10-26-2008, 04:11 PM | #1 |
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How Detroit Drove Into A Ditch.
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10-26-2008, 05:00 PM | #2 |
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Maybe bankrupcy is the only way to break the midsets there and start over without the cultural and financial baggage. It invariably happens to all businesses that stop being competitive. It's too bad so many people will lose their jobs, but this recession is just getting started.
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10-26-2008, 05:20 PM | #3 |
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I suspect a bankruptcy may be used in the same way as the airlines used them. Shed some obligations and continue operations.
Chrysler is on life support, Ford is in the ICU, and GM, while the healthiest of the bunch, is wounded (but not a mortal injury ; -). |
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10-28-2008, 04:14 PM | #4 | |
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I too feel pity for the workers who had nothing to do with what has proven to be a disaster in management, whom if I was judge and jury would be fired without severance. Yes, this downturn is just getting started. |
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10-28-2008, 04:55 PM | #5 | |
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From what I read I see a different battlefield, all three are dying without government funding. |
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10-28-2008, 05:53 PM | #6 |
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10-30-2008, 12:09 AM | #7 |
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I heard about Bill Heard and their poor sales/service tactics compounding their problems and forcing them to close. In any case, its looking really bad for Americas 3. Good articles.
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11-10-2008, 11:12 AM | #8 |
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Since I believe we are witnessing the transformation of the once "Big 3," I've attached the following articles from today's Wallstreet Journal.
"Automakers Force Bailout Issue" http://online.wsj.com/article/SB122616278065311225.html "Detroit Auto Makers Need More Than a Bailout" http://online.wsj.com/article/SB122628230122212449.html "Nationalizing Detroit" http://online.wsj.com/article/SB122628060458212379.html Today Deutsche Bank downgraded GM to "sell" price target $0.00! In the meantime, GM dealerships continue to close nationwide. Guess who's likely to pay for this bailout? |
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11-10-2008, 04:11 PM | #9 |
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11-15-2008, 08:47 AM | #10 |
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"Just Say No to Detroit" from today's Wall Street Journal.
http://online.wsj.com/article/SB122669746125629365.html |
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11-15-2008, 09:23 AM | #11 | ||
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That's just comical coming from WSJ. Someone explain to me exactly why the US taxpayers should fork over $700 Billion to save the financial sector, and not $25 Billion to save one of the largest single employment sectors in the country? The fact that GM has made mistakes over the years is beside the point right now. The very simple fact is, the lost revenue, and unemployment benefits the government will have to fork over when GM goes under DWARFS the $25 Billion needed for them to stay afloat. Direct GM employment is only around 150k people. If it were only those people who were about to lose their jobs, I'd say "screw it" let em go. They created the problem. But it's not. The indirect job losses from a GM shutdown will run well over half million mark, and bankrupt everything from restaurants to doctors offices. How a publication that claims (WSJ) to be a source for solid financial expertise can't see that is beyond my understanding...oh but wait...they said there was no housing bubble, and predicted oil was headed to $200/bar. Are they seriously saying that Lehman Bros and some of the other large firms that were just raking in the cash didn't destroy investment capitol? Seriously?! Catering to Wall Street is EXACTLY why GM (and a lot of other companies) are in the shape they're in right now, and I'm truly disgusted Complete and utter trash. |
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11-15-2008, 09:37 AM | #12 | |
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GM, Ford, Chrysler, a national disgrace but still needs saving: http://www.slate.com/id/2204582/ I would not feel comfortable buying a car from a bankrupt car company. Its just me.
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11-15-2008, 11:03 AM | #14 |
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The best hope for them is some kind of mandated restructuring, either through the bankrupcy court or as a condition for a Federal bailout. The goal in either one will be to void the contracts, replace management and make the hard decisions ncessary for the companies to remain viable. Any way you look at it, the UAW will be eating crow. The poor strategic decisions and a ridiculously rigid and antiquated union has pretty much killed these companies. The current crisis just accelerated their downfall.
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11-16-2008, 12:28 PM | #15 |
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Here are various opinions regarding Detroit's bailout.
Ben Stein, "Bail Them Out...it's a matter of national security" http://www.foxnews.com/video2/video0...com/yourworld/ Neil Cavuto, "Common Sense" http://www.foxnews.com/video2/video0...com/yourworld/ "Bailout Needed? Does the economy need the auto industry?" http://www.foxnews.com/video2/video0...w.foxnews.com/ "Pelosi Outlines Conditions for Auto Industry Aid" http://www.foxnews.com/story/0,2933,452667,00.html BTW, I'm not a FOX News fan, but flipping through the channels I learnt that Chrysler will be giving $30 or $40 million in bonuses to their top executives while they're going to Washington for a hand-out. Isn't Chrysler a privately held company? Meanwhile, there's something wrong with losing such a large manufacturing base. |
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11-16-2008, 01:31 PM | #16 |
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In a nutshell all 3 have lost our trust. It's going to be very hard for them to gain it back. Only mechanics and die hard car buffs will know when it's crap or not. As much as a social paradigm shift happened when we used to see
"Made in Japan" meant low end stuff Now when we see Chrysler/Ford/GM meant low end stuff and bad value So how can they change that??? And do they have enough time? We shall see. EspressoBoy |
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11-16-2008, 01:36 PM | #17 | |
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And that's the real issue at hand. It's very obvious that all of these companies have suffered from decades of poor management, and some of them (the managers) deserve to be taken out and flogged. If it were the fat cats who were going to suffer after this is all said and done, I'd be forming a mob calling for the downfall of all three, but sadly that's not the case. The people who are really going to suffer are going to be the much lower paid support. The guys working in the fast food places surrounding the plants, the bartenders at the bar on the corner, the hair dressers, basically the lower end of the pay scale. Next hardest hit will be the people who work for the suppliers. Not all of them are unionized and making way more money than they're worth. Entire towns will be bankrupted, and have to stop offering basic services such as police and fire protection. Then those people are going to be looking for jobs as well. If GM goes under in December, I'll probably be out of work by the end of March. My division is pretty diversified, but out parent company is headquarted in Detroit, and stands to take a huge hit if this happens. I've been able to see it coming, and will have prepared well enough for it by then to make it through the summer without too much difficulty, but there are a lot of people out there who aren't able to do that, and it's not going to be good for any of them. |
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11-19-2008, 10:35 PM | #18 |
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"Auto Bailout Would Create 'Unfair Playing Field'", from CNBC.
This is an angle that I have not heard addressed by US media. http://www.cnbc.com/id/15840232?video=933012324 From tomorrow's Washington Post, "As Support for Auto Aid Stalls, Efforts Shift to GOP Loan Plan" http://www.washingtonpost.com/wp-dyn...11903846&s_pos= |
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11-20-2008, 01:40 AM | #19 | |
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http://info.detnews.com/video/index.cfm?id=1189 |
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11-20-2008, 07:44 AM | #20 | |
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I agree the Big 3 need to be bailed out. But, they need to start innovating, and bringing products to market that people want. As a person who has purchased 3 new vehicles in the last 2.5 years, there was NOTHING on the table from GM, Ford, or Chrysler that made me want to give them my hard earned $$$. Thus my spending power went elsewhere. edit: Oh, and by the way, note to the Big 3 automakers. Maybe try flying commercial next time you go and beg for money. Story here.
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11-20-2008, 08:30 AM | #21 |
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Here's an article I agree with
http://www.nytimes.com/2008/11/19/op...mney.html?_r=2
Op-Ed Contributor Let Detroit Go Bankrupt By MITT ROMNEY Published: November 18, 2008 IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed. Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check. I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers. First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers. That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable. Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations. The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.” You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture. The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat. Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn. Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet. It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers. But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost. The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk. In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check. |
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11-20-2008, 08:51 AM | #22 |
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Here's where I disagree with Romney, GM tried management from outside in the late '90s (when they brought in the Proctor & Gamble gang) and they lost their way badly. You need management that has built cars profitably in the past. It may mean taking a chance on a foreign national running a US car company, but it'd be better than letting the COO of Dunkin' Donuts run GM. ; -)
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