Filed under: Economy, Government/Legal, Green, Hirings/Firings/Layoffs, Plants/Manufacturing, Chrysler, LLC., Ford, GM, Earnings/Financials
McCain has no plans for Detroit bailout
Back in the late seventies and into early eighties, Chrysler had gotten itself into such horrid financial shape that the U.S. government decided to step in and fix the situation itself. Considering the sorry state of affairs that all three of the Detroit automakers find themselves in today, some may wonder if a government-funded bailout is in the cards. Not so much... at least according to John McCain. "Frankly I just don't see a scenario where the federal government would come in and bail out any industry in America today," says the Republican.
So, what plan does McCain have in store for the Detroit 3? More Chevrolet Cobalts and Pontiac G5s for one, as the Arizona Senator said the above words after touring the plant in Lordstown, Ohio where the GM compact cars are made and a where third shift has just been added. "I am convinced that what is being done at the Lordstown assembly plant is the future of the American auto industry," added McCain.
In more related good news for the U.S. automakers, McCain says he supports nationwide CO2 standards and would oppose any state's individual plans -- California, we're looking at you. The Presidential hopeful also wants to see more fair-trade standards implemented with the other various auto-building nations and quicker violations for unfair practices. We await a response from the Democratic side.
[Sources: The Detroit News, Automotive News - sub. req'd]
Reader Comments (Page 1 of 4)
Brian 6:33PM (6/29/2008)
If the the D3 were suddenly fold and close up shop, its not just the people working for them will be out of a job. The suppliers, cleaning companys, transporters, dealerships, and plant maintance jobs will be lost. The ripple effect will continue and leave small towns built around the all those factories in ruins. It could mean a loss of 1 million jobs in the U.S. The government bails out the airline industry. Why not the the automakers?
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Robert 5:47PM (6/30/2008)
For most suppliers the little 2.4 are just *some* of their business.
stretchsje 7:52PM (6/29/2008)
The government shouldn't have bailed out the airlines either. GM is showing it can become competitive on its own. Government just interferes with unconstitutional union laws, mileage and safety regulations, and other interference.
What you want could be the responsibility of the state government. The federal government exists only to protect the freedoms of individuals, not to fund special interests. That you, like most others, see things otherwise is exactly the problem in America today.
tim 8:36PM (6/29/2008)
I agree that the ripple effects wold be huge. However the Airline bailout was less than 25 billion. A bailout of GM alone would be over 60 billion dollars if the govt were to take on the health care and pension guarantees. This is a bailout that we cannot afford at the time. Unfortunately a GM bankruptcy is imminent and will happen before the end of the year.
MM 9:38PM (6/29/2008)
$60 billion is a drop in the bucket. Isn't that less than 2% of what is being spent to "police" the Middle East. Somehow I think saving a million jobs for Americans has a better return on investment.
jamie 11:26PM (6/29/2008)
I am pretty sure GM and Ford can survive without government hand-outs. They are already making the vehicles they should be right in their own back yard. I am referring to the fuel stingy cars of Europe.
Mulally is already set to import Ford of Europe until they can get the Motor City humming again.
GM is already on the ball bringing in Astras for Saturn to sell. But it needs to expand Opel sales more by giving more sales to Pontiac and Chevrolet dealers as well. GM also has to do quickly adapt current production facilities in America to manufacture Opel derivatives today.
GM and Ford must have been blind not to have seen that gas prices were going to go through the roof. They stupidly placed all their bets on high profit gas guzzlers. Well, it's time to pay the piper. Heads are going to roll!
Dan 3:45AM (6/30/2008)
If Detroit fails, Americans will still need cars. Americans will still buy cars - from Toyota or Honda or another better managed company.
Those cars will be built in America by Americans, with American suppliers, American cleaning companies, American transporters, American dealers.
Spending government money to bail out failed corporations doesn't result in a net savings of jobs - it takes money from successful business which would have otherwise been used to create jobs.
Leave Intel another billion dollars of their profits and they'll use it to hire new people and make more money to hire even more people.
Give that money to Ford and they'll use it to pay unionized slobs 80 grand a year to sit around reading the paper at the job bank, next year that money is gone, and their hands will come out for another handout.
That One Person 5:42AM (6/30/2008)
Uhhh Dan? You think Honda and Toyota are going to save all those jobs if the Big 3 go under? I doubt it.
And I am glad you generalize and think every union worker is a slob...I can honestly say I am offended by that. They may not be perfect but you can't blame the worker for all the problems the UAW has created.
Rocketboy 8:51AM (6/30/2008)
So, to reward Detroit's great job in running car companies, we should give them more money? Because they've proven that they will do what's best with it?
They can't even spend the money that they EARN properly, do you think that free (as in extorted from the populace) money will do any better?
Hey Mr. Crackhead, you seem like you're having some hard times. Here's some money.
jamie 10:38AM (6/30/2008)
With combined war chests of $50 billion, GM and Ford should be teaching our Federal government more about fiscal management. LOL
What about the the 28TH AMENDMENT??
Bring it on!
Dan 12:33PM (6/30/2008)
Of course Honda and Toyota won't save all of them, the reason Detroit is in the mess it's in is because they are paying too many people to compete with better run companies. If Honda or Toyota took on all of them they'd be in the same failing position Detroit is now.
But other car companies will save a large fraction of them.
And the rest can find a job in another field, the way all of the rest of us have as the economy changes around us.
why not the LS2LS7? 6:43PM (6/29/2008)
Somehow, I think if major Arizona corporations were threatened, he wouldn't say this.
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iQuack 6:43PM (6/29/2008)
The U.S. auto companies became truck companies burdened by high-priced UAW workers. Now those companies are hurting because nobody wants their uneconomical iron, and there's still the perception that GM, Ford and Chrysler produce inferior, gas swilling vehicles slopped together by union workers who think they work for their union instead of their employers.
The only way out of this mess is to further weaken the union's hold on domestic automakers and for the car companies to offer buyers in the U.S.A. the kinds of cars they make in Europe and Asian countries. GM and Ford both offer overseas buyers some great products that we should be able to buy, too.
With respect to the government guaranteed loan that bailed out Chrysler in 1980, it probably would have been best to let Chrysler go broke. It's workers would have gone to GM and Ford to meet higher demand in the absence of Chrysler.
As it turned out, Chrysler ultimately was ruined by Mercedes, and now a private equity company is trying with no visible success to save the wreckage--not a pretty picture at all.
A government bail-out of U.S. auto companies would be a mistake.
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AZMike 7:56PM (6/29/2008)
iQuack,
I don't know where to start.
how could you think that Chrysler going out of business in the 80's would be a good thing?
as someone who was there (I was a Dodge dealer from 1983-1993), this couldn't be further from the truth.
-first, you can thank Lee Iacocca for breaking the stranglehold the unions had on their workers. when Chrysler couldn't afford to give pay increases to match what the other automakers were paying, he offered the workers shares of Chrysler stock instead, as a concession. of course, all the "experts" said this was foolish, as Chrysler "wasn't going to make it". sound familiar??
two things happened. first, those assembly-line workers who took the "foolish" stock options were millionaires in 1985, with the average worker receiving 1.2 MILLION dollars for their patience. not a bad concession, was it?
second, Chrysler paid off their loans to banks (NOT the government; the government NEVER gave them a dime) seven years EARLY.
heard the same garbage in 1987 when Chrysler bought AMC/Jeep from Renault. of course, gallons of ink were devoted to what a mistake this was (those pesky "experts" again), and how this was going to push Chrysler bad to the bring of bankrupcy again. funny, though, contrary to the "experts", the purchase of Jeep brought a whole new customer to Chrysler, and they prospered.
Chrysler may have been set back by Daimler-Benz (they immediately sucked 11 BILLION in cash in Chrysler's coffers, and wired it back to Stuttgart), but they are far from out. if you read the entire history of Chrysler, you'll see these are far from the only times Chrysler has been on the skids. and like all the other times, they will rise again.
perhaps you should spend some money and get a subscription to Automotive News. I'm just getting caught up with my reading today, and it's interesting to read about Toyota and Nissan's bloating inventory of vehicles. it's especially bad for Toyota, with over 100,000 vehicles that dealers are refusing to take. lots of those big SUVs and trucks, just like the domestics. ditto for Nissan, and Honda with the silly Ridgeline and Pilot. no one did anything wrong, other than making vehicles the public wanted to buy.
what's especially interesting is the difference between the domestics and imports with regard to building vehicles.
with the domestics (those backward rascals), the dealer orders what they want for their inventory, and the factory builds the vehicles to the dealer's specifications. with the imports, it's the reverse. the factories build what THEY want to build, and then call the dealers to let them know what they will be getting. the dealer has no input whatsoever in colors, models, options, etc. the factory decides for them. if the import dealers don't want 'em, they get shoved down their throats.
I'm always amazed at all the bad press always aimed at the domestic automakers. the Germans and Japanese long ago abandoned the low-end (and low-profit) market to the Koreans, gladly moving upscale to where the demand and profits were. the small Japanese cars we get now, like the Yaris, Versa, and Fit, are just some JDM market "bones" thrown at the US to fill some showroom space. if fuel wasn't expensive now, they would be sitting, gathering dust. and they will again, when the oil futures bubble bursts.
vehicles have gotten bigger and bigger (just compare a 1976 Accord with a 2008 model) because people wanted the bigger vehicle. the cold reality is that people only buy small cars when they don't think they have a choice.
this isn't just a fact in the US, but look at Australia. when I was down there in the mid 90s, the average price for a gallon of gasoline was about $3.25; yet the volume vehicles that were selling were midsize and above, all powered by straight 6 or V-8 engines. I doubt if they're wrong, too.
AZMike
why not the LS2LS7? 8:10PM (6/29/2008)
3 of the last 4 Hondas introduced are trucks.
A year ago, half of Lexus' lineup was trucks (and 40% of Toyota's).
Every company made a lot of trucks because that's what the market wanted. Not just GM, Ford and Chysler, but VW, Mercedes and even Porsche.
All auto companies are feeling a pinch, it's just that the big 3 started out in a hole, so they're hurting first.
iQuack 8:17PM (6/29/2008)
I don't disagree with much of what you say, but bad management, concessions to unions that held a gun to the heads of the managers, and being caught with too many trucks and SUVs has hurt the domestic car companies.
I think that GM, Ford, and Chrysler should have had a better selection of cars to offer--if they did, Toyota, Honda, et al wouldn't have been eating their lunch for so many years.
Yes, Iacocca saved Chrysler and he was the most revered executive in the U.S., if not the world. And Chrysler did enjoy some success thereafter. Still, given Chrysler's current insignificance, if it had failed and GM, Ford, and imports had taken up the slack, it wouldn't have mattered much for most Americans--especially after whatever dislocations resulted ran their course.
I'm not saying that Chrysler should have been left to fail--just that if it had, the result would be nominal in the scheme of things.
By the way, I liked Chrysler cars in the past--especially my '63 Valiant and '68 Charger that were new and excellent. The used '53 Plymouth with Hy-Drive (remember that?) was an oil-leaking mess;-).
tim 8:48PM (6/29/2008)
AZ Mike,
One thing you left out in your thesis of how Detroit will make a Phoenix like rise over the coming years is that oil prices fell all through the 80's. That saved Chrysler. Although the minivan focused leadership helped the falling price of oil did what Detroit could not, convince people to buy larger higher margin cars like Jeeps, and Trucks. The auto biz is in trouble but unfortunately the domestics are in rougher seas at the moment
The Luigiian 11:15PM (6/29/2008)
AZMike, the only reason Chrysler survived in the 1980s was because Lee Iacocca was a genius marketer who was not only able to market less-than competitive vehicles but was also able to successfully goad his workforce into accepting stocks in lieu of pay raises. The closest any of the big three have to Iacocca is Ford with Mulally and therefore I'd accept a Ford bailout.
I won't accept a GM or Chrysler bailout until they get better management. Both Bob Lutz and Bob Nardelli suck and should be fired before any money exchange take place.
Thedevil 6:51PM (6/29/2008)
And people will still come on here to defend this retard.
i remember about 3yrs ago Bush told the big 3 the same thing.is his own words he said "build better cars".
atleast Obama wants to help.
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TwinTurboVR4 7:33PM (6/29/2008)
what exactly would be the point of bailing them out? saving jobs? sure, it might save some jobs now, but if hey dont get their act together and "build better cars", eventually they're going to need to get bailed out again, and again, and again...all on taxpayer money. You might as well have the goverment build cars.
McCain is right.
However, i dont think GM or Ford are in any real danger at the moment, and i think Chrysler will linger for a year or so before cranking out some high quality euro-market-like vehicles.
Anyways, i dont think a bail-out is neccesary, now would it solve anything if it were.