So, the Big Three.

Manic Moran

No, not White House, House of Reps and Senate.

The current headlines are over 'What shall we do about GM, Ford and Chrysler?', who are haemmorhaging money.

Democrats want to divert $25bn from the $700bn financial bail-out to the automakers. Helping their case is the fact that the Treasury Secretary has said he only plans to have about half the $700bn used by the time the Administration changes.

Republicans suggest they take advantage of the $25bn loans from the Dept of Environment which were dedicated to retooling lines to make more efficient (and thus more appealing) vehicles, and that the $700bn was supposed to go to the financial industry.

The numbers sound huge, until you realise that GM alone lost over $4bn in the last three months.

I'm in sortof two minds on the issue. On the one hand, they deserve to fail. Particularly the union people deserve to have them fail: AUW is a heavy contributor for the failure: There's about $2000 a car price difference between US and Japanese cars which is solely attributable to union-sought benefits, they arguably killed the golden goose.

On the other hand, I am kindof considering getting a CTS-V the year after next, and would rather that GM were still around to build them!

There is the argument that there is a strategic interest in having an automobile industry in the US, but even at the worst, I can't see all the US car factories closing. Not least half the US automakers build in Canada and Mexico, and half the foreign automakers build in the US.

There is also the thought that in recent years, over half the US's large airlines filed for Chapter 11 Bankruptcy, reorganised, and came out the other end still alive. GM might end up having to sell a lot of its operations, such as Opel, but it would still survive.

NTM

brianthebard

Its always the unions fault :rolleyes: It has nothing to do with having a ****ty business model I'll bet.

edit: http://www.businessweek.com/magazine/content/05_50/b3963114.htm They've been talking about GM going bankrupt for three years now.

Black Swan

I'd give them the temporary loan, with the specific provision that they must design and build alternative energy non-petrol driven vehicles that are efficient and effective, and at a price that consumers can afford, ten percent of production minimum starting 2009, adding 10 percent per year, until they are 100 percent non-petrol manufacturing within 10 years.

Of course, hydrogen fuel processing and distribution would be a separate industry (non-auto maker) part of my R&D package during the first 4 years of office, and the 4 after if re-elected. Brazil is doing it, why can't the so called super power?

Saw my second GMC hydrogen fuel cell SUV a couple days ago, driven by the US Postal Service (beta test). Chatted with the driver, and he said he's been driving it for 4 months, without maintenance problems, on a average of 25 miles per day of stop-and-go driving delivering mail. Said that he refuels with hydrogen from a tank once every two weeks, and has had no problems with leakage. Says it has a lot of pep, more so than Toyota petrol-electric hybrids, and wishes he could personally own one.

And what's really great about hydrogen fuel cell cars and trucks is that their emissions are water, not poisonous gas.

Manic Moran

brianthebard wrote: »

Its always the unions fault :rolleyes: It has nothing to do with having a ****ty business model I'll bet.

I didn't say sole contributor, but the Union overhead has been known for quite some time. For a vehicle equivalent to a Toyota Camry, that's about 5% price difference just because of the difference in worker benefits. That's no small hurdle to overcome when you're trying to make an equivalent vehicle and remain price-competetive.

NTM

brianthebard

Blue, its an interesting plan but you are just moving all your eggs from one basket to another there. What if people aren't interested in converting to hydrogen? How much would it require to build up a national infrastructure to provide hydrogen fuel?
Manic you may not have said it was the sole contributor, but you didn't give any other reason. Why should the workers not be entitled to benefits, like pensions? What a terrible thing for them to have. Price differences also come from inefficencies in production, materials, and r&d, stuff that unions and workers are not responsible for.

Black Swan

brianthebard wrote: »

Blue, its an interesting plan but you are just moving all your eggs from one basket to another there. What if people aren't interested in converting to hydrogen? How much would it require to build up a national infrastructure to provide hydrogen fuel?

First Obama could use that silver tongue of his and address the nation, rally support during his presidential honeymoon, then the Congress, along with how the Brazilians are shifting from petrol driven vehicles to non-petroleum alternatives. The nation is in a crisis, and foreign oil dependence is part of the problem, ergo, they are shifting just like Brazil, but to clean hydrogen cells rather than dirty alternatives for vehicles over the next 10 years in gradual stages.

Obama could issue an Executive Order affecting the vehicle makers. You want the federal bailout money, then here are the conditions. You don't, then go under.

As for the consumer, it will be no different than converting from analog to digital TV. By February 2009, only digital will be broadcast by the major networks.

Yes, creating a national infrastructure that will generate and provide hydrogen will be at first expensive, but in the long run the US will not be dependent upon foreign oil or energy imports, because we are surrounded by hydrogen in the air we breathe and the water we drink. Plus, from an environmental standpoint, water emissions are preferable to poisonous gases coming out of tail pipes.

If this is the one big super power, it would seem that they have the scientific and engineering knowledge to make this work in 10 years time? If not, then they should learn to speak Chinese, because eventually they will be owned by them.

Petrol driven vehicles are old tech, what? A hundred or so years old? Don't they have the brains in American to do this, if R&D funded, with incentives for infrastructure development, converting petrol to hydrogen refineries and fuel stations? The Brazilians are doing it, and they are half the size of the US in population at 150 million, and their tech can't be more advanced, huh? After all, "The Stone Age did not end because they ran out of stone!" Don't drill baby drill! Dump dirty oil for clean hydrogen!

I don't want my Blue Lagoon polluted by an oil rig, plus they are ugly looking!

brianthebard

Brazil has been making a shift, or reducing dependence on oil since the seventies though. And they have recently started exploring/drilling for oil off their coast again. Not exactly the best sign that your plan could be implemented in the short time frame you gave. Obviously for the US being energy independent has its advantages, but I wonder what the oil lobbies would have to say about it? Again the time frame you gave wouldn't suit as such a quick change over would have huge consequences for a raft of different businesses.
Finally, a quick look at a few articles on GM and the possibity of going bankrupt suggests that if they found their backs against the wall, they may just decide to go against a plan such as this, restructure and take their chances. What would you do then?

Black Swan

brianthebard wrote: »

Obviously for the US being energy independent has its advantages, but I wonder what the oil lobbies would have to say about it?

Well, the oil lobbies contributed to the McCain campaign, so if I was Obama I would tell them "Póg mo thóin!"

brianthebard wrote: »

Finally, a quick look at a few articles on GM and the possibity of going bankrupt suggests that if they found their backs against the wall, they may just decide to go against a plan such as this, restructure and take their chances. What would you do then?

No play, no pay!

brianthebard

http://firstread.msnbc.msn.com/archive/2008/03/28/834887.aspx

I bet the figures have increased since that article was published. And in any case there are probably plenty of senators from both parties who've been given oil money. Let's face it lobbies aren't going to back one horse in a two horse race, and risk being frozen out every four years.

As for no play, no pay-what if they decide a restructuring would keep them going, and that they don't need the money? How do you force change in the industry in that case? $25bn is an obscene amount of money to you or I, but between the three companies its peanuts.


http://www.opensecrets.org/news/2008/08/oil-industry-leans-toward-mcca.html

This article says that by June oil companies were giving Obama more than McCain.

Black Swan

brianthebard wrote: »

This article says that by June oil companies were giving Obama more than McCain.

Then they bought him, just like McCain, Palin, Bush, and Cheney, so no hope for my silly plan to divorce oil.

RedPlanet

Manic Moran wrote: »

I'm in sortof two minds on the issue. On the one hand, they deserve to fail. Particularly the union people deserve to have them fail: AUW is a heavy contributor for the failure: There's about $2000 a car price difference between US and Japanese cars which is solely attributable to union-sought benefits, they arguably killed the golden goose.NTM

They are unionised at Volkswagen, and i bet if we dig around, we'd find they have unionized labour in other major automobile manufacturers.

brianthebard

Blue_Lagoon wrote: »

Then they bought him, just like McCain, Palin, Bush, and Cheney, so no hope for my silly plan to divorce oil.

Yes I'm afraid so. It would be wonderful to believe a politician when they say they want change, but the more they say it, the more things stay the same.

Black Swan

I've seen a couple of these zipping about So Cal... so the tech exists.

brianthebard

I guess if anything were to convince US Americans that hydrogen is ok, it would be a big suv!

JohnMc1

brianthebard wrote: »

I guess if anything were to convince US Americans that hydrogen is ok, it would be a big suv!

Hummers are bigger in the States than SUVs actually. My old neighborhood used to be flooded with Hummers.

Manic Moran

RedPlanet wrote: »

They are unionised at Volkswagen, and i bet if we dig around, we'd find they have unionized labour in other major automobile manufacturers.

Volkswagen doesn't have a plant in the US. They only announced the construction of one in Chattanooga in late July, to be operable 2011, so I don't think there are any workers to unionise right now.

Even when unions exist, the difference is in the level of packages between UAW and others. The UAW really dug their heels in a few decades ago, before the foreign companies really started to get a beachhead onto the American market and they thought they had an oligopoly. Foreign companies which showed up afterwards to build plants in the US have a much lower overhead because they were not around to make the deals when UAW was taking advantage of its position. After the competition arrived, UAW refused to lower its demands to remain competetive, and the newly arriving companies struck their own, more competetive deals with the employees. Even last year, when Mercedes was divesting itself of Chrysler, UAW went on strike. They're shooting themselves in the foot.

Even at that, most don't have unions. Nissan, for example, is non-union, the workers repeatedly refused to unionise in elections and their big Smyrna plant hasn't had a strike since it was opened in the 1980s. Toyota also is non-Union. Neither is Honda. Toyota does have a combination plant near where I live, called NUMMI which it shares with GM and thus is unionised, guess which plant they're looking at closing due to costs?
http://www.thetruthaboutcars.com/nummi-rip-toyota-considers-dumping-uaw-plant/

http://www.labornet.org/cgi-bin/ib/cgi-bin/ib.cgi?action=read&id=49

Of the 33 auto, engine and transmission plants in the U.S. that are wholly owned by foreign companies, none have been organized by the UAW, despite repeated attempts. Mainly, foreign auto makers have located plants in Southern states where the UAW has little presence and where right-to-work laws limit union power. When they have ventured into Northern states such as Indiana and Ohio, they have mostly chosen rural locations far from any unionized plants and UAW halls. The moves now are helping the foreign-owned plants begin to lower wage scales.

NTM

RedPlanet

Regardless, if GM had innovative design and opened it's eyes to the demand for fuel efficient vehicles, they would see themselves in a wholly different position today. Blaming unions is just trying to score cheap political points instead of owning up to their shortcomings.

CPT. SURF

Even if their cars were cheaper I still think they would be in terrible shape. Their product line is really abysmal.

Manic Moran

It's gotten a lot better in the last couple of years. It's to the point that of the three cars currently on my potential shopping list two are American, and I've pretty fair standards.

Regardless, if GM had innovative design and opened it's eyes to the demand for fuel efficient vehicles, they would see themselves in a wholly different position today.

Sortof. It's not as if the US Automakers are entirely behind the curve on it. They make Hybrids, the Chevy Volt is going to be a very interesting little design, and Chrysler's fuel-saving Hemi's a good answer as well. The problem is that they can't take on the other manufacturers on equal terms. I'm sure they'd always have loved to take on a chunk of the huge Toyota Camry market, but it would mean out-Camrying the Camry, which is impossible. Why?

Here's a proposal. I think it's fair to say that the basic resources available to all manufacturers in the US are about the same. Cost of steel will be about the same, the labour pool of Chevy in Detroit, Toyota in Smyrna or BMW in Greensburg will be more or less equally motivated, with equal American work ethics. There's certainly no reason US automakers can't make quality cars, GM, Ford and Chrysler all have in recent years come out with warranties far in excess of what Toyota or Honda provide, equal to Hyundai. But if you're going to compete in the same market, with more or less the same construction costs, you need to be able to sell at the same price in order to compete. The US manufacturers can't, they have higher overheads. Their solution was to go to a sector that the Japanese manufacturers had not bothered with, namely the larger SUVs, trucks and muscle cars. Arguably they didn't as much ignore the smaller vehicle market, as much as were force to focus on the market that they could sell their vehicles in.

The US automakers were done in by the end of the 1980s, they just didn't know it yet.

NTM

brianthebard

Oh come on now, not behind the times? The prius came out in 1997, the volt is supposed to be out in 2011. Its not that the poor US car makers were muscled out by smaller, cheaper imports, the problem is the US producers haven't been improving efficency or done anything of note with their industry until it was too late.

Manic Moran

You can't say they didn't try. They spent quite a lot of money and effort on the EV-1 car and S-10EV pick-up in the 1990s, four years before Prius entered the US market. Possibly they were ahead of the times, the demand for such vehicles was artificially created by governments, not by consumers looking for efficiency.

It's not fair to equate the 2010/2011 Volt date with the 96 Prius either, they're differing technologies. The one is a pure electric vehicle with an self-charge option, the other a hybrid that basically just relies on a battery for a short-term boost. Toyota's working on its own version, but it's not scheduled to hit the streets by the time Volt is available.

NTM

RedPlanet

Sure they can MM, they can alway just wave the Stars and Stripes in peoples faces. It's a matter of marketing.

Overheal

T Boone Pickens recently did an interview on The Daily Show; I highly reccomend it.

http://www.thedailyshow.com/video/index.jhtml?videoId=210176&title=T.-Boone-Pickens

America is going to have to mobilize the Natural Gas Reserves and Begin the transition for personal vehicles to be powered by hybrid technologies, using natural gas for the larger applications, like busses and 18 wheelers.

As for the Auto Industry, it is Crucial to the entire underlying principles of our economic system that they be allowed to fail. If you take away the possibility of failure when a company reaches a certain status, then you remove risk. Without Risk, the entire founding principles of economics are undermined.

Let them all file for bankrupcy. Most if not all of them will reorganize and get the thumb out of their ass. This has as much to do with the October Crisis as it does the Auto Industry's failure to make a smoother, faster transition to hybrid tech, and the $4 a gallon gas from this past summer; and competition from ultimately better vehicles from abroad.

RedPlanet

hmm, according to Wikipedia, on the 2007 United Auto Workers strike:

A new labor contract was ratified by UAW members exactly one week after the tentative agreement was reached, passing by a majority 62% vote. In the contract are several product and employment guarantees stretching well into the next decade. One of GM's key future products, the Chevy Volt, was promised to the GM Poletown/Detroit-Hamtramck plant in 2010. Also included is a VEBA (Voluntary Employee Beneficiary Association) which will transfer retiree health care obligations to the UAW by 2010. This eliminates more than 50 billion dollars from GM's healthcare tab. It will be funded by 30 billion in cash and 1.4 billion in GM stock paid to the UAW over the next 4 years of the contract. It also eliminates 70% of the labor cost gap with GM's Japanese rivals.

Check out the criticisms, John DeLorean wrote a book about mismanagment at the top of GM.
http://en.wikipedia.org/wiki/General_Motors#Criticism

Mr.Micro

So the 3 big car makers in the US want a bailout? Does that mean that Capitalism is dead? First the Wall Street banks being partially nationalized and next the car makers? The writing may be on the wall where the US has lost its crown as the number one economic nation and its in terminal decline. The car makers cannot cut it when things get tough but were happy to rip people off when credit was abundant. Its the excesses of the last 8 years that have finally caught up with the US and its continuing massive budget deficit.

Tough I say, its the order of the things, if they are failing then there are fundamental reasons, such as bad management, over production, lack of competitivness, poor products, none of which a cash bail out will solve, but would just prolong the malaise. Restructure and slim down. In real life there is often nobody there to step in and people lose their homes and jobs. Nothing is permanent apart from death.

Manic Moran

Overheal wrote: »

T Boone Pickens recently did an interview on The Daily Show; I highly reccomend it.

He was the major proponent and sponsor of one of the 'environmental' propositions on CA's ballot last month, which nobody else supported. Basically he suggested getting people off oil-based fuels, and onto natural gas fuels. It is a pure coincidence that he happens to own most of the natural gas consumer suppliers in the nation.

NTM

Overheal

Manic Moran wrote: »

He was the major proponent and sponsor of one of the 'environmental' propositions on CA's ballot last month, which nobody else supported. Basically he suggested getting people off oil-based fuels, and onto natural gas fuels. It is a pure coincidence that he happens to own most of the natural gas consumer suppliers in the nation.

NTM

So a doctor that sells medicine isnt allowed to prescribe it

He makes a strong argument: Oil is foreign; Natural Gas is not. And nobody wants to keep pouring money into the Mid-East, so we need a viable alternative.

mumhaabu

There is two distinct differences between the US and European Markets,
Nearly everyone drives Automatics and Diesel is unheard of as an Auto Fuel.

The Irony is all the yanks should do is mate Diesel & Automatics and you will have a great plan. Diesel's by nature are very torquey which suits Auto's perfectly, if you ever drove a Skoda, Mercedes or BMW Diesel Auto you will see they are great and very fuel efficient. Hybrids and Electric cars are only hotair and Diesel is the only show in town and with BioDiesel etc it can be Carbon Neutral also.

Manic Moran

The Irony is all the yanks should do is mate Diesel & Automatics and you will have a great plan

There is no technological reason they cannot, there are plenty of vehicles in the US with diesel motors and automatic transmissions, particularly heavy-haulers like trucks or HMMWVs. The problem is that really big markets like CA or NY ban the sale of new diesel cars on environmental grounds. Diesel is already more expensive than petrol over here, and by the time the fuel is sufficiently refined and additived to be all eco-friendly, it's too expensive to compare well with petrol in the dollars-per-mile department.

I mentioned that two of the three candidates for 'my new car' were American. The third is an Audi A6 Diesel in the hopes that it will be on sale here when I actually get to go shopping. But as long as I'm not allowed to buy one courtesy of our friendly legislature, there's not much point in Audi trying to import it.

NTM

Overheal

Well according to Larry King the vote was overturned.

I guess when you're flying to washington to ask for a financial bailout you shouldnt travel by private jet.

galwaydude

Let them fail and file for bankruptcy. Then they will be forced to reorganise into smaller, leaner more profitable companies. If this gets passed whats stopping other industries asking for a bailout. When will it ever end.