Bush says automakers may not survive

That poor president is in total nervious breakdown anybody talked to him is just wasting time. I guess the secret service is assigning body doubles in newsreel shooting right? like walking to helicopter, waving at the door etc. Just an year ago he began to talk about 3rd world war stuffs, why american doctors cannot heal own president?

Bah, this has been coming for years. It's hardly bush's fault, despite the pretty impressive legacy he'll be leaving...

Isn´t the deal the big US autocompanies made with the UAW the equivalent of the big, glorious promises of the Democrat Party? Full employment, free healthcare, entitlements left right and center... the UAW got it all. Probem is that someone has to pay for it...

So the US and France will finally be on par with Germany, Korea, and Japan?

a person only needs to see what mentality pervades 'big 3' supporters:

'my 69 has a 405 and a slap stick, etc.'

'my 64 and a half...'

basically it's old junk. futurism was never on their minds to begin with. while the world switched to metrics and it's accompanying precision, these buffoons were lost in the 60's.

Like France?

France, in fact, is embarking on its own restructuring. For many, the heavy hand of the state in the French plan will leave the industry heavily dependent on government subsidization. On the other hand, if the Big Three go under reliance on the free market, as advocated by Senator Shelby, will render the auto industry in the US comparable to that of Turkey, Mexico and a host of other third world countries. People have to take off their ideological blinders to find a happy medium.

President Nicolas Sarkozy on Thursday announced a 1.5-billion-euro (1.9-billion-dollar) boost for France's struggling car industry as part of a massive plan to help France resist the global economic slowdown.

"The state is prepared to do everything to save the car industry, which employs 10 percent of the French workforce," the president said in a speech in Douai in northern France, home to a major Renault car factory.

With the Big Three US car makers seeking Congressional backing for a massive bailout, Sarkozy said their French rivals would have the state's full support.

"I believe in globalisation, I believe in free trade. But if our American friends were to do more for their own industry, I would not let French carmakers suffer a competitive disadvantage."

But he also warned that state help would be conditional on pledges to keep jobs in France and to refrain from outsourcing operations.

jean colmar:

I think that a Big 3 brought back from the dead will eliminate jobs and export jobs to third world countries....

Like France?

rgetty, change does happen in Japan but it is a slow change. In America they have no patience. Time and time again the "big three" would start a panic change just to see it stop and revert to the old ways. Big cars made them big money which was NOT used for innovation but dividends. They fell back into this with the SUV. Japan has had a slow constant change since the 1960's. There is also a clear lack of choice, small autos are stripped for "economy" and it is there goal to sell ever larger to increase their profit per unit. Also the cars and trucks are lasting longer than before. It is not unusual for a vehicle to go 400k or more and most getting 200k plus before being recycled. (note vehicles in Japan are not driven as much as America) Thus when the time of greed it was "vanity" that had people replacing good vehicles. (America and Japan). Now people will keep the same vehicle longer before replacement. My point is this is driving demand down. The "big three" is at least 10 years behind perhaps 20 and there is not enough time for them to change. The "old ways" will lead to their downfall and even President George Bush know this!

having Bush as your leader must be a bit like having a house guest who way overstays their welcome and craps all over the carpet before they leave. he's going to leave the place in a bit of a mess eh?

Pretty bad when the big three can't even make a car I'd want to buy anymore.

Sad

SuperLib,

Does that mean the President, the Congress, the auto-execs, and organized labor? Or does that mean the diverse opinions of the contributors here?

Hey, if Hank Paulson can have a strategy du jour, consistency and clarity from those of us who do not bestride the earth like colossi might not be the thing to look for.

"The ( Big 3 ) auto companies may tank"

No great loss there. We can buy excellent made-in-the USA Toyotas, Hondas...

"he ( Bush ) is finally, after all these years in office painting a glowing, rosy picture"

Maybe that's because of the Bush tax cuts, the economy was doing great for several years.

Sorry, I can't say I really understand what anyone's point is.

Truly this 'president' has no shame. Notice how he is finally, after all these years in office painting a glowing, rosy picture of everything in the world, starting to admit the painful truths. The economy is in a recession. The auto companies may tank. Pre war intelligence in iraq was regrettable. And so on and so forth.

He reminds me of someone on their deathbed making a final set of confessions to purge his soul of guilt and atonement for past wrongs. Truly pathetic.

I think that a Big 3 brought back from the dead will eliminate jobs and export jobs to third world countries and try to strangle the UAW. One thing the US needs in more union power. That'll mean unionizing the Japanese, Korean, French and German companies should they take after the Big 3's demise.

G.M.’s biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment.

The two views were rarely in sync — in effect, fighting over the steering wheel that controlled G.M.’s direction — and the internal battles distracted G.M. from spotting shifts in the marketplace.

Time and again over the last 30 years, G.M. has spent billions of dollars on innovative ideas like its Saturn small-car company in the 1980s and the EV1 electric vehicle in the 1990s, only to then deprive those projects of further financing because money was needed elsewhere or because they were not delivering enough profit.

I don't find this to be much of an excuse. They have long been aware of this trade-off and the need to address it.

Yeah, Sez, I do too. The Chinese are really utilizing a nineteenth century strategy of mercantilism to develop and we've become heavily dependent on both their exports and their ability to finance Uncle Sam's deficits to maintain our current standard of living. But that can't go on forever.

The benefits of the free market model accumulate to the core. Now we're at risk of becoming part of the periphery the perspective is a lot more sobering. Becoming simply an assembler of foreign-name autos is not desirable in my opinion since it means the innovation part will be carried out at firm headquarters, be it in Japan or Germany.

I just realized that some of my posts can affect things in Japan, while to get the equivalent change, the US Govt. would have to use the complete US Foreign Policy apparatus to get similar affects - I believe that they think that to get Japan to do anything, it's like squeezing blood out of a turnip. Actually, they don't know how things have been setup in Japan by Big Mac. Also, realized I have never stated things about SCAP in the US, but rather common awareness among those associated w/ SCAP/GHQ/Military Intelligence - things were done in a certain way.

To FromEurope:

I believe I can be more specific than Rajakumar's post, though I think this is not even classified b/c it was not official, but rather semi-official. In conjunction w/ SAC, SCAP, effort was expended to get the auto industry promoted in W. Germany and Japan {Daimler-Benz, Toyota). The extent is debatable. They envisioned a more modest growth to the respective industries, but they did not foresee the 1973 Oil Crisis and the subsequent change in the auto industry.

The above post I would never say it in the States except to those who spent time in GHQ. Even when I was in grad school, I could correct the teacher, but it seemed a waste of time - it would not make any sense since it was not recorded: Just some things.

"At 12 months, the current recession is already the longest since..."

The current recession only became a full-fledged recession from this month. The previous 11 months were merely a slowdown.

"During Bush's eight years in office, the United States has fallen into two recessions. The first one started in March 2001..."

This wasn't exactly the Bush administration's fault, being as how Bush took office only 2 months earlier.

"... and ended in November of that year."

Despite our being hit by the worst terrorist attacks in out history just 2 months before. The U.S. economy is incredibly resilient.

As for the auto-makers, again, I say let them fail.

Yes, the certainty of defense spending really buoys the market.

Betzee,

The one thing that strikes me is that in the US we take the position that we "believe in" a free-market economy wedded to democracy. Not all other countries do--for example, Japan, but more notably, China.

I don't like to think about what our choices will be if our economy continues to nose-dive and other countries refuse to create what we call free markets. Never mind that there are no free markets without the free flow of labor.

I don't think Alabama's low rank in household income is because automakers are not unionized. I think auto makers are not unionized because of Alabama's low rank in household income.

That's right. Those are good paying jobs relative to other opportunities in the local economy.

I never expected in my lifetime to see the US turn into a developing country economy, but that prospect is certainly on the horizon.

So if giving a 'cash infusion' is socialism for the rich and nationalising the car companies is socialism by the government, and doing neither would be disasterous, doesn't that mean that socialism is the answer?

SezWho,

When I entered graduate school the last thing I expected was to be represented by the UAW. But I was sure happy after we (teaching assistants) finally won the right to unionize. It's not the same; they didn't negotiate for job security but rather better benefits. The UAW saw that as a market for their services and jumped into it so it worked out well for both sides.

I don't blame Shelby for the position he's advocating, he's just trying to get jobs into his state. But if left to the free market, that scenario I sketched out is the way it will play out. By contrast, in China some level of government has to sign off on auto investment and they make sure to maximize the benefits for China. Localize supplier networks, etc. Free-market conservatives, by contrast, will leave those decisions to the firm.

If one follows the approach advocated by "free market conservatives" such as Senator Shelby this is what the future would likely look like (after the recession, hopefully, lifts) for the auto industry in America: In the absence of competition from the Big Three, Toyota, Hyundai, Honda, Mercedes-Benz and other foreign brand-name manufacturing plants would expand their operations in the USA to fill the market void. This would provide jobs on the factory floor, in showrooms (since it's unlikely internet sales will ever take over this market) and, of course, repair shops.

But there won’t be as many since these auto assembly plants would become just that, namely assembly sites for firms which increasingly procure their parts elsewhere. (China has insisted on supplier part localization but they have more clout than we do given they are an emerging market where many people are first-time car buyers while we are a mature one geared toward "replacement.") Such is the case for many U.S. automakers which manufacture their brand names in developing countries like Turkey or Mexico. They are slap together operations from components sourced abroad. Wages would also likely fall as the threat of the UAW and unionization receded from the horizon. More importantly, administration, engineering and auto design would be carried out elsewhere, probably in the firm's home country. Simply put, some of the brawn would be left but the brains, who command the high salaries, will belong to nationals of other countries.

Betzee,

I don't think Alabama's low rank in household income is because automakers are not unionized. I think auto makers are not unionized because of Alabama's low rank in household income.

Even so, though, Alabama auto workers benefit from the unionization of the shops in the north because they cannot offer benefit packages that are too far out of scale with a predominantly unionized industry. To do so would make unionization more attractive. If the unions are driven out of business, however, Alabama auto workers could expect to see their compensation decrease--even if only relatively so.

Their is a perpetual hostility against unions. (Magna Carta was a result of a different kind of union.) But labor unions will always survive as long as they are not legal. And if they are made illegal, stockholders will pay in other ways until they are legal again.

I'm not sure given last month had the largest number of job losses in 34 years we can afford to let the Big Three go under given the number of people that would add to the ranks of the unemployed.

TooFarGone: "Michigan is the future all of America faces if the Democrats gain the permanent majority they seek."

That's right, the Michigan created by Bush will represent the rest of the US if the Democrats don't repair the damage he's done soon! He had plenty of time to fix things, but chose instead to simply ignore all the warnings and ride your nation into the ground. You're 100% TooFarGone, Michigan is a bleak reminder of what GWB did to you guys. Look at it and don't forget.

The strongest opposition to an auto industry bailout isn't coming from environmentalists. It's coming from free-market conservatives who see burying Detroit as an opportunity to bury the United Auto Workers and the entire union movement. Sen. Richard Shelby of Alabama called the auto industry a "dinosaur" and suggested government aid would only delay its well-deserved demise. "Companies fail every day and others take their place," Shelby said. "I think this is a road we should not go down."

The companies that would take GM's place -- Mercedes-Benz, Hyundai, Honda -- all have plants in Alabama, where they benefit from a hostility to organized labor. None of Alabama's automakers are unionized. Do we want to go down Shelby's road? Alabama ranks 46th in household income.

http://www.salon.com/opinion/feature/2008/11/26/auto_industry/

yuriOtani: No the secret to the Japanese auto industry like all of the J-industries is not the ability to change, How long have you been in Japan? Change is very slow to come about. What they do here is standardize, they use a lot of the same parts for all the cars. The same cruise control system on the cheapest Toyota is on the most expensive. That plus decades of access to free to cheap loans not having to pay health care or retirement costs getting free OT hours, and lets not forget NOT having to answer to an shareholders and finally the exchange rate. I am sure others companies wish they had 1/3 of their profits just from the exchange rate like Toyota WAS enjoying. Look at them now they are running scared without that free money. It would be a shame to have no choices. Like in cameras. Most are made here in japan so they are basically the same. i am sad to think the same could happen to the auto industry. being here in Japan and seeing all the same boring cars go by everday is a glimpse of what the future could be like.

To FromEurope:

I believe I can be more specific than Rajakumar's post, though I think this is not even classified b/c it was not official, but rather semi-official. In conjunction w/ SAC, SCAP, effort was expended to get the auto industry promoted in W. Germany and Japan {Daimler-Benz, Toyota). The extent is debatable. They envisioned a more modest growth to the respective industries, but they did not foresee the 1973 Oil Crisis and the subsequent change in the auto industry.

I am pretty "close" to this.

It will not work, the American firms will ask for more money before Obama even takes office! They are asking for more money now than 2 weeks ago! The secret to Japanese Auto companies is the ability to adapt to change. Did they ask for a "bailout" when the oversize overweight SUV was the king of sales in America? I went car shopping in America for a replacement for my "American" auto and GM has few small cars, Ford has one and Chrysler has NONE. The ones at GM are clones of each other. The small or "cheap" ones are stripped and their thought is still "bigger is better". What is amazing is the bright people at "the big 3" can not change their business plan to changing times. If things remain as they are the "big three" in America will be Toyota, Honda and Subaru! (even with a bailout!) They will fill the void and things will go on as usual. There will be no depression just a change of names and ownership.

"after WW2,with help of US motor industries finance" (rajakumar)

As far as I know, US motor industries didn't help the Japnese motor industry at all, before and after the WW2. Japan had the motor industry well before the WW2. Do you have any precise information of your comment ?

That's a legitimate concern. But the money involved is peanuts compared to the money provided for governments that may not survive."

that's a good point

...concerned about taxpayer money being provided to these companies that may not survive....

That's a legitimate concern. But the money involved is peanuts compared to the money provided for governments that may not survive.

It's good that the administration is finally admitting that the economy is in recession. However, it has mismanaged its priorities from the first. And it remains wrong about the fundamental cause of the current problem. It is not because of problems in our housing, credit and financial markets. It is because of the socioeconomic values that created those markets.

drop them!

Michigan is the future all of America faces if the Democrats gain the permanent majority they seek.

Japan and korea motor industry cars better. Japan and south korea rely on motor industry a lot and got richer via them. US does not need to rely too much on motor industries like japan/south korea which do not have much agro products or land.

Japan and south korea motor industries did well after WW2,with help of US motor industries finance.

The japanese and koreans now make better cars,than USA. The consumers in USA, decide which companies do well japanese,korean or american. Time to let rich foreign companies/others/US tax payers keep GM/Chrysler/Ford jobs.

Many jobs are moving to China/India/Japan/South korea/elsewhere in today's globalised world, no country is immune from globalised trade products.

USA needs to innovate itself in making jobs in the new globalsed world,where all finance systems/trade are interlinked and not immune from globalised trade products.

Yeah, another 2 million jobs lost won't effect his legacy. It's already sealed. < :-)

"The president supports adjusting the $25 billion loan program, so that the money would be available more quickly and for more urgent needs than its original long-term purpose of helping to retool factories to produce more energy-efficient cars."

Sounds like the usual rubbish, and again a big excuse for them to blow all the money without doing anything for change, then come back asking for more saying, "We have used the money to PREPARE to make the changes to retool, etc., and now request the money to do so in order to survive".

Drop them like a hot potato, and like anyone would drop bush these days.

“Our economy is in a recession,” bush said flatly, speaking to reporters on the South Lawn only hours after the release of a government report showing the biggest month of job losses in 34 years.

You have to get up pretty early in the morning to stay ahead of w. Well...at least noonish for our sharp-as-a-bowling ball lame duck.

Taka