Bailout Challenge
We periodically run challenges here at Car Lust--for example, we have challenged readers to identify the most interesting used car available for less than $5,000 (challenge, results), the most interesting used car for less than $25,000 (challenge, results), and the best first car for a teenager (challenge, results). This time I'm going to take a slightly different tack.
My boss and I were discussing the potential bailout for the struggling American automotive industry this morning, and we agreed that if the automakers are going to request help from taxpayers, the taxpayers should have the right to make that help contingent on the automakers changing how they do business. After all, it makes little sense to throw billions of taxpayer dollars into what appears at the moment to be a broken business model.
So, assuming you could present a list of take-it-or-leave-it conditions to the automakers, what would they be? Silly, serious, semi-serious--it doesn't matter, I want to hear your suggestions. I would only ask that the discussion not get partisan--remember the comment guidelines and be respectful of each other, or I will need to shut down comments and suspend the challenge.
My thoughts in the comments section.
--Chris H.
Jeff Cunningham on November 17, 2008 at 04:00 PM
While I do agree with "Steaming Pile" that we have the labor unions to thank for some of the better working conditions, I disagree with his assumption that working conditions would get worse if unions disappeared. There are far too many laws (that the unions pushed to get passed) that protect the workers. I believe that Unions hit their peak membership in the mid 1940s-50s, and it has been declining ever since. Private sector membership is currently around 7.5%. Unions have kind of killed themselves by the laws they helped get passed, and since the cost of doing business with union employees is so expenseive, unions have to bear a lot of the responsibility of labor outsourcing to India, Latin America, Africa, etc. I was rather amused at the recent Boeing strike and they were bargaining for "job security." What a joke! Especially in today's economy. No employer can guarantee your job forever.
Chris Hafner on November 17, 2008 at 04:31 PM
Smoke_Jaguar4, I love the ideas of the scarlet "I" and the stockade.
David Colborne: "Easy - the UAW is a semi-monopoly."
Yep.
Sillypickle on November 17, 2008 at 04:53 PM
I have to say that I don't think labor unions have any purpose in America these days. Work environments are already over-regulated by the government, people can switch jobs fairly easily if they have real, marketable skills, and globalization is happening whether we like it or not. Unions which demand better working conditions than are available overseas are the real cause of outsourcing and the failure of American businesses. If better working conditions are really better, they will help employees to do their jobs better, so smart companies will provide these conditions. If they are such that they just allow employees to be lazy and take too many paid breaks, then it's no surprise we get our butts kicked by foreign manufacturers. If you look at most other industries, particularly those with no unions, "Made in America" means you get a particularly high quality product. This has not been the case with the auto industry for about 40 years because the unions have made it impossible for American automakers to stay profitable while making a quality product. I predict that, until the UAW is disbanded, the Big Three will never be competitive and will not make any money without government protection (itself a recipe for more corporate laziness).
Mochi Mochi on November 17, 2008 at 11:47 PM
hmmm - here's an idea. why don't we just dump them all, let the them chapter 11, and allow them to be taken over by their european and australian counterparts. these companies have been like crack dealers for years - peddling nothing but gas guzzlers and refusing to truly innovate. they built themselves a mountain of SUVs which contributed to gas price increases, which ultimately overcame their marketing forces, and left them with an unsellable inventory and a bankrupt marketing strategy. oh yeah - and no way to easily come back and turn out appropriately designed vehicles that are right for the times.
i long for the days of CAFE standards.
i long for the cars that the rest of the world gets.
bail out? ok how about this. we cut all the ridiculous safety standards that protect us from ourselves. institute federal seatbelt laws like they have in other countries. sell all those great european and japanese cars that we don't currently get access to. we could just adopt the auto laws of some place like spain or germany. and let those lovely cars be sold here. oh and implement some environmental standards for consumption of oil and carbon emissions.
if this sounds good - your probably like me - overworked, sleep deprived, and not thinking too straight. but it has a ring doesn't it? i mean why would we want to bail out companies that are so patently incompetent and which refuse to sell cars that are appropriate to the times.
i've been working all night so i haven't been able to read all the great thinking that i;m sure precedes this rant... i will i promise. i'm doing what i do when i get like this...ranting.
i don't know how to make this happen but i want to force honda to start selling civic hatchbacks again, and make them drop the struts and go back to unequal length a arms.
i also want to be able to buy a car that has a displacement at or below 1300cc and weighs less than 1800lbs.
bail out? give me a break - the world is full of great cars that do what we want and need. we just can't get at them, or they are getting picked up by tuners. if GM could just build the same car that honda made in 1990 we'd be set!!!
someone needs to hit these guys upside the head and say "dude! buy some scrap machining from honda and just build a 91civic!!"
EGSMachine on November 18, 2008 at 09:34 AM
I like the tactic the LincVolt guy has, make them sell electric vehicles, now. a similar tactic was applied in the early 70's after the oil embargo. I am angery that our government has not required the same concessions from importing countries that they have applied to our products overseas. Ever price a corvette in Europe? its not because the car is valued at that price, thats mostly tax. withthat, i also suggest reciprocity for tarrifs/concessions. Aliviate the health care/pensions for the manufacterers and drop the bonuses.
Rob the SVX guy on November 18, 2008 at 10:37 AM
Yeah, there's an easy way to fix the whole economy. Put a huge tax on anything imported. Poof, our country wants to become more self sustainable.
Mochi Mochi on November 18, 2008 at 12:16 PM
EGSMachine:"Ever price a corvette in Europe? its not because the car is valued at that price, thats mostly tax. withthat, i also suggest reciprocity for tarrifs/concessions."
firstly - those taxes are applied to all vehicles of certain displacements. the EU levies taxes based on engine size, which encourages drivers to buy smaller lighter vehicles, save gas, put less carbon in the atmosphere. it also encourages manufacturers to build smaller cars.
2nd... when you have all the great vehicles available in europe, who really needs a corvette? the corvette is a great car in the american landscape, but not compared to the cars that you have access to in the EU. one of the things i love is watching the TopGear guys test american cars in comparison to EU offerings... the US cars always get panned for miserable mushy handling.
protectionist tariffs? think about what you are saying folks. you really want to pay higher prices for all those things you consume? cause that's what you're asking for. right along with a tariff war. the US has basically de-industrialized itself. the reason we have such a huge trade inequality is that we we consume cheap imports and we like it that way. the price of producing those same products in the us would mean you'd be spending a lot more for the domestic version... if you could get it. anyone know where computer chips are made? car parts? take a look at all the cheap stuff you buy, use, and throw away every day... how often do you see "made in usa" on that stuff... not often i bet. but if it was made here the cost would be huge.
the US either by design/plan or accident has pushed it's manufacturing overseas. we have a trade deficit because of that. we consume more than we produce or export. we have set ourselves up as a consumerist nation, and we have a consumerist culture. we'd need to change that culture and stop buying a lot of useless crap and dirt cheap goods if we wanted to really change that.
That Car Guy on November 18, 2008 at 12:46 PM
Deja vu time... we are EXACTLY where we were 30 years ago. "HUNGRY? EAT YOUR IMPORT", and "300,000 LAID-OFF UAW MEMBERS DON'T LIKE YOUR IMPORT... GO PARK IT IN TOKYO" were bumper stickers seen all over this great land at the beginning of the Al Franken Decade. Despite the screaming, tire slashing, and rock throwing at Nissan's groundbreaking ceremony in February 1981, the American auto workers wanted the foreign companies to build their cars here if they sold them here... and they did. Nissan has thrived; they are frequently the most-productive auto plant in the USA, and have never been under a union contract.
My point? We've learned NOTHING. When's the last time you saw a foreign company CLOSE a plant in America (Other than the ill-conceived VW Rabbit plant in PA)? When I see protestors outside the auto show in Detroit wanting more $$$, I have no sympathy for them. $60,000 a year and benefits for a janitor? What do the skilled people make? I'm all for the government helping The Big Three with research, repealing some anti-trust laws such as the ones that make each company develop its own safety and emissions systems, and definitely improving infrastructure needs, but paying one cent in salary or operating costs is throwing good money after bad, in my humble opinion.
Yes, it's going to take DECADES to get out of the mess The Big Three have made... and our country depends on it. But we can't keep doing what we have been... and that seems to be what They want, just with a guarantee that they can build the same old stuff and still get their paychecks. Why can't The Big Three tighten their belts a bit and, Hey!, a novel idea... build a good vehicle and be nice to their customers?
meccano on November 18, 2008 at 03:00 PM
SVX guy, that is called protectionism and it doesn't really work. What is an import anyway? Is a Chrysler PT Cruiser made in Mexico an import or is a Toyota Camry made in Tennessee an import? How about my American made Saturn with it entire drive traindrive made by Honda in Japan? Is a GM made in Korea an import or is a Hyundai made in the US one? Who is the government to say I can't have my goofy Swedish car anyways? If I have to buy my wife a Saturn can't we have one fun car in the family? Once these restrictions are in place what happens to sales of Boeing jets in Europe, GM sales in China and US beef sales to Japan? If we restrict sales of BMW in the US, what is to stop the European Union from restricting sales of our plans there? Boeing is this countries largest exporter (in dollar amounts), China might be the only place on the world where a Buick is consider young, urban & hip (AND GM makes money there) and American beef in Japan is thought of as highly as Japanese cars are in America. Just examples, but you see it gets rather complicated very quickly.
I agree with letting the Big Three file for bankruptcy. They need to reorganize from top to bottom and drop everything and anything that isn't profitable. They make millions of cars a year and can figure out a way to be profitable if they are able to dump the excess luggage. "But they can't file for bankruptcy because then all the OEM manufacturers will go out of business." OK, so we set up a loan program for the OEM companies who can borrow on a case by case basis depending on their business plan for going forward.
By the way, what is Chrysler, Ford & GM's business plan to survive? Iacoca had a plan for Chrysler to return to profitability when he went to the government for a loan. Business plan looked good, he got a loan. Enough with why it is bad if the Big Three go bankrupt - Enough with your full page ads in the newspapers GM about why it is better if you don't fail. We get why its bad. We're not stupid. The question isn't whether its bad, but rather WHAT IS THE BUSINESS PLAN TO RETURN TO PROFITABILITY and IS IT FEASIBLE???? BTW, the Volt is not plan enough. 50,000 Volts by 2011 isn't gonna save GM. Chrysler - very cute, you took a Lotus and put an electrical engine in it. Not a long term plan to survive. Ford - you can take every car you make and change the name to Taurus something or other because Taurus used to sell, but you'll need something a little more concrete than that. So, let us recap - No plan, no money, no way. These are three of the most mismanaged companies on the planet and their is no plan to change that any time soon that I can see.
The UAW was a great way to protect and establish protections for workers. Today the UAW is a dinosaur long past its usefulness just as Chrysler, Ford & GM are dinosaurs long past theirs.
Brian on November 19, 2008 at 02:00 PM
Seems to be a good amount of myth with respect to this topic. Usually it comes down to US products vs. Japanese products, obviously, and Union vs. non-union manufacturing. US vehicles have been pretty bad in the 70's & 80's, so reducing the perception of US vehicles being unreliable shoddy build quality is pretty hard. But the perception that the US doesn't make cars which are efficient AND have performance and reliability on par with Japanese cars is no longer true, according to consumer reports. Take a look at the Focus.
It's just that, US car manufacturers have for the most part not thought of small efficient cars as anything but an "entry point" for car buyers who will ostensibly move up to a bigger and bigger car as financial situation improves. This has been proven wrong by any number of German and Jap car manufacturers.
Further, you can't blame it all on the unions. It's a combo of union demands, bad marketing (not marketing the small cars), bad management (killing off perfectly good cars for no reason), and the anticompetitive advantage of transplant manufacturers like Toyota in America which have government subsidies as well as lower labor costs.
I think Ford has the right idea with bringing the Euro cars to America, though they should've been doing that for years now. And what's with them selling off Mazda?!! That's what they're going to need more than ever seems like.
One thing that I've heard said but never seriously is a voucher, kind of a "food stamp for a new car" system, where you can get 10,000 rebate through the government for buying an American brand. Kind of a Guns, Butter, and BAMF Hoodrides policy.
Ken on November 19, 2008 at 09:11 PM
I have one demand: ELIMINATE THE "VENTIPORTS" ON THE FRONT QUARTER PANELS!
Man, I hate those things.
That Car Guy on November 20, 2008 at 06:13 AM
By the way, did everybody see the CEOs of The Big Three venture into Washington yesterday (Nov. 19) in their personal jets and limos and beg Congress for billions? Then they couldn't even tell Congress what they would do with the money... they have no game plans, except to pad their pockets with taxpayers' money. I don't support Mitt Romney, but his dad turned American Motors around and saved them... for a while. Mitt thinks they should declare bankruptcy and reorganize, and so does 80+% of the American people, according to surveys.
There will always be an American car industry... too bad it might be owned by foreigners.
Mochi Mochi on November 20, 2008 at 12:11 PM
i guess private jets and limos are the big3-ceo's idea of belt tightening - arrogant twits. i can't wait for the day when i can buy a new or used german ford.
Jesus on December 06, 2008 at 07:50 AM
Lets stop paying these ridiculous wages for lazy, unmotivated workers! Disband the UAW!
Spread the Message www.disbandtheuaw.com
on December 10, 2008 at 05:37 PM
Why arent we just taxing gas more? If we just had $4 a gallon gas with over 1/2 the fees being tax back in the early 90's then there would be more alternative mass transit available, and much needed improved infrastructure. Heck...we could have hi speed trains going from state to state.