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Post Info TOPIC: The Fate of the American Auto Industry
Mindcrime


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The Fate of the American Auto Industry
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WASHINGTON -- The $25 billion rescue plan for the auto industry, desperately sought by Detroit's beleaguered Big Three, collapsed Thursday as Congress drew the line at one more bailout and Democrats said they wouldn't even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.

The demise of the rescue - at least for now - left uncertain the fate of General Motors Corp., Ford Motor Co. and Chrysler LLC, and sent Wall Street spiraling to its lowest level in years. The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit the lowest point in nearly six years.

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In the wake of a $700 Billion bailout for the banking industry, the Big 3 auto makers are now looking for the same kind of financial assistance. My gut tells me to say no, the same way it did with the banking bailout. They pushed this act of charity through Congress under the demand that it was vital and urgent, that the sky would fall if the banks didn't get an unprecedented sum of rescue money. Immediately. A month later we find that rather than fixing the problem by buying up these toxic mortgages I remain unconvinced that it was necessary in the first place.

But the more I think about it, I would feel better helping these companies out -- with some conditions.

Firstly, the situation they find themselves in is not entirely their fault. They could not predict the cost of oil tripling in 2 years, making their products undesireable. Nor could they predict the credit crisis we now face, making their product less accessible. These two problems alone have cost US automakers billions in lost revenue.

That's not to say they could have avoided these problems by building more efficient cars that cost less money. In the auto industry you have to plan ahead five years from concept to sales floor. So moving quickly to avoid these pitfalls is impossible. They've had all the time in the world to insulate themselves from this kind of economic trumoil, and they chose instead to make bigger and less efficient, monstrous vehicles.

So what to do? First, forget the world "bailout." Simply throwing money at a failing business is not the answer. I would, however, consider giving these companies a loan. Low-interest, with strings attached. Contrary to what the Limbaughs and Hannity's of the world would have you believe, there is precedent for such a large-scale loan. The government bailed out Chrysler in the 80's, and as a result, the government made money, Chrysler paid off the loan in a few years and everyone was happy.

Secondly, assign some conditions to this loan. Start by dismissing all the CEO's, their boards and senior executives. These people have demonstrated that they are ill-equipped to handle their business. Next, demand that they submit a simple, revised business plan that includes real change. Congress, to their credit, has already demanded such a plan. Finally, dedicate a third to a half of their manufacturing plants to retooling for flex-fuel or electric cars.

Do I feel bad about government making demands of a private company? Not in the least. Not when the companies we're dealing with are too big to allow to collapse. They support 3-5 million jobs nationwide, and another 10 million jobs that indirectly rely on these companies remaining open and viable. Not to mention the national security issues that stem from our ability to build tanks and humvees. But the industry has been unwilling to make much-needed advances in technology or technique. We had to pass laws just to get fuel efficiency up to 20 mpg after the 1970's oil embargo. We had to pass a law to make seatbelts manditory. They willingly and deliberately produced a viable electric vehicle and then 7 years ago eclipsed it from existence. This is an industry that does not have the best interests of the country in mind. Is it immoral to remake this industry into one that does?



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Scott Leffler


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MC,

You could actually make a claim that the REASON for the price of oil jumping to $150 a barrel is because of Detroit ... at least largely.

I'm opposed to ANY bailout ... but $25 billion for the big three makes more sense to me than $700 for ... whatever the hell it was for.

If we do this loan ... bailout ... whatever ... there need to be strings. Lots and lots of strings.

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Mindcrime


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The cost of oil is also the result of worldwide demand increasing. China and India are becoming more and more industrial by the day, dramatically increasing their need for petroleum.

But I would agree with the assessment that Detroit is partly responsible for the increasing cost of oil, insofar as the auto industry's refusal to build more efficient vehicles. We have had the technology to build less wasteful vehicles for decades, yet the Big 3 refused, fighting efficiency and conservation every step of the way.

In 1969, Suburu introduced to America the "360," a VW Bug wannabe that got about 65 miles a gallon. 65MPG! In 1969! We're lucky if our compacts get 40MPG, 4 decades later!!!

In 2008, Ford makes a diesel car called the Fiesta. It gets 65 MPG, but they refuse to sell it in America. This is a car, like all diesels, that could run on bio-diesel.

We had viable electric cars years ago, and the car companies suppressed the technology.

The car companies intentionally, willfully, with premeditation, make inefficient, wasteful vehicles. For this, we deserve some payback ourselves. If we, the American taxpayers, are going to be their bank of last resort, we should have the right to tell these companies how to build cars in the future. I want an affordable electric car in production and on the market by 2009. Unrealistic demand? Maybe. But I think they owe us that.

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Daddydog


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As a GM worker since 1978 I have seen so many changes in the way we work it makes my head spin. The workers and the Union are always blamed for poor cars and quality while the Brass and engineers continue to engineer slowly more fuel efficient cars, and we can only build what is put in front of us. Lately more and more imported components are going into our engines and less and less American parts are used, and the Engineers I dare say are probably the lowest paid in any industry... I have talked to many who say they would jump to bail out to another field due to their lack of benefits and wages... while more and more of the good ones are being transfered to China, Brazil and Mexico to build the cars that are thought to be American made.
The assembly line workers are busting their collective asses on the jobs we still have...respect these men and women because it is not like the seventies and eighties where long breaks and easy jobs made our reputations sink... and not without good reason. But now we are virtually locked down in the plant, 2 23 minute breaks and an unpaid 1/2 hour lunch are our rewards for laboring at speeds of ridiculousness and with less and less people.
For an example, there was an attempt this summer to hire some temps to help relieve our vacation time and 600+ applicants were screened (I don't have the bulletin any more, but my numbers are pretty close...I'll edit this later with the real numbers)....around 60 of them passed the drug tests and out of them only 16 showed up for work on Monday...and 10 of them quit by lunchtime. Our new contract brings in new workers at $14 an hour, our Janitors and laborers now make $11 and our health benefits have gone to traditional BCBS...with only 5 doctors visits allowed per year per family. The white collar force pays for their health care, and overtime has virtually disapeared. So goes our "cushy" jobs that the public generally assumes due to the past...
We as a union understand the world market scheme of things... and our consessions have been astounding over the last contract..but really, what ever happened to American Jobs for Americans? The loosening of the corporate rules especially over the last 8 years have allowed the large corporations to hire third world slaves to make their products while all of our living wage jobs have disapeared...and the fat cats laugh in their mansions while Americans work 60 hours a week to stay ahead of the bailed out banks that are knocking at the door to reposess their homes they have worked so hard for....
Read "The Audacity of Hope".....by Barack Obama.
Its time to take our country back.

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Mindcrime


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Leave it to Michael Moore to have the most rebellious point of view of all. Yesterday the car CEO's told Congress their original request for $25 billion was understated, and that they now need over $34 billion.

Moore suggests, that if you look at the sum market value of their stock, these companies are only worth around $3-4 billion. So why loan them $34 billion when we could buy the industry for a tenth of the price? Then we would truly have total operational control over what kind of cars we will drive into the 21st century. And after 5 years, once we've overhauled the companies and established a workable business plan and we've proven that the electric car was not that hard to build and market, we could sell these companies off at a massive profit.

Just food for thought.

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Daddydog


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Maybe this is a voice of reason and explains alot....

Reluctance to Help Detroit Reeks of Class Bias
Washington Post
By Warren Brown
Dec. 7, 2008

It has happened repeatedly in the last several weeks -- well-paid, well-known
journalists questioning the wisdom of "bailing out Detroit," of
helping an industry whose union-represented workers have substantially better
wages and benefits than other manual or skilled laborers, or, more precisely,
who are better compensated than their nonunion counterparts working at
foreign-owned rival companies building cars and trucks in the United States.

The questions are tinged with outrage and ridicule: Why should Americans who
earn less, have inferior pension and health-care plans, help the United Auto
Workers union? Why can't the UAW be satisfied with the same pay packages
given at Honda, or with an even less-expensive compensation agreement for
workers at the Hyundai assembly plant in Montgomery, Ala.?

The queries often come from people who earn substantially more than the
estimated $71,000 annually in wages and benefits paid to UAW members. They come
from people who, having reached upper-middle-class status by virtue of their
college educations and communication skills, certainly wouldn't settle for
earning less.

So, why are the questions being asked?

Might I suggest class bias?

There is a feeling in this country -- apparent in the often condescending,
dismissive way Detroit's automobile companies have been treated on Capitol
Hill -- that people who work with their hands and the companies that employ them
are inferior to those who work with their minds and plow profit from
information. How else to explain the clearly disparate treatment given to
companies such as Citigroup and General Motors?

Let us stipulate for the record that both Citigroup and GM have made their
share of management errors. Citigroup made loans it should not have made and
sold lots of commercial paper it should have trashed. But Congress offered
barely a whimper of protest to the government's emergency action granting
Citigroup $25 billion in bailout money. Similarly, the Mob of Pundits seemed not
to care much that many of Citigroup's managers remained just as rich after
the federal bailout as they did before receiving the government's aid.

What Citigroup manager was dragged to Capitol Hill to publicly present a
long-term plan for business profitability and viability? Did I miss something?

Now comes GM, Ford and Chrysler -- supplicants all, companies that bet wrong on
U.S. gasoline prices (the same error made by Toyota with its Tundra pickup, by
the way) and that were as shocked as the rest of us by the fiscal carnage caused
by bad loans made by banks such as Citigroup.

It apparently matters not that the domestic car manufacturers account for 3
million to 5 million U.S. jobs. It matters not that, despite some bad guesses on
product development, they've remained engines of U.S. innovation. (Their
work with biologically derived fuels and emergency communications systems are
examples.) Nor does it matter that they pulled us through several wars and one
terrorist attack (GM's zero-percent financing plan after the Sept. 11, 2001,
horror).

And, of course, it does not matter that the domestic manufacturers for decades
have been operating in a country wide open to foreign competition, but bereft of
anything resembling a sensible industrial or energy policy. That's quite
different from Japanese car manufacturers that have benefited mightily from
financing and cooperation via Japan's Ministry of International Trade and
Industry.

No. The only thing that matters is that Detroit's automobile workers have
earned enough money to allow their families to dream, to send their children to
the colleges and universities from which many of their critics in the media
graduated. How dare they!

Implicit in the criticism of UAW compensation packages is that
union-represented automobile workers are being paid above their social class.
Greedy, bad people. They are supposed to be satisfied with wages that cover only
the basics -- food, acceptable clothing and housing. They are not supposed to
receive pay that allows them to aspire to or dream of more. They should be happy
with the development of America's Wal-Mart economy, one in which
less-expensive skills, talents, products and services are imported to satisfy
the American consumer's insatiable lust for the highest-quality goods and
services at the lowest possible prices.

That is what stuff-makers and other manual laborers deserve. Wall Street's
money people and well-paid journalists, on the other hand, deserve much better.
They studied, went to college. They use their brains. They should be paid more.

So, let Detroit's automobile companies slide into bankruptcy. We'll
lose a few million more jobs. But those of us lucky enough to remain employed
will still be able to buy cars from Honda, Hyundai, Nissan and Toyota. Or, if we
are doing quite well, we can snatch something from BMW, Porsche or
Mercedes-Benz.

What the heck? If things get really rough, we can always catch a sale at
Wal-Mart. Citigroup most certainly would be willing to finance our purchases at
favorable interest rates. What a country! We once rejoiced in building things,
innovating, racing to the top. Now, at least for the people who use their hands
to make this country go, we're celebrating a mad dash to the bottom.

Are we not better than this? Is this the America we want to be?no.gif

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woof
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