cure (possible) for auto industry

[sunburnwilly]

Why not have the fat cat oil industries bail out the auto industry ?

[michael hurd]

Being in the automotive repair and towing business... for the last 8-10 years the big 3 have been churning out JUNK. Why is it that the foreign made products go up and down the road, with less grief than our "North American" made vehicles?

Answer me this, does a Honda Civic made in Alliston, Ontario constitute "North American" made? Foreign companies are building vehicles on our own ground and handing the big 3 it's collective... well you get the picture.

If you took all the models of vehicles produced by Honda, Toyota, and Suzuki collectively, I don't think they would equal the number of vehicles produced by General Motors.

[kevinmi]

Here is an example of foreign craftmenship. The driver just driving down the road and the bumper falls off and messes up the back end. I'll take an American car, Thank you.

Top Notch!

[Jeff Matthews]

P.S.

#1. 30 years ago CEO pay was about 50X the average worker's pay. Today it is 500X and moving NORTH.

#2. Reviewing personal wealth, all the growth has occurred in the top quintile, whlle the others are flat or down. This, in spite of productivity gins compounded annually!

Those two changes mean something. Something dramatic, and not made up, and not a part of any paranoia.

You tell 'em, Mark! Incidentally, though, I have to ask: "Supposing the decision of executive pay is made by a board of directors, and the board of directors is elected by the shareholders, hasn't the process been fair and according to the rules?"

If you don't like how a company is run, you either don't buy stock in it, or you sell what stock in it that you have, or you conince co-sharehodlers to vote the way you want them to. I don't know what legislative changes could really justifiably interfere with the process of corporate management.

As to wealth and income distribution chnages over time, you are right. I do agree with your premise that the ethic of wanting more for less is fair game for everyone. I don't think, however, that just coming to that observation would change much of anything.

[oldtimer]

In theory jeff. However in practice one or a few shareholders control the majority of the stock voting rights. It's an inside job.

[Jeff Matthews]

True, Oldie, but those were the known rules going into the game. If you own 51%, and I buy John's 49%, I know in advance you call the shots. It's not exactly like I was deceived. The thing I like about the system as it exists now is that the rules are pretty straight-forward. I would hate to see what legislation would look like and work like in the other world where executive pay is controlled. Of course, they do have team salary caps in the NFL, and those seem to work..... It's just a bit of an oddity to run from the free market when the rules are know. After all, gambling... err.... I mean investing in a company where you own a tiny, miniscule interest, in reality, is.... gambling. So, why do we need to change the rules of gambling? If Congress says to Vegas: "Henceforth, a straight beats a full house," will much be accomplished?

[oldtimer]

Don't confuse me for arguing for legislation on this point. Should we legislate all executive pay? I agree that is a slippery slope. In sports only the workers pay is capped by the way. Of course we can all figure out why. However, if execs have run a company into the ground and then ask for taxpayer money to stay afloat then yes the rules should be changed for them. Markets can also be regulated to prevent the collective actions of players creating positions which have no backing in real assets from dragging down entire economies.

[Jeff Matthews]

Don't confuse me for arguing for legislation on this point. Should we legislate all executive pay? I agree that is a slippery slope. In sports only the workers pay is capped by the way. Of course we can all figure out why. However, if execs have run a company into the ground and then ask for taxpayer money to stay afloat then yes the rules should be changed for them. Markets can also be regulated to prevent the collective actions of players creating positions which have no backing in real assets from dragging down entire economies.

True, Oldie, and the points you make are actually in place. For example, a lender has the right to demand to have a place on the board, or to dominate the board, etc. before making a loan. If the borrower does not want to agree to that, it will get no loan from that lender. So, certainly, I agree the US, in taking a role of providing money to these corporations, has every right to dictate terms, including how the company will be managed. I don't suggest the government will do a good job at it, but you never know.... Nonetheless, I view this type of "regulation" as more of a voluntary agreement. That's much diffewrent in my mind because any player who objects can certainly opt out.

[BLSamuel]

CEOs keep getting more and more... the average worker less and less... Mark, you're right, that must mean something.

Were it me, I would nationalize them for a period of time, replace the incompetant bean counting executives with real car people, and get them back into the real economy. There are real car visionaries - real engineeering geniuses who ought to be in charge, and this is a good opportunity to get them in offices they belong in, and show the paper shufflers the door. Of course it's not me, so we'll probably allow these clods to hornswaggle to the public out of its money.

Nationalizing an industry sounds scary but for a period of time and getting rid of the incompetent bean counters who made this mess... and put car people in charge? That sounds like a very good idea. But unfortunately you're probably right in that it'll never happen and the same clods will hornswaggle the public (us) out of its money.

Compare and contrast: OPEC countries bringing massive wealth into their nations as Western industrial nations LOSE the same. Hmmmmm? Look at Dubai - - then look at Detroit.

so true ...

[BLSamuel]

Nationalizing may seem a bit scary until you think of the two other alternatives. Give them money with no strings and there will be no improvement at all. Take them through bankruptcy, and the vulture capitalists will simply dismember this industry and it will be lost forever. To the extent anyone believes in the real economy - making things, not paper - nationalising would be (could be) the most productive effort for saving a huge part of the real economy.We can always sell it back to the private sector at a profit.

Yes. A lot less scarier than the alternatives.... and could work if they'd put the engineers in charge as you suggested. But, it makes too much sense so will probably never happen. Unfortunately one of the two alternatives may.

[michael hurd]

The trouble with North America as a whole? Corporate welfare, IMO.

[jacksonbart]

[Groomlakearea51]

"It may have been my mission, but it sure as sh*t was the Chief's boat..."

[jacksonbart]

            It's hairy ,though. That's

            where we lost McDonnel -- they

            shot the hell out of us. It's

            Charlie's point.

[ZAKO]

YEH !!!!! WE LOST PACKARD, HUDSON, and STUDEBAKER !!!!!!!! They didnt stand a chance. Poor buddys.

[Audio Flynn]

You're absolutely right on the money there Tom!

Before any bailout is given there needs to be some kind of salary/wage restructure done. Overpaid workers & overpaid executives. AND something needs to definitely be done about the UAW. What you are saying about "Lean Manufacturing" is absolutely correct. I work in a non-union shop & we also practice the Lean principals. We are also required to submit suggestions monthly and it does eventually impact our annual review. The days of overpaid lazy factory workers is quickly coming to an end.

UAW and OEMs have ben acquising to the "lazy" behavior for over 2 decades as I have witnessed in the plants I visit. Mexico auto worker is much more dilligent when working for the Big 3 (Old 3) in Mexico.

Even the most deplorable executive or UAW worker cannot be fired.

The times they are a changing and it is an undefined but sure to be ugly future.

Bakruptcy is not the answer. Ripple effect would be a tsunami. I can write in detail at another time.

[JohnA]

And then there's this thing called "Lean" manufacturing that applies to everybody at Toyota to the extent that a worker is required every week to submit at least one idea to make the manufacturing process leaner. Don't make submittals and your performance based pay suffers.

Dang! My old boss did this to us!

The name for this is "giving more for less." It has a long history.

GML

In this practice, you are asked to "give more and get less." For labor classes this GML strategy of screwing yourself is called "the work ethic."

Let's summarize. When management labor, or the business itself, attempts to Give Less and Get More, it is American and patriotic ...... When line workers attempt to Give Less and Get More it is communistic, socialistic ......... Got it.

No, I don't get it. Are you cynical for the sake of cynicism?

[kevinmi]

What would happen if the Big 3 did file bankruptcy? I am not an economist, so I don't have the answers. I do know that we, the taxpayers, will be stuck with paying the pensions of the retirees, and I'm sure we will end up paying a portion of the health care also. It looks like the Government is going to be involved one way or another. Maybe it would be best to have some type of managerial takeover so that we can at least get some of our money back out of the Company. It is going to be messy no matter what.

The legacy costs aren't going to go away no matter what. It is only a matter of time before the younger auto companies have similar costs as their workforce gets older. We are becoming a nation of older people, and we are not prepared to deal with so many people reaching retirement age. The Auto Industry is one of the older industries in our country. It will be interesting to see how we deal with this problem, and if we learn anything from it.

[Colin]

Jacksonbart, your anecdote about foreign cars is not substantiated by the facts: German and Japanese ­ have far better repair records than American product lines.

Consumer Reports once said you would be better buying a five year old Japanese car than a new American one.

I think cosnumer incentives are the best route to ensure a change in our energy policy and encourage auto makers:

The tax credits listed below are for hybrid vehicles purchased or placed in service on or after January 1, 2006. Cost incentives also vary state-by-state, so it's a good idea to check your state's hybrid incentives. And give your insurance company a call--many offer discounts to hybrid owners.

http://alternativefuels.about.com/od/hybridvehicles/a/hybridtaxcredit.htm

Otherwise, I think the $4T Social Security trusts should loan money to the Detroit 3, in exchange for equity positions and preferred stock, to build or convert their assembly lines to high MPG vehicles

[michael hurd]

"Otherwise, I
think the $4T Social Security trusts should loan money to the Detroit
3, in exchange for equity positions and preferred stock, to build or
convert their assembly lines to high MPG vehicles"

Would you buy a seat on the Titanic as it's going down? What will the stock be worth WHEN, not IF they fold? So the whole of the country can feel good about bailing out a faceless corporation or three for a few months? I don't agree.

To start: cut about 50% of the vehicle lines totally.... and have fewer option packages. Who needs DVD player / navigation etc... ? Bring down the price of the models to suit, this will start to improve the situation in the short term. In the long term, bloat has got to be reduced if they are going to survive.