As always, Zakaria has the answers. There is a healthy auto industry in the US, but Detroit is not in that category. The bailout needs to push them into that category. Unfortunately it won't.

The problme with no bail out is the number of unemployed in this economy (See last paragraph), we should try to avoid that for a lil while. In the meantime, Ima start designing cars cause I see an opening in a nice large market!



http://www.cnn.com/2008/WORLD/ameri...ia.autobailout/


Zakaria: There is a U.S. auto industry that works

quote:

NEW YORK (CNN) -- The future of the U.S. auto industry was in doubt Friday after a proposal for $14 billion in federal loans died in a late-night Senate vote. The Senate voted 52-35 to bring the measure up for a vote -- short of the 60 votes needed to advance the legislation. The failure followed the collapse of negotiations between Senate Democrats and Republicans seeking a compromise that all parties, including the auto companies and the United Auto Workers union, could accept. The dramatic late-night developments could doom General Motors to bankruptcy and closure in the coming weeks, with Chrysler LLC potentially following close behind. While Ford Motor has more cash on hand to avoid an immediate crisis, its production could be disrupted by problems in the supplier base, as could the production of overseas automakers with U.S. plants, such as Toyota Motor and Honda Motor. CNN spoke to world affairs expert and author Fareed Zakaria about a potential bailout. CNN: Is a bailout of the U.S. automotive industry necessary? Zakaria: There are really two different U.S. auto industries. And only one part of it would have qualified for the bailout that was just rejected by the U.S. Senate -- the inefficient part that is headquartered in Detroit. There is another auto industry in the United States and it is healthy. While it is obviously going through tough times because of the economic crisis, it has not gone begging to Washington for taxpayer help. CNN: But aren't the Big Three the drivers of the American auto industry? (No pun intended.) Zakaria: Actually there are 12 international car companies that have manufacturing operations in the United States. Collectively, they employ 113,000 Americans directly -- even though that is less than the 239,000 at Ford, GM and Chrysler. However, those international car companies sell more cars than the Big Three and their customers love their products. They have millions of American shareholders. They do sophisticated work like research, design and marketing in the United States. All in all, they add jobs and high value to the United States. CNN: So what are they doing better than the U.S. car companies? Zakaria: It is simple -- better management. Yes, Detroit has problems because of its legacy costs, the cost of paying health care and pensions to its retirees. But many other Americans firms in other industries have had to change their benefit systems or die. Detroit always managed to avoid making the change in part because of government assistance. But companies like Toyota, Honda, and BMW are not just skilled at cutting costs -- they make better cars. They have more flexible factories and production systems, and understand what American consumers want. For example, Toyota and Honda are years ahead of American carmakers in designing and producing hybrid cars, and as consumer demand moves in that direction, they will reap the rewards. Al Gore remarked on the problem on our show a few weeks back. "It's really tragic that General Motors, for example, allowed Toyota to get a seven-year head start on the hybrid drive train in the Prius that is now positioned to really be a dominant feature of the industry in this century." CNN: But aren't the Big Three saying they will restructure to compete with their foreign competitors? Zakaria: Yes, as in the past, now that the heat is on, Detroit has been promising to change its ways -- as long as it gets cash. But many people are skeptical and think of it as just a jobs program. CNN: So you are against the bailout? Zakaria: No. But the reasons the CEOs of Ford, GM and Chrysler present -- that they will restructure, they are still competitive, they will change -- are bogus; they won't. The best argument for the bailout is that it is the most cost-effective jobs program that the government can run in the short term. Spending on infrastructure to create jobs will take months, maybe years. However, keeping the Big Three afloat will keep hundreds of thousands of jobs in place quickly and easily. It's true the companies will eventually go bankrupt, but by then hopefully the economy can withstand it.

quote:

Originally posted by XaNaX If you bothered to look at the graph on the link you posted you would have noticed that there is very little difference between the non-UAW and the UAW workers when it comes to actual salary.

Do you read my posts? That was my whole point from the start!!

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this thread makes me lol

If the people wanted to bailout GM we would have bought more of their cars. Good conclusion to that NY times article and basically sums up my feeling about the issue.

Why spend billions propping up an industry that has proven too big, bloated, and inefficient to make it on its own?

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i wonder what the social welfare costs will be if the millions in the auto industry lose their jobs.

If I understand correctly.

The auto industry goes in to chapter 11...whatever happens happens.
But the government will then pick up the tab on all the pensions and such. So either way isn't the government fucked here?


Also I heard that Toyota and Honda and shit want this bailout package because if the parts suppliers go out of business (chpt 11) (which they already have, or are close to) then it will only complicate things for them.

i just got emailed a job offer from chrysler

i was gonna email them back something about concerns of job security but.. meh. too lazy.

quote:

Originally posted by Omega_Blue i just got emailed a job offer from chrysler i was gonna email them back something about concerns of job security but.. meh. too lazy.

lol...sounds like yer set fer life. Just keep making the Dodge Challenger and Viper

quote:

DETROIT, Dec 17 (Reuters) - Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it would shut down all of its manufacturing operations from the end of this week for at least a month. The blanket shutdown marked a deepening of the financial crisis for the embattled U.S. auto industry and came as Chrysler and its larger rival General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) both seek to shore up cash as they seek a federal bailout they say they need to survive. Chrysler, considered the weakest of the Detroit automakers, made the announcement on its plant shutdown in a letter sent on Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website. Chrysler said its dealers were getting car shoppers into showrooms but losing between 20 percent and 25 percent of those potential sales because of the lack of consumer financing for new car purchases. "As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers," the automaker said in a statement. Separately, Chrysler said its finance arm could be forced to stop making loans dealers use to finance inventory because the dealers have been pulling money out from a fund that helps finance the floorplan loans. [ID:nN17349800] The shutdown by Chrysler will idle plants in the United States, Canada and Mexico producing vehicles for its Chrysler, Jeep and Dodge brands. The more than 30,000 Chrysler workers in the United States represented by the UAW receive nearly full benefits and wages during plant shutdowns, but labor costs represent only about 10 percent of the total cost of the average vehicle. By idling plants, Chrysler and other automakers can cut costs on inventory, components and related charges such as utilities for operating large production facilities. The moves also keep finished vehicle inventories from piling up on dealer lots and increasing the pressure for even greater discounting to consumers. GM said last week that it was cutting its first-quarter production schedule by 60 percent compared with the same period a year earlier. Privately held Chrysler is 80-percent owned by private equity firm Cerberus Capital Management. Chrysler's sales plunged 47 percent in November and were down almost 28 percent for the first eleven months of 2008.

http://www.reuters.com/article/rbss...735395920081217