Replies to This Discussion

Permalink Reply by The_Baron on November 21, 2008 at 6:42

Actually, a big chunk will fall on the taxpayer if the fail. The US govt. backs the pension plan.

But I agree with KB, no bailout.

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Permalink Reply by George III on November 21, 2008 at 7:07

No bailout=massive unemployment=massive uneployment benefits=taxpayers pick up the tab anyway=I would rather help GM, than help a handful of investment bankers and the nice insurance executives at AIG who have managed to wreck the entire U S economy for the next 2-3 years for all of us-Really, the people being bailed out consist of ----all of us ----my 401K is now a 101K-heading towards 1/2 of 101K-

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Permalink Reply by The_Baron on November 21, 2008 at 7:56

you assume that GM will manage the gov't money well enough to return to profitability.

I bet they won't, and it will be like AIG, they'll ge their money, blow it, and come back for more.

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Permalink Reply by wrjack on November 21, 2008 at 16:16

As I read through the various opinions in this discussion link, I am surprised to see how many contributors do not appear to have any first-hand knowledge about the subject that they are so quick to express an opinion on. The majority of purported “facts” and “figures” that are being used are simple regurgitations of the opinions and statements made by the reporters and talking-heads of the local and national media outlets.

No one really knows what the final impact could be of letting one or all of the domestic three automakers fail at this time. The position that the automakers are in at this time is due to several factors; one of the most popular “problem” is the uncompetitive “baggage” that they are all saddled with as a result of the 70 years of social engineering that we have all benefited from in the form of increased wages and improved standards of living. Although I am not a fan or member, of the United Auto Workers (UAW) union, I do understand how they are in a large part, responsible for improving the working lives of all workers today. They were born out of a need to address an oppressive working environment (common to most industries of that time) that abused workers and their families with oppressive working conditions and cavalier attitudes about worker’s health and safety.

The previous managers of these companies, and their counterparts, the UAW leaders, made long-term financial decisions (today’s legacy costs) during a time in which contract provisions could be paid for with increased prices for the products that we all needed. Those times are past, and I believe that the majority of salaried and hourly workers in these companies are good, hard working individuals that are merely trying to continue with the lives that they have worked so hard to build over the years. Most of them know that changes are needed. I know many of these individuals, and they, your neighbors, fellow church-goers, and customers, are working hard to overcome a negative image that many have of them. The products they build today are nothing like the ones coming off of the production lines even 15 years ago. Today they are building very high quality vehicles that are competitive in price and fuel economy. (Did you know that GM builds more cars that get over 30 mpg than any other domestic or foreign competitor? I didn’t either until I started researching the issue.) And their prices are as competitive as any others on an “apple to apple” basis.

Many of the contributors to this discussion believe that the car companies need to be punished and/or taught a lesson by letting them go into chapter 11 in order to straighten out their problems, or completely fail. The problem with this is that the purchase of a vehicle is the 2nd largest single purchase for many of us. I for one do not think that I would spend that kind of money on something that may not have anyone to support the warranty or provide long-term parts supply or repairs. (Multiple studies support this.) So, if they go bankrupt like so many suggest, and the customer base dries up, they will be forced to close the doors. With almost 20% to 40% of the competition gone, how long do you think the foreign competitors will keep their prices as low as they are today. And how about all of the incentives and 0% financing that they are offering, that will be gone as well.

Gone also will be the company paid health care and retirement support (retirements reduced by 30% to 50%) for these companies employees. Now what will the cost to all of us be when all of the current and retired employees of these companies are thrust into the public arena of health and retirement care? (How about 1.5 to 3 million additional mouths to feed and house, plus their families.) And what will happen to your current wages when 10% of the current national work force is out of a job? Do not think for a minute that they could not impact you since these are mere “factory workers”. The majority of them are very productive and intelligent individuals with college degrees or highly valued technical skills that many employers have shown they are very willing and eager to acquire (recent manpower reductions have proven this).

And, as to the point that the void could be picked up by the foreign competitors or someone new; are any of you aware of what it costs to bring a new vehicle to the market? Probably not. Most new cars or trucks introduced today can cost the car manufacturers close to $1,000,000,000.00 (1 Billion) before the first one even gets to the dealers. This includes the cost for the equipment and buildings to make them and the engineering required to design and get them approved by our government as being “safe”. The local Shreveport plant pumps millions of dollars into our local economy every year. Are we big enough to absorb this loss without additional jobs and tax dollars being lost as the customers of our restaurants, grocery stores, and the local plumber, leave to find lower paying jobs elsewhere? And how about housing? What would the addition of several thousand houses for sale do to all of the home values in our area? Something to think about isn’t it?

I am not in favor of bailing out anyone, but I do believe that the current crisis in the automotive industry can be solved by providing the money required with a few strings attached. The Congressmen and Congresswomen who are now passing judgment and stating that the “problems” can only be fixed by allowing the companies to go chapter 11 could craft the proper enabling legislation to allow the companies the ability to reopen and renegotiate the union contracts that everyone seems to be saying under their breaths are the root of the problems. The way I see it, a lot of people are using the chapter 11 provisions and protections to find a “back door” way of letting the companies break their contracts with the UAW and various suppliers. Why not let them do it up front without having to put all of us through the national economical and financial quandary of an actual Chapter 11 bankruptcy? The proper legislation with a sufficient bridge LOAN would allow them to correct their problems and re-establish themselves in a financial position to be fiscally strong for the long-term.

I for one think this situation needs a more thoughtful and detailed discussion about the current facts and the potential problems that this could cause for all of us. Flippant or emotional responses about this serious situation only serve to portray this issue as something less serious and dangerous than it is to all of us, and our current way of living. This situation scares the H*** out of me!

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Permalink Reply by The_Baron on November 21, 2008 at 17:13

Sounds like the UAW newsletter to me.

detroit has missed the boat...over and over....lets see if they can catch it this time.

Permalink Reply by Grice on November 22, 2008 at 3:57

wrjack, many of those thoughts have been identified. Most do not find their way to a web based forum, as a means to not be overwhelming to its readers. While the most interested will involve themselves, more will desire a less stagnant contribution.

You spoke of all the potential fallout that face the failure of granting the money, but you speak little of how that money will be returned. While many may base their comments from a emotional perspective, there remains the business side of the equation. Are there any guarantees that the money will move bidirectionally?

Lets trim it down a little. Lets say you earn 75K per year, and you saw a beggar in need of money. How much would you give him? Or, would you give him anything at all? When I offer to share my fortune with those in need, I do so based on the amount of my return. It is a business transaction, taking into account all available risk. If I give him a dollar, I do not expect for him to return it at a latter date. I merely count that as a loss. But, if I were to give him a ten thousand dollars, I would mark that as an investment. With that investment, I would want some type of guarantee on my return.

The same principle applies the granting the loan to the DAI. We, by way of the treasury, are seeing this as an investment. We are not want to refuse the money, but merely want some guarantee that we will see a return. If the DAI can fulfill that obligation, then we should have no hesitation into lending the money. But, if they can not provide a plan of repayment, then it would be unwise for us to approve such risk.

The things you mentioned, health care and retirement, that might "suffer" from not granting the money to the DAI, could be resolved by addressing those issues directly. I believe our future president has already began to address those issues, which may lessen the burden should the DAI not be revived.

I apologize for such a long-winded response.

Permalink Reply by Alligatorshuz on November 21, 2008 at 18:43

Did you all know GM, Ford and Chrysler has United States Military Contracts?
In Warren, Michigan, Chrysler has the The Tank Facility they build U.S. Military TANKS.
They are going to get bailed out this country is fighting two wars...
Not everything was talked about in those hearings a few days ago and those congress people and senators knew these automotive companies has military contracts.

The three automotive companies will be bailed out and they won't go bankrupt.

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Permalink Reply by The_Baron on November 21, 2008 at 18:50

You live in a dream.

Even the demacratic majority can't get behind this.
They have blown it off by a whole month...GM will burn another 2 BILLION by then. Even if they approve a bailout, it will take time to implement. The Detoit auto co. better start working on a backup.

Otherwise, we can find someone else to build tanks and hummers....

How about the new homda plant in Indiana???

How about a cng TANK!!!

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Permalink Reply by Snake Stewart on November 22, 2008 at 2:58

Hey wrjack,
A well thought out and worded arguement but falling on bruised ears.While the wages and benefits were nice additions to the families directly affected by employment in the industry, it is obvious that they are short term now and actually could be harmfull in the long run. If they are accustomed to makeing $35 an hour, how in the world are these people going to survive on $10. I also need to state that the cost of these "lineworkers" benefits werent the biggest reason that the industry is in the tank.

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