Topic: Let them fail!

[Thucydides]

Let's look at how well the Big Three have done with two previous handouts, shall we?

The money the McGuinty government threw to the Auto sector ($200 million +), but jobs had to be cut anyway.

The $800 million the Big Three got from the Clinton Administration on the Partnership for Next Generation Vehicles, which resulted in not one new hybrid reaching the road before Toyota and Honda started selling their (non taxpayer subsidized) hybrids. (Indeed, the Big Three still have very few hybrids, and some are a simple waste of time and money like the Cadillac Escalade hybrid, which gets the same milage as a Buick Enclave luxury SUV which weighs 1000 lbs less and has a V6 and six speed transmission).

They will be back in a year or two (they loose cash at a rate of $2 billion a month, how long will $25 or $50 billion last at that rate?) for another bailout, then another, since they are not being forced to change their dysfunctional behaviours. End it now.

[retiredgrunt45]

Let's look at how well the Big Three have done with two previous handouts, shall we?

The money the McGuinty government threw to the Auto sector ($200 million +), but jobs had to be cut anyway.

The $800 million the Big Three got from the Clinton Administration on the Partnership for Next Generation Vehicles, which resulted in not one new hybrid reaching the road before Toyota and Honda started selling their (non taxpayer subsidized) hybrids. (Indeed, the Big Three still have very few hybrids, and some are a simple waste of time and money like the Cadillac Escalade hybrid, which gets the same milage as a Buick Enclave luxury SUV which weighs 1000 lbs less and has a V6 and six speed transmission).

They will be back in a year or two (they loose cash at a rate of $2 billion a month, how long will $25 or $50 billion last at that rate?) for another bailout, then another, since they are not being forced to change their dysfunctional behaviours. End it now.

Yes we all heard the stories about the what ever and what ever, but that doesn' diminish from the facts that putting two and half million people out of work because of bad decisions made by a few top executives is not a recipe for disaster.

My question is why aren't you having the same mindset towards the banks who caused this fiasco in the first place and ended up receiving ten times the amount of money and are now, just sitting on it? Why?

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

If you placed conditions on the relief, then no they couldn't come back. In the past governments just threw money at them and that didn't help and we all seen what happended, but if you place strict rules on that money, they have no choice but to pull up or pull out.
But to just say oh what the hell, let them go, it would be a big difference if that was any of you who was told that maybe next week you wouldn't have a job, now wouldn't it?
Before you go of and be judge jury and executioner, put yourselves in their shoes and then see if your still willing to let them go. Its always easier to criticize from a distance than it is to be the one in the hotseat.

As I said in one of my earlier posts, the next time you buy a car and its more expensive because the Japanese have filled the void from the big three and theres no more competition, are you going to say then, oh well to bad so sad. No your going to holler like the rest of us ask, why are prices now so high?

Well I'm very happy that the decision isn't up to any of you.

[Brad Sallows]

Essentially all the TV manufacturing ceased in NA long ago; I suppose we must be buying more expensive TVs now because the Japanese etc filled the void and there's no more competition.

Here is the problem: the only way to bail the auto manufacturers out of their pension commitments and benefits, among other costs that they are about to be unable to carry, is to raid my pension and benefits.  This is unavoidably true because dollars in government hands are fungible.  Is my pension protected?  I think a small part of it lies where is theoretically protected by deposit insurance, but that is all.

If we are to have bailouts in general, and if we are in particular to have governments backstop pension funds, then I would like to see some equal protection and benefit of the law.  If his pension is to be guaranteed against loss, then so is mine.  If his salary - not his EI - is to be guaranteed in some fraction against loss, then so is mine.

While I admit to some antipathy toward unions which exhibit the worst characteristics of the archetype, the objective truth is that workers have a right to negotiate with the business for a share of the business proceeds.  This applies equally to workers who nominate a union as a bargaining agent, and workers who act as their own bargaining agents.  It is up to the prospective employee to cooperate with the prospective employer to ensure there will be business proceeds to share.  If between them they break the business model, there should be no recourse to third-party compensation that is not equally available to every other person.

If you are foolish enough to ask a weak-minded employer for something as absurd as a "job bank" (or powerful enough to extort it), you are entitled to a full share of the benefit and obligated to endure a full share of the consequences.

[brave little soldier]

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

There is absolutely nothing as fabulous as being behind the wheel on my yellow Crossfire, top down, hair all over the place, sun on my face... A little pink macho going on...

But I think my hard earned tax dollars would serve me better if they were invested into the construction of a subway across Ottawa : auto workers will be building wagons for Bombardier (another $$$ eater) and people will commute in and out of the city with a smile on their faces.

[Snafu-Bar]

Yes we all heard the stories about the what ever and what ever, but that doesn' diminish from the facts that putting two and half million people out of work because of bad decisions made by a few top executives is not a recipe for disaster.

My question is why aren't you having the same mindset towards the banks who caused this fiasco in the first place and ended up receiving ten times the amount of money and are now, just sitting on it? Why?

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

If you placed conditions on the relief, then no they couldn't come back. In the past governments just threw money at them and that didn't help and we all seen what happended, but if you place strict rules on that money, they have no choice but to pull up or pull out.
But to just say oh what the hell, let them go, it would be a big difference if that was any of you who was told that maybe next week you wouldn't have a job, now wouldn't it?
Before you go of and be judge jury and executioner, put yourselves in their shoes and then see if your still willing to let them go. Its always easier to criticize from a distance than it is to be the one in the hotseat.

As I said in one of my earlier posts, the next time you buy a car and its more expensive because the Japanese have filled the void from the big three and theres no more competition, are you going to say then, oh well to bad so sad. No your going to holler like the rest of us ask, why are prices now so high?

Well I'm very happy that the decision isn't up to any of you.

 You state that two and a half million people will be out of work? How long do you think it would take for someone or some corporation to come into the auction and buy out the assets and restructure the business for resuming business? It's not rocket science going on here, it's called letting go and watching the pheonix rise from the ashes. Without failure success cannot be achieved. It time the big 3 go the way of the dodo(pun befitting and intended) and someone else to rise up in thier places to provide the populous with a viable product worth the money to spend on it.

 Toyota and Kia already have plants here in canada and are expanding due to market share gains, the public will not be completely screwwed if the big 3 absolve. They will be divvied up to the highest bidder. The unions will lose thier place and be left out in cold where they belong, and we move forward.

 Prices are HIGH becuase of the UNIONIZED lollygaggers wanting 90 an hour with 150% coverage across the board with 6 months paid holidays a free car every year and a gas voucher = to 25,000 a year. But hey it's a tough job working for the big 3... i mean they do have to go on strike at the hint of the place actually having to produce vehicles and making money 

 Cheers.

[Brad Sallows]

Two and a half million people are not going to be out of work.  The problem is that Ford, GM, and Chrysler aren't selling enough product to meet their negotiated obligations to their workers; it isn't that Ford, GM, and Chrysler aren't selling any product at all.

[SeaKingTacco]

I seem to remember a certain airline named Air Canada going bankrupt less than 5 years ago...

You will perhaps note that Air Canada is still with us today.  Sometimes, bankruptcy is the best thing that can happen to a company.  It focuses the board and shareholders wonderfully on solving problems.

Let. Them. Fail.

The world will not end.

[Michael O'Leary]

People love criticizing the auto industry but love buying and driving your cars. A bit hi procritical don't you think?

I have to say that made me laugh.  I didn't get a license until I was 30 because I didn't need one.  I drive a 13 year old Ford Aerostar.  The automotive industry's successes and failures have not been a result of any hypocrisy on my part.  I will not shed a tear over the demise of a bloated dinosaur that thinks convincing people they need a monster pick-up truck or SUV to go buy milk is a sustainable business model.

[DustintheWind]

I hate the idea of bailing out companies like this. Lets get that new German car company over here in the next few years.. They are supposedly making a vehicle that is 2x the savings of a Smartcar.. (but full sized, some lightweight bottom heavy frame) too bad I can not remember the name of it since it was about 2 months ago I read on it.

[MedTech]

Want to hear something... funny?

Well I was watching the US Senate committee on this whole economic hand me down thing, and the person who did this cracked me up.

Speaker: Just so I understand... and can put things into perspective. How many of you, CEOs of major corporations came down here today asking for a grant in your own private charter flight?

CEOs all put their hands up.

Speaker: Let the record show that all of them did.

CEOs all put their hands down.

Speaker: So, once you've received this grant, how many of you are going to take a charter back?

CEOs all put their hands up.

Speaker: Let the record show that all of them did.

CEOs put their hands down.

Speaker: Now what if... you don't get this grant. How many of you are willing to abandon your charter, and fly commercial, so that that money may be put towards your employees' severance pay?

*cricket* *cricket*

Speaker: That's what I thought. Let the record show that NONE of them put their hands up.


...classic....

[Brad Sallows]

The irony being, what steps will the guy in the questioner's chair and his peers take to minimize their own expenses so as to ease the burden on the taxpayers who are ultimately liable for the decisions to be made.

[RangerRay]

I have a Mazda truck, which is just a Ford Ranger built at a Ford plant with a Mazda sticker slapped on.  Is it a "Japanese" truck?  Am I in trouble if Ford sinks?

[chanman]

I have a Mazda truck, which is just a Ford Ranger built at a Ford plant with a Mazda sticker slapped on.  Is it a "Japanese" truck?  Am I in trouble if Ford sinks?

Ford owned a minority stake in Mazda (bit over 30%), of which they have sold a good portion recently.  Your warrantee will not go down if Ford does.

[HunterADA]

I'm an average young American. I make a little more than average, but not terribly so. My work absolutely requires that I have transportation 24/7/365, and because I'm locked into a 4 year contract, that's not going to change anytime soon. So I need a car. Matter of fact, I'm looking for a new car during this next year. The used car I'm driving right now will last me at least another year, but I'm not too sure beyond that.

I don't need a Corvette. I sure as heck don't need a price tag that's comparable to my yearly salary in these economic times.

I don't need a big pickup truck. With gas the way it's been lately, I couldn't be sure of filling it up for less than $100 anyway, and that's with the ridiculously cheap American fuel.

I need something with 4 wheels that runs. Air conditioning is optional. Try to charge me an extra grand for a transmission that does what I can do better with my right hand and I'm going to laugh.

So what's available for this first time new car buyer?

What's more American than a Jeep? Not much. But for $20,000, I can buy a lot of flags.

Ford? $15k gets me a Focus with A/C and even an MP3-capable CD player. Their Mercury badge line is out, nothing there for under $20k.

Or Chrysler? Their Dodge Caliber at 15.7 isn't too bad. Of their own brand, the PT Cruiser will redefine fugly for me at a hair under 18.

Maybe a GM model. The Pontiac Vibe is an entry-level vehicle, for $16,000. Looking further, we may have a winner! Their Aveo sedans and hatchbacks start at $12,000.

Looking around the imports, the MAZDA3 and Honda Fit sit at $14.5k, Nissan Versa is at $13k, the Yaris is even lower at $12k, and both Hydunai's Accent and the smart fortwo drop the price bar to 11 and 11.5, respectively.

So, among the lowest-priced, entry-level cars out there for a new buyer on a budget, there is precisely one American car out of seven under $15k, and a second sitting right on that line. The margins and gross profits in the first-car market are tiny compared to an SUV or V8-driven oversized sedan. But market research shows time and again that the 20 or 25 year old who buys a budget car and drives it for a few years turns into the 40 year old who buys your luxury sedan. Fail to compete in that segment of the market and you fail to capture the brand loyalty that helps you throughout your product line.

Sometimes you need to get smacked across the face with a cold, wet fish before you wake up. It doesn't look like the Big Three are there yet.

[chanman]

The Vibe is a rebadged Matrix.  The Aveo, Optra, Wave, are Daewoos.  I think the only GM small cars designed in-house right now are the HHR and the Cobalt/G5 twins.  The HHR is assembled in Mexico making the only GM small (compact or subcompact) cars assembled inside the US... the Cobalt/G5 and the rebadged Toyota.

It's a funny world, but at least we can expect that GM won't be lobbying for tarriffs this time around - not if they want to actually have small cars available to sell.

[Lil_T]

I don't think a bailout is the answer, and it's certainly not going to heal any of the serious, serious problems plaguing the Big Three.  Not this late in the game.  I think the only sensible solution to this problem is massive restructuring, and getting rid of (or remodeling) the union.  Being that they don't want to budge a single inch on wages and benefits, I think they're going to be in for an awful shock when the Big Three have to say, okay, well, we're just going to have to shut it all down.  Then no one will have a job.  The entire situation is ridiculous.  

I'm just concerned for my in-laws.  If GM goes belly up and they lose their pensions, what will become of them?  

[Michael O'Leary]

I don't think a bailout is the answer, and it's certainly not going to heal any of the serious, serious problems plaguing the Big Three.  Not this late in the game.  I think the only sensible solution to this problem is massive restructuring, and getting rid of (or remodeling) the union.  Being that they don't want to budge a single inch on wages and benefits, I think they're going to be in for an awful shock when the Big Three have to say, okay, well, we're just going to have to shut it all down.  Then no one will have a job.  The entire situation is ridiculous.  

I'm just concerned for my in-laws.  If GM goes belly up and they lose their pensions, what will become of them?  

Firstly, if governments decide there "has" to be a bail-out, it would be cheaper to just underwrite the pension plan than to fund the rolling catastrophe of the Big 3.

Secondly, as previously mentioned, any vacuum caused by the "threatened" disappearance of the Big 3 would quickly be filled by others taking over the useful assets and working to take over that market share of automotive sales. The failure of the Big 3 doesn't mean that demand for vehicles disappears, or that the infrastructure and workforce evaporates. It does mean that a new business model can evolve, leaner and more effective for today (instead of demanding tax dollars to sustain yesterday's illusions).

[Lil_T]

That's a good point you make as far as underwriting the pension fund. 

Secondly, as previously mentioned, any vacuum caused by the "threatened" disappearance of the Big 3 would quickly be filled by others taking over the useful assets and working to take over that market share of automotive sales. The failure of the Big 3 doesn't mean that demand for vehicles disappears, or that the infrastructure and workforce evaporates. It does mean that a new business model can evolve, leaner and more effective for today (instead of demanding tax dollars to sustain yesterday's illusions).

Another good point.  I'm sure there are plenty of fledgling (or established) automotive companies just waiting for space in the market to open up.  But in the interim between failure of the big 3 and new/ other companies commencing operation our unemployment rate is going to increase exponentially.  Hopefully there will be a sensible solution to this whole debacle and soon, though I'm not counting on it.

[Thucydides]

It looks like the supposed saviour of GM is really an overweight "Rube Goldberg" contraption. Series hybrids can be useful (most locomotives, the giant trucks at mine sites are series hybrids, and military applications can be easily envisioned: imagine a series hybrid LAV doing a silent runup). Without the 1000lbs of batteries, electric motor, control electronics etc. you would have a car that is much lighter, cost 1/2 as much and probably have similar performance (and would not have been under development since 2003(?) but on the market already).

Sorry guys, but the Chevy Volt was one of those "cool" ideas that didn't survive contact with the real world.

http://www.technologyreview.com/energy/21387/?a=f

Is GM's Volt Ready to Roll?
The production design is ready, but the electric vehicle's battery needs work.
By Kevin Bullis

General Motors (GM) unveiled the production design of its Chevrolet Volt electric vehicle on Tuesday, as part of its 100th-anniversary celebration. But significant hurdles remain before the car can start rolling off assembly lines, chief among them the need for continued development of the car's main battery pack.

The Volt is an electric car that can be recharged by plugging it into a wall socket or by running a small, onboard gasoline, ethanol, or diesel generator. The 16-kilowatt-hour lithium-ion battery pack stores enough energy for 40 miles of driving--enough to cover almost 80 percent of the daily driving in the United States, the company says. On longer trips, the generator kicks in to recharge the battery, giving the Volt as much range between fill-ups as a typical gas-powered car. For more than a year, GM has been showing off the concept-car version of the Volt in ads. The new production version looks considerably different--it has a more aerodynamic shape--but it will have the same performance specifications that the automaker has been advertising.

Plug-in hybrid vehicles like the Volt began to seem feasible because of new technology that made lithium-ion batteries safer, more durable, and less costly. But while individual battery cells using the technology seem to work well, yoking nearly 300 of them into a battery pack has proved challenging. That, in turn, is forcing GM to design systems that make the vehicle more expensive. "At the cell level, things look good," says Mark Verbrugge, the director of the materials and processes laboratory at GM's research-and-development center. "There are still issues at the pack level that we're trying to iron out, which gets pretty nerve-racking as we get close to production."

A battery pack for an electric vehicle is complex. The cells have to be wired together to deliver power reliably, despite the harsh vibrations and jolts encountered on the road. (For an example of what can happen when things go wrong, see "Electric Cars 2.0.") Even a few defective cells or connections can dramatically lower the performance of the pack. What's more, the pack includes complex electronic controls for charging each cell, delivering power, and capturing energy from braking to improve vehicle efficiency. And maximizing the battery's life requires a good cooling system. To make matters worse, methods for testing whether a battery pack will last for the life of the car are only now being developed.

"There's only so much known about how to accelerate the testing of batteries," says Greg Cesiel, GM's program director for the E-Flex Vehicle Team, which is developing the Volt and related electric vehicles. Questions remain about how to simulate driving the car and charging the pack, and how to confirm that the pack will survive vibrations and exposure to hot and cold temperatures over the life of a vehicle.

"The big risk when it comes to putting these on the road is, we don't have accelerated life testing," Verbrugge says. "We have some at the cell level, which gives us enough confidence to say we're going to do this thing. But I would contend that's still the big risk."

Verbrugge says that one of the biggest challenges is ensuring that the batteries won't fail in extreme climates, such as the deserts of Arizona. Conventional starter batteries already give automakers trouble in hot areas, he says. Today, they're the car part that most commonly fails under warranty in the Southwest. "Batteries don't like hot temperatures," Verbrugge says. "But we're not going to say to people in Arizona, 'We're not going to sell you our Chevy Volt. You can drive one, but we're not going to give you a warranty.' That's not an option."

To make up for uncertainties about the life of the battery packs, GM plans to coddle them, wrapping them in insulation and including heating and cooling systems to keep them at optimal temperatures. Questions remain about when these systems should operate, since they can eat into the energy savings that electric vehicles are supposed to provide. "Let's say you're charging," Verbrugge says. "Do you run your cooling system now to keep your battery cool over black asphalt? Then your energy efficiency doesn't look so hot. Do you do that only in Arizona? These become critical engineering issues."

GM is also oversizing the packs, adding several kilowatt-hours' worth of extra cells to make up for potential degradation over the life of the vehicle. That makes the packs, and the vehicle, much more expensive. "Cost is a major issue for us now," Verbrugge says. "We're not sure people are willing to pay."

Indeed, the Volt and other proposed cars like it are expected to cost thousands of dollars more than conventional cars, which could limit their appeal, says Paul Werbos, a program director for the National Science Foundation (NSF), who has been promoting research on better, cheaper batteries. "I don't expect most people are going to pay that," he says.

Werbos and Verbrugge spoke last week at an NSF-sponsored workshop focused on improving batteries for the next generation of hybrid and electric vehicles. Speakers at the workshop emphasized that better tests for battery lifetime, combined with improvements to battery design to make them last longer, will allow automakers to use fewer batteries and cut costs.

In spite of the remaining challenges, Cesiel is encouraged by the progress that the company's engineers have made so far and believes that the Volt will be ready for production on time. Based on its laboratory testing so far, he says, the company is "happy" with the capacity and performance of the batteries. GM also knows what the cooling system will look like and has physically integrated the pack into the vehicle. What's more, the entire propulsion system, including the battery pack, the electric motor, and the generator, was incorporated into a test vehicle and delivered to the company's Milford, MI, testing grounds at the end of August, just two days behind the schedule set last year. "I wouldn't say that the battery is ready," Cesiel says, "but we're right on track."

Copyright Technology Review 2008.

[tomahawk6]

The Senate lacks the votes to approve this loan to the car companies. Instead the Senate will allow $25b previously allocated for green cars to be used by the big 3.

[Thucydides]

Slogan for a T-shirt or bumper sticker:

"You gave them a bail out, now I can't afford a car. Good thinking....."

[KingKikapu]

While it is a "bailout", it is also a loan that will make the government a small amount of net present value money.  That is of course assuming the big 3 survive.  It's a risky investment to be sure, but there are 3 million auto worker jobs and 5 million support jobs on the line.  Of course they were going to do it.

[E.R. Campbell]

Please don’t forget that Tata (India) and Chery (China) are both reported to be only a year or so away from being ready to make cars that will meet North American technical standards. The trick will be to produce them in quantity and, more importantly, to competitive price/quality standards. That can be accomplished by buying and retooling existing plants and hiring skilled, experienced assembly line workers – albeit for lower wages than the big three paid to CAW/UAW workers.

A $(CA)10,000 four passenger compact will sell – remember the Hyundai Pony? And, despite (inevitable) problems with reliability and quality (which now respectable Hyundai and Kia suffered - even the Honda Civic was junk in the '70s and early '80s) it is likely that Chery and Tata will grow and prosper in North America by building and selling the cars we need in the plants the big three will be forced to close – bail outs or not.

Many plants will close, with or without taxpayers’ money. Many, many workers will be out pounding the pavement, with or without a bail out. But a turn around will come, probably in/around 2010, and people will want new cars again – just not the expensive behemoths GM and Ford make now. It is likely that companies like Tata and Chery will have the cars we want in production, made by Canadian and American workers in Canadian and US plants, when we want them.

By the way, be prepared to have you car deader collocated with large Canadian Tire retailers in your area – one or two dealers in a city like Halifax or Saskatoon, maybe three in Calgary or Ottawa and four in Vancouver, Montreal and even Toronto. You will probably shop on line and take delivery at the Canadian Tire retailer which may, also, have the warranty servicing contracts for two or three Asian world auto brands.

One or, more likely two of the big three will not die, completely, if they are not bailed out, but they will be much smaller and will  likely specialize in larger cars, vans and trucks as they work hard to find their niche in the still rich North American market.

[ArmyVern]

Let's face it : only half of the population is actively working and too much of our pay goes back to the government to help support the other half that doesn't...

If someone you love came to you and said that they give 40% of their pay to a Cult Leader for eternal peace, you would have them committed ! Yet, we have been giving it to our government ! 

OK ... keep your 40%.

No healthcare for you or your spouse. Nor for your kids. No free schooling for your kids. You can fork out the 10K a year each it costs to send them off to Private Schools from your pocket. No fire service should your house catch fire. No police to help you if you're in an accident. ... and on an on and on. No military or other services coming in to help you out should forest fires threaten your lives and homes or floods. Gawd forbid no military resources to fight off an enemy invader ... Oh - and most of all - no government money forthcoming to pay for food for your kids should you be left without a job all of a sudden ...

 

I'll continue paying my 40% thanks very much ... I actually prefer it. The benefits far outweigh the alternative. The vast majority aren't abusing the system. Why should the rest suffer for those few sycopants and cretans?

[missing1]

Army Vern

Very very well said, so many fail to stop and think where the taxes go.