What's going on with the bailout?- Page 2

[KrissySim]

Posted: 11/14/08 at 12:03am

None of the companies can respond overnight to rapid market changes like the gas price spike.

Overnight? From the 1970's to today "overnight" ? So just because there is a hot selling item they can't anticipate the future?

Yes they are publicly traded companies. But if they collapse under the free market system they could be taken over by the government, rebuilt with new management and structure, then publicly traded again.

If the government grants them lines of credit with the existing management, contracts and structure; or if the government takes over the operation of the industry temporarily and totally restructures, in either case you are looking at socializing the industry temporarily. There is more than one way to do that. With a government take-over the focus could be placed on what is needed for the future direction of America's transportation system, not what is needed for immediate returns and profits.

All I'm saying is that there is more than one recipe to cook a steak. I doubt that my suggested scenario will happen or that it will even be seriously considered. Not in America, not today.

So the industry gets a multi-billion dollar bailout until the next sudden market change tips it over again, or it crashes.

[Yawper]

Posted: 11/14/08 at 12:32am

Obviously this will be a surprise to you, but GM has more 30+ mpg model vehicles than any other manufacturer. The domestics do make, and have always made, fuel efficient vehicles. GM is still the top annual seller of vehicles in the world.

The problem is profitibility on the smaller vehicles. Toward correcting that the domestics have already substantially restructured themselves and will realize major cost savings once the 2010 labor contracts kick in. All they are looking for is a loan to bridge the 14 months until that contract kicks in.

And the sooner the Feds realize they need to start running the country as America, Inc. so that companies based here will not be at a disadvantage in the global market the quicker that loan, with interst, will be repaid.

[KrissySim]

Posted: 11/14/08 at 12:50am

I understand your point. However, 30+ mpg is not fuel efficient compared to technologies that are in development and could be applied now with the right incentive. The Fed needs to take leadership in directing industry like the automotive industry towards the future (which holds many implications in terms of workforce, economy, the environment, energy resources, etc.). Or should I say "more leadership"? Sticking to gas guzzlers because they sell is not going to provide a long term solution. Gas guzzlers should be "officially discouraged" by any number of means.

A greater transition needs to come about. America has got to stop squandering such a large cut of the energy resources. I'm afraid you may be a little optimistic if you think a 14 month loan is all that is needed for this.

[Yawper]

Posted: 11/14/08 at 9:33am

The auto industry is light years ahead of what's on the market today. Whenever the Fed decides to get on board and establish an energy policy the auto companies will be right there. Under Bush the oil companies have had their way and, despite all the hypocritical lip service, the American public doesn't want off oil because it's the cheapest fuel out there. It's the Wal*mart effect - everybody bitches about it but still buys.

The auto companies can build cars that run on almost anything. They do in other countries. The problem is getting the fuel distributed because the oil companies control the distribution system.

The only thing the auto companies can do without a fuel distribution system is go toward electrics, which has not only been a technological challenge but is also hindered by the fact that right now all electric vehicle batteries are supplied by Asia. The auto companies have asked the Fed to spur battery technology development here but nothing's been done.

The auto companies spend more on R&D than any other private industry, but until the Fed (or states working together as has happened with E85 in the Midwest) provides an energy policy favorable to translating alternative energy options to the marketplace it's not going to happen.

The core problem is a US problem, not an automaker problem.
Updated On: 11/14/08 at 09:33 AM

[KrissySim]

Posted: 11/17/08 at 2:55pm

Now I know where elephants can hide. (There are some big holes in your argument. )
The Fed has had to provide incentive (money) to get the American auto industries to produce fuel efficient cars. They should outlaw gas guzzlers IMO. No, the Fed hasn't done the right things either. It lets oil get away with too much. One can cry "free enterprise" but when industries have such a big impact on the economy and lives of all Americans, the Fed should step in and bitch slap a few corporations.

Listen, If you weren't so paranoid about the word "socialize", look at this scenario:
The big 3 automakers are having a hard time and are still in the 20th century. Let them fold, when they do so the Fed steps in and socializes the industry for a certain time only, only enough time to revamp the industry, redirect it and re-privatize it. This will protect the American auto industry from foreign take-overs and foreign competition in the meantime.

OK I may be hiding elephants, too, but I think the concept is interesting.

[Yawper]

Posted: 11/17/08 at 6:09pm

"The Fed has had to provide incentive (money) to get the American auto industries to produce fuel efficient cars."

When and how much?

"The big 3 automakers are having a hard time and are still in the 20th century."

Not at all. GM has more 30+ mpg models than any other manufacturer, has the 100+ mpg Volt hitting the market in 2010 (and early tests are showing it will beat the 2010 Prius in mpg) and the new UAW contracts will have the American manufacturers at a labor cost advantage over the Japanese.

You also conveniently ignore the fact that the American makers have been rolling out alternative fuel vehicles for over 10 years.

What really amazes me, though I guess I shouldn't be surprised, is the level of ignorance about the auto industry in this country on display these last few weeks.

[KrissySim]

Posted: 11/17/08 at 6:42pm

What is on the table now is $25 billion in loans previously approved for development of fuel efficient cars to be used for a more immediate "bail out". Assuming that all Senate Democrats support today's proposal to aid the auto industry, they are going to need Republican support, too, to push it through. A lot of Republicans are saying that the American auto industry is archaic. The American auto industry is now at risk of being superseded by foreign companies.

We'll see if the American auto industry and its supplier network is or isn't superseded by foreign companies Toyota, Honda, Nissan, Hyundai, VW, BMW, Mercedes.

And I'm not conveniently forgetting anything. I'm just remembering your justification for building gas guzzlers.


Updated On: 11/17/08 at 06:42 PM

[TheatreDiva90016]

Posted: 11/17/08 at 6:57pm

Businesses fail all of the time.

These should as well.

The auto industry has no one to blame but themselves.


I say, NO BAILOUT. Let them fold and let newer business that can make greener cars start up.

[Yawper]

Posted: 11/17/08 at 7:14pm

"The American auto industry is now at risk of being superseded by foreign companies."

The only way that will ever happen is if the foreign companies are supported even more than they already are by their own governments.

btw there's no company out there right now capable of mass producing a vehicle more advanced than the Volt while meeting all current government regulations for road legal vehicles

folks need to realize there's a lot more to being an automaker than merely producing a proto-type

[KrissySim]

Posted: 11/17/08 at 9:45pm

That may be true of the Volt, but I'm also interested in seeing how the air cars fare next year, and how the RR4 looks the following year. I'm really curious about the RR4 for personal reasons. I want to see how much more fuel efficient it is, if at all.
Risk of foreign control

[Yawper]

Posted: 11/17/08 at 10:01pm

Air cars aren't going anywhere and the RR4 will never be a high volume car. RR doesn't do high volume cars.

As far as the risk of foreign control goes, as I posted before, it will only happen if their governments support them even more than they already do, or, at the extreme, if GM's Chinese partner buys GM.

If the domestic automakers fail so does the entire US supply chain, which the foreign companies also use. Some suppliers (and dealers) are already having problems just with the current downturn. That's rather moot anyway because if the US industry goes down no one here will be able to afford a new car. The US economy (and thus the nation) cannot survive without domestic manufacturing.
Updated On: 11/17/08 at 10:01 PM

[KrissySim]

Posted: 11/17/08 at 10:18pm

"Air cars aren't going anywhere"

I'm not so sure of that. These have the potential for a certain kind of driving if the technological issues are resolved. They do work, up to a point. A hybrid with a gasoline engine that runs a compressor has potential. But highways will have to look a lot different if these are to be used intercity and not just intracity.

My interest in these is personal, as I said, I 'd like to own an air car and an RR4, if either or both turns out as I hope. Time will tell.

Foreign manufacturers have already made significant inroads to the American auto industry since the 1970's. There's no reason why that couldn't continue under the right conditions.

[Yawper]

Posted: 11/17/08 at 10:25pm

They have gained marketshare but are by no means dominant. If the US share continues to gradually decline the foreigns can sustain, but if the US makers come crashing down nobody will be sustaining anything.

[KrissySim]

Posted: 11/17/08 at 10:50pm

The whole point is to try to prevent a crash, either by a loan bailout as you suggest, which is facing some controversy in Congress, or by a temporary take over by government as I suggest - but isn't even being seriously considered, and the success of that would depend on who would manage the show and how long the government would want to run it. But it's only an intellectual argument because it's not being considered.

Obama has his work cut out for him. The new Congress has its work cut out, too.

[Yawper]

Posted: 11/17/08 at 11:24pm

The problem is Congress and teh administration have totally mismanaged the credit market collapse and that's affecting everything else. Not only is the closed credit market why GM is looking to the government (historically they'd just be able to go to a bank for their financing - they have assets but none of the banks will lend now) but they're getting double-whacked because consumers can't get financing to buy any cars, hurting all automakers, foreign and domestic. Japan's inability to sell product here has now dragged Japan into recession, the Chinese have also reduced manufacturing for their exports of *everything* and the Euro zone is also in recession - Iceland has totally collapsed.

After a house a car is the next most expensive investmet American make. It only makes sense that after the housing market collapses the next market to be impacted is automotive. If the collapse can't be stopped at the automotive level all hell will break loose.

The saddest thing is that, as one of the top, if not the top, manufacturing state in the country, we here in Michigan started jumping up and down screaming about things a number of years ago, but everyone just dismissively blew us off as having a 'one state recession.' Updated On: 11/17/08 at 11:24 PM