Dire Times for the Auto Industry


GT Tech

Ford GT Team Alumni
Aug 13, 2006
678
Kingman, Arizona
No big post here, just a few thoughts.

RV, The article you linked to is almost 4 years old. Things change in that amount of time. Was it True? It was. Was it right? Personally, I don't think so.

Question? Why only bust the American unions? The European unions are a lot stronger than ours. Lets just bust them all.

As far as letting the big three go belly up, Thats just nuts. If they did, we could all just send our money to Japan or Korea. Sure, they build cars here. But where does the dollars earned end up? Not in the good old USA, thats for sure. Here's an interesting little story. There is a kindly old gentleman who lives in My community. I see him from time to time at our restaurant. He has special license plates on his car. They say, "Pearl Harbor Surviver" as well as the purple heart. He wears a hat that says the same. The plates are on a brand new Nissan SUV. Who won WW2 after all? Ironic huh? RV, I don't know your line of work but I hope your not hit to hard by the current financial situation. I hate to see ANY American company in trouble. From your screen name, I deduce you sell RVs. If thats true, how many 36' motor coaches would you sell if they were powered by Toyota V-6s

It's estimated that 3 million jobs could be lost. How many people reading this have a monetary interest in one way or another tied to the American auto industry? I'll bet more than a few of us.

How many business owners here would stay in business by not selling what people want? Should we fault the American automakers for building trucks and SUVs instead of Pirus's. If I'm not mistaken, a bunch of automakers around the globe jumped on that bandwagon. As for not keeping up with the times, try driving a Ford Escape hybrid. I did. GREAT car. Gets close to the same MPG as a Prius and feels a hell of a lot better.

Congress is not wanting to help out the American auto industry, but they will give 700 billion to the financial sector. How many managers at mismanaged brokerage firms will get golden parachutes from that boondoggle. Big article in the local paper about how last week, AIG threw a $350,000.00 "managers retreat" weekend using bailout money. Are we all getting suckered on this one or what! But when it comes to supporting company's that produce a tangible product, and keeps millions employed, it's a different story.

I guess I was wrong. Big post here. I've got to stop this "soap boxing" before Bony or Dave kick my butt off the forum. Take my house, take my wife, take my cars, but don't take away my Ford GT Forum.:willy:willy
 

tpraceman

THEE GT OWNER
Mark II Lifetime
Le Mans 2010 Supporter
Feb 20, 2006
2,835
Washington Michigan
No big post here, just a few thoughts.
I guess I was wrong. Big post here. I've got to stop this "soap boxing" before Bony or Dave kick my butt off the forum. Take my house, take my wife, take my cars, but don't take away my Ford GT Forum.:willy:willy

Rich you should load up some of your photos from past events and some of your cars. And I know you better the wife and your cars are not something you would ever give up.:thumbsup
 

GT Tech

Ford GT Team Alumni
Aug 13, 2006
678
Kingman, Arizona
Wellllllll, maybe not the cars. :banana:banana
 

BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
From what I am reading the current congress is not likely to pass a bailout beyond accelerating the 25 billion already slated for investments into more energy efficient cars. That combined with the fact that GM may not make it until Jan 20th, and DBK stating that if GM files BK, then Ford will also, timing will be critical to any bailout plan.

My concern is larger than the big 3, the reduction of the industrial base in the US. Maybe we would all be speaking German now if it wasn't for the big 3 churning out all of that war machinery during WWII. If you care one way or another, posting here will have no affect, write your congressman and senators.
 
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B O N Y

MODERATOR & FGT OWNER
Mark IV Lifetime
Sep 5, 2005
12,110
Fresno, Ca.
. I've got to stop this "soap boxing" before Bony or Dave kick my butt off the forum. Take my house, take my wife, take my cars, but don't take away my Ford GT Forum.:willy:willy

No issues with what you have written at all, only trouble Elaine and you are in is for missing the SEMA dinner:biggrin
 

kjslider

GT Owner
Mark IV Lifetime
Mar 1, 2006
360
socal
Because they know is better to receive the paychecks, rather than writing them given the current state of the companies. Milk them until they are dry! Besides writing a check to yourself doesn't make any sense.

I was being ironic.

Ford has a market cap under $5 billion. If the current 250 thousand employees ponied up 20k each they would own their company.

And when did writing yourself a check not make any sense? That's what I do.
 

BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
I was being ironic.

Ford has a market cap under $5 billion. If the current 250 thousand employees ponied up 20k each they would own their company.

And when did writing yourself a check not make any sense? That's what I do.

I stand on what I said. Why write yourself a check, that would transform revenue into W2 income, subject to income taxes, SSI, and medicare. It is often better to retain the earnings for investment, growth, or dividend payouts.
 

GT Tech

Ford GT Team Alumni
Aug 13, 2006
678
Kingman, Arizona
A thousand pardons my exalted leader. May the smell from 1000 camels follow me for 37 days.

I will defiantly be buying the first Makers Mark at B-J in January.:banana
 

Cobrar

GT Owner
Mark II Lifetime
Jun 24, 2006
4,027
Metro Detroit
The irony of the whole situation is a bunch of assholes in New York who've talked down their noses at Detroit for bad management needed an astronomically larger amount to save their own ass. Believe me, many tears were not shed as they all pathetically caved in on themselves. Fierce international competition and the one of the toughest labor markets in the world hurt Detroit; what's their excuse? Just blatantly ripping off the public.

It's just sad that people in America don't care or understand about the auto industry because it employs so many Americans. I love seeing people on CNN saying "if they built better cars they'd sell more". Yes, because the domestics control only 50% of the market, the clear answer is they are not selling enough cars because they suck. Yup, that's it.

Nice concise response, Dave - you got it right. On Monday in the WSJ there was an Opinion/Editorial that appeared: http://online.wsj.com/article/SB122628230122212449.html (Detroit Auto Makers Need More than a Bailout) which, frankly incensed me enough to respond to the writer at DowJones. A summary of the message:

Mr. Ingrassia,

It is with great interest that I read your Op Ed in today's Journal re: the Auto Industry. It is certainly a 90,000 foot view; a stirring opinion founded on common misconceptions of why the industry is where it is.

First and foremost, I find it remarkable that there is criticism from a part of our country that used to be referred to as the ‘financial capital of the world’, now a distant third by most counts. The very same pundits that have destroyed the global financial markets and whom deliver intangibles like wealth management and financial derivatives are now seemingly qualified to judge an industry that employs its capital in the production of real goods and services? Perhaps a perspective on the automakers position is a bit different when you're closer to our ground zero - Detroit. A few of the more substantive observations:

1) Notwithstanding arguments to the contrary, the GM and F components of the Detroit 3 were heavily invested in massive rebuilding/recapitalization processes when the US financial markets decided to capitulate, driven down by the cumulative effect of poor lending practices, unmitigated speculation and unrestrained hedge fund activity practiced by the Street. Out of fear of outright collapse, the Wall St. team has been accorded some $700B+ in federal ‘bail-out’ with promise for more. The US taxpayer meanwhile has not seen any significant oversight or relief on the package for Wall St. Sadly, I also expect that we will see record executive compensation and bonus’ paid to the subject firms on Wall.

2) Unlike Wall Street, automakers have endured not only federal regulation, but regional mandates that have been layered successively on top of each other making compliance nearly impossible. Complex proposition? Let's add some dimension to it. Try to balance moving targets on regulatory compliance, manufacture product of high quality, meet/exceed consumer expectation and make a profit. Not enough? Add in a legislative element taken continues to take the short view. Instead of benchmarking the global competitive landscapes and understanding cost drivers, Congress instead adds complexity and burden in regulation under the guise of protecting the consumer against themselves. Cost of capital for the auto industry you ask? You can't begin to fathom the amount of capital, nor the long term implications associated with operating a capital intensive business and the long cycle product plans - it just doesn't turn on a dime.

3) And while in Washington, this same ‘while you were sleeping’ government confused Fair Trade with Free Trade, essentially permitting foreign competitors to enjoy unchecked long term competitive advantages in health care cost, infrastructure, raw material and local investment subsidies, not to mention tax and import advantages. In a gesture, the foreign automakers invested here, but only because it made financial and political sense for them to do so. By my accounting, non-US corp profit is repatriated back outside the US. This same government is qualified to operate a ‘going concern’ on a long term basis? Please show me a working precedent.

The view from 90,000 feet is just that, a view from 90,000 feet without oxygen. Who cares? After all, we're a nation transitioning from an industrial economy to a service economy, aren't we? A funny thing happened along the way, over time we have exported one of the few remaining core industrial competencies and now run the risk of not having enough jobs to buy the services that are the center of our new economy. Grand planning. And the automakers only want $50B? Cheap by comparison to the influsion that will be needed to float Wall Street.

Thanks for your time.

Last, if you made it through the above, please do as BlackIce recommended and write your legislators.
 

BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
Cobra, one point the 700B has not be spent on the banking industry yet, only about 250B. The treasury has 300 billion authorized and have given 250B to banking, 50B remains. The treasury has to get congressional authorization for the rest of the 700B. From what I am hearing, for the auto bailout to happen before Jan 20th, is dependent on getting some Republican Senators to go along with the Democrats. Then the bill would be vetoed and will need to be overridden. Even if overridden the executive branch can stonewall the distribution until Obama gets into office. If I was Wagner I would not hold my breath for a holdout before Obama is in office, but instead plan how am I going to last until Feb. This will be very difficult, given the news everyone is reading about GM's demise. Some if not many will propone buying a GM, or buy another brand. GM's sales are going to tank!
 
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dbk

Admin
Staff member
Le Mans 2010 Supporter
Jul 30, 2005
15,247
Metro Detroit
Last, if you made it through the above, please do as BlackIce recommended and write your legislators.

I played high school ball with Paul Ingrassia's son. Chances are your response will go right in the bin and not given a second thought. These are east coast elitists.
 

AJB

GT
Mark II Lifetime
Le Mans 2010 Supporter
Jun 28, 2006
2,976
Bloomfield Hills, Michigan
Rex - great writing. I wrote to my Congressmen/women too...but they already support.
I am not a fan of Government support (my vote was MCain and not Obama) without major restructuring on the part of the company and of labor per my earlier notes, but I am concerned that without a short term loan (not a bailout as some call it) that GM and Ford and Chrysler will not survive to 'fight that battle'. That is the big issue.
AJB
 

BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
What would you call a short term loan that would only be paid back if a bailout package comes later? Even before the credit crisis all of the auto companies credit ratings were in the toilet and credit wasn't available via normal channels.
 

BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
Obama Ties Automaker Rescue to Regulation

From - http://www.washingtonpost.com/wp-dyn/content/article/2008/11/13/AR2008111303804.html

Top advisers to President-elect Barack Obama are helping to draft an auto industry rescue plan that would bring new government oversight, including the possibility of an auto czar who could ensure the money was being used wisely.

Aides said Obama is also open to an oversight board that would perform the same function as one individual. The proposals come as the estimates of the cost to fix Detroit's three largest automakers continue to mount.

"Certainly he wouldn't believe in it being a blank check," said an Obama adviser, who spoke on condition of anonymity due to not being authorized to speak publicly on the topic. "He wants oversight to be making sure the auto companies have figured out how to become viable, ongoing concerns." ...

Right now, I don't think there are the votes. I don't know of a single Republican who's willing to support" the auto bailout, Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, said yesterday. While Dodd said he supports a bailout, he cautioned against "bringing up a proposition that might fail" and suggested that Congress wait until Obama takes office...

An increasing number of analysts say the cost of reviving the American auto industry is not likely to stop with the current plans. Citigroup analyst Itay Michaeli said a General Motors bailout alone would exceed $21 billion. J.P. Morgan Chase's Himanshu Patel and Barclays Capital's Brian A. Johnson both speculated that federal assistance for GM could easily reach $30 billion.

At the pace GM and Ford are burning through their cash -- at a rate of least $4.9 billion a month -- $25 billion won't last much longer than five months. And that's not taking into account what Chrysler might need...
 
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Neilda

GT Owner
Oct 19, 2005
3,559
London, UK
A very interesting thread....

It seems to me that America cannot afford to let the automotive companies go bust - the ripples would affect every community.

However, should the American taxpayer bail out companies that fail?

Here in the UK we've had a banking crisis, most notably Northern Rock (a UK 'building society' or savings bank) and then, of course, Lehmans. This led to RBS, HSBC and other major UK banks to the brink of meltdown - UK savers would have lost savings. So the government bailed the banks out and now we, the tax payer, effectively own these banks.

Good? Well, sort of. Except the banks are now playing hard ball with the very customers that saved them! Interest rate cuts not passed on to borrowers, houses repossessed for the smallest transgressions - and so on.

So how is this relevant to Ford, GM and Chrysler for example?

If the American tax payer were to bail out the automotive industry then there'll be a host of issues to sort out. Lower pay levels, lower benefits, different 'leaner' working practices.

And this doesn't address the issue that the export markets might claim that US cars are now subsidised by the state - would this lead to an increase in import tariffs I wonder?

Would this stimulate claims from other large US manufacturing companies also wanting hand-outs from the government?

No easy solutions - far from it. But I watch with interest and a genuine enthusiasm to see these great companies and the thousands of jobs saved.
 

tpraceman

THEE GT OWNER
Mark II Lifetime
Le Mans 2010 Supporter
Feb 20, 2006
2,835
Washington Michigan
Lets look at a closely related industry which might shed some light.

Some of you may remember we had 7 of the largest steel producing companies in the world (any many more small ones) here in the USA.

Clinton would not respond to "dumping" in the USA from Asian suppliers.
The pay sweat shop .17 cents per hour (amazing what a night in the white house with Bill would do to your veiws):eek

Within 1 year we lost all but 1 steel company. When they shut down you cannot restart, the furnaces are just solid chucks of nothing and now useless.
We were told that the low over import cost would reduce our costs and make us more competitive.

In the Detroit economic meeting I warned the politicians that we will be paying 10X what we do now in 10 years.

I was wrong it only took 3 years after LTD closed up :ack

Want to pay $100,000.00 for a KIA! Don't laugh, that’s what the Economic board did to me.:ack

With no steel nor tool & die-nor engineers what we will all do should we have to go to war?:willy

Just bought a load of the Cheap Cold Rolled 1018 steel for a project last week.
6061-T6 Aluminum was cheaper than steel! I actually had the Purchasing agent check it 3 times and all different sizes. I still cannot believe it.:eek

87% of all sheet metal stamping companies were driven out of business over night as they paid 700% (in bulk) more than the Asian counter parts pay......They relate it to shipping cost......."we so sorry":bs
 
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Fast Freddy

GPS'D 225 MPH
Mark II Lifetime
Aug 5, 2005
2,727
Avondale, Arizona
this is a national security issue. the gov't needs to bail the auto industry out. the airlines are next......
 

Doc

Huge ****ing Crybaby
May 15, 2006
113
.

[read this]
 

on d bit

Well-known member
Jul 20, 2008
297
maricopa az
what about lifting the sanctions and regulations that the United States auto manufacturers have to deal with? the rules for selling a camry and a euro focus here in the u.s. should be the same for both toyota and ford. from my understanding they are not as of today.
would this not let some of the top selling world platforms from both gm and ford be sold in the United States?

if the government wants to help, why dont they help in developing a fair playing field for all manufacturers not just those from other nations. more regulations, more handouts, and more government control is NOT the answer in my mind. hell the government has never been able to use money wisely! why do they think they can now?
 
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jamie

GT Owner
Mark II Lifetime
Sep 23, 2005
271
Virginia
I read that the auto companies want 25 billion so that they can fund their health plans and retirement accounts. Isn't that sort of saying ok we want all Americans weather you have health care or not or retirement or not to give us some of your tax dollars so that you can make sure that we (the auto workers) have our health and retirement covered weather the rest of you do or not? I don't think they should give them any more money, at the rate there losing money it would be gone in 6 months and they would want more and it would be never ending. If the companies go into bankruptcy and shut down they could re-open with a new non union workforce and at 50% of the current union workers pay and benefits plan the new workers would still be some of the highest paid workers in the US. Maybe they should model their business like Honda and Toyota do in non union states like Georgia where they seem to be running profitable companies.
















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