Bil Browning

We're the Big Three: We Don't Need to Compete

Filed By Bil Browning | December 15, 2008 5:00 PM | comments

Filed in: Entertainment, Living
Tags: congressional bailouts, oil industry

So what's your thoughts on the auto industry bail-out? bailoutyk2.jpgIt's an open thread!

The auto industry should be asking the oil industry for some bail-out cash. Those oil companies have had "windfall profits" the past few years thanks to the gas guzzling monstrosities Detroit has been churning out but no one buys now.

I don't remember the car companies bailing out Indiana when a huge amount of our factory jobs shipped off to Mexico in the late 80s and early 90s. Instead, I remember the auto plants and their affiliated factories (transmissions, engine parts, etc.) closing up and heading south while Hoosiers struggled to find a job that paid a living wage. Hell, GM has been outsourcing even its white-collar jobs for years now, while our former middle class works for Wal-Mart.

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Bankruptcy would be preferable. It would allow for the clearing out of guilty management. It would force the unions to bite the bullet. It would not perpetuate the diseased running of those companies. Despite the disruption that would be caused by bankruptcy, the smoke would soon clear and the production lines would retool and crank out new and better cars soon enough. The nation is full of small entrepreneurs who work long hours to manage their little companies. They don't get a bail out even though they deserve it more than the big auto manufacturers.

Well, I am kind of mixed mind here. I would much rather bail out something or someone who creates a tangible product, than give it to investment banks or the like who create nothing but paper and phoney inflated wealth based on imagination and greed.

I drive a Ford Focus, and I find it is a nice car, I have had no problems and find it is a nice ride for me. It is fairly economical, for an automatic that is, and very spiffy. I have owned Dodges and Chryslers in the past, as well as a Datsun(Nissan before they changed their name and went upscale).Way back when, one of the first car's I ever bought on my own was a Chevy Vega. Except for the unfortunate tendancy to blow the engine every 50,000 miles or so, a very sporty and zippy car. I wish I had of had the money to have gone ahead and put a 281 in it like some folks did. I hear they went like stink with one of those in it and handled like a dream, though with the slight tendency for the back end to float at high speeds on corners (they did that anyway, just ask me about the time I pulled a 360 on Purgatory road in the middle of the night, what fun!).

Anyway, What with the meltdown we have already experienced, the failure of the big three auto makers would IMO put this country into a depression that would be very hard to recover from. So many jobs, and so many different sectors of the economy depend on them that I am afraid the ripple effect would just cave this whole sorry mess in for good.

Of course, I do not think any help should be without serious strings. Complete restructuring of the companies, a revamping of their procduct lines, renegotiation of the labor contracts and a cut in white collar pay and bonuses should be mandatory.

Screw the bankers, let's do something for the real 'joe sixpack' instead.

Well, it's interesting how there was no problem with giving the finance industry a much larger bailout (at least in Congress) and AIG got a bigger bailout with almost no outcry.

But the controversy here isn't about whether it's OK to bail out a company or not, it's about whether we can control the companies or not. Republicans want to bust those unions, as Tony pointed out, which will, in turn, decrease education, destroy the middle class, and bring America much closer to being the third-world nation Republicans want it to be.

America actually has a pretty good track record when it comes to bailing out companies and turning them around. Ad at the proposed $25 to $34 billion, the price isn't as bad as compared to the finance industry, especially considering how the auto industries fund about 10% of the nation's jobs. I don't want to live in a country with a 15% unemployment rate. Especially in the rust belt.

So, yes, it's fine, but serious string, as diddlygrl put it. And then move the upper tax bracket back up to nixon-era levels to help pay for it, as well as other infrastructure-building projects.

Bail out? No. Nationalize all three. Enter in to good faith negotiations with the UAW. Start producing a "green people's car", then slap a 75% excise tax on all automobiles produced in the US by non-US companies. When Mercedes, BMW, Nissan and whoever else close up shop, tell all the good Republicans in "right to work" states that they're welcome to apply at Walmart. In the mean time fit the execs with work boots and stevedore's gloves.

We are in for some hard times and the fall and decline of the United States. The sinking value of the dollar on the world money market, massive unemployment, riots, accelerated crime, more fraud on Wall Street, the Wal Street stock market crash, and the end of our free enterprise system as we know it. Spurred initially by economic realities, an ugly mood of seperatism and exclusionism is taking hold that emphasizes differences, not similairites. Bigotry and an almost rabid hatred of other races, cultures, and religions will increasingly permeate all levels of society. It is already happening with the southern Congressmen not wanting 85% black Detroit to get a bailout. They of course have foriegn auto makers BMW, Volkswagon, ect. in their states that employ mostly white workers.

All right--it's time for a little basic education and fact-checking...
1. "Thanks to the gas guzzling monstrosities Detroit has been churning out." Guess what? Nissan built a plant for fullsize trucks here in 2003 and Toyota in 2006. Why? Because that's what Americans wanted to buy. The notion that Detroit shoved these big trucks down Americans' throats is ludicrous. If our government had a rational energy policy instead of buckling under pressure from Big Oil to keep gas cheap, then consumers would have demanded fuel efficient vehicles (as in Europe) long ago.
2. As far as jobs in Mexico, Toyota, Nissan, and VW all have plants there as well. Because of union-related issues, US automakers have a legacy cost of (depending on who you talk to) up to $2000 per car to support retirees' health care, while other automakers either build in non-union plants or import cars from countries with socialized health care. Either they move jobs to where the wages are lower or they go out of business.
3. Father Tony: Would you buy a car from a bankrupt automaker? Would your friends? Surveys so far say... maybe. If you and your circle of friends would commit to buying from a bankrupt automaker, then bankruptcy could work. But I'm guessing (and I might be wrong) that you wouldn't go that route. Would it force the unions to bite the bullet? Possibly? And, at the same time, endanger the millions of white-collar, non-executive jobs both in the auto industry and in related businesses (eg advertising).
4. Diddlygrl: All good points. Keep in mind the Detroit3 have been restructuring for the past several years, with numerous plant closures and white collar layoffs and reductions already put in place.
5. Alex Blaze: Nationalize the automakers? After our government has done such a good job managing the war? And after the cabal of southern Republican senators voted down the loan (not bailout) plan because they simply wanted to bust the union? Frankly, I wouldn't trust the US government to run the auto biz--that's why no other country in the world has successfully nationalized their auto industry.

And, yes, I do work here in Detroit--for nearly 23 of my 44 years--and am proud of it. Yes, there were screwups in the past, but those have been acknowledged. For those who think this is a Detroit3 issue, please note that...
1. Toyota has cut bonuses, forecasts (and now expects to lose money in the most recent quarter) and suspended plans to build the Prius here (with Prius sales down over 30%).
2. Honda has pulled out of Formula One racing.
3. Numerous countries, including Sweden, France, and Germany, have either promised aid or are planning aid to their native automakers.
4. BMW has said they can survive about two more years under current economic conditions.

Bottom line? This is a global economic problem and needs government assistance to avoid our current recession turning into a depression.

Well, that is the idea. And the US government has done it before and even turned a profit before letting private companies go. I don't know about a car company in the US, but France nationalized Renault for 15 years and turned that company from bleeding money to making a good profit.

The government does manage things well when it tries (like the post office). And I think it did a good job with the Iraq War, except for the fact that the war was a fundamentally flawed idea. What we're seeing now is probably the best we could expect to have done.

behindTheCurtain | December 16, 2008 12:55 AM

Bankruptcy sounds like a simple solution, but like many simple solutions, it's wrong.

Here's why:

1) it's a way to cashier all of the pension monies owed, and the brunt of that will be on the taxpayer (remember the UAL bankruptcy?).

2) it will cause a cascade effect of bankruptcies in large and small suppliers. The big 3 will be just the tip of the iceberg; there's a whole set of international ecosystems that would become corrupted as well

3. unions as we know them will be screwed. Really screwed. McJobs will become the rule of the day.

4. gas prices are a sham. This doesn't mean to justify gas hog vehicles, rather, it's artificial. NEVER believe the oil companies, but do understand carbon emissions and global warming.

5. US manufacturing needs to be revamped. We've been buying subsidized parts from China and the ASEAN countries, and they've been selling at a loss to us. We need to repatriate labor, desperately, instead of exporting labor to save 'shareholder value'.

6. The price, when compared to many different industries being subsidized, is chicken feed. We're already printing money to offset deflation of the currency. Give some to the auto makers with a mandate to straighten up their business models globally

The 'auto czar' needs to have a whip and cattle prod, and needs to use them freely. No bad metaphors here-- this person need to wield real authority. But don't let bankruptcy happen. The cascade will kill the economy for years, not to mention starting a system where failed industries are subsidized for their under-funded pension plans.

Robert Ganshorn Robert Ganshorn | December 16, 2008 6:52 AM

An important component not mentioned is the ability to retool these factories to build mass transportation vehicles and mandate their use. If you want to both save emissions and keep these companies from going under you have to develop new markets for them. Thirty years ago there was a move to have free, cost free mass transit in Indianapolis to relieve traffic congestion and get people out of their individual cars. The savings in road building, maintenance, policing, accidents and lives would be tremendous.

But there were political interests/donors that wanted to sell more cars, so we needed to build more roads to hold them, and breathe worse air.

We need to make low pollution public transport one of Obama's infrastructure initiatives and attack the problem in that manner. Also without these companies, we are knee deep in trouble to operate our military even as I would have it (a completely domestic force).

@behindTheCurtain: Very well stated.
@Alex Blaze: Perhaps my experiences with our local branch has tainted my perception, but I never thought of the US Post Office as a well-run institution. As far as Renault, I agree, but that was the FRENCH government--which, based on my research, seems to have a pretty good managed health care system, too; I'm inclined to think there's a cultural element at work. In addition, Renault, at the time, was a far simpler entity than either Ford or GM. If you held a gun to my head, I'd rather the auto industry brought in an outsider (which seems to have worked well with Mullaly and Ford, perhaps in part because Boeing, unlike Home Depot, actually BUILDS THINGS) than have the US government manage it.

the other auto makers are already saying that if the Big 3 go we are not going to survive. You might have all your opinions about what they have done here in Indiana, and I am not saying it has not hurt people in this state but the resulting effects of losing the Big 3 is like flushing every other car makers out down the toilet too and making more of a pile of unemployed people than we currently see. I know I feel the strings on the money and demands of their responsibility and accountability should be high.

The financial bail out must also be followed up on. not allowing folks to go their merry way with OUR money since it is tax payers money and anyone who is not complying with the demands should have their money taken back and let fall.

If I remember correctly this is a democrat based blog yet here I see a lack of support for an American industry and union workers.I'm actually surprised that no one thought to suggest taxing the foreign builders or forcing them to unionize there American plants to be competitive with the American companies.Toyota,Honda and Nissan and other foreign manufacturers have been given an unfair advantage for years and I think an unearned reputation for building better quality cars then America.Honda has the single highest recall average of any active manufacturer with an average of 27 per model Ford and Chrysler average 21.Chrysler the smallest of the three builds more different models then Toyota,Honda and Nissan combined yet has a lower recall average then Honda I'd say that's pretty good.Both the Nissan Titan and the Toyota tundra full size trucks are gas hog toilets and have you ever tried to use an all aluminum motor for serious work.Pulling heavy loads cause engines to heat up aluminum warps under these conditions.The previous Tundra has premature frame rust issues and again I wouldn't even began to consider owning one for construction work or towing.I say bail out the big three make them keep good union jobs in America where possible and tax them at the same rate as imports when they import cars into the US.Then tax the crap out of the foreign manufacturers so there cost equals the big three legacy costs and all and force them to unionize there American plants.Then and only then will the big three be able to build the small fuel efficient cars some Americans prefer in the Us competitively.

Robert Ganshorn Robert Ganshorn | December 18, 2008 2:49 AM

And what about the European, Asian and South American operations of the Big three? Should they be forced to become UAW members? Will the governments of other countries not slap taxes on our exports to them? That is exactly what made the "Great Depression" of the 1930's happen.

Robert who cares about workers outside the USA their trying to take our jobs for less money and our industries,Government and companys like Walmart are helping them.What about the time when America wouldn't do business with Communist Country's? Why should we think it's our responsibility to fix others countrys when their unwilling to do it themselves? Companys outside the US wouldn't have to unionize their workforces including those factories owned by the big three but all would be taxed to make their products competively priced with made in USA goods.Other Countrys can tax our goods how they see fit but we can also deny them products like high tech items,foodstuff's, mechanical goods and metals.If other Country's goods are better than ours than being competitively priced shouldn't hurt them if anything it would increase profit and bring more money to the country of origin who could also increase the tax on their exported goods everybody gets a little more money and the consumer gets even competition for their buck.

Dawn Storrud | December 17, 2008 7:32 PM

I do not think we should bail out the big three, and I did not think we should bail out the banks. It is unfortunate, but many times union jobs have been lost due to the extreme incompetance of management. The only way to ensure good management is to allow bad management to go under. Investors will only police managers when their pockets are being fleeced. Any bailout funds should go directly to the laborers affected by the folding of banks and the big three.
Retraining, refinancincing of housing, and financial and health support while they transistion to new skills and jobs should be our aims.
Incompetent managers should be sued by their stockholders for lost profits and capital. After all it was the stockholders responsibility to oversee the actions of their managers and corporate leadership.
We might even try killing every limited liability corporation and returning to a time when corporate criminal behaviors were tried in public courts.