auto industry about to get 25 billion bailout

Discussion in 'Politics, Religion, Social Issues' started by dukebound85, Nov 14, 2008.

  1. dukebound85 macrumors P6

    dukebound85

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    #1
    http://www.msnbc.msn.com/id/27718233

    not a fan of this personally. live and die by your mistakes GM, Ford, etc. I hate this trend of any rewards are kept private by the companies and any losses are "well give us a bailout"
     
  2. Schtumple macrumors 601

    Schtumple

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    #2
    So at what point is the US debt clock just going to stop counting and post a ∞...
     
  3. iJohnHenry macrumors P6

    iJohnHenry

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    #4
    Just like children, rewarding bad behaviour is an unsound policy.

    I feel sorry for the workers for the Big 3, but with their demands on management where else could they go but their biggest and "best" profit-makers.
     
  4. SLC Flyfishing Suspended

    SLC Flyfishing

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    #5
  5. jplan2008 macrumors regular

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    #6
    Yeah, the workers agreed to reduced wages, reduced health benefits, reduced pension, including for those who had already been promised those benefits, and especially for new workers because otherwise the companies were outsourcing everything. Shame on those workers for fighting to keep a bit of their pay, and for fighting for such ridiculous things as health care benefits all these years -- benefits that all their competitors receive, since we're the only country where health care is a luxury.

    And shame on anyone for living in the same town, county, state or country as these workers, since we'll all pay for the downfall.
     
  6. bradl macrumors 68040

    bradl

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    #7
    Anybody find it funny (interesting/ironic) that Bush wants the auto industry to get a $25 billion bailout, while Freddie Mac posts exactly a $25 billion loss?

    BL.
     
  7. LethalWolfe macrumors G3

    LethalWolfe

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  8. stevento macrumors 6502

    stevento

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    #9
    I don't think they should be handing out money to GM and certainly not Chrysler. People who know alot about cars know they might not last 10 years more anyways.
    Chrysler has been going through a phase of introducing new models and marketing them hard, then cutting them two or three years later. GM was on the edge of oblivion 3 years ago, then they invested big bucks in these brand new trucks and SUVs that brought them back to life... then gas hit $4/gal.

    I seriously do not think Chrysler is going to be here five years from now with or without corporate welfare.
     
  9. Anuba macrumors 68040

    Anuba

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    #10
    CNN Money has an article that examines what would happen if GM goes down. Some far reaching ripple effects there.

    I can't help but note the irony that there's a link to a video called "Clean diesel car is here" (Volkswagen Jetta) next to the article. Getting pummeled by Germany and Japan 63 years after WWII must sting.

    Here's another: "Why GM can't survive bankruptcy".
     
  10. iGary Guest

    iGary

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    #11
    I think everyone forgets the thousands of parts suppliers that would likely dry up and disappear if we let GM go away.

    No doubt, GM needs to reinvent itself and the unions need to pull back from the royal benefits that are strangling the automakers, but we can't just let it go away and say, oh well, that's how our system works.
     
  11. mkrishnan Moderator emeritus

    mkrishnan

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    #12
    Yeah, I think more than just the harshness on the hundreds of thousands of Americans whose jobs depend on the industry, the larger problem is that we can't just let our major industries disappear when we get pissed off at their poor management (that resulted at least in part from our deregulated style of economics) without considering the overall cost to our future as a country.

    We don't necessarily need to be an automaker nation. BUT, the post industrial service-based economy is a mythology. The inexorable process over the last two decades is that we've had loss of relatively high paying manufacturing jobs. These people don't become six-figure consultants after they lose their jobs. The jobs that are replacing these jobs are in the services industry, but they're at the extreme low end of this industry, in low wage, low benefits retail.

    Transforming hundreds of thousands of American jobs from $30/hour semiskilled and skilled manufacturing positions to $8/hour Walmart jobs is not good for us. Replacing the rest of them with $15-20/hour non-union jobs at international automakers in the South and Southeast might be relatively better, but it has its own problems.

    I'm not saying we have to save our automotive industry or our airline industry or our banking industry or any other industry in a particular fashion.

    But the net impact on our country of letting all the growth be in $8/hour retail while we systematically destroy mid-wage jobs is unacceptable. We can't live in the country that we'll end up with if we take every 10,000 $50,000 a year jobs and replace them with 8000 $8/hour jobs and 100 $150,000 a year jobs. That's just not good for us.
     
  12. jplan2008 macrumors regular

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    #13
    20 million jobs relate directly or indirectly to the auto industry. None of the companies would just "go away" -- there'd be bankruptcy reorganization -- but a lot of the jobs would be lost out of those 20 million. Then there is some number of totally unrelated jobs (a "multiplier effect") that are lost if a plant shuts down in a town, etc. I said in the other thread, if it's "only" 10% lost, that's 2 million jobs, and if the "multiplier" is "only" 1.5X, then that's 3 million total. If it costs on average $25,000 each in unemployment and other benefits, that's $75 BN to not save the industries. Plus subtract the lost taxes. And that's lost money, paying people not to work, compared to a loan of $25 - $75 BN total, which, if there are strings attached, could end up with the US auto industry being in a much better place in terms of plug-in hybrids, etc, and would be paid back with interest.

    I don't like the idea of rewarding these companies for their mistakes, but we have to look at who would be punished for them with no help.

    And, like Mkrishnan says, if the jobs are replaced, many will be with lower-paid jobs.

    The unions have already sold out their new workers in an agreement that the companies would stop shipping their jobs to Mexico and China. New UAW workers get paid $14 an hour -- I certainly don't call that excessive to stand up all day and do repetitive work. They've also given up pensions, they've given up health care for retired workers (GM used to pay the medical costs, now they gave the UAW a fund of money that will run out, and new workers get no post-retirement health care), etc.

    A worker in Germany gets a month or so off, doesn't have to worry about health care, etc. UAW members have to fight for each day off, fight for health care, etc.
     
  13. iGary Guest

    iGary

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    #14
    It's naive to think that all of GM's suppliers would survive a shutdown.

    A worker in Germany gets a month or so off, doesn't have to worry about health care, etc.

    $14 an hour with full benefits for "unskilled" work is pretty damned good.

    Fight for health care? In most cases it's paid for. My health care isn't paid for.

    UAW has basically effed their members out of a company.
     
  14. takao macrumors 68040

    takao

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    #15
    just to see how bad the situation is for GM: Opel just asked the german government for a 2 billion euro guaranty because the mother company can't give them the money anymore (believe it or not that money is debt from GM US towards Opel for R&D ... nobody could make that up)
     
  15. mkrishnan Moderator emeritus

    mkrishnan

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    #16
    Having worked at/with GM, I can believe it. :rolleyes: Only in their world...

    OTOH, Opel gave GM a number of vehicle designs recently... the roadster / sports car, the Astra, etc... that were vitally needed to modernize the GM/USA small cars.

    In the best of cases, the automotive industry globally is going to go through a lot during this crisis. Cars after all are the second largest value consumer purchase item for most people after their homes, rely heavily on financing, etc....
     
  16. Anuba macrumors 68040

    Anuba

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    #17
    14 bucks an hour?

    Wow. German auto workers make 38 Euros/hour ($50) and work 37-hour weeks. So it's not really about the unions, the wages and the benefits, is it? It's the damn PRODUCTS.

    The American car industry has fought evolution at every turn. They fought seat belts and air bags, they fought fuel efficiency standards. When Volvo (who are owned by Ford) wanted to add pop-up roll bars and reinforcements in their SUV's roofs for extra safety, so that the occupants wouldn't get squished if the beast rolled over, Ford fought it because it would give Volvo an "unfair" advantage over the American made cars. You're safer in a puny Fiat 500 or Peugeot 1007 than in a Ford F-150, because the sheer weight of that behemoth combined with its lacklustre construction makes it crumple like a napkin if you actually hit something.
     
  17. rdowns macrumors Penryn

    rdowns

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    #18
    An article on what the ripple effect might be like if GM were to go bankrupt.
     
  18. iGary Guest

    iGary

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    #19
    While I won't disagree with you about the quality of the products aspect, you have to remember that GM not only pays the health benefits for it's current employees, but also to retirees. Add in massive pension obligations and it's like a huge concrete block weighing them down.

    I think I saw something that said like $1200 of the cost of each car was for pensions and benefits.
     
  19. takao macrumors 68040

    takao

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    #20
    yeah i'm just reading more links and it's disgusting how GM handled their european subsidies ... first running them into the ground then restructured them even without any less sense, then letting them pay for new developments and now when they pull everything together regardless, GM let them pay during their own downfall

    what gives...

    at least for Opel a future might be ahead if the german regional governments and the federal moves together .. especially since such guaranties would prevent assets moved somewhere else or R&D or production moved

    vauxhall and saab workers: you're very likely to receive the dirty end of the stick
     
  20. jplan2008 macrumors regular

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    #21
    Some suppliers will go under. Those are included in my 10% estimate. Again, the choices are "bailout," with some immediate job loss, but building for the future, vs. bankruptcy reorganization -- in which case you'd get your wish and the workers would probably lose their health care benefits.

    Any health care that is provided is because the UAW fought for it. Do you think GM provides it out of the kindness of their hearts? Again, whatever you may hear from the anti-worker movement, UAW has given up lots of benefits, including some health care (including zero health care after retirement) and most pension, and 50% of the wages for all new workers. Just because there are so many jobs that don't provide health care, I'm not sure why that's seen as a luxury, or those damn strangling unions.

    $14 an hour is pretty damned good for this work? Yeah, whatever.
     
  21. MacNut macrumors Core

    MacNut

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    #22
    How many Americans don't even have health care or are paying up the ass to hold on to it. The UAW was upset when healthcare costs were going to go up. Well tough ****, everyone has to pay an increase why not the auto workers. They have gotten to comfortable and all those perks are now coming back to bite them. $14 an hour is great considering every benefit is paid for.

    Now this is not to say that the auto companies are off the hook, they didn't change their business model so they have to take a hit as well, but the UAW is not blameless.
     
  22. Peace macrumors P6

    Peace

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    #23
    I agree completely. That's why I say let GM file chapter 11. This way they can re-negotiate contracts with the UAW. and while they're at it. Cut back on corporate bonuses etc.
     
  23. Lord Blackadder macrumors G5

    Lord Blackadder

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    #24
    To be fair, you are using an older F-150 model in your link. Notice that the 2004-2008 F-150 performs much better in the 40mph frontal offset crash test.

    Actually, safety is probably the one area where I don't have too much to complain about from the US automakers. Large trucks and SUVs create some inherent safety issues, but I don't see safety as a major problem area. The problem lies with design, build quality, interaction with the unions and the way the Big Three generally run their businesses.
     
  24. jplan2008 macrumors regular

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    #25
    Do you really think the executives are taking a hit?

    All benefits are NOT paid for. Just because anti-worker propaganda says it, doesn't mean it's true.

    Again, UAW workers did pay an increase in healthcare costs, took a cut in healthcare benefits, a cut of all pension and a 50% cut in pay. Let's hear it for union-busting practices. I'm sure you're thrilled that auto workers can no longer raise a family and retire with dignity, and still you're calling for more cuts?

    The labor cost is $9 per hour less than European companies, which includes healthcare costs and the healthcare portion of worker's comp., etc., which European companies don't have to pay. And it includes the costs for older workers who still get their higher pay and pension and full healthcare. The difference for the new workers is much more severe.
     

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