View Poll Results: Should governments bail out US automakers?

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Thread: Should governments bail out US automakers?

  1. #1

    Default Should governments bail out US automakers?

    Do you think governments should bail out US automakers? Part of the problem in the US is that they provide pensions for millions of Americans. But is that a reason to support their failure?

    What do you think? If GM, Chrysler or Ford fails (or all of them), the vehicles won't all disappear. Many will be purchased by non-North american automakers (for example, the corvette must have some value). So, it wouldn't devastate the north American auto lifestyle. Or would it? Do you care?

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    What happens if US automakers are bailed out? They'll be expected to protect jobs in the US, not in Canada. That's my only problem with the whole deal. The companies should all be downsized anyway, since they obviously can't compete or make a profit at their current size. It would be better if it were left up to the market, and their divisions sold off to companies who can do what the big 3 have failed to do: make a profit and make good vehicles that are better for the environment.

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    3 million people out of work for a start

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    The problem with the US automakers is their labor deals. You wouldn't believe some of the stuff that goes on. Shifts only working 4 hours (or less) but being paid 8 hours, people paid full time wage for months on end to not show up to work, it goes on and on. The reason that the American automakers are in such dire straights is because their labor costs are double or triple what they are for an equivalent North American Toyota or BMW factory (which aren't under UAW/CAW strangleholds).

    There's no question that the companies have been poorly managed, but the UAW/CAW will deserve much of the blame when these companies go under.

  5. #5

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    Quote Originally Posted by raz0469 View Post
    There's no question that the companies have been poorly managed, but the UAW/CAW will deserve much of the blame when these companies go under.
    I agree - although US social security / health care policy failings are part of it too. The unions were in effect, trying to "fix" the things the government was not taking care of.

    It is going to be interesting, for if the government does not bail out, the ripple effect through the US economy - all those pensioners losing their pensions, all that money not available for health care, is going to affect a lot more than just the auto industry. These companies are a de-facto social welfare state (which is a large part of why they can't compete).

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    I was thinking about this today: why should government bail out a corporation who has failed to change according to market demands? Seemed to me that they should fail.

    On the other hand though, what if 3 million people go unemployed? What kind of burden does this put on government? EI cheques+welfare+subsidized housing etc. could = a lot more money than propping up a company.

    Or does it? I guess that's the question.

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    If the US automakers didn't build crap that passes for automobiles then they wouldn't be losing market share to the Toyotas and the Hondas. Let the market decide. Taxpayers shouldn't be on the hook for the bad decisions of multimillionaire executives.

    The autoworkers can go work at more successful automakers with plants on the continent, or get other jobs.

    As for US automakers disappearing, there's talk of a GM/Chrysler merger brewing.
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  8. #8

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    Quote Originally Posted by Sonic Death Monkey View Post
    The autoworkers can go work at more successful automakers with plants on the continent, or get other jobs.
    The retired ones who will lose their pensions / health coverage won't. This will have a big impact - mind you, maybe its inevitable that this pain has to happen? Perhaps an end to it all is better than the ongoing slow death of these companeis that we have been watching?

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    Quote Originally Posted by Sonic Death Monkey View Post
    If the US automakers didn't build crap that passes for automobiles then they wouldn't be losing market share to the Toyotas and the Hondas. Let the market decide. Taxpayers shouldn't be on the hook for the bad decisions of multimillionaire executives.

    The autoworkers can go work at more successful automakers with plants on the continent, or get other jobs.

    As for US automakers disappearing, there's talk of a GM/Chrysler merger brewing.
    And what jobs would they go to in a recession?

    GM/Chrysler won't be merging anytime soon. Two money losing companies coming together to lose more money doesn't make sense.

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    I think bailing out the auto industry is a tough call. Sure, there are many jobs at stake, and that means votes, but this has gone on for decades and I think that bailing out the auto industry is corporate welfare. Yes, it will hurt in the short term, but I think that it would be better for governments to support new industries, and offer training for new jobs for those who are laid off.

    If there is an unfunded pension liability, perhaps our governments could support that to ensure financial security for retirees and those near retirement.
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    NO! The automobile companies that form the "big three" have repeated shown they can't not function intodays market...they can't catch up with the competition. Focus on building new manufacturing markets.

  12. #12

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    I think the pensions should have to carry mandatory insurance so they'd get paid out. Just as we have CDIC for bank accounts, there should be an equivalent for pensions.

    Other than that, let them fail. There has been a lot of bail out lately and very little creativity or effort on the part of the corporate world to help itself and make rational choices to limit the impact of their previous poor investment choices.
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    These companies have been bailed out or have received financial assistance of some sort so many times now, it must be obvious that throwing more money at them won't help. Chrysler is a particular standout, but neither Ford nor GM are much better.

    Let them fail if needs be, then let the survivors build something new and viable.
    Almost always open to debate...

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    Why is this thread in the Lifestyles section of C2E?!

  15. #15

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    Quote Originally Posted by MikeK View Post
    Why is this thread in the Lifestyles section of C2E?!
    Autos are part of our lifestyles. Our lifestyles will change, if some of these north american autos disapear for good.

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    The US is one of the most socialist states around despite their protestations that they are not.

    NO bailouts, they should not even of done anything for the financial institutions. If a business makes stupid decisions the government should not come along to help them out.

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by MikeK View Post
    Why is this thread in the Lifestyles section of C2E?!
    Autos are part of our lifestyles. Our lifestyles will change, if some of these north american autos disapear for good.
    And our lifestyle will be better without them!

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    why government continue ramming these junk autos down our throat. Concern should be made in educating these workers like it or not things are going to change and soon we will have a bunch of unskilled workers capable of what monkeys can do

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    Quote Originally Posted by SDM
    As for US automakers disappearing, there's talk of a GM/Chrysler merger brewing.
    GM recently declared that the merger talks are done with for now, because of how poorly they did last quarter and how little operating cash they have left.

    Again though, I think a lot of people are missing the point here. People are saying "well if they didn't build crap, they wouldn't be losing market share." While there's definitely some validity in that statement, it ignores a lot of what's really going on. Hyundai, Kia, and numerous other manufacturers with much much smaller market shares than any of the Big 3 make money selling their little econoboxes. But the Big 3 concentrated on larger, more expensive vehicles for the past couple decades because they absolutely could not make money on small cars because of their incredibly expensive labor costs.

    Again, even compared to North American Toyota or BMW or Honda factories, the American automakers have labor costs per vehicle that are anywhere from 50% higher to double or triple what their competitors have, even though their factories are also in the US. They pretty much cannot make money on small, inexpensive cars that their competitors make bank off of because of it.

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    I think if we bail out the Big Three, we're delaying the inevitable, with these plants going broke. I think our governments should support developing skilled labour so our people can compete in the job market in the future.
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  21. #21

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    How can the economy recover and thrive with the government bailing out failing sectors?

    Protectionist measures for a mismanaged industry is a bad idea. The automakers didn't have the guts to stand up to the unions, and now union greed is killing the goose that laid the golden eggs. I think they also relied on brand loyalty (i.e. "Buy a Chevy - Buy American!" too much. After owning a few domestic cars that broke down or had to be recalled 2 or 3 times, I've switched to Japanese cars. They are efficient and never seem to die on me.

    I think they need to die for the betterment of everyone involved. A bail out isn't going to force them to change their poor business pracitices.

  22. #22

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    Quote Originally Posted by MrOilers View Post
    How can the economy recover and thrive with the government bailing out failing sectors?
    Michigan is Democratic heartland / base. As we write, the Democratic leaders are talking about redirecting some of the bank bail out to the auto industry. Robing Peter to pay Paul?

  23. #23

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    Quote Originally Posted by MrOilers View Post
    How can the economy recover and thrive with the government bailing out failing sectors?

    Protectionist measures for a mismanaged industry is a bad idea. The automakers didn't have the guts to stand up to the unions, and now union greed is killing the goose that laid the golden eggs. I think they also relied on brand loyalty (i.e. "Buy a Chevy - Buy American!" too much. After owning a few domestic cars that broke down or had to be recalled 2 or 3 times, I've switched to Japanese cars. They are efficient and never seem to die on me.

    I think they need to die for the betterment of everyone involved. A bail out isn't going to force them to change their poor business pracitices.
    Two things:

    1. This is why we need an economic thread. This topic is in "lifestyles".

    2. It's not a question of whether they should bail out the automakers. Ideally they shouldn't. Unfortunately they must. The last thing the U.S. or Ontario economy needs right now are the big 3 to go out of business. Any bailout must have strings attached.

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    Just to reiterate what I've already said: http://money.cnn.com/2008/02/12/news...ion=2008021211

    The current veteran UAW member at GM today has an average base wage of $28.12 an hour, but the cost of benefits, including pension and future retiree health care costs, nearly triples the cost to GM to $78.21, according to the Center for Automotive Research.

    By comparison, new hires will be paid between $14 and $16.23 an hour. And even as they start to accumulate raises tied to seniority, the far less lucrative benefit package will limit GM's cost for those employees to $25.65 an hour.
    And people actually think that GM is going bankrupt because they make bad vehicles? Their labor costs are double or triple what an equivalent non-union plant would be. Which again is why they've relied so heavily on more expensive and larger SUV's and trucks, because they can't make money on anything else.

    I mean, doesn't anyone else find it ridiculous that they have to PAY someone $140,000 just to leave?

  25. #25

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    raz, i think their current benefits costs are more to do with earlier decades of not bothering to save any money for promised retirement benefits. They're stuck paying for yesterday's pensions because they didn't bother to set anything aside.
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    I wish I knew the right answer. When I really take a hard look, I come to the conclusion that we need to let the market settle to where it belongs, as opposed to propping up a dying sector. The question in my mind is are these companies viable in the longer term? Is this a short term problem?

    Do we bail out the banks? Do we bail out the big 3 auto makers? How about the insurance companies - SunLife or MetLife? The cattle industry? Starbucks? Rona? Nortel?

    I somewhat agree with Raz. Have the auto workers unions priced themselves out of the market? Should they get preferential treatment?

    I feel for those who lose their jobs or careers anywhere in Canada. I deal with them every day, and it can be very tough, especially for those with families. Most employed people, when they lose their jobs, become eligible for employment insurance for a period of time, while they look for other employment. They may also become eligible for training. Should some people be treated special, differently than others who are laid off?

    I sympathize with these workers plight. As for some very well paid execs on corporate dole, stories like this get my blood boiling "AIG executives were grilled over spending $443,344 for a weeklong conference at the resort just days after the federal government approved an $85-billion bailout."

    I look out my window, see a guy fishing empty bottles out of the dumpster, and think this guy has more class than any of the AIG top executives. I know AIG is in the US, but I'd rather my tax dollars go to housing the guy doing the dumpster diving than to paying the bar tab and green fees of execs who are raking it in while they are ripping US taxpayers off.

    I'm not normally pessimistic regarding the economy, but, for the first time, I have a sinking feeling that things could get very bad for some time to come. The stock market continues to plunge, and banks continue to sell off their holdings. What happens if people start to look at what the banks are doing, start to sell off their stocks too, and we get a run on the banks, as is starting to happen in other countries. I don't believe our banking sector is in as good shape as we are being told.

    I know the auto sector is in dire condition. Many other groups have been in worse shape for a long time. Why the emergency for this group when we can't afford to put that kind of money into things like affordable housing and child care? I'm not making a case either way, I'm just wondering and asking these questions of myself.
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  27. #27

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    Quote Originally Posted by lux View Post
    raz, i think their current benefits costs are more to do with earlier decades of not bothering to save any money for promised retirement benefits. They're stuck paying for yesterday's pensions because they didn't bother to set anything aside.
    That's my understanding as well - although I am not sure if anything has been done (i.e. was the liability carved off?). I seem to remember this was an issue a few years ago when the labour deal was negotiated. Back then, there were all sorts of statistics, that suggested if you purchased a North American car, you were paying something like $5,000, not for the cost of the car, but for the medical and pension payments of retired workers.

    In other words, in the 1950's and 60's, instead of funding pension liabilities, greedy auto makers and unions, made promises of retirement and medical benefits in the future, without setting aside the money to pay for them (and of course, medical is much more expensive than anyone imagined). Now there are a million or so pensioners who live off that promise. Newer automakers to North American haven't had to deal with this (as their governments provide pensions), - they aren't so silly as to follow the unfunded pension model either.
    Last edited by moahunter; 11-11-2008 at 12:22 PM.

  28. #28

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by lux View Post
    raz, i think their current benefits costs are more to do with earlier decades of not bothering to save any money for promised retirement benefits. They're stuck paying for yesterday's pensions because they didn't bother to set anything aside.
    That's my understanding as well - although I am not sure if anything has been done (i.e. was the liability carved off?). I seem to remember this was an issue a few years ago when the labour deal was negotiated. Back then, there were all sorts of statistics, that suggested if you purchased a North American car, you were paying something like $5,000, not for the cost of the car, but for the medical and pension payments of retired workers.

    In other words, in the 1950's and 60's, instead of funding pension liabilities, greedy auto makers and unions, made promises of retirement and medical benefits in the future, without setting aside the money to pay for them (and of course, medical is much more expensive than anyone imagined). Now there are a million or so pensioners who live off that promise. Newer automakers to North American haven't had to deal with this (as their governments provide pensions), - they aren't so silly as to follow the unfunded pension model either.
    There is no such thing as the unfunded pension model. In reality it's an overly optimistic discount rate (return assumption) that many of these companies were using, which allowed them to take contribution holidays and it happened way more recently than the 50's and 60's.

  29. #29
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    Quote Originally Posted by Jimbo
    "AIG executives were grilled over spending $443,344 for a weeklong conference at the resort just days after the federal government approved an $85-billion bailout."
    That was completely blown out of proportion. It was a reward for top performing brokers, and had been arranged long before AIG hit it's current problems. Cancelling it would have been a slap in the face for the brokers that received it. It wasn't "executives" going on the trip. The timing was bad to be sure.

  30. #30

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    Quote Originally Posted by raz0469 View Post
    Quote Originally Posted by Jimbo
    "AIG executives were grilled over spending $443,344 for a weeklong conference at the resort just days after the federal government approved an $85-billion bailout."
    That was completely blown out of proportion. It was a reward for top performing brokers, and had been arranged long before AIG hit it's current problems. Cancelling it would have been a slap in the face for the brokers that received it. It wasn't "executives" going on the trip. The timing was bad to be sure.
    What it does highlight is the enormous amount of excess in the business.

  31. #31

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    Quote Originally Posted by Ins View Post
    There is no such thing as the unfunded pension model. In reality it's an overly optimistic discount rate (return assumption) that many of these companies were using, which allowed them to take contribution holidays and it happened way more recently than the 50's and 60's.
    That's probably true, I don't really know the details - just broad thoughts from what I have read. The way I see it is that there are two types of pension model, funded, and "unfunded". Funded is where a employer pays a Pension fund to set aside funds for that employee. The risk / reward of the pension fund lies with the employee, on any given day they can see the balance sitting there just for them - what has been contributed. Unfunded (perhaps partially funded?), is the socialist teacher / union model, where the employee is promised a certain amount of coverage / payout, and the company or some other enterprise takes the risk in meeting that pay out. IMO that second model is very flawed / dangerous, which the discount rate mistake illustrates. If a stuff up occurs, it can damage the financial viability of the existing business, and the costs get passed on to consumers (who then shop elsewhere). Todays workers end up paying for the over promises made to yesterdays - or the business just goes belly up.
    Last edited by moahunter; 11-11-2008 at 12:53 PM.

  32. #32

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Ins View Post
    There is no such thing as the unfunded pension model. In reality it's an overly optimistic discount rate (return assumption) that many of these companies were using, which allowed them to take contribution holidays and it happened way more recently than the 50's and 60's.
    That's probably true - although the way I see it is that there are two types of pension model, funded, and "unfunded". Funded is where a employer pays a Pension fund to set aside funds for that employee. The risk / reward of the pension fund lies with the employee, on any given day they can see the balance sitting their just for them. Unfunded (perhaps partially funded?), is the old teacher / union model, where the employee is promised a certain amount of coverage / payout, and the company takes the risk. IMO that second model is very flawed / dangerous, which the discount rate mistake illustrates. If a stuff up occurs, it damages the financial viability of the existing business, and the costs get passed on to consumers (who then shop elsewhere).
    The first type is Defined Contribution whereby you pay a certain amount, the company matches to a degree and then you pick your own investments.

    The second type is Defined Benefit where the company manages all the investments.

    Pro's and cons with both.

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    Quote Originally Posted by Ins View Post
    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Ins View Post
    There is no such thing as the unfunded pension model. In reality it's an overly optimistic discount rate (return assumption) that many of these companies were using, which allowed them to take contribution holidays and it happened way more recently than the 50's and 60's.
    That's probably true - although the way I see it is that there are two types of pension model, funded, and "unfunded". Funded is where a employer pays a Pension fund to set aside funds for that employee. The risk / reward of the pension fund lies with the employee, on any given day they can see the balance sitting their just for them. Unfunded (perhaps partially funded?), is the old teacher / union model, where the employee is promised a certain amount of coverage / payout, and the company takes the risk. IMO that second model is very flawed / dangerous, which the discount rate mistake illustrates. If a stuff up occurs, it damages the financial viability of the existing business, and the costs get passed on to consumers (who then shop elsewhere).
    The first type is Defined Contribution whereby you pay a certain amount, the company matches to a degree and then you pick your own investments.

    The second type is Defined Benefit where the company manages all the investments.

    Pro's and cons with both.

    Not quite.

    A defined benefit is your typical pension plan that has been in existence for a very long time, and is typically indexed to inflation. The company does not manage the investments. Their is a pension committee made up of employees and managers who are all members of the plan. They select a fund manage to manage the plans assets. The pension legislation sets specific guidelines that are not optional for the company as to times when they have contribute more (i.e. underfunded position) or get a contribution holiday (over funded position). The company has little say in either case. These positions are determined based on various actuarial assumptions such as discount rates, and a whole raft of others. Market performance has no (or very little) bearing on this. All of the risk is with the company as they have to make up the short falls.

    A defined contribution is when the employee contributes and the employer matches. The employee has the ability to choose how the money is invested, usually a limited set of funds, but the employer still has an obligation provide the employee or make available information on how to manage their investments. The risk is with the employee primarily.

    There are also RRSP type plans that give the employee even greater autonomy.

    The DB plans are good if you want certainty on your pension at retirement, providing the company is around and the pension is solvent. The DC plans give the employee greater autonomy over their future.

    I prefer the DC or RRSP type plans as I like control over my destiny.

  34. #34

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    In some cases the pension committee is a sub set of the board of directors for instance and most large funds will have a mix of internal and external managers.

    Unless this has changed, the company does have say on the discount rate. Many firms were using 10%+ around the tech bubble. Here's a simples article that explains. YOu are right about having little say about contribution holidays, however the point is moot if you control the discount rate.

    http://beginnersinvest.about.com/od/gaap/a/aa090704.htm

  35. #35

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    I think the US auto example shows why defined plans are the new model, and will be used by most businesses moving forward. It is too difficult to plan long term for these payouts, the risk is too great for shareholders, and even employees, to the extent it puts companies themselves in jeapordy especially versus competitors. The exception perhaps is government employees - but even there, I think it is not right to put this sort of burden / risk on the children of todays taxpayers. It's just gambling by another name - I'd rather employees just face the reality that the return they earn on their pensions will be set by the market, for better and worse.

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    Quote Originally Posted by raz0469 View Post
    Quote Originally Posted by Jimbo
    "AIG executives were grilled over spending $443,344 for a weeklong conference at the resort just days after the federal government approved an $85-billion bailout."
    That was completely blown out of proportion. It was a reward for top performing brokers, and had been arranged long before AIG hit it's current problems. Cancelling it would have been a slap in the face for the brokers that received it. It wasn't "executives" going on the trip. The timing was bad to be sure.
    The timing was more than bad.

    When you are broke, you can't afford it. They are broke. They do not have any money. This reward was paid for by US taxpayers, not the company. The taxpayers are the ones getting the slap in the face. They aren't happy, to say the least.

    There is a new reality for AIG and companies like them that the executives don't seem to be coming to grips with.

    I normally don't like to wish ill on businesspeople, and this isn't "tall flower syndrome", but I hope the CEO's who raped this company and others lose everything and end up in a rental bungalow in a shady neighbourhood next door to the people they ruined. $259M (give or take a few mil) bonuses when your company is going broke is obscene.
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  37. #37

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    Quote Originally Posted by moahunter View Post
    I think the US auto example shows why defined plans are the new model, and will be used by most businesses moving forward. It is too difficult to plan long term for these payouts, the risk is too great for shareholders, and even employees, to the extent it puts companies themselves in jeapordy especially versus competitors. The exception perhaps is government employees - but even there, I think it is not right to put this sort of burden / risk on the children of todays taxpayers. It's just gambling by another name - I'd rather employees just face the reality that the return they earn on their pensions will be set by the market, for better and worse.
    Both methods rely on market returns.

    Defined Benefit plans designed well and managed properly are far from gambling and for several reasons should provide a more secure and larger pension for the average employee.

    Let's face it, the world changed on the big 3 (and their unions) and they couldn't adapt quickly enough. This applies to the wages they paid, the products they made, the benefits they provided and almost everything else in there business model.

  38. #38

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    So what's the difference between the American and Foreign Automakers constructing cars in the US? Is this why the big 3 have outsourced to Mexico and Canada?

  39. #39

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    Quote Originally Posted by JBear View Post
    So what's the difference between the American and Foreign Automakers constructing cars in the US? Is this why the big 3 have outsourced to Mexico and Canada?
    The foreign automakers set up their factories mainly in the South of the US where the auto unions do not hold power. They aren't dogged by all the pension / health care requirements, especially the historical ones. Ford, GM and Chrysler can't do this (their staff would probably strike).

    No-body can cost effectively build small cars in Canada or the US (maybe the Matrix is an exception), most of these are being manufactured in Mexico now (vw, Nissan, etc.). It was on the larger premium vehicles that the US and Canada are competitive, as the margins on these vehicles are high enough to cover the labour differential. But, with small cars gaining market share at the expense of SUV's ... its not looking good, for US and Canadian auto plants be they foreign owned or not.
    Last edited by moahunter; 14-11-2008 at 02:51 PM.

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    Quote Originally Posted by JBear View Post
    So what's the difference between the American and Foreign Automakers constructing cars in the US? Is this why the big 3 have outsourced to Mexico and Canada?
    Simple: the UAW/CAW. The foreign companies with plants in North America like Toyota, Honda, Nissan and BMW are either not unionized or if they are they don't have nearly as bad of a CBA as the Big 3 do. Again, a typical worker at a Big 3 plant costs the company upwards of $70-80 an hour, and chances are they're only productively working about half the time due to shift cuts and production line slow downs. When you hear that GM "laid off" 1,000 workers, what that really means is they're getting 90% of their pay to sit in the lunch room for 5 hours a day. Hence why instead they offer buyouts of $140,000 just for the worker to go away.

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    If you are the cable company, I already sent the money. If you are my family, please give me money. If you are my employer, you didn't pay me enough money. If you are my friends, you owe me money. If you are a female, don't worry, I have plenty of money

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    i don't know if this was asked and answered, but why is this under "lifestyles"?

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    Quote Originally Posted by moahunter View Post
    Autos are part of our lifestyles. Our lifestyles will change, if some of these north american autos disapear for good.
    Yip - I answered that one. There are never many active threads in Lifestyles anyway...

    Interesting to see the Globe and Mail is running a story now that the Canadian government may join in with the US - I guess there are too many votes out East to not do a bailout.

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    http://online.wsj.com/article/SB1226...ays_us_opinion

    If they're bailed out, they'll just be back in the same position in a couple years. Either they have to go to Chaper 11, or the US government creates some sort of special reorganizing process similar to it. Handing them 25 or 50 billion will only delay the inevitable.

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    ^^^Yeah, sounds like to me it's the Unions who are the ROOT of the problem though.

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    Quote Originally Posted by JBear View Post
    ^^^Yeah, sounds like to me it's the Unions who are the ROOT of the problem though.
    That's what I'm starting to think too... there was a very interesting piece on Saturday night CBC's One on One covering this topic.

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    It's not JUST the unions, but they're certainly a big part of it. GM has about the same market share as Toyota, yet has three times the number of brands and dealerships. Everything about the company is well and truly screwed up, and their management has been unable to change it. Yes things economically are pretty bad right now, but over the past decade things have been fairly good. Yet GM and Ford have, for the most part, barely been scraping by. Now that things have gone in the tank, they have their hands out. What happens the next time things get bad. Repeat the process.

    And the quality of their vehicles, whether perceived or actual, has little to do with their problems as well. Ford and GM still have around 20-25% of the auto market each, about the same as Toyota (give or take). Yet Toyota makes billions and they lose billions. If you're selling ten thousand widgets and losing 5 cents on every widget, is selling twenty thousand widgets at a loss of 5 cents each going to make things better? They're so bloated and inefficient they don't have a hope of being profitable any time soon.

    Again, either they go bankrupt and restructure in bankruptcy protection (bankruptcy doesn't mean they just disappear), or the US government arranges a bailout package that pretty much sacks the entirety of upper management in short order, whipes out shareholder equity, voids existing labor agreements, and appoints a transition team to restructure the whole mess.

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    This thread belongs in Politics.
    Edmonton first, everything else second.

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    Parts are going to be made in asia and sent to mexico where Ford has invested 9.2 Billion in assembly plants. These Global corperations have no interest in American jobs

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    Rarwin, How could you have American jobs when they are definetly hurting the American Manufacturers? Parts are made cheaper in Asia, and labour is cheaper in Mexico. It is to even out the playing field that the Imports, who set up business in the cheaper labour southern states (as stated earlier). The American Car Companies unions are pricing themselves out of the market, and unfortunately, the american companies are stuck with them.

    I think a good example is Ontario, didn't they go on strike a few years ago for more pay and/or benefits? Now plants may/will/are closing and I don't think the US car manufacturers will come back. The whole reason they went to Ontario was because they were cheaper and physically close to Detroit.

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    Quote Originally Posted by JBear View Post
    Rarwin, How could you have American jobs when they are definetly hurting the American Manufacturers? Parts are made cheaper in Asia, and labour is cheaper in Mexico. It is to even out the playing field that the Imports, who set up business in the cheaper labour southern states (as stated earlier). The American Car Companies unions are pricing themselves out of the market, and unfortunately, the american companies are stuck with them.

    I think a good example is Ontario, didn't they go on strike a few years ago for more pay and/or benefits? Now plants may/will/are closing and I don't think the US car manufacturers will come back. The whole reason they went to Ontario was because they were cheaper and physically close to Detroit.
    Wages are not the problem it is our standard of living

    The Comptroller General of the United States proclaims that our current standard of living is unsustainable technically the USA is bankrupt by 2040 they will not generate enouph revenue to even pay the interest on the debt they have.
    http://ca.youtube.com/watch?v=OS2fI2p9iVs

    Guys like David Rockefeller will talk about population reduction social security and health.
    http://ca.youtube.com/watch?v=Un-N_HLQMwY
    Last edited by Rarwin; 19-11-2008 at 09:27 AM.

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    http://www.detnews.com/2005/autosins...A01-351179.htm

    An article about the job banks and other programs that are weighing down the car makers. It's three years old, so obviously the number of employees in the job banks mentioned in the article are probably much, much higher today with all the recent layoffs.

    Also an opinion piece by Mitt Romney:

    IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

    Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

    I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

    First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

    That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

    Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

    The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

    You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

    The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

    Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

    Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

    It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

    But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

    The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

    In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

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    Quote Originally Posted by raz0469 View Post
    An article about the job banks and other programs that are weighing down the car makers. It's three years old, so obviously the number of employees in the job banks mentioned in the article are probably much, much higher today with all the recent layoffs.
    I love how all the "experts" now know how to fix things. But seriously - even the article above conflicts. For example, it says, dad did the right thing by cutting executive salaries. But at the same time, it says bring in talent from elsewhere... (anyone see the conflict there .... would u take a pay cut to work at GM if you were a talented executive in another industry)? And - the big 3 have been doing this anyway re outside talent - a Boeing guy is in charge at one of them (I think Ford from memory).

    One thing in the back of my mind with GM - is what if the Chevy Volt is the magic bullet some are projecting? Is it worth keeping it afloat to see if that occurs? I don't know, but the industry is going to change a lot in the next 5 to 10 years as lithium batteries become reality. And does Obama's health care promise tie in somehow, in terms of removing that debt with respect to retirees from the big 3?
    Last edited by moahunter; 19-11-2008 at 11:31 AM.

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    Lets say we never allowed foreign auto's into the market everyone drove Ford or GM

    do think the big3 would be in the same position they are in now?

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    I'm not sure what the point of your hypothetical is. If there was no foreign competition, we'd all be driving vehicles that are more expensive and of much poorer quality. GM and Ford would be rolling in dough, probably. Competition is a good thing, and so is trade. Protectionism isn't the answer. In fact the current state of the American auto industry is the direct result of various protectionist measures over the years, which allowed them to stagnate and put off the necessary changes and restructuring that would allow them to compete on a level playing field with foreign manufacturers.

    The CAW continues to march along in complete denial: http://www.cbc.ca/cp/business/081120/b112025A.html

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    When the oil crisis hit, and the japanese came in with their fuel sipper cars, didn't Detroit start producing some really really bad compact cars? I think to answer your question, there would be little if any competition between the big three and innovation would go out the window. They would be making a profit, though I think they would be mismanaged.

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    The Pinto was a quality automobile. So long as you didn't get rear ended. That could end badly!

    Quote Originally Posted by Wikipedia
    Through early production of the model, it became a focus of a major scandal when it was alleged that the car's design allowed its fuel tank to be easily damaged in the event of a rear-end collision which sometimes resulted in deadly fires and explosions. Critics argued that the vehicle's lack of a true rear bumper as well as any reinforcing structure between the rear panel and the tank, meant that in certain collisions, the tank would be thrust forward into the differential, which had a number of protruding bolts that could puncture the tank. This, and the fact that the doors could potentially jam during an accident (due to poor reinforcing) made the car a potential deathtrap.

    Ford was aware of this design flaw but allegedly refused to pay what was characterized as the minimal expense of a redesign. Instead, it was argued, Ford decided it would be cheaper to pay off possible lawsuits for resulting deaths. Mother Jones magazine obtained the cost-benefit analysis that it said Ford had used to compare the cost of an $11 repair against the cost of paying off potential law suits, in what became known as the Ford Pinto memo.[4][5] The characterization of Ford's design decision as gross disregard for human lives in favor of profits led to major lawsuits, criminal charges, and a costly recall of all affected Pintos. While Ford was acquitted of criminal charges, it lost several million dollars and gained a reputation for manufacturing "the barbecue that seats four."[6] Nevertheless, as a result of this identified problem, Ford initiated a recall which provided a dealer installable "safety kit" that installed some plastic protective material over the offending sharp objects, negating the risk of tank puncture."[7]

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    I've heard that Ford really got picked on as all of the big 3 were doing the same thing.

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    Documentary filmmaker Michael Moore was on Larry King last night discussing this. Now, love him or hate him,he does have some valid points,as he made a documentary called Roger & Me,about some the inside workings of GM. Here is a portion of his conversation from last night's program.

    http://www.cnn.com/2008/US/11/20/lkl...ore/index.html
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    Quote Originally Posted by Sonic Death Monkey View Post
    If the US automakers didn't build crap that passes for automobiles then they wouldn't be losing market share to the Toyotas and the Hondas. Let the market decide. Taxpayers shouldn't be on the hook for the bad decisions of multimillionaire executives.

    The autoworkers can go work at more successful automakers with plants on the continent, or get other jobs.

    As for US automakers disappearing, there's talk of a GM/Chrysler merger brewing.
    Seems to me, GM is doing well, but the Asian companies...not!
    http://www.jdpower.com/corporate/new...spx?ID=2008250

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    I have more respect for a bum on a streetcorner shaking a cup than I have for the big 3 execs. At least the "bum" gets it. He knows he's broke. And he's begging for money directly, which is a lot more honest than reaching into the taxpayers wallet.

    Yesterday when the big 3 execs came begging to congress (?), they were asked "who among you took a commercial flight to get here?"

    None of them did. They each took a private jet. On their way to beg for money because they are "broke". I guess they were in a hurry.

    Let them find out what broke feels like. I say let them collect welfare like the rest of us when we're broke. Or have them stand on the streetcorner and ask for the money from the American/Canadian taxpayers directly. We'll see how much they come up with then.
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    Absolutely no to a bailout.

    The only proper and responsible course of action is for the automaker to file for chapter 11 bankrucpy protection, which would allow them to renegotiate all their current contracts and agreements, and to keep them in business long enough to do what needs to be done to make themselves competitive.

    Of course they're resisting this, because the first thing that'll happen is that an appointed management team will clean the house of all the company top brass, who'll basically be shown the door with nothing more to show for their tenure than a legal box full of their personal items. THe union doesn't want this either because they'll be forced to renegotiate all their contracts.

    It's about more than crappy gas guzzling american cars, unfortunately. (Although that has a lot to do with it) It has to do with the culture of the American car company, that has languished in the 80's as competitive automakers from around the world adapt their operations to meet the changing market. GM, Dodge, and to a lesser degree Ford have failed to do this. Honda and Toyota have been running circles around the big three for years, And the big 3 have refused to try & keep up. Look whereit's gotten them.
    Last edited by 240GLT; 20-11-2008 at 03:42 PM.

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    Quote Originally Posted by raz0469 View Post
    Just to reiterate what I've already said: http://money.cnn.com/2008/02/12/news...ion=2008021211

    The current veteran UAW member at GM today has an average base wage of $28.12 an hour, but the cost of benefits, including pension and future retiree health care costs, nearly triples the cost to GM to $78.21, according to the Center for Automotive Research.

    By comparison, new hires will be paid between $14 and $16.23 an hour. And even as they start to accumulate raises tied to seniority, the far less lucrative benefit package will limit GM's cost for those employees to $25.65 an hour.
    And people actually think that GM is going bankrupt because they make bad vehicles? Their labor costs are double or triple what an equivalent non-union plant would be. Which again is why they've relied so heavily on more expensive and larger SUV's and trucks, because they can't make money on anything else.

    I mean, doesn't anyone else find it ridiculous that they have to PAY someone $140,000 just to leave?
    This the info I was trying to find. thanks raz. I'd read somewhere that all things included an auto worker was making $75 an hour. Just wrap your brain around that number for a second. Bail-out? Sorry, no. Welcome to earth.

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    my answer to the initial question is: no.

    I would prefer they use the money instead for infrastructure projects and for research and development of new technologies to keep people employed while businesses sort out who will continue making cars or other modes of transportation.

  65. #65

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    Quote Originally Posted by raz0469 View Post
    The Pinto was a quality automobile. So long as you didn't get rear ended. That could end badly!

    Quote Originally Posted by Wikipedia
    Through early production of the model, it became a focus of a major scandal when it was alleged that the car's design allowed its fuel tank to be easily damaged in the event of a rear-end collision which sometimes resulted in deadly fires and explosions. Critics argued that the vehicle's lack of a true rear bumper as well as any reinforcing structure between the rear panel and the tank, meant that in certain collisions, the tank would be thrust forward into the differential, which had a number of protruding bolts that could puncture the tank. This, and the fact that the doors could potentially jam during an accident (due to poor reinforcing) made the car a potential deathtrap.

    Ford was aware of this design flaw but allegedly refused to pay what was characterized as the minimal expense of a redesign. Instead, it was argued, Ford decided it would be cheaper to pay off possible lawsuits for resulting deaths. Mother Jones magazine obtained the cost-benefit analysis that it said Ford had used to compare the cost of an $11 repair against the cost of paying off potential law suits, in what became known as the Ford Pinto memo.[4][5] The characterization of Ford's design decision as gross disregard for human lives in favor of profits led to major lawsuits, criminal charges, and a costly recall of all affected Pintos. While Ford was acquitted of criminal charges, it lost several million dollars and gained a reputation for manufacturing "the barbecue that seats four."[6] Nevertheless, as a result of this identified problem, Ford initiated a recall which provided a dealer installable "safety kit" that installed some plastic protective material over the offending sharp objects, negating the risk of tank puncture."[7]
    yep. and wasn't there a GM pickup (probably many) that had the nasty fuel tank issue?

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    Their base wages for new hires are pretty much identical to non union Toyota factories in the US South now, actually. The big cost differential is in health and retirement benefits. For every currently working GM employee, there's something like 2.5 who are retired and collecting pension and health benefits. It's just a complete mess. But I don't want to give the impression that the CAW/UAW hasn't given consessions as they most definitely have, nor that they're the only problem, as they're most definitely not.

    As far as the private jet thing goes, let's be realistic here. First of all most large corporations have travel and safety policies in place for executives. The likelihood of Wagoner being attacked by a rabid UAW member on a commercial flight isn't exactly sky high (why do it after you have to jump through the usual security hoops?), but I can see the logic there.

    Furthermore, those executives if you boil their pay packages down to an hourly rate are around $5000/hour. Debate the appropriateness of that all you like, but that's the reality. Is having them waste their precious time on a commercial flight really as thrifty of an idea as it sounds? Probably not. That particular issue is politicians blowing wind to get headlines.

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    I know one way that the US gov't could help automakers without actually giving them any funds, but unfortunately there's too much money to be made in the crooked health insurance industry for that to happen.

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    Correct me if I'm wrong but didn't the Big 3 ask for $25B for new design, projects, r&d, etc. THEN another $25B to get them out of their current jam? I'll reserve my 'WTF!' til this is ferified, denied or corrected.

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    I found it quite amusing how one of the congressmen at all these hearings into the bailouts in the USA asked the CEOs of the automakers to raise their hands if they flew commercial to get to the hearings... not a single one raised their hand.

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    Quote Originally Posted by Wrecker View Post
    Quote Originally Posted by Sonic Death Monkey View Post
    If the US automakers didn't build crap that passes for automobiles then they wouldn't be losing market share to the Toyotas and the Hondas. Let the market decide. Taxpayers shouldn't be on the hook for the bad decisions of multimillionaire executives.

    The autoworkers can go work at more successful automakers with plants on the continent, or get other jobs.

    As for US automakers disappearing, there's talk of a GM/Chrysler merger brewing.
    Seems to me, GM is doing well, but the Asian companies...not!
    http://www.jdpower.com/corporate/new...spx?ID=2008250
    This report is purely from the customer satisfaction viewpoint. It's the dollars that count and a Newsweek report recently stated that GM has already lost $18B this year and continues to lose $1B per week. Chrysler are reported to be in even worse shape.
    http://www.newsweek.com/id/163692

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    JD Power and their poll respondents have their biases, as does Consumer Reports.
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    Quote Originally Posted by raz0469 View Post
    ...
    As far as the private jet thing goes, let's be realistic here. First of all most large corporations have travel and safety policies in place for executives. The likelihood of Wagoner being attacked by a rabid UAW member on a commercial flight isn't exactly sky high (why do it after you have to jump through the usual security hoops?), but I can see the logic there.

    Furthermore, those executives if you boil their pay packages down to an hourly rate are around $5000/hour. Debate the appropriateness of that all you like, but that's the reality. Is having them waste their precious time on a commercial flight really as thrifty of an idea as it sounds? Probably not. That particular issue is politicians blowing wind to get headlines.
    We've been down this road before Raz (AIG convention).

    They're asking for billions because they don't have any money, so the rationale that they need to use private jets because they get $5000/hr just makes it worse for me. There's their reality, and then there's real reality. Don't they realize they aren't going to elicit a lot of contributions in the cup if they're on the corner dressed in Versace leaning against their Maserati lighting cigars with $1000 bills. How in touch with reality are these guys, and how bright are they anyway? To use another metaphor - they're steering the Titanic towards the iceberg and they are begging for our tax dollars to burn as fuel to keep going. Only you can bet in this version the captain isn't going down with the ship, we are.

    Real reality is that they are paying themselves $5000/hr and flying in a private jet to ask for a handout because they are broke, partly because of economic conditions, but largely due to their own ineptitude. I wish I got $5000/hr to screw up. There's something seriously wrong with this picture.
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    The survey posted by Wrecker measures new vehicle sales process ratings. I should hope that someone buying a Jag, Benz, Lincon or Hummer would be happy with the process.

    This says nothing about the quality of the vehicles.

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    Default A modern parable . .

    The following was sent to me from some friends (non union members BTW ) from the States, Thought I'd share:

    A MODERN PARABLE . .
    A Japanese company ( Toyota ) and an North American company (Ford) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.

    On the big day, the Japanese won by a mile.

    The North Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

    Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

    Feeling a deeper study was in order, North American management hired a consulting company and paid them a large amount of money for a second opinion.

    They advised, of course, that too many people were steering the boat, while not enough people were rowing.

    Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.

    They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.

    The next year the Japanese won by two miles.

    Humiliated, the North American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.

    Sadly, The End.

    Here's something else to think about:
    Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages.

    TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results:

    TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.

    Ford folks are still scratching their heads.

    IF THIS WEREN'T TRUE, IT MIGHT BE FUNNY.

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    lame.


    If there was to be any parallel to that parable, the Ford boat would have 8 rowers and 15 retiree's who add dead weight.

    Here's something else to think about:
    Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages.

    TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results:

    TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.

    Ford folks are still scratching their heads.
    Yeah, thats it.....

  76. #76

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    "To expose a 4.2 Trillion dollar ripoff of the American people by the stockholders of the 1000 largest corporations over the last one-hundred years will be a tall order of business."

    Buckminster Fuller (1895-1983)

    "The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than the aristocracy, more selfish than the bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes." -- Abraham Lincoln 16th president of the USA

    http://www.evolutionaryjustice.com/i...nd_The_Fed.doc

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    An editorial from a US newspaper, so its US mpg....

    As I watch the coverage of the fate of the U.S. auto industry, one alarming and frustrating fact hits me right between the eyes. The fate of our nation's economic survival is in the hands of some congressmen who are completely out of touch and act without knowledge of an industry that affects almost every person in our nation. The same lack of knowledge is shared with many journalists whom are irresponsible when influencing the opinion of millions of viewers.
    Sen. Richard Shelby of Alabama has doomed the industry, calling it a dinosaur. No Mr. Shelby, you are the dinosaur, with ideas stuck in the '70s, '80s and '90s. You and the uninformed journalist and senators that hold onto myths that are not relevant in today's world.
    When you say that the Big Three build vehicles nobody wants to buy, you must have overlooked that GM outsold Toyota by about 1.2 million vehicles in the U.S. and Ford outsold Honda by 850,000 and Nissan by 1.2 million in the U.S. GM was the world's No. 1 automaker beating Toyota by 3,000 units.
    When you claim inferior quality comes from the Big Three, did you realize that Chevy makes the Malibu and Ford makes the Fusion that were both rated over the Camry and Accord by J.D. Power independent survey on initial quality? Did you bother to read the Consumer Report that rated Ford on par with good Japanese automakers.
    Did you realize Big Three's gas guzzlers include the 33 mpg Malibu that beats the Accord. And for '09 Ford introduces the Hybrid Fusion whose 39 mpg is the best midsize, beating the Camry Hybrid. Ford's Focus beats the Corolla and Chevy's Cobalt beats the Civic.
    When you ask how many times are we going to bail them out you must be referring to 1980. The only Big Three bailout was Chrysler, who paid back $1 billion, plus interest. GM and Ford have never received government aid.
    When you criticize the Big Three for building so many pickups, surely you've noticed the attempts Toyota and Nissan have made spending billions to try to get a piece of that pie. Perhaps it bothers you that for 31 straight years Ford's F-Series has been the best selling vehicle. Ford and GM have dominated this market and when you see the new '09 F-150 you'll agree this won't change soon.
    Did you realize that both GM and Ford offer more hybrid models than Nissan or Honda. Between 2005 and 2007, Ford alone has invested more than $22 billion in research and development of technologies such as Eco Boost, flex fuel, clean diesel, hybrids, plug in hybrids and hydrogen cars.
    It's 2008 and the quality of the vehicles coming out of Detroit are once again the best in the world.
    Perhaps Sen. Shelby isn't really that blind. Maybe he realizes the quality shift to American. Maybe it's the fact that his state of Alabama has given so much to land factories from Honda, Hyundai and Mercedes Benz that he is more concerned about their continued growth than he is about the people of our country. Sen. Shelby's disdain for "government subsidies" is very hypocritical. In the early '90s he was the driving force behind a $253 million incentive package to Mercedes. Plus, Alabama agreed to purchase 2,500 vehicles from Mercedes. While the bridge loan the Big Three is requesting will be paid back, Alabama 's $180,000-plus per job was pure incentive. Sen. Shelby, not only are you out of touch, you are a self-serving hypocrite, who is prepared to ruin our nation because of lack of knowledge and lack of due diligence in making your opinions and decisions.
    After 9/11, the Detroit Three and Harley Davidson gave $40 million-plus emergency vehicles to the recovery efforts. What was given to the 9/11 relief effort by the Asian and European Auto Manufactures? $0 Nada. Zip!
    We live in a world of free trade, world economy and we have not been able to produce products as cost efficiently. While the governments of other auto producing nations subsidize their automakers, our government may be ready to force its demise. While our automakers have paid union wages, benefits and legacy debt, our Asian competitors employ cheap labor. We are at an extreme disadvantage in production cost. Although many UAW concessions begin in 2010, many lawmakers think it's not enough.
    Some point the blame to corporate management. I would like to speak of Ford Motor Co. The company has streamlined by reducing our workforce by 51,000 since 2005, closing 17 plants and cutting expenses. Product and future product is excellent and the company is focused on one Ford. This is a company poised for success. Ford product quality and corporate management have improved light years since the nightmare of Jacques Nasser. Thank you Alan Mulally and the best auto company management team in the business.
    The financial collapse caused by the secondary mortgage fiasco and the greed of Wall Street has led to a $700 billion bailout of the industry that created the problem. AIG spent nearly $1 million on three company excursions to lavish resorts and hunting destinations. Paulson is saying no to $250 billion foreclosure relief and the whole thing is a mess. So when the Big Three ask for 4 percent of that of the $700 billion, $25 billion to save the country's largest industry, there is obviously oppositions. But does it make sense to reward the culprits of the problem with $700 billion unconditionally, and ignore the victims?
    As a Ford dealer, I feel our portion of the $25 billion will never be touched and is not necessary. Ford currently has $29 billion of liquidity. However, the effect of a bankruptcy by GM will hurt the suppliers we all do business with. A Chapter 11 bankruptcy by any manufacture would cost retirees their health care and retirements. Chances are GM would recover from Chapter 11 with a better business plan with much less expense. So who foots the bill if GM or all three go Chapter 11? All that extra health care, unemployment, loss of tax base and some forgiven debt goes back to the taxpayer, us. With no chance of repayment, this would be much worse than a loan with the intent of repayment.
    So while it is debatable whether a loan or Chapter 11 is better for the Big Three, a $25 billion loan is definitely better for the taxpayers and the economy of our country.
    So I'll end where I began on the quality of the products of Detroit . Before you, Mr. or Ms. Journalist continue to misinform the American public and turn them against one of the great industries that helped build this nation, I must ask you one question. Before you, Mr. or Madam Congressman vote to end health care and retirement benefits for 1 million retirees, eliminate 2.5 million of our nation's jobs, lose the technology that will lead us in the future and create an economic disaster including hundreds of billions of tax dollars lost, I ask this question not in the rhetorical sense. I ask it in the sincere, literal way.

  78. #78

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    Interersting that the editorial is so glowing about the Fusion, a car that is a modification of the Mazda 6, a Japanese engineered auto... The difference though - is that the Japanese automakers have not asked for a massive bail out.

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    i'm not totally opposed to a bailout but i think government - i.e. us - might be better served if that were to happen on their way out of chapter 11 instead of trying of trying to keep them out of chapter 11.
    "If you did not want much, there was plenty." Harper Lee

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    Quote Originally Posted by kcantor View Post
    i'm not totally opposed to a bailout but i think government - i.e. us - might be better served if that were to happen on their way out of chapter 11 instead of trying of trying to keep them out of chapter 11.
    And in the meantime, hundreds of thousands of jobs will be lost.

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    Quote Originally Posted by etownboarder View Post
    Quote Originally Posted by kcantor View Post
    i'm not totally opposed to a bailout but i think government - i.e. us - might be better served if that were to happen on their way out of chapter 11 instead of trying of trying to keep them out of chapter 11.
    And in the meantime, hundreds of thousands of jobs will be lost.
    my guess is you would see fewer layoffs and plant closures and related job losses than you'll get trying to maintain the status quo.
    "If you did not want much, there was plenty." Harper Lee

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    I think that our governments should look at the following options:

    (1) A bailout with loan guarantees.

    (2) A scenario where bankruptcy is considered. Each of the auto manufacturers would then have time to restructure, and the government could then help them out.
    "Talk minus action equals zero." - Joe Keithley, D. O. A.

  83. #83

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    Quote Originally Posted by ThomasH View Post
    This thread belongs in Politics.
    Not "Off-Topic"?
    Let's make Edmonton better.

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    Quote Originally Posted by kcantor View Post
    Quote Originally Posted by etownboarder View Post
    Quote Originally Posted by kcantor View Post
    i'm not totally opposed to a bailout but i think government - i.e. us - might be better served if that were to happen on their way out of chapter 11 instead of trying of trying to keep them out of chapter 11.
    And in the meantime, hundreds of thousands of jobs will be lost.
    my guess is you would see fewer layoffs and plant closures and related job losses than you'll get trying to maintain the status quo.

    Agree. The question I have is what happens if Ford manages to survive without c11 as it appears they are in a much better position. Would Ford be bound to the same new deals with unions that Chrysler and GM would be able to negotiate for?

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    Quote Originally Posted by The_Cat View Post

    (2) A scenario where bankruptcy is considered. Each of the auto manufacturers would then have time to restructure, and the government could then help them out.
    I don't think the Government in Canada really has much say in the matter here... the only thing the Gov't of Canada has any control over is whether or not the companies move all their Canadian operations south of the border or not. It's the American Gov't that will control whether or not these companies go bankrupt.

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    Default U.S. automaker bailout package dies in Senate


    U.S. automaker bailout package dies in Senate

    White House calls Congress's failure 'disappointing'
    Last Updated: Friday, December 12, 2008 | 6:12 AM ET
    CBC News

    A planned $14-billion US federal bailout of the Big Three carmakers died Thursday on the U.S. Senate floor after negotiations between Democrats and Republicans collapsed over a dispute about wage cuts for autoworkers.

    The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 votes needed to pass the plan.

    Ahead of the vote, Democratic Senate Majority Leader Harry Reid said he was "terribly disappointed" to see several hours of unprecedented private talks in Washington with Senate Republicans, representatives from the country's auto industry and labour groups come to naught.

    "There's too much difference between the two sides," Reid said from the Senate floor.

    Full Story: http://www.cbc.ca/money/story/2008/1...tobailout.html

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    Default Federal government remains 'open to helping' Canadian automakers: Flaherty

    Federal government remains 'open to helping' Canadian automakers: Flaherty
    Finance minister says Canada will watch U.S. situation after failed bailout attempt
    Last Updated: Friday, December 12, 2008 | 9:15 AM ET
    CBC News

    Finance Minister Jim Flaherty said Friday that the federal government will continue discussions with the auto industry in Canada despite the collapse of a proposed $14-billion US federal bailout of the Big Three automakers in the United States.

    Flaherty, speaking Friday to reporters after addressing the Saint John Board of Trade in New Brunswick, said the Canadian government was "open to helping the industry."

    However, he said little about the collapse of the proposed U.S. bailout that died on the Senate floor Thursday night after negotiations between Democrats and Republicans collapsed over a dispute about wage cuts for autoworkers.

    He also responded it's "a day-by-day thing in terms of developments in the United States.

    "We'll continue to stay close to the situation there and continue the discussions with the industry here."

    Full Story: http://www.cbc.ca/money/story/2008/1...y-deficit.html

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    Default White House may tap $700B bailout fund for automakers


    White House may tap $700B bailout fund for automakers

    Last Updated: Friday, December 12, 2008 | 11:09 AM ET Comments64Recommend29
    CBC News

    A White House spokeswoman said Friday it would be "irresponsible" to hurt the economy by letting the Detroit Big Three automakers fall.

    Speaking to reporters aboard Air Force One, press secretary Dana Perino said the White House is considering using money from the $700-billion US Wall Street rescue fund to support the domestic automakers.

    Perino said the administration would not typically make such a move, but she said the White House would consider the option due to the economic distress currently confronting the United States.

    "While the federal government may need to step in to prevent an immediate failure, the auto companies, their labour unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable," Perino said.

    The U.S. Treasury Department also said it was ready to move to avoid the collapse of the industry.

    Full Story: http://www.cbc.ca/money/story/2008/1...housebail.html

  89. #89

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    Quote Originally Posted by etownboarder View Post
    [B]
    The U.S. Treasury Department also said it was ready to move to avoid the collapse of the industry.
    Can an entire industry collapse when people still need cars? I doubt it - the strong companies will survive, its just, those companies aren't the North American big three - but many of the suppliers will do fine (as they also supply the Japanese automatkers - some almost exclusivley now). The more valuable brands will probably survive too.

  90. #90

    Exclamation GM to close all NA plants for entire month of Jan 09

    GM to close all their NA plants for entire month of Jan 09 with one Canadian plant to remain closed for an additional two weeks into February.

  91. #91

    Default What Makes a Car American?

    Looking at a Ford Fusion? It is assembled in Mexico. The Chrysler 300C is assembled in Canada, but its transmission is from Indiana; the brand's V-8 engine is made in Mexico. Engines in the Chevrolet Equinox sport utility vehicle are from China.

    On the other hand, Toyota's Camry is comprised 80 percent of parts made in the United States, and 56 percent of Toyota's vehicles sold in the U.S. also are made here, according to Toyota spokeswoman Sona Iliffe-Moon.
    http://www.cnn.com/2008/US/12/12/ame...ars/index.html

  92. #92

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by etownboarder View Post
    [b]
    The U.S. Treasury Department also said it was ready to move to avoid the collapse of the industry.
    Can an entire industry collapse when people still need cars? I doubt it - the strong companies will survive, its just, those companies aren't the North American big three - but many of the suppliers will do fine (as they also supply the Japanese automatkers - some almost exclusivley now). The more valuable brands will probably survive too.
    I think we might be seeing something else here. I think few would dispute there has been an increase in manufacturer quality over the last 10 years. People who take care of their Hondas and Toyotas (and I'm quite sure many newer domestic vehicles, after domestic manufacturers--or at least Ford and Chevy/Pontiac--were forced into a vicious quality ratings war) will be likely to get 400-500,000km .

    What's the likelihood that the N.American new car sales market is oversupplied as it is? What's the likelihood that ALL automakers are likely to see a significant collapse as a result of a recession that will force people into cheaper, older, used vehicles (for which there is also unquestionably a glut of supply)?

  93. #93

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    Quote Originally Posted by PickLeZ View Post
    or at least Ford and Chevy/Pontiac--were forced into a vicious quality ratings war) will be likely to get 400-500,000km .
    When they say quality has improved, that does not mean longevity. Quality typically refers to how many defects there are. But cars aren't designed to last much more than 10 years (especially in this climate) Around that time, the parts start breaking on any auto. Eventually you can replace them all, but its probably cheaper to buy a new car than go through that extortion racket, criminals can make a lot more than a car is worth just by breaking it up and selling the parts.

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  95. #95

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    I guess when the US decided to bail out, Canada didn't really have a choice. To not follow the US would have been political suicide in Ontario.

    Now, if the oil and gas industry collapses - will there be a federal bailout? Unfortunatley, we don't have the swing seats to justify that.

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    Autos and oil industry are apples and oranges. The Canadian auto industry can easily move to Mexico, which is the reason attached to the Canadian bailout. But our oil is a resource that cannot be moved.
    “You have to dream big. If we want to be a little city, we dream small. If we want to be a big city, we dream big, and this is a big idea.” - Mayor Stephen Mandel, 02/22/2012

  97. #97

    Default

    From post 77 above:
    "While the governments of other auto producing nations subsidize their automakers, our government may be ready to force its demise."

    While I am not in favor of a bail out without major changes on the parts of both the manufacturers and the unions the quote above is something that needs paid attention to. As does the media influence on the perception of the quality of North American products.

    The Japanese manufacturers have grown and continue to grow in a very protected domestic market and receive varying degrees of their governments support as do many off shore auto builders.

    They have also targeted North America as a cash cow as do most auto manufacturers around the world. And the profits go to the home country.

    I spent 30 years in the car biz from sales to service and parts and quite frankly my experience is now a few years out of date but name brand vehicles (forgien or domestic) are all about the same quality dollar for dollar.

    If the industry and unions are foolish enough not to work on concessions that allow for a rebirth of the industry with government assistance the economic collapse will magnify and the last of the large North American industries will be gone.

    Think it only affects that market? The ripple will hit every segment.

    All the parties directly involved need to give their heads a shake and do whats needed to get this industry back in the game.

    Tom
    Last edited by Thomas Hinderks; 22-12-2008 at 05:08 PM. Reason: accuracy

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    Quote Originally Posted by Thomas Hinderks View Post
    From post 77 above:
    "While the governments of other auto producing nations subsidize their automakers, our government may be ready to force its demise."

    While I am not in favor of a bail out without major changes on the parts of both the manufacturers and the unions the quote above is something that needs paid attention to. As does the media influence on the perception of the quality of North American products.

    The Japanese manufacturers have grown and continue to grow in a very protected domestic market and receive varying degrees of their governments support as do many off shore auto builders.

    They have also targeted North America as a cash cow as do most auto manufacturers around the world. And the profits go to the home country.

    I spent 30 years in the car biz from sales to service and parts and quite frankly my experience is now a few years out of date but name brand vehicles (forgien or domestic) are all about the same quality dollar for dollar.

    If the industry and unions are foolish enough not to work on concessions that allow for a rebirth of the industry with government assistance the economic collapse will magnify and the last of the large North American industries will be gone.

    Think it only affects that market? The ripple will hit every segment.

    All the parties directly involved need to give their heads a shake and do whats needed to get this industry back in the game.

    Tom
    tom,

    i think the key is in the highlighted segment of your post - the industry needs a rebirth and my concern is that the bailout will end up paying for nothing more than short-term palliative care. if one or two or all three of the "big three" don't survive, the plants will still be there as will the skilled labour and the infrastructure necessary to man them and supply them. a buick mady by gm is still a buick and it would still be a buick if it were made by tata or fiat or porsche. gm gave up on oldsmobile as a north american brand but still sells opels in europe and holdens in australia. short term pain? perhaps. but probably no more painful that what we are going through now as they pay employees to stay home and not build cars. and probably no more painful than it will be next year or the year after anyway if they don't get it right.

    ken
    "If you did not want much, there was plenty." Harper Lee

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    crap! i spent all my loot at the casino and drank too much liquor and bought that nice lady a sexy thing and now i dont have money for food and rent. can i have some money you guys? c'mon c'mon c'mon. even though you dont know me, i promise to get a job soon and pay you all back in a couple months or whenever, but in case things dont work out im gonna need another loan and maybe pay you back later or not. c'mon c'mon c'mon. i promise to get some people to shovel your walks even though i dont have the cash yet but it'll save you money in the end. c'mon c'mon c'mon.

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    Quote Originally Posted by kcantor
    as will the skilled labour
    Most manufacturing jobs are the antithesis of skilled labor, and that's half the problem. Unskilled labor being paid $70+/hr (when you include benefits and other incidentals) is absolutely ridiculous in this day and age.

    Attaching the same door panel to a car a hundred times a day is not skilled. I'm sure that the factories do have a lot of skilled tradespeople like millwrights and electricians and pipe fitters working as well, but they're probably less than 10% of the workforce. The other 90% are completely unskilled and would require years of training and work experience to even approach the salary and benefits they're currently making in another industry that's not completely dysfunctional.

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