The US Big 3 questionable status

[Good Times]

What are your thoughts on the current outcome of the senate rejecting the bailout for the big three? If one of them goes into bankruptcy, how if any would it affect us? I don't think we currently have any members working for the big three but I'm sure we have friends/families that either work directly or indirectly that may get affected by what may or may not happen coming the first of the year.

Since the senate is now on official recess, what are the odds that the current administration will use the 700B and bail the big three out?

[4x4mike]

Doesn't Frank, elripster, work for GM?

I'm not sure what to think about the whole thing. I look back to elementary school when we saw the movie Tucker. The company made cars, people bought the cars. Things were good and bad but in the end couldn't make it so they closed up shop. No bailout, no excuses. I'm not saying the big three should go belly up and it would be bad because there goes a ton of jobs, directly and indirectly like Lance said. It'll be interesting to see what happens.

[Vermejo]

The banks that have received bailout funds should be lending the money to Detroit. Rather than lending the banks are buying other banks and paying dividends. Even if the legislation is passed before the end of the year the operating expenses of these companies is huge. 15 billion is merely a band aid on a gaping wound. If a bailout is given to the “Big Three” government leverage on what type of cars are produced is eminent.

If this whole situation was not reality, it would be a bad movie. Bankruptcy is not the apocalypse; these companies will exist beyond and most likely become streamlined and gain new leadership. Someone will pay, be it the autoworkers, taxpayers or our children.

[elripster]

I don't work for GM (I work for Argonne National Lab) but I work with them a lot so I get to visit the proving grounds see a lot of their testing. It's actually pretty cool, they test their stuff hard.

I think the administration will step in, I think they have to. Adding 10% to the unemployment rate would be devastating. I'm not one for corporate welfare but this situation is so far beyond the norm that some intervention is necessary unless we all want to accept a large decrease in financial stability and quality of life. Not to mention if the Big 3 go down, we'll all get to pay a lot more for our vehicles. Also, we should remember, we are talking about loans, not a bail out. The white collar financial industry on the other hand got a bail out. GM employs a ton of people who are paying their bills and mortgages and helping to keep this economy moving at all. We don't want to lose sight of that.

Another thing to consider is that if Toyota or another Japanese automaker has to seek help from their governments, they will likely get it without much issue. Japan gave Toyota a lot of dough just to produce the Prius at a time when they were ridiculously profitable. To remain competitive we in an extreme case like this will need to do the same unless competing countries stop.

There is an upside to all of this. The union issue has finally come to light. Our manufacturers bleed cash supporting unrealistically high wages and benefits. For example, one of the most desirable jobs on the production line is the filling of the coffee pots. It's a seniority based position. That person makes $80k/ year. I have a bachelors and masters degree in mechanical engineering and don't make that much dough. When a company has a competitive ball and chain like that they simply cannot compete with other companies that don't.

That is why when I hear people talk about how the B3 are out of touch, clueless, or the likes, I get really irritated. They understand the situation completely but have 20% of the vehicle profit margin with which to work. They do their best to stay in the black and remain technologically competitive.

I could type on this for a long time so I'll subscribe.

If I had the dough right now I'd go by an H3 Adventure, F/R selectable lockers, 4:1 t-case, 125A alternator, 20MPG on the highway, good truck at a great price.

Frank

[4runnerchevy]

Here's an idea, may have already been said. Why don't we make the oil companies bail out the automakers.

[elripster]

That would be something.

Oil companies and auto companies don't mix well though. When oil goes up car sales and most other goods impacted by reduction in expendable income goes down. The more money oil is making typically the less money car companies make unless the economy tanks for an unrelated reason like that of the current financial crisis.

Frank

[paddlenbike]

A friend sent me this today:

[Scuba]

A friend sent me this today:

Seen that, Freakin hillarious..

Didnt the bailout get shotdown?

[elripster]

Guys, these are loans. The financial industry got a bail out. Congress did not pass it, the Bush administration will have make them now.

Actually, that might be good. Congress was putting these ridiculous caveats on the loans that should not be there. They are way to far from the day to day operations of the automakers to decide where the money should go within the company.

Honestly, those adds are just too full of it to be funny. GM sells more cars than any other company on the planet. Their cars and trucks are MPG leaders in their classes, especially their trucks. The same is true for Ford. Quality is a wash nowadays. Toyota has had to deal with major engine issues starting in 1990 and has had it's share of recalls, etc... Consumer reports took Toyota off the auto-recommended best buy list for reasons. American autos have had great powertrains but flimsy chassis and sometimes cheap interiors. Today their chassis are rigid, interiors are nice, they got better. (Let's leave a lot of Chrysler's out of this one...)

Let's all remember that while many people are unable to pay their mortgages, the people employed (hundreds of thousands) at our auto companies are their suppliers are part of that segment of the population that IS paying their bills keep what economy we have moving.

Frank

[DHC6twinotter]

I'm not an expert on the matter, but would it be possible for the big 3 to file for chapter 11? A lot of the airlines have done it. While they are still struggling and have taken a loss this last quarter, Delta has exited chapter 11, and has just recently purchased Northwest. Delta is now the largest airline in the world and expects to make a profit by the last quarter of '09.

Would it be possible for the auto makers to do the same? File for chapter 11, reorganize, and possible start pulling in profits in the near future? It seems like it would be better than everybody loosing their jobs anyway.

There are a lot of jobs both directly, and indirectly tied to the automobile industry. I would hate to see so many people lose their jobs.

Just out of curiosity, if one of the big 3 gets a loan and still goes under, what happens to the money that is owed to the government? Do the tax payers cover that?

I dunno. I’m not familiar with how chapter 11 or any of this works, so I'm just thinking as I type.