Cars That Go Boom: Detroit's Big Three & Me

I am getting very concerned for US automakers. And not just at the idea that they may go under but what it could do to the economy of our nation (and perception of our economy) right down from Wall Street to the oft-invoked Main Street. The shock waves of a failure of any of these firms is as economist David H. Wang said to BloggingStocks "economically and psychologically unacceptable."

But did I help a little in their slide recently? I don't think I did but it doesn't help that I at least feel that way right now because I'm not driving a Detroit piece of luxury iron. But before you say that I'm an unpatriotic, femiNazi liberal socialist (I'm actually a capitalistic, Marxist Surrendered Wife-ist), let me say this: just before I graduated from college, my bad ass drove a Chevrolet, a gift from my parents. Not just any Chevrolet but this:

http://farm4.static.flickr.com/3199/...1c287957_o.jpg

It was an automatic, don't worry, or else it would have needed a new transmission! :D And while I like and love fast cars, not that I want to actually drive one myself, most I would never want to live with on a daily basis, the Z28 SS included, and really just prefer being driven in one. It chewed up any little Rice Rocket people and Mustank owners easily, and that was fulfilling, but it should have been a weekend car not a primary car so I sold it a little while ago and got myself a Mercedes. My parents drive Jaguars, ones made during Ford's "stewardship," and also have a Ford F-250 King Ranch to pull my mother's horses. So they're not traitors. But are the rest of us?

http://farm4.static.flickr.com/3252/...e7639e54_o.jpg

I was speaking with some colleagues in the financial industry recently, each of us representing the automotive, retail and luxury sectors, and we all agreed that nothing bad has really come out of Detroit since the 1990s, except for maybe Eminem. These three companies face many problems but bad product isn't really one them. They face rising legacy costs (which I had no issue with because of the time at which they were struck but find problematic now), import competition which was allowed to flourish unchecked (while in their home countries our products faced numerous financial hurdles put in place by their governments to protect their national firms) and they also face the seeming contempt by many Americans against their rescue (something no other country's citizens would seem to do if one of their industries were failing).

http://farm4.static.flickr.com/3230/...acb2c431_o.jpg

The failure of any company is bad but the failure of these American institutions would be disasterous for not only themselves, but for many people who depend on them worldwide for income, money infuses many communities and local governments with revenue. This is not the same situation Moore's Flint, Michigan encountered in Roger & Me. The impact of losing Ford, Chrysler and General Motors could be far more cataclysmic than the loss of companies like Stearns and Lehman Brothers where over 50% of their profits were paid out in bonuses to fewer employees than make up even one shift at Chevrolet's Bowling Green, Kentucky plant.

What is everyone else's thoughts and feelings on this? Please, let your ideas or opinions be heard!

Let GM die.

They make cars nobody wants and do so badly.

Why do they get special treatment from the US Government? How many bail-outs have they had?

Nice question Posh, because of letting the companies go not only the people working in those companies will be affected but also the companies which deliver to those 3. So a lot of families will have been affected by this and because of that a big part of economy in USA and worldwide. So for now, support the 3.

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Originally Posted by Pugwash

Let GM die.

They make cars nobody wants and do so badly.

Why do they get special treatment from the US Government? How many bail-outs have they had?

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They haven't ever really had any, Pug. Chrysler had one in the early 1980s and the government ended up making almost $350 million on the deal. Recently, Chrysler actually was making a sound profit but the costs of their pension funds and healthcare costs eroded much of it! The same with all three, really.

It's easy to say let GM die but what's your reasoning behind it? That's what I want to get to, the thought processes behind why people think these multi-national companies should be alllowed to go down, taking so many people down with them.

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Originally Posted by onzenuub

Nice question Posh, because of letting the companies go not only the people working in those companies will be affected but also the companies which deliver to those 3. So a lot of families will have been affected by this and because of that a big part of economy in USA and worldwide. So for now, support the 3.

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So, the US people should give money to GM workers so they can sell them crappy cars?

Save something worthwhile; not GM.

All those sailors put out of work when the slave trade was shut down, the coal miners in the UK, telegraph operators, valve radio companies ...

Things end, prolonging them artificially causes more long-term damage.

I dont buy domestics and I dont care about the bailout. I keep my money and "investments" in safe places. Which will never be discussed with the likes of you fools.

Hope they have a great time cuz I dont give a sh*t. Mean to say but I dont.

i want to know why the big companies will wait until there is no oil until they change the product they make. just because there is oil left doesnt mean we have to use it. yes they have made token efforts to produce green cars, but if they really committed to them, they might be able to reproduce the market dominance they once had. if they get US government funds they should come with some pretty serious strings attached and a repayment plan as well.
i feel very sorry for those who stand to lose a job, regardless of the types of cars they make.

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Originally Posted by Posh

the thought processes behind why people think these multi-national companies should be alllowed to go down, taking so many people down with them.

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Is GM really a multi-national? They're a US company that owns a few foreign brands.

Right, you have one car per person who can drive in the US. Should the money really be pushed into trying to make more? If it's just the jobs you're wanting to say, then say so, because the companies themselves are screwed.

A good solution I heard was to give GM a government contract to make the federal car (or something) that would be a hugely efficient car/truck used by all government forces and partly paid for in advance like is done with the defence industry. Or tell them to make some military stuff.

If they're being propped up purely to keep jobs, don't do it. Create new jobs.

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Originally Posted by $~mLuMaN83~$

I dont buy domestics and I dont care about the bailout. I keep my money and "investments" in safe places. Which will never be discussed with the likes of you fools.

Hope they have a great time cuz I dont give a sh*t. Mean to say but I dont.

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http://www.costaricapages.com/panama...piggy_bank.JPG

maybe we should just condense the big three into one. merge or die. i grew up in detroit and pretty much everyone i knew worked for the auto companies. any one of these companies dying would be absolutely catastrophic for employees and familes, local and national. i really hope we can figure out a way to make them successful.

[quote=$~mLuMaN83~$;485272]I dont buy domestics and I dont care about the bailout. I keep my money and "investments" in safe places. Which will never be discussed with the likes of you fools.

Hope they have a great time cuz I dont give a sh*t. Mean to say but I dont.[/quote]

I think I know who chose 'I don't care.!' :D And what don't you like about domestics in particular that would make you choose a foreign brand?

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Originally Posted by louisruby

i want to know why the big companies will wait until there is no oil until they change the product they make. just because there is oil left doesnt mean we have to use it. yes they have made token efforts to produce green cars, but if they really committed to them, they might be able to reproduce the market dominance they once had. if they get US government funds they should come with some pretty serious strings attached and a repayment plan as well.
i feel very sorry for those who stand to lose a job, regardless of the types of cars they make.

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The money will come with serious strings, Lou, and some of them the automakers don't like but not for the reasons you would initially think.

Pug, taking them down the road of government contractor sounds pretty good actually. Would it solve problems long-term or only temporarily?

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Originally Posted by Posh

Pug, taking them down the road of government contractor sounds pretty good actually. Would it solve problems long-term or only temporarily?]

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That would depend on the quality of work they did.

If they kept doing what they're doing, it would be a short-term fix and then you're back to where you are today.

Face it, if they made decent cars, they'd not be in trouble.


ps. http://pacificgatepost.blogspot.com/...m-friends.html

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Originally Posted by Pugwash

That would depend on the quality of work they did.

If they kept doing what they're doing, it would be a short-term fix and then you're back to where you are today.

Face it, if they made decent cars, they'd not be in trouble.


ps. http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

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What exactly is wrong with their cars? Which cars do you feel are 'indecent?' There seems to be a stigma attached to them that is entirely based on their product which is the best its ever been, eclipsing many import products in certain categories.

The only dometics that I would buy would be a Roush Mustang, 67 Camaro SS, Viper, GM or chevy truck (If I couldnt have a Toyota truck), and thats it.

I think the newer stuff, besides GM trucks, are expensive, poorly made, and most importantly, for the most part have a very generous dose of ugly put into each vehicle with pride.





Piggy bank?...


AAAAAAAAAAAAAAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!!!

If you only had a clue brother. LOL!!!!!!!!!!!!!!

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Originally Posted by Posh

What exactly is wrong with their cars? Which cars do you feel are 'indecent?' There seems to be a stigma attached to them that is entirely based on their product which is the best its ever been, eclipsing many import products in certain categories.[/COLOR][/SIZE]

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If they're selling so well, why are they in trouble?

What's wrong with their cars is that they don't sell.

Why they don't sell is a matter left to experts, but the fact they don't sell, in spite of some of the best brand awareness in the world and some dead easy marketing, is the important bit.

No matter how much you defend the quality of car they build, they are proven to either suck or be perceived to suck. There's no way around it.

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Originally Posted by Pugwash

Let GM die.

They make cars nobody wants and do so badly.

Why do they get special treatment from the US Government? How many bail-outs have they had?

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I have many thoughts on this but I have to take the family out for a bite to eat so I will keep this short for now. Pug...do you feel the same way about the only Government subsidized aircraft manufacturer? Perhaps we should let Airbus go out of business and leave the airplane making to Boeing. Airbus has proven this time and time again...and most recently with the A380.

BWP....if it aint Boeing, Im not going!
A300 Pilot

no.

Throwing money at Detroit is like new needles for a junkie.
You can't shine s**t.
Starvation is a great motivator for innovation.

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Originally Posted by collector26

Throwing money at Detroit is like new needles for a junkie.
You can't shine s**t.
Starvation is a great motivator for innovation.

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WOOO!


Btw... Any word for a new gtg? Zach starts stuff and never finishes. He always takes credit for everything I do. I'm not kidding one bit either.

Unfortunately, bailing out the automakers is necessary. It's not about saving the companies, it's about saving the jobs.

Whether or not anyone agrees the jobs should be saved, if they are not we will be looking at the DJIA at 5,000, and the current economic situation will seem like a walk in the park.

Should the bailout have conditions? You bet. But it's got to get done.

I have owned 3 Trans Am's,1 Z28,2 Vettes a Grand Prix and i own a Charger R/T,though i don't really like Dodge,the plant that makes the car is down the street from me,just supporting the local guys...i rarely drive it.

I will always buy Chev's,never had a problem with mine,i just won't do the asian thing,aside from doing my wife,who is asian....after that i draw the line :)

She drives a C350,an o.k car,but not one of my Chev's.....i love em and they are a part of our history here,will leave it at that.

Like a bumper sticker i have seen many times 'Out of a job yet?...keep buying foreign!'......keep it up,you guys are hurtin as it is.

Im sorry...The Vette is cool too.

Actually...come to think of it this is very sad. The history of the Vette is incredivle, full of triump, and is legendary for America. Pretty crazy to actually think of the end of the Corvette. That actually makes me a bit sick to my stomach.

Wow... Never thought about that.

No more Corvette...



Im gonna go drink myself to sleep now.

If this does indeed happen we must have a thread for a Corvette tribute!!! Never let the racing flags die!

Bail 'em out. we can't afford to have a million more people collecting un-employment checks.

I just got a Chrysler 300 SRT as my work car w/ my promotion and I can tell you that you guys can keep your silly little rice burning play toys. I will wave to you as I motor past you.

I work in a shop for a Saturn dealership. If gm tanks, I and everyone else there will loose their job. Another GM brand is having issues, and my owner already shut down that store and that brands shop at this location.
From a personal perspective, I don't want GM to tank. So many people will loose jobs. It could start with me and my crew, and just trickle around the globe as I've heard it would. Given today's BOOMING economic situation...this can not be a good thing.

But I can also easily step away from it to view the big picture...Before recently, GM has been slacking on a lot of their product in the way the public liked them vs forign cars. Things got sloppy; exterior styling got mundane, interiors got boring and cheap, and just were overall lackluster cars. The last few years (ESPECIALLY) with saturn have turned over more attractive cars that people are now choosing over foreign cars based on aesthetics along with the people who are brand/USA loyal. To get specific, interiors are now made with better looking material with nice tight panel gaps inside and out on top of mostly improved exterior styling to boot. (the durability of these materials on my end .....I can get into a whole other story on that lol) Plain and simple, they are just more attractive now.
So why didn't they do this 10 years ago???? If they did, they could be on top of the game. But they waited until the public's perception of gm's cars became very poor before they turned it around and started trying again. Because things take a while to catch up, not everyone is going to jump on the wagon and buy all big three again just because they are getting better review from critics and their neighbors alike. It takes time to win over people you've lost. Time they don't have right now. Especially with the doom cloud so low in Detroit.

Back to the bailout proposal, a shot in the arm would just be temporary overall I believe. I don't think they could survive on that ration long enough for people to play catch up, buying enough cars that should be sold now (due to the above paragraph), putting them in the black.
So how many times will it need to be done?? And how many other businesses out there will expect the same thing? Like said before in this thread, there will have to be some steep stipulations if the gov is going to hand gm cash as far as what to do with it. And like the Chrysler bailout in the 80's, It will actually need to make them money.
I just don't see how you could justify it in the long run. Too many questions as of now that I'm not hearing answers to from those who make decisions.



So my opinion for now at least...Sorry GM...its time.

stevie7s does bring up a valid point though, because probably most everyone will collect if that happens...I wonder what that will cost vs their proposed bailout. The taxpayers will pay one way or another.

Wow, for once I actually agree with you Posh. The downfall of one of the big three would have a devastating ripple affect throughout the whole country and around the globe. It will also be much more perceptible than anything that's hit so far... where I live things are exactly the same as they were six months ago, we haven't felt the stock market craziness one bit... GM, Ford, Chryslerberus go under, there's about 200 of the best paying jobs in the area gone.

Theirs nothing wrong with the cars the big three make.Quality as good as any, class for class.They just haven't been managed properly for today's world. Little, or no visible effort to build more efficent vehicles.
It's going to take a group effort to get them back running strong again.
Probably need some sort of goverment package.
File bankruptcy re-organization to buy time and re-tool for more efficent manufacturing, and more efficent cars. The big 3 are building decent cars, but nothing to seperate them from Asian auto's.
Unions need to come off some of that 58.00 an hour wage. The U.S. based Asian plants that are non-union pay 28 to 38 bucks an hour. The big 3's cost structure is a problem.

Just bad management.

If the government is going to throw money at failing company's, I would rather it go to the auto makers than AIG.

You know whats funny about this all? Everything that has happened?

I seem to recall Luma stating many times we are going to start seeing some huge changes on this planet.

Around 2012 we are gonna see some BIIIIG ones.

Mark my words AGAIN.

Luman has his crystal ball out,what do you think Lume,will i be getting a tan in February here in Toronto?....can't wait for 2012!...:cool:

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Originally Posted by Dave123

Luman has his crystal ball out,what do you think Lume,will i be getting a tan in February here in Toronto?....can't wait for 2012!...:cool:

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:lol: :lol: :lol:

Das right...I have a crystal ball. I melted all my watch crystals down. I see all


OOOoooOOoOOoOoOooooooOOOoOOOoooo


Speaking of a tan... I need to go to the tanning bed. Wooooo

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Originally Posted by Triple-d

Unions need to come off some of that 58.00 an hour wage. The U.S. based Asian plants that are non-union pay 28 to 38 bucks an hour. The big 3's cost structure is a problem.

Just bad management.

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Agreed.

Starting to give money to the big three is a big mistake,it will be a money pit,they are not profitable now and they won't be in ten years,the Gov will have sink money non stop,it will never end.

If they file bankruptcy, it doesn't dissove the company. It holds of financial obligations, and gives them time to re-group.
Maybe get a government loan to re-tool for efficent manufacturing, and more efficent cars.
Pumping money into the same company's with no changes is endless.

Quote:

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Originally Posted by Triple-d

If they file bankruptcy, it doesn't dissove the company. It holds of financial obligations, and gives them time to re-group.
Maybe get a government loan to re-tool for efficent manufacturing, and more efficent cars.
Pumping money into the same company's with no changes is endless.

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Im with TD here...I think they need to go through with restructuring before we throw money at them. Throwing money at something is the core of American problem solving.

As far was what the American car companies are making...in the 80's the big 3 were in the mind set, "It doesn't matter what we make, it could be a turd with wheels and they will buy it." They started falling behind in style, design, and innovation. The only thing new to come out of Detroit the last 20 years is the SUV.

There is so much wast and overlap. Do we really need a Cadillac, GMC, and Chevy version of the same car? Each with 4 different packages and 100's of options? Yes I know Honda has Acura, Toyota has Lexus...but they don't look the same and you only have few options.

The US car companies in my opinion have spent their time competing with each other rather than the rest of the world. I am sure in their minds there was no other competition. I think they should look at downsizing, eliminating some 'brand' names, and consider a merger to become more competitive in the world and the US. This happened in the aviation world more than once. ie; Boeing, McDonald/Douglas, Lockheed/Martin...and all of our European aircraft manufacturers.

BWP...out of breath!

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Originally Posted by Triple-d

If they file bankruptcy, it doesn't dissove the company. It holds of financial obligations, and gives them time to re-group.
Maybe get a government loan to re-tool for efficent manufacturing, and more efficent cars.
Pumping money into the same company's with no changes is endless.

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Bankruptcy, even Chapter 11, will kill them... would you buy a car from a bankrupt company?

You have to remember that most of the population makes no distinction between Chapter 11 (reorg) and Chapter 7 (liquidation) all they hear is "bankrupt". The headlines will be "GM declares bankruptcy" or "GM goes bankrupt" not "GM decides to reorganize"... that's a massive blow to consumer confidence on an item that they expect to be able to keep for five to ten years.

I still haven't heard anyone give a reason other than charity or welfare. That is what bailing out the automakers is, it is welfare.

Can't anyone give an actual business related reason to bail them out? Something like, "they have excellent designs ready for future production, they have the best technology for more environmentally safer cars, they have a plan on how to reduce the costs of producing their cars, they are only having cash flow problems, their business model is sound...etc."

I haven't heard it cause it isn't true. And THAT is why they should go under. Hell, they've been dead in the water for years now. Their friggin cars are horrible (other than the engines). Designs? Bad. Style? Bad. Average cost to produce a car? Sky high. Why in the world would that kind of business deserve to get bailed out? The answer, they don't.

It's too bad people would lose their jobs. I feel great compassion for those individuals. But this is business, not charity. Do we keep bad businesses around based on charity? And don't give me that "blow to the economy" "we can't afford that" crap. We can't afford to keep crap companies like this around, that is what we can't afford.

Let them die, then somebody smarter and better will buy their assets and make better cars.

Ok, I amazed what a short term memory most people here have.
Do we all not recall how many AMERICAN MADE SUV'S we have all be buying for the past 10+ years. Gas prices skyrocket and we stop buying them leaving GM, Ford and Chrysler with a boat load of unsold gas guzzlers. They have to push all kinds of rebates to try and move these things leaving then with no profit and in many cases a loss on these vehicles. And for the record, Toyota, Honda and Nissan are all feeling some pain too. Should detroit have been more diversified in their product offerings? No doubt, but it's had to stop selling vehilces that AMERICANS can't get enough of. 2005 marked the first time in history light trucks out sold passenger vehicles.
And to retool and design more fuel efficent vehicles take a bit of time, at least 30 to 38 months, it dosen't happen overnight. In fact GM and Ford were both doing pretty well through the early part of 2000.
Then there are the labor cost that the Big 3 have that no foreign mfg. has when bulding vehicles here in the US. The Big 3 have an overall labor cost of $78.00 per hour while the foreign mfg have a 42.00 per hour labor cost. Now this figure dosen't just represent pay rate, it includes benifits and the cost to cover retired employees as well.
I think the Big 3 have done a pretty good job competing with the foreign mfg with their labor cost almost double.
And don't think for a minute that US Car companies are the only auto mfg that have gotten in over their heads.
Nissan would be gone today if Renault didn't jump in and buy 40% of the company and then run it back to profitabilty. Mitsubishi needed a bailout a couple years back and got it from the Mitsubishi Bank ( a different company).
Here is another question to ask yourself, if the forigen manage their auto companies better then the US, why couldn't Dalimer make a go of it with Chrysler. They bought them 10 years ago for just under 40 billion and sold them last year for what amounted to 650million. Aloss of 39 billion and change.

I just feel it's too easy to say they build crap, and are mismanaged. It's a sure show of how little you actually know about the situation.

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Originally Posted by Posh

They haven't ever really had any, Pug. Chrysler had one in the early 1980s and the government ended up making almost $350 million on the deal. Recently, Chrysler actually was making a sound profit but the costs of their pension funds and healthcare costs eroded much of it! The same with all three, really.
It's easy to say let GM die but what's your reasoning behind it? That's what I want to get to, the thought processes behind why people think these multi-national companies should be alllowed to go down, taking so many people down with them.

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Oh my. So you are saying it's the unions fault that Chrysler (and the big 3) is having trouble turning a profit? lol...
Oh me oh my oh...
Actually for the first time in almost 2 decades GM is putting out a halfway decent product. In fact Buick is the biggest selling import in China. This theory of the workers pay and benefits is what is costing the big 3 to tumble is an out right ridiculous lie. Gm's CEO is capping almost 10 mil a year base. Don't cry for me Mr. Wagoner. 7 years on the job and still not a penny earned. Wait until you see his golden parachute. This problem cannot be debated as to why, that's already been determined, but more as to how come. How do you take advantage of a buyer for 20 some odd years and then in the aftermath of being destroyed by your competition ask for loyalty, and in the same breath, blame the working man who really in turn is your loyal base buyer? The big 3 have treated the American buyer and worker like a red headed step child. You don't fix that over night. It is fixable IMO, but lets face it. CEO's need to be paid, and sellouts need to be divided, and the common man/buyer/worker, needs to be blamed, and pay for everything first. No, the government should not bail out any of the big 3. They have a huge market who has been dying for a quality product at a fair price just waiting for them to make a move. Whats even more shocking is, they have the capability. Unfortunately, there counterparts dominate that market. How did they do this? Media hype? Cost effective cheap labor wages and non paying health care? lol...Please.
Corporate greed Mrs. Gekko, is your answer.

Uh, the fact that they need 50 Billion in handouts, and aren't even worth a combined 50 Billion - that means they are mismanaged. Even they admit that!

Their SUVs sold cause at that time the competition wasn't making many. They are now. Good times are over.


Your reference to other car makers that need help is irrelavant. Those companies were bailed out by other companies, not taxpayers. One is a business deal, the other is welfare.