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Auto Industry Bailout
A Ford plug-in hybrid Edge cruises on Capitol Hill in Washington, Jan. 17, 2007.   (AP Photo/Manuel Balce Ceneta, File)

A Ford plug-in hybrid Edge cruises on Capitol Hill, Jan. 17, 2007. (AP)

The American auto industry is on its knees, with its hand out.

GM, Ford, and Chrysler want a bailout now, and they want it fast. They’re hemorrhaging cash. GM says it will be unable to pay its bills by the end of the year. That’s six weeks from now.

The flailing Big Three have asked for many billions from the federal government. Congress appears sympathetic. But should Detroit be bailed out? Or allowed to go bust, and rebuild on new terms?

How much of the U.S. economy can or should the U.S. government float?

This hour, On Point: Dire straits. Should Washington bail out Detroit?

You can join the conversation. What do you say? Yea or nay? And why? Can we afford to bail out Detroit? Can we afford not to? Does it make sense?

Guests:

Micheline Maynard, business reporter for The New York Times. Her article on the front page of this morning’s Times is “G.M.’s Troubles Stir Question of Bankruptcy vs. a Bailout.” She’s been blogging about her personal switch to a new hybrid car at NYTimes.com’s “Green Inc.”

Matthew Slaughter, associate dean and professor of international economics at Dartmouth College’s Tuck School of Business.

Susan Helper, professor of economics at the Weatherhead School of Management at Case Western Reserve University and research affiliate for the International Motor Vehicle Program at MIT.

More Links:

The Wall Street Journal examines the politics of the bailout debate. For a scathing indictment of Detroit’s way of doing business, see Thomas Friedman’s column in yesterday’s New York Times. Meanwhile, David Greising at The Chicago Tribune opines that Detroit deserves a piece of the bailout action.

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  • Peter Nelson

    The auto industry should be bailed out if (or as we say in engineering, “IFF” ( = if and only if)) there is some strong reason to think it can be done successfully. Else it’s just throwing good money after bad.

    Everybody knows the jobs argument – the “Big” Three are, themselves, still major employers. And thousands more jobs are at risk in the companies that supply parts, components, materials, and services. Consider, alone, how many car advertisements we see on TV and in print and how much revenue the media will lose. This morning WBUR had a sponsorship spot by Chevy. Plus, there are the jobs in the dealer network, plus countless jobs in restaurants, retail stores, and other businesses in the communities hosting plants and offices for auto industry companies. PLUS all the teachers, firemen, cops, and other local government workers in towns that depend on that tax base.

    Also the auto industry is important for a less-well-known reason. Consider the technology that goes into a car – combustion systems, electronic control systems, energy management systems, safety systems, display technology, sensor technology and much, much more. The engineering, design, and manufacturing skill used to make a car are important in a modern industrial economy. The auto industry is a major source and a major consumer of these skills. Countless university engineering programs are funded with this in mind and supply graduates hoping to get jobs in the industry. Without it we’ll have fewer workers and fewer engineering graduates with those skills and that will make the US less competitive.

    So we should try to save the car industry if we can, but any deal must have, not just strings attached, but ropes and chains attached. For example GM’s management team must GO. Union contracts must be dramatically rewritten. Companies must be dramatically restructured, for example GM should probably be reduced to 3 divisions (from their current 8 or whatever it is). I don’t know if either Congress or the industry are willing to accept such dramatic action, but that’s the way it has to be.

  • bob lichtenfels

    The comment below is a very good point, but, will all this work be outsourced?

    “the auto industry is important for a less-well-known reason. Consider the technology that goes into a car – combustion systems, electronic control systems, energy management systems, safety systems, display technology, sensor technology and much, much more. The engineering, design, and manufacturing skill used to make a car are important in a modern industrial economy. The auto industry is a major source and a major consumer of these skills. Countless university engineering programs are funded with this in mind and supply graduates hoping to get jobs in the industry. Without it we’ll have fewer workers and fewer engineering graduates with those skills and that will make the US less competitive.”

  • Jim Ohm

    Since the current trend in “bailout” is “in exchange for partial ownership”, can there be green requirements attached to all future manufacturing? And will someone please tell me what will become of the tens of thousands of unsold, outdated combustion engine vehicles? Thanks!

  • Pam Dohm

    I am from the Detroit area, have worked for Chevrolet, and know many people whose livelihood depends on the auto industry.

    I would like to make a few points:

    While I believe that many mistakes were made over the years in the auto industry, there seems to be a lack of fairness in the treatment of the industry.

    Why are there tax breaks for the oil industry in order to help the energy situation, yet the auto industry has to meet increased CAFE standards on its own?

    In Michigan we are told that for years our state has been a net tax donor. Now that we need help, where’s the love?

    Mr. Paulson wants things like limits on executive pay, and other controls tied to aid to the auto industry, yet this wasn’t required for the financial industry. This double standard is hard to swallow.

    I’m not a fan of unions, but I can’t help but wonder if this Republican administration sees this as an opportunity to deal a fatal blow to the UAW.

  • John Petesch

    GM killed the EV-1.

    GM could be one of the most successful car makers today if their brilliant leadership had not killed one of the best, most innovative vehicles ever made.

    At the time the EV-1 was obliterated from existence, GM had so many orders for the vehicle that there was a production backlog of several years. Many high profile celebrities who had active leases on the EV-1 were showering the vehicle with praise on talk shows and such, providing free publicity and critical acclaim only dreamed of by manufacturers of other autos.

    The general consensus is that the vehicle was too well built, and that execs at GM were concerned the EV-1 would not produce enough legacy income in the form of replacement parts and turnover purchases. Who knows what other nefarious powers also came into play to kill this amazing vehicle.

    GM would undoubtedly be selling the EV-1 everywhere to everyone today if their executive leadership had not been so short-sighted, misguided, and greedy.

    GM should bring the EV-1 back, take a final shot at success, or be allowed to fail as a company… a fate they probably deserve.

  • PW

    IF the bailout(s) were more transparent, I could see investing in the US auto industry IF there were a significant change in management and IF this were part of a plan to develop a single-payer healthcare plan (to take the burden off industry) and IF the cars and trucks produced were designed to run efficiently on the widest possible variety of non-petroleum fuels.

    Otherwise? Forget about it. Bankruptcy might achieve the same results, according to some analysts.

  • wellbasically

    The car companies have made most of their money financing the purchase of their cars. With recent inflation, from 2005-2008, lenders are hurt because they are unexpectedly paid back in dollars worth less than those they lent out. So the problem for car companies is part of the systemic financial problem.

    If you are not going to change the systemic issues hurting lenders, then you are going to have to keep redistributing to keep them alive. In our case we are talking about taxing the farmers and oilmen who made a killing off inflation and redistributing that to the lenders.

    It would be better to fix the dollar to gold or some other proven physical standard and then you won’t be hurting lenders unfairly. In addition you won’t be throwing workers out of their jobs by raising rates, and that will save business too.

  • jk

    As someone commented in a letter to the editor in today’s Boston Globe; the Oil Industry should bail out the US Automotive Industry.

  • Gregg Dunn

    I agree with Pam. I view this as the Republicans last attempt to destroy the labor unions which started as open warfare by Ronald Reagan’s destruction of PATCO in 1981.

    Republicans view unions as THE BIGGEST thorn in their side. So, why should they care if millions of jobs and pensions are lost?

  • Tina Huang

    Unless there is significant overhaul in their ethics (which propobably requires new leadership), the major automobile companies should be allowed to fail. The money should go ONLY to companies that are working agressively (not using stall tactics that we’ve seen from our automobile industry) to produce environmentally friendly cars. The American automobile industry has stiffled innovation in that regard, and GM destroyed its best product, the electric car (EV1), and now claim they cant’ produce another one quickly. They have made enormous contributions to global warming, and their dangerous habits and tactics need to be stopped immediately!

    Yes, people might loose jobs, but they can be employed in other companies that are committed to keep our green technology moving forward!

  • Wilson Samuel

    Years ago Charles Darwin postulated “Survival of the fittest”. I’m really sorry that none of these Auto Giants i.e. GM, Ford and Chevrolet has refused to make cars that are not up to the standards of today’s demand.

    Why is that Japanese and Korean auto makers are able to maintain a lead in the North American market which historically were never challenged by any competitors??

    Why is that today more and more people want Toyota and Honda cars than any other American Car??

    Why???

    Toyota and Honda are also in the same market yet they are in much better position than our auto makers are.. but WHY???

    I wish somebody from the higher management of Detroit had even read a book called “The Toyota Way” which doesn’t cost billions of dollars to buy, but would put them in a better position!

    Its a consumer-driven market, and when consumers decide to ditch a company(s) nobody on earth can save them!

  • Claire E. Humphrey

    How is funneling money that will keep the auto makers afloat for a few weeks or months going to change an industry that’s been having problems for decades and knew this day was coming for the last 30 years?

  • Kevin J

    How is the auto industry now more deserving of government support than the tech industry in 2000 when many companies also failed? At the time I don’t think any tech exec then would have considered asking the government for help, let alone expect to receive it.

  • Northeast Kingdom

    How about a federal loan and an agreement to purchase a large number of Volts for the fleet of government cars?

  • Paul

    Why not launch the “green” revolution by supporting the re-tooling of Detroit’s auto industry to build the products of an oil-free future? Auto plants converted to wind-generation manufacturing (one example) would do a world of good for all parties involved, bringing a sense of pride and purpose back to an industry that has lost its direction, providing stimulus directly to workers that need it desperately, creating products that benefit our collective futures.

  • maryd

    It is not a bailout of Detroit! It is a hand up to American Workers that are now aging and need their benefits in order to not become dependent on gov’t aid indefinitely. Most workers support a large network of children & relatives, not to mention large numbers of local businesses across the nation.
    The trouble is the oil profits & the Wall Street meltdown.

  • http://ronthehandyman.biz Ron the Handyman

    Bankruptcy is not the end of the world. Fire the management, get the books under control, cut the ridiculous benefits packages, reduce the obscene hourly wages, get lean and mean. Design products that consumers want to buy. Free markets baybee. Compete, grow or die.

  • jeff

    They should file for bankruptcy and reorganize.
    Bailing them out will not help, after they run out of the loans WE are giving them and they are still in a hole, then what?

  • Frank Green

    Great show as always. Minor matter, though: I believe Matthew Slaughter’s school is Dartmouth College, not Dartmouth University. It’s a small school but there those of us who love it. Thanks!

  • Randy McNeal

    A bailout may or may not be the right thing for GM.
    Given the direction they are going on the Chevy Volt shows just how out of touch their managment is with drivers. The reason hybrid cars now are selling well is that they are not asking the dirver to change any of their driving experience.
    In order for a plug in car to work American consumers are going to have to rewire their garages, on extended road trips hotels will need to offer plug ins etc.
    Plus there is the cost of plugging in your car.
    When offered a hybrid that a driver can operate just as before or one that needs to be plugged in which one do you think Americans will pick?
    Before we bail out we need to make sure the compoanies have thier act together.

  • Tom Barefoot

    There is no hope that current management will change course far enough or fast enough to survive. We need to use this opportunity to invest in electric and Hydrogen vehicles. This builds technology, manufacturing jobs and saves us all from climate change.

    There is a story, I am not sure how accurate, that at the start of WWII — President Roosevelt called the Presidents of the big three to his office. The President outlined the needs for production of so many tanks, personnel carriers, trucks, etc.. One of the presidents replyed that they would certainly try, but they had so many cars to produce. President Roosevelt said, “I don’t think you understand…you are NOT producing ANY cars, you are producing what we need for the war.”

    I think we need to invest heavily in re-tooling the auto industry, but not bailing them out. The Government should buy preferred stock, appoint new management, monitor their daily efforts to switch to new carbon-free products immediately. This would be a 10 year crash program to get to zero carbon emisions in 10 years. This would require incenting retirement of regular gas or diesel vehicles. We need not partially clean, we need ONLY 100% clean vehicles.

    This creates a value to the public to invest tens of billions in resurrecting these companies. They need to force engineering ahead of the curve. If you look at their advertising today — it is still pushing muscle cars. They don’t know how to change. They are like a deer in the headlights. They need to be led out of this by engineers. We have an opportunity to really get a valuable future payback or throw money down the drain.

  • Kirk

    The Detroit auto makers have steadfastly pursued an UNPATRIOTIC course since the energy crises of the 1970s: they have spent hundreds of millions to lobby Congress and every administration to fight CAFE standards at all costs, instead of designing the cars that could have saved this country from the national security threat of such a powerful addiction to foreign oil.

    They spent hundreds of millions more to advertise trucks and farm implements with stone age technology with leather seats as luxury vehicles, and the ignorant masses were suckered into believing it.

    How much was spent making a car as good as a Prius or even a 4- or 6-cylinder BMW that has been getting more than 30 miles per gallon for decades?

  • http://cg.dryovage.com Henry J Dryovage Jr

    How about having the Rich Oil Companies help bail out the car companies. Would the Oil empire be where it is with out the Auto industry.

  • howard rutiezer

    Which companies won’t get a bailout?

    What’s happened with Schumpeter’s creative destruction?

  • Jim M

    You can tell the GM designer from Warren, MI that we definitely don’t want his products. This is not a figment of the public’s imagination. GM makes junk. They often use old parts on their new vehicles. I once saw a new Impala with water floating around in the taillights. One of the guests stated that JD Power is reporting favorable information on GM vehicles. JD Power surveys are usually meaningless in that they don’t take into account the long term reliability of the vehicles. For my money, it will always be a Honda or Toyota because I know the knobs won’t fall off and I won’t be stranded on the highway in the middle of nowhere.

  • Jim M

    Congrats to Mr. Dryvoyage, I thought about channeling the oil company profits back to the auto companies as well.

  • Chris Watson

    CAFE is a distraction in this conversation — if you look at Ford vs. Honda vs. Toyota, you’ll see that Ford cars in the same class meet or beat the mpg of the competition. Ford has marketed reliable, small, high mpg cars in the US and they didn’t sell — so they made trucks and SUVs and vans and those did sell. But those larger vehicles lower the fleet mpg, confusing people as to the efficiency of cars in the same class.

  • ryan s

    Why can’t GM ditch its tainted brands- chevy, oldmobile, hummer ect.. and boost its desirable brands like Saab and start marketing Opals in the US. These are nice cars that young people want to buy.

  • Marrisa

    In response to the GM engineer who says that no one is selling cars right now: I just bought a Honda Fit and had to call dealers 200 miles away just to find one that hadn’t been sold yet. Those cars are sold, at least here in the Northeast (I live in Vermont), before they even reach the lot.

  • Diane Dustin

    The auto industry should be “nationalized” in the name of “national” security along the model of FDR in early 1942; they should be told what to build (trains, trolleys, and other mass transit) and the sale of private autos should be banned as they were 1942-1944; “bailing out” the auto makers assumes that people will still drive private autos and be able to buy them-not necessary. Statements of this type will ensure that Americans understand the global seriousness of the “national security” emergency that we face and will also allow the Obama administration to consolidate this historic moment in the way that Bush did NOT do after 9/11.

    This would also allow suppliers and everyone up and done the chain to continue to operate in a totally new paradigm.

  • Denise J

    Kirk: Good for you for moving to high mileage vehicles 30 years ago. So did I and over these 30 years I’ve owned Toyota, VW, GM, Chrysler, and Ford. My current Pontiac Vibe, 35 highway, is the best car I’ve owned.

  • Andrew Morrill

    “Mark” from the G.M. Tech Center symbolizes the arrogance of the U.S. auto industry. Yes, Ford & G.M. have many relavent, high-quality vehicles in their portfoliop today. But his comment that it was Audi that developed the Hybrid is hugely off-point. It has indeed been Honda & Toyota that have successfully developed & marketed Hybrids. And poor-selling trucks represent only a recent brand-extension effort on the part of “the foreigners”, not the core of their offerings. The “Detroit” is largely responsible for its own problems…however, it IS too important to our long-term economic viability as a nation to be allowed to fail. However, the tax payer should not be asked to fund a G.M. bailout of Cerberus! We must allow Chrysler, and their sub-standard products, to fail.

  • Patrick M. Luppens

    I seem to remember Ford recently recalled 1000 employees to build F150 trucks even though dealerships are awash in new and used full size pickups. They don’t need a bailout; they need to be sent back to Econ 101 where they may relearn the principles of supply and demand.

  • Jim M

    Good for you Denise J, I like the Vibe as well. I hope you know that it is really a Toyota Matrix!

  • http://www.myspace.com/r2fax2b Mari McAvenia

    Automobiles are not my favorite machines. I don’t own one and I dislike driving them, largely because millions of others ARE driving them quite recklessly and selfishly.

    JK made an excellent point in a previous post. Big oil should bail out the big 3 automakers. If anybody has benefited from the rapacious takeover of our human culture by giant steel and plastic conveyances (cars, in short) the oil industries stand alone with mega-billions in profits.

    Surely, big oil can afford to diversify and go into automaking.The government cannot. Caveat emptor.

  • David G

    GM has profitable overseas operations that need to be sold off before it gets any taxpayer money. The problem with the auto companies is that they do not do enough engineering. The guy who works at the Tech center draws pretty pictures as opposed making things manufacturable. Chris Watson is not living on the same planet as us. When Ford redesigned the Taurus they made it bigger and more expensive than the Camry. What were they thinking?

  • Debi

    I think it quite hypocritical for the bailout of AIG etc to go through with the idea that the country needs it and now with the big 3 there is huge discussion on how, why, and more emphasis put on bankruptcy than help. With an estimated 2.5 milliion people to be affected, I cant believe that the government isnt moving swiftly like they did with the banking situation. Certainly seems like a case between haves/have nots – and the haves already got their bailout, now its time for real americans to have their bailout as well.

  • Lyman P

    Hmmm… let’s see. I was in the High-tech industry in 2001 during the tech crash and I lost my job. I don’t remember anyone giving my large employer a bail-out.

    Frankly, I don’t remember receiving a check in the last couple of years from any of the car companies when they were making money hand-over-fist on gas guzzling SUVs that have been blocking my streets, polluting my environment and increasing gas demand (and prices) that affect my pocket book.

    For shame! They support capitalism when they are making money and go crying to Uncle Sam (and the taxpayer) when they get in trouble.

  • http://www.jgeigerphoto.com Jonathan

    About a year ago Tom had one of GM’s CEOs’ on his program. He (the GM guy) was smug, arrogant and dismissive. Now the big three are no different than that person we’ve all known that we keep lending money too and keeps squandering it. “Gee, things are really bad for me right no. Can’t you loan me some bucks? I promise to get my act together this time. An oh yeah, I’m gonna get a job, stop drinking and lose weight. just you see.”

    David Halberstam’s The Reckoning is aculmination of this literature of business culture, more valuable than most because it is such a thorough and engrossing case study. Its themes will be familar to anyone who’s read the other books (or more than an issue or two of this magazine), but his narrative approach can make even shop-worn concepts seem vivid and urgent.

    Halberstam has been a patron to me, whichmakes it awkward either to praise or criticize him. There are problems with this book, similar to the problems with all his previous works. Halberstam’s diminish the force of his argument, as the repetitious anecdotes and overblown writing diminised The Best and the Brightest. But that book, despite its defects, remains readable and important 15 years after it was published, and I think The Reckoning is in the same league.

    As everyone knows, The Reckoning is aboutthe rise of the Japanese auto industry and the simultaneous decline of Detroit. Halberstam concentrates on the number-two manufacturer in each country, Nissan in Japan and Ford in the U.S., rather than the giants, Toyota and GM. (Halberstam has said that if he had descended into GM, he might never have come back up. The book took six years as is.)

    The travails of the American car makers arenot exactly fresh news. We’ve been reading about them for 15 years. In fact, the familiarity of its themes and subject makes The Reckoning’s success more impressive. In general, Halberstam tells us what we already know. The American industry suffered, he tells us, because it was smug and arrogant, and because the country was complacent about cheap gas, and because the proud men of Detroit underestimated the funny little tongue-tied Japanese. Ford lost its edge because the balance of managerial power swung away from men who knew cars and design and manufacturing and toward men who knew only balance sheets. Detroit and American manufacturing in general suffered because stock market speculators cared only about the next quarter’s results, and because unions were greedy, and because managers were greedier still, and because everyone involved viewed the factories as pies to carve up and eat. The Japanese triumphed because they’d been chastened by war, and because their society stressed teamwork and shared sacrifice, and because they cared about building the right car for the market and designing it well. (The classic illustration of arrogant inattention to market, incredible but still true, is that even in 1987, American manufacturers ship cars to Japan with their steering wheels on the American, or “wrong,” side. How far would the Japanese have gotten in America if they had pushed cars designed for driving in the left lane?)

  • Brent Granger

    We need to bail out the auto industry for the sake of our economy. As part of that bailout we should dictate that the type of cars built, starting now, would not be powered by energy supplied by foreign countries. This could be batteries, fuel cells, natural gas or anything else our more than talented US engineers can come up with. This would be money well spent.

  • http://www.ohelp.com Scott Fordin

    Glaring in its absence is any discussion of health care reform, specifically the need and feasibility of universal health care.

    The money we are spending on all these bailouts could easily pay for universal health care, which would immediately make the auto industry as well as many other businesses currently saddled with health care costs much more competitive. Universal health care would also put money directly in the hands of consumers in the form of reduced or no out-of-pocket and premium costs.

  • Ron G

    We need to put this whole ‘bailout’ within the context of environment friendly infrastructure development. I agree with Diane Dustin. We need to really think creatively. Require that public dollars be used to replace SUV lines with transit car building, the great locomotives that GM can build. We currently do not have enough transit car builders to meet growing national demands. Here is our golden opportunity. Something that would excite the public.

    Otherwise, it is cars, cars, cars….and we know where that is going to end up.

    Oh, and remember, it was GM which helped dismantle public transit even before the interstates.

  • Alyssa

    Nationalize the car makers. Put the workers on Medicare type of insurence, take the stock price to zero, and let the nation rebuild the companies in a way that benefits our long-term energy and safety needs. Any profits go to the US Treasury. Maybe people will really buy American again if the money went to the public coffers. Cut the number of models being produced drasticly, and only offer ones that are environmentally sound and safe. (Toyota makes how many models?? How many does GM make in comparison?)

    They haven’t been good businesses with their own money on the line — why would you expect them to do better with my money? $0 stock price in the markets … why should we (taxpayers)be paying more than the market value?

    Michigan Congressmen and state leaders are reaping the poor crop they planted by trying to “protect” the indusrty’s lack of innovation and responding to the changing marketplace.

    Or just let them fail. Let’s get on with this Depression instead of the constant drip of the Chinese water torture road we are on.

  • Glen

    the IRS has allowed large writeoffs for suvs and trucks over 6000 lbs for business use for the last 15 years- where’s the hydrogen Bush 2 put billions into in his first 4- do search on fabulous ruins of detroit website

  • John Petesch

    If the GM employee who called in is correct in his thinking, then his focus should be on fighting for universal health care in this country… that will free American companies from the most prohibitive and crushing expense they face in terms of benefits cost.

    Make US companies more competitive by providing UNIVERSAL HEALTH CARE to every US citizen!

  • sean

    In response to the GM engineer, populist is “populist” for a reason. As a consumer I am angry at the auto industry. I refuse to buy a new auto until I have a range of hybrids to choose from. I don’t care who invented the hybrid. It’s like a seatbelt, every car should have one. What happened to the hydrogen fueled cars that President Bush eliminated CAfe standards so that the car companies could focus on developing. Will a re-tooling take into account cotinuous improvement or will we need to have another bailout 10 years down the road? Will there be a cap on executive salaries or will managers get big salaries and bonuses out of the tax payers dollars?

  • Matt Bradish

    This bailout must be coupled with union renegotiation as well as higher gas mileage. There is no reason in this day and age why an auto worker should make more hourly than a cop or a teacher. They should take 35% cut in pay and receive bonuses only when quality and profits are up. The unions must face up to the current economic reality; they have been just as greedy as management.

  • Nate

    I am against any bailout for GM and other auto manufacturers. Unfortunately this bailout bill will pass.

    I want to thank designers like Mark from GM in advance for their future contributions in developing lagging technology, ignoring market conditions, and continuing to be second best to other more nimble and technologically forward thinking companies.

    I look forward to watching my tax dollars go to artificially propping up companies that cannot compete in a global market and that fail to recognize that it is their ignorance and pigheadedness that has put them where they are today!

    To Mark and the rest of the GM’ers I say “OINK OINK!! I can hardly wait to see your NEW 3mpg, monster car crusher SUV unveiled at the 2010 International Autoshow!”

    Keep the Flag of Mediocrity flying high! Why should we expect anything more?

  • Samantha

    I am all for helping out ones neighbor, giving %10 of my income to charity but as a rule I can not condone bailing out big business, however, this is our situation. My family rents space to a company here in MA that makes a product that goes into the cars made by GM. If GM goes out of business, so might our tenant who will then not be able to pay his rent. His rent check is a big chunk of our monthly income. As it is we are having a hard time paying our mortgage, so I would have to support a bailout. I have four children, I can’t be zen about this and say let them declare bankruptcy and let the chips land where they will.

  • http://n/a Rob Zeleniak

    Your callers are predominantly auto industry workers and their advocates from Michigan. During WWII, factories retooled in short order . . . if the situation is so dire, extreme measures are appropriate to survive, but not at the expense of the taxpayer yo bolster poor management decisions that delayed retooling factories . . . GO FOR THE VOLT!

  • maryd

    It patriotic to help the big 3.

    It is ageism to support the foreign companies over our own. The Big 3 provides health care to it’s workers.

    It seems the baby boomer workers are considered collatoral damage. Throw us under the bus at this country’s peril and expense.

    Meanwhile AIG goes on junketts and gets massages.

  • http://www.jgeigerphoto.com Jonathan

    Honda motor car corporation introduced the CVCC engine in 1972 which exceeded the emission standards at the time without a catalytic converter. The were then and will look ahead and therefore stay ahead.

    Don’t give money to the panhandling drunk.

  • Diane Leifheit

    To blame the consumer is rediculous How many millions of $s was poured into advertising to the American public that the public needed those SUVs and monster trucks. Give me a break.

    Those companies need to deal with hard times just like everyone else.

  • Liz Brickhouse

    Wouldn’t it be a better idea to give ‘grants’ to individuals and families to purchase American manufactured cars that are ‘green’ or at least fuel efficient? This would ‘trickle up’ to the car manufacturers from the buyer and would include the dealers,etc. Everyone would benefit and it would leave more money for people to spend on other things.

  • maryd

    And send the panhandling drunk to the steets eh? Jonathon is insulting the worker. Most benefits you have enjoyed all your life is due to the UNION

  • Rags

    If the American government starts to pick winners and losers using borrowed money, particularly from China (who have an upcoming auto industry) and Japan, what is the incentive of these countries to continue to lend money that will ultimately compete with there local firms. Also what will stop these countries from imposing policies that start to close these markets ( the fastest growing markets) from US auto players.

  • Caryn

    Lot’s of comparing US and Asian automakers and what they can do. Let’s not forget that foreign car companies receive money from their governments as part of their energy policies. Their roads are smaller, gas is more expensive and small cars are what their consumers demand. Their government, like ours, requires fuel efficient cars. Unlike our government, foreign governments provided money to fund R&D and production. It’s not viewed as bailing out an industry. Rather they’re funding their energy policies.

  • Peter Nelson

    Given the direction they are going on the Chevy Volt shows just how out of touch their managment is with drivers. The reason hybrid cars now are selling well is that they are not asking the dirver to change any of their driving experience.

    Neither does the Volt. The Volt is a plug-in hybrid – when the battery runs out a gasoline motor takes over. Plug-in hybrids are definitely the wave of the future and all the majors have them under development.

    CAFE is a distraction in this conversation — if you look at Ford vs. Honda vs. Toyota, you’ll see that Ford cars in the same class meet or beat the mpg of the competition. Ford has marketed reliable, small, high mpg cars in the US and they didn’t sell — so they made trucks and SUVs and vans and those did sell.

    I agree that CAFE and “green” issues are a distraction to the current discussion. The key point is what I highlighted, above – Ford, et al, need to make cars people actually want to buy. Toyota and Honda make small, fuel-efficient cars that many people want.

    They should file for bankruptcy and reorganize.

    The problem with bankruptcy is, who’s going to buy a car from a company in bankruptcy? It’s not like buying an airline ticket where you’re only risking a few hundred dollars for a few weeks between the purchase and the flight. A car costs $20-$30K and has to last for a decade or more. Even if you only plan to keep it for 5 years, you have to consider the resale value. For a purchase that big people need to feel confident the company will be around and healthy for a long time.

  • http://www.jgeigerphoto.com Jonathan

    I guess that’s one of the greatest thing about our freedoms here; If you want to borrow and spend foolishly you’re free to take as many people down with you as you can. Can’t wait to see the next Chevy Vega.

  • Andrew Rebeiro

    Why is it that I can buy a ford in Europe that gets 65mpg but the best I can get in America is 35 mpg ?

  • Megan

    No one else gets the employee benefits that union workders get. That’s why the auto makers are failing. Their international competition does not have to pay those benefits because their governments have universal health care. And teachers union benefits are why education taxes are so high.

  • sean

    I can’t agree that CAFE is a distraction. I am under the understanding that the whole retooling is necessary to make the more fuel efficient cars.

  • Dilip

    Bankruptcy is suggested for US auto companies to get thought the crisis instead of a govt loan.
    Would anyone want to buy a high ticket item like a car from a company that is in bankruptcy? I doubt it.
    It would certainly be a death knell for those companies.

  • Jake Greenup

    We are obviously and painfully entrenched in the World economy. We, as a nation, will want to acknowledge that and position our country to me more effective as part of that World economy. With that, is the fact that maybe as part of that economy we cannot support or should support 3 major car manufacturing companies. We keep mortgaging our future to maintain our status quo – status quo may not fit into the mix of the World economy. Look in the recent past; if we had not bailed out Chrysler back in 1979 it would be a memory and ultimately we might not be in this position now with auto makers. Also, if Chrysler was not here now; how much money, if we indeed choose to bailout, would we be saving. Some one at some time will need to take a stand and some pain may need to be felt. No politician is willing to make this kind of stand and we keep getting into more and more debt to pass on to many generations to come.

    Jake Greenup
    Casper Wyoming

  • Jim Stewart

    “Why is it that I can buy a ford in Europe that gets 65mpg but the best I can get in America is 35 mpg ?”
    Posted by Andrew Rebeiro

    Isn’t that the root of this whole conversion. Why WHY! is it that the American automobile market is so anti-efficiency.

    My first car was a ford, I have owned 6 GM. Now I drive a VW. Why? Because its a diesel that gets 50mpg.

    But isn’t it interesting that even this car isn’t advertised at all here? yet when the Prius went on sale they couldn’t and still cant keep them in stock?

    It all doesn’t add up. I hate to sound like a conspiracy theorist here but that’s what is smacks of for me. BIG OIL written all over it.

  • james pesci

    This mornings commentary is terribly vexing. Ford makes a car, selling well in other countries, that gets 65 MPG. It is, however, financially impossible to sell this car in the U.S. because it is a diesel. The tax on diesel fuel is too high.
    The green argument of making the gas price artificially high is not helpful in the near term. Which comes first, high gas prices or fuel efficient cars?
    If the Detroit car manufactures moved from Michigan to Tennessee a heavy financial load would be lifted because they would be in a Right-to-Work state.
    If they were to follow the Toyota business model it would include re-negotiating Union contracts.
    I do not like bailouts but it seems to me that the first order is to get Ford and GM to stay in business. Changing their business model is not an overnight process. Stop piling on government directives until this is accomplished.

  • Peter

    The decision we really need to make is whether the U.S. should develop an industrial strategy or whether we continue to follow a pure free market economic policy model. The current wisdom has been, fix education, fix health care, and sprinkle in a bailout or two and we can have a highly competitive, world class economy based on free markets. This doesn’t seem to be working. It’s dependent on the assumptions that we’re inherently smarter than the rest of the world and that the rest of the world will follow the sames rules we do. Unfortunately, neither assumption is valid. China, Japan, South Korea and other countries have highly capable people. Their economies are not classic free market economies but bank economies that implement mercantilism in support of a defined national industrial strategy with clear goals for success or dominance in targeted industries.

  • http://www.autoextremist.com/current/ Jesse G

    On Point commentators to Michigan: We hope you die. Please leave us you tax money and water

  • Jim Stewart

    Tax to high on diesel. BULL$%@# I drive a diesel car it blows every other car I have ever owned out of the water $ per mile.

    THERE IS SIMPLE NO COMPARISON DIESEL IS 30% MORE EFFICIENT.

    The problem is misplaced subsidies on fuel in general. The real problem is that cars get similar mileage as they did the year I was born 1978.

  • RipplesHurt

    I wholly agree with Caryn’s premises as posted 13 November, 10:58 AM. (Did “The Reckoning” or “The World is Flat” recognize those truths?) Regardless, Caryn may agree that traditional USA market demand for heavy vehicles has been unmatched elsewhere (globally). We infer that Caryn would favor a loan model structured (but with key tethers) like the Chrysler 1979 experiment. In retrospect, that publicly-backed experiment worked fine, but probably could have had some product design conditions attached to launch or bolster a domestic Auto Industry efficiency trend. If we dive in to peer at a variety of Japanese Ministries’ funding habits, year-to-year, Caryn got it right.

    I believe this new Domestic Autos’ assist-package should require US Oil Industry alternative fuel R&D consistent with and choreographed with new autos. I cannot expect bankruptcy driven retooling will be the simple 24-month throw of a switch; scrapping, then substituting capital equipment overnight can likely only happen with gigadollars times ten. Thus, the evolving energy infrastructure should match each planned next phase of the auto industry’s global transition to the ultimate energy version that will power what customers will expect as their preferred personal transporters. A final energy solution may require guesswork in 2008 while the Oil Industry is already investing in each alternative that we can imagine today. While on this topic, Mr. Pickens, how shall we effectively store all those solar and wind teraWatts, or do we need to?

  • http://www.lit.org/fritzwilliam Fred W. Bracy

    Economist Matthew Slaughter. We’ve heard from this troglodyte before on NPR. Why does public radio keep pushing the microphone in front of people who, over time, have consistently stood on the wrong side of every issue? Why is On Point not having Robert Kuttner on the program? I don’t know him, I don’t converse with him. . .I just know that the man has the best grip on what is happening with our economy than any of the hundreds of cacophonous voices out there. You did, however, have one good voice on the program. Susan Helper, apart from apologists like Matthew Slaughter, was able to put forth a reasoned approach, and this is what it’s going to take. Reason. Forget the troglodytes and let’s get on with saving our country. If that means bailouts for some people who didn’t make perfect choices in the recent past, judge the kinds of choices anyone has made during their brief lifetimes–maybe even you or me.

  • AV

    As an aside, can we please not use “survival of the fittest” to describe what happens in the auto and other industries? Seems to me this is one of the most misunderstood and most commonly misapplied term used to explain events which can be traced back to bad decision-making, and lack of foresight by those at the top of the hierarchy – who of course, will also escape the consequences of their actions to a larger extent than those at the bottom.

    In nature, a lion is more fit than a deer, yet both of them still co-exist and “survive.” Or for that matter, the “fittest” member of the great cat family (tiger, lion, leopard, jaguar, cheetah, snow leopard, clouded leopard, and cougar) does not lead to rest of the “less fit” members not surviving.

    Here’s more on “survival of the fittest”:
    http://en.wikipedia.org/wiki/Survival_of_the_fittest

  • NS

    Three weeks ago a big Swiss bank got a bailout package by the Swiss National Bank of $50 billion. (Keep in mind: Switzerland has the same population as Massachussetts!) At about the same time this bank announced, that it will pay $7 billion of bonuses this year.

    I’d be seriously embarrassed for America, if they let their Auto industry go belly up. What message would this teach us: If one is an expert in tax fraud and is losing money massively, despite not investing in expensive R&D, tooling and factories, they get a bailout and if they are an expert in vehicle engineering, design and production they’re on their own. Has anybody ever wondered why less people choose to become engineers in the developed world?
    By the way: I’m Swiss, I live in Switzerland and I drive a non-SUV car which was produced in Michigan and I’m satisfied with it.

  • Ann-marie

    NO MORE COMPANY BAIL-OUTS. BAIL-OUT PEOPLE INSTEAD.

    It’s sad how even low-wage workers have bought the cool-aid of tickle-down Republican-nomics. Help the company and the people will be helped.

    We still REFUSE to bail-out homeowners because THEY are too “irresponsible”, “greedy”, and “stupid”. Yet, everyone breaks out with violins and tears when it comes to corporations. THEY are too big to fail, THEY are victims of X,Y,Z. The same Corporations that have continued to increase CEO pay at 400% while the company falls off the cliff due to poor management. They have freezed workers wages, laying off workers, decreased health benefits, etc. This is ridiculous.

    When management makes poor decisions, they get golden parachutes and bail-outs. Workers get a pink slip and get called “lazy” and “useless”.

    Bailing out GM and other car companies is NOT going to save workers, their benefits, or pensions. It’s going to save CEO’s and create platinum parachutes. IF these companies go down, workers will gain more in the long run. It’s the only way to change the Corporate mindset of making CEO’s accountable to BOTH their workers and investors. It’s the only way to create a new path for new industries where workers gain more respect, health benefits, etc.

    If we continue with the old rhetoric of hand-outs to companies and turning our backs on American citizens, we will continue to see the elimination of the middle-class towards a 2-class system and the eventual downfall of the American Experiment. Tickle-down economics is lethal.

  • http://tikitony.com/vegcar.html Mr. Beachcomber

    Gas prices have been rising more and more since 2000. Most Oil supplies around the world are in unstable regions and we have to fight wars over it… How did the US auto makers not see the future of transportation?

    The Auto makers did themselves a disservice by concentrating on ineffiecient larger cars while forgetting about the smarter, more efficient vehicle. People were sold on the giant SUV for its luxury, toughness, roominess, and “safeness”. People were blinded by what was marketed to them, and didn’t think for themselves about rising fuel costs. These same people could be sold on smart, effiecient, and intelligent design if they have it and if they want to change their direction.

  • Peter Nelson

    THERE IS SIMPLE NO COMPARISON DIESEL IS 30% MORE EFFICIENT.

    The other issue with diesel is that the vast majority of engines burning it in the US are NOT the ultra-clean ones in some modern European passenger cars. Instead they are trucks, busses and older-design (pocketa-pocketa-pocketa) engines which spew tons of pollutants. As long as that’s the case it’s bad for the environment to make diesel cheap.

    Business Week reports that the main reason the Ford ECOnetic isn’t sold in the US is because it would be too expensive – $25,700 for what’s basically an econobox.
    http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=rss_topStories_ssi_5

    On Point commentators to Michigan: We hope you die. Please leave us you tax money and water

    That’s a little harsh – I think the message to Michigan is “if you want a bailout, what strong convincing evidence can you provide that the money won’t be wasted postponing the inevitable? Why should we believe that, THIS time the management teams at Ford, GM, and Chrysler will actually be able to create sustainable, successful businesses now, when they’ve failed so many other times in much better economic environments?

  • AV

    The other myth that needs to be busted is that auto-industries are providing what the consumers want, when PR and advertising play a huge part in creating that “want.”

  • Nate

    I place teh blame squarely on:

    1. Auto executives – Who willfully chose to ignore the reality that technology based on the burning of fossil fuel (regardless of houw effificent) is a loosing proposition.

    2. Unions – Who chose to go for the big “money grab” and took the attitude of “If the execs are getting lots of money we want it too”. Instead they shoul dhave been focused on providing a more nimble, educated, and flexible workforce.

    3. Federal Govt – For providing the wrong tax incentive for way to long.

    If any money is spent it should be provided in the form of tax incentives for the first of the big 3 who can develop an alternative energy vehicle in 5 years or less and bring it to market for under $26000. THe reality is the Big 3 were allowed to get artificially big and now in a faster more nimble economic environment they are suffering, as any company should if they choose to put their heads in teh sand and act as though things are A-OK.

  • Jerry Bowers ADKS, NY

    I have to agree with Pam D. & Gregg D. above. I think the suits see a golden opp. here to bust a union. Not counting gov’t employees there are darn few left! God forbid labor has an advocate on their side! I wonder why Pam is no big fan of unions? I admit sometimes they are a necessary evil, depending on the union and it’s leaders. More to the point is they and some lawyers are all that advocate for working and middle class people anymore. Too few elected officials do.

    I spent 13+ years in the auto & related businesses (retail side). Blaming the unions for getting their members the best deal posible is like criticizing yourself for negotiating with the car dealer. Double standard anyone? And blaming Big 3 execs and boards for poor mgmnt is justified, but they were only doing what wall st. “Masters of the Universe” told them to do, via Harvard & other business schools. And that propaganda is still being spread. Check out Tom Ashcroft fawning all over “super guru” Michael Porter on NPR. (On Point, Mon 11-10) “Maximize profits any way you can, and all that matters is the end of this quarter”. If they did not they would be punished by “the street”. And of course the way most of these geniuses reduced costs was to cut workers to the bare minimum, – 20%. What do most of us do when we are told what we want to hear? Especially if we personally will benefit immensely.

    We can argue all we want about whether the Big 3 get more help or not. I say yes to LOANS to GM & Ford with serious conditions. Chrysler/Cerberus would have to be looked @ very closely. That hedge fund deal smelled bad from the beginning, and look what they all did with & for credit default swaps, etc! The Daimler merger was a farce. The whole predatory capital searching for another company, country, or resource to plunder & pillage needs to stop. Again, this all can be laid @ the feet of the financial “guru” crowd and the schools that turn them loose on the rest of us.

    It would be great on the one hand if big oil bailed out there bud’s @ big 3, but then we would never see high fuel mileage or greener cars! P.S. Ryan S. Don’t buy a Saab! They have no resale value.

    p.p.s. After news this am from The Fed, does anyone out there believe they have a handle on this mess? Let’s hope Congress can do better. JPB

  • Jerry Bowers ADKS, NY

    I have to agree with Pam D. & Gregg D. above. I think the suits see a golden opp. here to bust a union. Not counting gov’t employees there are darn few left! God forbid labor has an advocate on their side! I wonder why Pam is no big fan of unions? I admit sometimes they are a necessary evil, depending on the union and it’s leaders. More to the point is they and some lawyers are all that advocate for working and middle class people anymore. Too few elected officials do.

    I spent 13+ years in the auto & related businesses (retail side). Blaming the unions for getting their members the best deal posible is like criticizing yourself for negotiating with the car dealer. Double standard anyone? And blaming Big 3 execs and boards for poor mgmnt is justified, but they were only doing what wall st. “Masters of the Universe” told them to do, via Harvard & other business schools. And that propaganda is still being spread. Check out Tom Ashcroft fawning all over “super guru” Michael Porter on NPR. (On Point, Mon 11-10) “Maximize profits any way you can, and all that matters is the end of this quarter”. If they did not they would be punished by “the street”. And of course the way most of these geniuses reduced costs was to cut workers to the bare minimum, – 20%. What do most of us do when we are told what we want to hear? Especially if we personally will benefit immensely.

    We can argue all we want about whether the Big 3 get more help or not. I say yes to LOANS to GM & Ford with serious conditions. Chrysler/Cerberus would have to be looked @ very closely. That hedge fund deal smelled bad from the beginning, and look what they all did with & for credit default swaps, etc! The Daimler merger was a farce. The whole predatory capital searching for another company, country, or resource to plunder & pillage needs to stop. Again, this all can be laid @ the feet of the financial “guru” crowd and the schools that turn them loose on the rest of us.

    It would be great on the one hand if big oil bailed out there bud’s @ big 3, but then we would never see high fuel mileage or greener cars! P.S. Ryan S. Don’t buy a Saab! They have no resale value.

    p.p.s. After news this am from The Fed, does anyone out there believe they have a handle on this mess? Let’s hope Congress can do better. JPB

  • Nate

    The mentallity that:

    “It is patriotic to support the Big 3″

    “It is ageism to support foreign companies”

    “Most benefits you have enjoyed all your life is due to the UNION”

    is yet another problem here. In a global economy (in case you just woke up maryd that is what we have) competition dictates winners and loosers. Had the Big 3 made products worth purchasing they would not be here in the first place. I find it very UNPATRIOTIC that the Big 3 willfully chose a path that everyone knew would lead to financial ruin.

    Ageism? This is irrelevent and reminds me of the rhetoric that you hear in those smoke fill union halls of the 80′s. Blame it on ageism or unpatriotic behavior. Heaven forebid you actually turn your finger inward and recognize that the unions are just as much to blame. They never held their employer’s feet to the fire when it came to advances in technology or creating a nimble work force. Instead the unions wanted “Their piece of the money pie.”.

    Yes in the past unions were big advocates for better working conditions, wages, and benefits but somewhere along the way when the economy and workplace market drivers changed the unions didn’t. The comment:

    “Most benefits you have enjoyed all your life is due to the UNION”

    may be partially true in that it got us through to a certain point. But the comment is arrogant and hints at entitlement. That because the union did good things in the past you deserve pay back now? You don’t. Union labor will become more and more irrelevent if you do not change the “What is in it for us” attitude.

    The unions share as much in the blame as the executives. The union helped make the bed… now LIE IN IT!

  • Lon C Ponschock

    I read about 3/4 the way down these comments and didn’t see the words/phrases:

    Protectionism
    Feather bedding
    Employee ownership

    Hint: Only one of these would be a good thing.

    I am not for any sort of bailout and from here, I’m going to write my Congressman again.

  • Nagesh Rachakonda

    Keeping jobs, economy and GM condition/history in mind, I would like to see it to be bailed-out with strong conditions:

    1. Top Management & executives should be replaced and monitored by Govt.

    2. Union Contracts should be re-negotiated.

    3. Strong re-structuring should be performed.

    4. Mandated to come up with Green & fuel-efficient cars

    5. More authority should be given to Tech executives than the Management people.

  • Peter Nelson

    The other myth that needs to be busted is that auto-industries are providing what the consumers want, when PR and advertising play a huge part in creating that “want.”

    There has been a huge amount of academic research of the effects of advertising and it does not provide much support for the above.

    Advertising effects, to the extent they exist at all, tend to be more subtle – reinforcing a decision that a consumer is already leaning towards, for example, or confirming a decision he’s already made. A good ad campaign might also be able to get a consumer to buy a different brand of the same product he was already going to buy (e.g., if he was leaning toward a RAV4, he might consider a CRV). And, of course, ad campaigns can shape consumer perceptions of a company (e.g. that Apple is innovative). The other thing effective ad campaigns can do is inject doubt about competitors’ products.

    But there is very little evidence that an ad campaign can turn, say, a Toyota Prius driver into a Ford Exploder driver. Or get someone who would normally drive a VW Beetle to switch to a pickup truck.

    Furthermore, over the last 10 years GM’s advertising budget has dwarfed most other car-makers, so if advertising was such a powerful tool, why did their sales fall?

    Would you, AV, admit to making a $25K purchase decision based on an ad campaign? Few people would, so why accuse them of it? At the time I bought my Subaru Forester in 2003 I had never seen even a single ad for a Forester. (I don’t watch TV or read the sort of magazines likely to feature them).

    Give people a little credit – they buy the cars they want to buy, for their own reasons. You might not agree with their reasons or logic, but that doesn’t mean they were brainwashed.

  • jeff

    Jerry Bowers makes a lot of valid points.
    I think the big three are going to fail anyway, and that the bailout in general is being mismanaged by the same people who created this mess.

    We, our country is now in a mini-depression heading for a larger one.

    If Obama appoints Summers to the Treasury hold on to your hats. His record on economic policy is pretty bad.

  • Peter Nelson

    1. Top Management & executives should be replaced and monitored by Govt.

    2. Union Contracts should be re-negotiated.

    3. Strong re-structuring should be performed.

    4. Mandated to come up with Green & fuel-efficient cars

    5. More authority should be given to Tech executives than the Management people.

    I agree with 1-3. But the market should determine the product mix, because the goal is to create successful, profitable companies. So if the MARKET wants “green”, then great, make “green”. If the market doesn’t want green then it’s a recipe for failure. The most important color is BLACK – the ink we want on the balance sheet. Today it’s red.

    And having worked for tech companies as an engineer for years I strongly disagree with 5. Successful companies are market-driven, so unless you’re making products for geeks, the techies should stay out of sight in the lab. Good management people know how to run a company, sell things, and motivate people. The problem in Detroit is that they’re management isn’t good.

  • jeff

    Peter is kind of right here, I don’t think it was the ads.
    I bought a VW Jetta not a GMC 350HP muscle truck with big wheels.

    Americans have this weird thing about cars and romance and independence. People in the burbs bought SUV’s because they could move all the kids around to all those events.
    Then drive form the Mcmansions to the malls to fill the Expedition with stuff.

    In my area I see all these people with huge pickup trucks and they are waring suits to go to work.

    Or they work in some other industry that does not require a giant GMC or Ford pickup.

    Americans think big is better.

    Europeans have laways had expensive petrol so they designed better machines. Ford had to compete in that market so they made better cars.

  • Vittaya

    I was a fortunate enough to get on the show, and first I would like to thank them for the opportunity to be put on air. That being said, I would love to see the big three fall~ and rebuilt into what Tom and myself said, Lean and Green. Bring back the EV line of cars with todays technology we would be able to provide a much more effective car line, workers will still have jobs, but they would be moving foward instead of backwards with today/yesterday’s mind set. Move away from low mileage cars and rebuild the cars that our World thirst for.

  • Steve Parent

    I am 47 years old and have been a car nut as long as I can remember..I learned to drive on a 1967 Ford Country Squire station wagon. What I do not hear in all this discussion of a bailout is discourse about the quality and quantity of cars availiable today. Back in the 60s and 70s American carmakers made crap. (remember the Pinto, the Vega, the Kcar and anything AMC made). Toyota, Honda and Datsun (now Nissan) started to import small and affordable cars. The quality was not good at first but they quickly improved, much faster than American cars. The big three treated this as a joke and now the joke is on them. It seems that the American car companies are still working on the business model that we trade in our cars every 3 years. The Toyota Camry blew this idea out of the water. There are too many good and afforadable cars on the market, and with reasonable maintainece will last for 10 years or more. I drive a 13 year old car (Volvo) and a 14 year old truck (Ford Ranger) and expect to get 5 more years of service from both of them.

  • Steve Parent

    I have to add this observation about gas prices…It cost me, in July, almost $60 to fill the tank in my Volvo. Today, it was $30.00. (the gas gauge is stuck on full so I have to fillup the tank and reset the odometer) I think that the Obama administration should seriously consider a $1.00 per gallon gas tax to help us out of this financial mess.

  • Peter Nelson

    In my area I see all these people with huge pickup trucks and they are waring suits to go to work.

    Or they work in some other industry that does not require a giant GMC or Ford pickup.

    Americans think big is better.

    At my company, which is mostly white-collar professionals, I am routinely amazed at the number of big pickup trucks I see in the parking lots. The other day I parked my little Subaru and found myself surrounded by big pickups towering over me. I don’t mean F150′s – these were F350s, Toyota Tundras, GMC Sierras, etc. I have no idea what they need them for. Were they software engineers or mathematicians who have side businesses doing landscaping or construction work?

    As someone who regularly drives up into the White Mountains in the winter I can understand the need for 4WD. Since I have to transport my wife’s electronic piano and speakers, I can understand needing to tote things. And since I like to build stuff I can understand needing to carry 4×8 sheets of material. But I get all that with my Forester (and Thule’s). And I can understand minivans for soccer-parents. But why someone would want to commute to an office job in a GMC Sierra with a 5.3L engine escapes me.

    That being said, I would love to see the big three fall~ and rebuilt into what Tom and myself said, Lean and Green.

    If they fall they will not get up again. The barriers to entry in the car business are huge and the capital required to become a major manufacturer is astronomical. When’s the last time someone started a major new US auto company from scratch? Remember Bricklin? Tesla is downsizing.

    Realistically our choices are to figure out how to make the existing US car companies viable businesses, or accept life as a major industrialized nation without a domestic car industry (and probably an 11-13% unemployment rate for the next several years)

  • Ann-Marie

    AMEN Lon! Simply more corporate welfare from OUR pockets.
    Thanks for the reminder to contact our Congress(wo)men.
    ——————————————————–
    Posted by Lon C Ponschock,
    Protectionism
    Feather bedding
    Employee ownership

    Hint: Only one of these would be a good thing.

    I am not for any sort of bailout and from here, I’m going to write my Congressman again.

  • jon wheatley

    Look at the circumstances leading up to this. Is there anyone who is blameless? Only Americans who have voluntarily driven fuel efficient cars, and used public transportation. On the program today there was some discussion about whether or not Detroit has been guilty of building cars that people don’t want to buy. Actually, what Detroit has been guilty of has been building, selling and promoting the cars that Americans DO want. Big, stupid gas guzzling SUV’s and trucks that relatively few have a legitimate need for. They deserve the trouble they are in, as do many Americans who will pay for the bailout. All of these short-sighted folks have contributed more than their share to the destruction of the environment and the depletion of natural petroleum.
    However, the pain should not all fall on the taxpayers. if there is a bailout, there should be a provision that each executive in these auto companies take a 50% pay cut, and each union-protected worker should take a 20% pay cut. The auto workers union has been proceeding on the belief that there is unlimited amounts of money with which to pay its work force.
    Oh, they will tell you about concessions they have made. They have accepted contracts with less pay in them than some imaginary number that they provided. They would be happy for us to pick up the tab.
    Where do I get these far-fetched ideas? Twenty-five years ago I traveled to Paris. The first thing I noticed was, my goodness, it is possible to transport yourself and your essential belongings in autos that are one-half the size of the ones Americans use. Twenty-five years ago it was abundantly clear that we needed to conserve. Wake up, folks.

  • Ted

    This is perhaps a diversion: The real issue, as the professor suggested, is changing our ways as a nation. Consumers can no longer be accustomed to cheap gas, to gas prices that ignore the negative externalities of individual motor vehicle operation. That’s the real issue here, not whether the current ownership structure of manufacturing capacity in this country stays intact. Cars will continue to be made in this country, in plants that may be owned by Japanese, Korean, Chinese, Indian or American firms. Does it really matter? If Indian firms are the best at gauging and responding to market demand, why not allow them to satisfy it? The problem is people taking cheap transport as an entitlement, with all of its costs. No is the perfect time for government to step in and change our ways by, as the professor suggested, implementing a tax regime that will fully factor the costs of vehicle operation into what people pay for the privilege. This has gone on for too long and now, given the crisis conditions we face, is the time for dramatic change.

    I voted for Obama as the candidate of change, and I hope he won’t fight to protect the status quo ante.

  • RJ

    The so-called legacy costs (retirement, health care) represent deferred payments from contractual negotiations–the workers forgo cash in hand when the contracts were negotiatiated in exchange for future benefits. That the companies screwed up along the way doesn’t make it the workers’ responsibility to, in effect, bail them out. To label them with abstract phrases like “legacy costs” is to deny the humanity behind them.

    But this doesn’t negate that these are real costs. As has been said, they represent in large part the difference in the costs to companies from countries that provide health care and retirement benefits for *all* of its workers, and therefore not an addition to each car. In addition to the requirement to move to greener cars (and, Pam, Congress did include $25b in the increased CAFE standards bill, so there was *some* love there), there should be a specific commitment and process to offload the health care and retirement problem–by ensuring it for all of us, like every other industrialized country with which we compete.

  • Michael

    Bail them out, but ….

    Particularly, GM — the following needs to happen.
    I believe GM as a brand is damaged. Psychological customers have a negative view of the company an a large group of its products. Here are the step I think that needs to occur with GM….

    1. Rename the company
    2. Create a streamlined product Line. Get rid of the numerous sub-brands and reduce to no more than two – an economy line and a luxury line. e.g: Toyota and Lexus… Toyota is an excellent example to mimic. There is Toyota, Lexus, and Scion. Toyota represents economical product, Lexus luxury, and Scion targets younger drivers.
    3. Like most other company the new name should drive the economy line and all non-luxury products. i.e: if GM is renamed LMW, there might be the following products: LMW Prima, LMW Mitta, LMW Thun. This line of car would compete directly against a Maxima, Altima, Sentra. I bet very few people could say which model represents GM entry level car, but could do so for Honda. Cadillac is best positioned to be the luxury brand.
    4. Get rid of Saab. Saab simple is not a good fit with GM
    5. But maybe 1, get rid of current management.

    In the end maybe no amount of money can save this car companies. But making changes like those outlined above is probably they best hope. This is more applicable again to GM. It is simply too big….

  • http://Change.gov David Kitaguchi

    I suggested my idea to President Elect Obama on his change.gov website:

    “For failing industries like the automotive and aircraft, etc… Negotiate with them and the oil industry to broker a deal where the “bailout funds” are backed by the “fuel” of sed industries. I don’t want the American taxpayer to have to bear the burden of another bail out. Big oil owes America that much.
    In addition, by helping big oil backing the needs of the very industries that their very existence is dependent upon, I would think that both industries would be interested in such a negotiation.

    Furthermore, I think that the auto industry would be interested in establishing more fuel efficient and alternate powered vehicles in order to break free of the bonds of their financially bound debtors. I see this as a possible change in how business is done.
    In short I would like the market really take care of itself instead of “socialized” welfare for big business. Let the oil decide if it needs American cars, planes and trains. Let the shareholders see if they trust the financial institutions to build growth rather than gamble with imaginary money.

    Like many, I have lost money and trust in my financial institutions. But there will be no change if credit is extended to big business while people who really are trying to do the best they can in all honest measures are getting kicked out of their homes and losing their jobs.

    The financial woes of today are much like dealing with an addict. Would you hand out money to an addict who promises they will not (autonomously) spend it on drugs or gambling? The only real difference is that big business bailouts are far worse since we, our children and our children’s children will suffer for the benefit for the very few.”

  • Dave

    1. People can’t buy cars if they can’t get financed. 2. GM employs people all over the world. The bailout would be Worldwide not just for the U.S. workers. If everything shuts down there would be a definite depression. – Not just in this country.
    3. People have repeated over and over and over that we are on track to restructure the vehicles that GM sells. And i’ve seen it and I’m excited.
    4. Ask the guy who is against the bailout if he has ever been to Michigan before. Also ask what kind of car he has and hang up on him if it’s not made by an original U.S. manufacturer.
    5. It takes years for a vehicle program to produce/develop a new vehicle.

  • AV

    Peter, as long as there are half-naked women in the ad, I buy whatever is being sold, irrespective of the cost.

  • AV

    Also if the ad mentions concepts like freedom, fastest, strongest etc. linked to a product, I’m sold. And then I buy.

  • AV

    Peter Nelson wrote:
    “But why someone would want to commute to an office job in a GMC Sierra with a 5.3L engine escapes me.”

    Peter Nelson wrote:
    “Give people a little credit – they buy the cars they want to buy, for their own reasons. You might not agree with their reasons or logic, but that doesn’t mean they were brainwashed.”
    :)

  • Eric

    Why are we not looking at our import-export ratio and adding tariffs upon foreign products being imported, when we have our strongest we did not have this massive imbalance. GM Ford and others have been building public demand however it is the public that must change as well. We cannot have Suzy homemaker driving an 8 person SUV and not paying any carbon tax. GM has had an AIG moment, corporate business MBA mentality running a “MAD MEN” company excesses, unecessary waste, V8′s with 12 MPG for an SUV? Most people would be better off driving a MINI, someday if we don’t change, we won’t have a decision.

  • http://www.onpointradio.org/shows/2008/11/auto-industry-bailout/ Laura A Kriss

    Hello,
    Why do we never speak in terms of restructuring executive compensation?
    The justification for the exponentially large salaries and bonuses is that the idustry needs the best decisive minds and this means providing large salaries.
    I don’t see the payoff – I don’t even see above average creative problem solving. It doesn’t take much thought to decide to lay-off 1/2 the workforce and then award yourself for the savings.
    Former Ford Motor Company Designer
    Laura A Kriss

  • http://www.pnart.com Peter Nelson


    Peter, as long as there are half-naked women in the ad, I buy whatever is being sold, irrespective of the cost.

    Peter Nelson wrote:
    “But why someone would want to commute to an office job in a GMC Sierra with a 5.3L engine escapes me.”

    Peter Nelson wrote:
    “Give people a little credit – they buy the cars they want to buy, for their own reasons. You might not agree with their reasons or logic, but that doesn’t mean they were brainwashed.”

    So what’s your point? Obviously they have their reasons. Just because it escapes me doesn’t mean that their reasons aren’t as valid as mine or yours. Remember, I have a Subaru Forester partly because I like to tramp around the mountains on snowshoes or crampons in sub-zero temperatures in January. How is that more sensible than commuting to work in a Ford F350? We all have our eccentricities.

    And if you want half (or fully) naked women, just go to my website. (pnArt.com) I also have a picture of my Subaru there.

    Cars will continue to be made in this country, in plants that may be owned by Japanese, Korean, Chinese, Indian or American firms. Does it really matter?

    Yes, it matters, as I explained in the first posting, because cars won’t be DESIGNED here. Earlier this week OP had a guest on talking about US competitiveness. That’s the root of this matter. Cybernetic and robotic technology is becoming so advanced that in 20 years almost all assembly will be automated anyway, so most UAW jobs will be gone soon. But the technology that goes into modern cars has to be designed and that base of engineering and technical talent is the foundation of a modern industrial and post industrial economy. Automotive engineering – combustion, control, safety, sensors, etc, etc emcompasses hundreds of key skills that have broad applicability. List the top 5 or 6 technology innovative countries in the world. How many DON’T have a domestic car industry?

  • http://www.pnart.com Peter Nelson

    Why are we not looking at our import-export ratio and adding tariffs upon foreign products being imported,

    Two words – Smoot Hawley. (most economists regard that as one of the major contributing factors to the depression of the 1930′s.)

    Why do we never speak in terms of restructuring executive compensation?

    What are you talking about?! Limits on executive compensation are part of every bailout plan that’s been proposed!

    On the other hand, it’s totally irrelevant to the problem. If Wagoner and the other exec’s at GM gave up their ENTIRE salary and bonusses it might buy GM a few extra hours of survival.

  • AV

    So what’s your point?

    My point was to show you talking through both sides of your hat, Professor Pedantic Bloviator. Kind of like the Democratic Party. ;)

  • Nate

    I agree partially with Peter Nelson’s comments BUT with regard to teh market dictating whether or not we go green. Our tax code has been used for Social Engineering for years (rebates for buying a house, having kids, attending college, etc, etc). The govt can structure tax incentives in such a way that the auto manufacturers are better off making alternative fuel vehicles.

    The “Market” chooses from the pool of options that are made available to them. If 9 out of 10 cars across all price ranges were alternative fule vehicles vs. gas vehicles then 90% of people would own an alternative fuel vehicle.

  • jeff

    In the 30′s and 40′s LA had a huge public transportation system, granted it was a smaller city then, one has to ask, what happened?

    Granted in rural areas people did not have easy access to mass transport (people did not have to travel far for work in those days), but a lot of towns had train stations and were built around this kind of transport.

    In the that same period one could go from to Manhattan to a summer home upstate for the weekend by train.

    All small cities and towns large enough had trolly’s.

    We made a pact with the auto industry after WW2 and in the 50′s this expanded killing public transportation.

    Now we have reaped what we have sowed.

  • http://stanweckl@gmail.com Stan Weckl (the S-One-W)

    Why doesn’t anyone talk about a bailout for us grizzled veterans of the advertising industry? Does anyone have any idea how hard it is selling useless crap now that the sheep are refusing to graze on the grass?

  • LindaFL

    The designer who called in made me feel more against this bailout, to hear one of these guys still bent on designing the same thing he always has, angry that anyone would suggest he consider changing. Nobody was able to get rid of him, if there was anyone at all to disagree in the first place, he thinks it’s still 1998, and more than willing to take the whole company down with him. Unbelievable.

  • http://neilblanchard.vox.com/library/posts/ Neil Blanchard

    Hi,

    How much profit did these companies make on each SUV? Where did that money go?

    The success of the economy is based on the success of the middle class. Other people’s success helps the rest of us. The same cannot be said for company profits — unless they continue to innovate.

    The wages at the non-union auto plants are just about the same as the union ones, I think. The biggest differences come from healthcare expenses, and from continuous innovation.

    How many models does Toyota/Scion/Lexus have? About 16 or 17?

    How many models does Honda/Acura have? About 10 or 12?

    Someone listed 127 GM models…

    All companies should use the year that a vehicle is sold as the model year. This takes the pressure off of making change for changes sake. It also (hopefully) will reduce the prevalence of planned obsolescence; and increase the durability and the recycle-ability of the materials used. All these things would greatly lower costs over the long run.

    All design changes should be based on functional improvements. Imagine it: higher and higher reliability, better and better efficiency, continuous safety improvements, more and more recycled materials, design changes based on owner’s needs — what a concept!

    Sincerely, Neil

  • Peter Nelson

    The govt can structure tax incentives in such a way that the auto manufacturers are better off making alternative fuel vehicles.

    Sure, but that has nothing to do with the current situation.

    Any such incentives the government creates would have to apply equally to all auto companies – there’s nothing about a green mandate that increases the chance for survival of Detroit. You can create tax incentives to shape the market any way you like – big cars, small cars, green cars, gas guzzlers, luxury cars, econoboxes, but whatever that market is, Detroit still has to create cars people want to buy in enough numbers to be profitable.

    That’s why I’m saying that the whole “green” thing is a distraction from the current crisis – it applies to the entire industry – there’s nothing about a “green” mandate that improves Detroit’s chances of survival. A successful car company needs to meet market demands regardless of what those demands are. Toyota can, GM can’t.

    Going green is good to do on its own merits, but there’s nothing about it that advances Detroit’s survival. Keep in mind that GM will probably be out of money in January, Chrysler may be a few months after that (it’s a guess because they’re private) and Ford can last another year. Then it’s all over – no domestic car industry, double-digit unemployment.

    BTW, I paid $2.21/gal to fill up this AM.

  • Nate

    I agree the incentive should be for all companies. I guess I come the perspective that the Big 3 should get NO SPECIAL TREATMENT. The govt shoul dsimply move forward with incentive programs that move us towards the desired end result. Then let the Big 3 compete like everyone else. I’d be willing to bet that 2 out of the 3 would go under or they would consolidate.

    I think the difference is that you Peter believe we must “Save Detroit”. I on the other hand say let the chips fall where they may. Detroit (ie the auto industry) is a victim of it’s own greed, ignorance, and stubbornenss. Under my proposal the Big 3 could very well go out of business BUT there are plenty of smaller, inventive, and technologically foward thinking companies that would fill the void.

    Change HURTS but I firmly believe that unless some fierce pain is felt there will be no incentive to change anything, it’s human nature.

  • Peter Nelson

    Change HURTS but I firmly believe that unless some fierce pain is felt there will be no incentive to change anything, it’s human nature.

    I don’t understand this attitude. We’ve seen the same thing with underwater homeowners and banks – “They made their bed so they should lie in it”.

    To me that’s cutting off your nose to spite your face. Sure, irresponsible investment banks, reckless homebuyers, and stupid auto exectives “made their bed”. But it’s MILLIONS of innocent Americans who have to “lie in it”. Today we see that retail sales have dropped 2.8% – the biggest on record. The economy is unravelling faster than anyone expected and those same economists who are saying this won’t be the next Great Depression, would probably have laughed if you predicted last April what’s happened in the last few months.

    The goal for Congress should be to do what will produce the best result for the nation’s economy and for millions of people who didn’t do anything wrong but who now are suffering the evaporation of their retirements or layoffs. That’s more important than trying to make some kind of moralistic point by punishing the guilty.

    As an far as incentives for change – you don’t need “incentives” – there’s no reason the bailout can’t be written with requirements for change in the form of replacing upper management, replacing the board, and required restructuring of the companies (e.g., GM should go from its current 8 divisions down to 3).

  • Rachel

    Totally agreed! Let the oil industry bail out the auto industry, after all, they have always looked after each other.

  • Rachel

    I understand letting the big 3 to go down would hurt lots of workers and business. But this is the trend that is going on throughout the whole country. Financial industry cuts thousands of jobs even after the bail out, thousands of retail stores are closing down, over millions of people in U.S. are unemployed, and lots of them are not protected by Union, who tried to prevent them from losing their jobs?

    I not saying we should or should not bail out auto ind. because of the future unemployment, if had to, it has to be thought out to make this ind. commit for green and innovated change. Otherwise, they have to go down like the rest of millions of small business that no one was looking after.

  • Rachel

    If Detroit auto ind. uses common and ethical sense to run their business, instead of focusing on short term profit, they would stand on their own feet today. Shame on them!

  • Rachel

    I once was shopping for a car, my mind was set for Japanese car. But I got convinced by a friend to keep my mind open for U.S. made cars. So I gave it a shot.

    To no surprised, they just can’t live up to my expectation, I ended up buying a Japanese car, which was way cheaper and way better.

    So wake up! Detroit auto makers, your product sucks!

  • Rachel

    To Peter— please tell me how much we have benefit from this 700 billion bail out as a average Joe tax payer, and as a “live within our means” citizen?

  • Rachel

    “retail sales have dropped 2.8%”

    Can someone tell me why 2.8% drop is such a big drop when a stock value drops more than 50% to 90%?

  • Peter Nelson

    Otherwise, they have to go down like the rest of millions of small business that no one was looking after.

    Since the start of 2008 there have been roughly 3/4 million newly unemployed, according to BLS. But it WILL be millions if the auto industry goes down. And if you think small businesses are hurting now, wait till you see what happens to small business if the auto companies and their dealers and all the thousands of companies that supply parts and materials and services to them go down. The ripple from this “ripple effect” will look like that tsunami in the Indian Ocean a few years ago.

  • kevin

    I don’t think they deserve the taxpayers money. They have been ripping americans off for decades and don’t care so turn about is fair play. Just go out of business and let us buy good cars from the Japanese.

  • Peter Nelson

    To Peter— please tell me how much we have benefit from this 700 billion bail out as a average Joe tax payer, and as a “live within our means” citizen?

    Ask your elected officials that question.

    I don’t know why you’re asking me
    - I was quite vocal in my opposition to it. Here in these very forums I characterized it as giving Paulson $700B to buy “magic beans” and I also had a letter-to-the-editor published in the Boston Globe opposed to it. I also wrote to my Congresswoman and both of my senators opposing it.

    What did YOU do to try to stop it?

    Can someone tell me why 2.8% drop is such a big drop when a stock value drops more than 50% to 90%?

    Apples and oranges. Retail operates on very thin margins, so a small drop in sales can make the difference in survival. If you want an answer to your question look at CompUSA, Circuit City, Linens N Things and other companies that have closed or gone Chapter 11 this year. Or take a look at the latest numbers from companies like Best Buy.

    In the US retail sales is often the employment of last resort when people lose their jobs. “I can always get a job at Home Depot”, thay say. Not this time. The Wall Street Journal reported this week that new job openings are down 25-50% at retailers now.

  • Peter Nelson

    I don’t think they deserve the taxpayers money. They have been ripping americans off for decades and don’t care so turn about is fair play. Just go out of business and let us buy good cars from the Japanese.

    So, basically you’re saying that in order to make an example of a bunch of incompetetnt managers and pampered UAW workers, you’re willing to consign hundreds of thousands of innocent people who don’t work for the big three to unemployment. You’re perfectly happy to see entire communities devastated with thousands of small businesses going out of business and cops and teachers and firemen who depend on that tax base to lose their jobs. Just to make an example of Rick Wagoner, who will still probably have a comfortable life.

    Good plan.

  • Rachel

    Well, Peter, the reason I asked you about the benefit from 700B bail out, because you made some points about why we should bail out auto ind.. I do agree with you to some extend. That just relatively leads me to think what do we get to lose if not bailing out the auto ind., since I haven’t seen any POSITIVE ripple effect from the 700B bailout, only it gets WORSE everyday. How 25B would help the auto ind.?

    And I don’t understand your question to me “What did YOU do to try to stop it?” is relevant to my question to you. I can tell you one thing, I am guilty of creating this crisis. If it has to go down, everyone goes down. I know so many people around me are losing jobs and their retirement saving, none of them are part of this sub-prime borrowers. But it’s those sub-prime borrowers are getting bail out, where’s the justice and fairness? I am not asking you those questions, I am just expressing my frustrations of millions of Americans. And I don’t believe our elected officials are able to give us any sensible answers, if they do, we won’t be in this mess.

  • Rachel

    ****I can tell you one thing, I am guilty of creating this crisis. If it has to go down, everyone goes down*****

    Sorry, I made a BIG error, I mean “I am NOT guilty of creating this crisis”

  • Peter Nelson

    Sorry, I made a BIG error, I mean “I am NOT guilty of creating this crisis”

    Thanks for clarifying that. We’d hate to waste all those torches and pitchforks on the wrong person.

    “Who is to blame in what country?
    Never can get to the one.”
    – Electric Avenue by Eddy Grant

    It’s understandable that people are angry. In the next year 1-3 more million people will lose their jobs (maybe including me), along with their health insurance and other benefits. People will lose houses and cars. 10′s of millions of people have seen the retirement nest eggs virtually wiped out. Local and state public services have been cut back or eliminated.

    And all of this because some wealthy, powerful business executives and bankers made reckless, irresponsible decisions. OK. We get it. It’s not fair.

    But does it make more sense to focus on punishing the guilty and making moral examples of them, or does it make more sense to try to figure out how to preserve as many jobs as possible and maintain our country’s industrial and R&D base so we can remain competitive among industrial nations in the future?

  • Peter Nelson

    Bloomberg reports that a GM bankruptcy will cost 4 to 8 times as much as the proposed bailout being debated.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aNv90nwWR0Wg&refer=home

    N.B. that I’m not necessarily saying I agree with them. For one thing, the current plan being advanced by Pelosi is likely to fail to save GM. Obama’s plan, which includes a “czar” to oversee GM and force more changes, may be more likely to work. But I’m posting the Bloomberg link to illustrate the flaw of any comments here that we should just let them collapse – “they made their bed”.

  • http://banicki.biz srwvw banicki

    The UAW shares some of the blame, with two other culprits, regarding the problems facing the domestic auto industry. Our politicians and the executives overseeing these large corporations also failed in doing their jobs over the last 40-years.

    When Adam Smith talked about “rational self interest” and competitive markets in his book Wealth of Nations, he envisioned many consumers interested in buying goods and services from many producers. Our politicians allowed the competitive automobile market to become an oligopolistic market in the ‘50’s and ‘60’s instead of a free market.

    This oligopolistic market allowed the auto executives either to ignore the coming onslaught of foreign competition or not even to think about it. They knew their “competitors’ at the other two auto companies would match any conspiratory agreement that was reached with the UAW. This occurred because there was no foreign competition to worry about at the time.

    Even back then, there was plenty of blame to go around. The free market has not caused our problems; it is the governing of our free markets.

  • AV

    Why were the three US auto industries able to resist attempts by the Congress to impose standards to increase fuel efficiency of their cars? Could it be because they bought off some members of the Congress to do their bidding? Does this strengthen the case for public financing of elections and supporting Green Party candidates who voluntarily do not take money from special interests?

    I’d say an unqualified “Yes.”

  • Peter Nelson

    Does this strengthen the case for public financing of elections and supporting Green Party candidates who voluntarily do not take money from special interests?

    Do you think there’s any connection between the fact that Green Party campaigns are so underfunded and the fact they they mostly don’t win elections?

    Talk is cheap but actions speak louder than words. American voters have demonstrated through their actions that they respond to well-funded ad campaigns! So a politician who wants to win an election has to raise lots of money. Essentially the voters have said that, “we won’t listen to you spend a lot of money”.

    There’s another problem. The First Amendment. If the Founding Fathers intended to protect any particular kind of speech then surely it was political speech. Even if the campaign doesn’t accept direct contributions, it would be a violation of the First Amendment to say that interested, well-funded outside entities could not spend millions promoting a particular candidate. And indeed many parts of McCain-Feingold have been, and are being, challenged in the courts on that very basis.

    Out of curiosity, how does the Green Party feel about advertising groups such as Moveon.org? Would they ban them?

  • AV

    Peter, are you once again being an apologist for the corrupt Congress members and status quo of the spoiler duopoly of Republicrats? At least your old generation with its prejudices is on its way out.

    Yup, I agree that talk is indeed cheap. Take “hope” and “change” for instance.

  • AV

    As for your curiosity, direct your question to your local/state Green Party member, or head over to their website and submit your concerns. Let us know what answer you get.

  • jeff

    If I’m not mistaken I think John D. Dingell and other prominent democrats are behind this ‘bailout’ push.

    They should file for chapter 11, it’s going to happen anyway. I feel for the people who will lose their pensions but this is one more problem with our country.

    How do we pay for health care and retirement without people becoming victims to market forces and the bad plaining of management.

    If we had a good national health care system the big three might be in better shape to weather the economic downturn.

    However they still build pretty awful cars.

  • Peter Nelson

    They should file for chapter 11, it’s going to happen anyway. I feel for the people who will lose their pensions but this is one more problem with our country.

    There are two problems with chapter 11 for car companies:

    1. Chapter 11 provides “protection” from creditors (meaning companies in Chapter 11 doen’t have to pay money they owe to creditors). Unfortunately the creditors of the auto industry are all the parts and component and other suppliers they need to make cars. About 2 dozen of those companies have already gone bankrupt this year (according to Bloomberg) and many more are teetering on the brink. So if they don’t get paid then many more will go out of business so they won’t be around to supply the stuff Ford and GM need to make cars, not to mention the fact that they won’t supply it anyway if they’re not getting paid. In other words, a car company in Chapter 11 will find it hard to produce cars, so they won’t be able to emerge from Chapter 11.

    2. Cars are huge, long-term purchases. How many people will spend $25K and make a 5 or 10 year commitment on something they don’t think the company will be around to support? It’s not the same as buying a plane ticket on an airline in Chapter 11.

    http://money.cnn.com/2008/11/13/news/companies/gm_bankruptcy/?postversion=2008111305

    Today the UAW warned that GM may end up in Chapter 7 (liquidation) instead.

  • Peter Nelson

    As for your curiosity, direct your question to your local/state Green Party member, or head over to their website and submit your concerns. Let us know what answer you get.

    Actually, Google is our friend. It turns out the Green Party has their own 527 – GreenChange. So much for public financing.

    Furthermore, this seemed to be a response to MoveOn going from being a 527 to recently becoming a 501(c)!! Maybe the Greens are finally wising up to the fact that it takes money and media to win elections in the US. The Green Party should be commended for creating an organization under the same part of the tax code as the Swift Boat people – at least it means they might be prepared to play the game instead of sitting on the sidelines and whining.

  • jeff

    I find it interesting that Dingell’s wife is a senior executive at General Motors.

    Peter you make some good arguments for why the auto companies should be bailed out.

    However they dug this hole. Our lack of a national health care system did not help as that is one expense that has not helped them compete with Japanese companies.

    If you compare the the price of a night in a hospital in Japan versus this country it’s pretty easy to see how these cost eat into this industries ability to compete.

    But…they still made bad decisions , and did so for decades.

    There is no easy answer. I think they will get the bailout, they will also still be filing for bankruptcy.

  • http://banicki.biz steve banicki

    The UAW shares some of the blame, with two other culprits, regarding the problems facing the domestic auto industry. Our politicians and the executives overseeing these large corporations also failed in doing their jobs over the last 40-years and this is why the auto companies deserve to be bailed out…………………

    If, and only if, the bail out gives them at least two years of survival in order to solve their problems.

    When Adam Smith talked about “rational self interest” and competitive markets in his book Wealth of Nations, he envisioned many consumers interested in buying goods and services from many producers. Our politicians allowed the competitive automobile market to become an oligopolistic market in the ‘50’s and ‘60’s instead of a free market.

    This oligopolistic market allowed the auto executives either to ignore the coming onslaught of foreign competition or not even to think about it. They knew their “competitors’ at the other two auto companies would match any conspiratory agreement that was reached with the UAW. This occurred because there was no foreign competition to worry about at the time.

  • Alex

    Americans are quick to abandon their principles such as personal freedoms and free market capitalism whenever they are told by the bosses that there is some kind of a crisis going on. Healthcare for the population that would be in tens of billions is always a problem, but bail-outs of capitalists costing hundreds of billions is not a problem because we are in the crisis. Improving domestic infrustruture is a no-no because we are against big government spending, but sinking hundreds of billions into sand thousands of miles away is fine ’cause, you know, we are at war. This friggin’ gullible population deserves exactly what’s coming to it.

    I am against any of these bailouts. It is better to spend government money directly to lend to businesses and consumers and put people to work on public projects than throw money at capitalists.

  • jeff

    Top Ten reasons the big three should not be bailed out.

    1:Ford Pinto.
    2:Chevrolet Cavalier.
    3:Chevrolet Astro.
    4:Ford Taurus.
    5:Ford Explorer.
    6:Jaguar X-Type.
    7:Hummer H2.
    8:Toyota Prius.
    9:Chrysler Sebring
    10:Jeep Compass.

    http://www.usnews.com/blogs/flowchart/2008/11/14/10-cars-that-sank-detroit.html

  • David Morris

    Why not!!! Everybody else is standing in line for a bailout. Our government has tons of money to throw away. Politicians love to buy votes with money, handouts and promises. This whole bailout has sadly become a necessity for survival in our country. Sadly,It will not cure the problem.This is just a bandaide on a monsterous oozing sore of years of irresponsibilty and self-indulgence. The auto industry and its problem: Make gas guzzling monsters to satisfy ego drunken Americans. The old keep up with the Jones’ syndrome. Climb the ladder of success!!! Build me a vehicle that impresses people, who cares if it gets 8 mpg. I had a 1970 mustang that got better mileage than a 2008 mustang. Ford had in the early 70′s a carburetor that would produce 45 mpg in a car. That little device was destroyed before it got on the market. Ford makes cars in Europe that get far better mpg than those here in USA. With this information, yes!!! lets bail these poor auto companies out to, are maybe we need some individual bailout money so we can change our habits. I am for keeping Americans working but not for promoting the same old junk.

  • eric rodriguez

    so,where are the oil companies who are making money hands over fist not helping out their little buddies making the most fuel guzzling vehicles on the planet? maybe they feel that they will supply whoever is left.

  • Ray Yamin

    Most of the people in this country DON’T have pensions, don’t have platinum healthcare coverage and don’t have the wages of these UAW workers. When you plead for the taxpayer to guarantee these jobs, pensions and healthcare coverage, you are asking the HAVE-NOTS to take care of the HAVES. Is anyone gonna replace people’s 45% losses on their 401k’s like the Pension Benefit Guaranty Fund is going to take care of these private UAW employees? What makes these private citizens more worthy than the rest of us? Government is discriminating when it takes care of one group to the detriment of the rest. Either that, or put ALL of us on the dole.

  • jeff

    Good point Ray, very good point.

    I don’t squat in my pension fund, it dropped by thousands recently. Who’s bailing me out? And another thing I since I’m now a share holder in AIG I want go on one of those nice expensive weekend getaways they going on with my money.

  • Daniel Franks

    What the “Big Three” never grasped was how much they ticked off the blue collar class when they closed assembly plants in the U.S., moved the jobs to Mexico and other third world countries paying a pittance in wages and no benefits and then sold the cars in the U.S. as though they had been built in Detroit. Where thay had a U.S. plant and a third world plant producing the same car the U.S. workers were told that the car model just wasn’t selling therefore they had to lay-off the U.S. employees, while in reality, the U.S. plant was used to build the overflow that could not be built at the third world plant. At the same time that they were taking jobs out of this country the Japanese were building assembly plants in this country and providing jobs. The “Big Three” just couldn’t figure out that if people were put out of work here, who is going to buy there foreign produced cars? That is one reason the “foreign” manufacturers all building assembly plants here.

  • Amalio Escobar

    Why don’t we use the bail out money to help the automakers make the public transportation we need instead of promoting adding more automobiles to the congested roads we have? By the way this also would help to balance the huge trade deficit, improve the air we breathe and give us more time to be with our families instead of being stuck in traffic.

  • http://google Calvin Winslow

    I vote for survival of the fittest also. I have watched the american auto industry and the oil industry hold hands all of my life. The only time the ato makers moved toward cleaning up their act for effeciency, was when the oil industry got greedy. The unions run the industries in america and have raped the american tax payers long enough. My only regret is that these problems haven’t exposed the corruption in big industry, unions and our government, sooner. My vote has to go to bankruptcy and cleaning up their own acts. I am fully aware that this will bring on the inevitable sooner, than later, but it is going to happen and as usual, the poor working class, will have to pick up the tab. So let’s quit putting bandaids on a bleeding jugular and see if we can’t re-build this nation like was done after the great depression.

  • Kathleen Miles

    Who should bail out the Big Three?

    We have examples of government action to consider:
     Managed care, wherein physicians spend as much time completing paperwork to justify their professional judgment as they do actually giving care;
     Sarbanes Oxley, wherein companies redeploy significant resources to hiring accountants to examine their records, while still not actually performing the internal audits that just might catch the creative accounting;
     California’s well-intentioned but unnecessary rush to eliminate all asbestos in schools, which robbed resources from a generation of school children and plunged California schools from near the top in the nation to near the bottom in the nation;
     “No Child Left Behind” which redirects valuable teacher time to filling out paperwork instead of grading student compositions and developing lesson plans.
     Airport security, an entire government agency, a virtual explosion in tax costs, that checks our bags at the airport for a minimal improvement in actual security. Wouldn’t we rather have better healthcare?

    Bankruptcy, which forces the industry to actually look within and restructure itself by itself without the props and advice of the government, looks like a more promising means to revitalization.

  • Kenneth Pincumbe

    Excuse me, but where is Toyota in all of this? Are they asking for a bailout, as well? Just curious.

  • http://www.lit.org/fritzwilliam Fred W. Bracy

    It couldn’t be more simple. Why would the Republicans want to see the U.S. Auto industry slip into Chapter 11 reorganization? . . .because it means that Detroit management can finally *rip up* all the prior agreements and commitments they’ve ever made–union contracts, health care benefits and of course retirement plans. It’s all about legacy costs and most importantly — unions, unions, unions. And once they’ve busted the unions they will have established the greatest legal precedent ever, allowing all of big industry to use this tool should financial hard times ever get *really* hard.

  • jeff

    No Toyota is a Japanese company they lost about 30% in the market.

    The US auto industry should not be saved, the reason they are failing is not the current economic problem, it goes back to a history of constant failures for over 25 years.
    Mismanagement is the culprit. They had the nerve to fly into Washington on their private jets at the cost of over 20k each for the day, and ask for handouts!
    Are they kidding? The arrogance is astounding.

    This is an interesting read:

    Why We Shouldn’t Save GM
    Howl
    By Nicholas von Hoffman

    http://www.thenation.com/doc/20081201/howl2

  • globi

    Has anyone noticed how quiet Iran got, since the oil price dropped?

    If the US would introduce a gas tax, it could finance efficient car development and production in Detroit, it could pay for efficiency and renewable energy projects. This would not only create valuable jobs, reduce America’s dependence on foreign oil, improve its trade deficit, but also increase world security.

  • david calabrese

    GM would never negoitate with their GM labor union, the Ford labor union, and the Chrysler labor union as a block. The congress should not be negoitating with GM, Ford and Chrysler as a block. Each has different problems.

    We are told GM will make it with their new electric boutique car for the wealthy? The world’s auto industries are not waiting for the US to figure things out. Mercedes has just announced a C class 4dr, 3500 lb sedan that only puts out 138 g/km. The Prius and new VW golf 2.0 emit less than 140 gm/km and the coming Prius will under 100 gm/km. The Europeans and Japanese are attacking the mileage needs and carbon emission problems with not one, but a slew of new models. GM???

ONPOINT
TODAY
Jul 28, 2014
This June 4, 2014 photo shows a Walgreens retail store in Boston. Walgreen Co. _ which bills itself as “America’s premier pharmacy” _ is among many companies considering combining operations with foreign businesses to trim their tax bills. (AP)

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