burlapp car

US Auto industry and the Ripple Effect

By  •  Published:  •  Last updated:


That’s a tough one….
On one side, sure, it sound much better to bail them out with a $25 Billion loan than over $100 Billion loss later.
On the other hand, they built a lot of crap for too many years, and never listen to anyone who told them one day people would get tired of they gas guzzlers…

What to do? What do you think????

I’ll tell you later what I think.

Conversation 44 comments

  1. It should really be the OPEC nations bailing these companies out since they were under their spell
    for such a long time, but who wants OPEC anyway..
    American Auto Reformation (8)
    ———————–
    1) enough with the crappy plastics.
    2) enough with the gas eating engines.
    3) enough with the stupid emblems.
    The Buick, Pontiac and Chevy are so lame!!!!!!!
    4) UAW need not to over pay someone for putting on a plastic hubcap. $ 50/hr is a waste!
    5) Money needs to go to designs, not stupid
    concepts.
    6) kill the Canadian and Mexican plants.
    7) Limit executive privileges and pay.
    8) Hire Japanese, German and French consultants
    to check everything else.

    -Woody thecarnerds.com

  2. such BS for the lobbyists.

    I guess they forget Toyota, Honda, Kia, Huyndai, Mercedes, BMW etc. all have plants and would be glad to take over the consumption of steel and contractors from the defunct GM, Ford and Chrysler.

    Unless they are planning to overhaul the entire vehicle lines, more money is just prolonging the death.

    First, get rid of the UAW or drastically reduce their power. Be blunt with them. “Work with us or die.”

    Second, cut down on cross-product lines. GM does not need Buick and Pontiac. Just keep your Chevy for bread-and-butter cars and Caddy for the luxury. Chrysler gets rid of Dodge and keep Jeep for your SUV and Chrysler for everything else. Ford should rid of Mercury and other foreign car lines (they all bleed money anyway.)

    Third, federalize your Euro and Japanese models and bring it here within a model year.

  3. this video is full of bull, there are PLENTY of other car makers out there that need to buy parts and raw material, so the same “suppliers” would just end up redicrecting the supplies to other car companies as the other companies pick up the demands left by the big 3. and let’s face it, EVERYBODY GETS THEIR RAW MATERIALS AND PARTS FROM CHINA NOWADAYS ANYWAY, so don’t make it sounds like some small american suppliers trying to make ends meet are gonna die because of the big 3.

    second of all, for many, many years, the detroit big 3 used to be THE BEST in the auto business, there used to be a time that the phrase “go out and buy a new car” means EXCLUSIVELY a ford or chevy, and buying a honda/toyota implies that either you just got canned or someone in your family died. so if they were so successful, THEN WHAT HAPPENED TO ALL THE MONEY THEY MADE? if they used to churn out billions after billons of dollars in profit for many, many years with ease, then how come they don’t have just a small portion saved up to get them through a few rainy days? and that’s exactly where the $25 billion bailout money will end up, it might save their asses for a year or two, then it’s down the toilet once again.

  4. Oh, GM should kill the Volt and concentrate on small cars. With its track record, the Volt will probably be a dud especially with its new technology. Leave hybrid tech to Toyota. Oh, maybe partner with Toyota to get its hybrid tech on its cars.

  5. I’m thinking some loans would be in order, but only if the stockholders absorb the loss, not the taxpayers. That means that to get money they have to give ownership to the people. If they survive, the taxpayer gets some of their money back. When a company is failing, the loss should be entirely borne by the owners/shareholders. They can survive, they have good product, for the most part.

  6. I think GM and Ford deserve to get a helping hand. All the criticism about their products is mostly aimed at their US line-up, but these are global corporations and are making competitive products in the rest of the world. Ford of Europe and Holden/Opel make some pretty good cars. Chrysler deserves all the flack they get, although I still would hate to see them go.

  7. for me it’s not a question of SHOULD the automakers get help,
    but questions about the HOW.

    Ford will probably make it through all by themselves.

    Chrysler was raped, pillaged, and sold into slavery.

    GM management seems to have a death-wish.

    And the short-term-profit-ONLY U.S. business/banking/WallStreet attitude could be the real root of the problem…
    …THAT and the economic WAR that’s been waged against the U.S. by foreign INVADERS who never forgot to safeguard their own markets – with the help of their governments!

    Will the government try to fix THAT?

    Who can they put in charge of it?

    How can they fairly address the very different needs and sizes of each of the ‘Big’ 3?

    When’s the last time our government actually did something RIGHT?

  8. Loan guarantees like Chrysler had (which never had to be called in, thank you K Cars) would be good except that no Banks seem to actually have money to lend, and are lining up for bailouts of there own.

  9. I would rather bail the auto industry then the banks.The auto indutry paid thier employeees well and pretty much spread the wealth around. Keep in mind thwy MADE WHAT CONSUMERS WANTED. The most valuable vote you make in life is what you spend you all might USD $ on. America builds the best full size trucks and SUVs in the owrl and is second to none. Unfortunatley fuel costs and fashion have changed.
    My question is why the green people never adress the issue of the other 50% of oil and fossil fuels use in space heating that is awfully non efficient and has no polution regs at all ??????

  10. Let the market control what happens. They cant just go bankrupt and disappear. Some other private investment group will buy part of the companies and make them smaller and more efficent. But really all the 3 need to do is stop making ugly cars, that is it. Look at the Chevy Malibu. Very good looking car and is selling like crazy. The government can help this one time but needs to stay out of it in the future.

  12. The moment Cadillac and Lincoln started building trucks folks should have realized something is wrong in the brain of top managers. Greed is a bad adviser and here we are today. In the mid 90s GM turned away from cars instead of putting money into their development. They deserve where they are today but the workers and suppliers don´t. That is the big shame – and the highly paid managers are still making millions. They should be made responsible for all the bad decisions they have made in the past years.

  13. They need to be bailed out. While all the stats in this video aren’t 100% accurate, it still paints a good picture.

    This is one of the dumbest comments I have ever read on Vince’s site

    “this video is full of bull, there are PLENTY of other car makers out there that need to buy parts and raw material, so the same “suppliers” would just end up redicrecting the supplies to other car companies as the other companies pick up the demands left by the big 3. and let’s face it, EVERYBODY GETS THEIR RAW MATERIALS AND PARTS FROM CHINA NOWADAYS ANYWAY, so don’t make it sounds like some small american suppliers trying to make ends meet are gonna die because of the big 3.”

    So, you think the slack can be picked up by other much smaller car companies if the Detroit 3 go under? I think not and if you were educated you would understand. Sorry, you are an idiot.

  14. We should provide universal health care so that the domestic manufacturers can compete with the Japanese (yes Japan has national healthcare so their manufacturers don’t need to pay those legacy costs for a smaller, newer workforce).

  15. Hopefully the bailout won't happen-
    GM will declare bankruptcy.
    Be helped out by the govt to get
    R&D rolling again and restructure.
    Regroup their brands:

    Tier 1:
    -Chevy/GM Daewoo: The discount value brand
    $8,000(Aveo)-$27,000(Impala)
    make money here on volume and cheaper materials

    -Opel/Saturn: The everyman's brand, but better
    quality and more upscale $16,500(Corsa)-$35,000
    (Insignia/Aura or Antara/Vue)
    Profit from extras (leather, satnav, dvd, heated seats, glass roof, etc…) and also volume

    Tier 2:
    -Holden/Pontiac: The performance RWD brand
    that has mass-appeal.
    Profit from in-dealer customization and other extras and the price of the car itself
    $17,500(small hot hatch)-$45,000(large RWD sports sedan)

    -Cadillac/Corvette:
    Luxury brand/upscale performance
    $37,000(CTS)-$125,000 (Top of the Line Caddy/Corvette)
    Profit made on amenities and the price of the car itself

    -Buick (China only):
    A mix of Opel, Holden, and Cadillac Models but with distinct styling and interiors.
    $17,500-$75,000(Enclave/Park Ave)
    Profit made from volume and amenities,
    and for the more expensive models, from
    the price itself.

    Sell off the other brands and get rid of product that isn't competitive. Get rid of the execs and the UAW.
    Use government aid (post bankruptcy) to invest in R&D.

    Then someday soon, hopefully we will have a healthy GM again.

  16. What blows my mind is that they are begging for money when they are full of properties.

    Why don´t they just sell saab, or vauxhall in uk, or daewoo or opel to get some cash?

  17. It seems to be a case of pay now, or pay a helluva lot more later on. A $25 billion bailout is small beer compared to a loss of $150.7 billion in the FIRST YEAR alone. I’d imagine the losses over successive years could quite easily run into trillions of dollars for the US economy.

    I’m not one for socialist concepts or ideals, but in this instance, a little bit of protectionism is very much warranted, despite potential protestations from the EU and WTO. The EU is shooting itself in the foot if it forces the US to abandon any bailout, as a large proportion of European car production is made up of models manufactured by the European subsidiaries of Ford and General Motors.

    Ford and GM need some time to reorient themselves and get their model mix right for the new conditions in the market. Yes, they have been slow to react thus far, but conversely, you can’t expect two corporate behemoths like them (and Chrysler to a lesser extent) to simply change direction overnight.

  18. I agree totally with Johnny. Loans, not charity.

    They all have partnerships to some degree – GM has Toyota… and they’ve squandered it. Producing more cars that nobody wants. Chrysler alone can say they were done no favors (by Mercedes), who stripped them clean and left them for dead. And they were doing fairly well with a design philosphy that produced cars like the 300. Then, they should move their design centers out of Detroit. Good for Ford… talking to Mazda and getting a real product pipeline started!

    I have no problem with a loan. But dont reward the managers for running the place into the ground. Not all of it is the UAW’s fault. The UAW didnt design those terrible GM minivans, huge SUV’s, the Cobalt, the Aztek, the previous Malibu and Impala….

  19. Either way, it’s going to hurt. And it’s going to hurt more than just GM, Ford, Chrysler, the UAW, and all the suppliers involved.

    If GM should fail, do you think the economy is going to instantly improve and Toyota’s just gonna step in and take over, with auto sales magically rising? I don’t think so.
    This problem is a global (yes, global) problem, not a Chrysler/Ford/GM problem. Europe is bailing out their automakers – 40 bil euros (about $56 bil)

    And I love when people say “We are no longer a manufacturing economy, get over it” They are so ignorant that they don’t see we are becoming manufacturing dependant just like we are oil dependant on the Middle East. What if a few years down the road the Asian countries form a cartel similar to OPEC and decide to embargo all manufactured goods to the US because they are unhappy with some US policy. What do you think would happen to our economy? Including your income. Suddenly a shortage of everything, cars, appliances, computers, tools, circuit boards, replacement parts, light bulbs, just look at Cuba. And don’t say “that could never happen” in the early 70s the OPEC countries were willing to lose the oil revenue so, in their opinion they could “teach the US a lesson”. People just don’t care until it affects their job/profession.

  21. Germany can bail out GM…They still owe us for the marshal plan and 60 years of military support and everything else.

    Seriously…Where do these parasites get off trying to steal money from me using political threats?

  22. Fear Fear Fear – Scare Scare Scare.

    3 out of every 2 jobs in the USA is auto related! If we don’t get your tax money then little puppy dogs are going to die! If you don’t hand over your money then Britney Spears will keep her clothes on forever! If you don’t allow us to steal from you then you will never get laid again and your beer will always be warm……

  23. Let them go Chapter 11 and get rid of their $200B in unproductive and useless liabilities…DO NOT steal from me and hand over to them!

  24. Let them go Chapter 11 and get rid of their $200B in unproductive and useless liabilities…DO NOT steal from me and hand over to them!

  25. With GM Ford and Chrysler collectively burning through 5 billion in cash a month, 25 billion in loans will be gone in April. What will be different in May of 2009 for GM? Nothing.

    Economy will still be in the tank. They will still have too many dealer and too many products. They will still be losing money and most importantly, they will require anther bail-out.

    Don’t give our money to a failed business plan.

    Make them restructure dramatically, then help them.

  27. 6) kill the Canadian and Mexican plants.

    Why? If anything all manufacturing should be moved out of the US to cut costs and crush the UAW. GM pays $29 an hour to an assembly guy while the competition pays $14. Now they want a bailout? Oh please, American bitching an whining at it’s best. GM chose to be a dinosaur in the market, they’ve caused their own extinction. Taxpayers shouldn’t have to spare a dime for their mistakes over the last 40 years!

  28. At the rate that GM alone is spending, if Chrysler and Ford got a portion of the money, they won’t last 6 months!

    It’s just too bad they are behind the times….especially Chrysler.

    They rested on their laurels for too long (especially Ford and GM….Chrysler’s death of innovation is new during this decade) and were lapped during the race. It sucks, but had they have concentrated on their vehicles equally, the SUVs wouldn’t have been their only money makers. This is something they should have learned from the 80s anyway!

    I’m sure Toyota, Honda, and Nissan will hurt as well…but look at how they market and build their products! Although Toyota is turning into quite the Japanese General Motors, the quality isn’t nearly as bad as GM’s quality, fit and finish from the 80s and 90s. Those auto companies learned that it’s not all about the SUVs….especially Honda.

  29. It’s easy to say that suppliers will get out of this without a problem. Same thing for other companies that would pick up the demands left by the big 3…

    It would be a long and painful process and meanwhile, millions of cars would lose value, thousands of workers would lose their jobs, thousands of dealerships would close and hurt the economy even more. It would not become paradise for other car companies so fast.

  30. The Big 3 didn’t force anyone to buy a Suburban, Explorer, or Ram pick-up. Toyota and Nissan both got into the business and are paying the consequences. If you think Honda is great, ask all of their contract workers with no health care in Marysville what they think. The Japanese government paid for the development of the Prius and it’s battery development so why shouldn’t we help develop the Volt or retool for the Fiesta? You think the Japanese will be able to fill the void if the Big 3 go under? You want to pay $30,000 for a Corolla?

  31. wow – I agree with you Vince, it is a tough one.

    I have thought long and hard about this over the past few weeks. Our government has nationalized much of the mortgage industry and significant aspects of the banking sector and the insurance sector. The automotive industry focused too much on short term earnings per Wall Street, so why should the Big 3 be treated any different?

    If America wants and needs the Big 3, and to be consistent with current government policy, we have no choice other than to NATIONALIZE them. Sigh. Not a choice I like, but I honestly don’t see any other way.

    In one quarter, we have become the fastest socialist revolution in history, and – so far – without one shot being fired. Congratulations everyone for your recent ownership of AIG, Freddie Mac, Fannie Mae and your impending ownership of GM, Ford and Chrysler. What do WE want to do with them??

    It’s our choice people.

  32. From above Anonymous said…
    “I guess they forget Toyota, Honda, Kia, Huyndai, Mercedes, BMW etc. all have plants and would be glad to take over the consumption of steel and contractors from the defunct GM, Ford and Chrysler.”

    I worked for a Japanese supplier, and ended up leaving them. Our division always finished the year making $0.00, even though we doubled our sales goal. They kept a minimum amount of people in America, they would rather hire Japanese. Our research and product design was done in Japan, even though we could do it cheaper and faster in America.

    You really think that the other auto companies not based in america will give good jobs to Americans? They will give work to people from their own country or to a country who can do it cheap.

    Who cares where the car is made, the people who make decent salaries are not the ones who build the cars, but rather the white collar people. The blue collar jobs are moving to cheaper countries, except for final assembly. That will be done in America.

    Please do some research before talking about a topic you don’t know about.

  33. I researched the last auto bailout of automotive. I found that chrysler paid the loan back early and the government made money off the deal.

    While money given to banks were not paid back from the failed savings and loans program.

    So why are people alright with giving money to banks, but not to the automotive?

    What banks from the 1920’s are still around today? Or what banks from the 1980’s are around today? I am more worried about lending money to banks than I am automotive.

  34. Sometimes the only way to get rid of the disease is to shoot the patient. GM, Ford, Chrysler are the patients. Government over-regulation, America’s notorious lawsuit cancer; and the good ‘ol UAW are the diseases. Sometimes things have to get a whole lot worse before they can get better; so I guess we let the patient die — and suffer the consequences for the next 10 years.

  35. jonny said: “That means that to get money they have to give ownership to the people.” Huh??? who do you think owns these companies NOW? These aren’t “Sole Propriotiships”. Did you know that part of YOUR pension fund is probably vested in (ie; owns STOCK in) these 3 Auto Companies? EVEN IF YOU WORK FOR THE GOVERNMENT??? For years these have been “blue chip” stocks. And so are the companies that sell materials and parts and energy and all kinds of stuff to these three. Are you really so dumb that you don’t think the destruction of these 3 isn’t going to affect your “lifestyle” — and for many years to come??? WAKE UP AND SMELL THE RECESSION.

  36. So these numbers are if all 3 go completely out of business? I seriously don’t think that ALL 3 are going to go under if they don’t get the money. So all 3 are going to go under if they don’t get $25B? Is that going to be enough?…..Did’nt GM lose over $4B last quarter alone? How much money was lost by all 3 combined for the quarter…maybe $6 or $7b? So whats $25b…..maybe a year to one and one half years? And I’ll tell you right now what’s going to happen once the big 3 get the money……they’ll go into bankruptcy anyway. Why….well, they’d be given a crap load of money and then go into bankruptcy to reorganize the company, make cutbacks, redo the union contracts, kill or reduce the retirement payouts, etc, etc…

    I think if they are’nt given the money then all 3 will go into bankruptcy, Chrystler may go under and GM and Ford will end up smaller then they are today.

    If they are given the money I think the only difference will be that Chrysler will be able to stick around. All 3 will still go into bankruptcy and reorganize everything and end up a little smaller and more efficient.

    This is just my opinion, obviously I’m no economics professor. But I am in the airline industry and have seen similar things before.

    Oh and if anyone out there is thinking of buying stock in any of the big 3…..just remember what happened to United Airlines….they completely eliminated the old stock with their reorganization and issued new stock…and to my knowledge (I could be wrong)if you owned old stock, you did’nt automatically get the new stock, which means you got screwed. Just something to ask your broker and think about.

  37. “So, you think the slack can be picked up by other much smaller car companies if the Detroit 3 go under? I think not and if you were educated you would understand. Sorry, you are an idiot.”

    then educate me this, assuming that today I decide to replace my old beater vehicle, and i go out there hoping to get a ford/chevy only to realize that the all the big-3’s dealership dissappeared, what do I do? go home and cry and remain vehicle-less for the rest of my life? or do I go to the nearest toyota/nissan dealer and buy thier suv/truck isntead?

    it’s amazing (amazign stupid that is) that you assume that if the big 3 dissapear, the overall demand of new vehicles will actually decrease, this is business in the real world, if your company die, your product’s demand will get filled by your competitor immediately, and your competitor will be VERY VERY HAPPY to pick them up, and they will be VERY VERY HAPPY to order the necessary materials to make those product to get the consumer’s business. and why do you think the big-3 need help in the first place?? that’s right, THEY ARE SELLIGN LESS AND LESS CARS BECUASE PPL AER PICKING JAPANESE/GERMAN OVER DOMESTICS, so it’s not like their vehicle are in hot demand and the lack of those car will make ppl cry and refuse to shop for a new vehicle.

    still though, the fact that you think if the big 3 dies then some ppl would simply decide to stop buying car is so far beyond the realm of mental retardation is amazing.

  38. ppl working for the big-3 had YEARS of warning sign for them to switch jobs.

    ppl investing stock in the big-3, including ppl that handles your pensions, had YEARS of warning sign to sell their shares off and invest in something else

    ppl working as top-white-collar position in the big-3 had first hand information about the company’s situation way before anybody else had the same information. yet they decide to push products that make the company worse.

    so you can keep hoping that your bail out money will keep your stock/pension alive, just realize this, you are taking money out of one pocket and putting them in the other, and the other pocket has a hole in it, so guess what? your bail-out tax dollar that keep the big-3 alive will simply be wasted away by the big-3 as they keep making more crap, until a few years later they will face bankruptcy again, then ask for your tax dollar to bail them out again to cover your pension invested in them, so they can continue to make crap, and bankrupt themselves yet again. and ask for your tax dollar to bail them out and cover your pension invested in them again.

    go ahead and feed this viscious cycle, putting a bandage to cover the wound instead of treating and curing the wound is exactly what these companies did to kill themselves, and they are now asking you do to participate with your own money.

  39. it doesn’t really matter if the government bails them out or not to a certain extent. basically, if gm, ford or chrysler file for chapter 11 bankruptcy, they won’t disappear as companies but will be required to restructure which they should anyways since the present business model obviously isn’t working. no matter what, all will not be lost.

  40. So Vince when are you going to tell us what you think? I think they should be saved if they have a viable plan…..but to just prolong the death a few months will just stick the taxpayers with 25 billion in unrepayable loans.

  41. cut off the UAW. Did you know there is a problem called ‘job bank’ where these guys who got laid off one way or another get roughly 80% of their salary plus other benefits for not working as long as they are not getting another job. geez, why would i be looking for another job?

    … and you’re wonder why the big-3 is going under. and now they want my money.

    i say let it dies.

  42. The video suggests: Avoid apokalypse now. Poor big Three- poor CEOs. They went to Washington like beggars – each in his own private jet. Now they probably asked the government to cover that by the tax payer too. Estimated cost for the three business jets: $ 60 000. The tax payer should be more generous – don´t you think so?
    Maybe pay for the next SUV and not getting one. Or maybe donate money for the poor executives who were intelligent enough to run the companies into the mud. Don´t forget: They are still in charge.

  43. Responding to:
    Germany can bail out those Big Three – are you the soldier they found some 50 years after the war who did not even know the war was over? Oh no, seems you heard something about the great thing called Marshall plan – so you just read the history book backwards and had problems understanding it. Poor fellow. Just for education: We are living in a global world. By the way, you must have some influence on the Germans because they are going to bail out Opel which is by the way GM. Did you know that? Did you know Opel was the only GM division writing in black ink recently? You should go into politics but then you better don´t call the others parasites.
    You got enough of those at your own front door.

  44. The big three have been digging their own graves for years. Its called complacency.
    It that the “Last Post” tune i can hear playing.
    Lest we forget.

Leave a comment

Your email address will not be published. Required fields are marked *