Thread: Car Industry Bailout! (Or, a result of elected official "genius")

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Here's Ed Wallace's take on how we got where we are.

Good reading if you've got the stomach for it.


http://www.businessweek.com/lifestyl...212_127244.htm


Jim

Provocative point of view Jim, though there are nits to pick. On the plus it's good to get a different perspective from the echo chamber of what passes for journalism today, but I think Ed let some of his own perspective bias get in the way. Claiming the UAW as a "last vestige of unionism" prompts the question; Ever heard of the SEIU? This union group broke away from the AFL/CIO because the umbrella organization wasn't aggressive enough for them. They are the fastest growing union in the country. In part thats because of aggressive recruitment (soon to be helped by the elimination of employees ability to vote for or against union representation by secret ballot, an abomination hidden by the innocuous identifier of "card check") and in part because they represent members of another fast growing group, government employees. Oh boy!

Also the impression is left that the various states he noted for "buying" auto manufacturing plants might have written a check (such as what's being done in DC for the Not So Big 3) to entice the plants. In reality, most of that money is actually in the form of promises to not tax, those amounts being "potential" money to the state. What that means is it's theoretical money. It's money that the state could have collected from those companies if they set up the plant there and paid the prevailing business taxes. Unspoken is that the state would never have realized that income if the plant never was built there anyway. So it isn't that a state handed over a sack full of $168,000 to buy a job, it's that they agreed to not siphon off potential profits worth that amount for the benefit of having an employed citizen who in turn pays sales tax, property tax, excise taxes and so on. Michigan of course has taken the opposite approach and increased taxes on business. Any wonder they have been in a near constant recession even while states like Texas, and South Carolina have been prospering, at least until this year. There's a big difference between a state foregoing mythical tax income versus a federal government printing or borrowing money it doesn't have and may never be able to back up without devaluing future currency.

Still, it's a thought provoking piece.

It's an interesting article and certainly shows a different point of view. However, when you cut through all the BS, what survives is the fact that the "Big Three" are burdened with higher wages AND a back breaking reti
rement/insurance package. I live in FL and know many GM and Ford "retiries" who are in rheir sixties and have been retired for 15+ years!!

I ran my own companies (successfully) all my adult life and I couldn't retire before 65. I wish I had just bolted fenders on for 25 years and recieved a great retirement at age 50.

The free market system we live in gives everyone the chance to succeed OR FAIL!

Right now, the big three are in trouble, maybe they should be allowed to fail.

Some group of investors will pick up the pieces, salvage the good stuff (Chevy Caddy, Jeep, etc.) and dispose of the weak stuff.

If we should bail out Detroit, do we then offer a bail out to everyone who lost money in the stock market?

How about the people with no credit who got sub prime mortgages and are losing their homes? Where does it end, and more importantly, how much of your money do you want the government to spend bailing out companies and people who made bad choices?

Having said all that, two things that shouldn't be discussed are religion and politics!!

Originally Posted by Bob Parmenter

Provocative point of view Jim, t. There's a big difference between a state foregoing mythical tax income versus a federal government printing or borrowing money it doesn't have and may never be able to back up without devaluing future currency.

Still, it's a thought provoking piece.

Can't disagree with you there, Bob. Tax incentives are the way its done. When a large company looks to establishing a presence in just about any area you can bet that's a consideration. That along with whether or not the proposed area is prone to unionization.

And, yes, I'm plenty aware of the SEIU. My former employer had me in Washington, DC for four years!

Let's see ...... How to phrase this? I've never seen this stated anywhere but my feeling is that the "rank and file" SEIU member is probably from a less educated segment of the population and is a superb target for an organizer, and would be an avid supporter of any cause, however damaging, his/her leadership espouses. Abolishment of the secret ballot would be an easy sell to the membership.

And that scares the britches off of me.

I think maybe I'd better ease off of that subject lest I risk making enemies of some guys I've never met, and I don't want to do that.

Ed Wallace says that he is not a union member and has never been one, but in the several years I have read and listened to him I'll say that he is quick to defend the UAW, particularly in recent days and in light of the flak they are taking in the media.

He can make one think. I'm with you there!


Jim

Originally Posted by Geezer2

Right now, the big three are in trouble, maybe they should be allowed to fail.

I guess the thing that bugs me (about the idea that "To hell with 'em, they made their bed so let 'em lie in it!) is that if the big three, or one or two of the big three, fails, that would drag down bunches of parts suppliers and glass companies and paint manufacturers and rubber companies and no end of other associated entities involved in making the cute little '08 Malibu my wife drives.

Those people didn't cause this mess.

Jim

There is a big difference between failure and Chapter 11. It is clear that they need to reorganize, get their debts in order, get some concessions/partnership from their labor force, then make some tough choices of what to keep and what to dump or sell. Sounds exactly like what Chapter 11 is for. They say that no one wants to buy a car from a company in bankruptcy, but honestly I would be equally nervous after hearing them tell Congress what dire straights they are in, even with a taxpayer loan. I think they are scaring customers away with their tactics. I believe they are making vehicles people want and making them well. They just need to adjust their process so they can do it profitably. Maybe GM needs to dump a division or two instead of making cars that compete with each other. Maybe Ford should retire Mercury. Chrysler did that when they dropped Plymouth. The cars are essentially the same except for trim and basic fender lines. Why pay designers to come up with different sheet metal and have the expense of tooling it? They could save a lot of expense by that type of consolidation. I like my Chevy truck, it has been trouble free for almost 9 years so far. When the time comes I will definitely consider another one. My daughter has a GMC Acadia and it's sweet! Which brings up another point, Why do they need Chevy and GMC Trucks?

Pat

At the risk of being called a traitor to GM and the UAW , I say let em fail. Fall on their ass right down the line and let them restructure at lower wages w a decent benefit package. NO ONE deserves $35+ an hour for general labor, NO ONE. Anyone who made that kind of money and did not put any away is an idiot. UAW may not like it , (Yes I AM a former member) but in the overall scheme of things a lower priced car is not only needed. But nessesary for all to survive + that means lower wages /lower cost parts and people who will WORK for living. (not the line people,but EXECs) , NO bonuses OR we/you will ALL be out of work.

Consider this, we pay the President (I don't care who likes him or doesn't, I'm referring to the position) of the United States $400,000.00 a year. This country is probably the largest "corporation" in the world.

So how does the guy that tanked a major corporation deserve $25,000,000.00 a year??

PLUS, if they fire him he gets 2 years salary an office with expenses, etc, etc

They economy is in the mess it's in because we all want it now, and we've mortgaged ourselves, and our kids, to get it.

I buy what I can pay for, period.

I have NEVER bought anything but an American car from an American car manufacturer! Am I a dinosaur? YES, but that's the way I am.

Up until recently I would have said the same thing , Never been a foreign car in my family right up until the next one. Made in USA means zilch now. NOTHING is all US made anymore and IF it was, NO ONE could afford it. Rich, middle and the low classes in particular.Some US made cars are junk in so many ways a complete scrapping of the product lines and machinery would be nessesary to bring it all up to world class again.
Pay as you go is the only way to go. Living within your means. Means paying as you go + not hawking yourself up to your eyeballs.
I have had ONE loan in my life, ONE and it was a C4D on my lake place. I got out from under it in 4 years by working two jobs and selling an old car now + again. (because of this, my credit is nonexistant -so what) I also paid CASH for my current house and am fixing it up as I go w CASH -NO loans. Yes, I have bought new cars, BUT IN CASH and have not for quite some time. NOT because I cannot ,but because I have yet to find one US or foreign I want to pay that much money for. IF anyone US or offshore comes up w a car that gets 45-50+ MPG and has power enough to climb a hill w a small boat on the back AND costs UNDER 9K ,I'll buy it. Until them I'll live w my 3 yo. 24 MPG Jimmy and fix it as I go. (Yes it does have good ol' hotrodder help getting it.)

I approach my hobby w all the same lifestyle zeal. I shop for weeks B4 I spend a dime and avoid the latest "Bling" part by all costs. I do not pay Rod shops or Body shops. I TRADE whenever possible. My cars are not "GoodGuys" or "BJ" qualty. But I think I actually have MORE fun in them because I actually drive them. They are usually in the 8k to 18K value range, tho I rarely have more than 4K cash invested,double that in trade for values.. I do not chase them around w a DustBuster mop in my hand, Scratches + bugs are a part of life. I can fix anything that goes wrong and I still take my share of local trophy's,tho I can care less about them. I have not traveled more than 150 mi's 1 way to a car show/race in years and probably never will again. I usually leave long B4 they are given out anyway.

lettem fall. they can close the doors, or file chapter 11, thier choice. If they file chpt 11 then the union contracts will be broken and they will have a chance to rebound. Bail them out, and the unions retain their strength, and the unions are the ones whom have driven them to the grave.

If you find a drunk in the gutter, do you hand him another bottle of booze?