Don't know if you've been following this, but GM and Chrysler are asking for another bailout roughly as big as the one Bush gave them on the way out of town:
The ailing automakers have already received government loans totaling $17.4 billion. But declining sales forecasts, worse than originally feared, have driven up their cash needs as the global economic woes have persisted.
"We have continued to see an unprecedented decline in the automotive sector," Chrysler LLC Chairman and CEO Robert L. Nardelli said.
The automaker requests now compel Congress and the Obama administration to weigh the risks of making the additional multibillion loans against having one or two of the nation's most important manufacturers run aground, potentially provoking hundreds of thousands in additional job losses during one of the deepest recessions in decades.
Just off the top of my head, I'm inclined to say "no." Or maybe, "hell, no." We knew the last time that all we were doing was postponing the inevitable. Unless GM and Chrysler come up with a lot of reasons I haven't seen to believe that with just a little more, they can suddenly become productive and profitable, I don't see why we should prolong the pain.
I'm not trying to be insensitive. Those of us who work in the newspaper business can't afford to be cavalier about people losing their jobs. But I'm not asking the gummint to bail newspapers out (although some would disagree on this point), and I don't see why the auto industry should be different — especially when it's not ALL the auto industry. It's not Ford; it's not Toyota. But maybe I'm missing something. What do y'all think?
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The nature of capitalism is those who cannot profitably produce items the public wants fail. Sorry guys.
%^$# no !
Nissan and Toyota bosses that have laid off employees and are bleeding profits every day are foregoing their bonuses, I think I heard. Would these Detroit clowns every deign to do the same? They’re back at the trough, like anyone with a 1/2 a nut knew they would be.
Sad to think if they slobber up to the new powers-that-be with a popular ‘green initiative’, they may be able to score.
If the unions won’t make concessions, it’s over.
You are correct! How can the taxpayers expect to take a hit so certain employees can protect salaries and benefits which are not supported by the market?
Why should there be billions for Wall Street and only pennies for the auto industry? I can tell you. It’s because the auto industry is all about everyday people making a living and Wall St. is about people making a fast buck. Our government has usually favored the latter over the former.
Barack Obama will bail out the auto industry and it will be the right decision. Once again, Brad and the State are wrong. It’s an historical thing. In this state, we’re usually wrong. Thank God no one’s listening on the national level!
Nobody tell Rich that Obama voted to give all that money to “Wall St.” I wouldn’t want to see the fella’s romantic dreams of our dear president crushed.
In fact, no one tell Rich all the other ways Obama is like Bush either. It just might break his sweet little heart.
Rich, Congress appropriates money, not Barack Obama, unless he’s planning to give the auto industry money out of his own pocket.
Right. Fat chance.
Thank God none of your students will see what you wrote here.
Or will they?
Weldon,
Engage in rational discussion or just shut up! The Republican Party is facing extinction. Even conservatives recognize failure when they see it. We’ve had tax cuts, massive military spending, and deregulation.
Why hasn’t it worked??
Using Lindsey’s new found philosophy, it’s clear that tax payers should buy GM and Chrysler.
Funny how how the GOP senator is proposing socialism and the 2012 GOP presidential candidate is now proposing sex ed for teens extend beyond abstinence (Palin).
Engage in rational discussion or just shut up! The Republican Party is facing extinction. Even conservatives recognize failure when they see it. We’ve had tax cuts, massive military spending, and deregulation.
Why hasn’t it worked??
Conservatives may or may not recognize failure when they see it — that’s debatable, but when it comes to Obama, you just don’t get it.
“Massive military spending”
“Tax cuts”
What a delimna. Mr. Barger does make some good points. Yet, at the end of the day, Chrysler and GM were very slow to respond to the rising cost of gasoline. Chrysler still doesn’t have a hybrid car that I know of. They discontinued production of the one small car they had, the Neon, rather than work to make it a better car. And GM continues to produce the Hummer H2 despite it’s obvious shortcomings in an age of high gasoline prices. And all 3 companies continue to build muscle cars like the Mustang GT, Camaro SS and Hemi Challenger. Sure gas is cheap now, but it was obvious way back in 2004 that fuel prices were headed up. Why the slow response?
Instead of bailing out Chrysler and GM why don’t we instead provide some financial support to companies like Tesla that have struggled to build viable electric vehicles. I’m sure the engineers and workers at the old companies would find a suitable job at one of the progressive companies who are actually building cars for the future. After all we didn’t bail out Stanley Steamer and the auto industry thrived. Why is this situation any different?
What is General Motors?
Shareholders and employees.
This is a bailout of the shareholders and employees and retirees.
So far, only the UAW is being bailed out.
But the shareholders have no downside protection from losing every cent, except to sell out above the bottom, and take their losses.
Democrats do not have the political will to back the only solution, which is cutting the wages and pension benefits for current workers and retirees, to the point they are competitive with non-union US automobile factories.
That will still not solve the demand problem, but it will put them on the same basis as Nissan, BMW, Toyota, and Honda, all of which have sales down worse than GM.
For bureaucrats to dictate which models will be built, which plants will close, and to impose tighter emissions and mileage restrictions is poison to recovery, and ludicrous, coming from non-manufacturing people whose primary interests are other political agendas, not saving autoworkers’ jobs.
The economies of scale and profitable production levels are complex, different for every model, and will evolve during the overall economic recovery. Making a decision to kill off a plant, model, or brand at this point would be the most ignorant sort of mistake.
– Lee Muller, manufacturing automation consultant to GM, Ford, Lexus and other automakers since 1982.
The biggest selling models right now are light trucks. Ford just added a shift to produce more F-150 trucks.
Hybrid cars are not selling. Toyota and Honda have discontinued most of their hybrid cars in 2007 and 2008. They never were profitable, even with $4.00 gasoline.
Obama panders to the non-technical environmental cults with calls for “cars of the future”. No one in the government knows a damn thing about designing the cars that consumers want to buy.
Mr. Barger,
My smart car arrives in Charlotte on April 18th. I’ve been on the waiting list over a year. There are something like 30,000 of them in America now, and more people waiting every day. If a European company can build (in an environmentally responsible manner) a low-emission, high mileage (33 CITY) vehicle and export it to the USA for $14,000, why can’t GM build one here? Your Volt is exciting. I can’t afford it. I see CNG in your plan for 2012. The technology has existed for decades. What is GM waiting for? Your plan says GM has more than 20 vehicles that get more than 30 MPG highway. I just want one that gets more than 30 in the CITY (that’s where I drive) and is priced at a schoolteacher’s price range. Toyota and Nissan are suffering as well, but they have run their businesses in such a way that they are prepared to weather the storm. They anticipated market demand for certain types of cars, and they were willing to build low-profit margin cars in order to build market share and consumer loyalty. The US manufacturers concentrated on high-profit margin vehicles, and now they can’t sell them. You’ll probably get my tax dollars, but until you build an affordable, high-mileage, low emission vehicle you’ll not get my business or my sympathy.
This ideological talk of GM being saved by electric cars, and micro 3-wheel cars is delusional and it is dishonest.
GM can’t make money on any $14,000 car, regardless of its power train, because it has too much medical and retirement benefits for the workers. You can’t absorb $1,500 medical benefits in a $14,000 car, but you might in a $44,000 car with the same labor content.
– Excellent comments by bud and Norm in this post
bud and Norm know nothing about the automobile industry. They are just like Obama and his team.
bud and Norm know nothing about the automobile industry. They are just like Obama and his team.
But they are totally correct that we should not use taxpayer money to prop up these failing industries.
No sympathy. If they die, they die.
Rich, my discussion was perfectly rational. The U.S. Constitution grants the power to appropriate money to Congress, not the president. If you teach social studies, and you’re so giddy because one of your guys has power for a change that you’ve lost sight of that, you need to calm down.
Besides, nobody ceded you ownership of Brad’s blog. Telling me to shut up doesn’t make you look more important.
Weldon,
Of course Congress appropriates the cash. I never suggested otherwise. I do believe we’ve just seen that Congress is perfectly capable of pushing through all or most of Obama’s program with or without the Republicans.
Bart,
As a libertarian, I don’t believe in government propping up any company or industry, but the government created this mess.
* The cost of bankruptcy, to we taxpayers is estimated at $124 billion in unemployment for 3,000,000 automobile workers.
* The government was there soaking up all the corporate income taxes, taxes from shareholders on their dividends, and taxes on the sale of stock. Instead of a bailout, how about they just give back some of those taxes from past years, and let management and the UAW fight it out.
* As long as the Democrats keep propping up the high wages and untenable benefits of the UAW, the union will never negotiate seriously with management. The government has to let the union know it is only going to lend money to pay competitive wages of about $27.50 an hour. The UAW workers and retirees are going to have to take a cash settlement of what is in the retirement fund now, without one cent of taxpayer money.
And I’d like to thank Mr. Barger for contributing to our conversation…
I hope you pay attention to Mr. Barger.
Everything he tells you is true, and has been out there from plenty of experts for months, for anyone to find out.
So Brave New World is watching Brazil in 1984, except it’s 2009.
If we’re choosing between $124 billion in unemployment cost to the government vs. $14 billion cost to the government to save the American automobile industry, while the government is spending 10 times those numbers combined to save the banks, as the stem cell waits on the president’s desk, it looks like Obama has the brave new world in his hands.
All the children sing:
He’s got the earth and sky in his hands;
He’s got the night and day in his hands;
He’s got the sun and moon in his hands;
He´s got the brave new world in his hands.
He’s got the land and sea in his hands;
He’s got the wind and rain in his hands;
He’s got the spring and fall in his hands;
He’s got the brave new world in his hands.
He’s got the young and old in his hands;
He’s got the rich and poor in his hands;
Yes, he’s got everyone in his hands;
He´s got the brave new world in his hands.
He’s got you and me, brother, in his hands;
He’s got you and me, sister, in his hands;
He’s got the little bitty baby in his hands;
He’s got the brave new world in his hands.
Or does he just have Brave New World on his teleprompter?
No one in the government knows a damn thing about designing the cars that consumers want to buy.
-Lee
Apparently no one in Detroit does either.
Bart,
As a libertarian, I don’t believe in government propping up any company or industry, but the government created this mess.
* The cost of bankruptcy, to we taxpayers is estimated at $124 billion in unemployment for 3,000,000 automobile workers.
* The government was there soaking up all the corporate income taxes, taxes from shareholders on their dividends, and taxes on the sale of stock. Instead of a bailout, how about they just give back some of those taxes from past years, and let management and the UAW fight it out.
* As long as the Democrats keep propping up the high wages and untenable benefits of the UAW, the union will never negotiate seriously with management. The government has to let the union know it is only going to lend money to pay competitive wages of about $27.50 an hour. The UAW workers and retirees are going to have to take a cash settlement of what is in the retirement fund now, without one cent of taxpayer money.
On your first point,
Whenever any business fails, people will become unemployed. Basically, you’re saying Detroit is too big too fail — that is unless you’re saying we should bailout every business that fails because people would find themselves on unemployment. Either way this is not an argument that the government created this mess.
On your second point,
The government takes those taxes from every business. If you give back the tax money to one business but not the rest, then that IS a bailout. You are creating an uneven playing field that gives one industry a better chance to succeed than the rest. This is still not an argument that the government created this mess.
On your third point,
Finally, an argument that the government has a hand in Detroit’s troubles. If the workers want to bite the hand that feeds them, I don’t care as long as they don’t get a damn bailout. What a poor excuse to pick my pocket.
As to your assertion that you’re a libertarian,
*You believe that “good government encourages good behavior.”
*You are for an interventionist foreign policy.
*You seem to support the curtailing of civil liberties in the name of fighting the “war on terror.”
*You are against the free flow of labor.
*You are against the freedom of some individuals to marry.
*You are constantly railing against the corruption of liberal Democrats but never against the corruption of conservative Republicans.
No, I would say you are less a “libertarian” and more of a conservative in the mold of a modern day Republican.
Lee,
Where are my comments you are responding to?
I don’t believe in the government propping up any business. The auto companies are responsible for where they are and as such, should be held accountable, not bailed out.
The auto companies and UAW have been “odd bedfellows” for a long time and each contributed to the bloated condition of the other. Both sides remind me of the gigantic character balloons in the Macy’s Thanksgiving Day Parade. Full of hot air and unstable, with a tenuous tether to reality.
A close relative worked in the auto industry his entire life just as his father did. He served on boards at all three companies where design and innovation were the focus. Many of the present day products we have now were concepts and proven designs decades ago with the exception of computer chips and some of the more sophisticated electronics.
Lifetime batteries, although not so new anymore were held back for over 40 years, languishing on the shelf. High mileage tires, capable of 200,000 plus miles under normal driving conditions. Carburetor systems for full sized cars capable of 40 to 70 miles per gallon on regular gasoline have yet to be put on the market. CNG fuel systems have been around for decades but never fully developed for the average consumer or available on production cars.
I asked the question, “why not release all of these innovations?” Answer: economics and aftermarket products. If you buy a car that has tires capable of 200,000 miles, how many sets of tires do you think would be sold by Goodyear and Firestone? If you can buy a battery that will last a lifetime, how many batteries will Delco sell in a year? If you sell full sized automobiles that can average 40, 50, or 60 plus mpg, how many gas stations will be needed?
In 1957, GM produced what is perhaps the best production line vehicle ever driven over the American highway system. The 1957 Chevrolet line. Nothing before or since has been as good. Detroit proved capable of designing and producing a high quality product with a long in-service life expectancy at a fair price. They learned their lesson well and never repeated it again.
Detroit should not receive any of my tax money. They knew what was coming but did nothing to adapt and be innovative or abandon the comfortable relationship between the companies and the UAW. Each served the other too well. Detroit is no more deserving of a bailout than any other business who fails to keep up.
Bart,
I think you mean well, but a lot of your criticisms are not accurate. They are the simplistic truisms repeated continuously by pundits with no direct knowledge, until “everyone knows”.
I am speaking as an expert on this subject, having worked inside the factories, designing and building them and developing new processes, for 26 years.
Top management in Detroit based their business model on the same old assumptions as house building, and a hundred other industries – that population growth could increase sales revenue enough to pay for past promises to the UAW which were undeliverable when they were made. The politicians were counting on the same economic growth to bail out bankrupt Social Security, too, but they couldn’t keep a lid on government. Now they are all going broke.
The government is to blame for Detroit’s problems, especially in the last few years, and right now, with useless CAFE and emissions standards, just so the politicians can grandstand to their ignorant “environmentalist” base.
Yes, all businesses have to pay taxes.
In these times, I think businesses and individuals who paid lots of taxes in prior years should get some of it back so they can reform the economy. Let the government do without for a change.
I have worked in R&D for all divisions of GM, and for Lexus, Ferrari, VW, Porsche and Audi. GM has not “failed to innovate”. They build cars for huge market not served by the European automakers. I have a GMC Suburban with 240,000 miles on it, using no oil between changes. I have owned Mercedes, Cadillacs, Buick, Pontiac, Olds, Fords, Peugeot, and Dodge.
As for tires, since 1979, I have had 4 sets of tires last over 95,000 miles with safe thread, and they were not the top-of-the-line. The right tires today with the proper inflation and driving habits will last 75,000 miles. But many cars today run much lower aspect tires, with stiffer sidewalls and larger wheels, because that is the cosmetic look buyers want. Those tires have to run a softer tread which absorbs most of the shock, and they last half as long as a more narrow, higher-sidewall, deeper tread tire on a smaller rim.
Bart,
As for your saying I don’t support free markets or libertarianism, it is because you don’t know my positions on the issues.
I was a founder of the LP, state chairman, etc. Just as some outsiders like Brad Warthen have an ignorant, warped misunderstanding of free market economics and liberatrian concepts of freedom, so do some people whose sentiments are libertarian. They just have a shallow, rigid template for issues, but often do not understand the intricacies of the real world. That applies to some people I know at Cato and Reason magazine, too.
Lee,
I respect your published background and experience and won’t question it. However, the information I listed came from someone who worked in the industry “full time” and had considerable more experience within the industry than you do. Day to day, year after year with access to information you would never have. The person is a highly respected mechanical engineer who DID work on design and development in the auto industry for over 40 years. His father helped develop and build the equipment used to x-ray metal components including engine blocks for the industry and was one of the foremost experts on the equipment. I think I will trust them on this one and take into account their long term, first hand experience and direct knowledge on the subjects mentioned. Unlike Santa Claus and the M&M characters on the commercials, they do exist.
I’m not going to get into a contest with you because it does no good. You need to understand that many of us are just as experienced and well travelled as you are and do understand the intricacies of the world. I too have designed and installed operating processes for various industries. I worked on the design for improvements to the equipment that completes the final process for the manufacture of Actonel, a well known drug produced by Proctor & Gamble. I also worked on the design and process functions for one of the first injection molding operations for Amoco Foam Products. I can go on but in the end, it comes down to a —- measuring contest which serves no legitimate purpose.
95,000 miles is 105,000 short of 200,000. My point was that the industry would suffer financially in the long run if tires were available that would get 200,000 miles under normal driving conditions and taking into consideration the way the average person cares for and maintains tires. If everyone took proper care of their tires and drove the speed limit, kept the drive train in good working order, maintained proper alignment and wheel balance, they too could get 95,000 miles out of a middle line set of tires. That is old news. Obama was ridiculed for the same suggestions to reduce oil dependency. The systems I referenced were purposely held off of the market solely for financial reasons. Auto dealerships make a larger profit from after market parts and labor than from the sale of a new car. Something is wrong when a headlight assembly costs hundreds of dollars when the only problem is a cracked lens needing replacement.
The relationship between the auto companies and unions has been a symbiotic one, serving the larger purpose for each. The close relationship between the major oil companies and the auto industry has been around since the inception of both and they have always worked together for the mutual benefit of each.
The auto industry did try at one time to address the issue of producing smaller cars with greater fuel efficiency. However, when Ralph Nader pressed them on safety issues, instead of trying to resolve the problems, they had investigators follow him so he could be discredited. The Corvair was a decent automobile and could have survived if GM had been serious. An even earlier attempt was an American Motors design, the Metropolitan, another good vehicle. The original design for the chassis of the Mustang was more dangerous than the Corvair but GM didn’t address their issues, Ford did. I drove all three plus many more including some of the vehicles you listed.
Auto companies didn’t have the initiative or desire to do the right thing and offer Americans the available innovations in vehicles that were not cosmetic. It took foreign competition to get their ass off the dime but it was too late because the malaise had set in. A once proud industry that could retool in a matter of days to meet the demands of a nation at war forgot who they were and started to believe the notion that if General Motors sneezed, the country caught a cold. Or as the line in Al Capp’s Little Abner went, “What’s Good for General Bullmoose is Good for the USA.”
Now, about the only vehicle manufactured in America is the Hyundai Sonata. Our “American” cars are made in Mexico or Canada.
Lee,
Fair enough. However, from your posts I have yet to see where you support some sort of “libertarian” idea except on economic issues (not that you don’t — and not that there’s anything wrong if you don’t). Feel free to go into detail if you want.
I still am 100% unconvinced that Detroit should get another dime. If Detroit fails, someone is still going to be making the cars because we all will still have a need for them. Besides, is this not what the bankruptcy code is for?
I think a lot of people who consider themselves libertarian try to claim that some other aspects of their ideology are libertarian, when they are not.
Ralph Nader is a fraud.
His 2000 FEC filings show him to own $2,500,000 of 20 blue chip stocks, including GM and Ford, while he ran his campaign out of the Manhattan offices of the Communist Party USA. Go look up the FEC reports and his address.
I don’t know how your third hand information from the son of some engineer in Detroit is supposed to be a rebuttal to my statements about the economic reality of GM and the UAW. A lot of alternatives look good to those who don’t understand the legal and other barriers to implementation.
I don’t favor a bailout, but I might accept the right one. I think there are better solutions, but none with the federal government backing the unions, much less telling Detroit what cars to make, the mileage or new emissions standards.
Excellent economy maintained by Obama ……… Economic condition is good
Christena
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