The Big 3 Auto bailout

[minnie61650]

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.

That is bacause I do not think what you stated is indeed fact.
I think it is your opinion.

Please give me the stats to back your statement up.

TIA

 

[Lib E]

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.

The suppliers will get smaller or merge and change. If there is a market here, even a smaller one, there will be someone to pick it up. It's really silly to think otherwise.

Parts of the Big 3 (whether it be a plant or their more successful lines) could go on under different ownership, and most likely without the UAW. That's a good thing IMO. Pouring money into the Big 3 as they exist now is a complete waste though and just delaying the inevitable.

 

[minnie61650]

The suppliers will get smaller or merge and change. If there is a market here, even a smaller one, there will be someone to pick it up. It's really silly to think otherwise.

Not true the suppliers cannot just cut production in half overnight and survive.

My line of thinking is not silly at all.

See why GM is sueing Cadence over closing its parts plant:

They have GM-owned machinery needed to make essential car parts.
GM said it may not be able to reopen some production lines in January because they cannot get essential car parts.

GM sues Cadence over parts tooling
Automaker: Assembly plants could be shut
FREE PRESS STAFF AND NEWS SERVICES • December 27, 2008



General Motors Corp. has sued supplier Cadence Innovation LLC, accusing it of breach of contract for not turning over GM-owned machinery needed to make essential car parts.


GM could be forced to shut some assembly operations if closely held Cadence, which is liquidating, doesn't turn over the tooling as required under an earlier financing deal, the automaker said in a complaint filed Wednesday in U.S. Bankruptcy Court in Wilmington, Del.

Troy-based Cadence filed for bankruptcy for the second time on Aug. 26, blaming reduced demand for its vehicle-interior parts. The company is liquidating.

GM made the same claims about the machinery in papers filed Dec. 22, asking the court to compel a turnover of the tooling.

GM said it may not be able to reopen some production lines in January if it didn't have access to the machinery by Friday. "The damages GM would sustain from such a shutdown would be in the millions of dollars per plant per day," GM said in the complaint. New tooling "cannot be manufactured in time to prevent a production interruption at GM assembly plants," GM said.

Tony Cervone, a GM spokesman, couldn't immediately be reached for comment. Cadence's lawyer, Norman Pernick of Cole, Schotz, Meisel, Forman & Leonard in Wilmington, declined to comment.

Another Cadence customer, Chrysler LLC, was authorized by the court to remove tooling used in making Chrysler vehicles. Chrysler was ordered to pay $4 million and waive any claims against Cadence stemming from financial support during the aborted reorganization.

GM's suit comes during an employee-led effort to sell the business after attempts to do so in bankruptcy failed.

A group of middle managers has been trying to persuade GM to keep Cadence as a customer after a private investment firm agreed to buy the supplier's Chesterfield Township plant. But GM's business is a requirement for that deal.

That plant employs more than 1,000 people and makes instrument panels for the automaker's crossover vehicles, including the Chevrolet Traverse. GM has said that it has signed contracts to move the work to other suppliers.

 

[frisco]

That is bacause I do not think what you stated is indeed fact.
I think it is your opinion.

Please give me the stats to back your statement up.

TIA

Sure thing.

SUV's:

2008 Dodge Durango 4WD
4 dr V6
Retail - $38,420
60 month Residual - $8,175

2008 Ford Explorer 4WD
4 dr V6
Retail - $36,180
60 Month Residual - $8,350

2008 Toyota Highlander 4WD
4 dr V6
Retail - $34,520
60 Month Residual - $12,225
--------------------------------------------------------------------------
Minivans:

2008 Chrysler Town & Country
4 dr Wgon
Retail - $28,980
60 Month Residual - $8,375

2008 Toyota Sienna
5 dr Wgon
Retail - $27,100
60 Month Residual - $9,450
--------------------------------------------------------------------------
Cars:

2008 Ford Taurus
4dr Sedan SEL
Retail - $25,525
60 month Residual - $6,650

2008 Toyota Camry
4dr Sedan LE
Retail - $21,685
60 Month Residual - $7,700

Not only do the Toyotas have better residual value, but they're less expensive.

 

[Lib E]

Not true the suppliers cannot just cut production in half overnight and survive.

My line of thinking is not silly at all.

See why GM is sueing Cadence over closing its parts plant:

They have GM-owned machinery needed to make essential car parts.
GM said it may not be able to reopen some production lines in January because they cannot get essential car parts.

Sorry. I disagree. The sky is gloomy, but it ain't falling. Cadence may go down, but will liquidate and someone else will pick up the demand. It won't happen overnight though.

 

[minnie61650]

Sorry. I disagree. The sky is gloomy, but it ain't falling. Cadence may go down, but will liquidate and someone else will pick up the demand. It won't happen overnight though.

Maybe, Maybe not.

Meanwhile, GM will just have to stop making some it's crossover vehicles, including the Chevrolet Traverse and willlose millions of dollars per plant per day.

Not a good scenario.

Now mutiply that 10, 20, or 30 supply plants.

The ripple effect will be too much.

 

[rascalmom]

Top 10 Resale Value Cars

http://money.cnn.com/galleries/2008/autos/0811/gallery.kelly_bluebook/index.html

1. Honda Civic/Civic Hybrid

2. Honda Fit

3. Mini Cooper

4. Scion Xb

5. Scion xD

6. Scion tC

7. Toyota Corolla

8. Toyota Prius

9. Toyota Yaris

10. Volkswagon Rabbit

The overall best rated resale value brand (the survey comes from KBB.com - the Kelley Blue Book site) is Honda.

Awards are presented to top vehicles within 15 vehicle categories, for Overall Top 10 vehicles across all categories and the brand with the best projected resale value across its entire line of vehicles.

The only American cars listed in the 15 categories were the Cadillac STS for Full-Size Car and the Jeep Wrangler for SUV.

 

[minnie61650]

Rep. Maloney posted this report about how a ." Collapse of the big three U.S. automakers would lead to nearly 150,000 jobs lost both directly and indirectly, taking into account the serious negative spillover effects in industries in the auto production supply chain.

December 18, 2008 Contact: Joe Soldevere, 212-860-0606

Rep. Maloney: New report shows auto shutdowns could cause largest one-year job loss in NYS in last 17 years
The "Big Three" Automakers Directly Employ Almost 3,000 Production Workers in New York State, but "Ripple Effect" of Shutdowns Could Cause 144,600 Job Losses in One Year, Estimates Show
Washington, D.C. – Rep. Carolyn B. Maloney, Vice Chair of the Joint Economic Committee (JEC), released a report today entitled "The Ripple Effect: The Impact of a Big 3 Failure on New York State." Collapse of the big three U.S. automakers would lead to nearly 150,000 jobs lost both directly and indirectly, taking into account the serious negative spillover effects in industries in the auto production supply chain.
"The news that Chrysler and Ford are closing plants for at least a month should be an indication that President Bush needs to act quickly to get aid to the automakers so they can reopen these plants as quickly as possible," said Congresswoman Maloney.

"We cannot allow any of the Big Three automakers to fail because we cannot afford to lose the millions of jobs at risk, including the nearly 150,000 we stand to lose right here in New York State. The tremors from their collapse would be felt far and wide. We need to preserve our domestic manufacturing base for the future prosperity of our nation and because it is an important source of good paying middle class jobs. I think it's in the best interest of American families to use funds from the Troubled Assets Relief Program to rescue these companies in order to avoid an economic earthquake."

Highlights from the report include:
• The "Detroit Three" automakers directly employ almost 3,000 production workers in New York State. The plants are the Tonawanda engine plant owned by General Motors, which employs 1,447 workers, the Massena powertrain plant also owned by General Motors, employing 348 workers, and Ford's Buffalo stamping plant, which employs 1,116 workers.
• Estimates by the Economic Policy Institute (EPI) show that New York State could lose 144,600 jobs in one year due to a "Detroit Three" shutdown. This estimate includes direct job losses in auto manufacturing, losses of supply chain jobs at firms that provide necessary goods and services, losses of jobs at dealers, and also the indirect job losses created by spending declines among workers who lose their jobs.
• The effect of the auto shutdowns alone would be sufficient to cause the largest one-year job loss in New York State in the last 17 years, according to EPI. Unfortunately, in 2009 the state can expect numerous additional job losses from the current national recession, even beyond any job losses from automaker shutdowns. The addition of the major job losses from the automaker shutdowns could easily propel New York State to the worst one-year job loss in its history.

 

[Anewman]

So now I understand the BIG 3s plan for long term viability...

Just guilt Americans into buying their product.

 

[minnie61650]

My links include the Chevrolet Corvette in the top10 resale value:

http://money.cnn.com/galleries/2007/autos/0711/gallery.2007_best_resale_value_top_10//index.html

http://www.kbb.com/kbb/NewsAndReviews/BestResaleValueAwards.aspx?YearId=2008&SelectedTabIndex=1

 

[rascalmom]

The potential job losses are sobering and the effects on communities that have not diversified will be painful. I don't think anyone is disputing that.

President Bush has agreed to a loan and the Canadian government has also.

I just don't think the automakers and their supporters can expect things to go on as they are (or have been). The companies are losing money. They are having to seek loans to continue to operate. They have lost market share and overall demand is down dramatically. They have more plants and employees than they need to produce the number of vehicles wanted by their customers.

Since WWII, we have undergone the post-War boom era, the transition to 2 car households, and the addition of spare vehicles for many American families. What they are selling now is replacement vehicles to current auto owners. Until prosperous times return, I don't think sales will increase and may even continue to decline.

So because they used to be big & bountiful, we need to loan money to give the allusion that they are still that way? How much and for how long? Last I checked the US economy isn't exactly thriving - that means tax revenues will be down & probably average personal incomes. We are borrowing money from China to lend to US automakers so that they can try to compete with Japan.

Just doesn't make sense to me.

 

[rascalmom]

My links include the Chevrolet Corvette in the top10 resale value:

http://money.cnn.com/galleries/2007/autos/0711/gallery.2007_best_resale_value_top_10//index.html

http://www.kbb.com/kbb/NewsAndReviews/BestResaleValueAwards.aspx?YearId=2008&SelectedTabIndex=1

You're right - I was using 2008 statistics, didn't realize 2009 was already released. Jeep Wrangler has been replaced by the Acura MDX as the best SUV for resale value. The Corvette is in the top 10 overall and is listed as best for high-performance vehicles.

My apologies for using old data.

 

[rascalmom]

So now I understand the BIG 3s plan for long term viability...

Just guilt Americans into buying their product.

Oh - wait.....I think you're right! Maybe it isn't funny.

 

[frisco]

My links include the Chevrolet Corvette in the top10 resale value:

http://money.cnn.com/galleries/2007/autos/0711/gallery.2007_best_resale_value_top_10//index.html

http://www.kbb.com/kbb/NewsAndReviews/BestResaleValueAwards.aspx?YearId=2008&SelectedTabIndex=1

1 car out of 10 is in the top 10.

So again, I ask, if the Big 3 make cars that are just as reliable as Honda and Toyota, why is their residual value so much lower?

 

[silmarg]

Quite frankly the big 3 are doomed if the Feds will dictate what the mix of cars that they should build are.

The beginning of the end of the big 3 was in the mid 1970s. Detroit was caught off guard in the oil crisis. The foreign automakers made best of the opportunity and the big 3 rushed out several big lemons. It was starting then (and prob for the next 10 years) that the Big 3 killed off the many of their previously loyal customers. And it is for this reason that resale values of Big 3 cars are inferior to the non-US makers to this day (the demand is just not as robust for used US iron as it is for non US)

Because of the Labor costs of the Big 3 are so high, they will only make profits in luxury cars and SUVs that are built in the US - not the small cars that Congress wants them to build. They really cant build a profitable smaller car in the US (thats why GM has partnered w Daewoo & Suzuki - Ford with Mazda and Chrysler w Mitsubishi).

CAFE requirements also hurt he big 3 as it forces them to build smaller (and unprofitable cars). While CAFE applies to all car manufacturers and they can pay a monetary penalty if they dont comply, but the Big 3 have always complied as they felt US consumers would resent it if they did not comply to CAFE. Many non US manufacturers just pay the CAFE penalty.

At the end of the day, I dont think the Big 3 will survive in the form they now exist - no matter what the government does. I think retiree medical is just going to kill them financially. You know what is real scary is if municipalities (and the Fed govt) had to fair value account for their retiree obligations they would be in worse shape than the big 3. That shoe will drop some day... and who will the politicians ridicule then?

It should be interesting to see what the new administration will do about all of this. They are supposed to be pro-Labor. But doesnt labor have a hand in the problem? And will the administration have the fortitude to deal with it. (as an aside, I find it odd the big 3 cars sell better in red states while blue states are awash in foreign cars - yet the blues are pro labor).

While I only buy US cars (maybe its dumb nostalgia, maybe its wishful thinking) and I hope this industry will thrive, I have a bad feeling about how this will all end.

 

[silmarg]

if we stripped fleet sales (esp to governmental entities) I wonder what percent of the US auto market the Big 3 really have

 

[rascalmom]

Well - if you want to do some number crunching (it is broken down by badge, not manufacturer):

http://www.automotive-fleet.com/Sta...ources/stats/AFFB-cht-pass-ctreg.pdf&channel=

And here is a pie chart with fleet statistics by manufacturer:

http://www.automotive-fleet.com/Sta...sources/stats/AFFB-cht-breakdown.pdf&channel=

 

[minnie61650]

From the following website:

Not a fan of a government loan to the Big 3? Neither am I. However, after spending hundreds of billions of dollars to “stabilize” our financial system, it would go all to waste if the US automotive industry collapsed.

GM has produced a video that gives a grim view of the effect of a US auto industry collapse as a whole. It’s surprisingly straight to the point and factual. Whether the video changes your opinion or not it’s very much worth the 4 minutes of your time that it will take to watch.

Link to video:

http://www.autoinsane.com/2008/11/17/news/ripple-effect-what-happens-if-the-big-3-collapse/

 

[golfgal]

if we stripped fleet sales (esp to governmental entities) I wonder what percent of the US auto market the Big 3 really have

Good point.

 

[minnie61650]

Overseas automakers, most notably Toyota Motor, all endorse some form of federal aid to keep General Motors (GM, Fortune 500), Chrysler LLC and possibly Ford Motor (F, Fortune 500) out of bankruptcy.

Why Toyota wants GM to be saved
A GM failure would cause production problems, crush already weak demand and potentially open the door to low-cost competitors.


Overseas automakers, most notably Toyota Motor, all endorse some form of federal aid to keep General Motors (GM, Fortune 500), Chrysler LLC and possibly Ford Motor (F, Fortune 500) out of bankruptcy.<Snip>



"We support measures to help the industry," said Toyota Motor (TM) spokeswoman Mira Sleilati. "We just want a strong, competitive healthy industry."

This may seem surprising at first, especially considering that much of the opposition to the auto bailout was from senators from Southern states that are home to auto plants operated by Asian auto companies, such as Alabama and South Carolina. But the Asian automakers insist they never lobbied against such help for the Big Three.

And this makes sense after taking a closer look at the dynamics of the auto industry and the intertwined fates of its companies.

Here's why Toyota, Honda Motor (HMC) and other Asian auto manufacturers clearly believe they are all better off if GM and Chrysler survive.

Collateral damage


The overseas automakers, who between them produce more than 3 million vehicles a year at U.S. plants, all worry their production would be hurt if one of the U.S. automakers went under. That's because a Big Three failure would likely lead to widespread bankruptcies in the auto parts supplier industry.

Erich Merkle, lead auto analyst with the consulting firm Crowe Horwath LLP, said there is much overlap between the automakers' suppliers. Since most parts in an automobile have only a single supplier producing them, the disruptions in production will be severe and prolonged.

"It could take months for a Toyota to work through that and resume normal production," he said.

Merkle said the current network of auto suppliers, manufacturers and dealerships has worked well for the overseas automakers, who have posted steady gains in their U.S. market share during the past few years.

Besides sharing suppliers, many dealers sell both U.S. and overseas brands. So the failure of a U.S. automaker could hurt the overseas manufacturers' dealer network and their sales as well, Merkle said.

"There would be a severe disturbance in the force," he quipped.

Economic shockwaves
A collapse of one of the Big Three would also probably cause an even more severe hit to the U.S. economy. That would further eat into demand for U.S. auto sales, which hit a 26-year low in November.

"The U.S. economy would be in shambles," Merkle said. "The robust U.S. economy that Toyota and the others depend on would suddenly not be as lucrative."

The overseas automakers agree that the last thing they need is for the U.S. economy to slow further. The U.S. is the largest market for Toyota, Honda and Nissan (NSANY). All are expected to report lower U.S. sales this year for the first time ever.

"We want to get the economy back," said Michael Stanton <SNIP>

Link to full article:

http://money.cnn.com/2008/12/15/news/companies/overseas_automakers/index.htm?postversion=2008121609