The US Big Three want more $$$

[StAndArdAU]

http://au.biz.yahoo.com/081205/33/22rhm.html

Hopefully not already posted. Key points of interest:

Ford CEO Alan Mulally was asked whether the failure of one of the Big Three could result in the demise of its competitors.

"If one of us goes in, it has the potential to take all of us in," he said.

&

United Auto Workers chief Ron Gettelfinger warned on Thursday that time was short.

"I believe that we could lose GM by the end of the month," he said.

[FPV8U]

Not looking good over there which in Turn is very bad for over here...

2009 is going to be a very interisting year..

[Romulus]

It's their own fault, this is what happens when you build vehicles that return 5mpg. GM's attitude was always what's good for GM is good for America. "We build it, you just buy it, ok?!"

The problem for the big three is their customers want better quality cars that burn less fuel, they've realised it 10 years too late. However, the government cannot let any of them go broke as it will affect over a million people directly and indirectly employed by the big three car manufacturers.

What I find hypocritical is the US government is balking at lending $50b to the automotive industry, yet they roll out the hundreds of billions of dollars to the support the financial industry who've had their noses in the trough for years, without any accountability used:

[StAndArdAU]

Is it possible for these manufacturers to save money simply by cutting down on vehicle production numbers?

like, whats the ratio of cars that die everyyear to new cars produced?

[Yaw]

I know I will get flamed for this, but Governments cannot keep bailing out corporate business. It is simply unsustainable. I know the job losses and the welfare the governments would have to put up, but this is the system we have called capitalisim, the alternitive road we are fast going down is socialism, we are in danger of becomming the very thing most previous wars have been about. If these companies/banks/multi national coproate's do not fail when they are due to, we are just throwing good money after bad and postponing the inevitable. Wheather that be GM, Crylser or Ford. The stockmarket needs to have consquenses otherwise every company will take bigger risks with the knowledge that the government will bail us out.

[chevypower]

Originally Posted by TVS Super Pursuit

It's their own fault, this is what happens when you build vehicles that return 5mpg.

Definitely the biggest load of crap I have read all day!

[SB076]

Originally Posted by StAndArdAU

Is it possible for these manufacturers to save money simply by cutting down on vehicle production numbers?

like, whats the ratio of cars that die everyyear to new cars produced?

Not really cutting production may reduce some cost, but it also reduces return on investment (assuming you can selll the product) Plus if you cut production you need to cut jobs.... which leads to payouts that the companies might not be able to afford. I partially agree with Yaw, governments cant keep bailing out businesses (they will run out of money - the governments that is) But there are consequences to letting them fall that is what everyone is worried about. I personally think the problems started years ago, when businesses got greedy striving for massive profits etc, lending/borrowing money when they shouldnt have etc. Now everything is catching up and people are finding out things are not worth as much as they thought or had valued - thats just my opinion.

Pretty sure the US automakers pay the pensions of their former employees, is this correct?

[djst]

It makes you wonder where is it going to end.
GM need 4 billion before the end of the month to keep operating,thats just to keep the doors open.
It looks like the Senate will vote and pass a 15-17 billion dollar Bridge loan for GM and CHRYSLER,to get them through to March,if the US economy does not get worse.
This money then will probably have conditions on it.
Then there is still the question of how much more money is needed to reform the companies and turn them around to operating and being profitable.
People have estimated it could be as much as 120-140 billion of US taxpayers money. :

[vztrt]

Obama is going to put 5-700 billion US into the economy when he starts up.
http://business.theage.com.au/busine...d9.html?page=1


From the same article this is what they're saying about the big three.

Originally Posted by The Age

During the hour-long interview, Obama also said that while it's not an option to let the Big Three US automakers ``collapse'' amid a recession and throw more workers out of jobs, any government loans or aid they get must be conditioned on the companies revamping their business and their products.

That also may mean management changes at General Motors Corp., Ford Motor Co. or Chrysler LLC, he said. The executives must abandon their ``head-in-the-sand'' approach and develop a ``sustainable business model'' that begins by building fuel efficient vehicles.

``They can't keep on putting off the changes that they frankly should have made 20 or 30 years ago,'' Obama said.

[Romulus]

Originally Posted by chevypower

Definitely the biggest load of crap I have read all day!

How do you figure that? I mean, aren't these car manufacturers going cap-in-hand to the Fed government asking for money because their cars aren't selling? What do you think is the end result of building cars of poor quality and poor fuel economy? Ummmm, lack of car sales perhaps?

[Clint Eastwood]

Originally Posted by TVS Super Pursuit

How do you figure that? I mean, aren't these car manufacturers going cap-in-hand to the Fed government asking for money because their cars aren't selling? What do you think is the end result of building cars of poor quality and poor fuel economy? Ummmm, lack of car sales perhaps?

I agree 100%,proping up failing car companys because they are unable to produce a product that sells is beyond stupidity,why should the tax payer have to bail out failed companys? It is the tax payer that stopped buying there products.

It is unfortunate that job losses will take place,but consumers have spoken with there feet by walking away from the types of cars ford and gm produce,and these companys have waited ten years to long to react to a very changed market.

[vztrt]

Originally Posted by Clint Eastwood

It is unfortunate that job losses will take place,but consumers have spoken with there feet by walking away from the types of cars ford and gm produce,and these companys have waited ten years to long to react to a very changed market.

Ford turned a profit in the qtr before the credit crunch hit.

[Clint Eastwood]

Originally Posted by vztrt

Ford turned a profit in the qtr before the credit crunch hit.

Whats your point? They are asking for money now.

Big car sales have been dropping for years, and the big three have just sat back and watched it happen.

[vztrt]

Originally Posted by Clint Eastwood

Whats your point? They are asking for money now.

Big car sales have been dropping for years, and the big three have just sat back and watched it happen.

Means that Ford is turning it around. Getting their line up right, and making it a more efficient operation. They want to have access to this money in case they require it unlike GM that needs it to survive. Ford have already said they think they can survive without another loan but if they need it they want to have the cashflow to survive.

[Clint Eastwood]

Originally Posted by vztrt

Means that Ford is turning it around. Getting their line up right, and making it a more efficient operation. They want to have access to this money in case they require it unlike GM that needs it to survive. Ford have already said they think they can survive without another loan but if they need it they want to have the cashflow to survive.

Fair points,

The point I was making in my original post was that failed companys shouldnt be propped up by government handouts,regardless of what business they are in.

Cash handouts to mismanaged companys is a total waste of money and is just prolonging the inevitable,if these companys are bailed out, they owe it to the tax payer to re-structure the company,so they dont need another hand out in 5 years.

[Dave_au]

Originally Posted by vztrt

Means that Ford is turning it around. Getting their line up right, and making it a more efficient operation. They want to have access to this money in case they require it unlike GM that needs it to survive. Ford have already said they think they can survive without another loan but if they need it they want to have the cashflow to survive.

I don't think it's that simple; 80% of the parts suppliers in the automotive industry also supply parts to other vehicle manufacturers. If one major manufacturer collapses, this will place distress on the parts suppliers, who at least will be suffering from reduced margins on production. The result will be either the eventual collapse of the supplier, or the supplier re-negotiating their production margins with whatever company is left at the end of the day.

[vztrt]

Originally Posted by Dave_au

I don't think it's that simple; 80% of the parts suppliers in the automotive industry also supply parts to other vehicle manufacturers. If one major manufacturer collapses, this will place distress on the parts suppliers, who at least will be suffering from reduced margins on production. The result will be either the eventual collapse of the supplier, or the supplier re-negotiating their production margins with whatever company is left at the end of the day.

Yeah I know what your saying. This is where the problem lies. Bailing out the big 3 keeps the suppliers at work. Also with the amount of jobs being lost over there it would be a bit scary to add another large amount. But in saying that, where does this end. I guess the idea of getting the money by showing a plan to stay profitable is better then just giving tax payer money away.

[Bent8]

Originally Posted by vztrt

Obama is going to put 5-700 billion US into the economy when he starts up.
http://business.theage.com.au/busine...d9.html?page=1


From the same article this is what they're saying about the big three.

He can add it the $6.3 trillion so called "bailout"....

http://articles.moneycentral.msn.com...r-bailout.aspx

[peachey80]

Originally Posted by Dave_au

I don't think it's that simple; 80% of the parts suppliers in the automotive industry also supply parts to other vehicle manufacturers. If one major manufacturer collapses, this will place distress on the parts suppliers, who at least will be suffering from reduced margins on production. The result will be either the eventual collapse of the supplier, or the supplier re-negotiating their production margins with whatever company is left at the end of the day.

If pressure is put on the parts suppliers, yes they will most likely have to let some people go. But if there is still demand for these parts from 1 or 2 of the big three, then I can't see why they wouldn't still operate, albiet a smaller operation. Afterall, they must be making a profit, they are not asking the gov for money.
So, yes I agree, they will have to re-structure, but could still be a viable business if some demand is still there.
I personally think one needs to go. I think someone mentioned it earlier, how many new cars are being built every day ??? Alot more than would be putting on the scrap heap I dare say, it's all about supply and demand, and at the moment, supply is heavily overtaken demand. Loss of jobs.... yes, but, sad to say, I think it's inevitable.

[SB076]

Originally Posted by peachey80

If pressure is put on the parts suppliers, yes they will most likely have to let some people go. But if there is still demand for these parts from 1 or 2 of the big three, then I can't see why they wouldn't still operate, albiet a smaller operation. Afterall, they must be making a profit, they are not asking the gov for money.
So, yes I agree, they will have to re-structure, but could still be a viable business if some demand is still there.
I personally think one needs to go. I think someone mentioned it earlier, how many new cars are being built every day ??? Alot more than would be putting on the scrap heap I dare say, it's all about supply and demand, and at the moment, supply is heavily overtaken demand. Loss of jobs.... yes, but, sad to say, I think it's inevitable.

The will lose economies of scale, which will lead to increases in costs from these suppliers, however these increases wont be accepted by the remaining manufacturers and as such this will close down the suppliers. Not to mention less volume means less investment will take place which means they cant afford to invest in new technologies, which will lead to them becoming uncompetitive and losing more work.

[peachey80]

Originally Posted by SB076

The will lose economies of scale, which will lead to increases in costs from these suppliers, however these increases wont be accepted by the remaining manufacturers and as such this will close down the suppliers. Not to mention less volume means less investment will take place which means they cant afford to invest in new technologies, which will lead to them becoming uncompetitive and losing more work.

So why shouldn't the suppliers look at there costs and way of doing smart business by re-structuring there own company's. Why is it just the car manufactures. It's in the suppliers best interest to keep their costs down so they still have a market to sell to.
I'm sure something could be negotiated between the suppliers and remaining car manufactures. Yes, they will make less, and yes that will impact on developing new tech, but they wont be alone. The majority of company's will not be making the profit they have been used to, and develepment will slow, that's the result of recessions.

[chevypower]

Originally Posted by TVS Super Pursuit

How do you figure that? I mean, aren't these car manufacturers going cap-in-hand to the Fed government asking for money because their cars aren't selling? What do you think is the end result of building cars of poor quality and poor fuel economy? Ummmm, lack of car sales perhaps?

5mpg Give me a friggen break. That is not correct, and even as an exaggeration is misleading, nor is the statement funny, it was just, as I said, the biggest load of crap I read all day.

The Impala, Focus, Malibu, Fusion, CTS, Acadia, Edge (just to name a few) all get good mileage in comparison to their Japanese equivalents. The fact is, every car manufacturer is down in sales (including the Germans and Japanese), and the big three are obviously overstaffed and have too many overheads. I don't know why people think of Toyota as being innovative or any better with fuel consumption, but Toyota has fooled many people.

[chevypower]

Originally Posted by Clint Eastwood

I agree 100%,proping up failing car companys because they are unable to produce a product that sells is beyond stupidity,why should the tax payer have to bail out failed companys? It is the tax payer that stopped buying there products.

It is unfortunate that job losses will take place,but consumers have spoken with there feet by walking away from the types of cars ford and gm produce,and these companys have waited ten years to long to react to a very changed market.

Hold on, ten years ago, everyone wanted a Hummer or an Excursion.... Customers may be to blame too?

[SB076]

Originally Posted by peachey80

So why shouldn't the suppliers look at there costs and way of doing smart business by re-structuring there own company's. Why is it just the car manufactures. It's in the suppliers best interest to keep their costs down so they still have a market to sell to.
I'm sure something could be negotiated between the suppliers and remaining car manufactures. Yes, they will make less, and yes that will impact on developing new tech, but they wont be alone. The majority of company's will not be making the profit they have been used to, and develepment will slow, that's the result of recessions.

The current remaining suppliers I am sure have done that, given the amount of cost disclosure required to supply the automotive manufacturers, the suppliers dont make big profits (a lot dont make any profits - thats why you are seeing so many suppliers close their doors both here and overseas) The automotive industry has volume and thats why a lot of suppliers have tried to get auotmotive work. However suppliers need to be competitve with overseas suppliers (are regulary benchmarked), able to absorb material and labor cost increases and also provide productivity cost downs each year.

[peachey80]

Originally Posted by SB076

The current remaining suppliers I am sure have done that, given the amount of cost disclosure required to supply the automotive manufacturers, the suppliers dont make big profits (a lot dont make any profits - thats why you are seeing so many suppliers close their doors both here and overseas) The automotive industry has volume and thats why a lot of suppliers have tried to get auotmotive work. However suppliers need to be competitve with overseas suppliers (are regulary benchmarked), able to absorb material and labor cost increases and also provide productivity cost downs each year.

Yep, I agree.
But at the end of the day, we probably need some culling. As I mentioned, supply far outweighs demand at the moment. If any or all of the "big 3" get a hand out, I think it will just delay the inevitable, if there is no market to buy all these cars that are being built, they will still go under. IMO.

[mcnews]

This mock advertisement says it all really :-)

[Clint Eastwood]

Originally Posted by chevypower

Hold on, ten years ago, everyone wanted a Hummer or an Excursion.... Customers may be to blame too?

Thats what i was saying,the customer has been walking away from gas guzzling tanks for years, why havent car companys adapted to consumer trends?

[vztrt]

Originally Posted by chevypower

I don't know why people think of Toyota as being innovative or any better with fuel consumption, but Toyota has fooled many people.

It's called perception. You think American brand and you think big and gass guzzling. Japanese brand you think small and econimical.

[vztrt]

Money going to the big three.....update

http://business.theage.com.au/busine...1210-6vqu.html

Originally Posted by the age

$22b car bail-out plan nears conclusionDecember 10, 2008 - 6:35PM
US Congressional Democrats and White House negotiators agreed on the outlines of a $US15 billion ($23 billion) plan to give General Motors Corp. and Chrysler LLC federal loans to stay in business while requiring them to restructure their operations.

A senior administration official said tonight the White House reached an agreement in concept with lawmakers and that negotiations on details were continuing.

``Bipartisan hard work has paid off and I understand an agreement has been reached,'' Senator Carl Levin of Michigan said in a statement. ``This gets us to the 20-yard line, but getting over the goal line will take a major effort, particularly in the Senate where we need 60 votes.''

GM and Chrysler have said they need at least $US14 billion in combined aid to keep from running out of cash by early next year.

The legislation would include protections for taxpayer money, including the appointment of a so-called car czar who could force the companies into Chapter 11 bankruptcy if the companies don't come up with a business plan by the deadline of March 31, according to the official, who briefed reporters on the condition of anonymity.

The car czar has until that date to negotiate with the companies and stakeholders to come up with a plan that satisfies the definition of long-term viability as set out in the legislation. The czar, who would be appointed by President George W. Bush, is required to call the loan if they haven't agreed to a strategy by the deadline.

30-Day extension

The senior administration official said the president's designee could grant one 30-day extension beyond the March 31 deadline if he or she decides there are ongoing, good-faith negotiations to come up with a road map for the future.

``We are making progress and are optimistic that we will have a reasonable compromise that will protect taxpayers and ensure the long-term viability of the American auto companies,'' Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi of California, said in an e-mailed statement.

The measure will not include a provision sought by Democrats that would have barred automakers accepting federal loans from suing states that seek to impose tougher auto-emission standards than are set by the federal government, the administration official said.

Block transactions

The car czar would have the power to block the automakers' financial transactions over a certain amount. The administration official said the level at which the government could intervene would be for transactions ``significantly higher'' than the $US25 million in earlier drafts. The official didn't specify the new figure.

The official said the bill would seek to ensure that federal loans are not the first in a series to an industry that refuses to make fundamental changes, by barring the automakers from getting additional federal funds if they reach the deadline without an acceptable plan for viability.

The administration will consult with representatives of President-elect Barack Obama on the appointment of the car czar, the official said.

Levin, a Michigan Democrat, called on Bush and Obama to personally push for the measure's passage. Some Republicans in Congress are resisting giving the loans.

`Can't manage itself'

Senator Tom Coburn, an Oklahoma Republican, would support an effort to filibuster the bill, his spokesman said earlier today. ``He believes it's naive to trust Congress to manage the auto industry when it can't manage itself,'' said Coburn spokesman John Hart.

Jim DeMint of South Carolina said Senate Republicans have the 41 votes needed to force Democrats to allow amendments to the proposal.

Also earlier, Senate Majority Leader Harry Reid warned lawmakers may be in session this weekend if objections are raised to voting earlier. ``Everyone should understand we're going to work until we complete this,'' said Reid, a Nevada Democrat, on the Senate floor.

Senator Judd Gregg of New Hampshire, the top Republican on the Budget Committee, told reporters he would support the bill if the czar had authority to require debt restructuring and to force unions to accept reduced pay and benefits.

``I could support something I felt was going to lead to fundamental restructuring,'' Gregg said.

`Bone of contention'

Representative Edward Markey, a Massachusetts Democrat, said that Democrats' desire to bar automakers from suing over state-mandated emission requirements was ``a big bone of contention,'' adding that disagreement over the provision could unravel the deal.

GM and 21 carmakers in June lost a bid in court to block California from quickly enforcing carbon-reduction rules if the state wins Environmental Protection Agency approval for greenhouse-gas emission caps.

Ford Motor Co. yesterday fell 15 cents, or 4.4%, to close at $US3.23 in New York Stock Exchange composite trading. GM fell 23 cents, or 4.7%, to $US4.70.

Ford, which would be eligible to apply for the loans, said again yesterday it doesn't expect to.

[mik]

does anyone think that greedy governments and oil companies have played a part in these companies demise? ....i do, if fuel had not sky rocketed in the last few years i suspect the status quo would have remained the same, in one way its probably the shake up the industry needed to become more efficient.