Why We Shouldn't Bail Out the Big 3 Auto-makers

The New York Post ^ | November 16, 2008 | Eric Torbenson

[St. Louis Conservative]

That beeping sound you hear this week is the semi-truck being backed up to the Federal Treasury in Washington. After being filled with taxpayer billions, it's on its way to Detroit.

A heaping bailout for the Big Three automakers - currently losing millions every day theyproduce cars no one wants to buy - feels like it's being gift-wrapped for the holidays.But the beeping sound you should be hearing is the heart monitor of the Big Three, slowing downto flatline. General Motors, Chrysler and Ford are such horrific financial wrecks that not even the Jaws of Life - and certainly not a taxpayer bailout - can save them.

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"We're funding a day care system for people with extinct skills," says Michael Covel, an entrepreneur, trader and author who is among many to back the simple argument: "let them die."

"We'll be a heck of a lot stronger in the long run if we just take the pain on this right now. They'll burn through it and be back for more. We're turning auto jobs into government-supported jobs and it's a shame." In just under two years, GM has lost $57 billion. The current quarter will provide more huge losses, and even in its regulatory documents the company admits that demand for its products isn't coming back soon. Translation: profits are as likely as trucks that run on rainbows.

[truthguy]

That said, I AM proud of what my countrymen here in the South make. Nissans, Toyotas, BMWs, Mercedes....

You don't' make em. You do low-tech final assembly. That's chump work, or better yet, chimp work.

[Spktyr]

Sorry, no. Mercedes’s US products, for example, are put together from parts made here in the US, mostly in the South. The Mercedes ML, made in Alabama, is *65%* US content.

Please stop swallowing the UAW line of “Transplant factories don’t use US parts.”

[truthguy]

Sorry, no. Mercedes’s US products, for example, are put together from parts made here in the US, mostly in the South. The Mercedes ML, made in Alabama, is *65%* US content. Please stop swallowing the UAW line of “Transplant factories don’t use US parts.”

Then Mercedes is probably an exception. I'll bet you that they don't do the Engineering, R&D, Test etc here. They keep the really good knowledge based jobs offshore. I'm very familiar with Toyota and Honda Plants myself. They are final assembly. I'm not swallowing the UAW Line. I can't stand the UAW. They have been more responsible for destroying auto manufacturing here in the US than anyone else by a wide margin. However as much as I detest the UAW we still need an auto industry here so that we can maintain an expertise in Manufacturing. We simply can't have that if we lose our domestic capability.

[Spktyr]

Well, are you forgetting the Calty center in California that Toyota has for engineering (Camry, most of the Lexus line)? Then there’s Honda R&D Americas, where the Accord is developed and is the ONLY place in the world that the US/JDM Accord is developed. The same facility developed the FCX Clarity and the Element. Nissan had an R&D center up in Michigan for decades; Hyundai did as well - not sure if those have moved with their plants/operations.

Almost all of the transplants have test tracks or use test tracks out in the desert southwest of the USA; many rent US tracks for development and testing, many do real world testing here on US roads.

And you’re forgetting Honda Racing Corp - which is Honda’s racing division, mostly run and staffed by Americans (which is why the HRC colors have been Red White and Blue since the 70s.)

In actuality, the Asian transplants have a hell of a lot of R&D, testing, and engineering facilities here in the US. The Europeans less so (the last ML wasn’t actually designed here in the US, the new one was partially developed here.) Heck, Honda even is developing airplanes in the US - wholly in the US.

[pnh102]

Okay for about the 10th time; Toyota, Honda, Mercedes, Mitsubishi, do NOT MANUFACTURE here. They do LOW-TECH final assembly. There is a tremendous difference between Manufacturing and Final Assembly. I don't have time to explain this. Look it up.

And they still manage to do this low tech final assembly (if that's even true) better than GM, Ford or Chrysler. I personally don't care what GM, Ford or Chrysler is trying to do. They are failing, they want taxpayer money, so that makes them even worse than any foreign car company.

GM, Ford, Chrysler have a COST STRUCTURE that the foreign manufacturers do not have. The legacy cost alone is about $2,300 per car. This is nearly impossible to make up on a small car. This is why the US Manufacturers concentrated on larger cars, SUV's, and Trucks. They actually made money on these vehicles. The per hour compensation package for US Manufacturer's is about $73/hr vs $48/hr for the Japanese Manufacturer's here in the US. I'm not sure about Mercedes and BMW wages. I haven't seen the numbers for these companies.

That is GM, Ford and Chrysler's problem, not mine or any other US taxpayer. GM, Ford and Chrysler chose to engage in piss-poor business practices that led them directly to where they are now and now they want to steal my money to continue engaging in such business practices? That makes them even more worthy of going under in my book.