Bridge Loaner? But I hardly know her...
November 18, 2008 9:21 AM Subscribe
Andrew Ross Sorkin takes apart GM piece by piece.
While furiously selling off assets, its stock at a 40 year low, a 38 billion dollar loss in 2007, and 25 billion loss so far in 2008, GM seems to be in a worse position than ever.
Some argue GM and the big 3 automakers are too interconnected to let fail. But are they?
What's the solution? A whole variety of opinions
While furiously selling off assets, its stock at a 40 year low, a 38 billion dollar loss in 2007, and 25 billion loss so far in 2008, GM seems to be in a worse position than ever.
Some argue GM and the big 3 automakers are too interconnected to let fail. But are they?
What's the solution? A whole variety of opinions
Rick Wagoner's been taking GM apart piece by piece.
posted by gman at 9:37 AM on November 18, 2008 [2 favorites]
posted by gman at 9:37 AM on November 18, 2008 [2 favorites]
Andrew Ross Sorkin, the chief mergers and acquisitions reporter of the New York Times?
posted by Auden at 9:38 AM on November 18, 2008
posted by Auden at 9:38 AM on November 18, 2008
Surely the Escalade hybrid will turn everything around.
posted by Combustible Edison Lighthouse at 9:45 AM on November 18, 2008
posted by Combustible Edison Lighthouse at 9:45 AM on November 18, 2008
This whole "too big to fail" concept is sickening. As many others have said before me, if you're too big to fail, you're too fucking big. I'm very happy I live in Canada; I get pissed off enough about the government here subsidizing dubious things -- like paying artists large sums of money to throw feces at a canvas. I would probably have a full-on rage seizure were I living in a country pondering bailing out every failed multi-national corporation that got caught dick-in-hand, with no viable business plan.
Maybe they're failing because they're not relevant. Propping them up with the tax-payer money is just absurd. If you piss away 65 billion dollars in two years, I wouldn't trust anyone involved to run a race, let-alone a company -- nevermind handing them 10 billion dollars.
posted by Dark Messiah at 9:57 AM on November 18, 2008
Maybe they're failing because they're not relevant. Propping them up with the tax-payer money is just absurd. If you piss away 65 billion dollars in two years, I wouldn't trust anyone involved to run a race, let-alone a company -- nevermind handing them 10 billion dollars.
posted by Dark Messiah at 9:57 AM on November 18, 2008
I'm very happy I live in Canada; I get pissed off enough about the government here subsidizing dubious things
I hate to break it to you…
posted by oaf at 10:04 AM on November 18, 2008
I hate to break it to you…
posted by oaf at 10:04 AM on November 18, 2008
But they were only like maybe 2-3 years away from selling 200 prototypes a year! We can't kill the electric car!
posted by geoff. at 10:04 AM on November 18, 2008
posted by geoff. at 10:04 AM on November 18, 2008
Let them fail. Companies that can't compete need to leave the market, not be propped up by the government. Use bail out money to retrain the workers for new jobs, not condem the economy to being perpetually behind the rest of the world. The same thing goes for the banking industry.
The free market would work if government intervention was limited to making consumer-protection laws, and not to handing out money to any failing business that comes along.
posted by blue_beetle at 10:06 AM on November 18, 2008 [3 favorites]
The free market would work if government intervention was limited to making consumer-protection laws, and not to handing out money to any failing business that comes along.
posted by blue_beetle at 10:06 AM on November 18, 2008 [3 favorites]
The government should buy them out, by which I mean hire all the workers for WPA-type alternative energy projects and kill the companies themselves.
posted by DU at 10:06 AM on November 18, 2008 [5 favorites]
posted by DU at 10:06 AM on November 18, 2008 [5 favorites]
Propping them up with the tax-payer money is just absurd. If you piss away 65 billion dollars in two years, I wouldn't trust anyone involved to run a race, let-alone a company -- nevermind handing them 10 billion dollars.
Well, when you put it that way they are clearly under-performing compared to Wall Street.
posted by srboisvert at 10:06 AM on November 18, 2008 [3 favorites]
Well, when you put it that way they are clearly under-performing compared to Wall Street.
posted by srboisvert at 10:06 AM on November 18, 2008 [3 favorites]
(did I get that shrill enough for you?)
posted by blue_beetle at 10:06 AM on November 18, 2008 [1 favorite]
posted by blue_beetle at 10:06 AM on November 18, 2008 [1 favorite]
Shouldn't be too hard, just drive it down the highway for a hundred miles or so.
I'll be here all week.
posted by backseatpilot at 10:14 AM on November 18, 2008 [1 favorite]
I'll be here all week.
posted by backseatpilot at 10:14 AM on November 18, 2008 [1 favorite]
if toyota's really concerned about the state of their auto suppliers because of a gm bankruptcy, perhaps they're the ones who should make gm an offer, after they file for bankruptcy
we shouldn't bail them out - that's not because we should "let them fail", but because they already HAVE failed - a few billions of dollars is not going to do anything but put off the day of reckoning
posted by pyramid termite at 10:16 AM on November 18, 2008
we shouldn't bail them out - that's not because we should "let them fail", but because they already HAVE failed - a few billions of dollars is not going to do anything but put off the day of reckoning
posted by pyramid termite at 10:16 AM on November 18, 2008
Oh and remember "Americans want really big, inefficient cars and not Euro-Japanese trash"?
LOL
posted by DU at 10:18 AM on November 18, 2008
LOL
posted by DU at 10:18 AM on November 18, 2008
"Liquidate labor, liquidate management, liquidate the shareholders."
posted by troy at 10:22 AM on November 18, 2008 [1 favorite]
posted by troy at 10:22 AM on November 18, 2008 [1 favorite]
So, taxpayers shouldn’t pay anything and put people out of work, where they can’t pay taxes so taxes go up, because workers are making too much money?
I fail to see how this is a labor and not a management problem.
The free market is just fine when ‘competition’ means ‘overseas investment in exploitive labor markets to leverage against workers here’ but when ‘competition’ means ‘competition’ suddenly, whoa, it’s all wrong.
The boss makes 800 times Joe Auto worker’s take home is, but Joe Auto worker’s kid, maybe, gets to go to college and suddenly that’s a gold plated deal.
The CEO negotiates himself a good deal - he’s a sharp guy and that’s just competition, fair market, blah blah.
The union does it, they’re blood suckers?
Howzabout they stop dominating the market and keeping us from buying stuff we actually want? Might be nice to drive a car that gets good gas mileage.
Jesus, all this stuff keeps dodging the roots and looking for ways to keep doing the same kind of business the same way.
posted by Smedleyman at 10:27 AM on November 18, 2008 [9 favorites]
I fail to see how this is a labor and not a management problem.
The free market is just fine when ‘competition’ means ‘overseas investment in exploitive labor markets to leverage against workers here’ but when ‘competition’ means ‘competition’ suddenly, whoa, it’s all wrong.
The boss makes 800 times Joe Auto worker’s take home is, but Joe Auto worker’s kid, maybe, gets to go to college and suddenly that’s a gold plated deal.
The CEO negotiates himself a good deal - he’s a sharp guy and that’s just competition, fair market, blah blah.
The union does it, they’re blood suckers?
Howzabout they stop dominating the market and keeping us from buying stuff we actually want? Might be nice to drive a car that gets good gas mileage.
Jesus, all this stuff keeps dodging the roots and looking for ways to keep doing the same kind of business the same way.
posted by Smedleyman at 10:27 AM on November 18, 2008 [9 favorites]
Why can't we let them fail, see what happens and if it's bad, call for a "do over"?
posted by tommasz at 10:29 AM on November 18, 2008
posted by tommasz at 10:29 AM on November 18, 2008
You know who else took apart GM One Piece At A Time?
posted by piratebowling at 10:29 AM on November 18, 2008 [1 favorite]
posted by piratebowling at 10:29 AM on November 18, 2008 [1 favorite]
Rick Wagoner's been taking GM apart piece by piece.
Rick Wagoner has been doing as good of a job as anyone possibly could under the circumstances of the hand he was dealt.
These "GM needs to go bankrupt" arguments all take into consideration what GM was 5 years ago, but the reality of the situation is that GM is a former shell of itself in terms of what is on the books now as opposed to where it was pre-Wagoner. You can't judge this company based on where it was 5 years ago. It has been restructuring like crazy and will continue to do so, but a horrible recession with a credit collapse isn't in anyone's business plan, let alone a company that is trying to come back from the brink by doing the right things.
posted by fusinski at 10:35 AM on November 18, 2008 [1 favorite]
Rick Wagoner has been doing as good of a job as anyone possibly could under the circumstances of the hand he was dealt.
These "GM needs to go bankrupt" arguments all take into consideration what GM was 5 years ago, but the reality of the situation is that GM is a former shell of itself in terms of what is on the books now as opposed to where it was pre-Wagoner. You can't judge this company based on where it was 5 years ago. It has been restructuring like crazy and will continue to do so, but a horrible recession with a credit collapse isn't in anyone's business plan, let alone a company that is trying to come back from the brink by doing the right things.
posted by fusinski at 10:35 AM on November 18, 2008 [1 favorite]
Is any of this government money going to be used to develop better manufacturing techniques? Cause, y'know, you can build an assembly line that doesn't have to be completely replaced when you change models. It just costs more money, both in up front costs and in R & D. But if you manage to look farther ahead than next quarter's earnings report, it actually saves a ton of money.
One of the things that I hear they need this money for is to retool their factories from building currently unpopular models to more popular models. When the new models aren't popular any more, are they going to need a new loan?
Until GM can learn to look farther ahead than next year's model, I don't see how any amount of money is going to make them competitive.
posted by Quonab at 10:36 AM on November 18, 2008
One of the things that I hear they need this money for is to retool their factories from building currently unpopular models to more popular models. When the new models aren't popular any more, are they going to need a new loan?
Until GM can learn to look farther ahead than next year's model, I don't see how any amount of money is going to make them competitive.
posted by Quonab at 10:36 AM on November 18, 2008
The argument he makes is sound, GM is in exactly the sort of position that Chapter 11 was designed to combat. Make the tough moves to clean house, and most of all, create a reasonable schedule of salary and benefits with appropriate employee contributions to healthcare costs (1/3 of GM's expense is for healthcare, mostly for retirees, many of whom could have identical care coverage through Medicare and and a Medicare HMO program at a much lower cost). It is absolutely repulsive that the average employee salary/benefits package at a company hemorrhaging money is $70/hour, even including executives. There's just no excuse.
Wipe out the executives who have run things into the ground. Burn the contracts and force the UAW to start negotiating from a real world, America in 2008 position, not the idealized ivory tower they've been sitting in, demanding $35 an hour for someone with no specialized education to push the button to make the highly specialized piece of equipment do its work on the line. Jettison these "hybrids" which magically get only 2-3 mpg higher than their non-hybrid models, if that. And by all means, kill the Hummer line completely. (I disagree about Saturn, but yes, no more Saab, no more Pontiac, no more damned Hummers.)
posted by Dreama at 10:37 AM on November 18, 2008 [1 favorite]
Wipe out the executives who have run things into the ground. Burn the contracts and force the UAW to start negotiating from a real world, America in 2008 position, not the idealized ivory tower they've been sitting in, demanding $35 an hour for someone with no specialized education to push the button to make the highly specialized piece of equipment do its work on the line. Jettison these "hybrids" which magically get only 2-3 mpg higher than their non-hybrid models, if that. And by all means, kill the Hummer line completely. (I disagree about Saturn, but yes, no more Saab, no more Pontiac, no more damned Hummers.)
posted by Dreama at 10:37 AM on November 18, 2008 [1 favorite]
It is absolutely repulsive that the average employee salary/benefits package at a company hemorrhaging money is $70/hour, even including executives. There's just no excuse.
And you know what, this has already been dealt with. It all comes off GM's books in 2010 thanks to the Voluntary Employee Beneficiary Association, a decision that has already been made and executed which will result in a $47B benefit.
Again, people continue to argue GM 5 years ago, not GM 2008. There's just no excuse.
I'm not a Big 3 apologist and I'm not going to sit here and defend the fact that these companies screwed up royally in the 80s and 90s, but let's judge the bailout for what it really is in present-day terms. Otherwise we may as well keep calling Germans Nazis.
posted by fusinski at 10:42 AM on November 18, 2008 [1 favorite]
And you know what, this has already been dealt with. It all comes off GM's books in 2010 thanks to the Voluntary Employee Beneficiary Association, a decision that has already been made and executed which will result in a $47B benefit.
Again, people continue to argue GM 5 years ago, not GM 2008. There's just no excuse.
I'm not a Big 3 apologist and I'm not going to sit here and defend the fact that these companies screwed up royally in the 80s and 90s, but let's judge the bailout for what it really is in present-day terms. Otherwise we may as well keep calling Germans Nazis.
posted by fusinski at 10:42 AM on November 18, 2008 [1 favorite]
force the UAW to start negotiating from a real world, America in 2008 position, not the idealized ivory tower they've been sitting in
Professor Frink got his fellow union members the best theoretical deal he could; that's his job.
posted by trondant at 10:48 AM on November 18, 2008
Professor Frink got his fellow union members the best theoretical deal he could; that's his job.
posted by trondant at 10:48 AM on November 18, 2008
Some of you need to read CunningLinguist's Free Press link and quit repeating the same old BS.
posted by rfs at 10:48 AM on November 18, 2008
posted by rfs at 10:48 AM on November 18, 2008
Until GM can learn to look farther ahead than next year's model, I don't see how any amount of money is going to make them competitive.
I'd go further than that. Until GM can make cars that compete with foreign cars, they'll never be competitive. Every GM car I've ever owned is a lemon that has cost me thousands of dollars in repairs and I ended up selling (Hell, I gave one away) it in disgust after a few years. This is clearly anecdotal evidence but it's also the experience of most of my family and friends as well.
On the other hand, I've owned a Miata since 1989 that, apart from routine maintenance, I've spent under $1000 dollars in repairs on. And I've had an excellent experience with Toyotas and Hondas I've owned as well.
I don't think I'd ever buy an GM car again. And it's hard for me to understand why we should be bailing out a company that makes such a shitty product.
posted by cjets at 10:49 AM on November 18, 2008
I'd go further than that. Until GM can make cars that compete with foreign cars, they'll never be competitive. Every GM car I've ever owned is a lemon that has cost me thousands of dollars in repairs and I ended up selling (Hell, I gave one away) it in disgust after a few years. This is clearly anecdotal evidence but it's also the experience of most of my family and friends as well.
On the other hand, I've owned a Miata since 1989 that, apart from routine maintenance, I've spent under $1000 dollars in repairs on. And I've had an excellent experience with Toyotas and Hondas I've owned as well.
I don't think I'd ever buy an GM car again. And it's hard for me to understand why we should be bailing out a company that makes such a shitty product.
posted by cjets at 10:49 AM on November 18, 2008
...but let's judge the bailout for what it really is in present-day terms.
A reward for complete and utter failure? What am I gonna get for keeping my own company innovative and afloat?
posted by gman at 10:50 AM on November 18, 2008
A reward for complete and utter failure? What am I gonna get for keeping my own company innovative and afloat?
posted by gman at 10:50 AM on November 18, 2008
For a different take on the matter, check out this piece from The New Republic. A strong argument is given by Jonathan Cohn to the effect that a Chapter 11 strategy will likely result in the collapse of the auto makers.
I think that the whole "let them fail" talk is a bit too cavalier. Such a move would likely result in hundreds of thousands, if not millions, of lost jobs, which will be hell on an already weak economy.
posted by Tullius at 10:56 AM on November 18, 2008
I think that the whole "let them fail" talk is a bit too cavalier. Such a move would likely result in hundreds of thousands, if not millions, of lost jobs, which will be hell on an already weak economy.
posted by Tullius at 10:56 AM on November 18, 2008
A reward for complete and utter failure? What am I gonna get for keeping my own company innovative and afloat?
That depends, do you supply the automotive industry? Because if you do, you'll get bankruptcy yourself for all your hard work and responsibility under your terms and conditions.
And let's call a spade a spade here. A reward implies free money.
posted by fusinski at 10:56 AM on November 18, 2008 [1 favorite]
That depends, do you supply the automotive industry? Because if you do, you'll get bankruptcy yourself for all your hard work and responsibility under your terms and conditions.
And let's call a spade a spade here. A reward implies free money.
posted by fusinski at 10:56 AM on November 18, 2008 [1 favorite]
Again, people continue to argue GM 5 years ago, not GM 2008. There's just no excuse.
Other than the fact that that is GM's actual reputation, regardless of what they're doing now, because of people's past experience getting burned by them, you're right, that's not relevant and couldn't affect future sales at all.
posted by oaf at 10:56 AM on November 18, 2008
Other than the fact that that is GM's actual reputation, regardless of what they're doing now, because of people's past experience getting burned by them, you're right, that's not relevant and couldn't affect future sales at all.
posted by oaf at 10:56 AM on November 18, 2008
Let's bailout the workers. Give them free training for new careers, access to job placement programs, subsidize their moving expense. Probably still be cheaper than bailing out a failing industry.
posted by Astro Zombie at 10:56 AM on November 18, 2008 [4 favorites]
posted by Astro Zombie at 10:56 AM on November 18, 2008 [4 favorites]
Surely the Escalade hybrid will turn everything around.
"I'm environmentally conscious, so I got a hybrid. It gets a whopping 20 miles to the gallon! Sure, the only time it actually uses its electric motors is when I'm cruising at drive-by speed, but it IS a Cadillac Escalade after all..."
How are Rick Wagoner and Bob Lutz still hanging on to their jobs? I'm guessing that they must have a lot of dirt on the other board members...
posted by clevershark at 10:57 AM on November 18, 2008
"I'm environmentally conscious, so I got a hybrid. It gets a whopping 20 miles to the gallon! Sure, the only time it actually uses its electric motors is when I'm cruising at drive-by speed, but it IS a Cadillac Escalade after all..."
How are Rick Wagoner and Bob Lutz still hanging on to their jobs? I'm guessing that they must have a lot of dirt on the other board members...
posted by clevershark at 10:57 AM on November 18, 2008
Uh oh. We've slipped into a time loop. Maybe we can ride it all the way back to when American auto manufacturers were king.
posted by Astro Zombie at 10:59 AM on November 18, 2008
posted by Astro Zombie at 10:59 AM on November 18, 2008
Um, how about making cars that people want to buy? Like with the quality of Honda or Toyota or maybe just some inspired styling? The sedans coming out of Detroit just depress me, they look so generic that any one of them could appear as a line drawing next to the word 'car' in a dictionary.
posted by mattholomew at 11:00 AM on November 18, 2008 [1 favorite]
posted by mattholomew at 11:00 AM on November 18, 2008 [1 favorite]
It's pointless to engage in a debate on this issue in this forum. I will only say that for those of us who work in the U.S. automotive industry, it's been surreal seeing and reading the endless talking heads opining about what the government should or should not do, or how poorly GM is managed, or GM, Ford & Chrysler's crappy cars. It's this strange confluence of thirty-year-old outdated rhetoric about U.S. cars, oversimplification of labor relations history, desire for punishment for perceived past sins, misunderstanding about bankruptcy law, and total lack of understanding of the impact a failure of the U.S. automobile manufacturers would have on the U.S. economy. There's a real sense that most Americans are perfectly willing to cut off their nose to spite their face. If this industry collapses, there will most certainly be a day of reckoning -- but it won't just be for automaker exects -- it'll be for you and me and the whole notion of a true American middle class.
posted by pardonyou? at 11:00 AM on November 18, 2008 [15 favorites]
posted by pardonyou? at 11:00 AM on November 18, 2008 [15 favorites]
that's not relevant and couldn't affect future sales at all.
Last I checked GM still had a fairly substantial market share, was improving in quality and even more importantly to your point, perceived quality. Corporate loyalty (or disloyalty) is silly; Buy a brand for what it is today, not what it was yesterday. That goes for anything, not just cars.
posted by fusinski at 11:00 AM on November 18, 2008 [1 favorite]
Last I checked GM still had a fairly substantial market share, was improving in quality and even more importantly to your point, perceived quality. Corporate loyalty (or disloyalty) is silly; Buy a brand for what it is today, not what it was yesterday. That goes for anything, not just cars.
posted by fusinski at 11:00 AM on November 18, 2008 [1 favorite]
That depends, do you supply the automotive industry? Because if you do, you'll get bankruptcy yourself for all your hard work and responsibility under your terms and conditions.
I do indeed supply the automotive industry, but that includes non-U.S. car makers. I have been cutting costs and coming up with new ideas which help both myself and my dealers, since I took over here in 2005. And to be honest, my business has been up substantially as of late.
posted by gman at 11:02 AM on November 18, 2008
I do indeed supply the automotive industry, but that includes non-U.S. car makers. I have been cutting costs and coming up with new ideas which help both myself and my dealers, since I took over here in 2005. And to be honest, my business has been up substantially as of late.
posted by gman at 11:02 AM on November 18, 2008
The argument he makes is sound, GM is in exactly the sort of position that Chapter 11 was designed to combat.
Except for this little problem. You need credit to work. You can't pay cash for everything.
When you're bankrupt, you have no credit, and if you had enough cash to get credit, you wouldn't be bankrupt So, how does a bankrupt company reorganize? DIP financing.
DIP=Debtor in Possession. DIP financing is simple. One of your creditors gives you a loan, in exchange for a priority on assets should you fail. In case your reorganization fails. So, to use the airlines as an example, the lender takes liens on the aircraft, but the airline gets to keep flying them.
Here's the kicker: What assets does GM have that a GM creditor would accept as collateral?
I'm thinking "Well, nothing." A few office buildings in Detroit? A few behind-the-times factories? GM Cars? GMAC? Oh, wait, they sold that.
So: The rub. To go Chapter 11, the bankruptcy court has to agree that the reorganization plan is feasible. I suspect that should GM be forced into bankruptcy, that many of GM's creditors are going to refuse to offer DIP financing, because they really don't want GM's assets.
Without financing, GM will not be able to operate under Chapter 11. The creditors will then get the court to force the conversion to a Chapter 7 bankruptcy.
I could be wrong, but after the Chrysler buyout/spinout, I'm pretty sure that creditors would prefer the 10% or so of their debt repaid rather than own GM assets, which are likely to keep sucking money.
posted by eriko at 11:03 AM on November 18, 2008 [2 favorites]
Except for this little problem. You need credit to work. You can't pay cash for everything.
When you're bankrupt, you have no credit, and if you had enough cash to get credit, you wouldn't be bankrupt So, how does a bankrupt company reorganize? DIP financing.
DIP=Debtor in Possession. DIP financing is simple. One of your creditors gives you a loan, in exchange for a priority on assets should you fail. In case your reorganization fails. So, to use the airlines as an example, the lender takes liens on the aircraft, but the airline gets to keep flying them.
Here's the kicker: What assets does GM have that a GM creditor would accept as collateral?
I'm thinking "Well, nothing." A few office buildings in Detroit? A few behind-the-times factories? GM Cars? GMAC? Oh, wait, they sold that.
So: The rub. To go Chapter 11, the bankruptcy court has to agree that the reorganization plan is feasible. I suspect that should GM be forced into bankruptcy, that many of GM's creditors are going to refuse to offer DIP financing, because they really don't want GM's assets.
Without financing, GM will not be able to operate under Chapter 11. The creditors will then get the court to force the conversion to a Chapter 7 bankruptcy.
I could be wrong, but after the Chrysler buyout/spinout, I'm pretty sure that creditors would prefer the 10% or so of their debt repaid rather than own GM assets, which are likely to keep sucking money.
posted by eriko at 11:03 AM on November 18, 2008 [2 favorites]
And let's call a spade a spade here. A reward implies free money.
Yes, let's.
posted by gman at 11:07 AM on November 18, 2008
Yes, let's.
posted by gman at 11:07 AM on November 18, 2008
gman, look... executives get paid a lot of cash. If you are arguing that Wagoner makes too much money I'm not going to dispute that given the state of the company, but he does receive below-average compensation for a Fortune 500 CEO. So try to keep that in perspective when you're using "the executive salaries are the problem" argument when discussing your feelings on the Big 3.
posted by fusinski at 11:10 AM on November 18, 2008
posted by fusinski at 11:10 AM on November 18, 2008
It's pointless to engage in a debate on this issue in this forum. I will only say that for those of us who work in the U.S. automotive industry, it's been surreal seeing and reading the endless talking heads opining about what the government should or should not do, or how poorly GM is managed, or GM, Ford & Chrysler's crappy cars. It's this strange confluence of thirty-year-old outdated rhetoric about U.S. cars, oversimplification of labor relations history, desire for punishment for perceived past sins, misunderstanding about bankruptcy law, and total lack of understanding of the impact a failure of the U.S. automobile manufacturers would have on the U.S. economy. There's a real sense that most Americans are perfectly willing to cut off their nose to spite their face. If this industry collapses, there will most certainly be a day of reckoning -- but it won't just be for automaker exects -- it'll be for you and me and the whole notion of a true American middle class.
Translation for those of us who don't work in the Auto industry:
JUST SHUT UP AND GIVE US THE MONEY!
posted by cjets at 11:14 AM on November 18, 2008 [7 favorites]
Translation for those of us who don't work in the Auto industry:
JUST SHUT UP AND GIVE US THE MONEY!
posted by cjets at 11:14 AM on November 18, 2008 [7 favorites]
I suspect that should GM be forced into bankruptcy, that many of GM's creditors are going to refuse to offer DIP financing, because they really don't want GM's assets.
From the first link in the post:
From the first link in the post:
After all that is agreed, and only then, the government should come in with what’s known as debtor-in-possession financing to help the company through the bankruptcy process.posted by designbot at 11:16 AM on November 18, 2008
The author of that article first basically makes the argument that GM's predicament is its workers' fault, for their "outlandish benefits" (like, uh, healthcare), then goes on to demonstrate his ignorance with the following statement:
"In the case of G.M., frankly, the only ones worth saving are Cadillac, Chevy and Buick. (Buick? Yes. Despite its lackluster sales and fuddy-duddy image in the United States, it’s a huge seller in China.)
That means Saturn, Pontiac, GMC and Saab would all disappear. "
That overlooks Opel and Vauxhall, GM's two main European brands, good for 1.6 million cars sold in 2007 in Europe alone (these brands are also used in a few other places, and their cars sold in other markets under the Chevy and Saturn brands as well). Buick's sales in China are around the 200,000 p.a. mark, eight times less.
And there's also Holden, GM's Australian brand.
Another suggestion to save the economy: fire all idiotic financial reporters and shills. I'm sure Mr. Sorkin will find a "gold-plated" job putting cars together more to his liking.
posted by Skeptic at 11:18 AM on November 18, 2008 [3 favorites]
"In the case of G.M., frankly, the only ones worth saving are Cadillac, Chevy and Buick. (Buick? Yes. Despite its lackluster sales and fuddy-duddy image in the United States, it’s a huge seller in China.)
That means Saturn, Pontiac, GMC and Saab would all disappear. "
That overlooks Opel and Vauxhall, GM's two main European brands, good for 1.6 million cars sold in 2007 in Europe alone (these brands are also used in a few other places, and their cars sold in other markets under the Chevy and Saturn brands as well). Buick's sales in China are around the 200,000 p.a. mark, eight times less.
And there's also Holden, GM's Australian brand.
Another suggestion to save the economy: fire all idiotic financial reporters and shills. I'm sure Mr. Sorkin will find a "gold-plated" job putting cars together more to his liking.
posted by Skeptic at 11:18 AM on November 18, 2008 [3 favorites]
fusinski - I'm not. Their problems are far greater than any executive salaries. I simply don't believe that 2007 Q1 profits down 90% warrant a bonus. Free money, ideed.
posted by gman at 11:18 AM on November 18, 2008 [1 favorite]
posted by gman at 11:18 AM on November 18, 2008 [1 favorite]
Here is my real problem with the Auto Industry, frankly that the regulation is so serious and the market is so closed that all the autoworkers were about to put out of work can't simply start there own Auto company picking up the infrastructure that the big auto companies leave behind for cheap. We might look back at this period of total manufacturing decimation and think, damn aren't we glad we got rid of that old calcified infrastructure. Regardless of what the government does we will not have 3 car companies in the future.
posted by Rubbstone at 11:25 AM on November 18, 2008
posted by Rubbstone at 11:25 AM on November 18, 2008
You're free to have that opinion, but the fact of the matter is that Wagoner has made great progress in retooling a company that was essentially completely underwater. You or I don't know what happened in that board room, but I do know that losing Wagoner and hitting reset would have put GM back another 2-3 years in the restructuring process. In the end it comes down the the basic principal of profit not equaling progress. If you want him to forego a bonus until GM goes black and be an American Hero I think that is rather utopian. We're not talking about an agile mom and pop shop here. To that point, however, the bill currently in the house will likely restrict his compensation if it ends up passing.
posted by fusinski at 11:30 AM on November 18, 2008
posted by fusinski at 11:30 AM on November 18, 2008
The boss makes 800 times Joe Auto worker’s take home is, but Joe Auto worker’s kid, maybe, gets to go to college and suddenly that’s a gold plated deal.
The CEO negotiates himself a good deal - he’s a sharp guy and that’s just competition, fair market, blah blah.
Smedleyman, I empathize with the whole "siding with the worker" thing. I'm not saying that dismissively or to belittle your point, I'm being sincere. But the article itself says that Wagoner needs to get shit canned. Nobody is saying the problem is just labor, but the other thing nobody's saying is that labor has nothing to do with it. I'm no expert, so I'm not going to claim to be an authority who speaks from experience, but I work in a much stronger field, given the economic climate, than these auto workers in a position that requires more education and far more individual responsibility to perform, and I make 1/3 of what these people make. My benefits are pretty good, but not as good as theirs. I can't start a family, or even own a home (or a car!) on what I make, much less save up to send anyone to college. This isn't because I'm too dumb to negotiate or because my bosses are assholes. It's because shit's fucking tough right now, and when shit gets tough people make sacrifices. What these men and women make a year is between them and their employer up till the point where it involves my taxes. Then, yeah, it seems to me that all sectors of that company come under scrutiny, including the auto worker who certainly deserves as much security as I myself deserve, but which I don't have because times are tough.
No one's blaming them. This guy, and some others, are saying it's necessary. Not deserved, just necessary.
And yeah, those are gold plated benefits. I wish I had those benefits. I wish there was a union that strong for what I do.
posted by shmegegge at 11:30 AM on November 18, 2008 [6 favorites]
The CEO negotiates himself a good deal - he’s a sharp guy and that’s just competition, fair market, blah blah.
Smedleyman, I empathize with the whole "siding with the worker" thing. I'm not saying that dismissively or to belittle your point, I'm being sincere. But the article itself says that Wagoner needs to get shit canned. Nobody is saying the problem is just labor, but the other thing nobody's saying is that labor has nothing to do with it. I'm no expert, so I'm not going to claim to be an authority who speaks from experience, but I work in a much stronger field, given the economic climate, than these auto workers in a position that requires more education and far more individual responsibility to perform, and I make 1/3 of what these people make. My benefits are pretty good, but not as good as theirs. I can't start a family, or even own a home (or a car!) on what I make, much less save up to send anyone to college. This isn't because I'm too dumb to negotiate or because my bosses are assholes. It's because shit's fucking tough right now, and when shit gets tough people make sacrifices. What these men and women make a year is between them and their employer up till the point where it involves my taxes. Then, yeah, it seems to me that all sectors of that company come under scrutiny, including the auto worker who certainly deserves as much security as I myself deserve, but which I don't have because times are tough.
No one's blaming them. This guy, and some others, are saying it's necessary. Not deserved, just necessary.
And yeah, those are gold plated benefits. I wish I had those benefits. I wish there was a union that strong for what I do.
posted by shmegegge at 11:30 AM on November 18, 2008 [6 favorites]
I'm not a Big 3 apologist and I'm not going to sit here and defend the fact that these companies screwed up royally in the 80s and 90s, but let's judge the bailout for what it really is in present-day terms.
In 2006, GM upgraded its assembly plant in Janesville, WI, to the tune of $175 million. The Janesville plant specializes in the manufacture of large SUVs. It will produce its last just before Christmas this year, and the last 1200 of its employees (down from 5,000 a few years back) will be laid off.
We, like everybody else, didn’t anticipate fuel prices to go up like they did - Rick Wagoner
They told us it would never end, that it was a recession-proof vehicle and we’d never be able to build enough of them . . . We thought we were the luckiest auto workers in the world. We had the product that everybody wanted, and all of a sudden, poof - Daryl Klemp, GM assembly line worker, Janesville
(both quotes from the New York Times, October 25, 2008)
I am a freelance journalist, and in 2005-06, I embarked on a series of research trips around the world to study the converging problems of climate change and energy scarcity. (The result is this book.) My total funding from all sources (including my own savings) was maybe $75,000, which I'm sure is a good deal less than GM spent on dealer ads in Peoria for FY2006. And I could have told you with pretty much absolute certainty, by around the time GM finished upgrading its Janesville operations, that fuel prices were headed permanently into a range where SUV manufacture would no longer be profitable at the scale the American auto companies were churning the things out.
All it took, really, was attendance at a single conference in the company of a few honest fossil fuel geologists. The claims now being made by the heads of the companies most affected by this crisis that there was no way to anticipate it means they are either baldfaced liars or utter incompetents, and in either case they should not be handed taxpayer money to continue in their ignorance of the defining problem of our time and its implications for their business and the health of the North American economy.
posted by gompa at 11:32 AM on November 18, 2008 [30 favorites]
In 2006, GM upgraded its assembly plant in Janesville, WI, to the tune of $175 million. The Janesville plant specializes in the manufacture of large SUVs. It will produce its last just before Christmas this year, and the last 1200 of its employees (down from 5,000 a few years back) will be laid off.
We, like everybody else, didn’t anticipate fuel prices to go up like they did - Rick Wagoner
They told us it would never end, that it was a recession-proof vehicle and we’d never be able to build enough of them . . . We thought we were the luckiest auto workers in the world. We had the product that everybody wanted, and all of a sudden, poof - Daryl Klemp, GM assembly line worker, Janesville
(both quotes from the New York Times, October 25, 2008)
I am a freelance journalist, and in 2005-06, I embarked on a series of research trips around the world to study the converging problems of climate change and energy scarcity. (The result is this book.) My total funding from all sources (including my own savings) was maybe $75,000, which I'm sure is a good deal less than GM spent on dealer ads in Peoria for FY2006. And I could have told you with pretty much absolute certainty, by around the time GM finished upgrading its Janesville operations, that fuel prices were headed permanently into a range where SUV manufacture would no longer be profitable at the scale the American auto companies were churning the things out.
All it took, really, was attendance at a single conference in the company of a few honest fossil fuel geologists. The claims now being made by the heads of the companies most affected by this crisis that there was no way to anticipate it means they are either baldfaced liars or utter incompetents, and in either case they should not be handed taxpayer money to continue in their ignorance of the defining problem of our time and its implications for their business and the health of the North American economy.
posted by gompa at 11:32 AM on November 18, 2008 [30 favorites]
but he does receive below-average compensation for a Fortune 500 CEO
I forget, are we talking about the Fortune 500 companies that are begging me to bail them out, or GM?
posted by YoBananaBoy at 11:42 AM on November 18, 2008
I forget, are we talking about the Fortune 500 companies that are begging me to bail them out, or GM?
posted by YoBananaBoy at 11:42 AM on November 18, 2008
I forget, are we talking about the Fortune 500 companies that are begging me to bail them out, or GM?
Well, are we including all of the Fortune 500 companies we already bailed out whose economic impact is arguably less far reaching than GM? And are we including all of the Fortune 500 companies that would get absolutely pummeled as a result of a GM bankruptcy who might be begging for a bailout after the fact? Or just GM?
posted by fusinski at 11:45 AM on November 18, 2008
Well, are we including all of the Fortune 500 companies we already bailed out whose economic impact is arguably less far reaching than GM? And are we including all of the Fortune 500 companies that would get absolutely pummeled as a result of a GM bankruptcy who might be begging for a bailout after the fact? Or just GM?
posted by fusinski at 11:45 AM on November 18, 2008
the Fortune 500 companies we already bailed out whose economic impact is arguably less far reaching than GM
And which would those be?
posted by oaf at 11:46 AM on November 18, 2008
And which would those be?
posted by oaf at 11:46 AM on November 18, 2008
Again, people continue to argue GM 5 years ago, not GM 2008. There's just no excuse.
Good point - and I for one was unaware of a lot of the more recent information on GM, thanks for the links.
However much of GM's reputation (and that of Ford and Chrysler) depends not on their recent models but on their cars of the last 10 years. Many of us cannot afford new cars and on the second hand market the list of "Best Used Cars" is completely dominated by Japanese models and the list of "Worst Used Cars" is populated primarily with US models. When I can afford a new car this will make it very tough for the US auto makers to sell me a new car and tougher yet for the panjandrums to convince me right now that pouring my money into GM is a great idea.
Maybe they are correct - but it's a tough sell.
posted by speug at 11:51 AM on November 18, 2008
Good point - and I for one was unaware of a lot of the more recent information on GM, thanks for the links.
However much of GM's reputation (and that of Ford and Chrysler) depends not on their recent models but on their cars of the last 10 years. Many of us cannot afford new cars and on the second hand market the list of "Best Used Cars" is completely dominated by Japanese models and the list of "Worst Used Cars" is populated primarily with US models. When I can afford a new car this will make it very tough for the US auto makers to sell me a new car and tougher yet for the panjandrums to convince me right now that pouring my money into GM is a great idea.
Maybe they are correct - but it's a tough sell.
posted by speug at 11:51 AM on November 18, 2008
The automakers reaped obscene profits during the SUV and pickup craze, and spent that money on the equivalent of hookers and blow, nary a dollar looking at the future. Fuck them. Let them fall apart and retool from the ground up.
posted by maxwelton at 11:53 AM on November 18, 2008 [2 favorites]
posted by maxwelton at 11:53 AM on November 18, 2008 [2 favorites]
if you're too big to fail, you're too fucking big
Spot on. If the failure of a single company would be so much of a hardship on the US economy as a whole that it is more advantageous for every taxpayer to pay them to keep running, then there is a problem. Automakers, investment banks, whatever. Single points of failure like this are not acceptable. Making a company so big that it cannot fail is outright anticompetitive.
posted by kiltedtaco at 11:59 AM on November 18, 2008 [4 favorites]
Spot on. If the failure of a single company would be so much of a hardship on the US economy as a whole that it is more advantageous for every taxpayer to pay them to keep running, then there is a problem. Automakers, investment banks, whatever. Single points of failure like this are not acceptable. Making a company so big that it cannot fail is outright anticompetitive.
posted by kiltedtaco at 11:59 AM on November 18, 2008 [4 favorites]
Could somebody give this guy a few billion dollars. He'd probably even pay it back.
posted by secondhand at 12:14 PM on November 18, 2008
posted by secondhand at 12:14 PM on November 18, 2008
And which would those be?
All of the banks in the Fortune 500 who are on this list which keeps growing. Nevermind the fact that other Fortune 500 companies like American Express are currently restructuring to become a bank so they have access to the bailout money also. Check back for more updates soon!
posted by fusinski at 12:16 PM on November 18, 2008 [1 favorite]
All of the banks in the Fortune 500 who are on this list which keeps growing. Nevermind the fact that other Fortune 500 companies like American Express are currently restructuring to become a bank so they have access to the bailout money also. Check back for more updates soon!
posted by fusinski at 12:16 PM on November 18, 2008 [1 favorite]
"If you're not familiar with GM, it's a health care benefits management firm that sells cars for a loss as a side venture."
posted by milkrate at 12:17 PM on November 18, 2008 [3 favorites]
posted by milkrate at 12:17 PM on November 18, 2008 [3 favorites]
This is my uneducated and purely emotional view. Not backed by facts, just a kneejerk reaction.
The US doesn't make anything anymore.
Except, as far as I can tell, the big 3 car manufacturers.
Yes, GM makes shit. But they make something.
The hundreds of thousands that this will hit are blue-collar folks. Normal people who make things with their hands.
We're complaining about giving them 38 billion after we pissed away 300 billion on absolute fucking ripoffs like citibank, AIG, fannie and freddie? We're fucking worrying about joe shmo the union worker when we just used taxpayer fucking money to pay for a 400k spa treatment for the shitheads that drove AIG out of business and then burnt throgh 120 billion dollars worth of loans?
I don't understand how this is a debate anymore. We've already decided to bail people out. Let's stop giving money to the dude from Monopoly and give a bit to some dude who makes cars. He needs it more.
posted by Lord_Pall at 12:20 PM on November 18, 2008 [3 favorites]
The US doesn't make anything anymore.
Except, as far as I can tell, the big 3 car manufacturers.
Yes, GM makes shit. But they make something.
The hundreds of thousands that this will hit are blue-collar folks. Normal people who make things with their hands.
We're complaining about giving them 38 billion after we pissed away 300 billion on absolute fucking ripoffs like citibank, AIG, fannie and freddie? We're fucking worrying about joe shmo the union worker when we just used taxpayer fucking money to pay for a 400k spa treatment for the shitheads that drove AIG out of business and then burnt throgh 120 billion dollars worth of loans?
I don't understand how this is a debate anymore. We've already decided to bail people out. Let's stop giving money to the dude from Monopoly and give a bit to some dude who makes cars. He needs it more.
posted by Lord_Pall at 12:20 PM on November 18, 2008 [3 favorites]
All of the banks in the Fortune 500 who are on this list
We were looking for less far-reaching than GM.
posted by oaf at 12:22 PM on November 18, 2008
We were looking for less far-reaching than GM.
posted by oaf at 12:22 PM on November 18, 2008
Bail them but make them make decent cars. Flying ones if possible.
posted by Lord_Pall at 12:25 PM on November 18, 2008 [1 favorite]
posted by Lord_Pall at 12:25 PM on November 18, 2008 [1 favorite]
Is there any chance this conversation could actually progress without anyone who admittedly knows nothing about how the labor market works chiming in with their incredibly practical, original, and brilliant suggestion that "we just let GM fail?"
posted by XQUZYPHYR at 1:05 PM on November 18 [+] [!]
Sure thing!
posted by butterstick at 12:27 PM on November 18, 2008 [2 favorites]
posted by XQUZYPHYR at 1:05 PM on November 18 [+] [!]
Sure thing!
- The study, which came out on Election Day, estimates “the economic impact — in terms of jobs, compensation and tax revenues — of a major contraction involving one or more of the Detroit Three automakers,” under two separate scenarios. In both cases, there would be major short-term shocks to employment; depending on which scenario you use, a contraction of the Detroit Three would result in direct and indirect job losses of 2.5 million to 3 million in 2009. (This figure was also cited by Governor Granholm.)
posted by butterstick at 12:27 PM on November 18, 2008 [2 favorites]
We were looking for less far-reaching than GM.
Yeah, we are. 3M jobs on the conservative side downstream from the US Auto industry vs., as Lord Pall eloquently puts it, banks who aren't using the capital we just gave them to lend money, which is exactly what the bailout was intended to do.
I'm not saying that the banks shouldn't have been bailed out and there wouldn't have been consequences if they didn't, but similarly you can't ignore the ripple effects of a GM bankruptcy.
It just is not as simple as "they suck, let them fail."
posted by fusinski at 12:27 PM on November 18, 2008 [1 favorite]
Yeah, we are. 3M jobs on the conservative side downstream from the US Auto industry vs., as Lord Pall eloquently puts it, banks who aren't using the capital we just gave them to lend money, which is exactly what the bailout was intended to do.
I'm not saying that the banks shouldn't have been bailed out and there wouldn't have been consequences if they didn't, but similarly you can't ignore the ripple effects of a GM bankruptcy.
It just is not as simple as "they suck, let them fail."
posted by fusinski at 12:27 PM on November 18, 2008 [1 favorite]
“I work in a much stronger field, given the economic climate, than these auto workers in a position that requires more education and far more individual responsibility to perform, and I make 1/3 of what these people make...”
Well, that’s the thing - I mean - yes, you wish you had a union that strong. So right there - end of story. They had the power and skill to negotiate the deal, and they did. Maybe you and I don’t.
But I’m not going to disparage some guy just because his people were able to work out a better deal than him.
But this “tough times” schtick - it’s always ‘tough times.’ Always. Even when it isn’t.
I’ve never heard any management group anywhere saying “hey, times are great, would you guys like a some more money?”
I’m not saying you’re saying that shmegegge. I’m saying that’s what they always say.
I mean, if we’re supposed to be a free market here - why, when times are good, do workers not get raises, perks, profit sharing, whatever, but when times are bad - suddenly they’re the ones who have to take the hit?
When times are good if the UAW came to management and said “Hey, profits are way up, times are good, howzabout we renegotiate our contract now, maybe get more money?” think that’d fly?
No way. There’d be a huge furor over that.
So why, when times are bad, are bets off and suddenly those contracts should be up for grabs?
Y’know, the guys on the line, they did their jobs. Cars got made.
They fufilled their part of the contract. So why do they have to be the ones to give up anything?
Who dropped the ball? Who didn’t do their job?
Nobody asked the guy on the line what kind of car he wanted.
I mean, I get where you’re coming from, but when shit gets tough, why is it the guy who does his job that’s expected to take the hit?
There’s this “we’re all in this together” mentality that folks bring up all of a sudden.
Oh, but when times are good and you’re not getting pay commensurate with your work in either quality, effort or the time you’re putting in - yeah, it’s every man for himself. Capitalism, don’tcha know.
Y’know, it sucks that you and a lot of other people don’t make the kind of money you should.
But it’s ‘necessary’ only because it’s been made necessary.
If they want to yelp about someone’s take home now, then why didn’t they maybe take a little less when times were good?
Why didn’t they say ‘hey, times are good - let’s spread this around’?
What, because it wasn’t ‘necessary’ then?
It isn’t about blame. It’s about responsibility. You can’t ask Joe Autoworker to be responsible for something he had no control over. He built the cars. End of story. If the cars were lousy or not to spec or some other things - that’s his baby. But the industry didn’t fail because the workers couldn’t build what they were being told to build.
So who did have the power over that?
And so - who’s responsibility is it?
Plus the fact is, just generally if more people had more money in their pockets we wouldn’t be in the straits we’re in now.
As it is, stockholders, CEOs, a lot of ‘smart’ and ‘educated’ people made a whole hell of a lot of money.
And now, gee, they aren’t. And it’s a huge problem and suddenly we’re all supposed to pull together like it was not about the money.
No, I don’t buy that.
I’ll stand with a guy in a union, I’ll stand with a blue collar guy or a middle class guy trying to make a living. I’m not going to cut anyone else much of a break.
And I have close personal friends who have lost a lot of money on investments, stocks, all kinds of other things. Hell I took a beating and I make guys who hide their money in mason jars and bury them look like radical prodigal bastard sons.
But I’d be happy to spend more in taxes to retrain folks, get them jobs, whatever. I don’t have the answers.
But what I’m not going to do is ask the guy who just gets up in the morning and does his job to cover for the screw ups in his industry who didn’t do theirs.
Especially when his hard work didn’t mean jack when the ‘right’ moves were being made by industry leaders.
It’s still about the bottom line.
Bread on my table or bread on theirs.
So yeah, I’ll feed my own kids, thanks. I didn’t see anyone worrying about my kids when they were figuring their own bottom line.
posted by Smedleyman at 12:34 PM on November 18, 2008 [19 favorites]
Well, that’s the thing - I mean - yes, you wish you had a union that strong. So right there - end of story. They had the power and skill to negotiate the deal, and they did. Maybe you and I don’t.
But I’m not going to disparage some guy just because his people were able to work out a better deal than him.
But this “tough times” schtick - it’s always ‘tough times.’ Always. Even when it isn’t.
I’ve never heard any management group anywhere saying “hey, times are great, would you guys like a some more money?”
I’m not saying you’re saying that shmegegge. I’m saying that’s what they always say.
I mean, if we’re supposed to be a free market here - why, when times are good, do workers not get raises, perks, profit sharing, whatever, but when times are bad - suddenly they’re the ones who have to take the hit?
When times are good if the UAW came to management and said “Hey, profits are way up, times are good, howzabout we renegotiate our contract now, maybe get more money?” think that’d fly?
No way. There’d be a huge furor over that.
So why, when times are bad, are bets off and suddenly those contracts should be up for grabs?
Y’know, the guys on the line, they did their jobs. Cars got made.
They fufilled their part of the contract. So why do they have to be the ones to give up anything?
Who dropped the ball? Who didn’t do their job?
Nobody asked the guy on the line what kind of car he wanted.
I mean, I get where you’re coming from, but when shit gets tough, why is it the guy who does his job that’s expected to take the hit?
There’s this “we’re all in this together” mentality that folks bring up all of a sudden.
Oh, but when times are good and you’re not getting pay commensurate with your work in either quality, effort or the time you’re putting in - yeah, it’s every man for himself. Capitalism, don’tcha know.
Y’know, it sucks that you and a lot of other people don’t make the kind of money you should.
But it’s ‘necessary’ only because it’s been made necessary.
If they want to yelp about someone’s take home now, then why didn’t they maybe take a little less when times were good?
Why didn’t they say ‘hey, times are good - let’s spread this around’?
What, because it wasn’t ‘necessary’ then?
It isn’t about blame. It’s about responsibility. You can’t ask Joe Autoworker to be responsible for something he had no control over. He built the cars. End of story. If the cars were lousy or not to spec or some other things - that’s his baby. But the industry didn’t fail because the workers couldn’t build what they were being told to build.
So who did have the power over that?
And so - who’s responsibility is it?
Plus the fact is, just generally if more people had more money in their pockets we wouldn’t be in the straits we’re in now.
As it is, stockholders, CEOs, a lot of ‘smart’ and ‘educated’ people made a whole hell of a lot of money.
And now, gee, they aren’t. And it’s a huge problem and suddenly we’re all supposed to pull together like it was not about the money.
No, I don’t buy that.
I’ll stand with a guy in a union, I’ll stand with a blue collar guy or a middle class guy trying to make a living. I’m not going to cut anyone else much of a break.
And I have close personal friends who have lost a lot of money on investments, stocks, all kinds of other things. Hell I took a beating and I make guys who hide their money in mason jars and bury them look like radical prodigal bastard sons.
But I’d be happy to spend more in taxes to retrain folks, get them jobs, whatever. I don’t have the answers.
But what I’m not going to do is ask the guy who just gets up in the morning and does his job to cover for the screw ups in his industry who didn’t do theirs.
Especially when his hard work didn’t mean jack when the ‘right’ moves were being made by industry leaders.
It’s still about the bottom line.
Bread on my table or bread on theirs.
So yeah, I’ll feed my own kids, thanks. I didn’t see anyone worrying about my kids when they were figuring their own bottom line.
posted by Smedleyman at 12:34 PM on November 18, 2008 [19 favorites]
fusinski:
Yeah, we are. 3M jobs on the conservative side downstream from the US Auto industry vs., as Lord Pall eloquently puts it, banks who aren't using the capital we just gave them to lend money, which is exactly what the bailout was intended to do.
This "vs." is a false dichotomy. We can have this conversation outside the realm of the financial bailout (morally speaking) considering how unpopular TARP has been (speaking for myself).
I'm not saying that the banks shouldn't have been bailed out and there wouldn't have been consequences if they didn't, but similarly you can't ignore the ripple effects of a GM bankruptcy.
It just is not as simple as "they suck, let them fail."
Actually it is. I believe in the free market to a degree, and I believe even stronger in the power of blank slates. I'm a bit of a nihilist, but I really think that if the smart people who built these companies had a chance to start over, leveraging all the hard lessons they learned, we'd all be much better off for it. The sooner we liquidate, the sooner the bold and the brilliant can start buying up these factories and starting the next big thing.
posted by butterstick at 12:36 PM on November 18, 2008
Yeah, we are. 3M jobs on the conservative side downstream from the US Auto industry vs., as Lord Pall eloquently puts it, banks who aren't using the capital we just gave them to lend money, which is exactly what the bailout was intended to do.
This "vs." is a false dichotomy. We can have this conversation outside the realm of the financial bailout (morally speaking) considering how unpopular TARP has been (speaking for myself).
I'm not saying that the banks shouldn't have been bailed out and there wouldn't have been consequences if they didn't, but similarly you can't ignore the ripple effects of a GM bankruptcy.
It just is not as simple as "they suck, let them fail."
Actually it is. I believe in the free market to a degree, and I believe even stronger in the power of blank slates. I'm a bit of a nihilist, but I really think that if the smart people who built these companies had a chance to start over, leveraging all the hard lessons they learned, we'd all be much better off for it. The sooner we liquidate, the sooner the bold and the brilliant can start buying up these factories and starting the next big thing.
posted by butterstick at 12:36 PM on November 18, 2008
And yeah, those are gold plated benefits. I wish I had those benefits. I wish there was a union that strong for what I do.
Maybe you could approach the UAW and ask them to sign up your shop and negotiate you a better deal?
posted by notyou at 12:42 PM on November 18, 2008
Maybe you could approach the UAW and ask them to sign up your shop and negotiate you a better deal?
posted by notyou at 12:42 PM on November 18, 2008
So why, when times are bad, are bets off and suddenly those contracts should be up for grabs?
Because the Big Three can no longer afford to pay those contracts. So it's either renegotiate the contracts (either as part of a chapter 11 or otherwise), get laid off, or have the U.S. taxpayer bail them out.
As one U.S. taxpayer, I don't want to bail out blue collar workers making $70 an hour.
The UAW is far from the only problem here. In fact, I blame corporate management much more than I blame the UAW. But they are part of the problem.
posted by cjets at 12:57 PM on November 18, 2008
Because the Big Three can no longer afford to pay those contracts. So it's either renegotiate the contracts (either as part of a chapter 11 or otherwise), get laid off, or have the U.S. taxpayer bail them out.
As one U.S. taxpayer, I don't want to bail out blue collar workers making $70 an hour.
The UAW is far from the only problem here. In fact, I blame corporate management much more than I blame the UAW. But they are part of the problem.
posted by cjets at 12:57 PM on November 18, 2008
It just is not as simple as "they suck, let them fail."
You're ignoring two things:
They've already failed. Don't postpone the inevitable.
posted by oaf at 1:09 PM on November 18, 2008
You're ignoring two things:
- Throwing money at bad behavior just yields more bad behavior.
- TINSTAAFL—we will end up paying for GM's past mismanagement one way or the other.
They've already failed. Don't postpone the inevitable.
posted by oaf at 1:09 PM on November 18, 2008
Some of you need to read CunningLinguist's Free Press link and quit repeating the same old BS.
"A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate."
Probably because buyers are so repulsed by their new Aveo they stop driving it after three months.
There is a lot of hand-waving and, "Yeah, but Toyota and Honda did it too...." in that link.
posted by stargell at 1:16 PM on November 18, 2008
"A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate."
Probably because buyers are so repulsed by their new Aveo they stop driving it after three months.
There is a lot of hand-waving and, "Yeah, but Toyota and Honda did it too...." in that link.
posted by stargell at 1:16 PM on November 18, 2008
dude, the union guys don't make $70/hr. They make 26/hr, plus benefits. The cost per hour is 70/hr. If you're a full-time worker bee with benefits in any field, you're actually costing the company about 2.5 times your hourly rate, once the bennies are figured in.
posted by notsnot at 1:20 PM on November 18, 2008 [1 favorite]
posted by notsnot at 1:20 PM on November 18, 2008 [1 favorite]
Really, the question everyone is: "Do we take care of X-Million Michigan workers via loans to carmakers, or by writing a lot of unemployment checks?"
posted by Relay at 1:21 PM on November 18, 2008
posted by Relay at 1:21 PM on November 18, 2008
It is absolutely repulsive that the average employee salary/benefits package at a company hemorrhaging money is $70/hour, even including executives. There's just no excuse.
“I work in a much stronger field, given the economic climate, than these auto workers in a position that requires more
education and far more individual responsibility to perform, and I make 1/3 of what these people make...
As one U.S. taxpayer, I don't want to bail out blue collar workers making $70 an hour.
Jealous, much? Can we have a list of else's life that should ruined for having the temerity to earn more than sundry MeFi commentators?
(Man, if I were a Marxist this would be validation-in-a-can. Here are the useful idiots cutting the workers' throats while the bosses make off with golden parachutes...)
Y’know, the guys on the line, they did their jobs. Cars got made.
They fufilled their part of the contract. So why do they have to be the ones to give up anything?
/me pounds favourite button.
posted by rodgerd at 1:22 PM on November 18, 2008 [1 favorite]
“I work in a much stronger field, given the economic climate, than these auto workers in a position that requires more
education and far more individual responsibility to perform, and I make 1/3 of what these people make...
As one U.S. taxpayer, I don't want to bail out blue collar workers making $70 an hour.
Jealous, much? Can we have a list of else's life that should ruined for having the temerity to earn more than sundry MeFi commentators?
(Man, if I were a Marxist this would be validation-in-a-can. Here are the useful idiots cutting the workers' throats while the bosses make off with golden parachutes...)
Y’know, the guys on the line, they did their jobs. Cars got made.
They fufilled their part of the contract. So why do they have to be the ones to give up anything?
/me pounds favourite button.
posted by rodgerd at 1:22 PM on November 18, 2008 [1 favorite]
They make 26/hr, plus benefits.
My understanding was that the $70 an hour included the "gold plated" benefits. What value would you place on the benefits?
posted by cjets at 1:24 PM on November 18, 2008
My understanding was that the $70 an hour included the "gold plated" benefits. What value would you place on the benefits?
posted by cjets at 1:24 PM on November 18, 2008
butterstick wrote: The sooner we liquidate, the sooner the bold and the brilliant can start buying up these factories and starting the next big thing.
You meant: "the sooner the bold and the brilliant can fuck it up as bad as the last group."
New does not equal better. New does not equal successful. In fact, new usually equals stupid. Look at Eclipse. The second coming of aircraft, supposedly. Belly up due to a shit business plan. Most startups fail. Wishing does not make that go away.
The automakers (and everybody else) would be in a hell of a lot better position if we would get off our asses and shift some money from the military budget to providing universal healthcare in this country.
posted by wierdo at 1:24 PM on November 18, 2008 [1 favorite]
You meant: "the sooner the bold and the brilliant can fuck it up as bad as the last group."
New does not equal better. New does not equal successful. In fact, new usually equals stupid. Look at Eclipse. The second coming of aircraft, supposedly. Belly up due to a shit business plan. Most startups fail. Wishing does not make that go away.
The automakers (and everybody else) would be in a hell of a lot better position if we would get off our asses and shift some money from the military budget to providing universal healthcare in this country.
posted by wierdo at 1:24 PM on November 18, 2008 [1 favorite]
I blame all this on our government. If in the 1950's we had forbidden the import of foreign cars Americans would not have discovered the thrill of driving and the economy of owning VW's, Toyotas and Datsuns.
We would still be driving and replacing our three year old Fords, Cevys and Plymouths and been fat dumb and clueless.
posted by notreally at 1:28 PM on November 18, 2008
They've already failed. Don't postpone the inevitable.
Anndddd we've come full circle, judging these companies based on what they were 5 years ago. GM can be resurrected without bankruptcy because they have already taken the steps to do so. It's not like they are this behemoth who has resisted change; rather, they have done anything and everything to stay afloat. I defy you to find an executive who could have done anything differently with the hand Wagoner was dealt. The right steps have been taken and a horrible market has killed the restructuring, it is really that simple. If you are for GM bankruptcy, fine, so be it... however, judge them on their books today, not on a visceral reaction of what they have been historically. And if you look at this properly without any political motive or emotional bias, I think you'll find that GM is a very viable company who simply needs a financial boost to succeed.
The problem (and honestly I don't say this with any ill intent) is that most people lack the financial acumen to correctly diagnose the health of a single business let alone the state of the auto industry. Look no further than public opinion of the financial bailout for validation here. If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade. However this company is barely recognizable from where it was 10 years ago, so don't tell me it can't change and come out on top. GM has been on the right path since it started shedding toxic assets several years back.
posted by fusinski at 1:33 PM on November 18, 2008
Anndddd we've come full circle, judging these companies based on what they were 5 years ago. GM can be resurrected without bankruptcy because they have already taken the steps to do so. It's not like they are this behemoth who has resisted change; rather, they have done anything and everything to stay afloat. I defy you to find an executive who could have done anything differently with the hand Wagoner was dealt. The right steps have been taken and a horrible market has killed the restructuring, it is really that simple. If you are for GM bankruptcy, fine, so be it... however, judge them on their books today, not on a visceral reaction of what they have been historically. And if you look at this properly without any political motive or emotional bias, I think you'll find that GM is a very viable company who simply needs a financial boost to succeed.
The problem (and honestly I don't say this with any ill intent) is that most people lack the financial acumen to correctly diagnose the health of a single business let alone the state of the auto industry. Look no further than public opinion of the financial bailout for validation here. If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade. However this company is barely recognizable from where it was 10 years ago, so don't tell me it can't change and come out on top. GM has been on the right path since it started shedding toxic assets several years back.
posted by fusinski at 1:33 PM on November 18, 2008
Lord_Pall: You've got it backward. The US makes Japanese cars. GM is a Chinese manufacturing management and integration firm.
posted by rusty at 1:36 PM on November 18, 2008
posted by rusty at 1:36 PM on November 18, 2008
judge them on their books today, not on a visceral reaction of what they have been historically
I know it's blindingly obvious, but I'll go ahead and say it—their past idiocy is not something you can just wish away and pretend doesn't affect today's numbers. It does, and that's partly why they are where they are.
posted by oaf at 1:40 PM on November 18, 2008 [1 favorite]
I know it's blindingly obvious, but I'll go ahead and say it—their past idiocy is not something you can just wish away and pretend doesn't affect today's numbers. It does, and that's partly why they are where they are.
posted by oaf at 1:40 PM on November 18, 2008 [1 favorite]
(If their books today weren't full of problems, nobody would be seriously considering giving them any more taxpayer money.)
posted by oaf at 1:41 PM on November 18, 2008
posted by oaf at 1:41 PM on November 18, 2008
Weirdo: butterstick wrote: The sooner we liquidate, the sooner the bold and the brilliant can start buying up these factories and starting the next big thing.
You meant: "the sooner the bold and the brilliant can fuck it up as bad as the last group."
New does not equal better. New does not equal successful. In fact, new usually equals stupid. Look at Eclipse. The second coming of aircraft, supposedly. Belly up due to a shit business plan. Most startups fail. Wishing does not make that go away.
I most certainly did not mean that. That would take another 50 years for initially good ideas and business practices to fail. Nowhere am I suggesting that new == better, so please refrain from putting words on my keyboard. History is a wonderful teacher is all, and it is not too generous to assume that people starting a new car company right now would have plenty to learn from, both positively and negatively.
Failure is educational. We should learn from this.
posted by butterstick at 1:46 PM on November 18, 2008
You meant: "the sooner the bold and the brilliant can fuck it up as bad as the last group."
New does not equal better. New does not equal successful. In fact, new usually equals stupid. Look at Eclipse. The second coming of aircraft, supposedly. Belly up due to a shit business plan. Most startups fail. Wishing does not make that go away.
I most certainly did not mean that. That would take another 50 years for initially good ideas and business practices to fail. Nowhere am I suggesting that new == better, so please refrain from putting words on my keyboard. History is a wonderful teacher is all, and it is not too generous to assume that people starting a new car company right now would have plenty to learn from, both positively and negatively.
Failure is educational. We should learn from this.
posted by butterstick at 1:46 PM on November 18, 2008
GM can be resurrected without bankruptcy because they have already taken the steps to do so.
Isn't a bailout just bankruptcy for the rich and powerful?
however, judge them on their books today, not on a visceral reaction of what they have been historically. ....If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade. However this company is barely recognizable from where it was 10 years ago, so don't tell me it can't change and come out on top.
You make some good points. But it's still not enough for me. Why isn't it just as valid to judge them on their last ten years or their last thirty years as it is to judge them on the last five?
And when I judge them on their product, the big three cars are still inferior to foreign cars. Maybe that's my bias. But I can't help noticing that you're from Detroit, so I suspect you've got your own biases as well.
posted by cjets at 1:48 PM on November 18, 2008
Isn't a bailout just bankruptcy for the rich and powerful?
however, judge them on their books today, not on a visceral reaction of what they have been historically. ....If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade. However this company is barely recognizable from where it was 10 years ago, so don't tell me it can't change and come out on top.
You make some good points. But it's still not enough for me. Why isn't it just as valid to judge them on their last ten years or their last thirty years as it is to judge them on the last five?
And when I judge them on their product, the big three cars are still inferior to foreign cars. Maybe that's my bias. But I can't help noticing that you're from Detroit, so I suspect you've got your own biases as well.
posted by cjets at 1:48 PM on November 18, 2008
Jealous, much? Can we have a list of else's life that should ruined for having the temerity to earn more than sundry MeFi commentators?
(Man, if I were a Marxist this would be validation-in-a-can. Here are the useful idiots cutting the workers' throats while the bosses make off with golden parachutes...)
First of all, you might want to read my whole post instead of cherry picking the sentence that fits your argument. I blame the bosses much more than the workers. As I said above:
In fact, I blame corporate management much more than I blame the UAW.
If I could cut throats, I'd always start at the top, not the bottom.
And how does not wanting to bailout the UAW workers (beyond services offered to all unemployed workers) mean that I want to ruin their lives? I've worked for several companies that went under. There was no government bailout for them. I got laid off and found another job. But I guess I shouldn't mention that. That means I'm jealous.
posted by cjets at 2:22 PM on November 18, 2008
(Man, if I were a Marxist this would be validation-in-a-can. Here are the useful idiots cutting the workers' throats while the bosses make off with golden parachutes...)
First of all, you might want to read my whole post instead of cherry picking the sentence that fits your argument. I blame the bosses much more than the workers. As I said above:
In fact, I blame corporate management much more than I blame the UAW.
If I could cut throats, I'd always start at the top, not the bottom.
And how does not wanting to bailout the UAW workers (beyond services offered to all unemployed workers) mean that I want to ruin their lives? I've worked for several companies that went under. There was no government bailout for them. I got laid off and found another job. But I guess I shouldn't mention that. That means I'm jealous.
posted by cjets at 2:22 PM on November 18, 2008
butterstick wrote: That would take another 50 years for initially good ideas and business practices to fail.
If we were really lucky. More likely, they'd be done in a year or two. (Maybe five if people would dump enough capital into them)
posted by wierdo at 2:25 PM on November 18, 2008
If we were really lucky. More likely, they'd be done in a year or two. (Maybe five if people would dump enough capital into them)
posted by wierdo at 2:25 PM on November 18, 2008
Wierdo, you are completely missing my point. Lots of startups failing is a good thing, it means that whoever survives had to compete with lots of ideas to do so. Wiping the slate clean means that an industry which has been historically impenetrable for startups, entrepreneurs and garage tinkerers could actually have shot.
BE BOLD! And mighty fates will come to your aid.
posted by butterstick at 2:34 PM on November 18, 2008
BE BOLD! And mighty fates will come to your aid.
posted by butterstick at 2:34 PM on November 18, 2008
All western legal structures already include a private rescue package known as bankruptcy, which normally works quite well.
posted by jeffburdges at 2:45 PM on November 18, 2008
posted by jeffburdges at 2:45 PM on November 18, 2008
butterstick: Making cars is incredibly capital intensive. The model you espouse works well for software companies and other businesses with low capital requirements.
We need big automakers to build the cars we want to buy. (and plenty do buy them from both Ford and GM) A bunch of little startups will leave us with no warranty and plenty of turmoil in all sectors dependent on the big 3 for business. Even things as far flung as magazines, newspapers, and television will be impacted. Big 3 ads are a significant portion of revenue there.
Then there's the millions of folks working for their suppliers.
If they are in fact restructuring themselves as it stands, I fail to see the harm in providing them with the money to complete that restructuring. If they're not, well, that's a different story.
posted by wierdo at 2:59 PM on November 18, 2008
We need big automakers to build the cars we want to buy. (and plenty do buy them from both Ford and GM) A bunch of little startups will leave us with no warranty and plenty of turmoil in all sectors dependent on the big 3 for business. Even things as far flung as magazines, newspapers, and television will be impacted. Big 3 ads are a significant portion of revenue there.
Then there's the millions of folks working for their suppliers.
If they are in fact restructuring themselves as it stands, I fail to see the harm in providing them with the money to complete that restructuring. If they're not, well, that's a different story.
posted by wierdo at 2:59 PM on November 18, 2008
Yeah, total industry failures should always be handled by backing startups, never giving the big boys free money.
posted by jeffburdges at 3:02 PM on November 18, 2008
posted by jeffburdges at 3:02 PM on November 18, 2008
Yes, cars are capital intensive but that doesn't mean they must be quite so big. Warrenties are covered indirectly by reinsurers anyway. Why not use separate warranty companies who've been granted patent licenses for the purpose of building after market parts. A few startups can handle the job far better using subcontracted manufacturing capacity, ala Tesla.
posted by jeffburdges at 3:11 PM on November 18, 2008
posted by jeffburdges at 3:11 PM on November 18, 2008
The thing that scares me most about the suggestions in the main article is that it would break American Labor forever in the manufacturing sector forever. Unions are weak enough here in the US as it is; this would have wide-ranging repercussions for the way that US companies deal with Unions and their obligations.
posted by lekvar at 3:16 PM on November 18, 2008 [2 favorites]
posted by lekvar at 3:16 PM on November 18, 2008 [2 favorites]
But I can't help noticing that you're from Detroit, so I suspect you've got your own biases as well.
I guess this is time for a disclaimer. I AM from Detroit, however I do not work for or supply an auto company (at least not directly) (I also own a Nissan and a Subaru--black sheep of the family). That said, I am a lot closer to this than most people and I have become sort of a hobbyist bailout analyst (I am also an MBA student).
It's pretty safe to say that regardless of whether these companies get bailed out this town is going to see a whole lot of changes for the worse, as far as Joe Sixpack is concerned. As far as bias is concerned, I have watched Detroit get pummeled for the last 10 years so as I said before I am by no means a Big 3 apologist. In fact I was pro-bankruptcy for a long time until I really started studying what was actually going on with GM. They have to shed brands for sure and that is the last real looming Big Problem, but other than that the transformation they have undergone has been really impressive.
posted by fusinski at 3:20 PM on November 18, 2008
I guess this is time for a disclaimer. I AM from Detroit, however I do not work for or supply an auto company (at least not directly) (I also own a Nissan and a Subaru--black sheep of the family). That said, I am a lot closer to this than most people and I have become sort of a hobbyist bailout analyst (I am also an MBA student).
It's pretty safe to say that regardless of whether these companies get bailed out this town is going to see a whole lot of changes for the worse, as far as Joe Sixpack is concerned. As far as bias is concerned, I have watched Detroit get pummeled for the last 10 years so as I said before I am by no means a Big 3 apologist. In fact I was pro-bankruptcy for a long time until I really started studying what was actually going on with GM. They have to shed brands for sure and that is the last real looming Big Problem, but other than that the transformation they have undergone has been really impressive.
posted by fusinski at 3:20 PM on November 18, 2008
See what makes this easily identifiable as a piece intended to deceive, or alternatively the author is idiotically parroting stuff that he's been told, is this line:
"the average worker was paid about $70 an hour, including health care and pension costs."
That's completely false. It is true that the average cost per hour of labor for GM is $70 per hour, but no single worker is paid $70 an hour, and that's including benefits. When they say, "including ... pension costs" what they are really saying is not the "average worker's" pension costs, but the costs of all current obligations to pension drawing workers averaged over the hours put in by active employees plus the average worker's individual costs.
The problem with GM is the same stupidity that struck the mortgage market. They refused to set aside the money to meet their obligations because they believed that they could grow forever. Another more cynical explanation: those running the show during the more profitable times knew they could never pay off these obligations and take home the fat profits, but knew they wouldn't be around when it came time to pay, so they didn't care that they were setting the company up for failure.
posted by betaray at 3:21 PM on November 18, 2008 [2 favorites]
"the average worker was paid about $70 an hour, including health care and pension costs."
That's completely false. It is true that the average cost per hour of labor for GM is $70 per hour, but no single worker is paid $70 an hour, and that's including benefits. When they say, "including ... pension costs" what they are really saying is not the "average worker's" pension costs, but the costs of all current obligations to pension drawing workers averaged over the hours put in by active employees plus the average worker's individual costs.
The problem with GM is the same stupidity that struck the mortgage market. They refused to set aside the money to meet their obligations because they believed that they could grow forever. Another more cynical explanation: those running the show during the more profitable times knew they could never pay off these obligations and take home the fat profits, but knew they wouldn't be around when it came time to pay, so they didn't care that they were setting the company up for failure.
posted by betaray at 3:21 PM on November 18, 2008 [2 favorites]
And I could have told you with pretty much absolute certainty, by around the time GM finished upgrading its Janesville operations, that fuel prices were headed permanently into a range where SUV manufacture would no longer be profitable at the scale the American auto companies were churning the things out.
From 1/3/05 to 12/29/06, WTI averaged $61.32. Today it's at $54.39. We must use different definitions of "permanently".
posted by Kwantsar at 3:24 PM on November 18, 2008
From 1/3/05 to 12/29/06, WTI averaged $61.32. Today it's at $54.39. We must use different definitions of "permanently".
posted by Kwantsar at 3:24 PM on November 18, 2008
I will only say that for those of us who work in the U.S. automotive industry, it's been surreal seeing consumers rank our products according to quality, instead of answering the call to blind patriotism.
I'm sure it has.
posted by Durn Bronzefist at 3:32 PM on November 18, 2008
I'm sure it has.
posted by Durn Bronzefist at 3:32 PM on November 18, 2008
GM can be resurrected without bankruptcy because they have already taken the steps to do so... That said, I am a lot closer to this than most people and I have become sort of a hobbyist bailout analyst (I am also an MBA student).
"Can be resurrected" is a vague enough statement that I'll refrain from calling you names. But for the sake of our educational system, I can only hope the chapter on "Present Value" is ahead of you in the curriculum.
posted by Kwantsar at 3:35 PM on November 18, 2008
"Can be resurrected" is a vague enough statement that I'll refrain from calling you names. But for the sake of our educational system, I can only hope the chapter on "Present Value" is ahead of you in the curriculum.
posted by Kwantsar at 3:35 PM on November 18, 2008
See, what I don't understand is, if they get their bailout, what do they do then? Business as usual? Do they simply burn through what's given them and come back asking for more?
I am absolutely positive that they will fail the sanity test and continue to engage in the same behavior and wonder why in the world they keep losing money. I mean, haven't they been losing money, year after year, and what have they done to reverse the trend? Stop making so many SUVs, while neglecting to make their compacts and subcompacts competitive with foreign offerings?
So letting GM fail would be bad for the economy, okay. What does creating billions out of thin air do for the economy then? I guess that's perfectly fine. Mortgaging the future for the now, and all that. It's really popular these days, apparantly.
posted by Talanvor at 3:58 PM on November 18, 2008
I am absolutely positive that they will fail the sanity test and continue to engage in the same behavior and wonder why in the world they keep losing money. I mean, haven't they been losing money, year after year, and what have they done to reverse the trend? Stop making so many SUVs, while neglecting to make their compacts and subcompacts competitive with foreign offerings?
So letting GM fail would be bad for the economy, okay. What does creating billions out of thin air do for the economy then? I guess that's perfectly fine. Mortgaging the future for the now, and all that. It's really popular these days, apparantly.
posted by Talanvor at 3:58 PM on November 18, 2008
“Because the Big Three can no longer afford to pay those contracts. So it's either renegotiate the contracts (either as part of a chapter 11 or otherwise), get laid off, or have the U.S. taxpayer bail them out.”
Well again, I think that’s slipping folks a cold deck. Why can’t they afford to pay the contracts? Why do they have to lay people off?
Brings us back to ‘doe.’
As I said, I’m fine with bailing them out - for the jobs. I’d be happy to float GM a loan - bound to performance. (It’s a lot of jobs in a critical industry).
I’m happy to listen to business guys who know what they’re doing.
But this “I can’t afford to pay you, so you either take less money or hit the bricks” thing is ass.
Shady contractors pull this all the time. Start up one LLC. Build some projects. Split. Leave some guys with worthless checks in their envelopes. Pocket the cash yourself and then go cry poormouth because your business ‘failed.’
Meanwhile, there’s no one to go to if the project is hosed up in some way. And then they start up another LLC, find some new suckers, and start all over again.
I mean - it’s already happened here. Is there any heavy industry left in the U.S.?
If it were just some company - viable or not - I’d otherwise say to hell with them. But it’d be really nice to have the facilities to make....something, in the U.S. Right now it’s cars. I’d like to see more.
And hell, I’d like to see Joe AutoWorker take home $30 an hour, why the hell not if it’s viable? Why should some guy who is ‘educated’ or starts out with more money - make more money? Why can’t Joe AutoWorker get educated? Why can’t he have some spare money so he can invest? Why shouldn’t he be able to buy things and live decently?
What just because some guy works with his hands he’s got to be your jagoff? He’s not allowed to compete?
Reminds me of Ford, before unions, paying his workers handsomely - so they could buy one of his cars.
The stuff from the other side reminds me of this “welfare queen” rhetoric with the black woman with 9 kids driving a Cadillac.
Pull the other one it plays ‘Jingle Bells’
I don’t buy it.
posted by Smedleyman at 4:33 PM on November 18, 2008 [1 favorite]
Well again, I think that’s slipping folks a cold deck. Why can’t they afford to pay the contracts? Why do they have to lay people off?
Brings us back to ‘doe.’
As I said, I’m fine with bailing them out - for the jobs. I’d be happy to float GM a loan - bound to performance. (It’s a lot of jobs in a critical industry).
I’m happy to listen to business guys who know what they’re doing.
But this “I can’t afford to pay you, so you either take less money or hit the bricks” thing is ass.
Shady contractors pull this all the time. Start up one LLC. Build some projects. Split. Leave some guys with worthless checks in their envelopes. Pocket the cash yourself and then go cry poormouth because your business ‘failed.’
Meanwhile, there’s no one to go to if the project is hosed up in some way. And then they start up another LLC, find some new suckers, and start all over again.
I mean - it’s already happened here. Is there any heavy industry left in the U.S.?
If it were just some company - viable or not - I’d otherwise say to hell with them. But it’d be really nice to have the facilities to make....something, in the U.S. Right now it’s cars. I’d like to see more.
And hell, I’d like to see Joe AutoWorker take home $30 an hour, why the hell not if it’s viable? Why should some guy who is ‘educated’ or starts out with more money - make more money? Why can’t Joe AutoWorker get educated? Why can’t he have some spare money so he can invest? Why shouldn’t he be able to buy things and live decently?
What just because some guy works with his hands he’s got to be your jagoff? He’s not allowed to compete?
Reminds me of Ford, before unions, paying his workers handsomely - so they could buy one of his cars.
The stuff from the other side reminds me of this “welfare queen” rhetoric with the black woman with 9 kids driving a Cadillac.
Pull the other one it plays ‘Jingle Bells’
I don’t buy it.
posted by Smedleyman at 4:33 PM on November 18, 2008 [1 favorite]
>"A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate."
>Probably because buyers are so repulsed by their new Aveo they stop driving it after three months.
That's kind of hilarious. The Aveo is just a rebadged Daewoo Kalos, made here in Korea (although they may be assembled in America for sale there). Daewoo and GM hooked up a few years back after the Asian economic crisis of the late 90s to form GM Daewoo, the official name of the company here, much, I'm sure, to the ongoing chagrin of the Korean partners in that particular marriage of convenience.
It is a fine car, and far from the smallest or most economical you can buy here, even amongst the ones made by Daewoo. It's a great little city car -- if I had a choice between it and a similar-sized American car (if such a thing even exists), I'd choose the Daewoo in a second.
Repulsed? Really? For my part, I'm kinda repulsed by Hummers and the like, by idiots in North America who insist on driving tanks around the city, and then whine when gas prices go up and panic when manufacturers start sucking the tailpipe because they pandered to those idiots for far too long.
posted by stavrosthewonderchicken at 4:47 PM on November 18, 2008 [2 favorites]
>Probably because buyers are so repulsed by their new Aveo they stop driving it after three months.
That's kind of hilarious. The Aveo is just a rebadged Daewoo Kalos, made here in Korea (although they may be assembled in America for sale there). Daewoo and GM hooked up a few years back after the Asian economic crisis of the late 90s to form GM Daewoo, the official name of the company here, much, I'm sure, to the ongoing chagrin of the Korean partners in that particular marriage of convenience.
It is a fine car, and far from the smallest or most economical you can buy here, even amongst the ones made by Daewoo. It's a great little city car -- if I had a choice between it and a similar-sized American car (if such a thing even exists), I'd choose the Daewoo in a second.
Repulsed? Really? For my part, I'm kinda repulsed by Hummers and the like, by idiots in North America who insist on driving tanks around the city, and then whine when gas prices go up and panic when manufacturers start sucking the tailpipe because they pandered to those idiots for far too long.
posted by stavrosthewonderchicken at 4:47 PM on November 18, 2008 [2 favorites]
I drive a Saab (which is owned by GM) 9-2X (which is a rebadged Subaru WRX Sportwagon), and I just received an email from GM asking me to contact my congresspersons and encourage them to support the bailout. Which is really just a loan.
Anyhow, here's GM's take: gmfactsandfiction.com.
A facts and fiction site is a good idea, if only to get competing talking points out there, but somebody really should have thought through the placement of the "Next" and "Previous" buttons at the bottom of the page, because that's just the kind of screwup that gives people the idea your car company sucks.
posted by notyou at 5:29 PM on November 18, 2008
Anyhow, here's GM's take: gmfactsandfiction.com.
A facts and fiction site is a good idea, if only to get competing talking points out there, but somebody really should have thought through the placement of the "Next" and "Previous" buttons at the bottom of the page, because that's just the kind of screwup that gives people the idea your car company sucks.
posted by notyou at 5:29 PM on November 18, 2008
The problem (and honestly I don't say this with any ill intent) is that most people lack the financial acumen to correctly diagnose the health of a single business let alone the state of the auto industry...If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade.
So, they lost a quarter of a trillion dollars and I'm the one who lacks "financial acumen" and can't understand the state of the auto industry?
posted by vibrotronica at 5:30 PM on November 18, 2008 [1 favorite]
So, they lost a quarter of a trillion dollars and I'm the one who lacks "financial acumen" and can't understand the state of the auto industry?
posted by vibrotronica at 5:30 PM on November 18, 2008 [1 favorite]
I think that the whole "let them fail" talk is a bit too cavalier. Such a move would likely result in hundreds of thousands, if not millions, of lost jobs, which will be hell on an already weak economy.
Let's say 500 million people lose their jobs and the government bails them out at 3 million dollars each, to a person, that's 4.5 billion dollars and 500 million home owners with disposable incomes and if managed even a tenth as poorly as these companies have been, the ability to pass on some of that wealth, start new businesses, etc.
Or we save these companies and the government doesn't get their money back (or much of it) and thousands if not hundreds of thousands of people lose their jobs anyway.
I know not how the financial world works. Seems to favour certain people though.
posted by juiceCake at 5:32 PM on November 18, 2008
Let's say 500 million people lose their jobs and the government bails them out at 3 million dollars each, to a person, that's 4.5 billion dollars and 500 million home owners with disposable incomes and if managed even a tenth as poorly as these companies have been, the ability to pass on some of that wealth, start new businesses, etc.
Or we save these companies and the government doesn't get their money back (or much of it) and thousands if not hundreds of thousands of people lose their jobs anyway.
I know not how the financial world works. Seems to favour certain people though.
posted by juiceCake at 5:32 PM on November 18, 2008
Seems to favour certain people though.
Those with multiplication skills, for starters.
posted by Kwantsar at 5:39 PM on November 18, 2008
Those with multiplication skills, for starters.
posted by Kwantsar at 5:39 PM on November 18, 2008
Those with multiplication skills, for starters.
Indeed.
posted by juiceCake at 5:41 PM on November 18, 2008
Indeed.
posted by juiceCake at 5:41 PM on November 18, 2008
I defy you to find an executive who could have done anything differently with the hand Wagoner was dealt.
he could have tried not being a global warming denialist, could have hedged the price of Oil. See this comment.
That said, the anti-bailout people seem to be living in a dream world. The U.S. unemployment rate is about to hit 7.5%. Adding another 3 million jobs would be devastating; it would mean an even slower recovery. Sometimes delaying the inevitable can be a good idea because sometimes it's easier to deal with one problem at once. Letting GM and Ford fail now would be a lot worse over all then letting them fail in three or four years even it costs $400 billion dollars. I don't know the numbers, but it's possible that the government could recoup that in tax dollars alone by helping those companies and their suppliers stay in business.
posted by delmoi at 6:00 PM on November 18, 2008 [1 favorite]
he could have tried not being a global warming denialist, could have hedged the price of Oil. See this comment.
That said, the anti-bailout people seem to be living in a dream world. The U.S. unemployment rate is about to hit 7.5%. Adding another 3 million jobs would be devastating; it would mean an even slower recovery. Sometimes delaying the inevitable can be a good idea because sometimes it's easier to deal with one problem at once. Letting GM and Ford fail now would be a lot worse over all then letting them fail in three or four years even it costs $400 billion dollars. I don't know the numbers, but it's possible that the government could recoup that in tax dollars alone by helping those companies and their suppliers stay in business.
posted by delmoi at 6:00 PM on November 18, 2008 [1 favorite]
Repulsed? Really? For my part, I'm kinda repulsed by Hummers and the like, by idiots in North America who insist on driving tanks around the city, and then whine when gas prices go up and panic when manufacturers start sucking the tailpipe because they pandered to those idiots for far too long.
Keep in mind that GM "Americanized" the Kalos when they brought it here; typically, that means making styling tweaks to make it look less foreign, and redoing the interior to be more durable and full of cupholders. My personal experience in the Aveo is that it has a typically awful GM interior, as you'll find in many of their products; heck, the Chevrolet HHR and the Chrysler PT Cruiser were both designed by the same person, and while the Chrysler is a pleasant place to be, the HHR is a festival of supercheap-looking and supercheap-feeling plastics inside. Those are more expensive cars than the Aveo/Kalos.
mind you, I trive a Versa/Tiida, so I'm not averse to small cars at all; I just expect them to have a pleasant appearance -- which the Aveo also does -- a pleasant interior -- which the Aveo most certainly does not -- and good crash test scores -- which again the Aveo does not.
posted by davejay at 6:12 PM on November 18, 2008
Keep in mind that GM "Americanized" the Kalos when they brought it here; typically, that means making styling tweaks to make it look less foreign, and redoing the interior to be more durable and full of cupholders. My personal experience in the Aveo is that it has a typically awful GM interior, as you'll find in many of their products; heck, the Chevrolet HHR and the Chrysler PT Cruiser were both designed by the same person, and while the Chrysler is a pleasant place to be, the HHR is a festival of supercheap-looking and supercheap-feeling plastics inside. Those are more expensive cars than the Aveo/Kalos.
mind you, I trive a Versa/Tiida, so I'm not averse to small cars at all; I just expect them to have a pleasant appearance -- which the Aveo also does -- a pleasant interior -- which the Aveo most certainly does not -- and good crash test scores -- which again the Aveo does not.
posted by davejay at 6:12 PM on November 18, 2008
...where exactly do supporters of such a bailout think this money comes from? It's made up out of thin air. Creating that much debt will have enormous, systemic effects on our economy.
Creating 25 billion dollars in debt to keep GM afloat for some to-be-argued-about period of time will have enormous, systemic effects on our economy but creating 750 billion dollars in debt to do the same thing to banks won't? Huh?
posted by Juffo-Wup at 6:23 PM on November 18, 2008 [1 favorite]
Creating 25 billion dollars in debt to keep GM afloat for some to-be-argued-about period of time will have enormous, systemic effects on our economy but creating 750 billion dollars in debt to do the same thing to banks won't? Huh?
posted by Juffo-Wup at 6:23 PM on November 18, 2008 [1 favorite]
that means making styling tweaks to make it look less foreign, and redoing the interior to be more durable and full of cupholders
Hmmph. Other than the cupholders thing, I honestly don't have any idea what that means. Car interiors, at least these days, wouldn't have struck me as something with much local variance.
Still, I didn't know GM that gutted the interiors for the US versions, so thanks for the info.
posted by stavrosthewonderchicken at 6:31 PM on November 18, 2008
Hmmph. Other than the cupholders thing, I honestly don't have any idea what that means. Car interiors, at least these days, wouldn't have struck me as something with much local variance.
Still, I didn't know GM that gutted the interiors for the US versions, so thanks for the info.
posted by stavrosthewonderchicken at 6:31 PM on November 18, 2008
Anyhow, here's GM's take: gmfactsandfiction.com.
Apart from the hilariously uneven design on that site, the thing that sticks out for me is that when they bust a "myth" they point out how amazingly awesome they are, how much their market share has increased by and how many cars they're selling.
So... why do they need a bailout, again?
posted by Talanvor at 7:00 PM on November 18, 2008 [1 favorite]
Apart from the hilariously uneven design on that site, the thing that sticks out for me is that when they bust a "myth" they point out how amazingly awesome they are, how much their market share has increased by and how many cars they're selling.
So... why do they need a bailout, again?
posted by Talanvor at 7:00 PM on November 18, 2008 [1 favorite]
To elaborate on a previous point; where exactly do supporters of such a bailout think this money comes from? It's made up out of thin air. Creating that much debt will have enormous, systemic effects on our economy.
What a bizarre statement. If it were made out of thin air (i.e. simply printed), it would not be debt. In fact, it's not made at all, the government sells treasury bonds which it pays back after a fixed term, using tax money. The interest on the deficit is calculated in the annual budget as... interest on the debt. Your comment could only have been made by someone who doesn't understand fiscal policy at all.
You're certainly right that it has profound effects on the economy, and those are mostly good when you're in a recession/depression.
--
Here's the problem. People don't want to invest in the stock market, and they don't want to spend money shopping either. So what do they do with the money? There are two choices really. Either they can save their money in a bank, or they can buy U.S. Treasuries. If they buy treasuries, that means they are loaning money to the government. Right now, the demand for treasuries is gigantic, and the government can afford to do these bailouts without to much of an increase in the annual budget from interest payments.
posted by delmoi at 7:10 PM on November 18, 2008
What a bizarre statement. If it were made out of thin air (i.e. simply printed), it would not be debt. In fact, it's not made at all, the government sells treasury bonds which it pays back after a fixed term, using tax money. The interest on the deficit is calculated in the annual budget as... interest on the debt. Your comment could only have been made by someone who doesn't understand fiscal policy at all.
You're certainly right that it has profound effects on the economy, and those are mostly good when you're in a recession/depression.
--
Here's the problem. People don't want to invest in the stock market, and they don't want to spend money shopping either. So what do they do with the money? There are two choices really. Either they can save their money in a bank, or they can buy U.S. Treasuries. If they buy treasuries, that means they are loaning money to the government. Right now, the demand for treasuries is gigantic, and the government can afford to do these bailouts without to much of an increase in the annual budget from interest payments.
posted by delmoi at 7:10 PM on November 18, 2008
Me: And I could have told you with pretty much absolute certainty, by around the time GM finished upgrading its Janesville operations, that fuel prices were headed permanently into a range where SUV manufacture would no longer be profitable at the scale the American auto companies were churning the things out.
Kwantsar: From 1/3/05 to 12/29/06, WTI averaged $61.32. Today it's at $54.39. We must use different definitions of "permanently".
I agree there's a communication breakdown, but it actually appears to be around the phrase "into a range." See, I'm inclined to think a spot quote in the midst of the biggest capital flight from the commodity (and all other) markets in nearly a century might indicate that $54.39 is in the vicinity of a new kind of bottom, even though - as you mention - it was seen as crazily high just three years ago.
But hey, if you're looking to short oil futures at say 60 bucks a barrel, I'd take the other side of that bet any ole day.
posted by gompa at 7:58 PM on November 18, 2008 [1 favorite]
Kwantsar: From 1/3/05 to 12/29/06, WTI averaged $61.32. Today it's at $54.39. We must use different definitions of "permanently".
I agree there's a communication breakdown, but it actually appears to be around the phrase "into a range." See, I'm inclined to think a spot quote in the midst of the biggest capital flight from the commodity (and all other) markets in nearly a century might indicate that $54.39 is in the vicinity of a new kind of bottom, even though - as you mention - it was seen as crazily high just three years ago.
But hey, if you're looking to short oil futures at say 60 bucks a barrel, I'd take the other side of that bet any ole day.
posted by gompa at 7:58 PM on November 18, 2008 [1 favorite]
In a good economy, letting GM or even all three fail might be OK. Right now, it would send a massive shock through the economy which could very well tip the scales in the seriously wrong direction. A lot of toxic assets still have to be shed from the system, and there are still gaping holes in many balance sheets, but a catastrophic failure of a complete sector of the economy is NOT a good thing for anyone. We're past moral hazard at this point, and all we can do is try to avoid the hazard. Forget moral. We're on the edge of a cliff, all of us.
posted by krinklyfig at 8:05 PM on November 18, 2008 [1 favorite]
posted by krinklyfig at 8:05 PM on November 18, 2008 [1 favorite]
jeffburdges wrote: A few startups can handle the job far better using subcontracted manufacturing capacity, ala Tesla.
And who, pray tell, will be running these plants? (you know, the ones GM, Ford, and Chrysler are running now) The remaining manufacturers will be running at full capacity if we let Ford and GM go.
I'm not saying there are no conditions under which they should be allowed to fail, but they seem to at least be attempting to change and would probably have the private funds to do it if the credit markets weren't fucked.
posted by wierdo at 8:09 PM on November 18, 2008
And who, pray tell, will be running these plants? (you know, the ones GM, Ford, and Chrysler are running now) The remaining manufacturers will be running at full capacity if we let Ford and GM go.
I'm not saying there are no conditions under which they should be allowed to fail, but they seem to at least be attempting to change and would probably have the private funds to do it if the credit markets weren't fucked.
posted by wierdo at 8:09 PM on November 18, 2008
vibrotronica wrote: So, they lost a quarter of a trillion dollars and I'm the one who lacks "financial acumen" and can't understand the state of the auto industry?
That they did poorly is of no credit to your own knowledge or skill. Nor mine. Nor anyone else's for that matter.
posted by wierdo at 8:18 PM on November 18, 2008
That they did poorly is of no credit to your own knowledge or skill. Nor mine. Nor anyone else's for that matter.
posted by wierdo at 8:18 PM on November 18, 2008
They had the power and skill to negotiate the deal, and they did. Maybe you and I don’t.
But I’m not going to disparage some guy just because his people were able to work out a better deal than him.
i will - when the labor movement got its start, the call was for SOLIDARITY for all workers, not "i'm alright jack, i've got mine" for a few
if they'd fought for ALL of us, then the prospect of losing an auto worker job wouldn't seem like such a catastrophe to them
and i say that as a factory worker and a union member
posted by pyramid termite at 8:31 PM on November 18, 2008 [1 favorite]
But I’m not going to disparage some guy just because his people were able to work out a better deal than him.
i will - when the labor movement got its start, the call was for SOLIDARITY for all workers, not "i'm alright jack, i've got mine" for a few
if they'd fought for ALL of us, then the prospect of losing an auto worker job wouldn't seem like such a catastrophe to them
and i say that as a factory worker and a union member
posted by pyramid termite at 8:31 PM on November 18, 2008 [1 favorite]
Anndddd we've come full circle, judging these companies based on what they were 5 years ago.
they weren't losing 10s of billions of dollars 5 years ago
GM can be resurrected without bankruptcy because they have already taken the steps to do so.
steps that now have them asking for billions of dollars so they don't go bankrupt - you know, there comes a point where one really has to pay attention to the RESULTS and realize that they speak for themselves
all a bailout will do is postpone the day of reckoning
And if you look at this properly without any political motive or emotional bias, I think you'll find that GM is a very viable company who simply needs a financial boost to succeed.
but a bankruptcy can actually do the same thing for them and more - they can renegotiate contracts and do the restructuring they need
it's not the end of the world
If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade.
and 25 billion is going to fix that?
posted by pyramid termite at 8:47 PM on November 18, 2008
they weren't losing 10s of billions of dollars 5 years ago
GM can be resurrected without bankruptcy because they have already taken the steps to do so.
steps that now have them asking for billions of dollars so they don't go bankrupt - you know, there comes a point where one really has to pay attention to the RESULTS and realize that they speak for themselves
all a bailout will do is postpone the day of reckoning
And if you look at this properly without any political motive or emotional bias, I think you'll find that GM is a very viable company who simply needs a financial boost to succeed.
but a bankruptcy can actually do the same thing for them and more - they can renegotiate contracts and do the restructuring they need
it's not the end of the world
If you look at GM based on past performance, you will see that they have destroyed a quarter of a trillion dollars in capital over the past decade.
and 25 billion is going to fix that?
posted by pyramid termite at 8:47 PM on November 18, 2008
That said, the anti-bailout people seem to be living in a dream world.
i'm just saying that there are times when a company is too broke for anything but a bankruptcy court to fix
posted by pyramid termite at 8:48 PM on November 18, 2008
i'm just saying that there are times when a company is too broke for anything but a bankruptcy court to fix
posted by pyramid termite at 8:48 PM on November 18, 2008
it's not the end of the world
As has been mentioned, it's not clear that GM would survive Chapter 11.
I think GM/F/DCX could be bought out by the government, replace management and bring the companies private, restructure them to make energy-efficient vehicles, re-negotiate with labor, and start making cars the rest of the world will imitate again. It would be a pretty massive undertaking, sort of like building the freeway system in the first place, but that was also a government effort, and it helped usher in the post-war middle class era. At the very least, government intervention should involve massive restructuring and retooling for a different market with different energy needs. It's one critical key of making our infrastructure useful past the oil age, and we need to get that over as quickly as possible.
posted by krinklyfig at 9:44 PM on November 18, 2008
As has been mentioned, it's not clear that GM would survive Chapter 11.
I think GM/F/DCX could be bought out by the government, replace management and bring the companies private, restructure them to make energy-efficient vehicles, re-negotiate with labor, and start making cars the rest of the world will imitate again. It would be a pretty massive undertaking, sort of like building the freeway system in the first place, but that was also a government effort, and it helped usher in the post-war middle class era. At the very least, government intervention should involve massive restructuring and retooling for a different market with different energy needs. It's one critical key of making our infrastructure useful past the oil age, and we need to get that over as quickly as possible.
posted by krinklyfig at 9:44 PM on November 18, 2008
I'm convinced that nobody who is not connected with the automotive business seems to have any appreciation for how difficult it is. No one. It's like barbecuing; everyone's a self-appointed expert. Plus they had a Ford/Chevy/Dodge many years ago and it was crap, so there you go, what more proof do you need.
Silicon Valley thinks it can whip up an electric car. Not millions, only a few hundred at a time. Of course, they have to hire Lotus to do the actual car stuff. And then they start hiring automotive engineers themselves. And then oops, that's not working out. Time for massive layoffs and product delays. But no one ridicules them ...
Wall Street thinks automakers are idiots. They'll just drop their brain trust in place and turn things around, presto! Only it turns out that building a product with 14,000 parts and lead times measured in years is a bit more complicated than they expected ...
Plus there's the safety regulations. And the emissions regulations, which multiply in complexity as different levels of government insist upon their own rules for their own market. And the fuel economy rules that dictate what companies are supposed to sell, while cheap gas prices effectively encourage customers to buy the exact opposite. And foreign competitors with the financial advantage of government-supplied health care.
It's so much easier to blame Detroit when you don't grasp what they're dealing with.
Don't get me wrong; American auto companies have caused themselves a lot of problems ... but many of those problems started with decisions made many decades ago, and there are entrenched interests benefiting that make change difficult or impossible. And bankruptcy will solve that like magic pixie dust ... except that no one will buy a vehicle from a bankrupt automaker. (When I say no one, I mean 80%, as shown by consumer research into this exact question.)
It would be nice if this country could continue to actually manufacture something, instead of just selling each other services. Otherwise we become England, a shell of our former economic selves.
We're bailing out Wall Street who created this economic doomsday machine, but heaven forbid we spend anything helping companies that actually make things who are caught up in this financial maelstrom.
Adjusted for population growth, vehicle sales are at their lowest level since World War II. Not American automakers, but all automakers. People are afraid to buy any vehicle, and many people who do want to can't get credit. That's the immediate cause of this situation. Better vehicles and lower labor costs have already been in the pipeline for all three companies ... but this credit crisis and economy will kill them first without loans.
Countries all over the world help out their industries this all the time. Why shouldn't we do the same?
posted by pmurray63 at 10:29 PM on November 18, 2008 [5 favorites]
Silicon Valley thinks it can whip up an electric car. Not millions, only a few hundred at a time. Of course, they have to hire Lotus to do the actual car stuff. And then they start hiring automotive engineers themselves. And then oops, that's not working out. Time for massive layoffs and product delays. But no one ridicules them ...
Wall Street thinks automakers are idiots. They'll just drop their brain trust in place and turn things around, presto! Only it turns out that building a product with 14,000 parts and lead times measured in years is a bit more complicated than they expected ...
Plus there's the safety regulations. And the emissions regulations, which multiply in complexity as different levels of government insist upon their own rules for their own market. And the fuel economy rules that dictate what companies are supposed to sell, while cheap gas prices effectively encourage customers to buy the exact opposite. And foreign competitors with the financial advantage of government-supplied health care.
It's so much easier to blame Detroit when you don't grasp what they're dealing with.
Don't get me wrong; American auto companies have caused themselves a lot of problems ... but many of those problems started with decisions made many decades ago, and there are entrenched interests benefiting that make change difficult or impossible. And bankruptcy will solve that like magic pixie dust ... except that no one will buy a vehicle from a bankrupt automaker. (When I say no one, I mean 80%, as shown by consumer research into this exact question.)
It would be nice if this country could continue to actually manufacture something, instead of just selling each other services. Otherwise we become England, a shell of our former economic selves.
We're bailing out Wall Street who created this economic doomsday machine, but heaven forbid we spend anything helping companies that actually make things who are caught up in this financial maelstrom.
Adjusted for population growth, vehicle sales are at their lowest level since World War II. Not American automakers, but all automakers. People are afraid to buy any vehicle, and many people who do want to can't get credit. That's the immediate cause of this situation. Better vehicles and lower labor costs have already been in the pipeline for all three companies ... but this credit crisis and economy will kill them first without loans.
Countries all over the world help out their industries this all the time. Why shouldn't we do the same?
posted by pmurray63 at 10:29 PM on November 18, 2008 [5 favorites]
It would be nice if this country could continue to actually manufacture something, instead of just selling each other services. Otherwise we become England, a shell of our former economic selves.
Yeah, that's exactly why I think there should be some sort of nationalization, because this sort of problem is dealing with a massively complex industry which can't be really helped just by throwing cash at it. GM is in better shape than the media gives it, true, and if we weren't in dire times, they'd probably be OK. But we are in dire times, and they're probably not going to emerge without help, if at all. But they won't be helped by continuing the same business models.
GM and Ford could restructure from the ground-up to create pure electric and natural gas vehicles, and give people huge tax incentives to buy them, government backed loans if necessary, build out the infrastructure as a green energy project, give T Boone his green light to crank up his wind farm, and lead the way and get this thing done. No better time than now. We can come up with the money, and we can create jobs. There's all this untapped potential, all these people who really wanted change for this election want to contribute to something big. This is something big.
posted by krinklyfig at 10:59 PM on November 18, 2008 [1 favorite]
Yeah, that's exactly why I think there should be some sort of nationalization, because this sort of problem is dealing with a massively complex industry which can't be really helped just by throwing cash at it. GM is in better shape than the media gives it, true, and if we weren't in dire times, they'd probably be OK. But we are in dire times, and they're probably not going to emerge without help, if at all. But they won't be helped by continuing the same business models.
GM and Ford could restructure from the ground-up to create pure electric and natural gas vehicles, and give people huge tax incentives to buy them, government backed loans if necessary, build out the infrastructure as a green energy project, give T Boone his green light to crank up his wind farm, and lead the way and get this thing done. No better time than now. We can come up with the money, and we can create jobs. There's all this untapped potential, all these people who really wanted change for this election want to contribute to something big. This is something big.
posted by krinklyfig at 10:59 PM on November 18, 2008 [1 favorite]
Again, people continue to argue GM 5 years ago, not GM 2008.
Maybe that's because the Cavaliers of 5 years ago are now shitting themselves all over America's roads. Do you really want me to believe that the 2008 Cobalt won't be doing the same in 2013? My Mom bought a Cobalt last year. So far, she's already had to get the steering column replaced. Fuck. That. Shit.
I am 32 years old. For every year I've been alive, GM cars have been seen as shitty, low quality crap. I don't know a single person who owns a GM car unless 1.) they work or are family of someone who works for GM, or 2.) they work or are family of someone who sells GM. This is because GM has spent 30 years selling the worst cars in the automotive industry. They have an entire generation of people who have grown up knowing that General Motors = shit car.
I, for one, will never, ever buy a car from GM. They have spent an entire generation convincing anyone not blinded by nationalism that they are a world-record incompetent car company. They will go out of business. The only difference is whether the execs get a combined $25 billion bonus as they lay off their workers or not.
The General Motors car company is a completely, utterly trashed brand in the United States of America. This will not change in time to save them. Maybe, maybe if they completely change their name and drop practically every line they have (laying off tens of thousands in the process), they might have a slim chance at survival. I don't see that happening.
FWIW, I won't buy Ford* or Chrysler**, either, though they, at least seem to be semi-competent with their foreign collaborators.
*Let me tell you about the time I rented a Focus with a bad ignition key switch-thing (this was a new car).
**Have you ever driven a PT Cruiser?
posted by dirigibleman at 11:39 PM on November 18, 2008 [1 favorite]
Maybe that's because the Cavaliers of 5 years ago are now shitting themselves all over America's roads. Do you really want me to believe that the 2008 Cobalt won't be doing the same in 2013? My Mom bought a Cobalt last year. So far, she's already had to get the steering column replaced. Fuck. That. Shit.
I am 32 years old. For every year I've been alive, GM cars have been seen as shitty, low quality crap. I don't know a single person who owns a GM car unless 1.) they work or are family of someone who works for GM, or 2.) they work or are family of someone who sells GM. This is because GM has spent 30 years selling the worst cars in the automotive industry. They have an entire generation of people who have grown up knowing that General Motors = shit car.
I, for one, will never, ever buy a car from GM. They have spent an entire generation convincing anyone not blinded by nationalism that they are a world-record incompetent car company. They will go out of business. The only difference is whether the execs get a combined $25 billion bonus as they lay off their workers or not.
The General Motors car company is a completely, utterly trashed brand in the United States of America. This will not change in time to save them. Maybe, maybe if they completely change their name and drop practically every line they have (laying off tens of thousands in the process), they might have a slim chance at survival. I don't see that happening.
FWIW, I won't buy Ford* or Chrysler**, either, though they, at least seem to be semi-competent with their foreign collaborators.
*Let me tell you about the time I rented a Focus with a bad ignition key switch-thing (this was a new car).
**Have you ever driven a PT Cruiser?
posted by dirigibleman at 11:39 PM on November 18, 2008 [1 favorite]
Tonight I heard Ford blew through $7.5 billion cash in the third quarter. Now suppose this bailout of $25 billion passes, divided evenly between the big three, that's roughly $8.3 billion each. That gives them each a little over three months to right the ship. Yeah, right. We've got a better chance of being out of Iraq in three months time.
posted by hangingbyathread at 12:25 AM on November 19, 2008 [1 favorite]
posted by hangingbyathread at 12:25 AM on November 19, 2008 [1 favorite]
Otherwise we become England, a shell of our former economic selves.
Ask the UK how Rover is doing, although you'll have to ask in Chinese. And that is after they threw millions of pounds at them to keep them around.
There are reasons to keep a US auto industry, but I can't see they make financial sense to US taxpayers. If you cut the patriotism and the "but they are so much better now" wishful thinking you end up with car makers who are more expensive at making less popular vehicles. Are we going to have a free market or not?
posted by bystander at 4:45 AM on November 19, 2008
Ask the UK how Rover is doing, although you'll have to ask in Chinese. And that is after they threw millions of pounds at them to keep them around.
There are reasons to keep a US auto industry, but I can't see they make financial sense to US taxpayers. If you cut the patriotism and the "but they are so much better now" wishful thinking you end up with car makers who are more expensive at making less popular vehicles. Are we going to have a free market or not?
posted by bystander at 4:45 AM on November 19, 2008
"...if this were any normal time in the business cycle I would say YES, let GM declare Chapter 11, let them restructure themselves and they will come out the other side a smaller, leaner company but these are not normal economic times - with the world-wide credit crisis as it stands, there is no way GM or any large business could get the refinancing - look at AIG, they had to go to the Fed too...in the current climate, GM would not be able to get the loans they would need to come out of bankruptcy without Federal help so I am quietly shouting for the loans to be approved."
- Paul Krugman, 11/16/08
posted by pmurray63 at 5:53 AM on November 19, 2008
- Paul Krugman, 11/16/08
posted by pmurray63 at 5:53 AM on November 19, 2008
I think GM/F/DCX could be bought out by the government, replace management and bring the companies private, restructure them to make energy-efficient vehicles, re-negotiate with labor, and start making cars the rest of the world will imitate again.
but it would be cheaper to do so after bankruptcy, wouldn't it?
posted by pyramid termite at 6:01 AM on November 19, 2008
but it would be cheaper to do so after bankruptcy, wouldn't it?
posted by pyramid termite at 6:01 AM on November 19, 2008
I can't wait for the episode of 'Mad Men' where they discuss planned obsalescence:
DAN DRAPER enters the room late and hungover, despite his freshly-pressed shirt. A strategy meeting is already in progress:PETE CAMPBELL (mid-sentence)
... people are already competing with the Joneses, the car companies are just buiding this into their production schedule, like an annual check-up...
PEGGY
But --
BEAT -- CAMPBELL and COSGROVE stare her down. PEGGY goes silent.posted by vhsiv at 8:04 AM on November 19, 2008KEN COSGROVE
Call it a feature. Research shows that very 2 years, people are already looking to upgrade...
CAMPBELL
So, they're already trying to give the consumer what they want before they ask for it!
DRAPER
But I've looked-over their material -- they've got no long-range business plan.
CAMPBELL
But that's the charm, Dan -- they want to surprise the public with their annual innovations!
DRAPER (suddenly worried)
How long have they been doing thing this way?
CAMPBELL
Four years. It's brilliant, isn't it?
DRAPER (perpelexed and losing patience)
I just bought a new car... I'm not sure I like the sound of this.
COSGROVE
Get with the program, Dan! It's not like they're asking us to actually MAKE the cars.
DRAPER (perpelexed and already losing patience)
How much is this account worth, again?
CAMPBELL
Four million dollars.
ROGER STERLING (to CAMPBELL)
Your wife's not related to anyone over there, is she?
CAMPBELL
No.
STERLING
Then consider it a done deal. Next?
CAMPBELL
A new product -- Health insurance!
Why doesn't GM just restructure to become a bank?
posted by mazola at 3:36 PM on November 19, 2008 [1 favorite]
posted by mazola at 3:36 PM on November 19, 2008 [1 favorite]
but it would be cheaper to do so after bankruptcy, wouldn't it?
Perhaps, but allowing it to fail might have worse repercussions than nipping the problem in the bud now. The amount of money spent is not as important as dealing with systemic risk.
posted by krinklyfig at 4:15 PM on November 19, 2008
Perhaps, but allowing it to fail might have worse repercussions than nipping the problem in the bud now. The amount of money spent is not as important as dealing with systemic risk.
posted by krinklyfig at 4:15 PM on November 19, 2008
fusinski: I defy you to find an executive who could have done anything differently with the hand Wagoner was dealt.
Pity I wasn't around yesterday, when this thread was still alive, but are you serious?
Here's but one good example: GMT900.
Early mid-2000s, GM was already in trouble, and there came a call for drastic action. But what would Wagoner choose to do? Perhaps invest in the development of more fuel-efficient cars, or more rapid hybrid development? Maybe work on improving the quality of the already-existent model lines, to fight some of the image problems GM cars face in the domestic market? Push development of global car platforms that would make possible lots of solid future automotive prospects?
Haha! Of course not. Wagoner chose instead to cannibalize all of those initiatives to sink as much money as possible into GMT900, the upcoming large truck and SUV platform (think Escalades and Silverados), so that GM could rush to the market all the shiny new enormoboxes for which just everybody would be so desperately clamoring. This was in blatant disregard of economic, political, climate and oil exploration realities, but who cares? Big trucks make you feel like you got a big dick, amirite??
Fast forward a couple of years, and GM is ready to introduce the rushed-to-market Tahoe and Escalade, just in time for... a year after Katrina hit and gas prices had started climbing. And new trucks were being cranked out, while the old models sat on dealer lots, still. (Not like they did because of the gas price over this past summer, or the credit crisis now, but sales had definitely plummeted from the fin-de-siecle rates)
Well, what's a car company to do when they've got lots and abandoned airfields stockpiled with new trucks (that nobody's going to want to buy, :-( !!), and nowhere to put them on dealer lots? Why, have a fire sale to get rid of everything on the lots! Thus began the original GM "Employee Discount for Everybody" scheme, wherein the company who was selling each car at an average LOSS of $2331 cut another few hundred or thousand dollars off their prices, just to get them moving.
Eventually, the new trucks debuted and moved a few units, then sales dropped off drastically. And they've stayed off. And not even the few people who were buying SUVs in 2006 are doing so anymore, so the plants cranking out GMT900 vehicles are being throttled back, development of the next-generation Tahoe and Suburban have been killed like they should have been last-generation, and GM's been forced to reinstate the Employee Discount for Everyone sales every year since, just to keep clearing out lots to make room for more cars that nobody wants to pay greater than cost to buy.
I can't name an executive who could have avoided this goddamn fiasco – I don't pal around with many CEOs. But I DO know plenty of columnists and bloggers who saw this horseshit being a disaster from miles away, who wrote countless articles about it at the time, and who proved to be absolutely, 100% correct. So it's not all laughing at the dumbasses in hindsight; legitimately bad decisions HAVE been made in the past five years, and CONTINUE to be made, and throwing an obscene sum of money at these cretins to try and help them turn around a colossal disaster of an industry that hasn't been able to do it in decades, so far, seems like throwing a captain a small sail to help turn around an aircraft carrier in a swimming pool.
(That simile was fucking horrible, and I regret not being able to come up with something better, but in my defense, at least THAT mistake didn't help destroy one of America's few remaining industries and potentially put all of the taxpayers in the nation on the hook for my retardation)
posted by cobra_high_tigers at 9:58 PM on November 19, 2008 [3 favorites]
Pity I wasn't around yesterday, when this thread was still alive, but are you serious?
Here's but one good example: GMT900.
Early mid-2000s, GM was already in trouble, and there came a call for drastic action. But what would Wagoner choose to do? Perhaps invest in the development of more fuel-efficient cars, or more rapid hybrid development? Maybe work on improving the quality of the already-existent model lines, to fight some of the image problems GM cars face in the domestic market? Push development of global car platforms that would make possible lots of solid future automotive prospects?
Haha! Of course not. Wagoner chose instead to cannibalize all of those initiatives to sink as much money as possible into GMT900, the upcoming large truck and SUV platform (think Escalades and Silverados), so that GM could rush to the market all the shiny new enormoboxes for which just everybody would be so desperately clamoring. This was in blatant disregard of economic, political, climate and oil exploration realities, but who cares? Big trucks make you feel like you got a big dick, amirite??
Fast forward a couple of years, and GM is ready to introduce the rushed-to-market Tahoe and Escalade, just in time for... a year after Katrina hit and gas prices had started climbing. And new trucks were being cranked out, while the old models sat on dealer lots, still. (Not like they did because of the gas price over this past summer, or the credit crisis now, but sales had definitely plummeted from the fin-de-siecle rates)
Well, what's a car company to do when they've got lots and abandoned airfields stockpiled with new trucks (that nobody's going to want to buy, :-( !!), and nowhere to put them on dealer lots? Why, have a fire sale to get rid of everything on the lots! Thus began the original GM "Employee Discount for Everybody" scheme, wherein the company who was selling each car at an average LOSS of $2331 cut another few hundred or thousand dollars off their prices, just to get them moving.
Eventually, the new trucks debuted and moved a few units, then sales dropped off drastically. And they've stayed off. And not even the few people who were buying SUVs in 2006 are doing so anymore, so the plants cranking out GMT900 vehicles are being throttled back, development of the next-generation Tahoe and Suburban have been killed like they should have been last-generation, and GM's been forced to reinstate the Employee Discount for Everyone sales every year since, just to keep clearing out lots to make room for more cars that nobody wants to pay greater than cost to buy.
I can't name an executive who could have avoided this goddamn fiasco – I don't pal around with many CEOs. But I DO know plenty of columnists and bloggers who saw this horseshit being a disaster from miles away, who wrote countless articles about it at the time, and who proved to be absolutely, 100% correct. So it's not all laughing at the dumbasses in hindsight; legitimately bad decisions HAVE been made in the past five years, and CONTINUE to be made, and throwing an obscene sum of money at these cretins to try and help them turn around a colossal disaster of an industry that hasn't been able to do it in decades, so far, seems like throwing a captain a small sail to help turn around an aircraft carrier in a swimming pool.
(That simile was fucking horrible, and I regret not being able to come up with something better, but in my defense, at least THAT mistake didn't help destroy one of America's few remaining industries and potentially put all of the taxpayers in the nation on the hook for my retardation)
posted by cobra_high_tigers at 9:58 PM on November 19, 2008 [3 favorites]
cobra_high_tigers: At the time you speak of, it was not at all obvious that SUV sales would end up in the tank. People love them some SUVs (and are still buying them en masse around here). People were not, in the main, buying small fuel efficient vehicles. There was no indication things were going to change on that front. Nor was there any indication there would be the massive price gouging after Katrina that would last for so long.
I may have been calling for a banking meltdown since 2002 and a stock market meltdown since 1999 or so, but it wasn't at all certain to happen, and that doesn't mean other people are stupid for not seeing it. They just aren't as pessimistic as I was.
The automakers have been mortally wounded by a confluence of the economy and energy speculators, along with a dose of their own lack of foresight and previous horrendous quality issues that keep Honda/Toyota snobs (of which I am one, thanks) from even considering buying a vehicle produced by the big 3. Mainly the first two.
posted by wierdo at 9:25 AM on November 21, 2008
I may have been calling for a banking meltdown since 2002 and a stock market meltdown since 1999 or so, but it wasn't at all certain to happen, and that doesn't mean other people are stupid for not seeing it. They just aren't as pessimistic as I was.
The automakers have been mortally wounded by a confluence of the economy and energy speculators, along with a dose of their own lack of foresight and previous horrendous quality issues that keep Honda/Toyota snobs (of which I am one, thanks) from even considering buying a vehicle produced by the big 3. Mainly the first two.
posted by wierdo at 9:25 AM on November 21, 2008
« Older Wow, Boogle. It looks brown and soft and it smells... | Michael Myers Beauty Mask Infomercial Newer »
This thread has been archived and is closed to new comments
posted by acro at 9:32 AM on November 18, 2008