I knew driving home from the office last night I'd get called on this and admit it would have been much better with some more specifics. What I'm trying to get across is that in general and light manufacturing (toys, furniture, consumer electronics, etc.) the US is getting clobbered. On niche and industrial manufacturing we're doing pretty good largely due to the engineering talent around. Likewise, for semiconductor we have a good base, but this isn't growing very fast in the US since the cost of fabs are insanely high. Also note that semi fabs are largely automated. This country has an extremely deep pool of high tech talent, engineers, educated/experienced production line workers, construction workers, and so on. On large projects that require experience, a lot of R&D, or massive systems integration, we do extremely well. On the smaller things with less value add and requiring lower skill sets we simply get killed by the cheaper cost of overseas labor unless we can do it with automation.
In the future I am certain this will improve. As transportation costs increase the lower end of manufacturing and raw materials production will start to move back closer to markets. But with the cost of a labor unit still being incredibly high, it will probably mean more and more automation. Until then the worst thing we can do is export our knowledge base as it puts us at a competitive disadvantage.
As for government (mis)regulation, you don't have to tell me much. I work in healthcare, it's killing us. This morning I almost lost it when I heard Daschle is in at HHS under Obama. Unlike what many perceive, fat cats are not the problem with healthcare. It's government bloat and fat people who want all you can eat care. The former drives up our overhead, the latter our underlying costs.
Quote:
Originally Posted by SolsticeMan
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The Toyotas may be small and outnumbered by work trucks but they're much higher margin. There is a big market in pretty-boy trucks with lots of glitz. They're also good haulers but very few people buy the relatively small trucks for hauling. Either way, they have superb quality and cost about 50% more than the average Silverado or F150 rolling out of here. An old friend who sells at the local Chevy dealer has always been jealous of the ASPs for Toyotas, but then he was rolling out two dozen Silverados a week just last year for about $18-20k each.
As for the market and the options of the Big Three, I still have a different perspective. Most of those tertiary job losses related to them failing (e.g. outside of GM, thus meaning suppliers, dealers, etc.) will still happen due to the cutbacks they're making. Each time they close a plant a network of suppliers and logistics shuts down or cuts back significantly. Even if they get bailed out they still are almost 50% over capacity and the variables have to come down less we build massive inventory and see deflation on a grand scale. Thus, in my eyes, these consequences/costs/whatever you may call them are built in already.
The actual bailout itself, if it happens, will need to be prepackaged. A while back I said what we see in the economy is largely due to fear. This is no different. People don't know if GM will be here next year. They do not know if the Volt will see the light of day with a bowtie on the front (if they did liquidate, this significant asset would be sold to someone else). Any bankruptcy would need to be swift and preplanned. The judge could not afford to sit and watch suppliers or creditors squabble; he would have to know what GM needs to keep running and keep funding flowing to those components, even if they need to be cut back by some percent (e.g. union wage cuts or supplier cuts). Uncertainty is thus eliminated and they can change on their feet. Similar to what was discussed on CNBC the other night, warranties can be offered by third parties, and this is a very good idea. There are plenty of insurance companies would take this on if offered the chance. This would result in less uncertainty and help resolve that issue.
Finally, I wholly disagree with this being a heart attack. This is a drug addict asking for money to cover their next fix, even though they're cutting back and are heading to rehab.
Quote:
Originally Posted by 2 007 Silver
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The media knows bailout is sexier, so they use that term. It is no more a bailout than what Wall Street got. Neither is free money. The question is what type of terms does the Fed want in exchange for a loan. More than anything this is a sticking point. Unlike the financial companies who were desperate to shore up their balance sheets the Big Three seem unwilling to issue preferred stock, give up some degree of governance, or agree to making large changes in exchange for this money. All the alternatives are politically unpalatable. Some group, either the UAW, the management, the white collars, the taxpayers, the shareholders, or others will get screwed by any deal more than the others. From watching the testimony this morning I don't think any group is ready to take their medicine yet.
Oh, and I think people realize domestics are getting good mileage these days. But again, they're uncertain who will be around so they don't buy. As for me, I just choke when I read the specs on the domestics. The curb weight of the Fusion almost caused me to fall over when I read it off a door sticker.
Quote:
Originally Posted by normsf
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Agreed, the companies appear to be neophytes at managing public opinion. It is true that private jets are more practical for their leadership to use for a variety of reasons. However, when you're asking to be bailed out and are in the process of hocking assets to raise cash, one may ask why those assets haven't been disposed of. And yes, I do realize that Ford sold a couple Boeing BBJs a couple years back.
Hello Sugglebear, I have found a new appreciation for your thoughtfulness of your posts. Seems a practical common sence approach for a possible solution for the big three. On a side watching a interview tonight on PBS with Rick Wagoneer there was a Picture of a Solstice on the wall behind him, maybe a ray of hope. Thanks Norm
Oh, and I think people realize domestics are getting good mileage these days. But again, they're uncertain who will be around so they don't buy. As for me, I just choke when I read the specs on the domestics. The curb weight of the Fusion almost caused me to fall over when I read it off a door sticker.
That is not the "real" weight. I made the same mistake until I found out that weight
on sticker includes 4 passengers @ 150-180 # each. Subtract that to see a real
curb weight.
Hello, well the perception is not very good. Look at it from another viewpoint, They all ready own the plane, they already have paid the flight crew as there employees of GM. From Detroit to DC is about a three hour flight time commmercial with security checks and check in now you have 6hrs now add the delays that always come up and you may have a 8hr flight. Rick Wagner CEO makes how much per hour, add those wasted hours on top also his private jet can fly higher and faster so his flight time is now less than 3 hrs. So adding these and etc expenses such as anyone who came with him that he may need, his private jet may well have cost less than commercial. Just a thought.
How about the simplest point of view. Don't come asking for $ billions in tax-payer loans if your flying out in your private jet with crew. Sell that Sh^& off if you are in dire circumstances. The public will see total hypocrites.
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How about the simplest point of view. Don't come asking for $ billions in tax-payer loans if your flying out in your private jet with crew. Sell that Sh^& off if you are in dire circumstances. The public will see total hypocrites.
Hello, just playing the Devils Advocate.
Though in GMs defense Im sure the stock market failure, credit freeze put on by the commercial banking failure and Democratic lack of oversite of the Housing lending sector of Fannie Mae wasnt in their Forecast nor any other business model.
What they should of realized is the high cost of energy was taking the purchasing power of American consumers out of the market which led to that no one could afford the fuel to propel their automobile let alone purchase a new one.
Hello Sugglebear, I have found a new appreciation for your thoughtfulness of your posts. Seems a practical common sence approach for a possible solution for the big three. On a side watching a interview tonight on PBS with Rick Wagoneer there was a Picture of a Solstice on the wall behind him, maybe a ray of hope. Thanks Norm
Hey Norm, thanks. I'm not trying to sit here and bash GM or US industry. It may seem like this at times but the reality is that we all have problems and can do better. This goes for GM, US industry, Congress, myself, and everyone else. Air the problems, think them through, find the solutions, and implement them. Sure, there is pain, but life is not nor has it ever been easy.
To fix GM, everyone is going to need to suffer to some degree. Management will not be paid well and many will be looking for jobs. UAW will be dealing with more drastic reductions in benefits or pay for furloughed workers. The GM white collars will be downsized some more and may have to take pay cuts. GM products will be further delayed or axed. The shareholders will be out billions. The taxpayers will be out, depending on the terms, quite a few billion over the next few years. Local economies and tertiary businesses will suffer. The Feds will have to write a big check and take political heat from all sides (Republicans from people against a bailout, Democrats from the unions, etc). When everybody involved can swallow that in exchange for keeping a giant ripple from adding to the economic uncertainty right now, we can move forward.
Quote:
Originally Posted by turbofreak
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Edmunds says you're right. I was floored when I thought it was ~4400lbs.
Quote:
Originally Posted by kwtoxman
How about the simplest point of view. Don't come asking for $ billions in tax-payer loans if your flying out in your private jet with crew. Sell that Sh^& off if you are in dire circumstances. The public will see total hypocrites.
If the Big Three really wanted a bailout they should have come to DC, sat down, admitted their mistakes to the headmaster, detail how they're acting to solve the problems at present, how they plan to do so in the future, and then explain what they're willing to give up to the Feds in exchange for a loan. Showing up, private jets or no, and acting like it's not their fault, that Congress needs to appropriate them $25 billion in low or no-interest loans with no collateral, no solid plans for how they'll do things different, how they'll pay this back, and threatening economic collapse if Congress doesn't play ball does not get you paid. Most of Congress understands the macroeconomic effects if we don't bail them out. Much of the public does as well. We don't need this aired all day long causing the markets to panic in their fragile state. The adults need to stop scaring the children, go into the back room, and hammer out a deal. All sides have to make significant concessions. UAW will lose something. Management will lose something. Shareholders will lose something. Congress will lose something. Everybody had a part in the mistakes that lead up to this. Everybody needs some degree of punishment. Everybody needs some degree of help. Balance this and we're done here.
@all:
Boy do I wish I could have just sat at the computer last night and responded to each and every post. Truly great discussion, multiple viewpoints, and yet good, honest, respectful opinions. Just wanted to put that out there.
@Snugglebear:
You and I see things differently... but that's OK. Having spent time in the industry, having the connections I do have, and hearing the things I hear... well, I'm going to have a different viewpoint. What I do agree with you on is that everyone needs to "hurt" a bit in this. No doubt... but I think that the Big 3 are taking a tactic they use with the UAW and applying it to the Feds. Not good... and they are missing what you pointed out because of that. This... here's what we want, and you get nothing sort of discussion just reeks of my dealings with the Unions in my past. I'm not sure the exec's at the Big 3 remember how to not negotiate in that manner... and it's hurting them, IMHO. Airing the laundry, putting forth the plan, and asking for money based upon that would have gotten them further.... but not all the way. The Feds's *believe* the Big 3 have done wrong... and the exec's are fighting against perception, and they are doing that with their own reality. You can't fight someone's perception with your reality if they differ... it only creates conflict, and that's what we are seeing playing out on TV.
@Private Jet conversations:
I tend to agree with Norm here... I don't know if the jets are paid for, still on the books for depreciation, or fully depreciated. I don't know if Wagoner flew by himself, or with a team... but I can tell you us from experience. You can't get the kind of work done those folks would be doing on the private jet in a commercial airliner. Wagoner could have flown Coach / First Class on Northwest out of DTW, yep... but how much of that supposed $20,000 (I think that's a bit high... maybe $7k - $8k each way) was going to be spent even if the jet hadn't flown? That's not what makes news though... huge numbers and glaring mistakes make good news reports... not facts and figures. Some portion of that money was going to spent (as Norm so perfectly explained), and there is only additional cost on top of that. How many people flew (I saw $827 as the commercial airline ticket price on the news last night) * ticket cost subtracted from the actual additional money spent to fly private... that's what was wasted. Now ask yourself, if that's $5,000 (or $10,000 even) is it possible for those CEO's to have done work on the private jet which covers that cost, work that could not be done on the commercial flight in the open of the general public?? Nobody wants to talk about that... nobody wants to admit it, but I'll tell you what... as much as it does upset me that companies have jets like these, I have yet to witness a "party plane" happening in the sky. Work is being done, granted in nice accommodations yes... but it's a working trip.
@other topics:
I didn't read all of the news links from yesterday... and I can't find a link from my local news which I saw yesterday, so maybe someone else can find this. GM suspended payments in November to their dealerships, and delayed them into December. Rumor has it that GM will be idle in December... meaning when they shut down for Thanksgiving next Thursday, plants will not open until Jan. 5th (except for those who made an announcement to extend that into January). That's only three additional weeks (Dec. 1 - 19), but it will save some money. If the Feds don't come up with something, and free up the cash before Christmas... I fear the courts in Detroit will become very busy.
I left the automotive industry a few years ago... but I know a fair amount of what's going on. I still talk, on a daily basis, with my "contacts" which work in just about every aspect of the OEM's and cover GM, Ford, Chrysler, Nissan, Toyota, and Honda. Nobody is comfortable right now, and I'll say that I couldn't agree more with Solstice Man... Chapter 11 / 7 is not an option... not now. A loan is needed... let the economy recover and if the OEM's fail after that... let them fail. Add stipulations, add restrictions... don't take away the management (I'm usually not a proponent of keeping them in situations like this; however the complexities of the auto industry / federal regulations / etc. mandate execs with knowledge of this as well as general business). Give them a chance...
I know if GM files for bankruptcy I won't be purchasing another GM vehicle while they are under the courts protection. The risk is too great as SM pointed out. I know I'm not alone in that either...
If the B3 all go away, other manufs will take their place and build plants in the US, and hire American workers. The jobs will merely migrate to the south. Inefficiency will be punished and leaner, lower cost operations will emerge. The US Govt can simply add a $3000 surcharge to all foreign made cars to stimulate the American made ones. Other countries already do not play fair with us and go to extremes to protect their own. We ought to do the same.
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The US Govt can simply add a $3000 surcharge to all foreign made cars to stimulate the American made ones.
As I understand it the US already adds costs by some sort of tariff to foreign made cars. So that is already done. And that is why there are many foreign product car plants in the US. These vehicles are US made and the tariff does not apply.
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. I don't know if the jets are paid for, still on the books for depreciation, or fully depreciated. I don't know if Wagoner flew by himself, or with a team... but I can tell you us from experience. You can't get the kind of work done those folks would be doing on the private jet in a commercial airliner. Wagoner could have flown Coach / First Class on Northwest out of DTW, yep... but how much of that supposed $20,000 (I think that's a bit high... maybe $7k - $8k each way) was going to be spent even if the jet hadn't flown? That's not what makes news though... huge numbers and glaring mistakes make good news reports... not facts and figures. Some portion of that money was going to spent (as Norm so perfectly explained), and there is only additional cost on top of that. How many people flew (I saw $827 as the commercial airline ticket price on the news last night) * ticket cost subtracted from the actual additional money spent to fly private... that's what was wasted. Now ask yourself, if that's $5,000 (or $10,000 even) is it possible for those CEO's to have done work on the private jet which covers that cost, work that could not be done on the commercial flight in the open of the general public?? Nobody wants to talk about that... nobody wants to admit it, but I'll tell you what... as much as it does upset me that companies have jets like these, I have yet to witness a "party plane" happening in the sky. Work is being done, granted in nice accommodations yes... but it's a working trip.
Nothing saves money from a company facing bankrupty like removing expensive planes from the books completely. That I think is the most salient point. IMO there is no justification for their use under the circumstances. Not to mention the public relations nightmare that came about. Talk about captain obvious; how could these companies not realize the implications of their plane use.
If the B3 all go away, other manufs will take their place and build plants in the US, and hire American workers. The jobs will merely migrate to the south. Inefficiency will be punished and leaner, lower cost operations will emerge. The US Govt can simply add a $3000 surcharge to all foreign made cars to stimulate the American made ones. Other countries already do not play fair with us and go to extremes to protect their own. We ought to do the same.
Wow - that protectionist thinking is exactly what deepened the Great Depression. Agreed that other countries do not play fair w/ us, but the time to have put those tarriffs in place was 10-12 years ago.... not right now.
Fundamentally, in the midst of any recession the wrong thing to do is raise taxes - any taxes. Tarriffs are a tax on free trade.
Keep in mind that in any other circumstance, in a healthy economy, I'd say absolutle-fking-NO on an auto bailout, and the GM, F, and Cx would have to follow the path of chapter 11 reorganization...
...these are NOT normal circumstances. Even Honda and Toyota, the all-knowing and prescient, perfect beyond reproach automakers are having trouble. Toyota's sales were down 34% in September, 23% in October, and 32% in November. Toyota's Geo'town KY Camry plant, along with the new Woodstock RAV-4 plant and Cambridge all cutting workers or hours. Speculation in the auto-press is that Toyota may actually be cutting production in ALL of its North American plants due to demand drying up (which leads to increased dealer inventory, long day's supply, cars sitting on lots, etc.)... This with Toyota's 0% financing promotion.
Honda just pulled out of F1 racing because they can't afford it. The Fit's sales were down substantially. Civic Hybrid down by almost 70%.
Even the infallable "car that everyone wants" Prius was down by 48% in November. And it wasn't because of 'battery supply'.
Automotive sales in general are unsustainably weak. It's not only the D-3 that were hurt, every automotive company is hurting. But, people are still buying trucks. Ford's F-series is still strong (new model out), and is largely credited with the reason their sales were the cream of the crap at only 31% down in November
(tho I think largely the truck volume is an exercise that anyone will buy vehicles if you put enough incentive money on the passenger seat... , congrats ford and gm, you've just proved that it is possible to stimulate a market through discounts - the merchants figgered that out on Black Friday this year, though!)
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, congrats ford and gm, you've just proved that it is possible to stimulate a market through discounts - the merchants figgered that out on Black Friday this year, though!)
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