Saw this earlier: http://money.cnn.com/2008/11/18/news/economy/auto_hearings/index.htm?postversion=2008111815 Don't know how to feel on this one. On one hand, I think Dodd is right in that the American auto industry has fed their own stagnation by not driving innovation and r&d to improve the real value of their product and have, instead, just added more "bells and whistles" to an already over-consuming product. Fighting the science industry on global warming hasn't helped them any, either. However, letting them just founder doesn't seem to solve the problem for me. Quite the opposite: it would cost a great many people their jobs in an already uncertain economy. What do y'all think?
From what I understand they're dying under the weight of their debt - future debt from their retirees etc. All this money is going to do is help them pay for their bad UAW contracts and not much to prepare them for the future of their business. They need R&D and innovation like you said, but they're weighted down too much by their past bad decisions. Theoretically the best way would be for them to restructure out of that, but psychologically it might be devastating.
I agree with those saying bailout funds should be coupled with a bankruptcy contingent. Don't give them taxpayer money just so they can continue for 6 more months under the model that isn't working. Don't let them fail (completely). Let the money be insurance that they will emerge from bankruptcy. I think one of the things that has to happen for them to create a sustainable model is to deunionize the autoworkers. They've got to rethink what they're selling, and their cost model. Evan
I think the idea of the US government providing the loan after the filing for bankruptcy and to guarantee the warranties is probably the best solution. GM needs to use bankruptcy to be come leaner and better. It will hurt, but it is necessary.
The jobs argument I can understand, even if I don't agree. But, this one left me scratching my head: 1. I wasn't aware of the Big 3 doing any major innovating recently. 2. A better argument could be made that their existence stifles innovation because their monolithic presence keeps other American entrepreneurs from an expectation of market viability for their inventions. And, they tie up thousands of workers who might innovate as entrepreneurs in salaried work keeping the status quo going. 3. If the Big 3 were wiped out, there wouldn't be some kind of unsurpassable lead that Japan would then enjoy in technology. 4. One benefit I see from a weakening or a destruction of the Big 3 is increased innovation as the industry fragments and more players compete harder for market share.
Let them fail. Giving them money will only delay the inevitable. File for Chapter 11, reorganize and get out of or renegotiate UAW contracts, and start over.
I'd love a chapter 11 for all three ... as long as they're not allowed to just fold into chapter 7. That would be absolutely disastrous for EVERYBODY. But they've got to do something about this: right now GM is paying labor costs of more than $73/hr/vehicle, and meanwhile Toyota pays less than $48. That is ridiculous.
Yup. It's not what they're actually paying them now. That's pretty equivalent to what Toyota is paying. It's the costs of retirement and other benefits. http://money.cnn.com/galleries/2008/autos/0811/gallery.autos_crisis_causes/5.html Also interesting from that article, the Asian companies have a younger base of workers. That means even more emphasis on retirement benefits for the Big Three.
1. Ignore making any protection for 20 years for detroit and the manufacturing capability of the USA. 2. Ignore the currency manipulation by the MITI so good relations continue with Japan ensuring you can keep your military bases in japan and keep the lobbyists for electronics happy. 3. Unilaterally support the UAW no matter how huge their entitlement programs get. Causing the companies to accept buyouts from the pension programs, then watch their skilled labor move to the non-union japanese plants. 4. Blame the american car companies failures on building too many SUV's and not predicting global warming. SUV's are the only segment USA is leading in, and bought them about 15 years of life when the government played the ignore game. What has Dodd done to protect the jobs of the USA? Has he ever shown any leadership to allow them to be more competitive?
no thats not correct. Toyota also has a burden of health care and they are doing fine. The problem is retirement and overall higher cost of labor due to the unions.
Except GM put billions (25?) into a fund for medical health care...wonder if the union would just give that back to the company??? Universal health care would help a lot of newer companies or other companies that are struggling with this issue however. I started with the belief that we should bail GM out, but after reading more about the mess they are in with their cost structure because of legacy issues, I'm not so sure its not for the best. The thing is, those pension liabilities will basically go to the Pension Benefit Guaranty Corp (ie., the U S govt...ie you and me)....and that means they will be cut...if the UAW/GM can't figure out a way to cut it, then I guess the UAW will face the same cuts the steelworkers did when steel companies went belly up in the 90s...
I wasn't referring to the autoworkers, whose careers would, no doubt take a dive on average. That's the jobs-argument. I meant all the engineers and business people who work for car companies but would have the capacity to bring an invention to market, if the barrier to entry is not too high.
