Should the government bail-out include domestic automakers?

Should the government bail-out include domestic automakers?

  • Yes

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  • No

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JuneBug said:
Damn - is there anything you could do to that basement to get it to pass, I mean is there anything that can be done on the cheap? Most houses down here don't have basements unless it's one with a side open, like on a hill. Maybe one of those companies that do this work could give you a break, maybe they're hurting for biz too. I don't know, just thinking out loud. I really feel for you, I hope that you get that house sold and move to a better place. NC was full of opportunity - but the word got out and we're experiencing some surplus of workers now. My company is so diversified that all we have is a hiring freeze and no raises this year, but I'm not complaining. I have 25+ years, but no degree -I had two years of general college and I quit to start working, and worked my way slowly up to a sales job. But, if i can make it 10 more, I'm out of here.



Take care Len. I wish you and your family the best.



JB
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I'm looking into it. Sometime in the first quarter of the year, there are a couple Home & Builder shows, and I'm going to shop them for price like my customers (Big Three included) have done to me in the past. It's freaking highway robbery. I want a cheap solution that I can cover up with a simple, DIY basement finishing system. One neighbor just had cracks that showed dampness on either side of the cracks, so he got some carpeting and padding, and glued it down to cover up. Somehow, the city building inspector suspected, and on a pre-sale inspection, the S.O.B. from the city pried up one edge and found the cracks - sales was out on hold three months pending resolution.



The dumbest thing on this subdivision is that the city signed off on the development of this subdivision knowing, but not disclosing, that the site was ten to fifteen feet closer to the water table, when construction started, than the property was twenty-five years years ago. Seems the prior owner strip mined the top soil and sold it to the state - to landscape one of the local freeways. Bastards. After checking out some of he new home construction in Dallas three years ago, I've come to the conclusion that some home construction companies around here do some really stupid sh*t. My phase of the sub is the lowest point, and of thirty-three houses, twenty-eight have some degree of water seepage or damp concrete. All the "black mold" talk the past five years adds fuel to the fire. Average basement waterproofing job rounds $3500 to $6000, plus whatever you spend to finish the basement and cover it up. One neighbor epoxied the floor and the walls to cover up the repairs. The contractors that do that do this won't even bid until the dampness is resolved, so that idea to camouflage the problem is kind of out the window.



NC is joining a lot of company in getting surplus workers. Seems that the slow economy we've had in Michigan for the last eight years has spread to the rest of country. We were in Las Vegas in September, turning an interview my wife had with DOE into a mini vacation (she didn't get the job), and business in Vegas is off a whooping 15%. My brother's consulting business in Dallas is losing clients as lines of credit get frozen.



I wish you and your family the best as well. Have a great Thanksgiving.
 
Lumadar said:
Agreed. I hope you come through ok Len.



All I want and hope for is what is best for the nation as a whole, and all the honest hard workers out there.
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Thanks. Like you, I want what's best for the country. Seems like the country needs it.



Take care and have a great holiday.



Remember - any day above ground is a good day!!:D
 
i'm not a fan of going to big daddy government for money... but somewhere u have to draw the line. like Len A, i'm from metro Detroit, and i've been able to see some of these things slowly building over the past couple years, to the point now michigan has the highest unemployment rate in the nation. that makes for tough times. the problem isn't just that the state is losing auto jobs, it's that all industries are affected by the big three here, and very very few new jobs are coming here. truly some tough times in metro detroit / michigan / spreading around the midwest and through-out america.

just seems real shady to see the backlash towards the auto makers when banks keep getting more and more. i understand we want people to have secure money/savings, but what does that do if they don't have jobs?



-Marc from Southfield MI
 
MuttGrunt said:
i'm from metro Detroit, and i've been able to see some of these things slowly building over the past couple years, to the point now michigan has the highest unemployment rate in the nation. that makes for tough times.
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Building slowly...I know I've probably said some of these same things already in this thread, but I guess I've seen this slowly building since the 80's. Here in NJ, we started to see the mass exodus of manufacturing in the 80's. That was the era of leveraged buyouts and when the guy at Coke upended the CEO pay scale. Manufacturing here moved south and west, or just closed up. Mfg. plants (and farms) were converted to malls and houses.



It seemed to accelerate in the 90's, the "service economy" and the internet bubble. In the late 90's, the real estate boom, feeding swelling housing prices. I actually predicted the mess we're in now when the Enron/Worldcom fake money thing was exposed...I thought that the confluence of that fraud with the internet bubble bursting and the stock market tanking would force people out of their overpaid jobs on Wall St. and into foreclosure, but it didn't happen.



It seems a lot of the companies that moved from this area in the 80's have gone offshore in the 00's, along with companies that had stayed. To my eye, we slowly built from a state/country/economy that made things and grew things to one that simply buys and services things. And to my mind, that just can't work. If you don't make/grow anything, you don't have anything that other countries want to buy or trade for and the numbers just don't add up.



Maybe because I've never worked in an industry that didn't make something or depend on heavy equipment, that's why I can't understand how CitiCorp can have 5 times the number of employees as GM and can't imagine what all those CitiCorp employees do...all I know is that here in the Wall St. commuter corridor those guys are the ones living in the McMansions.



PS Yes, I know we do still manufacture in this country. I'm hearing the chorus of "we still have corporate giants like GM and Intel and Dell"; well, look at some of the parts in your GM car for the "Made in China" labels, and open up your Dell computer with the motherboard from Taiwan and read the markings on the Intel chips and see where they were made. I'm not anti-foreign, I'm just pro-American manufacturing, and I remember when we were the ones who called the shots when we had all the manufacturing might and technical know-how.



We're all communicating here by virtue of the transistor, which was created not far from here at what used to be known as AT&T Bell Labs, at one time one of the foremost research centers in the world, also where the Big Bang theory was confirmed (actually at an outlying facility in Holmdel). I've seen the signs change to Lucent, and now to Alcatel (a French company), as employment has shrunk. Holmdel is long closed ( Developer to raze Bell Labs Holmdel facility, birthplace of the cellphone - Engadget ). Don't look to those places for any new transistors.
 
Lumadar said:
No, they are asking for a loan. They are not selling or giving a stake in the company to the government. :bigups



America is known around the world as the country that helps out to those in need, but when our own need help it somehow is different. Interesting. :nervous:



To me, it would seem "un-American" to not help the automakers out and simultaneously make a decision that would boost the economy as a whole.
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That's for sure. I guess the goverment and American public seem to have forgotten who prodcued the tanks, armored vehicles, plane engines, and other goods during WWII. If something like that were to happen again do they honestly think they could depend on honda and toyota here in the US?:rolleyes:
 
Lumadar said:
NTo me, it would seem "un-American" to not help the automakers out and simultaneously make a decision that would boost the economy as a whole.
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"un-American"? That's a rather scary term to me. I can't help but think of the last time that was used as a phrase. :nervous:
 
MuttGrunt said:
i'm not a fan of going to big daddy government for money... but somewhere u have to draw the line. like Len A, i'm from metro Detroit, and i've been able to see some of these things slowly building over the past couple years, to the point now michigan has the highest unemployment rate in the nation. that makes for tough times. the problem isn't just that the state is losing auto jobs, it's that all industries are affected by the big three here, and very very few new jobs are coming here. truly some tough times in metro detroit / michigan / spreading around the midwest and through-out america.

just seems real shady to see the backlash towards the auto makers when banks keep getting more and more. i understand we want people to have secure money/savings, but what does that do if they don't have jobs?



-Marc from Southfield MI
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My wife's paralegal job here in Detroit is now on the line, sooner rather than later. Her practice group does work for one of more of the Big Three, and that makes them a vendor like any parts maker. All the contracts are being renegotiated, and "do more with less" is the operative word. So here I am unemployeed for fifteen months, and now...



Scary.



I agree that it's very unsettling to see the banks get money without so much as a hearing, and the auto makers get raked over the coals.
 
Setec Astronomy said:
Building slowly...I know I've probably said some of these same things already in this thread, but I guess I've seen this slowly building since the 80's. Here in NJ, we started to see the mass exodus of manufacturing in the 80's. That was the era of leveraged buyouts and when the guy at Coke upended the CEO pay scale. Manufacturing here moved south and west, or just closed up. Mfg. plants (and farms) were converted to malls and houses.



It seemed to accelerate in the 90's, the "service economy" and the internet bubble. In the late 90's, the real estate boom, feeding swelling housing prices. I actually predicted the mess we're in now when the Enron/Worldcom fake money thing was exposed...I thought that the confluence of that fraud with the internet bubble bursting and the stock market tanking would force people out of their overpaid jobs on Wall St. and into foreclosure, but it didn't happen.



It seems a lot of the companies that moved from this area in the 80's have gone offshore in the 00's, along with companies that had stayed. To my eye, we slowly built from a state/country/economy that made things and grew things to one that simply buys and services things. And to my mind, that just can't work. If you don't make/grow anything, you don't have anything that other countries want to buy or trade for and the numbers just don't add up.



Maybe because I've never worked in an industry that didn't make something or depend on heavy equipment, that's why I can't understand how CitiCorp can have 5 times the number of employees as GM and can't imagine what all those CitiCorp employees do...all I know is that here in the Wall St. commuter corridor those guys are the ones living in the McMansions.



PS Yes, I know we do still manufacture in this country. I'm hearing the chorus of "we still have corporate giants like GM and Intel and Dell"; well, look at some of the parts in your GM car for the "Made in China" labels, and open up your Dell computer with the motherboard from Taiwan and read the markings on the Intel chips and see where they were made. I'm not anti-foreign, I'm just pro-American manufacturing, and I remember when we were the ones who called the shots when we had all the manufacturing might and technical know-how.



We're all communicating here by virtue of the transistor, which was created not far from here at what used to be known as AT&T Bell Labs, at one time one of the foremost research centers in the world, also where the Big Bang theory was confirmed (actually at an outlying facility in Holmdel). I've seen the signs change to Lucent, and now to Alcatel (a French company), as employment has shrunk. Holmdel is long closed ( Developer to raze Bell Labs Holmdel facility, birthplace of the cellphone - Engadget ). Don't look to those places for any new transistors.
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People forget that real wealth is created by manufacturing, not pushing numbers around. What's happened to all American is a shame. The service economy is not the path to economic growth. The service economy can't survive on it's own with manufacturing.



RedlineIRL said:
That's for sure. I guess the goverment and American public seem to have forgotten who prodcued the tanks, armored vehicles, plane engines, and other goods during WWII. If something like that were to happen again do they honestly think they could depend on honda and toyota here in the US?:rolleyes:
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The XM1 Abrams tank prototype was actually developed by Chrysler Defense, which was sold to General Dynamics, who went on to put the M1A1 Abrams into production. The HMMWV or Humvee was developed by AM General - which used to be a part of AMC-Jeep. GM, Ford, and Chrysler have produced the vast majority of police cars in this country. Secret Service relies on the Big Three for the vehicles for the Presidential Protection Detail.



Very few examples of Detroit's competition doing much outside of cherry picking the retail business. Someone needs to remind Congress about that.
 
Do i think that they should bail out the auto industry?



Yes, just because of the shear volume of workers and the fallout of them not contributing to the economy. Also if they give 600 billion to over a trillion to the financial sector, the auto industry should also get some help. That being said this should be the last time and may the cards fall where they may. Capitalist economy?





A fairly long read about the workings at GM in 1997 one of the last years they were on top of the Fortune 500. Ten years later can you spot the mistakes? This was just before Wagoner took over from Smith and you know the rest.



GM: TIME TO GET IN GEAR TURNING AROUND THE WORLD'S LARGEST COMPANY HAS BECOME A DECADE-LONG PROJECT. WILL GENERAL MOTORS EVER BE GREAT AGAIN? - April 28, 1997



Also after checking out the past 10 years of the Fortune 500, AIG and JP Morgan top 15 and nice profits.
 
First , what really happens in bankruptcy? Specifically, Chapter 11 bankruptcy which would be the likely course versus alternatives which would mean dissolution of the company



Second, what is the chance of success if we provide loans to these companies?



I suggest that Chapter 11 would save GM although it would emerge from court protection significantly different. It would undoubtedly be an automobile only company with smaller market share, lower employee numbers with a sharply lower cost per employee based on court restructuring existing labor contracts. Estimates range from 25% fewer employees and 30% lower cost per employee along with 20-30% less market share. Those numbers are not pleasant to hear if you are an employee or labor union leader, but that is a scenario. How much impact on feeder businesses is a guess, but market share and lower cost needs dictates tough times ahead and the combination of events dictates really serious issues for Michigan.



One thing for sure, GM cars would continue to be made in fewer plants and probably with fewer models. Some models/divisions would probably be closed or sold off if marketable, in order to generate cash for the process. Corvette is an example and I am unsure if there are others.



Ford will survive and does not need bankruptcy protection to continue forth and could emerge from this downturn as the larger of the two companies based on its European success. Mullaly has structured them appropriately for survival and they have already downsized significantly. Any labor deals generated via court mandate would ripple through to Ford making them stronger at the far end of a GM bankruptcy



Chrysler is almost a non-factor as the investors who decided to purchase it, made a bad deal and should have their hands slapped with large losses. Chrysler needs to be shopped to a foreign company that wants its limited product lines and dealer network in the USA. They have virtually no international footprint and the synergism for a foreign investor becomes obvious. Instant foot print in the US and price is the only remaining obstacle. I suspect that left to their own devices, Cerebrus will peddle Chrysler and lick its wounds without any government aid. Aid for Chrysler would best be offered as tax incentives to a purchaser to sweeten a sales deal. No loans required and future Chrysler sales revenues pay the Chrysler bill.



Now, regarding any loans - we have yet to see a plan for any of these companies. We know Ford can survive and they are the most likely target of a loan package if its not too expensive. I would not be surprised to see Ford refuse a loan with too many encumbrances and therein lies the problem for loaning money to GM, who would likely take any deal. Bundled together, a loan package will not fly requiring separate packages for GM and Ford. Politically that is a nightmare for obvious reasons.



Assuming that GM can produce a believable plan for turnaround - which is a must in order to be able to repay a loan -what is the coast to them. Congress is full of lawyers and I suspect that any government loan is not going to be a sweet deal for GM. Bankruptcy may look better to GM in a few days.



Chrysler should be sent back with instructions to find a buyer, who can get some sweet tax deals for the next 10-20 years. Any plan that Chrysler puts forward to survive alone has to be very suspect and a merger with GM or Ford is a poor idea unless its an asset only deal leaving a lot of dead paper behind. Very unlikely.



I will be watching news reports to see how these companies approach a request for loans. I hope that we will see three separate packages offered based on the needs of each of these companies, ability to repay, plus saving as many jobs as possible.
 
It is my understanding that GM's huge financial burden (its "legacy" obligations) based upon retiree payments, including health insurance, will be turned over to the union in 2010. Removing that horse collar from the company should be enough alone to make it profitable again.



The problem is, GM didn't borrow its credit line when credit was freely available, like Ford did. GM's problem is a lack of cash to make it to 2010, now that the credit lines are no longer available.



Mike
 
MSOsr said:
It is my understanding that GM's huge financial burden (its "legacy" obligations) based upon retiree payments, including health insurance, will be turned over to the union in 2010. Removing that horse collar from the company should be enough alone to make it profitable again.



The problem is, GM didn't borrow its credit line when credit was freely available, like Ford did. GM's problem is a lack of cash to make it to 2010, now that the credit lines are no longer available.



Mike
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Not exactly. Here is a description of what it is and how it works. Notice it is underfunded.



Should Taxpayers Bail Out GM's Retirees? - TIME
 
As if my situation of being out of work fifteen months hasn't been bad enough, now my wife lost her job with Michigan's largest law firm. Her practice group's biggest client, Chrysler, has been demanding give-backs on the flat fee contract, like any other vendor, and workload has diminished, and they have to have a head count reduction. The other practice groups in the firm have a hiring freeze.



Chances for finding a new paralegal position is very slim, because those openings have evaporated just like outside sales jobs for me have gone down.



What we're going to do now, we're just too stressed out to think clearly. We would love to bail on Detroit, but like I posted earlier, a page or two back, dumping this house will be next to impossible.
 
Len_A said:
As if my situation of being out of work fifteen months hasn't been bad enough, now my wife lost her job with Michigan's largest law firm. Her practice group's biggest client, Chrysler, has been demanding give-backs on the flat fee contract, like any other vendor, and workload has diminished, and they have to have a head count reduction. The other practice groups in the firm have a hiring freeze.



Chances for finding a new paralegal position is very slim, because those openings have evaporated just like outside sales jobs for me have gone down.



What we're going to do now, we're just too stressed out to think clearly. We would love to bail on Detroit, but like I posted earlier, a page or two back, dumping this house will be next to impossible.
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Len, hope things work out in the long run buddy...
 
three cheers for AIG receiving even more money!! YYYYAAAYYYY!!!



at least it wasn't the auto industry throwing $400k party a week after they got bailed out...
 
DETROIT – Ford Motor Co. will tell Congress that it plans to return to a pretax profit or break even in 2011 when the Detroit Three automakers' CEOs appear before lawmakers this week to request $25 billion in government loans.



Ford CEO Alan Mulally said he'll work for $1 per year if the company has to take any government loan money.



After grilling the CEOs at hearings last month, Congressional leaders demanded plans from the automakers by Tuesday to show that they will survive if they get federal funds. The plan Ford submitted said the company will cancel all management employees' 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.



The company also said it will sell its five corporate aircraft. The CEOs of all three Detroit automakers were harshly criticized during last month's hearings for flying to Washington in separate corporate jets.



Mulally said in an interview with The Associated Press on Tuesday that Ford will give much more detail to Congress than it did previously, and the company will emphasize the steps it has taken to cut its labor costs with the United Auto Workers union.



Mulally said Ford will seek $9 billion as its share of the loan money but may not need to use it. The Dearborn-based company has said it has enough cash to make it through next year without assistance.



As part of the plan submitted to Congress, Ford said it does not anticipate a liquidity crisis in 2009, "barring a bankruptcy by one of its domestic competitors or a more severe economic downturn that would further cripple automotive sales." The loan would provide a safeguard against worsening conditions, the company said.



The company said it will accelerate plans to roll out electric vehicles as part of its plan.



"We are going to do that across our product line," Mulally said in the interview.



The first plug-in vehicle will be a Transit Connect small van for commercial use in 2010 and a car the size of the Ford Focus compact the following year.



Ford also said it will accelerate plans for hybrid gas-electric vehicles.



Mulally said he will encourage automakers and parts suppliers to join forces to develop new battery technologies in the U.S. for future electric cars so the country doesn't rely on foreign batteries.



"We don't want to trade oil for batteries," he said.



Ford's plan calls for an investment of up to $14 billion to improve fuel efficiency over the next seven years. The company said would improve the overall efficiency of its fleet by an average of 14 percent in 2009.



The CEOs of the Detroit Three are scheduled to appear before congressional committees Thursday and Friday. Chrysler LLC and General Motors Corp. have said they are perilously low on cash and need the government loans to survive the recession and the worst auto sales environment in 25 years.



GM and Chrysler were to submit their plans to Congress later in the day.



The CEOs were skewered on their first visit in November, when lawmakers criticized them for high labor costs and products that aren't competitive with foreign automakers.



"I think we learned a lot from that experience," Mulally said in the interview, adding that the CEOs were there last time to discuss the progress of the industry, not a plan for viability.



Ford's new plan is 32 pages long, plus an appendix, and it includes much detail that was lacking during the first visit.



The company says its plan to achieve profitability or break even by 2011 is based on industrywide sales estimates of 12.5 million units in 2009, 14.5 million in 2010 and 15.5 million in 2011. The seasonally adjusted annual sales rate dropped to 10.6 million vehicles in October.



Ford shares rose 25 cents, or 9.8 percent, to $2.80 in midday trading.



Ford's plan said it will reduce its number of dealers by 606 to 3,790 by the end of the year. It will also trim the number of major sourcing suppliers it uses to 750 from 1,600.



Ford reiterated its intention to offload Volvo, by either selling the Swedish automaker or spinning it off into a separate company. Since 2007, Ford has sold its Jaguar, Aston Martin and Land Rover lines. It also sold most of its stake in Madza.
 
Len_A said:
As if my situation of being out of work fifteen months hasn't been bad enough, now my wife lost her job with Michigan's largest law firm. Her practice group's biggest client, Chrysler, has been demanding give-backs on the flat fee contract, like any other vendor, and workload has diminished, and they have to have a head count reduction. The other practice groups in the firm have a hiring freeze.



Chances for finding a new paralegal position is very slim, because those openings have evaporated just like outside sales jobs for me have gone down.



What we're going to do now, we're just too stressed out to think clearly. We would love to bail on Detroit, but like I posted earlier, a page or two back, dumping this house will be next to impossible.
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Sorry to hear the Mrs lost her job....
 
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