Should the US Gov't Bail Out the Auto Industry?

[Jae Onasi]

Well, the "Big Three" executives are speaking with Congress today to ask for a bailout. Should the gov't get involved in this? If the gov't does, what should the auto industry be required to do to become profitable, and theoretically pay the taxpayers back for this 'loan'?

 

Apparently they drove to the meeting this time instead of all flying in on their private corporate jets.

[Yar-El]

We use to have a tradition in the United States. Corporations and companies go out of buisness, and then another stronger one takes it's place. They are going to bail them out regardless, and there is not enough vocal citizens to prevent them from doing it.

 

We have to end this somehow. Here is the irony - They get taxpayer money for the bailout; however, they will not lower the price of a car to say "thank you we get it". Where is our discount on cars? What do we get in return? Do we also get a cheaper-greener car?

[SW01]

From what I have read in our reports on the matter, letting the big three go under might be the straw. I can see the problems for a staunch capitalist nation in aiding a failing private company, but surely if the repercussions of collapse will detrimentally affect the entire US economy, it would be worth breaking from ideology? Clearly, some strict requirements and limitations should be placed upon the companies in question in the event of a loan, though.

 

I think the chair of the Senate Banking Committee (Sen. Christopher Dodd) put the point well: "This is not about acting to save individual companies. If it were, I would let them fail."

 

I found this somewhat amusing: 'The chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid.'

 

Source

[Darth_Yuthura]

It would cause much more damage to the US economy to let those three declare bankruptcy, yet we cannot just bail out every company and corporation that made a bad set of choices. What's worse?

 

A compromise: the US government should place sanctions on the CEO's for what they did to the stockholders who trusted them first. To keep everyone else in business, the property and assets of the Big Three should be bought by the Government and be managed by arbitrators or directors who have no stake in the companies. That would ensure no one would have reason to run the corporations into the ground again.

[mattig89ch]

I think if they can come up with a comprehensive business plan to turn their companies around, then they should be bailed out. If not, then they should not be.

[Chevron 7 locke]

No they should not be bailed out. they have had it way to good for way to long in my opinion

[mattig89ch]

And what would you have them do? Go out of buisness, push more people into unemployment, and make the economy that much worse?

 

Don't get me wrong, if they don't have a clue how to run their companies better then the government should, temporarily, take over the companies.

[Chevron 7 locke]

All i did was offer my opinion, i realize that would probally screw up the economy even worse, but the guys in charge of these companies seem to have no clue on how to run things

[mattig89ch]

Well....at least you realize the downside of your point of view.

 

I want to hear what they offered the government as a business plan. My point of view might shift to your side if they don't offer a legitimate plan.

[GarfieldJL]

To be honest, the State Government of Michigan is partially to blame, labor unions are as well, and the Feds might have partial blame in this mess.

 

I'm going to say that most of the blame is on the shoulders of labor unions, which are semi protected by the Federal Government.

[jrrtoken]

If the government decides to bailout the automakers, then they should fire all of the executives as well. They're the ones who got themselves into the mess, and they're bringing America down with them.

[mattig89ch]

If the government decides to bailout the automakers, then they should fire all of the executives as well. They're the ones who got themselves into the mess, and they're bringing America down with them.

 

That I agree with.

[mimartin]

Should the gov't get involved in this? [/Quote]

I’m conflicted as to if the bailout will actually do any good or will it only allow a dying dinosaur a few more years of life.

 

 

If the gov't does, what should the auto industry be required to do to become profitable, and theoretically pay the taxpayers back for this 'loan'?[/Quote] As to what the auto industry should do, design cars that people want to buy.

 

Although even then with GM’s pension obligation, I still don’t know if they would be profitable. They are going to moan about their pension burden until the government steps in and helps them get rid of the burden.

 

 

As to blame you can assign blame to whoever you like, but if the big three designed vehicles the average American wanted to drive, then the blame game would be moot. They are having problems because people do not want the vehicles Detroit is producing.

[GarfieldJL]

Explain why the big 3 pay over $70 an hour for each worker...

 

Seriously, the Union rules, and the insane pay is enough to drive them into the ground.

[Jae Onasi]

The UAW is working on getting concessions from their workers--they have to abide by their constitution in how they work with their union workers. It's not all the UAW--the companies need to make a profit on their cars and they haven't for quite some time.

 

I was watching some of the proceedings today, and one expert gave the dire prediction that GM would be bankrupt by the end of December if nothing was done. There's also talk about GM and Chrysler merging. I'm not entirely sure how putting 2 failing companies together will create a profitable one, but I don't have their business plans either.

[Litofsky]

In my opinion, Federal Government should bail the Big Three out- but at a (heavy?) price: in return for billions our our dollars, it is my belief that the companies should be forced to meet certain benchmarks, such as in fuel economy (over 35 MPG by 2010-12 would be reasonable, no?).

 

At any rate, I disagree with letting them fall flat on their faces (the executives/companies): doing so might be highly detrimental to the poor-dealings of our current economy.

 

If my calculations are correct (information on employees comes from Wikipedia), the Big Three employee a little under 500,000 people. Imagine all of them becoming jobless in the next few months, and the impact on the economy.

[Rev7]

Yes, they have made had done some really stupid stuff- i.e paying some of their employees to just sit around, but I think that they do need some help. There has to be a balance though, because what they are asking for is really quite a lot of money. I think that the Big 3 should make some major changes in how they run their company and their employees. But yes, if it will work, I think that, in the long run, it will be beneficial.

 

The economy is really taking some hard hits as of late...

[GarfieldJL]

The UAW is working on getting concessions from their workers--they have to abide by their constitution in how they work with their union workers. It's not all the UAW--the companies need to make a profit on their cars and they haven't for quite some time.

 

Didn't they originally refuse to negotiate, seriously Subereu (sp?) is doing just fine (probably cause they aren't shelling out $70 an hour).

 

I was watching some of the proceedings today, and one expert gave the dire prediction that GM would be bankrupt by the end of December if nothing was done. There's also talk about GM and Chrysler merging. I'm not entirely sure how putting 2 failing companies together will create a profitable one, but I don't have their business plans either.

 

Well yeah, but how much is due to the ridiculously high cost of labor though? Subereu is actually still making a profit. So is Toyota for that matter.

[Rev7]

Well yeah, but how much is due to the ridiculously high cost of labor though? Subereu is actually still making a profit. So is Toyota for that matter.

Subaru

 

Perhaps because maybe they are making more fuel efficient cars? Labor doesn't have to be up to $70.

 

70*500,000= $35,000,000

 

That is crazy.

[Tommycat]

When a broom pusher unskilled labor worker is making $35/hr, something has to be done. The labor unions did quite a bit of good in their time, but they have also stifled the ability for the US automakers to be as competitive. Perhaps there is a need for the big three to file for bankruptcy to save the companies. They have to stop paying for people that aren't working for them anymore. Bankruptcy would allow them to lower prices, sell more cars, employ more people, and still earn a profit. Chances are though even if they do file bankruptcy, they won't lower car prices.

 

I think bailing them out is a bad idea without an established plan on how to become profitable again.

[Web Rider]

And that's a problem, because lowering people's income will prohibit them from being able to afford products, from anyone. And the worst part is the whole "it's expensive to be poor", which if you aren't familiar with the saying, when you have 5 dollars, all you can afford is the small thing of food, but if you have 8 dollars, you can get triple that at a wholesale place.

 

If companies like GM and Ford paid minimum wage, their employees would be living in abject poverty.

[Lynk Former]

Unfortunately, the top two car companies in Australia happen to be Holden (an Australian company that GM bought) and Ford. In this case, the problems in your country happen to effect my own and it's not looking good for anyone down here either.

 

We've already had the Mitsubishi plant close down here which killed a lot of jobs and I think a Holden plant is about to close too. The only source of encouragement is the government pitching in some money to get Toyota to start a plant here.

[Darth_Yuthura]

I am absolutely against any bailout that does not place sanctions on the CEO's of the corporations. The only thing I despise about all this is that many of the people who made the decisions that doomed the big three have long since sold most of their stocks and left the next generation to die in the aftermath of what they did.

 

When SUV's were becoming ever so popular, they were a very big success in the short term, but devastating for the long-term prosperity of the corporations. The CEO's knew that, but acted to make huge profits, and then sell their stocks before the long term consequences affected them.

 

We should be going after those people more than the ones who inherited the doomed corporations. However, they must not just be given a slap on the wrist if they are bailed out. They must forfeit their control if they are to be rescued.

[vanir]

At some point in the future you may find luxury industries necessarily downgraded in order to prevent economic collapse. Ultimately the auto industry is far beyond adequate, whilst the argument of job creation is muted by the entirely disproportionate cost of new cars and upgrading current models.

In terms of what is required for public facilitation you could get away with the amount of new cars built for one year, every ten years.

 

But then it's a little like chasing gold in the entertainment industry I think. Everybody wants to be a pop star, and has no idea fifty talented musicians and songwriters were ripped off to make that one pop star, whose profits go to the record company that made them.

 

In any case the victims of Hurricane Katrina deserved far more government subsidisation than the luxury of a well more than adequate auto industry, didn't they? What about subsidised healthcare and education? There's some truly needed job creation. I'm not one of the believers that such a thing would make Americans start chanting, "Stalin, Stalin."

 

Now the electronics industry for example, you wouldn't want that to crash. Everybody needs electronics these days.

 

I don't know, I worked in the auto industry for some ten years and just see it as a dinosaur. I haven't even owned a car for years.

[Bimmerman]

I have a rather vested interest in this question; I'm a car nut and an active racer, have both a daily driver car and a racecar, and am looking for a job in the international Motorsport world as a racing engineer.

 

That said- I am absolutely against any form of automotive bailout, no matter what the conditions.

 

I will go so far as to say that if the Big 3 get bailed out, I will never buy their products again. Ever.

 

I believe that the current issues with the Big Three can be directly laid at the feet of the antiquated bureaucracy of idiocy, the UAW, the upper management of the three companies (not just everyone's favorite whipping post, the CEOs, but the whole executive board and high level managers), and the fact that combining 1) with 2) yielded such horrendous cars for so long.

 

I have said numerous times to friends, family, etc that I would buy a new American car if they made a car that fit my needs and worked as a cohesive package. However, despite a car's straight line speed, which the Big 3 excel at, their cars always leave something to be desired. Interior fit and finish, the ability to turn left and right at speeds above 20mph, brakes that aren't undersized for a mountain bike or Geo Metro, an engine that isn't based off of the same 1940s design (i.e. overhead valve single cam in block V8s), I can go on and on. Since the Big 3 don't, I take my money and business elsewhere.

 

Now that gas is getting more expensive, and despite the recent downturn, I would like a small city car that gets good gas mileage and isn't a surprisingly non-capsized land yacht. Unfortunately, the Big 3 don't make such a car, despite the "30 mpg HWY!!!11!!!one!" signs and advertisements. It's not an accomplishment to get 30mpg, it's not even adequate. My 20 year old racecar gets 30mpg on the highway, and I have a rather leaden foot.

 

Since I've veered rather off topic, I'll try to steer my way back. A bailout would be disastrous for everyone involved. I am absolutely against the government spending my tax dollars to pay some lazy fat ass in GM's idled plants to not work. Building a car takes almost no skill; being paid ~$35 per hour in pure wages to do so is absolutely ludicrous.

 

The best thing to happen is for the Big 3 to go into Chapter 11(GM) or Chapter 7(Chrysler...seriously, no more minivans please!). Ford is not in the same financial straights as the other two, so hence why I've not included them in the bankruptcy fun.

 

By going into bankruptcy, the failed companies can finally shed themselves of the useless brands like Hummer, Buick (ugh), Pontiac, Saturn, GMC, Everything by Chrysler, etc; they can finally rid themselves of the ******* UAW; they can cut back on their contracts with parts suppliers; and other benefits. Yes, it will hurt the economy a good deal, but if they do not go into bankruptcy GM and Chrysler will never become competitive again.

 

What is possibly the best argument against the bailout is to look at what happened to British Leyland Motors back in the 70s. They were bailed out by the British Government and survived for about five years, and then went bankrupt and disappeared, due to Unions, Management, etc.

 

Cliffs to the novel of a post: Bailout Bad, says Car Guy.