Car Companies Down the Drain
by Ted Slater on 12/18/2008 at 1:02 PM
This particular Detroit automobile manufacturer is in real trouble. They've produced some great vehicles, powered by cutting edge six cylinder engines: My favorite is their convertible model. But for some reason, expenses have been exceeding income, and it looks like it might go out of business.
Another Detroit-based car maker is also in trouble. For decades they've been turning out a variety of attractive vehicles. Their cars are remarkably safe and comfortable, they include advanced brake systems and transmissions, and they've been able to kick out hundreds of thousands of them per year. But it too seems destined for collapse, for some reason known only to their CEO and CFO.
A third Detroit car maker is experiencing serious problems. They've gone for the high-end customer, and gone for producing a wide variety of models, some with as many as eight cylinders. But stockholder muttering and a hostile takeover attempt seem to be destining this car company for failure.
Late-breaking news: All three car manufacturers have gone under.
The first car company above was Columbia Motors, which produced autos from 1917 to 1924. The second car company above was the Hudson Motor Car Company, which produced Hudsons from 1909 to 1957. The third auto company above was Hupmobile, which made cars from 1909 to 1940.
Indeed, hundreds of American car manufacturers have come and gone, among them Studebaker, Midland Motor Company, American Automobile and Power Company, Pierce-Arrow and Packard.
In some cases, these companies were acquired by other car manufacturers, who restructured them into something profitable. And in some cases, they just closed their doors and that was that.
In either case, American workers survived. Though it was no doubt sad to see each company fail, and to see decent people lose their jobs, life went on and other car manufacturers filled the gap. It wasn't the end of the car-making in America, and it wasn't the end of the workers' wage-earning, when these companies imploded.
Should these poorly run companies have received a bail-out by American taxpayers? Should successfully-run car companies have come to the financial rescue of these failing companies? Or was it right that we let the free market system allow success to succeed and failure to fail?
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1. obewan said the following at 2:02 PM on Dec 18:
At some point the issue of "fairness" with bailouts is going to come into play. If the government bails out one failed industry, the others are going to line up at the hog trough. Since the financial industry was bailed out, why not the automakers? One reason is the issue of UAW concessions I suppose.
There is a real Mexican standoff right now on the issue of pay. If I were in the UAW, I would be willing to take $17 an hour. It might not be $30 an hour, but it is a lot better than bankruptcy, followed by a fight for the few remaining jobs at $6 or $8 an hour. Been there, done that. I don't plan to head back to Michigan any time soon since they may be facing double-digit unemployment.
The thing to remember is that people who are homeowners cannot easily pick up and move to other states where the job outlook is better. Yes there are automakers in the South, but there are also thousands of unemployed people there ready to grab up those jobs. That leaves a lot of people in the mid-west in very bad shape.
2. LouiseinPA said the following at 2:02 PM on Dec 18:
I have to say...I'm not sure where I stand on the auto bailout (the issues are too complex for most who are not financial experts to understand), but I believe the term free market is misleading. There is not "free market," but a marketplace controlled by overlapping layers of international, national, and local regulation. To say the free market caused these companies to fail is a misnomer.
3. Saidahwk said the following at 2:03 PM on Dec 18:
My husband is very troubled by this mentality as well. It seems that Americans have bought into a very European way of thinking that says, "if its a problem, the government should fix it." Geez people, we all have problems. Big Brother can't fix everything. Somethings are better left broken. Life goes on. You don't WANT Big Brother to fix everything. That means taxes go up and the government gets to stick its nose where you DON'T want it, too. The government shouldn't be responsible for helping the poor, the widow, the orphan, etc. The Bible commands US to do that. Not to mention, the way the economy gets stronger is for it to fail. If the government bails everyone out, the stock market (and everything else) gets weaker. Nothing is forever. Things fail. People fail. Life goes on. Take it from someone who's been there; hardship happens. You won't die.
4. Matt from DC said the following at 2:04 PM on Dec 18:
Ted,
I want to see a picture of the Columbia Motors convertible model that is your favorite.
5. Ted Slater said the following at 2:08 PM on Dec 18:
Matt (#4) -- here you go! :-)
6. Matt from DC said the following at 2:09 PM on Dec 18:
Well, we've already designated 700B and put it into a bailout account that is being monumentally mismanaged (no accountability and no strings attached). I heard that Bush is going to dip in to that and bail out the automakers. If that happens then I will be happy about the bailout because the money may be used better. As long as it doesn't cost us anything else I don't care if the banks get less of our 700B. They are taking our money and holding on to it anyway. They aren't lending. So give it to the automakers.
7. HoustonGal said the following at 2:11 PM on Dec 18:
I don't want to think of the ugly aftermath if the Big 3 go under (people use the word "fail" but in essence they have already failed, hence the need for a bailout).
It is difficult to listen to the news and analysis and learn about the costly benefits and perks that employees get with the Big 3. Take one manufacturer's job bank, which requires the company to pay workers nearly their entire salary plus benefits and pension, if they get displaced. How many employers offer that?
My first car that I bought post-college was made by the company in the best financial position of the Big 3. I had every piece of maintenance performed according to the manufacturer's schedule, and the car started falling apart at 55,000 miles.
My second car was one of the brand names under the biggest of the Big 3. Same story as above - I treated it well and it let me down way too early.
My third new car was from a Japanese company, but the car was manufactured in Marysville, Ohio. Wow. Let's just say they have a customer *for life.* I paid a little more for it, but the quality is amazing. It is such a dependable car. I have paid it off, the maintenance is reasonably scheduled and priced, and it drives great.
I will *never* pay money for a Big-3 car again. My first two pieces of junk from them pushed me away forever.
8. Kevin said the following at 2:57 PM on Dec 18:
I would be completely against giving them money to save their companies...if it weren't for the fact that it would be all of the employees that would end up suffering for the higher-up's mistakes, not the higher-ups themselves.
9. BDB said the following at 3:32 PM on Dec 18:
I'm glad there's more discussion of how bankruptcy is not the same as wiping out the industry. I do think that the big 3 automakers need to be restructured, and I'm all for the U.S. government providing debtor-in-possession financing if they agree to restructure in bankruptcy court. GM's pension is fully funded, they should give that money - and all their pension liabilities - to the Pention Benefit Guarantee Corporation and start fresh with 401(k) plans and no retirees. If they're not willing to take this restructuring step, I doubt they will ever become viable companies.
There's a reason that the UAW has been unsuccessful at organizing the various foreign-owned car assembly plants in the U.S. The management of those companies listens to both customers and employees much better. More listening = less problems with both workers and happier customers.
In bankruptcy, I'm sure that the companies could find buyers for their military lines (Chrysler makes tanks, GM makes hummers, there are other defense contractors that could pick up the business.)
But the other big, perhaps fatal structural problem is their financing companies. The finance arms of both Chrysler and GMAC were used for years to prop up the auto manfacturers through easy financing. Now that Cerberus owns both financing arms, they are tightening up a lot. That tightening is forcing down sales at the two automakers, Cerberus and GM. I am deeply, deeply concerned about using taxpayer money to bail out the automaker arm when I know a portion of their current crisis is being deliberately driven by Cerberus. One of the conditions should be to force Cerberus to give up control of the financing companies as a condition of any federal assistance. Otherwise Cerberus will simply pocket the money to profit itself.
10. IMO said the following at 3:32 PM on Dec 18:
a big part of the problem are the auto unions..
11. Brian said the following at 9:58 AM on Dec 19:
The ability to take risk and to fail is what has made this economy the most productive in the history of the world. When people talk about recessions and wanting to keep them from happening, I always think about forest fires. Forest fires happen naturally, and are a sort of "cleanser" of the forest. These days, people take great pains to keep fires from happening, which in the end makes the fires even more disasterous (lots of underbrush that hasn't been cleaned results in fierce fires). I see the same thing happening with our economy. In the regulated capitalism that we enjoy, junk builds up, poor decisions are made, and some companies are successful just because everyone is making money. Any bandage such as rate cuts or stimulus is just postponing the inevitable "forest fire" and increasing the chances that it will be a terrible fire. Just as in a forest fire, a recession is painful. People will lose their jobs and experience pain. I may lose my job out of this deal, and I still say you should just "let it burn".
Oh, and HoustonGal, I have drive two different cars built in the same plant over the 200,000 miles mark. You chose a good one!)
12. J. said the following at 10:00 AM on Dec 19:
Hmmm...Are we not allowed to mention any of the Big 3 by name because doing so would make the discussion "political?" :-)
Re the failure of other auto manufacturers in years past, I don't think the Detroit auto industry is in a position now to move forward in the same way. There is much more competition from foreign manufacturers and the issue of the union states vs. the right-to-work states.
One thing that is worth mentioning is the role our government has played over the years in terms of unfair trade practices that have occurred on its watch over the last 20+ years, e.g., Japan's dumping cars here and S. Korea's capping its imports of American cars at 5,000 while millions of S. Korean cars are sold here. Our government has fallen short of ensuring a level playing field for the Big 3. All this being said, can it be argued that our government *should* help the Big 3? I definitely have mixed feelings about this as it's a slippery slope. Don't get me wrong. I definitely agree that the Big 3 have also been plagued by mismanagement and caving in to union demands that have proved to be unworkable. I believe in free trade and competition, and I think the popularity of Japanese cars here forced the American automakers to improve their products, which was a very good thing. But I also want trade to be fair.
13. BDB said the following at 10:00 AM on Dec 19:
Sorry, typo. Let me rephrase. The private-equity firm, Cerberus, owns the auto-financing arms for both Chrysler and General Motors. Because Cerberus is raising the bar on who can be financed for a loan (a credit score of 700 is now required), both those companies are in deep trouble.
That's part of the reason Ford isn't in as much trouble, and why the Japanese car makers are in relatively good shape: their financing rules haven't changed nearly as much.
14. Michelle said the following at 10:03 AM on Dec 19:
Living on the Canadian side of the Detroit border, I can't help but think of the dramatic impact the closing of the Big 3 would have on Detroit and the surrounding area - not just those working directly in the manufacturing plants, but also the surrounding industries that produce and supply parts, etc. Tens of thousands of jobs would be lost. It's not just about a company or the government, there are real people with families involved.
I'm not saying a bailout is the answer, but let's keep in mind that these decisions are not just 'politics', they affect people just like you and I.
Let's keep praying for the decision makers, the 'higher ups', as well as those working on the front lines...this is an unsettling time, but we know that God has a plan. Whatever happens, let's pray that the Lord will use it to draw people to Himself and open our eyes to opportunities to share the Hope we have in Christ, no matter our circumstances.
15. P&P said the following at 10:04 AM on Dec 19:
What worries me isn't the big 3 going under, it's the city of Detroit going under. The fate of the big three is so deeply tied to the Detroit area economy that if they were to shut their doors, it would mean the death of a large part of the city.
It also disappoints me to see the possibility that there would no longer be a car company owned by a US entity. There's so much complaining about manufacturing being moved offshore, that I don't welcome the idea that the country that developed automobile mass production is no longer able to produce them without foreign investment.
16. Brent1776 said the following at 10:06 AM on Dec 19:
Some interesting food for thought:
Who Is at Fault for the Decline of the Big Three?
I think bankruptcy proceedings are the only thing that will allow for the restructuring that is needed.
17. S said the following at 10:06 AM on Dec 19:
December 5, 2008
7 myths about Detroit automakers
BY MARK PHELAN
FREE PRESS COLUMNIST
This column by Free Press auto critic Mark Phelan originally was published on Nov. 17 and has been updated.
The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.
Myth No. 1: Nobody buys their vehicles
Reality: General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.
Myth No. 2: They build unreliable junk
Reality: The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers."
The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.
Myth No. 3: They build gas-guzzlers
Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway.
The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic.
A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.
Myth No. 4: They already got a $25-billion bailout
Reality: None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.
Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs
Reality: The domestics' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.
The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than Toyota and Nissan's full-size pickups.
Myth No. 6: They don't build hybrids
Reality: The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.
Myth No. 7: Their union workers are lazy and overpaid
Reality: Chrysler tied Toyota as the most productive automaker in North America this year, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM.
The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That's like assuming you get your parents' retirement and Social Security benefits in addition to your own income.
Hourly pay for assembly line workers tops out around $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There's no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they're working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis.
18. P-Rest said the following at 10:44 AM on Dec 19:
Ted,
I am definitely not for the bailout and the breakdown of negotiations between the Senate and the UAW was no surprise to me. The Senate members were only doing the responsible thing and rightly so. The UAW just didn't want to concede the proposed wage cuts (for whatever reason) and took the deal down with them.
It all makes it seem like they think that the Big 3 were sure to get the money and they would somehow come out untouched or barely scathed, which if true, is foolish in my mind. If the Big 3 go out of business, where are the members of the UAW supposed to work in the short term? At least with the wage cuts they still have a job, which is a serious blessing in this current economic climate. There is also the distinct possibility that it was a negotiation tactic. They knew the concessions were coming and were trying play high-ball/low-ball.
In response to your questions, I think you are dead on. The world is not going to come to an end if something happens to the Big 3. That is the plain truth of it. Also, I am not a big fan of using my hard earned money to bailout an entire industry when my own friends and acquaintances with businesses are just going to have to succumb to failure and bankruptcy. How does that factor in to fairness?
Also, what about the slippery slope affect? First it was financial, then automotive. What’s next? I think [Saidahwk] brings up a good point--The government cannot solve all of the problems, and we don't or shouldn't want them to. Every industry and business in this country lives and dies by supply/demand and the economic climate. Why should the automakers get a free pass from taxpayers or other companies? At least you can understand the financial industry, because everyone in America can and would be directly affected by some “bomb” in the banking system.
A world without the Big 3 as we know them today would not cease to produce automobiles. I say if they run their company a certain way, which they are entitled to do, then they have to deal with the outcomes, good and bad.
19. B. Minich said the following at 10:48 AM on Dec 19:
I think another important thing is to remember that these things happen all the time. Industries rise and fall . . . countries change . . . the seas rise and fall . . . but the word of the Lord lasts forever. THAT is the only place our hope will ever be rewarded, even if industries collapse.
20. Matt from DC said the following at 10:49 AM on Dec 19:
Ted,
I've seen those. Who knew that had a name?!? I guess I'll have to retire my assumption that all old cars probably didn't have names ;) I will take one too for the list price. Here's my favorite convertible from a probably soon to be bankrupt automaker: (http://www.arxmancars.com/wp-content/uploads/2008/03/sebring_vert1280.jpg)
The only problem is that I have to drive the wheels off my Honda Civic before I can justify buying another car.
21. Ted Slater said the following at 11:02 AM on Dec 19:
Matt (#20) -- the Sebring is nice, but I've had my eye on the Toyota Solara convertible for years now. Maybe some day when my Dodge Neon dies I'll find a used Solara....
22. obewan said the following at 12:36 PM on Dec 19:
Ted (#20):
If your luck the the Neon is like mine, you may not have to wait long.
I hope things turn out better for you though.
I babied mine, but it still only gave me 7 yrs and 60,000 miles. It went through 2 air conditioners, 3 transmissions, and an electrical system, and had the brakes sieze at only 20,000 miles, which was another $500.
Before that, I put 500,000 miles on 3 Jap cars, and only put in oil, and replaced brakes and tires!
Sorry to the UAW, but I drive a Honda now.
23. BDB said the following at 12:40 PM on Dec 19:
S (#17) wrote:
>>J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.<<
Wow - I didn't believe that statement, and I had to go look it up. The statement is true. Details here.
However, in the details, you see the reason why the big 3 are in trouble. The Malibu is now the same size as the Chevy Impala. So ... why does Chevy have two mid-sized cars? How can they be profitable with two of the same thing, when Honda and Toyota make due with one such model? Indeed, this is what the Big 3 need to do: get rid of their poor-selling duplicates. It's not that GM needs to liquidate. They need to get rid of cars like the Impala and focus their efforts on successful vehicles like the Malibu.
However, having test-driven the V-6 Malibu, the V-6 Ford Fusion, the V-6 Camry, and the V-6 Altima, there are substantial differences in the vehicles. I thought the American cars were 4-cylinder vehicles when I drove them. I was shocked when they told me afterwards that they were the 6- cylinder models. To test drive all four, comparably equipped, on the same day on the same course made it absolutely clear why the Japanese are pounding the American makers in the mid-sized segment.
Unfortunately, I also discovered that I liked the new Altima more than my Accord. It costs more, though.
My Accord was built in Ohio. Americans can build good cars. Honda listens to its customers much better than the big 3 do. But even I'm not sure that 8 cup holders are necessary for one car...
24. W. Rucker said the following at 9:44 PM on Dec 20:
REMEMBER WORLD WAR 1-2? who did americans turn to in that time when Japan & Germany were murdering millions of people in the world - The WORLD turned to the Americans for help and how did the America help win the war against Japan - I'll tell you who it was The Big 3 Auto Companies thats who - they rebuilt and retooled are the factories and plants so that they could build Tanks - and Jeeps and Trucks - and boats - and ships and Artillary Cannons - and weapons and all sorts of other Equipment - Do you think that when World war 3 comes that Japan and other companies will retool their factories to help Americans - NO they will not.
After 9/11 in New York Who was it that gave 10 million each?? there was only 3 companies that gave that much and guess what else they gave they gave Fleets of Cars and trucks and building spaces - It was the Big 3 thats who it was - I'll tell you who else gave - it was Harley Davision Motocycles they gave 1 million dollars and a fleets of new bikes for N.Y. - and with all that giving during our nations darkest time I'll tell you Honda & Toyoya DID NOT GIVE ONE PENNY to the people of the United States of America
Do real American want to see our US Companies that give 4 million people daily jobs IN ALL 52 states? - Not just the Southern States in the south that are non-union - and by the way the UAW new Contract stats that new hired people only make $14 per hour for the Big 3 - $15 bucks less than the Japenese plants.
I beleive that US Car makers are and can build the best cars in the world, and we The BIG 3 will prove it to the world by doing so, Are so-called Americans anti-americans that all of our manufacturing jobs are going to mexico and china and other countries, what kind of jobs will that leave for americans - WAL-MART - oh yeah let's get millions of jobs at WAL-MART and live in a trailor court in some busted down old trailor cause you can't afford nothing else and barely get by in life and have nothing.
America needs Manufacturing jobs - Americans need to start now by buying american products - Americans can pull together and we can be the super power of the world that the World knows us as, not all americans can go to college, that's just the way things go for many, so whats wrong with making a living busating your back in a factory or on a assembly line making parts or building cars, and making a good wage with benefits to have a nice life, with a simple home and a simple life - thats the American Dream - and we as Americans need to believe in that dream again by Buying American Cars and trucks and other American made products that supports our country The United States of America - not Japan - not Germany.
In Closing we have to do it for our Children, and our Grand Children and our pensions and their retiements and their pensions and theirs lives, we have to beleive in America - we have to believe in ourselves again by acting on that hope by buying American.
IN GOD WE TRUST - Michael Rucker
25. BDB said the following at 9:42 AM on Dec 21:
W. Rucker (#24) wrote:
>>Do you think that when World war 3 comes that Japan and other companies will retool their factories to help Americans - NO they will not.<<
Two things:
1) From now on, every war is a come-as-you-are war. It takes SOOO long to build new equipment, and a country can be knocked over in, say, 100 days, it is unlikely we'll ever again see a change in manfacuturing base to prosecute a war. You use air power to win wars now, and stealth aircraft are built more by hand than by factories. They rarely get shot down, either, so you don't need to build thousands of them.
2) Japan and Germany are now strong allies - especially Japan. I have no doubt if we did need new manufacturing capacity, the Japanese-owned plants in the U.S. could convert their robots over much faster - the same way they can switch to building different types of vehicles much faster than the UAW plants.
>>I'll tell you Honda & Toyoya DID NOT GIVE ONE PENNY to the people of the United States of America<<
But they did send ships to the Persian Gulf. They had to change the laws we imposed on them to do it, too. But they felt quite strongly that they needed to step up to the plate.
Incidentally, Japan has a first-world economy, and they deliberately outsource manufacturing to other countries in Asia. They believe as a matter of policy that it's better to be the engineer/marketer than the manufacturer. It's exactly the opposite of the U.S. theory. It will be interesting to see who is right. What I do know is that with many products, less than 20% of the value/cost is in the actual manufacturing of it. The rest is in design, marketing, distribution and sales. A container full of widgets is worth nothing if there's no way to get it to the customer.
I remember 30 years ago when people laughed at the little Toyotas. My neighbor had one, and it was tiny and looked silly. But people said, wow, those Toyotas run forever. Much, much better drive-train engineering than any of the American cars.
And now the big 3 are crying because the companies they laughed at for so long are beating them in the marketplace. I remember reading the in-flight magazine when I was in college about 17 years ago. It described how some GM executives came to Los Angeles for a meeting in 1991 - and they were humbled by how many Japanese cars were in the parking lots. THEY DIDN'T KNOW. Iknow car dealers who every year tried to tell the manufacturers the kinds of cars that the customers were asking for. The manufacturers refused to listen to their customers. That, my friends, is managerial malpractice.
The German car-makers at first refused to put cup holders in their cars. Their driving experience was on the autobahn, which is much too fast to be drinking coffee while driving. But they did eventually listen. Even Mercedes and BMW include a few cup holders now. But only in their U.S. sold vehicles. Meanwhile, my Accord has EIGHT cup holders for a 4-5 person car. Apparently they want to be prepared with space for four Starbucks AND four water bottles at the same time. THAT is listening to the L.A. customer.
What's killing us is the lack of people going into engineering and inventing new stuff to make and sell to the world. America still has almost the freest economy. If you think up a product, you'll probably be able to sell it here. But if the people thinking stuff up aren't Americans, then they aren't going to build their stuff here, either.
26. Mike Theemling said the following at 6:59 PM on Dec 21:
Some of my thoughts on the Big 3 bailout:
1. "The world is flat". Get used to it.
Which country invented and then popularized the television? America. How many major American TV manufacturers are there now? (Hint: not too many). Interesting that all those American companies going bankrupt didn't kill the industry or the American economy. Granted, the auto industry is larger but it's not as if the Big 3 went under we would all stop driving.
Bottom line is that many traditional manufactering industries (Steel, cars, TVs, etc) have declined in the U.S. because there are others overseas who can offer the same product for much less.
2.Industries change and so do trends within industries, get used to it.
Remember when SUV's were the "big thing" during the 90's? The Big 3 made a lot of money from it. But what did they do with that windfall? Invest it in future technologies like hybrids/electrics? No, merely pump out more gas guzzlers like the Ford Excursion and Hummer H2. Oh sure, the foreign automakers were getting in on the act too, but they didn't pin their entire product line on it. More traditional, fuel efficient cars like Camry's and Accords were still selling well.
Apple computer reinvented itself during the 90's (creating products such as iPods and the "cool" schtik) to become successful. And Google took advantage of the fact that there's an entire emerging industry devoted just to information.
The companies that fail are those that are slow to see the future. Kodak and Polaroid were slow and reluctant to see the change to digital photography and look what it cost them (one of them is in bankrupcy now).
3. Companies are successful largely because they have good business models
Interesting that #24 bashes Wal-Mart, yet that is a classic American success story. No one heard of Wal-Mart 30 years ago. Now it's the world's largest retailer that originally competed in a very saturated market. Why? Ultimately, it's because they had a simple, solid business plan (keep inventory stocked and have low prices all the time rather than use gimmic promotions) with a huge empahsis on cutting costs.
The Big 3's business plan (especially GM in my opinion) is terrible. Create mediocre quality cars (admittedly, quality has gotten better recently) with about 10 different models which compete against each other, have more dealerships than necessary, and keep costs high (mainly through unionized workers).
So, as you can tell I'm not a huge fan of the bailout. Or rather, I'm reluctant for a bailout without some real, bona fide changes from the Big 3 (which includes loosening the grip of the UAW).
27. Loris said the following at 9:30 AM on Dec 22:
I'm a Toyota girl and my husband drives a Honda...so much for American cars in our household. We're both second-generation Japanese car lovers, too.
28. S said the following at 11:59 AM on Dec 22:
I am glad to have my 4-wheel drive small SUV to drive around with 12+ inches of snow on the ground. Small hybrid cars are fine for some climates, but those are the ones that are in ditches around here.
29. Texas Craig said the following at 1:04 PM on Dec 22:
I grew up in a midwest town based upon the automotive industry. My sole parent worked for GM and most of my friends' parents worked for GM or Chrysler. My cousin was a union rep. After I graduated high school, many of my friends were able to get summer jobs at the local auto factories. Many of them were so seduced by the pay (which was quite good for anyone, let alone a 19- or 20-year-old), the stayed on and worked instead of going to college. Many of them are regretting that decision today.
I always owned GM cars for the first 12 years I was driving. But, I got tired of all of the problems with them and the lack of ingenuity in design. Now, I still own one GM vehicle, but also own a Japanese car.
The American automakers are suffering for the reasons discussed by BDB and Mike Theemling above. They can rebound, but it will take such a massive restructuring and reorganization of the industry that bankruptcy or governmental reorg. may be required.
I am not hopeful. But, instead of pouring massive amounts of money into a dying model, our country should be investing for the future. If we do not, we will no longer be the world's economic leader in 30 years.
30. Erin said the following at 11:50 AM on Dec 24:
I work at one of the Big 3 as an engineer. Over the past 5 years, my company has changed so dramatically that it is unrecognizable to many who have been here for 10+ years. We have turned our company around, and were even profitable in the first quarter of 2008. Before credit markets tanked and gas went up to nearly $5.00/gal, that is.
Everyone is entitled to their personal choice in automobiles, but let's not decide to label an entire industry based on what happened decades ago. And let's not decide to become instant experts on what "should be done" in a complex industry that most have no inside knowledge of. :) It's easy to be a Monday morning quarter back.
31. John said the following at 8:14 AM on Dec 29:
#17,
If that article was written on paper it would be on fit for flushing!
That dude has a nose that Pinocchio would be ashamed of.
The stupid execs along with the stupid unions have destroyed American auto companies.
Unions are useless and so are incompetent execs.
32. Jonathan Sarfati, Ph.D. said the following at 1:13 AM on Jan 19:
If the bailout supporters were around a century ago, they would have bailed out the horse and buggy industry, with all the associated industries. After all, they had existed for centuries, and now, through no fault of their own, they were hemorrhaging customers to this new product of Henry Ford. What were the workers going to do?
Similarly, a huge industry existed centred around the ice box, including instruments to cut ice and places to store it. These jobs were gone forever when household refrigerators were invented.
Yet now it's OK for the government to confiscate money from taxpayers to prop up featherbedded industries — with executives who fly on private jets to beg for taxpayer money?