Big Auto Wants $50B

[finknottle]

One interesting point neglected about the big three - the financial hemoraging is primarily due to US operations. GM and Ford's foreign operations are generally healthy and their marketshares are about 10% each in most countries. They have been quietly and steadily increasing the number of cars they actually manufacture overseas and sell here (as has their foreign-based competition).

[Chump Change]

One interesting point neglected about the big three - the financial hemoraging is primarily due to US operations. GM and Ford's foreign operations are generally healthy and their marketshares are about 10% each in most countries. They have been quietly and steadily increasing the number of cars they actually manufacture overseas and sell here (as has their foreign-based competition).

 

Question- Are their foreign operations union based? If not- this might be a hint as to why they're broken here.

[/dev/null]

Is this based on Revelations?

 

I watched as the Lamb opened the first of the seven seals. Then I heard one of the four living creatures say in a voice like thunder, "Come!" I looked, and there before me was a white Durango!

 

When the Lamb opened the second seal, I heard the second living creature say, "Come!" Then another horse came out, a fiery red Corvette

 

When the Lamb opened the third seal, I heard the third living creature say, "Come!" I looked, and there before me was a black Mustang!

 

When the Lamb opened the fourth seal, I heard the voice of the fourth living creature say, "Come!" I looked, and there before me was a Honda Fit! Its rider was named ieatcrayonz, and hamsters were following close behind him. They were given power over a fourth of the earth to kill by sword, famine and plague, and by the wild beasts of the earth.

[erynthered]

"Bankruptcy" does not equal "fail". Let them sort out their issues under Chapter 11 like everyone else does who drives their business into the ground.

 

 

Its nice to see you agree with me on this. Eliminate some brands, renegotiate contracts across the board.

Kill the board, kill management.

 

I'd invest if they did that.

[finknottle]

Question- Are their foreign operations union based? If not- this might be a hint as to why they're broken here.

 

Not sure. But even if they are (as is likely in Europe), I'm fairly confident they aren't averaging $72 an hour. Labour climate is a key factor in determining where you set up shop.

 

Nevertheless, I do know that one of the problems GM faced with taking over Saab was existing high labor costs and absenteeism. In terms of labor, Ford had an easier time with Jaguar coming as it did after the Thatcher administration, which did a lot to reign in the unions and make the UK more competative. Jag became profitable, I don't think Saab ever did. I don't know anything about the situation of the US lines that are manufactured there (like GM Opal, employing 50,000).

[SDS]

Eliminate some brands,

 

The problem is deciding which ones to keep.

[DC Tom]

The problem is deciding which ones to keep.

 

You'd think it would be easy: Luxury, truck, and "every day". Cadillac, GMC, and Chevy. Or Cadillac, GMC, and Saturn.

 

 

So they'd keep Saab, Hummer, and Pontiac. Because this is, after all, Detroit.

[erynthered]

Interesting. I may have to change my mind about this.

 

http://www.youtube.com/watch?v=72cHfOKoA1c

[finknottle]

While researching something else related to the automobile industry, I came across the following 2006 tidbit on GM's plans for a $250 research center on hybrid technologies, to be located in China:

 

http://www.iht.com/articles/2007/10/29/business/gm.php

 

It makes one wonder what strings were attached to the current $25 billion, and raises into question the oft-repeated claim about how investing in green technology is going to create all these great non-exportable jobs.

[pBills]

As people continue to blame the union. They must dig a big deeper. It's more than simple wages. The costs that are driving up contract costs are related to health care and pensions. Control the ridiculous rising in health care costs, to save companies like these billions of dollars. Although, the UAW has already cut a deal that alters coverage on retirees that goes into affect in 2010. This deal saves billions of dollars per year. They have also made deals that alter pension plans. In some cases eliminating them.

 

One other thing that I have heard lately that cracks me up is that the product is crap. I find this laughable because if you look at their ratings lately. Many of their vehicles are receiving high ratings. Higher ratings than toyota, honda, etc. Problem was, I believe, bad design for many years and believing in vehicles that weren't selling. Management should have trimmed the lines down and brought in new designers/engineers.

[John Adams]

One other thing that I have heard lately that cracks me up is that the product is crap. I find this laughable because if you look at their ratings lately. Many of their vehicles are receiving high ratings. Higher ratings than toyota, honda, etc. Problem was, I believe, bad design for many years and believing in vehicles that weren't selling. Management should have trimmed the lines down and brought in new designers/engineers.

 

American cars are way better than they once were. The problem is, as you perceive, that the Japanese cars have a better (deserved) reputation.

 

When you !@#$ a consumer for so long, it takes a while to get your reputation back. Detroit will have to do a lot to get me into a showroom. I have owned 1 German car, 5 Japanese cars, and 3 American cars. Most of all of those were used; the American cars were the worst. The Japanese cars were by far the best.

 

Now that I buy new and newer cars, the Japanese cars are embarassingly better than the American ones.

[molson_golden2002]

As people continue to blame the union. They must dig a big deeper. It's more than simple wages. The costs that are driving up contract costs are related to health care and pensions. Control the ridiculous rising in health care costs, to save companies like these billions of dollars. Although, the UAW has already cut a deal that alters coverage on retirees that goes into affect in 2010. This deal saves billions of dollars per year. They have also made deals that alter pension plans. In some cases eliminating them.

 

One other thing that I have heard lately that cracks me up is that the product is crap. I find this laughable because if you look at their ratings lately. Many of their vehicles are receiving high ratings. Higher ratings than toyota, honda, etc. Problem was, I believe, bad design for many years and believing in vehicles that weren't selling. Management should have trimmed the lines down and brought in new designers/engineers.

And Honda, Toyota and cars made in Canada by American companies don't have to pay health care costs because the government does that for them giving those countries a competitive edge over our companies

[pBills]

American cars are way better than they once were. The problem is, as you perceive, that the Japanese cars have a better (deserved) reputation.

 

When you !@#$ a consumer for so long, it takes a while to get your reputation back. Detroit will have to do a lot to get me into a showroom. I have owned 1 German car, 5 Japanese cars, and 3 American cars. Most of all of those were used; the American cars were the worst. The Japanese cars were by far the best.

 

Now that I buy new and newer cars, the Japanese cars are embarassingly better than the American ones.

 

 

 

perceived better.

[Joe Miner]

As people continue to blame the union. They must dig a big deeper. It's more than simple wages. The costs that are driving up contract costs are related to health care and pensions. Control the ridiculous rising in health care costs, to save companies like these billions of dollars. Although, the UAW has already cut a deal that alters coverage on retirees that goes into affect in 2010. This deal saves billions of dollars per year. They have also made deals that alter pension plans. In some cases eliminating them.

 

And just what is the justification for these Union workers to receive health benefits that are vastly superior to other working Americans with normal health insurance plans? Especially if health insurance is as out of whack as it is?

 

http://www.reason.com/news/show/121746.html

Before the 2005 "givebacks," the Detroit Three companies picked up the entire health-care tab for all their hourly workers—active, retired, dependents and, incredibly, even laid-off workers till they found other jobs. Workers were not required to pay any premiums, deductibles or co-pays-except for routine physical exams and prescription drugs. The 2005 deal left these benefits virtually untouched for retirees with pension incomes below $8,000. But for the first time ever it began requiring more well-off retirees to cough up $252 in annual premiums for family coverage and another $500 in total annual deductibles. In short, for a grand total of $752 in out-of-pocket annual costs, UAW retirees and their spouses get full medical coverage for life. Given the huge retiree population that the Big Three support—GM has three times more retirees than active workers—this has saddled them with a combined unfunded health-care liability exceeding $100 billion.

 

 

No no, don't blame the unions, it's greedy CEO's.

 

No no, don't blame the unions, it's health care.

 

No no, don't blame the unions, it's unpatriotic Americans buying foreign cars.

 

It's time the unions stand up and acknowledge that many of their efforts have helped drive the US auto industry straight into the ground and quit blaming everyone else.

 

But why would I expect anyone, CEO's, unions, gov't, voters, to take responsibility for their F'ups?

[John Adams]

perceived better.

 

Decades of consumer reports reviewers choose Japanese cars (not trucks until recently) as better.

 

My dad only drives American and always has problems. I have owned only Japanese (Hondas, Toyotas) since 1999. I have had zero breakdowns, no repairs, and only regular maintenance. My biggest complaint was that my last Accord that was 15 years old when I sold it went through brake pads at an absurd rate. The new Hondas don't have that problem.

[pBills]

Really... their health care is usually an average PPO. Most people have that coverage. All companies are seeing ridiculous increases. You don't see that?

 

And really you can't completely blame the union. I have said many times, dig deeper look at what is causing the contract costs to go up. 99% of the time it would health care costs and pension plans. Do you see fault in the CEO's?

 

I think it's complete BS and a waste time to just jump on the "blame the union" bandwagon. Again, dig deeper.

 

 

In regards to quality. Yes, years ago some foreign cars were better. Not truly the case these days. Sorry for your father to always have problems. I have driven nothing but GM cars - never had problems.

[KD in CA]

I think it's complete BS and a waste time to just jump on the "blame the union" bandwagon. Again, dig deeper.

 

Of course you do, since you refuse to acknowledge it is part of the problem and you can't fathom letting go of that sacred political cow.

 

Yet you are still unable to provide any solution and continue to sidestep the question about how to fix GM. You can type "dig deeper" all you want, but you aren't doing that. Deeper is answering how GM can possibly compete when its resources are continually drained by billions in post retirement benefit obligations? So far your answer seems to be "build better cars". That's another thread, but I can say that the last good American car I drove was a '72 Vista Cruiser. I've owed only Japanese or German cars since and have had outstanding results.

 

As people continue to blame the union. They must dig a big deeper. It's more than simple wages. The costs that are driving up contract costs are related to health care and pensions.

Agreed, and that's the point. No one is suggesting that current employees not receive health insurance. But how much is GM paying in pensions and health insurance for people that have not reached retirement age? Is that really something you think other taxpayers should be forced to pay for? Those people have rights to Medicare at retirement just like everybody else. In the meantime, if they want health insurance, they can go out and find another job just like you and me.

 

I didn't really get your point about how it's the CEOs fault that he's forced to sign union contracts that call for ever increasing costs. As has been discussed here already, he doesn't have a choice unless he wants to shut the doors. But regardless, suggesting that there is a 'fix' for Detroit that doesn't include a very hard look at the benefits promised to unions is simply laughable. It's a shame that you are not willing to do that.

[KD in CA]

Before the 2005 "givebacks," the Detroit Three companies picked up the entire health-care tab for all their hourly workers—active, retired, dependents and, incredibly, even laid-off workers till they found other jobs. Workers were not required to pay any premiums, deductibles or co-pays-except for routine physical exams and prescription drugs. The 2005 deal left these benefits virtually untouched for retirees with pension incomes below $8,000. But for the first time ever it began requiring more well-off retirees to cough up $252 in annual premiums for family coverage and another $500 in total annual deductibles. In short, for a grand total of $752 in out-of-pocket annual costs, UAW retirees and their spouses get full medical coverage for life. Given the huge retiree population that the Big Three support—GM has three times more retirees than active workers—this has saddled them with a combined unfunded health-care liability exceeding $100 billion.

 

 

Holy crap. I remember hearing this before, but it really deserves to be highlighted as an example of just how lavish the union benefits are and why this entire auto bailout is a complete sham. I would really like to hear one of the staunch pro-union people here defend this and in turn the bailout. I would also like to know if anyone on this board has this sweet a deal. According to my benefits broker, the average employee contributes around 25% to the total cost of their health insurance in the form of co-pays, deductables, etc. Our company has been generous at about 15% but I'm in the process of bumping that up for 2009 as times are tight.

 

 

p.s. for pBills: You want to lower the overall cost of healthcare in the US as part of a solution? Well, don't you think that providing unlimited healthcare access for somewhere between $0-$62 per month is going to do exactly the opposite? It's economics 101.

[John Adams]

In regards to quality. Yes, years ago some foreign cars were better. Not truly the case these days. Sorry for your father to always have problems. I have driven nothing but GM cars - never had problems.

 

Agreed. American cars have come a long ways. The problem is that they let themselves develop 20 years of bad reputation. That's a big hole to dig out of. I'd rather take the surer thing (a Japanese car) than the possibly improved American car when I'm dropping thousands on a car.

[pBills]

Of course you do, since you refuse to acknowledge it is part of the problem and you can't fathom letting go of that sacred political cow.

 

Yet you are still unable to provide any solution and continue to sidestep the question about how to fix GM. You can type "dig deeper" all you want, but you aren't doing that. Deeper is answering how GM can possibly compete when its resources are continually drained by billions in post retirement benefit obligations? So far your answer seems to be "build better cars". That's another thread, but I can say that the last good American car I drove was a '72 Vista Cruiser. I've owed only Japanese or German cars since and have had outstanding results.

 

 

Agreed, and that's the point. No one is suggesting that current employees not receive health insurance. But how much is GM paying in pensions and health insurance for people that have not reached retirement age? Is that really something you think other taxpayers should be forced to pay for? Those people have rights to Medicare at retirement just like everybody else. In the meantime, if they want health insurance, they can go out and find another job just like you and me.

 

I didn't really get your point about how it's the CEOs fault that he's forced to sign union contracts that call for ever increasing costs. As has been discussed here already, he doesn't have a choice unless he wants to shut the doors. But regardless, suggesting that there is a 'fix' for Detroit that doesn't include a very hard look at the benefits promised to unions is simply laughable. It's a shame that you are not willing to do that.

 

 

First off I have acknowledged plenty of times that there is a problem with the union contracts, that problem is the rising cost of health care. Control that and you will help out many companies. Union and non-union. Fact is that the UAW revised health care agreement that comes into play in 2010 will save the company billions. And that is just for retirees. See, revise health care plans - save money.

 

It's a shame that you will continually blame the union and worker and never set blame on management. They are rewarded for bad decisions and the workers get screwed or told that it's their fault because they have a union contract.

 

Lavish union benefits.... yes a PPO, hopefully a pension plan (which in many cases aren't part of the contract these days) and fair wages. How horrible is that. Damn them for having a good medical plan... a PPO plan that many people have in other industries. So your plan is to let them all go bankrupt? Ok to bail out companies like AIG who spends money recklessly and then just keeps asking for money. Come on, they WASTED hundreds of thousands of dollars on a retreat and think nothing of it. And do not even apologize for wasting the funds given. It's ok that $108 billion of the first $125 billion was reserved to pay for compensation and bonuses?

 

But do not bail out the big three. Makes sense to me.

 

With all of that being said... I will tell every union person I know in the UAW that you say they have it great.