Should the government bailout the American car companies?

[damon_Z]

I haven't been to this forum in a while and I'm surprised to see that there wasn't a post like this around.

Anyway, I am a registered Democrat and voted for O'Bama, because of the important reasons such as his his views on the economy, education, and healthcare, and his outstanding ability to communicate those views. In fact, he's the reason why I got into politics in the first place. However, I am not agreeing with his view to bailout the American car manufacturers. Don't get me wrong, because I have been a fan of domestic high performance cars, but one has to look at the bigger picture here. I mean, how can the government bailout (or even think about) bailing out companies with bad business models? or bailing people for being irresponsible enough to take out adjustable-rate mortgages?

I say, let the Big Three fail. Let them go into Chapter 11 and reorganize. Let them renegotiate their contract with the UAW, the heavy-ass anchor that's keeping these companies from being more competitive with their foreign competition. Then, they can come out of Chapter 11 and focus on becoming more profitable.

What do you think?

[WildBillyT]

Damon:

Just an FYI- we don't allow political discussions in here anymore, but since this is more about the plight of the American auto industry I think it should stay.

To all-

Please leave the partisan bickering and garbage out of this and keep the discussion on the auto industry or it will be deleted as per forum rules.

Thanks.

[LTb1ow]

But if they do fall to pieces, whats to stop a company like Toyota etc from buying up the pieces?

[Frosty]

If the dip****s on Wall Street are getting bailed out then so should the Big 3.

[BigAls87Z28]

Chap 11 means Chap 7 within a month.

GM must be bailed out, but GM's part of teh 25 billion will give them enough money to get them to the end of Jan.
The south is not in support of this, and I think overall Republicans are against it, which goes hand in hand now. The south does not like the disadvantage it would give the import companies who have set up shop down there giving the northerners a bail out.
This is not politics as usual and they somehow magically come together and pass it at the last moment. The Republican Party seriously wants the unions destroyed and this they have realised this is the first chance they have had in 30 years to do it. And having lost both houses and the Presidency, it's simply too inviting for them not to savour this rare victory for their cause.

If GM does not get a bail out, GM will have no choice but to file Chap 11, which will turn right into Chap 7. This is exactly what we dont want.
A bail out must happen now. This money would keep them moving for a few more months untill a larger and stronger bail out package is put together.

If GM makes it out of this alive, they will need to cut everything to make vehicles, all vehicles, profitable.

[alamantia]

A lot of the revinew in Michigan depends on the auto industry. Also, are american car companies failing because they make bad financial decisions like wall street or because everyone is buying hondas now? I think american car manufacturers screwed themselves by making chit boxes in the 80's and 90's look how crappy 3rd gens are. My 91 RS almost detered me from buying another american car. Now we make good cars americans should start buying american productis again in time.

[BigAls87Z28]

My 87 and my 72 are still solid cars, neither are falling apart.

But what they made then, and what they make now are two very different animals.
Americans dont know that.
I dont understand how in general people will accept an improvement in quality ratings from companies like Hyundai, but will downplay any major advancements made by the American automakers.

More people need to stop by a domestic auto maker and see what they have to offer instead of just going right to a ToyHon dealer.

[WildBillyT]

Originally Posted by alamantia

A lot of the revinew in Michigan depends on the auto industry. Also, are american car companies failing because they make bad financial decisions like wall street or because everyone is buying hondas now? I think american car manufacturers screwed themselves by making chit boxes in the 80's and 90's look how crappy 3rd gens are. My 91 RS almost detered me from buying another american car. Now we make good cars americans should start buying american productis again in time.

I think buying American overall is still frowned upon. There are people here at my work who wouldn't even consider buying an American car.

Much like people who only drink imported beer. Doesn't matter if the beer tastes awesome- if it's American, that means its crap.

[GP99GT]

Originally Posted by damon_Z

I am a registered Democrat and voted for O'Bama

you voted for someone and dont even know how to spell his name?

anyway, bailout, yes, but make sure its spent the right way...not just to prolong the inevitable

[damon_Z]

Originally Posted by BigAls87Z28

Chap 11 means Chap 7 within a month.

Not all Chapter 11 companies end up in Chapter 7 (complete liquidation).

[BonzoHansen]

It is not a yes/no question. I’d vote yes BUT…….

I don’t believe chp 11 = chp 7 in a month. No way. However I think this mess is a direct result of the housing/Freddie/Fannie fiasco. Therefore perhaps some assistance may be warranted given the correct provisions.

I’ve got a new plan. Instead of giving it to the companies, lets look at things form “we’re going to pay one way or another” view

* Fully fund the VEBAs so the UAW can take over retiree HC (unless forcing them to Medicare is cheaper, then do that & throw billions at Medicare)
* Over fund the pension plan and punt it to the PBGC so they can take over the retiree pensions.
* Freeze the pension plan; offer only 401k plan, also no more health benefits at retirement. There would of course need to be some grandfathered participants and all to deal with based on seniority, etc. –
* FORCIBLY buy out anyone within 5 years of retirement at full benefit + 65% salary for time from now until retirement age. No UI.
* Offer scaled down buyouts to other employees.
* Any ptp left with earned pension credits put equivalent cash in their 401k and that is all, no more pension liability for any active employee

Retiree $$ problems gone. We’re going to pay them one way or another, might was well do it right. Oh yeah….

* Cap all total comp for any employee (from the CEO to BiGal) at $500k max until profitability is restored for 4 straight quarters. I may be swayed to allow high priced options ($30 strike price?) to upper management.
* Force ½ of the Directors out. Chrysler is a strange bird being a private firm, but I’m guessing a similar deal can be cut.
* Pay the costs of getting rid of all idle plants/assets - that is a big deal, given cleanup, etc. Spin it as an EPA win.
* Any $$ left? Pay the costs of getting rid of PMD/Buick/GMC/Mercury/(dodge?)

Move on, good luck.

[damon_Z]

Originally Posted by GP99GT

you voted for someone and dont even know how to spell his name?

anyway, bailout, yes, but make sure its spent the right way...not just to prolong the inevitable

A petty question and besides the point...

[BonzoHansen]

Originally Posted by damon_Z

Not all Chapter 11 companies end up in Chapter 7 (complete liquidation).

Airlines generaly didn't.

[BigAls87Z28]

Originally Posted by damon_Z

Not all Chapter 11 companies end up in Chapter 7 (complete liquidation).

Originally Posted by BonzoHansen

It is not a yes/no question. I’d vote yes BUT…….

I don’t believe chp 11 = chp 7 in a month. No way. However I think this mess is a direct result of the housing/Freddie/Fannie fiasco. Therefore perhaps some assistance may be warranted given the correct provisions.

GuyM over on CZ28.com

Chapter 11 would hold creditors at bay while GM reorganizes. The problem is that if GM declared bankruptcy, it would never recover.

The news would scare off any remaining customers. Only the people who would buy GM stocks out of loyalty (and watch their money evaporate by over 90% in less than 12 months) would purchase GM cars at that point. There will be plenty of other automakers to give hard earned $20K & $30K+ where there are no doubts about their ability to stick around for most of the warranty.

But just as important, the company has to have the potential of regaining solvancy. By right, GM should have investors eager to buy controling interests in or even buy out GM. Regardless as to where the stocks are, GM has a large amount of assets that can be sold off. However, there's no one, and with good reason. GM's debt is far greater than it's assets. While GM will likely find takers as they themselves sell off parts, no one is banking on GM as a whole due to those debts.

In the midst of all this, suppliers could simply stop delivering to GM and demand payment. Especially if they even thought GM was going to declare bankruptcy (they would get only a fraction of money owed under bankruptcy, and even then the timetable for repayment would be uncertain).

Nobody can buy GM, and bankruptcy (even involuntary, which can be done via creditors) will do no good, and infact will enflame things even more.


But the thing about Chapter 11 bankruptcy is that it's going to take money to reorganize. Money that GM doesn't have & money that no one will lend them (which is where a government backed loan would fit in). It's at this time GM would likely move to Chapter 7 Liqudation, and GM would be sold off in parts, with overdue payments to venders likely to be the first place the money goes.

I’ve got a new plan. Instead of giving it to the companies, lets look at things form “we’re going to pay one way or another” view

* Fully fund the VEBAs so the UAW can take over retiree HC (unless forcing them to Medicare is cheaper, then do that & throw billions at Medicare)
* Over fund the pension plan and punt it to the PBGC so they can take over the retiree pensions.
* Freeze the pension plan; offer only 401k plan, also no more health benefits at retirement. There would of course need to be some grandfathered participants and all to deal with based on seniority, etc. –
* FORCIBLY buy out anyone within 5 years of retirement at full benefit + 65% salary for time from now until retirement age. No UI.
* Offer scaled down buyouts to other employees.
* Any ptp left with earned pension credits put equivalent cash in their 401k and that is all, no more pension liability for any active employee

Retiree $$ problems gone. We’re going to pay them one way or another, might was well do it right. Oh yeah….

* Cap all total comp for any employee (from the CEO to BiGal) at $500k max until profitability is restored for 4 straight quarters. I may be swayed to allow high priced options ($30 strike price?) to upper management.
* Force ½ of the Directors out. Chrysler is a strange bird being a private firm, but I’m guessing a similar deal can be cut.
* Pay the costs of getting rid of all idle plants/assets - that is a big deal, given cleanup, etc. Spin it as an EPA win.
* Any $$ left? Pay the costs of getting rid of PMD/Buick/GMC/Mercury/(dodge?)

Move on, good luck.

GM has made some serious moves to save a lot of money, but they wont see that till 2010.

GM would need a bail out the size of the one AIG got in order to enjoy the rest of 2009.

It would cost GM 2 billion per dealer, but they dont have to kill all the dealers.
Pontiac is on its way out, so you move Saturn over to the former PBG dealers. That gives Saturn more dealers, that makes dealers happy that they didnt lose any cars, in fact get a FULL LINE again.
Buick is doing well in China, as is Chevy. GM needs to figure out how to make a profit on these cars, not just trucks.
GM's problem isnt sales numbers, its profit.

[cdacda13]

Originally Posted by WildBillyT

Much like people who only drink imported beer. Doesn't matter if the beer tastes awesome- if it's American, that means its crap.

Sadly, its true. Most Americans believe that if its forgien, its better in one way or another then American. (Better could mean cheaper too)
Reputation is a huge factor is the current situation the Big 3 is in right now. When people think Honda, most think of cheap and durable. Even if you could buy brand new car from one of the Big 3 that is the same price and have the quality, most people will go with the Honda. Every car company has a reputation or image, that people automatically think of when the name is mentioned. The more car oriented crowd knows that every brand has its positives and negatives, but unfortunately, most Americans don't.
Now, America isn't the only problem here. GM can't seem to sell cars outside the U.S. Is this due to poor reputation, or due to poor marketing? Almost every GM fanboy will admit that GM's advertising sucks extremely hard.

Should we let the Big 3 pass? Well, Adam Smith's capitalism would say yes. Companies would die, and if their service was deemed important enough, some other company would take over their market share and be more efficient and productive.
But, that Laizze Fair (Spelling is way off, been a while since my last economics class) attitude leads to huge ups and huge downs in the economy. See the great depression and even the current market meltdown as examples of this. So the government should regulate businesses to prevent that from happening.

Sometimes you have to stick a penny in an electrical socket to learn a lesson. This is where we are at with GM. Let them fall, and either they will learn how to pick themselves up and realize their mistakes and make a comeback in a few years, or they will continue to make the same mistakes and soon be deemed unnecessary by the markets and replaced.

[WildBillyT]

Originally Posted by cdacda13

Sometimes you have to stick a penny in an electrical socket to learn a lesson. This is where we are at with GM. Let them fall, and either they will learn how to pick themselves up and realize their mistakes and make a comeback in a few years, or they will continue to make the same mistakes and soon be deemed unnecessary by the markets and replaced.

The problem is that you can't look at it as teaching corporate fat cats a lesson (may not be what you meant but that is how it seems to me). If GM takes a dive, entire towns and regions of the country will be in financial despair. Not good.

[Tsar]

I feel bad for the people who have to lose their jobs because of idiots in charge. If it was up to me, I probably wouldn't bail them out. Its an iffy situation, one part of me says they should be bailed out, and the other part says let them go under like they're suppose to for being retards, and not looking forward.

[BonzoHansen]

Al, that is why I am saying use the bailout $$ to do all that-the don't have the cash now Can't give it to them - I do not trust them.

Al, if GM goes under, are we going to have to put you on suicide watch?

[NastyEllEssWon]

without being political...



the american auto companies helped give a face to america. its time america repays them for their image.

[Tsar]

Originally Posted by BonzoHansen

Al, if GM goes under, are we going to have to put you on suicide watch?

I think he will go ape **** if Camaro doesn't come out.

[Tsar]

Originally Posted by NastyEllEssWon

without being political...



the american auto companies helped give a face to america. its time america repays them for their image.

American people gave them plenty of money, they wasted it.

[Featherburner]

Originally Posted by WildBillyT

The problem is that you can't look at it as teaching corporate fat cats a lesson (may not be what you meant but that is how it seems to me). If GM takes a dive, entire towns and regions of the country will be in financial despair. Not good.

I heard today "one out of every ten jobs in this country are related to the auto industry." That's a lot of jobs. We need to keep the big 3 afloat.

[NastyEllEssWon]

Originally Posted by Tsar

American people gave them plenty of money, they wasted it.

actually americans have long sinced abandoned the car companies since the mid 90s. american auto makers hardly make any type of money, which was the idea behind global parts sharing and platforms


edit: gm killed the camaro...how awesome would it be if the 'neu' gen never sees the light of day.

[NJSPEEDER]

The short answer is that the nation can not afford to lose the million plus jobs that it would cost if the big3 went under. They are all in trouble, Chrysler worse than Ford and GM.

We have lost enough manufacturing and development jobs in this country through inefficient labor policies, it was only a matter of time before the related lame marketing and R&D broke the camels back.

I don't think the airline bailout and subsequent annual kick backs are directly related. The airline industry has been propped up and ****ed over by the government in rotating cycles for decades. Regulation is not always the best thing for industry, just ask all the dead airlines about government price fixing policies that drove dozens of second tier companies under.

-Tim

[79CamaroDiva]

I think they should be bailed out, restructure as bonzo said, and the government should offer huge sales tax breaks to purchasers of american cars, while increasing tax on foreign cars. i think to a lot of people, that tax saved might sway their purchase.