Auto Industry

[Tahoe]

So are we going to give the big 3 a few billion...25ish just to keep them afloat? Then they come back to us (taxpayers) for more in a few months?

Should we let them go bankrupt so they can restructure and actually get their house in order?

I want Detroit to succeed without being subsidized.

[DennyMcLain]

I think bankruptcy might get messy. The LA Times had an article on Monday about how many people nationwide might be directly affected if the big 3 go belly up. I'm not sure how such a bankruptcy might play out, but there's a helluva lot of smaller suppliers looking in the mail for checks based on work rendered. If bankruptcy frees GM, Ford, and Chrysler from paying on that work, you might have saved the big 3, but killed the smaller 350.

[Uncle Mxy]

The type of restructuring that enables the Big Three and friends to emerge as champions of industry involves screwing current workers and retirees, on a much larger scale than what the airline industry did. The taxpayers costs of their restructuing, because of having to support all the screwed businesses and people in various ways, could easily prove to be more than the bailout. Of course, if the bailout doesn't work, we'll have those costs + the costs of the failed bailout.

Oh, check out:

http://www.freep.com/article/20081117/COL14/811170379

[Zip Goshboots]

I say you let these fucks go the way of the dodo, er, the Edsel. Could they have done something to save themselves? Do the Japanese have unfair advantages? Every dog has its day. We saw them teetering in the late '70s and early '80s. The big gas guzzling shits and redneck powered pickups saved them for awhile, but Detroit and the state of Michigan never diversified, and never axed the Big 3 to do anything to stay ahead of the competition. These guys have been going out of business for 30 years now.

[Uncle Mxy]

We subsidized Big Oil for a generation, doing lots of things to keep gas prices artificially low (e.g. the Gulf War), to avoid paying the environmental and the infrastructure costs to offset Big Oil's impact as most other countries were doing. Remember, in 1981, average gas price was $1.35/gallon. Adjusting for inflation, after 20-odd years, that same gallon of gas should have been about ~$3.10/gallon. The average price of gas just after 9/11 and before Iraq in 2002? $1.35/gallon.

As people lived longer than anyone dreamed (at a greater cost than anyone dreamed), legacy costs shot through the roof. So, The Big Three went from selling K-Cars to bigass trucks, architecting itself around Big Oil. They're far from the only enterprise that's fueled by cheap gas. Suburban and exurban development doesn't happen with rising gas prices. Ecowarriors in L.A. bitch at the automakers for their smog, but they're the ones expanding at 30% per generation in a desert with no end in sight (and no water, for that matter).

The Big Three's saving grace is that they didn't fuck their employees and retirees through staged bankruptcies when they had the chance. Unions sacrificed their young to align current/future employee costs with non-union shops, and even stepped to the plate in dealing with healthcare. Ecowarriors claim that peak oil and more foreign demand made such price hikes inevitable. But as current events show, that inevitability shouldn't have spiked prices that much. Bush fucked them and us with Iraq and laissez-faire dollar policy.

The competition isn't doing so hot, realistically. Toyota's had projected flat profits at best,and they've historically been a lot more supported (some have said "subsidized") by the Japanese government than the Big Three ever were by Uncle Sam. Ever since Ralph Nader and the ecowarriors, the Big Three lobbyists have been lousy and on the defensive, and the Big Three blows research dollars on all sorts of government-required safety innovation that doesn't really help save many lives.

[geerussell]

the Big Three blows research dollars on all sorts of government-required safety innovation that doesn't really help save many lives.

Aren't foreign manufacturers who sell here subject to the same requirements? I always had the idea the playing field was level in that regard.

[Uncle Mxy]

Historically, much of the safety innovation came from the Big Three and was fanned out through suppliers in various ways. The Big Three are much easier to legally entangle here because the bulk of their R&D is done domestically. So, they've always been the ones with the gun on their head here. It's not like the Germans don't care about safety, but they learned that real safety wasn't just about car design, but keeping alcoholic and poorly trained drivers off the road. (That's why they get to have the Autobahn. )

I don't want to make it sound like it's ALL that their research labs have done -- check out telematics. But, it's been a really large amount over time given the relatively-low ROI on anything beyond seatbelts and airbags. Much of today's safety innovation involved compensating for legislatively-mandated unsafe design, and has been a "net zero". The environmental requirements to make cars lighter kicked in just as safety standards were jacked up, and you end up with "crumple zones" making up for plastic/aluminum vs. steel.

The relationship between the Big Three and Uncle Sam is adversarial when compared to relationships that most automakers have with their governments. The Japan MITI will bend over backwards for the automotive keiretsu (and even "nouveau riche" Honda) and South Korea for its chaebols, in ways that the U.S. won't approach. Renault, Daimler-Benz, and were part-owned by their governments at strategic points in a way that just doesn't happen here. The Big Three are America's pincushion for their problems with Big Oil.

[geerussell]

Historically, much of the safety innovation came from the Big Three and was fanned out through suppliers in various ways. The Big Three are much easier to legally entangle here because the bulk of their R&D is done domestically. So, they've always been the ones with the gun on their head here. It's not like the Germans don't care about safety, but they learned that real safety wasn't just about car design, but keeping alcoholic and poorly trained drivers off the road. (That's why they get to have the Autobahn. )

If you want to sell a car here, you still have to meet the same standards whether you're VW or Toyota or GM. Where is the innovation shortcut for the foreign companies? The Germans may not care about safety but they still have to clear the same bar.

I don't want to make it sound like it's ALL that their research labs have done -- check out telematics. But, it's been a really large amount over time given the relatively-low ROI on anything beyond seatbelts and airbags. Much of today's safety innovation involved compensating for legislatively-mandated unsafe design, and has been a "net zero". The environmental requirements to make cars lighter kicked in just as safety standards were jacked up, and you end up with "crumple zones" making up for plastic/aluminum vs. steel.

I don't see where this is a bad thing. Lighter, more fuel-efficient cars with lower emissions are a net positive. Again, the foreign cars have to clear the same bar in those areas. The argument that these are special handicaps for the american companies seems weak to me.

The relationship between the Big Three and Uncle Sam is adversarial when compared to relationships that most automakers have with their governments. The Japan MITI will bend over backwards for the automotive keiretsu (and even "nouveau riche" Honda) and South Korea for its chaebols, in ways that the U.S. won't approach. Renault, Daimler-Benz, and were part-owned by their governments at strategic points in a way that just doesn't happen here. The Big Three are America's pincushion for their problems with Big Oil.

I can see this being argued from the standpoint of labor and tariffs/trade. Outside of that... not so much.

[Glenn]

I think we should do whatever Uncle Mxy says we should do.

Hopefully Barack will tap Mxy for Paulsen's job, Mxy owns.

[gusman]

My dad retired from fords and said he could lose his retirement.