Should the U.S. Taxpayers Bail Out the American Auto Industry?

[Rohirrim]

The biggest of the Big Three is on the verge of going belly up. How do we work this? Lots of jobs. Is this disaster their own faults? Is their situation due to bloated payrolls and overpaid executives with top-heavy managerial staffs, or is it that they don't make products anybody wants? Is it the foreign competition, or labor costs? Why can Toyota make money building cars in America, but the Big Three can't?
http://money.cnn.com/2008/11/07/news/companies/gm/index.htm?postversion=2008110711

[Rohirrim]

I voted no. They should either go out of business or be forced to trim down to the bare necessities and start over. Maybe that way they'll rediscover the core values that brought them success in the first place. I do, however, believe that if America does not find some way to deal with health care costs in this country, the fall of the Big Three is only the beginning.

[Bronco Yoda]

oh Sarah.....yooohooo... where art thou 'hot 4 teacha'....

ring...ring...ring....

[Garcia Bronco]

We have to. It wouldn't be fair since Congress and the President have done it with the banks

[bronclvr]

I think the Issue that is not being brought up here is the loss of Manufacturing capability. It would certainly put us in a bad position if we had to, say, go to War (don't forget the contributions by the big three in WWII)-

[Bronco Yoda]

I would consider tapping into the $700 billion bailout as a loan with oversight attachments in regards to executive salaries, bonuses etc. Greener & safer auto's might be an idea.

[baja]

Sure why not it's all funny money anyway.

[Old Dude]

The soup kitchen line just gets longer every day.

You do have to wonder who in heck has been running some of these outfits. Gas prices are up, consumers are tightening their belts, trying to make ends meet, and suddenly, in September, Detroit decides that maybe its time to convert to production of more fuel efficient vehicles because they are being overstocked with SUVs.

Like no one could possibly have seen this coming.

Anyway, yeah, I suppose that to the extent that they need some kind of help in their financing arms and in retooling and resdistributing capitol, they have just as good a claim to the corporate welfare soup as the mortgage speculators.

[Drek]

This problem exists because American auto manufacturers sold out to big oil and jammed huge overpriced gas guzzling SUVs down our throats when the rest of the world was developing gas efficient alternatives. They are now behind the eight ball and trying to play catch up.

The unbalanced "free trade" present in the global economy, where other countries that don't give their workers equal wages, rights, or treatment as ours and don't meet the same environmental standards as our factories are able to undercut our prices.

Fix the "free trade" agreements. Give them subsidies and low interest loans to give them the jump start into greener automotive technology, and give U.S. citizens tax write offs for not just buying a more environmentally friendly car but a U.S. made environmentally friendly car and we'd see a very different playing field for GM, Ford, etc..

[Garcia Bronco]

This problem exists because American auto manufacturers sold out to big oil and jammed huge overpriced gas guzzling SUVs down our throats

I disagree. Nothing was jammed down anyone's throats. People are free to buy what they wish.

[Rohirrim]

This problem exists because American auto manufacturers sold out to big oil and jammed huge overpriced gas guzzling SUVs down our throats when the rest of the world was developing gas efficient alternatives. They are now behind the eight ball and trying to play catch up.

The unbalanced "free trade" present in the global economy, where other countries that don't give their workers equal wages, rights, or treatment as ours and don't meet the same environmental standards as our factories are able to undercut our prices.

Fix the "free trade" agreements. Give them subsidies and low interest loans to give them the jump start into greener automotive technology, and give U.S. citizens tax write offs for not just buying a more environmentally friendly car but a U.S. made environmentally friendly car and we'd see a very different playing field for GM, Ford, etc..

They have taken plenty of advantage of the "free trade" agreements. I'm guessing the majority of the components of the average American car are produced in Mexico and points East. And still they can't compete. Why not?

[Garcia Bronco]

The soup kitchen line just gets longer every day.

You do have to wonder who in heck has been running some of these outfits. Gas prices are up, consumers are tightening their belts, trying to make ends meet, and suddenly, in September, Detroit decides that maybe its time to convert to production of more fuel efficient vehicles because they are being overstocked with SUVs.

Like no one could possibly have seen this coming.

Anyway, yeah, I suppose that to the extent that they need some kind of help in their financing arms and in retooling and resdistributing capitol, they have just as good a claim to the corporate welfare soup as the mortgage speculators.

It takes 3-5 years for most auto manufacturers to bring an auto from concept to production. Toyota can do it in two. The fact that there are American cars that are fuel efficent negates the premise of your argument that "no one saw it coming"

[Garcia Bronco]

They have taken plenty of advantage of the "free trade" agreements. I'm guessing the majority of the components of the average American car are produced in Mexico and points East. And still they can't compete. Why not?

Because they are old and bloated with old design methods that they built their business on. They can't change with the times inspite of themselves.

[W*GS]

The not-so-Big Three already got $25 billion, tucked away in the bailout.

[Dudeskey]

Because they are old and bloated with old design methods that they built their business on. They can't change with the times inspite of themselves.

Old and bloated is right. GM & Ford still have way too many brands and their products are crap. They need to sell off or discontinue some brands if they want any chance of surviving. But with this bad news coming out, thats going to mean a lot more inventory is going to sit. Buyers don't want to buy these vehicles only to find out later that the manufacturer won't be there to stand behind them (at least not in the half assed way they have been)...™

[Old Dude]

It takes 3-5 years for most auto manufacturers to bring an auto from concept to production. Toyota can do it in two. The fact that there are American cars that are fuel efficent negates the premise of your argument that "no one saw it coming"

I was being sarcastic, Garcia. Of course they saw it coming. They saw it coming many years ago. But they were still making and selling boodles of SUVs, because consumers were still buying them.

This is one of the reasons why government needs to step in and give industry a kick in the butt once in awhile (with tax incentives or pure R&D help) if it really wants to promote energy and oil independence. Otherwise, we fall behind on the curve and don't respond until the crisis is on top of us.

As in, like now.

[gyldenlove]

It takes 3-5 years for most auto manufacturers to bring an auto from concept to production. Toyota can do it in two. The fact that there are American cars that are fuel efficent negates the premise of your argument that "no one saw it coming"

The funny thing is that Ford for decades have sold more fuel efficient cars in Europe than in North America.

My dad has an 8 year old car with a turbo charged engine and a carrying capacity of almost 2000 lbs that gets 40 MPG city and 60 MPG highway.

Compare that to what a Ford Focus gets or a Chevy Aveo, hell if you drive like an actual person that is better than what most people get out of a Prius.

It is possible to make cars that doesn't consume tons of fuel and clubs baby seals to death, unfortunately nobody in the states ever really cared about that.

[Bob]

All we will hear for the next few years are various aurguments -- hey we are too big to fail too...

I think that bailing folks out only encourages others to get in line.

[DHallblows]

They have taken plenty of advantage of the "free trade" agreements. I'm guessing the majority of the components of the average American car are produced in Mexico and points East. And still they can't compete. Why not?

Because their cars are ****. Like already said, our cars take 3 times as long to produce as Japanese cars. For inventing the assembly line, we sure have fallen behind everyone else...

[cutthemdown]

People will be upset then because Obama will bail them out. All those unions workers?!!!!! Forget about it it's a done deal. Like Stevie Wonder said, Signed Sealed, Delivered!!!!!!!!

[gyldenlove]

Because their cars are ****. Like already said, our cars take 3 times as long to produce as Japanese cars. For inventing the assembly line, we sure have fallen behind everyone else...

One thing I love is Mitsubishi, a couple of years ago they were on the verge of bankrupcy because they had withheld information about safety recalls from the Japanese government and got fined hugely for it and lost a lot of consumer goodwill. They also lost a deal with then DaimlerChrysler to help them produce and sell cars in North America.

A couple of years later with no government help they are making a profit, something the American automakers have failed to do despite record sales in the last many years.

Toyota have felt the sting of the downturn as well, and had to lower their expected profits by about 25%, they still expect to make solid profits, just not as much as they thought they would last year. Meanwhile the big 3 are rapidly heading toward insolvence, it is remarkable how badly mismanaged the American auto sector is.

[Paladin]

This problem exists because American auto manufacturers sold out to big oil and jammed huge overpriced gas guzzling SUVs down our throats when the rest of the world was developing gas efficient alternatives. They are now behind the eight ball and trying to play catch up.

The unbalanced "free trade" present in the global economy, where other countries that don't give their workers equal wages, rights, or treatment as ours and don't meet the same environmental standards as our factories are able to undercut our prices.

Fix the "free trade" agreements. Give them subsidies and low interest loans to give them the jump start into greener automotive technology, and give U.S. citizens tax write offs for not just buying a more environmentally friendly car but a U.S. made environmentally friendly car and we'd see a very different playing field for GM, Ford, etc..

I have to disagree with parts of this, but I agree with much of it. SUVs and big cars were responses to what was being sold. When Oil was cheap, why not a bigger wagon? However, the whole "quality" is another matter.

I voted to ask Palin if she knew where Detroit was and if Saturns were made there. Actually, I think the auto industry is willing to re-tool to go for the green auto, but they need to know that the Government will help get the things sold with credits or whatever. There are millions of jobs related to this issue. It is not just the people in Detroit, but the ancillary businesses are at risk, too. Seriously, I would look at some guarantees on their capacity to borrow money, say from Japan.....

[cutthemdown]

One thing I love is Mitsubishi, a couple of years ago they were on the verge of bankrupcy because they had withheld information about safety recalls from the Japanese government and got fined hugely for it and lost a lot of consumer goodwill. They also lost a deal with then DaimlerChrysler to help them produce and sell cars in North America.

A couple of years later with no government help they are making a profit, something the American automakers have failed to do despite record sales in the last many years.

Toyota have felt the sting of the downturn as well, and had to lower their expected profits by about 25%, they still expect to make solid profits, just not as much as they thought they would last year. Meanwhile the big 3 are rapidly heading toward insolvence, it is remarkable how badly mismanaged the American auto sector is.

Yeah but Japans economy was down for yrs. America wants a quicker recovery and Obama will give it to them.

I guess it will be a short honeymoon for him after all

[gyldenlove]

Yeah but Japans economy was down for yrs. America wants a quicker recovery and Obama will give it to them.

I guess it will be a short honeymoon for him after all

Their economy might have been down for years but Toyota, Mitsubishi, Honda were still making money without government help.

[The Lone Bolt]

I would consider tapping into the $700 billion bailout as a loan with oversight attachments in regards to executive salaries, bonuses etc. Greener & safer auto's might be an idea.

Second. The Chevy Volt is too important to die. Let the aid come with big strings attached.

But also how about low interest gov't loans to Tesla, Aptera, and other small auto companies producing revolutionary vehicles with the potential to free us from foreign oil once and for all?

[cutthemdown]

Their economy might have been down for years but Toyota, Mitsubishi, Honda were still making money without government help.

Govt made money on the Chrysler bailout.

[cutthemdown]

No reason the govt can't make money off some of these deals in the long run. That is unless you think the 3 big automakers can't compete anymore.

[watermock]

I say let GM and Chrysler merge. We'll never get that infrstructure back if we shutter GM and Ford.

[Bronco Bob]

The biggest of the Big Three is on the verge of going belly up. How do we work this? Lots of jobs. Is this disaster their own faults? Is their situation due to bloated payrolls and overpaid executives with top-heavy managerial staffs, or is it that they don't make products anybody wants? Is it the foreign competition, or labor costs? Why can Toyota make money building cars in America, but the Big Three can't?
http://money.cnn.com/2008/11/07/news/companies/gm/index.htm?postversion=2008110711

Toyota is hurting too. I'll bet if it gets bad enough, Japan bails them out.

If the US makes the same deal with GM that they did with Chrysler,
I don't have too much of a problem with it, even though I do think
anything made by GM is crap.

[Bronco Bob]

I say let GM and Chrysler merge. We'll never get that infrstructure back if we shutter GM and Ford.

I'd prefer keeping Chrysler as a separate company. I've always liked Chrysler,
don't really care for GM. It was bad enough when Daimler took over Chrysler
and got rid of the Plymouth. To me it would be like the Broncos merging with
the Raiders.

[Drek]

I disagree. Nothing was jammed down anyone's throats. People are free to buy what they wish.

You underestimate the power of marketing. Most people are sheep.

They have taken plenty of advantage of the "free trade" agreements. I'm guessing the majority of the components of the average American car are produced in Mexico and points East. And still they can't compete. Why not?

They've outsourced a lot of parts manufacture, which itself is something I'm not a fan of, but ultimately they have it assembled in the U.S. by union labor, which costs considerably more than the foreign labor many companies use, or the non-union labor a company like Toyota uses in the southeastern U.S..

That is again something that needs to be fixed. The reason its so much cheaper to let Chinese labor make all the parts or wherever else they want to outsource it to is because the workers there don't have the rights we do here and the environmental standards aren't the same. They treat labor and the environment in such a way that if they did it here in the U.S. we'd lock them up for a very, very long time.

"Free trade" needs a complete overhaul if American manufacturing will ever compete again.

[gyldenlove]

They've outsourced a lot of parts manufacture, which itself is something I'm not a fan of, but ultimately they have it assembled in the U.S. by union labor, which costs considerably more than the foreign labor many companies use, or the non-union labor a company like Toyota uses in the southeastern U.S..

That is again something that needs to be fixed. The reason its so much cheaper to let Chinese labor make all the parts or wherever else they want to outsource it to is because the workers there don't have the rights we do here and the environmental standards aren't the same. They treat labor and the environment in such a way that if they did it here in the U.S. we'd lock them up for a very, very long time.

"Free trade" needs a complete overhaul if American manufacturing will ever compete again.


That is not true at all, a very significant portion of Ford cars are produced in Mexico, and as early as May this year they announced a 3bn dollar plant was going to be built in Mexico which would handle all production of Fords new compact cars for the entire North American market.
Many of the big 3 cars driven in the Northern states are produced in Ontario with cheaper labor.

[Pseudofool]

This is a good question. But I think this question is belied by the hurdling unemployment numbers. It's not that GM is going belly up; it's that more and more American companies are having a harder an harder time producing American jobs. Unmitigated trade has led to this point. But reworking trade policies alone isn't going to save the companies that are trending downwards. There's needs to be some sort stop gap to keep these companies in business while they work towards a new competitive advantage, and, hopefully, within a new system that favors and privileges businesses who use American workers.

That's why what's be talked about is a loan w/low interest rate, not a bailout. I'd like a deal where GM etc., are obligated to close their foriegn plants and reopen plants here with gov't help...

I fear if the gov't doesn't start intervening and doesn't change trade laws and tax code, there will be fewer and fewer private jobs. The reality is we are never going to get the taxes low enough for any businesses to want to move to America, so we need to encourage the businesses that are here to stay, and create an environment where new businesses can emerge without the pressures of international trade or the stock market.

[W*GS]

Pseudofool, you're wrong in so many ways.

"Unmitigated trade" is not causing American companies problems. For every job or company you try to "protect" by restricting trade, you cost another job or company that relies in exports. The US is not some black hole, sucking in products and services, and emitting nothing. Once you decide to limit trade, our trading partners will retaliate and limit our exports to them.

Basically, punitive trading practices are a self-inflicted blockade.

If autarky actually worked, North Korea would be heaven on earth.

[Pseudofool]

"Unmitigated trade" is not causing American companies problems. For every job or company you try to "protect" by restricting trade, you cost another job or company that relies in exports. The US is not some black hole, sucking in products and services, and emitting nothing. Once you decide to limit trade, our trading partners will retaliate and limit our exports to them. You might have a point if our exports outpaced or even pulled even with our imports (I'm having trouble finding the number, but I can't imagine it even being close). More than that I'm not sure the macroeconomic view of the economy is going to differentiate between a GM mexican-produced car from a GM american-produced car.

There needs to be a middle ground between blockade and free trade, because the later will lead to fewer and fewer American jobs. Our labor costs too much because of our high standard of living. Of course another solution would be to lower our standard of living but that too would have deleterious affect on the economy.

[Rohirrim]

Globalism is just the new word for Feudalism.

[Pseudofool]

Globalism is just the new word for Feudalism.And it's life blood--cheap labor--will run out sooner than later.

[ghwk]

I have to disagree with parts of this, but I agree with much of it. SUVs and big cars were responses to what was being sold. When Oil was cheap, why not a bigger wagon? However, the whole "quality" is another matter.

I voted to ask Palin if she knew where Detroit was and if Saturns were made there. Actually, I think the auto industry is willing to re-tool to go for the green auto, but they need to know that the Government will help get the things sold with credits or whatever. There are millions of jobs related to this issue. It is not just the people in Detroit, but the ancillary businesses are at risk, too. Seriously, I would look at some guarantees on their capacity to borrow money, say from Japan.....

Hey the Japanese didn't need US Govt. credits to understand our market and eventual need for more fuel efficient cars. The American public has known this as an inevitability for years. Auto execs are idiots for not seeing this and starting to tool up years ago. We got beat in our own free market. Big Oil and Big Cars go hand in hand and they and their business plans take into account how each others markets are doing rather than what a huge segment of the public has known for years--that the oil gravy train can't last forever.

If the govt. bails out GM, exec salaries get capped at 25% more than the lowest paid worker and the govt. owns the company until they can buy it back.

[W*GS]

Globalism is just the new word for Feudalism.

Anti-globalism is just another word for loony leftism mixed with populism and ignorance.

[Rohirrim]

Anti-globalism is just another word for loony leftism mixed with populism and ignorance.

I'm not "anti-globalist." I'm anti-tyranny.

[Pseudofool]

Anti-globalism is just another word for loony leftism mixed with populism and ignorance.I love how you measure your digs of the looney left with digs on the looney right, oh wait, you never do that.

[cutthemdown]

Dems are pushing Bush to bail them out. He probably will.

[Spider]

meh what the hell we bail out every else

[cutthemdown]

meh what the hell we bail out every else

Plus if you already hate the Republicans, and Dems want the bailout ( all those union jobs) who would there be left to hate if it pissed you off?

[cutthemdown]

meh what the hell we bail out every else

I wish they would have bailed out this little Deli by my house. They had the best corned beef ever. Oh well!!!!!

[Spider]

Plus if you already hate the Republicans, and Dems want the bailout ( all those union jobs) who would there be left to hate if it pissed you off?

meh I wasnt pissed off about wal street bailout . in fact i was for it ........