Should the big 3 be bailed out?

[Brian Minkin]

Tomorrow the debate on bailing out the big 3 starts in congress.  What do you think?

[Ccns23]

No. They have proven time and time again that they just do not have what it takes to compete in todays market. Here's a perfect example. My Cayman gets better gas mileage than a Cobalt. Which would you rather drive? The big 3 put all their eggs in the SUV and Truck market and now they are paying the price.

What I don't get is why doesn't the UAW step in and make some serious concessions to their contracts. And I mean SERIOUS conecessions. Pensions, health insurance, and salary should all be looked at and fat should be trimmed wherever possible. They are just as much to blame for the current state of affairs @ the big 3 as anything else. Let em' sink.

[Brian Minkin]

The union says it has made all the concessions it is going to. This was stated by their president this past week.  He says in the cost of a new car, labor (the union piece of it) only accounts for 10% of the total cost of a new vehicle.

If they sink what would be the real net effect on our economy.  Some analyists say the trickle down would jepordize the jobs of over a million people.

[michael lang]

I agree with Brian. Way to many people will be negatively affected by something like that. Forget about just what goes on in Detroit, look at the ripple effect as it spreads across the country. All those people who work in domestic stores in sales, parts, service. They would suffer greatly as well. Something should and probably will be done, though I'm not sold on a complete bail out. I'm especially interested in how this turns out since the car business is my livelihood.

 

[Ccns23]

Let them go into bankrupcy and reorganize. A judge can then void any labor contract and force the union to make SERIOUS concessions. I understand that a failure of any of the big three will have a huge impact, but I believe I read somewhere how the US automakers start each year 3.3 billion in the hole just for retiree benefits and pensions. I'm not saying that the unions are 100% of the cause, but they are a major contributing fact. I mean seriously, they have a contract that says no one in the union can be layed off. So, if a plant shuts down, the automakers still have to pay all of those employees they're full pay and benefits OR buy out their contract. Does that sound right to you? The unions haven't done their part IMO.

And would it kill them to come up with a decent design on a car? I mean look at the Ford Flex...can you get any more lazy with design? No style, no excitement, nothing. Just bland and IMO ugly. If they showed a little more effort I'd be for a bailout, but they don't deserve it. Let them go bankrupt and sort things out.

[emayer]

I drive by the carcass of Bethlehem Steel daily which serves as a reminder of what happens to large unwieldy companies with unyielding unions.

IMO we should not bail these industries out.  We shold not be on the hook for companies that are unwilling/unable to adapt to market conditions (we've been complaining about the US auto product line for decades) nor is it the taxpayers obligation to fulfill union contracts....  If we start down this road, when will it stop?  Airlines next?

Whatever happened to the free market principle?  Have we lost faith in our ability to take adversities such as this and create something better as a result?  Is there a clause in the constitution that states that Americans are not to suffer hardship?

I'm done ranting for now....  hock:

[AMoore]

Ccns23 wrote:

Let them go into bankrupcy and reorganize. A judge can then void any labor contract and force the union to make SERIOUS concessions. I understand that a failure of any of the big three will have a huge impact, but I believe I read somewhere how the US automakers start each year 3.3 billion in the hole just for retiree benefits and pensions. I'm not saying that the unions are 100% of the cause, but they are a major contributing fact. I mean seriously, they have a contract that says no one in the union can be layed off. So, if a plant shuts down, the automakers still have to pay all of those employees they're full pay and benefits OR buy out their contract. Does that sound right to you? The unions haven't done their part IMO.

And would it kill them to come up with a decent design on a car? I mean look at the Ford Flex...can you get any more lazy with design? No style, no excitement, nothing. Just bland and IMO ugly. If they showed a little more effort I'd be for a bailout, but they don't deserve it. Let them go bankrupt and sort things out.

Agreed! Yes, I know many of you are surprised that is is not my usual liberal position. But I don't like bailouts without a detailed long term solution. The big three would survive reorganization, and would be able to cut the fat in the process. Too often people say "its not fair" without offering a viable alternative. A bailout will only lead to a bigger problem down the road.

[ccm911]

I was really torn on this issue.  On the one hand, if we bail them out, millions of jobs would be saved.  On the other hand, they made their beds, by pushing junk and SUVs on the American public.  And look at Chrysler, after they got bailed out they still couldn't design and build appropriate vehicles. 

And then I drove a Corvette the other night.  What a piece of junk!  There was a strange vibration pulsing through the frame, and everything about it just looked cheap.  It was the final nail on the coffin.  It is not the Unions, so much as the Big Three just can not design decent cars.  They were, and always will be, complete garbage.  I really think that it may be time to just cut them loose, and let the cards fall where they may.

It's really sad that it has come to this. 

[APXD 30]

AMoore wrote:

Ccns23 wrote:

Let them go into bankrupcy and reorganize. A judge can then void any labor contract and force the union to make SERIOUS concessions. I understand that a failure of any of the big three will have a huge impact, but I believe I read somewhere how the US automakers start each year 3.3 billion in the hole just for retiree benefits and pensions. I'm not saying that the unions are 100% of the cause, but they are a major contributing fact. I mean seriously, they have a contract that says no one in the union can be layed off. So, if a plant shuts down, the automakers still have to pay all of those employees they're full pay and benefits OR buy out their contract. Does that sound right to you? The unions haven't done their part IMO.

And would it kill them to come up with a decent design on a car? I mean look at the Ford Flex...can you get any more lazy with design? No style, no excitement, nothing. Just bland and IMO ugly. If they showed a little more effort I'd be for a bailout, but they don't deserve it. Let them go bankrupt and sort things out.

Agreed! Yes, I know many of you are surprised that is is not my usual liberal position. But I don't like bailouts without a detailed long term solution. The big three would survive reorganization, and would be able to cut the fat in the process. Too often people say "its not fair" without offering a viable alternative. A bailout will only lead to a bigger problem down the road.

Agreed, they need a pre-packaged Ch.11 and a judge to throw out the existing labor contracts. They don't need cash (GM has $111B). What they need is to reinvent themselves to be competitive in our current century and beyond.

A bailout only puts a Bandaid on the problem.

[cjbcpa]

Ignoring the prior points, which are all valid;

The harsh reality of the situation is we have an automobile industry that is capable of producing 16-17 million units per year for US consumption in an environment that may only be able to sell 11-12 million per year for the indeterminate future. It's really only a question of which one (or two) will go.

IMHO, the discussion should not be about bailing any of them out. It should be about how to shed the excess capacity in an orderly fashion without a catastrophic impact on the larger economy.


CB

Off topic but relevant, did anyone see the latest Pano. Porsche only sold something like 185 Boxers & Caymans nationwide in September. That can't even be one per dealership. Makes me wonder how the Porsche dealer network will survive.