Let them fail!

[FastEddy]

The greed and ineptitude at the top of this food chain deserves to go belly up and lose thier golden rainbows along with it. Chapter 11, no bailout, no handouts and no saviours. Chain the doors closed, wait for the auctions to end and then restart the industry with all new ownership and new personel. Put in legislation to block ANY and ALL unionized practices within the industry and start making vehicles for tommorow, not 100 years ago.

Cheers

Sure sounds good to me .

Cheers.

 

[Redeye]

I remember hearing countless times that if the 1960s they gave every Cape Bretoner a million bucks and told them never to come back it would have been cheaper than all of the money poured into DEVCO et al to try to keep the Cape Breton industrial economy going - and it's been a dismal, continuing failure - even ACOA still is doing the same thing I would guess.

Anyne remember DEVCO?

Ottawa, Monday, May 6, 1996

Bailouts don't make companies create functional business models or profitable and sustainable practices.  Companies that get bailouts accept them as an opportunity to repeat the same bad practices year after year

 

[retiredgrunt45]

Heavily unionized businesses usually have trouble competing with non-unionized businesses. Unions are successful in getting above-market wages and benefits, which makes it difficult for the businesses to compete. In the auto industry, there are many more dealerships than necessary. And, according to Larry Kudlow, the average compensation and benefit rate for auto workers in Detroit is $72 an hour, compared to $44 an hour for foreign car workers at US plants.

And this is were it has to begin. The unions must have their wings clipped and told to curb their Mafia style tactics. Wages have to be rolled back a bit, CEO salaries and perks must to be significantly reduced. Worker benefit packages have to be toned down and workers have to start contributing something towards their own pensions, just like the rest of us do.

Both the CAW and UAW have become huge liabilities to the auto sector and it has to stop.

That's not to say there can't be some relief given to the auto sector with highly regulated terms.

I read all these articles on how every one is against giving them some relief, there's many to choose from in all the papers and on the web. I call it free lip service. Its one thing to sit behind a computer and write these erroneous artifices about how bad the auto sector is, when actually these people know little or nothing about the industry. Its actually quite funny to listen to these people place all the blame of the industries demise on only a few factors, when in actuality that couldn't be farther from the truth. But I guess it sells papers and writing a half ass story seems to be the media's way on most everything these days. If it sells papers, what the heck an little spin doctoring always helps.

I heard something this morning that rang very true and it came from a politician. If the big three were to be let fail, they would have to spend almost twice as much on EI claims than what the big three were asking for in relief. $50,000,000,000.00 on EI claims, that's a lot of zero's. It would probably bankrupt the EI system it would be so large and as more people lost there jobs and applied for EI, it would caue yet another crisis and there seems to be no shortage of those,these days.

They gave half a trillion dollars to the very people who caused this mess and what are the banks doing with that money, sitting on it, so to add fuel to the fire, we let two and a half million people walk away with pink slips, who now apply for EI and bankrupt that system, now not only do we have a banking and a manufacturing crisis, we now have put billions upon billions more into the EI system to keep it from being crushed under the weight of a now massive unemployment crisis. Can you say "Depression" I hope so,because if that happens the big "R" word won't seem so bad anymore.

I'm no fan of the auto sector either, but I wish people would stop thinking about this problem with their emotions and start looking at it in a more logical manner. The end doesn't justify the means, it will only make an already extremely fragile system that must worse and push us that much closer to a 1929 scenario and I don't think anybody wishes for that to happen, ever again.

Economics 101.

 

[Michael OLeary]

I'm no fan of the auto sector either, but I wish people would stop thinking about this problem with their emotions and start looking at it in a more logical manner. The end doesn't justify the means, it will only make an already extremely fragile system that must worse and push us that much closer to a 1929 scenario and I don't think anybody wishes for that to happen, ever again.

Economics 101.

Hmmm, logical thought, what a concept.

Like asking how much of the automotive industry has been relying on the idea that cars/trucks are lifestyle accessories rather than means of transportation?

Or asking what portion of a vehicle's cost is merely underwriting an unnecessary annual cosmetic redesign loop?

Or asking what portion of a basic car's price only serves to underwrite losses on unprofitable but highly advertised models that are unobtainable to the purchaser of that basic car?

Or asking how they expect to be sustained by the taxpayer who has already decided to economize by not buying that new car yet?

How about asking why the Big 3 haven't created affordable alternative energy vehicles for mass production by now? Or even more economical and energy-efficient internal combustion models?  Why the continued embrace of the V-8, et. al., that has really only been milking egos and disposable income for decades.  Just because the public is watching that disposable income more closely is no reason to force them to give it up in a bailout funded by taxation.  You can't blame the Big 3's troubles on a more prudent public.  They created a poisoned business model kept afloat by aggressive advertising and it is unfortunate that many people will likely suffer for their continued arrogance.

Logical thought is indeed required, and is long overdue in the automotive industry.

 

[Snafu-Bar]

And this is were it has to begin. The unions must have their wings clipped and told to curb their Mafia style tactics. Wages have to be rolled back a bit, CEO salaries and perks must to be significantly reduced. Worker benefit packages have to be toned down and workers have to start contributing something towards their own pensions, just like the rest of us do.

Both the CAW and UAW have become huge liabilities to the auto sector and it has to stop.

That's not to say there can't be some relief given to the auto sector with highly regulated terms.

I read all these articles on how every one is against giving them some relief, there's many to choose from in all the papers and on the web. I call it free lip service. Its one thing to sit behind a computer and write these erroneous artifices about how bad the auto sector is, when actually these people know little or nothing about the industry. Its actually quite funny to listen to these people place all the blame of the industries demise on only a few factors, when in actuality that couldn't be farther from the truth. But I guess it sells papers and writing a half *** story seems to be the media's way on most everything these days. If it sells papers, what the heck an little spin doctoring always helps.

I heard something this morning that rang very true and it came from a politician. If the big three were to be let fail, they would have to spend almost twice as much on EI claims than what the big three were asking for in relief. $50,000,000,000.00 on EI claims, that's a lot of zero's. It would probably bankrupt the EI system it would be so large and as more people lost there jobs and applied for EI, it would caue yet another crisis and there seems to be no shortage of those,these days.

They gave half a trillion dollars to the very people who caused this mess and what are the banks doing with that money, sitting on it, so to add fuel to the fire, we let two and a half million people walk away with pink slips, who now apply for EI and bankrupt that system, now not only do we have a banking and a manufacturing crisis, we now have put billions upon billions more into the EI system to keep it from being crushed under the weight of a now massive unemployment crisis. Can you say "Depression" I hope so,because if that happens the big "R" word won't seem so bad anymore.

I'm no fan of the auto sector either, but I wish people would stop thinking about this problem with their emotions and start looking at it in a more logical manner. The end doesn't justify the means, it will only make an already extremely fragile system that must worse and push us that much closer to a 1929 scenario and I don't think anybody wishes for that to happen, ever again.

Economics 101.

A chapter 11 scenario would not be at all an impending doom on the economy or the industry itself. The public demand for transportation will not diminish in the slightest. However due to forclosure at the big 3 allows for opportunity from the likes of Toyota Honda and other offshore companies to swoop in and grab the tender cuts off the carcasses while the getting is good. This means the parts and pieces they find "usefull" will be salvaged and put to good use. That means parts plants and companies supplying the big 3 won't be left in the cold very long. It will however mean the big 3 will no longer be and the very greed and corruption will cease. The vehicles themselves will be either re-tooled and remarketed or be dropped in favour of something economically viable for the current downspiral of the econonomy as it stands. Hence you go back to the basics and start over once again. People will inevitable lose thier jobs and they will be forced out to the UE lines and that's part and parcel of the system. When the system is being drawn under strain to due having an industry IMPLODE such as the auto sector it's far better to INVEST those dollars in the "system" than invest them back into the failing industry for the greedy bastards to use at thier own discretion.

Hurry up and fail and be done with the dinosaurs of greed...

Cheers

 

[a_majoor]

Let's look at how well the Big Three have done with two previous handouts, shall we?

The money the McGuinty government threw to the Auto sector ($200 million +), but jobs had to be cut anyway.

The $800 million the Big Three got from the Clinton Administration on the Partnership for Next Generation Vehicles, which resulted in not one new hybrid reaching the road before Toyota and Honda started selling their (non taxpayer subsidized) hybrids. (Indeed, the Big Three still have very few hybrids, and some are a simple waste of time and money like the Cadillac Escalade hybrid, which gets the same milage as a Buick Enclave luxury SUV which weighs 1000 lbs less and has a V6 and six speed transmission).

They will be back in a year or two (they loose cash at a rate of $2 billion a month, how long will $25 or $50 billion last at that rate?) for another bailout, then another, since they are not being forced to change their dysfunctional behaviours. End it now.

 

[retiredgrunt45]

Let's look at how well the Big Three have done with two previous handouts, shall we?

The money the McGuinty government threw to the Auto sector ($200 million +), but jobs had to be cut anyway.

The $800 million the Big Three got from the Clinton Administration on the Partnership for Next Generation Vehicles, which resulted in not one new hybrid reaching the road before Toyota and Honda started selling their (non taxpayer subsidized) hybrids. (Indeed, the Big Three still have very few hybrids, and some are a simple waste of time and money like the Cadillac Escalade hybrid, which gets the same milage as a Buick Enclave luxury SUV which weighs 1000 lbs less and has a V6 and six speed transmission).

They will be back in a year or two (they loose cash at a rate of $2 billion a month, how long will $25 or $50 billion last at that rate?) for another bailout, then another, since they are not being forced to change their dysfunctional behaviours. End it now.

Yes we all heard the stories about the what ever and what ever, but that doesn' diminish from the facts that putting two and half million people out of work because of bad decisions made by a few top executives is not a recipe for disaster.

My question is why aren't you having the same mindset towards the banks who caused this fiasco in the first place and ended up receiving ten times the amount of money and are now, just sitting on it? Why?

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

If you placed conditions on the relief, then no they couldn't come back. In the past governments just threw money at them and that didn't help and we all seen what happended, but if you place strict rules on that money, they have no choice but to pull up or pull out.
But to just say oh what the hell, let them go, it would be a big difference if that was any of you who was told that maybe next week you wouldn't have a job, now wouldn't it?
Before you go of and be judge jury and executioner, put yourselves in their shoes and then see if your still willing to let them go. Its always easier to criticize from a distance than it is to be the one in the hotseat.

As I said in one of my earlier posts, the next time you buy a car and its more expensive because the Japanese have filled the void from the big three and theres no more competition, are you going to say then, oh well to bad so sad. No your going to holler like the rest of us ask, why are prices now so high?

Well I'm very happy that the decision isn't up to any of you.

 

[Brad Sallows]

Essentially all the TV manufacturing ceased in NA long ago; I suppose we must be buying more expensive TVs now because the Japanese etc filled the void and there's no more competition.

Here is the problem: the only way to bail the auto manufacturers out of their pension commitments and benefits, among other costs that they are about to be unable to carry, is to raid my pension and benefits.  This is unavoidably true because dollars in government hands are fungible.  Is my pension protected?  I think a small part of it lies where is theoretically protected by deposit insurance, but that is all.

If we are to have bailouts in general, and if we are in particular to have governments backstop pension funds, then I would like to see some equal protection and benefit of the law.  If his pension is to be guaranteed against loss, then so is mine.  If his salary - not his EI - is to be guaranteed in some fraction against loss, then so is mine.

While I admit to some antipathy toward unions which exhibit the worst characteristics of the archetype, the objective truth is that workers have a right to negotiate with the business for a share of the business proceeds.  This applies equally to workers who nominate a union as a bargaining agent, and workers who act as their own bargaining agents.  It is up to the prospective employee to cooperate with the prospective employer to ensure there will be business proceeds to share.  If between them they break the business model, there should be no recourse to third-party compensation that is not equally available to every other person.

If you are foolish enough to ask a weak-minded employer for something as absurd as a "job bank" (or powerful enough to extort it), you are entitled to a full share of the benefit and obligated to endure a full share of the consequences.

 

[brave little soldier]

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

There is absolutely nothing as fabulous as being behind the wheel on my yellow Crossfire, top down, hair all over the place, sun on my face... A little pink macho going on...

But I think my hard earned tax dollars would serve me better if they were invested into the construction of a subway across Ottawa : auto workers will be building wagons for Bombardier (another $$$ eater) and people will commute in and out of the city with a smile on their faces.

 

[Snafu-Bar]

Yes we all heard the stories about the what ever and what ever, but that doesn' diminish from the facts that putting two and half million people out of work because of bad decisions made by a few top executives is not a recipe for disaster.

My question is why aren't you having the same mindset towards the banks who caused this fiasco in the first place and ended up receiving ten times the amount of money and are now, just sitting on it? Why?

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

If you placed conditions on the relief, then no they couldn't come back. In the past governments just threw money at them and that didn't help and we all seen what happended, but if you place strict rules on that money, they have no choice but to pull up or pull out.
But to just say oh what the hell, let them go, it would be a big difference if that was any of you who was told that maybe next week you wouldn't have a job, now wouldn't it?
Before you go of and be judge jury and executioner, put yourselves in their shoes and then see if your still willing to let them go. Its always easier to criticize from a distance than it is to be the one in the hotseat.

As I said in one of my earlier posts, the next time you buy a car and its more expensive because the Japanese have filled the void from the big three and theres no more competition, are you going to say then, oh well to bad so sad. No your going to holler like the rest of us ask, why are prices now so high?

Well I'm very happy that the decision isn't up to any of you.

You state that two and a half million people will be out of work? How long do you think it would take for someone or some corporation to come into the auction and buy out the assets and restructure the business for resuming business? It's not rocket science going on here, it's called letting go and watching the pheonix rise from the ashes. Without failure success cannot be achieved. It time the big 3 go the way of the dodo(pun befitting and intended) and someone else to rise up in thier places to provide the populous with a viable product worth the money to spend on it.

Toyota and Kia already have plants here in canada and are expanding due to market share gains, the public will not be completely screwwed if the big 3 absolve. They will be divvied up to the highest bidder. The unions will lose thier place and be left out in cold where they belong, and we move forward.

Prices are HIGH becuase of the UNIONIZED lollygaggers wanting 90 an hour with 150% coverage across the board with 6 months paid holidays a free car every year and a gas voucher = to 25,000 a year. But hey it's a tough job working for the big 3... i mean they do have to go on strike at the hint of the place actually having to produce vehicles and making money  :

Cheers.

 

[Brad Sallows]

Two and a half million people are not going to be out of work.  The problem is that Ford, GM, and Chrysler aren't selling enough product to meet their negotiated obligations to their workers; it isn't that Ford, GM, and Chrysler aren't selling any product at all.

 

[SeaKingTacco]

I seem to remember a certain airline named Air Canada going bankrupt less than 5 years ago...

You will perhaps note that Air Canada is still with us today.  Sometimes, bankruptcy is the best thing that can happen to a company.  It focuses the board and shareholders wonderfully on solving problems.

Let. Them. Fail.

The world will not end.

 

[Michael OLeary]

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

I have to say that made me laugh.  I didn't get a license until I was 30 because I didn't need one.  I drive a 13 year old Ford Aerostar.  The automotive industry's successes and failures have not been a result of any hypocrisy on my part.  I will not shed a tear over the demise of a bloated dinosaur that thinks convincing people they need a monster pick-up truck or SUV to go buy milk is a sustainable business model.

 

[Marshall]

I hate the idea of bailing out companies like this. Lets get that new German car company over here in the next few years.. They are supposedly making a vehicle that is 2x the savings of a Smartcar.. (but full sized, some lightweight bottom heavy frame) too bad I can not remember the name of it since it was about 2 months ago I read on it.

 

[medaid]

Want to hear something... funny?

Well I was watching the US Senate committee on this whole economic hand me down thing, and the person who did this cracked me up.

Speaker: Just so I understand... and can put things into perspective. How many of you, CEOs of major corporations came down here today asking for a grant in your own private charter flight?

CEOs all put their hands up.

Speaker: Let the record show that all of them did.

CEOs all put their hands down.

Speaker: So, once you've received this grant, how many of you are going to take a charter back?

CEOs all put their hands up.

Speaker: Let the record show that all of them did.

CEOs put their hands down.

Speaker: Now what if... you don't get this grant. How many of you are willing to abandon your charter, and fly commercial, so that that money may be put towards your employees' severance pay?

*cricket* *cricket*

Speaker: That's what I thought. Let the record show that NONE of them put their hands up.


...classic....

 

[Brad Sallows]

The irony being, what steps will the guy in the questioner's chair and his peers take to minimize their own expenses so as to ease the burden on the taxpayers who are ultimately liable for the decisions to be made.

 

[RangerRay]

I have a Mazda truck, which is just a Ford Ranger built at a Ford plant with a Mazda sticker slapped on.  Is it a "Japanese" truck?  Am I in trouble if Ford sinks?

 

[chanman]

I have a Mazda truck, which is just a Ford Ranger built at a Ford plant with a Mazda sticker slapped on.  Is it a "Japanese" truck?  Am I in trouble if Ford sinks?

Ford owned a minority stake in Mazda (bit over 30%), of which they have sold a good portion recently.  Your warrantee will not go down if Ford does.

 

[HunterADA]

I'm an average young American. I make a little more than average, but not terribly so. My work absolutely requires that I have transportation 24/7/365, and because I'm locked into a 4 year contract, that's not going to change anytime soon. So I need a car. Matter of fact, I'm looking for a new car during this next year. The used car I'm driving right now will last me at least another year, but I'm not too sure beyond that.

I don't need a Corvette. I sure as heck don't need a price tag that's comparable to my yearly salary in these economic times.

I don't need a big pickup truck. With gas the way it's been lately, I couldn't be sure of filling it up for less than $100 anyway, and that's with the ridiculously cheap American fuel.

I need something with 4 wheels that runs. Air conditioning is optional. Try to charge me an extra grand for a transmission that does what I can do better with my right hand and I'm going to laugh.

So what's available for this first time new car buyer?

What's more American than a Jeep? Not much. But for $20,000, I can buy a lot of flags.

Ford? $15k gets me a Focus with A/C and even an MP3-capable CD player. Their Mercury badge line is out, nothing there for under $20k.

Or Chrysler? Their Dodge Caliber at 15.7 isn't too bad. Of their own brand, the PT Cruiser will redefine fugly for me at a hair under 18.

Maybe a GM model. The Pontiac Vibe is an entry-level vehicle, for $16,000. Looking further, we may have a winner! Their Aveo sedans and hatchbacks start at $12,000.

Looking around the imports, the MAZDA3 and Honda Fit sit at $14.5k, Nissan Versa is at $13k, the Yaris is even lower at $12k, and both Hydunai's Accent and the smart fortwo drop the price bar to 11 and 11.5, respectively.

So, among the lowest-priced, entry-level cars out there for a new buyer on a budget, there is precisely one American car out of seven under $15k, and a second sitting right on that line. The margins and gross profits in the first-car market are tiny compared to an SUV or V8-driven oversized sedan. But market research shows time and again that the 20 or 25 year old who buys a budget car and drives it for a few years turns into the 40 year old who buys your luxury sedan. Fail to compete in that segment of the market and you fail to capture the brand loyalty that helps you throughout your product line.

Sometimes you need to get smacked across the face with a cold, wet fish before you wake up. It doesn't look like the Big Three are there yet.

 

[chanman]

The Vibe is a rebadged Matrix.  The Aveo, Optra, Wave, are Daewoos.  I think the only GM small cars designed in-house right now are the HHR and the Cobalt/G5 twins.  The HHR is assembled in Mexico making the only GM small (compact or subcompact) cars assembled inside the US... the Cobalt/G5 and the rebadged Toyota.

It's a funny world, but at least we can expect that GM won't be lobbying for tarriffs this time around - not if they want to actually have small cars available to sell.