To bail or not to bail, THAT is the question.

DrBoost wrote: We’ve been seeing gas prices rise steadily for a few decades now. We’ve seen fuel efficient cars come to be in high demand. We’ve come to see “reliable” and “economic” top the lists of attributes that the new car shopper looks for in a new car. What has the Detroit Three done to answer these wants? Not much.

Before we get too far in bashing the industry I work for, I'd like to point out that the above is a common misconception.

Basically, have you compared the fuel economy of a Focus or Cobalt to the smaller Hondas and Toyotas? For a bigger car, they are barely lower. So while none of our cars are economy leading, to say that we've not offered fuel economy cars is not true at all. The problem is that people have been mainly buying trucks and SUV's to miss the fact that the small cars are there, too.

On top of that, the whole reliabilty issue- while I can't speak for GM or Chrysler, I know that Ford's reliabilty is even with Toyota and Honda. So while our past products may have been crap, they are no longer that way.

You can diss them for style, and looks, fine- but I can't really say that any of the economy cars that Toyota makes are exactly really nice either. And we commonly get bashed for making boring cars- have you driven a Camry or Accord lately? Not exactly BMW or Alfas....

It leads back to my stock answer- where do you work? And can I find ways to use old information to tell people to not buy your product? I'm not saying "Buy American" but stop irrationally bashing our products.

Anyway, as far as I can tell, the industry is asking for loans. And, for the most part, what they will be used as is both to develop new products that are high tech and fuel efficient, as well as being able to loan customers money, since few banks are able to do that at the moment.

As for bankrupcy- I'm quite torn on that. But I would tell you that we are a bellweather for the US. When we loose benefits, you probably will, too, within a decade. What we are going through now leads the country by about 2 years- so get ready for pain. (what lead us to this situation is now catching up with the rest of the country....)

Eric

Bankruptcy of the manufacturers won't automatically mean that dealerships will get cut in half, as long as the mfg. can supply parts etc the majority of dealerships will survive. What concerns me is that if the suppliers (Lear, Delphi, Bendix, Bosch etc) start shutting down or cutting way back we are screwed. Just think that if Bosch were to shut down their injector parts manufacturing plant here in Chucktown how that would affect getting repairs done in a timely manner. About three months ago, one of our suppliers ran out of cam and crank sensors for the 4.0 six bangers and we had a helluva time getting them. It got so bad that dealers wouldn't sell to each other, they saved them for their own customers. Imagine that for damn near everything on a nationwide basis.

The territories set up at dealerships' inception won't change unless agreements get completely renegotiated, which is not real likely. The territory thing means you can't have two dealers closer than X miles together and that can be a big problem when it comes to renegotiating territories. What will probably happen is the small town dealers will go under on their own and the territories won't be lucrative enough for someone to start another dealership in the same location, meaning no sales/service/parts. That means the people who live in the outlying rural areas will have to go much further to get their cars serviced. FWIW, rumblings involving cutbacks at some of the smaller dealers in our area (and one of the larger ones) appear to be coming true. For instance, a large used car satellite operation owned by one of the local dealers laid off all of their employees and locked the doors yesterday.

There might be a few of the larger urban dealers setting up rural satellite sales and service locations, but it's very doubtful the manufacturers will do anything like that.

I'm of the opinion that if you start a business and do well you prosper. If you don't do well or you can't keep up with changing times you go down in flames. This has been the American way for a very long time. You find out what peolpe want and are willing to spend money on and you provide that product or service. As times and intrests change you must change with them or go out of business. Busineses fold every day either from mismanagement or a lack of clients.

IMHO it's not the governments job to direct or influence business. If you can't stay afloat on your own then I'm sorry about your bad luck, don't let the screen door hit in the a$$ on your way out.

Datsun1500 wrote: Lee Iacocca, lowered his salary to $1a year until the loans were paid off in 1983. Basically the taxpayer guaranteed the loans to Chrysler with interest that added up to $350 Million.

Mr. Iacocca may have lowered his salary, but he was also paid in Stock Options. He did not exactly go into the poor house for this decision, in fact he made hundreds of millions.

that being said, I think all CEO's should be paid in stock options...then their pay would be performance based.

oh, and GM does not make bad cars anymore. everything they make now is 1000 times better than anything anyone else made 10 years ago...

(except maybe the Aveo)

alfadriver wrote: Basically, have you compared the fuel economy of a Focus or Cobalt to the smaller Hondas and Toyotas? For a bigger car, they are barely lower. So while none of our cars are economy leading, to say that we've not offered fuel economy cars is not true at all. The problem is that people have been mainly buying trucks and SUV's to miss the fact that the small cars are there, too.

The fact that they offer larger, less fuel efficient cars is kinda my point. There's a reason the Japanese (and even Korean) cars outsell the American small cars and there is again my point. The Detroit Three have failed to answer market demand with product. How else can you 'splain the rise of the Asian automakers and fall of the U.S. automoakers?

On top of that, the whole reliabilty issue- while I can't speak for GM or Chrysler, I know that Ford's reliabilty is even with Toyota and Honda. So while our past products may have been crap, they are no longer that way. I can't deny that the U.S. automakers are improving their quality but I still think it's not on par with those from, well, everywhere else just about. This is a case of "too little, too late sir" here. They took WAAAAY too long to answer the call for reliable transportation. Look at Kia and Hyundai. Both of those companies offered sub-par products when they hit out shores. But it took them how long to correct that?

alfadriver wrote: You can diss them for style, and looks, fine- but I can't really say that any of the economy cars that Toyota makes are exactly really nice either. And we commonly get bashed for making boring cars- have you driven a Camry or Accord lately? Not exactly BMW or Alfas....

Well, you are right there sir, but that's why they are economy cars. But on that note, I have to give SERIOUS congrats to GM (my god, did I say that out loud?) for the Cobalt SS. What a machine!!

alfadriver wrote: It leads back to my stock answer- where do you work? And can I find ways to use old information to tell people to not buy your product? I'm not saying "Buy American" but stop irrationally bashing our products.

I"m not saying don't buy american either. I'm simply saying that when a buisness mismanages it's buisness case so terribly for this long they shouldn't expect a hand out. Take for instance my wife's buisness. She sells "Foundation garments" i.e. bras and such. Let's say her customers are asking for pink bras. She says, "well, I have red, that's close to pink, will that do?" Then her customers keep asking for pink bras and she says "I have red and now white ones. If you squint at both together, they look pink. Will that do?" and they keep asking for pink and she just never offeres pink ones. Now, another company opens it's doors and offers pink bras and she is hurting. Should she expect you and I to bail her out? Aren't we the very ones she wasn't listening to in the first place??

alfadriver wrote: Anyway, as far as I can tell, the industry is asking for loans. And, for the most part, what they will be used as is both to develop new products that are high tech and fuel efficient, as well as being able to loan customers money, since few banks are able to do that at the moment. As for bankrupcy- I'm quite torn on that. But I would tell you that we are a bellweather for the US. When we loose benefits, you probably will, too, within a decade. What we are going through now leads the country by about 2 years- so get ready for pain. (what lead us to this situation is now catching up with the rest of the country....) Eric

I'm ok (sort of) with a loan as long as certain things are mandated. Like dump the unions and make pay performance-based like others here have said. Just throwing money at the problem will only create more. Look at how well that idea worked with the banks.....

DrBoost wrote: I"m not saying don't buy american either. I'm simply saying that when a buisness mismanages it's buisness case so terribly for this long they shouldn't expect a hand out. Take for instance my wife's buisness. She sells "Foundation garments" i.e. bras and such. Let's say her customers are asking for pink bras. She says, "well, I have red, that's close to pink, will that do?" Then her customers keep asking for pink bras and she says "I have red and now white ones. If you squint at both together, they look pink. Will that do?" and they keep asking for pink and she just never offeres pink ones. Now, another company opens it's doors and offers pink bras and she is hurting. Should she expect you and I to bail her out? Aren't we the very ones she wasn't listening to in the first place??

The problem with your analogy as it relates to the US auto market is that the customers don’t want pink bras, they actually much prefer red. Unfortunately, the price of the special detergent required for the red bras increased 400% during the last year and now they are virtually forced to buy pink.

You can say that she should have foreseen the detergent increase and had pink models ready for that inevitability, but if the profit margin for red was double that of pink and your customer base has historically hated everything about pink bras, where would you put your resources?

That_Renault_Guy wrote: The problem with your analogy as it relates to the US auto market is that the customers don’t want pink bras, they actually much prefer red. Unfortunately, the price of the special detergent required for the red bras increased 400% during the last year and now they are virtually forced to buy pink. You can say that she should have foreseen the detergent increase and had pink models ready for that inevitability, but if the profit margin for red was double that of pink and your customer base has historically hated everything about pink bras, where would you put your resources?

exactly. 800k F150's per year weren't sold to people looking to buy Foci.

Okay... let's keep in mind that there are more than two possibilities with this scenario.

There is middle ground between: Leave the manufacturers completely alone and just let them fail; and use taxpayer money to forever hold up companies that are completely incapable of sustaining themselves.

And if you look at truck technology the engineering cycle lasts twice as long as the engineering cycle for cars.

MFG F introduces model F and in the first year everyone decides they love it. Everone buys model F. Later that year MFG T introduces their C car which is nearly identical to model A but has a henweigh installed in the dash so you can fart over the intarwebb hands free and everyone buys them. MFG G introdes the I car and it not only has the henweigh but it comes equipped with a buttfor which we all know is the coolest option ever installed, AND the I car includes it free! Everyone buys the I car. Meanwhile MFG F wants to know why they are getting outsold by T and G so instead of offering henweighs and buttfors in their car they throw away the molds and design the model T which is really a F with an altered body but they change the name to T to harken the days of old when an earlier version of the Model T was the best seller. Then MFG T and G follow suit all the while the engineering budgets for these car replacements are not being utilized to make the car double in fuel economy but rather to redesign the badges.

DrBoost wrote:

alfadriver wrote: Basically, have you compared the fuel economy of a Focus or Cobalt to the smaller Hondas and Toyotas? For a bigger car, they are barely lower. So while none of our cars are economy leading, to say that we've not offered fuel economy cars is not true at all. The problem is that people have been mainly buying trucks and SUV's to miss the fact that the small cars are there, too.

The fact that they offer larger, less fuel efficient cars is kinda my point. There's a reason the Japanese (and even Korean) cars outsell the American small cars and there is again my point. The Detroit Three have failed to answer market demand with product. How else can you 'splain the rise of the Asian automakers and fall of the U.S. automoakers?

Thanks for missing my point. The Focus IS a fuel economy car. It's just bigger than the B class cars that might get 1 mpg better. Plus it's been on sale for almost a decade now. It's BARELY less efficient, but a lot more useable than the gross majority of B cars. So there's no fail to answer to the demands of the US public.

The fact that we've been making tons of cash selling +800k F150's a year- the world standard in sales for the last decade should be an indicator that we do actually buy cars that the American public did want. And since we are going to clear 200k Focuses this year, we STILL make cars people want.

The big issue at the moment is why more effort hasn't gone into making the Focus reasonably profitable. Or, more important to our current situation, why the F150 wasn't much more profitable. But you can't expect us to sell a Fiesta at a loss...

Our problem is that we don't make money on cars, but do on trucks. We must focus on making money on cars, and moreso small cars. BTW, you should check Toyota's numbers some day- much of their recent growth was in TRUCKS and SUV's. They wanted more of our pie, which is understanable. But they don't make a huge profit on small cars any more, either.

Just as important, the entire economy of Japan helps Japanese made cars, and the entire economy of Korea helps Korean made cars WRT heath care. Yes, much of Honda's and Toyota's cars are made in the US, where it's not subsidized. That is a big deal, and helps them make money on small cars. Yes, both Toyota and Honda pay that tax, as do their employees, but so does Sony, and their employees....

And I'm not saying that we've not earned a reputation of making bad cars, but we've gotten past that, and are even with Honda and Toyota. That is on our new cars.

Seems like everyone has the answers to fix the big 3. You know what- it's a LOT harder than you think. Cerberus came in thinking that management must be a bunch of morons, and that they can fix them.... What happened? Cerberus has accelerated Chrysler's demise.

It's not like we are not doing everything we can, but since we put many years into focusing on the wrong thing (stock price) it's taking that long to recover. Mind you, it really does take 60 months to develop a 100% new product. The Japanese do it in 36-48 months since they only make about 80% of it brand new- the expensive parts are re-used or just derivatives.

Eric

That_Renault_Guy wrote:

DrBoost wrote: I"m not saying don't buy american either. I'm simply saying that when a buisness mismanages it's buisness case so terribly for this long they shouldn't expect a hand out. Take for instance my wife's buisness. She sells "Foundation garments" i.e. bras and such. Let's say her customers are asking for pink bras. She says, "well, I have red, that's close to pink, will that do?" Then her customers keep asking for pink bras and she says "I have red and now white ones. If you squint at both together, they look pink. Will that do?" and they keep asking for pink and she just never offeres pink ones. Now, another company opens it's doors and offers pink bras and she is hurting. Should she expect you and I to bail her out? Aren't we the very ones she wasn't listening to in the first place??

The problem with your analogy as it relates to the US auto market is that the customers don’t want pink bras, they actually much prefer red. Unfortunately, the price of the special detergent required for the red bras increased 400% during the last year and now they are virtually forced to buy pink. You can say that she should have foreseen the detergent increase and had pink models ready for that inevitability, but if the profit margin for red was double that of pink and your customer base has historically hated everything about pink bras, where would you put your resources?

If there were only a given amount of that special detergent in the world and you could almost figure out exactly how much of that detergent is left and when it would run out, then sure she should have been ready to go with the pink bras. The color of the bra isn't the only issue here since you are right, people buy what they want, maybe the red bras. But there is the issue with the bras falling apart. Everybody who isn't in the UAW wants a car that runs for a long time with very reliable performance. (The UAW folks just want to buy what they build). That reliable bra is another thing that they have failed to produce for a long, long time.

BTW, I like bras made out of Saran Wrap ;)

alfadriver wrote:

DrBoost wrote:

alfadriver wrote: Basically, have you compared the fuel economy of a Focus or Cobalt to the smaller Hondas and Toyotas? For a bigger car, they are barely lower. So while none of our cars are economy leading, to say that we've not offered fuel economy cars is not true at all. The problem is that people have been mainly buying trucks and SUV's to miss the fact that the small cars are there, too.

The fact that they offer larger, less fuel efficient cars is kinda my point. There's a reason the Japanese (and even Korean) cars outsell the American small cars and there is again my point. The Detroit Three have failed to answer market demand with product. How else can you 'splain the rise of the Asian automakers and fall of the U.S. automoakers?

Thanks for missing my point. The Focus IS a fuel economy car. It's just bigger than the B class cars that might get 1 mpg better. Plus it's been on sale for almost a decade now. It's BARELY less efficient, but a lot more useable than the gross majority of B cars. So there's no fail to answer to the demands of the US public. The fact that we've been making tons of cash selling +800k F150's a year- the world standard in sales for the last decade should be an indicator that we do actually buy cars that the American public did want. And since we are going to clear 200k Focuses this year, we STILL make cars people want. The big issue at the moment is why more effort hasn't gone into making the Focus reasonably profitable. Or, more important to our current situation, why the F150 wasn't much more profitable. But you can't expect us to sell a Fiesta at a loss... Our problem is that we don't make money on cars, but do on trucks. We must focus on making money on cars, and moreso small cars. BTW, you should check Toyota's numbers some day- much of their recent growth was in TRUCKS and SUV's. They wanted more of our pie, which is understanable. But they don't make a huge profit on small cars any more, either. Just as important, the entire economy of Japan helps Japanese made cars, and the entire economy of Korea helps Korean made cars WRT heath care. Yes, much of Honda's and Toyota's cars are made in the US, where it's not subsidized. That is a big deal, and helps them make money on small cars. Yes, both Toyota and Honda pay that tax, as do their employees, but so does Sony, and their employees.... And I'm not saying that we've not earned a reputation of making bad cars, but we've gotten past that, and are even with Honda and Toyota. That is on our new cars. Seems like everyone has the answers to fix the big 3. You know what- it's a LOT harder than you think. Cerberus came in thinking that management must be a bunch of morons, and that they can fix them.... What happened? Cerberus has accelerated Chrysler's demise. It's not like we are not doing everything we can, but since we put many years into focusing on the wrong thing (stock price) it's taking that long to recover. Mind you, it really does take 60 months to develop a 100% new product. The Japanese do it in 36-48 months since they only make about 80% of it brand new- the expensive parts are re-used or just derivatives. Eric

I suppose we'll have to agree to just disagree. People point to the mega-selling F-series trucks and say "see, we make what you want." If that's true, why do the Detroit 3 have to greatly discount prices to move them? You gotta consider the idea of value for the dollar. I'm shopping for a vehicle. I can get a 30K Camry for about 30K. But I can get a 48K F series for about 30K. What feels like a better deal? The truck for sure. Now when gas prices rise (surprise sargint!) that truck is devalued well below anything you would have ever expected.

Oh and trust me, the U.S. automakers have not "moves past" the crap car reputation. It may be less true than it was a few years ago but it's still there. I think it'll take a generation of truly good cars to make a serious step away from that well-earned rep.

Boost, This may or may not help:

Economics makes a big difference in this situation. An automaker is building the vehicle for $18,000 and selling it for $48,000 for 5 years then marks it down to $30,000 after the fifth year. Another automaker is building a vehicle for $18,000 and sells it for $30,000 for six years straight.

Which one is a better value to the customer?

Hey Eric,

I know I've crossed you before on this issue (as have others), but bear with me for a second.

The fact that you are regularly called upon to defend your company and your industry has very little to do with bashing or hating.

But, like it or not, the legacy the big 3 are dealing with is NOT limited to their retirement and pensions accounts. Part of that legacy is also the reputations they have earned (in some cases justifiably).

If you have to defend Ford's reputation of building crap, the problem might be that people think Ford builds crap, whether they do or not.

If we have to question decisions related to salaries, UAW relations, CEO compensations, legacy costs, perhaps the issue is that the big 3 have developed and nurtured long standing positions on these issues, and have therefore earned reputations on these issues, regardless of what they are actually doing right now.

Foreign cars have a reputation for building more efficient better built cars, because they did for several decades. They did this because they had to to compete. The big 3 simply didn't invest the same amount of energies they did, and they are now reaping what they sowed. Regardless of the actual performance of these vehicles, the reputation stands.

Sometimes this works in favor of the big 3. A good example is trucks. As you noted, the full sized pickups are a niche that the big 3 have filled well for a long time, and it doesn't matter how good a truck Toyota builds, they simply aren't going to steal that reputation (even though I've never heard of a Tundra owner who was not satisfied).

The reputation of being the best builders of SUV's in the world suited the big 3 quite nicely when it was profitable.

Competing is a long term investment. Developing a reputation is a long term investment. Changing one may be longer. Don't get down on people when they make claims on the US automakers that are based on the reputations the automakers CHOSE, CULTIVATED, and EARNED.

Here's the bottom line for me. All 3 automaker's stock has tanked. GM is as low as it has been since the Great Depression. Though I own small quantities of stock in all 3 of these companies, there's no way I would plan my entire retirement based on buying their stock at this time, because I haven't seen them making business decisions that convince me it would be wise or prudent for me to count on them.

I'd happily tell you where I work, if you'd like to consider it as an investment option. We have ALREADY signed contracts for 2009 for TRIPLE the amount we sold in 2008, and we expect to TRIPLE THAT before 2009 is finished. Yep, that's a nine fold increase in this lousy economy.

Seems to me, if you were considering investment options, that wouldn't be a bad one. However, if you were just looking to boycott our company because I was "hating" on yours, then I'm going to have to respectfully disagree with your wisdom as it relates to business decisions.

Sidenote: I do, however, admire your loyalty. US companies need a lot more employees with attitudes like yours.

SVreX wrote: Hey Eric, Here's the bottom line for me. All 3 automaker's stock has tanked. GM is as low as it has been since the Great Depression. Though I own small quantities of stock in all 3 of these companies, there's no way I would plan my entire retirement based on buying their stock at this time, because I haven't seen them making business decisions that convince me it would be wise or prudent for me to count on them.

Side note, none of us inside are effected by the stock price going in half. Which kind of justifies one of my old political points that Wall Street and long term capitol gains are pretty irrelevant to a company whoes stock is being traded. End Wall Street tax subsidies....

I'm sure inside GM, the stock price is not worried about- but the cash in hand. What Wall Steet thinks of us should be irrelevant, what customers on Main Street think is relevant.

I'd happily tell you where I work, if you'd like to consider it as an investment option. We have ALREADY signed contracts for 2009 for TRIPLE the amount we sold in 2008, and we expect to TRIPLE THAT before 2009 is finished. Yep, that's a nine fold increase in this lousy economy. Seems to me, if you were considering investment options, that wouldn't be a bad one. However, if you were just looking to boycott our company because I was "hating" on yours, then I'm going to have to respectfully disagree with your wisdom as it relates to business decisions. Sidenote: I do, however, admire your loyalty. US companies need a lot more employees with attitudes like yours.

I'm not buying your stock, but telling potential customers that your products sucks when it really doesn't. Based mainly on old data when independant data is showing that the product is basically as good as the next guy. It get's really old.

BTW, check Focus sales- they are way up year to year. Way up. Our problem is that we can't figure out a way to make money on all of those Focii.

One last BTW- I'm very tired of listening to all of this, so don't expect any more replies- I just don't have the energy to read this anymore.

E-

Anyone who has ever had a competitor has had someone who is more than willing to tell their customer's that their product sucks, regardless of it's quality.

It's not your enemies you need to convince, it's your customers.

If you can't convince potential owners (stockholders) your company is good enough to invest in, how are you going to convince your customers?

Marketing 101.

Eric, I'm sorry this offends you.

You hold a high level of respect on this site and in this community, and I'm thinking the better approach would be to listen to potential customer's constructive criticism, then ask them what you could do to earn their trust and their business.

Complaining about the complaints really doesn't accomplish a thing.

That's what was wrong with the US manufacturers for years: they wouldn't listen. They coasted on the reputation built during the 1950's and '60's when they were the only game in town and people sneered at the lil' furrin cars.

The lil' furrin cars had their share of problems; look at Renault, Peugeot, and FIAT. They all built crap the US public wouldn't buy a second time, but Toyota, Nissan, Honda and Mazda picked up repeat customers. During that period ('70's and '80's) the US manufacturers continued to coast on that 50's and 60's rep, oblivious to the pot boiling all around them (with a few exceptions like the Pinto and Vega).

Then the big SUV explosion happened, the Big 3 built outrageous fuelhogs with DVD players in the ashtrays 'because that's what everyone wants' and then gas prices spiked again with the Big 3 once again looking down their pants. I give you the launch of the Commander and GM opening HUMMER stores like they were Starbucks locations just before the big oil price increases.as perfect examples.

Their quality has gotten better, no doubt about that (but Chrysler's NVH is still not up to Japanese standards) but that doesn't matter when they have products that no one wants to buy. So now the Big 3 have plants that produced the gas hogs that are killing them financially and their smaller offerings aren't profitable enough.

Toyota and Nissan both brought out full size trucks and SUVs, Honda stuck with the midsize part of that market and Mazda chose to concentrate on passenger cars. Their common factor: their mainstay has always been well built but rather boring transportation appliances that get good gas mileage and last for dammit ever. So they idled their truck plants but that's not a real big hit because IIRC Toyota had two plants and Nissan one, Toyota is even converting one truck plant to build Prii. They are going to weather this storm pretty well and be in a perfect position to snap up some idled plants at fire sale prices to expand their market share here. You think for one moment that the city of Detroit is going to tell either of them 'no' if they want tax breaks etc to put production there? How about if someone offers to open an assembly plant outside of Atlanta? You think they won't jump at the chance and offer all kinds of incentives to get, say, Honda to build cars there?

There is an ongoing history of poor business decisions by the Big 3 which makes me real hesitant to open the tax dollar faucet.

This is a car site so we're going to concentrate on the automotive side.

I think one thing that we need to also talk about is the legacy issue of retired workers who have a company back pension. As I mentioned in a previous post I see two industries being crippled by this decades old burden. The airline industry and the auto industry. Coincidentally these are two industries that America used to be a leader in.

I believe this, as well as core business decisions, have as much impact on the bottom line if not more when you factor in the explosion in costs such as healthcare.

You forgot one industry- steel.

We were once the world leader in steel. Now there is NO US steel industry.

Ask places like Bethlehem, PA and Pittsburgh, PA what it used to be like.

The difference, of course, is that was when capitalism was still in vogue. So those companies folded to companies (in China) who were better poised to face the world economy.

Now, we are full blown barreling toward nationalism, and the only solution we seem to be able to come up with is a government bailout. Makes me sick.

BTW- Bethlehem and Pittsburgh survived. Their steel plants did not.

Yeah, they have retirement costs and healthcare costs. Lets look at these:

Retirement costs The company negotiates with the employee for a retirement. A union may be involved or not (line v. management). There is a finite cost associated with any retirement package. The insurance companies are very good at coming up with tables of anuities. So, lets say that for an employee working for 25 years, there is a cost of $5K/yr for that employee for future retirement costs. That is, each year, including year 1, the company should be putting aside $5K for that employee for his/her retirement and investing it in a stable fashion. By the time 25 years rolls by, there's some serious money in that account. The company then pays the employee and/or his family for some length of time until he/they are dead from this account. That's how retirement plans were supposed to work, and did for a while. Now, here's what happened instead: The companies look at all that money sitting there and say, damn, that's a lot of money. We should buy our own company's stock with that and help boost the stock price. And, we should be charging higher "management" fees on that money. And what else can we do with that money? Then, instead of having enough to pay the employee in his/her retirement, there isn't any money left and the company biatches "Oh, we have these retirement obligations and we can't afford them anymore. Please, Uncle O, take this off our hands so we can keep employing 3 million people." Meanwhile, conventional retirement plans such as this are now a thing of the past as 401K's are brought in and we are all on our own, berkeley you very much. Mismanagement and theft left the company with the retirement obligation and "no money to pay for it, waaaaaaa!"

Healthcare
I've discussed this before. The easy version that even an English major could understand: Lawyers, insurance companies and Big Pharm in colusion drove up the costs of healthcare to a point that the system no longer functions. The auto companies failed to pass on the increased costs to the employee for healthcare plans that would make the rest of us shake our heads with disbelief. As in 100% coverage, no deductable, etc. The companies cry "Oh, Uncle O, please pass nationalized healthcare so we can make cars to compete with the Japs and Koreans."

These are two failures that the car companies have made. Add in making crap for 20 or 30 years and you have a FAIL business model.

I got family and friends who all have worked for them and ive been saying for years they will do this to their self eventually. I mean come on how long can we keep paying guys 30 bucks an hour to stand at the end of an assembly line and put tailgate stickers on trucks?

On a side note to bailouts. Im in St louis and the anheiser/inbev deal went through today. The irony is that the money for this buyout came from 2 sources jp morgan and first national. Both banks the government gave bailout money to. And if the 700 billion is coming from tax money. Then we the people are helping a foreign company buy out an american icon. If you do or do not like the products a/b makes, still this is ridiculous. Look up sometime and look how much a/b gives to charities alone. Inbev has all ready made the statement they iwll not do this. Way to go Gov.

There is still a US steel industry, it's just much smaller than it used to be. Check out http://www.nucor.com/index.aspx

A lot of the steel used in US cars comes from overseas.

I can't remember where I read it before, maybe Car and Driver, but the general gist of the article was that GM payed somewhere in the neighborhood of $2500 to RETIRED employee benefits for every car that rolled down the assembly line. I think the UAW has more to do with bringing the big three to it's knees than anything else, and would love to see them get the heave-ho.

On another forum I frequent, somebody posted this gem...

Funny story about UAW.

My wife’s cousin works at a GM plant just outside St. Louis. They build mostly full-size vans there. For a little over 2 years, his job on the assembly line was to install the rear, drivers’ side glass window. Now, keep in mind, 8 out of 10 vans there are commercial vans, so he doesn’t have to install anything as they have solid sheet metal on that side

So, he joked with us for a long time and explained that he got paid over $40 an hour (28 years tenure) to sit on his arse and work on 1 out of every 5 cars. As the “other” 4 cars went by, he would sit in a chair and read the newspaper, drinking coffee.