AND 
Automakers Are Running Out of Time
Despite the intense pleas from GM, Ford, and Chrysler yesterday at the Senate Banking Committee, Washington’s reception to the automakers has been cool.
Reports indicate that the Senate will not have adequate votes to pass the legislation, and may not even vote on it. To the automakers Senator Dodd stated “You’re asking an awful lot, I’d like to tell you that in the next couple of days this is going to happen. I don’t think it is.”
Furthermore, Democrats continue to oppose the alternative proposal of allowing the $25 billion retooling loan to act as a bridge.
Each day GM’s financial status becomes more and more precarious, and November sales are reportedly as bad so far as October was. Both Chrysler and GM have indicated they will likely run out of cash by year end, and expect dire and widespread economic consequences if they do.
The automakers are expected to appear before a House committee today.
Source (AP)
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November 19th, 2008 at 7:20 am
first!
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November 19th, 2008 at 7:22 am
What bothers me is that the US government can give 700 billion to wall street for paper but can’t come up with another 25 billion loan to automakers so they can survive until they can bring new lines of cars to the market.
IMO the government needs to loan the 25 billion to the automakers but with the stipulation that 1/2 the cars they produce across all lines, starting now, would be CNG. You can refuel at home but what about long trips… What? No refueling stations? Contact Walmart and tell them to put a public CNG refueling station at every store. Walmart is currently considering converting to CNG for their trucks.
Build something that will give people a reason to buy a new car and they will buy a new car.
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November 19th, 2008 at 7:50 am
From the AP article.
Given the concerns, Democrats in the Senate discussed but rejected the option favored by the White House and GOP lawmakers to let the auto industry use a $25 billion loan program created by Congress in September — designed to help the companies develop more fuel-efficient vehicles — to tide them over until President-elect Barack Obama takes office.
So what will happen to the 25B if the auto companies go under?
Can Toyota / Tesla use it?
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November 19th, 2008 at 7:51 am
What I don’t get is why the Dem’s are opposed to using the $25B retooling loan for now. By the time the big 2.8 came back for more, they’d be in a better position to ram through pretty much whatever they want.
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November 19th, 2008 at 8:00 am
DB@4: One problem may be that they’ve rolled over for Bush and the Republicans so much in the last two years, that they’re tired of it and feel like they should not have to after what was, by any objective measure, the most decisive election in the last 20 years.
Another problem is that the parties are positioning the debate for the next four years. After rubber-stamping Bush from 2000-06, the Republicans will now wake up and decide that Bush was no conservative, and they will “go back to conservative principles.” This means saying “no” to all government spending on principle, even though over 90% of economists will tell you that government needs to spend more, not less, during a recession. To counter this, Democrats, especially from more conservative districts, will be gun-shy about any new spending. They will want strings that conservatives will decry as excessive government intrusion.
Now it’s time to see if folks are serious about reaching across the aisle to get things done. The problem is that Obama has taken up the line that there is one president at a time (a good thing under normal circumstances), and no one is listening to this president any more. Will McCain reach out the bridge the gap? Lieberman? Reid? I guess we’ll have to hope that GM and Chrysler limp through to the 21st of January.
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November 19th, 2008 at 8:00 am
#4 DB Cooper says
What I don’t get is why the Dem’s are opposed to using the $25B retooling loan for now. By the time the big 2.8 came back for more, they’d be in a better position to ram through pretty much whatever they want.
===============================================
There’s a lot of political theatre going on and everybody wants to be on TV, it seems. But what you say is so logical that maybe that’s what will happen, eventually.
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November 19th, 2008 at 8:02 am
How will any amount of money help the automakers if no one is buying?
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November 19th, 2008 at 8:03 am
My thoughts
GM has been restructuring etc. all along so it’s not like they’ve been just moving along the same path and now asking for $25B.
UAW auto workers cost GM around $73 per hour. GM has negotiated with the UAW so they (UAW) pick up all the health insurance and other benny’s. This will result in having the auto workers cost GM around $44 per hour, about the same as Toyota and Honda workers. However, this change doesn’t take place until 2010 (about 13 months from now), so if we think of the “loan” (and that’s the Big 3 are asking for as a “loan”, not a “bailout” as it’s widely being called) as a bridge to get to 2010, it makes all the sense in the world. In the 70″ we gave Chrysler a loan and they repaid the loan with interest and ahead of schedule.
If the financial crisis had not happened and people had been able to get car loans, the Big 3 would not be asking for this loan, so it’s not necessarily something that the Big 3 did that caused their problem. So they need this bridge to 2010 and it’s not a bridge to nowhere. GM currently has the most models averaging over 30 MPG that any other car company and the plug-in Chevy Volt along with other plug-in’s will be out in the 2010. It’s with this thought in mind that I don’t think the management has to be replaced as a condition of the loan. When we gave Chrysler their loan in the 70’s, we didn’t say, ok you can have your loan, but the management has to be replaced.
Even Pat Buchanan said yesterday that this loan to GM must be approved! He stated that if any of the Big 3 went down, it would be the beginning of the end of manufacturing in the United States. He said any other country with auto manufacturing would stand behind and help out their auto manufacturing company. If a country wants to be an economic power in the world, it has to manufacture it’s own cars.
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November 19th, 2008 at 8:05 am
#7 Guy Incognito says
How will any amount of money help the automakers if no one is buying?
==========================================
GM’s actual customers are GM dealers,who buy the car from GM for resale, so what hurts GM the most the fastest is if its own dealers are not buying from GM, as seems to be the case right now.
In the bigger picture, though, I agree with you, and it might be that more action and better politics would come from a widespread incentive to consumers.
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November 19th, 2008 at 8:06 am
So I guess our economy is not doing very well. They say 2009 is going to be just as bad if not worse. Time to pack up and find that nice place in the woods. Does anybody know the best places for survival living are? Perhaps one of those communities.
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November 19th, 2008 at 8:06 am
Two options:
1) try to weather the storm until Obama takes office (and control of half of the bailout money;
2) file chapter 11 now…
Pick your poison.
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November 19th, 2008 at 8:08 am
I’d suggest instead of loaning any of the big three anything at all, how about a massive government purchase of excess inventory. This way we know we are getting an asset in exchange for the cash. The purchases could be targeted to larger domestically designed and assembled vehicles which exceed the fuel economy and emissions for existing government vehicles, such as municipal ambulances, police cars, and vehicles used by the FDIC (they probably need a few extras now), FTC, etc Negotiate a fair discount for this bulk purchase, to be delivered directly from the automaker (sorry dealerships–no unnecessary mark-ups), and allow for up to 18 months for delivery (in case some municipalities have more recent vehicles that aren’t quite ready for replacing).
In my professional and personal life it is rarely either or. Not sure why that always seems to be the case in Washington. Bailout from 700b approved for banks OR use the 25b approved for something different altogether. I vote none of the above.
PS: CNG is as practical as Hydrogen. You are driving a bomb.
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November 19th, 2008 at 8:09 am
#11 Dave B –> They are taking 1) already even while talking.
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November 19th, 2008 at 8:13 am
#12 D LO –> Some big orders for government vehicles, especially if for state and local governments, could modernize a lot of important fleets and be a step that provides visible benefits to lots of people. No need to leave out dealers, though, as all these vehicles need local support and service.
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November 19th, 2008 at 8:18 am
Couple things:
A) “Automakers are Running out of time” – If we are talking about their mounting financial crisis, this is true…but only GM measures their lifespan in days. Ford has at least 400 more of them with their reserves and Chrysler’s mom and dad can keep paying their Visa bill almost indefinitely
B) As I mentioned earlier in the week, this ‘legislation’ has been dead long before it hit the floor. They had a private ‘pow-wow’/vote counting phone call session over the weekend (and on monday) and knew it was not going to fly. What we have here is grandstanding and a opportunity to drag some CEOs and UAW to the hill. Reid wants the show, Pelosi just wants this over, so they split the difference and we get 3 or 4 days of capital hill– Days of Our Lives style
C) As for the quote, “Furthermore, Democrats continue to oppose the alternative proposal of allowing the $25 billion retooling loan to act as a bridge”… They only oppose to it, in the fact that they already have it and they want more money out of the Republicans so they do not have to have their name attached to it (and sole responsibility) in January. They are opposed to it like I am opposed to getting a bonus of $100 when I know they just gave someone else $200…I am for sure still taking the $100, but first I have to jump up and down a bit.
Basically the 25 billion ‘retooled’ converted to bailout loan is easily adequate to get all the players through into January 20th. However, if they whisper support for taking it, or officially show anything less that ‘opposition’ it basically scuttles the whole ‘dog and pony’ show we have going on here now.
Again, the ‘actual’ bailout/25B conversion is already draw up and ready to go, everyone knows it, the Reps are just getting more and more annoyed and saying over the top things to combat the PR storm the other side has conjured up.
/even I’m a little annoyed, I wish it was friday, so this thing could be rammed through and we won’t have to talk about it again until early January…a flashing neon sign on the White House could not make this plot anymore clear
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November 19th, 2008 at 8:19 am
Seems like this would be a great time for the US Postal Service to step in and order a large quantity of electric urban delivery vehicles. They’re looking to replace hundreds of thousands aren’t they? (I don’t think they’re looking at EV though, but I’m not sure why. Those things don’t travel many miles per day.)
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November 19th, 2008 at 8:19 am
I’m thinking they should take what they can get. If they can only get the retooling loan for now so be it.
My first concern is that the reality is that the economy is not going to turn around for 3-4 years at the earliest. Until that happens people are not going to be able to get loans or afford any new car. Families here in Detroit are struggling to pay their bills and keep their houses and this is not going to stop soon no mater how Obama Crazy Hopeful we get in this country.
My second concern is that any bail out would be bad triage fixing the wrong wound while the patient bleeds out. I am not anti-union, however it is starting to sound like the Union and bad leadership is killing these companies. If it is still too expensive to produce cars that people can afford that are not profitable anyway what is the point. What is the impact of CH 11 and CH7? Maybe in the long run filing will be better then a bailout.
It is sounding like most governments in the world help their companies become strong. If we don’t help ours how fast are we falling behind the rest of the world. All this talk about free markets and independence and individualism is nice but we could be becoming antiquated in the global economy.
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November 19th, 2008 at 8:23 am
Here is the problem: the current UAW contract and GM structure with their dealers is inherently more costly then what Toyota and Honda face in the US. If you just give GM money, then all this will do is go to the UAW Veba. There are basically two problems with this: first, you still have much of the UAW cost structure problems in place, so GM will still not be competitive, and secondly is it really fair to ask people making $25/hr to pay for people making $50/hr?
GM needs to be restructured. This means a flush of GM management, elimination of executive bonus programs, and elimination of UAW costly benefits and wages. This means that UAW member have to have co-pays like the rest of the world and they get 401(k) and not defined benefit pensions. Things like 30 and out and the job bank have got to go.
So, would I give GM $25 billion? Yes, but only after a chapter 11 type restructuring so the government does not have to do a bailout every year.
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November 19th, 2008 at 8:24 am
$25 Billion a “bridge”? Talk about a “Bridge to nowhere”.
GM is done. Washington knows it. They don’t want their name on the $25 Billion BAILOUT because they know that this buys GM only another 4 months. They are just trying to figure out how they can get through this so that they can get re-elected when the time comes.
9. RB, If consumers were buying GM’s cars then the dealers would be buying more cars from GM. Enough with the incentives… how about GM builds a better car so that people actually want to buy it without incentives and GM can make a profit?
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November 19th, 2008 at 8:29 am
#9 RB
GM’s actual customers are GM dealers,who buy the car from GM for resale, so what hurts GM the most the fastest is if its own dealers are not buying from GM, as seems to be the case right now.
In the bigger picture, though, I agree with you, and it might be that more action and better politics would come from a widespread incentive to consumers.
==============================
Ok, you are starting to sound like me now. I was writing out another post sorta like this, but decided to refresh first before hitting enter, lol.
I think maybe I need a small vacation, if I go away for a little bit can you just post in my name for a few days? Basically, just shoot down anything that involves spending money and support everything that appears to make the immediate situation worse. 9 times out of 10 thats the right thing to do, hehe.
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November 19th, 2008 at 8:41 am
I really want to support some help for the domestic auto makers. Hell, my own employer depnds heavily on them. But I cannot support any “aid” to them unless they are dealing with the problems that got them to this point.
If they are ready to confront their UAW problems and the associated legacy costs, then I think they can be viable functional companies. But if there is no plan to deal with the UAW waste then I feel that handing them $25 billion to limp along for another couple months is like handing a crackhead $20 to ‘help’ them go get high one more time.
I’d hand the crackhead a $20 bus ticket to the clinic; but not a $20 bill to go buy a couple rocks.
I’d support handing the auto industry a bridge loan to get them by while they fix their problems; but not handing them money to get by till the climate becomes even more favorable to get more handouts.
These UAW phucks make three times what everyone else doing the same work make. Hell, most of them make twice what I make with a 4-year engineering degree.
If the big three can afford to pay their assembly line crews that much money, they do not need a chunk of my paycheck to help them get by.
But I do admit, the government has been part of the cause of the UAW getting this stranglehold over the auto makers in the first place. So it would not be totally out of line to expect the government to help clean up the mess.
But, I repeat – only if the original root causes are addressed.
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November 19th, 2008 at 8:51 am
Perhaps a Chapter 11 restructuring is what needs to be done.
I hope laws protecting auto dealership franchises are revised as well, so that automakers aren’t tied to those bad policies.
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November 19th, 2008 at 8:56 am
25B bailout? You could buy the whole company for that amount. Of course, nobody would be so stupid. And that’s the problem: GM is already dead. But giants fall slowly.
What you guys don’t want to see is that the Volt can’t save GM. I don’t even think, that GM wil make profit with it. Don’t get me wrong – I like the Volt. GM is getting concreter than any other car builder. But it’s too big and way too expensive. Just an old style metal carriage, where the combustion engine ist replace by a electric motor (or a hybrid).
But real innovation looks different. And is way cheaper. Until 2010 there will be enough alternatives to the Volt…
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November 19th, 2008 at 9:08 am
The republicans I see on TV and their various mouthpieces in the conservative media (what little there is left of it thank god) are blaming the labor unions for the auto crisis. Stating that the UAW auto worker costs $25 more than the non-union and giving that as the main cause that US auto makers are not competitive. It is just another in a long series of calculated moves to destroy labor unions in this country.
Now that labor unions have been wiped out of 90% of the American economy who is simple-minded enough to believe that unions are the cause of our collective economic woes???
The pundits have been given their talking points and have been blabbing on (non-stop) about how the unions are the problem. Guess what. That makes no sense at all. Speaking as a hard working American who has never been in a union and seen my benefits and salary (adjusted for inflation) go DOWN over the past 20 years yet productivity go up steadily it strikes me as just another big lie. Watching Senator Tom Coburn (R-Oklahoma) this morning I see he is dutifully following his anti-union marching orders.
News flash, the auto makers admit that labor costs are a very minor part of the cost of doing business. The economy is in the tank because of incompetent leadership in corporations and the “leaders” in the government being bought out by the special interests. Why does China require its auto makers to make cars that get 40 mpg but the big 3 spent millions just in the last year to kill an increase in mileage standards here in the US. Killing the labor unions will have zero benefit for the economy or for the competitiveness of US auto makers. Getting talking heads like Tom Coburn out of office will. As will meaningful legislation to stop jobs from streaming out of the country and force companies to produce products that people actually want.
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November 19th, 2008 at 9:08 am
The federal government should immediately initiate a program to develop/select a standard powertrain for future American cars (i.e., CNG, battery, whatever) … then use tax $$ to build the infrastructure to support this new mode of transportation. This is how I’d like my money spent.
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November 19th, 2008 at 9:18 am
This week is just about partisan politics.
Democrats could provide the $25 Billion from the retooling money already provided but won’t because Bush will support it.
Bush could have the treasury secretary use part of the $700 Billion, but won’t because the Democrats want it.
GM will just have to weather the storm until Obama takes office.
(#11 Dave B -> Option 1)
GM should be working with the Obama transition team now, to get what they want on January 21.
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November 19th, 2008 at 9:22 am
To those of you who are jealous of the protections that labor union employees get and their higher wages: Why are you griping about someone who makes a couple bucks more an hour than you when the CEOs and other fat cats make MILLIONS (some make millions daily).
You are easily led. Let me take a turn. It is in your best interest to send me $1000 right away. My address is…
– NO PLUS = NO SALE –
ps, CNG is for trucks not for cars. It makes zero sense for cars but would be the best fuel for trucks. Go electric (all-electric) cars.
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November 19th, 2008 at 9:25 am
It was Keynesian economics and socialist central planning that caused the current financial problems so how can MORE of the same fix the problem? It can’t!
Taxpayer money (DEBT) is only a Band-Aid on a cancer!! It makes it feel and look a little better while the cancer grows under the bandage.
Austrian economics has warned of this type of collapse due to central planning since 1871! Keynesian economics collapsed the Soviets before us so why are we listening to these morons now?
Visit http://www.mises.org to learn more about how Austrian economics can really FIX this problem!
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November 19th, 2008 at 9:30 am
@Tim 28 – it is in your best interest to send me $2000 right away. You will directly benefit if you do that. Remember to put the cash in an envelope (a big one) and get it to me really soon. You need me to repeat this a few times before your brain is sufficiently programmed to follow my instructions. Now get your cash and put it in the envelope and send it to me. My address is ….
– NO PLUG = NO SALE –
ps, CNG is for trucks not for cars. It makes zero sense for cars but would be the best fuel for trucks. Go electric (all-electric) cars.
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November 19th, 2008 at 9:39 am
24 CS Guy:
The entire basis of your argument is tied up in the “The auto companies admit labor isn’t a huge cost to them”
Where have you ever heard that? link?
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November 19th, 2008 at 9:52 am
Senator Dood was making noises for the voters back home – he
will support anything which keeps his financial benefactors ( the labor unions) alive. That statement was pure BS. Shelby supports Chapter 11 which almost every economist I’ve seen also agrees with. That’s the only way that the automakers have a chance to throw off the union wagerate albatross and have a shot at a future.
Any future that includes a union is going to be a short future.
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November 19th, 2008 at 10:18 am
Even the omniscient Toyota is having problems as the demand shortfall is causing pileups in storage areas. Sounds like a contraction in supply capacity is needed industry wide. Unfortunately for the Big 3, closing a plant does not reduce their fixed costs much due to their contractual obligations.
http://www.iht.com/articles/2008/11/19/business/19ports.php
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November 19th, 2008 at 10:22 am
yes CEO pay is pretty ridiculous. Especially without any real accountability. You ran our company into the ground here’s 50m to leave. That’s total BS. But a relatively unskilled worker making 72 dollars an hour is total BS too. I have friends who are engineers who make less than half of this.
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November 19th, 2008 at 10:23 am
I agree with Statik that this is a lot more theater than substance but the hearings have been helpful in getting the issues into focus.
The consensus seems to be that loans and so forth are a good idea if, and only if, there is a sustainable plan. Labor costs seem to be the primary impediment to sustainability, and payments for health care and pensions for retired workers seem to be a major part of those costs.
Given this, it’s not rocket science to conclude that the path to the future runs over the bodies of retired workers. The “let them go Chapter 11″ is really shorthand for this view since Chapter 11 would let them the companies abrogate their contractual obligations.
It’s also not rocket science to see how this could be done better and with more aplomb without a bankruptcy. The unions would need to give up health care for retirees and perhaps some parts of the comprehensive health care benefits that existing workers get now as well as some part of the pensions for retirees. The government would help with the pensions (not really a concession because it would do this is there was a bankruptcy), and of course supply the loans. To the extent that health care for retirees is a give-away for the union, that could be ameliorated by health care reform.
With respect to CS Guy’s points: I’m not an anti-union guy, I believe that some of the stuff posted here and elsewhere is anti-union propaganda being passed off as fact, and I feel sorry for the retirees. But the only way forward for the auto companies is to have labor costs which are the same as the foreign manufacturers, and the only path to that goal is to jettison health and pension benefits for retirees and, possibly, wage cuts for existing workers. At the end of the day you have to do what’s best for the existing workers.
FWIW this same drama was played out in CA a few years ago in the supermarket industry. There the traditional supermarkets had to get wage concessions in order to compete with the Walmarts of the world whose labor costs were lower. In industries with low profit margins it’s a tough game.
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November 19th, 2008 at 10:24 am
25 billion won’t save GM. The Volt won’t save GM. It’s already dead. GM didn’t need 25 billion to start making Escalades. INstead of making more fuel efficient cars, as a matter of course, they made a big deal about flex-fuel, when that was just a gimmick to improve their CAFE without actually improving anything. If you don’t believe me, check the way CAFE is calculated regarding flex fuel vehicles. They don’t have to count 50% of the ethanol burned – making a 9MPG car look more like a 29.97MPG for CAFE. Nice, but it doesn’t do anything but exploit a loophole. In my opinion, this is exactly what they’re doing with the Volt. Instead of making a car that truly is more efficient, they’re building a car that can look like it gets over 100MPG on the fuel economy test. True fuel economy – more like 50MPG. That’s great, but let’s try to improve that rather than trying to act like it doesn’t exist cause you can plug your car in. Anybody think about what their electric bill is going to be after plugging their car in every night for 8 hours? How much coal is that going to burn? There’s no easy answer to fuel consumption. We need more efficient vehicles, period. No gimmicks – give me an american car that gets terrific fuel economy. Can we shoot for 60MPG from a small sedan? Honda had a car that got over 70MPG in the 90’s. Granted it was ugly and tiny, but why weren’t the big 3 buying them and taking them apart for innovations? Nope – just kept building Escalades and Suburbans lollygagging until the bottom fell out. RIP
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November 19th, 2008 at 10:27 am
There is a very important reason why GM and other auto manufacturers are selling fewer cars. It’s the reason why I and many others aren’t buying any car. It’s the reason why most people prefer to lease than to buy. It’s not all about the economy. I myself have enough cash to buy 3 new cars even though I’m driving two 2004 models.
Why am I’m waiting? The better question would be: what am I waiting for?
I’m waiting for two things. Liquidation of old automotive technology and introduction of new automotive technology.
When GM announced they could make a car that can be plugged into an outlet to charge a lithium ion battery that allows the car to be driven 40 miles, a lot of people listened. Then when they said they could extend the range for another 300 miles with a gas powered generator to maintain battery charge, a lot of people started to think. Why should I buy a car that gets 30-50mpg when I could WAIT and buy a car I can drive 40 miles a day without using a drop of gas?
GM, whether they knew it or not, killed the automotive industry when they announced the VOLT.
25 Billion is not going to save the industry, unless it’s used to get the VOLT on the road and in show rooms sooner.
How many people do you know bought a new VHS Player after DVD Players were released? I’m sure some did because of liquidation pricing. Sure I’ll trade in one of my 2004 cars for a 2009 if the price dropped by half. Otherwise I’m WAITING for the Plug-In Volt and keeping to my motto. No Plug No Sale.
NPNS!
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November 19th, 2008 at 10:29 am
At this rate, Lyle, you will have to rename your blog from “GM-volt” to “GM Bailout”…
The BIG 3 put themself in that position and before going out and ask for more money, they should give example (CEO, upper mgmt, syndicate) and clearly state they will also make major changes to pass through those ruff time, which they don’t…
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November 19th, 2008 at 10:33 am
Great idea in linked article. If people won’t buy from a Chpt 11 firm (though there are many cases where people still do), the gov’t could guarantee a certain amount of warranty costs if GM moves to Chpt 7, and if sales drop further.
Help me out with the #’s here Statik. If GM sells 1,000,000 vehicles/year, and each vehicle has 1,000 in warranty costs, this would cost the gov $1 billion, if GM doesn’t survive. Depending on what risk factor you put on that, lets say %25 chance of Chpt 7, this warranty program would cost the gov 250 million.
I’m not a fan of gov’t intervention here (GM has an incentive problem), but for those who fear bankruptcy, $250 million would go a long way towards reducing the fears, and costs 100X less than a straight up bailout.
http://www.iht.com/articles/2008/11/18/business/sorkin.php?page=2
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November 19th, 2008 at 10:34 am
#32 Cautious Fan – “Even the omniscient Toyota is having problem”
Toyota is in trouble because they badly timed a huge expansion just in time for a world wide downturn. If their financials were like GM’s going into this downturn they’d probably be first into Chapter 11. (Honda seems the best situated both because they only have small vehicles and because of the flexibility of their assembly lines).
#36 Nelson – “GM, whether they knew it or not, killed the automotive industry when they announced the VOLT.”
Very interesting point I’ve never seen mentioned. As support for this, did you notice that at least one Senator said he was trying to nurse his mini van along until he could get a Volt? For me it’s definitely true. NPNS.
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November 19th, 2008 at 10:36 am
#38… that would only work for cars sold in the USA… what % of GM sales is now coming for the USA market only?
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November 19th, 2008 at 10:40 am
The democrats are playing this perfectly. They push the republicans to for money to save GM, knowing that the reps will refuse. They also know that sending billions to the big 3 will just result in more billions and more billions. So they bank on GM being right that they don’t have the cash to make it to Jan. 20th and with the reps declining to loan the big 3 money GM fails on Bushes watch. Now the dems don’t have to spend billions on GM to keep it afloat and they don’t get flack from the UAW for letting GM fail. It’s brilliant.
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November 19th, 2008 at 10:41 am
Ch. 11 is the way to go. Govt can provide the needed DIP financing, if no one else does. All the economists’ writings I’ve read support this position.
And we need to get rid of all the execs in GM. Esp. the ones that try to dictate to us how they will accept bailout money.
One major thing that needs to be done is to start proving universal healthcare – like all other industrialized countries do. The fact that GM now does the work of Govt. is a major competetive burden compared to all other auto majors.
Make changes to particle emission laws so that all the high mileage diesel cars from EU can be sold here. That way big 3 can start making cars that people would want to buy here …
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November 19th, 2008 at 10:44 am
#40 frankyB
AFAIK GM’s North American operation is technically separate so a bankruptcy could be limited to those operations. Operations in other parts of the world wouldn’t be affected.
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November 19th, 2008 at 10:51 am
A lot of UAW bashing and I have jumped on that runaway train, wherein there is simply ZERO logic for GM to be paying assembly workers an average over $70/hr…
I do however, recognize 1 major issue in bashing the UAW …. GM signed the freakin contract with them…!!!
So we can we continue to blame them for not fighting for what was agreed to ??? ….while at the same time the term ’shooting yourself in the foot’ does creep into my head when I hear how the UAW refuses to renegotiate in any way.
PS: whomever claimed CNG wasn’t viable because “you are driving a bomb”….I love how these people dont think about the fact that they already have been driving around strapped to a machine with big tanks of gasoline/diesel in them….
Also a big believer in CNG for TRUCKS not cars…
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November 19th, 2008 at 10:51 am
Brad G # 2
CNG is not a solution at this time.
We don’t have a good infrastructure for that.
But we have an infrastructure for gasoline and electricity.
CNG doesn’t really make sense now. Perhaps in the not so distant future?
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November 19th, 2008 at 11:04 am
A British Lesson on Auto Bailouts
http://www.nytimes.com/2008/11/18/business/economy/18car.html?_r=1&th&emc=th
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November 19th, 2008 at 11:06 am
#38 cautious fan
Great idea in linked article. If people won’t buy from a Chpt 11 firm (though there are many cases where people still do), the gov’t could guarantee a certain amount of warranty costs if GM moves to Chpt 7, and if sales drop further.
Help me out with the #’s here Statik. If GM sells 1,000,000 vehicles/year, and each vehicle has 1,000 in warranty costs, this would cost the gov $1 billion, if GM doesn’t survive. Depending on what risk factor you put on that, lets say %25 chance of Chpt 7, this warranty program would cost the gov 250 million.
I’m not a fan of gov’t intervention here (GM has an incentive problem), but for those who fear bankruptcy, $250 million would go a long way towards reducing the fears, and costs 100X less than a straight up bailout.
http://www.iht.com/articles/2008/11/18/business/sorkin.php?page=2
—————————————
As was mentioned by frankyb in #40, “… that would only work for cars sold in the USA… what % of GM sales is now coming for the USA market only?” Assuming the rest of the GM’s international structure dissolved as well, this is a very real scenario, and any gov’t back warranty is pricey concept…and a logistical nightmare. So not really a option I think.
I think the only logical move (if you actually wanted to do it) would be to basically ‘commoditize’ the warranty.
I’ll explain.
When a customer buys a car, a certain portion of the pricing that GM has set is factored in to do warranty work. Instead of that money being entrusted to GM to be a good steward of, the money now has to go into a seperate, 3rd party trust. As the customer comes in for service that account is ‘drawn’ on by GM for the cost of warranty as it occurs.
In the event GM goes C7. The warranty is still covered (because the 3rd party trust is its own entity)…but no longer by GM. The trust merely tenders the warranty contract work to another national repair shop and that company draws upon the customer’s initial payment portion intended for warranty just the same as GM did.
Now GM (big 2.8) can advertise their cars as having a full warranty regardless of their solvency or future.
/that is my thought on how it would work best
(if they are going on the assumption that people won’t buy cars from a company that is going C11 or maybe C7 because the warranty is not assured)
I’m still not sure about the truth in the statement people won’t buy from companies in C11, I’d rather have a cheaper car than a warranty if I had the option. I’ve owned many new cars and it is a rare instance where any of them have needed anything major under warranty…I’d much rather have a extra $1,000 in my pocket than a 3 year/60 mile warranty.
Besides is anyone buy cars off GM anyway? How could you tell what the effect was? Sales are probably off 60% this month, whats the difference between 60% down and 70% down for a few months in C11? In C11 they would probably be cutting costs be a greater factor than that of the ‘lessened’ sales…and the cuts in C11 continue to pay huge, monsterours dividends for the next decade when the gov’t pulls them out of bankruptcy and back their play (and also renews public confidence in them).
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November 19th, 2008 at 11:18 am
LOS ANGELES — AFS Trinity Power Corporation today reported independent test results demonstrating that the company’s “Extreme Hybrid” technology that utilizes batteries in combination with ultracapacitors will enable a plug in hybrid vehicle using the system to have a useful life that is 6 times greater than plug ins that use lithium batteries alone.
http://www.evworld.com/news.cfm?newsid=19707
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November 19th, 2008 at 11:20 am
Nelson (#36); that’s the reason I’m waiting, but then, I have an unusual interest in electric cars, and the Volt. If you’re right, most of us here have drastically underestimated the notice that EREV and EV development has generated.
I agree with Rashiid (#45) that CNG or even LNG could become a near-future fuel option. Electricity and Gasoline seems the best “next step.” Hydrogen, if practical at all, belongs to the remote future.
My fear at the thought of government involvement at this time is that we’ll end up paying vast sums of Federal revenue trying to make Hydrogen happen before the technology is ready — resulting in broke industries and unacceptable vehicles.
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November 19th, 2008 at 11:22 am
CS Guy (#29)
What are you smoking?
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November 19th, 2008 at 11:40 am
Dear Folks!
For all of those who want to give GM a bridge loan, bailout or otherwise give them money. . . .
Just go out today and BUY a GM Car!
Otherwise, don’t complain if the rest of your fellow countrymen do not want to hand over their money to save GM!
Time to “put up or shut up!”
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November 19th, 2008 at 11:47 am
Let’s play “worst case / what’s next” for a moment.
What happens if there is no big 3 anymore, and we’re limited to what we can find on the car aisle at Wal-Mart, or a Honda dealership? Lets say US research finds a really good breakthrough or two; are we still screwed because no one is around to manufacture them into cars (unless Asian industries snap them up, along with our money)?
I cannot help but look at some software history, and wonder. Could automobiles be built on the “Linux” model?
In the beginning, there were university groups, government agencies, and IBM. Software was priced at the corporate user level, or custom written for high importance applications (like nuclear plants, moon rockets and the like). The idea of having a computer of one’s very own was equivalent to the idea of having a personal spaceship.
But then the microprocessor came, and suddenly there was money to be made — if only there was software. Programmers and tinkerers came out of the woodwork. It was one of those heady times when someone could start a major industry from his or her garage.
After Bill Gates and Microsoft put an end to most of that through absorbtion, a lot of programmers and tinkerers needed a new hobby. Unix, the holy grail of many programmers was still very expensive. If only there was a cheap alternative …
The answer proved to be Linux. A standard was established, and a geeks-only OS began to take shape: overseen and added to by a widely separated group of enthusiasts.
Eventually, Linux became stable enough and usable enough to find it’s way into industry, and even start making some headway into homes. It currently forms the basis of many dedicated-use appliances.
What has all of this got to do with cars?
Imagine that a design (based on CAD software) could be placed on-line, with the ability of many engineers and designers to contribute to it. Perhaps an engineering school would host and moderate it.
Eventually, through analysis and simulation (and actual undergraduate / post doctorate experimentation), some stable specifications for components could be arrived at.
Perhaps in exchange for using alternative energy technology, the government might agree not to regulate the following scenario to death:
At some point, someone, perhaps several someones (probably much smaller companies than any automotive concerns which exist today) would start putting up money with the intention of actually assembling the car, and desperate but still surviving parts suppliers might be motivated to make components which could comply with the on-line standards.
Eventually, regional small car companies would emerge to take the pre-designed powertrain components and build their own vehicles from them.
Ok, well; if “Chapter 11 is a fantasy,” consider this Science Fiction.
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November 19th, 2008 at 11:50 am
5 MarkinWI “One problem may be that they’ve rolled over for Bush and the Republicans so much in the last two years”
This Congress has had a lot of problems, being bipartisan was never among them.
“even though over 90% of economists will tell you that government needs to spend more, not less, during a recession.”
Exactly, just like FDR did which caused the stock market to boom and ended the Great Depression brilliantly.
“Now it’s time to see if folks are serious about reaching across the aisle to get things done.”
No Mark, they’re tired of “rolling over for 2 years” so we don’t need anymore of that.
“I guess we’ll have to hope that GM and Chrysler limp through to the 21st of January.”
Yeah, rumor is things might get so bad that they will have to travel on planes with other people on them someday, I think there was something about that as a sign in the book of Revelations. At least right now they’re still using private jets without the slightest hint of irony.
http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
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November 19th, 2008 at 11:56 am
People are fools. Detroit needs a bail out with new labor contract conditions and less money to go into health care.
Toyota wants to turn American into a sweat shop torturing our workers
http://www.corpwatch.org/article.php?id=15182
http://www.nlcnet.org/article.php?id=562
Who bough large SUV cars ?? Americans did. So blame yourselves.
Who sells gas guzzles the Asian car companies too.
Toyota Tundra, 4 runners, Nissan Titan etc.
Quality of Detroit is now better than Asian car companies.
Get a Grip and stop being greedy?
If you let Detroit fail your home will drop in value. Your way of life will fail and you will be forced to send your money to make another country richer.
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November 19th, 2008 at 12:00 pm
In addition to Detroit’s mistakes, seems like the deck is being stacked against Detroit.
For years, the US government has been “bailing out” the poor by giving them loans they couldn’t afford and didn’t deserve. Eventually, that wrecked the economy … and the US auto industry along with it. And at the same time, the US government has been eagerly helping the Japanese auto makers, offering huge tax incentives to buy cars like the Prius.
Yet, somehow GM is still able to make cars that are (except for the Prius) just as good and fuel efficient as those from Japan.
GM is not allowed to sell or manufacture cars in Japan. It’s a closed market, where Japanese industry can spend years working the kinks out of their designs and manufacturing processes. When the designs eventually get to the USA, they have that perceived “Japanese quality”. And unlike US citizens, Japanese citizens are loyal to Japanese industry. They gladly buyi their products, and only their products, tolerating imperfections because they know it’s in the best interest of their country.
Ironically, it’s not the US cars that are inferior to the Japanese. It’s the US government and US consumers that are inferior.
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November 19th, 2008 at 12:01 pm
Post #21
DB Cooper
Well said!!!
Agree
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November 19th, 2008 at 12:01 pm
Isn’t this interesting…
The big 3 bail out haggling is giving GM huge exposure for the Volt.
The ‘green’ crowd was aware of the Volt years ago. The ‘car’ crowd have read at least 5 or 6 progress reports from automotive magazines. Now the Wall Street crowd and political leaders through out the world know about the Volt.
When I mention the Volt to the ‘man on the street’ the response is, “pretty soon we’ll all be driving electric cars”.
So although the current confusion and wordage are physically draining. This economic slow down has ENSURED the making of not only the Volt, but a complete line of E-REV sport, off road, and small truck model lines. We don’t want hybrid, we want E-REV.
Time to invest in a battery company?
http://garfwod.250free.com/Photos/Volt-nose.jpg
Go VOLT, GO!
=D~
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November 19th, 2008 at 12:04 pm
Get ready to learn China’s national anthem!!!
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November 19th, 2008 at 12:29 pm
The officials apposing the use of the $25B that is already approved will cave if the immediate loans being sought outside of those arent’ given. Everybody knows this and those apposed to the additional loans won’t back down. This mess will be pushed off as much as possible on the next administration. Hard to blame the politicians given the BS approach the automakers have taken, although the are making the correct choice for the wrong reasons.
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November 19th, 2008 at 12:30 pm
There is a lot of UAW bashing.
Far be it from me to defend Union workers, but let’s be realistic about this. There is more than enough blame to go around. How about management’s decision (good or bad) for making junk cars in the 1980s and 1990s. It may have seemed like a good idea then, but they have completely damaged their reputation for now. People aren’t buying new cars much these days, but they are really staying away from American cars. If we only blame Unions, we are wrong.
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November 19th, 2008 at 12:35 pm
GM does NOT pay it’s current workers 70$/hr, that number comes from their total labor/pension/healthcare costs. Which includes all workers past/present. They have approximately 180k current workers, comparied to nearly 500k retires that are being paid. With the new UAW contract that goes into effect in 2010 they will have labor costs on par with the japanese manufacturers.
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November 19th, 2008 at 12:45 pm
Let’s make it official:
Buy out GM, and call it “Government Motors.” You don’t even need to change the logo.
Isn’t it nice to know that we have fine men and women of unimpeachable character in Washington to take care of us?
Best regards,
D’Artagnon
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November 19th, 2008 at 12:52 pm
Automakers running out of time? No way, they got lots of time! GM’s been doing this for 100 years. They’ll figure a way to ride out the storm. Just remember to help with the bailing out process whenever they take on too much water!
Nelson #36 – You are bang on! “GM, whether they knew it or not, killed the automotive industry when they announced the VOLT. 25 Billion is not going to save the industry, unless it’s used to get the VOLT on the road and in show rooms sooner.” Stop making autos people don’t want and get the VOLT on the road in 2009 !!!!
Hey Chris #58 – how does that anthem go?
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November 19th, 2008 at 12:53 pm
What’s all this about LTF (Little Tommy Friedman)? Why is anyone listening to that jackass? This is the same idiot who mouthpieced for the Saudi regime and observed “countries that have McDonalds don’t go to war with each other”. Wow…that’s deep Thomas. There are lots of people in the Democratic party that think exactly like this imbecile. We’re all screwed.
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November 19th, 2008 at 1:03 pm
Static #47
I 100% agree, the best option is for GM to cover it’s own warranty costs. It also aligns incentives better as then GM is motivated to keep quality high, whereas if the gov’t covered the warranty they’d have a short term incentive to sacrifice quality for costs. Funding future warranties in current dollars will mean GM paying cash out to support this, at the very time they need cash the most. This can be covered by charging more for the vehicle, thereby reducing demand for their cars (and increasing it for the other 2), but that’s just life.
I don’t support the gov’t warranty idea, I just wanted to point out there are far less expensive alternatives to addressing the “people won’t buy” concerns than throwing $50,000,000,000 at the problem. Yeah it’d only cover made in america cars, and yes it’d have complexities, but it still costs 100X less than a full bailout and allows reorganization to occur outside of the wonderful political process.
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November 19th, 2008 at 1:08 pm
Michael D #51 says,
Dear Folks!
For all of those who want to give GM a bridge loan, bailout or otherwise give them money. . . .
Just go out today and BUY a GM Car!
Otherwise, don’t complain if the rest of your fellow countrymen do not want to hand over their money to save GM!
Time to “put up or shut up!”
———–
Sorry. No plug, no sale.
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November 19th, 2008 at 1:13 pm
SOS, different day.
As the Volt seems to recede into the sunset, maybe it’s time to look harder at what the alternatives might be.
Does anyone know anything about the current (no pun intended) status of Aptera? Their website is pretty uninformative. The new Autoweek reports that the former general manager of Saleen(!) has gone to work for Aptera. Not a great recommendation IMHO, but at least they seem to be hiring!
And what about Trinity, as reported upon by Tim at #48 above? Arch posted a terrific link yesterday about Trinity’s application for $2.5 billion of the famous $25 billion for more efficient vehicles.
Zenn??? Others?
I am a die hard Chevrolet supporter, but I am not going to purchase another conventional ICE vehicle, regardless of the fate of the Volt.
N!@#$P, N%^&*S!
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November 19th, 2008 at 1:16 pm
When Rick was told the problem was of GM’s own making I would like to have seen him turn the tables on Congress and point out….
Congress needs to share part of the blame….
1) USA has the lowest gas tax in the major industrialized world. Indeed it is effectively a subsidy since costs are externalized.
2) Congress has even given business tax breaks (subsidies) for buying SUVs over a certain weight but not for sensible sized cars (originally in Farm bill intended for farm equipment I think). Indeed pointing out how some vehicles have been made bigger/heavier simply to qualify for the tax breaks. I wonder if Iowa farm lobby and a broken political system had anything to do with that?
Not that would have helped, but looking in the mirror for the source of blame can be enlightening. Of course Rick can use his mirror, so can UAW, so can Congress, and so can we the public.
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November 19th, 2008 at 1:20 pm
#46 JeffM
Great link Jeff. Puts an historical perspective on this decision.
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November 19th, 2008 at 1:25 pm
#53 2Snowboard:
Thanks for the link to the story about the corporate jets, even if it did almost make me throw up my breakfast.
That’s it. Let ‘em die.
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November 19th, 2008 at 1:33 pm
All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.
“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee. GM owns 8 of these jets. Ford only 3. Overall cost $20,000 per trip. Give them the money, they need it.
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November 19th, 2008 at 1:38 pm
Voltswagen … the next People’s Car … subsidized by the government … purchased by rich and poor. Heil Obama!
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November 19th, 2008 at 1:39 pm
the favorite thing I’ve read today….
N!@#$P, N%^&*S!
thanks Mr. Park….
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November 19th, 2008 at 2:12 pm
Statik #47
“Besides is anyone buy cars off GM anyway? How could you tell what the effect was? Sales are probably off 60% this month, whats the difference between 60% down and 70% down for a few months in C11? In C11 they would probably be cutting costs be a greater factor than that of the ‘lessened’ sales…and the cuts in C11 continue to pay huge, monsterours dividends for the next decade when the gov’t pulls them out of bankruptcy and back their play (and also renews public confidence in them).”
If sales do end up being off 60%, then that would be more substantiating the claim of sales problems for a car mfg in C11 than refuting it. The other non-immenently bankrupt mfgs will not be close to being off this much. These numbers will reflect all of the associated hoopla about their financial situation and likely C11. It will only get worse when it becomes a reality.
I like the idea of a 3rd party warranty holder though, but only if they are invcentivized not to pay excessive warraty claims.
Another concept that should have already begun is that the carmakers finance arms should have “registered” under the $700B bailout. They should be seeking assistance to gain liquidity so they can lend to car buyers. They should seek reclassification as an FDIC bank. Thereby allowing consumers to make deposits into “escro” accounts for future purchases. GM could guarantee the price for specific future models. Traditional savings accounts are paying nill right now and probably will be for the foreseeable future. These “escro” accounts can accrue inteterest at, say, 3%. The interest can be applied to the car purchase or returned with the deposit if the carmaker cannot deliver. With such accounts, we could make deposits for our Volts, for instance. This could apply for any future models. Essentially this will be the government backing loans from the consumers. The same restructuring conditions should apply for this scenario as I believe they should for any government loan.
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November 19th, 2008 at 2:43 pm
The automakers are hurting because of the credit crunch and people’s irrisponsibility to repay their loans and mortgages. GM was doing GREAT 10 years ago, and their cars and trucks SUCKED compared to what they’ve got out now! So whoever is giving that age-old excuse of “i hate GM, so i’m going to blame them for their cars” needs to realize that it’s not 1995 anymore. People aren’t buying from ALL the automakers.
*********************RANT ALERT! RANT ALERT!**************************
(but its a true rant)
If this was the 1950’s again, and people LIVED WITHIN THEIR MEANS, there wouldn’t be a credit crisis! The average housing square footage was 900 back then! Do you know how amazing everyone would be doing financially if they all lived in 1000 or less sq ft houses? (which can actually have 4 bedrooms, believe it or not) Or if they didn’t shop and eat out on a daily basis? WOW suddenly everyone has a bunch of money to buy a car! It’s effing magic!!!
GM’s problems are YOUR fault, America. Not their cars’ fault.
Or, for sake of argument….90% your fault, 10% their cars’ fault.
And nobody wants to change THEMSLEVES, that’s why they voted in Barack Obama, the man that every voting democrat believes is a miracle worker! MAKE ME NOT THROW AWAY ALL MY MONEY MR. OBAMA! SUBSIDISE MY 3500 Sq Ft HOUSE MR OBAMA! I WANNA STAY FAT MR OBAMA!
FEED ME LIKE A YOUNG BIRD STILL IN THE NEST MR OBAMA! CHEW UP SOME FOOD AND REGERGITATE IT IN MY MOUTH MR OBAMA!
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November 19th, 2008 at 2:45 pm
I don’t know anything. I can’t predict what will happen.
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November 19th, 2008 at 3:05 pm
#73 Murray:
It is I who should be thanking you. Thanks.
#76 ThombDbhomb:
Yeah, me too. After following this blog and this saga for what seems like a lifetime, I feel like I know less than I did at the beginning. One of my co-workers, knowing how closely I have tried to follow this, asked me this morning, “What do you think is going to happen?” I thought for awhile and then just shook my head and said, “I dunno.”
The executive jet story just about did it for me though. Anyone who cannot see the symbolism of that is not fit to serve as the CEO of anything, IMHO. If they are that far out of touch, they deserve whatever they get.
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November 19th, 2008 at 3:05 pm
Noel @ 70,
Right on…I’m temped to let GM die… This crap about screwing shareholders has done it for me. I’m sick of “loaning” money to corporations to make me richer as an investor. What a load of shit. Wagoner, you ass!
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November 19th, 2008 at 3:09 pm
Not sure why GM can’t get the funds from the first 25B already sitting on the table. If they don’t get that now, there will be no GM to tap into it later anyway!
PS. In any case, there needs to be extreme compensation conditions on union and mgt – less than Honda and Toyota America.
Come on, GM/Congress! The Volt is too important an American asset to let go down the drain!
I feel like #76 ThumbDbhomb!
=D~~~~
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November 19th, 2008 at 3:21 pm
Latest news. True to Statik’s prediction, they are now looking at the Republican compromise.
http://www.cqpolitics.com/wmspage.cfm?docid=news-000002988060
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November 19th, 2008 at 3:26 pm
55 Paul R: “And unlike US citizens, Japanese citizens are loyal to Japanese industry. They gladly buy their products, and only their products, tolerating imperfections because they know it’s in the best interest of their country.”
How true. Go to http://www.autoblog.com or http://www.jalopnik.com and the sheer number of domestic bashers don’t realize this. They say that they want the best in the short term (and for themselves), and not the long term (and for the country as a whole).
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November 19th, 2008 at 3:30 pm
And nobody wants to change THEMSLEVES, that’s why they voted in Barack Obama, the man that every voting democrat believes is a miracle worker! MAKE ME NOT THROW AWAY ALL MY MONEY MR. OBAMA! SUBSIDISE MY 3500 Sq Ft HOUSE MR OBAMA! I WANNA STAY FAT MR OBAMA!
FEED ME LIKE A YOUNG BIRD STILL IN THE NEST MR OBAMA! CHEW UP SOME FOOD AND REGERGITATE IT IN MY MOUTH MR OBAMA!
=================================
Careful there, Skippy. Drinking too much of Comrade Obama’s Kool-aid has been found by the surgeon general to give you parasites
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November 19th, 2008 at 3:35 pm
75 Mike D: “And nobody wants to change THEMSELVES, that’s why they voted in Barack Obama, the man that every voting democrat believes is a miracle worker! MAKE ME NOT THROW AWAY ALL MY MONEY MR. OBAMA! SUBSIDISE MY 3500 Sq Ft HOUSE MR OBAMA! I WANNA STAY FAT MR OBAMA! FEED ME LIKE A YOUNG BIRD STILL IN THE NEST MR OBAMA! CHEW UP SOME FOOD AND REGERGITATE IT IN MY MOUTH MR OBAMA!”
ROFLPMP!!!
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November 19th, 2008 at 3:46 pm
As to the article link on AFS Trinity Power .. they’re not even on the same sheet of music concerning the capabilities of the batteries GM plans to use if & when the VOLT is assembled ..
“… whereas the lithium batteries of conventional plug ins with battery-only technology will need to be replaced every 25,000 miles. A number of companies have announced plans to build plug in hybrids that can power a car for 40 miles in all-electric mode. Even if the batteries can deliver this much power, how viable are these plug ins if they are only good for 25,000 miles?”
—
Zero credibility ..
First of all .. there is no such thing, *yet*, as a mass-produced ‘conventional plug-in hybrid’ .. and secondly .. where on Earth did they pluck the 25,000 mile estimate from?
Their having put so much spin on the numbers makes me take the entire article with less than a grain of salt.
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November 19th, 2008 at 3:48 pm
I think that Wagoner, Nardelli, and Mullaly can live on a little bit less than they do (Wagoner got $16million in 2007). This is not just about they American automotive industry this is about the whole World Economy.
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November 19th, 2008 at 4:07 pm
#80 MarkinWI
Latest news. True to Statik’s prediction, they are now looking at the Republican compromise.
http://www.cqpolitics.com/wmspage.cfm?docid=news-000002988060
————————————–
It is not much of a prediction when you have a inside line, but I’ll take it, lol.
—
Random Factoids from today:
DOW closed under 8K today, first time since ‘03.
If it goes under 7K that would be the low since 97′
Nasdaq is 350 odd points away from 13 year lows.
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November 19th, 2008 at 4:18 pm
#60 Rashiid Amul
I have been saying all along that it is all our fault for the situation our automakers find themselves in. We, the consumers, demanded large trucks and SUVs. The labor unions demanded higher and higher wages and benefits while producing shoddy work. Management made bad decisions and did not stand up to the unions and its workers on wage, pension, health and quality work issues. Government bent over backwards to hamstring our companies while supporting union demands because of political issues such as accepting millions in union funds for political campaigns.
We need to restructure more than the auto companies. We need to rethink our loyalties and work ethnics. And we should demand that government get off he backs of business and be impartial when labor issues come up. I don’t mean a blind supporting of management, either. Impartial, but fair to all parties. We should hope government would work to remove unfair laws and regulations that hamper American auto companies while giving foreign companies an advantage, if any is found. All of us should enter into a kind of Chapter 11 and shake off the bad while improving the things that are good about us and come out reinvigorated and ready to compete on the world markets.
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November 19th, 2008 at 4:33 pm
I was for the loan program until I watched the big three last night. None of them went prepaired with any solutions. Chrysler CEO looked scared to death like he would kiss anyone’s a** that will give him a dollar. GM’s Rick W. sounded like he was everyone’s father and they should all do what he says. Ford’s CEO was the biggest joke; When asked if he would take the symbolic pay cut to $1.00. His response of, I have to keep my people motivated… you idiot, you were asked to take the cut, no one else. I was really angry that none of them were ready to offer a plan. I also thought that the UAW was a joke. We’ve taken pay cuts, yeah, and the big three won’t see the positives of this move for two years! Where were you two years ago when this needed to be done? Also, I sure wish I would get 80 to 95% of my pay if I am told to go home because my company is going idle at our facility. UAW said that’s un-employment? Uh, I get 1/4th of my pay in unemployment, why do they get 80%+?
Now seeing the big three fly in on their private jets today, well I really wanted a Volt but these guys are just not getting the picture here. They should be riding in on tricycles with a wagon full of paperwork showing how they are going to cut costs down to what their present profitability level is. All they want is a hand out and they hope that business will come back above their present burn rate. Build a plan of action to produce better and less expensive cars/trucks. Then come to America and ask for help.
I’m sorry but let them burn their houses down without my money. And the UAW can burn with them. The sad part is all the others this will hurt that are not directly involved with the stupidity of the big three.
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November 19th, 2008 at 4:41 pm
Great Job People! I’m possitive that allowing 10% of the country to loose their job with do wonders for the economy!
As much as I hate to give it to them, they need the money! Just make sure conditions that make sence are in place.
We bail out AIG so they can go on more luxury trips and leave the working man to die on the vine….I think the value system is screwed…
Considering the BANKS caused the headache for most of this, we should force them to loan the money to GM….
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November 19th, 2008 at 4:41 pm
Wagoner is simply an idiot.
He needs to leave ASAP
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November 19th, 2008 at 4:48 pm
Mobilize for America, GM, Ford and Chrysler.
Watch the You-Tube Video at:
http://gmfactsandfiction.com/
E-mail your representatives in Congress by clicking on “I‘m a concerned American” and tell them that you support the Loan to GM, Ford and Chrysler.
And or Call 1-866-927-2233 to be connected to your representatives by phone.
Thanks for supporting America, GM, Ford and Chrysler.
Also please forward to fellow Americans.
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November 19th, 2008 at 4:49 pm
Break from all the bailout action?
Here are some shots from the live reveal of the new Ford Fusion Hybrid (although previously ‘leaked’ by Ford).
Goes up to 50 mph electric (well 47, but stop busting my chops) and gets north of 700 miles to a tank, estimated MPG is 40ish
http://jalopnik.com/5093481/2010-ford-fusion-sport-hybrid-revealed-live
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And the Cube bows at the LA show as well, this is interesting to us, because this will be the vehicle that is ‘electrified’ by Nissan.
http://jalopnik.com/5093250/2009-nissan-cube-revealed
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November 19th, 2008 at 4:51 pm
#87 N Riley
“Government bent over backwards to hamstring our companies while supporting union demands because of political issues such as accepting millions…”
I kind of agree with what you are saying. But, correct me if I’m wrong, didn’t corporations also donate millions to politicians? Hasn’t government bent over backwards to support business interests? Perhaps a less partisan assignment of blame would be fairer.
Also, I pretty sure you didn’t mean to say, “We need to rethink our…work ethnics [sic]”
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November 19th, 2008 at 4:54 pm
If GM comes out of the next 2 years in good shape and starts making HUGE profits in 2012 or whatever, I expect GM to pay back their loans to the taxpayers with interest. Maybe even kick in a little extra interest and do it EARLY like Chrysler did in the 80s.
Speaking of Chrysler, Wagoner and his sales team need to do what Lee Iaccocca did back then. Do lots of really GOOD commercials and let everyone know that GM makes MUCH improved cars these days …. which is true. The 3rd party car reviewers are giving GM vehicles good reviews … several of them anyway. Right now, GM needs to do whatever they gotta do to “move the merchandise”. World class marketing and salesmanship is what’s needed to pull a company that’s in trouble out of the ditch.
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November 19th, 2008 at 5:15 pm
I honestly don’t think the Big 3 will be allowed to go out of business but the way GM alone is burning cash, the 25B would only support GM for maybe 7 or 8 months if they got the whole thing.
Looking at the FED’s new projections this morning, they now believe the economy will not begin to recover until until 2010 and they project unemployment to be very high through 09,10 and into 11. The market for automobiles will likely be depressed for several years.
Chapter 11 may be the only sollution. The government can then act as a loan guarantee to allow them to get the cash they need to restructure. The courts may break up the automakers into smaller independent companies. The common parts between many GM cars come from 3′rd party sources anyway. Common GM produced parts can be built and shared by the new companies, much like Chrysler co-developed their 4 cylinder engine with Hyundai, and Mitusbushi.
If the government allows all 3 to fail completely, it would be a serious national security issue let alone an economic disaster. There are no other companies in the U.S. that have the capability to mass produce complex machinery in time of a REAL war. Boing can’t do it, General Dynamics can’t do it, Northrop-Grumman can’t do it.
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November 19th, 2008 at 5:24 pm
First off some good news Toyota ships 250 thousand cars into the U.S. every month from Japan into Longbeach, the cars are stacking up, Toyota has requested to store the vehicles there until they can be sold, the same with Mercedes. I HOPE THEY SIT THERE UNTILL THE WHEELS ROT OFF, We are on our own now the government can give AIG over 100 billion but they cant come up with 25 billion to save a core industry, welcome to the beginning of the Great Depression 2.0. General Electric is also on the brink and may have to declare bankruptcy, we are headed for a hard landing things are only going to get worse. GOOD LUCK TO YOU ALL IN THE MESS WE ARE HEADING INTO, the crooked republicans and the spineless democrats can all go to hell, what a worthless sorry bunch of liars and cheats we have for a governmnet.
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November 19th, 2008 at 6:01 pm
GM Chief Executive Rick Wagoner told a House committee Wednesday that the downfall of his industry would ripple through communities around the nation. Pressed by lawmakers, Wagoner wouldn’t say precisely when GM would run out of money without a government lifeline, but disclosed that the company now was burning through “$5 billion each month.”
Oil prices fell to a nearly 22-month low Wednesday after a government report showed a bigger-than-expected rise in crude inventories, reinforcing concerns that demand for petroleum products is waning.
Falling demand: Concern about demand for petroleum products has driven crude oil prices down from a record high of $147.27 a barrel in mid-July. The decline has also slashed the price of unleaded gasoline in half since July to $2.047 a gallon, motorist group AAA reported Wednesday.
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Less driving means less shopping mall activity. Build the Volt and prevent chain store employee lay offs. The dropping price at the gas pump is just a short term lure to get people back to driving Hummers. When viewing this mornings hearings I actually saw a GM Hummer ad on TV . I am glad the big oil plan is failing before our eyes. People are not interested in buying gasoline.
If the government really wants the public to return to their normal driving habits, build the Volt.
=D~
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November 19th, 2008 at 6:02 pm
I almost want the Big 3 to fail just to show our stupid government what the outcome would be. I agree with chevonly #96; we are heading to the Great Depression 2.0. Good luck guys. No Volt if GM’s bankrupt.
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November 19th, 2008 at 6:02 pm
NVIGB (no volt if GM’s bankrupt) hehe.
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November 19th, 2008 at 6:20 pm
Rick Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash. From Set America Free:
Ford CEO Mulally’s corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends. I am reminded of Nero and violins. That $36 million GM private jet is the cost of making 360,000 cars gasoline-ethanol-methanol flexible right there (it’s a $100 cost per car,) breaking oil’s monopoly in the transportation sector through fuel choice. And GM has 8 such jets. Add up the Ford and Chrysler plane fleets and we’re talking the cost of making several million cars gasoline-ethanol-methanol flex fuel vehicles. Given that taxpayer money is on the table here, the trade would seem only fair.
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November 19th, 2008 at 6:24 pm
So some facts from Red ink Rick.
Under intense questioning from Rep. Paul E. Kanjorski , D-Pa., G. Richard Wagoner, chief executive of GM, said under a “worst case scenario,” his company would need $4 billion to $5 billion per month to avoid bankruptcy.
Well I am pretty sure ‘worst case’ is exactly what we are looking at, so call it an even 50 billion a year for BAU. That’s for GM alone of course.
I am thinking now we need to take the Vietnam approach to saving this village. Burn it to the ground, then rebuild a whole new generation of vehicles based on the E REV design using the 25 Billion to do so. Government to make the money available on the understanding the finished designs can be used by anyone manufacturing in USA.
At the same time increase CAFE to 40MPG starting 2012. Put penalties in place for anyone not complying.
Gonna be a brutal couple of years, but, at the end of it your fuel import bill will be down by hundreds of billions per year, so even a 100 billion now to make that happen is a good investment.
Interestingly enough, I remember reading that one of the reasons Chrysler paid the loan back early was so Lee Ego-coka could regain use of the corporate jet without having to justify why he needed it each time. Withholding the jet will be an important part of the loan conditions. hehe.
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November 19th, 2008 at 6:29 pm
#86 Statik – “DOW closed under 8K today, first time since ‘03″
Which makes the obvious point that the car industry’s problems are not a GM problem or a Ford problem per se. The CEO’s in their testimony tried to make that point but it always gets lost, probably because if admitted then the issue becomes why has Congress so screwed up, which is not a question members of Congress want asked.
Basically the entire economy is off the rails. This is just one manifestation, and if the economy doesn’t get back on the rails soon then Toyota will be in line as well. I was thinking this as the congressman from Texas, the one who can only be described as an annoying little jerk, kept asking whether the companies could guarantee that they could pay back the loans. The answer of course is that if the Congress does it’s job then yes. If it keeps screwing up and collectively the companies are selling less than 10 million vehicles a year then no.
This is not that hard.
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November 19th, 2008 at 6:41 pm
And also…
They’re global mega corporations for crying out loud, they’re allowed to have jets! What kind of nonsense is that? “Oh you have planes, we’re not going to bail you out.” What?! Did they ask the banks and insurance companies if they had private jets and were willing to give them up for a bailout? I don’t think so. It’d be one thing if this was Circuit City asking for a bailout while in possession of a jet fleet; its not though. Despite their poverty, GM and Ford are global giants. Give them a break with this petty matter. Chrylser on the other hand…
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November 19th, 2008 at 6:55 pm
“We” didn’t bail out AIG, unless you mean the royal we. I believe this was a case (maybe one of many) where our representitives did not do the will of the people. The people were overwhelmingly against the bank bailout and it was our wiser politicians that made that mistake. We should take it out of their salaries.
Paulson refused to link executive pay cuts and bonus elimination as conditions on the loans. He knew these folks were so greedy that they would rather let the company fail and take their money than the other way around. I think it is time for the Lee I. $1 and the unions need to immediately adopt the 2010 pay structure as a show of seriousness. Otherwise it may well be the end game. $71 an hour is a joke. I am an engineer and barely make over half that. Get real. I have had one dealing with unions, in Chicago I was demoing a system at a trade show and had to tip the union $100 to let me unplug my computers so I could make my flight out.
Obama said that there must be a winning plan, he doesn’t want to see them back for more, or simply fund them to see failure.
The 2010 Fusion doesn’t look too bad.
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November 19th, 2008 at 7:08 pm
#102 Don C
#86 Statik – “DOW closed under 8K today, first time since ‘03″
Which makes the obvious point that the car industry’s problems are not a GM problem or a Ford problem per se. The CEO’s in their testimony tried to make that point but it always gets lost, probably because if admitted then the issue becomes why has Congress so screwed up, which is not a question members of Congress want asked.
Basically the entire economy is off the rails. This is just one manifestation, and if the economy doesn’t get back on the rails soon then Toyota will be in line as well. I was thinking this as the congressman from Texas, the one who can only be described as an annoying little jerk, kept asking whether the companies could guarantee that they could pay back the loans. The answer of course is that if the Congress does it’s job then yes. If it keeps screwing up and collectively the companies are selling less than 10 million vehicles a year then no.
This is not that hard.
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Sorry, Don…your wrong on this one.
The economic collapse is a fortunate excuse for GM, the DOW was at 11.5Kish only 2 months ago…13K entering the year. The CEOs ‘attempted’ to make this connection, but no one was that gullible.
GM had dropped over 60 BILLION before there was anything like this happening (2007 and earlier). GM was hemmoraging over 10 billion way back in 2005.
When the car business was booming and sales where expanding and even homeless bums on the street had access to credit in 2004, 2005, 2006 and 2007 GM was still losing money under there massiv debt and legacy costs. As a example…me, I was hear pounding the table saying GM was done well before any of this ‘credit crisis’ happened. All this did was speed up GM’s endgame by 6 months.
It will be a stretch for you to prove GM was anything less than living on the edge, even when times were good.
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November 19th, 2008 at 7:22 pm
#86 Statik – “DOW closed under 8K today, first time since ‘03″
Part of what caused the sell-off today was Congress’s apparent decision to let the automakers hang out and dry. This makes bankruptcy more likely for all 3 of the automakers. First, GM goes, followed by the other two. That starts the dominoes falling as more parts of the economy start failing and the job losses rapidly escalate. So it looks like we will soon be facing Depression #2. Hope you’re all prepared for that. The reason the Big 3 are looking for money is because no one (or very few) are buying cars. If you watched the testimony, GM was asked why it could not repatriate its profits from overseas sales. Waggoner said sales in Europe are already down and it appears Brazil is about to follow suit. I imagine it will spread to Asia, although those governments will try to prop up their economies, unlike the US in its current approach.
BTW, I’m looking for the DOW to hit 7000 for its first bounce. No telling where it will go after that. Just using the old 50% rule.
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November 19th, 2008 at 7:40 pm
#106 dwwbkw
Massive government intervention and NOT letting big things fail is not the solution here.
May I direct your gaze to Japan in..um, lets say, oh, 1990-early 90s, almost 20 years ago…total meltdown there, banking and real estate (sound familiar?). Japan tried to prop it up, put ’stimulus’ in the system, massive public sector hiring, etc… then big time gov’t bailouts (took a lot longer than America’s 9 months, but it came just the same – 97-98ish), they would not let anything go under it felt like.
Nikkei Index in 1990? 40,000
Nikkei index today? 7,960
-80% return is a pretty good investment for 20 years right? The were so bad they ‘bridged’ one crisis to the next.
So if we extrapolate the same results here, (if America chooses the same path),the DOW topped out at around 14,000, that means we should be seeing 2,800 in a decade or so. (Side note: I hate using the DOW as a benchmark…I want to use S&P, but the majority don’t associate with it)
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November 19th, 2008 at 8:17 pm
Statik #105 – “It will be a stretch for you to prove GM was anything less than living on the edge”
They were definitely on the edge. My point is that if the economy stays off the rails Toyota isn’t going to be in any better shape. European car companies are already lining up. Chinese car companies are lining up. You can’t run a company in an industry that sucks down capital when the the financial system is broken.
FWIW here is an OP Ed piece you may find interesting:
http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=1&hp
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November 19th, 2008 at 8:35 pm
Statik #107 – “Japan tried to prop it up, put ’stimulus’ in the system, massive public sector hiring, etc… then big time gov’t bailouts (took a lot longer than America’s 9 months, but it came just the same – 97-98ish),”
The problem is more with what they didn’t do — and that is straighten the banks before cutting interest rates and trying stimulus programs and so forth. Consequently all this stuff was like pushing on a string. It wasn’t until they copied the Swedes and started injecting money into the banks that things turned around.
Also they were way too tentative. Too many baby steps that the Japanese like so well. When you do stimulus you need to do it fast and on a large scale. The “massive” stimulus you’re talking about is only massive if looked at over a period of years. It was actually very little dribbled out over a long period.
The bubble was far greater than anything we’re seeing here. For example, with respect to the real estate bubble, at one point before the crash the value of real estate in Tokyo was greater than the value of all the world’s stock markets, which if you think about it is sort of shorthand for the capitalized value of the world’s GDP. At no point was the value of all US real estate in the same category, and the US is a lot of real estate.
Their timing was also terrible in that they didn’t start anything of any scale until deflation has set in. Once deflation sets in you can be truly cooked. A major stimulus before deflation occurs has a very good chance of succeeding; a major stimulus after deflation is established has to be magnitudes greater to get the same result.
Finally we don’t have the same problem with the savings rate and the postal service that the Japanese have. This is too complex to get into here but it’s a huge and difficult part of the Japanese puzzle.
I’ve actually done OK in Japan but part of that of course is currency.
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November 19th, 2008 at 8:45 pm
#109 DonC
I agree the difference between the Japan situation in the 90s and the US now is the reaction time. If I remember correctly, massive injections started about 7-8 years into the thing.
Whether or not there bubble was greater there than the US now…that remains to be seen still I think, but hopefully that remains true, lol.
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November 19th, 2008 at 8:57 pm
#108 DonC
My point is that if the economy stays off the rails Toyota isn’t going to be in any better shape. European car companies are already lining up. Chinese car companies are lining up. You can’t run a company in an industry that sucks down capital when the the financial system is broken.
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I don’t know about Toyota, that might be true for Honda though. Toyota made 40 billion the last 3 years while GM lost 60. Even last quarter in ‘car-mageddon’ they managed to pull in 1.5 billion.
This quarter is going to be hideous, so they probably only eek’d out a small profit or broke even. But with their massive equity and cash/investments they could ride out probably 10 years of this.
Additionally, if the economy stayed ‘off the rails’ and the gov’t sat on its hands, GM is done by Christmas, that is 22% market share up for grabs…I’d wager close to half of that goes to Toyota. Good Christmas present for them.
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