Not to take a political side here, but... The unions have pretty much supported a Democratic candidate for quite some time. And now that the union is begging the politicians for a bailout, GBjr (and other republicans) are saying "NOT!", or at least "Not so fast".
And because of the past support from unions, democrats want to give them money to keep the political contributors employed, even if nobody will buy a new car in the current economy.
And politicians say "We may have gotten money from (insert your political contributor here), but that does not mean we are influenced by them".
Well, we have this problem. We want to keep all of those people employed. It would be bad for the nation as a whole for all those folks to be out of work, and for all of those facilities to be dumped on the surplus market.
But, we also want to hold the car companies responsible for their bad decisions in the past. We don't want to see the upper management of the auto makers to continue making their phenomenally inflated salaries while they continue to make bad decisions.
Giving the auto makers money doesn't solve the problem. Letting the auto makers go bankrupt doesn't solve the problem either. Nationalizing the car companies solves those problems but it causes a whole host of other ones that might be even worse (especially considering that the government doesn't have any money either).
I'm waiting to see someone promoting an actual solution and I'm not seeing it right now.
The actual solution should recognize what the real source of the problem is.
Not to say that there aren't improvements needed to the auto companies or union but the real problem is the economy. It is all to easy for many to bash American cars or unions. They seem to forget that $4.00 per gallon gas coupled with a major recession is a one two punch that would be hard for anybody in the car business.
There are a whole bunch of different problems. Some of them involve the general economic malaise, some of them involve credit problems. Some of them involve the fact that GMAC has given credit to anyone who can show a pulse for the past decade. Some of them involve the fact that US auto makers aren't making products that are popular in the export market any longer, so they are dependent very strongly on US sales. Some of them involve the fact that US automakers have specialized recently in products which have become unpopular in the US as well now that people are worried about gas prices. Some of them involve the fact that the management of the big three wouldn't understand the phrase "diversification of product line" if it was tattooed on their foreheads.
Some of them have to do with the fact that medical insurance prices have gone through the roof, and unions got very reasonable medical benefits from the auto makers with agreements that benefitted everyone involved, and then prices skyrocketed leaving union members, retirees, and the auto manufacturers badly screwed at the same time.
Because there is no one problem, there isn't going to be any one specific solution.
That's absolutely true, but it's a lot harder for people making huge SUVs than it is for people making Priuses. On the other hand, gas prices have now dropped and people still aren't buying cars. But you'll notice that there is still a waiting list for the Prius and the Mini Cooper.
All they have to do is accept the going market rate for the work they do. Instead they want to paid much much more and then when a plant closes still get a check.
So long as the cars cost so much more than those everyone else makes to build in those facilities it is likely they will keep closing.
One big part of the problem is government. Government's interference in the market empowered the UAW to increase labor costs, distort market purchasing decisions with CAFE law, distort credit with easy money, and much more. Then with all these false signals some executives make poor decisions. On top of this, various regulations and labor rules,(some supposedly to protect the domestic automakers) make the domestic automakers much less flexible to meet market demands.
What I find amusing is that the ruling class over the objections of the people gave around a trillion of the people's dollars to the bankers, the bankers who make nothing, create nothing, basically leach off the productive yet a tiny fraction of that is too much for those who actually make something and create wealth. Now don't get me wrong, nobody should have bailouts, it's just the absurdity of how the rulers do this. It really says the bankers run the country.
The solution is simple. Deregulate.
Repeal CAFE, or at the very least repeal the split CAFE. The split CAFE keeps 'domestic' cars in one bucket and 'import' cars in another. This means that Ford,GM,and Chrysler can't import some tiny little car to offset an SUV. They have to make the tiny car in a UAW plant at labor costs that make much more expensive than the other tiny cars on the market.
Get rid of the 'different, but equal' and 'different, but worse' regulation on everything from armrests to headlamps or allow ECE vehicles in the US. This would allow the domestics to easily change their model line up in the US with models made for europe and other parts of the world when the market shifted faster than they could design new products and tool up new production lines in the US.
The US corporate culture has to be forcibly changed by the market. With the government out of the way, market forces can begin to take over again and piss-poor executive decisions will take hold. And by out of the way, I mean out of the way in more than just product regulation, but in the regulation of management (stock, boards, etc) that protects these corporate structures from their own piss poor decision making. That goes beyond the auto makers as well.
Lastly, the government should stop giving protection to the UAW. If GM,Ford, and Chrysler could hire US workers at the same rate and same benefits as Toyota, BMW, and others they would have people lined up around the block willing to do so and would have competitive labor costs. The UAW wants people to think it will be 11 year olds working 14 hour days at 15 cents an hour without them, but the reality seems to be that building cars pays pretty good without the UAW involved.
The problem is that you can't make what sells today, you have to be making what will sell _tomorrow_. Since nobody can really predict what the market will be like in the future, you have to keep a diversified product line at all times, even if that means keeping some models in production that don't sell very well right now. And it means spending money on development of models that you might not see getting back for 20 years.
Absolutely, but to be honest that's the case for most cars in general. And it doesn't really matter _why_ they sell into the market, as long as they do.
As global automakers Ford,GM,and Chrysler cannot be as flexible as their competition because of the US federal government. There is no way they can make money on the smaller cars given what they go for on the market and still have a car of comparible features and quality because of their labor costs in the US. Their ability to import small cars made elsewhere is limited because of UAW restrictions to protect UAW's labor market. US regulation further limits importation by requiring millions of dollars and months upon months of development, testing, and certification time to make a car legal to sell in the US. The two are deadly combination when the market shifts from large high margin vehicles to small low margin ones.
If the US automakers could have immediately started to supplement their US line up with cars they make for Germany, Italy, etc they could have minimized their difficulties. Ford may start to do better once north american production of the Fiesta begins, provided it sells. But who knows where the market will be by then.
Unless they are selling at a loss to the manufacturer.
It took a long time for the oil owners to realize just what it would take to get folks to finally cut back on usage. When gasoline went from $2.00 a gallon to just over $3.00 a gallon, and record profits were being made, Americans were driving even more with $3.00 gasoline. When it topped at $4.00 a gallon though, the market had finally come under supply and demand trends, and Americans cut usage. We remember, as fast as fuel prices have dropped, it's been slower than they've gone up, and at best, the price can be called volatile. Now that many are entrenched in our "falling economy", they aren't going to take up the slack by driving more and increasing their gasoline usage, they need to keep their belts tight because of worse "economic" castastrphes lay before them. Toyota still advertises the Prius. They still advertise the Tundra, but folks aren't going for the Tundra in the droves they were before gas hit $4.00 a gallon. GM, OTOH, did and still does make a dozen or more models over 30 mpg. Thing is they weren't as profitable to make and sell as SUV's are. Economically, we've greened up more, we're more attune to the environmental damage our actions do, it's unlikely we're ever going to embrace as a nation big sub 20 mpg SUV's again, but we still like size, and affordability. When we're collectivly in shape to purchase
It was discussed yesterday (by CEO's) that they had no idea what the market really is. During the last 10-15 years, credit has been very easy, gas was cheap, jobs were rather secure.
People bought cars because they were tired of the old ones, wanted new shiny status symbols, had no problem getting loans, gave a damn about the price of fuel.
And some American cars durability encouraged the client to buy as things started causing problems, knobs started cracking, panels falling off, and rattles developing.
That has changed very significantly recently.
When the market reaches a new tier of "stability", it may no longer be stylish to trade your car every 3-5 years... In which case, GM and others will have to make things that are durable as well as fuel efficient. "Initial build quality" can mean nothing in a market like this if durability is still poor.
Ford, which was deemed certain to fail in recent years, has come out of this in the best shape of the Big Three. Surprising..
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