And the Senate shot down the Big 3 loan...

On one hand, I'm upset it didn't go through, because I have a lot of family that work for the auto companies.

On the other hand, what the *blank* was the UAW thinking?

I don't even know how to feel anymore, because I know I'm not going to hear the end of this from my family, and I'm disappointed in the Unions for failing as an organization to save their employers.

I've been doing more reading about this, and it looks as though Ford and Chrysler don't even need the bailout. GM is the only one that really needs the bailout. Ford is still solvent and will remain so as long as GM doesn't fold. Chrysler is owned by Cerberus, a large corporation that has plenty of cash that it can infuse to prevent Chrysler from failing (Chrysler comprises only 7% of Cerberus' total value). Cerberus has been vying for a GM-Chrysler merger since the moment it bought the automaker. The only thing we need to worry about is whether Cerberus will make the investment or whether it'll let Chrysler fall and simply write it off.

In the end, we need to bailout GM and force a GM-Chrysler merger so that the entire industry doesn't go belly up. This is by the better solution than simply throwing a bunch of cash at all three and have pseudo nationalization regulations imposed on them.

Why a GM-Chrysler merger in particular? Why not Chrysler/Ford? I only ask because GM already has so much redundancy in product lines already, this would only seem to make things more complex.

Corporate Darwinism. Thin the herd every so often and this will work out. Not at all shocked it didn't pass. I was hoping the Wall Street bailout didn't pass either, but such is life. I don't enjoy paying for other's mistakes.

derek, i'm from windsor ontario canada, not far from where you live. we have the GM transmission plant here and we have already had mass layoffs there, and ford and chrysler are almost belly up in the city too. my girlfriends dad works at gm, so this is a tough time for everyone.

i think the problem i that neither gm, ford, nor chrysler really proposed what exactly they were going to do with the money. they basically said 'give us cash or your economy is messed up'. this mess is their own making; they didn't make cars that kept up with foreign cars, they kept thinking 'bigger is better' and they lost mass business, which sent the economy down the tubes, now people can't afford $30k cars...

any way, that's just how i see it... i hope they come up with something that can solve the problem.

Kash said:

I've been doing more reading about this, and it looks as though Ford and Chrysler don't even need the bailout. GM is the only one that really needs the bailout. Ford is still solvent and will remain so as long as GM doesn't fold. Chrysler is owned by Cerberus, a large corporation that has plenty of cash that it can infuse to prevent Chrysler from failing (Chrysler comprises only 7% of Cerberus' total value). Cerberus has been vying for a GM-Chrysler merger since the moment it bought the automaker. The only thing we need to worry about is whether Cerberus will make the investment or whether it'll let Chrysler fall and simply write it off.

In the end, we need to bailout GM and force a GM-Chrysler merger so that the entire industry doesn't go belly up. This is by the better solution than simply throwing a bunch of cash at all three and have pseudo nationalization regulations imposed on them.

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Kash,
I'm curious to see where you got the info...I'd like to read it as well. I don't think we should bail out GM, or any of them however. Like I said before, there have been many, many, many times these car companies faced bankruptcy. Like I've said, these guys sat around not doing jack squat while their businesses were failing and if these guys go bankrupt, who really suffers? It's certainly not going to be the CEOs - they already have SO much money it's ridiculous. It's going to be the regular blue collar people in Michigan that are going to suffer. Personally, I think the government should say "Hey, merge with a successful car company or c'ya."
This happened in 1986 when Jaguar was running in the red...They asked Parliament to bail them out ; they said no and they were bought out by Ford in 1988 and hey think about it - Jaguars are England's most well-known cars. I think Honda should buy GM, Toyota should buy Ford and Chrysler can just go away.

cwa107 said:

Why a GM-Chrysler merger in particular? Why not Chrysler/Ford? I only ask because GM already has so much redundancy in product lines already, this would only seem to make things more complex.

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Because Ford is doing just fine and plans are underway that are going to further pad its coffers so as not to necessitate any government intervention. The only reason Ford needs the other two to stay afloat is to prevent costs from shooting up that will result out of the thousands of distributors going out of business when two out of their three customers are no longer buying product.

Primus_badger said:

i think the problem i that neither gm, ford, nor chrysler really proposed what exactly they were going to do with the money. they basically said 'give us cash or your economy is f^%&$d'. this mess is their own making; they didn't make cars that kept up with foreign cars, they kept thinking 'bigger is better' and they lost mass business, which sent the economy down the tubes, now people can't afford $30k cars...

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Actually, Ford announced in detail exactly what its plans were over the next few years and what it was going to do with the bailout money. Ford was simply asking for a line of credit as a form of insurance in the event things didn't work out over the next two years. Ford's CEO (this is the man who turned around Boeing and has actually made Ford profitable since he came on board) stated that if his company ever ended up tapping the line of credit, he and several top level managers would reduce their salaries drastically (his alone would drop to $1 a year). Granted, Ford could very well have gotten a loan from a bank to keep afloat if such a situation were to occur, but you can't beat the low interest rate of a government loan ;P

I'll agree with you that GM and Chrysler hadn't provided any real information into what they were going to do with the money besides acquiesce to any strings the government attached to the money. They weren't proactive in the least bit with their future plans to come back to solvency.

xj6jaguar1985 said:

Kash,
I'm curious to see where you got the info...I'd like to read it as well. I don't think we should bail out GM, or any of them however. Like I said before, there have been many, many, many times these car companies faced bankruptcy. Like I've said, these guys sat around not doing jack squat while their businesses were failing and if these guys go bankrupt, who really suffers? It's certainly not going to be the CEOs - they already have SO much money it's ridiculous. It's going to be the regular blue collar people in Michigan that are going to suffer. Personally, I think the government should say "Hey, merge with a successful car company or c'ya."
This happened in 1986 when Jaguar was running in the red...They asked Parliament to bail them out ; they said no and they were bought out by Ford in 1988 and hey think about it - Jaguars are England's most well-known cars. I think Honda should buy GM, Toyota should buy Ford and Chrysler can just go away.

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There are several sources where I've gotten my information. Here's a good one on the Chrysler-Cerberus issue:

Forbes - Chrysler's Hidden Coffers

The information regarding Ford's plans are widely available from a variety of sources, I'm sure you can find that sort of information with a quick Google search.

Remember Eric (;P), it's not about the companies themselves, it's about the workers and the distributors. Letting the companies fall is going to be a major blow to our economy that will take a long time to recover from. If we can prevent such a thing from happening with a few billion dollars and a forced merger, I say we do it. The terms of the failed bailout were bad and I'm glad the Senate saw it that way. Let's hope the next one that comes up is more in line with what the country needs and not what the companies want.

Neither the UAW or Big 3 are blameless in this, but $15bil is a drop in the proverbial bucket compared to $300bil to AIG.

From what I understand, UAW workers make on avg $3.00/hr less than compareable jobs at Toyota/Honda/Nissan; it's the pension plans that are saddling the Big 3, on top of quality (perceived or otherwise) issues.

It's not that we can't make a good car or a car that people want to buy...it's that American autos put emphasis on the quantity being made over the quality of those going out.

For instance... The first car I bought brand-new was a '99 Ford ZX2. I had it for 6 years and lasted 118k/mi until an illegal alien drunk driver took it out when I was driving home from a friend's house. The car was totalled, so when I was looking for another car I decided to buy a certified used car; I bought a certified used '00 Toyota Camry a little over four years ago. The difference in quality going from Ford to Toyota is almost night/day. I'm very proactive about having my car maintained and getting things repaired/replaced promptly, so it wasn't an issue with keeping the car maintained. You know those little books you get with a new car that has spaces for the dealer to stamp when you have had 'this' or 'that' service performed? I ran out of spaces in my book....yes, I'm that guy...the one who is super-anal about getting it maintained. I feel US autos (esp. Ford) has a lot to learn about quality, and I imagine GM and Chrysler aren't far behind.

I still have all the repair receipts scanned/archived for my Ford...the motor never had a problem but everything else did....

3 wheel bearings replaced, 5 brake boosters (yes, 5!), two transmissions, motor mounts, new A/C, and 3 speed sensors ($70 plastic relay that tells the trans. when to shift)--thank god I had bought an extended warranty b/c it paid for itself almost 3x over. This was a new American car that was driven mostly highway miles (commute to work) and fully maintained.

After the accident, I was done with American cars for the time being, so I was going to buy Japanese after that. I bought a Certified '00 Camry that had 48k/mi on it...in four years, I've had motor mounts, main seal, starter, radiator, and cv boots replaced--not all at once, but as things have need repair, I've been proactive about getting them fixed. This car is 9yrs old vs. the 6yrs I had the Ford; the transmission shifts great, motor hums quietly, and it gets excellent gas mileage. The only thing that ever really "went out" on me was the starter, which I believe was 1/2 my fault; for the first few weeks I owned the car, I sometimes would turn the key even though the car was idling in park (usually waiting for my g/f at the ATM). hehe.

To GM's credit, my fiance bought a brand new Saturn 3 years ago and it runs beautifully. No issues, and I have planned on buying a new Saturn in the next few years (if they're still around).

Alright Kash, you've made a valid point and it makes sense. We should force a GM/ Chrysler merger and if it's only 15 billion...That's pretty much chump change in Government talk.

Juan Guapo,
Let me 1st start out by saying AWESOME avatar...O.J...hahaha...
Anyways,
I had a 1998 Ford Escort ZX2 as well. Hey let's give it to Ford, they made an attractive looking car....For once haha..
My dad was letting me make payments on it since he bought a new Mustang. (This was in '03.)
Mind you when I got the car, it had 93,000 miles on it.
That thing was ALWAYS in the shop for SOMETHING. I was CONTINUALLY replacing the rotors, the stupid thing chewed through TWO timing belts, it shook when you went faster than 45MPH and I must've tried to align that thing at least 10 times, and Juan...How can we forget how LOUD it sounds when you're going faster than 65!??? Hahaha. I hated that car so much, I bought a manilla paper yellow 1984 Volvo 240 for $300 and drove it around instead hah..
With that being said, I completely agree with you that domestic cars are awful with three lone exceptions for Ford: 01-04 Ford Focus, 1988-2004 Ford Mustang and the Ford Taurus. When I was working at the shop, you could count on seeing AT LEAST 5 Chrysler vehicles dropped off for some problem. Thankfully I didn't have to worry about it as I had my own back bay for British cars. ;D

Ford and GM have always made great trucks. It's what they're known by. When I get back to Rhode Island, I know I can hop into my 1998 Ford Explorer that has been sitting for months and it will start right on up and drive. These car companies need to take a page out of their truck handbooks and apply it to cars.

I've owned 3 Fords, a Festiva, a ZX2 and Focus SVT. All them were great cars that gave me next to no problems. The Festiva made it to 275K and we gave it to the Boy Scouts for a tax write off, I traded my ZX2 in on a 00 Eclipse GT, and I bought my SVT in 04, when my wife and I split she took it and killed it by hitting a parked car. I have also owned a Honda Accord and Acura Integra, both of which were colossal POS cars, nice cars, but they nickle and dimed me to death. Mitsubishis are hit or miss, my Eclipse had some minor issues but all in all it was a good car, and my cureent car is a Mitsu Endeavor, it's been OK too. I think personally, out of the 3, Ford has the best reliability and most up to date designs. GM's product line is tangled up mess and Chrysler can't make anything without trying to stuff a Hemi in it (Dodge Neon, now with Hemi option, lol.)

ErikJenkins1187 said:

The Festiva made it to 275K

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if you looked inside the door jamb of that Festiva you should have noticed that it was made by Kia. We owned a Festiva also, that thing was awesome. it went everywhere you took it. never had a problem. we have owned Chrysler cars and loved them. the problem is that for a car that is comparable, you could get much better elsewhere. It did not help that the Five Star Chrysler Dealers where we lived at the time were terrible. i have owned an Accord and currently own an Element. never had any problems and love them to death. we also own a Ford Escape and the Interior is laid out so poorly that i refuse to drive. the wife likes it and it is her car.

i wont even start on what i think about UAW, but they make more at entry level than i do and i am an enlisted person in the military. I kind of wanted the bail out to happen just so that people can keep jobs until i heard that entry level pay for a UAW person is $28/hour. i am kind of glad that it fell through. maybe the big 3 will make better cars cheaper.

Kash said:

Actually, Ford announced in detail exactly what its plans were over the next few years and what it was going to do with the bailout money. Ford was simply asking for a line of credit as a form of insurance in the event things didn't work out over the next two years. Ford's CEO (this is the man who turned around Boeing and has actually made Ford profitable since he came on board) stated that if his company ever ended up tapping the line of credit, he and several top level managers would reduce their salaries drastically (his alone would drop to $1 a year). Granted, Ford could very well have gotten a loan from a bank to keep afloat if such a situation were to occur, but you can't beat the low interest rate of a government loan ;P

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i didn't hear about that... hmm, too bad ford is basically belly up here in windsor... which is probably why they don't talk about them much on local news.

i'm generally concerned because of the relations my friends have with the company. i'm just a student, so the low economy means cheeper post secondary education (that sounds terrible for me to say that...but the truth is the truth right?) and i totally agree that something needs to be done. like i said, my girlfriends dad works there and she has two other siblings in high school ready to move on to university... her parents don't know how they are going to pay for it. i wish there was just more detailing in the plans (by the other companies that is, now that i know ford has provided some plan. thanks for clearing that up).

i believe they are all still asking the government of canada for some cash too. but will those few billion dollars really do anything overall? especially is an entire production line of autos needs to be overhauled...

regards;
Eric

JuanGuapo said:

From what I understand, UAW workers make on avg $3.00/hr less than compareable jobs at Toyota/Honda/Nissan;

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I don't know where you got that from. It's the UAW's fault that the bailout didn't go through. One of the conditions was that the autoworkers at the big 3 would have to lower their pay to the same levels as the domestic plants of the foreign automakers and they said no. They basically dug their own grave; choosing to potentially lose their jobs over taking a pay cut and surviving.

But I wasn't surprised by this. It is the union that forced the companies into offering bigger and bigger pay rates and benefits until they raised costs so much that the companies couldn't turn a profit on selling a car any more. They've dug themselves a nice deep hole and now I guess they're choosing to lay down and die in it. Bitter and whiney to the very end.

But hey, that's how the free market economy works: get rid of the inefficient, impractical, and costly businesses. Maybe Toyota and Honda will open more plants to accommodate their increased market share left behind by the big 3 and those people can get jobs again.

Truth is, they wouldn't go out of business anyway. They would go into chapter 11 bankruptcy, reorganize, and come away leaner and more competitive. Which I believe is a much better solution than losing my tax dollars to companies that aren't going to change and will simply limp along until we give them more money or we let them finally fall on their face. And all that talk about people not buying for fear of having not warranty service in the future is just scare talk so they can get their handout.

what happened to the times of when you run a business poorly, it doesn't succeed? There is no point in trying to keep a failing business afloat, it is failing for a reason.

If a business can't be successful, they don't deserve to stay in business...

It is really that simple...

No, it's really not

Kash said:

No, it's really not

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Yes it is, if a business can't bring in enough customers, why does the burden of those customers still fall on them to make sure that business doesn't fail?

If Ford can't stay in business due to their own bad business practices then why should tax payers have to pay for them to stay in business?

It is their mostly their fault, thus the blame should fall on them

If you say that there is a bad economy to blame, I think that is just the assumed risk of going into business ever...

For starters, Ford is doing just fine. Chrysler always sucked, and GM is the one that's facing the biggest problem in terms of liquidity. However, you're making the assumption that if one of the car companies go belly up, then all that happens is that the company crashes and a couple of people are out of a job. That's an extremely near-sighted view of the impact such a collapse would have. Let's forget about the thousands of jobs that are going to be directly affected, there are also the thousands of dealerships that are going to go out of business along with the distributors who supply the parts for the cars. Then there's the ripple effect you have to worry about since those distributors are shared amongst the auto manufacturers. If these distributors lose out on one or two of their biggest customers, they go out of business. Once that happens, you've got the problem of increasing costs, thus leading to the downfall of the formerly solvent Ford and potentially the foreign companies that build cars on American soil.

So no, it's not as simple as "let them fall because of bad business practices." One would be naive or seriously misinformed if they actually thought it was that simple.

Personal attacks aside...

I was using Ford as an example

I think it is that simple because anybody working for those companies has the assumed risk of a loss of job accepted when they take the job first off. Second off, the business owners are allowed to make decisions that increase their income as long as those choices are within the scope of legality.

Finally, the ripple effect that will happen is all within the assume risk of starting a business in my opinion. In order to go into business you need to be willing to accept consequences of your choices . If we just give these people money because they make bad choices, we teach them nothing, only that they can run to Uncle Sam whenever their wallets are in danger...it really does come down to Corporate Darwinism...If we prop up the weak, we give no encouragement for them to fight to survive and excel.

I think we bail out because it "feels good" now but in the long run I don't think it is financially beneficial for our nation as it changes economic policy away from capitalism and towards that of a socialist capitalism, finally, the principles change too. They become less constitutional.

Considering the hundreds of billions we've already given to the banks, I think it's a little late to get all philosophical about it.

We've become a socio-capitalist nation, and really, we've been that way for ages.