Jalopnik 
Enter your username and password.
Detroit, 4:58 PM
Wed Nov 11
34 posts in the last 24 hours
Tip your editors:
tips@jalopnik.com
Editor-in-Chief:
Ray Wert | Email | AIM
Road Test Editor:
Wes Siler | Email
Weekend Editor:
Murilee Martin | Email
Associate Editor - Houston:
Matt Hardigree
Associate Editor - Detroit:
Ben Wojdyla
Editor-at-Large:
Mike Spinelli
Contributors:
Mark Arnold
John Krewson | Email
Andy Didorosi
Original material is licensed under a Creative Commons License permitting non-commercial sharing with attribution.
12/11/08
12/11/08
There also needs to be regulatory relief on the production of vehicles, so that European models can rapidly be converted to US markets, because that is more than half of the burden which Detroit is dealing with here.
Simply giving loans isn't the answer. There needs to be an automotive New Deal.
12/11/08
12/11/08
But it probably doesn't matter what Paulson or Bernake does in the short term. The crisis has gone beyond the control of even the fed at this point, and life support now is likely only to prolong the agony.
No matter what financial deals are struck, significant portions of all unsustainable industries, including many parts of the auto industry, are going to be axed. Overstretched personal budgets worldwide are going to prioritize keeping a roof overhead rather than buying more automotive bling. NO COMPANY OR INDUSTRY CAN CONTINUE TO MAKE WHAT THE CUSTOMER ISN'T BUYING.
Nothing like a recession (or depression?) to remind all of us to live within our means.
12/11/08
12/11/08
12/11/08
Ya had a nice little point going there, then you had to interject with the "making cars people aren't buying" stupidity.
The Big 3 still design, build and sell somewhere north of 60% of ALL cars sold in N.A.
But you're not off by "much"... ; )
12/11/08
12/10/08
Superior as moved many jobs to Mexico, but the small remaining Van Nuys entity would be in jeopardy if more domestic sales falter or fail.
12/10/08
12/10/08
12/10/08
12/10/08
12/10/08
Anyways, if it happens, I think somehow we'll all survive. I just don't see what's happening different now that will make the Big 3 profitable, even with a massive cash infusion to tide things over.
12/10/08
12/10/08
GM has active plants in Oshawa, Ontario; Windsor, Ontario (until 2010); and the CAMI plant in Ingersoll, Ontario. Not sure about the other two companies.
12/11/08
12/12/08
12/10/08
I am surprised that someone has not tried sticking fins on cars again as an answer to the problems. It is really easy to compete with Toyota, Nissan, and Honda. Copy and steal everything they do. Hyundai did this and in 20 years went from being a joke disposable car to high quality and low cost.
The big three need to change and just throwing money at them to keep doing what caused the trouble is not going to fix anything.
12/10/08
And holy crap, if Detroit copied what Toyota did, those engineered being laid off should feel glad, otherwise they'd end up dead from overworking.
I can't remember the last time a massive conglomerate actually managed reinvent itself successfully after being completely bankrupt. Can you?
12/10/08
12/10/08
Then how the hell is Volvo still in business?
Sorry, guys, I love you (I've got a 244) but my grandmother's '00 XC70 was nothing but aggravation. Lovely car, though.
12/10/08
12/10/08
12/11/08
12/11/08
And who would be BUYING all of these shiny new GM/VW buggies?
Sales are already down 40-50%. And that's not going to instantly ramp back up with new investment in old infrastructure, nor are tight credit markets going to help transferred workers buy what they're now making for some new company.
And a lot of those "less productive units" include people who were PREVIOUSLY buying cars - who will now have no jobs at all to do so.
I think you need to do a little research on Henry Ford, and the economics that he balanced to make sure he had CUSTOMERS within his employee base, so he could actually sell what he made.
12/11/08
First, over-extension of credit recently has glutted demand, so people can afford to put off major durable goods purchases for a while. They are likely to remain on the sidelines until a compelling reason to purchase comes up, like more efficient and affordable vehicles, or like it did in computers, a new energy paradigm forces the purchase of a new car that works with the new system. Demand at that time will have to ramp up, and it will happen sooner, if artificial intervention in the markets doesn't allow the dinosaurs to continue to feed.
And most of the displaced workers are relatively skilled individuals who have other economic potential, so assuming that they will be unable to purchase vehicles when the demand spike hits, is not logical.
Besides, this isn't about only the autoworkers. The housing downturn is actually much more important to the health of our economy. When people felt flush on the strength of their home's appreciating value, they bought vehicles. There was also considerable lateral movement in sale of homes, so people could move from one job to another fluidly. These factors will limit durable goods sales, and also make it harder for families to sell their house, and move from a place where they lost a job, to a new place where one is available. That ACTUALLY is a more important factor to the well-being of those autoworker households than artificially propping up a dying sales model.
12/10/08
You could put a half a pin in for the Janesville SUV plant also but they are set to close Dec 23rd.
The collapse of the American auto industry will also affect my company (I work in engineering at an American motorcycle manuf) by making the prices of components we purchase increase. We are a small customer to most of the suppliers and if they manage to stay in business they will pass the buck to us.
There is also the chance that Delphi goes under (We buy a lot from them) and our test track is owned by a one auto mauf and we are set to move to a facility owned by another in the near future.
Things are going to get ugly for a lot of America as well as the rest of the world if the toilet gets flushed.......
12/10/08
I work for a mid-sized family owned manufacturing business...we have already frozen hiring, suspended merit increases for 2009, and are taking every other measure we can think of to avoid layoffs.
Tough times, and the worst is yet to come.
12/11/08
First Parker Pen, now GM...goddamn the decline of American manufacturing is sad.
A service economy won't work. This country is fucked long term. Mark my words.
12/11/08
12/10/08
12/10/08
12/10/08
12/10/08
12/11/08
12/11/08
12/10/08
Say hello to capitalism.
12/11/08
Not every business that fails is poorly run. You're slamming on thousands of hard workers whose businesses are faltering because their clients have less/no money.
12/10/08
It's not just the factories that'll shut down, it's guys like me who work at parts stores that fix their project cars, it's the guys who run the restaurants that feed us, the schools that teach our children, the bars that serve to drown the sorrows in these last few good days. We all depend on the money that comes from this manufacturing sector, and moving the production overseas has already hurt, this is just going to hurt more.
I don't want to sound all gloom and doom, but look at some of the pictures on DetroitYes.com (where the lead picture is from) and see what happens when plants close. See the ruins left behind in search of a quick buck. Yes, I think they've screwed up big time, but I don't think that all of us should suffer that badly.
Look at this as an investment in our country, an investment in our future, and our children's future, and their children's future. Is it worth it?
12/10/08
12/10/08
Yes, it is. Even with this map.
Incompetent and poorly run companies and industries fail all the time. eToys? CompUSA? Circuit City? Cotton mills? The entire US steel industry?
Yes, I'd feel bad about all the out of work people. But that is life. Those people should be able to move on to find other jobs. Or is everyone saying that they are so stupid and poorly skilled that they can't find work in any other industry?
12/10/08
Unfortunately, no one is hiring right now.
No businesses are growing. That means even if you're qualified and competent, the payroll budget's just not there at your next employer.
12/11/08
12/11/08
12/11/08
This goes very far into the industrial base, consider as an example that the largest consumer of microprocessors is not the computer and cell phone market, but the auto industry. Intel, IBM, and texas instruments would be in the hurt too if anybody takes the fall.
And lets be clear. The reason Detroit is in Washington for a loan is that they can't get a loan from a private bank, they can't get one from a bank because the credit markets are shit, the credit markets are shit because the American people overextended themselves on mortgages that were commoditized after the government deregulated the derivatives market. If you want a root cause analysis, you'll never get it, the problem is too complex, but regurgitating thinly thought out bumper sticker slogans about "bad management" (which nobody was complaining about when they sold SUVs by the millions and were hugely profitable, and everyone was cashing in on high stock values and healthy dividends), the UAW labor and benefit costs, and the price of tea in china (or $0.12 an hour labor in toxic environments, as it were) does nothing for the overall conversation.
12/11/08
Having said that, US automakers have been pathetically run for, oh, the past 30 years. GM is a case study of how not to run a large company.
I also think, should GM and/or Chrysler fail, someone eventually will step in and take over those factories. UAW workers will probably take pay cuts. But some pay is better than no pay. Though given past UAW actions, they might actually starve and go homeless just to spite the world.
I don't think Ford will fail. Worst case, they could just shut down US operations and become a European company.
And frankly, I don't want to see GM or Chrysler fail. But they have such ruinous decision-making I find it hard to support them. It's giving money for food to a crackhead. And I want bankruptcy, not failure. It would give GM a chance to completely restructure itself and hold off creditors for awhile.
12/11/08
12/10/08
That whole "One in Ten jobs is related to the auto industry" figure (which I still find dubious) is definitely not evenly distributed. It's more like 7/10 in the midwest and 1/50 on the coasts.
That means when most of us are thinking of The Auto Industry, it's the UAW and a handful of executives, not Bill down the street who's a mechanical engineer for Dana-Spicer.
12/10/08
12/10/08
12/10/08
Explain to me how used car sales diappear if GM goes into Chapter 11.
Both of these grow if the supply of new cars goes down.
Don't get me wrong. I recognize there will be a terrible ripple effect if GM shuts down, but I still think everyone's new favorite statistic gets stretched a bit.