Posted on 11/15/2008 11:45:07 PM PST by fightinJAG
[snip]
One reason for this is that a rescue is unlikely to work. The Big Three face an enormous array of challenges. Recent economic conditions have battered all automakers, but in both good and bad times Detroit has more or less constantly ceded market share to rival firms (many of which employ thousands of Americans and will operate through the recession with no government assistance). Its plants and equipment are old. Its management is unproductive and rigid. Its products are of low quality. Absent major restructuring, it is fantasy to expect a change.
Detroit has found itself in these straits in the past. Nearly 30 years ago, as the American automakers flailed amid high oil prices and foreign competition, Chrysler went to the government hat in hand, seeking help to avoid bankruptcy. . . . The bail-out kept a company alive, yes. But it failed to save the Rust Belt or produce the necessary top-to-bottom restructuring. We have little reason to expect a different outcome this time around.
More important still is the opportunity cost of saving the automakers. It is suggested that millions of jobs might be lost if the firms folded. That may well be true, but those workers wouldn't remain unemployed forever. At present, the Big Three suck up labour and human, physical and financial capital that might instead be employed at more productive firms in healthier industries. Allowing the automakers to fail creates an opportunity for a much-needed reallocation of resources. From their ashes, anything, including an automaker free of the institutional burdens of the Big Three, might emerge. Standing in the way of this process will damage the long-term outlook of the entire region.
(Excerpt) Read more at guardian.co.uk ...
This may interest you.
Interestingly, here’s what’s happening with the auto industry in Australia. Is it just me or is it starting to look like the “auto industry” all over the world is too 20th century?
Excerpt (link follows):
Carr refuses to reveal how many car industry jobs to go
Senator the Hon Eric Abetz
Deputy Leader of the Opposition in the Senate
Shadow Minister for Innovation, Industry, Science and Research
$34 million in car package for worker redundancies
Today in Senate Question Time Industry Minister Kim Carr refused to reveal how many car industry jobs the Government expects to be lost through their car package.
And just one day after the package was released, he also attempted to lower expectations about its impact by stating “I do not make promises that this government cannot keep”.
It beggars belief that despite setting aside $116 million for structural adjustment assistance, including $34 million specifically for “labour market assistance” for retrenched car industry workers over the next two years, that the Minister has no idea of how many jobs will be lost.
Labor came to office on the promise of “saving” Australia’s car industry, yet already more than 3,000 jobs have been lost in the sector in less than one year of Rudd Labor Government.
http://www.liberal.org.au/news.php?Id=2036
Many analysts say the U.S. auto industry already is dead. So why would Pelosi & Gang want to bailout an industry that is deader-than-a-doornail and which cannot be revived?
Maybe the last line of this piece explains it.
Excerpt (link follows):
As Car Industry Fails, Detroit Class Warfare Loses It Power
[snip]
The earliest permanent disruption of the balance between labor and the auto companies began after the 1970s as VW and some of the Japanese companies used oil prices to get a foothold in the US market. Despite the tremendous financial success of the auto firms during most of the 1990s and 2000 to 2004, Japanese brands picked up a larger piece of the vehicles sold in the American market. GM’s (GM) profits peaked in 1999 and 2000 at over nearly $17 billion each year.
One of the effects of rising sales for firms like Toyota (TM) is the strikes against US companies tended to do greater and greater damage as consumers could buy good cars from a pool beyond those made by The Big Three. Labor unrest actually had the potential of pushing customer out of the circle of “buying American” if the strikes were long enough to significantly vehicle cut supply.
The American car companies have been overrun by two savage events, both of which largely happened after their latest contracts with the UAW in 2007. The first was the sharp rise in gasoline costs which, coupled with a collapse in the housing market, undercut car sales for The Big Three to a large extent because of their dependence on pick-ups and SUVs . The problem of fuel-efficiency threw huge numbers of sales to Japanese manufacturers who tended to build smaller cars. Just as gas prices began to come down, the credit crisis made getting auto loans much more difficult
The last round of negotiations between the car companies and UAW were tense because auto executives wanted payroll cuts to offset rising employee benefit costs, especially those for retired workers. The car companies were prepared to put tens of billions of dollars into accounts run by the unions to pay future labor benefits. The union agreed to sacrifice jobs. It was an admission on the part of the UAW that its leverage was limited by the damage the US auto industry had sustained from 2005 on.
The UAW made a bad deal. But, it would be hard to imagine how iy could have made a better one. Fuel costs and a recession turned both labor and management into losers. The fury between the two sides, which even showed itself in last year’s negotiations as the UAW threatened several strikes, has lost all of its power. The union will be lucky to get what the car companies owe it for its new benefits fund.
http://www.247wallst.com/2008/10/as-car-industry.html
Should we really bailout Big Three automakers with $73.20 per hour labor compared to Toyota’s $48.00 per hour labor compared to $31.59 per hour for all other goods-producing labor in the U.S.?
[snip]
The chart above shows average hourly compensation for the Big Three ($73.20) and Toyota (TM) ($48.00), compared to average hourly compensation for Management and Professional Workers ($47.57), Manufacturing/Goods Producing ($31.59) and all workers ($28.48), data available here.
Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM (GM), Ford (F) and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?
Maybe the country would be better off in the long run if we let the Big Three fail, and in the process break the UAW labor monopoly, and then let Toyota, Honda (HMC) and Volkswagen (VLKAY.PK) take over the U.S. auto industry, and restore realistic, competitive, market wages to the industry. It might be the best long-run solution.
If this bailout happens, it needs to be after the big three declare bankruptcy and deal out the UAW. The companies have more capacity for production than they have customers, bye bye employees.They can survive without the union leeches
And that's exactly where any "bail out" would go. Screw them. Let the union pay their members benefits out of union dues -as they should have been all along instead of bilking the auto company- instead of sinking billions into political activism.
http://www.wsws.org/articles/2003/oct2003/uaw-o01.shtml
This article (yes, consider the source) was written in 2003. At that time, according to the article, nearly 50% of the UAW workforce would be eligible to retire within 5 years, which would be just about . . . now.
50$ !!!
Plus UAW gave up 50,000 jobs in its last contract negotiation.
The point is how can the Rats stand up and say this is about jobs? It’s not about jobs. It’s about paying the union’s bills for pensions and healthcare for all its retirees.
The proposed bailout of $25B will use about $12B just to pay retiree benefits-—IOW, the bailout will give $12B to people who DO NOT HAVE AUTO INDUSTRY JOBS (because they are retired). Jobs? This is NOT about jobs.
It’s about the Rats making good on their payback to the unions because UAW knew by 2003 that the Big 3 would not be around much longer to pay into its benefits fund.
The UK Guardian is absolutely correct about this, which defies belief.
Indeed it would. The expansion these companies will have to make plus any other multi-national companies that move in will pick up the unemployed workers.
GM, Ford, Chrysler aren’t really “American” companies anymore anyway, they are multi-nationals, and part-out to other countries most of the component manufacturing anyways.
Prez Bush and the Republicans in congress must do NOTHING!! before Jan.20.
Let Prez Obama and the Dems take ALL the blame for the creeping socialism.
The GOP was conned into signing off on the first big attack(the bailout)on the free market.
It must not happen again.
At this rate Toyota could just buy the Big Three, I think they have something like $85 billion cash on hand, should do the trick.
Marker
regards
alfa6 ;>}
GM stock, is valued at 1.8 billion. That’s it. The US government could buy GM for less than 7% of the 25 billion bailout.
The Rats plane to legislate unions into existence at the foreign car plants in the US. The increase in costs will help the B3 become more competitive and raise the price of cars to the consumer. The UAW is standing their ground because they know that the Rats will not abondon them.
Spot on. I don't believe the so-called "bailout" is for the "big three" at all. It's for the UAW. GM is pissing through close to $3 billion a month. Giving them $25 billion keeps them afloat for what, about 9 more months? What do they expect to accomplish in 9 months that will save them? Restructuring their debt and reorganizing their operations happens in bankruptcy court, not by giving them bailouts.
This is all about payback to the UAW for their efforts to put Obammy in the Whitehouse, IMHO....
U.S.News & World Report
10 Cars That Sank Detroit
Friday November 14, 5:34 pm ET
By Rick Newman
The global financial crisis is suffocating the Detroit automakers, but the problems at General Motors, Ford, and Chrysler have been festering for years—even when the mighty “Big Three” were earning billions. Aging factories, inflexible unions, arrogant executives and shoddy quality have all damaged Detroit. Now, with panicky consumers fleeing showrooms, catastrophe looms: Without a dubious federal bailout, all three automakers face the prospect of bankruptcy.
There will be plenty of business-school case studies analyzing all the automakers’ wrong turns. But, as they say in the industry, it all comes down to product. So here are 10 cars that help explain the demise of Detroit:
Excerpt: Go to the link below for the story:
http://biz.yahoo.com/usnews/081114/14_10_cars_that_sank_detroit.html?.&.pf=insurance
One of the things that really did Mitt Romney in for me, was him going along with, and his plan demanded with the force of state law, that I had to, was forced to, and (most of all) was thought of as a purely economic animal. That my, and many other cussed, were but children, putty in the hands of the political elite.
Yeah, I'll show’m hands if I could get them alone in a room with me.
I could see the Democrats making some sort of national labor union, only call it a ‘co-op’. The buy in deal will be great for working stiffs ( which I very much am. More stiff now than working, anyways ) but will make Doctors, Hospitals, Big Pharma but, more or less, property of the state, very much along the German model.
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