Auto bailout.

[Anonymous]

Does anyone besides Jeff believe that the union contracts are part of the problem, not part of the solution?

The GOP wants to win elections; supporting an auto bailout is a suckers bet.

I worry about the unholy alliance of pro-labor Dems and GOP Hawks (a viable auto industry being vital to our national defense) actually pushing through more money to Detroit.

[Anonymous]

I agree that the companies are not in the same positions, based on the little I know, and that they shouldn't receive the same bailout across the board. I agree that any bailout should be contingent on major changes to the way these companies work, and to their product lines. I am completely pissed about American automakers' antagonism toward higher fuel economy standards. But. . . . I also wish Americans didn't want to drive vehicles like the Excursion or Tahoe or Navigator. If Americans didn't buy them, Detroit wouldn't make them.

Those I've offended may flame away now.

[jsteele]

Anonymous wrote:Does anyone besides Jeff believe that the union contracts are part of the problem, not part of the solution?

One clarification. I actually don't think that the union contracts are part of the problem. I think that smashing the UAW is part of the Republican motivation in this instance.

Renegotiation of the union contracts may be part of a solution, but I don't believe it is a requirement of a solution. In fact, given the screams coming from Detroit about the cost of healthcare, I'm surprised the companies have not been supportive of universal healthcare proposals. Its just another example of the short sighted leadership. Cutting healthcare and retirement funds may save the companies money in the short term, but would have long term social costs. If US taxpayers are footing the bill, I'd rather pay in the short term. If the Big 3 want to offload healthcare, let's enact Obama's healthcare plan, or even better, Hillary's healthcare plan.

[Anonymous]

I am just tired of this socializing losses and privatizing profits. The auto makers and the banks, I am working to keep them happy.

[Anonymous]

Anonymous wrote:I am just tired of this socializing losses and privatizing profits. The auto makers and the banks, I am working to keep them happy.

Plus, the media keeps calling it a "bailout" which makes the situation sound that much more desperate. Perhaps a sugar-coated phrase like "recovery plan" would sit better with us tax payers.

[Anonymous]

Anonymous wrote:Does anyone besides Jeff believe that the union contracts are part of the problem, not part of the solution?

The GOP wants to win elections; supporting an auto bailout is a suckers bet.

I worry about the unholy alliance of pro-labor Dems and GOP Hawks (a viable auto industry being vital to our national defense) actually pushing through more money to Detroit.

The industry's problem is not unions. Unions affect the cost structure. The American auto industry has had a declining sales problem. Just like in the 70's, they are making the wrong cars for the market. The credit crunch is magnifying it, but the trends were all there. I am sure the unions would be willing to build fuel-efficient, mid-priced vehicles any day of the week. But management keeps getting suckered into feasting on the boom years and getting hammered when consumer patterns change. Sure, the foreign companies will feel it, too. But they never made such big bets on such big cars.

[Anonymous]

"The industry's problem is not unions. Unions affect the cost structure. The American auto industry has had a declining sales problem. Just like in the 70's, they are making the wrong cars for the market. The credit crunch is magnifying it, but the trends were all there. I am sure the unions would be willing to build fuel-efficient, mid-priced vehicles any day of the week. But management keeps getting suckered into feasting on the boom years and getting hammered when consumer patterns change. Sure, the foreign companies will feel it, too. But they never made such big bets on such big cars"

I am not anti-union at all but the unions do factor into the equation. No doubt the auto industry execs were idiots and were too close to the oil friendly anti environment Bush admin. Seriously, there is still a small group of Republicans out there that think we can just drill more, find more oil and then the auto companies will be fine continuing to depend on the big SUVs and trucks. Crazy.

As stupid as these people are it doesn't mean turning around the Big 3 will be that easy. The high labor costs will factor into the costs of building better and more fuel efficient cars that will be able to compete with Toyota and the others. You can give more incentives to buy american cars but you run into free trade issues and possible disincentives the Big 3 from resolving problems in their lines.

If tax incentives to the auto makers for fuel efficient cars and penalties for low efficient ones had been part of the last 8 years we would be in much better place than we are now picking up the pieces.

[Anonymous]

GM and Ford didn't make SUVs because they like to burn oil.

They made SUVs because...
1. We had a cheap gas supply.
2. Americans wanted to buy them
3. They were the only profitable vehicles (with trucks) in their lines.

Suddenly,

1. Gas doubled in price.
2. Homes devalued so bye bye home equity loans for SUVs
3. Credit crunch made it impossible to find alternate financing.

The SUVS were where the profits are; when you have $1500 of retiree pension and health care costs built into EVERY vehicle, you cannot make money on 12-15K economy vehicle. Toyota can. Honda can. They don't have that fixed cost.

I don't know what the solution is going forward, but until we can correctly identify how we got to where we are we will never make an informed decision.

[Anonymous]

If the unions factor into cost, then the automakers can't reduce their prices to the low level they should be when you consider the poor quality.

[Anonymous]

Anonymous wrote:GM and Ford didn't make SUVs because they like to burn oil.

They made SUVs because...
1. We had a cheap gas supply.
2. Americans wanted to buy them
3. They were the only profitable vehicles (with trucks) in their lines.

Suddenly,

1. Gas doubled in price.
2. Homes devalued so bye bye home equity loans for SUVs
3. Credit crunch made it impossible to find alternate financing.

The SUVS were where the profits are; when you have $1500 of retiree pension and health care costs built into EVERY vehicle, you cannot make money on 12-15K economy vehicle. Toyota can. Honda can. They don't have that fixed cost.

I don't know what the solution is going forward, but until we can correctly identify how we got to where we are we will never make an informed decision.

I very much disagree. They went for easy short-term profits at the expense of the long term. They know that oil prices are cyclical, and that recessions happen every ten to fifteen years. The Japanese live in the same world, but they do not place all their chips on large SUV's. If it was a sound strategy, then Toyota and Honda would have done the same, certainly in the US market. Any automaker who cries "unfair" at high gas prices or the woes of the credit crunch is not qualified to run an auto company because they show they can only think ahead two or three years at best.

The foreign manufacturers develop a product line that appeals globally, fits a variety of tastes and income levels. That is why Toyota has the Lexus for the luxury customer, Toyota for the middle market and the truck buyer, and Scion for the young first purchasers. Yes, they added that last brand to bring in the next generation of car buyers, who think Toyotas are old and stodgy. This is how you don't end up becoming like Cadillac.

By the way, Japanese labor costs are not what you expect. They are facing lots of pressure from the low cost manufacturers in other Asian countries. Meanwhile, they build an increasingly large component of their US production using US labor. It is true that they don't have the same union pressure, but it is not what we used to think about decades ago.

Detroit failed twice now to build a product line of the future. They have one more chance, though. They can commit to a sustained program to develop fuel-efficient vehicles if they choose. It is popular right now, so it is easy to say. And Congress is fully behind it. But I can tell you now, oil prices will go back down. Then we will see whether these companies have the guts to stick with their plans to build these future technologies when it is not so popular. That is strategy. Personally, I don't think they have it in them. But we'll see.

[Anonymous]

Anonymous wrote:

Anonymous wrote:GM and Ford didn't make SUVs because they like to burn oil.

They made SUVs because...
1. We had a cheap gas supply.
2. Americans wanted to buy them
3. They were the only profitable vehicles (with trucks) in their lines.

Suddenly,

1. Gas doubled in price.
2. Homes devalued so bye bye home equity loans for SUVs
3. Credit crunch made it impossible to find alternate financing.

The SUVS were where the profits are; when you have $1500 of retiree pension and health care costs built into EVERY vehicle, you cannot make money on 12-15K economy vehicle. Toyota can. Honda can. They don't have that fixed cost.

I don't know what the solution is going forward, but until we can correctly identify how we got to where we are we will never make an informed decision.

I very much disagree. They went for easy short-term profits at the expense of the long term. They know that oil prices are cyclical, and that recessions happen every ten to fifteen years. The Japanese live in the same world, but they do not place all their chips on large SUV's. If it was a sound strategy, then Toyota and Honda would have done the same, certainly in the US market. Any automaker who cries "unfair" at high gas prices or the woes of the credit crunch is not qualified to run an auto company because they show they can only think ahead two or three years at best.

The foreign manufacturers develop a product line that appeals globally, fits a variety of tastes and income levels. That is why Toyota has the Lexus for the luxury customer, Toyota for the middle market and the truck buyer, and Scion for the young first purchasers. Yes, they added that last brand to bring in the next generation of car buyers, who think Toyotas are old and stodgy. This is how you don't end up becoming like Cadillac.

By the way, Japanese labor costs are not what you expect. They are facing lots of pressure from the low cost manufacturers in other Asian countries. Meanwhile, they build an increasingly large component of their US production using US labor. It is true that they don't have the same union pressure, but it is not what we used to think about decades ago.

Detroit failed twice now to build a product line of the future. They have one more chance, though. They can commit to a sustained program to develop fuel-efficient vehicles if they choose. It is popular right now, so it is easy to say. And Congress is fully behind it. But I can tell you now, oil prices will go back down. Then we will see whether these companies have the guts to stick with their plans to build these future technologies when it is not so popular. That is strategy. Personally, I don't think they have it in them. But we'll see.

I suppose Detroit will get another government sponsored lifeline but one of the requirements for this infusion of public money (taxes) is to gut the level of executive & senior management as well as completely replace the board of directors. They're a bunch of visionless, group think dinosaurs.

The big 3 need to be nimble, flexible, and visionary. They are none of these. Perhaps the government can let them go bankrupt to annul the union contracts and start anew without the liabilities of pensions and union contracts.