Should the big3 get a bailout??

[Charade]

OK...as you know it takes two to tango..all of these things are collectively bargained..the workers in auto plants are not living high on the hog my friend. These people are working class people. As I stated before in another post labor costs are about 10 percent of total costs... It is not the main problem...glutoness reliance on giant urban assault vehicles, and smaller cars that don't get the mileage are the true problem.

We do agree that the UAW needs to be a partner in this and make appropriate concessions

I never implied anyone was living "high on the hog". I said that the actual costs for employees (both active and retired) at the big 3 is almost twice the competition. The big 3 also employ more than twice as many workers as the competition. So even if you factor OUT the cost of retiree benefits AND assume that both the big 3 and their competition workers wages are very close, it STILL takes twice as many workers at the Big 3 as it does their competition to build lousy (as you say) cars. What's wrong with this picture?

 

[gottaluvPluto]

I agree. My 2001 Buick Park Avenue is still consired a baby since it only has 74,000 miles on it. It runs like dream. It gets 24 MPG in the city and 28 on the highway. We plan to leave it Florida after snow bird season and buy a new Buick this spring for up north. I just cannot bear to trade it in. It has been a great car and should last a lot longer.

Just my 2 cents

I guess I have bad luck when it comes to the big three. I have had three Fords, two Chevys and one GM and they all caused me trouble, lots of trouble. I still have one of my Fords, but barely drive it due to it always breaking down and the customer service for FORD is horrible. That is why I now buy Honda. I have a 1996 Accord and it has never been in the shop for repairs and it is still running strong. I am also a person who loves to buy American, however, when it comes to a car, I need something reliable and to me that is not a FORD, GM or a Chevy.

 

[Colleen27]

I think I'm generally a little more mercenary than this. I buy based on quality and price first. I feel that if a company makes a superior product, they should be rewarded for it. I don't buy out of a sense of sentimentality or obligation.

I don't think of it as sentimental at all. It is about what business practices I want to support, and where I want my money to end up. I don't want to save a few bucks so badly that I will choose a cheap product made by foreign workers paid a pittance to further enrich the already wealthy over a more expensive American-made product. And for me it also ties into environmental issues, because the fuel used in shipping is as substantial a concern as the fuel burned by personal vehicles and locally/domestically made goods have less miles to travel to get to me.

Quality does matter too, but for the most part I find that works in favor of American products. With small children in the house, I'm not comfortable buying anything made in China these days anyway (which makes for a bit of a challenge at the toy store! ). And when it comes to most food items, there's no comparing the quality of locally produced to imported!

 

[Charade]

Conservative analysts have chosen to divide the automakers' total personnel expenses by the number of active workers. This means that $70 per hour statistic includes all pensions and benefits being paid to retirees - in other words, other people.

It would be akin to adding all retired persons SS and dividing by the number of woring persons and then including that portion of SS in your hourly pay.

It is not representive at all!

Just my 2 cents.

What are we trying to represent? We're talking actual costs, not some phantom number. It doesn't make the cost any less real. So either the Big 3 need to cut loose a lot of active workers or they need to cut loose retired workers pensions/benefits.

I think we've already determined that active workers at both the Big 3 and the competition make about the same hourly wage. Fine. But the Big 3 employ more than twice as many active workers than their competition. That translates directly to the labor cost of each vehicle to be as twice as much as their competition. For most corporations, labor is the number one cost.

 

[ols386]

What are we trying to represent? We're talking actual costs, not some phantom number. It doesn't make the cost any less real. So either the Big 3 need to cut loose a lot of active workers or they need to cut loose retired workers pensions/benefits.

I think we've already determined that active workers at both the Big 3 and the competition make about the same hourly wage. Fine. But the Big 3 employ more than twice as many active workers than their competition. That translates directly to the labor cost of each vehicle to be as twice as much as their competition. For most corporations, labor is the number one cost.

Don't say that....I receive a pension from there, and it's a big chunk of my income. Ouch - that would hurt real bad.

 

[Charade]

Don't say that....I receive a pension from there, and it's a big chunk of my income. Ouch - that would hurt real bad.

 

[ntsammy5]

Don't say that....I receive a pension from there, and it's a big chunk of my income.

PBGC will cover that up to about $50,000 annually - they'll probably be insolvent but the government will bail them out too.

As for medical benefits, bankruptcy courts are very, very reluctant to mess with retiree benefits, particularly medical. Of course that doesn't mean they won't, just that they're reluctant to.

 

[ols386]

PBGC will cover that up to about $50,000 annually - they'll probably be insolvent but the government will bail them out too.

As for medical benefits, bankruptcy courts are very, very reluctant to mess with retiree benefits, particularly medical. Of course that doesn't mean they won't, just that they're reluctant to.

OK, thanks.

 

[minnie61650]

What are we trying to represent? We're talking actual costs, not some phantom number. It doesn't make the cost any less real. So either the Big 3 need to cut loose a lot of active workers or they need to cut loose retired workers pensions/benefits.

I think we've already determined that active workers at both the Big 3 and the competition make about the same hourly wage. Fine. But the Big 3 employ more than twice as many active workers than their competition. That translates directly to the labor cost of each vehicle to be as twice as much as their competition. For most corporations, labor is the number one cost.

I respectly disagree. I do not think the cost of the health insurance and retirement benefits should be included in the hourly pay figure of the current UAW worker.

Many retired hospital workers have pensions and /or health care benefits. The cost of a hospital stay will have those costs included in the stay but we do not include the retired nurses, doctors, and other health care providers added into the hourly salary of the active nurses, doctors, and other health care providers.

The same goes for teachers, or for any other company that has benefits.

Yes, we often include the actual cost of the health care that our employer is paying for health care in our total salary as health care is a true benefit but do we think to include a portion of the benefits of the workers who have retired form the company/business/service we are working for and include that portion as part of our hourly pay?

I think Not!Then why is fair to say UAW workers are paid $70 an hour when that figure is NOT TRUE?

A better and more accurate way is to describe how much of a percentage of the cost of a product is used to pay current labor, current benefits, and the retired benefits of previous laborers.

Just my 2 cents?

 

[LuvOrlando]

I just read this article in the Wall Street Journal.

http://online.wsj.com/article/SB122875608562688401.html

First, how can there be so many words on a page that don't say anything?

Second, as I read this I got the distinct impression of dumb old Uncle Sam giving his ner' do well deadbeat dad nephew his life savings 'for the wife & kids' instead of giving it to the wife & kids directly. Everyone knows what will come of this, yet they are steaming ahead towards disaster anyway.

I, for one, am losing all hope in our governments ability to help anyone anywhere. This money is not going to help a single person who is already in trouble, there will not be a hiring frenzy nor are there any requirements to prevent lay-offs, further there is no reason to think any of this will work out in the end, its as big a gamble for our government as if they were novice venture capitalists. Speaking of which, if this is all such a sure thing why aren't there any investors looking for the deal of a lifetime....

 

[Charade]

I respectly disagree. I do not think the cost of the health insurance and retirement benefits should be included in the hourly pay figure of the current UAW worker.

Many retired hospital workers have pensions and /or health care benefits. The cost of a hospital stay will have those costs included in the stay but we do not include the retired nurses, doctors, and other health care providers added into the hourly salary of the active nurses, doctors, and other health care providers.

The same goes for teachers, or for any other company that has benefits.

Yes, we often include the actual cost of the health care that our employer is paying for health care in our total salary as health care is a true benefit but do we think to include a portion of the benefits of the workers who have retired form the company/business/service we are working for and include that portion as part of our hourly pay?

I think Not!Then why is fair to say UAW workers are paid $70 an hour when that figure is NOT TRUE?

A better and more accurate way is to describe how much of a percentage of the cost of a product is used to pay current labor, current benefits, and the retired benefits of previous laborers.

Just my 2 cents?

I thought I posted twice that I don't consider the direct cost of active labor for the UAW is $73 hour.

But I agree with your last sentence. You have to consider all costs. But even if you consider just active labor costs AND assume they are similar between the Big 3 and their competition, the Big 3 STILL employ twice as many workers than their competition. That's a recipe for failure. As we can see.

 

[minnie61650]

I thought I posted twice that I don't consider the direct cost of active labor for the UAW is $73 hour.

But I agree with your last sentence. You have to consider all costs. But even if you consider just active labor costs AND assume they are similar between the Big 3 and their competition, the Big 3 STILL employ twice as many workers than their competition. That's a recipe for failure. As we can see.

Thanks for explanation.
I see your point.

 

[JMD]

Should they get one?

Absolutely not.

 

[minnie61650]

Rick Wagoner may end up being the "Sacrificial Lamb" in the bridge loan deal. This article is a nice tribute to the kind of person Mr. Wagoner really is:

Wagoner's Mr. Nice Guy style could cost him -- but it shouldn't

BY MARK PHELAN • FREE PRESS COLUMNIST • December 9, 2008

It's not in Rick Wagoner's character to throw people under the bus to save himself or advance his goals, so General Motors Corp.'s chairman and chief executive officer may be forced to give up the wheel and walk away from the company he has led since 2000.


Some members of Congress have suggested that one or more of the Detroit Three's CEOs should step down in a ritual sacrifice before the industry gets financial aid to see it through the economic meltdown. Wagoner looks like the leading candidate.

Alan Mulally has been on the job at Ford Motor Co. for only a couple of years, and his leadership is responsible for most of what's right with the company. He presciently arranged billions in credit before the global finance system ground to a halt. He saw the wisdom in building more small, fuel-efficient cars to reduce the company's reliance on pickups and SUVs. He's safe.

Bob Nardelli has been running Chrysler LLC just over a year, and there's every evidence that he wants nothing more than to lose the job. Cerberus, the private-equity group that bought Chrysler from Daimler, doesn't appear to have any goal beyond rapidly shrinking Chrysler to the point that some other automaker will buy it.

That leaves Wagoner's head on the chopping block.

Why he should stay
He deserves better. Yes, GM's transition to become a competitive company with a modern, fuel-efficient lineup has been torturously slow, but nearly all the progress that has been made came under Wagoner's leadership.

GM offers more vehicles that top 30 m.p.g. in EPA fuel-economy tests than any other automaker. It has won the coveted North American Car of the Year Award two years in a row, beating cars like the Honda Accord and Toyota Camry along the way.

GM is finally using its global resources to develop good small cars, a move that will put the fuel-efficient European-engineered Chevrolet Cruze compact into production in Lordstown, Ohio.

None of this happened by accident.

Some other things to consider
Perhaps it could have been accomplished faster. Maybe Wagoner should have pounded the table, issued my-way-or-the-highway decrees and fired a few hidebound executives. That's not who he is. A team player who directs praise to others and accepts blame as his own, Wagoner painstakingly built consensus and a new, better structure for how GM operates.

Maybe there's someone else at GM who can run the company better than Wagoner. Maybe there's another brilliant industry outsider like Mulally, an engineer who combines a hard-eyed understanding of design and manufacturing with the charisma to light up a room. Maybe that person will take the job for the $1 a year Wagoner just committed to.

Maybe people like that grow on trees, but I doubt it.

Before members of Congress ask for Wagoner's head, they should ask themselves: What other CEO gives GM a better chance of thriving, employing Americans and repaying the taxpayers' loan?

Because if they throw Rick Wagoner under the bus, they're responsible for whatever happens at GM next.

 

[LuvOrlando]

Shouldn't they all get fired, not just the CEO's but everyone on top who was involved in the gross mismanagement of these organizations? Why couldn't we make the money based upon the contingency that the executives get a vote of 'no confidence' by investors, ousted and replaced?

I am 100% behind whatever is necessary to make this choice as un-palatable for the executives as possible. If its my tax money they want then I should get a say just like the stockholders do, or are my ownership rights less relevant?

 

[ntsammy5]

If its my tax money they want then I should get a say just like the stockholders do, or are my ownership rights less relevant?

You do get a say as do we all - that's why we elect Representatives and Senators ---

 

[LuvOrlando]

You do get a say as do we all - that's why we elect Representatives and Senators ---

In theory, yes, but they don't seem to be listening to their constituents. Even the poll here has against at 20% over in favor of the bailout... our representatives do not care what we want.

 

[c4a]

Ford says that they do not need the "loan".

Ford Motor Company Statement on Proposed Congressional Automotive Industry BillDEARBORN, Mich., Dec. 8 – As we told Congress, Ford is in a different position. We do not face a near-term liquidity issue, and we will not be seeking a short term bridge loan. But Ford fully supports an effort to address the near-term liquidity issues of GM and Chrysler, as our industry is highly interdependent and a failure of one of our competitors could affect us all.

link

FORD CEO ALAN MULALLY TESTIFIES ON CAPITOL HILLNOTE TO EDITOR: Today, Ford President and CEO Alan Mulally testified before the Senate Committee on Banking, Housing and Urban Affairs. Mr. Mulally's complete written testimony is available at: http://media.ford.com. The following statement was prepared for delivery:

WASHINGTON, D.C., Dec. 4 – "Mr. Chairman, Senator Shelby, and members of the Committee. Since the last hearing, I have thought a great deal about the concerns you expressed. I want you to know I heard your message loud and clear.

On Tuesday, you received Ford's detailed and comprehensive business plan, and I appreciate the opportunity to return here today to share Ford’s vision and progress in becoming a profitable, growing company.

You were clear that our business model needs to change. I agree. And that's exactly why I came to Ford two years ago to join Bill Ford in implementing his vision to transform our company and build a greener future using advanced technology. Let me share with you what we have done to change from how we used to do business to how we do business now.

It used to be that we had too many brands. Now we have a laser focus on our most important brand: the Ford blue oval. In the last two years, we sold Aston Martin, Jaguar and Land Rover – and reduced our investment in Mazda. And this week, we announced we are considering a sale of Volvo.

It used to be that our approach to our customers was: If you build it, they will come. We produced more vehicles than our customers wanted and then slashed prices, hurting the residual values of those vehicles and hurting our customers. Now we are aggressively matching production to meet the true customer demand.

It used to be that we focused heavily on trucks and SUVs. Now we are shifting to a balanced product portfolio, with even more focus on small cars and the advanced technologies that will drive higher fuel economy in all of our vehicles.

It used to be that our labor costs made us uncompetitive. Now we have a ground-breaking agreement with the UAW to reduce labor costs, and we appreciate the UAW's continued willingness to help close the competitive gap.

It used to be that we had too many suppliers and dealers. Now we're putting in place the right structure to maximize the efficiency and the profitability for all of our partners.

It used to be that we operated regionally – European cars for Europe. Asian cars for Asia. American cars for the U.S. market. Now we are leveraging our global assets, innovation, technology, and scale to deliver world class products for every market.

It used to be that our goal was simply to compete. Now we are absolutely committed to exceeding our customers' expectations for quality, fuel-efficiency, safety and affordability.

This is the Ford story. We are more balanced. We are more efficient. We are more global. And we are focused. In short, we are on the right path to becoming a profitable, growing company.

We have moved our business model in a completely new direction, in line with the most successful companies – and competitors - around the world. And as a result of our progress, we made a profit in the first quarter of this year. Unfortunately, we all are facing a severe economic downturn that has slowed our momentum.

Despite this downturn, Ford does not anticipate a near-term liquidity crisis. In fact, we expect our automobile business to be profitable in 2011. But we do support a government bridge loan because it is critically important to the U.S. auto industry.

Specifically, Ford requests access to $9 billion in bridge financing – something we hope we will not need to use. Instead, as we continue to drive change in our company, this line of credit will serve as a critical safeguard, if events require it. And if we did need to access this loan, we would use the money to continue our aggressive transformation and restructuring.

Ford is an American company and an American icon. We are woven into the fabric of every community that relies on our cars and trucks and the jobs our company supports. The entire Ford team – from employees to shareholders, suppliers to dealers – is absolutely committed to implementing our new business model and becoming a lean, profitable company that builds the best cars and trucks on the road for our customers. There is a lot more work to do, but we are passionate about the future of Ford.

In fact, we invite you to visit us in Dearborn to kick the tires, look under the hood and talk to our employees. We hope you will join us and see for yourself the progress we are making to develop the vehicles of the future."

link

Makes me question...then why was Ford asking for a 9 Billion dollar loan if they didn't need it?

 

[Ciao Mickey]

Hell NO.

As someone who sat for hours in gas lines back in 1973, I know that the US auto industry has learned zilch, nothing, nada. They've had 35 years to change their evil ways and haven't.

The people who purchased those huge gas guzzling behemoths are equally to blame for the gas crisis that exists today.

I could never quite figure out why a person who has 1 or 2 kids needs a freaking big-a$$ SUV like a Hummer or Expedition to drive their little ones around town. Especially when half of them can't drive to save their life.

 

[LisaR]

Ford says that they do not need the "loan".


Makes me question...then why was Ford asking for a 9 Billion dollar loan if they didn't need it?

Ford made it VERY clear from the beginning that they did NOT need a loan immediately. They have made it VERY clear that they have tried to secure a loan in the past 6 months from the banking industry and the banking industry has REFUSED to loan them the money. If the economy continues in this downward spiral, Ford will need a bridge loan. If it turns around, they will not. It is called planning ahead.

Ford met with Congress for two reasons. 1.) They wanted to secure a loan from the government to be used in 2010 IF it was necessary. 2.) They were there to show support for GM and Chrysler because while some seem to think the effects of one of them going out of business wouldn't be a big deal, Ford understands that that could fatally hurt the rest of the industry.


For everyone whining that these guys need to figure out how to make ends meet on their own, I would think people would be applauding Ford for doing just that. But, no........as usually, any of the Big 3 is damned if they do, damned if they don't.