive restructuring plan for long-term, sustainable success,” GM statement pronounced. “It will lead to a leaner, stronger General Motors, a GM that is:
*dedicated to great products, exciting design, and world-class quality
*fully committed to leading in energy-saving vehicles and technologies,
*responsive to the needs of our customers, our stakeholders and the communities we live in and serve.”
Once again, GM CEO Rick Wagoner has slipped the hangman’s noose without promising any quantifiable goals or metrics for future success. The General’s generals have scheduled a press conference for 11am.
What Bush has done is to basically pass off the whole problem to Obama.
My guess is that in 20 years Bush wants to look back and be able to say “Hey, at least the auto companies didn’t go bankrupt under my watch, it’s all Obama’s fault!”.
The NYTimes has some good info:
http://www.nytimes.com/2008/12/20/business/20auto.html?hp
I heard the press conference. Short version: Loan from TARP funds. And if the companies cannot come up with a good restructuring plan in 90 days, they have to pay the money back. Except that they won’t possibly be able to. There was nothing in the press conference about any significant strings,
From the previous thread discussing that the WH would rather organize a prepacked bankruptcy – the President has done it again by “snatching defeat from the jaws of victory”.
“Required to open their books”?
Decoded: They still aren’t telling the full story.
“Another $4b available in February”?
Decoded: As Michael Moore has said, they’re so incompetent they don’t know what next month’s payroll is going to be.
“Union costs and rules competitive with foreign automakers by Dec. 31, 2009”
Decoded: I’m passing this to Obama, but leaving enough rope for the UAW to hang itself.
EDIT: My source was bloomberg.com for details.
Nothing about the fate of GMAC? That’s still the joker at this moment in time.
nope everything is fine now – while Bush is in office – nothing is wrong 2+2=5
“And if the companies cannot come up with a good restructuring plan in 90 days, they have to pay the money back.”
They already have a restructuring plan. It’s called their long term business plan. What? We’re talking about the Beg3? Oh, that’s right, Toyota and Honda and the other foreign automakers have those. My bad.
Nevermind.
Mid-Year targets are laughable.
… Chrysler was meeting or exceeding its financial targets …
This was stated by Chrysler as late as August 2008.
http://www.autonews.com/article/20080924/COPY01/309249975/1078
At least we can now be sure the Volt will move forward!
Detroit Todd called it. Again. Still.
Not only did I predict that Toyota would report a loss, I also predicted that President Bush would provide loans to GM and Chrysler.
The war in Iraq and a destroyed economy are bad things, to be sure. But there’s no way Bush wants the death of American manufacturing to be his legacy.
For those of you who will (inevitably) complain about what the Gubmint has done with your money, two things:
1. It’s my money, too; and
2. I’d rather not have funded the war in Iraq, “faith-based” initiatives, and many other things. But, in a representative democracy, our elected officials make those calls. We live with it, and then vote accordingly.
Anyhow, the loan should allow GM some breathing room to continue getting their shit together. Chrysler will use the money as lipstick/perfume in a continuing search for a suitor who knows how to run an auto company (Cerberus sure as hell does not).
The UAW survives, as it always has. Any “strings” on the UAW contained in the loan package will be enforced (or not) by the Obama administration. Does anyone think President Obama is going to march the UAW to the gallows? I don’t.
Improving government
The American government is for sale. Politicians are not put into office by the voters, they enter public service with campaign contributions. My proposal is simple. End the investigations let the President Senators and Representatives come clean and admit they are for sale. They could publish rate cards for their vote. This would cause competition and would result in lower rates to rent their integrity.
Large issues this might be handled by E-bay in a special category. Where individuals could form like minded groups to place bids on an issue. If group A raises the the most cash they will receive the Presidents / Senators / Representatives undying fidelity, at least until the next auction.
Benefits would include the elimination of expensive investigations saving tax dollars. We could save precious educational dollars by eliminating civics classes that teach fairy tails.
Statues of successful criminals would replace the current meaningless Washington Lincoln Jefferson monuments. And we could replace the Lady Liberty in New York Harbor with a giant statue of a hooker.
That 90 day plan clock is a crock. Bush has simply played kick the can. Again.
Right now the only clock that matters is the one counting the days between now and January 20th. Bush is watching that clock hoping to avoid any more major disasters between now and then. Meanwhile the rest of us count the days, hours and minutes until we are rid of him. And to think, I voted for him. One of the few things in my life I’m really ashamed of.
The stock market seems to like this (for now), but this was basically a punt. I’d really like to see a detailed plan, with specific goals and oversight. I guess that’s too much to ask.
The next administration won’t have the option of punting. I hope they’ve got a better plan in the works.
Not only did I predict that Toyota would report a loss…
As I pointed out on the other thread, while Toyota may report a loss, it hasn’t actually done so. Toyota’s fiscal year has another three months to go, so it’s too soon to report anything other than a forecast, and as of now, Toyota is still forecasting a profit.
In any case, the bailout cash shouldn’t be a surprise to anyone. It’s harder to predict how the whole thing will ultimately resolve itself, but the next president is going to have a fine mess on his hands.
The timing of the loans is excellent. When the money runs out, the Bailing 3 should be in the ideal position to glom some of the $1 trillion-plus Obamagasm that will be coming…
Downside, more of my taxmoney wasted by the administration that came in with a budget surplus.
Upside, this stupid move cements Bush as the most incompetent President in recent history, just when I would have had to give him credit for one thing.
Obama: If you put paying off the mobbed up UAW before health care, infrastructure and financial reform you will have one term like Bush’s daddy.
The one good thing is that this announcement came before Paulson’s announcement that he is going to beg for more TARP money. Paulson won’t be able to use the threat of not bailing out the auto industry to prevent the Democrats from making othe reforms to how the TARP money is used.
$13.4 billion now and $4 billion later, interesting – the TARP only has $15 billion left in it. That means that the second $350 billion will have to be passed after the holiday in order for both the banks and automakers to get their cash, old Hank is making sure everybody is on the same page I guess.
They need this much cash just to successfully organize a bankruptcy plan by March 31. You dont decide on March 30th your plan isnt working and file that day. This money does nothing but delay the inevitable.
I feel the conversation is not so much about Bush as it is about the pressure placed on the UAW and the car companies for the next round in March. I fully expect the UAW and its leadership to deflect and obfuscate soon with emotion heavy news conferences. Three months goes past in a blink of an eye and money like this vanishes in a heartbeat with GM and Chrysler. I agree with others here – bankrupcy is likely inevitable.
““Under the terms of the plan, if the companies can’t demonstrate financial viability by March 31 the loans will be called and the money must be returned”
TO WHOM?!!!!
Paulson? He won’t be there. The new Sec Treas?
This is actually WORSE than the House bill.
This was a complete bailout BY Bush.
Mission accomplished my a$$.
Time for a bailout watch death watch?
“The automakers [must]… eliminate a program that pays union workers when they don’t have work and have union costs and rules competitive with foreign automakers by Dec. 31, 2009.”
Perhaps Gettlefinger will give this the one-finger salute. The deal would then be off and GM’s sojourn to the bottom of the deep blue will continue unabated.
FoMoCo will survive to the extent that their suppliers do and Nardelli will get to liquidate – Cerberus’ basic goal anyway – IMHO.
Oh well, looks like I’ll have to wait a while more to get a good deal on a Challenger…
If I was in management at Toyota/Honda I would be hauling each supplier in for this conversation;
1. How do you intend to ensure you are viable potentially without the custom of GM/Chrysler before March 31.
2. Should you not be viable, can you work up a spin-off business to ensure we have access to components for which we will pay you enough to make a per unit profit on. You have until March 31 to present it to us.
3. You must demonstrate to us that you are not building GM/Chrysler parts at a loss via subsidization from profitable parts made for us.
If I was in management at Toyota/Honda I would he hauling each supplier in for this conversation
I would assume that they have already been having similar discussions with at least some of their suppliers.
@ Pch101
Myself, I have absolutely no doubt they have. The clock is ticking now however.
Nothing about the fate of GMAC? That’s still the joker at this moment in time.
Pete’s got it. The 800 lb. gorilla in the room is the fate of GMAC.
If GMAC gets left to die, it does save GM the actual work of actively killing off much of it’s bloated dealer network. No GMAC, no floorplan. There’s some other fallout from a GMAC Houdini, but it could be mitigated.
Still not sure that GMAC will be allowed to die though. Cerberus wants to get paid, and there’s little at Chrysler to sell. Still waiting to see what happens with ResCap.
I can also see Toyota or Honda (or Ford!) willing to loan money to their suppliers to keep them in business if/when GM and/or Chrysler fails.
The number of vehicles sold is not directly effected by whether or not GM or Chrysler remains in business. Somebody has to make those vehicles. So, in the medium term, those suppliers will have the same amount of business. But there will be short term chaos.
Also, this is the type of governmental bailout I could strongly support-a bridge loan to suppliers after GM and/or Chrysler folds but before the others can ramp up domestic production.
I torn on this.
On one hand…I am an artist at a company that does ALOT of car dealer direct mail. Alot. as in 90% of our business. So while this doesnt promise that ill have a job in 6 months it does make me feel that there is a slight chance i might, possibly, maybe have aj ob in 6 months. until then ill be saving cash and updating my resume.
on the other hand, i dont think they deserved a dime.
The basic question still remains, is anyone, and I mean anyone, now more willing to go buy a GM or Chrysler car at sticker price? What about heavily discounted?
GM’s new ad campaign is a joke. Surprised? Ha ha, like anyone is going to now cross shop a Chevy or Pontiac with Toyota and Honda. They’re kidding themselves. They need to rebuild themselves with dirt cheap, rock solid automobiles. By cheap I mean new Malibu’s at $12k, and they have to be better than a Camry or Accord in the reliability dept. Then, maybe 10 years from now they’ll have a reputation to stand on and consumer respect. Right now, they are a laughing stock, no matter how good the current offerings are. Will GM use the bailout to accomplish something like this, I’m not counting on it.
I am not surprised by this outcome. TTAC and faithful should be happy. It guarantees Bailout Part Duex in 2009.
GM and Chrysler should be in a similar cash position by June. Major changes and possibly everybody favorite solution of bankruptcy is still in the pipeline.
Does anybody here REALLY believe that the loans will allow GM and Chrysler to “accelerate their plans” to build new, exciting vehicles with world-class quality? At best, it might allow them to keep the lights on for another month or two. Then what? And why in the world are we, the taxpaying public, being asked to bail out a privately held company? Cerebus bought Chrysler, let them fund the recovery, or let them suffer the idiocy of buying it in the first place.
The UAW has been pretty clear that they’ve “given ‘er all they’ve got” in the way of concessions. I see the Big 2.8 heading back to D.C. in the spring asking for yet more money as nothing changes back in Detroit.
Bloombergs chatterbox White House source has been fairly accurate during the week. Yesterday they were reporting that talks were re-opened on the GM/Chrysler merger at the insistence of White House officials. Denied by Chrysler I believe.
If I recall correctly, one Republican Senator in hearings was particularly keen on the idea as a condition of funding. Is this why $4b is floating in the wind and Nardelli can backhand suppliers in his letter?
Maybe I’ve had too much coffee already tonight.
I have a pair of shoes I’d like to toss right now.
Just another dumb move. *sigh*
There is no end to the appetite of Leviathan…
The basic question still remains, is anyone, and I mean anyone, now more willing to go buy a GM or Chrysler car at sticker price? What about heavily discounted?
They should be, if they want a return on their investment.
I have an ’08 Saturn Aura XE, with the 3.5 V6. It’s a great car. Assembled in the U.S., with a U.S.-built engine and trans. North American parts content: 85%. Fun to drive with plenty of pep, and 24 mpg in mixed (mostly stop-and-go) driving. Competitive price ($21,800), excellent build quality, excellent dealership experience. I couldn’t be happier.
Bush really blew a big chance to do something significant here. The main issues with this are:
1. By punting it to Obama, there is no guarantee that the requirements regarding creditors or the UAW won’t be changed.
2. By using TARP money, Bush has set the precedent that will allow Obama to bypass Congress (especially the remaining cranky Republicans in the Senate) and provide whatever assistance he (as well as Reid and Pelosi) deem appropriate as part of the forthcoming Obamagasm.
So under this plan, if Chysler and GM fail now, the government-as-creditor takes first priority on the assets that are left? This means this plan screws over all of the other creditors – the parts suppliers, the employees, the stockholders, the banks. Now all of them have to share in whatever is left, if anything, after the government takes their money back. So to gain a few months breathing space, they’ve actually made things much worse for everyone else. Great plan!
How, how are these companies getting bailed out without full disclosure. I really want to know this, because I’ve spent good chunks of the last few days facilitating bankers’ requests for data that amounted to, effectively, a summary dump of the general ledger for months.
And I work for a company that turned a profit, and was applying to a just-in-case line of credit, not someone looking for a lifeline who is bleeding dollars with no end in sight.
How do companies like GM, which turn year-over-year losses, get loaned billions without a full, independent goings-over of their books and a public airing of their business plans. I think I know the answer, but I find it really hard to swallow.
Now, I support a bail-out, but the bullsh_t level is getting toxic. To whit:
“This will allow us to accelerate the completion of our aggressive restructuring plan for long-term, sustainable success,” GM statement pronounced. “It will lead to a leaner, stronger General Motors…”
…should read:
“This is just enough to keep us going. We don’t have a plan, other than ‘hope things get better’. But we employ a lot of people and are responsible for a lot of the economy, and it’s just as well you pay us on the off-chance letting us die would make things worse”.
Agressive restructuring plan, my ass. They have a plan like a surgeon has a plan to control gangrene.
If I were suddenly invested with power over GM, I’d be adding a little clause about how, when we’re clear of the recession, it’s pay back the government or be forced into bankruptcy.
Bush really blew a big chance to do something significant here.
I don’t think that this was the objective, and I doubt that there is much that the feds can do, anyway.
Anyone with an understanding of the business who sits down and runs the numbers knows that the likelihood for turning these companies around, even with cost reductions, is very low.
To make it work, more cars need to be sold. The problem with that goal is that the damage to the brands is too deep for a turnaround to occur quickly, even if the economy rebounds and the cars improve.
Surely, there is some projection that has been created that forecasts an improvement in the sales outlook. But you can bet that the projection is unrealistic and the targets won’t be met. Which leaves them with more losses.
The goal here is to delay, more than it is to repair. In the worst case scenario, we can probably afford to have them fail in a year or two, but we can’t afford it at this very moment. The government is crossing its fingers, hoping that we can come up with something later, we’re just going to have to wing it.
Anyone still watching the press conference? Did you see the Rick throw Fritz in front of the bus when that reporter asked what the difference was between the Imports hourly wage costs and GM’s? The look on the reporter’s face when he got done grilling Fritz was priceless.
So under this plan, if Chysler and GM fail now, the government-as-creditor takes first priority on the assets that are left?
That’s what they claim, but in practice, there is no legal mechanism that automatically gives the government priority. There has been no bankruptcy here, and the government is not a DIP lender, even if it is trying to behave like one.
Realistically speaking, I believe that these comments are meant for public consumption. In practice, there won’t be any money to repay the government, and Uncle will be in line with the other secured creditors unless the creditors agree to compromise their positions. The other creditors would litigate, and they would win.
That money is gone. Kiss it goodbye, it ain’t comin’ back.
Ahhh.. what a breath of fresh air Detroit Todd is.Allways a pleasure to read, Mr Todd,keep up the good work.
After 36 years 3 months and 13 days I’m gonn’a punch the clock for the last time today.President Bush and our own government have granted GM a reprieve.In so doing they have taken a little bit anxiety from my retirement day.Thank you Mr President,thank you America.
GM ! Are you listening? UAW/CAW ,the dealers,management and the retirees.President Bush
made it pretty clear.We got to get our shit together right now.WE ARE !ALL!….ALL as in everyone of us gonn’a have to make some sacrifices.It ain’t gonn’a be pretty.
The taxpayers on both sides of the border are not enthused to say the least.I’m making a prediction.Sorry for cutting into your gig
Ken Elias.Anyway, I don’t see the governments
state,provincial or federal doing this again.Can anybody say voter backlash?This is it boys and girls make it work or we are all fu—d!
Anyway got to go to work.
Merry Christmas to all and May God Bless America
Michael
The only way we can prevent this farce from developing is to tell everybody we know NOT to buy domestic. If sales shrink even faster, there won’t be a domestic industry to bailout in March.
But I suppose Detroit will keep coming back to COngress every month with their hand out.
I am deeply disappointed by this “plan”. Bush has been a failure in the economics department with a string of poor treasury secretaries and economics advisors. Come to think of it, this was the failure of his father’s administration, too. But I digress. After the initial announcement that Bush would not let the D2.8 swirl down the drain, I started to become more hopeful after days and days of no news. Surely, said I, someone must be working on a plan to wring out some concessions from creditors and union alike, or to pave the way for a C11 with Treasury providing the DIP financing. What a setup: “Here’s what everyone has to do to get this money. Want to wait till Jan 20, fine. Oh, cant wait? Then sign here.” But no. Just throw the money. No significant strings at all (other than you have to pay this back if your 46th restructuring plan does not look like the way back to black ink).
I realize that the constitution with the limited powers thing has been thrown over the side long ago, but you have to wonder if this isn’t just too much. Tarp passes, solely as bailout of the financial system. Treasury (which interprets it) says it is not for bailing out specific industries. Congress apparently agrees, as it tries to pass a new bill and fails. So, the executive branch decides to do the very thing that congress couldn’t, by ignoring the interpretation of the Treasury Secretary. Maybe this thing took so long to bind and gag Paulson.
Oh screw it. Lets just socialize everything.
If you are angry about your taxpayer dollars being wasted like this then BOYCOTT THE BIG-3. As the continually declining market shares of the big-3 indicate, there are plenty of alternatives.
If you must buy big-3 then buy used; the deals on used big-3 cars are even better than deals on the new ones.
Oh crap !!! Now thousands/millions of auto workers may have a reprieve in future layoffs. Auto companies actually receiving help. Christ !!! What is the world coming to?
Now bloggers will have to complain about how the auto companies will f*ck up this handout from Bush. What to do? How will the bloggers get by?
Maybe now the website can discuss more about cars like the “C” in TTAC stands for. More oppurtunity to complain about crappy domestic cars, especially the Chrysler and GM shit.
Deputy Chief of Staff Joel Kaplan just said $9b of the $13.4b was for GM, so $4.4b for Chrysler, but that the Feb $4b is only for GM.
GM/Chrysler to have concluded merger for Feb?
My GM/Chrysler merger conspiracy theory grows weirder.
My holiday dream come true! Finally I have been given the chance to pad Steve Feinberg’s wallet!!
Upside, this stupid move cements Bush as the most incompetent President in recent history, just when I would have had to give him credit for one thing.
Word. Unfreaking real. A half-assed solution that will bring us back to where we are today in a few months, only billions poorer. The ‘paid back’ part is downright comical.
More oppurtunity to complain about crappy domestic cars, especially the Chrysler and GM shit.
I only complain about the ones that are shit. That’s not all of them, but it’s a lot of them.
What does “foreign workers” refer to?
Would that be Europe: 35 hour work week, good pay, decent vacation, and single payer health insurance.
Or China and Mexico: The “go die in a ditch” business model.
Did I say “single payer health care”. Without this America will only be able to compete with developing nations and the middle class will further erode.
Workers will slip further down the economic ladder as they have since Reagan started the shift of money to the oligarchal class. The very class we are now bailing out with the remnants of our future (since we are already bankrupt) tax dollars.
I don’t see how anyone with less than a few million in the bank isn’t furious. And if so – why they’re focusing that anger on the unions.
So when the vague term “foreign workers” is tossed out there, I think the power brokers already assume the 2nd or 3rd world model. It has arrived at the point that they don’t even have to state it – it’s seen as the only alternative. At least Reagan and his ilk had to generate a “big lie” scenerio – hard work but someone has to do it – now it’s seen as a done deal.
I would be very very frightened.
The limitations and restrictions attached to this $17B “loan” remind me of the bafflegab issued to sell the $700B bailout to the public just long enough to give Congress political cover to pass the bill. Remember the claims we taxpayers might even profit from the stake Washington was taking in mortgages? Now we hear that the auto companies must “demonstrate financial viability”. That can – and will – mean whatever Washington says it means.
Not long ago I read a piece containing a projection that taxpayers will end up shoveling $125B to the auto companies to prop up business-as-usual and the UAW. I think that number is low. Now that Detroit has latched onto the public teat, well, is this any less of a disaster than, say, Katrina? Are the citizens of Michigan and Ohio any less deserving? We are about to learn that it’s our duty to help our fellow Americans.
How many more days of George Bush’s administration left? I’m going to start planning the party now.
autoemployeefornow:
How about you send some money to the hundreds of thousands of laid off financial institution, Circuit City, and Tribune Company employees with your whining.
Those people don’t have government guaranteed pensions like you, they only have wiped out 401ks.
Every employee of the big-3 is responsible for their failure. From the incompetent management to the company shaking down UAW members.
Now we have to bail all of the losers out as the last, against the will of the people, act of the lame duck president.
Even the supporters of the bailout admit that the big-3 are long term failures, and simply argue that we need to keep them on life support for a year or two before letting them die because of the current overall weakness of the economy.
Too bad that will cost the taxpayers a couple hundred billion.
Maybe this is why Bush wants the US to sell nuclear power plants to our friends in the United Arab Emirates (the ones that are so close to the Iranians). He wants a way to pay for the billions he’s wasted on bank, credit card and car mfgs. giveaways, err, bailouts.
Bush is racing Carter to the finish line of the worst president in the last 100 years.
I think I predicted this all along. By the time all of them (Big 2.6) will be gone we, the people, will be 300bn in the hole. Remember the expert who predicted that it will take 150-175 bn to “save” the dying? Did he counted oversight committee costs in congress and senate? New cabinet post and attached bureaucracy? Perhaps even 300bn is optimistic of me, but I am an optimist. My children should be very pessimistic – someone is inheriting this cost.
now it comes down to how to sell cars. maybe now they will consider Return to Greatness.
@autoemployeefornow :
I think the bloggers will get by just fine by pointing out the ineptitude of how the government helped pick the pocket of our kids and grandkids to prop up failed companies like GM and Chrysler.
A simple thank you would do just fine. After all, the rest of us are now helping pay for your salary.
mikey, are they throwing you a party on your last day? Have some cake and punch for me. And best success to you with the new job!!
My uneducated guess is this is enough money to effectively fund C11, thereby preventing (at least for GM) C7 liquidation.
The argument that no one will buy a car from a company in C11 is a red herring. Almost no one is buying their cars now. If they can demonstrate that warranties will be honored and parts will be available (and $13b of our tax money should help that), I don’t see GM being in any worse shape if they file.
My company is a $2B consumer products company based in the recreational product industry. We have lost ~$300M in the last 3 months and have furloughed 80% of our 20 plants till January. We have been accountable for every penny.
It is hard for me to believe that GM and Chrysler will burn through $17B in 3 months. I bet if you ask them where the money is going, they couldn’t tell you. The best thing to do is to furlough these companies till March in order to get a reasonably accurate financial picture when they don’t even build cars. It’s not like they don’t have inventory to last until then…
Anger is focused on the unions because they were the driving political force behind this nonsense. If this were a non-union industry, there would be zero chance this bailout happens. It’s a political payback. Oh, and Bush ducking responsibility for another massive failure on his watch.
So, in 102 days, GM plans to form:
“…a GM that is:
*dedicated to great products, exciting design, and world-class quality
*fully committed to leading in energy-saving vehicles and technologies,
*responsive to the needs of our customers, our stakeholders and the communities we live in and serve.”
Since 2003, the last time gas was under $2/gallon, WinTF have they been doing, then? Sitting on their hands and holding back on these great energy-saving vehicles they can now get to market in 3.5 months, meanwhile selling us Cobalts and Aveos?
This will work…sure. And pigs will fly by 3/31.
Any bankruptcy will invariably go into chapter 7 simply because 4 out of 5 people won’t buy from a bankrupt automaker.
http://blog.wired.com/cars/2008/12/well-fly-the-ba.html
That, and there’s the paranoia from the left that this will break the UAW’s back.
http://emptywheel.firedoglake.com/2008/12/19/president-bush-employees-of-american-companies-must-get-paid-less-than-employees-of-foreign-companies/
Thanks jkross22 with 375 of us going today its gonn’a be a great party.With all us blue collars retiring the bars are going to have a good day.
Now getting a cab in a Southern Ontario snowstorm
might be a problem.
Anger is focused on the unions because they were the driving political force behind this nonsense.
Rick Wagoner and Bob Nardelli are not members of the UAW.
You’ll notice that among the list of job cuts that will inevitably be made, Wagoner has made a point of continually reminding us that his name won’t be appearing on it.
The union opposes this plan and gets harmed by it, so it isn’t particularly thrilled about it. Naturally, it will have to agree because it is the weakest party at the table, but this hasn’t been engineered with the membership’s interests at heart.
The government is doing this to avoid broader economic consequences, not as a favor to Gettelfinger or even Wagoner, for that matter. The feds have their back up against the wall.
Here’s a peak into the future of American labor negotiations:
http://www.huffingtonpost.com/huff-wires/20081219/as-china-factory-protest/
Of course that assumes anyone here would protest to begin with. They’d just say :” Those spoiled B*stards, next they’ll want the chains removed when they have to pee. It’s ruining the country.”
We’re now watching the spectacle of wallstreet money managers protesting any control over their bonus packages.
I’d love to see them beaten around the head and neck on c-span. After that I’d slap “It’s a Wonderful Life” on the dvd player, and later, lord knows, I might just sing “I’m Dreaming of a White Christmas” along with Bing.
Oh – to hell with it – I’d go the whole 9 yards – and sing “Little Drummer Boy” along with Bing and David Bowie.
It’s all a dream though… A sweet sweet dream.
Clerical issue, shouldn’t this be Bailout Watch 296?
All The President’s Plans
I remain agog at the TTAC Comments crew. The selective indignation at the (admittedly imperfect) bailout “plan” for the Detroit automakers is truly astounding.
All of the objections to the Detroit bailout (lack of oversight, waste of money, “kicking hte can down the road”, etc.) equally apply to (or more so because of the the greater amounts involved) to the TARP program, the Iraq War, the Madoff Ponzi scheme, the Enron/WorldCom/Global Crossing debacles, etc., etc., etc.
But, because the UAW won’t snap their heels and say “Yes sir, I want to keep my job, even if it’s at $14/hour with no health insurance”, the TTAC commentators see this as the Great Threat to Our Way of Life.
It speaks to the great success of the Right Wing Echo Chamber/Narrative Framing Propaganda Machine over the past 40 or so years that so many people are more pissed off about the government wasting $14 billion on a ‘blue-collar’ industry than they are about the government wasting $700 billion+ on a ‘white-collar’ industry, or $3 TRILLION on an unnecessary war.
In no particular order:
Rick Wagoner: CEO 8.5 yrs – abject failure
George W. Bush: Pres 8 yrs – colossal failure
Henry Paulson: Treas. Sec. 2 yrs – horrendous failure
Did anyone think that by putting these losers in the same room they’d somehow come up with a winning plan???
And GMAC isn’t the only 800# gorilla – don’t forget Delphi. When Delphi goes down (no DIP financing) GM stops production regardless of their current liquidity situation.
This mess will “unwind” over the course of the next 9 months. It will provide Obama with a perfect stage to be declared a hero almost no matter what he does.
It speaks to the great success of the Right Wing Echo Chamber/Narrative Framing Propaganda Machine over the past 40 or so years that so many people are more pissed off about the government wasting $14 billion on a ‘blue-collar’ industry
Mr. Stepans, people are angry because most of us are clued into the fact that Detroit is in trouble because it spent years screwing the consumer with second-rate products and service, and that while the credit crunch is very real, using it as an excuse is just a copout.
The Detroit Defenders seem to have absolutely no interest in getting Detroit to build better cars that people want. Meanwhile, they pout and pout, as if everyone owes them a living.
We owe Detroit nothing. They deserve to fail. Unfortunately, this particular failure is poorly timed, so we have no choice but to do something.
However, that doesn’t mean that we have to like it. And since we are all helping you out, while getting nothing in return, you could at least have the courtesy to thank us for the handout.
The Detroit Defenders seem to have absolutely no interest in getting Detroit to build better cars that people want.
No, the detroit defenders think that Detroit is building cars today that compete with the transplants. Apparently Detroit Todd’s Saturn Aura is a great car and the people buying Camry’s, Accord’s and Sonata’s must just not know any better. Well, I’ve had a few Aura’s as rentals and I wouldn’t trade my almost 10 year old Accord for it. Even the much touted ‘bu isn’t a class leader. Yes, much better than previous GM vehicles, but they are only now getting to a level that can compete.
Like I said, GM needs to literally make the price so damned low that people have to be crazy not to buy their cars. But, their reputation is only saved if the cars are better than the Toyota/Honda competition. And even at that it’ll take years to accomplish much, all the while you need to constantly improve and refine that product. I’m very skeptical GM has that in them. Clearly Chrysler does not…but GM…maybe…
Eric_Stepans: This is a car website. Thus, we comment on issues pertaining directly to the business of building and selling cars. Just because our criticisms could be directed at other political decisions doesn’t invalidate them. It’s not our job to argue for consistency in political decision making… you need to find another site for that kind of commentary.
But, by all means, take a look around at the archives while you are here. We’ve been around for a while, and we’ve been advocating for meaningful restructuring of the Detroit firms since long before the topic of bailout was even broached. The shortcomings of Detroit’s current structure and business are clear absent any political considerations, and until they are addressed throwing taxpayer money at them is waste. Period. Relativist tangent-wandering is a red herring, and entirely beside the point.
Surely, said I, someone must be working on a plan to wring out some concessions from creditors and union alike,
Check your game theory. Being the recalcitrant creditor is advantageous.
If an orderly bankruptcy is worth 100 to the government, and a disaster bankruptcy is worth 70, then I should stick out for 29 extra units of value.
Rick Wagoner: CEO 8.5 yrs – abject failure
Technically, he’s been President longer than he’s been CEO, and he was in charge of North American Operations before that.
We’re talking a proven track record of incompetence that goes back about a quarter century.
No shortage of blame to go around, so I say let’s take a deep breath and briefly mention (and honor) the public figures who, up until now have done everything right.
First person to come to mind is: Ron Gettelfinger
Really.
He knows that this has been just a game of keep alive until the next administration comes along, as it is politically impossible for the Democrats to force any type of cram down or economic claw back onto the UAW. He’s a master negotiator, just ask Senator Crocker….
Secondly, GM bondholder who recently bought the stuff at 30-50 on the dollar/face value. As soon as the government coughs up a debt guarantee those bonds are going to trade at close to face value and these guys are going to make a fortune.
You know, this is the outcome I thought would happen after the bailout got killed in the Senate. But during the last few days, with all the delay and talk about Bush considering other alternatives, I came to believe that he would actually send GM to an orderly bankruptcy and Chrysler to where it belongs (the grave). Meaning, I thought Pres. Bush had actually grown balls to do the right thing for once. How stupid. Now Canada will add its 20% tip bailout and we will be screwed up in both sides of the border.
Again, what an asshole I am. I should change my nick to MoronCanadian.
“The Detroit Defenders seem to have absolutely no interest in getting Detroit to build better cars that people want.”
This is the frustrating BS propaganda that flows generously around these parts. Let’s get something straight. The big 3 build many great vehicles that people DO want. There is statistical proof available to anyone who cares to check facts that GM, Ford and Chrysler sell a sh*tload of new vehicles. And don’t dare retreat to the “best and brightest” fleet defense. Not happening.
This is the biggest blessing to Ford ever. By staying out of this for now, they have bought themselves a lot of good will from Americans still looking to buy a domestic vehicle.
I can see a lot of pissed off Silverado faithful jumping ship to Ford, and a lot of folks taking a look at their other offerings that would have never stepped foot on a Ford dealership in the past.
Jump on this right now, Ford. You have just been given a gift.
There is statistical proof available to anyone who cares to check facts that GM, Ford and Chrysler sell a sh*tload of new vehicles.
No, there is statistical proof that they give away vehicles at a loss because they can’t sell them for retail.
If they were doing such a terrific job, they would have been profitable and competitive before the credit crunch. They weren’t doing well then, either. The losses are a big clue that they can’t make people happy unless the cars are sold for below cost, which is good as saying that they aren’t popular.
It would be kind of fun if Mr. Farago were to post a thread here, where those who are benefiting from the bailout can thank American taxpayers for their kind donation. I’ll bet you that no one will post a thank you on that thread.
“The losses are a big clue that they can’t make people happy unless the cars are sold for below cost, which is good as saying that they aren’t popular.”
Did you catch any prior information regarding legacy costs, UAW jobs banks or government intervention? I am actually a bit torn with the bailout situation. Indeed, it was the US government that affected domestic carmakers (and others as well) with CAFE restrictions, etc. In a way, you could say that they deserve a loan to right the ship. But 2 wrongs don’t make a right.
@Edward Niedermeyer;
“We’ve been around for a while, and we’ve been advocating for meaningful restructuring of the Detroit firms since long before the topic of bailout was even broached”
Props to you. Based on viewpoint, it was a great line while campaigning for Obama to blue collar workers: “Look, GM is going under. Who would you rather have in the white house: Obama or mcCain?”
But the idea that a bankruptcy court is going to reorganize GM is insane. A court can gut the union. Yea! it can make a bunch of 50 year old retirees go without health insurance. Yea! But it can’t make people buy cars and it can’t make GM suddenly sell good cars. Bankruptcy for GM is liquidation.
And while a lot of people hate GM and want it to go away, this is NOT the right time to do that. Unemployment rates would be well north of 10%. More than 10% of the US bond market would disappear. Firms everywhere would stop investing and start hoarding more cash.
Did you catch any prior information regarding legacy costs, UAW jobs banks or goverment intervention?
Here’s my suggestion: Go read GM’s financial statements, and compare them to Toyota’s. Spend ten minutes doing that, and it should be really obvious that job banks, etc. are not the problem.
It isn’t costs, it’s having products that people don’t want. The costs drain the blood from the patient a bit more quickly, but he’d still be on the stretcher near death even without a union.
Mr. Niedermeyer,
“The shortcomings of Detroit’s current structure and business are clear absent any political considerations, ”
This just isn’t true. If America is still competing with modern industrial countries (and this may not be so at this point) they have to face the fact that these countries provide many social services including single payer health care. GM and Ford in Europe are profitable. This is the reason why.
If we can’t come to this political conclusion we can no longer compete with countries we consider our peers and we will (and probably have ) slip to 2nd world status with regards to labor and income distribution.
It’s also apparent that this bailout is being used as a wedge to further erode worker’s rights.
Also, the money is coming from a fund that was created as a result of much broader political actions that have led to the general economic meltdown.
The failure of GM will not affect the very wealthy in any appreciable way and will in fact, benefit them as unions collapse. Every worker union or not – blue or white collar – will be affected.
It can’t be isolated: It’s the result of poor company management, but also the result of misguided government policy. To address one without the other will be a bad day for the vast majority of Americans.
So, does this mean Ford is keeping Volvo now?
Did you catch any prior information regarding legacy costs, UAW jobs banks or government intervention? I am actually a bit torn with the bailout situation. Indeed, it was the US government that affected domestic carmakers (and others as well) with CAFE restrictions, etc.
That really does sound like excuse-mongering. We’ve been hearing about costs and perception gaps for years, but–if they really were the problem–we’d have seen a solution by now. We haven’t. That should tell you that costs aren’t the problem, but instead a way to distract from management’s strategic failures.
Here’s a point: prior to Mercedes’ wrecking ball, Chrysler was turning profits per vehicle on par with the Asian competition, even (especially!) on small cars. Yes, despite CAFE and legacy costs. How did they do this? By having a cost-competitive model mix that people wanted to buy.
Of course, the reaming they took from Daimler fixed that, but the point is still valid.
The point is, GM was not viable back when they were raking it in on cheap gas, low interest rates and healthy buying power. They haven’t been really viable for decades. When they were right-sized they refused to be competitive and bled marketshare; when their volume dropped below that necessary to sustain operating profits, they failed to address the problem.
Unlike the financial industry–who failed after only, oh, five or so years of the writing being on the wall–GM (and to a lesser degree, Ford and Chrysler) have been failing for nearly thirty years and doing nothing about it. Complaining about costs and perception is like complaining about being fat and not having a vegetable store near you when you’re in the hospital for heart trouble and looking down the tubes at bypass surgery.
Edward Niedermeyer wrote:
Eric_Stepans: This is a car website. Thus, we comment on issues pertaining directly to the business of building and selling cars. Just because our criticisms could be directed at other political decisions doesn’t invalidate them. It’s not our job to argue for consistency in political decision making… you need to find another site for that kind of commentary.
I understand the criticisms of Detroit and I share many of them. I think a bankruptcy-like restructuring of GM and Chrysler (and probably Ford to a lesser degree) is inevitable.
I also think it is the public interest that this transition be a “soft landing” rather than a “slam the doors shut” liquidation.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/17/BUIU14PDMV.DTL
Many of the ideas presented here for the best way to do this provoke interesting and useful discussion.
However, there are a few aspects to this discussion that I find disturbing.
One is the lack of perspective. It seems to me that if someone steals $5 from me, I should have a very different reaction than if someone steals $5000 from me. Yet the reaction here to the $5 ‘theft’ is highly disproportionate.
This manifests itself most clearly in the amount of ‘bashing’ the UAW is getting relative to their contribution to the current situation. Yes, some of the UAW rules/benefits/etc. defy common sense. But labor costs are only a fraction of the overall cost of the final product. The fact that the UAW ‘bashers’ make no mention of this, or the concessions the UAW has already made or agreed to make, or the fact that wage figures are meaningless without productivity measures to go with them illustrates the propagandized thinking to which I object.
Another is a large amount of “slippery slope” arguing. Many here seem to think that if $14 billion of the TARP are used to provide a ‘soft landing’, it is inevitable that the US government will throw $125-150 billion at the problem. It ain’t necessarily so. Again, this is propagandized thinking.
Finally, it bothers me that the contributions of other actors in this crisis are being largely ignored.
For example, the automobile dealers are being given almost a ‘free pass’ in this, despite the near-universal acknowledgment that bloated dealer networks are one of the Detroit 2.6’s biggest problems. Why do these bloated dealer networks exist? Because they are politically influential at the state and local level. But why is their failure to ‘recognize reality’ any less egregious than that of Big 2.6 management or the UAW?
Similarly, the Detroit 2.6 get bashed for their dependence on large trucks/SUVs for their profits over the past several years. Yet the governmental role (mostly federal, but also state/local) of giving trucks/SUVs preferential tax and regulatory treatment relative to cars is almost ignored. If Washington provides a $25k tax incentive for people to purchase Escalades rather that CTSes, the rational Detroit executive is going to crank up the Escalade line.
In short, I think many TTACers have bought into narratives (e.g. “It’s the UAW’s fault”, “Detroit doesn’t build cars people want”, etc.) that are based on very incomplete analyses of the overall situation, and that are biased toward a particular political/social viewpoint (the one the owners of the Right Wing Narrative Frame Machine wish to sell).
http://www.berkeley.edu/news/media/releases/2003/10/27_lakoff.shtml
these countries provide many social services including single payer health care. GM and Ford in Europe are profitable. This is the reason why.
Irrelevant. Toyota doesn’t have single payer healthcare in the US, yet its US operations are entirely profitable.
“Government-paid health care” doesn’t mean “free health care.” It still has to be paid for, and it will be paid for by businesses.
I’m not an advocate of private health care, because it can and does screw up just as much as the government can and does. But there is no free lunch.
Mikey Congratulations on your retirement,I wish you well. I hope you will continue to give us your take as one from the inside.
In a way, you could say that they deserve a loan to right the ship.
The problem is, even a $100 billion loan is unlikely to “right the ship”. GM has been losing billions for a few years now. It didn’t just happen when the credit market tanked. Back when they were making a decent profit, it was largely on the backs of large SUVs (which wasn’t going to last forever, despite what Bob Lutz thinks) and GMAC (Ditech was one of the leading sub-prime lenders). A previous post by RF stated that GM’s liabilities currently outweigh their assets by a factor of 10:1. So what makes you think that this loan, or any loan, will fix the many problems that GM faces?
@probert:
“If America is still competing with modern industrial countries (and this may not be so at this point) they have to face the fact that these countries provide many social services including single payer health care.”
Do you know that in the UK suvivorship after a diagnosis of cancer is five years less than it is in the US? Do you know that diseases like Crohn’s Disease – which can be absolutely devastating to a life – isn’t even a recognized diagnosis in some countries?
Should the Union – shouldn’t we all – have single-payer health care? I reckon not.
Sometimes it helps to understand what you wish for, lest it come true.
Income distribution should depend on level of skill involved in performing the job, not the number of folks doing it. In fact, the more that can do it, the less it should pay.
Be well!
I’ve only got one thing to say.
I’m NEVER considering another Big Three automobile as long as I live.
And the UAW can go to hell.
kowsnofskia :
I’m NEVER considering another Big Three automobile as long as I live.
And the UAW can go to hell.
Out of curiosity, are you boycotting any other businesses that received bailouts? Banks, etc?
I’m NEVER considering another Big Three automobile as long as I live.
You aren’t going to buy a Ford because GM and Chrysler got bailed out?
Pch101 is right. This is just a “Pass the Baton” maneuver b/c the Timing sucks for every other present crisis.
It’s not a bailout, it’s just making the fuse on the bomb a couple months longer.
One of the best things that could happen in C11 is the UAW going away.
If that does Not happen, either 2.8 continues to get killed by costs, or the newest workers get crushed by their Commnuinst bosses, who will still want their “administration” skim, leaving less net for the Workers Paradise.
Anyhoo, Dubya just never fails to amuse, does he? :)
“It isn’t costs, it’s having products that people don’t want”
You just don’t get it. That’s plain wrong. GM outsells ALL automakers (even the reverent mighty Toyota). Chrysler ousells Nissan and Kia. Combined. And Ford sales dwarf many competitors. So please strike that misinformation from your memory banks. If possible. You should know better.
That’s plain wrong. GM outsells ALL automakers (even the reverent mighty Toyota). Chrysler ousells Nissan and Kia. Combined.
All I can say is that you obviously didn’t read the financial statements, as I suggested.
You allowed Rick Wagoner to misinterpret them for you, instead. I would hope that by now that everyone would know better than to make that mistake.
This manifests itself most clearly in the amount of ‘bashing’ the UAW is getting relative to their contribution to the current situation. Yes, some of the UAW rules/benefits/etc. defy common sense. But labor costs are only a fraction of the overall cost of the final product. The fact that the UAW ‘bashers’ make no mention of this, or the concessions the UAW has already made or agreed to make, or the fact that wage figures are meaningless without productivity measures to go with them illustrates the propagandized thinking to which I object.
How many times have Detroit defenders used the argument that it’s labor costs (wages, medical benefits, retirement coss, etc.)that hurt the US auto industry relative to foriegn competitors? Is this the major descrepancy between the US and foriegn manufacturers, Asian in particular, that is causing the US auto industry to fail or not? (I vote for “or not”; it’s the products) You can’t have it both ways. Saying that it’s the higher legacyand labor costs in general that keep the US from compeing and then saying that we can’t blame the union (and management as well) for those costs.
Another is a large amount of “slippery slope” arguing. Many here seem to think that if $14 billion of the TARP are used to provide a ’soft landing’, it is inevitable that the US government will throw $125-150 billion at the problem. It ain’t necessarily so. Again, this is propagandized thinking.
No I think $14.4B of wasted tax payer money is bad enough, but I also think itis not the end.
For example, the automobile dealers are being given almost a ‘free pass’ in this, despite the near-universal acknowledgment that bloated dealer networks are one of the Detroit 2.6’s biggest problems. Why do these bloated dealer networks exist? Because they are politically influential at the state and local level. But why is their failure to ‘recognize reality’ any less egregious than that of Big 2.6 management or the UAW?
Have you been here long? It’s almost a daily part of the deathwatch, etc. articles that the dealer networks are too, too large. It’s generally accepted on this site and stated hundreds even thousands of times that a reduction in dealerships is a necessary part of improving the health of the US car industry.
Similarly, the Detroit 2.6 get bashed for their dependence on large trucks/SUVs for their profits over the past several years. Yet the governmental role (mostly federal, but also state/local) of giving trucks/SUVs preferential tax and regulatory treatment relative to cars is almost ignored. If Washington provides a $25k tax incentive for people to purchase Escalades rather that CTSes, the rational Detroit executive is going to crank up the Escalade line.
How do you think those loopholes got in there? Could it be due to lobbying efforts by US automakers who had a strangle hold on the truck segment of the US auto sales? No, I suppose it happened because soem US legislators just happened to think it would be a good idea even though they foresaw the potential damage to the overall US car industry.
Finally, I opposed the idea of a financial sector bailout as well. It’s just not something that gets discussed on a car site.
Eric_Stepans: Addressing your “lack of perspective” critique would require turning this into something other than a car blog. From what I understand, we walk this line delicately enough as it is.
For example, the automobile dealers are being given almost a ‘free pass’ in this, despite the near-universal acknowledgment that bloated dealer networks are one of the Detroit 2.6’s biggest problems. Why do these bloated dealer networks exist? Because they are politically influential at the state and local level. But why is their failure to ‘recognize reality’ any less egregious than that of Big 2.6 management or the UAW?
Statements like this prove that you don’t want perspective so much as you want to put us in some “Right Wing Narrative Frame Machine” box. Seriously, go back and read the freaking archives. TTAC doesn’t give “free passes” to anyone who is part of the problem.
Thanks for the reply Dgduris.
Unfortunately the price to be paid for the dismantling of the New Deal (FDR) and the Great Society (Johnson) has lead to the present situation.
Germany, France, Sweden, Finland, Denmark, Italy, Holland, Japan, Taiwon, South Korea, Switzerland, England, Ireland, ….. all have come to a different conclusion regarding the role of government – can they all be wrong?
The quality of life in those countries is much higher than ours – am I missing something?
These national myths of one man against all are exploited by very well organized people for their tremendous profit. ..” And when these proponents of “individual responsibility” stand to lose they turn right to the government. And all us individuals have to bail them out.
Why don’t we bail ourselves out?
What happened to “united we stand” that’s American too.
For example, the automobile dealers are being given almost a ‘free pass’ in this, despite the near-universal acknowledgment that bloated dealer networks are one of the Detroit 2.6’s biggest problems. Why do these bloated dealer networks exist?
Because those networks weren’t bloated back in the days when Detroit sold enough cars to justify their existence.
It takes a lot for me to defend car dealers, but I’m going to do it, anyway. Blaming the dealers for Detroit’s problems is like blaming your local supermarket for the low quality of Twinkies.
They just sell the cars, they didn’t design or make them. They would happily make the profit that comes from warranty repairs, if the manufacturers would reimburse them.
The main victims of the high dealer count are the dealers themselves. They are the ones who are losing the margins that come from excessive price competition.
The solution to the dealer problem would be for Detroit to offer vehicles and warranty support that are so outstanding that the dealers would be busy serving customers who want them. Obviously, Detroit isn’t inclined to create those kinds of “problems” for their franchisees.
One is the lack of perspective. It seems to me that if someone steals $5 from me, I should have a very different reaction than if someone steals $5000 from me. Yet the reaction here to the $5 ‘theft’ is highly disproportionate.
Eric, it would seem you have never been on the wrong end of the handle.
It would be one thing if this were a matter of the US taxpayer throwing 15B into the Salivation Army kettle for those less fortunate autoworkers.
It’s another thing when somebody sticks a gun in your face, and threatens your family if they don’t get your $5. I will do whatever I have to in protecting those near and dear to me. I’ll also make sure to take my $5 back, with an interest plan reflective of their lack of concern for my welfare.
” It would be kind of fun if Mr. Farago were to post a thread here, where those who are benefiting from the bailout can thank American taxpayers for their kind donation. I’ll bet you that no one will post a thank you on that thread.”
Well, I’ll say thank you on this thread.
I don’t benefit directly, as I don’t work in the auto industry, but I appreciate not taking this recession right into Great Depression status. That alone, I think, is worth $17B.
Eric_Stepans: In short, I think many TTACers have bought into narratives (e.g. “It’s the UAW’s fault”, “Detroit doesn’t build cars people want”, etc.) that are based on very incomplete analyses of the overall situation, and that are biased toward a particular political/social viewpoint (the one the owners of the Right Wing Narrative Frame Machine wish to sell).
Please drop the nonsense that anti-bailout posters are only parroting right-wing talking points.
If anything, the arguments put forth by those skeptical of the bailout tend to be more analytical and less driven by hysteria (“America will shrivel up and die if GM goes under or UAW members have to trim their medical benefits”), nostalgia (“I really loved my 1970 Camaro”) or just plain stubbornness (“GM cars today are just as good as anything thing else out there, despite what Consumer Reports says”) than those of the pro-bailout contingent.
You should also know that, in a recent poll, 55 percent of DEMOCRATS oppose an auto industry bailout.
Bridge2Far: You just don’t get it. That’s plain wrong. GM outsells ALL automakers (even the reverent mighty Toyota). Chrysler ousells Nissan and Kia. Combined. And Ford sales dwarf many competitors. So please strike that misinformation from your memory banks. If possible. You should know better.
The goal shouldn’t be to have the most sales – it should be to sell as much as possible at a PROFIT. GM may be number one in sales (for now), but it is gushing red ink, which suggests that it must sell its vehicles below what it costs to make them, which hardly spells success.
And those sales are also artificially inflated by sales to rental car companies and hefty rebates.
probert: Unfortunately the price to be paid for the dismantling of the New Deal (FDR) and the Great Society (Johnson) has lead to the present situation.
Most of Roosevelt’s New Deal programs were dismantled by World War II. We haven’t dismantled the Great Society; if anything, we’ve expanded it, despite the rhetoric of Republicans and the wailing of some leftists.
The collapse of GM and Chrysler have nothing to do with government actions, or lack thereof, and everything to do with poor management. The failure has its roots in Michigan executive suites, not the Capitol or White House.
probert: The quality of life in those countries is much higher than ours – am I missing something?
Having been to many of those places, I can say that no, it isn’t. They have their advantages and disadvantages, just as we do.
Regarding the particulars, it seems that semantics get in the way as most of us seem to be reasonably intelligent and all car enthusiasts. Are people really wondering why Detroit is failing? Didn’t anyone drive a K-car? An Aztec? A Compass? Who here had a tight budget as a family man and had their Caravan give its last breath before 100k miles, costing precious coin to fix the tranny alone and not the broken door handles or window lifts?
Has anyone read the stories of UAW workers still getting paid having not worked at a factory in 2 years? Why are there robust benefits for retired UAW people when less than 10% of business even have pensions anymore?
Debating the details is fun, but Chrysler and GM are irrevocably broken for glaring and obvious reasons and I give them a 30% chance of ever turning it around. Seriously, is it any wonder this day has come?
Well, I’ll say thank you on this thread.
I appreciate that, but you’re not one of the Detroit defenders who benefits directly from the bailout. I’d like to see some of them thank the taxpayer for the gift that they were given.
But you know that it isn’t going to happen. From this angle, it looks like they feel entitled to the jobs and think they are doing us a favor by staying in business.
You can forget any ideas about BO taking a hard line with unions (if anyone was naive enough to do so, unlikely here). Look at his new labor pick:
http://www.cnn.com/2008/POLITICS/12/19/transition.wrap/index.html
Best quote:
“I am humbled and honored,” Solis said. “As secretary of labor, I will work to strengthen our unions.”
Strengthening unions will do the opposite for our economy. Fail.
I really don’t think the associates working for whats left of the big 3 are taking anything for granted these days.
in fact I feel that making such a comment is just a way to show ignorance of what is going on in the WORLD auto market now!
Some readers just cant stop bashing……
You know what?
Lets see those preaching…..
respond to the bailouts of:
Renault
Citroen
Fiat
Alfa Romeo
Nissan
and lastly….
Toyota!
Oh, and lets not forget the ‘belittling’ of the Auto industry Executives by flying private jets from congressmen that just voted themselves a raise.
If I was an autoworker and you asked me to thank YOU…I would ask what you drive b-4 I kicked your ass!
No..
I would just kick your ass!
If I was an autoworker and you asked me to thank YOU…I would ask what you drive b-4 I kicked your ass!
I’m sure you’d try.
This is the problem that we are up against, folks. Nothing will get them to improve.
They think that we owe them, it is a one-way street moving in their direction. They feel no obligation whatsoever to give us anything in return.
This illustrates plainly why Chapter 11 won’t work. It just isn’t enough, a majority of the workforce would need to be replaced and the whole culture would have to be reinvented. Even a bankruptcy judge can’t make that happen.
I think the DD’s have pretty much cemented the fact that they’ll never again get the good words. Ford is collateral damage.
(signed) the car people that talk to people who might need to buy a car.
So what happens now to Saturn(Opel)?
“This illustrates plainly why Chapter 11 won’t work. It just isn’t enough, a majority of the workforce would need to be replaced and the whole culture would have to be reinvented. Even a bankruptcy judge can’t make that happen.”
While I agree that auto workers should be greatful, I don’t think it really matters in terms of the turn around.
As I understand it, auto workers go into a factory and screw parts onto cars as they pass down the line. As long as they do that job well, it doesn’t much matter what they think – “The world owes me this job” or “Gee I’m grateful to still be working” both produce the same results.
It’s the management that has to change it’s thinking for the turn arounds to be sucessful. They have to start making good decissions.
@ Dynamic88
The minute your workforce feels that way, you have a disaster on your hands.
Everyone’s job security is only ever assured through participation in continuous improvement.
If there is a hint of “the world owes me this job” you have a very definite culture problem.
If you see “I’m grateful to still be working” there is no transparency from management and the organization’s goals are not clearly understood by everyone.
Either-way in manufacturing or service industry, quality, productivity and waste will be suffering.
As I understand it, auto workers go into a factory and screw parts onto cars as they pass down the line. As long as they do that job well, it doesn’t much matter what they think – “The world owes me this job” or “Gee I’m grateful to still be working” both produce the same results.
Dynamic88,
With that handle, I’m really wondering if you are blocking out the 70’s. Do you remember the ball bearings or screws thrown inside nooks and crannies to make cars rattle? Lineworkers pissing on the foam side of the upholstery? Things very deliberately not quite assembled? Undertorqued, overtorqued, screws missing? Bucket of fried chicken in a rear quarter panel?
People with the wrong attitude pull that crap all the time. Happens in every industry.
One of the many reasons the last new D3 car we bought was in 1979 (though I do have an old 80’s Ford work van).
Do you really want somebody with that attitude assembling your new $25K purchase? I don’t.
As to oldyak, the Americans I know are grateful for their jobs and know their paychecks come from their satisfied customers. If he wants to come try to kick my patriotic American ass for exercising my right to choose the best product for me and my family I question whether he should be able to retain his citizenship. Thankfully, the Constitution has provided an amendment that enables even my GF to address him and 17 of his bullying ilk without fear. Before she has to insert a fresh clip.