The Auto Bailout: Discuss Here + poll

[The Voice]

note: Image taken from treehugger

Article courtesy of Yahoo:

Congress sends White House $15B auto aid proposal
WASHINGTON – Congressional Democrats sent the White House an emergency $15 billion auto bailout plan Monday, complete with provision of a "car czar" to oversee the industry's reinvention of itself. The Bush administration said there had been progress toward agreement but pressed further negotiations into the night.
The measure would rush bridge loans to Detroit's struggling Big Three but would also demand that the auto industry restructure itself in order to survive and would put an overseer chosen by President George W. Bush in charge of monitoring that effort, according to the draft obtained by The Associated Press.
At first blush, White House officials suggested privately that the draft plan might fall short of principles behind a broad agreement to give long-term financing only to viable companies. But a later statement from press secretary Dana Perino sounded relatively upbeat about the rescue legislation, which congressional leaders hope to approve in the next few days.
"We've made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability," she said. "We'll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers."
Bush himself said it was "hard to tell" if a deal was imminent because definite conditions had to be met. "These are important companies, but on the other hand, we just don't want to put good money after bad," he said in an interview with ABC's "Nightline."
At the Capitol, Senate Majority Leader Harry Reid, D-Nev., said, "While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done." He added, "This is no blank check or blind hope."
House Speaker Nancy Pelosi, D-Calif., said negotiations were continuing with the White House, and lawmakers were hoping to create an auto industry that could thrive on its own — an effort she said would require concessions from management, labor, creditors and others.
"We call this a barbershop. Everybody's getting a haircut," Pelosi said.
Earlier Monday, the White House and a top Democratic lawmaker said they were likely to strike a deal quickly on the multibillion-dollar bailout, which places strict restrictions on the automakers while they're receiving the loans and mandates that the government overseer keep close tabs on their efforts to restructure.
The emergency loans would be drawn from an existing program meant to help the automakers build fuel-efficient vehicles.
Among the requirements included the draft proposal is one that the carmakers getting federal help get rid of their corporate jets — which became a potent symbol of the industry's ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government aid.
The proposal also would give the overseer — a kind of "car czar" — say-so over any major business decisions by the automakers while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more and any "material change" in their financial condition.
Under the plan, the carmakers could get emergency loans right away. Then the overseer would write guidelines, due on the first of the year, for restructuring the Big Three automakers.
In testimony before Congress last week, General Motors Corp. and Chrysler LLC, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009. Ford Motor Co. has said it has enough money to stay afloat unless one of the other Big Three goes under or the economy deteriorates more sharply.
While the measure would put an administration official selected by Bush in charge of setting terms for restructuring, the decision about whether the terms were being met would not be made until President-elect Barack Obama had been sworn in. Congressional Democrats and the White House were working to find a broadly supported candidate who could span the two administrations.
Congressional officials said Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims' compensation fund, was under consideration for the position.
Asked if a deal could be struck for a vote as early as Monday, White House spokeswoman Perino said, "I think it's very likely." That was before the Democrats sent their draft.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said that he, too, expected a deal by the end of the day and enactment by week's end.
In the latest gauge of public opinion, people were split about evenly over providing federal money to keep the car companies functioning.
Forty-five percent approved and 44 percent were opposed, according to a CBS News poll released Monday. Nearly six in 10 Democrats favored the aid, while nearly the same share of Republicans opposed it.
About seven in 10 said the government should have a say in managing the companies if taxpayers provide assistance, and nearly as many said requiring more alternative fuel vehicles should be a condition of such aid. Fifty-six percent blamed management for the companies' problems, double the number who blamed uncontrollable economic problems.

The poll is simply here to see how many people are for it and against it. The topic here is to discuss it. So please, may I have your thoughts?

My Thoughts

A.) The Auto Industry in America
The auto industry in America isn't dead or in need of bailout, in fact they are doing pretty well. These companies are Toyota and Honda. Both these companies have factories in the United States. Neither need a bailout. Honda already has influence in Ohio with their factories and Toyota has factories in West Virginia and Kentucky. They would expand and take more of the market then they already have, had the big three been not bailed out. They would have potential to become the big 2.

B.) The Big Three wouldn't be dead
They would just no longer be the BIG three. They would be reduced to about half their sizes or less. They would be able to restructure and go to a smaller scale. This would also give oppurtunity for another company to form or more foreign companies to invade the market. However, those cars would most likely be manufactured here in the United States.

C.) The New Business Structure?
Do the big three have a new business structure? Are they going to start advertising more about fuel economy rather then torque power and off roading. I haven't noticed a significant change yet. If the big three are to be bailed out, should they be required to meet standards and show progress? I believe they should and the first thing they should have to do is prove they can do it by showing a new business model. Sell themselves to us and make us think that they can achieve progress.

D.) Free Market Capitalism
Let the weaker companies die off and the stronger prevail. Right now that's Toyota and Honda along with other foreign cars. With good reason too, they seem to understand the consumers needs more then the others. Bulild a car that 1.) doesn't break, 2.) is good with fuel and 3.) affordable. I do recall the big three making fun of Toyota as they released the Prious and it happened to be the biggest seller of the year. They're now adding on solar panels to power the a/c to make it even more fuel efficient. Though this is a higher end car, Toyota still holds the Yaris and Corolla. Both are supposed to be good on gas and they don't really break. Furthermore, the 10 year/100,000 mile warranty is great. Along with if it does break and you have to bring it in they'll give you money off your next purchase and they fix it for free. (for those who don't know, they give you a card and it earns credits for each repair needed)

E.) If We Bail Them out and They Don't Change
We will be stuck right where we were before shortly. Do they just come back and ask for more money? The CEO's have agreed to take pay cuts, that's great and all. However, does this take away/reduce their stock options, private jets, season tickets to sporting events, ect? If the unions/autoworkers wanted the bailout so bad, then why aren't they accepting a paycut as well? Reduce the factory assembly line wages from 27 bucks an hour to 15-20. If they recover and prove they can be an effecient and profitable company again then fine, raise their wages all you want.

 

[Splitz]

I don't think Chrysler should get any help, they literally have been putting out garbage for years. I can't think of a single car from them that gives them brand recognition. The PT cruiser sucks, the Sebring was cool in 1998, the 300 was cool for a minute, I think their Town and Country is probably what they are best known for. Terrible car company from top to bottom. On the other hand Ford has some nice products.

I own a Mazda 6 which has been a great car, the 3 is nice, the Focus is and Fusion are solid, Edge and Escape, not bad. Lincoln MKZ and MKS are great looking cars. GM needs to get rid of Buick, Hummer, and SAAB. Chevy has a couple good products and Pontiac if managed right could be a great way to attract young buyers. Overall I say help GM and Ford and let Chrysler fail. The company that owns Chrysler could bail them out themselves if they really cared which apparently they don't.

 

[Maximus]

My problem with giving them the money is that I still don't think they have fixed the problems....it's just a band-aid for a gushing wound.

As I've said before, here are some of the most serious problems:
- The Big 3 have a MASSIVE cost disadvantage when compared to foreign car companies due to ridiculous labor costs.
- Average worker makes $70 and hour including health care and benefits. That's $10 to $20 more an hour than workers at Honda or Toyota make who are also WORKING IN THE UNITED STATES.
- Too many brands (eliminate half)
- Too many plants (eliminate half)
- They have the "dirtiest" cars in the industry...must commit to clean & high MPG.
- Management is a complete ABORTION. They have created this mess....at the least they have ignored the problems. So why keep them in place and just give them more money to make the same mistakes???

TOUGH changes need to be made. I just can't see how the UAW with a straight face can ask Americans that don't have gold plated income and benefits packages to write a check when the UAW are unwilling to make major sacrifices themselves. I don't think a nickel should be given to them until a commitment to significant changes are made. IF changes aren't made, they will be back in front of congress with their hands out in another 6 months.

Just my opinion...

 

[The Voice]

My problem with giving them the money is that I still don't think they have fixed the problems....it's just a band-aid for a gushing wound.

As I've said before, here are some of the most serious problems:
- The Big 3 have a MASSIVE cost disadvantage when compared to foreign car companies due to ridiculous labor costs.
- Average worker makes $70 and hour including health care and benefits. That's $10 to $20 more an hour than workers at Honda or Toyota make who are also WORKING IN THE UNITED STATES.
- Too many brands (eliminate half)
- Too many plants (eliminate half)
- They have the "dirtiest" cars in the industry...must commit to clean & high MPG.
- Management is a complete ABORTION. They have created this mess....at the least they have ignored the problems. So why keep them in place and just give them more money to make the same mistakes???

TOUGH changes need to be made. I just can't see how the UAW with a straight face can ask Americans that don't have gold plated income and benefits packages to write a check when the UAW are unwilling to make major sacrifices themselves. I don't think a nickel should be given to them until a commitment to significant changes are made. IF changes aren't made, they will be back in front of congress with their hands out in another 6 months.

Just my opinion...

I agree with you and that's why they close plants in the US more then Canada. They don't have to pay health care there. It's also almost like they are too big for their own good as well.

 

[gourimoko]

I agree with you and that's why they close plants in the US more then Canada. They don't have to pay health care there. It's also almost like they are too big for their own good as well.

....

 

[cavsfanclanman]

I think it's kind of lame if only Chrysler and GM are getting the money, why not put it into some smaller, up and coming companies, like Tesla Motor? Do you know what 1 billion dollars would do for a company like Tesla? It would change everything for them, and considering they made an all electric amazing roadster, something tells me they could make some more affordable cars on the same technology with that kind of money.

I voted for provisions, but I think the money should be given out evenly to all the companies that petitioned (I think there were like 25 companies) why should it just be the big guys?

I think you'd be hard pressed to find any Americans who are for giving money to these companies without provisions at least.