Why We Shouldn't Bail Out Detroit

General Motors (NYSE: GM  ) fell 23% yesterday. Shares hit levels not seen since 1946 -- a mere 38 years after Ford's (NYSE: F  ) Model T was introduced. Ford itself is less than a buck away from penny-stock territory. Chrysler's minority shareholder, Daimler, has written its stake down to ... drumroll, please ... zero.

"As GM goes, so goes the nation," the old saying went. Let's hope they weren't being serious.

Detroit's auto giants are running out of gas. Without a bailout, they're likely in big trouble. Before the gauge hits empty, auto execs, politicians, and investors are lining up to beg for help. And why not? Even strong banks like JPMorgan Chase (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) have received 11-figure injections from the Treasury. Why not include beleaguered auto giants, too? Too big to fail! Right?                                                                                                           

Uh, no
Comparing a Detroit bailout to a financial-system bailout is, quite frankly, stupid. When auto manufacturers go out of business, we lose jobs. When the financial system goes out of business, we lose the economy. If GM fails, Chevy trucks won't simultaneously explode. If AIG (NYSE: AIG  ) fails, financial markets will simultaneously explode.

But that isn't the point. To justify a bailout, you'd have to make the case that doing so would get the industry back on a sustainable track. There's no logic in bailing out companies if they're simply going to blow through the cash and come back begging for more.

The long downward spiral
Detroit's hemorrhaging, you see, isn't caused by a one-off event that will be contained with a blank check from Uncle Sam. It's driven by factors that have been brewing for decades. Mainly:

  • Uncompetitive labor and legacy costs.
  • Reliance on vehicles nobody wants anymore.

The first issue could probably dropkick auto giants into oblivion all by itself. GM's health-care costs tack on $1,500 per vehicle. Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) spend a mere $400 per vehicle at their U.S. production plants -- in Japan, it's as low as $150 per vehicle. In recent years, GM had a staggering 2.5 retirees per current employee. The rough reality of globalization is that the country with higher labor costs -- us -- gets the shaft when it comes to manufacturing. Unless a bailout entails permanently subsidizing labor costs, Detroit will probably never be competitive.

The second issue -- a reliance on SUVs and trucks -- is really the 800-pound gorilla here. The profits Detroit gushed in years past didn't come from selling small, fuel-efficient cars, but from SUVs with downright stupendous profit margins.

In some cases, Detroit could pull down five-figure profits per SUV sold, while accepting slight losses on small cars. Selling small cars at a loss probably didn't seem like a bad idea, because it built a stable customer base and enabled manufacturers to meet fleetwide gas-mileage requirements. Ford, for example, made as much as $18,000 profit on every Excursion SUV, while losing money on its Focus compact car. For years, that balance worked beautifully. But as soon as energy prices soared and the green movement took off, demand for those profitable SUVs drove right off a cliff.

In other words, the only avenue Detroit could rely on to remain profitable has been thoroughly roadblocked. And unless we discover another Saudi Arabia, it probably won't reopen. 

Cruisin' down a dead-end road
Taxpayers funding a bailout deserve the answer to a serious question: "Is this worth it?" I sincerely don't think it is. Think about it: When the economy picks up, energy prices will spike, and the fate of SUVs will continue hurtling earthward. How about selling cheap, fuel-efficient cars? Detroit can't compete there, simply because its labor and legacy costs are leaps and bounds higher than foreign competitors'.

Heads, you lose. Tails, you lose.

The brutal reality is that Detroit doesn't need a bailout so it can reorganize and compete with foreign manufacturers; it needs the money to salvage a business model that's been proven horribly hopeless. After all, Chrysler was bailed out in 1979 ... and three decades later, here we are again. Detroit isn't suffering a cyclical downturn that'll bounce back and reward taxpayers for their benevolence. It's suffering an inevitable day of reckoning decades in the making.

True, perhaps hundreds of thousands of workers will lose their jobs if an auto giant goes belly-up. That's terrible. But in the long term, those workers will find jobs in companies with better than a snowflake's chance in hell of surviving. In the short term, it's miserable. In the long term, it's for the best. That's how free markets work.

Your thoughts? Fire away in the comment section below. 

Related Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article, nor does he drive an American-made car. JPMorgan Chase is a Motley Fool Income Investor recommendation. The Motley Fool is investors writing for investors.


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  • Report this Comment On November 11, 2008, at 12:34 PM, geologics wrote:

    Well said Morgan.

    In order for a Big-Three Bailout to work, there has to be a plan as to how those companies will become more strategically competitive. What do they plan to sell, exactly, and where will profits come from?

    I can understand the emotional desire for a bailout, but it has to add up.

    A lot of these assembly lines were converted to military use during WWII. What was that process like, and what is the range of things that can be built?

    Does it make sense for the government to let nature take its course, and then buy those plants to make something more useful?

    geologics

  • Report this Comment On November 11, 2008, at 1:03 PM, surnair wrote:

    If the financial systems are so important to the economy then they should be treated at the same level as national security and managed entirely by the government. After all how do you ensure maintaining reasonable national security when you have the entire economy collapsing. And whats the guarantee that bailing out the financial corporations is not putting money in the drain, unless they are tighly controlled and watched over.

    I agree that not the entire auto industry could be bailed out. Those who are taking steps to compete by improving quality, creating more fuel efficiency vehicles should be helped. Those who are still tied up in the old bureacratic ways should let fall or survive on their own.

  • Report this Comment On November 11, 2008, at 1:19 PM, PROFESSORPUFFPOW wrote:

    If you build a better product people will buy it. The USA does not need 3 automobile companies. Just one that sales a good product. The business model is broken and putting a band aid on a bleeding finger when the entire body is bleeding out is just stupid. In the free market just like in nature it is survival of the fittest not the biggest or dumbest. Let the fail and start over again with a better model, plan and philosophy. Yes people will lose jobs but a better concept and model will emerge and that will equal jobs. Fool me once shame on you, fool me twice shame on me. Detroit is just a microcosm of what plagues the USA. If we want to stay on top, we need to stop lying to ourselves and start planning for today and tomorrow. Because yesterday is gone.

    SAR

  • Report this Comment On November 11, 2008, at 1:30 PM, kevinwinter wrote:

    OK- the beg three made mistakes. But in recent years, the quality issue has diminished dramatically. They are actually building good cars these days. Their biggest problem is the healthcare costs associated with retirees. If the gubment can get that gorilla out of the room, they may be able to make a go of it. Their "bad" choices seem to all stem from the huge expenses supporting retirees- not enough R&D, new plants/technology, etc. I think a cash infusion could save what has been called 8% of our economy.

    As opposed to the financial bailouts currently happening... which were the result of greed, lust, and downright lies. At least the Big 3 get it- I don't see much in the way of spa treatments happening in Detroit. I'm in the midwest- I don't know anyone who works (worked?) for the financial companies. But I do know if the big 3 go down many, many of my neighbors will be unemployed. And in the end, that will do more damage to my life than my 401K taking a dive. A bailout of the financial companies fixes a paper problem- letting the Big 3 go will create a people problem.

    Get the healthcare expenses off their back, float 'em a loan to get the next electric/hybrid/cell out of research and on the road, and lets see if we can save something that really matters. Toyota and Honda make money making cars in the USA- GM, Ford, and Chrysler can do it too if the playing field was level. They're not bad companies, they just have been dragging a weight around their necks for the last 40 years.

  • Report this Comment On November 11, 2008, at 1:40 PM, SteveTheInvestor wrote:

    Being from Michigan, I'm likely a bit biased in that our economy is quite dependent on the big three staying in business. Obviously, I would like to see them remain in operation because the alternative would be devastating to Michigan, not to mention what effect it might have on even a national level.

    There is little doubt that they (and their employees) brought it on themselves. The company, while profiting heavily at the expense of the environment also failed to even consider the possibility of that gravy train coming to an end. So shame on them from both environmental and prudent planning standpoints. The employees are not blameless either in that they have known for years that competitor's employees were "out-pricing" them, making it difficult for the big three to compete. Of course, considering what executives at the big three are being paid, I guess I can't blame employees for wanting some of those huge profits for themselves. It's difficult for employees to accept concessions when the exec's are being paid annually what some workers make in a lifetime.

    All that being said, I would like to see some form of financial assistance if for no other reason than to prevent a major fiscal calamity. If assistance is provided though, I think the government needs to play hardball (for once), and establish some hard and fast rules. Improving fuel economy, employee concessions and (ESPECIALLY) executive concessions come to mind. If they don't agree, they don't get the money.... period....end of discussion. If they want the money bad enough, they will agree. If not, then as much as it would hurt, they could go bankrupt. I think you would quickly see where the executives true allegiance lies..... their company or their own bank account.

    There's my opinion. That and $2.00 will get you a cup of coffee.

  • Report this Comment On November 11, 2008, at 1:57 PM, gloryroad wrote:

    Ah yes, the "they are entirely to blame for this" excuse to not bail out Detroit.

    Exactly how are they to blame for our government to allow foreign automakers to sell their vehicles cheaper in this country than our own can sell them for? Don't believe me? Remember in the 80's when a Dodge K Car was selling for $40k in Japan? That's right, a 500% markup on the trade difference. Yet they were able to sell their garbage here for CHEAP.

    Our country has been living with a trade deficit for so long it was only inevitable that this would happen.

    And all you have to do is look to September 11th for proof that a small piece of the pie can ruin the whole thing. 2 days of cancelled flights and look how many airlines collapsed because of that. I wonder what the downstream of that was to travel agents, etc. Don't think for a moment that half of our economy won't collapse in the U.S if GM goes under, because it will. The downstream effect of their business in our country is STAGGERING.

    If the government doesn't do something, trust me the whole thing will collapse.

  • Report this Comment On November 11, 2008, at 1:58 PM, anotherjames wrote:

    This is a perfect example of the cannibalistic nature and over-reach of unionization. Be weary of any company that concedes to or is threatened by long term and overzealous demands from strong unions. A Motor Trend article just over a year ago noted that GM lost 1/3 of its revenue to paying for benefit packages that GM was forced into by Unions and the government. That's 1/3 of its revenue that can't go into R&D and market research. While a company may have the best of intentions towards its workers, it can't give what it doesn't have, and that is what greedy union leaders (not the workers themselves) and politicians forced from GM. They killed the goose that lays the golden egg. That 1/3 could have helped GM cope with the SUV fixation and allow it to deliver profitable sedans and compacts. Motor Trend also reported that GM at one point (and maybe still does) earned more revenue through its financing arrangements with customers, so, as MT pointed out, GM is actually a large lending institution that happens to manufacture autos. GM was forced to add financing incentives to attract customers that it was losing due to its inability to fund and develop desirable products. A business model that either involves car guys acting as bankers, or car guys having to add on bankers to their workforce is a broken business model. This is not an example of a poorly run American business, it is an example of poorly run politics forcing the hand of an American business to destroy itself. And likewise, a bailout, or more government intervention, is not the answer, sadly.

  • Report this Comment On November 11, 2008, at 2:22 PM, Johneieio wrote:

    Ok -- Full disclosure here ... I work for GM at our HQ in Detroit. I came to the company 8 years ago after a decade-long stint in the airline business -- so I understand what happens when a business model fails and labor gets too expensive for the market. But what's happening on Main Street in the US today is something that impacts us all. The US auto industry stands to shed nearly 3 million direct and indirect jobs if the Detroit 3 stop working. This isn't about 'punishing' us for the sins of our fathers -- or serving a market that demanded big trucks and SUVs in the 1990s -- it's about the reality of today and how we restart the economy. When we 'Kept America Rolling' after 9-11, we were praised for doing what others wouldn't. Now, we are simply asking to be provided a helping hand to restructure in times that are historically challenging for many industries. Consider:

    • The U.S. auto industry has been hard hit by the credit crisis.

    Carmakers can’t get credit to complete their restructurings and put new advanced technology vehicles into production.

    Customers can’t get credit for new cars and other purchases, and consumer confidence has fallen to an all-time low.

    Suppliers are losing business and can’t get credit to keep them afloat until the industry recovers.

    Dealers can’t get credit to finance inventory and other routine business needs.

    • Prior to this crisis, the U.S. auto industry was aggressively and successfully restructuring.

    The industry has invested $10 billion in U.S. plants and equipment each year.

    U.S.-based companies have closed the productivity gap with leading imports.

    GM has all but closed the quality gap with Asian carmakers.

    New labor agreements will make U.S. manufacturers’ labor costs competitive with the transplants by 2010.

    • GM has been in the process of building a winning auto company for the long term. These efforts are threatened by a severe downturn in sales and a sharp drop in revenue caused by a widespread economic and credit crisis.

    GM is focused on building sustainable success, not short-term results.

    New GM vehicles such as the Saturn Aura, Cadillac CTS, Chevy Malibu and Buick Enclave are getting great reviews from the experts and enthusiastic support from customers.

    GM is committed to leading in the development of advanced propulsion technology, including breakthrough technologies like the Chevy Volt extended-range electric car.

    At the same time GM has been creating these award-winning vehicles, the company has been taking tough action to cut costs. In fact, since 2005, GM has reduced structural cost in North America by over $9 billion. And more recently, GM has outlined plans to enhance its liquidity position by $20 billion through 2009.

    GM has been streamlining its U.S. operations. It has reduced its U.S. salaried workforce from 44,000 in 2000 to 32,000 in the fall of 2008, and its hourly workforce from 132,000 to 64,000 during the same period.

    In response to the recent economic crisis, GM is further tightening its belt. The company recently took additional actions to reduce salaried employment costs by 30 percent, eliminate raises and discretionary bonus for executive and management employees, and suspend the 401k match for salaried employees.

    The long-term security of the U.S. requires a strong auto industry and strong domestic R&D programs.

    The auto industry will play a critical role in diversifying our energy sources away from imported petroleum.

    The U.S. should not trade its dependence on imported oil for a dependence on imports of critical technologies – batteries, biofuel technology, advanced internal combustion engines and transmissions, hybrid systems, and fuel cells.

    The U.S.-based auto industry is second only to the semiconductor industry in R&D spending -- $12 billion last year alone.

    • Federal assistance to help the U.S.-based carmakers through this historic downturn is a good investment in America’s future.

    Potential cost for supporting loans to the industry would be a fraction of one year’s lost tax revenue should the industry collapse.

    Because of pent-up demand, the industry should recover quickly once the economy improves, implying a fast payback for loans and interest.

    A healthy auto industry is an engine for creating the jobs, the new technologies, and the global business growth that America needs if it is to remain a great power.

    • What happens to the U.S. auto industry matters on Main Street.

    There are some 14,000 U.S.-brand dealers in cities and towns across the country , employing approximately 740,000 people, with a total payroll of some $35 billion.

    U.S.-based companies have 105 assembly and component plants in 20 states, including such “non-auto” states as California, Texas, Kansas, Louisiana and Maryland.

    The three companies purchased $156 billion in parts, materials and services, supporting jobs in all 50 states.

    The companies provide benefits for 775,000 retirees and surviving spouses, and provide health care benefits for 2 million.

    • Automotive manufacturing is a 21st Century growth industry, and the U.S. needs to earn its share.

    A strong U.S.-based industry lets America benefit from global growth of one of the largest, most important industries.

    Less that 15% of the world’s population owns a car, so growth potential is significant.

    The industry sold 70.6 million vehicles globally in 2007, an increase of 13 million units from 2002.

    U.S. companies can compete: GM’s now sells 61 percent of its car and trucks outside the U.S., and continues to set sales records overseas.

    CYTD, GM sales in LAAM are up 13 percent, while sales in Asia-Pacific are up 7.6 percent.

    Motor vehicles and parts are the single largest export from the U.S., topping aerospace, medical equipment and communications.

    The collapse of the U.S.-based auto industry would be devastating. In just the first year: Direct, indirect and spinoff employment would drop by 2.95 million people; personal income would drop by $150.7 billion; government transfer payments would increase by $14.3 billion; social security receipts would drop by $21.1 billon; personal income tax paid would drop by $24.7 billion

    • This is an auto industry crisis, not just a U.S. industry crisis.

    The Center for Automotive Research assumes that a 50 percent drop in production by U.S.-based carmakers would cause a 50 percent drop in production at the transplants due to supplier disruptions and bankruptcies.

    A complete shutdown of the U.S.-based carmakers would also shut down the transplants for at least one year.

    So -- Let's take a cold look at the facts and make a clear-headed judgement on what's best for everyone. Can we do better? Absolutely, and we need to be held accountable to do so. But let's not misunderstand what the consequenses would be if the Detroit 3 were to fail. As Jim Cramer said on his show last night -- if we want an economic recovery, we need the jobs to go with it.

  • Report this Comment On November 11, 2008, at 2:32 PM, chali2na wrote:

    And I bet 3 out of 4 of you all drive a honda or toyota. I'm gonna push my Silverado to 250K if possible. Buy as much American as you can from now on. Those actions DO speak louder than these words.

  • Report this Comment On November 11, 2008, at 2:35 PM, Jack67535 wrote:

    In general, I agree with your article.

    But ...

    You are incorrect regarding your reference to the Chrylser "Bail-Out" of 1979.

    It was NOT a bail-out - it was government backing of loans which Chrysler paid off in full, with interest, and ahead of schedule.

  • Report this Comment On November 11, 2008, at 3:13 PM, ponch032 wrote:

    I have been living in Germany for 2 years. They have BMW, VW, Porsche, and Mercedes. I work in the Auto industy, and their quality is not what you all think it is. Also, their labor costs are higher than ours in America. Yet, everyone here is driving cars no older than 10 years old, and most are 3 to 5 years old. They have a strong economy, because they all buy German. Go figure, Germans buying German. What if Americans bought American. It would really do wonders for our economy. The quality gap truly is closed. Trust me, i know. The other thing Germany do extremely well is marketing. They have the whole world convinced that German quality and efficiency is of the highest degree in the world. Take it from me again, this is a sham. I have worked here for 2 years, deep in the industry, and again 10 years ago. Anyway, my point. We need the American auto industry, and the big three would be the best scenario, but if we end up with two, it is still a good thing. Hopefully some of the electric car companies ike Tesla will be a beaken of light in this cloudy mess. We need more auto industry. We need more industry in general.

  • Report this Comment On November 11, 2008, at 3:18 PM, norm28 wrote:

    Your article is right that some of lost, approx 3 mil jobs, will get absorbed by other foreign automakers and other businesses, however if we'll face a global war in a future, will we hire Koreans and Japanese to build our heavy weapons?

    GM does not need a handout only loan guarantee and if they will fail, government will recover all by selling their domestic and overseas assets which worse many billions.

    Failure to do it will result in becoming a 3 world country with no manufacturing infrastructure and jobs which supported millions of service, medicine, entertainment, charities and Fool's like you.

    The question should be not if they should get assistance but when.

  • Report this Comment On November 11, 2008, at 3:23 PM, toledojeeper wrote:

    You make it sound like only a few jobs would be lost,it has been said that just GM going bankrupt would cost over 1 million US jobs.How would that be a good thing and where are these jobs that they will get?I work at Chrysler and believe we build quality vehicles,but with the anti-US sentiment that people have they won't give the Detroit 3 a chance.GM builds more models that get over 30mpg then Toyota does,but most people don't know that.I believe with the falling price of gasoline the trucks and SUV's sales will increase in the next few years,I just paid $1.40 a gallon and filled my Dodge Ram for $30.00.I do believe if the LOANS are given then the UAW must give back some wages also as a sign of good faith,but the UAW is taking over the health care in 2010.I believe that the taxpayers made $400 million from a 1.5 billion LOAN to Chrysler,not a bad investment.Also if GM goes bankrupt the taxpayers will be on the hook for some of the pension cost.No,I think it would be a bad thing if GM went bankrupt I don't know how you or anyone else could think it would be a good thing.

  • Report this Comment On November 11, 2008, at 3:29 PM, knighttof3 wrote:

    First of all, to all those preaching "Buy American": when it's a battle between my pocketbook and my patriotism, guess which one loses. Japanese cars consistently beat American and European is quality, reliability, longevity. Secondly, Europeans and Japanese consumers suffer when these regions have artificial barriers for foreign competition. Try buying Japanese electronics in Japan - it's twice as expensive as in US. Try owning a car in Europe with all the taxes and fees. US consumer is better off because of free trade.

    Having said that, back to Morgan's original argument: I would counter-argue that it's all about jobs. No point saying "suffer short term misery for long term capitalist nirvana" - in the long term, say it with me, we are all dead. The government should create jobs when the private sector is destroying them and step aside when it re-starts creating them. But - those jobs should benefit the nation. Look at California's crumbling infrastructure. What happened to building roads, highways, bridges, hospitals?

    Now, to finance them, you can't raise taxes so you have to borrow-and-spend, just like Bush did. Except here the spending is on infrastructure and not on war and unlimited payouts on CDOs/CDSs/MBSs - essentially for bets made on paper money by people who should lose their shirts if they lose the bets.

    Oh if I could be King for a day :-)

  • Report this Comment On November 11, 2008, at 3:57 PM, MissouriGC wrote:

    Good Article. Without completely letting the bottom fall out, why not consolidate the three and rewrite a business plan that promotes more advanced energy efficient vehicles. It's only a matter off time before gas will be cut out, it is inevitable why not create a base sooner rather then later. Be the leader in the future instead of falling behind while international automakers capitalize on our mistakes.

  • Report this Comment On November 11, 2008, at 4:02 PM, Brettze wrote:

    GM and Ford get over half of revenues from abroad. GM and Ford are international corporations in case you dont know by now.. It is worthwhile helping GM and Ford as they will continue to grow overseas. If UAW contiinue to stick to its guns with uncompetitive wages and benefits, it will be a matter of time before GM and Ford will be able to shutter all North American operations and move overseas 100%.. We will be glad to be still have GM and Ford contnue to bring bacon home... UAW is a rapidly shrinking part of GM and Ford workforce. I dont know exactly how many employees are already overseas. If GM and Ford fail, it will surely devalue our dollar a major notch.. How will 50 yens sound to you?? Corollas and Civics will be fetching $50,000 each here... Your thinking right now will be a joke of the future!!!

  • Report this Comment On November 11, 2008, at 4:04 PM, Brettze wrote:

    Your kind of thinking already gave us $145 oil barrels and $800,000 houses! Want more Hawaiian Punch?? PoW!@

  • Report this Comment On November 11, 2008, at 4:05 PM, Brettze wrote:

    I think it will be more constructive for your money gang to start talking about solar stocks in a big way so to buffer ourselves from Big Oil Monopoly!!! Why are all of you still lurking around in that stinking lizard lounge somewhere in Las Vegas??

  • Report this Comment On November 11, 2008, at 4:06 PM, c350amg wrote:

    Not sure I fully agree on not to save the US automakers, I do think the impact on economy (direct and non-direct jobs) would be huge.

    This being said I have a different view on cars themselves being from Canada more precisely Quebec. We have no car industry at all here so anything on wheels comes from somewhere else. The big 3 went from total domination of the market to around 30% today the rest being either from asia or europe. Now is the time to ask why? simply said the American cars are very poor quality, years away in technology well nobody wants them. It's that easy.

    The big 3 sat on their butts and looked at the rise of the Toyota's and others with a smile on their faces, well look at it now.

    Now let's talk about cost of manufacturing. A Cadillac CTS and a Mercedes C Class or BMW 3 series or an A4 are around the same price. Do you actually think for one minute that building cars is cheaper in Germany! Cost of living is very high and yet they produce very fine products, export them and sell them for the same price and on top of it make a nice profit.

    Again where I live we don't make cars we just buy them. Nobody in its right mind with money and wanting a highend car would buy anything else than a Mercedes, BMW, Audi, Lexus, Infinity or Acura, end of line.

    Does GM has a chance of survival, actually it does! The Volt and equivalent products are the future and GM needs to simply let go all lines of business not making money, rationalize and invest heavily in new technology. Is it going to happen? Your guess is as good as mine.

  • Report this Comment On November 11, 2008, at 4:07 PM, 1stresponder wrote:

    I partially agree but there is a lot of blame to go around. The manufacturers didn't do a good job planning ahead, the unions overpriced themselves but let’s not forget our government with its new environmental regulations and forced them to retool to meet the obligations.

  • Report this Comment On November 11, 2008, at 4:08 PM, Brettze wrote:

    One half of GM and Ford is already overseas... Why throw the baby with the bath water? Why dont you start throwing Big Oil with the OIL SPILLS???? Big Oil had done far more damage to our economy than GM and Ford ever will.. You are still pampering soft on Big Oil.. What gives??? Oh it is a safe stock for you that is why@@ You are sissy weaklings!!!

  • Report this Comment On November 11, 2008, at 4:12 PM, anotherjames wrote:

    Johneieio

    Good input. GM also holds largest market share in China, which I understand is the fastest growing auto market. I am more interested in reading your thoughts about the burdensome benefits GM is responsible for. As an investor I want happy and productive, healthy employees, but I don't want Union strain and waste.

    Ponch032

    It would be ideal for all Americans to purchase American cars. In my home state, however, we build Mercedes, Hyundia, and Hondas, and soon we will help a border state build VWs. Does this still make them foreign? Has the line not been blurred? My personal car was built by Ford... in Britain. Do I drive American?

  • Report this Comment On November 11, 2008, at 4:13 PM, Brettze wrote:

    You still keep on thinking that high oil prices is necessary to prop up solar stocks which is patently false... We can lower oil prices and go ahead building solar modules.. We will spend less that way... I dont worry about where the profits lies... I dont care as long as we are building a major buffer against Big Oil and Coal... There is so much work to doa, care to join ?? If not,,, just get lost, losers@@@@

  • Report this Comment On November 11, 2008, at 4:14 PM, nicholaslebeau wrote:

    I agree with the author on everything except comments on the AIG bailout. AIG is not being fiscally responsible with the money allocated to them. In fact they have gone begging to the government for large chunks of money based on a principle and business plan that was doomed to fail. They invested in a high risk purchasing of high risk mortgages. So why do they deserve to be bailed out? Simply because they picked an industry we cannot live without? MONEY. That doesn't make it right.

  • Report this Comment On November 11, 2008, at 4:15 PM, teppy37 wrote:

    How do Governments pick and choose who to help and who not too?

    I`m a Canadian, I work in the auto industry, and I will be unemployeed at the end of June 2009.

    I disagree with the bail out of the banks.

    So I guess I disagree with the bailout of automotive industry.

    These companies have been so mismanaged!!!

    You can blame unions for wages but I disagree with that too,why shouldn`t we make a piece of the pie when they are raking in millions? Now a CEO making 9,000 000/year come on give your head a shake.

    Now that the industry has gone sour I could look at my own contract and give benefits back that I never have used.

    Lets say I own my own business and the first 2 years its rocking and I making all kinds of wedge$$$$ OOOHHHH YAAAA living the high life!!! Next year I make a few poor decisions, lose some customers and fudge up my accounting books, realize I`m heading for bankruptcy.......does anyone bail me out? NO

    On the other side I`m sad my job is going because I made a decent living and supported alot of my local businesses with my $30/hour job. With times tough recently Im` trying not to spend a dime.....and we all know what that does to the economy.

    So the moral of the story is without jobs....no economy.

    We upnorth make the best GM trucks going, and now its gone to....

    Mexico

  • Report this Comment On November 11, 2008, at 4:51 PM, boomer1960 wrote:

    Response to post: On November 11, 2008, at 2:22 PM, Johneieio

    Full disclosure here ... I work for GM at our HQ in Detroit.. you posted your comments at 2:22 pm.. aren't you suppose to be working instead of cruising the internet. Perfect example of the non-productive work ethic that has lead to the demise of the USA auto industry. What reports are you people reading ? Maybe, on a few models, US car manufactures are holding their own regarding production of a quality product. Overall they still lag way behind Japan and now South Korea. When will you accept the blame and fate the industry deserves. I'm sure you've spent the rest of your afternoon walking around to your other cube-mates showing your posted response. Unions and entitlements have made you non-competitive. Accept it and make the necessary adjustments. As taxpayers, we demand it. Don't play the patriotic card, you did it to yourselves.. I have a ford, a chrysler and a honda. The honda has 220K miles on it and has had fewer repairs than either of the other two. Produce a quality product and the market will take care of the rest.. that's what a free market society is based on.. now get back to work.

  • Report this Comment On November 11, 2008, at 4:54 PM, hallofrecord wrote:

    Nancy Pelosi has come to the forefront of proposing government aid to U.S. automobile manufacturers. Do the manufacturers need a "bailout?" Well, that depends on what you mean.

    A little history....

    A decade ago the U.S. automobile manufacturers were doing quite well. The economy in general was doing quite well. The U.S. government was focused on regulating and mandating efforts toward the automobile manufacturers. The marketplace would not support a mix of vehicles to achieve higher fuel economy standards. Foreign manufacturers such as Toyota and Nissan and Honda were scrambling to increase the size of their vehicles in order to meet the tastes of the American buying public.

    So much for prosperity history....

    The dot-com bubble crashed and so did illusory "fortunes." Terrorists attacked the U.S. and the U.S. prepared for war... and went to war. The dollar began to weaken. The Federal Reserve began a series of interest rate hikes and reductions that left businesses and consumers trying to figure out how to plan for the future. The market recovered temporarily only to be struck by the twin forces of unemployment increases and the collapse of the housing market. Consumers went into an economic shell. Financial institutions were hit by consumer defaults on loans. Credit dried up. Then oil prices skyrocketed and gasoline prices followed.

    So much for recessionary history....

    The government reacted by... passing onerous mileage mandates requiring billions of dollars of capital investment by automobile manufacturers.

    The automobile manufacturers in the U.S. were faced with a broken economy, a credit lockdown, and a government, led by Nancy Pelosi and Harry Ried's efforts, intent on manipulating the marketplace by restricting the supply of domestic energy resources while forcing adoption of technology that either did not exist or was lacking a supporting infrastructure or was too expensive for consumers to buy... by 2015.

    So, back to the original question: Do the manufacturers need a "bailout?"

    The automobile manufacturers need:

    1. a restoration of credit availability for consumers

    2. a restoration of consumer confidence in the economy

    3. a reduction of government mandates and interference in the automotive marketplace

    But given that is not going to happen any time soon, the automobile manufactures need working capital... or 3-5 million automotive-related jobs in the U.S. are in jeopardy, millions of pensions are in jeopardy, and the U.S. economy is in jeopardy of a long-term malaise.

    So, Nancy and Harry, you were instrumental in helping to create the situation... what do you think?

  • Report this Comment On November 11, 2008, at 5:28 PM, esquire25 wrote:

    We've already "lost the economy."

    Aren't you paying attention? It's been in all the papers. And what's killed it is not unions. The murderers are the free market freaks who never read Adam Smith, conducted business by slogans, and turned an effective economic system into a pyramid scheme to sell worthless scrip. The biggest insurance fraud in the history of world put the world's economy in the crapper. Add to that the doubling of the national debt in the past 8 years with nothing to show for it and the receipie for disaster is ready for the oven.

    Our economy is consumer driven. Taking money away from consumers is probably worse than taking money from AIG. Their the problem, not the answer. It's impossible to tell at this point how much of the auto companie's failure is due to their own conduct or that of others. Anyone who thinks the quality of GM, Ford, Chrysler cars has not improved dramatically over the past half dozen years simply isn't looking.

    Furthermore, it's getting more and more difficult to tell what is an "American" car these days. With GM, Ford, and Chrysler importing substantial parts from other countries and with Germany, Japan, and Korea having manufacturing plants here, there may be no such thing anymore.

    Everyone take a breath, step back, and try the decaf. Before the decision is made one way or another, let's gather some facts. We don't yet know the consequences of action or inaction. One of my favorite quotes from Einstein is his definition of insanity: Doing the same thing over and over and expecting different results. Let's not launch a WMD against ourselves.

  • Report this Comment On November 11, 2008, at 5:28 PM, 8416JR wrote:

    Keep Detroit 3 in operation by giving them a loan guarantee, not a cash infusion.

    Attach to the loan guarantee stringent conditions tantamount to tough uncle who wants results, not more profligacy and pie in the sky bye and bye.

    One of the conditions would be no, zip, zero multimillion dollar compensation packages for any auto executive.

  • Report this Comment On November 11, 2008, at 5:35 PM, shivphoto wrote:

    All I can say is if we are to become independent of foreign oil, then lets look at startups that are working on that... like the Aptera, etc. Why won't the govt invest in these companies to help get this country rolling again... The technology is out there, it just is not at GM, FORD, or CHRYSLER...

    When I see commercials regarding the Hybrid Escalade, I just laugh. It is the leadership of GM, it is the stale and un-imaginitive creativity(?) of these companies that took them down this sad road... It is their fault, and they failed to listen to the oil companies when they decided to raise the price of fuel and we experienced the "fuel crises" in the 70's. Now they are crying and I don't care...

    The Big Three could have invested into the future 25 years ago and could have been the great leaders that they should have been, instead, they ripped us off with poor quality, poor fuel economy, and poor company management... I now call them the Big Babies..

  • Report this Comment On November 11, 2008, at 5:37 PM, Rockfish88 wrote:

    This is indeed a fascinating discussion. I would be loathe to have our government stand on the sidelines while so many stand to lose so much. The question is what is the appropriate response. Looking at the bailout of the banks, I conclude that there should have been substantially more strings attached and oversight. No need to make the same mistakes here.

    The auto industry is one that has for a long time been mismanaged in my view. As gas prices hit a peak the Hummer was still being pushed by GM. And while the government did little to make demands on increased fleet mileage when there was time, guess who's lobbyists were making sure that was the case?

    To turn this aircraft carrier around you need a lot of room. It will take years to retool and reemerge with products that will appeal to customers. By then there will likely be nothing left to save. And I for one have seen nothing to support the notion that quality has met the competition. When I rent a car and get a domestic vehicle I am always astonished that they sell any cars at all.

    My prescription -- mandate that vehicles meet a standard that none are currently addressing, either in terms of fuel efficiency, use of alternative fuels, or some combination thereof. Put the imports in the same position of having to meet these new standards to sell here. Establish trade tariffs to the extent needed so the imports are not unfairly advantaged by lower labor costs. All bailouts should be in the form of loans, and if the companies can not make the changes needed without further support break them up and sell them in pieces to form new companies. A company built on the Volt might have a chance. A company built on hi-tech batteries for the auto industry overall might work too. A company based on the fat profit in Hummers, we already have.

  • Report this Comment On November 11, 2008, at 5:38 PM, shivphoto wrote:

    All I can say is if we are to become independent of foreign oil, then lets look at startups that are working on that... like the Aptera, etc.

    When I see commercials regarding the Hybrid Escalade, I just laugh. It is the leadership of GM, it is the stale and un-imaginitive creativity(?) of these companies that took them down this sad road... It is their fault, and they failed to listen to the oil companies when they decided to raise the price of fuel and we experienced the "fuel crises" in the 70's. Now they are crying and I don't care...

    The Big Three could have invested into the future 25 years ago, instead, they ripped us off with poor quality, poor fuel economy, and poor company management... I now call them the Big Babies.. For crying out loud, quit your bellyaching and get to doing real engineering!

  • Report this Comment On November 11, 2008, at 5:40 PM, anotherjames wrote:

    Teppy37

    I don't know where you get the figure of $9,000,000/year as salary for CEO. You say workers should get "their piece of the pie" too. Earlier this decade GM was paying $9 Billion a year in employee benefits. That's not just a piece of the pie, that's 1,000 pies. A hefty CEO salary may be bad and unnattractive to investors, but its risk of bankrupting the company is minimal compared to putting a third of your revenue toward employee benefits (see GM). You suggest these CEO people do nothing but enjoy "the high life". Being a CEO is typically more involved than that. It's not all hot tubs and helicopter rides. To do things well you must attract the best person for the job, so the salary needs to be competitive (see Nick Saban). And these people work hard and benefit their companies (see Microsoft, Apple, Crimson Tide).

  • Report this Comment On November 11, 2008, at 5:46 PM, Tinka82 wrote:

    We need to make some difficult decisions, but I seriously doubt letting the big 3 auto makers going under is going to be a smart decision in the long run. Consolidating them into one will not work out in the long run either, as competition among the American auto makers would no longer exist.

    I have a plan that would not only help save them, but encourage relocating the out of country facilities we've lost over the past decade and a half.

    1) get rid of UAW. The labor costs are out of line, and as several above posters have noted, weigh heavily into the factor that our auto makers cannot be competitive.

    2) Get rid of the corporate tax. Now, before you discount this thought, consider this:

    Many of the foreign auto makers aren't taxed by their governments, they are SUBSIDIZED by them. You heard me right. We not only don't subsidize our big 3 (which I don't agree with) but we create a punitive situation when they try to compete by taxing them. Leave the tax revenues to be collected from the wages, product sales, etc. and I bet the government will end up better in the long run.

  • Report this Comment On November 11, 2008, at 5:47 PM, estilehogan1111 wrote:

    Why I will not buy another GM car. Four years ago my wife, wanted a new blazer, Every GM dealer we went to the sales person would not talk directly to my wife. I repeatly told the sale person. The blazer was for her. After going to 6 to 10, dealers. And getting the same treatment we purchased a new subaru. We both love it and the gas mileage is 32 to 35 MPG on the highway and 21 to 24 in town.

    I have a F 150, it is 12 years old. I have had not trouble with it. When I purchased it new. It was $1,800 less than a chevy truck.

    So let GM go belly up.

  • Report this Comment On November 11, 2008, at 6:07 PM, chendrix77 wrote:

    Auto industry workers are getting an average of about $76 and hour (fully loaded... retirement, medical, etc.) This is a LOT more than other industrial workers in the U.S.A. Shipping billi-bucks to Detroit is a new form of wealth distribution... sorta like water flowing uphill. Look at it this way. Joe the Plumber ---???-----> Auto Worker. Most plumbers will never see the equivalent of $76/hour. It's time for the UAW to BEG for a large pay DECREASE.

    I blame much of this on Congress. They are the ones who said "SUVS are trucks and so they don't have to have pollution controls.

    Make 'em big and make 'em bad." These monster SUVS and pickup trucks clutter the highways, pollute, and support very wealthy people in the Middle East. So... managers in Detroit got hooked on making more and more of these. In the meantime it was as plain as the nose on your face that the price of oil was going to go way up as world-wide demand for it increased. This should not have been a surprise. But the "What, me worry?" management kept making them bigger and badder until the market choked. Shame on them. Foolish people. Not Motley Foolish, either. It was all about politics, folks. Washington wanted to keep the UAW happy and keep those votes coming. Congress is no better than prostitutes. Shove money under their noses and they will give you a good time.

    By the way, what happened to those auto workers who were being paid big bucks to show up every day and play card games off-site from auto plants. We are talking a foolish waste of money here. Is that still happening?

    In the meantime, Detroit and Michigan are in one big mess. Not to mention the innocent people who thought they would have a lifetime of employment building cars.

  • Report this Comment On November 11, 2008, at 6:34 PM, elicek wrote:

    US auto companies have had years to compete in the market and offer fuel efficient cars. They have refused to build anything other than huge gas guzzlers, somehow taking pride in the American "big car mentality."

    I know there will be thousands of jobs lost if the carmakers fail but they have done this to themselves. If someone had asked me, I would have said, years ago, make more fuel efficient cars. The writing has been on the wall since the 1973 oil embargo. We have had over 35 years to get it together but in all this time, these powerful companies chose not to go down the road of energy efficiency. They don't deserve a bailout. The power people that run these companies have made wrong decisions that have made their companies fail. But don't forget they have made billions riding this wave of excess. Turns out that the power players in this industry were incredibly short-sighted or maybe just greedy.

    If GM, Ford and Chrysler had been building fuel efficient cars for even the last five years, they would be in fine shape. They chose not to.

    The bailouts have to stop at some point. And these car companies are very sick. They may not recover even with big money thrown their way.

  • Report this Comment On November 11, 2008, at 7:16 PM, gregjehl wrote:

    Automotive companies are like any company, they fail because management makes bad decision mostly based on faulty data. There are unions all over the world even in successful companies. If I were asked were my tax dollars were going to be spent, I'd say on companies that have cleaned house and held their management that made the bad decision accountable. Second, I'd want to know that they have put good, competent people in place to make better decisions. Third, I'd want to know that they are using valid decision models and validated data to make their decisions. Fourth, I'd want to know they have used their knowledge and experience to develop an adequate strategy. Finally they need to follow and execute the strategy.

    I believe that everyone that pays taxes in the US should receive a special preferred class of stock proportional to their tax contribution with which they can vote additional special members onto the company's board of directors. These members would have veto power over strategic issues and their role would be oversight to ensure the above points are followed. The companies would be required to buy back these shares first, when they have recovered as they would with a loan.

    Stop asking for something for nothing or asking for money when your house is not in order. We need to stop throwing away money on situations that clearly not stable.

  • Report this Comment On November 11, 2008, at 7:27 PM, DemonDoug wrote:

    "If AIG (NYSE: AIG) fails, financial markets will simultaneously explode."

    I have an issue with this statement. The only basis in fact for this statement is that AIG and the government tells us this is so. They told us that with Bear Stearns; but when Lehman Brothers blew up and filed BK, the stock markets dropped but I can't remember a nuclear explosion of the markets.

    In fact I'm betting GM and Ford are more important to bail out, if we are going to bail out anyone.

    But I agree with the premise. We shouldn't bail them out, but we should let em die and let other companies fill the void. You are spot on with that assessment.

  • Report this Comment On November 11, 2008, at 7:32 PM, brendanmckeever wrote:

    There is no way the government should bail out the auto industry. The initial "bail out" was meant exclusively for financial institutions, not industrial. This whole thing is out of control. Everyone argues about higher taxes, at some point this will have to be paid back, in taxes. Moreover, the rational of the "bail out" is suspect at best. Buying toxic debt that literally no one in the world will touch so that we can infuse money into investment banks to create more debt. Stupid. And yes, this is only investment banks with this problem. Intstitutions that gambled in the stock market and lost. Most savings banks are solvent. It is the low few that are costing the sucker, oh sorry, the tax payer. You watch, the credit card companies are next and then who knows. I say to the auto makers, make a better product, something they have not done for 50 years.

  • Report this Comment On November 11, 2008, at 7:42 PM, flyboy60 wrote:

    So here is Nancy's Plan. Identify the major groups that vote in blocks. Determine if they can be crucial to elections. If so funnell as much aid as possible to these groups. This will ensure the present members of congress they will be funded and reelected. Makes sense. If Paulson can do it for his ex-companies and business associates why can't congress?

    There are many reasons why we should not try to prolong the bankruptcy of the "big three". Unfortunately congress will do exactly as they please.

  • Report this Comment On November 11, 2008, at 7:58 PM, REIN wrote:

    My first feeling was that autoworkers (UAW and Engineers) make a lot more money than comparable industries (Oil and Chemical refineries) while working much less efficiently. These are impressions from having worked in a chemical plant for the last 20 years. But it is curious that German autoworkers are surely as expensive if not more so than the America's Big 3, so why are there so many successful German car makes? Germans do buy German cars, when they can afford them, because they think those cars are the best. Big 3 makes the best V-8 rear wheel drive vehicles. But that is not politically. If the government steps in and pushes them to make products that Big 3 aren't best at making then it will be a big waste. Looks like that is where we are heading.

  • Report this Comment On November 11, 2008, at 8:06 PM, maniehols wrote:

    The tax payer should not bail out Detroit and the big three ! For a country that could put a man on the moon but not give its citizens a quality fuel efficient car tells me that both the labor management and the boards and bosses of the big three are very arogant. Let them now pay the piper. When I was working I made my fair share of mistakes and no bailed me out. In fact I lost my job in one instance. Let the free economy rule

  • Report this Comment On November 11, 2008, at 8:16 PM, AustinAndy wrote:

    If we let the big 3 auto companies fail, then who or what will cover the maintenance for those vehicles on the road? Will it force the consumer (i. e. me) to buy another car from an overseas company at great cost that maybe I cannot afford right now? How much retooling of the economy in the form of consumers and workers laid off and changing from what we have to a foreign design retard our economy? Remember, a deliberately broken pane of glass does not create a bunch of new industry; it comes at the cost of investment and research and expansion of our existing businesses. At the same time, we cannot just let our auto industry continue to do their operations in the same old way. Nobody will win with that approach, either. Lastly, how much is Congress to blame for all its mandates and requirements (unfunded, of course) in the fiasco? They are not looking on high with "clean hands", just as they are not looking at the mortgage mess with "clean hands". Not a lot of answers, just a bunch of questions.

  • Report this Comment On November 11, 2008, at 8:41 PM, tlund2 wrote:

    Reading the 'Buy American' and 'won't give Detroit a chance' comments really annoy me. I've tried that when it comes to autos and I had nothing but issues. I grew up in a 'Chrysler/Dodge' house. My first two new cars were either Dodge and I had quality issues with both. The third was a Chrysler and the paint began to peel. I lived nowhere near an airport and was told it was due to Jet Fuel. The following car was a Dodge and had major electrical problems at only 21,000 miles. We then tried GM - there were more major (expensive) maintenance problems than any of the others. We go out of our way to maintain our vehicles. We then bought a Nissan. I traded that car in last year with 238,000 miles and little to no unscheduled maintenance. We will never purchase a 'traditionally Detroit' car again - you couldn't pay me to do it. I read an article in a magazine a while back that essentially said that the Detroit manufacturers have lost a generation of car buyers. They hit the nail on the head.

    It disgusts me to think that the government will have to bail them out but unfortunately there's too much at risk.

  • Report this Comment On November 11, 2008, at 9:15 PM, KeitaiOtaku wrote:

    "In some cases, Detroit could pull down five-figure profits per SUV sold, while accepting slight losses on small cars. Selling small cars at a loss probably didn't seem like a bad idea, because it built a stable customer base and enabled manufacturers to meet fleetwide gas-mileage requirements."

    In my personal opinion and experience, this was a really bad idea.

    Because they weren't making a profit, those small vehicles were made very poorly. They didn't keep customers like this... they lost them. Almost every small-Japanese-car owner I know was extremely happy with their vehicles; not so with American.

    So those people grow up eventually, and do they buy an American SUV or a Cadillac? Nope... Lexus, thank you very much.

    The logic of losing money on a product... ever... even for the purpose of maintaining market share, is simply backward. In the end these products get the least attention, and cost customers.

    I basically agree with this article, and others related to letting the big 3 die and become reborn. They're not going to get a shot in the arm from the government (even if they get the cash). It will only be the painful lesson of a bankruptcy that turns the big 3 around.

  • Report this Comment On November 11, 2008, at 9:20 PM, lscrossestix wrote:

    Gentle people. We need to save the auto industry because it is the only manufacturing that we have left in the U.S. . In our short sightedness and greed we have shipped every other industry overseas. I defy you to find one object near you right now that was made in this country. We have become a nation of paper pushers and basically money launderers for the rest of the world. Hence why the mortgage crisis affected the whole world. We as a nation need good paying jobs that produce durable goods for this nation and for export. If we lose the auto industry our whole economy will be based on nothing but consumption. We will, as one poster commented, become a 3rd world country.

    There is no doubt that the big 3 were mismanaged and a lot of the blame belongs to them. But we the investors also shoulder some of the burden by demanding pristine quarterly statements. No company can be managed properly by having to make the investors happy every quarter. Most of the rest of the world(exp China) plan in the long term. If we as investors do not understand or demand this we should cash out our portfolios now.

    One last thing. I agree with the poster who commented "if we get into another war who will produce our tanks, Korea?" Good question. I remember reading somewhere that the U.S. Army was running out of ammunition and for the first time in history was looking at foreign suppliers to produce the bullets that our troops needed because we no longer had the manufacturing capability to produce enough here. Is that a little scary or what?

  • Report this Comment On November 11, 2008, at 10:15 PM, melkboer2008 wrote:

    If the Goverment bails out the automobile/unions, I will not buy anymore USA cars or trucks. I will be needing a new car soon but I am now waiting to see if our tax dollars get spent on protecting unions and pension funds. I suggest we all boycott the industry by doing the same.

    Melkboer

  • Report this Comment On November 11, 2008, at 10:47 PM, gfomin wrote:

    Your article is short-sighted rhetoric without providing a solution to a critical problem for the United States. A problem much bigger than just bailing out the auto companies.

    It is irresponsible of you to write:

    "True, perhaps hundreds of thousands of workers will lose their jobs if an auto giant goes belly-up. That's terrible. But in the long term, those workers will find jobs in companies with better than a snowflake's chance in hell of surviving. In the short term, it's miserable. In the long term, it's for the best. That's how free markets work."

    AIG, Fannie Mae, Freddie Mac, et. al. have already proven that when in crisis the free markets only work for the CEOs that take $100,000 junkets.

    Here in the U.S. we are at a point where the private individuals who have had the chance to operate the free markets have abused their opportunity. The only viable way to fix this problem is for the government to provide assistance, incentives, regulation and guidance to the auto companies (and all other struggling institutions).

    If you are going to endorse a plan of action that allows "hundreds of thousands of workers" to lose their jobs -- you should at least write a sentence on how these workers will survive while the free markets fix this problem. (Or should they just eat cake?)

    Don't you realize that if Ford, GM and Chrysler are allowed to fail, corporations from around the world will gain the power to control our free markets in the U.S.?

    Do you really want to live in country where are free markets are controlled by corporations from other countries?

    I'd rather the U.S. government give the U.S Auto Companies a couple months worth of the money that is spent developing the "free markets" in Iraq. (Or are you just interested in making money in any free market -- without regard to the devasting and permanent damage that would occur to the U.S. economy and its citizens?)

    I hope you start to look at a the big picture -- instead of just spouting your "free market" idealist propaganda.

  • Report this Comment On November 11, 2008, at 10:51 PM, kelmal100 wrote:

    Good article and good responses too. Consolidate the Big 3 and limit them to manufacturing 9 models..3 each. Reduce the work force by 70% and cut wages and benefits to those that want to stay and work. The remaining 30% of workers can find jobs at Toyota or Honda of America. Or they can re-tool and work in alternative energy industry which we are going to need real soon.

    So long Hummer...Hello bike

  • Report this Comment On November 12, 2008, at 12:15 AM, BrianCNC wrote:

    SHORT AND SWEET. Unions KILLED the US Auto Industry. Outragous Pension plans.

    Medical for LIFE after retireing. (name ONE industry that does that)

    Outragous wages. Strikes for even MORE pay.

    One blogger nailed it. LABOR COSTS.

    Take the bailout money, give it to the unemployed workers as a "bouns" and the unions should empty their funds to the "laid off" unemployed workers and call it a day. Build cars overseas for cheaper and better. END OF STORY.

  • Report this Comment On November 12, 2008, at 1:38 AM, Tacomatight wrote:

    The lesson I got from the movie Jurrasic Park was that bringing dinosaurs back to life is bad...really, really bad. Anyone who's read the news or took an economics class in the past four decades knows that these three companies are the architypical examples of old firms failing to compete in a global economy. I grew up in a Ford family and still remeber when the Taurus was one of the world's best cars in the late 80's. Then Ford mucked everything up with a revamp and ruined their best selling car. They then took one of the great luxury brands( Jaguar) and destroyed that as well. Came up with the great idea of trying to turn it into a luxury Ford Taurus (awesome dude). The examples of incompetence are endless. The big three refuse to change their ways and are therfore crappy companies. They have been givin their shot countless times...they refuse to change. Enter the big comet...

  • Report this Comment On November 12, 2008, at 3:08 AM, GoNuke wrote:

    Toyota has demonstrated that it is possible to make both inexpensive and expensive cars profitably in both Japan and the US.

    There is an automotive manufacturing model that does work in North America.

    I think it is foolish to kick our economy when it is already down. The loss of GM and its parts suppliers would damage the economy at a time when it is teetering on the brink of depression.

    The best plan is to let GM go bankrupt through the chapter 11 process and get out from under all of its employee and labour union commitments. GM has to admit defeat and see itself as a hungry newcomer. That means no unions, no seniority, no benefits, and no commitments to current or future retirees. It must become a new company. Fixed management salaries should be cut and a portion of annual remuneration should be in the form of bonuses, if the company can afford them. The same should apply to direct labour. Hourly wages should be cut to reflect real productivity. As with management remuneration production labour should be rewarded with bonuses when the company can afford them and when productivity gains are achieved.

    GM needs to be reduced to a start-up that just happens to have a lot of capital equipment and in-house technology.

    I don't like GM. My first car was a Chevrolet that was so badly made I was nearly forced to declare personal bankruptcy because the cost of maintenance was so high. Since then I have owned two Honda's, a Suzuki, and a Toyota. I know that it is possible for good cars to be made by high wage earners.

    If the current employees want to keep their jobs they are going to have to accept massive cuts in income and forgo the inflexibility that the UAW has forced upon the companies.

    The alternative is to let GM go bankrupt and have some investors buy up the assets at a huge discount to fair market price. Then they can post job wanted ads offering starting salaries of $14/hr.

  • Report this Comment On November 12, 2008, at 4:30 AM, Brettze wrote:

    If you are right about letting GM and Ford down the tubes because imports are better quality, then Japan will stop propping up dollars by selling yens ... Dollar will weaken and buy only 50 or even 25 yens down from today's 90 yens... If you still plan to buy a $50,000 Civic in 2011, go do it!

  • Report this Comment On November 12, 2008, at 7:21 AM, voyetra8 wrote:

    I live in Michigan. I've worked in the belly of the beasts, having worked as a consultant for both GM and Chrysler. I've seen all of the wasted money and resources firsthand, the red tape, the duplication of work effort, the drunk marketing executives they would not and could not fire. I watched GM spend tons of money trying to determine which software they already knew they were going to purchase beforehand. I heard from over 50 top marketing executives at Chrysler that they "didn't care about the environment". Granted, they were just being honest, but this was merely 2 years ago.

    Anyone who has not actually lived in Detroit cannot understand the mentality of the people that live or have grown up there. I took my life into my hands driving to work every day. The people were mean, angry, and aggressive, without pity. I was forced off the road, had my Toyota vehicle spit upon, and literally tailed/chased to work. If they had access to a gun they likely would have shot me. When we moved into our neighborhood nobody welcomed us, nor did they have the desire to befriend us. Many lived in their large houses, retired at 50, with several vehicles in the driveway. I heard rumors of forklift drivers making $125k per year, and janitors making $85k per year at the local auto plant. The homes were high-priced due to high demand / high union wages / low-income mortgages. I saw the writing on the wall and left Detroit for good earlier this year, taking a 1/3 loss on my home, and there was no bailout for me.

    We need to pull the plug on the American auto industry for good. Go Kevorkian on it. They've ridden this horse for as long as it can go and did not adapt as they ought to have adapted. To throw money at this problem would be to throw good money after bad. Let it die. Now. As far as I'm concerned the entire east side of Michigan can fall off the face of the earth and the people can migrate out of Michigan to disseminate their hatred elsewhere. Maybe they will have to actually work for a living....at a Toyota or Honda plant.

  • Report this Comment On November 12, 2008, at 8:04 AM, mfmfreader wrote:

    If you take a look at the balance of federal payments by state...

    http://www.hks.harvard.edu/taubmancenter/pdfs/fisc/summary_9...

    ...Michigan has been on the losing end for many years. Michiganders taxpayers have been subsidizing many other states -- they pay out more in federal taxes than they receive back.

    I wish there were no bailouts of banks and Wall Street. I also wish Congress and the media didn't create such a frenzy that destroyed consumer confidence, causing damage to our economy and stock market which put us in the situation we have today.

    So, is it OK to bailout the automakers? What's another 50 billion? It's 5 years worth of subsidies that Michiganders have been paying in federal taxes and not receiving back. Why not?

  • Report this Comment On November 12, 2008, at 10:49 AM, mtwhallete wrote:

    To bail out Detroit, or not to bail out Detroit is a perplexing question. It raises questions like: Is this a loan or another governmental freebie? What will the funds be used for? If it is to pay interest on existing debt, shore up the underfunded pension plan, to fund employee health care costs or to continue building vehicles that do not sell, then NO! There must be massive restructuring, and that cannot be done without the UAW sitting at the negotiating table. Bankruptcy (Chapter 11) may be the be best approach. A Federal judge may expedite the structuring. Let's face it, Detroit has lost its competitive edge. By pouring taxpayer money to continue the failing practices will not make the competitive. The UAW has the auto industry in a corner, without them weighing the cost of the auto industry's demise, nothing will change. If the UAW is reluctant to negotiate, then Chapter 11 is the way to go, and let the courts decide. Otherwise, it's call the auctioneers!

  • Report this Comment On November 12, 2008, at 12:35 PM, cdwol wrote:

    Everyone keeps saying they will go out of business and all these jobs will be lost. Fortunately, this isn't what happens here in the US. They will file for bankruptcy, reorganize including renegotiating the ridiculous labor agreements with the unions, get out from under those legacy costs and probably - not definitely - but probably come back in good shape. They actually are making a decent product but when they start off with massive disadvantage before they even start building the product how are they supposed to comepete? They can't. The best thing that can happen to the US auto market is bankruptcy so they can reorganize under the current business model of their competitors with 401k's instead of pensions and the like. The only real losers are those close to or already in retirement but there is always collateral damage in situations like this. This is far better than the US taxpayer putting up cash that will never be seen again to subsidize a failed model. We all would like to be guaranteed a job and guaranteed retirement but as we have seen over and over - with the exception of gov't - this can't be sustained in the long run.

  • Report this Comment On November 12, 2008, at 1:32 PM, desertlady226 wrote:

    The oil companies have been claiming that their profits are being funneled into research and development. How about the oil companies funneling some of that research and development investment 'funding' into our auto industry? Or maybe the auto industry should sell cars like the Ford Mondeo here in the US rather than the rest of the world. Wouldn't you buy a midsize sedan that gets 50 MPG? If they sold those type of cars to us maybe they wouldn't be in the poop they are now! No bailout for them. We didn't bailout Amtrack (mass transport), the airlines (mass transport) why should be bailout an industry who doesn't build something we don't want to buy?

    Oil Industry 'investment'. Talk about cause and effect!

  • Report this Comment On November 12, 2008, at 1:36 PM, sellsior wrote:

    First of all the phrase bailout needs to be defined. Does it mean gift? No.

    Chrysler paid back their government loan a year before it was contracted to. So, in a time when money is tight and no one has the big bucks to loan trillions to all the companies who need it - government loaning money at a bank rate seems to make good business. Like any loan you have to meet standards... or no loan. Twenty five years ago I worked on advertising for GM I told their management that the Japanese were going to overtake them if they did not change their attack on design and function. I was asked off the account.

    So, do they need an attitude change. you bet. Do they need to dump three million jobless on the street. Hell no. The old school seems to be too dumb to carry on. But there are smart young management groups throughout the industry.

    The idea of let them die if they can't be competitive is foolish when you are talking on this scale. Why chop off your leg when a knee transplant will fix the problem.

    It is not easy. But a little thought will go a long way.

  • Report this Comment On November 12, 2008, at 5:19 PM, StarbellySneech wrote:

    All the doom and gloom over the need to save the big 3 is misplaced. If you care about the employees, you still need to let the businesses fail, not prolong the agony. The employees can then move on to other employment. Maybe not the cushiest or highest paying, but certainly in line with their value as an employee in the area they chose to live and work.

    I think a lot of people are not understanding the nature of what happens when a company fails. In most cases there is still a demand for at least some of the company services and another company fills the need. Almost always this involves buying some of the assets and hiring some of the employees of the failed company.

    If the big 3 are not bailed out, some of the assets and employees will still be employed in one form or another. It is not the "end" of every employee, supplier and trickle down recipient. But if they are bailed out it is most likely that the money spent will be destroyed. And it will be a net loss to we the taxpayers.

    So we are being forced to each donate an organ to prolong the life of this terminally ill patient. Which act makes us sick and the ugly cycle continues spiraling downward until we hit bottom. Where that bottom is, I don't know.

  • Report this Comment On November 12, 2008, at 5:41 PM, anotherjames wrote:

    BrianCND - Ditto

  • Report this Comment On November 12, 2008, at 5:55 PM, anotherjames wrote:

    This is EXACTLY why I was againt the bailout and this is EXACTLY why I'm against bailing out the Big 3. The house Dems want an "ownership stake" in the Big 3 in exchange for a piece of the $700 B bailout fund. This bailout fund is not meant to help anyone. It is meant to giv the Gov a huge purchasing fund. The gov knows JUST AS MUCH AS EVERY FOOL KNOWS that NOW is the time to buy. So conveniently the gov gives itself a "bailout fund", or what we Fools call investment money. This is how the government gets its claws into us. It's not so it can help us, but so it can further entrench itself and keep dependancy, votes, and ultimately money flowing into the individuals in Washington. This is unconstitutional. This is frightening. And this is happening much faster than we realize.

    http://news.yahoo.com/s/ap/20081112/ap_on_go_co/auto_bailout

  • Report this Comment On November 12, 2008, at 5:58 PM, loosecabooseus wrote:

    the fact is: while the world's auto makers from Asia, India, & Europe have been spending their time/money innovating, the Big 3 have become fat, lazy and stupid; relying on hype & flash to sell cars and financing the purchases at 0 down, low interest loans, to people who still can't afford to own the SUVs they "bought." Meanwhile, Bob Lutz et al. were busy bickering about whether there is an energy crises, or playing politics with the EPA and Unions... These guys (management) and their arcane business models are dinosaurs and will become extinct. I am not afraid, because the US industry is NOT just the Big 3! There are plenty of small, innovative companies providing specialized designs and parts for the global auto market, right here in the US. These are small companies. Furthermore, car-manufacturing companies like Tesla are emerging, and may take over the US auto market, they build cars AND innovate in ground-up electric motor design and Li-ion battery design that they license out to other car makers! This is the future of the US Auto Industry -a new generation!

    FORDget, GM, & Chrysler. Let the Japanese et al. build their assembly plants to replace some of the manufacturing jobs lost, but more importantly, have them license our technology and sell it all over the world. If an American wants to build cars (as many do in their garages) let them! May the best and brightest emerge as the new Ford, through innovation and hard work; not through gov't handouts. Maybe spending the handout money on Universal Health care would help cut costs incurred by US manufacturing!

    It is always darkest before the dawn... Don't Panic!

  • Report this Comment On November 12, 2008, at 10:35 PM, jprental wrote:

    i say if the banks get bailed so should the auto companies and so should people who like me lost my entire wealth because of the greed of these banks. at this stage of the game i could care less about the fing banking system and the economy . i dont have much left as it is. and if i lost it it would be well worth it to see all the fat cats out in the street begging for food.i lost faith in this country so i dont give a damn what happens to it. where are the terrorists when you really need them. oh yes they are still in business because of our tax dollars. armageddon is a welcome event as far as i am concerned . and the sooner the better

  • Report this Comment On November 13, 2008, at 12:56 AM, thomsans wrote:

    First of all, 25 billion divided by 3 is just about 8 billion each. Is that really going to fix anything. It's like trying to hand pump the water out of the Titanics hull! Frankly, shouldn't they all have big war chest after 100 years in business with a couple of 100 billion in reserve. You mean to tell me, they woke up one day to a broken business plan or was it broken for years and finally caught up to them. Heck, think about it, our grandparents only drove American cars, our parents much the same, but today even our kids are buying foreign cars. I hate to say it, but the writing is on the wall. Lets face it, Detroit is broken and the money is only half the problem... it will still be same pensions, management and product issues after they burn through those billions.

    Wgat really hurt Detroit is paying $70,000 to $80,000 for and average assembly-line union worker. Decades of fatcat salaries and pensions are the really to blame. They basically priced themselves out of the market and greed and sloppy craftsmanship.

    Frankly, this wouldn't be the first American Automotive company to fold. Whatever happen to capitalism anyway? Shouldn't it be survival of the fittest? If GM thinks 8 Billion (when they are burning through 7 billion a quarter) is the answer, then we are all fools. Once the cork is broken the government money will be flowing at and endless rates with countless excuses and over sights and miss appropriations you haven't seen the likes of. Its AIG all over! They are on life support and will say and do anything to keep them from pulling the plug. When was the last time the government so worried about other businesses closing? Look at the shoe and apparal industry in the 70's or the televsion and electronics industry in the 80's... all over seas. Many Americans suffered and lost jobs, but they all moved into other industries and created opportunites for other indusries to pick up equipment and real estate which is now used to manufacture other products.

  • Report this Comment On November 13, 2008, at 1:21 AM, SteelAggie wrote:

    The thing people are also missing in this discussion is simply national security. If there is ever, heaven forbid, another world war, or a war in such magnitude that we need manufacturing then with the loss of the Big 3 we have no true way of doing it. I realize yes, they are slow, old, and full people that make crappy cars no one wants to buy. Also, as an industrial engineer I know that their quality of cars are currently at par with Japanese cars. But, as the issue has been brought out, the Big 3 are like a large ocean liner that takes a long time to turn. In the global economy this will not survive with Japanese and Korean companies that at will change their manufacturing scheme to produce a different set of cars. We should in my belief dice up the Big 3, make them the Small 100. That way the can get the nimbleness they need, and can get rid of all the baggage of union contractors they have. Simply put, unions have really killed off allot of good companies, along with old bureaucratic ways.

    Also, someone needs to go talk to boeing union workers about how if they like their jobs, they should learn to compromise instead of strike. Unless of course they want Airbus to replace Boeing as the only major manufacture of commercial airplanes.

  • Report this Comment On November 13, 2008, at 5:14 AM, falang1 wrote:

    The big 3 should be loaned money by the government. I hate the words "bailed out". The reason is the current drastic situation was out of their hands. Would it matter if they had tiny cars to sell instead of SUVs? Not really, they lost money on them anyway. Now they can't get a loan which is what they need. I would say give them a loan that needs to be paid back to get through this mess then let them fail if they still can't get it together. I see Chrysler going under with even a bailout and the other 2 surviving. GM and Ford have good international presence. GM will be making huge profits in BRIC soon. Big 3 quality (except for one) is right up there.

    Or we could just be protectionist like the Japanese government and basically eliminate foreign competition here.

  • Report this Comment On November 13, 2008, at 11:42 AM, grescentre wrote:

    BYE BYE UAW. You killed yourselves

  • Report this Comment On November 13, 2008, at 1:09 PM, c350amg wrote:

    I think up to a certain degree the US automakers are living today what the British felt 30 years ago. If you are old enough you should remember that England was one of the biggest car manufacturing in the world from the 50's to the demise in the late 70's.

    MG, Triumph, Morris, Austin, Sunbeam, Humber,Rover, Hillman, BMC, British Leyland and so many others all disappeared at the same time. And the ones left are foreign owned Jaguar, Land Rover, RR, Bentley, Vauxhall, Aston Martin and MINI. Nothing is left which is British owned except the speciality carmaker Morgan.

    If you go back and read why you will see the same errors were done by the Brits. Poor Poor quality, dated design, Cheapy distribution network, fighting new safety regulations......

    And if you crossover to Germany it's the reverse they got way much bigger. VW-Audi, BMW, Mercedes are making money. These guys have no problems meeting new safety regulations (or actually making them), increasing efficiency. I mean let's be serious for one second the Germans make remarkable cars which consume not a lot of petrol and can be driven all day long at insane speed and they do drive them at 140-150 mph. Everytime I hit the Autobahn in Frankfurt I am amazed by those A4, 3 series and C class (all diesels) passing me by.

    Mercedes tried to integrate with Chrysler, what a disaster, for years they had to pay to sustain the company. At the end they basically gave it away and the rest of Chrysler value on Mercedes balance sheet is zero. I repeat ZERO.

    In the US they make really great things and products. Think of Apple, Microsoft, Google, NASA....the list is really long. How come cars are so off the lines?

    If they are being saved, the big heads of the 3 automakers should sit in their respective boardroom and simply say...we make cheap stuff lets start over fresh and go shopping for designers and engineers acros the world.

  • Report this Comment On November 13, 2008, at 5:32 PM, joeplumber wrote:

    Hey Morgan—so the govt bailed-out your fancy friends in NYC but we, here in Detroit, are not worthy? Your friends on Wall Street didn’t make extremely poor decisions too? Can you even begin to envision what would happen to the GLOBAL economy if the Detroit 3 folds? You might as well drop an atom-bomb on the Midwest because life as we all know it would end. Your friends on Madison Avenue would all lose their jobs if there are no ad dollars to spend, right? Your analyst friends wouldn’t have an entire industry to analize, right? There would be no patients with their GM/BCBS platinum cards. Who do you think really keeps the doctors, lawyers, accountants and consultants in business? Are you that naive to think it would be okay for GM to just go away? And you work on Wall Street?

  • Report this Comment On November 13, 2008, at 7:44 PM, kedo76 wrote:

    I have a reason why we should do whatever we need to do to keep the Big 3 in business. The Ford Mustang. Is that too trite, or "stupid" for all of you? Probably. My son turns 16 in 14 years and we will probably work on a car together. It's going to so much fun working on a Honda Accord since that's all we will have. Or maybe a Toyota Camry. Gee. Do they need to fix the business model? Yes. Should they just get money and be allowed to not put in any remedies to today's problems? No. But give me a break. The US gov't shouldn't help US companies like Ford and GM? In 10 years our streets are going to be all Honda's and Toyota's and Hyundai's? Things that are American do matter. It's our culture and our society and I for one think any atricle like this is complete trash.

  • Report this Comment On November 13, 2008, at 11:35 PM, 123go100 wrote:

    if we can bail out wall street and aig then we can bail out the big 3 sure we bail out social security sure we can bail out the credit card holders sure we---well u can see were this is going. get out the chainsaws and cut down the forests cause we need the paper to print the money. bail outs and printing more dollars will not do it. what we need is real leaders and leadership from our elected officials. but based on the 1st voted bail out we dont have any. it is now down to "we the people". i'm scared ,it will take real blood , real sweat, real tears.

  • Report this Comment On November 13, 2008, at 11:52 PM, scola91660 wrote:

    Makybe we can help?

    www.offshoregroup.com

  • Report this Comment On November 14, 2008, at 7:53 AM, IXLR82 wrote:

    I personally believe, that if the goverment is to bail out the auto makers, that a requirement should be breaking the unions and make the executives work for their salary. Also, forget the bonuses until the company is profitable again. But alas, try breaking a union in the upcoming administration.

  • Report this Comment On November 14, 2008, at 8:00 AM, Sinfest wrote:

    If we had universal health care (or socialist health care, call it whatever you want), and if George Bush and the other 49% of the country that agreed with him hadn't sneered at hybrid cars as weak, girly cars, then Ford and GM wouldn't be in the problem they are in now.

  • Report this Comment On November 14, 2008, at 11:14 AM, IXLR82 wrote:

    I just want to add a couple of items that the hybrid/anti oil people aren't commenting on. How in the post oil age will you take your son fishing? How will you tow your boat to the lake with your Prius? How easy will you be able to handle your hybrid lawnmower or snow blower? The simple fact, election aside this is still AMERICA! The auto maker's problem is simply the result of union and corporate greed! Break the unions tell the uaw faithful they will need to work for $18.00 dollars and hour like their brothers down south and like 90% of the working class in this country. What makes them so special?

  • Report this Comment On November 14, 2008, at 12:35 PM, jonindynorth wrote:

    First and foremost please don't blame the unions for the mess that the big 3 are in. NO company is ever going to pay its workers more than they can afford to pay after profits. The big 3 were making money hand over fist. They wanted more and had no respect for this country or its people. The bottom line was profit and yes they could make more using dirt cheap labor. It haunts them to this day. The foreign car companies realized that US workers built better cars and came here to have them manufactured. Better products, more sales.The big 3 have dug themselves this hole and should eat the mud out of it. We have urgent business, building hydrogen, electric, and even newer technologies that are not yet thought of. The Big 3 are bogged down in greed and build it and force em to buy it mindset. That won't change with a bailout, only drive their same as usual mindset. Lets take the money and invest in new car companies and let the big 3 compete, the way this country is supposed to work economically. I just can't fathom Henry Ford standing at the

    steps of congress begging for the money to purchase a new assembly line to begin mass production of Model T's. He did it himself and cared about his country. Something the big 3 could care less about. Their love is for green and its not the green that makes our cars more environmentally cleaner.

  • Report this Comment On November 14, 2008, at 12:43 PM, masturhu wrote:

    DOWN WITH UAW

  • Report this Comment On November 14, 2008, at 1:06 PM, IXLR82 wrote:

    joindynorth I agree in principal, however I said the unions and the automakers. I work in an industry where I get rented out to the automakers as an equipment erector and have seen firsthand what the uaw is like. Also my job will suffer if they don;t get bailed out. The American people had better be aware of why the dems are supporting this bailout, they are paying thier constituents, ie: the UAW!

  • Report this Comment On November 14, 2008, at 1:10 PM, Milligram46 wrote:

    I've tried to avoid this discussion but I just can't.

    This quote from the story stands out:

    <i>The second issue -- a reliance on SUVs and trucks -- is really the 800-pound gorilla here. The profits Detroit gushed in years past didn't come from selling small, fuel-efficient cars, but from SUVs with downright stupendous profit margins.</i>

    If you look at Toyota, Honda, and Nissan, and their product launches over the last 3 to 5 years, and you look at General Motors and Ford, and their product launches over the last 3 to 5 years, you'll be in for an eye opening surprise. It has been Honda, Toyota, and Nissan rapidly expanding their gas guzzling truck and SUV lines, not General Motors and Ford who are going in the other direction. I will openly admit, Chryler is the poster child for everything wrong with Detroit engineering, if they could have squeezed a 5.7L Hemi V8 in a Dodge Neon, they would have done it.

    Ya, ya, but Milligram46 what about the G8 and the Camaro that's coming. A CAMARO! Are they stupid. Yes, a Camaro with a 300HP V6 under the hood derived from Cadillac that gets 26 MPG. Have you looked at the MPG of a V6 Camry or Accord lately, and they don't put 300 HP down on the ground. The G8 is based on the same chassis, but using the FI 3.6L V6 gets 25 MPG on the highway with 256 HP, and runs with the V6 Camry 0-60, out brakes, it out handles it, out runs it, and shoot, even the guys on Top Gear adored its Vauxhall cousin, comparing it favorable to a BMW 5-series, let the sparks fly.

    The biggest arguement I hear over and over again is, "you don't see Toyota asking fora government hand out."

    Now since I was called a liar here on the Fool Prestone and I have made peace, among a flurry of numbers tossed around. Detroit auto workers are paid on average $73 an hour. Japanese auto workers in the US are paid $48 an hour (when you combine benefits into the equation for both figures). But when you ask anyone well gee, where did any of those numbers come from - no one can answer. Another figure said he average Detroit Big Three auto worker got $31.56 an hour, and their non-union Toyota counterpart got $27.00 an hour. But again, no one knows where that number comes from either. So are Detroit auto workers paid as much as their foreign based US employed counterparts, seems that is an open issue - but the numbers constantly tossed around point to the fact that they are.

    You see, you're right, you don't see Toyota, or Honda, or Nissan asking for US government handouts because they alreay get them.

    Japan has a socialized medicine program, so take that expense out.

    http://www.nyu.edu/projects/rodwin/lessons.html

    Japan has a socialized pension plan, and the oldest population in the world (that is an amazing statistic given the losses of population in World War II)

    http://www.ier.hit-u.ac.jp/pie/Japanese/discussionpaper/dp20...

    And lets not forget that Jim Press, formerly of Toyota accused the automaker of having the Prius engine and battery system R&D 100% funded by the Japanese government, something Toyota spun, then denied, and labeled Press as a bitter ex-employee (for the record Jim Press left Toyota to join Chrysler and made the accusation after leaving).

    So naturally Toyota isn't asking for government hand outs, they already get them.

    Look, if GM goes bankrupt and raids the pension funds guess what, the states and federal government is holding the bag for the costs, that's you and me stupid. If all those fat health benefits goes away for pensioneers where do you think their healthcare is going to come from? Japan? You and me - stupid.

    Oh I've heard the arguemen over an over again. Go Chapter 11, restructure, life is good. Ask yourself this question, regardless of who the car is made from, would you buy a vehicle from a bankrupt automaker? If you were planning to buy a new Prius, and then Toyota went bankrupt, would you still buy that Prius? If you were going to buy that Subaru Outback, and they went bankrupt, would you still buy that Outback? Would a bank write paper to provide auto loans to a bankrupt automaker?

    Hello, McFly - Chapter 11 is out of business game over. Secondly, if GM or Ford file bankruptcy, the naked shorts will kill the other within 30 days, Lehman Brothers, hello, anyone listening.

    And this ignores another big issue, generally speaking, GM in particular, and Ford are very healthy outside of North America. GM is the number one importer in China, by a landslide (turns out that Buick is the ultimate status symbol in China and the Chinese are still pissed off at Japan for that whole World War II thing, imagine that). In Europe Ford is very strong and is buiding some great models.

    And take this into consideration dear reader, because I've read suggestions that GM should sell the research its done on the Volt and let someone bring that car to market. Sure, I'm sure a group of investors backed by Halliburton and Exxon/Mobil and other parties very interested in not seeing a 102 MPG / 40 mile electric range car on the market next year. But General Motors KILLED the electric car. Well then can anyone explain to me why Dean Devlin, producer of Who Killed The Electric Car was with GM when the Volt was shown in its final form in September of this year, has unfettered access to the egineering effort and is working on a new documentary called, "Who Saved The Electric Car," showing the efforts GM is making to bring a VIABLE plugin vehicle that will work in any climate to the United States? Hey - just sayin'

    So if you enjoy the spectre of states picking up healthcare and pension costs along with the federal government, eliminating 300,000 high paying jobs at the low end, to fve million high paying jobs at the high end (hey I'll play the spread of the conservative to dire estimates) in a 12 to 18 month period of time, and tens of billions of debt and payment promises welched upon on a vast supplier network - hey - have at it folks!

  • Report this Comment On November 14, 2008, at 3:21 PM, TiltnSpill wrote:

    I live in Michigan, and I'm against bailing out the Big 3.

    They've failed to adapt and should suffer the consequences. The ripple effect on the economy won't be as awful as everyone is stating.

    If I end up losing my job because of the "ripple effect" of these horrendous companies failing then so be it.

    I... unlike so many other companies... can adapt... and I'll find suitable employment elsewhere.

    Why do we think throwing money at a problem will fix it? How about we throw that money at a company that knows how to use it?

    What a strangely absurd idea!

  • Report this Comment On November 14, 2008, at 4:11 PM, cann211 wrote:

    If I'm not mistaken - we just "bailed" them out a month ago! They mis-managed that (at about the same amount that a mid-size war is costing us) and now that they see deeper pockets they decided they could actually use a few billion more! For crying out loud! They can't even figure out how much they need from month to month no wonder they're business is sinking faster than my 401k. Besides, it's not like whoops, no more auto companies! With the beached whales out of the way the better managed companies may take a great opportunity to buy what's left, hire back some workers and start themselves a new Toyota or Honda or (fill in your own "green" auto) plant!

  • Report this Comment On November 14, 2008, at 4:16 PM, sixxgunner81 wrote:

    Reality doesn't always line up with perception of reality.

    So, Detroit has finally caught up to foreign automakers in quality? It'll take years for the public to come around to that idea, if ever. The seed has been planted for over 20 years that Hondas and Toyotas last longer with less repair and maintenance than the Detroit brands. (Even though it's odd, considering the example of a Pontiac Vibe vs. Toyota Matrix...oh wait, they're the same car.)

    Adaptation and evolution are key here. Labor unions are a thing of the past.

    I don't see many sweatshops, mandatory 75-hour work weeks, deplorable working conditions, etc. in most American workplaces. So what are the unions doing these days? Why are they still necessary?

    To fight "The Man?" To get your "fair share" of the profits? To take care of you and your family for the rest of your life?

    Get a grip, people.

    It's 2008 - your retirement is on you.

    Survival of the fittest.

  • Report this Comment On November 14, 2008, at 5:06 PM, shepmo wrote:

    If you want to get "main street" in on the bail out. Let Joe sixpack, plumber or whoever write off the interest on his car loan/credit cards and mortgage. I remember back in the 80's this was allowable by the IRS. Then there was a Reagan tax reform bill that wiped it all out. With the cost of today's car reaching that of a condo, a tax deduction is a better stimulis than a $600.00 from the government. At the same, the average Joe will have incentive to purchase without having to wait for the trickle down effect of wallstreet.

  • Report this Comment On November 14, 2008, at 7:40 PM, a46 wrote:

    PEOPLE, PEOLPLE, DO U THINK THAT ANYONE WILL READ ALL YOUR COMMENTS. TOO BIG.

    WE R FOCK UP!

  • Report this Comment On November 14, 2008, at 10:08 PM, toolzfoolz wrote:

    As a person who lives in Michigan, not far from Detroit and works in the automotive industry, I see the signs...I have seen them for decades, and I agree. Throwing good money after bad at the auto industry will not solve the problem of labor costs and lack of competitiveness. Yes, they are now trying, but too little too late I think. I remember the start of the SUV boom...and shortly after there were safety concerns with SUV's being topheavy I think. I expected the market to decline then, but it did not, it only expanded. Even now they are still making luxury SUV's...for who? No one wants them now. They have starting concentating on flex fuel vehicles, but a lot of those are midsize cars, SUV's and trucks. Nice try, but I don't think there is hope now. I think they need to sink, and a better company will come out of the ashes with a better business model, unless they can save themselves and junk their current business model and start again.

  • Report this Comment On November 14, 2008, at 10:28 PM, ryorgens wrote:

    "As GM goes so goes the nation" - what if this is more than a saying but more of a reality? What if their failure made "THE DIFFERENCE" between a recession and a depression? Wouldn't they be just as much "Too big to fail" as AIG for the economy to survive? This is a real big decision with big consequences.

  • Report this Comment On November 15, 2008, at 1:48 AM, raoool wrote:

    Difficult issue. Great series of comments. What's actually quite horrifying is that so much of what is presented re: the auto industry's problems applies to the majority of American business these days to some degree. The article's basic premise - 'saving AIG is more important to the U.S. than saving GM' may, sadly, be correct; but that's a strong indictment of how screwed up this country has become. If this new administration continues to prioritize wealth thru paper pushing, we should all be looking for a new homeland.

  • Report this Comment On November 15, 2008, at 4:26 AM, motorcitymick wrote:

    I live in Southeast Michigan. Have for over 60 years. Certainly a wide range of comments on the bailout issue but to me its not really a difficult issue. The choice is not about being for or against a bailout really.

    Its about pay it now or pay it later. Pay now-Lend the GM, Ford et al's 25-50 Billion now, require them to continue to cut labor costs, close plants, trim products, and get access to credit to make vehicle loans. Allow them to restructure to survive in a 12 million US car market for the next 15 months until things get back to 14 million units-making money time.

    Ford with its cash status should make it through that and hopefully GM also. Chrysler is probably going away no matter what happens. Sold too an overseas car manufacture or broken up take your pick.

    Pay later-GM and Chrysler get no loans-BOTH file Bankruptcy in the 1st quarter 09..out of cash no credit available. Immediate loss in 09-1.5 million jobs, $275 billion in overall lost US economic growth, $75 billion in taxes lost, $ 80 billion in pension debt transferred to US Gov for GM, and $10 billion for Chrysler. Tons of auto suppliers like Delphi, Lear and Johnson Controls: some now in bankruptcy others operating on less than 7% gp will only add to the financial turmoil as they lose their main customers. Related umemployment costs in the billions AND uncompensated healthcare costs for millions of these workers and their families in nearly 15 states.

    The court auto bankruptcy proceedings will take years to resolve-most likely more than 5. ( Look at Dephi's bankruptcy-2 yrs and counting and GM ect would be 20 times that size.)

    So take your pick-25 or 50 Bil now or 300-400 Billion later.

    Oh yeah-there is no such thing as free market failure for major players in the US economy...whether it's Wall Street or Woodward Ave. in the Motorcity..the answer...its always pay now or pay later for the the YOU S taxpayer.

  • Report this Comment On November 15, 2008, at 4:27 AM, trigfish wrote:

    The auto companies made deals with the unions in order to prolong their life, but now their time is up and they are weak and unable to resurrect themselves. Bail them out only if everyone is willing to bail out every other failing business for the next 5 years or so...after all, fair is fair....you cannot bail out their stupidity without bailing out every individual and every business that has failed from stupidity. It would be better to let them go down and use the funds to invest in something that has a chance...why throw good money after bad?? The political choice of Obama though will be "payback time"...he will bail them out! What a bad choice... "change we need", I guess.....where's the beef???

  • Report this Comment On November 15, 2008, at 5:48 AM, coasatalpg wrote:

    It is absolutely amazing how people can let their emotions override common sense. It is easy to see why someone would want to defend the Big 3 if their livelihood is supported by one of these companies or supporting companies. The pay and benefits have been over the top for years and the American consumer has footed the bill. As a taxpayer, I find it very insulting that the Big 3 or our Government would even entertain the idea of the American taxpayer footing the bill to continue a proven history of business disaster. I personally have owned several GM and Ford products and have enjoyed good service from both but I always felt that they were very overpriced. After studying the real costs that are involved, it is easy to see why they are priced as high as they are. Throw in the never ending greed of the UAW and the executives' and you have a ridiculous inflated price. I would really hate to see our American brands go out of business, but let's face it, they've been raping the consumer for years while they fatten their own wallets. It's time to pay the band now Big 3. You should have been part of our country's solution instead of being part of the problem. There's no way we should support the problems of our country any longer. I personally know what it is like to wake up one day and find out that your job has been eliminated. Guess what? The world doesn't end and doesn't revolve around you. You pull yourself togther and move on. Simple as that. The Big 3's gravy train ride is over. Time to move on to more productive things. I can't work hard enough and pay enough taxes to keep all of these bad businesses afloat. I need some relief!

  • Report this Comment On November 15, 2008, at 7:12 AM, silverfox6759 wrote:

    We need no bail out or even help for the automakers.It seems the only way people or companies change is when things are at their worse. I am an american all the way and there is not a better place but we have all been livin above our means. The american people as well as the companies and their high paid CEO's are all guilty. Unions have done great things but some of the leaders now a days need to look in the mirror and realize they are doing more harm than good. Gm will restructure like the airlines and come back stronger.

    The products and customer service is not what it used to be.It seems like everything is only based around how much money we make not how well we make it or what the cost is. There are a lot of companies closing their doors or at lease closing a large number of stores, this is not just about the automakers. This has not happen in the last few years. This stuff started in the early 1980's when the comsumer started charging everything they could get and now for most live paycheck to paycheck.

    I work overasea's now and I see this from a different view. There are a lot of counties that I travel through wish they had what america has. But one thing that has started bothering me over the last few years is all the news station have some one on their show that says what is the goverment going to do for me. If it was not wall street,it is housing market, now it is auto maker.I am sure it will be the credit card companies next, because we are billions in debt and can't pay the monthly charges. Large numbers of people and companies dont take any responsibility for what they do any more. I know there are many hardworking people and their are good companies but still we are all products of the choices we make. These will be the last ones to get any assistance.

    I have been laid off before like some of you. You will have to make changes and even though it is not easy change is good sometimes. The bottom line is american will come through this, because we have some of the best work force out there.

    We are going to have to quit being chargers and live within our means if this will every turn around. We as a country are in to much debt.

    I hope the best for everyone. Buy some knee pads because this is going to be a long slow crawl, there will be no quick fixes.

  • Report this Comment On November 15, 2008, at 8:39 AM, schmark1 wrote:

    I think the wages paid and legacy costs are the main reasons for this problem with the US auto makers. We need to get the US auto makers out from underneath the UAW. I work at at a parts supplier plant in Michigan and I make $13.39 per hour assembling automotive parts. I am provided a decent health care plan (that I have to contribute $13.00 per week to) and the company provides a 3% 401k match. I would gladly leave this position and take a job at GM, Ford, or Chrysler factory for a dollar or two more per hour and comaparable benefits. I am one of the higher paid employees where I work and most of the people I talk to at work feel the same way and would love to be able to get a stable $14.00 an hour job with benefits. I think if some how we could just get the union out and get hourly labor costs down, and not provide the health care and huge pensions for retirees. Of course,exalted big three employess would have to save for their own retirement like the majority of other Americans who did not win the lotto of life by lucking into a big three cush union job which pays you to slow down and not work so hard. If we get rid of the union, then the workers can choose if they would like to continue working at the plants for reduced wages and benefits. If they choose to leave I think there will be enough available workers who can be trained to fill these positions on the fly at a $14.00 -$17.00 rate. In line with foreign auto makers wage costs working in America

  • Report this Comment On November 15, 2008, at 9:28 AM, jcb989 wrote:

    I will bulletize my thoughts on this subject, they are strictly conceptual in nature:

    * Restructure, restructure, restructure. The government should help mandate the correct corporate solutions, but I don't want US automakers owned by the government.

    * If mergers are the solution, leave us with at least 2 American automakers, to help reduce the negative effects to product quality etc from having a government-derived virtual monopoly.

    * The government should mandate a blow-up of the union. If government dollars need to be put into the automakers, let it go into taking care of "writing off" dependency on the unions, so that the little guy does not get as screwed by dissolving the unions.

    * Save the banks but don't save the auto industry? Please. Call me back when % manufacturing in the US drops below 5% GDP, and while you're at it let's build more McDonalds and Taco Bells for all the Americans who will need jobs. I'd rather see a few banks go out of business in the US than see an elimination of a produced good from the US.

    * Add a tax on foreign vehicle sales in the US, and use the money to help rebuild US automakers (this idea might be a bit of a stretch). I'm talking less than $2,000 per sale. American car quality (I'm looking at you, Ford) has come a long way in the last 10 years, and Toyota is going in the the reverse direction as should be expected, their quality has peaked, nowhere to go but down. The separation in quality from a Ford to a Toyota in 2008 is not that large anymore in my opinion.

  • Report this Comment On November 15, 2008, at 9:34 AM, jcb989 wrote:

    Forgot this idea also:

    * Add a government credit to US autos foreign sales, and government-mandate reduced pricing on vehicles sold outside the US to countries like China, Brazil, India. Have the US government negogiate with these countries to allow the import and sale of American cars. Otherwise squeeze their automotive products out of our country with aforementioned sales taxes. Use US government money to make American cars more price-attractive on foreign soil.

  • Report this Comment On November 15, 2008, at 10:56 AM, novaphi wrote:

    Creative destruction. The failure of Detroit will give nimble, smaller companies, a chance to be the next big three. Detroit is ridden with so many burdens and cancers that it is simply best to let the free market do its work. Giving money to restructure these companies makes little sense and is inefficient. Do you have any clue as to how much GM has paid in redundant wages in its restructuring? That is money that might as well have reduced our oil dependence in some American's fire place for as much good as it did. It will take years for them to restructure and they may or may not emerge stronger for it. Companies that are pushing bold new concepts, like Aptera, will rise in the vacuum left by the failure of Detroit. American auto will be reborn as people move to seize the opportunity. The end of Detroit is not the end of America's auto industry.

    Besides what business is it of the government's to choose which businesses fail and which don't? I firmly believe that congress needs to get its hands off the economy. If they want to infuse money into the economy I agree with some of the others who have posted, rebuild America's infrastructure.

    In any case, the government bailing out Detroit is like my uncle, neck deep in dept, floating me a loan to save me from bankruptcy. The money isn't there people. There is no question of a bailout because there is no money for it. Get used to this kind of thinking America. If the money isn't there I don't buy it! That is how the rest of the world lives and it is long overdue that we join them in reality.

  • Report this Comment On November 15, 2008, at 11:03 AM, roadrunning wrote:

    UAW. Now what! If you want to survive everyone must take a serious pay cut. The figures I've read that people are making to put a car together are ridiculous ( Executive too). Start looking at an alternative form of employment or be willing to take a reduction in pay. You've all been over milking the cow and now she's finally dry.

  • Report this Comment On November 15, 2008, at 1:10 PM, Slowthumbs wrote:

    The Unions could never get what the companies were not willing to give at the bargain table. I'm as anti-union as you can be, but the companies were willing to give those high pensions tomorrow in exchange for a concession today. Tomorrow is here.

    The legacy costs must be dealt with. Responsible companies plan on tomorrow and don't make promises they can't keep in the future.

    By the way, who is an American manufacturer? Is the biggest gain the payroll that is paid out here in the US to the US workers or the profit that goes to the foreign entity where the company is headquartered? And who is the recipient of the profits? If we chose to invest, it is you and I, regardless of the origins of the company.

    I once married into a Camaro. I added oil fouler adapters so the car could complete a road trip of 300 miles without fouling the plugs. I recently married into a Chevy Blazer, only car I've ever owned that had parts fall from it while it was running. Ford Probe in the meantime gave up the engine and transmission short of 200,000 miles. My 2001 "made in America" Honda Civic is purring along happily now at 322,000 miles. I only expected 250,000, guess who is getting my money next time I buy? Some Honda workers in Marysville Ohio. Ford, GM nor Chrysler will ever be the beneficiary of my dollars.

    I work for a foreign transplant company that supplies product to the auto industry. A few years back we realized our labor structure was not sustainable in the long run. At that point, we maintained the legacy wages, but readjusted starting pay and the eventual pay of new employees to market rates. That is long term thinking.

    Over the years, we acquired union facilities. Through negotiations these facilities either made concessions to become competitive or ceased to exist. That's responsible business management.

    Now who and what are we saving?

  • Report this Comment On November 15, 2008, at 1:48 PM, Lars26 wrote:

    The point is that it is better for GM etc. to fail NOW than to hope an infusion of our money will see GM change its ways. This day has been long in coming and we need to let it happen so the rebuilding process can begin. Further, how long do we think we can kid ourselves into believing the Gov't is a bottomless pit of money. $25B her, $25B there - pretty soon we are talking real money! Sorry - my vote is for letting GM, Ford and Chrysler solve its own problems or fail and rebuild in BK. Actually, BK would not be that bad. We probably end up with smaller companies that can survive.

  • Report this Comment On November 15, 2008, at 3:07 PM, kaboom123 wrote:

    NO MORE BAILOUTS! When do the American citizens get their own personal bailout? GM dragged their feet. If the average common-sense American citizen could see this coming a mile away.......... COME ON! What's next? We need to let them go and adapt. You cannot save every industry who fails to prepare! Have you seen how much money they went through in the last quarter? YOu think throwing money at them to burn through is going to help? Let's get it over with........

  • Report this Comment On November 15, 2008, at 3:12 PM, kgj2008 wrote:

    Guys can we say loan. We are not giving gm and company free money. we are giving them a loan which they must and probably will pay back. In addition we are building up our capabilities. The plants that are being built by others are in the Southern states in traditional low paying farm worker areas. Give them the loan and hold the Board of Directors and Exec's accountable (Do an Iocca, $1 a year and stock options- no results no pay for the Exec's).

  • Report this Comment On November 16, 2008, at 5:21 AM, pocopanda wrote:

    If the big three auto companies are left to fail, It will seem strange that the world's largest economy cannot sustain a made in America auto company.

    Nevertheless, when I buy a car, I want the best and longest lasting car at the cheapest price.

    When I think of an American car, I picture large bulky vehicles with huge engines and with an overkill in horsepower that are expensive to maintain and don't last anywhere as long as Asian cars do.

    I had an new Oldsmobile and a new Chev Impala. The engines lasted just over 100,000 miles.

    I then bought my first Honda Accord. The engine in that car went 605,000 kilometres. Gas mileage was awesome.

    I would like the big 3 auto companies to be saved. The one conditon though for this to happen would be to: lower their operating costs significantly and produce better quality all round very fuel efficint vehicles.

    Forget the overkill in making big gas guzzling engines.

    IF THE CAR MANUFACTURES ARE LEFT TO FAIL, AMERICA WILL NEVER FORGET HOW THE STOCK MARKET FARED THAT DAY AND FOR MONTHS AND MONTHS TO COME!

  • Report this Comment On November 16, 2008, at 6:00 PM, blue67 wrote:

    elicek wrote

    US auto companies have had years to compete in the market and offer fuel efficient cars. They have refused to build anything other than huge gas guzzlers, somehow taking pride in the American "big car mentality."

    The American car companies built and sold exactlty what the American public wanted. Duh! That is why they sold so well.

    If they wanted smaller fuel effecient cars than that's what they would've built. Now if you've got government subsidation of your

    auto industry like Japan does, you can afford to pump millions

    into somehing like the God-awful looking Prius.

  • Report this Comment On November 16, 2008, at 7:06 PM, eswcpa wrote:

    This stuff from Morgan Housel is the same kind of BS that the Republican geniuses have talked about for years, and is now coming home to bite them in the 'rear end'. Where are the employees going to find new jobs that will pay the mortgage and allow them to support their individual part of the economy?

    The legacy costs of the domestic car makers are the result of decades of production in this country vs. the relatively recent production of the foreign car makers in this country. They have also avoided the COST of prior production experience by not joining the UAW, but benefit from the experience when they hire out of the domestic pool of workers. Also, in the home countries that these foreign manufactures come from there isn't a health & benefit cost burden because it is shared by everyone in the economy.

    You have a point about the continued production of large vehicle with high profit margins, but that was required to support the legacy costs that should have been dealt with years ago. If we had put the manufactures of this nation on an even playing field the product mix could have been different.

    The bankruptcy of any domestic would ripple through the economy much more directly than the failure of the 'financial firms' that you think are the pillars of the domestic economy. The role out from the loss of jobs from the related 'third party' suppliers would further the losses from defaulting mortgages & other credit instruments. How many small / medium suppliers could afford the loss of the Account Receivable when a major client like GM files bankruptcy?

    Many of those parts suppliers wouldn't be able to continue because the volume that they require could not be maintained would be below of break-even level of production. How many of the remaining manufactures would agree to price increase? So the spiral would continue, just as it has for the past few years.

  • Report this Comment On November 16, 2008, at 7:35 PM, PamelaPAR wrote:

    First of all, I'd like to comment on the quality of the discussion. It gives me encouragement to know that there are so many great thinkers out there.

    But I'm from Pittsburgh, and nobody bailed out the steel industry. People were fired and layed off as steel mill after steel mill closed due to union/labor costs and foreign competition. These workers figured it out. They survived. That seems to be one of our biggest virtues as a country.

  • Report this Comment On November 16, 2008, at 8:00 PM, adamgibson wrote:

    It is not a GM bailout. It is a UAW bailout as payback for their support of Obama. GM just paid every UAW worker in the US a full days pay so they could go deer hunting last friday. Does that sound like they think that the company is in trouble?

  • Report this Comment On November 16, 2008, at 11:29 PM, blue67 wrote:

    adamgibson,

    EVERYBODY at GM Ford and Chrysler had the day off. Not just UAW members. It seems very popular these days to union bash. What with their excesive pay and benefits and all. Although who are you and I to decide what someone earns. Would you choose to pay an athlete 250 million for a 10 year contract? The job pays what the job pays, and if you have someone negotiating that for you,they wouldn't be doing their job if they didn't get you the highest rate possible. I suppose it would be pointless to add that the union did contribute greatly to the rise of the middle class in this country. If anyone

    cared to look into the history of the union and what they did for our workforce in the early part of the 20th century, maybe they would view it differently than the greedy,bloated, lazy entity that they believe it to be. In many ways it is a dinosaur, but I think it should be allowed to evolve rather than go extinct. And just a quick word on quality, if you've done your homework and really believe the imports are still built better than an American car, then by all means buy one. But if you simply refuse to buy American just to spite the union, I hope you park that thing in a ditch. I'm sure some nice guy in a GM Ford or Dodge would be along shortly to tow your a** out.

  • Report this Comment On November 17, 2008, at 7:35 AM, dpdoor wrote:

    The big three are forced to use the UAW. The Japanese government invested in its auto industry and that is why they are more advanced. Our government has harmed the auto industry, let the government bail them out. How can we be so stupid as to let other countries dominate yet another product? We supported the UAW and it killed the auto industry, our government should take over the pension, help with retooling and make the United States profitable. If we keep losing manufacturing businesses how are we going to export. What are we producing that won’t be dominated by other counties. China obviously does not have the environmental restrictions for production, nor do they have the minimum wage we do nor the UAW. If we care about people’s well being and the environment they why do we force our citizens to buy from counties? Our cars cost more because of the USA regulations and failure to invest in ourselves.

  • Report this Comment On November 17, 2008, at 8:16 AM, srwm4 wrote:

    The question isn't "is a $25 billion dollar bailout of Detroit worth it?"

    The question should be "What will save the taxpayer the most money?"

    Yes, $25 billion is a lot of money. But it's peanuts compared with the hundred of billions of dollars the government would be stuck paying if the big three went bankrupt. Forget about lost tax revenue, or job re-training programs. I'm talking about the government-sponsored Pension Benefit Guarantee Corp.

    If the big three go bankrupt, the federal government would get to foot the bill of thousands and thousands of huge pensions for auto company retirees.

    Now, would the taxpayer still be on the hook for the pensions if the auto makers can't get their act together? Yes, but in the mean time, the government can give foreign companies incentives to buy Ford or GM whole. And, if the government can put limits on executive compensation for investment banks, then they can certainly throw out the UAW contracts and make the union give meaningful concessions, to help the auto makers out a bit.

  • Report this Comment On November 17, 2008, at 11:49 AM, IXLR82 wrote:

    I guess the union faithful, not unlike the democrats think that everyone but they are stupid. How manys thousands of families manage to enjoy a decent life on 18.00 per hour? Also what makes UAW personnel so superior? I am multi crafted and dont need special training to install half a bumper and what really is the installation of half a bumper worth? If the uaw was to settle down and take a reasonable pay and benifit package, the economy would follow suit. In other words the economy is based on what can be paid for goods and services, that said less money for uaw workers would reduce prices for everyone. One other note, it would appear as if Granholm, the Levins, the UAW care about the rest of us? NOT

  • Report this Comment On November 17, 2008, at 1:41 PM, misnomer2 wrote:

    Article below is from Wikipedia

    Bankruptcy of the Big Three would be very expensive to the American economy as a whole and the government, and shows just how important the auto industry is to the entire U.S. economy. Economists use 2007-8 data to build econometric estimates of what a shutdown would cost in summer 2008. Their goal is to set benchmarks that will help policy makers understand the impact of bankruptcies, and their estimates are indeed widely discussed among policy makers in late 2008.<ref. See Wall Street Journal video Nov. 14, 2008</ref> Closing the Big Three would mean loss of 240,000 very high paying jobs at the Big Three,[7] a loss of 980,000 high-paying jobs at the suppliers and local dealers, plus the loss of 1.7 million additional jobs throughout the economy--a loss of 3 million jobs. Estimates are that a Big Three shutdown would cause a decline in personal income of $151 billion the first year, and $398 billion over three years. The federal, state and local governments would lose tax revenue and spend on welfare programs a total of $156 billion over three years.

    I think if Obama gives them the cash they want, it won't be a blank check. Your guess as to what the details will be.

  • Report this Comment On November 17, 2008, at 4:31 PM, abliviax wrote:

    Bankrupt the companies, and restructure them with serious concessions from workers -- they are obviously providing their company with less value than they provide, pulling their own companies down into this whole.

    Management hasn't helped either, but it's not all on their shoulders. Workers have made inflated wages for years and brought this on themselves.

  • Report this Comment On November 17, 2008, at 5:12 PM, ssmir wrote:

    Why do all our politicians refuse to talk about the numbers that make Detroit uncompetative. Look at it this way:

    Detroit auto makers average pay with benefits $ 72/hr

    Toyota, Honda, anf BMW in the south $ 45/hr

    Average American factory worker $ 28/hr

    If we continue to supplement the pay for Detroits workers indefinetly, those companies would probally survive. If we want them to be self sustaining they must be forced to cut their pay and produce fuel efficient cars.

    None of our democratic politicians are willing to state the obvious and simply dance around these issues by pandering to their union supporters. When a plan doesn't make any sense it's simply got to be POLITICS.

  • Report this Comment On November 17, 2008, at 5:31 PM, ssmir wrote:

    About ten years ago I was a supplier to GM and Honda. Whenever I visited the GM plant and went to various offices in the course of my business, there were always a least three people in a heated conversation about sports which I happily engaged in. It made me one of the boys.

    I used to hate my visit to Honda because every white coated worker I had to talk with was busy running to his next assignment. No base ball for me.

    I think it would be unamerican to screw up the interest in baseball and hold those companies accountable.

  • Report this Comment On November 17, 2008, at 7:36 PM, TheMarkman wrote:

    There have been many fine points listed among these comments. Unfortunately, what is lacking is an outcry for a multi-faceted approach to correcting both the short-term and long-terms aspects of the problem. Handing the companies cash doesn't reduce excess inventory or address overhead costs, nor does it address problems caused by Unions and their involvement. The latter issue is of particular interest to me, since I am a Union leader (although not in the UAW). I view the Unions as a problem, but for a different reason. I have no resentment about the negotiated wages and benefits. I have a problem with the laws that force me as a leader to defend/protect slackers. I firmly believe that the Employers, including auto makers, would gladly pay a premium for its workforce if they were getting quality labor as a whole in return. Please do not interpret that as me saying Union labor isn't good. I'm saying it isn't as good as it could be, and for the incredibly large amount of money spent on organized labor, that difference is critical.

    In days of old we had guilds, and membership in the guild required a demonstration of technical prowess. Employers paid top dollar for guild workers, but typically got their money's worth. I firmly believe there are a lot of workers who would welcome an opportunity to work with the best.

    So, to add my $.02, I believe we should encourage our leaders to consider the following:

    * Use part of the auto industry stimulus package to buy cars, with the intention of replacing vehicles in the National, State, and Local government fleets. The sales should be negotiated to include enhanced warranties/service contracts. The older fleet vehicles can be sold at auction to help offset costs, or become part of some charity initiative. This would have the direct benefit of reducing automakers' inventories, along with aiding State/Local economies.

    * Enact legislation to improve the fuel consumption and emissions standards to align with the "Inconvenient Truth" standards proffered by the other modern industrial nations. The intention here is to ensure that future products are more desirable to both national and international consumers.

    * Overhaul the labor laws to either: a) allow Employers to hold their Employees to a uniform standard of performance, or b) create opportunities for new organizations to compete with the Unions for the representation of Employees (which we will call "Guilds"). Exclusivity clauses in Union contracts would be altered, allowing the Guilds to negotiate contracts with Employers. In order to achieve status as such as a Guild, it must agree to enroll only those who demonstrate a certain level of proficiency in their trade; it must agree to provide skill-maintenance programs for its members, and; it must agree to uphold the performance standards negotiated between the Guild and the Employer. Odds are that the Guild will cost more to both the Employer and Employee. The markets will create an equilibrium between the Unions and the Guilds, but the end result should be a vast improvement in the construction standards of products and the efficiency of services provided.

  • Report this Comment On November 17, 2008, at 10:46 PM, readdontbreed wrote:

    I have a cousin with a GED that works for Ford making $75,000 per year. He buys a new and bigger house every few years and always drives a shiny new car. I have an engineering degree and make less. A Bailout for the big 3? Fuggitaboutit! the UAW and the Longshoremen have given unions a bad name. Both jobs can be done by robots but we continue to feed the union trough by dumbing down our technology. Once a job can be automated, its time for retraining and a career change. If we want to stop evolution in its tracks; feed the union. Once we lose the urge to build a better mousetrap - entropy is inevitable.

    Giving money to GM is like giving bread to a starving country - you are just prolonging their dying. If it is not sustainable, it is better off dead.

  • Report this Comment On November 18, 2008, at 12:25 AM, kohljm wrote:

    Why do we still call the Big 3 American companies? I recently purchased a car for my wife. We looked at many options, she liked the Charger and Accord.

    The Charger was built in Canada, the Accord in the US. Which one is more American??? All of you complaining about those of us who drive "foreign" cars, look at where your vehicle is made. Are you supporting American companies who outsource their labor to Canada, or foreign companies that utilize American workers? I'd much rather support hard working blue collar American workers than highly overpaid American union leaders and CEO's. Especially since those hard working blue collar workers are producing vehicles of superior quality.

    The fact is that if the Big 3 go under, sales will rise for the so-called foreign companies. They will have to build new plants, and hire more workers. Yeah, maybe the unions won't be able to rape the industry for incredibly high costs anymore, but isn't that what caused this problem to begin with?

    I agree that executives need to take some pay cuts. But the fact is, taking a few million from a few executives accomplishes nothing in the grand scheme of things. The only place you can find significant cost cuts are in union packages. If you want to survive, get rid of your union, it's the POISON pill killing your company. Honda, Toyota, and Hyundai all have large plants with happy workers, briging home a solid wage, and who hold jobs with some security. The reason for their security, they have no poison pill.

  • Report this Comment On November 18, 2008, at 3:05 AM, jprental wrote:

    i think the banks should have been let go . they caused this mess. they should be blown up one at a time just like they do to casinos in vegas when they build another. i hate banks i hate america and i am now rooting for alkaeda. this country took away my life savings with lies. now its time for them to go down

  • Report this Comment On November 18, 2008, at 5:22 PM, scooterian wrote:

    This has been coming for decades, especially with GM. With the possible exception of their trucks, their products are awful. Even a cursory look at Consumer Reports best and worst vehicles, the best are almost the full lineup of Honda and Toyota. The worst... you guessed it.. mostly GM products. GM and Ford have publicly admitted they're focusing their efforts on overseas markets. So... the taxpayers are going to bail out Detroit so they can make vehicles overseas?

  • Report this Comment On November 18, 2008, at 7:07 PM, boiler6700 wrote:

    I agree that we should let them expire. They have been given multiple chances and failed every time, but there is another financial issue that will have a huge impact on this economy that I haven't seen mentioned yet. The big 3 have tremendous amounts of debt. A lot of that debt is insured. If Detroit collapses there will be a flood of creditors demanding payment from the insurance industry.

  • Report this Comment On November 19, 2008, at 11:36 AM, steveherb wrote:

    Check out Consumeraffairs.com Ford vehicles burning to the ground. But no problem Ford, people make mistakes. Here you go. Let us know when you need more money. Did the goverment bail you out or give you a loan when your home was getting foreclosed upon? Did the goverment bail you out or give you a loan when you post the sign. "GOING OUT OF BUSINESS SALE" Now or ever? What is the point. The redtape keeps stacking higher and higher. Every comment posted on every website states that no money should be allocated to Ford. That they should be treated as any other company. Yet,they still recieve it. Proven over and over, we don't have a voice. We are just here to pay our taxes. Bush gave me $300 to survive with my 25,000 income. HA! Congress just gave Ford 25,000,000,000. to people who make 250,000. Greener vehicles? So if I go around my home installing flourescent light bulbs will you save my home from foreclosure.

  • Report this Comment On November 20, 2008, at 1:20 PM, PowerOfKnowledge wrote:

    I am impressed with many of the comments posted here. Hat off to may of you.

    Now my 2 cents:

    Be the change you wish to see. We can go on forever unveiling and expressing what is "wrong", and what "mistakes", or "manipulations" occured.

    There are about 1000 "mistakes" and millions of people involved. All infected with greed. As we all are. Especially when it comes to money and security. We take care of "our own" even if it means supporting a different economy and putting Americans out of work to cut their overhead costs. How ridiculous is outsourcing simple basic jobs that are low paying to begin with for American's just to save a few extra bucks to explode their capital, and become more "financially sound".

    I am sure there is a way to make everyone rich, but then the rich would be terribly miserable because they don't have advantage over everyone else.

    The promising news for those who resent the "wealthy" is that the poor are already poor. This will not effect them. Not in comparison to those who will be most effected. The Rich have everything to lose, and the "prudent" people, very little. If your lifestyle was built off being "responsible" with credit, and securing mortgages with no green-back, or getting the 2 story instead of the 1 story house because you could afford it in trust that you can read 30 years into the future and control everything, then I hope you have learned your lessons. We mortgaged our future. We focus more on doing "well" then doing "good" for the greater good. Some are suffering truly through no fault of their own and I mean not to invoke any ill-feelings among those in this situation. For you, I feel truly sorry.

    Everything is connected here. Greed. Too many "too big to fail" corporations. Health care costs jacking our labor costs. And it's not the "gas guzzling SUV", or our failure to make "good products", or "economical ones". It is simple; a car is built as a vessel to slap a note on. As my grandfather told me once being a big GM corp guy." we aren't in the car business. we are in the money business". Our addiction to credit, and "buy now pay later" is suffered by every single individual commenting here, including myself. We hastily get into a debt situation, and bitch about it later, or say our rate is ridiculous when we agreed to it to begin with.

    Sure, the car companies became interested in the financing industry, but lets face it. Everyone wants their hands in this pot, and there are many flees attached to the elephants.

    Everything is about money and the generation of it, and the greed that comes with the obscene profits to be had in "lending", and the huge risks that inevitably materialized.

    The government takeover of Fannie Mae and Freddie Mac triggered the pending settlement of $1.4 trillion in credit-default swaps. The media treated this as something close to a non-event.

    A very real $1.4 trillion event happened which effectively constitutes one of the largest government bailouts in history. Nobody noticed, for even though this is occurring in “plain sight”, the simple fact is that few people outside of the financial industry understand the $600 trillion derivative securities market.

    With the takeover of Fannie Mae and Freddie Mac, the markets have been shown to be correct, and the reliability of the government bailout occurring has now been proven on a much larger scale. If the dollar amount is great enough, then no individual firm has to go down. Instead the United States Treasury and/or Federal Reserve will preemptively step in, and effectively make every one whole (or close thereto), perhaps without even affecting Wall Street bonuses.

    In all, the principle is very simple. There is nothing complicated about it. Take huge risks that you know cannot possibly pay out if you lose. In fact - that's the key to the whole transaction. The risks have to be so large that you cannot afford to lose, and the economy and markets cannot afford for you to lose. Then one of two things happens. Either the risk event does not come about and you make an extraordinary amount of money as an individual and as a firm for having taken on this huge amount of risk. Or the risk happens and you have to pay out. Except you really don't, because you can't afford to pay out and you have effectively blackmailed the rest of the population through being too big to fail. Then the government steps in and bails you out. Except it's not really the government, because the government can't truly do that, it is the rest of the population which bails you out.

    This is an insider’s game of global economic blackmail that is growing at a rate much faster than the overall global economy. The cozy relationship between Wall Street and regulators is crucial, and much of the massive, hidden derivatives bailout that just occurred can be explained by looking at just who the chief “cop” is. US Treasury Secretary Henry Paulson built his half billion dollar personal fortune as the former head of Goldman Sachs, meaning he was chief executive of one of the world’s leading derivatives players.

    It’s the best game in town. Take a huge amount of risk, be paid exceedingly well for it and if you screw up -- you have absolute proof that the government will come in and bail you out at the expense of the rest of the population (who did not share in your profits in the first place).

    The federal government is not going to let the financial system fail. It will create however much money needs to be created to bail out the institutions and attempt to bailout the economy, as it has already shown in real world test after test, from the so-called “tax rebate”, to Bear Stearns, to Fannie Mae and Freddie Mac. Which means that the government is prepared to destroy the dollar, and is not just prepared to, but is currently actively destroying the value of the dollar rather than let those firms fail. This is the biggest money maker ever thought of, the way you invest for the failure of an out of control derivatives market is to invest for the destruction of the dollar.

    And as far as bailouts are concerned, innocent people get in way over their head by failing to see the big picture, and get themselves into bankruptcy situations, which require a federal judge who has the power to tell the IRS to go fark themselves if need be, to bail them out and pardon debts and allow them to rebuild and recover. The federal government bails out its financial sector if need be. From the poor on welfare, to the wall street players who are too big to fail.

    Hopefully, we will not ultimately face a time where it will be cheaper to burn US currency for energy than to buy oil and electric services with the money, because the "financial strength" that we built on, was simply a house of cards, if anything tangible at all.

    In summary, I guess the answer for me is simple. I will be the change that I wish to see happen in the world. Debt is never a good thing, and never has been. And for those who will argue that point, all I have to say is, try not having debt, and see how it feels :) Less can go wrong financially. That's....... A fact.

  • Report this Comment On November 21, 2008, at 1:04 PM, clemons1 wrote:

    Well then, let the gov't support the companies through bankruptcy and then they can solve these two problems, we need U.S. manufacturing or else we will continue to spiral into dept.

    1. Uncompetitive Labor and Legacy costs - wipe legacy costs clean and let G.M. hire with no union or at a much decreased price.

    2. Reliance on Vehicles no one wants - stop making those vehicles and only make those vehicles.

  • Report this Comment On November 21, 2008, at 2:48 PM, Bevmach wrote:

    As much as I hate the medicine, the auto companies must be saved. They are too important to America's remaining manufacturing base to be allowed to drive off a cliff into oblivion.

    The auto companies know that they need to re-structure and were in the middle of the plan when the double whammy of surging fuel costs and no credit hit them.

    If we are to remain a great power, we must find a way to manufacture goods here.

    We cannot be solely dependant on the Japanese and the Germans for our cars.

  • Report this Comment On December 02, 2008, at 8:51 AM, TaranachMcleod wrote:

    Finally pulled out of the woodwork for this one... I used to work indirectly for the "big three" in Detroit... Something you "Fools" fail to realize is that it is not just the "big three" that will crumble with a paltry couple hundred thousand jobs... there is a plethora of support industries that will go belly-up as well... I worked in some of them... unless you want to look at half the state population of Michigan suddenly going on unemployment, not to mention the myriad other plants throughout the US the 'big three' need a very specifically controlled "bail-out. I rabidly oppose the greedy speculators that played games with finances getting a blank check from the government but that is nearly a fait accompli... Help the automakers recover and you also help several million other employees of the support companies... Restrict the use of the money to funding the lower levels of the management pyramid... there is very rarely anyone in upper management worth more than $100,000 a year and yet they rake in MILLIONS! ...or have we forgotten weasels like Kenneth Lay? Cut off those executives at $100,000 a year and tie them to the same profit sharing (at the same percentages) as the employees. I guarantee they will do everything in their power to keep the company profitable... if nothing else, to insure their own income.If a CEO demands more, tell them to hit the bread lines with the employees they have screwed over for decades. Smith Barney had a saying about making money... "They *EARNED* it!~ Time for executives to do the same thing by producing as much as they demand of their employees!

  • Report this Comment On December 03, 2008, at 9:15 PM, TheVinocat wrote:

    How is it that congress, and many of the readers here, all seem to forget the one law of economics that everyone agrees on: supply and demand. All of the arguments here about the collapse of industries and the (implicitly permanent) loss of auto industry jobs, make the completely false assumption that demand will suddenly disappear. This is like saying that the collapse of Purina will cause the death of millions of dogs! The demand for vehicles isn't going to change much if at all by a shift in the landscape of auto manufacturers, which means that others will come along to create supply to meet that demand. SUre, it will take some time for the power shift to occur here, and jobs will certainly be lost temporarily, but even some of the more self-aware UAW workers understand that they have been beneficiaries of unsustainable compensatory advantages; that they didn't save enough for the inevitable rainy day is unfortunate, but not one that requires an asymmetrical bailout for this one segment of the economy when other segments are in trouble.

    As to the notion of bailing out the banks, this was a somewhat different situation. As Paul Krugman (if I remember correctly) pointerd out in the NYT, the failure of the Detroit-based auto makers may cost jobs in the near term, but the failure of the financial system would (and still could) freeze the entire economy, so there really is no comparison here.

    Ultimately, if we swallow the bitter pill of losing the deadwood players in the overall auto industry, then that medicine will yield a healthier US auto industry (and I mean *all* the auto manufacturing operations that happen here -- who cares where headquarters are, when it's where the work is done that we really care about) in the long run. Detroit has been in a death spiral for 30+ years, and has never produced any leadership that could get it fully out of that spiral (not even, Iacocca, ultimately).

  • Report this Comment On December 04, 2008, at 8:00 PM, Deputyplow wrote:

    I believe that we should bail out the big 3 on grounds that they produce green vehicles that people want not the spaceship futuristic downright ugly look of the elecric cars of the past.

    Is what bothers me is congress made no hessitation to bail out banks but resist every plea from the automakers. When it is their money that is in trouble they are glad to throw our money to save it. But when it isn't their money they don't care about it.

    The auto industry makes up about 10% of all jobs in the US. Could we really afford to lose that many jobs? That much loss in tax revenue? That many people on unemployment and other programs? That many people unable to to put money into the banks? Which I recall was one MAJOR problem of the banks, a lack of deposits to fall back on. Could we really afford to lose our ability to mass produce, airplanes, tanks, ship parts and the like as we did in WW2?

    Sure lets face it the Big 3 made horrible decisions in the past. But so did the banks. So did many consumers living on credit like it was free money. However, we cannot afford what it would cost this nation to let these hundreds of thousands of people go to the streets.

  • Report this Comment On December 05, 2008, at 12:54 AM, HiroSanchez wrote:

    TheVinocat has hit it on the head in his/her post. Guess what guys? If any of the big three go under, yeah, there will be a lot of people out of work, for a short time; after that, when Toyota or Honda or Zen Motors (yeah, that's right -- Zen Motors! woohoo baby!) pick up the pieces and step up production to meet demand, they'll be jobs-a-plenty. The leaky three may sink permanently, but the auto industry won't.

  • Report this Comment On December 05, 2008, at 12:12 PM, letmsink19988r wrote:

    .NO Green in Detroit........ To late.... Decade too late atleast.... Check the site no US car in the list....

    http://www.greenvehicleguide.gov.au/GVGPublicUI/QuickCompare...

    Job banks Getting paid by Ford or Gm or Chrysler just sign in sit around and or go work another job and get paid still from the Big 3 FYI brilliant plan there guys....... You wonder what went wrong....

    Janitor making 150,000 WTF is wrong here.

    Contractors being called in to do jobs that the Union guys should be doing.... But getting paid to stand around and watch.

    Hmmmm a million dollar project really takes 2 million cuz the lazy over paid workers dont wanna work and want Gym memberships and Golf course perks and Red wings tickets etc etc....... I know the people on the inside of all 3 and most are ashamed of this.... How about keeping our plants in the US ..... now there is a good idea.... Looks like the big 3 are in the business of creating jobs in other countries....

    MY bad just looking for the cheapest non skilled laborers...... Great idea....

    These idiots cant even get it right the first time when they have the opportunity to prove to congress and the world that they have the integrity and business savy to PROVE to the world they are SERIOUS in truly trimming the bloat and restructuring the internal of the business mobel...... JOKE at best...

    Sometimes it best that a fire burns down a forest in order to clear away the debris so a new generation of trees plants and wildlife can develop and nurture...

    I really do feel bad for some of the people for being leaches to the system and the fools that made these stupid decisions but they cant stay and repeat this disaster...

  • Report this Comment On December 05, 2008, at 8:40 PM, doglvr wrote:

    I can only agree with the original comments. We have only so much money. If we give the $25 billion set aside to encourage and finance innovation in vehicle technology and give it to the Detroit big three moribund albatrosses there will be no innovation. One thing our country needs is new direction in energy technology. Who knows perhaps some one will find a use for all those factories that built the gas guzzling big metal.

  • Report this Comment On December 06, 2008, at 4:10 PM, msteg01 wrote:

    the article is wrong:

    gov micromanagement in auto and finance (through the fannie/freddy disasters) created many of the problems in both of these industries...

    take away the franchise laws protecting auto dealers, the laws protecting auto unions, the cafe fuel efficiency laws (that do what? prevent oil crises like the one we just had??), the skewed tariff structure (that creates the skewed profitability) and even some of the crazy zoning laws and you have a very different detroit than today.

    fact is our government long ago turned the auto biz into a nanny industry.

    We've been on a dead end road with government management of industry for 50+ years: why stop now?

  • Report this Comment On December 17, 2008, at 1:08 PM, mazecraze wrote:

    I know that I'm a bit late to the party, but I have to throw in my two cents (as valuable as those cents might be in these difficult times).

    Detroit is one of the reasons America became a great country. I think this bears repeating - American automakers helped make the United States the greatest nation. They didn't do it by themselves, but they were an important, key ingredient.

    With that in mind, here are my thoughts...

    Bailing out a business that has a history of begging for money from the government seems like a bad idea. We tell ourselves that they must have a problem with greed, or their business model is outdated, or simply stupid. But right now these are difficult times for everyone so who is to say now is the time the bell tolls for them? Like some other posters have mentioned, they have made quality improvements and recognize (albeit slowly) what the consumer wants. Were the automakers turning it around? Perhaps not quickly enough, but we may never know.

    The high cost health care is not necessarily the automaker's fault but our "capitalist health care system” failing us. It is rumored the U.S. has the best health care in the world, but I'll never know. If I suffer anything major I'll be standing in bankruptcy line with other Americans, about 50% of whom file for bankruptcy because of medical reasons. I don't know what the Big 3 have negotiated with the unions, but it is something I most likely would want.

    I agree with the idea that we shouldn’t reward the Big 3 when they haven’t responded to our auto needs and instead worried about their greed. But bad companies survive all the time. Take Microsoft for instance. They continue to produce low-quality programs that crash and/or close, for no apparent reason. But their marketers are brilliant and right now, even though I know my computer might corrupt this very message, I’m using a PC with all sorts of MS bells and whistles.

    I don’t have an answer regarding the automakers. I don’t like that the author points to the cost of healthcare as a reason for their failing, but why is health care provided by our employer? Their vehicles are improving in quality, and they are finally answering the call for fuel efficiency. But they are also showing up late to the game.

    I think we are all upset and insulted by our auto manufacturers and are taking particular delight in watching them fail when they have taken advantage of the consumer for so many years. But allowing them to fail will hurt Michigan and Detroit (perhaps making the first ghost city?). What kind of long-term drain will this have on America’s resources? How will we deal with an impoverished, uneducated and unskilled state? Will the government pay for re-education programs? Will the government help with paying off their homes? How will this further affect the housing crisis? Once people are poor and crime rises, are we going to foot the bill for their jails and prisons (see also Flint, MI)? Or are we going to hope that an entrepreneur, invoking the name Tucker, will rise up and make Detroit whole again? If we watch this fail and don’t fill the vacuum, we’ll be dealing with the consequences for many years to come.

  • Report this Comment On December 20, 2008, at 1:25 AM, loricus wrote:

    I have lived in Michigan for all of my 53 years. My husband has worked in the auto industry for about 30 years,15 of those in the UAW. The other 15 he worked in the pattern makers' union which eventually became the IAMAW. When he started to work at Chrysler, it was a profitable, in spite of UAW "excesses," and very viable company. (BTW his pay dropped by $2 per hour when he started, but he considered the sacrifice worth it for job security, hmmm) It was hiring new people because new workers were needed and partly due to an aging workforce. Iacocca was in command when he hired in, and Eaton took over shortly thereafter. It was through the machinations of Eaton that Daimler took over Chrysler. At that time, only 10 years ago, Chrysler had a $9 billion rainy day fund in the bank. Interestingly enough, when Daimler took over, that fund went to Germany to shore up Daimler's failing aircraft division and was not reinvested in Chrysler. To the person that thinks that Daimler only supported Chrysler, you better check your facts and see how long Chrysler supported Daimler. To say the least, Chrysler workers were quite unhappy with the loss of their rainy day fund. But they were not consulted about the takeover, were they? Frankly, Daimler did not want to build small, gas efficient cars. Their primary interest in Chrysler was for the Jeep brand and for Ram trucks. They wanted a piece of that high demand market in this country. These companies were not making cars that no one wanted as long as gas prices were low. The demand was for a very long time mostly for SUV's. The American public has only themselves to blame for that. The fact is that Daimler focused Chrysler in a direction that did not consider the future, and on top of that they took money out of Chrysler that needed to be there for a rainy day. There is not a single Chrysler worker that doesn't think that money would sure come in handy right now, wouldn't it?

    For 15 years my husband and I have truly wondered if Daimler had any intention of making vehicles that would ensure the longevity of that company. Cerberus has only held the reigns for a year, and in their defense, not enough time has passed to effectively undo the damage done by Daimler.

    Maybe some of the union hating blogger should get educated about how wealth is distributed in this country. The rich are indeed getting richer, the poor are indeed getting poorer, and the middle class is remaining flat. I thought that capitalism was supposed to grow the middle class... Maybe they would do well to read history. Those who don't are certainly doomed to repeat it. There is no doubt that the UAW needs to change, but I would be scared stiff if the labor unions disappeared. We will be back to the way things were before unions existed. The evidence of that is clearly seen in the way the financials have been doing business. Those guys have definitely filled their own pockets, and with the bailout money, continue to do so. But they have done it by raping and pillaging the entire American public several times over. They have stolen our savings, taken our tax money and laughed all the way to the bank. What can be said for the beauty of unbridled greed?

    UAW workers are already aware that the $14.40 per hour that new hires make will not pay our legacy costs. We have resigned ourselves to that. But we did not prepare for the savings that we responsibly put away for ourselves to be frittered away by the wizards of Wall Street. When Chrysler got money in the past, as was aptly stated above, it was paid back early, with $400 million in interest. It was not an American Chrysler that undid that progress. So do you really want another foreign company, whose vested interest is not in the American economy to take it over? We have been there, done that. When push comes to shove and that foreign entity has taken all it can from the American entity, guess who matters?

  • Report this Comment On December 25, 2008, at 5:29 PM, Rich9988 wrote:

    A lot of excellent comments and info here, as much from the commentators than the original article. I strongly believe in free markets but, like any sport, within the context of set of rules and a level playing field. In this case the playing field isn't level: health cares costs in particular are born by US corporations and not their foreign counterparts. We in the US need to address Health care and retirement for many reasons but certainly the competitiveness of our corporations is one important reason. The US auto industry has gotten in trouble also partly by its success in tilting the playing field: they chose to ignore fuel efficiency and got a pliant (Republican) Congress to pass legislation favoring SUVs and misused government money supposedly earmarked for improving efficiency design (wink wink). So I'm for a bridge loan, addressing the issues of Health Care and Retirement generally and specifically for the auto industry, and making sure that in future our companies face competition instead of hiding from it through political manipulation of the playing field. One pays the piper eventually.

  • Report this Comment On June 12, 2009, at 10:02 AM, barakobama wrote:

    The American auto industry has screwed the public over too many years. People no longer want their cars and have overwhelmingly turned to imports; nothing new here. Credit the unions who executed perfectly timed strategies of hitting up the car manufacturers when they could least afford a strike. Credit the management for not observing their steadily decreasing market share. Management collected obscene salaries and bonuses instead. The union guy didn't care about business conditions as the worst that could happen was he'd get laid off and paid 95% of his take home pay. What an incentive! We should have let them all go belly up. Nobody has stated the obvious. There's a market for X number of cars. With GM and Chrysler gone , their idle factories will be scarfed up at bargain basement prices by the Germans,Japanese,Koreans,Russians,Chinese,etc. Someone will make and sell those cars here. Like other US manufacturing that's gone down the toilet, this time its the car companies' turn. America has become just another 3rd world country.

  • Report this Comment On November 29, 2010, at 3:52 PM, Collectron wrote:

    Collectron can definitely help with this problem.

    www.collectron.com

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