Auto Bailout, yea or nea?

[Eric5273]

What happened to the belief in the "free market"?? If you want to have "compassion", then help start a private charity to raise money for those who are losing their jobs. Are you guys becoming soft and losing your faith in the capitalist system? If the free market works as advertised, then it will fix this problem on its own.

As for the union, they have nothing to do with the problems the domestic automakers are having. Their problem is that they don't make cars that people want to buy. If you think they do, then go trade your X5 in for a Trailblazer or Explorer.

[FSETH]

Originally Posted by Eric5273

As for the union, they have nothing to do with the problems the domestic automakers are having.

How can you seriously say that?

[Krimson X]

Originally Posted by MrLabGuy

Next...What the big three need now is SALES. Congress should provide incentives to the industry by giving consumers a large tax break for purchasing a Chevy, Ford or Chrysler product. Say $5-8K for the next year. Congress should add further incentives to the automakers to produce more of their products here in the USA with tax incentives thus creating more jobs.

That would be great if the Big 3 mfg's weren't losing money on just about every car sold.

http://www.leftlanenews.com/study-do...y-vehicle.html

A new study by the Harbour Felax Group indicates General Motors lost an average of $1,271 for every vehicle it sold in the United States and Canada last year. Ford, meanwhile, lost around $451 per vehicle, while Chrysler squeezed a narrow profit of $144.
Comparatively, Toyota profited $1,715 per vehicle and Honda made $1,259. Nissan’s profits were even stronger at an average of $2,135 per unit sold. Harbour Felax says U.S. automakers could greatly improve their profit margins by stabilizing pricing, cutting back on incentives, and reducing warranty costs. For example, the study shows Toyota’s warranty costs at $348 per vehicle versus GM at $512, Ford at $585 and the Chrysler Group at $595.

[LeMansX5]

Ch 11 is the right way. Have to get rid of UAW. This is 2008 not the 60s.

I agree with Motor Trend editor.
Angus MacKenzie, editor-in-chief of Motor Trend magazine: "The problem is Detroit is just just structurally all wrong. It's got too many people making too many products in too many factories, selling through too many dealers..."

[MrLabGuy]

Originally Posted by Krimson X

That would be great if the Big 3 mfg's weren't losing money on just about every car sold.

http://www.leftlanenews.com/study-do...y-vehicle.html

A new study by the Harbour Felax Group indicates General Motors lost an average of $1,271 for every vehicle it sold in the United States and Canada last year. Ford, meanwhile, lost around $451 per vehicle, while Chrysler squeezed a narrow profit of $144.
Comparatively, Toyota profited $1,715 per vehicle and Honda made $1,259. Nissan’s profits were even stronger at an average of $2,135 per unit sold. Harbour Felax says U.S. automakers could greatly improve their profit margins by stabilizing pricing, cutting back on incentives, and reducing warranty costs. For example, the study shows Toyota’s warranty costs at $348 per vehicle versus GM at $512, Ford at $585 and the Chrysler Group at $595.

The Government gives the rebate, not the automaker to spur sales. The Unions pay the health-care costs with the money saved for a strike which won't matter much if they fold. Then the Unions sit down with automakers and some financial experts to come up with a negotiated reasonable wage and benefits which keep the company afloat. Congress instead wants to give them 25 Billion to pay the Unions with strings attached to meet what Congress wants which is Green technology and fails to address the problem.

[Kewl X5]

Look, even BMW is letting 8100 workers go...they are downsizing as we speak so they don't end up like the BIG 3. GM/Chrysler file for Chapter 11 and let them reorganize and heck, maybe they can restructure their companies without UAW.

[AzNMpower32]

Our professor sent a few links. Here's one so you can see the (high) costs of an employee.

http://www.uaw.org/barg/03/barg03.cfm

Does this make any sense at all?

First, the terms of the 1999 UAW auto industry agreements provide that no worker can be laid off for more than 42 weeks for volume-related layoffs – a decline in sales or production – during the four-year life of the agreement. After that, he or she has to be called back to work.

[The Cleaner]

What happens when the 25 billion is used up on crappy management and UAW Obligations? We do it again... The sooner the US automakers fail the better, we can then dump the UAW contracts and get some fresh new investment and ideas in the door.

If 1 in 10 workers needs this industry then lets stop bailing it out, lets rebuild it. We don't need redesigned models every couple years, we need BETTER designed products. Spare us the extra HP every year and build a better looking product. STOP using the cheap plastic on the interiors, I can't get past it to get to test drive the product. American cars loose me when I opening the door.

Finally stop with the hybrids, they are WAY to complicated for a minimal return, instead use a smaller engine or diesel. Focus on the product can only happen when the financial obligation to the UAW is removed.

[AzNMpower32]

There's a lot of accounting behind the decision whether to axe a brand. As we learned in Accounting class, if GM or any one of the three simply eliminates an unprofitable brand, the fixed costs and overhead end up being reallocated to other remaining brands because they are unavoidable and must be paid out. As a result, a Death Spiral begins as the remaining brands shoulder a greater share of the costs, leading to losses, which then tempts another brand cut, reallocates fixed costs to remaining brands, etc....

[Wagner]

Multiple and similar brands are 10% of the problem, the other 90% is spelled United Auto Workers.

Mitt Romney had the best comments I heard so far:

"Chapter 11 would allow them to restructure their labor deals"


Brand reduction is definitely a step in the right direction, but until build costs are lowered the "Big 3" can not compete. It is impossible. It simply costs them more to build a car than it does a foreign company. And you don't have to graduate from "Warren Buffet's Econ Course 101" to understand that is a major problem.