Auto Bailout Talks Collapse

[Galahad]

This is like saying I'm responsible for the Iraq war because Bush is president, though, isn't it?

Nope. It's like saying that Senators are responsible for the Iraq war that they voted to allow - which they are.

 

[ScottJ]

Yes.

You would be wrong. Honda USA parent is Honda out of Japan.

 

[Galahad]

I am speaking of the upper management and executives that call all the shots for the business model itself. And if these same people found that the unions were to burdensome are they not responsible for the decision to sign the contract as well?

Sure they are. but if I, for example, go to buy a car I can't afford but I convince the dealer to finance me anyway, it is at least as much, and IMO more, my fault that I can't pay to loan than it is the dealer's. Union executives are not stupid enough not to know the implications of their demands. In fact, they boldly make those demands without regard to what it will do the the company and the industry. It's not their problem. They did what their job was - to get as much as they can, reasonableness be damned.

 

[Galahad]

You would be wrong. Honda USA parent is Honda out of Japan.

Still a different company in a different company with different "rules" - the same rules that the big three have to deal with.

 

[jodifla]

No, it's like saying you are responsible for your own actions and if someone doesn't help you out, it's now somehow that someone else's fault.

If everything around you is imploding, it doesn't really matter what your own actions are, you get sucked down with the mess.

I don't work for an auto company. I could skate by perhaps pretty unaffected personally -- time will tell. But neighbors and city and county and state will be devastated. Some people have empathy, and others lack it, it seems.

I guess they underlying current is: As long as it's not me!

 

[jodifla]

Still a different company in a different company with different "rules" - the same rules that the big three have to deal with.

The parent Honda takes care of its U.S. operation. It's like saying my son doesn't depend on from my job because he doesn't work there directly.

 

[ScottJ]

Still a different company in a different company with different "rules" - the same rules that the big three have to deal with.

Ummm, OK. That's like saying Adam Opel isn't GM or Holden isn't GM. There is a reason why Japanese auto-makers keep their imports at about 52% or better. I wouldn't call it a direct subsidy but they ALL of Honda benefits from the VAT & Japan's exchange rate manipulation.

Honda & Toyota make a ton of money based on exchange rates alone, it's always in their year ends.

 

[Galahad]

The parent Honda takes care of its U.S. operation. It's like saying my son doesn't depend on from my job because he doesn't work there directly.

No it's not. GM runs operations in other countries and is bound by the rules in those countries. In some cases the cost of employing people in those countries is higher than in is here and in some cases it is lower. But in no cases does it have anything to do with how they compete here. It is an expense that they either choose to take on or choose to sell.

 

[ScottJ]

No it's not. GM runs operations in other countries and is bound by the rules in those countries. In some cases the cost of employing people in those countries is higher than in is here and in some cases it is lower. But in no cases does it have anything to do with how they compete here. It is an expense that they either choose to take on or choose to sell.

Are you serious? Really? Come on? What?

The foreigns are still importing 52% or better yet I've never heard one person say my car was made in Germany or Japan. Also, those imports are sold as Honda USA. This is where rate exchange & VAT add a huge subsidy to Honda USA.

 

[Master Mason]

1) I don't have a side. The only party I've ever registered for in my life is Republican.
2) Count again. There are not 50 Democrates in the Senate and the Republican's have already said they'll fillibuster.
3) Bush has already said he'll give them the money which will be without the strings... so it is just political grandstanding.

I was actually refering to the bank bail out, which could have been passed the first time if the dems had voted for it, instead it was they that wanted to add an extra 100B in pork to it.

 

[ScottJ]

If the government would fix the VAT & demand Japan adjust it's exchange rate to true value. The EU is currently taking Japan & South Korea to task regarding their exchange rates. The foreign would have to make almost all of their cars here. In addition, their financial statements would look like the Big 3s.

 

[amyhughes]

Correct me if I'm wrong Jodi, but haven't you stated you own a Honda?

http://www.disboards.com/showthread.php?t=2029041

 

[Colleen27]

I guess they underlying current is: As long as it's not me!

Well that's nothing new, now is it? I think that pretty well sums up the general American philosophy of life these days.

 

[jodifla]

Correct me if I'm wrong Jodi, but haven't you stated you own a Honda?

http://www.disboards.com/showthread.php?t=2029041

I own a Honda, and a Buick. We just sold our other Buick last year.

In my family, we've owned about 90 percent American cars over the years, and 10 percent foreign. Both of our cars are over 12 years old...we don't replace them often.

 

[kaytieeldr]

So I'll say it again...we got a trillion bucks to blow in Iraq then we have a few billion to stabilize the auto industry.

But we DON'T have a trillion bucks - to spend on anything. The net national debt is quickly approaching six trillion dollars. Debt. That means money we OWE, not money we HAVE.

 

[jodifla]

But we DON'T have a trillion bucks - to spend on anything. The net national debt is quickly approaching six trillion dollars. Debt. That means money we OWE, not money we HAVE.

And with millions of unemployed workers, who will pay the taxes needed to get out of debt.

The countries who are doing best are those that MAKE things and SELL them to other countries. But we're about to let go of one of the best things we make and sell abroad. GM and Ford compete well in foreign markets.

 

[minnie61650]

Where does your state rank? How many may lose their jobs in your state?

Motor city is the U.S.A.
It's not just about Detroit. The auto industry employs workers in every state - including Alaska and Hawaii. More than 2 million jobs - from manufacturing, to parts, to auto dealers - depend on carmakers for their pay.

Note: As of December 2, 2008
Source: Center for Automotive Research


State Rank .Total jobs... Auto assembly jobs Auto parts jobs Auto sales jobs Average salary


Michigan 1. 241,883... 57,997 144,413 39,473 $65,119
California 2. 189,749...7,430 42,741 139,578 $17,590
Ohio 3. 159,061... 21,974 89,244 47,843 $44,319
Texas 4. 137,191 ... 9,104 28,487 99,600 $17,243
Indiana 5. 111,665 ... 12,622 71,403 27,640 $46,792
Florida 6. 99,199 ... 915 12,083 86,201 $9,189
Illinois 7. 93,763 ... 7,227 35,936 50,600 $26,281
New York 8. 82,357 ... 607 28,792 52,958 $54,826
Tennessee 9. 79,424 ...10,636 42,415 26,373 $35,744
Pennsylvania 10. 76,759 ... 533 17,128 59,098 $13,619
Kentucky 11. 65,468 ... 13,664 37,621 14,183 $44,199
North Carolina 12. 59,276 ... 522 20,662 38,092 $18,158
Missouri 13. 55,722 ... 11,122 17,935 26,665 $35,267
Georgia 14. 54,954 ...1,966 14,960 38,028 $18,266
Alabama 15, 49,346 ... 10,519 20,189 18,638 $35,165
Virginia 16. 47,485 ...1,777 9,978 35,730 $16,005
Wisconsin 17. 46,488 ...4,037 15,699 26,752 $26,782
New Jersey 18. 43,294 688 ... 7,100 35,506 $15,446
South Carolina 19. 41,285 ... 4,773 18,863 17,649 $30,624
Arizona 20. 34,973 ... 67 5,886 29,020 $10,564
Washington 21. 31,343 ... 197 5,788 25,358 $11,439
Maryland 22. 30,688 ... 205 4,192 26,291 $9,634
Minnesota 23. 29,598 ... 832 6,059 22,707 $18,929
Massachusetts 24. 28,464 ,,, 178 3,839 24,447 $8,995
Iowa 25. 24,634 ...57 10,611 13,966 $22,512
Colorado 26. 23,510 ...55 3,408 20,047 $12,626
Oklahoma 27. 21,484 ... 2,037 5,048 14,399 $16,582
Connecticut 28. 21,086 ...166 5,734 15,186 $16,790
Oregon 29. 21,067... 115 4,909 16,043 $14,698
Mississippi 30. 20,879 ...3,640 7,288 9,951 $26,603
Louisiana 31. 19,404... 82 2,139 17,183 $7,279
Kansas 32. 19,036 ...2,984 4,922 11,130 $23,484
Arkansas 33. 17,142 ...0 6,981 10,161 $17,316
Utah 34. 15,684 ...10 5,442 10,232 $18,696
Nebraska 35. 13,650 ...15 5,303 8,332 $19,583
Nevada 36. 13,041 ...65 1,511 11,465 $9,232
West Virginia 37. 8,966 ...0 2,295 6,671 $17,115
New Mexico 38. 8,763 ...0 842 7,921 $5,604
New Hampshire 39. 8,329... 0 797 7,532 $7,048
Idaho 40. 7,475 ...61 1,049 6,365 $8,396
Maine 41. 6,864 ...0 636 6,228 $7,081
Delaware 42. 6,600 ...946 1,036 4,618 $24,380
North Dakota 43. 5,539... 212 1,236 4,091 $14,602
Montana 44. 5,410 ...0 1,020 4,390 $10,730
South Dakota 45. 5,194 ...0 1,104 4,090 $12,687
Hawaii 46. 4,968... 0 393 4,575 $2,837
Vermont 47. 4,143... 0 1,145 2,998 $12,138
Rhode Island 48. 4,123 ...0 476 3,647 $7,040
Wyoming 49. 2,817 ...0 287 2,530 $6,907
Alaska 50. 2,470 ....0 133 2,337 $2,536
District of Columbia 51. 242 ...0 20 222 $48,439



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[MarkBarbieri]

I keep hearing some arguments that don't seem convincing.

1) We spent $X on other stuff (Iraq, AIG, etc), so why can't we spent a few billion dollars on the auto companies. The fact that we spent money wisely or unwisely in the past should not have a bearing on whether we spend money on the auto companies. If we wasted money in the past, we shouldn't waste more in the future. If the past spending was wise, it doesn't make any future spending proposal wise.

2) If GM/Chrysler/Ford fail, their suppliers will fail and drag down the entire US auto industry. While some suppliers will definitely fail, the demand from the remaining auto manufacturers in the US will keep suppliers in business. Some will shrink. Some will go bankrupt and re-organize as smaller companies supplying fewer customers. When there is a demand for goods or services, smart people find a way to meet that demand.

3) If the US auto companies go bankrupt, it will drag down millions of others. This is true to an extent, but it is a very one-sided portrayal. It will also liberate a huge amount of resources from inefficiently producing products that aren't in demand. Those resources (factory workers, engineers, factories, real-estate) won't vaporize or sit permanently idle. They'll get used for other things that are profitable. The adjustments will be painful for some involved, but that "creative destruction" is why capitalist economies outperform planned economies. The market will direct the resources to where there is a demand for them. Propping up a money-losing industry will lock those resources into over producing cars relative to the demand for them while taking resources from industries that are providing good and services that are actually in demand.

 

[MarkBarbieri]

Where does your state rank? How many may lose their jobs in your state?

My state ranks 4th and I think we'll gain jobs in the long run from the collapse of GM. I don't think that GM's failing will have much of an effect on the demand for cars. Someone will need to make those cars. My state has a flexible, inexpensive workforce that has a history of working with rather than against management. It's why so much manufacturing has moved here from states where inflexible labor rules make manufacturing more expensive.

 

[MarkBarbieri]

I invested in Honda for about a decade. I read my annual reports pretty carefully. We made good money in the US most years. Honda built plants in the US and around the world because they wanted to manufacturer in local markets. That helped insulated them from exchange rate risks, political risks (tarriffs and quotas), and local economic conditions.

Honda's US plants were significantly more effecient than the big three. The biggest difference wasn't in unit costs per labor; instead it was primarily in the amount of labor required to build a car. Honda's manufacturing got more done with fewer man hours of work.

Another big advantage was that Honda could easily shift production between models. That allowed them to shift as demand for models changed from our forecasts. It also allowed them to introduce updated models more frequently.

Finally, Honda could sell its cars for a significant premium. Customers felt that they offered higher quality and better resale. Because they perceived the long term costs of the car as being lower, people were willing to spend more upfront.

I still think that Honda is a solid company with good long term growth prospects. I sold because I wanted to reduce my exposure to individual stocks and because I thought that the auto sector was too crowded and that competition was going to hurt profits for a long time.