Congressional Leaders Want Bush to Help Automakers

[DiveCon]

Nafta put all those people completely out of work, and now they work at Walmart or McDonalds. Building a world economy? You mean the ones where the CEO's continue to bring in 30 million dollars a year while they pay Chinese workers three dollars a day and work them 15 hours a day seven days a week in horrible conditions? Is that your dream for the future? Is that what a global economy looks like?

well, of course
they have to make that much so Pres Obama can tax them to take care of the rest of us
didnt you get the memo?

 

[elvis]

well, of course
they have to make that much so Pres Obama can tax them to take care of the rest of us
didnt you get the memo?

apparently not. i don't know what Obama actually will do.

 

[DavidS]

It's a connundrum, I agree. But how many times are we going to do this? How high can the debt get before it ruins the economy?
I have seen the unions send jobs to Mexico. They wouldn't give in on their $27/hour assembly line jobs. So Delphi told them where to go and went to Mexico. I am sure those workers make about $10/hr now.

This is where Obama needs to step in and remove America's dependence on ANY corporation. Unfortunately, the idea of competition was destroyed when gigantic, mega-corporations bought out all of the old ones. Could you imagine what would happen if Microsoft ever needed a bailout? 90% of the world's computers would stop operating if Microsoft went under. I don't think the idea of relying on major mega-corporations was what the founding fathers had in mind when they setup America' capitalistic system.

The entire reason we invented the internet was so if one area of the country went down, communications could still be up and running because we didn't rely on one central node... everything was networked. So too need to be America's core businesses... it's just a big line of dominos and God forbid somebody tips one.

Unfortunately, not even Obama is bold enough to create new, tough monopoly laws. Especially in a time of economic crisis. We'll probably have to repeat the economy we're in today in 50 years or so until America realizes that we have monopolies controlling us.

 

[DavidS]

Obama should have sworn to this. As I remember, Ross Perot was the only one who said NAFTA was a bad idea. Everyone said he was stupid. Where would we be if he hadn't dropped out in 1992?

He didn't drop out in 1992. He got 22% of the vote in 1992. He ran again in 1996 and got 8% of the vote. Nader ran in 2000 and got 2% of the vote. In 2004 he got 1% of the the vote. This year, all of the third parties combined could even muster .5% of the vote. America is in dire need of another political party - I've been saying this for ages. But because our leaders outsources our jobs to Mexico, and because Mexico outsourced their poorest people to us, manufacturing in America has crashed.

 

[elvis]

He didn't drop out in 1992. He got 22% of the vote in 1992. He ran again in 1996 and got 8% of the vote. Nader ran in 2000 and got 2% of the vote. In 2004 he got 1% of the the vote. This year, all of the third parties combined could even muster .5% of the vote. America is in dire need of another political party - I've been saying this for ages. But because our leaders outsources our jobs to Mexico, and because Mexico outsourced their poorest people to us, manufacturing in America has crashed.

He dropped out initially and got back in. When he dropped out, he was ahead of both Clinton and Bush. He claimed the republicans threatened to sabotage his daughter's wedding.

 

[DavidS]

No, GM wants an additional $10bn for a merger with Chrysler, which so far has been turned down. And I agree, $10bn just about pays the layoffs and closures - bad idea.

As of Friday, GM and Chrysler called off their merger talks.

 

[tigerbob]

i know we seem like a remote area, but we are still using Dollars here

Aw, crap. I inflated the price of a gallon by about 70% didn't I?

My laptop has an English English keyboard. My 'pound' symbol is a £ symbol, and it's right next to the $.

 

[tigerbob]

As of Friday, GM and Chrysler called off their merger talks.

Correct - I should have said wanted, not wants. Today's Freep has a nice little article about where now for Chrysler.

Chrysler looks for new buyer | Freep.com | Detroit Free Press

 

[DiveCon]

Aw, crap. I inflated the price of a gallon by about 70% didn't I?

My laptop has an English English keyboard. My 'pound' symbol is a £ symbol, and it's right next to the $.

well, we ARE "NEW" England, dont know if that connfused you or not

 

[DavidS]

Nice work, Dubyah.

GM's stock fell 23% today.

GM: Summary for GEN MOTORS - Yahoo! Finance

 

[DiveCon]

Nice work, Dubyah.

GM's stock fell 23% today.

GM: Summary for GEN MOTORS - Yahoo! Finance

what do you expect to happen to a company that is being run the way it is?
PLEASE, that isnt Bush's fault, thats GM's fault



i bet you scream out "DAMN YOU BUSH" when you trip

 

[tigerbob]

i bet you scream out "DAMN YOU BUSH" when you trip

 

[PubliusInfinitum]

FORD IS CORRUPT TO THE MAX, PAYING THE EXECUTIVES OUTRAGEOUS SALARIES OF MILLIONS OF DOLLARS. NO MORE BAILOUTS! NOT ONE DOLLAR!

It is time to let Ford die a long deserved death. They are totally corrupt and debt ridden. Look at the numbers on any stock site.

If the US gov is to spend any money helping the auto industry, let it be given to the companies that come in to buy the Ford Factories and thus employ skilled Americans building what was the original type of car Mr. Ford intended, "A car for the average American." No more gas guzzlers. No more fat cat executives making ten times what the President of the US is making. That is outrageous!


FORD MOTOR COMPANY


Total Current Liabilities -- ONE HUNDRED BILLION DOLLARS!
Long Term Debt -- ONE HUNDRED SEVENTY BILLION DOLLARS!
Other Liabilities -- TEN BILLION DOLLARS.

This has to be the most corrupt debt ridden company in the whole world. Time to kill it and get it over with. No more special government hand outs.

At Ford Motor Co. they called it "Blue," a team set up around the year 2000 to design an array of small, fuel-efficient cars to compete with the Japanese. It didn't get far because no one could figure out how to make money on low-priced compacts with Ford's high labor costs.


Most of us know about Blue. The reality is that Ford is so top heavy with expense that they can not make the necessary small cars and turn a profit. No amount of Government bailout short of buying all of their debt will keep Ford in the money. They are morally corrupt internally in addition to being financially corrupt.

It is time to kill it and let a Phoenix arise from the ashes.

******

GM is totally insolvent and should file for bankruptcy!
Until they do that, it would be insane for the government to loan them money.

As of midyear, GM had total assets of $136b and total liabilities of $191b, a $55b deficiency.

That in my book says that GM is insolvent. How can GM ever repay a MULTI BILLION DOLLAR BAILOUT?

As of June 30, 2008, its current liabilities were $70b, dwarfing its current assets of $55b. Moreover, we do not know what deals GM has made to stretch/defer repayment of its account payables.

IF WE GIVE THEM THE MONEY THEY ARE BEGGING CONGRESS FOR, THE ONLY THING THAT WILL HAPPEN IS THAT SOME RICH REPUBLICANS WILL GET SOME MONEY AND THEN GM WILL DECLARE BANKRUPTCY ANYWAY

Say after me, 'NO BAILOUT! NO WAY!

Now, I can see federal money to help some startups to buy GM's factories for forty centis on the dollar. That would make sense to me. Since hte factories would be intact, a startup making a good product would still be ordering parts from manufacturers in other parts of the country. I know a lot of parts are made outside of the country, so buying American should be a part of helping a startup get going.

Letting the Big Three fail will only open the way for startup companies to buy the factories at deep discount prices. The worker pool will still be there, but they will be offered jobs at lower rates than the outrageously high pay scales demanded by the Unions.

Because of those high rates, the Big Three can not build a small economical car and turn a profit. THAT is a reality. We need to kill the Big Beasts and create new car companies in America. Ones that can build economical cars and mass produce them and sell them to the American public.

The corrupt Democrats who receive money from the Big Three to run their campaigns are now being asked to get some free Government money doled out to the automakers.

We urgently need to tell Congress that as long as the Big Three have already proven that they can not compete against the Japanese and Korean companies in making a cost effective car, it is time to kill the Big Three.

They are doomed to fail anyway. Might as well get if over with and build new companies from the ashes. The labor pool is there. Let's put them to work at lower pay scales building economical AMERICAN cars.

Agreed...

The Government should not give them one cent and in so doing send ONE MORE EXAMPLE OF THE INEVITABLE RESULTS OF COLLECTIVE BARGAINING INTO HISTORY AND SPLATTER IT ON THE RECORD.

Then perhaps GM could sell its holdings to a new GM and they could hire a new independent workforce INDIVIDUALLY... with NO COLLECTIVE BARGAINING; with compensation packages which are comparable to its international competitors, which will produce BETTER PRODUCTS, at a LOWER PRICE to the consumer...

 

[rayboyusmc]

I bet you scream out "DAMN YOU BUSH" when you trip

The right seems to be doing that to Obama now and he hasn't even taken office.

 

[DiveCon]

The right seems to be doing that to Obama now and he hasn't even taken office.

really?
LOL
you have got to be lidding

 

[PubliusInfinitum]

The right seems to be doing that to Obama now and he hasn't even taken office.

Only to the most pathetic cock-polishing POGUES...

 

[Turboswede]

Sadly, the Dems are beholdin' to the UAW. The UAW wants it's members to keep their jobs. For their members to keep their jobs, the auto makers will need federal money. For the Dems to keep the support of the UAW, well, you get the point.

If either company declares Bankruptcy it would be under Chapter 11 providing for a reorganization of the corporate assets. United Airlines has been operating under bankruptcy protection for the past 8 (I think) years (feel free to correct me). The big benefit of a chapter 11 is that it keeps creditors, at bay and the corporation is allowed to renegotiate just about any contract they have ever entered into.

In a bankruptcy Ford (for example) would be allowed to renegotiate every contract with the UAW that it has ever entered into. What they would probably want to do is eliminate as many costs not associated with production as possible. In order to do that they will want to gut the retiree medical and pension plans called for in collective bargaining agreements.

Ford workers could still go on strike but it’s doubtful considering Ford’s financial condition, they would probably suck up the changes just like the United Pilots gave up most of their pensions. They don’t want to go the way of Eastern’s baggage handlers. As the financial troubles facing Ford & GM are mostly “paper” I think bankruptcy may not be such a bad idea.

 

[tigerbob]

If either company declares Bankruptcy it would be under Chapter 11 providing for a reorganization of the corporate assets. United Airlines has been operating under bankruptcy protection for the past 8 (I think) years (feel free to correct me). The big benefit of a chapter 11 is that it keeps creditors, at bay and the corporation is allowed to renegotiate just about any contract they have ever entered into.

In a bankruptcy Ford (for example) would be allowed to renegotiate every contract with the UAW that it has ever entered into. What they would probably want to do is eliminate as many costs not associated with production as possible. In order to do that they will want to gut the retiree medical and pension plans called for in collective bargaining agreements.

Ford workers could still go on strike but it’s doubtful considering Ford’s financial condition, they would probably suck up the changes just like the United Pilots gave up most of their pensions. They don’t want to go the way of Eastern’s baggage handlers. As the financial troubles facing Ford & GM are mostly “paper” I think bankruptcy may not be such a bad idea.

I don't think Chapter 11 is going to be an option for the auto makers. It's been covered quite a bit in the press over the last few days. Some of the reasons given (and these are not facts, merely opinions, but they seem reasonably convincing to me) are:

Delphi went into Chapter 11 three years ago. Today, it has cut blue collar jobs by two thirds (that's 27.000 hourly employees) and salaried staff by 50% (about another 7,000) and it still can't find financing that will allow it to clear it's reduced debts and get out of court.

Imagine that sort of scenario for the autos. 1 in 10 US jobs (CBS news this evening said 2.5 million) are reliant on the auto industry so let's hypothesize that one of the auto makers is in Chapter 11 for that long - which in the current economic climate where financing is hard to come by is very likely.

The first thing that will happen as soon as one of them grabs chapter 11 is that most new car buyers are going to take that manufacturer off their list. Nobody wants to buy a car for $30k when the manufacturer is bankrupt. An airline ticket you buy, you use and you throw it away. A car you've got to look after for many years, servicing, warranty, parts, etc.

CNW Market Research did a study earlier this year that found that if an auto maker went bankrupt, 80% of buyers would take that manufacturer off their list. Except if the manufacturer was from Detroit, apparently, when the figure was even higher than 80%..

That piece of research rings true to me. I don't know about you, but I'm not making a $30,000 commitment to a company like that. In addition to which, can you imagine the impact on residual values for used vehicles? You could barely give them away, so why bother getting it maintained at a franchised dealership (which everyone knows is more expensive) when you are doing nothing for the value of your vehicle when the time comes to sell it. So, in addition to new sales going down the pan, dealers start to find that their servicing work is drying up as well.

So, sales go through the floor. Now (someone correct me if I'm wrong here - Chapter 11 isn't really my area), that being the case, could you even file for Chapter 11? I mean, don't you have to have a viable business model? My understanding is that if you run out of cash with huge debts and your revenue streams are in freefall, that's not a scenario for Chapter 11 - that's a scenario for a fire sale. That's liquidation.

Someone feel free to correct me, but I don't see Chapter 11 as likely, or even viable. All this talk about "let them take Chapter 11 and then an eco-friendly, 50 mpg phoenix will rise from the ashes" seems like someone's been smoking the drapes.

 

[Turboswede]

I don't think Chapter 11 is going to be an option for the auto makers. It's been covered quite a bit in the press over the last few days. Some of the reasons given (and these are not facts, merely opinions, but they seem reasonably convincing to me) are:

Delphi went into Chapter 11 three years ago. Today, it has cut blue collar jobs by two thirds (that's 27.000 hourly employees) and salaried staff by 50% (about another 7,000) and it still can't find financing that will allow it to clear it's reduced debts and get out of court.

Imagine that sort of scenario for the autos. 1 in 10 US jobs (CBS news this evening said 2.5 million) are reliant on the auto industry so let's hypothesize that one of the auto makers is in Chapter 11 for that long - which in the current economic climate where financing is hard to come by is very likely.

The first thing that will happen as soon as one of them grabs chapter 11 is that most new car buyers are going to take that manufacturer off their list. Nobody wants to buy a car for $30k when the manufacturer is bankrupt. An airline ticket you buy, you use and you throw it away. A car you've got to look after for many years, servicing, warranty, parts, etc.

CNW Market Research did a study earlier this year that found that if an auto maker went bankrupt, 80% of buyers would take that manufacturer off their list. Except if the manufacturer was from Detroit, apparently, when the figure was even higher than 80%..

That piece of research rings true to me. I don't know about you, but I'm not making a $30,000 commitment to a company like that. In addition to which, can you imagine the impact on residual values for used vehicles? You could barely give them away, so why bother getting it maintained at a franchised dealership (which everyone knows is more expensive) when you are doing nothing for the value of your vehicle when the time comes to sell it. So, in addition to new sales going down the pan, dealers start to find that their servicing work is drying up as well.

So, sales go through the floor. Now (someone correct me if I'm wrong here - Chapter 11 isn't really my area), that being the case, could you even file for Chapter 11? I mean, don't you have to have a viable business model? My understanding is that if you run out of cash with huge debts and your revenue streams are in freefall, that's not a scenario for Chapter 11 - that's a scenario for a fire sale. That's liquidation.

Someone feel free to correct me, but I don't see Chapter 11 as likely, or even viable. All this talk about "let them take Chapter 11 and then an eco-friendly, 50 mpg phoenix will rise from the ashes" seems like someone's been smoking the drapes.

Good point, Ford could not survive long in Cpt. 11 but I don’t think they would need to. If Ford could have its contracts renegotiated under Cpt 11 and eliminated most of it liabilities from pension & post retirement welfare benefits, if would become a very attractive target for acquisition by either another auto manufacturer or (more likely) a large private equity group.

In 2007 Ford had 140B in liabilities, and 114B of these had to go with carrying expenses and future costs (mostly retiree benefits). Ford had about 285B in assets. With a cpt 11 Ford may be able to discharge about 70B in long term debt through contract renegotiations. That leaves a company with 118B in assets and 25B in liabilities for a market capitalization of $46 per share. As Ford is currently under $2.00 per share I am sure they would be snapped up very quickly.

 

[DavidS]

BREAKING NEWS

GM needs federal aid in coming weeks: chief

General Motors is in such dire financial straights that it needs to line up a federal aid packaged before president-elect Barack Obama takes office in January, the automaker's chief executive said Monday.

"This is an issue that needs to be addressed urgently," Wagoner told Automotive News, adding that now is the time to "overshoot, not undershoot" the level of assistance.

GM is willing to offer the government preferred stock, speed the introduction of fuel-efficient vehicles and set limits on executive compensation in exchange for financial aid, Wagoner said.

But Wagoner did not think it would be "a very smart move" for him to resign.

"It's not clear to me what purpose would be served" Wagoner said. "I think our job is to make sure we have the best management team to run GM."

On Friday the biggest US automaker warned it would run out of cash in the first half of next year and appealed to the US government for help to save it from collapse.

The company announced a third-quarter loss of 2.5 billion dollars and said it had burned through another 6.9 billion of cash during the three-month period, leaving it with cash reserves of 16.2 billion.

GM has said it needs cash reserves of between 11 and 14 billion dollars to cover the cost of its operations.

Wagoner said that while the company's cash burn in the fourth quarter should ease to one billion dollars a month, it will likely not be able to survive without government help.

GM has developed a turnaround plan which assumes that sales fall to 11.7 million vehicles next year from recent averages of around 15 million a year.

"I'd question whether the US industry as a whole could survive that without support," Wagoner said, adding that even with government help the automaker will have to do "significantly more restructuring" if industry sales stay that low.

Wagoner and executives from Ford, Chrysler and the United Auto Workers Union asked for the federal government to speed up delivery of 25 billion dollars in loan guarantees for the development of fuel-efficient vehicles.

They also requested another 25 billion in loan guarantees to support operations amid a sharp economic downturn which has pushed vehicle sales to a 25 year-low.

Democratic leaders in the US Congress called Saturday for funds contained in a 700-billion-dollar federal rescue plan for the financial sector to be diverted to the struggling auto industry.

Obama's chief of staff urged swift action Sunday to rescue the US auto industry, but declined to say whether Obama supported the appeal by Democratic House speaker Nancy Pelosi and Senate Majority leader Harry Reid.

"As president-elect Obama has said throughout the campaign and as I think as recently as Friday ... the auto industry is an essential part of our economy and an essential part of our industrial base," Congressman Rahm Emanuel told ABC.