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Whoaccio
Senior Member
That is why Chapter 11 exists. It entitles firms to drop contracts and seek protection from creditors, as well as enact major management shakeups. That was the entire point of the article, that the only way it is plausible for Detroit to survive is to allow them to file for Chapter 11. If they were just kept in the industry equivalent of a persistent vegetative state, they would have little chance of changing the underlying problems. Unless Detroit files for Chapter 11, it will be unable to reconcile these issues. If it can't address the underling problems, what is the point of subsidizing it?
Does anybody think Washington loaning Detroit 25b to make "green cars" it admits wont make money will actually save Detroit? No.
syn
Senior Member
This is what it ultimately comes down to for me. A bailout package will just delay the inevitable. Bankruptcy would be the best option given the situation. It would give these companies some protection from their creditors and really force them to improve the management and efficiency of their organizations.
I understand why people don't want to see these companies go (I don't either), but I don't see a publicly funded bailout package making them viable again. They need to seriously change.
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Hydrogen
Guest
These companies have not been persistently vegetative as you insist, they have made considerable profits in the past. They can do so again.
The main problem is operating capital right now. Even in Chapter 11, the time required to bring in large-scale change would very likely not free up money in time to allow them to keep operating over the near term.
cacruden
Senior Member
The "main" reason why "they" say that bailout is needed vs Chapter 11 first.... is that people will not buy cars from bankrupt companies.... I find that argument to be problematic - people are not buying cars now. If people will not buy a car from a bankrupt company - then they are not likely to buy a car from company on the verge of going bankrupt. Which means bailout loans after filing for Chapter 11, should have little risk.
Long Island Mike
Senior Member
Everyone: Should the Big Three US-Canadian Automakers be saved?
Answer: Yes-The Big Three Automakers should be saved-provided there are plenty of stipulations like getting rid of the robber barons in management who are making big money while the Companies go down and that these companies build fuel-efficient and hybrid vehicles instead of big gas-guzzling monster SUVs.
I agree with what some have said-losing all those good Autoworker jobs may push the USA into a deep recession-perhaps even a DEPRESSION-the dreaded "D WORD" that NO ONE-INCLUDING ME would ever want to see!
I am against a plain bailout but if stringent rules and regulations on these companies can be implemented lets see what they can do-I feel that the Rust Belt's economic survival may hinge on this! - Long Island Mike -
Answer: Yes-The Big Three Automakers should be saved-provided there are plenty of stipulations like getting rid of the robber barons in management who are making big money while the Companies go down and that these companies build fuel-efficient and hybrid vehicles instead of big gas-guzzling monster SUVs.
I agree with what some have said-losing all those good Autoworker jobs may push the USA into a deep recession-perhaps even a DEPRESSION-the dreaded "D WORD" that NO ONE-INCLUDING ME would ever want to see!
I am against a plain bailout but if stringent rules and regulations on these companies can be implemented lets see what they can do-I feel that the Rust Belt's economic survival may hinge on this! - Long Island Mike -
Hipster Duck
Senior Member
Sorry to revive an old, dead thread but this is too much to swallow. Remind me, again, why we are bailing out this moribund industry.
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Detroit Calls Emissions Proposals Too Strict
The New York Times
By NICK BUNKLEY
Published: January 26, 2009
DETROIT — Automakers said Monday that they were working toward President Obama’s goal of reducing fuel consumption, but rapid imposition of stricter emissions standards could force them to drastically cut production of larger, more profitable vehicles, adding to their financial duress.
Mr. Obama ordered the government on Monday to reconsider whether California and other states could regulate vehicle emissions to help control greenhouse gas emissions, a reversal of a position taken by the Bush administration.
The announcement came as General Motors and Chrysler are borrowing billions of dollars from the government to avoid bankruptcy, and as Toyotaprepares to report its first operating loss in 70 years. Shortly after the president spoke, General Motors said it would cut 2,000 jobs at plants in Michigan and Ohio because of slow sales.
The California regulations, if enacted today, “would basically kill the industry,†said David E. Cole, chairman of the Center for Automotive Research, an independent research organization in Ann Arbor, Mich. “It would have a devastating effect on everybody, and not just the domestics.â€
But Mr. Cole said he thought major modifications to the proposed standards were likely and that action was still “a long ways off,†giving the carmakers more time to overcome their financial problems and develop the technologies needed to sell a full lineup of compliant vehicles.
Right now, carmakers say they would be able to sell only their smallest, most fuel-efficient cars — models like the Toyota Prius, a hybrid whose sales have fallen sharply since gas prices began dropping last fall — because once-popular vehicles like pickup trucks made by Ford and G.M. are not efficient enough.
“I want clean air and clean water just like the next guy,†said Erich Merkle, an independent automotive analyst in Grand Rapids, Mich. “But in the real world, there would be consumer outrage with the fact that they’re limited to maybe two vehicles and there’s nothing there that would meet their family’s needs.â€
Environmental advocates who have long challenged the automakers’ opposition to the proposed California standards say such regulations will help the companies produce vehicles that consumers want.
Failing to invest in reducing emissions and increasing efficiency will only prolong Detroit’s problems, said David Doniger, climate policy director for the Natural Resources Defense Council.
“I think this is the pathway to their survival,†Mr. Doniger said. “If carmakers are going to survive in a world of volatile oil prices and global warming, they have to be making more efficient vehicles. When the economy comes back and people start buying cars again, they’re going to expect that gas prices are going to go up, and they’re not going to want the gas hogs that they used to want. Consumers’ tastes have changed in terms of what’s cool.â€
One concern automakers have with states regulating tailpipe emissions is that keeping up with a hodgepodge of standards would be difficult. They expressed support Monday for the ideal of cutting emissions but want their engineers to be concerned with meeting just one set of requirements nationally.
The Alliance of Automobile Manufacturers, which represents 11 carmakers, said it favored “a nationwide program that bridges state and federal concerns and moves all stakeholders forward, and we are ready to work with the administration on developing a national approach,†in a statement from the group’s chief executive, Dave McCurdy.
G.M., the only Detroit automaker to issue its own response Monday, said it was “working aggressively on the products and the advance technologies that match the nation’s and consumers’ priorities to save energy and reduce emissions.†But the company also emphasized the need for “a comprehensive policy discussion that takes into account the development pace of new technologies, alternative fuels and market and economic factors.â€
Automakers are operating in the worst market since the early 1980s. New vehicle sales fell nearly 19 percent in 2008 and are universally expected to be even lower in 2009.
Representative John D. Dingell, Democrat of Michigan, who has long been one of the Detroit automakers’ strongest allies in Washington, praised the president’s attitude toward global warmingand expressed hope that the administration would act only after carefully studying the effect that “setting a patchwork of different emission standards†would have.
“President Obama and I both share the goal of energy independence and a cleaner environment for our children and grandchildren,†Mr. Dingell said in a statement. “We have a unique opportunity in history to address the issue of global climate change and we must take bold and balanced action.â€
Mr. Cole, the Center for Automotive research chairman, said he believed Congress would ensure Detroit would be able to live with any new standards.
---------------------------------------------------------------
Detroit Calls Emissions Proposals Too Strict
The New York Times
By NICK BUNKLEY
Published: January 26, 2009
DETROIT — Automakers said Monday that they were working toward President Obama’s goal of reducing fuel consumption, but rapid imposition of stricter emissions standards could force them to drastically cut production of larger, more profitable vehicles, adding to their financial duress.
Mr. Obama ordered the government on Monday to reconsider whether California and other states could regulate vehicle emissions to help control greenhouse gas emissions, a reversal of a position taken by the Bush administration.
The announcement came as General Motors and Chrysler are borrowing billions of dollars from the government to avoid bankruptcy, and as Toyotaprepares to report its first operating loss in 70 years. Shortly after the president spoke, General Motors said it would cut 2,000 jobs at plants in Michigan and Ohio because of slow sales.
The California regulations, if enacted today, “would basically kill the industry,†said David E. Cole, chairman of the Center for Automotive Research, an independent research organization in Ann Arbor, Mich. “It would have a devastating effect on everybody, and not just the domestics.â€
But Mr. Cole said he thought major modifications to the proposed standards were likely and that action was still “a long ways off,†giving the carmakers more time to overcome their financial problems and develop the technologies needed to sell a full lineup of compliant vehicles.
Right now, carmakers say they would be able to sell only their smallest, most fuel-efficient cars — models like the Toyota Prius, a hybrid whose sales have fallen sharply since gas prices began dropping last fall — because once-popular vehicles like pickup trucks made by Ford and G.M. are not efficient enough.
“I want clean air and clean water just like the next guy,†said Erich Merkle, an independent automotive analyst in Grand Rapids, Mich. “But in the real world, there would be consumer outrage with the fact that they’re limited to maybe two vehicles and there’s nothing there that would meet their family’s needs.â€
Environmental advocates who have long challenged the automakers’ opposition to the proposed California standards say such regulations will help the companies produce vehicles that consumers want.
Failing to invest in reducing emissions and increasing efficiency will only prolong Detroit’s problems, said David Doniger, climate policy director for the Natural Resources Defense Council.
“I think this is the pathway to their survival,†Mr. Doniger said. “If carmakers are going to survive in a world of volatile oil prices and global warming, they have to be making more efficient vehicles. When the economy comes back and people start buying cars again, they’re going to expect that gas prices are going to go up, and they’re not going to want the gas hogs that they used to want. Consumers’ tastes have changed in terms of what’s cool.â€
One concern automakers have with states regulating tailpipe emissions is that keeping up with a hodgepodge of standards would be difficult. They expressed support Monday for the ideal of cutting emissions but want their engineers to be concerned with meeting just one set of requirements nationally.
The Alliance of Automobile Manufacturers, which represents 11 carmakers, said it favored “a nationwide program that bridges state and federal concerns and moves all stakeholders forward, and we are ready to work with the administration on developing a national approach,†in a statement from the group’s chief executive, Dave McCurdy.
G.M., the only Detroit automaker to issue its own response Monday, said it was “working aggressively on the products and the advance technologies that match the nation’s and consumers’ priorities to save energy and reduce emissions.†But the company also emphasized the need for “a comprehensive policy discussion that takes into account the development pace of new technologies, alternative fuels and market and economic factors.â€
Automakers are operating in the worst market since the early 1980s. New vehicle sales fell nearly 19 percent in 2008 and are universally expected to be even lower in 2009.
Representative John D. Dingell, Democrat of Michigan, who has long been one of the Detroit automakers’ strongest allies in Washington, praised the president’s attitude toward global warmingand expressed hope that the administration would act only after carefully studying the effect that “setting a patchwork of different emission standards†would have.
“President Obama and I both share the goal of energy independence and a cleaner environment for our children and grandchildren,†Mr. Dingell said in a statement. “We have a unique opportunity in history to address the issue of global climate change and we must take bold and balanced action.â€
Mr. Cole, the Center for Automotive research chairman, said he believed Congress would ensure Detroit would be able to live with any new standards.
H
Hydrogen
Guest
Emissions and fuel efficiency are really two different issues. It's troubling when they always end up being confused as essentially the same thing.
Engines would release less carbon dioxide if the catalytic converter was removed. Of course, other emissions would increase.
Engines would release less carbon dioxide if the catalytic converter was removed. Of course, other emissions would increase.
Hipster Duck
Senior Member
As I recall, Obama had insisted that tougher emissions standards be part of the auto bailout conditions.
Link to News Article (12/20/2008)
Link to News Article (12/20/2008)
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gabe
Guest
We are bailing them so we can all keep our jobs i don't work in the auto industry but i know i will be effected if we lose the big 3. Think how many f***** business would go under if we lost Ford GM and Chrysler. You people get enjoyment out of companies crashing. Take walk around town and see the going out of business sales going on right now as we speak.
Now think about losing the big 3 what a impact that would make on downtown's.
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greatscott
Guest
The latest I heard was that around 3 million US jobs would be lost as a result of the failure of the big 3 automakers, both direct job loss and indirect job loss (suppliers, partners, etc.).
That would be a tough blow for an already hurting economy. It seems that Washington has faith in the big 3 to make changes and survive. I am hopeful, but not even close to convinced.
That would be a tough blow for an already hurting economy. It seems that Washington has faith in the big 3 to make changes and survive. I am hopeful, but not even close to convinced.
Hipster Duck
Senior Member
First of all, gabe, government is not (or should not be) in the business of saving jobs. If it were, then it would cut a check with the soon to be ailing development and construction industry which employs more people in the GTA than the auto sector. This is a case of the squeaky wheel gets the grease, and the auto sector has been very vocal in demanding that the government save blue collar jobs that, whether right or wrong, are totally at odds with the reality of employment compensation in the 21st century.
Secondly, the American auto industry is a dying business, like the British auto industry before it, or like all industries or business models that simply became obsolete, whether due to changes in technology or organizational practice. It makes no sense to keep these dying industries afloat because they just divert resources away (and in a recession, resources are in short supply) from more profitable, innovative ventures. If your company and the thousands of other auto suppliers out there are going out of business, consider diversifying. It's not like you didn't see this coming. Nokia no longer sells lumber and 3M's (Minnesota Mining and Manufactuing) primary business is no longer mining in Minnesota. I recognize that many suppliers will not be so lucky - the auto industry was a voracious consumer of resources and technology - but the death of this sector was inevitable.
Finally, if we disregard everything I've said up to this point, the bailout had some strings attached in the form of improved fuel efficiency and emissions standards. To reneg these responsibilities speaks volumes about the big 3's commitment to innovate or change and reaffirms their cavalier attitude toward receiving the copious amounts of corporate welfare with which we have bestowed them. Talk about biting the hand that feeds you.
Here in the US, my employer, a state-financed postsecondary institution of higher learning, had to take a massive cut - 35% of our annual budget. Positions will be cut and entire departments closed. Considering that our mission is to make society more competitive and foster innovation, I find it galling that an industry where high school dropouts make the same as middle managers by screwing together obsolete cars for a market that doesn't want them, are so successful at getting exactly what they want.
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gabe
Guest
Thank god people like you aren't running my country.
H
Hydrogen
Guest
It sounds like you are stating a philosophical position as if it were a fact. Governments have been creating work and preserving employment pretty much since people got around to creating governments some time ago.
Hipster Duck
Senior Member
Then let me say that government seems to be in the business of saving a selection of jobs, and my belief is that it shouldn't. I don't think I'm trotting out facts here.
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