  Rideron Member Username: Rideron Post Number: 195 Registered: 08-2008 |
Which is better in the long run,a loan bailout for GM etc. leaving them structured as they currently are but with huge additional government debt to pay, OR forcing them to go for reorganization under Chapter 11 where they could shed Union labor and medical benefit costs? | ||
Chrissy_snow Member Username: Chrissy_snow Post Number: 354 Registered: 07-2008 |
I say bankruptcy, so they could also stop paying out those million dollar bonuses to the execs who are running the company into the ground and get rewarded for it. http://www.freep.com/article/2 0081113/BUSINESS01/311130002 I say NO BAILOUT. Why? They're just gonna reward themselves first and a year from now they'll be crying broke again and laying off people again. | ||
Mashugruskie Member Username: Mashugruskie Post Number: 217 Registered: 09-2006 |
All executive contracts for bonus pay should be seen as null and void. If companies are worried that executives may leave, tfb! Let them leave...because there's actually nowhere for them to go! Over-rated bullshit and obviously not as brilliant as they all thought they were. Bonus withdrawn. Stay if you're dedicated, get the fuck out if you're not. Simple math and it's free! (Miss you Ledo Iacocca!) Chapter 11 will interrupt pension benefits | ||
Frankg Member Username: Frankg Post Number: 696 Registered: 08-2007 |
Actually, in a bankruptcy, it is common practice for a bankruptcy judge to allow retention bonuses for executives, even while forcing cuts on the rank and file. The rationale is that a company can't have it's top management team jumping ship because they can make more money or have a better career future at another company. i don't agree with this practice but it happens all the time. | ||
Otter Member Username: Otter Post Number: 375 Registered: 12-2007 |
Ordinarily I might prefer bankruptcy, or anything that is more likely to make the company change its culture, but in this case I think that bankruptcy could cause a catastrophic drop in sales, as people categorically disconsider any car that they think they might not be able to get service and warranty for in the future, or lenders stop providing loans for these cars. This may only be a matter of perception, but, again, sometimes perception matters at least as much as reality. | ||
Danny Member Username: Danny Post Number: 7928 Registered: 02-2004 |
Chapter 11 bankruptcy will be the final option for the Big Three. They may downsize and re-organize back to a couple of plants in Detroit, Dearborn or Warren and have a less then 200,000 work force but it would save them some money and a make a good profit that would make they company grow back. | ||
Higgs1634 Member Username: Higgs1634 Post Number: 759 Registered: 10-2005 |
I love how the rage is all on the exec's who recieve bonuses. there are 12,000 to 15,000 UAW workers sitting in rooms right now, collecting FULL pay and FULL benefits to do nothing. at 100k a man (salary and benefits combined) that is a huge chunk of the problem. Exec bonuses should, of course, go. But the Jobs Bank should go with it. | ||
Digitalvision Member Username: Digitalvision Post Number: 1442 Registered: 11-2003 |
There is data floating around that proves Otter right. The problem is that if they declare bankruptcy, they may as well shut the doors as most of the rest of their sales will dry up completely (think 60-70% down from where we're at now) according to many of the marketing folks I've talked to at the Big 3 and suppliers, preventing them ever from exiting. Cars are longer-term investments, most folks don't want to buy a car from someone who *might* be out of business in a couple years (and bankruptcy puts that in people's minds, not everyone realizes it's restructuring, or that they're key to getting out of bankruptcy). That's why the CEOs kept saying "bankruptcy is not an option." (Message edited by digitalvision on November 14, 2008) | ||
Mashugruskie Member Username: Mashugruskie Post Number: 218 Registered: 09-2006 |
Higgs, I'd pay 15,000 men and women in a job pool over ONE person collecting 1.86 MILLION and doing nothing. Workers are usually dedicated. Corporations are convinced high-paid execs will bail without big bonuses. There are plenty of intelligent people willing to jump into the think tank for a corporation without asking for millions and who will stick around out of loyalty. | ||
Iheartthed Member Username: Iheartthed Post Number: 3617 Registered: 04-2006 |
I don't think there is much of a precedent to say how consumers might react to an automaker in bankruptcy. I think that was a line conjured up by the auto execs that they hoped would resonate to help argue their case. I don't think that particular line has resonated much outside of the Detroit bubble. One line that is resonating a lot more is how intertwined the automakers are with the rest of the economy, specifically how many jobs they support. Another line that people seem sympathetic to is the prospect of domestic manufacturing virtually ceasing to exist if the automakers go under, and what that would mean to national security. | ||
Danindc Member Username: Danindc Post Number: 5217 Registered: 10-2003 |
quote: Is this really true, though? I know that people were flying on U.S. Airways as they went through bankruptcy. Of course, buying a car is a longer-term investment than taking a flight. You can still get parts for a DeLorean, though, even though that company hasn't existed for 25 years. No doubt, there will remain after-market parts suppliers. My personal opinion that this is part of a litany of excuses on behalf of the executives--it's far easier to have the government throw you free money than to make tough decisions that should have been made years ago. | ||
Lilpup Member Username: Lilpup Post Number: 5611 Registered: 06-2004 |
There is ample evidence of sales of hard good dropping when a company declares bankruptcy, even for items smaller than cars. But hey, what the hell does Detroit know. After all we're not in New York, California, or Washington D.C. so we must be stupid, right? | ||
Goat Member Username: Goat Post Number: 10507 Registered: 10-2003 |
Bankruptcy? Yeah and leave over 2-4 million without jobs? Really use your heads people this is an industry that will ultimately vanish along with all of those spin off jobs! Now what I want to know is will Mexico help in this bailout? Since many of our former production facilities are there they should be coughing up some cash. Along with the bailout they should demand that vehicles being made for Russia and China be made here and shipped there (no not 100% but a majority) and the UAW/CAW need to re-evaluate their costs such as wages, healthcare and especially pensions. The CEO's get fuck all for "bonuses" and must also trim their wages substantially to stem the loss. BRING BACK THE AUTOPACT and tell the WTO to go fuck themselves. | ||
Danindc Member Username: Danindc Post Number: 5218 Registered: 10-2003 |
quote: And sales are currently robust? quote: What the fuck does that mean, Lilpup? You should really get over your geographic xenophobia. Insecurity doesn't look good on you. In case you haven't noticed, though, the auto executives haven't been doing such a stellar job. Apparently, they're not the end-all-be-all King Shit of the business world. I'm just sayin.... | ||
Digitalvision Member Username: Digitalvision Post Number: 1444 Registered: 11-2003 |
Danindc, They've been saying this for a couple years around the drop in sales - of all the other things that might be FUD, this one makes a lot of sense and is corroborated with lots of evidence from bankruptcies' past. If people are hesitant to buy smaller goods, it reasons that they're going to be hesitant on something they need to make a monthly payment for. Even more so, banks will be hesitant to loan for such. You can find DeLorean parts, but what about the OEM part chain? If that's gone, it'll be a whole lot harder and expensive to get parts. I really think it'd be a perception disaster. People here would keep buying US cars, but the rest of the country would pull the plug even faster. Also, I seriously doubt it will be "Free" money; my guess any "bailout" will be a loan guarantee they'll have to pay interest on. Which personally, I think is the best situation. | ||
Lilpup Member Username: Lilpup Post Number: 5612 Registered: 06-2004 |
Dan, you and all the media pundits need to get over your geographic arrogance. | ||
Danindc Member Username: Danindc Post Number: 5220 Registered: 10-2003 |
quote: This is already the case, due to the flagging of the overall economy, is it not? It's not as if you pump $50 billion into the automakers, and people will suddenly line up around the block to buy new cars as Christmas gifts. I want the automakers to survive, but I don't like the idea of a bailout one iota. I've been on the fence, because I'm trying to objectively understand both sides of the argument. What I've determined is that a bailout provides no incentive to succeed. It does nothing to address decades of systematic failure to respond to changing market conditions. It does nothing to address a costly production system. And it does nothing to resolve the ever-present UAW, who (given past history) will almost certainly oppose any conditions of bailout funding or any tough decisions that may need to be enacted. I'm not an anti-union, anti-manufacturing ideologue. Handing over a blank check, though, doesn't provide any incentive for the automakers to conduct a thorough review of their business practices and undergo the necessary reinvention. A quick short-term solution like shifting pensions onto the UAW isn't going to cut it this time. They need systematic change in their business models, and all they can say is "Give us money." Sorry. Fifty billion dollars could buy our country a hell of a lot of infrastructure upgrades that we desperately need. For example, this "gimme" to three specific companies is more public money than Amtrak has received in its entire 37-year existence. Typically, when you attempt to get a business loan from a bank, they want to see your business plan. Where is the plan for what the automakers will do with the money? How do they intend to remake their companies? Maybe the high-paid execs should be burning the midnight oil thinking about this instead of hiring lobbyists to piss and moan about cash flow. | ||
Cman710 Member Username: Cman710 Post Number: 526 Registered: 07-2006 |
Here is my best take at an objective look at this situation. 1. The Big 3's current (and former) leadership has not done a good job, at all. 2. While the CEOs should not be rewarded for doing a good job, it will require significant pay packages to attract good new leadership. Right now, becoming CEO of GM would not be an enviable job, given all the difficulties, stresses, etc. he/she would be facing. In order to get someone well-educated and with the proper experience, you WILL need to pay them with a significant pay package, running into the millions. Otherwise, the most talented people will go elsewhere, to companies that are not a disaster. I do not see a problem with giving market pay for a CEO, given the demands on that person and the expertise being sought. Also, in the grand scheme of things, this has an extremely minor impact on the companies balance sheet. 3. In the long-term, the labor situation is not sustainable. The Big 3 cannot survive when they are paying labor costs that are $20 an hour higher than foreign manufacturers (and we are not even talking about benefits). This IS financially relevant. In the end, this disparity will inevitably lead to fewer unionized jobs in the U.S., at least unless the unions are willing to take significant pay cuts. This is inevitable, no matter the level of government intervention. In the long run, if Company A can make cars cheaper than Company B, Company B will either find new sources of labor (e.g., move more plants to Mexico) or sell fewer cars, or maybe even both. 4. Given the incoming administration and Congress, the government will step in with some kind of bailout package. A bailout package that required these companies to change could be beneficial, but given the unions' stranglehold on politics, that is unlikely. It would be best if the lawmakers stuck to their word and only provided aid if the companies could be "viable" in the future, but I am not holding my breath. In the end, I predict that the auto companies will get a bailout. Since bankruptcy seems unlikely, I do not see radical changes. The bailout will therefore most likely result in incremental change. In that case, I expect the auto manufacturers to be in trouble again before long. Given the political environment, the best outcome would probably be a bailout that required significant structural changes at the companies. This remains unlikely, but would be most helpful to the companies. | ||
Oladub Member Username: Oladub Post Number: 884 Registered: 08-2006 |
"GM Spends $17 Million Per Year on Viagra." "Lifestyle drugs -- chiefly Viagra -- are costing General Motors $17 million dollars a year and the cost is passed along to car, truck and SUV consumers. The blue pill is covered under GM's labor agreement with United Auto Workers, as well as benefit plans for salaried employees." This makes GM the number one purchaser of Viagra in the world. At least GM is still number one at something. http://www.consumeraffairs.com /news04/2006/04/gm_viagra.html "Put your _____ up for Detroit!" http://www.youtube.com/watch?v =HYPqA4slnbQ | ||
Goat Member Username: Goat Post Number: 10509 Registered: 10-2003 |
...and how much does Amtrak equate to the overall economy? Now compare that to the domestics. | ||
Gistok Member Username: Gistok Post Number: 7511 Registered: 08-2004 |
quote: Yes Dan, but $50 billion is chump change compared to what that idiot in the White House is spending in Iraq... think of all the infrastructure THAT could have purchased...  And remember, we're talking loans here... not a trillion dollars down a rat hole... (Message edited by Gistok on November 14, 2008) | ||
Danindc Member Username: Danindc Post Number: 5221 Registered: 10-2003 |
Agreed, Gistok. But how does $50 billion work into the cash flow equation? If people are still unable to buy cars, how will the automakers repay the loans? That's a legitimate question that any lender asks a potential borrower. We have yet to hear an answer. It seems like we're supposed to hope the automakers turn things around, and in the meantime, just throw cash at 'em and not ask any questions. Regarding executive compensation: I don't believe, for one moment, that outrageous salaries and bonuses are necessary to retain top talent. For one, this so-called "top talent" has driven the automakers to the brink of extinction. Two, I get the feeling these guys are in the business for the money, and not because they give a shit. The most demanding job in the world, President of the United States, pays $400,000 per year. No multi-million dollar bonuses, no golden parachute. Our military pays enlistees for shit, because they want soldiers to do the job for the desire to serve, not for the big dollars and fabulous prizes. Why can't the automakers find executives who truly want to improve the business model and make these companies profitable? Short-term quick-fixes just aren't going to cut it anymore. These are long-term structural problems that need to be addressed, and we haven't seen a single idea in this regard. | ||
Lilpup Member Username: Lilpup Post Number: 5614 Registered: 06-2004 |
Not only are we talking loans, but we are talking loans for companies that DO have viable business plans going forward, unlike the bunch of drunken gamblers on Wall Street who are looting the national coffers with a generous assist by their enablers in the administration. Maybe Ford and GM should just relocate to Windsor and scale up the plants in Ontario. | ||
Danindc Member Username: Danindc Post Number: 5222 Registered: 10-2003 |
quote: If they're going to get public money, shouldn't the public know what those plans are? They don't have to divulge trade secrets, but an outline would sure as hell help sell this to the public. As it stands, I'm calling my Congressman and Senators to vote against any kind of automaker bailout. The bailout for Wall Street wasn't necessarily meant as a bailout to keep particular firms in business. Note the number of failures and mergers that were allowed to occur. That package was intended to bailout the entire financial system. If we don't have a working financial system, we simply don't have much in the way of an economy. | ||
Johnlodge Member Username: Johnlodge Post Number: 9114 Registered: 10-2003 |
quote: What impact will millions of people losing their jobs, and then probably their houses, all at once have on the entire financial system? | ||
Mauser765 Member Username: Mauser765 Post Number: 3446 Registered: 01-2004 |
Why are those the only choices ? The Fed could buy controlling interest in General Motors for a measly couple bucks per share. 60% could be purchased for under 1.5 billion. A far cry from the endless billions the CEOs are begging for so they can meet the executive bonus payroll. Then the Fed can just hand those stocks to the GM employees for free, at a savings of 48.5 billion compared to a throwaway bailout. Next day, call a stockholders meeting, and they will clean out the festering cancer in the GM "leadership". Nobody knows how to run those companies better then the people who actually do the damn work. problem solved. | ||
Johnlodge Member Username: Johnlodge Post Number: 9115 Registered: 10-2003 |
The City of Detroit asking for a $10 Billion "bailout" is the STUPIDEST thing that could have happened. They could very easily screw the entire situation up for the automakers with that bit of ignorance. | ||
Lilpup Member Username: Lilpup Post Number: 5615 Registered: 06-2004 |
Phoenix, Philadelphia, and Atlanta have done the same. | ||
Ghetto_butterfly Member Username: Ghetto_butterfly Post Number: 870 Registered: 09-2004 |
Just FYI, in German News yesterday it was said that GM has requested its German subsidiary Opel to go into "Zero Tariff' negotiations with the current Union contract renewals, meaning no salary increases for 2009 which would save GM about 220 Million $. At the same time it was reported that GM requested a bailout package, otherwise they would be bankrupt by year's end and would probably have problems to pay salaries and wages starting January 09. This just what's being reported in Europe. | ||
Chrissy_snow Member Username: Chrissy_snow Post Number: 355 Registered: 07-2008 |
If Bankruptcy is going to cause people to lose jobs - what do you call what they're doing NOW? Every week, they announce thousands more jobs being cut. A million tiny cuts still lead up to massive bleeding, they're just doing it slower. And I bet even IF they get a bailout, they'll layoff several thousand more and claim it was part of the overall restructuring. And I want to know whose buying all of these new cars when the economy is tanked and people are losing homes and jobs? Who do they think is going to buy them anyway? How many of you all have purchased new cars in the last year? Even if you haven't lost your job, times are tough right now and pretty much everybody is looking to save money and tighten up for the future. So the majority of people are hanging on to their cars once they're paid off, or buying older used cheaper cars, rather than sign on to $20k new debt. |
