Bail out the Big 3?

What to do?

Quote
Canadian auto industry to lose 15,000 jobs by end of 2009: Conference Board of Canada.
Unquote.

To my way of thinking bailing them out is throwing good money after bad.
After all, the main reason they are in trouble is because people do not want to buy their products.

On the other hand allowing increases in Ontario's welfare and unemployment roles by 10's of thousands certainly wont get the Harper government any new seats in the heartland.

Trex

We're damned if we do and damned if we don't. There is no easy fix for the auto makers or any future. Put our money and time in mass transit and efficient affordable housing. Deleverage from the machine, tear up the trade aggreements and erect the barriers, get out in front of the contraction or it will run over us. I've been hearing stable economy, mild downturn, medium downturn, mild recession, medium recession for the last year while reading global catyclismic hyperinflationary depression and war on a never before recorded scale. Fornicate the cars, we have to eat and it's winter.

Bail them out in exchange for shares (at $3/share) and conditional upon the Big 3 building
affordable, durable, intelligent automobiles that people will actually want to buy....even in
this current market.

These HAVE to be priced at least competitively, if not substantially less than their
competitors, or why bother...If the Big 3 don't agree to this, use the $$$ for the Bail-Out
towards retraining these folks to do something else.

Do you mean the people who are doing the bailout...the tax payers...will be able to buy affordable shares. HA! And have a chance to share in the wealth, albeit a small token, if things go well?

The Japanese have been building great cars for years and they still haven't learned from them. They have the answers right in front of them. Heck...you can't even change a headlight in your own car w/o taking it apart now.

No way Ron...they want our money to do as they will with it because they know SO MUCH more than us. Just like Fanny Mac et all.

^Good one.

And almost certainly at the very least partially correct.

But what about all the family's of the workers?
The country just washes it's hands?

If they have a problem, they only have themselves to blame.

Let them rot for what they did to the car buying public.

Send the machinery back to the states and make them work rather than loaf.

I think the solution to this mess, just like most of our economic troubles, is to focus on domestic and North American troubles rather than sending jobs, money, offices, executives [yes it DOES happen] and resources to Asia, namely China.

I'm certainly not a fan of Asian products, nor would I ever, ever, ever, ever, EVER! purchase an Asian car, but they are cheaply built and cheap in all respects. If North American auto makers rebuilt their respect in their own market, there shouldn't be such an issue. Ford's are somewhat respected autos here in the car capital of the world, which is more than one can say about a Honda. A mate told me Fords are only respected here because the ones sold here (which yes, look very different than those in Canada) use European technology.

If there's still respect for a US-American car here there's still gotta be hope. If I was ever caught driving a Hyandai or Honda here in Germany, even as a rental car, I'd be labelled as a loser, or even worse, a traitor.

Why aren't North Americans also proud about their own products? Are they so unconcerned for their own safety and national pride that they'll go for the 'cheapest and cheerfullest' everytime?

A bailout is a subsidy and as such isn't legal under NAFTA. If the USA "bailout" their auto industry then we should sue them or slap tariffs on their cars they try and import. That in itself would be a "bailout" enough for our industry IMO.

Good idea .

Federal Government gets the shares for $3/pop....Taxpayers can buy them directly from the
Government at a locked in cost of $5/share....no trade fee's or minimum amounts...only to
Canadian Citizens who've overpaid on their income tax in lieu of an income tax return. Can
take part in $$$, and the balance in shares in GM, FORD, etc....just check the applicable
box's on the tax return form.

Auto industry gets bailed out, government gets their $$$ back fast from tax payers, and the
taxpayers can sit on whatever number of shares they're individually comfortable with (or none
at all). Government has large voluntary windfall of revenue from those that chose to buy the
shares. Federal Government avoids being able to use Bail-Out as an excuse for a deficit.

Avery sad situation and it was avoidable, but money always wins out. No matter what.

Like I said we're damned anyway, if we can borrow for the auto workers in expectation of socially positive outcome we can borrow directly for infrastructure projects like mass transit with greater realistic expectations of social welfare. The ruling paradigm is effectively and permanently selfdestroyed, that was deliberate, we must contract ahead of the wave and all we have is months or weeks to build some buffer.
We may be able to do nothing, so paralysed is our leadership. This country has been washing it's hands of the common people for over thirty years, systematically washing them out of industry and washing them out of real income. Much was allowed to deteriorate to fatten the few exclusive special interest groups, nothing trickles down from their tables but mindless rhetoric.

If that were true money would not be so terrified of the people.

It's a dependability thing ... and North American cars don't have it any more. Gone are the days when a car was built with pride, or you could get a million miles from a slant six engine, or find parts built in 1957 that will bolt onto your 1990 V8. It's all planned obsolescence and throw away now. The governments even had to come out with clunker laws because Asian cars will last twice as long as home made.

think napalm

The oil magnets should bail out the Big 3, don't tuch tax payer money to help the big 3 losers....

I am against bailing out any business with tax dollars, and even more so to bail out foreign owned companies. Should also be careful what you ask for. Look what happened to the Softwood lumber deal when that TRAITOR Emmerson decided to "help" us. Not only did we get screwed but he gave a billion dollars of the industries money to the US timber Barons in exchange for a worse deal than we had before he decided to help.
If we were to help the Auto Industry what guarantees do we have that Canadian workers would benefit and the money would not simply flow back to the parent company shareholders? Or that they wold ever build good ,fuel efficient vehicles that we can afford?

No guarantee and don't even give it a second thought.
rgs

Bail-Out $$$ for shares at a locked in low-low-low price...If they want the $$$, then that's
just the way it goes down, or it doesn't go down. By he way, Welcome Aboard!

Bail outs are merely incentive to keep screwing up with other people's money. If they can't turn a profit when total cost of a vehicle is 5-6K including labour then maybe they should cut down on advertising. How many times a day do you have to see a truck pulling a horse trailer through the mud at 250K for a 30 sec commercial.

If they offered a good product with quality and value it would sell it's self. A polished turd is still a turd no matter how many horse trailers get yarded through the mud.

The aviation industry is keeping their technology within our capacity to pay so why can't the auto industry?

Oh something like building inferior products at OUTRAGEOUS wages. That's just a start...

If Canada buys, let say in a six billion dollar bail-out.....two billion shares, and these are
spread out upon many Canadians....they make what we want or we buy Honda's and
such, and each person is out maybe $1000 average in shares, and the Big 3 can rot in Hell.

Still think Big 3 should get together and find their own way to success!..It's a bottomless money pit!.....Avoid the void!..or get suckered in..Again!.

It's a raw deal I agree, but the punch-line isn't the Big 3 and their exec's that have pilfered
and squirreled away big $$$ already and are insulated from an industry collapse...it's the
what (?) 15,000 employee's directly employed in Canada, and that number by a factor of
(?) for the peripheral industries like parts and shipping and dealers (100,000+) and all of the
peripheral business's (restaurants, stores,etc...) supported by that...that's the punch-line.

If (or more likely when, based on the "Monkey see Monkey do" philosophy with respect to
Canada being the tail on the U.S. dog) we contribute, it's with clear cut conditions. Salary
caps for Exec salaries and bonus's, enforced intelligence of their products for the Canadian
market, realistically competitive pricing, or no go. The Big 3 pull out of Canada, then we
follow ScottFree's guidance with respect to lawsuits, tariffs, and the like...

(P.S. I'm not in favor of a Bail-out either....but playing Devils Advocate)

If by bailout we mean hading them billions of dollars, not a good idea. How do we know that this money will do any good? If they continue with the same loss making practices as before, the money will just go down the rat hole.

I think the solution is bankruptcy. Let them declare chapter 11 bankruptcy. That doesn’t mean they go out of business, just that they are then able to restructure.

First, the can get rid of the union. Then they can reduce the wages and benefits. It used to cost the big three 77 dollars per hour per worker. They negotiated with the unions and it has come down to 70 $ per hour. However, the competitors (Toyota etc.) spend about 48 $ per hour per worker. So big 3 are at a huge disadvantage.

If they declare Chapter 11, they can reduce the wages and benefits to match their competitors. The whole workforce can be fired and rehired at reduced wage and benefits.

Chapter 11 will also give them time with the creditors, it will buy them more time. When they are in Chapter 11, they are in a position to make changes quickly. I personally think Chapter 11 is the way to go.

The only drawback with Chapter 11 is that sales may fall way down. Who wants to buy a car from a company which may not be around a year from now to honor its warrantee? This is where the government can step in. It can guarantee the warrantees of the cars sold by the bid 3, so that even if they go under, buyers are still covered by the warrantee, government will honour it.

I think Chapter 11 is the answer, it is a free market solution (I am a great believer in free market), it does not need any government handout. Let them declare bankruptcy, restructure and come out of it leaner, meaner and sounder companies.

Total material and labour for an auto whether a pick up truck or a cadillac is $5000-$6000. If labour is the culprit where did the $10K to $40K profit go?

It's a straight idea and if they retool and shore up the decrepit buildings that they work in (six months out of the market-- isn't the union dissolved -- it was that way) and if they give their competitors' product a good look , it just might work.

scratch

The game is to blame labour but the real culprit is return on investment.

If you have a factory that costs 400 million and costs millions to run then you better get a good return otherwise it's better to close the plant and invest somewhere else. Capitalists view labour as an expense which eats into their ROI so no matter what labourers get paid it is always too much. They just don't seem to be able to get over the whole slavery thing - they want the good times back.

Have you been down to IPSCO Place and strolled around at the tractor ballet? The price gouging is even worse in the agribiz sector. I'd rather see my tax money going to those who feed me. If the agribiz goes under we all go under....six feet under if they bother to bury the dead.

If you want to repair the trouble at the top of the money game you have to boost the very bottom. Nothing stands without a firm foundation. They keep crying for us to spend and buy but how is that possible when we have less and less to spend due to the greed of 1% of the populus who controll 90% of the wealth.


If things are rough on the top sell the Bentley or the beach house. Don't come begging to me and my family because you got too greedy and in over your head. They are going to have to swallow their pride just like all the others that are lined up at the foodbank because of the rich people that are now begging from the poor. Cowardly doesn't even come close to what they are suggesting.

Those who had their chance to sit at the top have shown they are incapable and must go. They won't die. Their bellies won't go empty. They still have healthcare, welfare, public schools foodbanks. It far cheaper to let that 1% take their knocks than it is to support the other 99%.

If they already have 90% of the wealth they are obviously more than able to sort it out on their own