I'm sure many of you are aware that Detroit automakers are lobbying the government (and the public in their website GM Facts and Fiction) for a $25 billion bailout loan package. The CEOs of the Big Three automakers, General Motors, Ford, and Chrysler went before the House of Representative ... and got grilled over their use of private jets (estimated at $20,000 apiece):
Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.
"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.
"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."
What do you think - should the federal government bail out the automakers?
[poll=10]Update 11/19/08 - Here's a thoughtful op-ed piece by Mitt Romney at The New York Times: Link
In order to solve the problem you need to cure the root cause of the decease, not treat the symptoms.
just got up, tired.
That's not halved the work force, that's the payroll.
So how can they have the same number of workers but have halved the pay roll?
The work is being done outside the US, in Mexico.
SO they are effectively a foreign company with a few assembly plants in the US, but still want US bail out money.
How cute is that?
Another thing I don't understand is income support. If a job doesn't pay a living wage, why are taxpayers subsidising the employer? We're all going to have to pay in the end, whether through taxes or at the till.
http://www.nytimes.com/2008/11/18/business/economy/18car.html
Lee Iacocca wheedled the fedgov for money to keep Chrysler alive. Chrysler's back for more today.
I understand that the automakers form the core of a big part of the economy (glass, metal, plastics, electronics, aside from the labor and the diners they eat in), but:
"It's the product, stupid."
A designer or engineer from a U.S. automaker called NPR to complain about the "populist drivel" about them making cars that nobody wants. I don't consider Consumer Reports or J.D. Powers "populist drivel" and by their surveys, the Japs make better cars in the most important category to me, vehicle durability. And they're making cars in the U.S. So who's American?
If it's "free market forces" then it's "no" to bailout. Recession aside, it's how we got the largest economy in the world. But if it's handout time, how about the workers who may be on the verge of destitution?
But I'm no expert.
Protectionism (for that's what this is, really) doesn't work for long, eventually the dam breaks.
Should we let them fail because appliances, home goods, home improvement, or personal credit aren't relevant? What kind of innovation can we expect if those companies are denied funding?
Also, anyone who gets laid off gets to kick a CEO in the nuts.
The only thing you guys should be socialising is your health care system...it'd trim a couple of grand off your car costs for one.
Everyone pays in everyone benefits.
Time and time again these auto execs (and the UAW) have lobbied against standards and other things that would have, in hindsight, kept them competitive and profitable. From compact cars to fuel efficient hybrids, over and over these execs have foolishly ignored the competition. And they expect us the taxpayers to bail them out, and for what, to prolong the inevitable?
Detroit only built what Americans wanted to buy. No one was forced to buy a gas swilling SUV or pickup. They did so because they wanted them.
It would be a huge, huge mistake to bail them out.
What they need is bankruptcy and then a massive restructuring. Adaptation and evolution will make the American auto industry stronger. Encouraging them as they are will kill them.
Besides the problem isn't only the types of cars they make. You can't sell cars when no one has any money to spend on them. Every automakers sales have dropped in the US, the Big 3 don't have enough sales outside the US to keep them in business like all the other automakers have.
The US would have been better off to have given all the bail out moneys to the citizens and let them spend it where they would, banks would have had loans/credit paid, cars would have been bought, and the economy actually boosted.
Oh and they have not paid back the previous loans from the gov that p*ssed away. So how exactly would they pay back these ones?
Other than Canada and a wee bit in Mexico I don't think the big 3 have ANY sales of US cars outside of continental America.
Sure once every year you'll see some knob in a dodge ram in the UK sitting on the wrong side of the car and making an ass of himself...but that's it.
Also you have to remember that the Big 3 own many foreign automakers. Ford owns Jaguar and Aston Martin, etc., GM owns Vauxhall and Daewoo, etc., and Chrysler owns Mercedes. But I would think that if the parent companies fail, the subordinate companies would surely be picked up by someone else.
Let em fail.
I looked through gm's myth site and they really seem focused on cars that are in a mid to high budget range. I think the majority of people are looking for smaller and cheaper cars these days and GM's only entry (the Aveo) is just a rebranded korean car.
Ford owns Jaguar and Aston Martin, etc., GM owns Vauxhall and Daewoo, etc
Why don't they sell those off to get some cash?!
A blank check is a bad idea, but doing nothing is just stupid. We need the companies to re-structure, and we're in a unique position to force that. Let's make an offer with strings and throw our weight around.
just throwing that many people out of work would give you some interesting economic times....
Got any proof to back that statement up? The feds have committed $25B in earlier loans to offset the cost of re-tooling and expediting new model offerings. This process takes 3-4 years even without the pressures of losses. What is Detroit doing to change? Take a look at Chevy - they will have the first production hybrid that will run on electricity for 40 miles before it starts burning gasoline. It will be ready late next year. Check out Ford's new hybrids. Better fuel economy and emissions than any similar sized Toyota hybrid. Ready for sale mid-2009. Chrysler? Well, they should probably go away. Not much in the way of breakthrough technology there.
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Ford does not own Jaguar, Land Rover or Aston Martin. Check your facts. GM DOES own the marques you mentioned along with a lot of others. In fact, GM received an unsolicited offer for Opel today.
I drive a Honda and a Mini. That being said, there are lots of people who depend on the US auto industry - I'm really appalled by lack of compassion for their situation. Not all of them are overpaid unionistas - they are trying to provide for their families just as the rest of us are.
By the way, where is the hue and cry over the Wall Street bailout? $700B if remember correctly...
In any other industry, if your products aren't good enough and you go bust, then tough! Why should the auto industry be any different? If they get a bailout what's there to stop other struggling industries from demanding the same treatment, it could all get very messy.
If the automakers do go bust, something will rise from the ashes. The US car industry will not simply vanish, more likely it will be 'rebooted' as something better and more efficent. Giving them a handout will only encourage their current behaviour.
The leaders of the auto industry have seen this coming for a long time but haven't made enough changes to fix the problem. So what's the surprise? Only now, it's so convenient to ask for hand-outs because that's what the banking industry did.
How long have people wanted more environmentally friendly cars that run on alternative fuels? It's obviously time for change and the failure of these companies will bring tremendous opportunity for growth in new directions. I say, why muddle with the mediocrity and problems of the past when there is finally a chance to start something better.
The automobile industry is THE LAST American manufactured product. If the automobile industry is left to fail, over 3 million jobs will be lost, not just by the "BIG THREE" but by their supporting industries.
Ultimately, the many will always suffer for the policies, mistakes and greed of the few.
i saw the other day,to push the big red launch button,costs approx,,mmm,,457 mil,,every time,
lets put this off for a yr or 2,,an spread the wealth!
It's like dealing with small children. I wouldn't give my 15 year old 20 more dollars if he spent it all on candy and realized he needed books for school. They knew this was coming, we all saw an economic crisis coming and they're not dealing with it in a way that's going to help anyone but themselves. They need to learn to cut back as well with their million dollar($) paychecks every month while the lower and middle class are struggling to pay bills.
"If we get a loan, we might make it through this"
MIGHT is not a very big confidence builder for me.
When 40% of personal income taxes is collected from 1% of the population, who do you think is going to get the help?
Maybe if they gave up the corporate jets and $28 million salaries, someone might be a bit more willing to feel sorry for them. You mismanaged funds, guys. Too bad for you! When my credit card is maxed out, I don't call on someone else to pay it!
The question is what is lost? When 12 people fly on a private jet it costs about $20,000. When 12 fly commercially to DC it costs about $12,000. Is a $8,000 savings worth the time lost?
Isn't it really worth it in the long run?
http://nomedals.blogspot.com
The current financial downturn may serve to hasten their demise, but don't believe for a second that these pathetic executives use it as an excuse for the handout. The auto companies have been seen their business declining steadily since the 70's and they'd run themselves into the ground sooner or later.
The industry got into this mess, I say let them figure things out for themselves. They alone have the ability to fix what's inherently ailing with the industry. Short term pains can help them emerge as capable competitors.
On the other hand, who has big bucks right now? And who's been in bed with the car companies for too long? That's right, the oil companies. Exxon Mobil has had record earnings the last several quarters; maybe *they* should bail out the Big 3.
Also:
According to CNN, GM has 74k employees in the US. Crysler's website claims 100K. I can't find any information on ford domestic employment; I found a site claiming 87k employees, but it does not indicate if that is world-wide.
So even if you invested $100,000 in each of these workers, it would be chepaer than what they're asking for in the bailput.
They act like the US is the only country that matters, and chose the path of least resistance. This why their sales outside the US are so low. And now as the economy crumbles, they don't have the international revenue streams to support them.
That's not to say that the other companies aren't facing hard times, but at least for them, they are able to adapt to the new environment, and are planning for a future beyond it.
I really love what Toyota are doing in the US:
http://edgehopper.com/what-toyota-knows-that-gm-doesnt/
I used to be a Ford fan, but those days are becoming few and far between.
If so, you will lose your stock share money if the company goes into bankruptcy, which they will do if they don't get the loan.
They don't get the loan = YOU lose.
The ripple effect of a company like GM going under can't really be completely anticipated or underestimated. The people that work directly for GM are just simply the very very tip of the iceberg. The effect goes all the way out to the guy that delivers the bread to the restaurant where a employees of a supplier to a supplier to GM eat lunch. People who may not even realize how they are connected to the auto industry.
On one hand people are very aware that the big three are very very dysfunctional, and maybe need to be wiped clean and restarted. But we also can't begin to estimate what it could do to every single person in the state. It's like being a mouse that lives in the basement of a dangerously unstable office building, you know it needs to come down, but you don't want it to come down on you.
Scary Stuff.
If there was no bailout, millions would be affected, at least that is what we are being told.
In the end, it's always the little guys that do get hurt.
Why are these not being sold in the usa?
While i do have sympathy for the workers and all those around them--EVERYONE is suffering from the current state of the economy. Trying to put a bandaid on a
hemorrhaging, gaping wound does not work. I dont have the answers, but neither does anybody else. Just because the bailout is the only current answer doesnt mean its the right one.
I can't help but feel sad that GM, Ford, and (chevrolet, is it?) will cease to exist. There's a sort of romanticism, a rustic pride in owning an American-made car. It's like that three legged lovable mutt dog you pick up at a shelter- you know it's less than optimal, but it's got a plucky, doomed but going to fight anyway charm.
That being said, I do not want two tons of three-legged one-eyed charm to be what I'm relying on in a crash, or for gas mileage, or reliability, etc.
I'm not willing to pay for a sub-quality product--no matter how patriotic I am.
If they want our tax money, our government should have most of the say in what they'll be producing from now on. There's no guarantee that the Federal Government will force Ford and GM to build affordable eco-friendly vehicles, but there's certainly a greater chance than in the past.
We've stood by for too long watching these companies produce inefficient vehicles while shipping their eco-friendly hybrids and EVs overseas. Vehicles that whose research, development, and production were all funded by hard earned U.S. dollars. It's time they listen to the increasing aggravation of the Amercian public, and head the call for greener technology, and vehicles that run off a fuel source that's readily available within the U.S.