GM and Chrysler Pushing for Merger

[afransen]

I don't like the idea of gifts. Any bailout should be in the form of low-interest loans or equity.

 

[Brian69]

I don't see the government saving failing small businesses around the province and collectively I feel they are as vital as the more noticeable auto industry. Furthermore, the business model of the big 3 made them the architects of their own demise--should my tax dollars go towards propping up a failing industry that might require another boost of a few billion a few years from now?

 

[Whoaccio]

When it comes to supports, hundreds of thousands of jobs lost is much better than millions of jobs lost. It's also better to have a North American car maker with North American employment than purchasing imports. If one of these producers is lost for good, then the jobs are not coming back. All major North American car companies have been profitable in the past, some of their present problems have to with major money constraints related to contract agreements as well.

Also, when you say "sub standard" are you just repeating the cliche that cars built here are all awful? Is that cliche alone an argument for allowing large numbers of people to be put out of work permanently?

My first point was that you can't clinically say 25b in handouts saves 2.5m jobs, or whatever. The Big 3 are going to have to carry out massive layoffs regardless. It isn't even guaranteed that the companies won't go bankrupt with the bailout. It is a distinct possibility that you could give 25b in handouts, and still loose 2.5m jobs (plus the jobs killed by taxing successful sectors 25b...). It is all a guess. That is the problem with these massive bailouts, they are made to gain political points not to actually help the economy. Governments keep pretending as though there is some magical formula and method by which they alone can determine what is a good investment. Time and time again though, we get Camaro plants that just suck up massive handouts before they go bankrupt.

And what cliche? I think the Big 3s performance over the past years has proved, quite definitively, that N. American consumers don't like their cars. That isn't a cliche, that is reality. The Big 3, or their supporters, have to come up with a better selling point than "buy our cars or you are unpatriotic." They systematically burned away decades of consumer goodwill throughout the 80s & 90s. Most of my friends had bought GM cars since the 1950s because of that tripe. By the 1990s, they had gotten sick and tired of their Impalas falling apart and switched to Camries. Here is another cliche for you, the customer is always right. If GM can't sell it's cars, it is its fault. I don't remember Sony roasting it's non-customers over not buying BetaMax players.

 

[Hydrogen]

My first point was that you can't clinically say 25b in handouts saves 2.5m jobs, or whatever.

Where was I saying this?

There are many ways to provide aid to ailing manufacturers.

The Big 3 are going to have to carry out massive layoffs regardless.

That's happened in the past. The economy and the companies recovered and then employed more people once again. However, if one or more of those automobile companies fail, then they won't be hiring anyone again, will they? Nor will their many parts suppliers who provide in the range of seventy percent of the actual automobile. Then there are the steel, aluminum and plastic producers who will see loss of business and loss of jobs.

And what cliche? I think the Big 3s performance over the past years has proved, quite definitively, that N. American consumers don't like their cars.

If it's so definitive as you claim, can you explain why North American manufacturers still sell millions of cars?

The Big 3, or their supporters, have to come up with a better selling point than "buy our cars or you are unpatriotic."

I must read different automobile advertising than you because I'm having a hard time identifying any car company building an entire campaign built on "buy our cars or you are unpatriotic" as you assert.

They systematically burned away decades of consumer goodwill throughout the 80s & 90s.

The numbers of car brands available to buyers has gone up since the 1970's. It was inevitable that more choice would dilute brand loyalty. Quality of all manufacturers has also increased since the 1980's. You just don't see anything as lousy as what was often available in the 1970's.

Most of my friends had bought GM cars since the 1950s because of that tripe. By the 1990s, they had gotten sick and tired of their Impalas falling apart and switched to Camries.

We all have our anecdotal evidence. As for my last German engineered road sedan, it was just not a great car. It featured expensive parts and many visits to the dealer for servicing. The recalls and warnings were never advertised in the press like those for North American manufacturers. My brother noted the same thing for his Toyota.

Speaking of Toyota, it's once vaunted position of quality has been diminished - not only here but abroad as well. It's saving grace is good service response, but that does not take away from a drop in its manufacturing quality.

If GM can't sell it's cars, it is its fault. I don't remember Sony roasting it's non-customers over not buying BetaMax players.

An odd comparison for you to be making as Beta was considered to be the superior technology.

 

[Whoaccio]

Where was I saying this?
There are many ways to provide aid to ailing manufacturers.
That's happened in the past. The economy and the companies recovered and then employed more people once again. However, if one or more of those automobile companies fail, then they won't be hiring anyone again, will they? Nor will their many parts suppliers who provide in the range of seventy percent of the actual automobile. Then there are the steel, aluminum and plastic producers who will see loss of business and loss of jobs.
If it's so definitive as you claim, can you explain why North American manufacturers still sell millions of cars?
I must read different automobile advertising than you because I'm having a hard time identifying any car company building an entire campaign built on "buy our cars or you are unpatriotic" as you assert.
The numbers of car brands available to buyers has gone up since the 1970's. It was inevitable that more choice would dilute brand loyalty. Quality of all manufacturers has also increased since the 1980's. You just don't see anything as lousy as what was often available in the 1970's.
We all have our anecdotal evidence. As for my last German engineered road sedan, it was just not a great car. It featured expensive parts and many visits to the dealer for servicing. The recalls and warnings were never advertised in the press like those for North American manufacturers. My brother noted the same thing for his Toyota.
Speaking of Toyota, it's once vaunted position of quality has been diminished - not only here but abroad as well. It's saving grace is good service response, but that does not take away from a drop in its manufacturing quality.
An odd comparison for you to be making as Beta was considered to be the superior technology.

If you can't even suggest how many jobs gov't money will "save", there is no way you can create anything approaching a cost benefit model. We only know how much it would cost, and for all we know it could have no effect at all. It is not good policy. I can't think of many other times when governments start handing out cash to failing businesses just to do something. If you can't realistically suggest how many jobs will be saved, what is you're argument? The amount of things that could go ass wrong for Canada here is really incredible. What if Obama & the US ties all of it's loans to "made in the USA" clauses, and the Big 3 shut down their Canadian branches just to comply? What if the US outsubsidizes us (as they most definitely can) and just sucks up all of the Big 3 branches like that? What if the UAW proves more flexible in wage concessions than the CAW, and most of the Big 3 branches move to Kentucky? What if resource prices spike and the dollar goes back to par, ruining the entire case of manufacturing cars for export in Canada? Maybe the better question is what do you know? So far it's just that GM is a big company and ipso facto it deserves as much government money as it can suck up.

Why the Big 3? There are hundreds, more likely thousands, of smaller cap companies out there who are struggling and have been for decades. A lot of them manufacturing based, but there are just as many service and resource sector firms out there that are having just as much trouble as GM/Ford/Chrysler. Why not subsidize the forestry sector in Ontario? It has been hit harder than manufacturing and it is the sole source of income for many communities in N. Ontario. Shouldn't it get a subsidy until situations improve in the industry? Or what about the Mr. Sub that just closed down the street from me? It probably has a better business case to be made for it than building Camaros in Oshawa to be sold to a nonexistent demographic in Middle America. Why not Nortel? Why not just start building houses in Markham to stimulate the housing industry? On a bang-for-buck basis, you could very well get better results from subsidizing these. But we don't. Instead we tax struggling business' throughout the economy in order to give money to the biggest corporations on earth, who aren't even Canadian! Why should Mom & Pop's Gadget emporium have to bail out GM just because GM has an army of high priced lobbiests and a good number of MPs/MPPs/Congressman in it's pocket?

 

[Admiral Beez]

I think the Big 3s performance over the past years has proved, quite definitively, that N. American consumers don't like their cars. That isn't a cliche, that is reality.

Not true at all. GM, Ford and Chrysler produce each produce approximately a million cars a year in North America (USA, Canada, Mexico). Even though sales are down now, N. American consumers have been buying plenty of big 3 cars.

The challenge facing Detroit is that their profit margin on high volume small and mid sized cars is much lower than the Japanese companies (including those made in the USA and Canada). Certainly GM has some lame duck cars that need to go, but their greatest challenge is killing costs.

 

[Glen]

First off they are not asking for a 'handout'. They are asking for loans. I think that it benefits society more to give the automakers 25 billion in loans than AIG 150 billion, or banks nearly a trillion dollars to shore up balance sheets.

 

[Hydrogen]

If you can't even suggest how many jobs gov't money will "save", there is no way you can create anything approaching a cost benefit model.

If you can't realistically suggest how many jobs will be saved, what is you're argument?

There are no definitive plans available now, so we are speaking in broad generalities here. Also, I don't see you posting any accurate breakdowns, either. Of course, that's because you're "argument" is to let one or more of these companies fail - seemingly on the basis of your prejudices against the them. As to the cost benefit, maybe you ought to think for a moment about the costs of allowing one or more of these companies to fail, as well as the benefits that would be derived from doing so. And please, no prejudicial views or anecdotal evidence.

What if Obama & the US ties all of it's loans to "made in the USA" clauses, and the Big 3 shut down their Canadian branches just to comply? What if the US outsubsidizes us (as they most definitely can) and just sucks up all of the Big 3 branches like that? What if the UAW proves more flexible in wage concessions than the CAW, and most of the Big 3 branches move to Kentucky? What if resource prices spike and the dollar goes back to par, ruining the entire case of manufacturing cars for export in Canada? Maybe the better question is what do you know? So far it's just that GM is a big company and ipso facto it deserves as much government money as it can suck up.

A nice list of what if's, but nothing more here. As there are no details on any such support plan or aid presently, there can be no response, so answering your hypothetical questions is a useless exercise. Anyone can come up with list of what if's.

I can't think of many other times when governments start handing out cash to failing businesses just to do something.

Governments support many otherwise healthy businesses all the time. It's hardly a Canadian or North American phenomena.

Why not subsidize the forestry sector in Ontario?

It is "subsidized" in a very broad sense. But then you are arguing for allowing businesses to fail, so why raise the issue of subsidies or aid?

Or what about the Mr. Sub that just closed down the street from me?

You're seriously trying to draw a parallel between, say, GM and a store down your street? But then you are arguing for allowing businesses to fail, so why raise the issue of subsidies or aid?

Why not Nortel?

Look at government policy related to R&D. But then you are arguing for allowing businesses to fail, so why raise the issue of subsidies or aid?

Why should Mom & Pop's Gadget emporium have to bail out GM just because GM has an army of high priced lobbiests and a good number of MPs/MPPs/Congressman in it's pocket?

Small business also has a significant lobby effort at the local, provincial and federal levels. But you are arguing for allowing businesses to fail, so why raise the issue of subsidies or aid?

 

[cruzin4u]

Not true at all. GM, Ford and Chrysler produce each produce approximately a million cars a year in North America (USA, Canada, Mexico). Even though sales are down now, N. American consumers have been buying plenty of big 3 cars.

Yea, they produce a million cars a year, but how many of those cars are actually sold? People are not buying their vehicles, yet they continue to produce them - it makes no sense.

Not to mention they pay their workers $40/hr to put in a damn screw into a vehicle.

I know many people who have switched from GM/Ford/Chrysler to Mazda's and Honda's. They are much more realiable and fairly priced.

If you think otherwise, you are in denial. The big 3 are struggling because there is no interest in their vehicles. It's as simple as that.

 

[Whoaccio]

Not true at all. GM, Ford and Chrysler produce each produce approximately a million cars a year in North America (USA, Canada, Mexico). Even though sales are down now, N. American consumers have been buying plenty of big 3 cars.

What exactly is you're point? That the Big 3 aren't circling Chapter 11, that they aren't in need of government "assistance"? That their business (barring their stock price being 10% of it's 52 week high and is at 62 year lows, barring they are burning through more than $1b a month, barring virtually every other marker) is fundamentaly sound. This is a wild thought; if GM is loosing money per car is sells (let alone produces and leaves rot in a sales lot), maybe it should sell fewer cars until it starts making money. If "consumers have been buying plenty of big 3 cars," it seems odd that they are continually laying off people and moving closer to bankruptcy. Must be me...

 

[Whoaccio]

My argument is quite simply that it makes little to no sense to throw money at the Big 3 on the sole logic that a.)they are big and b.)they are in precarious position (but apparently not according to Hydrogen & Adm Beez because they still "produce millions of cars", better fax Congress and alert them to the good news!). This should be nearly self evident. So far, the only responses I got was that I am "prejudiced" against GM for not wanting to forkover billions in tax money (hint. I'm not the reason GM is a failing company, it is) and that because an accurate cost benefit analysis is impossible to create with these kinds of market interventions, we might as well do it. Heh, if we can't see around the a bend in a river, there is just as much chance as us falling off a waterfall as finding an island with topless natives right?

As to the fairness of proposed subsidies, did I get an answer? If you are going to raze me for being "prejudiced" against GM for "allowing it to fail" why are you prejudiced against me? Like most people, I've lost more money than I can count. Why will you "allow me to fail"? This is a pretty open ended question. If the case for giving aid to the Big 3 is so clear, why not extend it to, well, everywhere else? You clearly seem to believe that the reasoning behind a Big 3 aid package is rock solid, why can't it be applied to the entire economy?

 

[gabe]

Yea, they produce a million cars a year, but how many of those cars are actually sold? People are not buying their vehicles, yet they continue to produce them - it makes no sense.

Not to mention they pay their workers $40/hr to put in a damn screw into a vehicle.

I know many people who have switched from GM/Ford/Chrysler to Mazda's and Honda's. They are much more realiable and fairly priced.

If you think otherwise, you are in denial. The big 3 are struggling because there is no interest in their vehicles. It's as simple as that.

Wrong Now a days those foreign cars aren't any more reliable than a GM or Ford and i don't find them fairly priced especially for a Honda or Toyota. my 2002 Highlander has been just as good as my old ford explorer

I can tell you don't travel much to the states. I go to the states a lot for work i see a lot more of the big 3 cars down there than i do up here in Ontario i see why they produce a million cars a year.

 

[Hydrogen]

My argument is quite simply that it makes little to no sense to throw money at the Big 3 on the sole logic that a.)they are big and b.)they are in precarious position...

You may want to take more time to clarify your "logic" as none is evident.

So far, the only responses I got was that I am "prejudiced" against GM for not wanting to forkover billions in tax money

You have billions available? I'm sure no one will compel you to hand over your new-found wealth. As prejudicial statements, here is one you made in an earlier posting of yours:

I think the Big 3s performance over the past years has proved, quite definitively, that N. American consumers don't like their cars.

Can you prove definitively that North American consumers don't like the automobiles produced by the big three producers?

As to the fairness of proposed subsidies, did I get an answer?

No specific subsidy has been proposed or has been put into place as of yet.

But here's a question for you to ponder: think of the one Western industrial nation that has no large-scale public healthcare system. Imagine the pressure such a system could take off corporations in that particular nation when negotiating wage and benefit agreements with its employees.

Like most people, I've lost more money than I can count. Why will you "allow me to fail"? This is a pretty open ended question.

Yes, it is an open-ended question and a bit of a reuse as you want to invoke some kind of universal parallel between your uncounted money losses, your (unproven) attribution that most people have the same experience as you, and large corporations with hundreds of thousands of employees and millions more employed downstream.

It's all a little more complicated than you make it out to be, but I'll play along. If your money problems are bad due to unemployment (and not bad management), there is always EI (which supported by taxpayers). When that runs out there is always welfare for you (also taxpayer supported). If you want to learn a new trade to make yourself employable once again (beyond personal money-management), there are retraining programs available, or you can always attend a college or university (also publicly supported with taxpayer dollars). None of those things guarantees that you will be a success in the end, but the supports are available to you.

Then again, maybe we should just let you fail. By your own admission, you've lost a lot of money. Maybe subsidizing you isn't worth it.

 

[Glen]

Yea, they produce a million cars a year, but how many of those cars are actually sold? People are not buying their vehicles, yet they continue to produce them - it makes no sense.

Not to mention they pay their workers $40/hr to put in a damn screw into a vehicle.

I know many people who have switched from GM/Ford/Chrysler to Mazda's and Honda's. They are much more realiable and fairly priced.

If you think otherwise, you are in denial. The big 3 are struggling because there is no interest in their vehicles. It's as simple as that.

This is a perfect example of the bias that the GM/Ford/Chrysler are facing. Are you really suggesting that for the last number of years that they have been stockpiling vehicles? Also, that blanket statement, repeated ad nausea, that Japanese cars are more reliable is bunk. They are about equal. Mazda and Nissan are decidedly middle of the road. Honda and Toyota are above average. What also skews the numbers is the amount 'secret warranties' that the Japanese manufacturers have. While it is common for all manufactures to have such warranties, cultural differences make them more prevalent for the Japanese. At least that is what a auto industry insider has told me.

The next time you are at a Honda dealership ask to see the regional book, chained to the desk. Ask Acura why the same transmission in the TL that proved failure prone, was not recalled in the MDX. An admission to that would have added hundreds of thousands to their list.

 

[Admiral Beez]

Also, that blanket statement, repeated ad nausea, that Japanese cars are more reliable is bunk. They are about equal. Mazda and Nissan are decidedly middle of the road. Honda and Toyota are above average.

Regardless of build quality, not all Japanese makes are successful in Noth America. The mediocre selling and bland cars coming out of Mitsubishi are a good example. Isuzu Motors completely withdrew from the North American market in January 2008 due to poor sales. Anyone remember Daihatsu USA, which shut down its operations in the USA in the early 1990s due to poor sales.

The Big 3 need to ditch cars that don't sell, close plants and concentrate their production, break free or get control of their legacy/union costs, and most importantly increase the profit margin on the cars they have left.