RBHoya
Diamond Hoya (over 2500 posts)
Posts: 4,143
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Post by RBHoya on Nov 17, 2008 0:46:13 GMT -5
Thoughts on this saga, B&G? Surprised there wasn't a thread for it already... are we only into politics around here or what? Decent position piece on the subject here: online.wsj.com/article/SB122669746125629365.htmlI am sure there's some good stuff out there to support the opposite position, but at the moment I'm lazy to look it up. Suffice to say, letting GM go under will end up sending unemployment skyrocketing and cause several other ripple effects. Overall, the craziest thing to me is that US Government seems to have basically turned into the world's largest private equity firm and it happened, like, REALLY fast. It's a complete change in how we think about the role of the Federal government, and it's happened in less than a year. I suspect that the automakers will receive federal money on the grounds that they will be economically viable in the years to come... whether that's true or not, and whether it's a good move in the long-term, I'm not sure, but I do think it will happen. |
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TBird41
Platinum Hoya (over 5000 posts)
"Roy! I Love All 7'2" of you Roy!"
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Post by TBird41 on Nov 17, 2008 8:09:20 GMT -5
Bad leadership (and cars) combined with a union that's won way too many battles have created this problem. If you don't fix both ends, (or at least allow both ends to be addressed) then giving the automakers money just pushes this exact problem down the road. The current scuttlebutt on the plan has executive reform, requires the greening of the product, etc, but it doesn't address the fact that no company can pay the benefits and pensions that the Big 3 do and remain competitive.
The Japanese and Germans are making cars here, in the U.S., for half the labor cost that the Big 3 are. And I'd be willing to bet the labor issue is never addressed, either, b/c the Dems (and Obama) owe UAW big time.
If this bailout helps the Big 3 restructure, lean up and get ready to be competitive, then I don't think I'd have a problem with it. If it doesn't allow them to address every aspect (labor and leadership) then it's a waste of taxpayer money, because it's just going to push the problems back a couple years
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EasyEd
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Post by EasyEd on Nov 17, 2008 8:44:48 GMT -5
US automakers pay an effective rate of about $73 an hour for their workers while the Japanese in this country pay about $46. Most of the difference is due to having to pay for benefits to those who are not now working (retirees and laid off). We need to let them go bankrupt so they can void their previous labor contracts and retructure from there. Otherwise any bailout would simply delay them going under. Of course the Democrats will never let bankrupcy happen.
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Cambridge
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Canes Pugnaces
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Post by Cambridge on Nov 17, 2008 9:21:43 GMT -5
US automakers pay an effective rate of about $73 an hour for their workers while the Japanese in this country pay about $46. Most of the difference is due to having to pay for benefits to those who are not now working (retirees and laid off). We need to let them go bankrupt so they can void their previous labor contracts and retructure from there. Otherwise any bailout would simply delay them going under. Of course the Democrats will never let bankrupcy happen. While I agree with you in practice, those deals you wish to void were negotiated fairly at arms length and allowed the automakers to put off paying higher salaries at the time of negotiation in exchange for backloading the compensation with pensions and retirement compensation. Basically, the automaker was able to savehundreds of millions, if not billions of dollars in compensation for workers back in the 60s, 70s, 80s and early 90s in exchange for retirement benefits for those workers. The workers gave up real dollars in hourly wage compensation then to be taken care of now in the form of pensions. Now that the automaker has to pay the piper for those years of service, they welch? Seems like automakers just got a free ride...again. That is what a collective bargaining agreement does. Why should the unions be forced (ie voided agreement) what they have earned through their own sacrifice? On the otherhand, the unions should recognize that their employers and industry are doomed without them giving something up, therefore they should voluntarily renegotiate. It's in their best interest. Will they do that? I doubt it. It's not in the interest of the union leadership; while it is likely in the interest of the union's survival. |
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rosslynhoya
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Post by rosslynhoya on Nov 17, 2008 11:11:40 GMT -5
The automakers and unions would both come out happy if the U.S. government were to assume the Big Three's pension obligations, which has been suggested from time to time. If a new national health care regime is instituted by 2012 as we've been promised, that would also eliminate another major financial burden. Plus those moves eliminate the messiness of a "bailout" or "bankruptcy" that the American public might not find all that appealing.
A fun fact I saw over the weekend was that the financial services divisions of Ford, GM, and Chrysler have already tapped into roughly $15 Billion of the financial sector bailout. I wish that number were popping up in more of the discussions this week.
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Elvado
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Post by Elvado on Nov 17, 2008 11:51:58 GMT -5
Why does the cynic in me believe that this "Big Three Bailout" is the first step in mandatory production of "green" cars no one wants to buy?
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TC
Platinum Hoya (over 5000 posts)
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Post by TC on Nov 17, 2008 12:07:20 GMT -5
"No one wants to buy"? Elvado, I guess you like sending $700B overseas every year for oil (actually more, if you consider the costs of the Iraq war)?
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Elvado
Platinum Hoya (over 5000 posts)
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Post by Elvado on Nov 17, 2008 12:08:14 GMT -5
What do you drive?
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mchoya
Bulldog (over 250 posts)
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Post by mchoya on Nov 17, 2008 12:09:47 GMT -5
First, mpg standards will be increased by the bailout. Green cars will follow. In all honesty, these are steps that need to be taken. If the Big Three were having any success selling the Hummer and other low mpg cars, we wouldn't be having this discussion right now.
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TC
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Post by TC on Nov 17, 2008 12:14:49 GMT -5
Right now? I telecommute full time and drive my wife's old '98 Cabrio. I'll gladly buy a plugin hybrid when one is actually made, problem is there isn't one out there yet. The '09 Prius might be the first generation, and then the Chevy Volt looks interesting as well.
If you're making this into a "everyone wants an SUV" issue, sure, everyone wants an SUV. They also want to pay no taxes and have universal health care and little kids want a pony and ice cream for dinner. We need to start doing things that make sense.
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Elvado
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Post by Elvado on Nov 17, 2008 12:20:09 GMT -5
I'm not making that argument at all. However, you know damn well that once the gov't gets a financial stake, it will start to compel production of vehicles that otherwise wouldn't be made.
You can bet that the current Congress will look to impose its will there, before it would ever take on one of the sacred unions that are destroying the auto industry as we speak.
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TC
Platinum Hoya (over 5000 posts)
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Post by TC on Nov 17, 2008 12:51:19 GMT -5
I'm not making that argument at all. However, you know damn well that once the gov't gets a financial stake, it will start to compel production of vehicles that otherwise wouldn't be made. You say that like it is a bad thing. |
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The Stig
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Post by The Stig on Nov 17, 2008 13:06:32 GMT -5
I'm not making that argument at all. However, you know damn well that once the gov't gets a financial stake, it will start to compel production of vehicles that otherwise wouldn't be made. You can bet that the current Congress will look to impose its will there, before it would ever take on one of the sacred unions that are destroying the auto industry as we speak. Wake up! The Big 3's problem right now is that they're not making the cars that people want! People want relatively cheap fuel efficient cars. The Big 3 are making overpriced gas guzzlers. Market efficiency is no match for stupidity and lack of foresight. During the late 90's and early 2000's, the Big 3 got sucked into the SUV craze and poured all their money into it. Meanwhile, their competitors were investing in fuel efficient technologies (the Japanese focused on hybrids, while the Europeans perfected the diesel). So when fuel prices skyrocketed, the foreigners had the cars that people wanted, while the Big 3 were left with lots full of SUV's that were worthless. Obama's pre-election plan (not sure if it's changed) was for the government to take over the Big 3's pensions/health care plans. The Big 3 would then invest the money they saved into fuel efficient technologies. |
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jgalt
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Post by jgalt on Nov 17, 2008 13:46:18 GMT -5
Obama's pre-election plan (not sure if it's changed) was for the government to take over the Big 3's pensions/health care plans. The Big 3 would then invest the money they saved into fuel efficient technologies. Dont want to get off of the this incredibly banal topic, but i thought obama wasnt a socialist?  |
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Bando
Golden Hoya (over 1000 posts)
I've got some regrets!
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Post by Bando on Nov 17, 2008 13:50:16 GMT -5
I think some of the more grandiose hopes of my fellow ideological compatriots here are wishful thinking. Yes, it would awesome if the bailout mandated production of green vehicles and a brand new Detroit focused on fuel-efficient and alternative fuel vehicles. I can pretty much guarantee, though, that any bailout will not look anything like that. It will be a straight cash transfer to the big three, with most of the federal involvement coming on the side of monitoring the money. I mean, when the Big Three and UAW are on the same page about something, we should probably be leery.
I'm almost of the opinion that we should just let GM fail, and with it the American auto industry. The bailout money would be better spent by simply giving it to the displaced workers rather than trying to prop up an industry that's been failing for years.
On the other hand, the quickest way to make Detroit competitive with Germany and Japan would be to institute universal health care, taking those costs off their books.
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Post by StPetersburgHoya (Inactive) on Nov 17, 2008 13:58:16 GMT -5
Why does the cynic in me believe that this "Big Three Bailout" is the first step in mandatory production of "green" cars no one wants to buy? I'm actually considering buying a green car - not because of my beliefs or as South Park suggested, my opportunity to be smug about it, but because its a good economic decision for me in terms of city MPG. |
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Bando
Golden Hoya (over 1000 posts)
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Post by Bando on Nov 17, 2008 14:00:30 GMT -5
Obama's pre-election plan (not sure if it's changed) was for the government to take over the Big 3's pensions/health care plans. The Big 3 would then invest the money they saved into fuel efficient technologies. Dont want to get off of the this incredibly banal topic, but i thought obama wasnt a socialist? He's not, unless you're defining socialism down to include George W. Bush, Richard Nixon, FDR, Ronald Reagan, Milton Friedman, and any sort of government intervention in the economy. Words have precise meanings, and it's idiotic to use words like "socialist" and "fascist" when you mean "someone I disagree with." By using a word like "socialist" to describe Obama, you're only showing me that you lack any sort of understanding of the political and historical implications of socialism. |
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Post by AustinHoya03 on Nov 17, 2008 14:27:52 GMT -5
I think some of the more grandiose hopes of my fellow ideological compatriots here are wishful thinking. Yes, it would awesome if the bailout mandated production of green vehicles and a brand new Detroit focused on fuel-efficient and alternative fuel vehicles. Yeah, jam it down those idiot SUV-drivers' throats! I'm with Elvado on this one. I am not against incentives (even heavy incentives/subsides) for green vehicle R&D/production, but I oppose a bailout and/or any sort of green car mandate. |
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Filo
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Post by Filo on Nov 17, 2008 14:46:14 GMT -5
A few points --
1. As far as buying a hybrid being a good economic decision on a personal basis -- that is far from clear-cut. Generally was not a good economic decision in the past but with car prices coming down and gas price going up, it may make more sense than it used to.
2. If a bailout is going to happen, I would prefer to see the government take over the pensions with the condition that the existing companies cease to exist as they are. New smaller, more efficient companies should be formed out of the big 3 behemoths, and they should start from scratch, with new union contracts that are negotiated at arms length, new leadership, new approaches, etc. Pipe dream, I know.
3. I think some of you are giving too much credit to the American consumer by saying the automakers are not making cars that people want. Would be greatif it were true, but the automakers have continued to produce gas-guzzling monstrosities because that is what they were able to sell. There was an article in the WSJ at the beginning of the month that Ford was going to increase producion of one of their lines (F-150 or something similar) because they cut back too much and there was increased demand for them as gas prices lowered. You are never going to get leadership, especially environmental leadership from these antiquated, slow-moving companies.
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HealyHoya
Golden Hoya (over 1000 posts)
Victory!!!
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Post by HealyHoya on Nov 17, 2008 15:10:47 GMT -5
Several months ago, Johnny MaC said of those lost auto industry jobs in Michigan, "They aren't coming back."
Guv Granholm went nuts objecting. Mitt Romney countered that in a Romney Admin those jobs would return in six months. Prez-elect Obama has indicated they will return, too. It looks like McCain will be right. Those jobs are gone for good and there are more lay-offs comings.
Employee medical benefits - unsustainable by Big 3
Retiree medical benefits - unsustainable
Pension benefits - unsustainable
Payments for redundant positions - unsustainable
Hey, when are those textile jobs returning to the Northeast? What about all those steel mills that were going to re-open in Western Pa.? So here it is -- the Big 3 need to go Chapter 11 now. They are unsustainable.
Notice that in this supposed industry-wide crisis only the American auto companies are teetering on the brink. Honda, Nissan, Toyota -- they will be fine without $50B...$100B...more...from their government.
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