Automakers Are Lining Up Aid, But Just Don't Call It a Bailout

The Washington Post ^ | 12-4-2005 | Jeffrey H. Birnbaum and Sholnn Freeman

[Iris7]

Troubled U.S. automakers and their allies on Capitol Hill are seeking billions of dollars in aid from the federal government ranging from health coverage for their workers to extra tax write-offs for themselves.

They're also asking for one rhetorical favor: Please don't call the requests a bailout.

"I don't view it as a bailout," Sen. Carl M. Levin (D-Mich.) said.

"We're not looking for a bailout," agreed William C. Ford Jr., chairman of Ford Motor Co.

The "B" word has been taboo ever since Chrysler Corp., faced with impending insolvency, sought and narrowly won $1.5 billion in loan guarantees from Washington in 1979 and 1980. The company eventually borrowed $1.2 billion and repaid the loans in 1983, seven years earlier than was required.

Nonetheless, the notion of the American taxpayer saving a company with a large and quick fix has pretty much gone out of style and has not been repeated since, with the exception of loan guarantees to airlines after 9/11. Even though General Motors Corp. and its rival Ford Motor now face serious financial straits, both are studiously avoiding public condemnation by spreading their aid requests widely among many types of government policies.

Taken together, however, the components of their wish list would cost tens of billions -- far more than Chrysler ever dared to seek.

[glorgau]

The latest set of Ford ads with the family scion trying to be like Lia Iacocca are hilarious. When I saw those for the first time - 4 color, 2 page center spread in section 1 of the Wall Street Journal, I just thought "Wow, they must really be in trouble". The whole "quality is US" or whatever it's callled smacks of desperation and lack of imagination.

[OldFriend]

If the companies made cars people wanted and trusted to be safe, they'd be making money.

They don't and until that changes, there will be nothing but heartache for the employees.

[A. Pole]

I think national healthcare is inevitable, it could be 10 or 20 years down the road, althought it is tough to assign a timetable, but I think it is a done deal except for the minutae.

Election year 2008. And it will be implemented within 2 or 3 years. So by 2011 we will have it.

[Dark Skies]

Plant closures bring on family problems, alcoholism, and even suicide.

I am sure. I was with a large company once that was acquired and most of the existing employees were summarily fired. Many personal problems surfaced.

However, eventually, most people recovered. And actually, there wasn't a choice. It wasn't much different than, say, an economic hurricane.

It came, it destroyed,...people rebuilt their lives. That's life.

[RadioAstronomer]

But, they would be even more reliable without all the electronic garbage.

Not true. My Vette has active handling, anti-lock braking, active traction control, electronic active ride control, performance algorithm shifting, electronic throttle control (included in the engine controller), engine knock sensors, dual electronic spark control sensors, camshaft position sensors, OnStar, Homelink, XM Satellite radio, Heads-up display (includes dot-matrix readouts for street mode, track mode with g-meter, vehicle speed, engine rpm, and readings from key gauges including water temperature and oil pressure), GPS Nav with LCD color map, an OLED two line Driver Information Center that monitors many vehicle functions such as tire pressure, oil temp, etc. (over 56 in all), electronic indexed windows, electrochromic mirrors, voice recognition (I can talk to the Vette and it talks back), keyless entry, push button start, all electronic guages (with white LED and fiber optic diaplays), electronic emission controls and sensors, HID headlights, etc.

I could go on but have been boring enough already. LOL! Some of the above allows a car that can do 0-60 in ~4 seconds and has a top end of 186 to get better than 20 miles per gallon.

Personally I love the electronics.

[stylin19a]

Bailout this ?????
"SUB stands for Supplemental Unemployment Benefits. First negotiated in 1955, this program is intended to provide a secure annual wage for auto industry workers.

Government-funded unemployment benefits typically replace only 1/3 to 1/2 of a laid-off worker's former wages. SUB payments supplement these benefits, and are structured such that when added to government benefits, a laid-off UAW-represented worker will receive a gross income of approximately 95 percent of his or her take-home pay for a 40-hour week, less a deduction of $25 for work-related expenses not incurred.

SUB pay is fully taxable; state unemployment compensation is subject to income tax, but not Social Security and Medicare (FICA) taxes. After taxes, when qualified for unemployment compensation and receiving SUB pay, the worker in this example would receive gross benefits equal to about 75 percent of his or her gross pay for a 40-hour week.

[EVO X]

It came, it destroyed,...people rebuilt their lives. That's life.

Ditto. The PM was an old timer and has been in the industry long enough to see quite a bit of ups and downs. It looks like it is headed down again, at least at GM and Ford.

[Erik Latranyi]

Personally I love the electronics.

I am a sales manager and I make sure that GPS Navigation is used by most of my salespeople. It makes them more productive since they have no trouble finding customer locations and can actually see 2-3 more customers per day!

Of course, some people would rather have us return to the horse and buggy.

[Southack]

http://www.bailoutgm.com/

[You Dirty Rats]

Japan and Europeam car manufacturers do not have to meet mileage standards.

That's untrue.

ALL US auto manufacturers are subject to CAFE rules. The calculation is separate for domestic and imports for each company. This is why Ford outsourced parts for the Crown Victoria and Grand Marquis years ago -- so that those care would count as "imports" and help their domestic CAFE standards. (GM Forrd and Chrysler typically import small cars more than large; hence the "gaming" on the large car sourcing).

For CAFE purposes, Canada is counted as domestic.

European and Japanese manufacturers have been insourcing into the United States for twenty years. Toyota and Honda began in Kentucky and Ohio; BMW and Mercedes are in South Carolina and Alabama. Bashing Europeans and Japanese for importing was accurate in 1986; in 2005 it's just not accurate.

[mr_hammer]

Ya, it leaves me scratching my head also. So what if a guy make 80K a year putting wheels on a truck, as long as those wheels stay on for a 100,000 miles and don't have to be replaced every 20,000 miles due to a poor material choice by a design committee.

[Nowhere Man]

Election year 2008. And it will be implemented within 2 or 3 years. So by 2011 we will have it.

Come to think of it, like you, it could happen sooner. I was discussing this with a co-worker of mine and we seem to agree that it could be possible to have some sort of single payer or socialized healthcare system in the U.S. as early as 2010.

[Iris7]

Sure looks like a "death spiral" to me.

I figure the Feds will intervene about twice before it is over. I can't see the Feds taking the political heat of the government paying a million UAW pensions and health care at about $65,000 a year each, say $65 billion a year. This is way over the median taxpayer income (Duh!). Just imagine the Wal-Mart employee's reaction to getting taxed to pay those pensions when he makes $20,000 a year himself.

[unixfox]

Name ANOTHER business that SCREWS up and has OUR government bailing them out.

Airlines.

But I agree, they won't help me if I screw up and mismanage MY business.

[Iris7]

Personally I find the whole affair like Sophocles' "Oedipus", of a terrible and inescapable fate, of a drawn out crushing of optimism and innocence, and of ambition and blindness.

Tried for years to do something, anything, positive. Very frustrating and then depressing. Over all that now, but still sad to see the utter denial.

[Harmless Teddy Bear]

Or maybe when they know there is a problem with last year or the last ten years design they could actually FIX the problem.

I guess that is far to much to ask.

[Clemenza]

The American auto companies and their largely incompetant management deserve to go the way of horse and buggy manufacturers. F--k them!

BTW: My father worked as an executive with one of the Big Three as well as a major Japanese auto manufacturer.

[Iris7]

To add my two cents to my agreement, I see the problem as seeing economic life as a matter of meeting the quarterly target whatever the long term results will be. The MBA attitude.

A problem with the American auto industry is that the UAW can destroy any and all auto manufacturers but that the manufacturers cannot destroy the UAW. This means that the UAW is the powerful one and the companies are the weak.