Big 3 Automakers seek $25B from Feds

[plinko]

Talk about "creative" ways to avoid a depression:

http://online.wsj.com/article_email/...jMyNjI1Wj.html

...and, for those who feel like seeing a bunch of comments on autoblog: http://www.autoblog.com/2008/08/22/i-wsj-i-big-3-seeking-25-billion-from-feds/

excerpt:
The Next Bailout: Detroit


First came Bear Stearns, then mortgage lenders and borrowers, followed by Fannie Mae and Freddie Mac: They've all looked to Uncle Sam for a bailout, and now the word around Washington is that Detroit will be next on the taxpayer supplicant list.
Earlier this month, the Detroit Free Press reported that the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits.


...


The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years. Meanwhile, Barack Obama recently signaled that he's open to federal money to help the auto makers invest in "renewable" technology, and Michigan Senator Debbie Stabenow and Mr. Dingell are supporting the $25 billion in loans to the not-so-Big Three as part of a second-round economic "stimulus."



___
also, i think this is my first post on itulip! I've been reading this site for about 3 years, and love the community here.

[phirang]

Re: Big 3 Automakers seek $25B from Feds

Talk about "creative" ways to avoid a depression:

http://online.wsj.com/article_email/...jMyNjI1Wj.html

...and, for those who feel like seeing a bunch of comments on autoblog: http://www.autoblog.com/2008/08/22/i-wsj-i-big-3-seeking-25-billion-from-feds/

excerpt:
The Next Bailout: Detroit


First came Bear Stearns, then mortgage lenders and borrowers, followed by Fannie Mae and Freddie Mac: They've all looked to Uncle Sam for a bailout, and now the word around Washington is that Detroit will be next on the taxpayer supplicant list.
Earlier this month, the Detroit Free Press reported that the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits.


...


The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years. Meanwhile, Barack Obama recently signaled that he's open to federal money to help the auto makers invest in "renewable" technology, and Michigan Senator Debbie Stabenow and Mr. Dingell are supporting the $25 billion in loans to the not-so-Big Three as part of a second-round economic "stimulus."



___
also, i think this is my first post on itulip! I've been reading this site for about 3 years, and love the community here.

In fairness, the US auto industry needs to transition, and that's what these funds are for. I would hope that the legislature has the backbone to demand fuel efficiency standards in exchange for this financing. Once GM and Ford make decent small cars that get 50mpg, they won't need the financing.

The chinese and japanese subsidise their industries: the US is fighting fire with fire.

[metalman]

Re: Big 3 Automakers seek $25B from Feds

In fairness, the US auto industry needs to transition, and that's what these funds are for. I would hope that the legislature has the backbone to demand fuel efficiency standards in exchange for this financing. Once GM and Ford make decent small cars that get 50mpg, they won't need the financing.

The chinese and japanese subsidise their industries: the US is fighting fire with fire.

disagree. usa auto industry needs to blow up so that next gen tech can take root in the fertile soil of ruined protectionism.

[plinko]

Re: Big 3 Automakers seek $25B from Feds

usa auto industry needs to blow up so that next gen tech can take root in the fertile soil of ruined protectionism.

I tend to find myself agreeing with this notion. I usually view that such bailouts short the value of the numerous American automotive startups that have been trying to innovate new technologies long before GM's recent rush to mass-produce the Volt. Examples: Tesla, AC Propulsion (which oddly enough I think was started from members of the GM EV-1 project), etc.

I believe there was a bailout of Chrysler back in the early 80's. 20 years later and I still can't think of a car I'd ever want to buy from them.

[c1ue]

Re: Big 3 Automakers seek $25B from Feds

Metalman,

I understand where you are coming from, but I can't say I agree.

While certainly GM, Ford, and Chrysler have not been shining examples of corporate leadership - the outsourcing of all automobile production to outside the US would have dramatic and bad effects in the future.

Besides the jobs in question, both directly at the car manufacturers and the supplier networks feeding into them, the United States as a low density nation is one which must have autos.

Car manufacturing is not an industry that is that easy to restart.

If the entire automobile manufacturing ecosystem is destroyed, one lesson we may all get a refresher in from the cutthroat school of business is: Kill off the competitors, then raise prices.

Besides the pure leadership issues, the more general questions on US dollar policy and health/retirement planning still must be resolved for the entire economy.

Also as the US dollar reverses its many year long 'strong fiat' position, ironically the US manufacturers ought to be the ones to benefit.

Bankruptcy proceedings may be the exact vehicle to start the process.

[Mega]

Re: Big 3 Automakers seek $25B from Feds

ANY help given MUST be with the understanding that THOSE SUV's and V8 MUST GO!

Small 4 pot Turbo motors will do the job, you don't need something the size of an Aircralf carrer to go shopping for a pint of milk!

Mike

[metalman]

Re: Big 3 Automakers seek $25B from Feds

Metalman,

I understand where you are coming from, but I can't say I agree.

While certainly GM, Ford, and Chrysler have not been shining examples of corporate leadership - the outsourcing of all automobile production to outside the US would have dramatic and bad effects in the future.

Besides the jobs in question, both directly at the car manufacturers and the supplier networks feeding into them, the United States as a low density nation is one which must have autos.

Car manufacturing is not an industry that is that easy to restart.

If the entire automobile manufacturing ecosystem is destroyed, one lesson we may all get a refresher in from the cutthroat school of business is: Kill off the competitors, then raise prices.

Besides the pure leadership issues, the more general questions on US dollar policy and health/retirement planning still must be resolved for the entire economy.

Also as the US dollar reverses its many year long 'strong fiat' position, ironically the US manufacturers ought to be the ones to benefit.

Bankruptcy proceedings may be the exact vehicle to start the process.

you have a valid point about the value of brand and distribution and repairs and parts etc, etc. but that was try buggy whips to cars as well. consider... the whole ecosystem is a dinosaur! the cars, the financing, the distribution, everything. throw it all out! start over with the internet as the core of the ordering system, just-in-time distribution. order your car and it is delivered to you from the nearest plant, made in the usa!

[KGW]

Re: Big 3 Automakers seek $25B from Feds

As much as I love driving a well-engineered car, they are dinosaurs without a doubt. Local transportation systems, connected to hubs/lines that go continental, makes much more sense. A sense of reality

I just put new pads on my Audi A3 this afternoon. But the last time I drove up to Los Angeles, I wondered whose idea of progress I was dealing with:p

[metalman]

Re: Big 3 Automakers seek $25B from Feds

As much as I love driving a well-engineered car, they are dinosaurs without a doubt. Local transportation systems, connected to hubs/lines that go continental, makes much more sense. A sense of reality

I just put new pads on my Audi A3 this afternoon. But the last time I drove up to Los Angeles, I wondered whose idea of progress I was dealing with:p

organic pads, i hope. or at least ceramic.

[GRG55]

Re: Big 3 Automakers seek $25B from Feds

Metalman,

I understand where you are coming from, but I can't say I agree.

While certainly GM, Ford, and Chrysler have not been shining examples of corporate leadership - the outsourcing of all automobile production to outside the US would have dramatic and bad effects in the future.

Besides the jobs in question, both directly at the car manufacturers and the supplier networks feeding into them, the United States as a low density nation is one which must have autos.

Car manufacturing is not an industry that is that easy to restart.

If the entire automobile manufacturing ecosystem is destroyed, one lesson we may all get a refresher in from the cutthroat school of business is: Kill off the competitors, then raise prices.

Besides the pure leadership issues, the more general questions on US dollar policy and health/retirement planning still must be resolved for the entire economy.

Also as the US dollar reverses its many year long 'strong fiat' position, ironically the US manufacturers ought to be the ones to benefit.

Bankruptcy proceedings may be the exact vehicle to start the process.

Every badly managed industry in the USA is going to be lining up behind the financial system bailouts, asking "Why not us too?" Who's next? Home Depot? General Electric?

[phirang]

Re: Big 3 Automakers seek $25B from Feds

It seems GM is doing OK in India:

GM plans power train unit at Talegon

It is reported that Automobile giant General Motors is expected to sign an MoU with Maharashtra government to set up a power train manufacturing facility near its Talegaon plant in Pune. The INR 1,200 crore unit will manufacture engines and gear boxes with a capacity of 200,000 units per year.

Meanwhile, GM is scheduled to begin commercial operations at its new car manufacturing facility at Talegaon in September. Set up with an investment of INR 1,400 crore the plant will manufacture 140,000 small cars including Chevrolet Spark. Trial production began in March this year.

Work on Talegaon plant began in late 2006 following a MoU signed with Maharashtra government in August that year. The Talegaon project is one of the largest Greenfield investments Maharashtra has attracted in recent history.

As per the report, once Talegaon facility goes fully commercial, GM, which began Indian operations in 1996 will have a total capacity of 225,000 cars per year. GM's only other manufacturing unit at Halol in Gujarat recently underwent an expansion in capacity from 65,000 cars to 85,000 cars per year.

http://www.steelguru.com/news/index/...t_Talegon.html

p.s: this must be part of GM's "bubble" in "emerging markets"

[c1ue]

Re: Big 3 Automakers seek $25B from Feds

you have a valid point about the value of brand and distribution and repairs and parts etc, etc. but that was try buggy whips to cars as well. consider... the whole ecosystem is a dinosaur! the cars, the financing, the distribution, everything. throw it all out! start over with the internet as the core of the ordering system, just-in-time distribution. order your car and it is delivered to you from the nearest plant, made in the usa!

I'm with you there, but I doubt a small matter like bankruptcy will be enough to overcome the existing system. For that to happen, you need a cleaning of the people who created, maintained, and profited from the system. But 'Cultural Revolution's aren't very American...

My primary point, however, wasn't just the distribution, repairs, etc.

It was that as the dollar falls, the domestic producers now receive an equivalent currency subsidy the opposite of the penalty being paid before.

Even with subsidized energy, imports from abroad are going to get progressively more expensive, and the likelihood of trade barriers going up also increases.

The last point is that the assembly plants being built here - to get around import restrictions - also tend to keep vital parts safely in the originating countries. Thus it is unclear how much an 'in US' foreign assembly plant where labor is paid in local currency offsets the foreign exchange/transportation effects.

Every badly managed industry in the USA is going to be lining up behind the financial system bailouts, asking "Why not us too?" Who's next? Home Depot? General Electric?

Of course. Who ever turns down free money?

[KGW]

Re: Big 3 Automakers seek $25B from Feds

organic pads, i hope. or at least ceramic.

Ceramic they were. . .