Stimulus again?

[GSH]

There are *good* reasons to put execs in private jets. When you pay someone $5mil/year (just a number I pulled out of thin air), that's $2500/hour, assuming 50 weeks of work at 40 hours. (Most execs work well over 40.) If they fly commercial, or slower still, drive, that's 3-8 hours of productive time that's lost.

Personally, I wondered if the execs deliberately took the jets, even knowing it'd look bad. Why? Because they're only *half* of the problem. Detroit has made a lot of ugly cars -- that's management's fault. Detroit is also saddled with a LOT of legacy costs from its unions. It costs Detroit $1500-2000 more in union costs, per car. Go read http://www.detnews.com/2005/autosinsider/0510/17/A01-351179.htm -- that's 12,000 union workers paid to sit around, doing nothing. That's why Detroit wants to focus on trucks (and similar, like SUVs) -- those sell for a lot more, and they can hide the extra labor costs. My feeling is that the auto execs knew that a bailout would get the execs (and management) gutted, but leave the workers untouched. Congresscritters love to show they're on the side of "the little guy" and leave union costs as-is. Only bankruptcy would be able to convince a judge (who's more impartial) that both management and unions needed to take a hit. So, if you fly a private jet, a congressional bailout is less likely.

In a downturn, everyone needs to make concessions. Right now, big ones are needed from everyone to save "the big 3." I'm not convinced the USA would be irreparably hurt if the big "3" turned into the big "2."

-- GSH

[mrtwosheds]

These company's are in trouble because they have not made the products people wanted to buy and the market needed.
A bailout will help them to continue doing this.
Its not as if these company's do not know what to do, they all manufacture products that sell well in other country's, different products than they chose to market in the US.
If I were a congressman I would be waiting to hear about the exec's 90% pay cut/resignations before I even considered giving them a single cent. To succeed they must compete with their opponents, rewarding failure with a bailout would be a great disservice to the industry and the tax payer.

[cheesepuffly]

Yeah, the auto people should start selling video games. Those are really popular now.

[Steeveeo]

Yeah, the auto people should start selling video games. Those are really popular now.

To quote Yahtzee from Zero Punctuation:

In short: No
In long: Nooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo---

The last thing we need are 500 thousand identical driving sim games; we already have the 50 million identical WW2 shooters! We do not need another beaten-dead-horse genre...

[OvermindDL1]

Someone actually made a "Beat the Dead Horse" flash game a while back...
Generated by OvermindDL1's Signature Auto-Add Script that OvermindDL1 did manually since Greasemonkey does not work in Firefox 3.1 yet...

[Steeveeo]

Someone actually made a "Beat the Dead Horse" flash game a while back...

So....would making "Beat the Dead Horse 12: Use the Spiked Club" be some sort of double negative? Perhaps one that would cause a rift in space time that would tear everything apart within a 12 mile radius (one for each iteration of Beating a Dead Horse), that, after 12 minutes, would spit out 12 copies of the game, which turn out to be EPICALLY AWESOME?!

I need to lie down, this is making me dizzy....

[Red Devil]

GM used up the last of their credit line back in October (if I remember correctly), so they're either going to get bought/taken over by Toyota or Honda, patent ownerships taken over, and Detroit plants (buh-bye $75/hour jobs! ) closed, and parted out or cut their line to 1..2 models. 

They won't keep the plants there due to them being union states.  I don't know why any car company has plants in those union states when they can pay half in other states or tenth in Mexico.

Ford and Chrysler are in better shape, so they may be able to weather this better.

Should be a good time pick up a car/truck for cheap real soon.

[Red Devil]

The UAW is pricing themselves right out of their jobs. The UAW contract expires August 1, 2009, so I would not be surprised if they pack up shop and move to a non-union state like Kentucky/Tennessee like Toyota and Saturn have or even move operations to Mexico.  I would.

[hybirdisdf]

What will happen to big 3 after failed payback 17.5 billion dollars to Government.Will Obama give it more money to big 3??? It shouldnt be.How can big 3 payback to government?Merger?No one still doesnt want to buy it.Did you guys know that polaroid camera company file for chapter 11.Sad.

[Avatar]

First of all, I'm from Michigan but not Detroit.  I consider Detroit a blight on the surface of the planet, as I do most obscenely large cities, but that's a personal thing.  I'm not affiliated with the auto industry and also barely care about cars in general now that they've gotten to the point where I really can't tinker with them anymore.  (that stopped in the early 80's, and I lost interest when computers replaced cars for home tinkering...)

That being said I've read some very wrong things here...

The Big Three HAVE been making the cars that America wanted.  They DO make little European-looking boxes with three cylinder engines that get 40 mpg, but we won't buy them here.  I'm a good example.  For the last 20 years I've been driving a huge Dodge 4x4 with a 360cid engine that got me 13mpg.  That was my choice, cost me $40,000 for the last one, and is typical of many in my area.

Do you honestly think they'd still be in business if they weren't cranking out what America wanted?  Everyone around here drives an SUV, Minivan, or Truck, depending on what they need in life.  Until gas hit $4/gallon you just didn't see any subcompacts on the road.  I blame this on not wanting to be crushed in an accident with a big truck or semi...  the little cars just don't seem safe in our traffic and vehicle mix.  I mean, I'm sure they work in Europe, but I never see a 48 foot steel hauling truck in London traffic pictures.  Sit next to one of those in a Geo Metro and see how comfortable you feel...

Now, around here what dried up sales was the fact that:
1.  A good percentage of people are losing their houses, and so aren't buying new cars.
2.  A good percentage of people are losing their jobs as companies cut back to pay the additional cost of fuel, and those things they need that are now more expensive because of fuel.  Remember, Diesel here is still $4/gallon, so commercial traffic is still struggling while regular gas is $1.45/gallon.
3.  A good percentage of people that WANT to buy a car are finding the credit market is virtually gone.  That's mostly because of #1...

So, it all comes down to expensive fuel and the credit crisis.

The expensive fuel was caused by Stock Market speculators buying Oil Futures, strangling supply and driving the cost up well beyond fair market levels.  I laughed when it crashed and they lost their butts, given that they were a big part of what inflated things to begin with.

The credit market death was due to sub-prime mortgages and loans 'encouraged' by the Clinton administration.  This is why Fannie Mae and Bernie Mac suffered... they wouldn't have if they'd stuck to giving loans to people that would/could actually pay them back.

It still pains me that Obama, running on Hillary's campaign plan, is overwhelmingly seen as a savior for the conditions Bill and Hillary caused in the first place...  but that's another rant.

So...  to end this I'd like you to read this...  it's long but it's the truest analysis I've seen yet.

"What Auto CEOs Should Have Said", by Gary Witzenburg

Did it occur to anyone else that those oh-so-painful auto
CEO/government hearings should have been the other way around?

Instead of the heads of America's three remaining automakers groveling, begging
and enduring live public floggings trying to sell their case for government
loans to get them past the global economic crisis and credit freeze that
government greed, corruption and incompetence has created, shouldn't they have
been vein-popping outraged and angry? Shouldn't they have pointed accusatory
fingers at that sorry collection of arrogant, auto-ignorant Senators and
Congressmen who got them into this mess and demanded their assistance?

Shouldn't they have looked those pompous public-trough pinheads straight in the
face and demanded to know why investment firms, banks and big insurance get
hundreds of billions of taxpayer bailout dollars no questions asked while
what's left of America's once-mighty manufacturing muscle begs for loans
totaling 1/28 of that initial $700 billion Wall Street bailout? Where were the public
humiliation hearings and newly viable
business plans for those guys?

Here is what I'll bet those long-suffering auto CEOs wanted to say, but
couldn't:

"You ignorant morons! How dare you accuse us of building cars nobody
wants? We sold 8.5 million vehicles in the US last year and millions more
around the world. GM still handily outsells Toyota here, Ford outsells Honda and Nissan,
and Chrysler sells more than Nissan and Hyundai combined. How many of our new
cars have you driven lately? How many quality surveys and plant productivity
reports have you reviewed? Have you bothered to check your own EPA's fuel economy
ratings?

"Have you paid any attention in the last several years as we've turned our
companies upside down, closed dozens of plants, shed hundreds of thousands of
hard-working people who did nothing to deserve it, canceled slow-selling models
and spent billions of hard-earned dollars redesigning the rest? Are you idiots
even aware that we renegotiated our union contracts last year to make our US labor and
health-care costs fully competitive by 2010?

"Would you recognize a good
business plan if one smacked you upside the head? Have any
of you ever run a business, made a business decision or even held a real job?
Is there any more dysfunctional organization on the planet, any that more
desperately needs a new
business plan, than the US Congress? Let's compare our public
approval ratings to yours .

"You scold us for using private aircraft? We run global companies flying
people, parts and equipment all over the world every day. We use private planes
for security and productivity and cost savings over commercial alternatives. If
it were not cost effective, we would not do it, and we've been doing a lot less
of it lately. Tell us, Ms. Pelosi, how much does that big private 757-200 of
yours cost taxpayers to fly you home and back between your tough 3 -day weeks?

"For decades, your national energy policy
has been summed up by two words: 'cheap gas.' Now you want to punish us for
building the big, capable, comfortable vehicles Americans wanted to take
advantage of that policy...and for not building millions more smaller, more
fuel-efficient cars that, until recently, almost no one wanted, and that we
can't make a buck on if we build them here thanks to the high business costs
you've imposed upon us through the years.

"You have blocked every avenue of domestic exploration and construction
that could lead to eventual energy independence,
preferring instead to pump hundreds of billions of dollars overseas to purchase
the energy Americans need, much of it from countries that are not our friends.
You have piled billions of dollars of unrecoverable costs on us with excessive
taxation, overkill regulation and relentless litigation that our off-shore
competitors do not have to bear. Then you have rolled out the red carpet to
predatory, low-cost foreign competitors who come here to take our market and
pump hundreds of millions more dollars out of this country.

"Is there any other country fortunate enough to have an automotive
industry that does not support, protect and nourish it in every possible way?
We are the only nation on earth too blind and stupid to recognize and treasure
the enormous economic and national security advantages of having its own
healthy, prosperous auto industry and manufacturing base.

"Now you have passed an enormously expensive new regulation requiring 40
percent higher corporate average fuel economy in hopes of someday reducing the
less than 0.2 percent of global human-sourced CO2 attributable to US light
vehicles. That will cost us an estimated $100 billion, and even if you believe
that is really worth doing at such a cost, where are we going to get that kind
of money? Talk about unfunded mandates!

"With recent resizings and restructurings and our new labor contracts, we
were well on our way to full financial competitiveness and profitability. We
could have survived the sudden $4 gas explosion - not our fault - that
shifted buyer demand overnight from larger, more profitable vehicles to small
unprofitable ones. We have millions of highly desirable, much more
fuel-efficient small cars and engines in the pipeline for 2010 and beyond.

"Then came your mortgage meltdown and fast-frozen credit crisis, which no
one in this credit-driven business can survive un aided for long: not us, not
our suppliers, not our many thousands of independent dealers, not even our most
cash-rich foreign competitors. They, too, are asking their governments for
assistance. Will they get it? Of course! No other nation will stand idly by and
watch its auto industry die.

"There was no end of election rhetoric about creating new jobs. How about
saving several million of the ones we have? Can any of you begin to understand
how this industry is a huge, fragile, interdependent house of cards? If GM
should fail, or declare Chapter 11, so will most of its 3,690 suppliers,
beginning with the 2,000 in the US
that operate 4,550 facilities in 46 states. Since most also supply key
components to everyone else, that will bring down all of us, including US
transplant production. Don't believe us? Ask Toyota .

"Vehicle assembly, engine, transmission and parts plants nationwide will
shut down. Have you seen a plant town whose plant has died? It's a jobless
ghost town whose out-of-work residents, including owners and employees of the
small businesses that depended on plant workers' incomes, can't afford to move
because their homes – like their hopes and dreams – are worthless.
How many of those communities will be in your states and districts? US dealers
of all brands, with no new cars, credit or credit-worthy customers, will drop
like flies. Without once lucrative auto advertising, many media will shrink and
some will die? The predicted initial loss of 3 million jobs will be just the
beginning. Can you spell depression?

"Yes, we have lost a lot of market share. Where did you think all those
millions of cars and trucks our foreign competitors import and assemble here in
taxpayer-subsidized plants in cheap-labor states would be sold, and out of
whose hides did you think they would come?

"Yes, we have made mistakes, some bad products and bad business decisions
in the past. And so has every one of our competitors. We are entirely different
companies today with new leadership and new priorities. We have wide varieties
of high quality, high fuel efficiency, highly desirable new products that
Americans, as they get to know them, absolutely do want to buy. Why continue to
punish us, and the millions of incredibly dedicated, hard-working people at all
levels who still depend on us to feed their families, for the sins of our
predecessors?

"Why punish the entire country and millions in other countries as well? If
you can think of any good reason, we would like to hear it. And don't come back
at us with your usual name-calling, finger-pointing, blame-shifting, uninformed
opinions, decades-old perceptions and self-serving, grandstanding rhetoric. We
have offered our business plans and all the facts behind how we got here and
why we need and deserve to survive and prosper for the good of this country and
every citizen in it.

"You know full well that this life-threatening position you have put us in
to is entirely your fault, not ours, and that our future viability depends
completely on you. We're anxiously awaiting your business plan for guiding this
country out of the economic morass you have created, beginning with the bridge loans we
desperately need."

Award-winning automotive writer Gary
Witzenburg has been writing about automobiles, auto people and the auto
industry for 21 years. A former auto engineer, race driver and advanced
technology vehicle development manager, his work has appeared in a wide variety
of national magazines including The Robb
Report, Playboy, Popular
Mechanics, Car and
Driver, Road & Track, Motor Trend, Autoweek and Automobile Quarterly and has authored eight automotive books. He is
currently contributing regularly to Kelley Blue Book