No Bailout - yet

[Sir_Galahad]

I was pleased to see that the Senate finally did something right, in my opinion. They voted down the bail out for the Big 3 Auto Makers. It seems that the UAW would not agreed to "renegotiating" wages for the minions, so the Senate told them to take a hike. Good for them. I did not feel that the bailout would do anything more than postpone failure for them as long as the status remained quo. I can only hope that lawmakers stick by their guns until the UAW and TPTB come to their senses and see that REAL CHANGE needs to happen.

[Mini [Bot]]

I don't mind the guys who actually MAKE the cars making money as much as the executives taking millions for driving the companies into the ground........

[littleblueneon]

The best way to get back at the auto industry is to just drive one car your entire life.

In 20 years, I'll be a classic and worth more than LB paid for it. Cha-ching!

[Mini [Bot]]

The best way to get back at the auto industry is to just drive one car your entire life.

In 20 years, I'll be a classic and worth more than LB paid for it. Cha-ching!

We bought a new car when our family outgrew the old one. Both of ours are long-ago paid for. Neither is American-made, sadly, but we can afford to fill them up when gas prices rise.....

[The Tackymobile]

The best way to get back at the auto industry is to just drive one car your entire life.

In 20 years, I'll be a classic and worth more than LB paid for it. Cha-ching!

We bought a new car when our family outgrew the old one. Both of ours are long-ago paid for. Neither is American-made, sadly, but we can afford to fill them up when gas prices rise.....

Stephen is just DYING for me to crap out so he won't die of embarrasment whenever he has to go anywhere. But I've got a Lexus engine and refuse to break down.........

[littleblueneon]

The best way to get back at the auto industry is to just drive one car your entire life.

In 20 years, I'll be a classic and worth more than LB paid for it. Cha-ching!

We bought a new car when our family outgrew the old one. Both of ours are long-ago paid for. Neither is American-made, sadly, but we can afford to fill them up when gas prices rise.....

Stephen is just DYING for me to crap out so he won't die of embarrasment whenever he has to go anywhere. But I've got a Lexus engine and refuse to break down.........

He should have gotten to experience the joy of station wagons....

[mellytu74]

I was pleased to see that the Senate finally did something right, in my opinion. They voted down the bail out for the Big 3 Auto Makers. It seems that the UAW would not agreed to "renegotiating" wages for the minions, so the Senate told them to take a hike. Good for them. I did not feel that the bailout would do anything more than postpone failure for them as long as the status remained quo. I can only hope that lawmakers stick by their guns until the UAW and TPTB come to their senses and see that REAL CHANGE needs to happen.

The UAW? THE UAW!!!??

That would be the same UAW that agreed to concessions on December 4th in order to make this deal work?

If they give up any more money per hour, they will be making less than the Toyota workers in Kentucky.

See, UAW members DO NOT make OR take home some $70 per hour or $77 per hour or whatever cockamamie figure it is.

That is the automaker's cost per active employee.

What's the difference?

The latter figure is total spent by automakers on wages and benefits divided by the number of active employees. The cost of benefits includes the pensions and health care costs for the hundreds of thousands of living retirees in addition to active workers.

Those punching the clock every day, don't get a dime of that. As of last year, UAW workers made an average of $28/hour in wages + $10/hour in benefits.

The rest went to retirees, a cost that is borne by the automakers.

The reality is that unionized and non-unionized autoworkers actually make very similar wages and benefits.

I suppose, Sirg, you (and Dick Shelby and Jim Demint) think the state-of-the-art Honda and Toyota plants all got to the US via the automobile fairy, as opposed to billions of dollars in subsidies and tax breaks from the states.

Now that the entire auto industry is off 35% worldwide, how's that working? If I find the story about the lots outside the Port of Long Beach filled with cars from Japan and Korea sitting that can't go anywhere because the US dealers aren't selling them, I'll post the link.

And, because of their relatively newness, how many retirees do Toyota and Honda have?

Well, gee, I'll have to check my figures but I'll bet it's fewer than 100 years of US automaking has produced.

Twenty years ago, GM and Toyota began to operate a joint venture in Fremont, CA, the NUMMI plant.

The plant, with UAW members, made GEO Prizms and Toyota Corollas. On the same platform.

Part of the idea was for GM management -- from the very top to the first-level supervisior -- to learn Japanese management techniques.

Well, gee, Rick Waggoner, how'd that work for you?

GM now no longer participates in the NUMMI plants. But, Toyota Corollas are still made there -- BY UAW MEMBERS.

So, where's your demonization of the UAW members who make Corollas, three types of Mazdas (all in Michigan IIRC), Suzukis and Mitsubishis?

You can't have it both ways, Sir G.

The problem that the Big Three UAW members have is that they are saddled with the likes of Rick Waggoner for management.

So, please, stop blaming the guys who punch the clock.

Or does Rick Waggoner's $9,500 per hour not bother you at all?

[Sir_Galahad]

I am not blaming the guys who punch the clock. They have no say in how the company is run. And I am not one who will poke a finger in the eye of a guy just trying to earn a living. But, it seems to me that someone making close to $100K per year (or is that figure wrong, too?) for working in an assembly plant is a bit much when you compare it with other classes of jobs. I don't blame the workers for making that much. I blame the unions for having the force to put the company's proverbial backs against the wall in "negotiating" for those numbers. And, I also blame them for "negotiating" the auto company's having to pay workers that are not working. And I also blame them for "negotiating" full health benefits for those that are no longer employed by the manufacturers. Why should the auto company's be saddled with those expenses which, as I've read, add nearly $2,000 per car to the cost of one of their vehicles? Now, if I am wrong with any of those facts, please let me know.

And, yes, I will never understand why the CEO's of failing / failed companies are permitted to continue to draw obscene amounts of income, whether it is in cash or otherwise deferred payments.

[nitrah55]

This is Tom Friedman's column from Tuesday's NY Times. One example of how things can change:

While Detroit Slept

By THOMAS L. FRIEDMAN
Published: December 9, 2008
As I think about our bailing out Detroit, I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitized global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done. If you have an idea in Detroit or Tennessee, promise me that you’ll pursue it, because someone in Denmark or Tel Aviv will do so a second later.

Why do I bring this up? Because someone in the mobility business in Denmark and Tel Aviv is already developing a real-world alternative to Detroit’s business model. I don’t know if this alternative to gasoline-powered cars will work, but I do know that it can be done — and Detroit isn’t doing it. And therefore it will be done, and eventually, I bet, it will be done profitably.

And when it is, our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.

What business model am I talking about? It is Shai Agassi’s electric car network company, called Better Place. Just last week, the company, based in Palo Alto, Calif., announced a partnership with the state of Hawaii to road test its business plan there after already inking similar deals with Israel, Australia, the San Francisco Bay area and, yes, Denmark.

The Better Place electric car charging system involves generating electrons from as much renewable energy — such as wind and solar — as possible and then feeding those clean electrons into a national electric car charging infrastructure. This consists of electricity charging spots with plug-in outlets — the first pilots were opened in Israel this week — plus battery-exchange stations all over the respective country. The whole system is then coordinated by a service control center that integrates and does the billing.

Under the Better Place model, consumers can either buy or lease an electric car from the French automaker Renault or Japanese companies like Nissan (General Motors snubbed Agassi) and then buy miles on their electric car batteries from Better Place the way you now buy an Apple cellphone and the minutes from AT&T. That way Better Place, or any car company that partners with it, benefits from each mile you drive. G.M. sells cars. Better Place is selling mobility miles.

The first Renault and Nissan electric cars are scheduled to hit Denmark and Israel in 2011, when the whole system should be up and running. On Tuesday, Japan’s Ministry of Environment invited Better Place to join the first government-led electric car project along with Honda, Mitsubishi and Subaru. Better Place was the only foreign company invited to participate, working with Japan’s leading auto companies, to build a battery swap station for electric cars in Yokohama, the Detroit of Japan.

What I find exciting about Better Place is that it is building a car company off the new industrial platform of the 21st century, not the one from the 20th — the exact same way that Steve Jobs did to overturn the music business. What did Apple understand first? One, that today’s technology platform would allow anyone with a computer to record music. Two, that the Internet and MP3 players would allow anyone to transfer music in digital form to anyone else. You wouldn’t need CDs or record companies anymore. Apple simply took all those innovations and integrated them into a single music-generating, purchasing and listening system that completely disrupted the music business.

What Agassi, the founder of Better Place, is saying is that there is a new way to generate mobility, not just music, using the same platform. It just takes the right kind of auto battery — the iPod in this story — and the right kind of national plug-in network — the iTunes store — to make the business model work for electric cars at six cents a mile. The average American is paying today around 12 cents a mile for gasoline transportation, which also adds to global warming and strengthens petro-dictators.

Do not expect this innovation to come out of Detroit. Remember, in 1908, the Ford Model-T got better mileage — 25 miles per gallon — than many Ford, G.M. and Chrysler models made in 2008. But don’t be surprised when it comes out of somewhere else. It can be done. It will be done. If we miss the chance to win the race for Car 2.0 because we keep mindlessly bailing out Car 1.0, there will be no one to blame more than Detroit’s new shareholders: we the taxpayers.

[silverscreenselect]

The best way to get back at the auto industry is to just drive one car your entire life.

In 20 years, I'll be a classic and worth more than LB paid for it. Cha-ching!

I've come close. I am 56 years old, and I have owned four cars my entire life. In all fairness, I'll be looking for number five in the near future.

[silverscreenselect]

The Big 3 have mismarketed and misbuilt their more more economical vehicles for years. They realized that they could make a ton of profit on SUV's so they made them seem as glamorous as possible while ignoring the bread and butter vehicles. The Japanese have since dominated that market.

The Big 3 say that people won't buy their cheaper cars. There's a reason for that. For years, the subliminal message from them has been that their smaller, cheaper cars are crap that only the losers who can't afford or aren't macho enough for SUVs wind up with. Gee, wonder why they don't sell.

I'm against the bailout for one reason. There's absolutely no reason to think that the automakers will do anything different this next time around other than try to blame the whole mess on the UAW and ram some nasty wage concessions down their throats.

There's a market for US cars. The Big 3 have valuable real estate, machinery, brand awareness, technology, and trained workers and someone is going to acquire those assets and run them profitably. Just not the same bunch of overpaid idiots who are running them now.

The same people who are blaming this on the UAW are blaming the entire subprime mess on deadbeat homeowners or government pressure. The vast majority of the companies making these loans were not subject to the government directives and there was certainly no pressure to make the loan conditions as ridiculous as possible, inviting default. These companies were being pressured by the major investment banks to produce as much mortgage paper as possible, that looked good on paper, so they could turn around and resell it.

Read this article from Business Week and ask how deadbeat borrowers and the federal government were the cause of it:

http://www.businessweek.com/magazine/co ... 638235.htm

I attended a seminar last week in which they discussed (in part) white collar crime. The opinion from the experts at the seminar was that there are going to be a bunch of people in this subprime mess doing some time at Club Fed within the next five years or so.

[mellytu74]

But, it seems to me that someone making close to $100K per year (or is that figure wrong, too?) for working in an assembly plant is a bit much when you compare it with other classes of jobs.

According to the Center for Automotive Research, a non-partisan organization, average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007.

That works out to a little less than $60,000 a year in gross income.

Where do you get the $100,000 per year figure?

According to an AP report this morning, Toyota workers make $30 per hour.

Toyota is poised for its first U.S. sales decline in 13 years; it canceled its 2009 annual dealer meeting in Las Vegas to trim expenses as consumer demand for new cars plummets.

It released a statement saying a bankruptcy among the not-so-Big Three would "exacerbate an already difficult environment" for itself and the industry as a whole.

Honda is cutting output in North America by 119,000 between now and the end of March at plants in Alliston, Ont., Ohio, Alabama and a new factory in Indiana that began producing cars just last month.

Is it any wonder that shares were off 10% in Nikkei trading today?

My links, lest you think I am blowing smoke out my ass.

http://www.theglobeandmail.com/servlet/ ... y/Business

http://news.moneycentral.msn.com/provid ... id=9431573

Also, where do you get your information about the negotiations? I am curious.

[gsabc]

This confuses me.

What Agassi, the founder of Better Place, is saying is that there is a new way to generate mobility, not just music, using the same platform. It just takes the right kind of auto battery — the iPod in this story — and the right kind of national plug-in network — the iTunes store — to make the business model work for electric cars at six cents a mile.

Nice analogy, but if I interpret this correctly, said auto battery does not yet exist, and the infrastructure for the plug-in network stands to be a wee bit more expensive than the iTunes store. That has to be paid for somehow, and repaid eventually by users.
Also, my last tankful of gas cost me $1.619 per gallon, and I got ~36 mpg. That works out to 4.6 cents per mile. Granted, it was a bit more when gasoline was nearly $4.00/gallon. But this story is recent, with the national average for gasoline around $1.70 or less. Leading to my next confusion:

The average American is paying today around 12 cents a mile for gasoline transportation,

You mean the average consumer vehicle (I'm not counting business vehicles such as buses or trucks) is only getting around 14 mpg? That's $1.70/12. I'm curious about where these numbers come from.

[Kazoo65]

I live in Michigan, the home of the Big 3 automakers. Our governor has been trying to talk Congress into helping the auto companies for one really big reason-our state's economy is going down the tubes now and if the Big 3 go under the state will be in VERY SERIOUS TROUBLE.

Estimates are that over 500,000 people will lose their jobs. Already, GM is closing 5 plants here in the state. The lost wages (and tax revenues) would affect every part of the state, from highway construction to public safety. Governor Granholm already announced big budget cuts, which could get bigger.
Senator Stabenow (who's up for re-election in 2 years) was on TV and she said the Republicans didn't understand how their inability to pass the bailout would cause further damage to an already weak economy.

Save GM, Ford and Chrysler-buy an American car!

[mrkelley23]

I don't like bailouts of any industry in principle. I will say that I don't understand why people are getting all het up over a $15 billion bailout for people who actually produce something, when nobody blinked at $750 billion for people who produce nothing.

Sirge, if you read the background on the Senate negotiation, the "deal-breaker" was that the UAW, who thought they were negotiating in good faith, wanted until 2011 to curve their wage/benefit packages down to Toyota levels. The good Suthren senators, who coincidentally have all those Toyota and other furrin car factories in their states, insisted that said parity come by 2009. And yet they claimed to be nonplussed at the idea of a "car czar" because he/she would either micromanage or not manage enough.

The cynic in me believes there weren't any principles involved here at all, other than the one that says they wanted to force the White House's hand and make them spend TARP money on the auto industry.

[silverscreenselect]

I don't like bailouts of any industry in principle. I will say that I don't understand why people are getting all het up over a $15 billion bailout for people who actually produce something, when nobody blinked at $750 billion for people who produce nothing.

When most businesses fail, the losses are limited to investors, creditors, suppliers, landlords, employees and the like. The losses from this are manageable. We have had bunches of airlines fail, but people are still able to fly anywhere they want.

If financial businesses fail, the entire economy can get sucked into a black hole. The flow of money can be disrupted, perhaps fatally, for a lot of companies. Almost every big company in the US depends on short term commercial paper for financing. Without it, solvent, prosperous companies might not have been able to meet payroll or meet their short term obligations.

The flow of money in today's economy is more critical that cars, oil, or any other industry. And from what I understand we were very close to seeing that collapse. The bailout isn't being handled as well as it should be, but in my mind something definitely needed to be done. The same can't be said about the automakers.

From all I've been able to read, there is nothing to indicate that the automakers won't spend this money and continue to make the same bad decisions they've been making for years which will lead to continuing losses. And forcing the UAW to renegotiate contracts won't solve the problems they have.

[ne1410s]

This all seems to be no more than a Reaganesque attempt at union busting.

[Bob78164]

This all seems to be no more than a Reaganesque attempt at union busting.

That is exactly what it was. On Wednesday, before the bailout had passed the House, a memorandum was circulated among Republican senators reading, in part: "The message they [Ensign, Shelby, Coburn and DeMint] want us to deliver is: This is the [D]emocrats['] first opportunity to payoff organized labor after the election . . . . Republicans should stand firm and take their first shot against organized labor." --Bob