In 1979, Chrysler was staring down the barrel of bankruptcy. ChryCo’s charismatic CEO stepped forward, publicly lobbying for $1.5B worth of federal loan guarantees. Lee Iacocca captured the American taxpayer’s respect and trust—to the point where the automaker’s ad folk made Lee the company’s pitchman. “If you can find a better car, buy it!” he dared. They did and they didn’t. Either way, Iacocca’s communication skills were beyond reproach. Contrast that with today’s mumbling, bumbling Motown CEOs, who’ve managed to alienate well over half of the American public, who no longer want to buy Detroit’s cars OR provide them with a second (third) chance. And no wonder. The CEOs have demonstrated an abject inability to call a spade a spade, or sell the spadework that must be done (which is largely grave digging by now). Wagoner, Nardelli and Mulally’s failure is what it is. But what about the little guy in all this? Who speaks for them?
I’m not talking about Detroit’s unionized workers or their white collar counterparts. As much as I sympathize with their plight—caught-up as they are in a poisonous corporate culture not of their own making—they are hardly a downtrodden, voiceless minority. Their Motown overlords have Washington’s ear. The fact that Chrysler and GM have scored over $50 bn in federal handouts of one sort or another (loans, retooling loans, finance company bailouts, etc.), while Ford has arranged a $9 bn line of credit, speaks for itself. Detroit’s dealers, captive finance companies and suppliers are also well represented. But what of everybody else in the American automotive industry?
I refer to the foreign nameplate automakers and their workers. Other than some gentle murmurs of encouragement, we’ve heard nothing from Toyota, Honda, Nissan, Hyundai and the rest of America’s so-called transplants re: Chrysler and GM’s federal trough snuffling. The transplants should be a force to be reckoned with; they currently account for more than half of all automotive sales within our borders. They aren’t technically bankrupt, or facing bankruptcy. Yet their tax money (like ours) must now pay for Detroit’s chronic mismanagement.
The transplants’ productivity and success, their ability to create goods and services that American consumers want at a price that makes the company a profit (in accordance with all U.S. laws and regulations), is now subsidizing Detroit’s ongoing incompetence.
Of course, it’s worse than that. This is not a general taxpayer bitch and moan thing. It’s a government using tax money to distort the will of the American consumer by propping-up a dead competitor trading thing. In a severely contracting market, no less. I know: jobs! jobs! jobs! But what about the jobs! jobs! jobs! of all the productive, hard-working non-Detroit autoworkers laboring within U.S. borders?
The current economic meltdown has forced Toyondaissan to curtail American production, cancel scheduled factory openings and lay off thousands of workers. Would those curtailments have been as severe if Chrysler and GM had been “allowed” to go belly-up? Of course not. Common sense tells us the transplants would have scooped-up a [yet] larger share of the suddenly smaller pie, supporting American jobs and American communities. There’s no getting around it: the federal bailout is taking food of the tables of American workers.
There’s plenty of room to debate the advisability of encouraging foreign nameplates to manufacture cars in the U.S., relative to, say, Detroit-based automakers. (Who’ve shown no reluctance about importing vehicles into the U.S. market.) We’ve engaged in that discussion here on TTAC many times. But where is the voice of the transplants and their workers in this debate?
Again, there are thousands of workers and dozens of communities spread throughout the U.S. who build cars for Toyota, Honda, Nissan and Hyundai. Workers who manufacture a quality product for American consumers. Workers who pay their taxes. Workers who are NOT sucking off the federal teat, either directly or indirectly. Who speaks for them? Are they not outraged by their own government’s willingness to put their jobs at risk to support a business model that’s broken beyond repair?
If they’re not, they should be. Last year, they went to bed and woke-up in a world where free and fair competition, combined with the sweat of their own brow, assured their family’s future. Now, who knows? A cabal of corrupt financiers blew a hole through U.S. banking regulations designed to protect the average wage earner from economic ruin. These insiders opened the door; the feds have come traipsing in, paving Detroit’s road to hell, forcing American autoworkers to compete against their own government.
It’s time for them to tell Washington that these enormous, unrecoverable “loans” to Chrysler and GM are a cancer on their beliefs. I understand the transplants’ desire to keep a low profile and wait for the dust to settle. But America’s traditional values are at stake. Their workers must step up and say no to Bailout Nation.
Robert Farago: There’s no getting around it: the federal bailout is taking food of the tables of American workers.
I wouldn’t go that far…I’d say that this bailout is taking from some to prop up others, who arguably don’t deserve to be propped up. But is anyone really having trouble putting food on the table because GM and Chrysler received a bailout?
The free market, if left to run its natural course, would have resulted in a different group or winners and losers. Those winners and losers would have been more deserving of their fate.
Spot on. Home run.
The federal government needs to stop handicapping this industry. If the 2.8 can’t stand on their own, they must be allowed to fail.
America and Freedom go hand-in-hand: The Freedom to succeed and the Freedom to fail (miserably).
— Rastus (TTAC)
But where is the voice of the transplants and their workers in this industrial life-or-death debate?
Do you see a major labor movement happening in the South in the next two decades? Many in the industry say it is more likely than we think.
Who speaks for them?
No one outside a union will ever speak up for them. They are too afraid to do so. Think about this….these plants are in the southern United States. Probably 90% of the employees would be making minimum wage flipping burgers had these plants not been built in these states. To them, it’s a godsend similar to Henry Ford’s $5 a day wage. It will take a generation for any ills to sink in….but by that time production facilities will be fleeing the US in a rate much greater than today.
Of COURSE the bail out is taking food off the tables of American workers. All of these bail outs are doing just exactly that.
The craven stupidity of what the Soviets did over 7 decades is now reality here in North Venezuela (also known as the People’s Socialist Republik of Amerika). Planning by the most intelligent! Everything must be micro-managed! The market is too cruel! Blah blah blah…. epic failure, and we’re doing it to ourselves/already did it to ourselves by voting in those responsible for doing it.
Elections and revolutions have consequences, even down to the epic failure of nations.
In the meanwhile, my wife saw a TV ad for Saturn Aura sedans for $14,999 and wondered if it might be suitable. No. Two reasons; won’t tow 1500 pounds. And I refuse to pay GM a penny; I’ve already UNWILLINGLY “given at the office” in my taxes paid.
We’re buying a new 2009 HYUNDAI SONATA manufactured in Montgomery, Alabama, including the body shell, engine, and major components.
That’s how we’re voting with OUR money.
We pick up the car Friday night.
The problem a lot of the transplants still don’t do the principal engineering and design of their cars in the US. It is really a one dimensional industry that resembles something you would see in the third world. America is suppose to be a superpower and should engineer its own products. By accepting the transplants, America is admitting failure. America is too good for that.
Excellent editorial with well reasoned arguments. To those folks who are thinking, “Of course this is what Farago thinks!”, I would invite you to change the by-line to Joe Smith and reread the editorial. It stands on it’s own merits.
akear
Maybe we should encourage the winners to do just that, instead of punishing them by propping-up the losers.
Excellent post Robert. I don’t understand this idea that we need three automakers, so we’ve got to keep them all afloat. Chrysler was already dead when they were split off from Daimler. A hedge fund made a bet that they could strip/flip them in a couple of years and make a nice profit, and they lost. We’re paying for their bad bet because Chrysler is some kind of precious American icon. Yeah, right.
It’s a loosing battle for the Hyundai, Toyota, Hondas to complain about the bailout. Won’t gain them anything but animosity. From unions, northerners and politicians who are called out on their favoritism.
Much wiser to (yet again) take the long view and just wait for the almost inevitable failure once the U$ Congress gets tired of printing money.
Ford could be more effective, but won’t risk publicly biting the hand that may yet be feeding them. (They may quietly be talking to key pols)
In William Graham Sumner’s essay, “The Forgotten Man,” he observed, “The forgotten man… He works, he votes, generally he prays, but his chief business in life is to pay.” That is, to pay for others’ benefits.
FDR used the phrase, too, but he had in mind the down and out — who were, of course, what the New Dealers thought about constantly. Actually, it was the taxpayers who got forgotten. And still are.
akear :
March 24th, 2009 at 1:03 pm
The problem a lot of the transplants still don’t do the principal engineering and design of their cars in the US.
And neither does GM for a lot models.
Who speaks for them?
Their Republican Senators.
It’s more of a regional and geographic thing than anything. The South has ganged together to protect what they have built up with auto manufacturing. Plain and simple. Shelby, Corker and the rest of the Sons of the Confederacy were defending their home turf and the “incerntives” that the put forward.
Like I said before….the “new” union-free auto manufacturing will remain strong in the south for another decade or two. But the engineering and RD will remain in the north for the most part. That’s the shift or schism as I like to call it. Hyundai, Daimler, Toyota, Nissan have all kept their brainpower seperate from the assembly…geographically speaking.
Who speaks for them?
We speak for ourselves. We don’t have an interest group lobbying the government on our behalf and buying a congressman with campaign donations. We have no UAW, AFL-CIO, NAACP, NOW, AARP, ACORN, MoveOn, or NEA to join that will speak for us.
We do what we have to do to live how we want to live. We ask for nothing. We don’t mind paying taxes for roads, law enforcement, and the national defense; but we despise paying the freight for all those looking to ride the gravy train.
We punish our children for failing and reward them for succeeding; however, we don’t expect our own failures to be rewarded nor our successes to be punished. We certainly cannot support a system which pays off the losers at the expense of the responsible.
We have no voice. You won’t see us on the 6 o’clock news. You won’t see us at a protest. We’re too busy working, volunteering for charities, doing homework with our children, going to church, and mowing our lawns.
We are a minority, and a shrinking one. Soon, there won’t be enough of us to keep picking up the tab. When that time comes, the rest of you are toast, and we’ll all be chuckling at the mess you created.
I am by no means anything near a Detroit fan boy, but I have two comments.
1. You’re wrong about Mulally. While he ain’t Iacocca or DeLorean, he certainly is not Wagoner or Nardelli. He’s been a calm, competent voice these past 6-10 months.
2. The transplants have received indirect handouts through massive tax breaks and infrastructure improvements used to lure them. While not direct cash infusions, handouts nonetheless.
We speak for ourselves. We don’t have an interest group lobbying the government on our behalf and buying a congressman with campaign donations. We have no UAW, AFL-CIO, NAACP, NOW, AARP, ACORN, MoveOn, or NEA to join that will speak for us.
It will be a hell of a lot worse when the transplants start hiring the majority of their workers as contract help for $15.00 an hour. I know that it’s quite prevalent now but it’s not something that is well-known.
The problem a lot of the transplants still don’t do the principal engineering and design of their cars in the US.
Beg to differ. All of the major transplant companies have styling studios and engineering departments within the United States.
For example, Hyundai-Kia has a styling studio in California which was responsible for the Santa Fe and the re-do of the Sonata, and they also have an engineering center in my home state, in Ann Arbor.
Granted a lions share of engineering might be done overseas.
But, as mentioned, a LOT of GM, Ford and Chrysler work has also moved overseas.
GMDaewoo seems to be the place where future GM automotive product will be engineered, for example.
Chrysler’s engineering will come from FIAT (wow, that’ll bring back stinking-turd memories for owners of 1970’s Chrysler products…)
Ford’s engineering increasingly has been via Volvo and Mazda of late, as well, to be honest.
Perhaps they can take some of the guys (still left) who’ve been working on TRUCKS (and SUVS) and start them on the next-generation of Ford cars…. engineered in the USA…
So, those of us (i.e. Americans) who live in glass houses really shouldn’t throw stones.
Particularly when you realize there are no legal or trade or financial incentives for these FOREIGN car companies to bring ANY design or engineering work into the USA.
They are doing it because they are following the example of what successful companies have done over the last 100 years; build and design product near where it is used.
Why is spending $50 billion plus on Detroit’s 2.8 taking money out of workers pockets, but spending $1 trillion (est.) on a useless war in Iraq is hardly mentioned? And then there is the other rat hole, Afganistan, where billions more are being wasted.
Add to the wars the never ending financial bailouts to large banks and AIG which some estimate will cost over another $1 trillion. A trillion is 1,000 billion.
$50 billion is petty cash compared to the money being siphoned out of worker’s pockets both domestic and transplant by wars and other bailouts. If we add in the money send outside the country to pay for oil imports, it is no wonder that auto sales are collapsing.
$50 billion plus for domestic auto bailouts is no big deal compared to the “bailout” money going to Iraq, Afganistan, banks, AIG and foreign oil producers.
Dave M.: The transplants have received indirect handouts through massive tax breaks and infrastructure improvements used to lure them. While not direct cash infusions, handouts nonetheless.
So have GM, Ford and Chrysler. They have been quite adept at wrangling tax abatements and infrastructure improvements from state and local governments for upgrading existing plants.
They would receive similar benefits for building new plants if they actually were building new plants.
derm81: It will be a hell of a lot worse when the transplants start hiring the majority of their workers as contract help for $15.00 an hour. I know that it’s quite prevalent now but it’s not something that is well-known.
Lots of companies hire temporary help at lower rates to have a more flexible workforce and to “screen” candidates for full-time, permanent work. This is quite a common practice; it is used by well-run companies.
Why is spending $50 billion plus on Detroit’s 2.8 taking money out of workers pockets, but spending $1 trillion (est.) on a useless war in Iraq is hardly mentioned?
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
Notice it mentions national defense, but leaves out the part about loaning money to private firms.
Who speaks for them?I thought they didn’t someone to speak for them.If they want a voice call up Ron Gettlefinger.
Nobody’s buying cars and your getting layed off?
Welcome to the autoworkers world.Derm 81 is right.
The tranplant guys will get sick of being abused and be unionized in next 5 to 10 years.
I think we’re being a little bit generous to Iacocca. Yes, he was a great communicator, but Chrysler was still selling cars with more than their share of problems despite his ability to communicate.
I think, in retrospect, Chrysler’s state of affairs would have been better served by someone would have “communicated” to finance and engineering that a third failed automatic transmission, or trim that falls off, or head gaskets that blow communicate more to the customer than a cheery PR campaign ever would.
As it would for GM and Ford.
mikey: Nobody’s buying cars and your getting layed off? Welcome to the autoworkers world. Derm 81 is right. The tranplant guys will get sick of being abused and be unionized in next 5 to 10 years.
Yes, they should unionize, and demand that the company pay them, regardless of how many new vehicles are being sold. That has worked out so well for GM, Ford and Chrysler…
Guess what! The same thing is failing with the bailouts of the Banking & Financial companies. Bailing out a failed business is not an answer regardless if it’s an automotive company or a bank, no matter how large. Nothing is too large to fail. Managing their collapse is what is needed to prevent a crisis.
This NPR interview: Economist Lauds Fed’s Effort, Criticizes Bailout Plan with Economist Douglas Holtz-Eakin. You’ll need to listen to the audio to get more info than is printed in the blog entry. Good stuff, same damn issue.
@geeber…The job banks are gone.Thousands of auto
workers are layed off.This idea of people drawing a full pay and not working,is a myth.
1. You’re wrong about Mulally. While he ain’t Iacocca or DeLorean, he certainly is not Wagoner or Nardelli. He’s been a calm, competent voice these past 6-10 months.
2. The transplants have received indirect handouts through massive tax breaks and infrastructure improvements used to lure them. While not direct cash infusions, handouts nonetheless.
I agree with this.
But all this is a very simplistic discussion of an extremely complex area. To think of this economy as independent of subsidies is nuts. Even the smallish burg I live near has some kind of taxpayer-supported economic development commission that is constantly on the prowl for somebody to throw money at; and most burgs do. For sure larger cities do. And counties and states and of course the Feds. The imports have been and area subsidized in their home countries in various forms too; like national health care, MUCH better educational systems and in other ways.
To get a firm handle on this issue we’d have to get long-term info on all the subsidies provided, taxes and wages paid, etc. Without that we’re all blowing smoke.
Just one tiny little example: Getrag and Chrysler supposedly had deal regarding a new transmission plant near Kokomo, Indiana. So various levels of local government sprang for over $250k up front for things like buying the land and infrastructure. Of course the deal is off, but the money is gone. It never seems to occur to the govt types to let the companies front the damn money and reimburse them over time as wages and taxes are paid. I hope these public official types are corrupt and skimming some of this; I’d hate to think they’re this damn stupid.
I think we’re being a little bit generous to Iacocca. Yes, he was a great communicator…
Lee Iacocca, circa 1982:
“Look you fucking asshole, I told you wanted this pentastar emblem two inches higher…get it right or you are a goner”
Thats what my dad heard Lido say to some poor shmuck at the design studios at Highland Park in the early 80s.
mikey,
The Jobs Bank is gone NOW. The companies eliminated it when their backs were against the wall. In the case of Chrysler and GM, it is too late…
(And I’m not saying that the Jobs Bank is solely responsible for these companies’ condition. It was just one aspect of their mismanagement. It was, however, a vivid reflection of the arrogance shown by both the companies and the UAW – they believed that sales would eventually pick up as people came to the senses and abandoned foreign vehicles, so all of those people in the Jobs Bank would eventually be employed again.)
Dave M. :
March 24th, 2009 at 1:48 pm
2. The transplants have received indirect handouts through massive tax breaks and infrastructure improvements used to lure them. While not direct cash infusions, handouts nonetheless.
A tax break is not quite the same as a bailout. A tax break is money not taken by the government; a bailout is money taken from a taxpayer and given to something else. In the first case the local/state government gave up on taxes they wouldn’t have collected anyway had the plant not been built; in the second the government takes money meant for roads and schools and law enforcement and such and diverts it into someone’s private pockets. Yes a tax break is a sort of “distortion” of an even playing field, but it is not quite a handout.
Second, the Detroit 3 would’ve gotten the exact same help had they decided to build plants in Alabama; and they have, as mentioned received state/provincial/local government help for such things in the past, just like the transplants have.
Not to mention that the Detroit 3 would have never reached their current (and once upon a time much greater) size had it not been for a massive federal government subsidy called the interstate highway program. GM lobbied heavily to have the US transport network based on the car/bus/truck-centred multilane highway and people tied to GM eventually got very important posts in the government and got to direct the development of the nation’s transport system. I mean, had the federal government decided instead to focus on an interstate rail network, would have GM ever become as dominant and big as it did?
BlueBrat: Great link!
Who speaks for them?
Just about every Republican Senator. The CATO Institute. Assorted free trade lobbyists. The state governments of Alabama, Kentucky, Tennessee, and South Carolina. The Heritage Foundation.
They have plenty of lobbyists.
@ geeber Yeah your right, that was the original idea behind the job banks.It evolved into something different.Its all history now.RF’s question was,who speaks for the tranplant worker?Well nobody does.Thats where unions got thier start.
All is not rosy at the tranplants.Toyota and Honda better pay attention to history.Cause it has
a nasty habit of repeating itself.
Who speaks for them?
Just about every Republican Senator. The CATO Institute. Assorted free trade lobbyists. The state governments of Alabama, Kentucky, Tennessee, and South Carolina. The Heritage Foundation.
They have plenty of lobbyists.
If you are joking, then please excuse my forthcoming comments.
Republican senators are powerless. Have you looked at the Senate roster lately?
CATO Institute and Heritage Foundation? These are lobbies you consider to be on par with the UAW, the NEA, and the NAACP?
The transplants build in the South to avoid the unions, Right to Work laws. You’re never going to see a transplant build in Michigan.
Republican senators are powerless. Have you looked at the Senate roster lately?
They can still filibuster and threaten to do so for the outrageous crap.
Although if the Dems romp in 2010, expect the transplants to be hit with an Uzi full of legislative hollow points.
Republican senators are powerless. Have you looked at the Senate roster lately?
Well, duh. You lost the election. But they can still speak for the imports, and come 2010 they’re free to run on a platform telling the Midwest to drop dead.
Of course that’s electoral suicide if the Republicans want to be a national party, which is why Bush and Cheney bailed them out when push came to shove.
Bluecon–
Honda has a plant in Ohio. Though I’d be willing to bet that, thanks to Union shops being next door, it’s wages are higher than the transplant shops in Alabama.
$50 billion plus for domestic auto bailouts is no big deal compared to the “bailout” money going to Iraq, Afganistan, banks, AIG and foreign oil producers.
Two wrongs don’t make a right. Nor does three, four, or five wrongs make a right.
BTW, what on God’s green Earth does the NAACP and NEA have to do with the car business!?
Good article. The transplants are keeping competently quiet and are or will reap the rewards from continued focus on the customer and the product. Give Ford credit, at least they chose to part ways from GM and Chrysler and I hope they continue to do so.
Competition in a very mature industry has already shown us the winners from the losers. GM and Chrysler have been losers for some time. We taxpayers are on the hook for these two losers and we don’t like it one bit.
I have a friend that just bought a used 2009 Hyundai Sonata Limited. Quite the incredo deal for $17,000 and it includes the 5 yr transferable powertrain warranty.
Adios GM & Chrysler. It was fun watching you try to compete. We’ll all have the memories. Sorry you lost…….Even more sorry we taxpayers keep losing our wallet to keep you on life-support.
BDB: But they can still speak for the imports, and come 2010 they’re free to run on a platform telling the Midwest to drop dead.
Most people know that Honda, Toyota and Nissan build lots of vehicles here, and that GM, Ford and Chrysler have been outsourcing as much production as possible. They don’t necessarily classify every Honda or a Toyota as an “import,” because they’ve figured out that a fair amount of the vehicles they sell here are built here. They also don’t buy the “where do the profits go” argument, because they realize that all auto companies are GLOBAL corporations, and will build vehicles where it is economically feasible to do so.
They like those vehicles – otherwise, they wouldn’t buy them – so they aren’t going to be too upset at Congresscritters who speak up for them.
And, yes, if GM and Chrysler are still begging for money in 2010 – which is not beyond the realm of possibility – there WILL be a backlash. At some point, enough is enough…
Especially when one of the players – Ford – is taking steps on its own to get its house in order. The only “unfair advantage” that Ford has over GM and Chrysler is that its management appears to be reasonably competent.
97escort: “a useless war in Iraq”
Uh, better check the news. The situation today is incredibly better than it was under Saddam. As indicated by President Obama’s remark the other day that he never expected Iraq to be “the least of my worries.”
derm81: “the engineering and RD will remain in the north for the most part. That’s the shift or schism as I like to call it. Hyundai, Daimler, Toyota, Nissan have all kept their brainpower seperate from the assembly”
I see … let those knuckle-dragging Johnny Rebs (a.k.a. burger-flippers) do the unskilled work; keep the highfalutin’ tasks in the North where superior intellects are found.
Who speaks for transplant workers? They can speak for themselves, of course. This is not 1880. And modern managers know a mistreated workforce will become an inefficient and surly workforce. Henry Ford adopted the $5 wage to reduce turnover, not out of benevolence. Sometimes I think UAW chiefs must read nothing but Upton Sinclair.
Maybe this has been argued before, maybe not.
I don’t like people lumping Chrysler and GM together. They have two completely different pasts, especially recent ones.
General Motors has nobody to blame but themselves for their failure. They have ran themselves into the ground, no ifs, ands, or buts about it.
A little over 10 years ago, Chrysler was the most profitable auto company in America, and one of the most profitable in the World. They were consistently producing award-winning designs… Which were then maimed through the severe cost-cutting that was put upon them by the top management. And then, instead of management reaping what they sowed, they pulled the trigger and sold the Pentastar’s soul to Daimler. Daimler proceeded to raid Chrysler of all of its cash reserves and valuable assets, and then spit the company back out with next to nothing. By this point, all departments crucial to running and auto company were mere shadows of themselves: Design, R&D, Legal, Marketing, everything was gone.
Simply put, Rome, or should I say Auburn Hills, was burnt to the ground. This was through no fault of any of the workers at Chrysler except a very, very small number at the top.
Should the many suffer so greatly because of the actions of a few?
This is not 1880.
It’s not for lack of trying.
BTW, Tyota, Honda, and Nissan built plants here because of the import quotas Reagan put on them in the early 1980s. It was an easy way to get around them. They didn’t come to build plants here out of the goodness of their hearts, they did it because the government made it worthwhile for them to do (by, yes, distorting the market). This part of the story is curiously left out of the speeches of Corker, Shelby, et al.
The transplants don’t want the domestics to fail because the rely on the same supply chain. If GM and Chrysler are liquidated, taking many of their suppliers down with them, the transplants will be hard pressed to build cars in North America.
Robert, the managements of the transplants are speaking for the employees of those companies (since they don’t typically have unions) and they say they want GM & Chrysler to survive.
I’m not talking about Detroit’s unionized workers or their white collar counterparts. As much as I sympathize with their plight
I do not. A Union is an extortion group with the permission of the State to engage in inmoral activities that would (with all Justice) put in jail any non-Union individual.
When I read in a good “Union made” (like those obnoxious “UAW Manufactured” stickers on the glass of 1990s Chryslers) I do not buy. As a matter of principle.
There’s plenty of room to debate the advisability of encouraging foreign nameplates to manufacture cars in the U.S.
In fact there is zero room to debate that issue.
* If you are for Freedom your are for Economic Freedom.
* If you respect other person´s rights you must respect the right they have to invest their money in whatever business -foreign or local- the want in your country, or to buy foreign goods. It is their money and -therefore- their life, not yours.
This is true if you want a Free America.
I am from Spain. Until the early 1980s Spain was a rigidly closed market for cars (and for everything). Our freedom of choice was much, much limited, and we were accustomed to some appalling quality cars.
I sure support the freedom to put text in bold!
A Union is an extortion group with the permission of the State to engage in inmoral activities that would put in jail any non-Union individual.
Mhmm. And this is different from a corporation, how?
And this is different from a corporation, how?
* In a free country (as America used to be) a Corporation can not initiate the use of force. Anyone is free to do NOT deal with a Corporation.
* For a Union the initiation of force usually is the very basis of its power. In a “closed shop” state an employer is not free to do not deal with a Union. Is not surprising that those states look more or less like Somalia.
Of course that a Government Bailout also uses force: The bailout money has been taxed under compulsion by the state.
In my book, dealing with GM in the year 2009 is like dealing with stolen goods with the Crips or the Bloods. A Honest Corporation in the shoes of GM would have choosen to say “We do not want tax money. We prefer to declare bankruptcy”.
BDB: “this is different from a corporation, how?”
A union can legally engage in collusion (organize and strike) to raise wages; business firms such as Ford and GM, like other firms, aren’t allowed to coordinate to raise their prices. Yes, I know how oligopolistic industries utilized informal “price leadership,” as with GM’s onetime leadership in changing car prices. The foreign brands put an end to that, thereby driving in several of the nails in the coffin of a formerly oligopolistic industry at the mercy of a labor monopoly.
“Other than some gentle murmurs of encouragement, we’ve heard nothing from Toyota, Honda, Nissan, Hyundai and the rest of America’s so-called transplants re: Chrysler and GM’s federal trough snuffling.”
Actually, the transplants’ position seems fairly straightforward (from CNNMoney.com):
“Why Toyota wants GM to be saved
A GM failure would cause production problems, crush already weak demand and potentially open the door to low-cost competitors.
Last Updated: December 16, 2008: 9:53 AM ET
NEW YORK (CNNMoney.com) — Detroit’s Big Three aren’t the only automotive companies that want to see the government step in with some much-needed financial help.
Overseas automakers, most notably Toyota Motor, all endorse some form of federal aid to keep General Motors (GM, Fortune 500), Chrysler LLC and possibly Ford Motor (F, Fortune 500) out of bankruptcy.
…
“We support measures to help the industry,” said Toyota Motor (TM) spokeswoman Mira Sleilati. “We just want a strong, competitive healthy industry.” ”
I suppose one reason the transplants support GM and Chrysler is that they’re looking for bailout money themselves (from usnews.com):
“Toyota, Honda, Mazda May Ask for Government Bailout
Posted: Mar. 04, 2009 10:03 a.m.
The Japanese auto industry may not be immune from the forces reshaping the auto industry after all. Three of Japan’s largest automakers are expected to approach the Japanese government asking for financial assistance as soon as today.
Bloomberg reports, “Toyota, forecasting its first loss in 59 years, may ask Japan’s government for 200 billion yen ($2 billion) in loans for its credit unit as private financing has become too expensive, public broadcaster NHK reported yesterday, without naming its source.” Toyota , the world’s largest automaker, suffered a 40 percent sales drop in February.
The company is already “in talks with a Japanese government-backed bank on possible lending,” the AP reports, “underlining the serious woes facing the car industry amid plunging global sales. Toyota Motor Corp. said no details had been decided,” but on the news, Japan’s Nikkei index “flirted with 26-year lows.”
The company is not alone, according to the Wall Street Journal. “Honda Motor Co. said it is seeking a government loan to help shore up funds at its U.S. operations, becoming the latest Japanese auto maker to ask for Tokyo’s help in doing business abroad.”
A separate Bloomberg report adds, “Mazda Motor Corp. is also considering a request for government loans, spokesman Toyota Tanaka said today.””
* In a free country (as America used to be) a Corporation can not initiate the use of force. Anyone is free to do NOT deal with a Corporation.
And then you’re “free” to starve and live under a bridge. Most sane people don’t see the 1880s as a golden age of liberty, pal. IF you think corporations don’t use force, go google the Homestead Strike. Or the British East India Company (a corporation with it’s own army!) They used to use force all the time when we had a weak central government and zero regulation.
If you’re over 20 and you still think Ayn Rand has a watertight, brilliant philosophy, I feel really sorry for you. It was refuted by a video game.
Shh, NoSubstitute! They’re the “winners!” It’s different when they do it.
If a vehicle is not designed and engineered in the States it is not American. The sad truth there are few American vehicles left even among the big 2.8.
The transplants represent America surrendering to superior foreign forces. It is the only time America has surrendered in its proud history.
What a national disgrace!!!
“It’s time for them to tell Washington that these enormous, unrecoverable “loans” to Chrysler and GM are a cancer on their beliefs” – Lets start with the banks first shall we? I’d say $150 billion and counting just for one company is way more to worry about and thats not even a “loan”…..
Nosubstitute beat me to it regarding the Toyondassans, just wondering as i dont have time to go back through the news on here but did TTAC report their approaches to the Japanese government for help which i read about in the other automotive news and regular news websites recently? How are these reports perceived by you RF? Surely if their cash horde is so immense as reported they wouldn’t need this help? Maybe things aren’t as rosy over there either. Maybe someones been telling porky’s there too??
A tax break is not quite the same as a bailout. A tax break is money not taken by the government; a bailout is money taken from a taxpayer and given to something else.
I understand. But I took the original inference that the transplants somehow built and achieved in the US free of government/taxpayer help. They did not.
Speaking of the original transplants in the ’80s to get around the import quotas of the time, I can’t begin to tell you how much those quotas screwed up the new car market. In 80/81/82, Toyota and Honda couldn’t import their cars fast enough. And the price premium to land one was ridiculous. In a sense, not too unfamiliar with today’s situation and resale prices, no?
@akear: What a national disgrace!!!
Andrew, you haven’t changed a whit since I was posting on C&D’s forums years ago. Good for you!
And then you’re “free” to starve and live under a bridge.
If that is the outcome of my actions as a producer, that´s the way it must be.
You should not be forced to pay my food of my flophouse if I fail to produce anything of value.
All this discussion is about the initiation of Force. Do you get it?.
If you think that Government intervention makes people richer, you are very, very, very, very, very (very) wrong.
Most sane people don’t see the 1880s as a golden age of liberty, pal
Most sane and informed people do.
The 1880s were an era of increasing living standards. Millions of Europeans moved to the USA to look for freedom and prosperity. Money contained actual gold. There was no inflation.
Uh, and the United States was not a bankrupt country with a currency degraded beyond belief. Like now.
Downtown Detroit looked much, much better in 1880 than in 2009.
BDB :
March 24th, 2009 at 7:25 pm
And then you’re “free” to starve and live under a bridge. Most sane people don’t see the 1880s as a golden age of liberty, pal. IF you think corporations don’t use force, go google the Homestead Strike. Or the British East India Company (a corporation with it’s own army!) They used to use force all the time when we had a weak central government and zero regulation.
If you’re over 20 and you still think Ayn Rand has a watertight, brilliant philosophy, I feel really sorry for you. It was refuted by a video game.
Why do union members and supporters always live in the past? There are plenty of non-union companies and areas in the US and can you name me any situation in the last few decades where a business has it’s band of mercenaries to keep the worker down?
I grew up in a very Democratic union family and can tell you the only people who threatened violence were union members. And that was usually to other union members to not step out of line. All of my relatives talked about how bad it was in the 30’s trying to organize, but they always joked about how powerless the Big 3 were against the UAW now (60 – 70’s timeframe).
If you’re basing Ayn Rands philosphy on a video game, then I feel sorry for you. Why don’t you read her books and understand that she escaped from a communist country. One that regulated everything and ended up blowing up.
When you consider how much Detroit production is from foriegn soil the Detroit companies have some nerve asking for a bailout. I’d like to know if more US autoworkers work for all the transplants combined at this point then the Detroit companies. IF not, it’s bound to be that way soon.
The solution may be to allow Cry-sler to drop and have the government assist workers in relocating to an area where a transplant company has a plant or will build one. It would be cheaper to through 20000 workers (example) 15 K a piece for relocating expenses as a straight tax refund or credit than drop 30 billion on a failed business model that can only spend it on rebates and 0% financing. On cars no one wants to own because of resale, style, function or quality concerns.
300 mil versus 30 billion. Hell, give the 200,000 UAW workers the same deal and call it 3 billion and be done about it. Some will bitch they didn’t get a relo package from the government but at some point everyone learns to shut up and pay their taxes. Look at the trillion here and trillion there scenarios.
Unemployed workers see jobs across the country they could fill but the relocation costs are prohibitive. For autoworkers it’s impossible. Of course selling a home is part of the problem but unless we are prepared to go 150K for 200,000 workers it can’t be done.
Oh wait, that’s 30 billion. There is an idea.
The UAW and Big 3 managers are both equally responsible for the US Carmageddon. The consumers who felt compelled to buy their products and lead them down a primrose path are partially responsible.
BDB: BTW, Tyota, Honda, and Nissan built plants here because of the import quotas Reagan put on them in the early 1980s. It was an easy way to get around them.
The Honda plant in Marysville, Ohio was built in the late 1970s, and began producing motorcycles in 1979, when Carter was still president.
This plant began producing Accords in 1982. Given the lead times necessary to tool up a plant for auto producion, I doubt that this move was solely in response to the import quotes imposed by Reagan, who would have been in office a little over a year at that point.
BDB: They didn’t come to build plants here out of the goodness of their hearts, they did it because the government made it worthwhile for them to do (by, yes, distorting the market). This part of the story is curiously left out of the speeches of Corker, Shelby, et al.
Any automobile company that sells large numbers of vehicles in a particular market will eventually produce vehicles tailored for that market. It will eventually make sense to build them there, too, regardless of whether the government threatens to impose quotas or tariffs on imported vehicles.
This is why Mercedes and BMW built plants in the U.S., even though they were never subject to the import quotas, to the best of my knowledge.
That is also why Ford and GM have plants and subsidiaries in Europe, Australia and South America.
Thought experiment – “If we allow 2 million auto industry jobs to vanish, those people all go on unemployment/welfare draining their states dry”. This at least saves further strain on state governments, most of which are in dire financial straits already. Or the 2nd option – “let them eat cake”.
Bloomberg reports, “Toyota, forecasting its first loss in 59 years, may ask Japan’s government for 200 billion yen ($2 billion) in loans for its credit unit as private financing has become too expensive, public broadcaster NHK reported yesterday, without naming its source.” Toyota , the world’s largest automaker, suffered a 40 percent sales drop in February.
I thought Toyota Corp had billions in cash?
My heart is with you American workers. The wrinkled and blistered hands of the divine creation. My heart is with you, the jobless, yearning to feed their families. My heart is with you, the strong men of America barely keeping their tears silently to themselves, and watching the dreams of their children evaporate at an empty Christmas table. My heart is with you, the whistling winds of barren corridors and rusted carcasses of once mighty family, that made this country strong.My heart is with you, the hard toiling hands of America, the greying hair of once forging nation to the alchemy of innovation. My heart is with you, struck by the void of emptiness and apathy of inevitability.
Just call my name, and I `ll be there…