Saving the US Auto Industry

[xoxoxoBruce]

Oh boy, more of Merc's conspiracy theories.

To expand on what Griff said, ultra low sulpher diesel became law in Europe in 2005, available here in 2006, and law here in 2007, except for non-stationary/off-road/maritime use. So up until last year they couldn't use the emission controls US law requires on diesels now.

Oh, and their vehicles are lighter as they don't have to meet US crash standards.

[tw]

'I support saving any one or all of them' using 'another plan to save them from certain death.' But the poll does not permit clicking both.

[tw]

Camaro concept becomes a reality
Chairman and Chief Executive Rick Wagoner responded to what he called an "overwhelmingly enthusiastic response" by announcing the automaker will begin production of the revived Camaro at the end of 2008, slated to hit dealer lots in the first quarter of 2009. ...

The concept, first driven across the Cobo Center floor by GM Vice Chairman Bob Lutz, pierced ears with a 6.0-liter V8 engine cranking out 400 horsepower, tied to a six-speed manual gearbox.

... while Ford Motor Co. have pledged to join the muscle-car caravan with a 325-horsepower version of the Shelby GT and the Dodge Challenger, respectively. ...

Despite claims that GM is missing the mark with some of its new products, Joe Wiesenfelder, senior editor at Cars.com, said that the company almost has to go this route with the Camaro.

... "On paper, the outgoing Pontiac GTO sounded great, but it was a relative flop.

Deja vue 1970s - same mistakes made by the same companies before bankruptcy finally fixed them.

[classicman]

Why Bankruptcy Is the Best Option for GM

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of "change," GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

GM's solution is to ask the federal government for the cash that will allow it to do all of this piece by piece. However, much of the cash will be thrown at unproductive commitments. And the sense of urgency that would enable GM to make choices painful to its management, its workers, its retirees, its suppliers and its localities will simply not be there if federal money is available. Like AIG, it will be back for more, and at the same time it will be telling us that it's doing a great job under difficult circumstances.

This is contradictory to some of the opinions previously posted here.
How does this affect your thoughts on the bailout of the big three? Can we selectively bailout one or two of them and not the other? Is GM that much worse off than the others? Do they all deserve to deal with their own issues with no bailout whatsoever?

[tw]

Requoted from classicman

It supports more retirees than current workers. ... It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month.

None of these commitments drain cash IF GM did what once was required. A responsible company has those employee costs funded before an employee retires. When an employee retires, the company pays nothing more - no legacy costs.

Since GM cars were so crappy, GM used pension funds to claim profits. This was acceptable with so many new spread sheet deregulations. New standards that even assumed a pension fund would always have a 10% ROI (even though history says it is always less than 8%). A solution that also assumed GMs pensions would be picked up by the government - see my warnings years ago about PBGC. This meltdown and lying was known so long ago that even I knew about it.

Had GM been required by responsible accounting to fund those pensions, et al, then GM would have faced bankruptcy earlier and solved this with little pain. GM would have fixed their only problem - top management. 85% of all problems are directly traceable to ... Instead Enron accounting was alive and well. No regulations did so much good - right.

GM's problems have been entrenched for 30 years. Since we are foolishly discussing bailouts, then those MBAs are making no plans to restructure. Rick Wagoner said last week that GM has no restructuring plans. Of course not. Government welfare will save GM. Why should they do what is necessary? They are MBAs - ostriches.

Ross Perot defined GM's problem 25 years ago. GM throws money at problems like a grenade. That means solutions are impossible.

Restructuring - eliminate many GM models. Start retooling now for only a few base models, as Toyota, Honda, and VW have long done. for example, only one intermediate frame - not three. IOW, GM must innovate - do what everyone else did more than 20 years ago. It cannot happen until everyone admits GM's only problem - Rick Wagoner and an entrench cadre of MBAs who routinely stifle innovation.

Rick Wagoner has no restructuring plans. $50billion thown into a company now only worth $1.8billion? Only a fool would even consider that. What happens when bean counters were replaced by car guys in 1979/1981? Restructuring was conducted ASAP. GM has no such plans because Rick Wagoner is an MBA waiting for government rescue.

How many of these divisions must be eliminated now - Buick, Saturn, Hummer, Pontiac, or Saab. At least two must go immediately if GM has any hope of being saved.

[classicman]

I vote 3 go - Pontiac, Buick and Saab or Hummer.
I just saw a show on cnbc about this too - they predict one to 2 million jobs lost, no matter what. If we give them the bailout then it just prolongs the inevitable even longer and further wastes money. The UAW is standing firm that they will not negotiate their contracts nor benefits at all. I wish them well with that. They really don't have a choice do they? BTW, one of the men remarked that there was a senator who had brought up this issue the last time they got bailed out... John McCain. He was overwhelmingly criticized for his "negative" opinion.

[footfootfoot]

I don't support welfare whether for poor or rich. But if you give thewelfare to the poor at least they'll spend it and keep the $ in circulation. If you give it to automakers they'll mostly use it for 85% of top management salraies and they won't spend it. They'll invest it and then we'll end up giving them even more money when their investment house of cards gets knocked down.

I'd say just cut right to the chase and distribute Milwaukke's Beast, Ciggies, and scratch-offs directly to the poor.

[monster]

I'm not in favor of taxpayers bailing out private companies, but I don't have an alternative. all i do know is that if the big 3 go under, Michigan dies. Detroit's pretty much dead already, Flint's a zombie (but we knew that), Ypsi's on life support, Ann Arbor is still waiting for a pacemaker after Pfizer pulled out last year, and the rest of the state makes/grows the stuff the inhabitants of the Mound of Venus spend their money on. dead it's not just about those companies -the network of businesses and livelihoods supported by them and their employees is huge and underlies the whole economy of the state. We're doomed, doomed I tell ye!

[tw]

Originally Posted by monster

I'm not in favor of taxpayers bailing out private companies, but I don't have an alternative. all i do know is that if the big 3 go under, Michigan dies.

How many times do I remind everyone of what is now monster’s myth? Throwing money like a grenade only destroys jobs. Did Perot teach you anything? Anyone with any grasp of history would know that.

monster - what saved 1979 and 1981 Chrysler and Ford? No bailout. Both companies were finally forced to submit detailed restructuring plans. President Ford also said "Ford to NYC Drop Dead!" Only then was Ford, Chrysler and NYC all saved. Get a grip. Throwing money at GM only guarantees Michigan job losses.

GM's only problem is stifled innovation. How did Chrysler and Ford get saved in only years? Once top bean counters were replaced by car guys, then all jobs were saved by liberating stifled innovation. Only one reason for that stifled innovation. Top executives did not even have driver's licenses. Did you learn from history?

Why is GM still doing no restructuring planning? Because your post (like so many others) endorses corporate welfare and protects Rick Wagoner. Your ‘worry’ or indecision is exactly what Rick Wagoner needs to save his job and to destroy jobs.

You know the difference between Chapter 7 and Chapter 11? Wagoner needs you to be ignorant. He needs you confused - to assume Chapter 7. Therefore his job is protected.

Clinton got all three to design hybrids in the 1990s - as only an American patriot would do. If informed, then you can name those 1999 hybrids - Precept from GM, Prodigy from Ford, ESX3 from Chrysler. Where are they? Oh. Wacko extremists (George Jr et al) said a $100million government investment was Clinton and must be wasted. Of course you remember that mantra. If Clinton advocated it, then it must be wrong. Everyone remembers that.

So wackos especially did not want innovative cars. We want to burn more oil – and even have White House lawyers also rewrite science papers on global warming - to justify stifling innovation. It was by Clinton so it must be wrong. The wacko extremist mantra that protected Rick Wagoner and promoted more Michigan job losses.

So GM still has no hybrids? Fifteen years later, $100million later, 8 years after completed designed were demonstrated? You would even endorse more stifled innovation by throwing $50billion into a company only worth $1.8billion? You would advocate the destruction of Michigan jobs?

Only an ostrich does not know what "70 horsepower per liter" means. Another example of destroyed American jobs. Twenty five years later – monster advocates more cars without 70 Hp/liter engines. More government protection means no 70 Hp/liter engines. monster – tell me no 70 Hp/liter saves Michigan jobs. When do you advocate a solution; not more welfare to stifle innovation?

Give Telsa Motors that money to manufacturer what is more innovative than anything in GM. Or give patriotic companies such as Honda, VW, and Toyota that money to actually save American jobs. Oh. But GM needs that money to start selling a 400 Horsepower Camaro. Monster - why do you approve of a car with as much or more horsepower than BrainR's 80,000 pound 18 wheeler? That is what you advocate.

History repeatedly defines the only thing that saves the worker's jobs. Bankruptcy - ie 1979/1981 Chrysler and Ford.

His name is Rick Wagoner. He created massive losses in GM North America. So they made him CEO. Now all of GM has no profits. This is no exaggeration. And monster would protect him? Sorry. But your protection of those who destroy Michigan jobs is obvious - if you learned from history. Yes, 1970's deja vue. Not stated politically correct. Stated instead with the same supporting facts that also denies those Saddam WMDs - with the same sound byte - deja vue.

[monster]

Originally Posted by tw

How many times do I remind everyone

who knows? you repeat and contradict yourself so often they haven't yet invented terms for numbers that high

of what is now monster’s myth? Throwing money like a grenade only destroys jobs. Did Perot teach you anything? Anyone with any grasp of history would know that.

monster - what saved 1979 and 1981 Chrysler and Ford? No bailout. Both companies were finally forced to submit detailed restructuring plans. .

wait, where did I say I was in favor of a bailout? I understand it can be hard when you're just bursting to condescend to someone, but please, spare me your ego.

I realize I have the answer to pretty much everything, but I think it's going a little far to say that me admitting that I don't know what should happen is a myth....


thank you for your considered response, Governor Palin.

[footfootfoot]

The US auto industry shouldn't be bailed out. The idea that Michigan would go down in flames is predicated on the belief that the people there are capable of only one thing- working in an auto plant.

Just as a for instance. Why not re-tool all the plants to build rail cars and get the country into feasible rail travel? You know, if I'm not mistaken I'm pretty sure somewhere over in Europe people travel in trains.

[tw]

Originally Posted by footfootfoot

Why not re-tool all the plants to build rail cars and get the country into feasible rail travel?

All patriotic auto companies had retooled their factories 10+ years ago to be flexible as well as build the new models. For example, a Toyota plant in Indiana making Tundras was changed in maybe a month to make Camrys. That was the latest auto industry innovation a decade ago when GM decided to address quality - a 1970s technology.

It takes GM something between three months and one year to retool a factory. Just another example of why GM needs bankruptcy. GM bean counters decided that flex manufacturing would only increase costs.

Remember the first Saturn factory in Spring Hill TN? GM cannot even decide what to make there. Every time a decision is made to make a new car there, the plans get quashed. Management plans to convert the factory to a new car. Long later, GM learns the factory is inflexible - cannot make that car. GM has gone through this 'maybe we will do this' cycle twice. Spring Hill may get closed because GM bean counters stifled another innovation over a decade ago - flexible manufacturing.

[lookout123]

Originally Posted by footfootfoot

Just as a for instance. Why not re-tool all the plants to build rail cars and get the country into feasible rail travel? You know, if I'm not mistaken I'm pretty sure somewhere over in Europe people travel in trains.

Screw it. Let's re-tool all the factories to produce wargoods and then announce we are defaulting on the US debt. "HAHA China, You're Effed for buying all our debt! Now whatcha gonna do!?!"

[footfootfoot]

That's what I'm talking about.

[Aliantha]

Well, personally, I'm pretty sure it's got nothing to do with lookout123. At least, no more than it's got to do with tw or UG or Bullit or anyone else that posts on here.