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US automaker bailout poll

Should the US bail these ungrateful automakers out?

  • Too bad, let them sink!

  • Blindly hand over 25 billion

  • Provide limited assistance in other ways.


Results are only viewable after voting.
BINGO! The big three have been making job cuts and are announcing more. Is it understandable now? :wink:
Don't go getting rude and condescending please... there's no need for that. Believe me, I completely understand. Perhaps you would do well to note the difference between "job cuts" and "threatening to completely dismantle and go out of business." (Which is what the big 3 are claiming).

The difference is that the niche which has been making the US automakers successful has been quickly eliminated and they are requesting a loan to shift direction.
Correct. And the extension of that, is that every other car maker in the world already accounted for and changed to reflect that elimination of the niche market. The big 3 were unable to do so, and (completely hypothetically speaking) I don't see why they should be helped out simply because the screwed up on a massive, stellar scale.

And let's be honest -- if that was really all they were requesting, I think a lot more people would be willing to lend a hand. However, that's *NOT* what they're requesting. They're claiming they *HAVE* to have this money or they run the risk of complete and utter ceasing of all U.S. operations (not merely a few rounds of job cuts).

I can't help but get the feeling you're being intentionally facetious.
 
Ford has hybrids on the market and is on the verge of releasing a hybrid F-150 pickup truck that gets 60 MPG, better than a Prius.
I just flat out don't believe that a hybrid F-150 pickup truck getting 60 MPG will be brought to the marketplace. I bet it was a nice "war room" discussion point for the executives though.

~~~
Auto sales will continue to slump hardcore because people are just not being given auto loans by the banks the way they used to. stated income loans are a thing of the past, etc. No bank is willing to carry debt (even after a 700B bailout!) and that is the big issue. Even if a bailout of GM, Ford, and Chrysler happens, these cars will not move out of showrooms.

Fix the credit crisis, don't bailout failed business models.
 
Domestic heavy manufacturing influences many things-- the job market is only one of them. The ability to mobilize an effective war machine is another. Do we just want to flush the toilet on heavy industry?? Indeed, if the gov't doesn't come through, what will the REAL scenario be (as opposed to what the industry tells us it would be)?

I don't know what the right answer is, but I feel that ideological stances on free market, capitalism, Unions, rugged individualism, etc., are only a few of the inputs that need to be taken into account.
 
"Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year..."

That's for 2007, taking into account the various charges and write-offs.
http://www.mindfully.org/Industry/2008/GM-Record-Loss12feb08.htm
If you'll notice, $722 million loss came in the 4th quarter, which is when the economy as a whole began to tank. They were profitable for the year before that. And going back to 2006, they had three straight profitable quarters until a poor Q3 2007.

Unfortunately, it would appear they only very recently did things they should have done years ago. If they're not able to stay afloat, why should people making, on average, less than the average UAW member, have their taxes shuffled to prop up a losing battle? Again, it's great that GM made all these sweeping changes, but it would appear that both the Marketplace, and the general consensus, is that it's just not quite enough.
It is not "only very recently" that they've been attempting to restructure. They've been working for several years to make changes; they weren't going to turn it around over night. If not for the supremely misfortunate timing of the current economic crisis there wouldn't be an issue; it wouldn't be a "losing battle." If these companies were failing while the rest of the economy was strong, I'd agree with you.
 
Domestic heavy manufacturing influences many things-- the job market is only one of them. The ability to mobilize an effective war machine is another. Do we just want to flush the toilet on heavy industry?? Indeed, if the gov't doesn't come through, what will the REAL scenario be (as opposed to what the industry tells us it would be)?

I don't know what the right answer is, but I feel that ideological stances on free market, capitalism, Unions, rugged individualism, etc., are only a few of the inputs that need to be taken into account.
An excellent point. I'm sure that the big 3 are keeping just such axioms in their back pockets for the inevitable next round of discussions/debate in Congress.

Lest we all forget, while we sit here and idly ping platitudes and high-level ideals back and forth... we do so in relative comfort. The real situation is that there are ACTUAL people who will be affected, dramatically, by whatever happens in the next 6 to 12 months.
 
If you'll notice, $722 million loss came in the 4th quarter, which is when the economy as a whole began to tank. They were profitable for the year before that. And going back to 2006, they had three straight profitable quarters until a poor Q3 2007.

It is not "only very recently" that they've been attempting to restructure. They've been working for several years to make changes; they weren't going to turn it around over night. If not for the supremely misfortunate timing of the current economic crisis there wouldn't be an issue; it wouldn't be a "losing battle." If these companies were failing while the rest of the economy was strong, I'd agree with you.
Are you seriously suggesting that GM's current financial problems and severe lack of sales and liquidity is 100% the result of the economic downturn from Q4 2007 and beyond? If so, it would appear that, as I said, all these changes (which are great and very necessary) are too little, too late. Otherwise, if they were so on top of it and making such drastic sweeping reform already, they would have been able to endure this round of financial downturn... granted they'd still have to lay people off and reduce production (like all the other auto makers) but they'd still be alive and kicking on the other side. Right?
 
I meant why Nissan/Toyota is announcing job cuts only in Japan in the recent announcements. Sorry if I confused anyone with my question.

We agree the entire industry is suffering, but only the big 3 are claiming complete and utter ruin and closing up completely if they don't get $25B.

Again, there's a big difference between forecasting slumping profits and cutting jobs to respond to a global crisis... and announcing that you cannot continue making/selling cars in the next 12 months without taxpayer money, to the tune of $25B.
Japanese companies were already marketing to the niche looking for small fuel efficient cars. While the US automakers were doing some of this themselves, there was a well defined market clamoring for the big utility vehicles. Production of these type of vehicles differs greatly from small car production techniques in all but the most modern facilities. Given the extremely recent downturn in demand for these vehicles the US automakers wish to redefine their market, as well. The Japanese don't have to redefine, therefore they don't need the immediate capital for retooling. The US industry does. It is bad business form to have massive amounts of uninvested capital on hand. That is what the big three are asking for now - a loan to assist them in a quick shift of direction. They have the resources available to repay the loans but it isn't liquid enough to access for the quick shift itself.
 
Japanese companies were already marketing to the niche looking for small fuel efficient cars.
Could it be they saw something our industry missed?

While the US automakers were doing some of this themselves, there was a well defined market clamoring for the big utility vehicles. Production of these type of vehicles differs greatly from small car production techniques in all but the most modern facilities. Given the extremely recent downturn in demand for these vehicles the US automakers wish to redefine their market, as well. The Japanese don't have to redefine, therefore they don't need the immediate capital for retooling. The US industry does. It is bad business form to have massive amounts of uninvested capital on hand. That is what the big three are asking for now - a loan to assist them in a quick shift of direction. They have the resources available to repay the loans but it isn't liquid enough to access for the quick shift itself.
There's a reason the Japanese didn't have to redefine. I think this problem has been decades in the making, and was (perhaps) simply accelerated by the global economic crisis we're all in right now. It was setup a LONG time ago. We just happen to be the lucky generation that has to deal with it.
 
I'm in Germany right now on business and it's interesting to get the US news as "foreign" news.

I've been seeing reports that some of the European car companies may consider lodging a complaint with the WTO because they view the US auto industry bailouts as state aid, which offers an unfair competitive advantage.

Of course, this is usually followed by news that the European auto manufacturers are also asking for money, so it's kind of like the pot calling the kettle black. I can't imagine that lodging a complaint with the WTO would do anything if a bailout is approved, but then again I know nothing about trade law.
 
I vote to let them collapse. The argument that it will cost millions of job can't be accepted. When you are simply paying public money to maintain jobs, the defeats the entire purpose of having a market economy. And also, going into Chapter 11 doesn't mean immediate collapse, some serious shrinking and restructuring are exactly what these companies need.

These companies are poorly run, they have a vastly overpaid unionized workforce, and the product they produce is unquestionably inferior to what the big Japanese companies make.

I'm Canadian and they want to do the same thing here, but I'm sure they won't unless the US does first. I would be horrified if I were an American, I can't see how people can't be just blown away by the debt levels their country is in, I mean it's just about ensured a dismal future for the next generation and those that follow for the next fifty-hundred years.

I think in the end, the basic problem is that these companies are all hamstrung by costs far higher than their competitors due to having a unionized workforce. Where else in society can someone make $30/hour with no skills or education? So what can be done? Become protectionist nations so we can prop up inefficiency? It's tough.
 
Don't go getting rude and condescending please... there's no need for that. Believe me, I completely understand. Perhaps you would do well to note the difference between "job cuts" and "threatening to completely dismantle and go out of business." (Which is what the big 3 are claiming).



Correct. And the extension of that, is that every other car maker in the world already accounted for and changed to reflect that elimination of the niche market. The big 3 were unable to do so, and (completely hypothetically speaking) I don't see why they should be helped out simply because the screwed up on a massive, stellar scale.

And let's be honest -- if that was really all they were requesting, I think a lot more people would be willing to lend a hand. However, that's *NOT* what they're requesting. They're claiming they *HAVE* to have this money or they run the risk of complete and utter ceasing of all U.S. operations (not merely a few rounds of job cuts).

I can't help but get the feeling you're being intentionally facetious.
I apologize for being rude. It was unnecessary.

If it was just the companies themselves I wouldn't give a flying rats kahootie. I'm looking at real people. Someone said these people could just get another job. It isn't that easy when there are no other jobs available. I know our local plant can't just spitting out Hummers that are no longer wanted. And they can't re-gear to build compact cars without some kind of aid. They *HAVE* to have this money or they run the risk of complete and utter ceasing of all Shreveport operations. This is very real and dire.
 
Could it be they saw something our industry missed?



There's a reason the Japanese didn't have to redefine. I think this problem has been decades in the making, and was (perhaps) simply accelerated by the global economic crisis we're all in right now. It was setup a LONG time ago. We just happen to be the lucky generation that has to deal with it.
Exactly. And how do we best deal with it? We can either throw the industry under the bus and say good riddance or we could simply float them a temporary loan to hopefully keep hard working Americans employed. I agree it has to be dealt with. Blindly saying let them sink isn't dealing with anything. It is ignoring it. :frown:
 
I apologize for being rude. It was unnecessary.

If it was just the companies themselves I wouldn't give a flying rats kahootie. I'm looking at real people. Someone said these people could just get another job. It isn't that easy when there are no other jobs available. I know our local plant can't just spitting out Hummers that are no longer wanted. And they can't re-gear to build compact cars without some kind of aid. They *HAVE* to have this money or they run the risk of complete and utter ceasing of all Shreveport operations. This is very real and dire.
But what about the millions of other people without any post-secondary education or trade who weren't lucky enough to get into some unionized workplace where they can earn $30/h on an assembly line? Of course people who are in jobs earning a salary that is many, many times higher than the market value for their skills aren't going to be able to match that. Is that really an argument to keep propping up these businesses?
 
But what about the millions of other people without any post-secondary education or trade who weren't lucky enough to get into some unionized workplace where they can earn $30/h on an assembly line? Of course people who are in jobs earning a salary that is many, many times higher than the market value for their skills aren't going to be able to match that. Is that really an argument to keep propping up these businesses?
It is not just unionized autoworkers we are talking about. If the US auto industry crashes many times more non union support workers in both the professional, industrial and service sectors will be forced out of work than the actual number of unionized autoworkers. But, even if it was just auto workers, they have already made concessions and agreed to certain pay cuts and reduced benefits. Wouldn't more of the same type of moves be preferable to chopping the head off the whole industry?
 
It is not just unionized autoworkers we are talking about. If the US auto industry crashes many times more non union support workers in both the professional, industrial and service sectors will be forced out of work than the actual number of unionized autoworkers. But, even if it was just auto workers, they have already made concessions and agreed to certain pay cuts and reduced benefits. Wouldn't more of the same type of moves be preferable to chopping the head off the whole industry?
Well if that were the case, but it's many times been argued that these union heads seem much more interested in squeezing every last penny out of the companies in the moment than guaranteeing the long-term safety of their worker's jobs.

The bottom line is that this is an industry which without massive changes cannot be profitable on it's own. It needs to be allowed to go into Chapter 11, fire all the top execs, shrink a ton, and completely revamp their business model.

There's no possible way to prevent hundreds of thousands of people in the auto industry from losing their jobs. It's completely unsustainable.

But, there's a chance that if they go into bankruptcy protection like that, and come out of it as completely different companies, they might be able to make it in the future.

I think that's what they are asking for now in congress, if they have some concrete plan for what comes next, then there's a chance of this being an investment. But if they are just saying "we're going to fail right now if you don't give us lots of money to keep plodding along" then no way.
 
Well if that were the case, but it's many times been argued that these union heads seem much more interested in squeezing every last penny out of the companies in the moment than guaranteeing the long-term safety of their worker's jobs.

The bottom line is that this is an industry which without massive changes cannot be profitable on it's own. It needs to be allowed to go into Chapter 11, fire all the top execs, shrink a ton, and completely revamp their business model.

There's no possible way to prevent hundreds of thousands of people in the auto industry from losing their jobs. It's completely unsustainable.

But, there's a chance that if they go into bankruptcy protection like that, and come out of it as completely different companies, they might be able to make it in the future.

I think that's what they are asking for now in congress, if they have some concrete plan for what comes next, then there's a chance of this being an investment. But if they are just saying "we're going to fail right now if you don't give us lots of money to keep plodding along" then no way.
They know they can't plod along. Nor can they change without help. I simply cannot see how it is in the best interest of the US economy to allow hundreds thousands of auto industry workers and millions of other American workers who will as a direct effect of those lost jobs lose their's in turn. This is the type of event that could quickly turn a period of recession into a full blown depression and that would affect each and every one of us.
 
Exactly. And how do we best deal with it? We can either throw the industry under the bus and say good riddance or we could simply float them a temporary loan to hopefully keep hard working Americans employed.
If they need a temporary loan, why don't they go to a bank & get it??

I agree it has to be dealt with. Blindly saying let them sink isn't dealing with anything. It is ignoring it. :frown:
But just rolling over & giving them a blank check for $25 billion is dealing with it, huh?? That's gonna solve all of their problems?? I don't think so. Those three idiots would be right back in front of Congress again in less than 6 months asking for more like Oliver Twist.
 
..... isn't dealing with anything. It is ignoring it. :frown:
The same can be said of awarding failed models billions (the burden on the taxpayers), essentially making the industry immune to any consequences of poor management/policy/models.

Competition drives capitalism. Businesses adapt to stay competitive, and successful ones prosper; those who fail to adapt to the ever-changing market and economy go under. Removing the possibility for failure removes the need to stay competitive. What good is a business in the long run that no longer needs to remain competitive, but continues to exist because the government and the taxpayers have become its crutch?

Putting in a safety net for those failing models does nothing to encourage policy change and restructuring. It is a short-term pass that treats the symptoms without acknowledging the cause.

The opinions are going to be on either side, and rightly so; this is a delicate issue.

But what if we took this same approach to our education system? What kind of students would we produce if there was no risk of failing, and no matter how little one studied or how poorly they performed, they were advanced further and allowed to remain in the system?

Obviously the students who are failing need some additional help - but an automatic A+ isn't it. It isn't the failing that is the problem - it is the reason that they are failing that needs to be considered. GM isn't failing because they are $25Billion short; they're failing because the model they are running on is not sound.

A bailout is no more than greasing the wheels when it's the engine that's knocking. We might get a little further down the road, but eventually (and soon) the whole thing will blow and there will be no solution in sight.
 
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