Political Cartoons

So we'll just let them fail and tens of thousands of workers go on unemployment, I guess, when if they can possibly survive they have a shot at making cars people want again and getting back in the competition. 'Kay.

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hazardous-filth.livejournal.com

American cars aren't worth saving, they have about as much sophistication, performance and style as an East German Trebant of the cold war days but without the fuel economy.

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borgseawolf.livejournal.com

That's Trabant and it hs LOTS of style!

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Only if you're a U2 set-designer.

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GO TRABBIE GO!

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American *cars* are currently the massive suck. Once upon a time they were pretty awesome though, but that time has long since passed.

ON THE OTHER HAND, if all the American manufacturers go down, what will the construction industry do? I mean, thank goodness Toyota is now making a full-size V8-powered pickup truck, but I can't imagine it's for everyone who used to buy F150s. And there really isn't anything from any manufacturer that compares to the Suburban, especially not at that price point. Wildassed guess I'd say these things are the only things keeping GM alive at this point. They can be big again, if not as ubiquitous as they were in the late 50s and early 60s (and certainly not under that business model!!).

What's really telling is the behavior of the car companies to this point - for example they had a pretty good thing going with Saturn, but the concept only lasted a few years and they completely castrated the whole thing, started running the Saturn factories on GM's same model, and turned all the Saturns into Chevys with plastic body panels and bad alternators. Yeah, pass on that.

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terminator44.livejournal.com

And you want the government to inject massive amounts of taxpayer dollars? How's that going to convince them to change their ways?

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hex.livejournal.com

Unexplained fires are a matter for the courts!

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I agree with you that propping up the US car industry would be dependent upon them becoming use to the range of consumer choice, soaring gas prices, environmental damage, and responding by designing and making cars that people want to buy. But all car manufacturers have to do this. The big question is: how did America let its car industry decline? and the answers are pretty much the same reasons the British motorcycle industry (and later, the British car industry) went down the tubes.
Lack of adapting to new marketplace conditions. Lack of leadership. Lack of understanding historical processes. A kind of complacency.

America builds great kit: I own many American guitars and amplifiers. They build high-quality tools, and great quality medium to high end stuff too. They haven't built a really good car for the marketplace for ages: and the industry in America as a whole is too big to concentrate on tiny niche placings. Mass-market cars are the beginning of the production line (if you discount the Royal Ordinance, which was run on a military basis) and are the source of America's manufacturing might.

Maybe state-run for a time wouldn't be a bad idea, but what happened in the UK was that after a period of constantly impending disaster, Japanese car manufacturers took over the old companies, shed staff, and instituted new working practises. For the UK and Japanese, read the US and Chinese, and that may be a better bet. I simplify the process of course: there was much redundancy, cost-cutting, bankruptcy, unemployment, and heartache before the companies were on their knees and their share prices low enough for the deals to be attractive. There were also a few government bail-outs, and a phase of nationalisation and privatisation, so perhaps the similarities end there.

And in the end, the UK hasn't any car industry left whatever outside niche market stuff like McClaren or Aston Martin. But we assemble Japanese cars very efficiently.

Well....I wouldn't start from here....but Obama's got to do something: it's what he was elected for. Else Detroit gots big big problems.
Sometimes government ain't all about economics: sometimes it's about people.

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At least the US has a big weapons industry. In countries without a weapons industry car making is essential to maintain as it is the secondary industry most convertible to a weapons industry. If shit really hit the fan around the world, I'd hate to have to rely on other countries to get guns from.

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It's not the 1940s anymore. It's not as though you can just retool a car line and start pumping out modern tanks.

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No? OK, then my point is moot! What about having a work force with at least some industrial manufacturing skill set? I've been trying to find arguments as to why we even bother with a manufacturing industry here (it's by and large propped up by the gov.), and this was the only reason I could come up with.

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The Bush administration is famous/infamous for attaching requirements to its dollars; most famously there were no aid programs that received a dime if they dared talk about abortion OR contraception to anyone. So I would be harshly disappointed if we bailed out any banks or other corporations without stipulations attached that included restructuring and a whole new business model. And especially, no golden parachutes.

Not that I'm stupid enough to believe that'll actually happen that way.

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terminator44.livejournal.com

Of course it won't. They know they can't take over the bank's operations because if they did they'd screw them up even worse than the execs did.

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So we'll just let them fail and tens of thousands of workers go on unemployment

They won't be unemployed. They can just move south and build Toyotas, BMWs, Nissans, Mercedes, Hondas, etc. in right to work states.

when if they can possibly survive they have a shot at making cars people want again and getting back in the competition.

The Big 3 sell small, cheap cars at a loss. How are they going to get that business model to work, scale?

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The Big 3 sell small, cheap cars at a loss. How are they going to get that business model to work, scale?

One wonders how Toyota, Nissan, and Honda manage to sell small cars at a profit?
I assume they make better cars for the money. Surely the big 3 ought to be making cars that people want to buy.

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terminator44.livejournal.com

Surely the big 3 ought to be making cars that people want to buy.

If they haven't been doing so even after years of losing profits to Japanese manufacturers, what makes you think they'll do so if they know they'll get bailed out if they screw up.

Removing competitive pressures is rarely a good way to encourage innovation.

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A temporary nationalisation with a view to sort out the business and then sell off both core business and the assets wouldn't stop competition. And it might give the rescue plan some payback, ergo returning some of your tax dollars. This looks to be happening in the UK with Northern Rock, and many other UK banks are going mad about it, and not always managing to compete in return.
Strange times.

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Detroit has massive legacy costs. You know how retirees in this country have Medicare? GM doesn't. It's paying for medical costs for its pensioners. So labor costs for the Big 3 are something like $70/hour, because those companies have promised to pay so much to their retirees.

Toyota, et al, haven't made those kinds of promises to their employees, so their costs are probably half of Detroit's.

In addition, Detroit basically sold crappy, cheap, fuel-efficient cars so the could meet the CAFE standards when they sold SUVs, pickup trucks and the like. The build quality was low because most of those cars were for fleet sales to rental companies and the like.

So we had the Federal government creating regulations which forced the Big 3 to build cars they didn't want to sell, in order to sell the vehicles that they wanted to make and people wanted to buy.

BMW, Mercedes-Benz, Porsche, Ferrari, etc. just shrug off those mileage regulations, pay the fines and sell cars that people want to buy.

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crazy-mittens.livejournal.com

This is why GM needs bankruptcy protection, its the only way for them to start getting rid of some of those legacy costs. But the question is what will ultimately cost the taxpayer more, having the government come in and try to pay out to these retireers what they lost from GM or just loaning GM the money to keep going like this? That's the only thing I am not sure about....

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Of course GM needs bankruptcy protections. Which is why they just need to go bankrupt. There is already a system in place to deal with the situation which doesn't include a massive Federal bailout.

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ltmurdoch.livejournal.com

Heavens to Betsy, I'm agreeing with you! At least in some ways.

I'm no auto industry expert, but my take is this:

1. The US companies do not design cars well. Aesthetically and functionally, many of the cars are stuck in the 80's.

2. Union-driven labor costs make it impossible for them to compete. You're right about the "legacy costs."

I think US carmakers should use this opportunity to shed a lot of these legacy liabilities and restructure their business model to be more competitive in the future.

Here's what I think the gov't should do: Bail them out in two ways, first, cover at least part of their legacy costs. Detroit is about to cut a bunch of its retirees loose without the medical and pension benefits they are counting on. I think it's a moral requirement that we make sure these retirees do not end up destitute because the believed the promises their employer made.

Secondly, require the automakers to renegotiate with the unions to create a sustainable business model that is consistent with the pay and benefits the US workers at Toyota, Honda, etc. are getting. Basically even the playing field.

Finally, give them some financial assistance to create a plan for building the cars that will be competitive in the future (e.g. hybrids, fuel cell, etc.). I'd only support giving them money if we can be assured they will not return to business as usual.

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My best scenario would be to nationalise it, put some hard fucker from the Treasury to oversee the restructuring, and try and sell it on for more than you paid for it, putting dollars back in the tax-payers pocket (indirectly). But be really hard-assed about it: force through the same deal that any other capitalist would make. Then trim the company's sails (and wages, management included) and get it moving again, providing employment and competing. The pensions may have to be allowed to fold in this case, or at least diminish: but there seem certain realities at present.
If the government's going to be any good in a crisis it has to have the people on board; prepared to put shoulder to wheel so to speak.

When you're knee deep in shit you can guarantee that you'll only have a spoon to dig you out. But dig out you must.

No bail-out without equity, though.

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ltmurdoch.livejournal.com

Interesting thoughts. My reflex is to cringe at the thought of nationalizing anything. Here's what I'd expect to happen: US Gov't sinks X Billion in GM and gets an equity stake. 2 seconds after the check is cashed, the US Gov't considers this a sunk cost, and given that the US Gov't is not a for-profit entity, there'd be little incentive to do much to improve the value of the stock. It'd be all about keeping jobs here and making sure the retirees get full benefits, etc.

If it was probable that a cash infusion in exchange for an equity stake would result in a positive return on investment, the market would take care of it. You'd have the likes of Karl Icahn lining up to do a hostile takeover and do just what you said. I have a feeling there are some structural barriers to a successful turn around (e.g. contractual legacy costs such as retiree health benefits, etc.)

I wonder if Bankruptcy itself would be the trigger to allow these companies to shed their baggage and re-emerge as the lean, mean, fighting machines they'd need to be to succeed in this market once again. Kinda like the airlines. You know, they declare bankruptcy, renegotiate their pilots', mechanics', and flight attendants' pay and schedule, and then they come out looking a lot more healthy. Hmmm.

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jlc20thmaine.livejournal.com

No bail out, no nationalization. The leadership and unions did this to themselves. Let them dig their way out.

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For the record, Japan has universal health care, which saves Japanese companies those legacy costs. It's the same reason a lot of US firms move manufacturing to Canada.

So? I don't see Japanese car companies building car plants in Canada.

Are you sure about those fuel rules? I don't think Detroit has to make crappy cars so that they can sell SUV's.

Yep. CAFE standards are the bane of Detroits existence, because they're the only car companies who sell lots of low mileage vehicles, but also choose to comply with the CAFE standards, probably because of the number of vehicles they sell domestically.

I thought they got to sell SUV's because they were classified as trucks and had different pollution/mpg standards.

SUVs are considered light trucks, as is anything whose seats fold flat. So the Chevy HHR which I rented this summer was considered a light truck, even though it was obviously a car. The Dodge Magnum's rear seats also fold flat for the same reason. Cars and light trucks are on two different standards, but Detroit likes to play a game where it makes cars that the government consider trucks. This lets them sell more of the pickup trucks and large SUVs that people want to buy.

And your reasoning still doesn't explain how Toyota can sell quality small cars within the regulations range at a profit in the US.

Well, Toyota A)doesn't have unions and legacy costs from poorly thought out promises made decades ago and B)builds small cars that people want to buy.

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Japanese assembly plants in Canada (http://www.jama.ca/industry/manufacturing/vehicle/index.asp)

Japanese vehicles built in Canada (http://www.jama.ca/industry/canada/index.asp)

New Honda engine plant opens (http://www.jama.ca/aq/news/index.asp#A200809260)

And the fuel efficiency standards are lower in the US than they are in Japan, Europe and China.

Well, Toyota A)doesn't have unions and legacy costs from poorly thought out promises made decades ago and B)builds small cars that people want to buy.

A) So the obvious answer is to move health and retirement costs from business to the government. B) So US car companies don't know what they're doing then?

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Well, when America is enough of a shithole other countries will begin outsourcing here.

What do you think BMW and Mercedes are doing?

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jlc20thmaine.livejournal.com

How are US auto plants of foreign cars doing these days?

I'm prteey sure that the Toyota plant in Georgetown, KY is still following through with their plans to expand.

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This is entirely the point. How do US manufacturers get it so wrong in comparison with Japanese ones? I refuse to believe that American (or for that matter British) ingenuity is any less ingenious than the Japanese: yet why are we failing of our promise?
All the major executives of the Auto giants have taken home bonus after bonus and left the industry in this state. That ain't good management. That certainly isn't desirable design.
No contingency plans in place apart from a government rescue indicates little in the way of foresight: which is a quality much-needed in long-term management.
We have to start doing things better, or at least differently.

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Volt will be years before it's in production, unreasonably expensive and it will suck compared to what you'll be able to get by then from Toyota and Honda for probably the same price or less. Forty miles on a charge? Then you're running off a ludicrously underpowered 3 or 4-cylinder? Yeah, um, no.

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A light...coming down from...somewhere...

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levityinbrevity.livejournal.com

1 in 10 U.S workers are employed by these Company's.
While I dont think we should be giving rich people more money I think these comany's do need our help or this nation will fall into a even worse depression.

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