Should the government bail-out include domestic automakers?

[Lenny]

A lot of great companies have gone bankrupt, but I've always admired GM.



There is the famous story here in NJ about when in WWII, many industrial plants were converted to manufacture war equipment, the GM Linden plant was switched over to building Navy aircraft (forcing construction of the now-defunct Linden Airport across the street to allow the planes to fly away). According to a local newspaper story years ago, the plane in which George H.W. Bush was shot down in was built in the Linden plant.



GM (as well as Ford and Chrysler) stayed in the military/defense/aerospace business after the war, including participation in the Apollo (moon landing) program. The peak of their aerospace involvement probably came in the 80's when they bought Hughes Electronics (yes, Howard Hughes' company), a major player at the time (since split up and sold to Raytheon and Boeing).



GM covered the waterfront in capability, with their own captive divisions making really every part of the car, Harrison Radiator making radiators, heater cores and A/C condensers, Delco making batteries, plugs, electronics, starters, Rochester making carbs and later fuel injectors. I can't remember the name of the div. that made the wiring. Transmissions, axles, you name it. Their New Departure-Hyatt division made wheel bearings (as well as plenty of other bearings). It's sad enough the mfg. capability and expertise that has been shed by the closure or sale of these divisions, but it will be a very sad day if this industrial icon falls.

New Departure-Hyatt division and Delco were combined into Delphi division, which was spun off. Delphi ended up in Chapter 11. Bloomberg News reported that Delphi may end up in Chapter 7 liquidation, if GM goes Chapter 11. Delphi may have ben spun off, but GM is still so dependent on them, that Delphi's been financially supported during it's bankruptcy. Been a rough time in Detroit.



The former New Departure-Hyatt division plant in Sandusky, OH was once an account of mine. Lots of good memories of some great sales calls there.

 

[Lenny]

LenA, you've made a huge mistake in ASSUMING, that I have not been in your shoes. And I can tell you that we are not alone. Men in our demographic seem to encounter these circumstances with some regularity.







And those 25 years of industry experience have lead to to be able to state that...





Sorry LenA, but my bet is it was just an apple falling from the tree...



I still say let Chrysler go if they can't make it on their own. We've bailed them out once and they are back again. What part about operating a business for profit didn't they understand?

How much do you know about the automobile manufacturing business model here in North America? Just curious.



Business has been rough for quite a while. Some suppliers have been getting "sustainability payments" from GM,Ford, Chrysler, and Toyota. I'm not sure about Honda or Nissan. "Sustainability payments" are company handouts to keep a key supplier out of Chapter 11 or worse. It contributed to Toyota's $336 million loss in North America last quarter. I wonder how bad this quarter is going to end up.

 

[Setec Astronomy]

The former New Departure-Hyatt division plant in Sandusky, OH was once an account of mine. Lots of good memories of some great sales calls there.

Well, the NDH plant here in Clark closed a long time ago, it's now a brownfield with a municipal golf course on top.

 

[Mr. Clean]

I didn't assume that you haven't been in my shoes. Go back and read what I said - "I may be assuming here, but I think you'd be a bit bitter as well." Who wouldn't get a little bitter, and perhaps a little cynical after over a year out of work?

...

Well, I don't want to belabor the point of grammer, but your sentence structure stated otherwise. And even for the part that you did assume, you were/are wrong. I wasn't bitter, I didn't whine. I have moved on.

How much do you know about the automobile manufacturing business model here in North America? Just curious.

...

I think it is pretty obvious that I am not in the industry, or I would have said so. I am a consumer and have worked in the business world for over three decades. So, I have a pretty firm grasp about the principles of business and the benefits of profitability and the detriments of the contrary. Do you have a point? Or, are do you wish to argue that if one is not in the industry, you can't possibly have a clue and therefore a valid opinion?

 

[Lenny]

I think it is pretty obvious that I am not in the industry, or I would have said so. I am a consumer and have worked in the business world for over three decades. So, I have a pretty firm grasp about the principles of business and the benefits of profitability and the detriments of the contrary. Do you have a point? Or, are do you wish to argue that if one is not in the industry, you can't possibly have a clue and therefore a valid opinion?

I was curious. I wouldn't say that people not in the industry don't have a clue, but I will go so far as to state that whether we're talking about GM, Ford, and Chrysler, or Toyota, Honda,and Nissan, the steps in bringing product to market, and a lot of the industry's practices, don't mirror other consumer products, or a lot of other business models. A lot of it mirrors industrial products in how long it takes to get to market, with the added complexities of changing consumer tastes coloring and complicating all of the business.



Trade credit is one area I found the auto industry deviates from a lot of the business world in a way that's somewhat unhealthy. Almost every area of the business world I've been exposed to is that payment terms are Net 30 days. The auto industry pays it's tier one suppliers net 45 days. Except for tooling. Tooling for the plants is net 45 days after job one. Anyone who supplies equipment for an assembly plant, or and other OEM plant, like an engine or a transmission plant, is often waiting for months after delivery, to get paid, for something that may have had raw materials delivered to the supplier three, four, even eight months before project completion. machine tool builder doesn't get paid until the car, that the equipment was designed to help build, starts production.



And that's not just a Detroit practice - the other auto makers do it as well.



It's a dysfunctional business model all the way around, in ways too numerous to list. It's a wonder anyone makes a buck in it anymore, and Toyota's $336 Million third quarter North American loss may show the cracks in their armor.

 

[Lenny]

Well, the NDH plant here in Clark closed a long time ago, it's now a brownfield with a municipal golf course on top.

Sandusky is gone now, too.

 

[Mr. Clean]

I was curious. I wouldn't say that people not in the industry don't have a clue, but I will go so far as to state that whether we're talking about GM, Ford, and Chrysler, or Toyota, Honda,and Nissan, the steps in bringing product to market, and a lot of the industry's practices, don't mirror other consumer products, or a lot of other business models. A lot of it mirrors industrial products in how long it takes to get to market, with the added complexities of changing consumer tastes coloring and complicating all of the business.



Trade credit is one area I found the auto industry deviates from a lot of the business world in a way that's somewhat unhealthy. Almost every area of the business world I've been exposed to is that payment terms are Net 30 days. The auto industry pays it's tier one suppliers net 45 days. Except for tooling. Tooling for the plants is net 45 days after job one. Anyone who supplies equipment for an assembly plant, or and other OEM plant, like an engine or a transmission plant, is often waiting for months after delivery, to get paid, for something that may have had raw materials delivered to the supplier three, four, even eight months before project completion. machine tool builder doesn't get paid until the car, that the equipment was designed to help build, starts production.



And that's not just a Detroit practice - the other auto makers do it as well.



It's a dysfunctional business model all the way around, in ways too numerous to list. It's a wonder anyone makes a buck in it anymore, and Toyota's $336 Million third quarter North American loss may show the cracks in their armor.

Spoken by an industry "insider"....And so why again should the American public want to cast their dollars to an industry that doesn't have a logical/healthy business model/plan? Note, I'm not singling out just the automakers by this statement. But, to argue that "our industry is special" "we don't conduct business the way others do" well tdb. If you don't and they do, they are profitable and you're not, you wouldn't have to pay me $16million (or whatever the numbers are) to figure out something is wrong and we need to fix it. Don't wait until the ship is up to the gunwales in water before it is decided that there are holes in the hull that need to be repaired. Instead, again basing this on the Chrysler situtation, we'll just hail down the public to help us bail.

 

[Spilchy]

I don't have the heart or stamina to read this whole thread. Sorry if what I say has been mentioned. In no way should we bail them out. Why on Earth would we give billions to the exact same people that screwed it up to begin with? That's crazy. The bozo that heads Chrysler received a $200 million golden parachute when he was FIRED from Home Depot. He was a schmuck to begin with.



Einstein said the definition of insanity is doing the same thing over and over again expecting a different result.

 

[dave40co]

I say they should file a BK and renegotiate the Union contracts. Hourly cost for an American automaker worker is $70 but for foreign automakers it is $40. The unions have priced them selfs out. I know how it works since I was a union worker for UAL when it went under. I also believe the upper management should take HUGE cuts.

 

[Lenny]

Spoken by an industry "insider"....And so why again should the American public want to cast their dollars to an industry that doesn't have a logical/healthy business model/plan? Note, I'm not singling out just the automakers by this statement. But, to argue that "our industry is special" "we don't conduct business the way others do" well tdb. If you don't and they do, they are profitable and you're not, you wouldn't have to pay me $16million (or whatever the numbers are) to figure out something is wrong and we need to fix it. Don't wait until the ship is up to the gunwales in water before it is decided that there are holes in the hull that need to be repaired. Instead, again basing this on the Chrysler situtation, we'll just hail down the public to help us bail.

Name another business group that not only gets a lot of government regulation, but gets as much conflicting regulations? NHTSA gets safety standards going, which tend to increase the weight of the car, making the gas mileage standards more difficult to meet. Then their's the whole problem of emissions.



And this problem doesn't just hit GM, Ford or Chrysler. Toyota's recent (by recent I mean since 2003) problem with engine oil sludge in everything from Corolla 4 cylinder's to Lexus V-8's. Problem has been traced to increasing engine operating temperatures to lower emissions. Let's not even forget Toyota's transmission problems, in the 2007 Camry and Avalon, Honda's oil filter related engine fires in the CR-V, etc. And for all of Chrysler's quality problems, assuming they survive, Nissan is basing their next generation full size pick-up on the new Dodge Ram platform and it will be built by Chrysler. Nissan isn't talking about what they plant for their very young Canton, Mississippi plant.



Then on top of all the regulation, there's conflicting consumer tastes - sporty ride verses boulevard smooth, how aggressive the transmissions shift, basic transportation (no matter what size segment) verses loaded luxury. Plus changing market conditions, liek the run up in gas pries taking even Toyota and Nissan by surprise, hit the market with high gas prices just as their five year product plan of getting into the light truck market was coming to fruition.



Which consumer product business gets nailed like this - Federal government interference, Federal court interference (give my wife her job), and then market factors changing faster than you can bring a new product to market?



Then what other industry is reported to affect 1 in 10 jobs (and that's supposed to include the dealers and all the businesses that depend on them)?

 

[Lenny]

I say they should file a BK and renegotiate the Union contracts. Hourly cost for an American automaker worker is $70 but for foreign automakers it is $40. The unions have priced them selfs out. I know how it works since I was a union worker for UAL when it went under. I also believe the upper management should take HUGE cuts.

Toyota, Honda & Nissan hourly costs are more like $48 to $49 an hour, and should the three Detroit automakers make it to 2010, their costs drop to very close to that, around $51 an, due to major changes in the union contract just negotiated this past September and October, 2007. One report even claimed that GM would actually have a $200 a car advantage over Toyota in 2010.



Mercedes and BMW are at the same level as Toyota and company. Only Hyundai is at $40 an hour, and they made no bones about it when they announced their USA assembly operations, that those wages were to undercut Toyota's selling prices.

 

[2002 Z06]

Someone on another board stated, "Where's my bail money?"...I couldn't agree more.

 

[Bunky]

Unless you have a job with the US government, you will likely be affected by the demise of GM or Ford. If you are a detailer, you have not seen anything near the bottom yet. The reprecussions (deserved or not) have yet to hit. There will be no recovery in 2009. Until at all the kung pao has hit the fan, it is not likely going up.

 

[Setec Astronomy]

Why on Earth would we give billions to the exact same people that screwed it up to begin with? The bozo that heads Chrysler received a $200 million golden parachute when he was FIRED from Home Depot. He was a schmuck to begin with.

One of the posters in this thread has been out of work for 14 months, probably thru no fault of his own, but a guy who got FIRED gets $200 million. Your assessment of "why give it to the people who screwed it up" fits pretty well with letting Paulson and Bernanke run the bailout when they were the ones in charge when it blew up.

 

[soccerjunky]

Do you work for General Motors?



I will admit that the new Malibu and CTS have made great strides at becoming very competitive in their classes. Those are but two examples in GM passenger cars that stand out from a sea of mediocrity.



But the Pontiac G6... they are crap.





I can't say I know anyone who "admires" the Chevrolet brand. WHO around the world admires them? :think: (Other than within the Corvette niche? Corvettes are special in their own way and don't deserve to be lumped in with the rest of Chevy most of the time.)

 

[Bunky]

This is crazy. Chrysler (Jeep, Chrysler, Dodge) leads the group as a pack?

 

[Setec Astronomy]

This is crazy. Chrysler (Jeep, Chrysler, Dodge) leads the group as a pack?

No, they are at the bottom. The top is the best (least defects). Interestingly, all GM divs are above average (well the traditional car ones, GMC and Saturn are worse), and the Ford divs are better than GM.

 

[Lenny]

No, they are at the bottom. The top is the best (least defects). Interestingly, all GM divs are above average (well the traditional car ones, GMC and Saturn are worse), and the Ford divs are better than GM.

And Ford is right behind Toyota, and Honda (Mercury is slightly ahead of Honda) and all Ford division is ahead of Acura.



Most of GM is ahead of Acura.

 

[Bunky]

No, they are at the bottom. The top is the best (least defects). Interestingly, all GM divs are above average (well the traditional car ones, GMC and Saturn are worse), and the Ford divs are better than GM.

It was crazy. Whew....down they go....

 

[Lenny]

One of the posters in this thread has been out of work for 14 months, probably thru no fault of his own, but a guy who got FIRED gets $200 million. Your assessment of "why give it to the people who screwed it up" fits pretty well with letting Paulson and Bernanke run the bailout when they were the ones in charge when it blew up.

Yep. Out for 14 months, and I didn't get fired. My company got bought out, and the new owner brought in his own management team. openings were skimpy to begin with, when I got laid off in September, 2007, but after the price of gas started to really spike upward, earlier this year, the openings really dried up. And since then, I'm hearing from the few people I have interviewed with, the employers are really getting picky on filling the openings. I've seen the same company run the same job posting in Careerbuilder and Monster three or four times, or more. One company I know ran the same help wanted ad eight times since last September.



Bob Nardelli, who ran Home Depot (almost into the ground), would not have been my choice to run Chrysler, but somehow he recruited Jim Press away from Toyota.