Big Three Get Reprieve from White House, Not from Terminal Illness

Will foreign interests buy the american car companies? Likely, then one more industry will be gone. Americans will become enslaved to foreigners.

Why the 'bailout' will not work.......................and solving these problems by March 2009 is nonsense! The massive nature of Toyota's (and Hondas) U.S. competitive advantage: 1. Basic wage rates in the US --- Toyota is 2/3 of the basic UAW wage rate for the big three 2. Work rules -- Toyota can man a plant as needed and not with up to 40% featherbedded jobs. 3. Structure of product lines - Toyota has volume and learning curve advantages because they make essentially the same car around the world with few variations. The basic chassis and engine/transmission investments are spread over volumes many times the US manufacturers volumes. They source the high capital investment parts, i.e. engines and drive train, from low cost and high productivity locations. 4. Borrowing costs -- GM, Ford and Chrysler are all at 'junk' rates in the world market and borrow at high rates. Toyota borrows when necessary at Bank of Japan rates at 1/2 of 1% to finance the worldwide business. This spread alone is a disadvantage of major consequence. 5. Acceptability of products -- Toyota has built products which enjoy worldwide preference and has engineered reliability into the vehicles. The US manufacturers are still using the business model of designed obsolescence where products are designed to wear out and provide parts business to the manufacturer after 3-5 years and support the parts/service structure of the dealerships. This creates used car markets that clearly prefer the foreign makers products and award higher trade in values for the foreign product. This whole perspective creates the need for US manufacturers to regularly discount and 'deal' their new cars more than the foreign makers. 6. Legacy costs -- health care and unfunded pension obligations which go on independent of volume and are largely indexed to inflation. 7. Exposure to US environmental regulations -- basic costs associated with running plants in most of the US compared with most Asian supply sources. 8. Outsourcing limits -- Toyota and others have few limits on outsourcing and can get parts from the sources which make most sense. UAW rules prohibit the Big Three from moving production of parts outside a UAW represented source. 9. International Supply structure -- Toyota, Honda, BMW, Mercedes and others have set up intermediary companies between the plants and the US marketing entity which moves profit to offshore entities and away from high tax environments (like the US!) ... the list goes on. But these issues account for most of it.

There must consolidation in the industry provided the UAW and the Union Tzar and all his cohort will be eliminated or reduce to pieces if not it is impossible to exist.......If it is a pound to pound Boxer a towel is about to be thrown in the ring.........

GM and Chrysler would not have imminently collapsed. They would have shut down some but not all operations and began supplying lower amounts of product in order to meet market demand.

not big three, but (big two). stop including ford, they are getting nothing and stories like your's are killing ford's stock price

The Big 3 get a Big Christmas gift from George Bush. Happy Holidays Big 3, courtesy of the middle class tax payers! Wouldn't it be nice if the tax payers got a Bail Out? Our 401K, Roth, and other equity Investments have been cut in half or worse. Our retirement savings and retirement income are invested in stocks and mutual funds. We are struggling to make ends meet too. Where is our Bail Out? Why do we get the lump of coal?

I say its time to buy an American car , and stop shopping at Walmart if we want to save our economy . Save America Now Buy American !

MAKE THEM REORGANIZE. SOMETHING THEY REFUSED TO DO FOR 25 YEARS.

US still has the how-to technology building cars. So we are at least #2 in this space. Let's work together and hang in there instead of going down fast and see Korea or other countries replace us.

I will bet you a week's pay the Big 3 will be back in March for more money. We need to stop ALL bailouts. They aren't working. Let the "Free" market decide who stays and who goes. Isn't that what capitalism is all about? If you're smart in business, you succeed. If you're dumb, you go out of business. mogleytheman, I agree with you that we need to stop the BS spending. But increasing taxes is not a solution. The more money gov't gets, the more BS they spend it on.

unicorndr got some good points...some other notes though..only GM has powertrain engineering to any degree..chrysler is pretty much on life support...ford has some cash and mullaly has some ideas but they need some attractive vehicles...summary...chrysler gone!..gm worst financially but best technology...ford..who knows..bottom line, in an 8 cylinder economy domestic autos is about one cylinder...that's why australia, france, germany, canada, sweden, etc are dealing with bailouts....we better figure a way to restructure ford and gm or game over...

GM shares at $1...that in of itself goes to show you the state of the economy. What about GM bonds? Junk status? Just a taste of what is to come about in 2009. Everything will be reduced to junk status which should have happened in 2003 but Greenspan did the 1% interest rate and artificially propped up the economy through real estate related borrowing. Happy New Year...2009. Scarey !

Calling the UAW's sacrifices as "major" is one humongously ignorant joke. The UAW members already are paid approximately 7times what they're worth, if a free labor marker were to exst and rational wages existent. Note that the unionized media cannot bring itslef to even question the extortion of the labor unions or the enormity of its effect on the companies. they can only dodge the issue and talk about 'bad planning" and dumb CEOs, thus demonstrating for all to see that their ability to provide honest reporting about the automakers is non-existent. The whole problem with detroit can be sumed up in one word : UAW. Until that union is legally destroyed for extortion, fraud, price fixing and monopolistic operations, there won't be any Big Three in our future. Hopefully a foreign automaker will buy up the pices and contract the work out to Americans actually willing to work. I also note that the UAw members are getting paid their full slary to sit on their asses during January Another couple of billion diollars down the drain. Oh, yeah, the bailout is working just fine..

Wow unicorn looks like u got it all figured out... I was impressed with the data. But the Big 3 purchases NON-union products all the time for there automobiles. I work for a company that does this on a regular basis. How much more of your data is incorrect?

http://video.google.com/videoplay?docid=1954933468700958565&hl=es

Enslaved by foreign ownership of our automakers? Let the teamsters get a taste of Sushi. As confucius say: man with good feet walk free.

Thanks to unicorndr for the first truly informed and intelligent comment I have seen on this subject on the Web. Blodgett and Task are, like nearly all of their fellow pundits, sadly uninformed and unqualified to comment on this issue. The struggle of the American automakers has been generations in the making and affected by many factors entirely beyond their control. No company is blameless for past failures, but neither is any company responsible for $5 a gallon gas or the international financial collapse.

Since so many people splurged on a new car in the recent credit bubble these durable big ticket items should be around for a long while as people are forced to conserve their precious cash flow. Unless Auto makers reinvent the automobile along the lines of a plug in Prius or Volt whats the motivation to buy a new vehicle unless it can really help save you some serious coin as the prospects of a global depression slowly sinks in around the world.

Terry F you really do not have a clue do you? It is really not that simple. You spend 2 weeks looking for American made furniture, then you buy foreign made electronics? Go to a grocery store in winter and ask them where they get their produce? Much of the fresh produce comes from South America. Your elected officials did this with their free trade agreements and their guest worker legislation. If you want to do something about this problem, you need to get these politicians out of office. It should have been done last November, but the American voter failed... If you truly want to stop this problem, vote these people out of office and put new people in. If they do not do the job, vote them out until someone gets in office that will help America.

Get Real: Obama will never push the UAW to cut wages. In fact, he supports open (rather than) secret balloting at plant sites in the right to work states to help UAW coerce workers to join the union. Saving UAW salaries via open balloting and bailouts, Obama will make john Q pay twice. First for the bailout, and second for the increased cost of cars manufactured in the right to work states, increasing the price of cars for all of us. You voted for him. Get ready for the $10 Whopper.