Congress Bailout Pull Out

[digit]

http://news.bbc.co.uk/1/hi/business/7778830.stm

I'm sure most people have seen the news this morning about Congress not granting any bailout money to the Detroit Three. Any thoughts or opinions on this? Anyone know anyone who works for GM in some capacity?

I myself work for GM on my placement and i'll be sad to know that potentially a lot of people who given many years to GM could potentially be out of a job as soon as March next year

[Salazaar]

I heard that the unions over there demand up to 95% of full pay for workers who are not working! No wonder their government don't feel like bailing them out!

It's very hard on the workers involved but if they can't make cars good enough or cheap enough to turn a profit then they really shouldn't be in business. Just like the British car industry 30 years ago.

[digit]

I heard that the unions over there demand up to 95% of full pay for workers who are not working! No wonder their government don't feel like bailing them out!

It's very hard on the workers involved but if they can't make cars good enough or cheap enough to turn a profit then they really shouldn't be in business. Just like the British car industry 30 years ago.

The thing is that the UAW had already agreed to a pay cut in 2011. Bit odd they would rather be out of job then bring the pay cut forward to secure there employment?

I'm not sure I agree on the car front point you've made completly. Its the american side that lets things down. If only GM had recognised America would go eco mad ... The brands in Europe and the UK are still very strong and respected especially on the Vauxhall/ Opel front.

[Funkstar]

The thing is that the UAW had already agreed to a pay cut in 2011. Bit odd they would rather be out of job then bring the pay cut forward to secure there employment?

This is what I've never understood about Unions.

[Salazaar]

The thing is that the UAW had already agreed to a pay cut in 2011. Bit odd they would rather be out of job then bring the pay cut forward to secure there employment?

I'm not sure I agree on the car front point you've made completly. Its the american side that lets things down. If only GM had recognised America would go eco mad ... The brands in Europe and the UK are still very strong and respected especially on the Vauxhall/ Opel front.

I agree about the european brands, and I suspect that if the worst happened that they would be sold off to another manufacturer as a complete entity. If Ford were to disappear from Europe it would be a great loss as they have an excellent range at the moment.

On the workers front, they (Americans) have consistently voted in governments which shy away from the kind of social support which we have in Europe, why should that government do the same thing via another route? Even if the workers do take a pay cut it's still up to their companies to make a product which turns a profit.

[digit]

I agree about the european brands, and I suspect that if the worst happened that they would be sold off to another manufacturer as a complete entity. If Ford were to disappear from Europe it would be a great loss as they have an excellent range at the moment.

On the workers front, they (Americans) have consistently voted in governments which shy away from the kind of social support which we have in Europe, why should that government do the same thing via another route? Even if the workers do take a pay cut it's still up to their companies to make a product which turns a profit.

Rumor is on detnews and a number of other sites that Ford Europe could survive if a split happened from its parent company. I put forward that at the moment its an option GM could and should consider. It would be silly to drag the whole company including european operations into chapter 11. I think the American government would welcome a smaller GM rather then the big complex organisation it currently is.

[Funkstar]

It also depends on how the companies are structured.

Ford Europe is a separate entity I believe (but could be wrong), so in theory could still survive if Ford US went under. But then it also depends on distribution channels and where they get parts from I guess (engines and gear boxes especially).

I don't know about the others though.

*edit* digit beat me to it

[dave87]

Is it actually as much of an issue as has been made out?

I mean European airlines have been complaining for years that their competition in America have been working under Chapter 11 bankruptcy with protection from creditors, so would the same not apply to the automotive industry?

The other angle is the unions are playing brinkmanship with the US government. Detroit is a state as it is, add into that the amount of money US automotive used to put into the government and they believe the government will attach some value to their continued existence. If so, its a risky but potentially successful option.

How long does it take to bring out a new eco model? 5 years ish, maybe less if based on existing designs? As such, would it not be better for the US to service the debts (rather than removing them) and set certain hoops for the automotive industry to jump through? It goes beyond a level of state intervention typically forthcoming in America, but could be enough to turn the companies around?

[Salazaar]

While the automotive industry is certainly important to the US and particularly the Michigan economy, it doesn't provide the same kind of essential (with respect to the modern way of life in the US) service that the airlines do. Americans still buy cars, just not American ones; if the airlines started to collapes there would actually be fewer flights available and therefore long distance travel would become a lot more problematic and businesses would suffer.

[Stringent]

While the automotive industry is certainly important to the US and particularly the Michigan economy, it doesn't provide the same kind of essential (with respect to the modern way of life in the US) service that the airlines do. Americans still buy cars, just not American ones; if the airlines started to collapes there would actually be fewer flights available and therefore long distance travel would become a lot more problematic and businesses would suffer.

Um there are other airlines besides American Airlines you know ... Not quite sure what you mean by this.

[Salazaar]

Um there are other airlines besides American Airlines you know ... Not quite sure what you mean by this.

Not that run trans-continentally within the US... Just try getting from NY to LA by land!

[Stringent]

Not that run trans-continentally within the US... Just try getting from NY to LA by land!

Ahh ok, with it now.

[Rave]

While the automotive industry is certainly important to the US and particularly the Michigan economy, it doesn't provide the same kind of essential (with respect to the modern way of life in the US) service that the airlines do. Americans still buy cars, just not American ones; if the airlines started to collapes there would actually be fewer flights available and therefore long distance travel would become a lot more problematic and businesses would suffer.

The bailout is clearly not about the ability of Americans to buy cars- it's about safeguarding 3m+ jobs, and minimising America's (already large) trade deficit.

As to whether it's a good idea- I don't know, to be honest. The American government is between a rock and a hard place- risk throwing good money after bad, or suffer a catastrophic spike in unemployment. TBH I think they're stuffed either way.

[joshwa]

I thought if they went bankrupt, their uncle could just rebuy the company for £1, write off the debts and start up operations again? This is what happened to the Cains bewery (albeit in the UK, and it was the original owners who repurchased it)...

[dkmech]

Did anyone see what the Daily Show had to say about this? In particular how it's ok to give $700bn to the banks (so fast they lost track of what went where) but not ok to give 25bn (i think they later asked for even more) to the car industry which actually makes stuff (not all of it good, granted).