Debate: The automobile industry

so...you want internet liberals to do your work for you?

smart.

i'll bite on one point---for every conservative that derides how unions will kill the automobile industry, there are about twenty realms of data that show high-productivity, high-wage automobile companies are outmuscling American automakers---and that their inability to compete was partly due to a "race to the bottom" in costs, rather than a consideration of higher productivity.

http://www.forbes.com/sites/frederi...-while-paying-its-auto-workers-twice-as-much/

A good article on this.

 

GM's issues are too large to simply explain in a short post. Your professor is ridiculous. If anything it was the opposite. GM started bleeding money on many of its cars because gas prices skyrocketed and all they had were large SUV's, trucks and hummers to offer. The Japanese were already positioned to meet demand for efficient vehicles since Japanese fuel efficiency standards were ahead of ours.

That said there were several issues.

1. GM's fleet of cars was out of whack with what was being demanded after fuel prices rose.

2. GM was stuck with huge fixed costs in the form of pensions and health care costs that bled the company dry when sales started to decline. They stopped turning a profit in 2005 and just fell apart from there.

3. They kept doing stupid things to solve their labor problems. GM suffered from a multitude of problems. Their plants were inefficient (listen to the This American life podcast on the GM plant) Toyota gave GM its formula to successful manufacturing and they still did nothing. Instead they did idiotic things like relocating to Mexico (which was a disaster) and put off a long term labor negotiation strategy since anyone with a brain saw that their fixed costs were going to kill them several years down the line. The labor unions also share some blame but it goes both ways.

4. GMAC, their financing wing, was a disaster and bled money as well.

5. Management was just slow. They kept doing things the same way they had for 50 years without adapting to market realities. Whether it was manufacturing, marketing, hiring, etc.. Everything was outdated. They weren't even focusing on the right markets. GM's overseas sales were (and still are) booming and yet they invested minimal effort into it and wasted time on silly things in the US.

And that's just scratching the surface. GM was just a terribly run company. Your professor is an idiot if he thinks something as simple as designing fuel efficient cars (in a time when we have 3+ dollar gasoline prices) was somehow a bad idea.

And so their losses just mounted over a 4 year period until they ran out and had no option but to ask the Feds for help. Keep in mind this wasn't a TARP style bailout. Obama initially turned them down when they asked for help and forced them to declare bankruptcy in order to receive a bailout. In turn this forced them to shed many of their underperforming brands, renegotiate with the UAW and reorient their market strategies.

As for why the bailout was good or bad, there's plenty of literature on that on the internet. I will say that no investor was going to give them the several billion dollars they needed to stay afloat (and this was after they sold or killed off several brands).

 

The reason American car companies crashed: American car factories are in the north and are forced to pay their employees extremely high salaries due to the contracts negotiated with the unions. The Asian car companies have their factories in the south (Georgia, Alabama, etc) and have much friendlier contracts with their employees. Therefore, Japanese car companies can make the same car for far cheaper than American car companies and can sell the same car for less.

Why we shouldn't of bailed them out: It's unethical for the government to be picking winners and losers (who to bail out and who not to bail out). The silly notion that our economy would collapse if American car companies wen bankrupt is false. Companies large and small go bankrupt all the time.

The automotive bailout has increased our debt greatly and has been a total failure. GM stock , which we now own tons of, has dropped dramatically.

http://reason.com/blog/2011/11/17/treasury-admits-what-everybody-already-k

 

GM's stock collapse is evidence of its failure. It got delisted when it declared bankruptcy and then re-listed. It has falled from its high by about $10 but that's been true for almost every auto company due to the recession. But you cant compare its stock high in 2000 to its price today considering it collapsed because of poor management before the bailout, not because of the bailout itself.

 

We wouldn't lose hundreds of thousands of jobs, but even if we would, it still would not be worth it. A failed business model can not hold all Americans hostage forcing us to bail them out just because they have X number of employees. BTW, what is the magic number of employees liberals think a company needs to have to earn the right to exist? 100,000?

 

I think the bailouts were made in consideration of the fact that the automobile industry, which may have been sickly in other ways, was unfairly hit the hardest by the credit crunch, and the moral failures of a few Wall Street bankers. In the depth of that maelstorm, even stalwarts like GE were having trouble financing, and a lot of good American companies were being punished for adverse credit conditions they in no way, shape or form caused.

I was not a fan of the bailouts, and I still am not. However, this was likely the logic of the Federal Reserve, and the Department of the Treasury. If they had failed indepedently, I think there might have been a different story.

 

Remind your professor Bush initially started the bailout trend with bailing out Chrysler and GM; Chrysler which should rightfully have died considering they are a novelty company.

Case in point: Prowler, PT Cruiser, 300 and 200.

Chrysler cars have sex appeal but are absolutely horrible in terms of maintenance, drivability, gas mileage, and etc when compared and contrasted to their competitors.

GM however was trapped with a huge stock market plunge which negatively affected retirement plans, stiffled credit for people to buy new cars, and they were making gas guzzlers in a period of rising gas prices. They make good cars.

 

The industry crashed because this type of technology is not as useful to people as it used to be, plain and simple, so the biased valuations didnt hold up. The industry continues to focus on marginal improvements in luxury when what most really want is for the R&D to focus on more fuel efficiency, lower cost of manufacturing, higher safety, and actual comfort.

While these should be the foundation of the car industry's technological development, they have instead focused on more profitable activities, which focuses primarily on giving us a suite of ranked (and expensive) options. It's a classic example of FAIL in capitalism, because slowing down technology is more profitable than speeding up technology given the level and quality of information customers have access to. It's also important to note that the car industry has a known history of sabotaging customer-focused technological development.

Also, since public transportation in the US is extremely fragmented and requires huge upgrades, that's one less option than other developed nations.

Can someone with car manufacturing knowledge answer a question I've been wondering about... Theoretically, because of the way in which cars are asembled, it is possible to build a camry which looks exactly like a (for example) Ferrari and it shouldn't cost much more than the Camry's original shape cost initially? It's just a mold with some safety features right?

 

The industry crashed because unions weren't allowed to pay their employees more for doing less

/liberals

 

Your professor is r****ded.

 

So what happens when our dependency on fossil fuels increases the probability for another world war?

Your professor is a true conservative for sure.

 

By being a ROCK SOLID company, making the BEST vehicles on the road. :grin:

 

as much as i hate agreeing with texxx, you have to look at the cost structure. yeah, part of the problem is the cars but the biggest issue is how many of the costs of current manufacturing go into supporting retirement and pensions from past employees.

look at gm's balance sheet. most liabilities are to pensions and health insurance. its crazy. american companines can keep jobs here but the can't offer the benefits they did in the fifties and sixties. its a different world

 

So your conservative professor wants you to debate it from a democrat stance, rather than just a pro/con on the issues/results stance?

Is it your professor's stance that all republicans were against it, and that all democrats were for it?

 

you still don't get it which is sad. if gm goes bankrupt, its not just gm. they have creditors whom some their only customer is gm. they hire thousand of people who won't get paid in the bankruptcy process causing that company stress and stress down the line.