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Hope lingers to save U.S. autos from econ crisis

Discussion in 'Business & Economics' started by The Scotsman, Nov 20, 2008.

  1. The Scotsman

    The Scotsman Well-Known Member

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    As for the car makers they may have a hard time convincing the politicians that the tax payers money is worth spending on their business plans.....will Obama intervene and force a deal through?

    Does he want to take office in January facing crisis that affects millions of US car and ancilliary workers?
     
  2. BigRob

    BigRob Well-Known Member

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    Obama has no power to intervene and force a deal until he takes office.
     
  3. The Scotsman

    The Scotsman Well-Known Member

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    .........but he can influence the way his party approach the issues in order to seek the outcome he wants prior to taking office?
     
  4. Pidgey

    Pidgey Well-Known Member

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    I've tried thinking this problem through six ways from Sunday... tricky. In order to save them, people need to start buying cars again. Now. What good does it do to give them money if people aren't going/can't buy the product. Just in case you haven't noticed, Americans aren't really buying ANY cars right now, at least not enough to keep them afloat. This is an interesting read although I haven't finished it yet:

    http://www.alternet.org/workplace/107489/end_of_the_road:_is_the_auto_industry_dead

    Well, I don't think the author quite picks up on the role of the consumer in buying the product in the first place and how that plays into the current crisis. That, of course, goes for our entire economy, not just the auto industry
     
  5. Pidgey

    Pidgey Well-Known Member

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  6. BigRob

    BigRob Well-Known Member

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    Does not matter. Bush is opposed to it and holds the veto.
     
  7. The Scotsman

    The Scotsman Well-Known Member

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    the march of the Chinese industrial giant will take some stopping....which leads me to think that Obama will lead a bail out rather than let millions of jobs into the hands of chinese companies...... I know the business plans suck but its not rocket science to design an efficient car that can compete with the Nips......you'll need to look at the $81/hr rate thought!! Toyota US are doing it for $48/hr?
     
  8. The Scotsman

    The Scotsman Well-Known Member

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    ........bush is a lame duck. :mad:
     
  9. BigRob

    BigRob Well-Known Member

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    So? He is the President.

    As for the auto-industry, they need go bankrupt, otherwise they will never be able to compete. I am against giving them anything.
     
  10. Hobo1

    Hobo1 Active Member

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    For those of you who have not read Lee Iaccoca's first book, I suggest you find a copy. The one thing that impressed me most was how much the car industry's fate rested on good design, good engineering, and good management. Iaccoca was at Ford when the Mustang was introduced and he tells how much money that this first model made for the company. The lesson to be learned is that automobile companies make their own fate - not external forces, like a bad economy.

    I think that last great idea that American auto makers had was the SUV - and they have been riding that wave for the past 15 years. But where is the car that consumers have been screaming for since the first fuel shortage in the 1970's? Even I, who have no experience with auto design, can guess it should be powered by natural gas (readily available everywhere). It needs a sleek design with lots of upgrade options like leather seats, good music system, etc., wide wheel base so it handles well on the road, and is designed to last for 200,000 miles - ie, built solid as a Honda truck!

    The American automobile makers are out of touch with the driving public. They've grown stale and the new kids on the block are kicking butt. American's are tired of the same old crap that comes out of Detroit. Obama got elected on the buzz word 'change', because the government has grown stale. The same thing has happened with the Big 3.

    The only plan that is going to save the Detroit auto industry is to replace anyone who has been in management or design/engineering for longer than 20 years. I am guessing the factories are still worth salvaging... as are the factory workers. I am not wild about the Union contract that allows a worker to retire after 30 years with full wages and benefits - but that's secondary.

    Right now we need some new blood in these companies. I am sure the US is filled with bright, energetic young men (ie, no gray hair) who could put a whole new face on the auto industry. The economy is not in such bad shape that a lot of people wouldn't jump to buy and alternative energy car that looks good, drives good, and is built solid.

    Having said all that, I know Detroit is not going to change - so now I am just steeling myself to accept the huge bundles of money Congress is going to uselessly throw at Detroit. They aren't going to change.
     
  11. Andy

    Andy Well-Known Member

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    I completely disagree. I see no evidence of any of this.

    The big three sold 8.5 Million cars world wide. Clearly they are not out of touch, nor are they not selling. Even in the US, GM outsold Toyota by 1.2 Million vehicles. Globally GM is the number dominate auto suppler.

    Ford outsold Nissan and Honda, by 1.3 million and 850K respectively.

    Further, domestic autos are built solid. The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

    Domestic autos are just as reliable, if not more so than our foreign competition.

    Bottom line, our domestic car companies sell more cars, and sell just as good or better cars, than anyone else.

    So why are they failing? Do some research. It's real simple. The Honda plant isn't unionized, and it's doing fine. The Ford Canadian plant isn't hammered by unions, and it's fine. The GM international plants in Korea and Australia, and all over the world, are fine, and doing well.

    The US plants with burdensome Unions are crumbling. This isn't that hard.
     
  12. Dawkinsrocks

    Dawkinsrocks Well-Known Member

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    ''Bottom line, our domestic car companies sell more cars, and sell just as good or better cars, than anyone else.''

    What planet are you on?

    American cars are ****.

    The great names in cars are either European or Japanese.

    Haven't you heard of Porsche, Ferrari, Rolls Royce, BMW, Mercedes, Lexus, Lamorghini etc?
     
  13. TruthAboveAll

    TruthAboveAll Active Member

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    The auto industry's fate does indeed depend in part on good design, engineering and management. It also depends on cost effectiveness and competitiveness. When Ford came out with the Mustang, which indeed was a winner, most of the Big 3 were coming out with massive redesigns and new model introductions. Many of them were also winners, as they all caught the wave of the trend in the mid- to late-60's. MUSCLE cars, as they fondly came to be known.

    However, the automakers are not exempt from being influenced by a bad economy.



    The volume of domestic automakers' sales does not support this. The consumers have indeed NOT been screaming since the 70's. They screamed a bit, then quieted down with the mostly moderate mileage improvements of the 80's, aka the mini-van era. Underneath this, the beefier pick-ups and luxury models of all the Big 3 held stead, with modest model changes and very few new model introductions (such as the Cadillac Catera) faced little competition from foreign companies; mostly European in the luxury area.

    Natural gas is a limited viable option, as it is a by-product of oil drilling to some degree. It also is a "fossil" fuel, so is looked upon as non-renewable. For diversity it is a much better option than ethanol, but presents it's own problems.

    As Andy clarified in his response to this post, that mostly is not true. There have been periodic stages of less-than-acceptable quality. Also when they've been out-performed in safety. And periods when they've lagged in model re-designs. But for the most part, they've stayed pretty consistent, and their overall sales have not suffered drastically.

    Resale value has been a factor, with foreign models retaining better value than domestic models in some cases. Most of this is because of model-to-model comparisons in quality, safety and fuel efficiency. Part of it is also due to availability.

    For example, I purchased a Honda CRV in 2001. I had quite a drive to work at the time, so I studied previous years repair rates, mileage, resale value and price as my primary determinants. I wanted a small SUV type, so that I would have either 4WD or AWD for inclement weather here in Michigan.

    The models I compared were the Chevrolet Blazer, Ford Escape, Toyota 4-Runner, Honda CRV and Subaru Outback. I liked the Escape, really, but there were no 2001 models left when I was shopping.

    The Honda ran about $1800 less than the Toyota or Chevy, and within a few hundred of the Subaru. All four were quite comparable in safety. Toyota and Chevy were very comparable in repair incidences, as were the Subaru and Honda. The interior of both the Chevy and Toyota were nicer, the Honda being definitely a bit more utilitarian. Mileage was rated at 21 mpg for both the Honda and the Outback (I get around 25 average) and 15 & 16 for the Chevy and Toyota respectively.

    Today, 7 years 2 months later, the trade-in value (standard, per Edmunds) are: Honda $7263, Chevy $3484, Toyota $6975 and Subaru $7606. When you are considering the fact that you take an immediate depreciation on a new vehicle of 10-15% the moment you drive off the lot, resale value becomes a bigger issue.

    During the 90's and early 2000's, Chevy has definitely had a quality issue in a great number of their models. I should really say GM. The higher-end models and trucks have been much better, but the mid- and low-end models have really struggled. Hence between that issue and the availability of, on average, 5-1, the value of 2001 Blazers is roughly half the competitive models. The Ford Escape is higher too by about $1300.

    Detroit hasn't changed because Detroit hasn't had to change. The problem is, as usual, they're about 3-5 years behind on the curve. Ford is actually in the best shape overall.

    When you look at the user reviews on Big 3 models you see a pattern of complaints about quality and repair. When you couple that with labor costs nearly twice that of their foreign competitors, the true problem comes into focus. One other factor is parts costs. Per one report:

    There are pros and cons about this, but it's still a fact. Foreign automakers parts costs are lower, partly due to their competitive demands. Contracts are shorter and more susceptible to lean competition. GM supplies a good portion of it's own parts, and this explains the problem in part (highlights mine):

    GM is looking to spin off some of these suppliers, condensing or outright selling them. The UAW is strongly resisting. (Gee, let's cut our throats just a bit more, eh?)

    Alternative energy vehicles is a great ides, but it is going to take time to get the support structure going - both in production and in buyers' upkeep. They still don't have a clue exactly what life they can expect from fuel cell technology, or how it will need to be disposed of ultimately.

    It's really bad timing for the Big 3 to need to get on the technology-revolution band wagon. I can see big problems with NOT bailing them out. In addition to the ripple effects directly, I see some residual problems.

    One, a situation that could result in more foreign ownership. (So we have to pay other countries for our oil & gas, AND the vehicles to put it in?)

    Two, a lack in vehicle availability itself. Driven by high costs of their own in material and labor, a Chapter 11 could immediately drive some suppliers under.

    Three, as a result to fewer Tier 2 & 3 suppliers, there could be increased parts scarcity, driving prices higher for remaining unaffected automakers.

    Four, at a period with lower energy costs (however long that lasts) inflation could once again be forced simply because of reduced availability.

    I agree with Andy's overall assessment. I can see that due to a lot of factors, these companies need to face the same hard look our government needs. CUT the waste. REDUCE costs. I'd say no bailout, but possibly a loan guarantee similar to Chryslers' in the 80's...
     
  14. Andy

    Andy Well-Known Member

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    I tend to use facts and evidence more than the fanatical ranting and ravings from the near religiously dogmatic left.

    http://money.cnn.com/2007/08/08/autos/jdpa_dependability/index.htm?postversion=2007080909

    This is evidence, not politically motivated rape-supporter screaming.
     
  15. Andy

    Andy Well-Known Member

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    Not so sure about this. Depends on what way you read the data. Most of the models that have a better resale value, have it because they cost more originally. In some cases, resale value is even less than domestic cars since purchasing imported overseas parts, makes owning an older car more likely to need new parts, a more costly deal.

    It all depends. Cars in general, are a very poor investment.

    Personally I'd never buy a new car. I'll let you take the hit, and lose your money, then I'll buy the Chevy off you for a few thousand. :D

    I have another possibility. In the glory days of GM, each company of the union, as it were, was on their own to make or break. Buick management handled Buick. Chevy management handled Chevy. Now things have consolidated to a massive corporate structure that can't respond as quickly to issues discovered.

    It isn't that there are more or less problems, but that it takes them longer to fix. It is the same way with massive government bureaucracy that slows the works.

    For example, the Catera was a disaster. Issues all over. Quality problems throughout the production cycle. A bad deal all around. GM was so slow in addressing the issues, that the new model called the CTS came out, while avoiding any connection to the Catera, even though it was a direct upgrade.

    Now when GM fixes a problem, it's universally a good fix. The CTS had almost no real problems. None of the prior problems were carried over.

    Another example would be Saturn. When the company first opened with it's own management, it's own design team, it's own plant, things went peachy because it was make or break on them. Now GM has consolidated, the engineers are back it GM HQ, the plant is operated like any other GM plant, and so on. Now Saturns have become like any other GM car.

    It's a bad idea. It will only work as long as government regulates or pays the tab for the technology, which is a bad deal all around.

    I have no problem with foreign ownership. Honda is a great company and provides many domestic jobs.

    There will always be vehicles available. Supply and demand will make sure of this. The moment reduced supply pushes up price, more companies will step in to invest to capitalize on the market.

    High energy prices push up inflation. Low energy prices will keep inflation low. The only other cause of inflation will be our government printing money because Obama needs to pay for his programs.

    Absolutely no bailout. Socialism always fails. Giving out money will simply give cause to more companies to be irresponsible and demand more cash. GM must either find a way to make ends meet, or filed chapter 13 and shake off the Unions. Ultimately, GM isn't going anywhere. They will live on in all their international companies even if GM USA crashes and burns.
     
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