The Big 3 Auto bailout

[minnie61650]

Well, now the Big 3 are subsidized by the US Government.

Loans not subsidies.

Also do not forget that the Canadian goverment has also offered their help.

Canada offers $4 billion in loans to automakers

http://cnews.canoe.ca/CNEWS/Canada/2008/12/20/7813216-cp.html

 

[minnie61650]

If anyone is interested I found the 37 page PDF plan that GM submitted to congress on December 2,2008 concerning GM's plans for long term viability.

It is titled:
Restructuring Plan for Long Term Viability

Submitted to Senate Banking Committee& House of Representives Financial Sevices Committee

http://gmfactsandfiction.com/wp-con...estructuring-plan-for-long-term-viability.pdf

I found it to be very interesting.

 

[edwardsfire]

The UAW will have to make HUGE concessions soon or no bailout will work.
That is just a fact.
Honda, Toyota and most others are weathering this storm quite well. NO layoffs, NO layoffs. They have slowed production and employees are "doing other things" i.e. cleaning and some did take VOLUNTARY vacations but no layoffs.
Im telling ya, If the big 3 dont do a 180 and the UAW soon, they will be no more.
When Honda, Toyota and most other manufacturers are building them here...
folks are happy to be "buying American".
You dont see GM,Ford or Chrysler building new plants very often, Honda, Toyota, VW and Hyundia are or just did build new plants here, employing American workers to whom, pay taxes and participate in commerce.
to me, Honda, Toyota,etc are just as American as GM,Ford.
If you disagree, ask the 4000 Honda Employees at Marysville, Ohio maikng the Accord. Or the 5000 plus in Ky., making the Toyota Camry...The list goes on.
We all have our opinions and buy what we wish..But in the end, The big 3 and the UAW must adapt, and i dont see them doing it, or they will die.

 

[minnie61650]

I would question how much lower of a wage was accepted by the worker in exchange for healthcare after retirement.... .

I do not know how much lower of a wage was accepted by the worker in exchange for healthcare after retirement but It was mentioned in this article about Employee rights that I found to be very interesting:

Your Employee Rights


Q: Can a Corporation Legally Cut Health Benefits for Retired Union Members Without Negotiating?

A: Probably not, but....

If the question concerned union members currently on the corporation's payroll, the answer would be an unequivocal "no": Section 8(d) of the National Labor Relations Act requires private sector employers to bargain in good faith over the terms and conditions of employment. Healthcare benefits are clearly among the "mandatory" issues an employer is legally required to negotiate for current employees.


But there's the rub: since retirees are not current employees, their healthcare benefits may not be regarded as a mandatory subject of bargaining. The Supreme Court has in fact ruled that pension and healthcare benefits for retired workers are "permissive" rather than mandatory subjects of bargaining and employers are not legally required to negotiate benefit cuts.


It gets murky, though, because Section 301 of the National Labor Relations Act stipulates that the union and the employer can bring suit in federal court for violations of the collective bargaining agreement. Citing Section 301, some retirees from unionized companies have successfully sued their former employer on the grounds that unilateral changes in their benefits violated vested contract rights. Others have also brought successful suits under the Employee Retirement Security Act. (See Bruce Feldacker, Labor Guide to Labor Law, Fourth Edition, p. 209).


Professor Ellen Dannin of Wayne State University's Law School makes a strong case for the contractual rights of UAW-GM retirees threatened with cuts in their negotiated healthcare benefits:


" GM's hourly retirees are receiving these benefits because they already paid for them. They received less in pay or other benefits while they were employees— and current employees are receiving less— as a trade-off for health insurance as retirees. Had they known that GM would renege on them, they would have negotiated and received higher wages in the past. So GM paid lower wages and now wants to shirk when its time to pay."


GM can get away with this when it cuts healthcare benefits for its retired salaried workers because they have no collective bargaining agreement protecting their benefits. GM unilaterally gave its salaried retirees healthcare as a gift, and it can now unilaterally renege on that promise. But UAW retirees have more than a promise: they have a collective bargaining agreement.


If GM tries to violate that contract, it is likely that the law will favor the retired union members who bring suit— though federal judges appointed by pro-corporate presidents can interpret the law to suit their anti-labor bias. "The one thing anyone can predict accurately," as Professor Dannin says of the legal ambiguities in the case, "is that this litigation will be a lawyer's delight."

Link:

http://www.laborstudies.wayne.edu/tools-info/RetHealthBen.html

 

[rascalmom]

The Detroit 3 have been taking steps to get to the "root of the problem."(Your words. Not mine)

As part of its 2007 contract with the automakers, the UAW agreed to a two-tier wage system that pays new hires $14 per hour. Over the years, the UAW also has made concessions on wages to help pay the health costs of retirees and their dependents.

The Detroit companies will remove billions of dollars in financial obligations from their books when the U.A.W. health care trust takes over responsibility for the medical bills of retirees in 2010.

Interesting, so how much will the huge costs to be paid by the Big 3 to fund the VEBA trust save the automakers in annual costs?

http://www.detnews.com/apps/pbcs.dll/article?AID=/20081105/AUTO01/811050385

The shift to a VEBA to pay for retiree health care is the largest part of the 2007 labor contract that will reduce GM's annual costs by $3 billion starting in 2010.

So with a $3 Billion dollar annualized savings, how much would that offset losses for the 2nd quarter 2008?

http://money.cnn.com/2008/08/01/news/companies/general_motors/index.htm

NEW YORK (CNNMoney.com) -- General Motors reported a huge second-quarter net loss Friday of $15.5 billion, after restructuring and other charges, as the automaker's run of troubles continued.

The automaker lost $27.33 per share in the quarter, compared to a profit of $784 million, or $1.37 per share, a year earlier.


Even factoring out those charges, GM posted a stunning $6.3 billion loss on operations.

Maybe we should look to the 1st quarter 2008?

http://www.usatoday.com/money/topstories/2008-04-30-459238858_x.htm

DETROIT — General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major parts supplier and plummeting sales of sport utility vehicles and pickups.

Or how about fiscal year 2007?

http://www.autoblog.com/2008/02/12/gm-announces-2007-loss-and-new-buyouts-for-entire-union-workforc/

Let's get the hard numbers out of the way. Today General Motors revealed that excluding special items, it posted a net loss of $23 million in 2007. Add in some funky deferred tax asset charge, and the automaker's net loss last year rises to $38.3 billion.

These numbers don't even reflect the last two quarters of 2008 - which will probably show record losses. So we all realize the Big 3 are paying our billions in order to be able to save those annual costs of $3 billion?

$25 billion is due from GM immediately, with several more expected in the future. The money is supposed to be coming from a concession by the UAW workers to forego a 3% wage increase. An increase? Really??

This all reminds me of the story of the Golden Goose.

 

[DVCPAT]

With all due respect, the quality and dependability of a Chrysler or Ford can't compare to that of a Honda or Toyota. I think you'll be hard pressed to find anyone who disagrees.

I’ve owned Japanese, German and American made cars. The most reliable vehicles I’ve owned are Chrysler (241,000 miles) and Pontiac (157,000 miles). The vehicle with the most issues is my 2006 Mercedes. I’ve had electronic, sunroof and audio problems….recently the transmission failed at 47,000 miles. I sold a BMW because of constant engine sensor issues and pixels failing on the digital display. Honestly, the most reliable vehicles I’ve owned are American made…they do lack in styling and curbside recognition.

 

[S. C.]

so sorry you are affected. We used to buy exclusively American until we got a couple lemons. Hopefully, quality is on the way back in and I can consider a domestic next time.

There are a few lemons in any business. What happens when you get a few foreign lemons?

Bravo Linda. That was even better then my original post. I'm not here to flame anyone but the ONLY reason the foreign auto makes built plants here is to MAKE MONEY. There hasn't been a real quality issue with the BIG 3 since the 70s. People have every right to buy whatever make of automobile they wish, but the American economy is tied to the BIG 3 and if they fail, so does every supplier, dealer and parts store in the country.

I agree!

I for one cannot understand why the legislators' are so eager to hand over our money to companies that make products that we do not wish to buy.
TC.

So who is buying the 8.5 million vehicles sold in the United States last year

General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year

The UAW will have to make HUGE concessions soon or no bailout will work.
That is just a fact.
Honda, Toyota and most others are weathering this storm quite well. NO layoffs, NO layoffs. They have slowed production and employees are "doing other things" i.e. cleaning and some did take VOLUNTARY vacations but no layoffs.
Im telling ya, If the big 3 dont do a 180 and the UAW soon, they will be no more.
When Honda, Toyota and most other manufacturers are building them here...
folks are happy to be "buying American".
You dont see GM,Ford or Chrysler building new plants very often, Honda, Toyota, VW and Hyundia are or just did build new plants here, employing American workers to whom, pay taxes and participate in commerce.
to me, Honda, Toyota,etc are just as American as GM,Ford.
If you disagree, ask the 4000 Honda Employees at Marysville, Ohio maikng the Accord. Or the 5000 plus in Ky., making the Toyota Camry...The list goes on.
We all have our opinions and buy what we wish..But in the end, The big 3 and the UAW must adapt, and i dont see them doing it, or they will die.

Japan exports plunge record amount on weak demand


http://apnews.myway.com/article/20081222/D957HITO0.html


TOKYO (AP) - Japanese exports plunged a record 26.7 percent in November, the Ministry of Finance said Monday, highlighting the drop in global consumer demand for automobiles, electronics parts and other Japanese products.

Economists warned that exports - a mainstay of the world's second-largest economy - would tumble further with no recovery in sight for the global economy. Even exports to the rest of Asia are falling sharply.

"Demand is rapidly cooling not only in the United States and Europe but also in Russia and the Middle East, and we are expecting a further plunge in exports as the global economy is deteriorating," said Hideki Matsumura, a senior economist at the Japan Research Institute in Tokyo.

Battered by falling sales and a strengthening yen, major exporters like Toyota Motor Corp. (TM) and Sony Corp. (SNE) have already announced job cuts and lower profit projections.

Exports suffered their biggest year-on-year drop since the current system of statistics went into effect in 1980. Exports totaled 5.3 trillion yen ($60 billion) while imports fell 14.4 percent from a year earlier to 5.55 trillion yen ($62 billion), the ministry said.

That resulted in a trade deficit of 223.4 billion yen ($2.5 billion) - the fourth time this year Japan said its imports exceeded exports after January, August and October.

For years, Japan was blasted by its trading partners over its trade surpluses. But now, the global economic slump is turning Japan into a net importer, at least in recent months.

"The plunge in exports in November clearly reflected a severe global downturn. Demand for Japanese goods, especially cars and electronics products, is falling sharply everywhere," said ministry official Yu Oki.

Exports to the United States, the world's largest economy, plummeted by a record 33.8 percent in November, marking the 15th consecutive year-on-year fall.

Among U.S.-bound shipments, vehicle exports plummeted by 44 percent in the month, while exports of auto parts fell 40 percent and those of audio equipment was down by 48.2 percent.

Japan's exports to the European Union tumbled by 30.8 percent, with vehicle shipments to the region falling by 37.2 percent, the ministry said.

Asia-bound exports fell 26.7 percent as semiconductor shipments dropped by 30.2 percent. Japan's exports to China alone plunged by 24.5 percent.

Exports are also shrinking as the yen appreciates against most major currencies. That means overseas sales in dollars and euros translates into fewer yen.

The ministry said the yen traded to 97.97 to the dollar on average in November, up 16 percent from the same month last year.

The yen continued to climb against the dollar in December, hitting a 13-year high as investors dumped the greenback on U.S. economic worries. The Japanese currency was quoted at 90.02 to the dollar in Tokyo Monday afternoon

 

[rascalmom]

So GM paid lower wages and now wants to shirk when its time to pay.

I realize this is taken from an quote from someone else, but I really think that statement is unfair.

I haven't seen or heard any evidence the GM wants to "shirk" any of its retiree obligations. Isn't this what the VEBA trust is being set up to do - to protect the healthcare coverage of the retirees even if the company goes bankrupt?

They have reached this agreement voluntarily and have planned huge outlays for funding the trust. The trust is designed to last for 80 years - that seems excessive if we are talking about current retirees - will they need benefits for another 80 years? Or could the expected contributions be adjusted downward somewhat?

There is a lot of discussion about creating a viable cost structure - mostly by news pundits and bloggers. I have never heard anyone from GM come out an say - "let's stiff the retirees."

The alternative to creating a viable cost structure & returning these companies to profitability is their eventual demise. I know wage and benefit renegotiation will be painful to those involved, but it would seem to be better to have a job than no job at all.

 

[rascalmom]

Fair enough.

How do you explain that 2 similar models priced the same, one by Chrysler and one by Toyota, would vary so greatly in their repsective residual values over time?

I haven't seen an answer to that question.

It also seems that overall, the US automakers offer shorter warranty periods that their foreign counterparts. Residual value and warranty are definitely two factors dh and I consider when we are purchasing.

I don't look at autos as "disposable" as I did when I was younger. Seeing the piles of scrap pile up in our landfills is concerning. We recycle diligently at home and drive our cars longer than we did when we were younger. In doing that, I am more careful to choose something that will last (mechanically and fit/finish/paint) longer. My Acura is now 5 years old, but it still feels "new" to me in the way it drives - the paint and interior have held up exceeding well. No rattles or road noise. It has almost 100k miles on it & it has only had one battery replacement and new tires. This is what I expect when I purchase a vehicle. My last American cars didn't fare nearly as well and the resale value was very minimal.

 

[S. C.]

It also seems that overall, the US automakers offer shorter warranty periods that their foreign counterparts.

GM has 100,000 mile warranties.

 

[Tigger Woods]

Ford To Build Small Fiestas in Mexico: Hatchback Coming
Posted by: David Kiley on May 30

Ford will build its sub-compact Fiesta hitting the U.S. market in 2010 in Mexico. This wasn’t a big surprise, because making a small car expected to be priced $15K and under couldn’t possibly be made in Europe or Asia given the uncertainty of how long the U.S. greenback will stay weak. The only possibilities were Canada, U.S. and Mexico, and costs are cheapest in Mexico. The plant, in Cuautitlan, Mexico, is getting a $3 billion investment to make the Fiesta.

 

[rascalmom]

GM has 100,000 mile warranties.

That is a limited powertrain warranty.

http://www.gmcforums.com/phpBB3/viewtopic.php?f=87&t=362

For non-powertrain components, GM’s Bumper-to-Bumper New Vehicle Limited Warranty remains in effect: four years or 50,000 miles for Buicks, Cadillacs, Hummers and Saabs, and three years or 36,000 miles for Chevrolets, GMCs, Pontiacs and Saturns.

 

[minnie61650]

GM has 100,000 mile warranties.

Yes, it does.
My 2001 Buick Park Avenue is still a "baby" as it only has 74,000 miles on it.
It runs like dream. It did very well in the SAB Crash Test Ratings. It gets over 22 MPG in the city and over 28 MPG on the highway. I have NEVER had a single problem with it.

Due to a spinal disability I have limited mobility in my legs but I can easily get in out of my Buick. It also has plenty of leg lroom and my electric scooter can fit in the trunk when needed.
Other times there is more than enough room for my walker plus lots of shopping bags.

I plan on keeping my 2001 Buick for a few more years.
It has been very good to me.

 

[edwardsfire]

Another poster presented a link as to where Toyota was making job cuts..
Yes , that is true in Japan, NOT in the U.S.
Im talking about jobs here.
As for factory work that pays very well...The "japanese" automakers and European ones here in the U.S. are as about as secure of a job as one can have. Hyundai hasnt been here long enough to see how their jobs are.
While due to the economy, The big 3 is just about out of business, other automakers are seeing a downturn but are doing a million times better.
There is a reason for that....Better cars and better run companies.

 

[edwardsfire]

Ford To Build Small Fiestas in Mexico: Hatchback Coming
Posted by: David Kiley on May 30

Ford will build its sub-compact Fiesta hitting the U.S. market in 2010 in Mexico. This wasn’t a big surprise, because making a small car expected to be priced $15K and under couldn’t possibly be made in Europe or Asia given the uncertainty of how long the U.S. greenback will stay weak. The only possibilities were Canada, U.S. and Mexico, and costs are cheapest in Mexico. The plant, in Cuautitlan, Mexico, is getting a $3 billion investment to make the Fiesta.

Yep, the big 3 chooses to ignore the US, while others (mostly) Japanese companies CONTINUE to build factories HERE. What does that tell you?
Who is more loyal to the American worker?

 

[minnie61650]

Yep, the big 3 chooses to ignore the US, <SNIP>

Not true:

GM's Lordstown plant is scheduled to produce the Chevrolet Cruze, a fuel-efficient vehicle expected to get 40 miles per gallon or above. It was designed in Europe and Asia and will be built in those areas as well as in Ohio.


GM has called the Cruze its first global car and said expenses will be spread over its worldwide operations.

 

[edwardsfire]

Not true:

GM's Lordstown plant is scheduled to produce the Chevrolet Cruze, a fuel-efficient vehicle expected to get 40 miles per gallon or above. It was designed in Europe and Asia and will be built in those areas as well as in Ohio.


GM has called the Cruze its first global car and said expenses will be spread over its worldwide operations.

That plant already exists.
Im talking about new ventures.

 

[minnie61650]

That plant already exists.
Im talking about new ventures.

I thought the Chevrolet Cruze is a new venture.

BTW:

Toyota's plans for a new auto assembly plant in Mississippi are being delayed by worries about slumping American auto sales and a broader U.S. economic slowdown.
The assembly plant being built in Blue Springs, near Tupelo, Miss., was initially to be up and running by late 2009 or early 2010.

My understanding is it ison hold indefinately.

 

[minnie61650]

Just a little FYI from me.

This thread andthe other auto "bailout" threads remind me of the movie "The Perfect Storm". Before I watched that film I did not know much nor did I really care about the fishing industry. After watching that movie I said "I learned more about the fishing industry than I ever really wanted to know."

No one in my immediate family works for the Detroit 3 or any of the auto parts suppliers.

My concern is not for myself but rather for my fellow Americans and for our US economy.

I fear if GM and/or Chrysler fail the ripple effect would not only take out the Detroit 3
and its parts suppliers but once the suppliers are gone US Toyta and US Honda would close up the US plants also.

In that case all of the new autos would be imports.

 

[frisco]

I haven't seen an answer to that question.

That's because it's a perfect example proving how American automobiles simply aren't as reliable as foreign. Defenders of the Big 3 feel this should be ignored and don't wish to acknowledge it.