Economic crisis? Detroit?

[Gordon Gray]

Seems to me that the world is confronting an issue that has not occurred for decades.

Does it seem strange that, in a period of six months, the entire world of finance, and the global economy, is now in a state of absolute chaos?

Given my bias, I would like to think that this Administration is largely to blame, but I can't help feeling that other forces were / are at work.

What are your observations and what are you doing and / or planning to do, in light of the current situation?

As an aside, what are your feelings about the USA car industry and whether they deserve a bailout consideration?

GG

 

[tonepub]

I also think it's pretty bizarre that EVERYTHING went to hell in such a short period of time, but I have way too many conspiracy theories as it is...

The bailout thing is a tough call. Unfortunately, all the worker bees that did their job every day are going to lose their homes, etc if this hits the fan and the big execs that are making 10-20 million a year will find something else to do and they are the ones that made the big mistakes.

Curious to see how it's going to shake out...

 

[C.A.P]

I am watching Michigan go to hell in a hand bag fast. We have lost 250,000+ jobs already. If the bail out seems like a answer it isn't but somethig has to be done. We can't just lose this many jobs and continue to have small business close that serviced the auto industry with out new business to continue the growth of the economy. Right now we are loosing more jobs than gaining.. We are record high for forclosures. people I know have had to just walk away from mortgages. As sad as it sounds, I don't see Michigan being back to where we were in 7 to 10 years if ever. Plants are closing and heading south to non union workers. Lets hope GM and Ford can endure this and stay in Detroit. How thry can and be profitable withall the loss and debt I don't know.

 

[FISH_MAN]

first of all things have been going bad for some time they are finally coming to a head.there is deep problems with the way that people think there just are no standards anymore.

as for the car companies since when is it the governments job to keep everybody in biz I could use some free government help and I do not even own a jet.they are no longer hungry so gone are the days of innovation if they invest in them you can kiss that money good buy. I do not want to see anybody loose there jobs but don't throw good money after bad.by the way it's money we do not even have think about that

its all a bad situation I hope it shakes out ok

 

[Neps]

Hmmm

People said Chrysler would never repay its loan, but they did ~ even ahead of schedule.

Interesting the Trillions of $s going into the financial institutions doesn't come under the same scrutiny as a small percentage of that amount asked for by the automotive companies. I think you'd be surprised to learn how much money the US taxpayers may end up paying to secure Chinese interests here in the US if all the interwoven plans are approved.

TARP was sold as a bill of good to the US public as monies that would be available as consumer loans, instead the banks are using the monies to buy up competitors thus ensuring that they will be able to charge us 30%+ interest without competition in the market place.

While I think the automotive companies have done this to themselves by bowing to every union demand for the last 30 years, I still don't think we as a nation can afford to see them fail. I see the inflated pay that the UAW has secured for it members and can't help but think that we can't continue to pay a line worker $45.00 an hour and be competitive in a world economy.

My brother took an early retirement from GM and sits at home drawing his full pay until he reaches retirement age, please tell me what sense that makes, and where I can sign up...

 

[Len44]

I turn purple every time I think about this mess that the @%&*^ bankers devil and the Bush "no oversight needed" administration created!

If the bankers had stepped in a year ago (hell, even a few months ago) and decided to do work-outs with homeowners it is quite possible much of this mess could have been avoided. But no -- the GREEDY bankers treated those in trouble with their loans -- that these same bankers made to them -- with a caviler attitude or worse, and forced a record number of foreclosures.

I do not mean to demonize unions, but the UAW got a bit carried away and the spineless auto execs almost always caved to their demands. Probably bankruptcy is the right answer, since those labor agreements could be renegotiated on a more realistic basis, so the automakers could at least compete in the marketplace.

Or, have a team from Congress negotiate with the automakers and the UAW.
AFTER this, then maybe a loan tailored to each of the automakers.

Certainly, it is difficult to understand why the $%&^$& bankers pretty much got free, no-strings-attached $$$$$$$$$$$$$, while the $$$ for the automakers is subjected to so much scrutiny. Of course, the CEOs pretty much showed their collective backsides with the private jets and refusal to take severe pay cuts. They just wanted to blame "the economy" for their dire straits, not their own ineptness. Especially GMs Waggoner -- he's been running GM into the ground for several years now, yet doesn't seem to think anyone else could do a better job. Give me a break!

Just my 2 cents...

 

[twich54]

Len, I'm in agreement with you. I've been a GM man most of my life, but I'm on the fence as to letting them all go under or what my gut tells me is a stuctured and properly managed loan or just complete reorganization under chapter 11.

 

[C.A.P]

Chapter 11 would get the union out of a lot of it. It would free up a lot of $ at the cost of a lot of jobs at the top which could be good. However it will effect a lot of retirees pensions too. How would you liked to have worked for 30 years and did your time and then they sweep you right under the rug. Thanks for the life we owe you nothing ! I'm sure Govt would not alow that to happen 100% but it will hurt many !

Its a sad situation to say the least. In one way I feel no sorrow for these companies that hire and pay millions to these jet setting CEO who failed them , on the other hand I feel for the common man who will suffer because of it.

 

[MiTT]

I'm convinced that the financial crisis is largely due to the unregulated Credit Default Swap market. Since there is still some $62 TRILLION out there in CDS's we're not likely to see bottom for some time. That's why it's effecting entire world markets, not just ours.

As far as the bail out of the Big 3. The oil companies are recording record profits. Big oil needs the Big 3 so that people continue to buy cars and use more oil. We should let the oil companies bail them out!

 

[Horchem1972]

Don't shoot the Union workers

How does one argue over the average union workers wage, when CEO's are getting paid millions in salaries?The companies proceed to give them stocks and bonuses,that in many cases have them collecting $20-50 million dollars per year.They then proceed to close plants or lay off to justify cutbacks.Please remember it is that average union guy that supports small business owners with their wages.If foreign companies had their way everyone would be making minimum wage.How many of you could feed your families on $7.75 an hour?This is what kills me when everyone says,just buy another set of panels or woofers.Many people are on budgets and cannot shell out $400-$1000 at the drop of the hat.I am one of those union workers that make $21.24 an hour busting my a** everyday at work so my family can have a descent life.We tell our company everyday how they can save thousands of dollars,but nobody wants to listen.Please remember it is not the union workers that are getting rich.It is the upper management with their large salaries that cause these problems.

 

[tsmooth]

What we have is years of government and management not trying to face issues before they become major problems. In the mid 1970’s it was easy to give a pension to the UAW with hundreds of thousands auto workers with only a few thousand people retired. Fast forward 30 years to 2008 and we now have over 6 workers retired to every 1 active worker. You tell me their finical problems are not tied to LEGACY COSTS. People wanted more reliable cars, US automakers responded. People wanted more fuel-efficient cars, US automakers responded. But if GM has to sell a Malibu at $3,000 more then the Camery just to be able to pay the bills, people are going to let the dollars do the talking. The market is bad, but you don’t see Toyota turning into a penny stock.

But the biggest fact we need to face is that this same problem has/will effect Social Security, Medicare, and a possible universal health plan. Our lawmakers and large companies are not adapting to the personale cycles of the workforce. The difference is that our government has to ability raise our taxes to meet the needs.

Sorry I am all over the board, but I am glad somebody brought this up for discussion.

 

[MiTT]

How does one argue over the average union workers wage, when CEO's are getting paid millions in salaries?The companies proceed to give them stocks and bonuses,that in many cases have them collecting $20-50 million dollars per year.They then proceed to close plants or lay off to justify cutbacks.Please remember it is that average union guy that supports small business owners with their wages.If foreign companies had their way everyone would be making minimum wage.How many of you could feed your families on $7.75 an hour?This is what kills me when everyone says,just buy another set of panels or woofers.Many people are on budgets and cannot shell out $400-$1000 at the drop of the hat.I am one of those union workers that make $21.24 an hour busting my a** everyday at work so my family can have a descent life.We tell our company everyday how they can save thousands of dollars,but nobody wants to listen.Please remember it is not the union workers that are getting rich.It is the upper management with their large salaries that cause these problems.

Except that there are a lot of forign companies building cars right here in this country and paying those workers decent wages. A lot of those workers are VERY content with their jobs and the living they make without being encumbered by the unions.

Don't get me wrong, I agree with you that the workers in the Detroit plants are NOT to blame for the crisis their employers have brought upon themselves. It's the upper management of those companies that have derailed their own industry.

Not paying attention to the voice of their customers, not embracing trends that the rest of the industry was using to gain market share, continuing to expand dealer networks even in the face of downsized markets (GM has more than 10 times the number of dealers as Toyota in this country!).

I agree that we need to keep the industry afloat for the sake of the folks that have given their lifes blood to it over the years - the common workers. But the workers need to realize that the unions are just as corrupt and self serving as the upper level management of these companies and share some of the blame for their current dilema.

 

[twich54]

Please remember it is not the union workers that are getting rich.It is the upper management with their large salaries that cause these problems.

Actually it is BOTH, and I think most of us know that.

Being in an indusrty (Railroading) all my life I have seen firsthand the despair of bankruptcy to the rewards of profitability the industry shares now.

I respect unions to a point (I did marry a school teacher afterall), but again I have witnessed their foolishness with respect to demands , etc.

Now with respect to CEO's and their large compensation packages, I actually have no problem.......so long as it's legal, they meet and or exceed shareholder expectations and as the "Top Man", they manage their respective companies present and future buisness fairly and equitably. Kind of like the "Benevolent Dictator" thing, great idea , trouble is they don't remain benevolent !

 

[User211]

Detroit? Steer well clear. Been watching a DEA series here, and it does not look good!

Anyway, one problem I believe the USA has is the cars it produces aren't much cop for export. They are simply too American, and as a result they don't appeal to European and Eastern market tastes in any way, shape or form. And that is a huge market to miss.

Generally, US cars are critised over here for having awful handling, and being able to nothing well apart from going in a straight line! At least, that is the view portrayed by Top Gear - the number one TV car show here in the UK. They do like some American classics, though. And the presenter owned a Ford GT40... but gave up cos of reliability problems.

 

[Len44]

Actually it is BOTH, and I think most of us know that.

Being in an indusrty (Railroading) all my life I have seen firsthand the despair of bankruptcy to the rewards of profitability the industry shares now.

I respect unions to a point (I did marry a school teacher afterall), but again I have witnessed their foolishness with respect to demands , etc.

Now with respect to CEO's and their large compensation packages, I actually have no problem.......so long as it's legal, they meet and or exceed shareholder expectations and as the "Top Man", they manage their respective companies present and future buisness fairly and equitably. Kind of like the "Benevolent Dictator" thing, great idea , trouble is they don't remain benevolent !

I agree with you...EXCEPT for the "CEO's and their large compensation packages..."

NO ONE is worth anywhere near what some of these guys are making. If it were within my power, I would restrict CEO compensation to, oh, say 20-25 times the pay of the average worker.

Lessee... if average pay is $20 / hr, then 25 x 20 = $500 / hr. Yep, that ought to be plenty...that calculates out to about $80,000 per month, or close to $1m per year. Most of us could live on that.

 

[Len44]

BTW, in our future history books, this period will be known as "The Bush Depression."

 

[twich54]

BTW, in our future history books, this period will be known as "The Bush Depression."

you know Len, the "seeds" to this mess were planted LONG before Bush took over. IMO, when the next set of History books are written we will look back to coming out of the Great Depression, entering WW II, recovering and here's the big one .........good ole' "US of A" rebuilding the war raveged nations only to have the insuing years of supposed prosperity and then the "World Economy" come up and bite us on the arse !

We as a people and a Nation did not forsee and or anticipate this. 10-20 years ago we started feeding our 401k's, had our employers match, enjoyed 15-20% annualized growth and became fat, dumb and happy.

While I am not at all happy with "W" the blame goes waaaay beyond him as ONE person.

 

[IWalker]

Obviously it's not the workers' fault individually...but the Union is the representative of the workers...chosen by the workers...and those union relationships have forced the Detroit automakers into a corner. Unions tend to do what is in the best short term for the worker...which is generally not in the best long term for the company...or the worker (when it causes a company to fail). Those people getting paid much more than their non-union counterparts (in total compensation...including benefits) are those most likely to now find themselves jobless. Blaming the executives doesn't do much good either...because their hands have been tied by these agreements. GM can't pare down the number of dealerships they have, and they can't get the workforce cost down without bankruptcy...and they can't be competitive without getting fewer dealerships and lower workforce costs. So Bankruptcy might be the best option for everyone involved. Some people may lose their pensions...but they'll have jobs. That's better than having a pension and no job (for those still working at least)...and it's definitely better than the other alternative...which is GM just plain failing...and people having no pensions and no jobs. There's no rosy alternative...but there is a best of the bad scenario.

When it comes to executive compensation vs union wages...the cost of the CEO of GM's salary per vehicle is probably in the cents (less than a dollar)...the cost of the increase in wage/benefits vs competitors per car? closer to $2k-$3k. It's a matter of scale. It seems frivolous to me that when actors can make up to $50million per movie, and athletes can make tens of millions a year, that a job as important as the CEO of a multi-billion dollar corporation would be thought of as being overpaid. For the record, I do disagree with golden parachutes and poison pills....but that money will be put into contracts somwhere or another in order for firms to attract top talent...so what are suggestions to fix it?

 

[Horchem1972]

Please let me know how $20 an hour is getting rich.

I would like to someone to clarify how $20 an hour is getting rich.In all due respect those who say that do not live in the real world.Take a CEO that gets a 20 million dollar bonus.That is enough money to hire 480 workers at $20 an hour for a YEAR.That is a staggering figure to think about.Your average union worker will never be able to afford a pair of Summits especially the CLX.There are alot more people getting rich off the backbones of said union workers,than the workers themselves.If you would ask the majority of the workers at non-union plants they are very unhappy with their wages.It is always easier to blame the unions than the corporations themselves. Everytime a company gets into this situation it is always the unions fault and never management.I do not want anyone to misterpret my words as anger.Everything I say is meant to everyone on this forum with the utmost respect.

 

[timm]

Well - I don't usually chime in with these - but I am from the Detroit area... so here it goes....

Of course many of the opinions stated are valid. The bottom line is - Do we want to actually manufacture anything in this country ever? I am not a union guy - at all. But, I'll tell you this - Try working on an assembly line. I did it for 2 weeks - and I'll tell you - I wouldn't do it for 30/hr. It is not easy work - hard on the body and the mind.

So, what is the measuring stick guys? Do we allow a guy to make 60K/year so he can make ends meet? Or do we just outsource the whole she-bang so that we can lower the standards of this country to those that make the wages we are competing with? My garbage man makes 40K/year as a comparison. It is not 'ok' for Kathy Lee Gifford or Nike to go and pay wages and take advantage of labor laws in 3rd world countries - but in order for us to be competitive we need to measure ourselves to THAT??

This is not just an automotive issue - it is an 'everything' issue.

Yes,yes... plenty of greed going around I am sure... and plenty of waste... and PLENTY of stupid ideas. But here we are - what are you gonna do about it? I liken this situation to the war ('gasp'!!!) - Maybe the new administration wouldn't have gotten into the war - but now they have to figure out a way to deal with it. We have to do the same thing with the auto industry. We could let it fall on the floor and go splat or we can try to do something. It just impacts too many families across this entire nation. Think of the suppliers - the companies that make parts,tools or even provide computers or ink for all of the brochures. Now think of the health insurance obligation and the failed pensions. Think of all of the non-US companies that sell things that will see a huge profit decrease because their largest consumer just lost millions of jobs.... Now think of all of the layoffs from these companies because - Dell isn't selling as many computers and they need to be more profitable.

And to watch some Congressman point fingers at the industry? You want to talk about hypocrisy? The congressman with millions in some political fund that he can use as he see fits??? The Congressmen that continue to tell half truths and bold faced lies in order to get ahead? The Congressmen that isn't going to come in until next year because they can't get anything done in a month??? Excuse me while I vomit!!

Re: Europe - Ford is profitable in Europe.

Well - now that I got that off my chest....