Should the government bail-out include domestic automakers?

[tibbsonaphone]

I recently read a news story about domestic automakers being included in the bail-out. What surprised me most was the feedback to the story. I am Canadian, and therefore, I consider U.S. car makers to be my national automaker (though technically they are not). Plants in Ontario are responsible for important components of vehicle production and many local shops are kept afloat by customers buying products for their American made cars. Many Canadian businesses also have fleets of exclusively American vehicles. It surprised me to see so many Americans providing brutal feedback to the news story. Some seemed content to watch their automakers suffer, while others slammed them on build quality and corporate greed. I see the Detroit big three (or two if excluding Chrysler) as not American, but North American, and I think the U.S. government should help them out. I don't think that a government should be responsible for bailing out every company that suffers poor business. In the case of Detroit automakers, those companies are a big part of American heritage. Each one of the big three has a rich history of racing success, innovation, and genius mechanics. The inventions of Henry Ford (Assembly line, porcelain spark plugs), Henry Leland (Standardized Parts/founder of Cadillac), and Francis Stanley (the steam car) have enhanced Americas history. I can't imagine the 1950's without those finned classics rolling into a diner with gleaming chrome. This is just my opinion and I don't know everything about corporate management or union contracts, but I think the streets would be a little darker, without the lights of an American car. Thanks for your time.:usa

 

[NCZ13]

i dont feel the should be bailed out.



its competition, and the foreign car companies are putting out superior products. Its plain and simple. GM and chryslers big mistakes were selling rebadged vehicles in the same country. Whats the point of competing with yourself like that?

 

[Lumadar]

IMO, it's just like the banks in concept. The point of bailing out the banks in simple terms is that the net effect is better for the country.



I think the same applies to this situation.



Ford has already turned down government help as they feel that they have the funds and the plan to pull it out on their own. GM I think could and should get the help, but Chrysler truly has nothing to offer.

 

[Setec Astronomy]

I am a GM guy forever, and I have no sympathy for them (or the other "big two"). In the last 20 years (since the first round of CAFE requirements expired) I have improved the insulation in my house, bought high-efficiency HVAC and appliances (when they needed replacing), replaced lighting that remains on for long periods with high-efficiency bulbs, and generally done things bearing in mind that energy is valuable and the cost of it will only go up. Why? Because it is the right thing and will save me money in the long run.



In the meantime, the GM cars I have purchased have gotten bigger and less fuel-efficient (buying comparable models), although they got much more powerful. Honda is not hurting so badly because they did the right thing and for the most part kept their cars reasonably sized and reasonably powered, and I was reading refused to put a V8 in their big pickup.



GM, Ford, Chrysler and Jeep found many years ago that by gussying up their '60's truck designs by putting in carpeting, leather, and stereos, they could sell an archaic design that was exempt from fuel economy, safety, and emissions requirements (their Gross Vehicle Weight excluded them from those regulations, regulations which exempted heavy trucks because they were special purpose, small percentage of vehicles, but grew to 50% of the market), built on existing tooling, for $50K and make huge profits. This is just a bit too much like the Wall St. firms with their mortgage derivatives, which they knew were the "wrong thing" but were too greedy and there was too much money to be made.



IMO a large part of today's problems stem from the fact that our economy doesn't produce tangible goods in the way we once did. Our trade balance is horrible, and many of the most profitable companies deal in intangible goods (software, entertainment, financial). It's pretty hard to bootleg a car. One of the ways we could get out of our debt problem and our energy problem is from a robust manufacturing infrastructure that could make products that people wanted to buy that could be exported, and products that could make us more energy independent. We have ignored manufacturing and tangible goods and lost it first to countries with lower labor rates, and now because we have largely lost our ability to design unique or best-in-class products. One only needs to look at the new presidential helicopter which is being made by a European consortium; it is reputedly the best helicopter in the world, but if I was a congressman approving that, I'd have to ask "why doesn't the US make the best helicopter in the world anymore?" How can the president of the country whose manufacturing might and ingeniuty won WWII and put a man on the moon fly in a foreign helicopter?



But back to your original question. If we are going to bail out the Wall St. firms when their greedy executives got hoist by their own petard, then we should definitely bail out the auto companies, who at least represent an infrastructure that can be leveraged in a time of crisis (like WWII or NOW). Let's hope that the end result is the end of this callous big-company managment greed, and a return to the normal greed...lol.

 

[gmblack3]

From the honda site they rated the Ridgeline at 15/20mpg. It weights 4500lbs and has a V6 that puts out 250hp and 247tq. Price looks to be $39,900 loaded.



My 2007 GMC denali 1500 pickup weighs 5200lbs has 403hp and 417tq from the 6.2liter V8. They rate it at 13/19mpg. The sticker on mine was $42,800 loaded.



For some there might be a hard choice here, for me it was easy.

 

[Setec Astronomy]

From the honda site they rated the Ridgeline at 15/20mpg. It weights 4500lbs and has a V6 that puts out 250hp and 247tq. Price looks to be $39,900 loaded.



My 2007 GMC denali 1500 pickup weighs 5200lbs has 403hp and 417tq from the 6.2liter V8. They rate it at 13/19mpg. The sticker on mine was $42,800 loaded.



For some there might be a hard choice here, for me it was easy.

I likely would have made your choice, too...if I was in the market for a large pickup. My argument on that topic is simply that my neighbor's wife's Yukon Denali (a vehicle based on your 1-ton pickup) is not required to put two kids in the back (and not much else). Don't tell me she needs it for the 4WD or ground clearance, because when we get only 2" on the ground they close the schools and the Yukon sits in the driveway (the kids take the bus, anyway). When I was a kid we did just fine with a station wagon (based on a car, not a truck), filling it up with the occasional load of bricks or top soil or kids going to the baseball game.



If GM was smart they would make the hybrid system standard in all the big trucks. Putting it in every one would probably halve the price (of the $10K premium) due to economy of scale, and let them boast that they have the most efficient, greenest, most responsible large truck family on the planet. But that would be too much like leadership.

 

[gmblack3]

I likely would have made your choice, too...if I was in the market for a large pickup. My argument on that topic is simply that my neighbor's wife's Yukon Denali (a vehicle based on your 1-ton pickup) is not required to put two kids in the back (and not much else). Don't tell me she needs it for the 4WD or ground clearance, because when we get only 2" on the ground they close the schools and the Yukon sits in the driveway (the kids take the bus, anyway). When I was a kid we did just fine with a station wagon (based on a car, not a truck), filling it up with the occasional load of bricks or top soil or kids going to the baseball game.



If GM was smart they would make the hybrid system standard in all the big trucks. Putting it in every one would probably halve the price (of the $10K premium) due to economy of scale, and let them boast that they have the most efficient, greenest, most responsible large truck family on the planet. But that would be too much like leadership.

Oh yes the old dragin' wagon. Parents has a 1974 pontiac grand safari station wagon. I'm guessing it got worse MPG then your neighbors YD gets.



Besides for how tall the SUVs of today are, they are about the same length as a XL denali. I think the wagon was 500lbs less.



Pontiac Grand Safari - Wikipedia, the free encyclopedia

Four kids in our family. We could lay down all the seats in the back and all 4 of us would sleep on the overnight drive to FL for vacation. :woot2:



I might of bought the hybrid version if they had that in my pickup when I bought it. But I still would be worries about long term reliability with the hybrid system.

 

[imported_Larry A]

You cant let a company that employs so many people go under. People must be kept working.

 

[David Fermani]

IMO a large part of today's problems stem from the fact that our economy doesn't produce tangible goods in the way we once did.



If we are going to bail out the Wall St. firms when their greedy executives got hoist by their own petard, then we should definitely bail out the auto companies, who at least represent an infrastructure that can be leveraged in a time of crisis

DETROIT -- General Motors Corp. Chairman and CEO Rick Wagoner's compensation package for last year is valued at $15.7 million.



That's 64 percent more than 2006 when the package was worth $9.57 million.



GM spokeswoman Julie Gibson says much of the increase is stock incentive awards that are based on future performance.



Wagoner earned $1.56 million in salary and no bonus last year, but he received $1.8 million in incentive awards and stock options valued at $11.7 million.



GM lost a record $38.7 billion in 2007, largely due to a charge for unused tax credits. Without the charges and other one-time items, the company lost $23 million.

 

[bwalker25]

If I employed 3 million people for example and I and my company continued to make bad investments and decisions, I should be bailed out too right? Just because someone employees alot of people doesn't make bailing them out the right thing to do. I dont want people to lose there jobs however, I just think the following should be on the CEO/Presidents wall and they should look at this before making ANY decisions "Prior Proper Planning Prevents Piss Poor Performance."



Bailout = denied! Big 3 Automakers = Failure

 

[askjeffro]

Well, normally I would have said no, they shouldn't be bailed out.



Its true that the American makers are burdened with high employee costs relative to foreign makers, and for that reason I would support a limited bailout of the government taking over those retired health plans to free up cash flow for the makers. If they can't survive then, then let them go down. (I'm a Ford guy btw, I bleed blue as they say)



I believe the American makers make quality cars, in fact I know it. The quality is not the reason they are in this difficult situation. They are large volume producers with high worker legacy costs in a downturn which not only zaps their current sales, but bleed the pensions that they have to make the difference up on.



In about 6 months expect to hear a lot more about pensions being the death blow to companies if the market doesn't pick up. (Which it likely won't)

 

[Setec Astronomy]

Oh yes the old dragin' wagon. Parents has a 1974 pontiac grand safari station wagon. I'm guessing it got worse MPG then your neighbors YD gets.



Besides for how tall the SUVs of today are, they are about the same length as a XL denali. I think the wagon was 500lbs less.

I suspect you are right on the MPG, but that's comparing a '74 to now. A current car-based large wagon, say, based on something like the Buick Lacrosse, would weigh about 3800 lbs, and get 16/24 MPG even with a 300HP V-8, which is tons more scratch than my mother's last Buick wagon circa 1978 which was pumping out about 160HP, although I think it was a few hundred pounds lighter. I'd list the exact numbers but I cleaned out my old factory manuals a few years ago. With the 200HP V-6, the Lacrosse gets 17/28.

 

[Setec Astronomy]

DETROIT -- General Motors Corp. Chairman and CEO Rick Wagoner's compensation package for last year is valued at $15.7 million.



That's 64 percent more than 2006 when the package was worth $9.57 million.



GM spokeswoman Julie Gibson says much of the increase is stock incentive awards that are based on future performance.



Wagoner earned $1.56 million in salary and no bonus last year, but he received $1.8 million in incentive awards and stock options valued at $11.7 million.



GM lost a record $38.7 billion in 2007, largely due to a charge for unused tax credits. Without the charges and other one-time items, the company lost $23 million.

See? That just proves that GM is entitled to a bailout just like Wall St.

 

[Deep Gloss Auto Salon]

Regardless if you feel that they should receive some of the money on a moral basis the facts are that if they go under the ripple effects will devastate this country

 

[Setec Astronomy]

You cant let a company that employs so many people go under. People must be kept working.

If I employed 3 million people...

You know, the car companies don't really employ a huge number of people anymore. Between their market share being way down, and them selling/spinning off so many of their captive divisions and outsourcing that work, they're really not that big. It's been a long time since GM was at the top of the Fortune 500. According to something I just looked up, GM last year had 284,000 employees (and I think that's a global number), less than Ford.



PS According to that same source, Wal-Mart has 2.1 million employees.

 

[gmblack3]

I suspect you are right on the MPG, but that's comparing a '74 to now. A current car-based large wagon, say, based on something like the Buick Lacrosse, would weigh about 3800 lbs, and get 16/24 MPG even with a 300HP V-8, which is tons more scratch than my mother's last Buick wagon circa 1978 which was pumping out about 160HP, although I think it was a few hundred pounds lighter. I'd list the exact numbers but I cleaned out my old factory manuals a few years ago. With the 200HP V-6, the Lacrosse gets 17/28.

It would be nice if they could make it "pimp" enough, I might even drive one.

 

[askjeffro]

PS According to that same source, Wal-Mart has 2.1 million employees.

I don't agree with opinion that just because they employ a lot of people they should be saved, however I wanted to point out that the jobs at GM are generally going to afford a much higher standard of living then a job at Walmart.



That is to say, there is something to be said for maintaining engineering competency and manufacturing expertise in one's country.

 

[Setec Astronomy]

It would be nice if they could make it "pimp" enough, I might even drive one.

Then check out the upcoming 2010 Cadillac CTS Wagon....due spring 2009...if GM lasts that long...

 

[MikeWinLDS]

Seeing all the past plant closures and outsourcing just to make a buck at the expense of American lives, no, I hope those greedy pigs go down.

 

[Setec Astronomy]

I don't agree with opinion that just because they employ a lot of people they should be saved, however I wanted to point out that the jobs at GM are generally going to afford a much higher standard of living then a job at Walmart.



That is to say, there is something to be said for maintaining engineering competency and manufacturing expertise in one's country.

You're preaching to the choir. I like my Home Depot/electric heater story. There's a factory making electric heaters, say in Ohio. Say it's a well known name, like GE or Honeywell. The people there make a decent middle-class living. So the management team decides it's better for the shareholders (and their bonus) if they close the plant and license their name to someone else to put on a heater. So they do that, and the workers get laid off, the plant gets torn down, and they build a Home Depot (or a Lowes, or a Walmart, or a Target, etc.). So now the middle-class factory worker who had a full time job with health benefits has to take a job at Home Depot part time making half the hourly wage he used to with no benefits...and what is his job? Stocking the shelves with badge-engineered electric heaters made in China.



That story is embellished a little, but is based upon my own experience buying an electric heater at Home Depot, and the sorry state of manufacturing here in NJ.



We used to have big long threads about this a few years ago.