Replies to This Discussion

Permalink Reply by wpt9452 on December 22, 2008 at 0:06

Why is it called a "Bailout" when it's a loan? WallStreet got a bailout. I avoided layoff at GM twice since September but don't think I feel any safer. The American auto companies must come up with something unique and cheap, yet safe. I doubt I will be working for GM 6 months from now but auto workers have a tarnished image that will be difficult to overcome. I hope a documentary would be done to get the truth out.

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Permalink Reply by P.G. on December 22, 2008 at 4:21

Doesn't sound like folks will be happy with the American Auto workers until they are making the same wages as the Mexican auto workers, huh?
The question I have is if auto prices are the result of high wages, then why aren't those cars coming from Mexican plants priced much cheaper?

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Permalink Reply by The_Baron on December 22, 2008 at 4:25

Its a bailout because the government must step in when no one else will. These companies are on the rocks, they are deep in debt. They have failed to adapt to changing markets and show little promise that they can this time.

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Permalink Reply by The_Baron on December 22, 2008 at 4:27

Look at the article in todays paper. GM is closing down a plant in Ohio despite getting the money from the government. This is proof that a government bailout will not save jobs.

GM will slowly fall apart until they enter bankruptcy anyway.

They can not compete, their buisness model is outdated.

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Permalink Reply by P.G. on December 22, 2008 at 5:44

The only thing that will save the auto companies is consumers buying their products.
The government would have done better to pass out money for folks to go buy autos.

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Permalink Reply by The_Baron on December 22, 2008 at 6:21

I totally agree with you P.G.

The bottom line is they need to sell cars at a profit. I do not believe they can. Honda, Toyota, Hundai, and Nissan all sell cars at a much higher profit margin. Many of their cars are now built in the US. Unless GM can close the gap in profit per car, or convince Americans to pay a higher price for their cars, they will eventually disappear.

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Permalink Reply by Grice on December 22, 2008 at 7:17

Part of the package includes a "Compensation Reduction" plan, where compensation (paychecks) will become competitive with NIssan, Toyota and American-Honda employees.

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Permalink Reply by P.G. on December 22, 2008 at 7:38

I don't know what the percentage of total payroll is as far as hourlys or salaried but they all should take a hit. The sad part is all those who spent their lives working for the companies who are retired and are now dependent upon that retirement check who will likely lose it. They could have made different arrangements or should have anyway.

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Permalink Reply by The_Baron on December 22, 2008 at 7:47

Its not just the payroll, but the benifits that are paid. The legacy costs are astronomical.

Also, Detroit continues to spend money on unnessary things, like keeping workers on the payroll who do not do any work. These workers are retained in case they are needed. In the past GM has justified this buy saying that it allowed them to add shifts or replace workers without having to train new employees. But having workers who are not actually doing work still on the payroll is ridiculas.

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Permalink Reply by Grice on December 22, 2008 at 8:36

There is a "Severance Rationalization" plan, which eliminates payments to those furloughed employees.

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Permalink Reply by Grice on December 22, 2008 at 8:31

P.G., what leads you to the conclusion that retirees will completely lose their benefits? While a review may curtail some extravagant benefits, it would not completely disengage the company from it obligations.

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Permalink Reply by P.G. on December 22, 2008 at 8:55

I don't know for sure they would but I believe a while back they said they needed to pay a few billion into their retirement fund. I don't know how they can keep doing that if they aren't selling cars. If what they are getting from the government is paying for those costs, it wouldn't be fair to the taxpayers who don't have such a nice retirement plan. I would think something would have to give. Another concern is how much of those funds are going to be used to retool to produce a more marketable product. And even if they did produce say higher mpg vehicles, would consumers be in a position to run out and buy one. Folk aren't buying a lot of anything right now!
All this "Green" talk sounds good on paper but how affordable will it be up front for the average citizen? I'd love to cover my house with solar panels to cut my electric bills but I couldn't afford to pay for them at what they cost right now! I heard those "Volt" cars were going to be expensive. GM and Ford can make everything green but what good would it do if the average Joe couldn't afford them?

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