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Author Topic: Auto Company Bailout  (Read 1801 times)

Carl

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Auto Company Bailout
« Reply #15 on: November 27, 2008, 11:31:07 AM »

This is a subject that is very close to me. I come from a fourth generation Chrysler worker. My great grandfather retired from Chrysler in about 1950. My grandfather retired in 1969. My father retired in 1992 and I retired in 2007. Chrysler has put food on our tables for 70 years. I forecast this downturn in the economy almost 3 years ago on another forum. Here is my post from back then
Now, lets go to the supply side of it. For every domestic auto worker working for the big three there are 10 spin off jobs in the feeder plants making roughly 22 dollars an hour. For every Asian transplant assembly plant they have 4 workers in spinoff jobs making 15 dollars an hour. The rest of those parts come in containers from overseas.
If you cannot see this then I feel sorry for you down the road.[/quote]
 
Another one I posted almost a year ago about how the auto industry affects each and every person living in Canada and the US
Every single person in the US and Canada is affected by the domestic auto industry in one way or another whether they choose to believe it or not.[/quote]
 
Here is something some of you would like to watch
 
[tube]http://www.youtube.com/watch?v=72cHfOKoA1c[/tube]
 
And here is something else I wrote about how I feel we could save the auto industry instead of a bailout
 
So instead of giving all these billions to the car companies, give the billions to the people to buy up the cars.
Let's call my plan the "Make Them An Offer They Can't Refuse"
We get James Gandolfini (Tony Soprano) to do the ads for free (A way he can share his wealth) and the theme is Mafia rescues Detroit.
Bet the agencies could do some really fun stuff with the theme (They bid it to the agencies to do for free and whoever has the best campaign gets the future ad revenue when the Big 3 recover) and YouTubes servers might blow from all the traffic they would get.
And here's the offer I would recommend...To steal a slogan from VW, I think it's what the people want!
[AA comment: even Bush rather than Obama could implement this, and salvage some good feelings for his tenure. he already gave BIG BUCKS to the rich; why not some for us 'little people?']
2. If you buy a Hybrid, Alternative Fuel, Diesel car or truck that gets EPA 27MPG City or higher the deduction doubles.
3. If you own a business the deduction DOUBLES. Buy a $30k Ford Escape Hybrid and own a business, get a $120k tax deduction on your 2008 taxes.
4. EVERY VEHICLE in stock gets 0% financing up to 72 months.
5. Every vehicle has GUARANTEED warranty coverage, even if the company who makes it goes out of business in the warranty period (Insured by 3rd party warranty company).
Offer is valid until 4/15/2009 and you can still deduct on 2008 taxes as long as car was purchased before 4/15/2009 but you can't get deduction in both years. You can only take in 08 or 09, one or the other.
And I think a lot of folks would take advantage of this because Obama shows up at the end of the Sopranos-like commercial and tells everyone he needs their help.
The inventory depletes quickly and the Big 3 gets the cash infusion in their coffers they need, to buy them precious time.
If this idea sounds crazy to you remember, desperate times require desperate measures.
The plan may be crazy but dollars to donuts my plan is better than theirs.
[/quote]
 
As you can see, I am pretty passionate about this topic
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Bill Mounteer

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« Reply #16 on: November 27, 2008, 01:31:33 PM »

Wow, four generations!

What you describe is very true and the number of jobs at risk is very real, but dumping a bunch of dollars into peoples hands to buy up outstanding inventory doesn't address the  problem, it only defers it.

The basic problem is an overly expensive  product, poorly assembled with components prone to failure that is unable to compete with off shore competition. 

In my neck of the woods a 3 year old used Honda sells for almost the same price as a brand new one.  I can't think of anything out of Detroit to match that.


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firedome

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« Reply #17 on: November 27, 2008, 02:19:31 PM »

Objective reports like CR and JD Power are saying that many of the US
cars are assembled well as the Asian cars nowadays, so assembly is not
really the issue. Durability of some components may be ... Chrysler
automatics have a spotty history since the mid 80s... also styling has
been hit or miss, some of the interior design has been sub-par. Resale
has always been an issue for Mopars.  The Daimler takeover hurt
thm more than anything since the '80 loan under Iacocca...

I'd like to see them have a chance to come back.



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Stitcherbob

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« Reply #18 on: November 27, 2008, 02:34:52 PM »

I just turned 178,000 in the 2000 Neon....it has done most of that at WOT and 75mph averaging 25mpg.....why did they kill the Neon?

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Carl

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« Reply #19 on: November 27, 2008, 02:48:09 PM »

Its a myth that Jap cars last longer or are better built than american cars. Americans that bought Jap cars said this to justify the sale. I  have 450K on my show van, replaced tranny once and just put a new engine in this summer. The paint on it is the original that I did when I first built it in 1984. I had an 86 Omni with 400K on it when I got hit broadside and totalled.
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steve fogel

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« Reply #20 on: November 29, 2008, 01:16:00 PM »

Yep, and now the media's blaming management for signing on to fat union benefits packages.....but, if you remember, every time such a package came up for consideration, the same media took the side of the unions vs. the "evil" corporate CEO's.........but, they're never around to take the blame when the $hit hits the 7 blade cooling fan.........they've been making electric cars for 10 years and they couldn't give them away......so the "if they'd build it, I'd buy it" argument is also a bunch of horse hockey
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Carl

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« Reply #21 on: November 29, 2008, 06:41:22 PM »

Wages and benefits count for 7% of a vehicles cost. You cannot blame the problems on the UAW/CAW
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Johnny D.

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« Reply #22 on: November 29, 2008, 07:20:51 PM »

isnt the problem in those lifetime bennies though? as i understand GM looses close to 2000 bucks a car, in support of people no longer working...

a health car company that makes cars on the side isnt a viable business plan...

this said i dont like the idea of the companies filing chapter 11... who wants a car from a bankrupt company?




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Stan Paralikis

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« Reply #23 on: November 29, 2008, 10:02:00 PM »

GM should go out of business just on their corporate mentality alone.
Sheer greed.  Almost illegal if not bordering on immoral.
They represent the absolute argument against free enterprise.
While the infamous GM "bean counters" were ruining the cars with their insane cost analysis of every part right down to the number of drops of Loctite used on a bolt,
the CFO's were raiding the coffers to make sure they got their piece of the pie NOW.
No one, and I mean no one ever questioned who was going to pay the bill down the road when all the retirees came to collect.
 
In the sixties, seven GM workers were supporting one retiree.
Today, one GM worker is supporting seven retirees.
No one did the math.
 
I know.  The Teamsters are in the same boat...

steve fogel

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« Reply #24 on: November 30, 2008, 06:07:17 AM »

Really?  Some GM workers are getting $81 per hour in wages and benefits, while Toyotas are getting $35.  And you wonder why American car companies can't compete in the global market?  Nobody in their right mind is going to pay $2000 more for a car just so benefits can be paid to people some of whom are no longer working, and others of whom are in a "job bank" watching TV and playing crossword puzzles making $81 per hour.  I don't blame those who are riding the gravy train, I'm just telling you the gravy train has derailed and is plummeting down a cliff.  Looks like yer unions have been too successful for their own good.   They've priced their labor right out of the market.   Either the unions make huge concessions on wages and benefits or the party's over.   And taxpayer bailouts aren't going to help much.  Would you buy a car from a company if it's teetering on bankruptcy?  Right, neither will anyone else.   I keep hearing everyone clamoring for "change".....well there's plenty of change coming, things are going to get a lot worse than they are now, before they get better.   Unions are going the way of the dodo bird as they've passed their usefulness in preventing sweatshops and getting a decent wage for workers.   Now, they're just defending slothfulness, waste and shoddy workmanship.
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Stan Paralikis

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« Reply #25 on: November 30, 2008, 06:58:16 AM »

[ Deleted by author]
 
Read this: http://www.uaw.org/auto/11_25_08auto2.cfm
 
 
I'm outta here.  Going to where there are intelligent lifeforms.
Bye.
 
Commando12008-11-30 12:24:24

Stitcherbob

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« Reply #26 on: November 30, 2008, 08:03:54 AM »



That was a good read Stan 


Maybe another fix right now would be to adopt the philosiphy of Packard in not having model years. They sold cars by the series.....if a car didn't sell in this model year it wasn't automatically a has been or leftover....no waiting for the newest model and leaving a parking lot full of unwanted cars....

Why is the 2009 car better than the 2008 when they look identical and have they same equipment? Running changes happen, but no one notices until it's "NEW FOR 200_" and they trumpet the changes in their advertising.
Model year would change to Series ....once the stock had been depleted enough the next cars could be sold as a new Series

Anyone remember when the Neon became the "Next Neon"? I do....but most don't (2000)

Would end a lot of this "End of the year blowout" sales gimmicks....
stitcherbob2008-11-30 13:07:38
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Carl

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« Reply #27 on: November 30, 2008, 08:06:34 AM »

More misinformation. Nobody makes $81 an hour. Get facts instead of fiction.
Wages and benefits are 7% of the total car costs. Japanese are 5% so its only 2% of the TOTAL car cost difference. On a 20K car that is $400, not $2000 like you think
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Bill Mounteer

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« Reply #28 on: November 30, 2008, 10:51:45 AM »

Stan's link to Debunking the myth of the $70-per-hour autoworker is interesting but is also as misleading as the $70/hr figure being debunked. It makes little difference to the corporate bottom line whether a company pays $70/hr to a worker or $30 to a worker and $40 to a retired worker. 

What does however make a huge difference is where the $40 benefit figure comes from.

Most large companies with retirement plans create pension funds which use investments to generate, hopefully, enough cash pay benefit costs. This assumes the "company" and "employee" contribute funds each month to feed the fund.  If the company doesn't provide enough new capital each month and/or if the fund for some reason fails to reach it's required rate of return, the company must kick out more cash to cover the short fall.

What is really interesting about the $70 figure is how the companies like to use it to discredit the unions and the unions like to use it as a somewhat convoluted measure of success. 

The key question is not really what will happen if for instance GM is allowed to go broke and shut it doors, it's will the GM pension fund be capable of financing outstanding retirement benefits until the last claimant dies of old age. On a shutdown, newly unemployed workers will soon get put back to work by whoever picks up the remains and starts a new and improved GM. The retired folks however are another story and I think they are going to need major long term government assistance.

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Stitcherbob

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« Reply #29 on: November 30, 2008, 12:26:22 PM »


Quote from: Fury440

The retired folks however are another story and I think they are going to need major long term government assistance.

Perhaps that's where the bailout money should go.....

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