In Defense of Detroit

November 14th, 2008 10:32 am
Paulson and Bernanke, along with our government set precedent for this bailout request by General Motors. The auto industry is much larger and much more important than most of us realize. Yes, there is Bankruptcy in place for dire situations, but General Motors employs over 2 million employees in our country alone and that does not account for the impact a collapse would have on the global economy. I am a strong supporter of American Made Automobiles and have NEVER purchased a foriegn vehicle. I have always been happy with my car's performance.

I urge Congress to think of this differently and understand the responsibility companies have to keep their employees healthy. In this country, Businesses are burdened with the cost of health insurance. The "successful" auto companies who are also taking an economic hit are not paying for these costs in other countries. General Motors does need to restructure, but this will allow for them to do just that. It's exhausting to hear consumers say that GM is failing to cater to the buyers needs after produicing SUV's For a good 8 years. SUV's were the only cars the American public would purchase, and that isn't all they produced. General Motors has spent over a decade researching alternative energy for cars without government funding. If you recall, our government for the past 8 years has supported oil companies instead of alternative energy.

It's time the government shows the country it is committed to invest in alternative energy and gives GM guidelines with the bailout. It's amazing to see the good ole boys support their Capitalist and Upper Middle class while leaving our blue collar workers, business men and women behind in their struggle. Clearly our country is still not focusing on the lower middle and working class which makes up over 60% of our country. Let''s consider it an investment, instead of a bailout.

All that money for AIG and those entities and nothing for the Big Three... I understand the arguments for letting the market "work itself out" but it's pretty hypocritical... I mean, Bear Stearns or Lehman brothers or whoever collapsing and evaporating a bunch of money that never existed in the first place is bad, but not nearly as bad as what would happen to millions of working americans if the Big Three fell. Lost jobs, health care and retirement are not something that can be restored through smart investing in 10 years time... These are permanent, life changing events for people that many will never bounce back from. The Big Three make tangible objects, and vert tangible losses will occur if they are allowed to fall...

BTW, it would probably only take less than half of the money AIG alone has received so far to take care of all three car companies and that seems like some pretty good bang for the buck when you think about how many working and middle class lives it could effect.

All that money for AIG and those entities and nothing for the Big Three... I understand the arguments for letting the market "work itself out" but it's pretty hypocritical... I mean, Bear Stearns or Lehman brothers or whoever collapsing and evaporating a bunch of money that never existed in the first place is bad, but not nearly as bad as what would happen to millions of working americans if the Big Three fell. Lost jobs, health care and retirement are not something that can be restored through smart investing in 10 years time... These are permanent, life changing events for people that many will never bounce back from. The Big Three make tangible objects, and vert tangible losses will occur if they are allowed to fall...

BTW, it would probably only take less than half of the money AIG alone has received so far to take care of all three car companies and that seems like some pretty good bang for the buck when you think about how many working and middle class lives it could effect.

Unless, and until, some drastic actions occurs (like a bankruptcy), I fear that GM et. al. will try to continue with business as usual. Change will come be grudgingly, if at all. All that will happen is that the taxpayers will be forced to keep thowing ever increasing amounts of money at an problem that will not fix itself.

Contrary to the tales of woe, the "auto industry" will not fail. Turns out the in the non-unionized states in the South, Detroit's competition is building cars in the U.S. (with U.S. workers). Thye market demand will just shift elsewhere and the suppliers will have a new customer for their wares.

As far as the argument that Detroit kept building big cars and SUV's, the reality is that they HAD to. Detroit has about a $1500 disadvantage per car over the other domestic suppliers. Detroit simply can not efficiently and profitably build small cars. Therfore, the had no choice but to build the BIG cars, since that is where most of the profits came from. When gas prices took away the big cars, Detorit has no way to compete on small cars.

After bankruptcy, a stronger and healthier industry will emerge. We should let it.

I was the CEO of an industrial electronics company which sold to the auto industry. I know how important they are, but any attempt to rescue them by feeding even $100 billion into their coffers simply wont succeed. They have been brain-dead from middle management up for at least 20 years and have at least $100 billion in unfunded liabilites in health and retirement benefits; keeping them on financial life support wont cure that problem. Furthermore, we are only in the middle of the first wave of a three wave economic tsunami and it's not smart strategy to blow all our reserves in this wave.

The second wave will begin next year as other nations, in self-preservation mode, peel away from a dollar based global economy. This will further depress business. The third wave will be hyper-inflation caused by a loss of faith in the US Government. That should start in 2010.

Our best bet to ameliorate this economic melt-down is to operate from a strategic plan, not to careen from one crises to the next wasting resources with short term fixes.

Bethlehem Steel in it's heyday did everything it could to keep other large businesses out of Bethlehem, PA.
Less wage competition that way. Politicians went along with it. Then when the BS hit the skids the entire town did as well. Allentown on the other hand, much more diversified, also had companies go bankrupt, but had nowhere near the problem that Bethlehem did. If Michigan as a state suffers greatly from this fall it mostly has itself to blame. If one can't understand the need for diversification they don't belong in office, or running a major auto company.

There seems to be a lot of concern voiced for all the employees here, though I don't see why. Since the 1980's thousands of IT jobs have been outsourced to Asian cheap labor. In total was it less than this situation? Doubtful. Why didn't anybody shed a tear for those workers? Cry some outrage? The banks, brokerages, and other large companies were and are just as greedy as these guys, with no first thought to the employee, let alone a second. And yet who cared? Why? Because the thousands weren't all clustered together like they were in Bethlehem? Out of sight out of mind, is that it? Seems like one hell of a double standard from over here. And IT workers never had the backing of a union, they were always on their own. The point here is not about capitalism, it's about the double standard.

Does anyone recall when Japan made junk? Then something happened. Some people went over there and taught them quality. How to do it, and how important it was. They listened. They listened to Americans. Why didn't Detroit listen? Who's fault is that? Please don't say GM can put a car together all that well. Even if the mechanics have improved I see numerous cars locally with sections of paint just falling off the vehicles after 3-5 years. Such a vehicle may get the JD Powers award for short term satisfaction, but it certainly won't get the important award; repeat buyers. Of course that's a long term thing, so who cares about that?

Why does the government have to give these companies a blank check? They should just buy up some of the automakers' inventory and provide discounted cars to the deserving working poor.

Like Lieberman they made their bed, and now they should lie in it. Decisions have consequences. We teach that to our children, and need to follow our own advice. Bankruptsy is the consequence here. Use the bail out money to assist laid off workers. There are plenty of car makers out there. Detroit did it to themselves.

according to an article by Henry Payne...

<Take grass cutting. As defined by the current United Auto Worker contract negotiated with the "Big Five" (GM, Ford, Chrysler, and top parts makers Delphi and Visteon), an auto "production worker" is a job description that covers anything from mowing grass to cleaning the toilets. In the real world, these jobs would be outsourced to $8 an hour, no-benefit wage earners, but on Planet Big Five, these jobs get the same wages as any auto line-worker: an average $26 an hour ($60,000 a year) plus benefits that bring the company's total cost per worker to a staggering $65 an hour.>

Wow, nice to be a leach!

They say that 3 million workers will lose their jobs in case of Chapter 11. Not true, we can expect that alleast 2/3 of employees still will keep thair gobs, so let say 1 million. Now divide those 50 billion by 50000 (annual salary of one worker) - it is exactly 1 million,which some others more worthy balied out (or not robbed) companies can pay to their 1 million workers.

Fine, infuse GM and Ford with cash and take back preferred stock with a real good rate. That would be doing the same for these companies as the Federal government is doing for the damned banks. However, it is obvious that Chrysler is a lost cause. Let Chrysler go bankrupt or find itself another foreign owner. Chrysler was already bailed out once by the government. Daimler dumped it; Cerberus picked it up; now its their baby, not ours. You can't save them all.

Japan has many automobile companies. Not one has asked the Japanese government for any kind of bailout. At every turn they have developed new technologies and built cars that people all over the world want to buy and own. They have good quality, reliability, and value. They have provided jobs in rural areas of America producing these cars. Toyota has NOT cancelled plans to build a factory in Mississippi in 2010. The CEOs of these companies earn a fraction of their American counterparts. Workers seem to be happy with their benefits.
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What is happening to the Big 3 happened before. It is exactly the same mistake produced this time by an army of MBAs who had the benefit of history books. They can read, can't they? They built gas guzzlers while others were paying better attention to the auto market , cutting costs, and retaining value in their cars. Detroit lobbied for and GOT tax breaks for SUV buyers at a time when Japanese firms were producing cars people all over the world wanted to buy.

As I wrote above Japan has many automakers, but not one is as ineptly run as any of the big three American firms. Supporting disfunctional industries is anathema to free trade, a level playing field, and so many other things that America has criticized other countries about for decades.

Saving industries that cannot compete, despite huge advantages, is something that third world countries do.