If we give the auto companies a bail out then...

United States
November 12, 2008 2:33pm CST
We in America are hearing about the possibility of a bail out for the automobile companies... General Motors, Ford and Chrysler have asked for $25 billion in government loans to survive the economic crisis as they are running out of money as there are too many people, making too many cars for too few buyers. At risk are more than 30,000 jobs in the factories and a lot more jobs in the dealers, part suppliers, etc. far too many jobs to loose in areas that have already been hard hit by the mortgage crisis, etc. Congressional Democrats are urging the Treasury Department to provide the loans, but many Republicans are against it and there is overall a general lack of enthusiasm for another bailout (as this one falls on the heels of one given in September to help the auto companies begin to switch to more fuel efficiency standards.) Now, the thought that I am having is this... Why don't we have GM, the company that is making hummers convert them to the military humvees, add electric power to them and sell them to Iraq for its military and police as it has a $79 billion budget surplus and might benefit from this kind of vehicle. We could also perhaps have all three of the auto companies do some retooling and start making the equipment that our troops need. There are estimates out there that say that the military and National Guard need about 9 billion dollars of equipment to replace the equipment that is worn out because of the wars. This equipment is not just needed for the warring but is also needed for emergency response in times of natural and man made disasters and/or to protect lives and property. I know that during World War II, there was an attempt to have the auto companies help out. They got contracts to help outfit the military. I am imagining that the National Guard, the police departments and even the fire departments around the country could use more equipment at reduced prices. And of course, all of these companies should start focusing on building economy cars that are safe, well made, good for places like California with high air quality standards, fuel efficient, and cars that will last... These cars could get good gas milage and also be utilize solar paint, have electric batteries, and perhaps be able to run on water... In other words... These cars could be innovative and yet cheaper than the hybreds out there that are often too expensive for the majority of Americans to buy. If we are going to bail them out... Let us have them do something new... There is no call to give these companies more money to keep on doing the same thing. America needs more equipment. Iraq and other countries need more equipment. Locations throughout the Country perhaps need new emergency vehicles and might not be able to afford them due to the budget problems and we all need more options when it comes to finding inexpensive, well made hybred vehicles. In other words, why don't we have these companies earn their bail out? What do you think about the proposed bail out? If they get it, what should they have to do to earn it? Should it have strings attached or no strings attached? Would the idea that I mentioned work or not? I am interested in reading your ideas....
1 person likes this
3 responses
@Lakota12 (42681)
• United States
12 Nov 08
to me alot of the vehecails over there look like hummers. amd sure GM is already making for there as my dad worked for GM during world war 2 as a mechnic to do things like this. but makes since for sure to have them build more the sand over there is killing the cars trucks what ever.
1 person likes this
• United States
17 Nov 08
Hi Lakota12, Good to see you here... I have been seeing a lot of kits on the net to make the hummers look like military humvees so it seems to be a doable thing and is very much in line with the defense work that car companies did during WWII. Thanks for sharing about your dad.
@Lakota12 (42681)
• United States
17 Nov 08
your welcome glad to share hugs
1 person likes this
• United States
17 Nov 08
hugs to you too. It is always good to see you here my friend.
@James72 (26829)
• Australia
12 Nov 08
I do feel that these auto buidling companies should have exercised far more forward thinking strategies than they did; and it is arguably unfair for the government to allocate funds to them when they could be better utilized elsewhere. Oil prices have been going up for a long time now so why were factories still pumping out masses of gas guzzling SUV's? The focus on global warming and the need to reduce carbon emissions has been escalating year on year yet no major effort has been made to manufacture environmentally friendly vehicles or alternative fuel engines etc as you have referred to as well. If they HAD of taken these points into consideration and acted accordingly, not only would jobs be saved and bail-outs not needed; the uptake of greener vehicles would be increasing rapidly because mass porduction would reduce costs. Sales equals revenues! These are major corporations that should know better. What about the average consumer that will lose their house or has done so already or their job? Where's their bail out package? It is these average consumers that will utlimately pay for these corporations mistakes! There should definitely be strings attached if these companies get funding and it should be along the lines of targeted employment number strategies, committments to more earth friendly focuses, community expenditure and things like that. I do agree that your plan to force them to make cleaner hybrid vehicles instead of more of the same is another focus they should be forced to undertake as well.
1 person likes this
• United States
12 Nov 08
Unfortunately this is just throwing good money after bad money. My opinion? The auto makers are crying "where's ours", after the mortgage industry and banks have gotten theirs, much like the sibling of a spoiled child. I think the government should have given the 700 billion to the people - to the tax paying registered voters (over 18 obviously) in the US. That would have given us law abiding citizens a little over $500,000 each. Then we would have paid almost half that back to the government in taxes. We would have paid off debt, refinanced our mortgages (or kept those out of foreclosure - or even bought homes!) bought cars and went shopping and invested some of it to keep the economy pumping. The government would have gotten money back in taxes paid on the money to fund projects, health care, clean air, fuel research, the list goes on. Instead they chose to give it to companies that continue to waste it away. Hear about the latest AIG "SEMINAR"? I'm just thrilled to pieces over it all....
• United States
17 Nov 08
James72 I agree that the auto companies were behind the times in their thinking and that they should have retooled a long time ago to make more fuel efficient cars... But I do think that the Federal Government had a lot to do with their failure to do this and might in fact have a moral obligation to bail them out as they were in fact responsible for their collapse. The Federal Government sabatoged the car companies. The Federal Government gave small businesses and individuals a tax break for purchasing the SUVs, Hummers etc. which are over three tons if the vehicles were used exclusively for work (Once they subtract the $25,000 from the cost of their 3-ton SUV, small business owners can deduct the depreciation on the remaining amount. Someone who bought a $60,000 SUV, for example, can claim the remaining $35,000 over six years.) and gave tiny ($2,000- 3,400 or less) tax breaks to those who purchased the hybrids and the smaller fuel efficient cars... And so there was an increased need for SUVs seen by the car companies... as production of things rises to meet the growing demand. The Federal Government artificially created the need for the SUVs and the companies were stupid enough to meet the need... They just did not think that the oil prices would ever sky rocket so much or that the people who were into SUVs for the tax break would struggle financially and be unable to purchase those vehicles. I blame the Federal Government most for this and Bush in particular because he knew or should have known that there was a need for the car companies to do something different, poo-pooed the need to have the companies respond to the requests from environmentalists for clean air and also against global warming and did not warn the companies about the possible higher gas prices which should have been predictable. I think that you are quite correct in thinking that the consumers need assistance. There should be a bail out package for consumers as we are the ones who are struggling and who have not seen our incomes rise for some time... And in fact most of us are less well off than we were 10 or 15 years ago. I totally agree with you that there "should definitely be strings attached if these companies get funding and it should be along the lines of targeted employment number strategies, committments to more earth friendly focuses, community expenditure and things like that." Thanks for expanding on the requirements... Thanks for your agreement on the "plan to force them to make cleaner hybrid vehicles instead of more of the same."
• United States
17 Nov 08
You are just one of many people who believe that giving a bail out to the car companies is "just throwing good money after bad money." And some people have said that "it would be better to burn the money" I think that the auto companies really are hurting and are not just experiencing a "I want it now!" feeling of a spoiled child... I do think that the Federal Government has been in the past a bad parent to these companies as it was artificially inflating the demand for the larger SUVs that are not considered undesirable by its tax breaks on these vehicles ($25,000 or more taxe break for consumers) and was not only giving tiny ($2,000-3,400) tax breaks for hybrid car purchases. The Government set these companies up for failure... and the companies were stupid enough to not to see it... Now the companies are hurting and are saying, "help me!" as they do not have buyers for the many vehicles they made... And in addition the parts suppliers, the dealers, and all of the other companies that get involved in the production and sale of the cars and trucks and are dependent on these car companies but have had no voice in what these companies have done are also facing the loss of their jobs and businesses. There are reports all over the net in emails, on websites, etc. that: "·4% of U.S. gross domestic product is auto-related and represents 10% of U.S. industrial production by value. ·1 out of every 10 U.S. jobs is auto-related, supporting approximately five million jobs across all 50 states. ·Domestic auto industry has invested nearly a quarter of a trillion dollars in the U.S., including $10 billion alone last year. ·The auto industry purchased $156 Billion in U.S. auto parts and is the largest purchaser of U.S. steel, aluminum, iron, copper, plastics, rubber and electronic and computer chips. ·Autos account for $690 billion, or about 20% of all U.S. retail sales ·Auto sales generate more than $10 billion dollars of annual tax revenue ·U.S.- based carmakers have 105 plants in 20 states, including California, Texas ,Kansas, Louisiana and Maryland. ·They support 14,000 dealers across the country, and these dealers in turn employ 740,000 people, with a total payroll of $35 billion a year. ·The auto companies provide pensions for 775,000 and health care benefit for 2 million. Because carmarkers are so tightly woven into the fabric of the U.S. economy, the collapse of this industry would reach far beyond Detroit. The Center for Automotive Research predicts that a collapse would lead to: ·Widespread failures of supplier companies ·Put nearly 3 million people out of work ·Personal income would drop by $150 billion ·Tax and social security receipts would fall by more than $45 billion" Because of these things, there are other people who are thinking that the auto companies are just too big to let fail. I totally agree with you that "the government should have given the 700 billion to the people - to the tax paying registered voters (over 18 obviously) in the US. " I think that we if we "paid off debt, refinanced our mortgages (or kept those out of foreclosure - or even bought homes!) bought cars and went shopping and invested some of it to keep the economy pumping" the government would have been much better off... and so would have those companies that we bailed out. It would have been a much better idea but unfortunately when you have an Administration that is invested in trickle down economics, taking care of the American consumer is not the intention... It was instead to feather the nests of those who already have power and wealth. Re: AIG-- "I'm just thrilled to pieces over it all.... " I join you in saying "NOT!" Thanks for posting.
1 person likes this
• United States
14 Nov 08
Absolutely STRINGS -- LOTS of strings!!!!! You have some good ideas. Every "expert" I have seen interviewed has said that the 3 car makers need severe restructuring. They have not put money towards making alternative fuel cars, or any kind of forward thinking investments. And they are being crushed under the weight of excessive union demands. But I also heard that the union problems -- too many costs for benefits and salaries -- is because the spineless executives have been giving in without a fight to all union demands. The reason is if they have a strike that year, then the execs don't get the bonus. The bonus is supposed to be tied to a job well done. An executive that really takes the risks and does what is best for the company AND its workers deserves a big bonus, but the shady, lazy seeming, spinelessness we seem to be seeing does NOT deserve a bonus.
• United States
17 Nov 08
Dear thedogshrink Thanks for posting here... I must admit that I had to laugh at the faces as I had never seen them on any other posts before. I like your "Absolutely STRINGS -- LOTS of strings!!!!!" comment... We are in total agreement with that. United Auto Workers President Ron Gettelfinger said the auto industry is suffering from on things beyond its control — the housing slump, the credit crunch that has made financing a vehicle tough and the 1.2 million jobs that have been lost in the past year and that labor costs only are up 8% to 10% of the cost of a vehicle which is down from what it used to be in the past... The workers are continuing to improve in their productivity but are not paid as well as they used to be. According to one worker on NPR, they are making $14 an hour now. They are trying to hold on to their pensions so that they can pay for their children to go to college after they retire... And there are some people that say that workers in some international companies are making more than the majority of the UAW workers are now. I honestly believe that the top executives are at fault and not the unions... The executives did squashed new technologies that could have helped them and instead continued to build SUVs to meet the demands for them that were artifically created by the Federal Tax break of more than $25,000 for these vehicles of 3 tons or more for individuals and businesses. I am wondering about the "severe restructuring". Are you meaning Chapter 11?
• United States
17 Nov 08
Hey! Glad you got a laugh! I think every "expert commentator" I've seen brought on the news to advise about the auto industry, plus the politicians who are not for the bailout, have all said that part of the problem is the unions -- I heard they were (some of them) making $40/hr don't know if it's true -- and that it is not right to do as the union's press release said, and take taxpayer money to pay for their very fine pension and health plan when those of us paying for it don't have those ourselves. However, they all also lay it at the feet of the management, who have failed over and over to lead in the right direction. As far as the "severe restructuring " -- that keeps coming up too. Some mean for there to be a requirement that they restructure the entire market -- auto makers, suppliers, unions, etc. And others say that is what will happen in Chapter 11, if we do not authorize the bailout, so let it happen. Or, if the unions won't back off and allow for some changes, then go the Chapter 11 route, so they will FORCE the unions to cooperate. And another thing is that there are car makers in the South here in the US, too, and they are American owned, even tho they make foreign cars. They aren't doing fantastic, but they aren't going under at all -- and they don't have unions. But I don't know if their execs get exorbitant bonuses and stuff. I think my worst fear is that the auto makers will find some way to hold out til February (probably on the backs of their employees) and then get a bailout under the new administration.
1 person likes this
• United States
18 Nov 08
Thanks again for that laugh... I am now hearing from: http://voices.washingtonpost.com/economy-watch/2008/11/auto_workers_union_issues_warn.html?hpid=topnews that the head of GM wants it to be a "loan" rather than a "bailout". I was reading a lot of articles on the net and came upon some informaiton about the problems that our companies are having in comparison to those in other countries... http://workinglife.typepad.com/daily_blog/2007/04/the_coming_atta.html 1.)The Big 3 companies have had massive health care costs... and the Government has not met with them to discuss the possibility of assistance in the area of health care... Part of the reason for the costs... injuries, heart attacks due to the stress of the line, etc. 2.)The CEOs make too much money. They have been the ones to ruin the company as they have made the bad decisions re: product lines, etc. and they get big pensions which are unfunded by the employees. The rank and file have pensions too but get a lot less and these pensions for the rank and file are fully funded. I went to another website out there http://www.facebook.com/topic.php?uid=21018086078&topic=4735s and saw these comments... One worker said," If the General gives us a product that the people want we will build them better than anyone else can! We deserve every penny we make! Case Closed! Just give us the product, that's all we ask! We'll look after the rest." "To the people who say GM workers are overpaid, you should go talk to someone who actually works at GM (since you guys obviously don't) and ask them how their shoulder is, or their knee, or back... etc. I'd almost bet that at least half the people working in there have some kind of life long problem that they will eventually have to have surgery for or just suffer from working on the line for 20 plus years. Also ask them how much they like working on those hot summer days where it's 30 degrees outside in the shade and about 45 inside with no air conditioning...and finally... ask them if they love their job...." This is one person comparing union and Honda plants in the South and saying what the unions need to do and also why we don't want more Japanese style ununionized plants here in the United States as they basically injure workers and then leave them suffering and in pain rather than taking care of them. http://www.iww.org.au/node/232 This is one person's response to the view that the workers and not the management are to blame for the problems... I thought it was well done. It seems clear to me that the management, the CEO and the top level management are the problem and not the Union workers. http://thatsrightnate.com/2008/11/16/workers-threaten-auto-industry/ This is another view of the proposed bailout... I had not heard it before... One person I saw on the net saw this request for a bailout as a way to get government funds to bust the union and also to build a plant which mimics one in a third world country, paying low wages and/or without benefits for the employees. I do not agree with all of the guys' comments but I do agree with this one: "Ford isn’t in trouble because of the UAW or because of the Teamsters or because of the Dock Workers. Ford is in trouble because they struck a deal with the oil companies to keep producing gas guzzlers even when it became clear we didn’t want them." http://willyloman.wordpress.com/2008/11/16/gmford-bailout-deal-is-union-busting-and-corporate-welfare/ It seems to me that the CEOs and upper managment for the big 3 car companies should all have to have a decrease in their salaries and that those in upper managment and those past CEOS and upper level managment retirees should have their pensions reduced... Maybe then, the companies would be better able to manage... Certainly it would be punishing them for their failure to lead this company well as it was their poor R&D, their insistance that GM get away from the electic cars and other things that the public liked, and their stupid manufacturing of the SUVs that has gotten them into this mess. And while we are at it, let's penalize Bush and the other Administrations who gave the purchasers of SUVs a tax break of more than $25,000 when the people who purchased the hybrid cars got a tax break of less than $3,400. I think that the Federal Government did indeed set up these companies for failure.