Big 3 U.S. carmakers beg for $25 billion or millions of layoffs will follow

Superlib - if you were correct, more fool Chrysler. In actual fact I think that Daimler tried to get Chrysler to build good quality cars but they simply weren't able to cut the mustard

Nippon5, I live in my family home on Okinawa during my time in Japan. I spend about half of my time there. My car just manages to fit in the parking spot. There is no room to open the passenger door. I do not have the money to buy a new house. I do not have the money to waste on "luxury" transportation. I place the money needed for such in savings. I can only suppose Japanese with the large autos must be very wealthy. About Americans, most are smart enough (at least for now) to understand that fuel prices can double even triple quickly. Buying a large car is pure folly! It is about the only thing the "big 3" manufacture these days. You have said lots of things supporting the "big 3" which has wasted its profits and would quickly go through any bail out money. They have no vision and are stupid beyond all understanding. I refuse to support them with my money and say no to supporting them with my tax money. These companies are a left over from the time of greed and need to take their place in the garbage can of history.

I don't know what they were thinking, spending twenty-thousand dollars to fly to Washington, and then having the nerve to ask for money.

Yuriotani..

Umm no most of the Hummers and Caddy suv vehicles I see are owned and operated by Japanese (we dont have a base near Shinagawa/Tokyo)... I can even go just down the way and rent an H2" at the local car rental here in Tokyo.. They are no bigger then a Toyota Highace van or the 4x4 's from Toyota and Nissan.. I live on a 4 meter road and next to a 6 meter road, and my back alley area is less then 4 meter.. We have no problem driving down any of these roads with our Full size vehicle, and on top of that the local company has Isuzu NPR dually trucks they run all day long here... Most Japanese buy a car based on the size of the parking space they have.. Most new houses come with a medium size parking space... So any mid size car will fit... The Shakken and the Insurance are not a big difference between weights and cc's once you go above the 660cc vehicle (yellow plate). Also when you take the test you do so in a mid size vehicle at the driving course, this Nissan or Toyota is about the same size as a Malibu, or a caravan .. Its not like you get a Benz Smart to take the test in..

Maybe you havent been in Japan in awhile, or you just dont live in Japan, but allot of the cars in my area are American or German made vehicles.

And like I said before its cheaper to produce a f150 then it is to produce a mustang.. The equipment and the basic chassis has been used for 20 + years.. So actually Ford or Chevy make more money on the larger truck then they do on the smaller car.. And that is why they push them so much... A framed vehicle is much cheaper to produce then a unibody vehicle.. The frame can be used along multiple models and vehicle lines, where a unibody is built into the body of the vehicle and is specific top that car...

And car sales in Japan have been down for years now as younger people do not want the extra expense of owning a car...

And the only Japanese car that has been on back order(in the states) was the Hybrid cars, and no even they are not being bought now because gas prioces came back down..

I'm all for the bailout to help the employees. But after what I've seen these past couple of days by the CEOs, I'm convinced that the company won't change and they'll go under anyway.

I couldn't believe their arrogance. < :-)

This just in - the Big Three ain't gettin' jack - at least not yet - the Senate just rejected their bailout request.

The American auto companies have the larger is better mentality. They preferred to make larger profit per unit by making fewer large vehicles instead of making a modest profit selling more units.

Also known as higher valued added. The Japanese have certainly climbed into that niche as well and they, along with other auto makers, are hurting too as this article below makes clear. (For those who've driven over the bridge in the background of the accompanying photo, you will immediately notice the difference).

It's not clear the bail-out being proposed is legal under WTO rules. Foreign auto-makers could bring suit.

A Sea of Unwanted Imports

LONG BEACH, Calif. — Gleaming new Mercedes cars roll one by one out of a huge container ship here and onto a pier. Ordinarily the cars would be loaded on trucks within hours, destined for dealerships around the country. But these are not ordinary times.

For now, the port itself is the destination. Unwelcome by dealers and buyers, thousands of cars worth tens of millions of dollars are being warehoused on increasingly crowded port property.

And for the first time, Mercedes-Benz, Toyota, and Nissan have each asked to lease space from the port for these orphan vehicles. They are turning dozens of acres of the nation’s second-largest container port into a parking lot, creating a vivid picture of a paralyzed auto business and an economy in peril....

http://www.nytimes.com/2008/11/19/business/economy/19ports.html?scp=1&sq=long%20beach&st=cse

USninJapan2, think most of these SUVs in Japan have the Y (American Military) plate. Parking is thus very easy on the American bases which is catered to them. Most people in Japan live off of a narrow roads and streets. Two small cars can not pass each other in a lot of places. Vehicles in Japan require a parking permit before purchase. Y plates do not need such. Also the larger the engine the higher the weight ax and JCI (Japan compulsory insurance). Y plates get a big discount over the "kanji" (Japan people) plate. Japanese people prefer small sensible vehicles and the ones made in America are too large. It is their preference and not a plot of the government/companies that dictate the small amount of American made vehicles in Japan. The American auto companies have the larger is better mentality. They preferred to make larger profit per unit by making fewer large vehicles instead of making a modest profit selling more units. With the collaspe of SUV sales due to high fuel prices, these companies had to discount price them to sell or below the cost to manufacture. The American auto companies blame everyone but themselves for their woes. The need to reinvent themselves and stop blaming others for their own mistakes!

It happened in your country, too, Harold. For many, the British Leyland bailout of the 1970s remains exhibit A in the laundry list of futile government interventions. Despite generous infusions of cash, they could never recover their market share and eventually went under.

Perhaps it's my liberal guilt, but when I read Wayne County, where Detroit is located, had logged 157 pages of home foreclosures I felt very sorry for the community. It's going to be next to impossible to recover without outside assistance.

America is in economic turmoil. Jeremy Paxman reckons all the big US auto companies will go bust without government handouts.

So this is capitialism. Great innit, blimey give me good old fashioned socialism anyday.

This is a really good Op-Ed by Mitt Romney discussing the situation.

http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2

The best thing that could happen is if they go bankrupt. The result will be streamlined Medium 3 that produces only electric/gas cars and no SUVs.

frontandcenter: Chrysler was tied to Daimler for how long, and what did they learn from the experience? Nothing, it would seem.

Daimler bought Chrysler and ran it into the ground, then sold it for a fraction of what they paid. What was it exactly they were supposed to learn? lol

"Nippon5 if they are selling more vehicles why are they losing so much money?"

Well, maybe when US car dealers start giving away cars for $1 with every new car you buy?

Hell if we give them 25 Bn of the 700 Bn Wall Street bail out. I would not have a problem with that.

I have read that a large sum of the money is now unaccounted and no one quiet knows where it went. At least if we bail out the automakers we would know where that small portion went.

YuriOtani

The Americans do not build a car anyone wants to buy! That is their problem and it is not Japan's policy to keep out the American auto, the sad truth is not many people want to buy a large American auto with poor fuel economy that is poorly built!

Why would anyone in Japan want to buy a 2,000 kilo SUV that is impossible to find a parking spot? Their "small" cars are at best a 300 plate. I just do not understand their reasoning.

I don't know what part of Japan you live in, if you do in fact currently live here, but I see enough American cars, many of them larger SUVs, on the road in my neck of the woods to know without relying on Nippon5's data that your claim that no one in Japan wants American Big 3 cars is a load of you know what. As for your issues with bigger/heavier SUVs, I drive a large 2600+kg SUV and have no problems driving on Japanese streets or finding parking. Maybe you need to work on your own driving/parking skills and take into account different lifestyles and road/traffic conditions in different parts of Japan (or the world for that matter) before deriding others who choose to drive American cars or larger vehicles out of choice or need.

This is not black and white. The impact of 2-3mil lost jobs would be unimaginable. Look at what contraction in the auto industry did to places like Flint and Detroit and apply that to the entire nation.

Couple things. First that number is inflated. The lost jobs in all likelihood won't be that many. Though the ripple effect through related businesses, and businesses supported by now unemployed UAW will suffer as well.

I don't think the entire nation would suffer from the Big 3 collapsing. To put it simply, people still need cars. The demand is still there. They will keep producing. They will have to sit down with the unions though and renegotiate a reasonable contract. If the unions refuse to negotiate, or refuse to compromise enough, they will have to break the unions. Either that or shutter the plants in forced union states, and open or expand plants in right to work states.

This said though, theres not a chance in hell of that happening. This is a democratic congress, with an incoming Democrat president. With the unions in trouble, the big 3 could ask for 100 billion, and congress would willingly hand it over.

It would be foolish to think that any of the big three are going to dissapear from the earth and all those people will be unemployed bacuse they are on hard times.. They may have to down size, layoff workers, but they are not going to fail into nothingness..

No matter how many ignorant people write they will...

Its not a 100k a year business and they can find the money from many places they have put it in over the years.. And yes some people will lose jobs now instead of 6 months from now when they hold their hands out for more bailout...

also they dont lose money on every car they make, but they do use the money they have very unwisely.Consider a truck unit like a f150, that basic frame and component design has been around for 20 years or more, they make great money on every truck they sell, hence the desire to keep them around and popular.. They make a majority of the profit they have on the financing of the vehicle, and just like the house market they gave many loans to those who shouldnt have them...

Consider this also. Jaguar(until sold to Tata),Range Rover(until sold to Tata), Volvo, Astin Martin,and mazda... ford either owned or had major shares in these companies. Plus its domestic brands

Gm has control or major shares in the following Opel,saab,Vauxhall, wuling,and Daewoo.. Plus its domestic brands

So I guess its not just a US issue when you figure in all the companies they own or have controlling intrest in....Also consider that most of the parts and production lines are out side the US now it will affect more then the US. But I still dont think a bailout is the answer.. Maybe its time to let them find themselves by restructuring....

YuriOtani:

Nippon5 if they are selling more vehicles why are they losing so much money?

Because if you lose money on every car, the more cars you sell, the more money you lose...

The appeal to "national security" interests is the last refuge of the failed American business, I reckon. Chrysler was tied to Daimler for how long, and what did they learn from the experience? Nothing, it would seem.

This is not black and white. The impact of 2-3mil lost jobs would be unimaginable. Look at what contraction in the auto industry did to places like Flint and Detroit and apply that to the entire nation.

I don't like the idea of a bailout either.

One of Obama's advisers may have it right. Let them fail, in part. Let them go into bankruptcy that allows for protection and restructuring. There will be lost jobs, lost value and heavy fallout. But the industry will have the opportunity to reinvent itself and to come out the other side as powerful players in the future green transport industry.

In any case, more and more I fear that a global depression may be unavoidable. Let's hope we move on to a new deal for jobs as fast as we moved on to bail outs.

Looks like the same people have come to this auto thread with the same empty rhetoric and misrepresentations as the one before it. At this point we can probably agree that people are saying what they want to say only because it makes them feel good to say it. We should consider ourselves lucky that so many are willing to raise their hand and shout "ignore me!" for this discussion. Sometimes they're not so easy to spot.

The government will probably bail them out over the objections of the ignorant anyway. That's what I'm putting my money on. If that makes you angry then so be it....you have only yourself to blame.

I'm pretty dense when it comes to this subject, but didn't a similiar thing happen to a bunch of the Japanese automakers in the 90's after the Bubble? I thought GM,Ford, and Dodge bought huge stakes in Mitsubishi, Mazada, Isuzu, ect. Do any of you think a similiar situation might come about if the Big 3 are refused their bailout? As I said, I don't know much about this subject, but I'm curious about your opinions.

Nippon5 if they are selling more vehicles why are they losing so much money?" I had learned that the car companies really didn't make much profit from their cars, perhaps a few thousand dollar at most. They seem to have made their money from other business, of course mostly supporting the manufacturing of autos.

That being said, I am about 80% in not giving them the loan. It would be better to turn those companies over to other companies like Toyota and Mazda for example. Additionally, while there would be a lot of problems should they fail, it would be quite a while before the big rush happens which may give people time to replace them.

I am in agreence with the above posters in terms of the unions. Many of them have robbed companies and workers alike blind.

Kwabish: "let nature run its course" couldn't have said that better myself and that goes for all industries. Most of the politician in our government know very little about business. It think it is a mistake to let them have any play in day to day business and if companies start taking loans, it'll give the government the green light to put their noses into it.

Forget the bailout. Let them file for bankruptcy protection. Unless they file Chapter 11, the companies aren't going to be able to break the union contracts. So long as the UAW is there, it will suck away any bailout money and profits and it will be just a waste of taxpayers' money. Perfect case of the parasite killing its host.

Let nature run its course, if the consumers want GM, Ford or Chryslers that badly, then it will survive in the long run. Otherwise, let them join Zenith and Pan Am (RIP).

"This is not about propping up the Big 3 automakers, this is about saving the unions."

I think it's both. Why should workers in other companies have to pay for auto workers' unions/pensions?

THEY'RE GIVING AWAY FREE MONEY, LET'S GET IN LINE! They are making Fords in Mexico, Chevies in Canada while Honda, Nissan and Toyota have plants in the U.S. No bail outs, how about just a loan to get you through the tough times and then YOU PAY IT BACK.

The more I think about this, the more I think, that even if these companies get a bailout, the only way to save them, is to ditch the unions. The only way to do this, is force the unions to renegotiate their contracts. Dump the collective bargaining agreements, the mandatory raises, the inability to fire non productive employees. When you have a forklift operator making 6 figures, theres something out of whack.

YuriOtani..

Everyone has had a bad car.. I have owned around 100+ cars in my time, including almost every brand.. I have had American cars go 300K plus with no problems and I have had Japanese brands do the same.. I have also had American cars need major repairs before 50k and I have had toyota, a honda, three Mazdas, and a Subaru need major repairs before 50K. American cars are made for Japan too, if you lived here you would know they have small framed Ford and GM vehicles here, and the most popular American cars in Japan are chysler(jeep, PT cruiser)..

Japan pays all the major car makers in Japan so I guess it isnt that unusual to do.. Also I dont think goverment should pay them as I stated in my post on the other article in this subject here on JT.

SushiSake3..

You make yourself look ignorant when you post without reading... I was putting up facts on the sales and reliablilty of vehicles, but I also posted that they dont deserve the bailout, and need to have a new business plan. I also stated they need to change the vehicle platform to make it more in line with todays market in the other article on JT about this. Take off the anti american glasses and please read the post you comment on it...

Guys, you don't understand the actual situation here. This is not about propping up the Big 3 automakers, this is about saving the unions. Don't kid yourself, when they talk about costly labor agreements, and inefficient production, thats precisely what they're discussing. If the Big 3 could pay standard industry wages, they would easily be profitable.

The only real way to save these companies long-term, is to dump the unions. Thats something the democrats will never allow. Its either that, or they need to outsource a heck of a lot more production jobs to other countries, or states that are right to work states rather then union organized.

Nippon5 if they are selling more vehicles why are they losing so much money? Why are there waiting list for some Toyota cars in the United States? It is from experience dislike GM cars, the car I owned was poorly built and cost a lot to maintain. The thing broke down with less than 40km in service. The electrical system was a nightmare!" We are sorry this repair is not covered by the warranty, it is a "service" item. BLAH! If they are selling so many vehicles, why are they begging in Washington? Why would anyone in Japan want to buy a 2,000 kilo SUV that is impossible to find a parking spot? Their "small" cars are at best a 300 plate. I just do not understand their reasoning. My question is why does the American government have to pay the "Big 3" to make vehicles?

Nippon5 - trying to prop up and defend failed Big 3 strategy, shockingly bad management and a refusal by the Big 3 to change with the times doesn' make you look very good, I'm afraid.

YuriOtani... Gm has the most car sales in the world over Toyota... so your statment is not only false its pathetic...

Actually look at facts and not your hate of something guesses..

http://www.jdpower.com/autos/ratings/dependability-ratings-by-brand/sortcolumn-1/ascending/page-#page-anchor

http://www.jdpower.com/autos/ratings/quality-ratings-by-brand/sortcolumn-1/ascending/page-#page-anchor

http://images.businessweek.com/ss/08/05/0519_top_sellers/index_01.htm

I dont think a bailout is the answer, I think new business plans would be better..

Once the car makers made cars, now they just make money. The product is irrelevant. They make more money from financing auto sales and leveraging their investments than they do from sales of autos. They need a new model for business.

Sorry, this is one time Bush has it right - let nature run its course!

The Americans do not build a car anyone wants to buy! That is their problem and it is not Japan's policy to keep out the American auto, the sad truth is not many people want to buy a large American auto with poor fuel economy that is poorly built! This includes Americans in America. The American "big 3" need to go bankrupt and become new instead of being "bailed out" for a few months by the US government and their tax payers. They will come back quickly for more money again and again.

What a farce. I was watching a bit of the hearings with the big 3 and it was awesome how one guy was grilling them about accountability and how time and time again the big 3's arrogance and stupidity has costed them.

This is an industry that has regularly lobbied against the very things that have always caught up to them and bit them in the arse. No longer can the big 3 smugly think they can blame all their woes on the japanese bogeymen, those days are long gone, the American public has caught onto the jig and buy quality not hype. Make no mistake the majority of this mess lies with the big 3 execs and the UAW, not anyone else or any other country.

For a GREAT commentary on this mess read the following which was emailed to me just today:

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2008/11/14/notes111408.DTL

Geez... talk about holding the pulic hostage. This is cowardice at its best. And again, I ask, if the US government gives the big-3 its 25 billion dollar windfall, are people suddenly going to say:

John: Hey, Mike! Did you hear the government agreed to give the auto industry 25 billion but is going to delay our tax breaks?"

Mike: Really?! Great! I'm going to go out and buy me a Ford tomorrow.

John: Not me!

Mike: What? You're not going to give your own hard earned cash to bail out the automakers?

John: I'm getting me a Dodge!

Both: waka waka waka

Nah... sorry. Give them this money and they'll be begging for it again next year, with the exact same methods. I feel sorry for the workers, but this has been in the making for two decades and the companies have long had the power to alter the path it was taking. In fact, I wouldn't doubt if the big-3 somehow stooped lower and promised that if given the $25 billion they'll force employees to buy one of their cars... at a cut rate, of course.