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Post by smlbstcbr on Nov 19, 2008 22:21:47 GMT -4
So, after watching almost every news channel, I decided to post a poll to know if you would agree/disagree with a rescue to the Big Three. Some sources indicate that GM is not going to last until 2009 and almost every analyst said that the awful decisions made by their executives is the reason for this begging.
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Post by LunarOrbit on Nov 20, 2008 0:00:43 GMT -4
There are so many jobs at stake that I can't imagine there not being a bail out. And it seems the people to blame for these kinds of things are never punished. I wouldn't be surprised if the big three were forced to merge.
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Post by dragonblaster on Nov 20, 2008 4:16:56 GMT -4
That would surely fall foul of antitrust legislation.
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Post by echnaton on Nov 20, 2008 11:35:13 GMT -4
The US auto industries problems go back to decision made years ago. Labor contracts that essentially prevented the companies from getting rid of employees. Those that were not needed were put in a jobs bank at a pay grade near their working salaries. So the companies were oversupplied with labor. Labor became a fixed cost. This meant that they had to produce cars that were labor intensive, big SUVs and Trucks, to make any money. Over the same time, mechanization of the manufacturing process meant that less labor was needed to produce each subsequent model.
Another labor cost was a guarantee to provide health care to retirees and dependents. Costs for this have increased far faster than the sales price for cars. These legacy costs have hampered the companies for years. Ford and GM have paid billions of there scarce liquidity over the past 18 months to buy out obligations to workers that weren't working, retirees getting company supplied health care and reduce head count at factories that are no longer productive.
The main result of this is the manufacturing of modest quality cars that sell at lower prices in an effort to maintain sales volumes. Being a high cost manufacturer forced to reduce prices to gain volume is a recipe for disaster. Thus where we are today. The problems are not entirely of the current management's making.
The bailout is probably the worst outcome. It would embed the political goals of Congress into the reorganizarttion of the companies. One of those goals will be a hand out to the UAW to keep employment levels up. A result that will hamper the cost structure for years to come. Bankruptcy will give manufactures a better opportunity to scale back production capacity to a level that can be supported by actual demand. Let capitalism takes its course and let investors take their lumps for poor decisions.
The scare tactics of job losses are not unfounded but exaggerated. People will not stop buying cars because GM is in reorganization for a few months. Warranty concerns can be handled by the seller paying an outside company provide the warranty. Ford and GM have some exciting new cars on the books that will be coming to show rooms soon. They need a clean start to make the best of these opportunities and buyers need a more competitive market to bring them the best selection.
That said, we have some GM and Ford bonds in our portfolios. I sure hope that the government bailout, when it comes, will spare the bond holders.
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Jason
Pluto
May all your hits be crits
Posts: 5,579
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Post by Jason on Nov 20, 2008 11:57:11 GMT -4
I'm with Mitt Romney on this one - the big three should be allowed to fail. A big part of the problem is the labor unions, and the only way out of those labor contracts is bankruptcy.
The typical "big three" worker earns around $75 an hour. The typical Toyota worker earns around $40. It's not hard to predict which company will be able to make money and which will fail.
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Post by smlbstcbr on Nov 20, 2008 13:54:28 GMT -4
A solution may be: to let them go bankrupt, then stimulate new factories with brand new technology. I think that if they go down, the results will be better in the long term. I've heard that auto industry there is not as good as it should be. (In Bolivia, the auto brand by default is Toyota, next is Volkswagen). And, 75 $ an hour? that's some expensive labor force...  |
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Post by PhantomWolf on Nov 20, 2008 19:12:09 GMT -4
That would surely fall foul of antitrust legislation. That might be true is only those three existed, but with plenty of competition from the likes of Toyota, Kia, Hyundi, Honda, Mitsubishi, Subaru, Volkswagon, Peugeot, and others then I don't think that merging the three US companies would cause a monopoly. |
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Post by Apollo Gnomon on Nov 20, 2008 19:31:18 GMT -4
I'm with Mitt Romney on this one - the big three should be allowed to fail. I agree with this But not so much with this. labor unions were a necessary force to empower workers against massive corporations. Needed now? Maybe not. I don't need to own a rifle to feed my family now, either, but I'll beat anyone upside the cranium that tries to take it away. What we don't need today we may need again tomorrow. Refs? And is this "typical" or "average?" |
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Post by Apollo Gnomon on Nov 20, 2008 19:37:37 GMT -4
That might be true is only those three existed, but with plenty of competition from the likes of Toyota, Kia, Hyundi, Honda, Mitsubishi, Subaru, Volkswagon, Peugeot, and others then I don't think that merging the three US companies would cause a monopoly. Maybe true in a planet-wide sense, but I don't think US antitrust laws were written with that in mind. My new Toyota was made in Indiana, and replaced a Dodge Caravan made in Canada, so "American" sorta falls into ambiguous territory anyway these days. I vote that they'll be bailed out, without heads rolling. |
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Post by LunarOrbit on Nov 20, 2008 23:30:55 GMT -4
Refs? And is this "typical" or "average?" Well, my brother works for Toyota and I think he said once that he makes $26/hr. (Canadian$), but I don't know if that is typical or not (and maybe American Toyota workers make more). |
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Al Johnston
"Cheer up!" they said, "It could be worse!" So I did, and it was.
Posts: 1,453
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Post by Al Johnston on Nov 21, 2008 7:42:11 GMT -4
Maybe the figures are for what it costs to employ a worker, rather than what they're paid? US figures would then include medical benefits which wouldn't be necessary in other nations...
OTOH, maybe the figures are averages distorted by including the vastly overpaid CEOs...
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Post by smlbstcbr on Nov 21, 2008 12:15:56 GMT -4
A priceless moment came when the executives were questioned if they used a regular commercial flight to Washington DC and none of them raised their hands...
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Jason
Pluto
May all your hits be crits
Posts: 5,579
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Post by Jason on Nov 21, 2008 12:24:05 GMT -4
The $75 figure includes wages and benefits, including the generous UAW pension plans for reitred workers. 38% of that figure is straight compensation, so it's more of a cost per worker figure. Here is one source. According to it, the health benefits offered by GM add $1,200 to the cost of each vehicle they produce, while Toyota only has to add $215 per vehicle. EDIT: It should be noted, too, that the $45 figure for Toyota is for Toyota workers in the U.S., not Toyota workers in Japan. |
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Post by JayUtah on Nov 21, 2008 12:57:22 GMT -4
I'm still trying to decide whether the private-flight issue is a red herring.
It is true that most large companies require their CEOs to fly on private jets. And while it is true that many cite safety as the primary concern, the real reason is perceived cost-effectiveness.
In terms of statistical safety, private jet carriers are no safer than commercial public carriers. Or no less safe. The safety argument is not in the safety of the travel, but in the safety of the apparatus surrounding it. CEOs are considered high-value crime targets. TSA will not provide additional security, and will not allow private security into the boarding area. The loophole for private carriers comes from the fact that the passenger list is wholly under the client's control and may include private armed security.
But the real reason is that public air transportation is time-consuming. Private carriers don't sell their services to large corporations on the safety question. In fact, they must constantly fight the misbelief that they are less safe than Delta Air Lines. The selling point is the notion that a CEO's time is worth so much money that the two hours he spends at the airport offsets the additional cost of private jets.
I always find that a dubious justification, considering what else could be done to save CEO time that isn't done. I don't find it necessary to save a CEO two hours that he's likely to go spend on the golf course with his buddies later that afternoon. And in the present situation, I'm not sure these CEOs merit having their time valued so expensively.
And unfortunately the other selling point is the opulence of the jets themselves. There is very much the rhetoric of, "You don't have to fly with the rest of that rabble; you're privileged." The question I want answered is how many members of Congress travel on public airlines while on business.
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Post by JayUtah on Nov 21, 2008 12:59:34 GMT -4
When bidding, I bid an engineer's time at $120,000 per year or $10,000 per month. That's the cost of the engineer, not what the engineer takes home in cash.
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