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November 17, 2008 06:08 PM UTC
49 Comments
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exorbitant vacationscorporate retreats.there has to be a pretty sizeable profit share for taxpayers. Perhaps some of the profits could be reinvested into building an alternative fuel infrastructure? This same infrastructure could also heat our homes?
And unicorns! Can I have my new car be a unicorn?
Let investors purchase the valuable assets out of bankruptcy. We the tax payers [and citizen’s] should not be on the hook for this problem.
1st. Screw the equity and bond holders, they should never have let management break their investment in the first place.
2nd. Suppliers, including the UAW, you gilrs need to tough it out. Next time look for customers that are financially sound or only extend credit based on the customers worthiness. If you think GM is such a great asset, maybe you should take a shot at purchasing the assets.
3rd. As to employees, two options. Go work for Toyota in TN, it is warmer down there anyway. If you want out of the auto industry, come West. We have many outdoor positions to fill and your manufacturing expertise will be useful as we add jobs at places like Vestis.
4th. State of Michigan. Refocus your state on hunters and other outdoors activities. You have a beautiful state, try to keep it that way.
and use it to capitalize an entirely new automobile manufacturer based in Michigan. A company that produces small, economical, high MPG hybrids, or flex fuel vehicles, or battery powered cars.
Create new jobs that have a future, make the US competitive again in the auto industry, and reduce our dependence on foreign oil.
No gas guzzlers, no crap, no SUV’s.
Start from scratch, and put American manufacturers back on the job working on something they can be proud of. If Congress is going to lay down that kind of cash why not do it right ?
That way if the govt comes into bail something out the costs will have all the crap beaten out of them and maybe by then new management will be in place.
Your proposition is a last resort.
that is, spend 150 billion, its better to do something meaningful and lasting with it, rather than just throw it down a hole, and enable failing manufacturers. GM is dying, and will die whether or not they get a bailout. That is my point.
These types of government backed initiatives are very common in Asia and are responsible for the birth of Samsung, Hyundai, Toyota, etc. They obviously have been very successful.
is to take ownership of the companies. I assumed that they were going exactly where you suggested they should, mileage standards were the first thing I thought of. The rest makes sense, Americans want cheaper, better made cars that run on little to no gas. If it’s our company, they oughta do what we want.
Someone from the outside has to right the ship, because GM isn’t going to do it themselves. They’ve had decades to improve mileage standards and nada, NADA, has been done.
this strategerically green endeavor you propose…then I think the citizens should get the assets at the lowest prices.
Federal government intervention should be a last option and a dramatic one. I would support your green car plan as a requirement if no one will buy the assets out of bankruptcy court.
The ColoradoWINS model would need to be employed if that [unions retention] was a demand of the Democrat leaders.
You don’t give a shit about the millions who work. Let the assets sit in court for a while, but in the meantime, who’s going to pay the workers?
If only Michigan was RTW, then they would surely be saved.
Amendment 47 failed, get over it redstate
and then their assets are purchased out of bankruptcy court, you are weeding out the inefficiency from the system (which contributed to the problem in the first place). I don’t see any problem with that – it is actually a necessary condition. This new entity, with government and private backing, could purchase those assets if it makes business sense to them.
I do think the government as a passive, non-managerial investor in an entirely new fuel efficient auto manufacturer, combined with other private investors, is a good idea. The government should also be allowed to recap their investment (on behalf of taxpayers) down the road, just like any other investor.
I want to hear more on your ideas
I am just thinking out loud. I don’t say let the big 3 go belly up just to be mean spirited or cruel either, I am just looking at it strictly from a business perspective. All of that money will be lost if they just want to prop up a dying entity for a few more years IMHO.
I read Lee Iaccoca’s bio a few years back and he wrote about how successful he was in getting the government to bail out Chrysler in the 80’s. The problem wasn’t that he was successful – it was that they failed and put Chrysler in the position that they needed a bailout in the first place. And where are we today ? History is repeating itself.
If GM needs to file then that is the way the ball bounces. The industry needs restructuring and little government support to do so. I’d support more government policy programs if they don’t cost the consumer.
As many have pointed out, the other issue is getting customers to buy the cars. Note to Feds: Interest only loans for autos are not a good idea 😉
I went to grad school in michigan in the early 90’s and watched the death of detroit up close.
Its not about the auto industry, its about the destruction of civil society.
I hate the US automakers–they have made such strategically bad decisions that they desrve to die– but we as society can not afford to destroy regional economies that have not been strong in 30 years.
Here’s what needs to happen.
1. we have to deal with retiree benefits. workers paid in to get them, its compensation and they deserve them. If GM fails the fed has to pick up the liability anyway–so lets just deal with it.
2. Healthcare costs–all of our major auto competitors have lower healthcare costs embedded in their cars because socialized medicine has lower cost structures. the high healthcare costs drove the big 3 out of entry level light weight vehicles into vehicles with higher margins like trucks.
3. to the vehicle mix–detroit abandoned their future when they gave up on entry level vehicles–not only are entry level vehicles lighter (better MPG) they also help form brand preferences. Much of Toyota and Honda’s dominance can be traced to brand preferences formed in the 70-80s on cheap starter vehicles like SR5 and CVCC Civics while the big 3 were destroying their reputations with vegas and pintos. If they don’t make a commitment to light vehicles that young people want–they are done no matter how much money is poured in by the government.
4. If the Volt has reliability and a quality finish, the US government could simply announce a new fleet requirement that only the Volt can meet. The federal government has a fleet of about 750K vehicles if they merely bought volts for a few years it would help GM. Throw in an additional tax break and we could drive even more sales. With big production runs costs would fall.
This is not a simple matter
According to GM
http://gmfactsandfiction.com/
I agree with most of what you said, particularly about retirement benefits. Bankrupt Baby Boomers are not going to help get us out of a recession.
The part I most agree with is that it isn’t a simple matter.
They are so full of crap. If GM fails, we still go to Jiffy Lube. If GM files for bankruptcy GM as an organization continues until someone acquires it and transforms its assets.
It might be said that it was the high cost of Oil that burned up GM. Just think, if GM had invested in newer electric or fuel cells 10 years earlier they might have protected share-owner value better.
Non-union retirees have already taken a big hit on their health care benefits. I’m not sure if they are just abandoned on the Medicare island or what, but slashed.
The union retirees have to take the same hit.
There are under age 65 retirees in both camps, so there needs to be a fair transition package. And maybe at age 65 cover the Medigap insurance, or run their own UAW one. Otherwise, welcome to the rest of America.
and as usual you don’t disappoint. Too bad YOU won’t be in the administration.
as in loans. If Detroit wants to come to the pawnshop, they have to put down the family jewels.
If they get the cash from the taxpayers, and spend it on corporate retreats and building the Cadillac Land Destroyer and still go bankrupt, then they need to file for Chapter 11 like any other company whose poor business decisions lead to their downfall AND the banks free up some cash and start lending again.
Considering that the Auto industry is the largest manfacturing sector in the US, we can’t just let them collapse and take down 1 million plus jobs with it.
“If they get the cash from the taxpayers, and spend it on corporate retreats and building the Cadillac Land Destroyer and still go bankrupt”
That being said, I really don’t know how their is any fairness in your retiree benefits being reduced to zero, from a company you gave your career to. I also don’t know how you are going to have a successful company come out of the ashes if they are burdened with these benefits.
I agree with all that this is very complicated.
All the previous proposals are basically blank checks, something that should NOT be allowed to happen.
Instead of just purchasing shares in the debtor company (like the bank bailout), this is a direct assumption of the capital of the company. If it goes bankrupt, the gov’t owns X amount of stuff, making any bankruptcy proceedings less beneficial to the original debtor since they lose that stuff.
Or something like that – this is the Econ wife’s dept….
I would love to see the auto industry here fail, but it’s not worth a million-odd people being out of work (assuming that’s what would happen).
There should be MAJOR conditions and restructuring tied to it though. There’s no reason to pay some folks 28 bucks an hour to put a car together. And execs shouldn’t be making umphteen times what laborers do.
On top of that, could we get some uber fuel efficient vehicles, please? It seems pretty straight forward: make a product people want and then they’ll buy it.
Ford makes a 76mpg eco-car in Europe. http://www.dieselpowermag.com/…
Why can’t we see it sold here? It’s a diesel and the environmentalists don’t want that sort of car sold here. The same with BMW, Audi, and just about every other European auto manufacturer. Diesel powered economy cars are a fact of life in Europe, and both Ford and GM are profitable over there, unlike here.
environmental standards are higher in europe
The 2008 E320 BLUETEC does not meet the emissions requirements of California, Connecticut, Maine, Massachusetts, New York, Pennsylvania, Rhode Island, or Vermont and is not available in these states.
For standard gasoline cars, they are more stringent, but not on diesels, we are more stringent on diesel passenger cars.
Raise the quality of the fuel and they will meet california standards.
california has a smog problem and can not afford the sulfer dioxide
It’s not the fuel any more. It’s the particulates, or so I’ve read. Someone needs to take a look at making the rules a bit more flexible – not less stringent overall, but allow for some variation, with some stats being better than others on a per-model basis. It will even out in the end.
Bio-diesel might help diesel attain better compliance, too; being ‘purer’ it doesn’t emit as much out of the tailpipe.
…there’s an ad on the back of the new Harpers. That’s all I know.
There are those on the left who now agree with the statement, “Whats good for GM is good for America.” Ralph Nader would be ashamed. 🙂
Let’s face facts, Ford, GM, and Chrysler are all in a deep hole, they have a glut of vehicles that they can’t sell, the current management of all three haven’t a clue on how to turn things around, and loaning them money will not change anything except to prolong the fall.
These companies don’t just deserve to go into bankruptcy, it’s going to be necessary. It is the only way that these companies can be structurally realigned to be competitive with the foreign manufacturers here in the U.S. Otherwise we will be revisiting the same problems we have now just a short time down the road.
With the U.S. as a major stockholder, it’s possible. No-one else is waiting in the wings to buy what looks like a money pit; like Chrysler, it’s going to take a serious, rules-and-culture-be-damned attitude to turn the car companies around.
I don’t think anyone here is in disagreement on the general state of the two companies; if they’re not functionally restructured, throwing money at them won’t do anything.
They’ve wanted to break the UAW for the better part of a century.
Now that’s the competitive spirit
I think one key requirement is they need to fire (with no golden parachutes) everyone from the V.P. level up. These guys have shown themselves to be totally incompetent and are not capable of making these companies successful.
Getting experienced successful managers in there, even without the years of industry experience, has to be better than the present bozos.
but don’t these folks have contracts? If you fire them, wouldn’t they still have to be paid?
Contracts are (re-)negotiable in a bankruptcy, and I think the Federal government stepping in should come with some bankruptcy-like provisions like “no golden parachutes” and “no bonuses” and “salary caps”.
and the workers are caught in the middle. I would definitely pummel the hell out of anybody from VP up as David mentioned, and try to make it least painful for the workers.
I see an ominous glow in the distance and his name is everyman–he has his torch; he doesn’t want a hand out, he doesn’t want to give a hand out (just like that BS that I believed from Paulson–Paulson lied and my 401k died). He is going to say, “Screw you Washington, Screw you financial insitutions and Screw you UAW!” Who’s next the Airlines? Or is Burger King the next in line? Soon the torches will be burning…
That would automatically force restructuring, UAW contract renogitaion, and best of all, (relatively) no politicians.
My understanding is that a party such as a creditor can file a forced BK. Can the government? After all, a lot of economic health is at stake, and whatever happens impacts programs like Medicare and many more.
Gas is below $2/gal.
Until this last partial calendar year, the US companies had tremendous sales. This isn’t about fuel standards or alternate energy cars.
This is about legacy entitlements, from bloated, greedy union negotiations years ago.
I’m inclined to let them go under, even though it will cost us $200 billion to pick up these pension and health plans for their retirees as opposed to $25 billion for having a bad, unsustainable economic model that gets loaned more money in the future.
BTW, not a big fan of government-owned manufacturing.
n/t
Did you like that one? I just thought it was appropriate to keep in mind.
Actually, the Nazi-era VW model is about exactly what would save the auto industry here.
Well, not the forced labor part, but the desire to have an affordable, easy-to-repair and cheap to run car for the masses.
is that Detroit should bring back the Model T?
Detroit should get rid of the unions that have basically destroyed the State of Michigan and start over with entrepreneurs in charge of the auto industry.
On private money.
How many cars are there in the US? Someone can make a fortune and pay their workers, but the system there has been broken for decades by greed and sloth and wages and benefits far above what the economy and market warrants.
I just finished a fascinating book about Genghis Khan. When he ransacked a city he would separate the aristocrats from the rest of the people, and kill all of them first (big 3 management, union leaders) by doing lovely things like stuffing dirt in their mouths until they died.
Then, he would separate the doctors, the artisans, the cooks, carpenters, etc. and allow them to assimilate into his army (big 3 autoworkers).
Any others left without any such skills were used as human filler to pile up in moats so he could drive carts across them (big 3 CEO’s).
The Genghis Khan plan. I like it.
Be assured that it will be again.
There are two things killing the Big 3 auto industry: health insurance (mostly on retired workers) and poor diversification.
The health insurance wasn’t, contrary to your opinion, originally a product of union negotiation – it was an incentive to get people to work for them. It is because employers were offering these incentive that we have an employer-based health care system now.
Oil is not infinite; alternate fuels may be, but they’re not up to that kind of production capacity and won’t be for some years to come. Oil will continue to fluctuate wildly until the economy recovers worldwide, at which time you can expect to see at least a partial return to the bad old days of the Summer of 2008. The Big 3 need the opportunity to recover from a major blunder in planning if they want to avoid bankruptcy, and IMHO we need the Big 3 mostly intact if we want to avoid pushing this recession into a full-blown depression.