Big Three Bail out

"Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].”

Hmmmm. In the end, don't the consumers decide what vehicles they are going to buy? And how many people do we see driving Hondas, Toyotas, BMWs, Mercedes, and so forth ? And how many people do we see driving GM cars? Okay, now that we've shown that GM knows nothing about the consumers, then we can move on to the hybrid issue....

 

Tom Friedman has hit the nail on the head. The "Big Three" have been resting on their laurels for way too many years and the Unions are not much better. I know of no other industry that pays its worker full salary plus benefits for three years after a plant has closed or full healthcare for eternity once they have retired. There has to be some sort of reality in the union contracts just as there has to be some sort of reality to the designs and model that the "Big Three" produce. Honda, Toyota, Kia, Hyundai, have been producing small fuel efficient cars for years and they seem to make money. So I have no idea why the Big Three have stuck with the huge gas guzzling SUV for so long.

 

I must admit that you have made a valid point here based on fuel efficient equivalent vehicles. But, methinks this is not the total picture. The most important point is that the big 3 are not making adequate profits to support thier existence. Because of incredible bad management, increasing debt, decresing cash flow, rising costs, Antiquated Union rules, stifeling Health plans, retirement plans and etc,etc....the big 3 are going broke. The best thing IS to let them go bankrupt and somehow protect the retirees benefits. This may not be possible. I think many hangers-on, which I include anyone in upper mgt, that was not with the initial entrepreneur, don't really give a fig, and are only interested in feathering thier nest and don't give a thought to thier workers. Exceptions occur, but not in Detroit.

 

I generally agree with this commentary:

Business Spectator - WEEKEND READ: Saving Detroit

GM especially doesn't deserve help as they kept fighting progress for years.

If they do get help it has to have several strings attached.

 

It also depends which model you are comparing, the regular cobalt gets around 22/32, and one site I checked out had the Yaris at 34/40. But numbers being similar, which is the more reliable car? I would take the car in the left column, every single time.

Also you say other than the Prius, which is great to support your argument but they don't even have a car comparable to the Prius. And that is what is sad. It has to take some kind of lack of vision from management to not see that Toyota had a year long waiting list for a more fuel efficient vehicle, and what did GM do? Not a damn thing.

The ones who should be bailing out the Big 3 are the oil companies. Certainly that is one way to keep oil consumption high.

 

I remember at the height of the oil madness back in the summer, GM dealerships are filled with trucks and SUVs that they can't sell, while they can't keep their smaller cars in stock. Toyota also couldn't sell their trucks and SUVs very well during that time but they had a far larger stock of compact cars to sell than GM.

I think that's where GM's heavy reliance on truck and SUV sales came home to haunt them.

The Big-3 does need help, but they clearly need comprehensive restructuring. It is obvious that their current way of doing business does not work at all, and throwing bailout money at them without requiring some sort of change is just flushing taxpayer dollars down the toilet.

 

The sorry truth is GM, Ford and Chrysler have built, and continue to build POS cars. By giving them tens of billions of dollars we are only enabling these morons to continue the flood the world with the crap that comes off their assembly lines. The sooner they go belly up, the better off the world will be.

 

If anyone should "bail-out" Detroit, it should be the BIG Oil companies.
Think about it, who profitted most from the POS gas guzzlers Detroit built?

So who should help out the car companies, but the folks they've helped so many years to keep us addicted to oil, with no alternative.........?

 

Very good suggestoin by 9G, but how would a bailout from there provide impetus to manufacture vehicles that people will want to buy in a world tight on fossil fuel supply? I think that's the only kind of bail out that would change the industry into a long-term asset.

 

So let's assume we don't bail out the Big 3. Jobs are lost for everyone connected to the Big 3. That is a figure that goes well beyond the Big 3 Corporate brain trust that needs to be cut. It means abandoning small towns (like the Big 3 abandoned american workers through out the years) suppliers of the Big 3 and even core american car buyers. Yes, people do still buy american.
Then we have abandoned all of the manufacturing plants. Do we sell them at 10 cents on the dollar?
Of course, now all of the car manufacturing is oversees. We now all buy foreign cars. That will not help the trade deficiet, the value of the U.S dollar and the american auto worker who can build a great Camry is now unemployed with no jobs available in a trade they are competent.
We need to restructure the auto industry insist on demands for fuel economy and quality, not endless forgettable american models we have historically been spoon fed by incompetent irresponsible corporate people.
Until we do this, foreign automakers will be scooping up all of the new and used car business.

 

And, this can all be done under Chap 11. This is the very function of Bankruptcy, restructuring and reorganization. And the company continues to live on.

 

Can't blame it all on Detroit. After all, those pols in Washington were the ones who froze mpg limits for 30 years, discouraging innovation for fuel efficiency. They also encouraged SUVs and trucks by making them exempt from fuel efficiency standards.
That SUV or truck in your driveway is supposed to be commercial!

Sure , the pols are bought and sold by the car industry and the rest of those special interests on K street. They have no choice, because the media has them over a barrel--forcing them to raise millions for all that TV advertising.

So it's a rotten system, and there is blame to go around.

If I were Obama, I would attack this thing from different directions.

First, get my new FCC chairman/woman to restore the Fairness Doctrine on TV. That will cut back on the TV advertising and reduce campaign spending and a lot of the special interest dependence on elections.

Second, double the fuel efficiency standards, and include SUVs and trucks. If this hasn't been done already during the $4 gas panic.

Third, Regulate oil futures prices again (you must buy oil to buy futures), to take the price volatility out of gas. $4 gas was Detroit's downfall.

Fourth, Give the big 3 $25 billion--with strings attached: a) new management with a green emphasis, b) a new Car Tsar--to make sure our money is being used properly and jobs are preserved.

Bankruptcy isn't a good idea, because a lot of parts suppliers, etc. will lose their shirts if they don't get paid.