American made cars and the bailout

[dougp26364]

Is there anyone else as ticked off as I am about the arogance of the American auto industry? Nothing like flying to Washington in private jets to ask for a cool $25,000,000,000.00 to keep them afloat because the foreign auto makers have been kicking their hind ends since the '70's. You'd have THOUGHT that when things started to go south some 30 years ago, they MIGHT have seen the writing on the wall and started to change their ways.

I've really tried to support the American auto manufactors but, I'm getting pretty near the end and, their plea to give them money or lose all those jobs (nothing like fear tactics) really has rubbed me the wrong way.

Besides, I can't say I've been all that impressed over the last decade in the quality of cars I've been purchasing.

Examples:

We had a Ford Tarrus that required the brake rotors be turned every 15,000 miles. At 35,000 miles I had to replace the transmission. There were several other small issues including having to replace two electric window motors.

The Buick Century we had also had issues with the electric window motors. It also had one of those thermostat controlled heating/cooling systems that went out. We traded that car around 50,000 miles.

The latest is the Saturn Rely we own. It has 26,000 miles and has required several maintenance issues. The overhead rack system wasn't installed correctly and had a horrible rattle. One of the electric sliding doors has a mind of it's own. The dealership has never found anything wrong with it but, there's something wrong with it (intermitant issue they can't seem to find). There were two front bolts in the steering that had to be replaced. I just had to have the rotors turned on all four wheels and, because of that little bolt problem, I just replaced the tires at 26,000 miles.

There's more I could write about the other cars we've owned in the last two decades but why bother. They want bailout money. I want a car that will continue to run without me having to put a couple thousand extra into it before it hits 30,000 miles. When I'm finished with these cars......and I'm getting close to being finished.......I don't see that I have any choice but to go with a foriegn made vehicle. It's getting to expensive to support GM, Ford and Chrysler.

 

[Icarus]

They want a loan. They aren't asking for a handout. (Though I'm sure that some people will argue that a loan is a handout.)

They, like many other companies and individuals, have been shut out of the financial markets.

Like American Express, GMAC is reorganizing as a bank holding company. GM is not the majority owner in GMAC, although they do own 49% of GMAC.

The corporate jet thing is ridiculous. They should have chartered a commercial jet like the president elect did.

-David

 

[Jbart74]

They want a loan. They aren't asking for a handout. (Though I'm sure that some people will argue that a loan is a handout.)

They, like many other companies and individuals, have been shut out of the financial markets.

-David

I'd like a 'loan' too. Where do I sign up?

 

[Icarus]

I'd like a 'loan' too. Where do I sign up?

You don't know where to get a loan? I assume all your limbs are currently intact?

I'll send somebody over from Brooklyn and they can help you out.

Frank? Where are you? I have a customer for you.

-David

 

[Jbart74]

You don't know where to get a loan? I assume all your limbs are currently intact?

I'll send somebody over from Brooklyn and they can help you out.

Frank? Where are you? I have a customer for you.

-David

Talked to Frank... He said the his credit lines are all dried up. Apparently GM and Ford borrowed the rest of his money already. He's a little bent out of shape over the whole deal. Needless to say, he's pulling for the bailout. I'd go on, but I feel it might be perceived as political. Frank hates politics.

 

[e.bram]

As long as the unskilled auto workers get $ 75.00 per hour, the companies can not survive.

 

[Lawlar]

A Mess

I hate GM cars. I've never bought one. Their management has been so out of touch for decades. [I'll bet Rick Wagner never test-drove a Prius.] So I almost would be happy to see GM file bk (and I'm a bk lawyer - retired.)

But we have a big problem. All of that GM debt is probably held by our insolvent banks, weak insurance companies, money market funds, thousands of pension plans, and, not the least, lots of retired Americans.

Then we have the problem of what are we going to do with the thousands of people that work for GM and the companies that supply GM? Just tell them to get jobs at McDonalds and Walmart? [And please don't tell me how overpaid they are. Their salaries allow working people to pay their mortgages, send their children to school, and pay 30-40% for taxes that support our schools and troops. Those who complain about labor wages are often the same folks who say it is fine for CEOs to earn millions in bonuses.]

And not that I want to scare anyone (frankly, I'm hiding under my bed because I'm so scared), how many of our financial institutions have issued credit default swaps (gurantees) on the GM debt?

Then there is the issue of whether we really want all of our stuff built overseas and then shipped on boats to us and paid for with money we borrow from overseas. [We can't go to war with China - because if we bomb China we will be bombing our own factories.]

So if GM goes down the drain, how much of our economy is going to go with it?

 

[Jbart74]

Lawler,

Where does it stop? I am not intending to be confrontational, just asking the question. If Exxon comes to Congress next year and says it can't afford to continue refining oil into gasoline unless it gets 25 billion dollars, should our government, aka, we, bail them out? (or offer them an interest free loan, whatever) Yes, if Exxon goes under many thousands will lose their jobs.

If Home Depot comes to Congress next year and says it can't afford to continue selling lumber and other home improvement supplies at cut rates, should we bail them out? Thousands of jobs will be lost if we don't.

If Marriott or Hyatt comes to Congress next year, and says that since everyone from GM, Ford, Home Depot and hundreds of other employers have lost their jobs, they can no longer afford to continue operating without help from the government, should we bail them out too? Thousands will lose their jobs!

Do we really want to head down that road?

Just thinking out loud, these are not points of view, simply viewing points.

 

[Kal]

The stock market was down 400 points today on the HINT that a deal could not be worked out.

Now think ahead to the moment when any of the 3 automakers draw a line in the sand and say they are filing for bankruptcy and will lay off 1 million workers? Aside from the fact that what they say may or may not have merit, WHAT WILL THE STOCK MARKET DO THEN??

The Dow is at 7500 today. Is it possible that we would see a 2,000 point drop? Investors (i.e. hedge funds and mutual fund managers) pull the trigger first and ask questions later, so fact has no bearing on the matter.

They have a gun to taxpayers head.

For me, I would show them the money but give them the Columbo approach where I just need one more bit of info to close the deal. That little bit of info just happens to be WHAT ARE YOU GOING TO DO WITH THE $$$$$ AND HOW WILL THIS GUARANTEE YOU WON'T BE BACK, EVER!

 

[Clemson Fan]

The corporate jet thing is ridiculous. They should have chartered a commercial jet like the president elect did.

-David

That is just an awesome quote!

I'm not sure how many people got it.

 

[Icarus]

I'm not sure how many people got it.

Usually I'm just here to amuse myself.

-David

 

[Brett]

getting back to the original point,
I also gave up on American cars after many problems at less than 50,000 miles. For the last 15 years I've had Honda's with no serious problems. I wish it wasn't like that and maybe the new cars are better but I don't want to take the chance.

 

[dougp26364]

They want a loan. They aren't asking for a handout. (Though I'm sure that some people will argue that a loan is a handout.)

They, like many other companies and individuals, have been shut out of the financial markets.

Like American Express, GMAC is reorganizing as a bank holding company. GM is not the majority owner in GMAC, although they do own 49% of GMAC.

The corporate jet thing is ridiculous. They should have chartered a commercial jet like the president elect did.

-David

Loan or hand out, it still has had the same affect on the economy and, I would suspect their business, a result of unintended consequences. Who wants to buy a car from a company that might not be in business in a few months if someone (taxpayers) doesn't just hand over the money.

What's even funnier IMO is, when asked what their plans were if given this money, not one of them seemed prepared to answer. Yep, these guys deserve to be running these huge companies.

 

[Kal]

That is just an awesome quote!

I'm not sure how many people got it.

Or....just like us who travel for our timeshare visit!

 

[dougp26364]

That is just an awesome quote!

I'm not sure how many people got it.

I caught it. For that matter, have they made such bad cars that they really have to worry about someone attempting to take down a comercial jet liner as revenge?

IMO, if they really wanted to make their point, they should have flown coach class on a discount carrier, paid for their luggage, paid for their window seat, paid for their booze and then stand up and tell everyone how broke they are. For heavens sakes they are not as important as the president elect, they don't have secrete service agents and media types to accomadate and I'm relatively certain they might be pretty low on the terrorist list of potential targets.

 

[dougp26364]

getting back to the original point,
I also gave up on American cars after many problems at less than 50,000 miles. For the last 15 years I've had Honda's with no serious problems. I wish it wasn't like that and maybe the new cars are better but I don't want to take the chance.

I've continued to say maybe the new cars are better for the last several years. In my case at least, that answer has been no. Now the Amercian car builders want me to buy another car from them but, they're telling us that without bailout money, they might go out of business.

This seems like a rather poor business plan to me. Build inferior products, run out of money and then ask people to buy your cars while asking for a 25, billion dollar hand out to stay afloat. No wonder they're are broke. I can't WAIT to see what plan they propose to pay back this "loan."

 

[Autoeng]

Something to chew on here is that IF American car manufacturers went belly up there would be virtually no "Made In America" products anymore. Why? Companies that manufacture parts for US auto makers also make a few other products. Without a large part of their business, the US auto make part, there usually isn't enough to survive on to continue making product for their other customers.

So that you understand this here is the situation that the company that I work for is in. Just about 1/3rd of our product is sold to US car manufactures. We manufacture manchines that move product. About 1/3 of our product supports companies who support US auto makers. If the first
1/3rd dries up then the 2nd 3rd is just going to cascade into the hole created.

Who is our remaining customer. The US military. If we are not in business then there is no Made In The USA company to provide our product to the US military. Do you really want to rely on Japanese or Chinese made product to keep our military moving?

Then we have no auto maker to manufacture war goods should they become necessary. During WWII the US automakers converted to producing the war machines that enabled the US to win the war.

The prospects for the US in both manufacturing and Military put me extremely concerned for the future. I am hopeful that this is the time when the true leaders of Detriot (like Iacocca) will show themselves with good plans to revitalize the US industry. I personally think that the best leader is the one that steps forward and says "let us go bankrupt and then support us". Once they are free of the union contracts then perhaps they can become profitable.

Just my .02¢

 

[Clemson Fan]

Or....just like us who travel for our timeshare visit!

So, you travel to your timeshares in your own personally chartered jumbo jet with your name and logo painted on the side?

 

[Carol C]

The mgmt saw all that market share going to Honda and Toyota for 20 years. Why didn't they take the cue and formulate a plan to re-tool plants and compete? The CEOs only care about their own bottom line and pleasing their biggest shareholders. As for unions, they're getting a bad rap. I don't think unskilled workers are making $75/hr...that sounds like the spin zone talkin. The senior-most skilled union workers might be getting $75/hr including vacation pay, health benefits, sick time, pension and stock options and such...all factored together.

I love Hondas and Toyotas and have owned them for years. My dad, who was a steelworker in Pittsburgh (before the steel industry got sold down the river), hated to see me driving "foreign" cars. Oh well...I guess I was on to something after all. Meanwhile, my hometown has been bankrupted and a blighted mess for years. When the mills were closed, there were lots of mom & pop businesses that went down. Lots of laid off workers were driven to substance abuse, and there were suicides, sad to say. So while I don't like the taxpayer bailout of the big three, I really feel for those communities that will be hard hit. I've seen that kind of heartbreak up close and personal.

 

[Kal]

So, you travel to your timeshares in your own personally chartered jumbo jet with your name and logo painted on the side?

No, the name and logo would be a tad bit over reaching. However, the idea of a big Chrysler logo on the side has merit. That way, no one would come anywhere near the aircraft. Will omit all the chrome trim as that just doesn't make it.

 

[normab]

Regardless of what cars I have owned, I don't think I should have to pay for other people's financial mistakes--no one pays for mine.

The automakers have been fiscally irresponsible for decades. There is an existing legal precedent to help them. Let them take the bankruptcy/ debtor protection route and and get financing/loans that way. We don't need to loan them money right now. Once they restructure they may then learn to run business efficiently and in a manner that makes money.

Also, the autoworkers union is not living in the real world. The currently are OVERPAID compared to the average person, even making more than many degreed professionals. They want to maintain the same level of wages and benefits when everyone else is losing them as the economy changes. During restructuring these folks would have to review what they can do to help their own industry survive.

I already wrote my legislators. I urge those with opinions to write their senators and congressman too! It's the only way to really have our elected officials represent us.

I feel much better now, thanks for letting me vent.

 

[DG001]

So here's my question - is the American car industry just going to disappear if they file bankruptcy?

I would have thought they would be like the airlines - filing Chapter 11 bankruptcies every few years, but still in business. They would also have the option of getting out of those union contracts (and bring smarter management on board?)

The other thing that bugs me about bailing out Detroit is that these companies have been horrible corporate citizens. They have spent money in fighting and lobbying against higher fuel efficiency, alternate fuel options, foreign competition and even public transportation instead of just building better cars.

 

[Icarus]

GM to return two leased jets amid criticism

http://news.yahoo.com/s/nm/20081121/bs_nm/us_gm;_ylt=Aog.fcLPcsIkXW5msBlgGO7LLJ94

 

[dougp26364]

GM to return two leased jets amid criticism

http://news.yahoo.com/s/nm/20081121/bs_nm/us_gm;_ylt=Aog.fcLPcsIkXW5msBlgGO7LLJ94

Now if they can only learn to make an affordable car/truck that can compete in quality with the foriegn models AND convince the American public to buy them, they might be onto something.

 

[T_R_Oglodyte]

So here's my question - is the American car industry just going to disappear if they file bankruptcy?

I would have thought they would be like the airlines - filing Chapter 11 bankruptcies every few years, but still in business. They would also have the option of getting out of those union contracts (and bring smarter management on board?)

The other thing that bugs me about bailing out Detroit is that these companies have been horrible corporate citizens. They have spent money in fighting and lobbying against higher fuel efficiency, alternate fuel options, foreign competition and even public transportation instead of just building better cars.

That gets toward the crux of the issue.

If the automakers file Chapter 11 bankruptcies they can shed the onerous labor contracts that make their labor rates twice the rates paid by Asian automakers in their US factories. A typical mid-sze car built by a Detroit automaker has about $2000 to $3000 of embedded labor cost that would not be there if labor rates were equalized. If you shave $2000 to $3000 off the price of a Detroit car - or add that much back into the car in added features or improved engineering - the U.S. auto industry will get a lot healthier in not much time.

At it's heart, the bailout isn't a bailout of the auto companies. It's a bailout of the United Auto Workers union and a reward for mismanagement in Detroit.

********

This issue is being pushed hard by Democrats because the UAW has been a long and loyal supporter of the Democratic party, and the Party is returning that favor by proposing to use public money to prop up those ill-advised labor agreements. It's just typical political largesse. Almost every politician of every political stripe does the same thing for his or her favored constituencies - one person's tax break is another person's bailout.

In the words of the inimitable Nikita Kruschev: “Politicians are the same all over. They promise to build bridges even when there are no rivers.”