Big 3 automakers should declare bankruptcy.

[AWL71 0]

Below is an excerpt from an article that I think makes a lot of sense. The Big 3 will never be profitable as long as the UAW is milking them dry.

"The better solution is a simple one: Allow automakers to declare bankruptcy.

Contrary to popular belief, that will not mean the end of a company such as GM, which has indicated it may run out of cash by the end of this year. Under Chapter 11, a bankruptcy judge will weigh the different interests of GM's creditors, labor unions, shareholders, and so on, and the resulting company will emerge leaner and stronger. Many current customers of United Airlines, Texaco, Global Crossing, and Pacific Gas and Electric probably don't even know that those companies once filed for Chapter 11.

Chapter 11 also would let a judge alter gold-plated union contracts and benefits that have hamstrung the Big Three and crippled their ability to compete against Japanese and European car makers. Toyota, Honda, and other non-Big Three manufacturers that employ over 100,000 Americans, mostly in right-to-work states, have shown that they can make money building cars in the United States. The best way to keep U.S. auto workers employed in the future -- tens of thousands already have lost their jobs -- is to make it profitable to keep them on the payroll.

One explanation for Washington's haste is that while bankruptcy would alter union contracts, a bailout probably won't. The labor movement spent, according to Financial Week, a whopping $385 million to elect Obama and other Democrats last week. Nobody writes such large checks without expecting something: now it's payback time.

It's true, as bailout proponents argue, that GM employs about 263,000 people. But corporations including AT&T and IBM employ more, and by that line of argument, WalMart (2.1 million full-time employees) would always be far too big to fail. The Feds have already been profligate in doling out cash; a GM bailout would invite a long line of supplicants, with the most politically-connected companies muscling their way to the front of the queue.

If you don't like this use of your tax dollars, now's the time to phone your elected representatives. You can find contact information for your House of Representatives member on their Web site, and the Senate has a similar list. My e-mail address is below -- please let me know what you hear."

Source: http://www.cbsnews.com/stories/2008/11/12/politics/otherpeoplesmoney/main4595068.shtml

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[livendive 8]

I agree.

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[TrophyHusband 0]

companies should be allowed to fail. allowing the sick and the week to be culled from the herd will make the herd stronger. as mentioned in your post, other auto maker have proven that you can build cars in the us and turn a profit. there is a parallel in the airline industry. the large older airlines can't make a profit, but the newer airlines can. there is a common denominator here. with the auto makers, they can't afford to retool and do the r & d to build higher mileage and lower emmission cars. this is something they should have been working on for many years, but short term profit is more important than long term goals. the older airlines have older fleets that are less fuel efficient and have higher maintenence costs. they should have been steadily replacing planes so that the average age of their fleets stayed the same, instead of the average age growing older. once again, short term profit is more important than long term goals. why the hell should we have to pay for their short sightedness? when a company can't fail, there's really no incentive to do the right thing. on the other hand, if these guys are allowed to go under, it will send a message to the companies that still exist that there is no safety net.

"Your scrotum is quite nice" - Skymama
www.kjandmegan.com

[AWL71 0]

And it is a shame that it likely won't happen. GM and Ford are producing excellent cars today, though they are still too reliant on big trucks and SUVs that no one wants anymore. If they could restructure without the UAW they could complete with the imports and turn a profit.

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[livendive 8]

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And it is a shame that it likely won't happen. GM and Ford are producing excellent cars today, though they are still too reliant on big trucks and SUVs that no one wants anymore. If they could restructure without the UAW they could complete with the imports and turn a profit.

I don't know much about their cars. The American trucks, SUVs, and mini-vans we drive at work are much improved in quality over what they were selling a decade ago, but still lacking somewhat in fit, finish, and reliability. When it's my dollars on the table, I still buy imports. My last 8 purchases have been three Toyotas, two Hondas, two Mazdas (quasi-Fords), and a Nissan...including two Toyota Tundras, the first competing with the Dakota and the current truck going head-to-head with the traditional half-tons. There are a few cars out now that I'd take a closer look at if I were in car-buying mode, but I'm not...a truck just suits my needs better.

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[Halfpastniner 0]

My family had horrible dealings with an American car company. After paying 35,000 dollars, a very expensive engine repair was needed at 61000 miles (warranty expired at 60,000!).

Aside from the car falling apart, the customer service sucked as well. There next cars were Toyota and have yet to have any trouble at all with them.

Its too bad the American products just are not as good. So why should we be saving them from failing? Bullshit. Noone is "Too Big" to go down.

Unfortunately, it is clear that the new administration ready to bail out everyone, and everyone is lining up for their piece of the tax-payers pie

BASE 1384

[Halfpastniner 0]

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There's plenty of demand for things like OTR truckers and nurses. They'll even pay for your training and schooling. Adapt and survive.

I agree with the rest of your post, but i dont know about this. The freight industry is hurting REAL bad right now, there cannot be many jobs to haul it. I know several companies are teetering on the brink of failing.

BASE 1384

[tkhayes 154]

they have no reason to file for bankruptcy if they can get $25B from the government. (OUR money)

The govt should pull any offers, then yes, they should and would file for Chpt 11 and the processes would solve themselves over time.

Shares drop to $1/share for GM and someone buys the company - the way it is supposed to work.....

[pirana 0]

Yes, failure needs to be an option. We have processes in place to deal with that (things like bankruptcy and unemployment).

All bailing out does is delay and spread out the pain over time; while minimizing the incentives for business leaders to make good decisions.

Better to let them fail, bite the bullet, and get on with things. Saddling the economy with trillions of dollars of additional debt is a much worse option in the long run.

" . . . the lust for power can be just as completely satisfied by suggesting people into loving their servitude as by flogging them and kicking them into obedience." -- Aldous Huxley

[Rookie120 0]

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the large older airlines can't make a profit, but the newer airlines can.

That is a very narrow and inaccurate statement. So Jetblue with the A320's who are losing money is an old company. There are a lot of other factors why they are losing money. A/C age might a a factor but not the only one.

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the older airlines have older fleets that are less fuel efficient and have higher maintenence costs. they should have been steadily replacing planes so that the average age of their fleets stayed the same, instead of the average age growing older.

So Southwest who has been around since the late 60's are one of the airlines you are talking about? Once again you made a very narrow minded statement. There is a lot more to the picture than just buy new planes and you will make money.

If you find yourself in a fair fight, your tactics suck!

[AWL71 0]

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And it is a shame that it likely won't happen. GM and Ford are producing excellent cars today, though they are still too reliant on big trucks and SUVs that no one wants anymore. If they could restructure without the UAW they could complete with the imports and turn a profit.

I don't know much about their cars. The American trucks, SUVs, and mini-vans we drive at work are much improved in quality over what they were selling a decade ago, but still lacking somewhat in fit, finish, and reliability. When it's my dollars on the table, I still buy imports. My last 8 purchases have been three Toyotas, two Hondas, two Mazdas (quasi-Fords), and a Nissan...including two Toyota Tundras, the first competing with the Dakota and the current truck going head-to-head with the traditional half-tons. There are a few cars out now that I'd take a closer look at if I were in car-buying mode, but I'm not...a truck just suits my needs better.

Blues,
Dave

The imports still make a better product for sure. But GM is finally on the right track when it comes to producing better cars. The new Chevy Malibu and Cadillac CTS are two examples. It just pisses me off that the UAW is almost single handedly killing the American auto industry.

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[Rookie120 0]

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It just pisses me off that the UAW is almost single handedly killing the American auto industry.

How is the UAW single handedly killing the auto industry?

If you find yourself in a fair fight, your tactics suck!

[TrophyHusband 0]

ok, i'll broaded it out a bit. for whatever reason, some airlines are succeeding while others are failing. i still believe its a lack of long term vision, and failure to adapt to the current market. they should not be rewarded with my tax dollars. they should be aqble to fail and let the companies who are doing it right fill in the void. hell, they might even be able to hire some of the displaced workers.

"Your scrotum is quite nice" - Skymama
www.kjandmegan.com

[Rookie120 0]

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ok, i'll broaded it out a bit. for whatever reason, some airlines are succeeding while others are failing. i still believe its a lack of long term vision, and failure to adapt to the current market. they should not be rewarded with my tax dollars.

Fair enough. But the same can be said for the auto industry also. Bad management and lack of vision plus a downturn in sales are all factors in the us auto industry screwin the pooch now. But there a lot of people here like to say the unions are the only factor in the downturn. That is another statement that comes from someone who is very near sighted.

If you find yourself in a fair fight, your tactics suck!

[AWL71 0]

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It just pisses me off that the UAW is almost single handedly killing the American auto industry.

How is the UAW single handedly killing the auto industry?

Its pretty simple - it's union contracts that prevent American car companies from hiring American workers as cheaply as Toyota, Honda, and Nissan can.

"For 30 years, to make and sell the large vehicles that earn their profits, the Detroit Three have been effectively required to build small cars in high-wage, UAW factories, though it means losing money on every car. (That -- not some perverse desire to make bad cars -- is why they skimped for decades on styling, engineering and materials in their family sedans.)

Sure, this bullet would be far from silver and would still cause pain. The UAW might declare war to stop production from being shifted offshore. The Big Three might have to pay billions in job buyouts to use their new freedom. Since 2005, they've had some leeway under Nafta to shift "domestic" production to Mexico and haven't done much about it.

But here's the key: Detroit would finally get what every foreign competitor and just about every other business has -- normal leverage over labor costs. Auto jobs wouldn't automatically flee offshore. The Big Three would rather hire high-quality U.S. workers -- but on the same terms that Toyota or Nissan or BMW do."

Source:


http://www.clusterstock.com/2008/11/ford-f-general-motors-gm-collapse-is-uaw-s-fault-

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[Rookie120 0]

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Its pretty simple - it's union contracts that prevent American car companies from hiring American workers as cheaply as Toyota, Honda, and Nissan can.

So the union shop gets better benefits and wages. Whats wrong with that? The company agreed to the union contract so why dont you spread some of the blame to them also instead of "It's the UAW's fault". And why is it such a bad thing to want higher wages and better benefits? Why are so many of you out there willing to lower the standard of wages and benefits?

If you find yourself in a fair fight, your tactics suck!

[AWL71 0]

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Its pretty simple - it's union contracts that prevent American car companies from hiring American workers as cheaply as Toyota, Honda, and Nissan can.

So the union shop gets better benefits and wages. Whats wrong with that? The company agreed to the union contract so why dont you spread some of the blame to them also instead of "It's the UAW's fault". And why is it such a bad thing to want higher wages and better benefits? Why are so many of you out there willing to lower the standard of wages and benefits?

There is not a thing wrong with it as long as the company can turn a profit. The UAW is biting the hand that feeds them. GM is getting their ass kicked by Honda, Toyota, etc because the UAW is driving up their labor costs. I have a friend that works for Toyota in KY making Camrys. He loves his job and makes good money with good benefits.

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[kelpdiver 2]

I think the ass kicking is all about design. Aside from the Taurus in the early 90s, what car has been a hit for them in the past 2 decades? They lived off the minivan, the SUV, and the truck, and that put them in bad steed when fuel prices rocketed. Just like it did in the 70s.

[AWL71 0]

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I think the ass kicking is all about design. Aside from the Taurus in the early 90s, what car has been a hit for them in the past 2 decades? They lived off the minivan, the SUV, and the truck, and that put them in bad steed when fuel prices rocketed. Just like it did in the 70s.

Design definately played a role in the past. But Ford and GM are producing much better cars today. They are not there yet but they are light yreas ahead of where they were in the 80's and 90's.

The most terrifying words in the English language are: I'm from the government and I'm here to help.

[Rookie120 0]

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There is not a thing wrong with it as long as the company can turn a profit.

WHen those contracts were signed they had money out the ass. Then the SUV and truck market dried up with the rise in fuel. Sounds like the relied to much on one side of the market instead of the broad picture.

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GM is getting their ass kicked by Honda, Toyota, etc because the UAW is driving up their labor costs.

No I think GM is gettin there ass kicked because they make a shit product. Go to a GM lot and look at the shit thet offer. The Malibu?

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I have a friend that works for Toyota in KY making Camrys. He loves his job and makes good money with good benefits.

I also have a few friends in the car plants. One is at the Hummer plant in Indiana and a couple others work up in Lansing. Pay is ok along with the benefits. The pay is nowhere extreme like some on here like to believe.

If you find yourself in a fair fight, your tactics suck!

[billvon 2,476]

>So the union shop gets better benefits and wages. Whats wrong with that?

If the cost of those better wages is that the company cannot be competitive, and it folds as a result, the union workers are worse off than they were before - and the economy takes yet another hit.

>The company agreed to the union contract so why dont you spread some of
>the blame to them also instead of "It's the UAW's fault".

Absolutely. It is their fault as well.

>And why is it such a bad thing to want higher wages and better benefits?

It's bad when it causes the failure of the company that pays them those benefits. It would be akin to all A+P's getting together and demanding a million dollars a year salary. No airline would be able to pay that, so the airlines would collapse and trains, high speed ferries and buses would start making more money. In the end, they would make less money (i.e. zero) than had they been more reasonable about wages - and you'd see them standing in line to apply for jobs as locomotive mechanics.

>Why are so many of you out there willing to lower the standard of wages
>and benefits?

Because you should be paid what the market values your skills at, not at what the union thinks they should be.

[normiss 644]

If the American companies had some of the "favorable and attractive government incentives" the imports were given to come over and build plants, they wouldn't be hurting like they are.
Level the playing field before comparing apples to oranges.
Giving Joe Automaker a job here while extracting profits overseas is not the same level of competition to an American auto maker still under union contracts.

[Ion01 1]

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They killed their reputations churning out junk cars for decades. Then they handed the hybrid market over to the Japanese companies by axing their EV1 (tried, true, tested, kick-ass) programs to focus on crap like the Volt and hydrogen fuel cell fu-fu dust.

Screw em. Either they figure out how to pull through (i.e. consolidate into one smaller, leaner company bringing the best from each) or let Toyota and Nissan buy whatever is worth saving and reemploy the workers that are worth a damn.

There's plenty of demand for things like OTR truckers and nurses. They'll even pay for your training and schooling. Adapt and survive.

although I agree with the let them fail part the EV1 was not so tried, true, and kick ass. The lease price for the vehicle was equal to leasing a 30-40 thousand dollar vehicle. The actual cost of the vehicle, when accounting for overhead costs, was around 80 thousand. It also had traditional acid batteries which are a huge risk in accidents and don't last every long before needing to be replaced as compared to the life of a vehicle. The real damage it did to GM was their image.

[normiss 644]

that AND the fact they "reclaimed" every last one of them and destroyed them!

[Rookie120 0]

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If the cost of those better wages is that the company cannot be competitive, and it folds as a result, the union workers are worse off than they were before - and the economy takes yet another hit.

Everyone seems to forget the company signed the contract in the first place. Why did they sign it if they knew they couldnt afford it? Sounds like piss poor management also.

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It would be akin to all A+P's getting together and demanding a million dollars a year salary. No airline would be able to pay that, so the airlines would collapse

I understand. But those workers like my friend didnt demand a million a year. He gets about $23hr. I dont know about you but that sounds pretty reasonable to me.

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Because you should be paid what the market values your skills at, not at what the union thinks they should be.

How do you determine what a market wage for skill is in a plant with thousands of workers? Agree with the company on what they can afford? The workers asked for a wage and the company agreed to it. That sounds like market price.

If you find yourself in a fair fight, your tactics suck!