Bailout of the Big 3

[Von Milash]

I started this so I may as well offer my take....in 100 words or less...this is incredibly complex....

the big three built shit, were uncompetitive, inefficient, and failed to address the current macroeconomic factors and trends driving the marketplace. They built shit gas guzzlers when the japs were producing things smaller and better. But to their credit, they also fought hard to establish a standard of living that we've all come to enjoy.

On the other hand, it's the shareholders and Wall st analysts demanding annual returns forcing them to make cuts that will boost eps. it's a short term fix, and adds nothing to organic growth.

on the third hand, the west has freely and openly engaged in RTAs with countries who are not at the same level of economic development. They've also sat back and allowed domestic firms to offshore contracts to these countries, thereby eliminating domestic work and shifting it to countries that pay no attention to basic human rights, CSR, sustainability, etc.

No party is beyond reproach here. That's why I agree with the bailout--b/c the gov't contributed to this mess. But I don't think they should be state run. But they should have a damn sound business plan in place....

Our current model of free trade goes against everything David Ricardo intended gains from trade and comparative advantage to mean.

[Wayne]

In away I'm for it and in away I"m not.
The reason I'm for it is because 1 in 10 jobs in the US have something to do with the Auto industry, it could be sales, manufacturering, parts, auto insurance and many more. If they don't get the bailout all those jobs are going to be lost and then this country is going to be in a world of shit, if it doesn't happed we are definitely headed for another great depression.

Now on the other hand I'm against it because if all three go bankrupt, what this does is it will void all the contracts that these companies have with the Unions, and then both sides can come up with different contracts that fit both sides. Some of these Union guys are getting paid 85 to 100 dollars an hour compared to Toyota and Honda which there guys are doing the same exact job and getting paid much less somewhere in the range of 35 to 55 an hour.
I also agree with Lyle in the fact that we don't need our government getting involved and telling the big three what kind of vehicles are going to be made.


So in away I'm torn between the both views. I don't want to see our country go to shit but then again it might just be the best thing for the top three. I really don't know.

Wadeb, did you also know that if the big 3 go bankrupt that surveys have revealed that people won't buy cars from them? And also, the big 3 won't have to honor any retirement benefits and that the gov't would have to come in and do it? It is to your benefit that the auto loans happen because at least there's a good chance you could be putting your money to work for you as opposed to it just being tossed out the window.

[El Kabong]

Wadeb, did you also know that if the big 3 go bankrupt that surveys have revealed that people won't buy cars from them? And also, the big 3 won't have to honor any retirement benefits and that the gov't would have to come in and do it? It is to your benefit that the auto loans happen because at least there's a good chance you could be putting your money to work for you as opposed to it just being tossed out the window.

#1 GM needs to restructure their business model...they have too many models which sell to virtually the same demographic

#2 The retirement benefits will be paid for by the taxpayer BUT that's a smaller tab to run up than just throwing money at the car companies.

[Von Milash]

Lyle that's called cannibalization.

Plus GM products tend to be ugly. Plain and simple. Old men with no creativity design them.

[Trainer Monkey]

Lets see,Detroit puts out nothing but giant turd burgers
Theres a gas crunch
People start wanting more fuel efficient cars
Detroits profits plummet
They go to Washington for a bailout
Im having a case of Deja Vu here

[El Kabong]

Detroit puts out good cars but it's too little too late for them. They need to cut back on the models and styles of cars that they make.


The new Mustang and Camaro look better than anything from Europe for the same price. Cadillac still puts out great cars.


The problem with GM is they can't make a profit easily, they owe too much to their former (and current) workers. It's not a problem of quality anymore (it used to be) it's a problem of the cars costing too much along with GM not making much profit at all and therefore they aren't able to offer great deals and warrenties that other companies can.

GM was built on quality cars for cheap prices with cheap parts, and good service....it's going to take a while to right the ship but it can be done Harley Davidson did it.

[CGM]

The big three respond too slow to changing market conditions. e.g. the price of gas goes up up up starting in about 2005, and they take an absolute pounding in the SUV side of the business. Now gas is low, and in a recession, sales of big ticket items like cars are the first to fall. IMO this responsiveness needs to improve.

Also, consumers are not that reponsive. They switch to Japanese cars like Toyota for reliability and fuel economy, they find that Toyota makes decent cars, and guess what, lots of those customers don't come back to the big three, even when the big three do make improvements to be more competitive with Japanese makes.

In principle I tend to think the private sector should solve their own problems, but now the stakes are so high, I really don't think there's any advantage at all in letting the big three fail. There should be a better answer.

[El Kabong]

If GM responds too slowly adding in government bureaucrats isn't going to help.


No business is too big to fail, this might sting but it's been a long time coming and we need to take our medicine and that way we'll come back bigger, better, and stronger with new products and new ideas. But I suppose that's just too much to ask. Bakruptcy would be cheaper and have a better effect than government interference

[CGM]

If GM responds too slowly adding in government bureaucrats isn't going to help.


No business is too big to fail, this might sting but it's been a long time coming and we need to take our medicine and that way we'll come back bigger, better, and stronger with new products and new ideas. But I suppose that's just too much to ask. Bakruptcy would be cheaper and have a better effect than government interference

Government assistance in the form of loan guarantees worked for Chrysler back in the day, I thought Lee Iaccoca did a great job in improving Chrysler's business model. In that case I think we can say that gov't assistance was a good thing. No reason why that sort of thing can't happen again.

You're right about beaurocracy though, that we don't need. But there should be a way of doing it right. Anyways, we shall see.

[Trainer Monkey]

If GM responds too slowly adding in government bureaucrats isn't going to help.


No business is too big to fail, this might sting but it's been a long time coming and we need to take our medicine and that way we'll come back bigger, better, and stronger with new products and new ideas. But I suppose that's just too much to ask. Bakruptcy would be cheaper and have a better effect than government interference

Government assistance in the form of loan guarantees worked for Chrysler back in the day, I thought Lee Iaccoca did a great job in improving Chrysler's business model. In that case I think we can say that gov't assistance was a good thing. No reason why that sort of thing can't happen again.

You're right about beaurocracy though, that we don't need. But there should be a way of doing it right. Anyways, we shall see.

Youve never worked on a Horizon or a K-car,sorry thats only half a joke,my now wife owned one of each,and I hated repairing either one of them,they were freaking nightmares to work on.

[El Kabong]

Good ol' K-Car hahaha. In the mid to late 1970's for some reason the American car industry took a major turn for the worse....quality was crap, the cars were ugly and they just thought "We've got a monopoly, nothing will ever go wrong".....surprise

[Trainer Monkey]

Good ol' K-Car hahaha. In the mid to late 1970's for some reason the American car industry took a major turn for the worse....quality was crap, the cars were ugly and they just thought "We've got a monopoly, nothing will ever go wrong".....surprise

More or less what happened this time,when gas was $1.42 a gallon everybody wanted an SUV that wasnt even really an SUV like a Tahoe,when gas hit $4.00 a gallon suddenly they didnt seem as popular,and Detroit didnt have a plan b kicking around,Japan did. Just like in the 70's

[CGM]

Good ol' K-Car hahaha. In the mid to late 1970's for some reason the American car industry took a major turn for the worse....quality was crap, the cars were ugly and they just thought "We've got a monopoly, nothing will ever go wrong".....surprise

Ok well if that's true then the consumer a big fact sucker, don't it? Fact is, the Kcar provided value for the money, and Chrysler came back quite nicely.

Your mid to late 70s remark tells me the big three did not adapt well to changing market conditions (The Energy Crisis) it took them a while to get a handle on both quality and fuel effficency in the same car. Including Chrysler. Iaccoca ran the show from 78-92. (late '70s onwards) The kcar was Iaccoca's idea.

[Trainer Monkey]

Good ol' K-Car hahaha. In the mid to late 1970's for some reason the American car industry took a major turn for the worse....quality was crap, the cars were ugly and they just thought "We've got a monopoly, nothing will ever go wrong".....surprise

Ok well if that's true then the consumer a big fact sucker, don't it? Fact is, the Kcar provided value for the money, and Chrysler came back quite nicely.

Your mid to late 70s remark tells me the big three did not adapt well to changing market conditions (The Energy Crisis) it took them a while to get a handle on both quality and fuel effficency in the same car. Including Chrysler. Iaccoca ran the show from 78-92. (late '70s onwards) The kcar was Iaccoca's idea.

Actually the K-Car was absolute garbage,the transaxle on any of those Mopars sucked,the back end exhaust sytem tended to litterally explode in a shower of plastic,the whole car was crap warmed over,I dont know if Ioccoca would want that as his crowning achievment

[El Kabong]

So CGM you're saying we're going to give a ton of money to the car companies so we can get more K Cars....wonderful