Should the government bail-out include domestic automakers?

[Deep Gloss Auto Salon]

It amazes me how people make statements when they have little to no knowledge of what they speak and OUTDATED data

They employ ridiculously high priced laborers that use ridiculous unions. This was bound to happen, there is no excuse. I say if they have managed to build junk cars and not expand, let them go under. This is the problem with the bailout proposed for automakers. .

Wrongo #1) Domestic implants and big three union workers make equivalent wages,... in 2009 the wages will be even more in favor for the big three



Wrongo #2) Quality of domestic vehicles has been on a steady improvement (refer to JD chart posted earlier in this thread



Wrongo #4) This is not a bailout, it is A LOAN.. JUST LIKE what was given to Chrysler years ago and I feel this needs to be repeated... OUR GOVERNMENT MADE NEARLY $500 MILLION OFF THE LOAN TO CHRYSLER

Spending trillions on an ailing economy with no hope of recovery is just greasing the skids. We will simply hit the wall faster than ever.

No hope for recovery??? Please elabortate on where are you getting your data from??? All reports/analysis I have access to tell a very different story

Exactly; it's amazing how the Non "Big 3" are doing just fine in the US while the "Big 3" are crippled. Pay cuts need to happen NOW not next week not next month, not next year, like YESTERDAY. If that means they work for $20 an hour do it, and when they are back on there feet increase the pay. I'd take $20 over $0 that's for damn sure.

Please understand, assembly workers for domestic and domestic transplants are now basically the same... the domestics will get even more leverage next year due to new labor contracts... What the implants have on thier side is they do not have decades of retiree's to support...... And for the record, Non Big Three OEM's are not doing just fine... Have you read any of their financials lately???

 

[jfelbab]

I fully expect to see GM only selling Chevy and Caddy plus a truck line, perhaps GMC. I don't see Buick and Pontiac in their future. Ford and Mercury may also need to get rid of model overlap. I don't expect to see Chrysler being around. This retrenching needs to happen yesterday. This may be good for the us in the long haul.



In case you were interested, in 2007, Toyota made over $700 per vehicle while GM, Ford and Chrysler lost $729, $1467 and $412 per vehicle respectively. This was before the credit crisis. So tell me why we should pour money into them when they were not profitable even before this crisis. How would this bailout make them profitable? Unless they get new leadership, new labor contracts and a total reorganization, it is not a bailout. It is just delaying the demise.



The credit crisis has affected sales of all major ticket items, not just automobiles. There is no end in sight to those lining up for a handout. Now several state governments are lining up with their hands out. Next week it will be the airplane manufacturers, then the boat builders, then home builders, then the heavy construction industry, then the farmers, etc. The problem is that the money we are doling out is not ours. It is our children's and grandchildren's. This debt growth is unsustainable. Sooner or later our debtors will foreclose on us. We have a problem that we can't spend our way out of.

 

[MSOsr]

Aren't the Nissan and Toyota plants in Tennessee or wherever non-union? Are autoworkers so scarce that they have to be paid more in retirement than a lot of gainfully employed people make?



How does GM sell more cars around the world than anybody and still go out of business?



If the government loans the money, someone not involved in being paid by the Big 3 (such as a bankruptcy trustee) needs to approve contracts signed by the Big 3. How many of its contracts could GM have gotten an outsider financial expert to sign off on as being "good deals for the company"?



When you sell more of your product than anyone else, but the others make money and you don't, you've done a pretty poor job of managing your operation.



Mike

 

[Inzane]

I don't see Buick and Pontiac in their future.

GOOD!



The only half-decent products to have come out of Pontiac in the last 10+ years are from overseas divisions (re: GTO, Solstice). Go figure.

 

[Deep Gloss Auto Salon]

In case you were interested, in 2007, Toyota made over $700 per vehicle while GM, Ford and Chrysler lost $729, $1467 and $412 per vehicle respectively. This was before the credit crisis. So tell me why we should pour money into them when they were not profitable even before this crisis. How would this bailout make them profitable? Unless they get new leadership, new labor contracts and a total reorganization, it is not a bailout. It is just delaying the demise.

Once again, OUTDATED OBSOLETE DATA... This is now a non issue... New labor contracts have been made....

 

[jfelbab]

Once again, OUTDATED OBSOLETE DATA... This is now a non issue... New labor contracts have been made....

You have more current data on how much the big three is making/losing per vehicle? If so, post it. The data I cited were reported in the news today.



I never said that GM's labor contract was the reason for their inability to turn a profit on their cars. Is that your assumption?



They have pension obligations, excessive management, too many high paid chiefs, poor organization, too many competing models, and a host of issues driving the cost up.

 

[Lenny]

You have more current data on how much the big three is making/losing per vehicle? If so, post it. The data I cited were reported in the news today.



I never said that GM's labor contract was the reason for their inability to turn a profit on their cars. Is that your assumption?



They have pension obligations, excessive management, too many high paid chiefs, poor organization, too many competing models, and a host of issues driving the cost up.

I'm sorry to say this, but "today's news" has been full of inaccuracies.



Last year, Toyota factory employees made more money than their UAW counterparts, link here. Honda, Nissan, BMW, and Mercedes employees are comparable to the Detroit 3. Their benefits are also comparable, except for the retirement programs, which any new UAW represented employees, as new ones come in to replace the retiring workers, are no longer eligible for. New contract with the Detroit 3 and the UAW eliminated al the non-manufacturing jobs, and they are now outsourced to lower cost vendors. This includes all shipping and receiving, material handling - including all forklift operations and overhead crane operation, janitorial, exterior building maintenance and landscaping, and the spare machine parts/nonproduction crib. All of those jobs are now in the hands of temp agencies and contractors at Ford and Chrysler, and in the hands of half-pay employees at GM. Plus there are whole manufacturing operations located in the assembly plants that are in the hands of low cost contractors. Link Here and link here



All the transplant automakers in the USA pay everyone, including their execs, comparable to the Detroit automakers.



GM, Ford, and Chrysler fought the regulations alone? And everyone embraced them? Baloney. On emission, safety, and fuel economy, Toyota and Nissan were standing shoulder-to-shoulder with Detroit opposing them, especially the fuel economy increases that were passed last year.Link Here. Honda was lobbying separately, and fighting much of them as well. All you armchair quarterback critics act like the Detroit automakers march in lockstep together opposing the regulations and the non-Detroit automakers happily accept them, and nothing could be further from the truth. First company to file written objections to this years increase in fuel economy standards, filed on record in the Federal Registry, was BMW. See Link for article



Got news for you - the same thing is happening in Europe. European union has sharply increased emission standards, and every European automaker, led by Daimler and BMW, are complaining up a storm, fighting them tooth and nail. Link Here



Don't want to get into a pissing contest, but is there any other misconceptions on the auto industry that people need updating on??

 

[Inzane]

Got news for you - the same thing is happening in Europe. European union has sharply increased emission standards, and every European automaker, led by Daimler and BMW, are complaining up a storm, fighting them tooth and nail. Link Here

The EU's proposed CO2 limits they are trying to impose are RETARDED!



Carbon DIOXIDE is a clean, odorless, non-toxic NATURAL byproduct of combustion.



Sigh........

 

[imported_RedlineIRL]

It pisses me off that most Americans are blind to this phenomenon.

It pisses me off that most Americans think that it's ok to let the US auto industry go under, and with it will have no affect on them at all. It pisses me off that most Americans didn't think twice or have any objections on a basically no strings attached bailout for Wall Street and the financial firms, but yet when our US auto industry is asking for a LOAN people are all against and thinking that that it's a bad thing. It pisses me off that most people seem to not be concerned with an industry that is the economic backbone of our contry.

 

[jfelbab]

I'm sorry to say this, but "today's news" has been full of inaccuracies.



Last year, Toyota factory employees made more money than their UAW counterparts, link here. Honda, Nissan, BMW, and Mercedes employees are comparable to the Detroit 3. Their benefits are also comparable, except for the retirement programs, which any new UAW represented employees, as new ones come in to replace the retiring workers, are no longer eligible for. New contract with the Detroit 3 and the UAW eliminated al the non-manufacturing jobs, and they are now outsourced to lower cost vendors. This includes all shipping and receiving, material handling - including all forklift operations and overhead crane operation, janitorial, exterior building maintenance and landscaping, and the spare machine parts/nonproduction crib. All of those jobs are now in the hands of temp agencies and contractors at Ford and Chrysler, and in the hands of half-pay employees at GM. Plus there are whole manufacturing operations located in the assembly plants that are in the hands of low cost contractors. Link Here and link here



All the transplant automakers in the USA pay everyone, including their execs, comparable to the Detroit automakers.



GM, Ford, and Chrysler fought the regulations alone? And everyone embraced them? Baloney. On emission, safety, and fuel economy, Toyota and Nissan were standing shoulder-to-shoulder with Detroit opposing them, especially the fuel economy increases that were passed last year.Link Here. Honda was lobbying separately, and fighting much of them as well. All you armchair quarterback critics act like the Detroit automakers march in lockstep together opposing the regulations and the non-Detroit automakers happily accept them, and nothing could be further from the truth. First company to file written objections to this years increase in fuel economy standards, filed on record in the Federal Registry, was BMW. See Link for article



Got news for you - the same thing is happening in Europe. European union has sharply increased emission standards, and every European automaker, led by Daimler and BMW, are complaining up a storm, fighting them tooth and nail. Link Here



Don't want to get into a pissing contest, but is there any other misconceptions on the auto industry that people need updating on??

Sure, this one was posted on Sunday:

What do you account to the clear failure of the big three to make money on their vehicles?



I also read that Rick Wagoner of GM got a 64% salary increase for GM's great 2007 performance of a $39 Billion loss.



Here it is:

Wagoner's compensation rose from about $9.57 million in 2006 to $15.7 million in 2007, a 64% increase.



Fritz Henderson, who was promoted to president and chief operating officer in March, received compensation of about $9.3 million in 2007, up from about $5.1 million in 2006.



Vice Chairman Bob Lutz's compensation rose to about $9 million in 2007, from about $5.1 million in 2006.

Not just sour grapes at GM as Ford carries a bag of suck too.

Ford Chief Executive Alan Mulally had earned more than $22 million in 2007, drew a sharp rebuke from the UAW as excessive, given concessions UAW members had agreed to in the 2007 contract. This from Ford, which posted a $2.7 billion loss in 2007.

Hard to understand that companies who are performing poorly give their chiefs exorbitant salaries.



Now I didn't bring up any of that baggage you posted about about the UAW and the CAFE standards. My point was simply that the big three are losing money on every car and their Asian big three competitors are clearly not. These are published and verifiable numbers. I could find no more current numbers for profitability available. If profit formula have changed I'd be anxious to see them but looking at the last few months it is clear that sales of the big three have suffered a much greater loss than the Asian big three so I tend to think that profitability has not changed much.



To check on just how well managed GM has been I went and looked back at GM's stock performance over the past 5 years and compared it to Toyota and the DOW.

So why do GM and Ford chiefs seem to get outrageous salary increases while they seemingly run the companies into the ground then ask for bailouts?

 

[MSOsr]

[quote name='Len_A']I'm sorry to say this, but "today's news" has been full of inaccuracies.



Last year, Toyota factory employees made more money than their UAW counterparts, link here. Honda, Nissan, BMW, and Mercedes employees are comparable to the Detroit 3. ch-tentative-contract-deal"]link here[/URL]



There is an interesting concept.....BONUSES based upon performance! The employees got bonuses because things went well...too bad that concept doesn't apply to executives and UAW workers.



If UAW workers had their pay reduced by the cost of warranty repairs attributed to their production line, think they might do a better job? So long as the execs and the union workers are paid regardless of performance, where is the incentive?



Mike

 

[BigAl3]

wow... looking at that chart, Ford ain't looking too good... :nervous2:

 

[Lenny]

Sure, this one was posted on Sunday:





What do you account to the clear failure of the big three to make money on their vehicles?



I also read that Rick Wagoner of GM got a 64% salary increase for GM's great 2007 performance of a $39 Billion loss.



Here it is:





Not just sour grapes at GM as Ford carries a bag of suck too.







Hard to understand that companies who are performing poorly give their chiefs exorbitant salaries.



Now I didn't bring up any of that baggage you posted about about the UAW and the CAFE standards. My point was simply that the big three are losing money on every car and their Asian big three competitors are clearly not. These are published and verifiable numbers. I could find no more current numbers for profitability available. If profit formula have changed I'd be anxious to see them but looking at the last few months it is clear that sales of the big three have suffered a much greater loss than the Asian big three so I tend to think that profitability has not changed much.



To check on just how well managed GM has been I went and looked back at GM's stock performance over the past 5 years and compared it to Toyota and the DOW.



So why do GM and Ford chiefs seem to get outrageous salary increases while they seemingly run the companies into the ground then ask for bailouts?

The profit per car changes as soon as the retiree health care kicks over to the union in January, 2010.



Last quarter, Toyota lost $336 million, so even they aren't making money now - estimate I saw yesterday on sales was that we're down now to around the 10 million unit annual level. At that level, no one is profitable. My information comes from Automotive News, which you need a subscription to, or else I'd link to it. I found a reprint, link here



Fitch Ratings has now put Toyota on "Ratings Watch Negative" because of their exposure in the USA. Link Here



As far as executive compensation, just about every union in manufacturing has been complaining bitterly for years. You & I can join the crowd.

 

[Lenny]

wow... looking at that chart, Ford ain't looking too good... :nervous2:

With Toyota's loss last quarter, they aren't looking too good either. A lot of people in the industry expect Nissan to suck this last quarter as well. If I had to make an educated guess, I'd say Honda still makes money this quarter, but barely. BMW and Mercedes production in the USA loses money this quarter, as well. That's my guess.

 

[Lenny]

It pisses me off that most Americans think that it's ok to let the US auto industry go under, and with it will have no affect on them at all. It pisses me off that most Americans didn't think twice or have any objections on a basically no strings attached bailout for Wall Street and the financial firms, but yet when our US auto industry is asking for a LOAN people are all against and thinking that that it's a bad thing. It pisses me off that most people seem to not be concerned with an industry that is the economic backbone of our contry.

Man, you aren't kidding. I know I posted this before, but I'll post this again. One) Most of the suppliers used by the Japanese and German transplants are also used by the Detroit 3, and are disproportionately dependent on the Detroit 3. Period. A Chapter 11 by any of the Detroit auto companies will tie up enough of the money coming back to the suppliers to pay previous bills, that it will push several suppliers into Chapter 11. Except one - Delphi. Delphi has been in Chapter 11 for years, and has been unable to secure the financing to get out of Chapter 11. A GM Chapter 11 pushes Delphi into liquidation - Chapter 7, at a time when there isn't the financing easily available to buy off pieces of Delphi. Delphi, in addition to being GM's biggest supplier, is one of Toyota's. And contrary to the uninformed, rocket-scientist keyboard jockey's posting "send them into chapter 11" all over the internet, and contrary to the know-nothing politicians in Washington, DC, auto suppliers can not be replaced in a short period of time. Automobiles are complicated machines with 6000 to 14,000 parts. Shortage on one key part, you're S.O.L. - you don't build cars. Period.



That's going to happen to every single transplant assembly, stamping, engine and transmission plant in North America after a Detroit C11 filing. When depends on which supplier goes down first. Last time I posted that, one Autopian said I was playing Chicken Little and in a later post, made a "spoken like an industry insider" crack. My response today is "tough". Damn right I'm an industry insider. Two family members, my sister one of them, work for European owned auto parts makers (Bosch and Trelleborg Automotive). They said the same thing I did. A neighbor across the street from me works for Metaldyne. He said the same thing I did. Another neighbor is an engineer for Eberspacher Automotive (exhaust systems) - says the same thing. Neighbor of one relative works for Nissan's engineering center here in Farmington, MI - says they, Nissan, are nervous for two reason - one, what I've posted here, and two, the Japanese nationals working here have expressed a concern that all Japanese automakers will get blamed for Detroit's problems. They're still paranoid.



Two, the layoffs caused by the disruptions in the auto industry, even is most are as short as several weeks to a few months, it will absolutely deepen this recession, and that will affect every state. All of them.



Three, auto manufacturing is 20% of all manufacturing and Detroit is 70% 0fthat 20%. 14% of all manufacturing. How the hell does a Detroit 3 banruptcy NOT affect all of the economy?



But, hey, all the keyboard jockeys are right, and those of us speaking out in favor of the loans are wrong. Bullsh*t. We're wrong when hell freezes over.

 

[Lenny]

[quote name='Len_A']I'm sorry to say this, but "today's news" has been full of inaccuracies.



Last year, Toyota factory employees made more money than their UAW counterparts, link here. Honda, Nissan, BMW, and Mercedes employees are comparable to the Detroit 3. ch-tentative-contract-deal"]link here[/URL]

There is an interesting concept.....BONUSES based upon performance! The employees got bonuses because things went well...too bad that concept doesn't apply to executives and UAW workers.



If UAW workers had their pay reduced by the cost of warranty repairs attributed to their production line, think they might do a better job? So long as the execs and the union workers are paid regardless of performance, where is the incentive?



Mike[/QUOTE]How do you figure are the UAW members of the Detroit 3 are responsible for the warranty costs? They don't design the vehicles. They do the jobs according to engineerings designs. Not to mention that the suppliers make the parts that cause most of the warranty and recall problems, not the automakers themselves or their employees. These days, whether it's a Detroit automaker or a transplant, the suppliers do most of the design work as well, on those parts.

 

[Setec Astronomy]

So why do GM and Ford chiefs seem to get outrageous salary increases while they seemingly run the companies into the ground then ask for bailouts?

I think that could be applied to all the financial co's in the bailout, and tons of other companies too. The CEO of Lehman got grilled over it in front of Congress last month. I don't know why there isn't more outrage, really, unless people just can't comprehend how large these salaries are, or that they just inured to them from the salaries of sports and entertainment figures, considering the National median annual income is $40,690.



Even if you make $100K/year, and worked from when you were 20 to 70 years old, you'd only make $5 million over your lifetime, and virtually all of these CEO's make that in ONE YEAR. And those would be the lowest paid CEO's. Think about that for a minute...even if you make a very decent salary, these CEO's will make way more in one year than you will in YOUR ENTIRE LIFETIME. I used to think it was kind of justified when an athlete made 1 or 2 million in a year, because their career could be very short, but this executive compensation is just completely out of control.

 

[Lenny]

I think that could be applied to all the financial co's in the bailout, and tons of other companies too. The CEO of Lehman got grilled over it in front of Congress last month. I don't know why there isn't more outrage, really, unless people just can't comprehend how large these salaries are, or that they just inured to them from the salaries of sports and entertainment figures, considering the National median annual income is $40,690.



Even if you make $100K/year, and worked from when you were 20 to 70 years old, you'd only make $5 million over your lifetime, and virtually all of these CEO's make that in ONE YEAR. And those would be the lowest paid CEO's. Think about that for a minute...even if you make a very decent salary, these CEO's will make way more in one year than you will in YOUR ENTIRE LIFETIME. I used to think it was kind of justified when an athlete made 1 or 2 million in a year, because their career could be very short, but this executive compensation is just completely out of control.

You're 100% right - it is totally out of control. I wish I had the answer, but I don't.



And what puzzles me is all the "outrage" over what other middle class Americans make, and yet the same people shrug their shoulders when the subject of executive compensation comes up.

 

[Bunky]

For a mere 3 months of normal Iraq spending, I would rather waste my money here than give it to Iraq and Halliburton.

 

[salty]

How many have seen the Zeitgeist movies? They're a free download. Makes you wonder about a few things. The first ones starts slow, for about 10 min.





Zeitgeist - The Movie