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View Poll Results: Should the government bail out U.S. automakers?
Yes 18 10.00%
No 100 55.56%
Limited bailout 15 8.33%
Need to see the details before deciding 47 26.11%
Voters: 180. You may not vote on this poll

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Old 11-12-2008, 10:12 PM   #41
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bailout

They will be bailed out. BO will see to that. The auto unions supported him and he will return the favor. Thats the way it works.
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Old 11-12-2008, 10:32 PM   #42
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I had a thought that doesn't bode well for the auto industry no matter what the government does to help 'em out.

Who would be buying a "new" car anyway with all the doom-and-gloom going on. Nobody has to buy a "new" car. Esp right after they got half their 401k wiped out. There are used cars enough around to last quite a few years. If I had a paid for car of any kind right now, I wouldn't be selling it too cheap - there may be a hot market for used cars the next couple years.

So what if they discount a $70k Escalade to 57K & 0% financing for 6 years - I still don't want it. Frankly, it's not worth 57k - or even 30k. I wouldn't even give you 25k for one brand new off the lot. (but maybe that's just me)
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Old 11-12-2008, 10:40 PM   #43
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I had a thought that doesn't bode well for the auto industry no matter what the government does to help 'em out.

Who would be buying a "new" car anyway with all the doom-and-gloom going on. Nobody has to buy a "new" car. Esp right after they got half their 401k wiped out. There are used cars enough around to last quite a few years.
I've been thinking about that too. The US automakers have been in trouble for a while now. If they are going to die, maybe this is the time to just let them go?

I was hoping to see that Chevy 'VOLT' become a success - maybe a small part of GM could succeed as Saturn, with the VOLT in their portfolio of vehicles? Of course, if we have $2.xx gas for a few more years, there won't be much demand for expensive plug-ins.

-ERD50
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Old 11-12-2008, 10:54 PM   #44
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....
I was hoping to see that Chevy 'VOLT' become a success - maybe a small part of GM could succeed as Saturn, with the VOLT in their portfolio of vehicles? Of course, if we have $2.xx gas for a few more years, there won't be much demand for expensive plug-ins.

-ERD50
Weren't they talking about a $36k MSRP on that? Not for me, thank you. I've still got a 1994 Dodge Caravan that runs perfect, gets 21mpg on the highway, & I can work on.
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Old 11-12-2008, 11:09 PM   #45
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Yes, the numbers have changed, but I think $36K was a recent estimate. Even at that price, some will buy it for a variety of reasons, but I don't see it hitting significant numbers at that price unless gas is way up.

I love it from a design standpoint, but it's gotta make sense for a mass market. But that is almost wishing for $6 gas (or whatever the number might be, but I don't think it is $2.31).

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Old 11-13-2008, 12:28 AM   #46
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On an NPR report last night some dude who is against the bailout pointed out that the casino industry directly employs twice as many people as the auto industry, and is also suffering a major downturn due to the economic hiccup we are currently experiencing. But nobody is talking about bailing them out. His point was not that we should bail them both (all) out, instead we shouldn't bail out anyone. I tend to agree, despite having sympathy for the people who will suffer. I think most people saw the auto industry crisis coming decades ago. There has been plenty of time for the unions and management to work things out. "Lack of planning on your part does not constitute an emergency on mine".
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Old 11-13-2008, 12:54 AM   #47
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I am not sure why it is alright to bail out the banks but not the auto companies.
I agree....I told my Congressman to vote agains the bank bailout also..and he did. Rep. Mike Pence, Indiana.
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Old 11-13-2008, 12:55 AM   #48
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They will be bailed out. BO will see to that. The auto unions supported him and he will return the favor. Thats the way it works.
But if he bails them out, won't he be essentially giving a break to those "fat cat executives" at the Big3? Which is exactly what he criticized GW for doing.

Guess it's different when he does it.
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Old 11-13-2008, 01:11 AM   #49
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Barack can bail out the UAW without bailing out the Big Three......

1. Let the Big Three die but provide extensive govt support for laid off union workers by providing ridiculously generous severance packages and extended unemployment benefits. Fund the retiree health plan and pensions with govt (our) money.

2. Change union organizing rules to make it much easier for unions to organize Toyota/Honda plants and their suppliers.

Then, the Big Three are gone and the UAW and it's fat cat managers are happy. Obama executes those he said he'd execute and rewards those he said he'd reward.
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Old 11-13-2008, 05:02 AM   #50
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One thing I have not seen anyone mention is the fact that GM is off loading there healthcare benefits to the union in the next year or so. Isn't this the kind of new business model you guys are talking about. I am not sure why it is alright to bail out the banks but not the auto companies. Last time this was done the goverment got repaid and the company lasted for another 30 years.

Granted I am bias I live in Michigan. However do not work for the auto industry.
IMO NONE should have been bailed out in the FIRST place. So to "draw the line" here is not diminished AT ALL. IMHO two (actually many, to this point) WRONGS does not make ONE RIGHT! BTW who said bailing out the banks is alright? Especially, since, yesterday, from my understanding of the Secretary Paulson News Conference, he has changed his mind about that now.
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Old 11-13-2008, 05:47 AM   #51
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I think most people fall into a couple of camps on this issue. And their point of view depends a bit on the impact of the possible outcomes.

  • If you were concerned that the immediate bankruptcy of GM (i.e., the domestic auto industry) right now would cause economic loss (spiral to an additional 10% unemployment that takes 10 years to recover) and securities market loss of another 30% - 40% from the current level... you are probably in favor of immediate triage.
  • If you think is is a small blip and will not affect you... then you are against it.
  • There are a few fools that would be ok with making them suffer the consequences even though it meant ruining themselves to stick with principle.
  • The majority of people who are not directly impacted (investors... including us and people who will not lose their job) are oblivious. These are the poor, working poor or lower middle class that have no clue about what has occurred. To them this is just noise. Or they may be the super wealthy that have the resources to weather the storm.

IMO - Our votes are based on most people perception of the outcome and their personal impact. If the poll were stated with an outcome identified... it show a bit more insight into their opinions.


I think we are in a severe crisis of which little is due to GM's recent decisions... Even if half of their cars were hybrids... they would be in trouble. Most of their woes right now are due to the havoc caused by financial institutions... including the oil bubble that was driven by speculation... mostly by large financial institutions.

I do not like the idea of a bailout... but if bailout = time to become stable and figure out next steps... I am for it. Especially if no bailout means a continued spiral downward.


The villains in this situation are our large financial institutions. Businesses that produce things are just swept up in it because they rely on the capital markets.
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Old 11-13-2008, 07:00 PM   #52
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Bail them out but have some REAL strong strings attached. DON'T just give them cash to burn like they are burning now !!! They need a lot of tough love to turn their act around. Management and the Unions need to step up and commit to do what ever it takes!!!! Yea sure, dream on.
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Old 11-13-2008, 07:11 PM   #53
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The business model has to change for the entire business -- management AND labor have to accept a long-term sustainable model. That requires ALL of them to make sacrifices because the alternative is worse for all of them. Then, we'll talk. If it doesn't require systematic changes to management compensation, business decisions and union contracts, I would be dead set against giving them one cent.
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Old 11-13-2008, 07:35 PM   #54
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I say no bailout, but my idea would have the gov't temporarily give auto buyers a tax credit for auto purchases, the amount of which would be proportional to the mpg of the vehicle purchased. That will provide a little relief for the auto makers, but they still need to overhaul their entire business model.
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Old 11-14-2008, 10:15 AM   #55
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From GM:
  • Prior to this crisis, the U.S. auto industry was aggressively and successfully restructuring.
    • The industry has invested $10 billion in U.S. plants and equipment each year.
    • U.S.-based companies have closed the productivity gap with leading imports.[ii]
    • GM has all but closed the quality gap with Asian carmakers.[iii]
    • New labor agreements will make U.S. manufacturers’ labor costs competitive with the transplants by 2010.

  • GM has been in the process of building a winning auto company for the long term. These efforts are threatened by a severe downturn in sales and a sharp drop in revenue caused by a widespread economic and credit crisis.
    • GM is focused on building sustainable success, not short-term results.
    • New GM vehicles such as the Saturn Aura, Cadillac CTS, Chevy Malibu and Buick Enclave are getting great reviews from the experts and enthusiastic support from customers.
    • GM is committed to leading in the development of advanced propulsion technology, including breakthrough technologies like the Chevy Volt extended-range electric car.
    • At the same time GM has been creating these award-winning vehicles, the company has been taking tough action to cut costs. In fact, since 2005, GM has reduced structural cost in North America by over $9 billion. And more recently, GM has outlined plans to enhance its liquidity position by $20 billion through 2007.
    • GM has been streamlining its U.S. operations. It has reduced its U.S. salaried workforce from 44,000 in 2000 to 32,000 in the fall of 2008, and its hourly workforce from 132,000 to 64,000 during the same period.
    • In response to the recent economic crisis, GM is further tightening its belt. The company recently took additional actions to reduce salaried employment costs by 30 percent, eliminate raises and discretionary bonus for executive and management employees, and suspend the 401k match for salaried employees.
  • The long-term security of the U.S. requires a strong auto industry and strong domestic R&D programs.
    • The auto industry will play a critical role in diversifying our energy sources away from imported petroleum.
    • The U.S. should not trade its dependence on imported oil for a dependence on imports of critical technologies – batteries, biofuel technology, advanced internal combustion engines and transmissions, hybrid systems, and fuel cells.
    • The U.S.-based auto industry is second only to the semiconductor industry in R&D spending -- $12 billion last year alone.[iv]


  • Federal assistance to help the U.S.-based carmakers through this historic downturn is a good investment in America’s future.
    • Potential cost for supporting loans to the industry would be a fraction of one year’s lost tax revenue should the industry collapse.[v]
    • Because of pent-up demand, the industry should recover quickly once the economy improves, implying a fast payback for loans and interest.
    • A healthy auto industry is an engine for creating the jobs, the new technologies, and the global business growth that America needs if it is to remain a great power.


  • What happens to the U.S. auto industry matters on Main Street.
    • There are some 14,000 U.S.-brand dealers in cities and towns across the country[vi], employing approximately 740,000 people, with a total payroll of some $35 billion.[vii]
    • U.S.-based companies have 105 assembly and component plants in 20 states, including such “non-auto” states as California, Texas, Kansas, Louisiana and Maryland.[viii]
    • The three companies purchased $156 billion in parts, materials and services, supporting jobs in all 50 states.[ix]
    • The companies provide benefits for 775,000 retirees and surviving spouses, and provide health care benefits for 2 million.[x]


  • Automotive manufacturing is a 21st Century growth industry, and the U.S. needs to earn its share.
    • A strong U.S.-based industry lets America benefit from global growth of one of the largest, most important industries.
    • Less that 15% of the world’s population owns a car, so growth potential is significant.
    • The industry sold 70.6 million vehicles globally in 2007, an increase of 13 million units from 2002.
    • U.S. companies can compete: GM’s now sells 61 percent of its car and trucks outside the U.S., and continues to set sales records overseas.
    • CYTD, GM sales in LAAM are up 13 percent, while sales in Asia-Pacific are up 7.6 percent.
    • Motor vehicles and parts are the single largest export from the U.S., topping aerospace, medical equipment and communications.[xi]
  • The collapse of the U.S.-based auto industry would be devastating. In just the first year:[xii]
    • Direct, indirect and spinoff employment would drop by 2.95 million people
    • Personal income would drop by $150.7 billion
    • Government transfer payments would increase by $14.3 billion
    • Social security receipts would drop by $21.1 billon
    • Personal income tax paid would drop by $24.7 billion


[i]
  • This is an auto industry crisis, not just a U.S. industry crisis.[xiii]
    • CAR assumes that a 50 percent drop in production by U.S.-based carmaker would cause a 50 percent drop in production at the transplants due to supplier disruptions and bankruptcies.
    • A complete shutdown of the U.S.-based carmakers would also shut down the transplants for at least one year.
Driving the Future: The New American Auto Industry, The Automotive Trade Policy Council (ATPC). 2008

[ii] The Harbour Report North America 2008, Oliver Wyman. June 5, 2008.

[iii] Various reports and publications, J.D. Power and Associates, Consumers Union

[iv] ATPC

[v] Center for Automotive Research Memorandum: The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers. November 4, 2008

[vi] ATPC

[vii] Based on NADA average employment and payroll figures, NADA Data 2007.

[viii] ATPC

[ix] ATPC

[x] ATPC

[xi] ATPC

[xii] Center for Automotive Research Memorandum: The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers. November 4, 2008

[i][xiii]CAR Research Memorandum
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Old 11-14-2008, 10:20 AM   #56
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Quote:
Originally Posted by cardude View Post
From GM:
  • Prior to this crisis, the U.S. auto industry was aggressively and successfully restructuring.
    • The industry has invested $10 billion in U.S. plants and equipment each year.
    • U.S.-based companies have closed the productivity gap with leading imports.[ii]
    • GM has all but closed the quality gap with Asian carmakers.[iii]
    • New labor agreements will make U.S. manufacturers’ labor costs competitive with the transplants by 2010.

  • GM has been in the process of building a winning auto company for the long term. These efforts are threatened by a severe downturn in sales and a sharp drop in revenue caused by a widespread economic and credit crisis.
    • GM is focused on building sustainable success, not short-term results.
    • New GM vehicles such as the Saturn Aura, Cadillac CTS, Chevy Malibu and Buick Enclave are getting great reviews from the experts and enthusiastic support from customers.
    • GM is committed to leading in the development of advanced propulsion technology, including breakthrough technologies like the Chevy Volt extended-range electric car.
    • At the same time GM has been creating these award-winning vehicles, the company has been taking tough action to cut costs. In fact, since 2005, GM has reduced structural cost in North America by over $9 billion. And more recently, GM has outlined plans to enhance its liquidity position by $20 billion through 2007.
    • GM has been streamlining its U.S. operations. It has reduced its U.S. salaried workforce from 44,000 in 2000 to 32,000 in the fall of 2008, and its hourly workforce from 132,000 to 64,000 during the same period.
    • In response to the recent economic crisis, GM is further tightening its belt. The company recently took additional actions to reduce salaried employment costs by 30 percent, eliminate raises and discretionary bonus for executive and management employees, and suspend the 401k match for salaried employees.
  • The long-term security of the U.S. requires a strong auto industry and strong domestic R&D programs.
    • The auto industry will play a critical role in diversifying our energy sources away from imported petroleum.
    • The U.S. should not trade its dependence on imported oil for a dependence on imports of critical technologies – batteries, biofuel technology, advanced internal combustion engines and transmissions, hybrid systems, and fuel cells.
    • The U.S.-based auto industry is second only to the semiconductor industry in R&D spending -- $12 billion last year alone.[iv]



  • Federal assistance to help the U.S.-based carmakers through this historic downturn is a good investment in America’s future.
    • Potential cost for supporting loans to the industry would be a fraction of one year’s lost tax revenue should the industry collapse.[v]
    • Because of pent-up demand, the industry should recover quickly once the economy improves, implying a fast payback for loans and interest.
    • A healthy auto industry is an engine for creating the jobs, the new technologies, and the global business growth that America needs if it is to remain a great power.



  • What happens to the U.S. auto industry matters on Main Street.
    • There are some 14,000 U.S.-brand dealers in cities and towns across the country[vi], employing approximately 740,000 people, with a total payroll of some $35 billion.[vii]
    • U.S.-based companies have 105 assembly and component plants in 20 states, including such “non-auto” states as California, Texas, Kansas, Louisiana and Maryland.[viii]
    • The three companies purchased $156 billion in parts, materials and services, supporting jobs in all 50 states.[ix]
    • The companies provide benefits for 775,000 retirees and surviving spouses, and provide health care benefits for 2 million.[x]



  • Automotive manufacturing is a 21st Century growth industry, and the U.S. needs to earn its share.
    • A strong U.S.-based industry lets America benefit from global growth of one of the largest, most important industries.
    • Less that 15% of the world’s population owns a car, so growth potential is significant.
    • The industry sold 70.6 million vehicles globally in 2007, an increase of 13 million units from 2002.
    • U.S. companies can compete: GM’s now sells 61 percent of its car and trucks outside the U.S., and continues to set sales records overseas.
    • CYTD, GM sales in LAAM are up 13 percent, while sales in Asia-Pacific are up 7.6 percent.
    • Motor vehicles and parts are the single largest export from the U.S., topping aerospace, medical equipment and communications.[xi]
  • The collapse of the U.S.-based auto industry would be devastating. In just the first year:[xii]
    • Direct, indirect and spinoff employment would drop by 2.95 million people
    • Personal income would drop by $150.7 billion
    • Government transfer payments would increase by $14.3 billion
    • Social security receipts would drop by $21.1 billon
    • Personal income tax paid would drop by $24.7 billion



  • This is an auto industry crisis, not just a U.S. industry crisis.[xiii]
    • CAR assumes that a 50 percent drop in production by U.S.-based carmaker would cause a 50 percent drop in production at the transplants due to supplier disruptions and bankruptcies.
    • A complete shutdown of the U.S.-based carmakers would also shut down the transplants for at least one year.
Driving the Future: The New American Auto Industry, The Automotive Trade Policy Council (ATPC). 2008


[ii] The Harbour Report North America 2008, Oliver Wyman. June 5, 2008.

[iii] Various reports and publications, J.D. Power and Associates, Consumers Union

[iv] ATPC

[v] Center for Automotive Research Memorandum: The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers. November 4, 2008

[vi] ATPC

[vii] Based on NADA average employment and payroll figures, NADA Data 2007.

[viii] ATPC

[ix] ATPC

[x] ATPC

[xi] ATPC

[xii] Center for Automotive Research Memorandum: The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers. November 4, 2008

[i][i][xiii]CAR Research Memorandum
Good info. However, what about the fact that GM will NEVER be competitive until they get out from under their health care albatross? I think if they get $15 billion or whatever, they only delay bankruptcy for another 1-2 years, and they still go bankrupt.

Is that worth $15 billion? Maybe........:confused:
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Old 11-14-2008, 10:36 AM   #57
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Good info. However, what about the fact that GM will NEVER be competitive until they get out from under their health care albatross? I think if they get $15 billion or whatever, they only delay bankruptcy for another 1-2 years, and they still go bankrupt.

Is that worth $15 billion? Maybe........:confused:
Yeah, I think it's worth 15bn to give them some breathing room. I think bankruptcy tarnishes the brand too much and will kill off what few remaining sales we have.

Also, a bankruptcy kills all the franchise rights that I have as a dealer, and the main problem there is GM and Chrysler don't have to take back my inventory if I decide to close up shop. That means I'm stuck with millions of dollars of inventory that will be VERY hard to sell IMO because folks will think they won't get warranty work, parts won't be available, and that the value of their car would drop as demand falls even more.
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Old 11-14-2008, 10:42 AM   #58
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I don't get it. How are other car companies not in trouble, but the Big 3 are? They have to be doing something fundamentally different from Toyota, Honda, etc.

Plus I'm against the bailout. I think it is mainly because I'm sick of just hearing of a new bailout each time I turn on the tv.
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Old 11-14-2008, 10:50 AM   #59
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With $2 Billion a month required to service their debt I doubt they will ever become profitable.

Paying $75 an hour where Toyota/Honda/etc., paying about a third of that they will never become profitable, unless they get rid of the Union and all of the legacy obligations that involves.
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Old 11-14-2008, 11:18 AM   #60
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With $2 Billion a month required to service their debt I doubt they will ever become profitable.

Paying $75 an hour where Toyota/Honda/etc., paying about a third of that they will never become profitable, unless they get rid of the Union and all of the legacy obligations that involves.
The $75 is discussed here: http://www.early-retirement.org/foru...-hr-40542.html

Basically "about a third" is an apples-oranges comparison. GM's costs in the US are higher than Toyota's. GM has a new contract which will "eventually" close much of the gap.

However, IMO GM has been running primarily for the benefit of it's unionized workers for some years. If we're going to "save GM", the taxpayers need more adjustments from the union.

We also need to think about the creditors. GM's long term debt has been trading at 30 cents on the dollar. If a bailout restores the bondholders, there will be a lot of "speculators" who triple their money.
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