News Are UAW Union Bosses Abusing Their Positions for Pay?

[Greg Bernhardt]

Bailout fails for the meantime
http://money.cnn.com/2008/12/11/news/companies/auto_bailout_senate/index.htm

 

[WhoWee]

One of the frustrating themes of the bailout discussion is the changing amount of need

http://online.barrons.com/article/SB122852234976384303.html?mod=googlenews_barrons

How does one underestimate by even $1 Billion?

An overlooked, but major component of this problem, is dealer inventory...cars ARE NOT selling. An infusion of cash into the manufacturers will not solve this problem...just buy some time.

However, there is an interesting proposal being discussed in Congress relating to a $7,000 tax credit for anyone who purchases a new (Big 3) vehicle. (Can't find a news story...saw an interview a few days ago on a cable news show).

To fix the problem long term, something needs to be done at the dealer to consumer level.

http://www.nada.org/Advocacy+Outreach/LegislativeAffairs/autostability

When credit markets tightened, Big 3 sales dropped about 40%.

http://www.icis.com/blogs/chemicals-and-the-economy/2008/12/november-us-auto-sales-down-37.html

The solution to the problem MAY actually be in the bank bailout. Instead of banks using the funds to acquire other banks

http://pittsburgh.bizjournals.com/pittsburgh/stories/2008/10/20/daily53.html

perhaps a portion of the bank bailout funds should be used to STIMULATE Big 3 SALES...AND guarantee warranties...just in case GM needs to reorganize under Chapter 11.

We can't allow the industry to fail...but we need to address ALL of the problems...at the end of the day, SOMEONE has to be able to buy a car (and with confidence).

 

[Art]

It will be interesting to see how the rest of the world reacts to any subsidy or bailout of the US auto industry as any such actions would almost certainly be in breach of the GATT agreements.

 

[mgb_phys]

An overlooked, but major component of this problem, is dealer inventory...cars ARE NOT selling. An infusion of cash into the manufacturers will not solve this problem...just buy some time.

There are 250,000 UAW workers in the big three but 1.2M people work in car dealerships. Do these guys get bailed out?

The dealer network is one of the main problems in cars today, it's a far too expensive way to sell small economic cars. The $2K/vehicle dealer mark up isn't sustainable and the 1K/year in dealer servicing is going to go away with plug-ins.

However, there is an interesting proposal being discussed in Congress relating to a $7,000 tax credit for anyone who purchases a new (Big 3) vehicle. (Can't find a news story...saw an interview a few days ago on a cable news show).

Now that will annoy GATT. A loan/bailout to the industry you can probably get away with - since everyone is doing it. Govermenty money (tax break) if you buy an American car - is harder to justify.

 

[Astronuc]

White House considers help for car makers
http://news.yahoo.com/s/ap/meltdown_autos

WASHINGTON – Running out of time and options, the White House said Friday it would consider using money in the Wall Street bailout fund to prevent the U.S. auto industry from collapsing after the Senate refused to pass a rescue bill endorsed by President George W. Bush and congressional Democrats.

"The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry," White House press secretary Dana Perino said.

The Wall Street bailout fund is one of the few remaining options for General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks. Bush had originally refused to use the bailout fund to help the automakers, insisting that help come from Congress. But the White House said it must reconsider after the Senate failed to agree on a $14 billion rescue plan.

. . . .

 

[turbo]

In the county seat (the largest town within 35 miles or so), one family owns ALL the new car dealerships, except one (Saab). If you want to buy a new Chevy, GMC, Pontiac, Buick, Ford, Chrysler, Jeep (ANY big-3 car), you will be dealing with the same outfit. There is a similar monopoly in the state capitol, with a half-mile stretch of Route 202 lined with foreign-car and big 3 dealerships... all owned by one person.

 

[Art]

The dealer network is one of the main problems in car today, it's a far too expensive way to sell small economic cars. The $2K/vehicle dealer mark up isn't sustainable and the 1K/year in dealer servicing is going to go away with plug-ins.

I fully agree. I made the point on a thread here a couple of years ago that the auto industry needs to redesign it's business model along the same line as Dell's direct model and it's build to order program.

 

[jal]

I have just been listening to the union's response that accuses them of being responsible for the failure of the bail out.

One point that he made stood out for me.
He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

In my part of the world ... at $14/hr it is impossible to have a mortgage and a car payment.
It is even considered slow death. It is not a sustainable level of income for middle class.
It is no surprise that the credit card companies can charge a spread of 15% and that even frugal people are obliged to use their credit cards to make it to the end of the month. It is no surprise that so many people are one paycheck away from bankruptcies.
When driving through a supposedly middle class neighborhood (older houses not new developments) you can see the signs of lack of maintenance on their properties for even minor things like a new coat of paint.

With what is projected to be coming down the pipeline there will be major "social shifts".
cough ... cough ... I hope that they don't end up taking the other 50% of my saving to try to fix the financial mess. If they do, I'll be decoration a tin cup to attrack your attention for a donation of spare change.
jal

 

[Evo]

I have just been listening to the union's response that accuses them of being responsible for the failure of the bail out.

One point that he made stood out for me.
He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

In my part of the world ... at $14/hr it is impossible to have a mortgage and a car payment.
It is even considered slow death. It is not a sustainable level of income for middle class.
It is no surprise that the credit card companies can charge a spread of 15% and that even frugal people are obliged to use their credit cards to make it to the end of the month. It is no surprise that so many people are one paycheck away from bankruptcies.
When driving through a supposedly middle class neighborhood (older houses not new developments) you can see the signs of lack of maintenance on their properties for even minor things like a new coat of paint.

With what is projected to be coming down the pipeline there will be major "social shifts".
cough ... cough ... I hope that they don't end up taking the other 50% of my saving to try to fix the financial mess. If they do, I'll be decoration a tin cup to attrack your attention for a donation of spare change.
jal

People will be paid according to their skill level. An engineer would not be a union member working on an assembly line. An engineer is management. If someone doesn't want to get hired as pretty much unskilled labor at $14 an hour, then they should go to school and get a better job. That's reality. The days of being highly paid for doing nothing are ending.

 

[Jimmy Snyder]

In the county seat (the largest town within 35 miles or so), one family owns ALL the new car dealerships, except one (Saab). If you want to buy a new Chevy, GMC, Pontiac, Buick, Ford, Chrysler, Jeep (ANY big-3 car), you will be dealing with the same outfit. There is a similar monopoly in the state capitol, with a half-mile stretch of Route 202 lined with foreign-car and big 3 dealerships... all owned by one person.

When I was there last month, I saw a lot of businesses owned by the Maine-ly family. Is that the one you're talking about?

 

[Jimmy Snyder]

Accordingly, why doesn't SOMEONE ask the GM shareholders to ante-up?

The reason you incorporate is to prevent such questions from arising. The British term 'Limited' gives you a better idea of what incorporated means: Limited liability.

 

[mgb_phys]

He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

If the media is factoring in payments to retirees to claim UAW are all on $200,000/year I think the UAW is also doing some massaging of figures to claim $14/hour.
My bet is that this is either for janitors/apprentice trainees or it's is the base salary and is doubled with shift allowances/bonuses/skills payments etc.
If UAW members on $14/hour then the let the industry collapse - McDonalds in Edmonton is begging for people at $15/hour.

 

[turbo]

When I was there last month, I saw a lot of businesses owned by the Maine-ly family. Is that the one you're talking about?

Ooh, I HATE that! Everybody that uses that gimmick seems to think they're being soooo clever.

In Skowhegan, all the car dealerships are owned by Walter and Louie Hight. In Augusta, the car dealerships are all owned by a fellow named Charlie. The Quirk family has much of the Bangor market tied up, and John Pulsifer had the Portland market pretty much to himself until he ran into some legal, er... difficulties.

 

[Art]

The reason you incorporate is to prevent such questions from arising. The British term 'Limited' gives you a better idea of what incorporated means: Limited liability.

Not at all. Rights issues are pretty standard. However you do need to convince would be investors they are not simply throwing good money after bad.

Perhaps it's because they do not have a realistic roadmap to take them back to profitability that they have the begging bowl out in Washington instead.

 

[mheslep]

The Big 3 have similar problems...UAW contracts and a difficult credit market to name 2...but their fates are not necessarily interlocked.

GM has a wide base of shareholders...more than 500 million common shares. On mainstreet in America, if a business needs funding, the owners go to the bank, sell an asset or dig deep.

Accordingly, why doesn't SOMEONE ask the GM shareholders to ante-up?

An investment of $40 to $50 per share should solve all of their problems. The shareholders approved the boards who approved the executives who make the decisions (including union agreements).

Oh they already paid, they paid and paid.

Afterall, when a profit is produced, dividends are paid...now losses need to be covered.

If the current shareholders don't want to risk more, then they can be diluted. Either way, the problem can be solved without risking taxpayer funds.

Who's going to buy new GM shares at $40? Thanks but I'll pass.

 

[RonL]

Why not a plan that not only helps the Big Three, but will also move more money across the general economy.

If most SUV's and some large pickups (up to 2500 series) are retrofitted with (almost) all electric drive systems, these larger units are already able to carry the loads, using common and proven lead acid battery packages a temporary market would develop, and maybe become the first big step to a larger electric transportation program.

Electric motors turning the automatic transmission would keep the feel of driving, much the same. The electric motor would stop at any point the vehicle stops. Top speed of no more than 45 mph, plenty for almost all inter-city travel. 75 miles +/- range. A computer controlled very small diesel, air cooled, generator would run continually or cycle the batteries through a 20% range. (depending on use of the vehicle)

This would fall between the extreme examples of the well proven golf cart, and the now on the market, Tesla Roadster.

In order to create demand, a consumer incentive package is set up, something like this ?

A. 0% financing, and 0% down
B. 100% free replacement of batteries (life of the note ?) (lead acid is almost 100% recycled)
c. Some kind of tax credit (fed, state, local) For driving such a limited vehicle.

Car makers still keep tooling and production much the same, and at the same time make a market for those larger units that are, (not so green).

Fuel suppliers still sell fuel for those little generators (they can be bypassed if plug in options are at hand).

Jobs are increased in all areas related to keeping up with this spin off line of cars and trucks.

I for one would step up to a program like this, as I think it would help the economy and a much larger portion of the general population. At the same time move us closer to the clean air environment that has been so popular a topic the past few years.

If our tax dollars are going to take a hit, why not in an area that we all can use?

Just my .02

 

[mheslep]

There are 250,000 UAW workers in the big three but 1.2M people work in car dealerships...

That figure is for ALL dealer makes including foreign, not just the big three.
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES4244110001
Googling around looks like the big three supply about 60% of the dealer jobs, or ~750k.

 

[mgb_phys]

That figure is for ALL dealer makes including foreign, not just the big three.

Yes but they are American jobs - wherever the car is made. If the point of saving the Detroit is to protect American jobs - then there are more jobs selling foreign cars than there are making American ones.

 

[BobG]

I have just been listening to the union's response that accuses them of being responsible for the failure of the bail out.

One point that he made stood out for me.
He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

In my part of the world ... at $14/hr it is impossible to have a mortgage and a car payment.
It is even considered slow death. It is not a sustainable level of income for middle class.
It is no surprise that the credit card companies can charge a spread of 15% and that even frugal people are obliged to use their credit cards to make it to the end of the month. It is no surprise that so many people are one paycheck away from bankruptcies.
When driving through a supposedly middle class neighborhood (older houses not new developments) you can see the signs of lack of maintenance on their properties for even minor things like a new coat of paint.

With what is projected to be coming down the pipeline there will be major "social shifts".
cough ... cough ... I hope that they don't end up taking the other 50% of my saving to try to fix the financial mess. If they do, I'll be decoration a tin cup to attrack your attention for a donation of spare change.
jal

People will be paid according to their skill level. An engineer would not be a union member working on an assembly line. An engineer is management. If someone doesn't want to get hired as pretty much unskilled labor at $14 an hour, then they should go to school and get a better job. That's reality. The days of being highly paid for doing nothing are ending.

$14/hour is pretty low, but it's a consequence of demanding that current workers not have an exhorbitant hourly wage cut. Having that $14/hour wage doesn't do much in the current sales slump, anyway. Those $14/hour workers are the first ones laid off.

Right now, wages at non-union companies are still kept high since going too much lower than UAW rates would result in employees joining the union.

Cutting wages for all workers by at least 25%, including workers at foreign owned US plants would be realistic. The big 3 aren't just competing with foreign competitors manufacturing cars in the US. There's no way cars made in the US can compete with cars made overseas at current wages.

If autoworkers don't like those wages, they should move... In fact, forget about going to college - they should move to California where they can earn about $117,000 a year as a dock worker. Or get a job as a skycap (even if you have to bribe someone) - they make about $30,000 in salary, plus about $300 a day in tips. No school required (and no liability if your luggage goes to the wrong city). It amazes me how much some people make.

On the other hand, if we're going to use the big-3 crisis as a lever to break the union, we better be prepared to pay a cost. The auto industry affects quite a few jobs across the entire nation. (There's a lot of dealer jobs, but a lot of those must not be full-time. They don't seem to make a very high annual salary.)

 

[mheslep]

Yes but they are American jobs - wherever the car is made. If the point of saving the Detroit is to protect American jobs - then there are more jobs selling foreign cars than there are making American ones.

Right, so if Detroit just closed down, and it won't just close down in chapter 11, only a share of those 1.1m dealer jobs would be effected. Many posts continually throw around nationwide auto employment figures as if all of them work for the big three which of course they don't.

 

[drankin]

Right, so if Detroit just closed down, and it won't just close down in chapter 11, only a share of those 1.1m dealer jobs would be effected. Many posts continually throw around nationwide auto employment figures as if all of them work for the big three which of course they don't.

I don't see any of them just closing down. I would think that they would be bought by another manufacture. Possibly from Europe or Japan. They at least have a very valuable manufacturing infrastructure. Surely, there are corporations waiting for a collapse to create a bargain purchase of these facilities.

 

[jreelawg]

It's not like the demand for cars will be less if the big three fail. Just raise the foreign auto import tariff, and foreign companies will continue to make cars in America like many already do(honda, toyota). Maybe even a tax on auto parts imports?

The same amount of cars would be built here, the same amount sold, why would there be any kind of long term job loss?

At this point, I'm not so sure the big three are loyal american companies any more than ones with Japanese names. Can Americans not buy stock in Honda? Can saudis not buy stock in GM? The big three are loyal only to personal profit, and they have shown to not even be very loyal to their own stockholders.

 

[turbo]

I don't see any of them just closing down. I would think that they would be bought by another manufacture. Possibly from Europe or Japan. They at least have a very valuable manufacturing infrastructure. Surely, there are corporations waiting for a collapse to create a bargain purchase of these facilities.

I agree. Toyota could buy GM, and Mitsubishi could buy Chrysler. Knowing how the Japanese operate, they would use the time in the slack market to rebuild production lines and retool. Then someone would have to come in and buy Ford after the newly-refurbished plants start eating Ford's lunch with superior products. Honda bought Ford's shuttered Marysville, OH plant 'way back when and started producing the Accord (highest car quality, highest percentage of US-made parts, highest sales volumes...) I can't see why we should throw money at these companies when they are so badly managed.

 

[Proton Soup]

There are 250,000 UAW workers in the big three but 1.2M people work in car dealerships. Do these guys get bailed out?

The dealer network is one of the main problems in cars today, it's a far too expensive way to sell small economic cars. The $2K/vehicle dealer mark up isn't sustainable and the 1K/year in dealer servicing is going to go away with plug-ins.

i think it'll cost several thousand to replace the batteries every few years, and expect that there would even be laws put in place requiring licensed technicians and proper disposal that will protect the industry. there'd be a big time lag, but it'd probably be more money for less work, which would ultimately work in the dealerships' favor (if not the employees).

 

[WhoWee]

The reason you incorporate is to prevent such questions from arising. The British term 'Limited' gives you a better idea of what incorporated means: Limited liability.

I understand the reason for incorporation...that's not the point. The shareholders (as owners of the company) are certainly in line to lose their entire investment without a bailout and turnaround...but they are also the ONLY ones who are guaranteed to benefit (some of the workers WILL lose their jobs when plants are closed) IF the bailout is successful.

Again, if the current shareholders don't want to exercise their WARRANT(or whatever other form/method of investment could be utilized)...then they could allow someone else (maybe a UAW member or a Dealer owner/employee) to participate. Being diluted in a secondary offering/re-capitalization is better than $0 value.

Please take a look at their ticker

http://finance.google.com/finance?q=NYSE:GM

and please be sure to notice they haven't missed a dividend since 1987.

A quick look at their balance sheet is un-nerving at best...(from the ticker article above)

Financials (In millions of USD)
Income Statement Quarterly(Sep '08) Annual(2007) Annual(2006)
Total Revenue 37,941.00 181,122.00 205,601.00
Gross Profit 3,020.00 14,543.00 18,912.00
Operating Income -883.00 -4,390.00 -5,823.00
Net Income -2,542.00 -38,732.00 -1,978.00
Balance Sheet
Total Assets 110,425.00 148,883.00 186,304.00
Total Liabilities 170,364.00 185,977.00 191,956.00
Total Equity -59,939.00 -37,094.00 -5,652.00
Cash Flow
Net Income/Starting Line - -38,732.00 -1,978.00
Cash from Operating Activities -7,473.00 7,731.00 -22,896.00
Cash from Investing Activities 997.00 -1,760.00 19,695.00
Cash from Financing Activities 3,473.00 -5,593.00 -3,767.00
Net Change in Cash -3,547.00 694.00 -6,603.00

They've lost approx $76Billion in assets since 2006 and only reduced liabilities $21B...for a total loss in equity of $53Billion roughly.

Maybe they should put a little box on the top of this years Federal Income Tax Return...___ check here if you'd like to throw $100 into the auto bailout fund...and issue us a share or 2?

 

[jreelawg]

GM Scrutinized for Alleged Nazi Collaboration
In August 1938, a senior executive for General Motors, James Mooney, received the Grand Cross of the German Eagle for his distinguished service to the Reich. Hitler "would never have considered invading Poland" without synthetic fuel technology provided by General Motors. [57],[58]

http://en.wikipedia.org/wiki/General_Motors

Alleged Nazi collaboration
Further information: Henry Ford
Other accusations were that the company collaborated with the German Nazi regime and relied on Germany. The German Ford company used slave labor in Cologne between 1941 and 1945 and it had produced military vehicles such as jeeps, planes, and ships used by a fascist regime. Many of these allegations were made in a series of United States lawsuits in 1998. The lawsuit was dismissed in 1999 because the judge concluded "the issues...concerned international treaties between nations and foreign policy and were thus in the realm of the executive branch."[58][59]
Detractors point to Henry Ford's outspoken anti-semitism, including his newspaper, The Dearborn Independent, which published The Protocols of the Elders of Zion. They also point to the fact that in 1938, four months after the German annexation of Austria, Ford accepted the Grand Cross of the German Eagle, the Nazi regime's highest honor for foreigners before the outbreak of the war.[60]
Defenders of the company argue that the Ford German division, Fordwerke, had been taken over by the Nazi government after it rose to power, claiming that it was not under the company's control, though Henry Ford, according to court records, did stay in touch with the company. Although Ford's initial motivations were anti-war, the company was heavily involved in the war effort after the outbreak of war.[59]

http://en.wikipedia.org/wiki/Ford

Why is it that nearly every auto maker was once linked to Nazis. You have the German auto makers, the japanese auto makers, even GM and Ford were linked to Nazis.

 

[Proton Soup]

Why is it that nearly every auto maker was once linked to Nazis. You have the German auto makers, the japanese auto makers, even GM and Ford were linked to Nazis.

probably because they already had business interests there and were trying to hang onto them.

as for the synthetic fuel, it was invented by germans. http://en.wikipedia.org/wiki/Fischer-Tropsch_process#History

 

[russ_watters]

Why is it that nearly every auto maker was once linked to Nazis. You have the German auto makers, the japanese auto makers, even GM and Ford were linked to Nazis.

Why is this relevant to this thread?

 

[russ_watters]

What I want to know is why the automaker CEOs said that Chapter 11 is not an option: it's bailout or close down. Why? Airlines have gone into Chapter 11 and come out ok. Why not the car companies? Is this just a ploy - a bluff to get bailout money instead of doing real reorganization?

 

[franznietzsche]

What I want to know is why the automaker CEOs said that Chapter 11 is not an option: it's bailout or close down. Why? Airlines have gone into Chapter 11 and come out ok. Why not the car companies? Is this just a ploy - a bluff to get bailout money instead of doing real reorganization?

The argument they put forward to explain why they are different is that

Buying a car is a significant investment. The promise of the availability of future parts, repair services, warranty guaranties, and resale value are important to consumers. Surveys have consistently shown that 90% of consumers would not buy a car from a manufacturer that had declared bankruptcy.

Basically, they think if they enter chapter 11, their market share will drop to zero and so they will never make enough money to come out of chapter 11. I don't know that I buy that, but it is what they have been saying. The difference between them and the airlines is that a plane ticket is such a short term purchase bankruptcy doesn't affect consumers' willingness to buy from that airline.

Again, I'm not really sure that argument holds water, but that's their argument.

 

[mgb_phys]

Pity their designers and engineers weren't as creative as their lawyers and accountants.

It's odd that the same pollsters show that 90% of consumers are happy with DRM music and movie downloads - must be how you ask the question.

 

[Astronuc]

What I want to know is why the automaker CEOs said that Chapter 11 is not an option: it's bailout or close down. Why? Airlines have gone into Chapter 11 and come out ok. Why not the car companies? Is this just a ploy - a bluff to get bailout money instead of doing real reorganization?

I wonder if it is a personal matter with the CEO's, i.e. their reputation, as in they don't want to be known as the CEO under which their company became bankrupt. GM and Chrysler are the most vulnerable and Ford can apparently hang on a little longer.

Perhaps Chapter 11 won't fit their business model.

There is a difference between Airlines and Auto manufacturers. Airlines are a service organization. They lease equipment and rent most of their facilities, and their infrastructure is largely subsidized by the government and taxpayers. Still I'm not sure the airlines are OK. Service has been reduced, routes discontinued, Delta and Northwest just merged, several have downsized - and some are hanging on because the price of oil just plummeted. Had the price of oil/fuel remained high, I think more airlines might not survive.

The auto manufacturers own their facilities (manufacturing and retail) and real estate, procure the material inputs, develop and own the technology, finance the purchases of their products, provide technical support and service of the products, . . . . They are capital intensive, as well as labor intensive, and therein lies a problem if they can't cover their capital and labor costs.

I believe there is a critical mass below which a company cannot survive. Perhaps the US automakers are close, if not at that point.

 

[WhoWee]

I wonder if it is a personal matter with the CEO's, i.e. their reputation, as in they don't want to be known as the CEO under which their company became bankrupt. GM and Chrysler are the most vulnerable and Ford can apparently hang on a little longer.

Perhaps Chapter 11 won't fit their business model.I think these articles demonstrate the point you are making.

http://www.google.com/search?q=gm+m...s=org.mozilla:en-US:official&client=firefox-a

They suggest a desperation by GM executives to obtain/maintain a global leadership position at ANY cost. The UAW seems to operate with the same philosophy as well. As it stands, the Big 3 ARE TOO BIG TO FAIL...the BIGNESS might just be EXACTLY the problem to address. Remember when they paid Ross Perot to go away (from the Board)? He thought too much like an entrepreneur...not a bureaucrat.

A short term (bailout) financing package ($14 to $34B) is fine IF it leads to a productive restructuring of some type...not just business as usual. Under NO CIRCUMSTANCES should these CEO's be allowed to perform a mega-merger with bailout funds...as we know the banks put at the top of their priority lists of late.

Instead, I think GM should go back to it's shareholders for some type of a secondary offering...(perhaps several rounds) in order to spin-off ALL of the divisions into stand alone entities.

Under these circumstances, it might even be palatable to have the government absorb a PORTION of the retiree benefits costs...up to $50 Billion to insure success.

Unpalatable is the argument of needing several brand names to spread costs and of building the same car under 2 or 3 brand names...in order to realize economies of scale (?) was always ridiculous. I think they just wanted to sell more dealer franchises. If they need to sell 5 million frames to justify re-tooling...then design a good frame and use it for a longer time.

A company worth looking at to make comparisons is Pepsico. During the 80's, while continuing to expand global soda operations and market share (Cola wars), they started buying everything in sight...Frito Lay, Taco Bell, Pizza Hut, KFC, then A&W and Long John Silvers. Eventually, they made the decision that the value would be greater if the restaurant brands were spun off...and Yum Brands was created.

While the reasons for Pepsico's decision were complicated and the results arguable...it makes the point that sometimes BIG for the sake of BIG is not the answer. Smaller companies are always more responsive to market conditions.

If one or 2 of the spin-off ventures fail...they fail...afterall, we are still a capitalist country...I hope.

 

[Vid]

"Already Bankrupt’ GM Won’t Be Rescued by U.S. Loan "
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ai5KpbywxqiQ

The whole article is fantastic, but here a particularly damning section.

After 77 years as the world’s largest automaker, GM and its executives were unable to embrace change. The company continued to plow resources into sport-utility vehicles and make bad alternative-fuel bets, even after consumer buying habits shifted. It rejected an offer from Carlos Ghosn, CEO of Renault SA and Nissan Motor Co., to form a global alliance. And it dismissed calls for radical restructuring from former board member Jerome York and other critics.

Ignoring Advice

York, 70, a former Chrysler Corp. finance chief, was advising Tracinda Corp. CEO Kirk Kerkorian, who had amassed a 9.9 percent stake in GM. He told analysts in January 2006 that the time had come for the automaker “to go into a crisis mode and act accordingly.” York calculated that GM was burning through cash at a rate of $24 million a day, which meant it had about 1,000 days before it ran out -- in October 2008.

GM ignored York’s advice to reduce its number of models, including getting rid of the Hummer and Saab brands, and to cut both management and labor costs in what he called an “equality of sacrifice.” He resigned nine months later, in October 2006, frustrated by the board’s unwillingness to take action. Only after York left did GM decide to sell Hummer. Now it’s talking about getting rid of Saab and Saturn, as well as Pontiac.

“Three years ago I thought GM had the time and financial resources to save itself,” York, now CEO of Harwinton Capital LLC, said in an interview. “Now I’m not so sure. Who’s responsible? Top management and the board of directors.
...

Wagoner unveiled a “turnaround plan” in November 2005. It called for closing nine plants, eliminating 30,000 jobs, boosting employee contributions to GM’s health-care plan, increasing investment in its best-selling models such as the Hummer and revamping marketing efforts.

To Kerkorian and York, who joined GM’s board in February 2006, that wasn’t bold enough. The plant closings and health- care changes saved only $2 billion a year, they said, and the company’s idea of innovation was more versions of the same thing: the SUVs and trucks whose sales had been carrying GM.

Others had come to a similar conclusion. A month after Wagoner’s plan was announced, S&P again downgraded GM’s debt and called bankruptcy “not far-fetched.”

 

[jreelawg]

Why is this relevant to this thread?

I was just reading through the wikipedia articles about the big three to get a better understanding. It is just kind of a counter argument to the people who think they should be bailed out because they were so important to us in our war effort during WW2. I just want to point out that these companies are "multinational corporations", and that in fact GM as well as Ford played a big role in our war machine, but were playing both sides, and actually were contributing to Hitlers war machine as well. I just wanted to debunk the myth that the big three are loyal to America.

 

[mgb_phys]

"Already Bankrupt’ GM Won’t Be Rescued by U.S. Loan "

Daimler Benz already wrote off it's remaining 20% stake in Chrysler

 

[mheslep]

What I want to know is why the automaker CEOs said that Chapter 11 is not an option: it's bailout or close down. Why? Airlines have gone into Chapter 11 and come out ok. Why not the car companies? Is this just a ploy - a bluff to get bailout money instead of doing real reorganization?

The argument they put forward to explain why they are different is that

Buying a car is a significant investment. The promise of the availability of future parts, repair services, warranty guaranties, and resale value are important to consumers. Surveys have consistently shown that 90% of consumers would not buy a car from a manufacturer that had declared bankruptcy

Yes this is exactly their argument (one of them) and in answer the WSJ editorial page said today:

...The bailout's backers argue that a GM bankruptcy would hold as much systemic risk for the real economy as a huge bank failure, but those risks are overstated. Chapter 11 is a well-established tool for financial restructuring. It is not tantamount to collapse or liquidation. If White House economist Ed Lazear is worried that no one will accept a car warranty from a bankrupt company, then Congress can address that specific problem rather than write an open-ended check. Chapter 11 could well offer a speedier resolution to the auto makers' plight than a slow-motion, politically infected catastrophe that could easily cost $125 billion or more.

I agree completely. Federally guarantee the warranty's for a few years, or something like that, if it is really a valid concern.
http://online.wsj.com/article/SB122912631328803145.html

 

[mgb_phys]

Surveys have consistently shown

Surveys can prove anything - it's all in the questions.

Q1, Do you think that if Ford went bust tomorrow all fords would stop working?
Q2, Do you ever use non-dealer tires/oil changes/servicing
Q3, Would you ever fit non-ford parts if they were just as good but cheaper

Q1, Do you think an airline should put safety first?
Q2, Do you think a bankrupt airline might cut corners on safety ?
Q3, Would you fly on an airline in chapter 11 ?

 

[OmCheeto]

Why not a plan that not only helps the Big Three, but will also move more money across the general economy.

...

If our tax dollars are going to take a hit, why not in an area that we all can use?

Just my .02

You think you're so smart.
Solving not just one problem, but two, with such a simple idea.
It might even solve three or four problems.

But do you think any of the 40,000 or so engineers in Detroit could manage such a design?
I think I posted somewhere that I thought they seem to all have graduated with PhD's in Dome light design.

I say let them drown, and let 100 small, innovative auto companies take their places. We'll have a new big 3 in 20 years or so.

 

[edward]

Surveys can prove anything - it's all in the questions.

Q1, Do you think that if Ford went bust tomorrow all fords would stop working?

Repairs and parts would be needed at the same rate they are now. There are very few alternative aftermarket parts for newer vehicles.

Even when after market parts become available for emissions systems, for instance, they must have an EPA approval.

Several years ago the big three started to get patents on their parts to get a bigger share of the parts business.

Q2, Do you ever use non-dealer tires/oil changes/servicing

There is no need to with tires and oil changes. But the corner mechanic may have to get a replacement part from Ford if the vehicle is less than five years old.

Many parts such as A/C controls are made by outside vendors who only manufacture parts on a specific contract with the automaker.. The only other source is a salvage yard.

Q3, Would you ever fit non-ford parts if they were just as good but cheaper

Non Ford parts will not fit. An aftermarket part that will fit may not be available for a number of years.

Q1, Do you think an airline should put safety first?
Q2, Do you think a bankrupt airline might cut corners on safety ?
Q3, Would you fly on an airline in chapter 11 ?

I think we are getting into oranges an apples here. The automobile industry doesn't have the FAA looking over their shoulder.

 

[mgb_phys]

I wasn't meaning to ask you the questions - I meant that if you wanted to prove that 90% of people would or wouldn't buy a car in chapt 11 you can just choose your questions. Similairly you could 'prove' people wouldn't fly on bankrupt airlines if you asked the same questions.

 

[edward]

I say let them drown, and let 100 small, innovative auto companies take their places. We'll have a new big 3 in 20 years or so.

We have already been there and done that. That is how the auto industry started. There were dozens of manufacturers in the early days. More than half of them folded during the great depression. Graham, Page, Essex, Hupmobile, Auburn, Cord, Duesenberg etc.

http://en.wikipedia.org/wiki/List_of_defunct_United_States_automobile_manufacturers

How long would it take 100 innovative auto companies to actually start production. I hate having to go to a salvage yards to get parts.

I really don't care what happens to the big three, but if they go down they take millions of auto industry related jobs with them. A lot of the parts that go into vehicles are made in small to medium sized factories all over the mid west.

 

[RonL]

You think you're so smart.
Solving not just one problem, but two, with such a simple idea.
It might even solve three or four problems.

But do you think any of the 40,000 or so engineers in Detroit could manage such a design?
I think I posted somewhere that I thought they seem to all have graduated with PhD's in Dome light design.

I say let them drown, and let 100 small, innovative auto companies take their places. We'll have a new big 3 in 20 years or so.

I would even be willing to LOAN them my book "Build Your Own Electric Vehicle" by Bob Brant, published in 1994.

But then why do the vast majority of people want to hold out for 400 miles on a single charge?

At 66 I don't think I have 20 years of wait time left.

 

[Proton Soup]

"Already Bankrupt’ GM Won’t Be Rescued by U.S. Loan "
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ai5KpbywxqiQ

The whole article is fantastic, but here a particularly damning section.

that article persuades me that a bailout will not work and the current economic situation is not the problem. in fact, i don't think i'd even be for cutting and pasting the law from chapter 11 and renaming it "auto bailout" because somewhere along the way lawyers would pull out its teeth, making it worthless.

chapter 11, the sooner the better. let's just get this over with.

 

[OmCheeto]

We have already been there and done that. That is how the auto industry started. There were dozens of manufacturers in the early days. More than half of them folded during the great depression. Graham, Page, Essex, Hupmobile, Auburn, Cord, Duesenberg etc.

http://en.wikipedia.org/wiki/List_of_defunct_United_States_automobile_manufacturers

How long would it take 100 innovative auto companies to actually start production. I hate having to go to a salvage yards to get parts.

I really don't care what happens to the big three, but if they go down they take millions of auto industry related jobs with them. A lot of the parts that go into vehicles are made in small to medium sized factories all over the mid west.

Like most people, I have my own personal interpretation of RonL's ideas and how they relate to the big 3. I've worked for a moderately large company, with currently 12,000 employee's, for the past 25 years. As far as I am concerned, my company is too large.

For most of my life, I've promoted the ideals of the economies of scale. But I've since learned that a company that grows too large, develops a head that does not know what it's feet are doing. Multi-layered management usually stops innovative ideas from ever reaching the top.

It does not surprise me that Detroit is stuck in the last century.

I'm not saying we should shut all the doors and melt down the factories. But their current structure does not warrant saving.

I would even be willing to LOAN them my book "Build Your Own Electric Vehicle" by Bob Brant, published in 1994.

1994? That might be outdated technology by now.

But then why do the vast majority of people want to hold out for 400 miles on a single charge?

Good question. I need about a 30 mile range.

At 66 I don't think I have 20 years of wait time left.

I wouldn't worry about it. Gas is down to $1.69 a gallon. But people have developed the habit of driving like it cost's $4.00 per gallon, which is how an electric hybrid will probably be like driving, so I'd say the stars are aligned for a change.

 

[RonL]

Like most people, I have my own personal interpretation of RonL's ideas and how they relate to the big 3. I've worked for a moderately large company, with currently 12,000 employee's, for the past 25 years. As far as I am concerned, my company is too large.

For most of my life, I've promoted the ideals of the economies of scale. But I've since learned that a company that grows too large, develops a head that does not know what it's feet are doing. Multi-layered management usually stops innovative ideas from ever reaching the top.

It does not surprise me that Detroit is stuck in the last century.

I'm not saying we should shut all the doors and melt down the factories. But their current structure does not warrant saving.


1994? That might be outdated technology by now.

Good question. I need about a 30 mile range.

I wouldn't worry about it. Gas is down to $1.69 a gallon. But people have developed the habit of driving like it cost's $4.00 per gallon, which is how an electric hybrid will probably be like driving, so I'd say the stars are aligned for a change.

Most of my working life was as a single operator, where I chased my own parts and estimated jobs, 50-100 miles in any given day would be about cover what I would drive, and this would be broken into several short trips in most cases.
I think most people would fall into a pattern of 2-4 movements during a 24 hour day, and the time between these movements would be a period that the small generator would restore some or most of the energy used, back to the batteries. In most cases where one goes to work and parks the car all day, the little generator will have restored the batteries and shut down before the trip back home.

About technology being outdated, I'm not sure I agree, but yes current control and distribution have improved a fair amount.

I think my biggest problem is not understanding all the considerations that need to be looked at, between the individual building a vehicle, and a large company producing a model for the masses.

Aside from waiting for that MAGIC battery, I think if more people had an opportunity to drive a comfortable and practical unit, they would find that most of the negative hype (of distance and acceleration) would fade into the background.
I know that an electric motor spinning the automatic transmission, is not the most efficient method, but it completely removes the learning curve of driving electric.

 

[JasonRox]

I would not give GM a penny, nor the others in the big 3.

In Canada, they would monopolize the government all the time. The government needs to realize that the billions of dollars are better invested in areas where it has future promise. The big 3 has been going downhill for a long time. In fact, GM hasn't pulled a profit in 4 years... not even during booming economic times! During times when everyone was loaning everyone money, GM still didn't pull a profit. The products of these 3 companies are garbage.

The Ontario government gave GM $600 million several years ago so that GM can start doing research and development into better vehicles... where did that go? Nowhere.

Chrysler has just threatened the Canadian government the other day. I wouldn't tolerate that if I were a top politician. I would let them do it, and use the money to support the employees to go to school, and help them find new jobs. It will actually be cheaper to do that.

Anyways, it's nice to see that this fantasy world that everything is ok, and you never have to think about politics/economy is over. All my friends were naive little nuts and still are, but with a big recession coming in, it's nice to see that they will finally see that getting a decent jobs requires more than just a nice resume.

 

[OmCheeto]

I think my biggest problem is not understanding all the considerations that need to be looked at, between the individual building a vehicle, and a large company producing a model for the masses.

The gentleman(P.C.) who graciously let me steal his signature just had a http://www.solarpowerrocks.com/solar-trends/what-powers-my-work-commute-the-sun/" published.

His 1997 full electric drive S-10 pickup truck was built by General Motors.

Even with the solution sitting in their data files, they still can't do it.

p.s. I see he has a new signature;

If you drive like there is no tomorrow, it may become self-fulfilling

 

[jal]

The big 3's problem is that the banks will not give them any more line of credit.

The problem is with the banks.

The bail out is for the banks.

The banks are is so much poo that they will no longer extend credit to the auto industry.

The solution is to give more money to the banks and make sure that it is earmarked for the auto industry.

Ohhhh!
Just put it on my bill! I'll pay for it on the way out.
jal

 

[edward]

Japanese car makers have had several financial advantages. When they built factories in the USA they were give large subsidies by the individual States.

Ironically, a major reason for the predicament of the one-time “Big Three” is the advantage of foreign car makers vis-à-vis domestic companies on the far from level playing field. A few week ago, United Autoworkers president Ron Gettelfinger said in a press conference that since 1992 foreign car makers received more than $3 billion in incentives to locate their plants in particular states and communities. Singling out the state of Alabama, the union leader said:

http://www.reflectivepundit.com/reflectivepundit/2008/12/subsidies-for-foreign-car-makers-he-fall-of-detroits-big-three.html

Then there is the Yen subsidy:

How much of a windfall advantage does the weak yen policy provide for an average Japanese vehicle?

The average windfall cost advantage is $4,000 when the yen is valued at 118¥ to the dollar. The actual windfall varies depending on the model and product range (and the value of the yen). For higher end Japanese imported SUVs like the Toyota Highlander — and for the Lexus line, which is imported from Japan — it can range up to $10,000 per car.

http://www.autoyensubsidy.org/faq.html

http://www.autoyensubsidy.org/

Would Japan bail out it's automakers if they were in trouble?? I think that they would do it without hesitation.