Thread: The Auto Bailout

In an interesting twist of ideas:
The retired workers pensions and health care are what is crushing GM. Instead of just giving them money, Government could look at taking over responsibility for that for awhile.

Originally Posted by Ditch Doc

In an interesting twist of ideas:
The retired workers pensions and health care are what is crushing GM.
.

Once a person is retired, doesn't the company stop paying?
When someone gets a paycheck, part of it is deducted by the state and kept in a pension fund, to be payed out as pension when you retire.
So once you retire, the company says goobye, and that's it, no?

Originally Posted by Ditch Doc

Instead of just giving them money, Government could look at taking over responsibility for that for awhile.

That would mitigate the problem 'right now' but unless the big 3 (and their unions) are forced to change their ways and become efficient or die, it won't matter and in another 2 years they need another 20 billion to support a failed business model.

Its bad enough that banks have been allowed to be so cavalier with your money. It is incomprehensible to me that they get bailed out and the totally irresponsible management is left in control and not in prison. But if the banks crash so does everything including "money".

Now motor cars are different. If your industry closes, don't worry there are plenty of other global manufacturers will fill the vacancy. It will cost you nothing and improve your quality of life as well.

Yes I feel sorry for those who work in the industry, but I felt sorry for the English coal miners and steel makers and ship builders and car manufacturers. I felt sorry for myself when my industry was outsourced.
Bail them out now and you are buying time. The industry is unproductive and just doesn't stand up to global competition. You can not stop the inevitable. The managers are not going to give up their planes and the workers are not going to take the sort of pay cut that would allow their products to compete in global markets. It is a credit to the industry that it has survived as long as it has. It's not my money but if it was, I wouldn't put it into the US automotive industry and expect to ever see it again. I'd rather see it put into a fund to retrain those who loose their work and to move onto a more secure way of making a living.

Originally Posted by Bruno

Once a person is retired, doesn't the company stop paying?
When someone gets a paycheck, part of it is deducted by the state and kept in a pension fund, to be payed out as pension when you retire.
So once you retire, the company says goobye, and that's it, no?



That would mitigate the problem 'right now' but unless the big 3 (and their unions) are forced to change their ways and become efficient or die, it won't matter and in another 2 years they need another 20 billion to support a failed business model.

Some companies maybe, but GM as a very comprehensive retirement and healthcare plan for retired employees, It is their largest expense.

Originally Posted by Bruno

EDIT: And if they really cared about being on time for that hearing, they could have
a) taken the same plane
b) done what I do if I have to be somewhere really on time: leave the evening before and spend the night in a hotel.

Your other points may be valid. but again the airplane thing is not that simple.

a) Last thing you do is put all those guys on the same plane. Companies that size don't even put more than a couple of key executives on the same plane. ...Plane goes down, company is toast or takes a huge hit. Then there is security.

b) Security, and time again. It's not just time shifting the flight. With the private jet you can work up until 15 minutes before you have to leave (and departure time is whenever you're ready). When you get there you go straight from the plane into the meeting.

There is something to it but it's just not that cut and dried.

(haha, not really related but a couple of years ago the President came to talk to John Chambers at Cisco Systems. They didn't even land at at the airforce base 15 minutes away. They landed in the parking lot next to the friggin building where the meeting was at.)

Really important people. Doing such a good job. Yes.

The problem with the auto industry is that everyone from the assembly line to the private offices are being payed way too much. We can thank greed for this. It's insane for me to think that 50 dollars an hour is a fair wage to virtually stand in one place. Also like others have allready said does doing your job like your supposed to warrant bonuses in the millions? Isn't that what their salary is for? The auto industry wants to blame the decline in sales as the problem. Well here's a solution. Instead of loaning them the money and losing it anyway through bad business practices. We should buy their products. Only models that get 30 miles per gal or better. This will give them the money their asking for through sales. What to do with all these cars the government just purchased. I say hold a lottery with eligibility requirements. Those being an annual income of single tax filers making 20,000 a year or less. And married filers making 50,000 a year or less. Will there be enough autos to go around? No but at least taxpayers as a whole would get something for their money. Not just flushing it down the toilet like we are doing on wallstreet.

The problem is, even if Congress bails them out, to which I am opposed, it's like a band aid on a gun shot wound.
It's not going to solve the problem. No one is buying cars. I was looking at the Ford Shelby Cobra. Here in No. Florida they were listing at 60k, that includes a 20k dealer mark up. I looked about a month ago and they were 48k, No one's buying cars. If we bail them out now, they'll come back again. Look at AIG, big mistake. What do they do after we bail them out the first time, Party!

I have no problem with unions and helping people get decent wages and benefits. I used to work for the Federal Govt and retired 6 years ago. I have good health insurance but I pay almost $600 every month for it not including all the co pays. I also paid a bunch into my pension plan for over 30 years to get what I do now. The problem with the car companies is in many cases it was easier to give the unions everything they wanted back in the old days thinking when the bills come due 20 years from now it will be someone else's problem and now the bills are coming due. Also in the old days the union basically ran the plants. The slightest work issue and the plant walked off the job for hours until the issue was resolved and the company supervisors knew this and they were held responsible. I had a friend that used to work in a plant that made transmissions. Once they did their quota they went to the locker room and went to sleep. There were guys who jumped the fence at the plant and had other jobs in the afternoon and came back to clock out later in the day. Then people wondered why the trany on their new car burnt out after a year or so.

I guess GM is hanging their hopes on the chevy volt. The only problem is the batteries to power the thing don't exist yet. They are hoping they will exist by production time and are going ahead with the car. Unfortunately the car as it is now has a tendency to seriously over heat leading to fires. Is this what we will be bailing out?

Originally Posted by Bruno

Once a person is retired, doesn't the company stop paying?
When someone gets a paycheck, part of it is deducted by the state and kept in a pension fund, to be payed out as pension when you retire.
So once you retire, the company says goobye, and that's it, no?

No. over here the unions have negotiated a pension and health care plan by which the company pays you a stipend and care plan until you die. In other words joining the company is like joining a socialist system where there is hire date to grave coverage, and like the soviet union this financial model only works during a period of perpetual growth. In times of stagnation the system begins to crumble.

Another point to consider. None of those CEO's has been on the job for more than three years. Their predecessors were all sacked for poor performance and these guys have all institued huge restructuring plans, that have already begun to have a positive effect.

I think it will be very interesting to see what happens if they are allowed to go bankrupt. I hope you all have plans to deal with a bankrupt state, one with 25% or more unemployment. I can tell you those of us in Michigan, no matter how remote our jobs seem from the auto industry, are already feeling the pinch of the downturn. There isn't a governmental body from the state on down that hasn't already tightened its belt, and that isn't facing worse in the year to come. This state will be bankrupt without the auto companies, and that WILL be without a doubt a problem for the federal government to solve.

By the way the Volt works. the batteries are made in Japan, but the car runs, in fact GM's CEO drove one to DC.