Saving the U.S. auto industry

[Sean Malone]

There are plenty of very good nationwide heath plans in this world that are not "nationalized". Quit writing off the health care system of every other nation on the planet when you have no idea how any of them work. The plan you have now will either drive your employer into bankruptcy or they will just cancel it as it gets 15% more expensive every single year.

Pffff. First, the correct term is 'universal' health care. The misinformation here is that socialized health care in other countries is on par with PPO plans in the US which is totally false. Socialized health care provides the quality of care equivalence of the IRL. Second, I won't be eligible for the universal health care plan being pushed by the new administration and I thank my lucky stars I'm not.

[opinionated ow]

Pffff. First, the correct term is 'universal' health care. The misinformation here is that socialized health care in other countries is on par with PPO plans in the US which is totally false. Socialized health care provides the quality of care equivalence of the IRL. Second, I won't be eligible for the universal health care plan being pushed by the new administration and I thank my lucky stars I'm not.

I'm curious...what're you basing that opinion on?

[Sean Malone]

I'm curious...what're you basing that opinion on?

A long career in the health care industry.

[opinionated ow]

A long career in the health care industry.

just in the usa or internationally too?

[Sean Malone]

just in the usa or internationally too?

Intergalatically.

[Methanolandbrats]

http://www.theonion.com/content/news_briefs/gm_covered_with_giant_tarp

[TrueBrit]

The misinformation here is that socialized health care in other countries is on par with PPO plans in the US which is totally false. Socialized health care provides the quality of care equivalence of the IRL.


Oh dear, what total, complete and utter bullspit...

[cameraman]

A long career in the health care industry.

Odd all the visiting Germans I work with at this medical school keep telling me how idiotic the US system is. They are joined by the Taiwanese, the Japanese, the Canadians, the Aussies and even the Brits. Try walking down the hall to the emergency department and opening your damn eyes, all those people sitting there with diabetes, the flu, ingrown toenails or god knows what general medicine complaints are not there in any of those other countries. Nor do those countries have large numbers of people in bankruptcy because they can't pay their medical bills. Their court systems are not clogged with people suing their insurance companies to force them pay when they should either.

The only people in the US who are well served by the current system are the professional couples with double insurance coverage. The other 70% of America would be better served by any of the foreign systems. So would the corporations who are paying ridiculous sums to provide coverage for their staffs.

[mapguy]

Odd all the visiting Germans I work with at this medical school keep telling me how idiotic the US system is. They are joined by the Taiwanese, the Japanese, the Canadians, the Aussies and even the Brits. Try walking down the hall to the emergency department and opening your damn eyes, all those people sitting there with diabetes, the flu, ingrown toenails or god knows what general medicine complaints are not there in any of those other countries. Nor do those countries have large numbers of people in bankruptcy because they can't pay their medical bills. Their court systems are not clogged with people suing their insurance companies to force them pay when they should either.



As someone who lived through Canada's healthcare system for 27 years I respectfully disagree. After experiencing the US system for the last 10 years I would not want to go back to a government run system.

[nrc]

The topic is saving the U.S. auto industry. Since folks decided to start screaming "left wing," "right wing," "lies," and "BS" there will be no further in-depth discussion of health care in this thread. Feel free to mention "the health care problem" but that's all.

Happy Thanksgiving.

[Stu]

The topic is saving the U.S. auto industry. Since folks decided to start screaming "left wing," "right wing," "lies," and "BS" there will be no further in-depth discussion of health care in this thread. Feel free to mention "the health care problem" but that's all.

Happy Thanksgiving.

who screamed left or right wing?

and whats the point in saying people were screaming "lies" and "BS" but then leaving those posts, while deleting the ones that were actual discussion?

[FTG]

who screamed left or right wing?

and whats the point in saying people were screaming "lies" and "BS" but then leaving those posts, while deleting the ones that were actual discussion?

Must be the turkey enzymes, I'm going to assume asking questions about the posts left up is OK, but I have a feeling it won't be.

[FTG]

Pffff. First, the correct term is 'universal' health care. The misinformation here is that socialized health care in other countries is on par with PPO plans in the US which is totally false. Socialized health care provides the quality of care equivalence of the IRL.

If a soldier gets his or her arm blown off in Iraq, how do you feel about the IRL care he or she gets?

[Michaelhatesfans]

If a soldier gets his or her arm blown off in Iraq, how do you feel about the IRL care he or she gets?

:confused:

[FTG]

:confused:

In a government owned hospital, with doctors and nurses who work for the government: long lines, no options to pay for special services, just show your ID like a canuck. That's how the military cares for soldiers and veterans.

[cameraman]

No one has ever said anything about government ownership of hospitals.

Ever.

The VA system is the perfect example of how NOT to do it.

[trish]

I see a padlock coming.

[cameraman]

Well I have to go finish baking an apple pie so...

[oddlycalm]

the problem is Toyota/Honda will beat them to it and make a better vehicle.
Not necessarily, and anyone that follows F1 has seen why. When venturing outside of the box inside of which the Japanese MITI has defined and tamed every detail Toyota and Honda can't find their ass with both hands. Tiny Ducati has done the same thing with motorcycles. That same opportunity exists with road cars. Take them to a place where MITI has not reversed engineered all the answers from the European brands and Japan, Inc. will have to play catch up.

The one area that US leads the world in is carbon fiber composite production. Not the tedious hand layup stuff used in race cars, but large scale production using 13 axis tape laying machines and massive autoclaves. Use CF to take significant weight out of cars and you will have the Europeans at a 5yr disadvantage and the Japanese not in the game. Boeing did it and the auto business could do it as well.

The drive trains are already well enough developed for where we need to be now. It's about the fact that those drive trains have to be scaled to push around 2-3 tons of steel to make the size cars Americans like. Cut that in half, implement hybrids and efficient turbo diesels, and the Japanese will fall away in the large high profit vehicles. So will the Europeans, but not for as long. CF has huge advantages when it comes to crashworthines and corrosion as well. Import the entry level cars from the overseas division initially, but take the composites there next.

The Japanese executives see business as war, and they have a lot of advantages baked in that US industry doesn't have. In the US we tax inventory, in Japan companies get inventory tax credits. In Japan the government (through MITI) shoulders the cost of basic research and production development for focus industries making those industries competitive and saving them $ billions. In the US we provide research tax credits, but unless you are making a profit those are of no help.

In addition the Japanese companies are part of a keiretsu, a family of related companies generally associated with a bank at the top of the pyramid. Why is this an advantage? Toyota makes cars. It's parent bank provides all necessary financial services at a very nominal cost. It's JTEKT division provides all machines and factory automation equipment under it's Toyoda, Koyo and other brands. JTEKT is also makes bearings, steering systems, etc. and provide them to Toyota at preferred prices. When Toyota buys CBN (cubic boron nitride) superabrasive grinding wheels for it's plant in West Virginia it buys them from the Toyoda Van Mopies division of JTEKT directly in Japan and they are shipped by a company in the keiretsu at a preferred rate. Another related company supplies the insurance for the operations.

In Japan companies do not pay for medical insurance or retirement benefits because both are nationalized. We either want to compete with these semi-nationalized companies that are assisted by relationships that would not pass our anti trust laws or we want to continue to export our wealth. Their protectionist trade laws followed by de facto protectionism have kept our manufactured goods out of their market. While that may be a moot point for cars and consumer electronics, it's certainly not in a wide range of industries. It's a street fight and we have been playing by the King's rules with one hand tied back while they have been using every advantage they can find. Time to change the rules or die.

oc

[nrc]

who screamed left or right wing?

and whats the point in saying people were screaming "lies" and "BS" but then leaving those posts, while deleting the ones that were actual discussion?

We moderate to the best of our ability as time permits according to the rules that have been laid out and the goals set forth for the forum. When we think it's constructive we answer questions about our moderation choices.

You seem to routinely question our choices. Based on your behavior I see no benefit to answering your questions since nothing that anybody tells you ever seems to make any difference. So we don't expect any more questions from you on our moderation decisions.

[Michaelhatesfans]

In a government owned hospital, with doctors and nurses who work for the government: long lines, no options to pay for special services, just show your ID like a canuck. That's how the military cares for soldiers and veterans.

Yeah, that wasn't the issue. I just didn't see the IRL connection. Then I read back over some previous posts. No big deal.

[JLMannin]

We moderate to the best of our ability as time permits according to the rules that have been laid out and the goals set forth for the forum. When we think it's constructive we answer questions about our moderation choices.

You seem to routinely question our choices. Based on your behavior I see no benefit to answering your questions since nothing that anybody tells you ever seems to make any difference. So we don't expect any more questions from you on our moderation decisions.

14 would be easier!

[Stu]

We moderate to the best of our ability as time permits according to the rules that have been laid out and the goals set forth for the forum. When we think it's constructive we answer questions about our moderation choices.

You seem to routinely question our choices. Based on your behavior I see no benefit to answering your questions since nothing that anybody tells you ever seems to make any difference. So we don't expect any more questions from you on our moderation decisions.

:rolleyes:

i wouldnt question if you actually did follow the rules you've said. even earlier in this thread you said, "Feel free to mention "the health care problem" but that's all." but as we have seen, that isn't all because other people are still discussing it.

and no, this post is not me questioning you. im just stating the inconsistency.

[chop456]

Attica! Attica! :tony:

[devilmaster]

14 would be easier!

:rofl:

[Michaelhatesfans]

The one area that US leads the world in is carbon fiber composite production. Not the tedious hand layup stuff used in race cars, but large scale production using 13 axis tape laying machines and massive autoclaves. Use CF to take significant weight out of cars and you will have the Europeans at a 5yr disadvantage and the Japanese not in the game. Boeing did it and the auto business could do it as well.

The drive trains are already well enough developed for where we need to be now. It's about the fact that those drive trains have to be scaled to push around 2-3 tons of steel to make the size cars Americans like. Cut that in half, implement hybrids and efficient turbo diesels, and the Japanese will fall away in the large high profit vehicles.

I like it. Going with more modern materials and embracing power to weight as opposed to the philosophy of "just put a bigger engine in it" would go a long way toward changing perceptions that people have about American cars. I would imagine it could give them some increased rigidity that could improve handling, as well. As it stands now terms like modern materials, lightweight, fuel efficient, and incredible handling hardly conjure up images of American cars.

[oddlycalm]

I like it. Going with more modern materials and embracing power to weight as opposed to the philosophy of "just put a bigger engine in it" would go a long way toward changing perceptions that people have about American cars. I would imagine it could give them some increased rigidity that could improve handling, as well. As it stands now terms like modern materials, lightweight, fuel efficient, and incredible handling hardly conjure up images of American cars.

Right, they can solve a half dozen issues at the same time. If they don't find a way to leapfrog the competition they are doomed and CF composite is the one technology where we lead the world when it comes to manufacturing technology. It is possible to do to the Japanese auto companies what Boeing did to Airbus because fuel economy rules in the long haul. Marry a car with significant CF content to a modern turbo-diesel and you have a 40mg car the size of a BMW X-5 which is a size Americans would find acceptable. They certainly aren't going to any make money selling hybrid econoboxes to people that don't want one. The Volt will have it's market, but electrics are fundamentally urban cars. The rest of the market needs something else.

We were selling these Cincinnati 13 axis tape layers to Boeing in the early 80's so they are quite a few generation up the development curve. The only other company that makes a decent one is a small outfit in Spain and they are many generations behind. The tape laying heads are complicated mechanisms that use few off the shelf parts so playing catch up is a hard nut to crack. Equally important is that there are people in the US that know how to run and support these machines because it's a well established technology. That can't be said for hydrogen fuel cells and other bleeding edge technologies.

http://news.thomasnet.com/images/large/817/817572.jpg

[Michaelhatesfans]

:laugh:
Last time I saw a machine like that there were Oopma Loompas dancing around it.

[cameraman]

I just have a hard time imagining buying enough of those beasts to turn out a couple hundred thousand cars a year:eek:

[oddlycalm]

I just have a hard time imagining buying enough of those beasts to turn out a couple hundred thousand cars a year:eek:
Seems like a massive undertaking until you consider what they do now. Below is a line of relatively small 800 ton Danly progressive die presses for doing a floor pan for a single car model. It takes lines of much larger 3000 ton presses to form the main body panels and they need a line for each different panel of each different model because changing over the die sets on a line of large straight side presses takes weeks, i.e. zero flexibility. The die sets weigh 50 tons and are transported on railroad cars inside the plant. Making the die sets is a complex and laborious process and they must be maintained constantly and replaced periodically. This is what every car company in the world currently does. Welcome to the 1940's.

With a 13 axis tape layer you want to make a different part or a different model car you simply load in different set of fiberglass molds, set them on the table and select a different program in the machine controller and hit the start button. You can also make a complete set of parts for one car by simply loading the molds one after another on the table and having the program run sequentially. The biggest challenge will be to automate the bagging and autoclave process. Welcome to the 1980's.

http://www.equipbrokers.com/danley800-5.jpg

[SteveH]

^ You may be right, but I'd rather have a car from 1940 than 1980. :gomer:

[Gnam]

A CF minivan may save the Big 3, but who's gonna save the Germans? :\

http://www.reuters.com/article/rbssAutoTruckManufacturers/idUSLP56414020081125

[Insomniac]

They should be back tomorrow. I imagine they'll have some small plans. I think Lindsey Graham was right when he said yesterday that 535 people in Congress shouldn't be determining whether a business plan for the US auto manufacturers will work or won't work.

I thought about it this morning whether bankruptcy protection could work. My fear is that once they file, sales dry up and they don't even have the cash to reorganize. Then they'd go bankrupt and liquidate into a market that likely doesn't have the capital to pick up the pieces.

My best idea was some type of percentage or flat amount based on the model that would be paid back to the car purchaser if the manufacturer goes bankrupt. So for example, GM says if they go bankrupt, the buyer of a car during the time they were in Chapter 11 would receive 20% of their purchase price. So 20% of the purchase revenue goes into a fund that GM only receives if they get out of Chapter 11. So if you buy a 20k Malibu, you know that if GM goes under, you keep the car and get $4k back. (I just picked 20%, I don't know what number would make the most sense on both sides.) Chapter 11 seems like the best way to redo all the union contracts (if the UAW isn't going to move) just like the airlines did.

If the government does bail them out (or whatever you want to call it), I hope it's a one time bridge loan. Get a good rate (~10%), make it clear it is one time and bankruptcy is next. Don't get sucked in like AIG and Fannie/Freddie.

[Insomniac]

I agree, the challenge for Detroit isn't to create a new Saturn it's to come up with something compelling enough to get families out of the Subaru, Toyoda and Honda they currently drive in large enough numbers to make a viable sustained business. The only way that can do that is by offering a significant advantage. And, they are only going to have one chance to get it right. Incremental improvement isn't going to make a dent at this point. The new Malibu may be a decent car but is it a better car with a better dealer experience and will it be better over 5yrs of ownership?

GM should pick it's 10 best models, kill the rest and completely kill their separate divisions. Duplication of effort on any scale is unacceptable. They need moon shot level transformations from product planning to dealer service and they need it in 24 months. Kill half the dealers and keep the best. GM has plenty of good people so they should take the opportunity to lose the dead weight from the top down. They should kill the excess capacity and sell off the associated real estate. That's only the start though.

I don't know if they need to get people to switch. They have 20% of the market. They need to focus on becoming profitable with less sales. If more volume is the only way to profit, they're going to have a hard time. Chapter 11 may be the only way they can dump dealerships and excess capacity easily.

[oddlycalm]

A CF minivan may save the Big 3, but who's gonna save the Germans? :\
They will certainly feel the slowdown but the companies are in fundamentally good shape and should be fine long term.

BTW, BMW is bringing it's 3.0L inline 6 diesel in the US. With 265hp & 425lb ft of torque thru a 6sp automatic it should be fun to drive and get great mileage. It gets 36mpg in a 3400lb. car and 26mpg in a 5300lb. car. As with the Audi R10 no smoke and no noise.

I'd love to see a 2.0L 175hp version of that drivetrain in a 2700lb. vehicle with substantial CF content. The fuel economy would be outstanding and the performance would make the vehicle fun to drive.

oc

[oddlycalm]

I don't know if they need to get people to switch. They have 20% of the market. They need to focus on becoming profitable with less sales. If more volume is the only way to profit, they're going to have a hard time. Chapter 11 may be the only way they can dump dealerships and excess capacity easily.

Agreed on all points. I still think a pre-packed chapter 11 with the gov guaranteeing loans makes the most sense. We want a domestic auto business that can produce the cars we need in the future and I don't see how you get there without some fundamental restructuring of the business. Whatever happens I want to see the taxpayers get a seat at the table for a period of time for their money. I don't trust a single one of these companies to do what is necessary without a healthy dose of persuasion.

oc

[Insomniac]

Agreed on all points. I still think a pre-packed chapter 11 with the gov guaranteeing loans makes the most sense. We want a domestic auto business that can produce the cars we need in the future and I don't see how you get there without some fundamental restructuring of the business. Whatever happens I want to see the taxpayers get a seat at the table for a period of time for their money. I don't trust a single one of these companies to do what is necessary without a healthy dose of persuasion.

oc

I know it won't help with domestic manufacturing, but even if they started importing their own cars here that would help. They obviously need to make cars here that can sell better here and likely abroad. Of course, all this stuff is long term and it seems the only people who think long term are growth companies. Most of these guys just care about quarter-to-quarter and their bonuses/options. Long term is just short term added up. And all 3 of them didn't care. Not even one of them saw it as a long term opportunity to take it to the other.

I do think we should get voting rights. The conflict of interest and the government shouldn't be telling them what to do arguments are ridiculous. They put up the money and should do everything they can to make sure it is put to good use.

[trish]

It looks like Ford is willing to make a lot of cocessions, something that wasn't even required of the financial sector to get their trillions of dollars. The CEO will take a $1 yearly salary, sell their corporate planes, and no merit increases for salaried employees next year.

The reason this burns me up is that NOBODY in the financial sector had to give up anything like this to get TRILLIONS of dollars in aid.

And why doesn't Congress give up the jets we pay for and take commercial airlines instead?

What a crock!

Ford asks for line of credit (http://news.yahoo.com/s/ap/20081202/ap_on_go_co/meltdown_autos)

$1 for CEO (http://autos.yahoo.com/articles/autos_content_landing_pages/775/ford-says-ceo-will-work-for-1-to-get-loans)

[Insomniac]

It looks like Ford is willing to make a lot of cocessions, something that wasn't even required of the financial sector to get their trillions of dollars. The CEO will take a $1 yearly salary, sell their corporate planes, and no merit increases for salaried employees next year.

The reason this burns me up is that NOBODY in the financial sector had to give up anything like this to get TRILLIONS of dollars in aid.

And why doesn't Congress give up the jets we pay for and take commercial airlines instead?

What a crock!

Ford asks for line of credit (http://news.yahoo.com/s/ap/20081202/ap_on_go_co/meltdown_autos)

$1 for CEO (http://autos.yahoo.com/articles/autos_content_landing_pages/775/ford-says-ceo-will-work-for-1-to-get-loans)

Those aren't really big concessions. There are a lot of CEOs who make $1. Companies in rough times can't hand out raises like candy. So basically they will hold salaries and give an across the board raise. As expected, they aren't coming back with more than their current business plan.

What does selling some jets net them? $100M? What will they do instead? Charter jets at $2k+/hour?

We're going to be prudent in tough times, can we have the money now please? I mean personally, I didn't expect much. They were poorly managed, but at this point, they knew they were on a bad path and have been trying to change it. It wouldn't happen overnight. It's a show to get the money. Partly because so many people got the money (and still get it) without much resistance.

[nrc]

It looks like Ford is willing to make a lot of cocessions, something that wasn't even required of the financial sector to get their trillions of dollars. The CEO will take a $1 yearly salary, sell their corporate planes, and no merit increases for salaried employees next year

The $1 salary is contingent on whether they actually take any of the loan money. Ford is the best positioned of the three formerly known as "Big" and believes that they can make it through next year without any of the loan money as long as the economy doesn't get too much worse.

All the focus on fuel economy and alternative energy is to placate congress. Those issues really have relatively little direct relation to the current state of the U.S. auto industry. A full line of appealing cars is much more important than electric cars or plug-in hybrids.

[chop456]

A full line of appealing cars is much more important than electric cars or plug-in hybrids.

Absolutely right. If they wanted to beg for something, beg for NHSTA fast-tracking of the Ford/GM models already sold in Europe and have a credible, instantly better lineup of smaller cars that get 45+MPG. Even the powertrains would be a decent stopgap. Then work on building them here. Chrysler builds small diesels here and sends them to Europe. :shakehead

[Ankf00]

Chrysler builds small diesels here and sends them to Europe. :shakehead

:saywhat:

[Methanolandbrats]

Absolutely right. If they wanted to beg for something, beg for NHSTA fast-tracking of the Ford/GM models already sold in Europe and have a credible, instantly better lineup of smaller cars that get 45+MPG. Even the powertrains would be a decent stopgap. Then work on building them here. Chrysler builds small diesels here and sends them to Europe. :shakehead
A good move, but will anyone buy the cars once they are here? The pickup truck, Yukon crowd won't, the foreign sedan buyer probably won't cross shop them, so who is left to market to?

[JLMannin]

A good move, but will anyone buy the cars once they are here? The pickup truck, Yukon crowd won't, the foreign sedan buyer probably won't cross shop them, so who is left to market to?

Do some viral marketing and pay aggressive, tailgating, lane weaving a-holes to drive the cars with those obnoxious fake nut sacks hanging off the rear bumper, and you may get some of the Yukon croud to cross over.

[trish]

Congress wants the big 3 to do a pre-packaed bankruptcy before filing for CHapter 11.

(This should have also been suggested to the financial sector.)

http://news.yahoo.com/s/ap/20081204/ap_on_go_co/congress_autos

[oddlycalm]

Listening to the media and congress you'd think foreign car companies and their suppliers are in peachy condition yet nothing could be farther from the truth. Doesn't matter what company it is, if you lose 35% of revenue overnight and it continues or worsens for any significant period you have big trouble. If a significant number of your suppliers cease or interrupt operations without any advance notice you are in real trouble as well. US sales for foreign builders are down 35% and in Japan domestic sales are off 27% with the higher profit over 2.0L models off 35%. Germany is similar.

The press and congress seem to accept that the international financial sector is so interconnected that the major players can't be allowed to fail yet they don't seem to understand the same situation is true for the automotive companies. Nobody seems to have considered what happens when Siemens Automotive, SKF, GKN, Tremec, NTN, NSK, JTEKT, Toyo, Linamar, Bosch, Timken, Michelin, Bridgestone, and a hundred others all lost 40% of their business overnight and get stiffed for 30% of their outstanding receivables and there are no banks to rescue them....:shakehead

oc

[chop456]

We agree that you are in pretty bad shape, and may not survive much longer without assistance. But here's our plan. We've seen your tired, rehashed plans that don't actually do a thing to address the cause of your problems. Your problem is that you're not selling cars. If you were selling cars, you wouldn't be here. Giving you access to $34 Billion isn't going to help you to sell any more cars- so here's what we're going to do. We're going to write a bill that creates a credit pool- a direct, cash, credit, payable up to $25,000, for any US taxpayer who purchases a fuel efficient vehicle (one with an EPA city rating of 40 MPG or better) from GM, Ford, or Chry-me-a-Cerebus-sler. At $25K per car, if all of that credit money is applied for- well, that's 1,360,000 cars, or the annual output from about six factories. Your competitors have proven that they can sell fuel efficient cars at or under that price. Heck, you can sell them at $25K each, base, and thus make money on them. We get more fuel efficient vehicles on the road, and more gas hogs off of the road, you get to make money, and keep your factories running- while you find ways to reduce your costs through consolidation, change in labor strategy, reduction in senior managment, brand consolidation, whatever... but we don't end up flushing $34 big ones down the rabbit hole. We'll get our money back- don't worry- through an increase in the federal fuel tax on gasoline- not prohibitive, but enough to fund the rebate- and folks driving a 40 MPG vehicle won't mind the slight increase, and others will flock to buy more fuel efficient vehicles. We use less oil from people who don't ruv us rong time. The money doesn't go directly to you- it actually passes through the hands of 1.36 million taxpayers. You keep factories running, instead of using our cash to pay shareholder dividends.

Thoughts?

[Insomniac]

Thoughts?

That's a 100% non-refundable tax on Americans. If it is a tax credit, you'd have no tax liability up to at least $100k. I'd buy a car, and I don't even need one! Also, it would shift the tax burden to everyone who doesn't buy a car. Keep in mind, whenever someone gets a tax advantage, everyone else who doesn't is paying more comparatively. If the money was never going to be paid back, or just used to delay their failure to slightly better economic times, then I'd say at least a bunch of people would get "free" cars.

[Gnam]

The problem is that you're not selling cars. If you were selling cars, you wouldn't be here.
I think that's incorrect. They sell a ton of cars and bring in piles of cash. The problem is their costs are greater than their revenue.

The proposed solution above makes the mistake of focusing on the wrong side of the equation (trying to sell more cars instead of reducing costs) and compounds the error by interfering with the demand side of the market (subsidies).

To a politician, the solution makes perfect sense. He gets to give away free cars to his constituents, give the BiG 3 a guaranteed revenue stream, and give himself the power to set not only the price of a car in the US, but who gets to sell those cars. Don't like it, everything's negotiable for a campaign contribution. ;)

Subsidies don't work and always have unintended consequences. Hey, let's help those farmers by buying their corn and making ethanol...wait, what do you mean beer is gonna cost more? :shakehead

The car companies say they need operating cash while they try to figure out a way forward. Fine. Cut 'em a check with the understanding that it's a one time deal and they will be allowed to fail.

[oddlycalm]

Hard to separate the long term systemic issues from the immediate effect of credit system meltdown and some feel that's a silver lining. The current crisis may result in fundamental restructuring that would have never been possible when the stock holders still held assets with value. Nobody bats an eye (me included) about suggesting prepackaged chapter 11 that leaves equity holders with nothing anymore. On the other hand none of the backers of the bankruptcy strategy seem to be mentioning that there are currently zero banks that would extend a line of credit to these companies during a debtor-in-possession workout. If Treasury fills that role we are right back to effective nationalization of the auto biz.

Others suggest the time is right for an overnight transformation similar to what happened in 1941-42 when Detroit transitioned from cars to tanks and airplanes in just 6 months. The Brookings Institution is convening “Oil Solutions Summit” with a unusual mix of industry experts, national-security hawks and climate protectors. Some think this is a singular opportunity to decisively deal with petroleum dependence almost literally overnight. Some of those attending were those tasked by the Pentagon with producing the document "Winning The Oil Endgame." The basic goal is to double the fuel economy of the US fleet in 5yrs then double it again. You don't get there with drive trains alone, you only get there if those drive trains are pushing a lot less mass.

The Pentagon's interest is on two fronts. Strategically, it anticipates an energy independent US will demand a lot less of the military in the future. Also, any large scale improvement in energy utilization means a lot fewer tanker loads of fuel they have to buy and haul as operators of more than a few motor pools.

oc

[Insomniac]

Interesting article about where sales will matter a lot more going forward.

http://www.economist.com/specialreports/displayStory.cfm?story_id=12544933

Also a 7 myths article from the Detroit Free Press.

http://www.freep.com/article/20081205/COL14/812050400/?imw=Y

[trish]

http://news.yahoo.com/s/ap/20081207/ap_on_go_co/congress_autos

Senator Dodd wants Rick Wagoner to resign as GM CEO in order to get the bailout money. He may not be the only one.

[nrc]

Also a 7 myths article from the Detroit Free Press.
http://www.freep.com/article/20081205/COL14/812050400/?imw=Y

And yet, these myths are some of the points that we've heard members of congress hammering on.

[Insomniac]

And yet, these myths are some of the points that we've heard members of congress hammering on.

Yes. They seem to be woefully off way too often. Plus, you basically have all the midwest congressmen on the Big 3's side and southeast congressman on the opposite side. I wonder why. IMO, GM/Ford are hobbled by their pensions and healthcare to retirees. It's easier to build a car with a built-in $2k disadvantage when it's an SUV. And it's not like people weren't buying them. I wonder if people could easily get credit if they'd be buying them now with gas prices at 3-4 year lows? Plus they seem to be working on a one size fits all solution for 3 companies not all in the same financial boat. And Chrysler? WTH? Mercedes-Benz kept all the pension/healtcare liabilities!

[SurfaceUnits]

the pork barrel bastards in DC who have lived off tax payer dollars their whole lives now think they are qualified to run the auto instrusty. I think they received a 4% approval rating recently. Stoopid is as stoopid does

[oddlycalm]

And yet, these myths are some of the points that we've heard members of congress hammering on.

Mr. :gomer: goes to Washington.

oc

[Ankf00]

1, 2, 3, and 5 seem like cherry picked hokum to me.

[SurfaceUnits]

BMW & Daimler idling plants, cutting production hours

[nrc]

1, 2, 3, and 5 seem like cherry picked hokum to me.

I'm not clear on what you mean by that. Are you saying that those aren't widely held myths, or that they're not myths?

[chop456]

the pork barrel bastards in DC who have lived off tax payer dollars their whole lives now think they are qualified to run the auto instrusty.

The auto industry isn't qualified to run the auto industry.

[SurfaceUnits]

we're de**** :laugh:
I think we should all move to a tropical island

Congress: Since nobody likes our bailout bill, we must doing everything right

the $15 billion bridge fund Congress is expected to approve in the coming days is only the first installment of what some economists warn could cost up to $200 billion when all is said and done.

[Insomniac]

1, 2, 3, and 5 seem like cherry picked hokum to me.

I disagree. They have been adapting and putting out decent cars. Yes, many new buyers prefer foreign cars to domestic, but it doesn't make them crap. Listening to people, you'd assume all they made was junk, SUVs and gas guzzlers. It's simply untrue. Now the problem is they can't turn a profit on their other cars. The stats may be cherry picked, and they don't highlight the falling market share and sales numbers, but they're in the fight still.

[Methanolandbrats]

I disagree. They have been adapting and putting out decent cars. Yes, many new buyers prefer foreign cars to domestic, but it doesn't make them crap. Listening to people, you'd assume all they made was junk, SUVs and gas guzzlers. It's simply untrue. Now the problem is they can't turn a profit on their other cars. The stats may be cherry picked, and they don't highlight the falling market share and sales numbers, but they're in the fight still. They might be reliable, but the last two GM and Chrysler rental cars I was in had horrible interiors, ass numbing seats, lousy steering and cheap, crappy anti-lock brakes. The placement of most of the controls was just stupid too. Other than that :thumbup:

[Insomniac]

They might be reliable, but the last two GM and Chrysler rental cars I was in had horrible interiors, ass numbing seats, lousy steering and cheap, crappy anti-lock brakes. The placement of most of the controls was just stupid too. Other than that :thumbup:

I only said decent and not crap. ;)

[KLang]

They might be reliable, but the last two GM and Chrysler rental cars I was in had horrible interiors, ass numbing seats, lousy steering and cheap, crappy anti-lock brakes. The placement of most of the controls was just stupid too. Other than that :thumbup:

I'm not sure how fair it is to judge based on rentals but my experience has been the same. It's been that way for too long. We don't even consider domestic brands when vehicle shopping. :(

[Andrew Longman]

I'm not sure how fair it is to judge based on rentals but my experience has been the same. It's been that way for too long. We don't even consider domestic brands when vehicle shopping. :(

Not too long ago I tried to help one of the big three improve quality for a few years with little success.

The one thing I could not get them to understand was how to include the customer experience into quality improvements. They would look at warranty claims to see what was costing them the most money. The VPs responsible for various components and systems were almost entirely measured by meeting set financial numbers.

What they didn't even measure let alone use to influence their decision was the frequency of claims or how customers feel about the failure.

The soccer mom who smells leaking gas in her minivan full of kids (from a cheap faulty filter) cares a heck of lot more about that than an expensive multiswitch or AC clutch that occasionally fails.

And the owner who has to keep taking days off to get the same thing repaired again and again eventually decides that with his next car he will not be spending days in the service area waiting room.

But the manufacturer would address the expensive repairs before designing the cheap filter (or some such) that broke again and again causing customers to be frightened and frustrated. Or they would ignore the issue because it would take too many years for fix to get a payback and the model wasn't going to last that long -- with no regard for what the claim was doing to the customer or company brand. They don't get it or if they do the VP are not going to sacrifice their bonus to do the right and smart thing.

I can also say that the incentive systems at at least Honda is more nuanced and rewards long term thinking and results.

[SteveH]

http://www.boingboing.net/images/x_2008/youwouldntbuyour.jpg

[Methanolandbrats]

:laugh:

[ChampcarShark]

:rofl::rofl::rofl:

[oddlycalm]

:D

[oddlycalm]

The one thing I could not get them to understand was how to include the customer experience into quality improvements. They would look at warranty claims to see what was costing them the most money.
My experience is that if you do consider the customer at all times it's relatively easy to beat foreign competitors, even in their home markets.

One of the guerrilla marketing strategies we used 25yrs ago when were were a startup was to make the cost of any repairs and replacement parts artificially low causing the customer to contrast our products with our established competitors in a way that was glaringly favorable. It really didn't cost us anything as we were still making some profit on parts and repairs. What it did over the years was to build unshakable customer loyalty. We also made a decision to do repairs the same day the instrument came in. We have to fix them eventually, so why not do it on that first day and make the customer happy...? Again, it's a simple thing that doesn't cost us a thing but the impression it gives to the customer can't be overstated. No big surprise that this same approach works in Europe and Asia as well.

Product design has to follow this philosophy as well. We're in an industrial business to business market so our focus is different in some ways, but my view is that if we use the best quality components we can always look the customer straight in the eye and tell them that regardless of what happened it wasn't because we cheaped out.

Detroit made the decision to stay with drum brakes, carburetors and stamped steel wheels long after their competition moved to more modern components. You don't make decisions like that if you are concerned about what people think about your product. Then again, those decisions were made by people long since gone and people need to be operating with current information.

oc

[SteveH]

The irony is, the US taught the Japanese how to beat American industry after WWII. A company that I had worked for years ago sent some of the management to seminars put on by W. Edwards Deming (http://en.wikipedia.org/wiki/W._Edwards_Deming) They came back changed.

[Michaelhatesfans]

The dealers are starting to get what Hunter Thompson liked to call, The Fear. Even the ads are getting ugly.

"All you people that buy all your Toyotas and send that money to Japan, you know, when you don't have a job to make your Toyota car payment, don't come crying to me," Welch says in the ad. "All those cars are rice ready. They're not road ready."
:shakehead

http://news.yahoo.com/s/ap/20081209/ap_on_re_us/angry_auto_ad

[Andrew Longman]

The dealers are starting to get what Hunter Thompson liked to call, The Fear. Even the ads are getting ugly.

"All you people that buy all your Toyotas and send that money to Japan, you know, when you don't have a job to make your Toyota car payment, don't come crying to me," Welch says in the ad. "All those cars are rice ready. They're not road ready."
:shakehead

http://news.yahoo.com/s/ap/20081209/ap_on_re_us/angry_auto_ad

And the Ford Fusion he sells is assembled in Mexico. :shakehead

[Insomniac]

The dealers are starting to get what Hunter Thompson liked to call, The Fear. Even the ads are getting ugly.

"All you people that buy all your Toyotas and send that money to Japan, you know, when you don't have a job to make your Toyota car payment, don't come crying to me," Welch says in the ad. "All those cars are rice ready. They're not road ready."
:shakehead

http://news.yahoo.com/s/ap/20081209/ap_on_re_us/angry_auto_ad

If I lived there, I'd make it a point to not buy from his dealership. I wonder if a UAW ad like those don't pirate movie ads that used non-actors (stage hands, makeup artists, etc.) would work?

[Andrew Longman]

My experience is that if you do consider the customer at all times it's relatively easy to beat foreign competitors, even in their home markets.

It is the primary rule of quality. The customer defines quality. Being error free is actually a measure of efficiency.

I am certain your business has done well for exactly the reasons you state :thumbup:

[oddlycalm]

It is the primary rule of quality. The customer defines quality.
There is another rule involved here; you can do it right 1000 times but the customer will only remember the 1 time you did it wrong. The US auto industry has done it wrong 1000 times and wants everyone to forget that now that they are doing it better. The world doesn't work that way.

That's why the changes have to be transformational. They need to leapfrog their competition. If they don't, it's over. A game changer is certainly possible, but it's hard to remake a corporate culture from the ground up and get the dealers to operate on that level as well. The only way I know is to set high standards, make it clear what those standards are, give people the tools and training they need, and have zero tolerance for those that don't want to perform.

oc

[JLMannin]

OK, it's official. "Transformational" is the new corporate buzzword, replacing the now obselete "paradigm shift"

Saying "we need to transform" really means "we have no idea how this happened or what to do about it, so we will do the only thing we know how to do, and that is mix up the org charts, fire a bunch of middle managers and line workers and pay the execs huge bonuses so that we can continue to benefit from their awesome strategery skills"

[Insomniac]

There is another rule involved here; you can do it right 1000 times but the customer will only remember the 1 time you did it wrong. The US auto industry has done it wrong 1000 times and wants everyone to forget that now that they are doing it better. The world doesn't work that way.

That's why the changes have to be transformational. They need to leapfrog their competition. If they don't, it's over. A game changer is certainly possible, but it's hard to remake a corporate culture from the ground up and get the dealers to operate on that level as well. The only way I know is to set high standards, make it clear what those standards are, give people the tools and training they need, and have zero tolerance for those that don't want to perform.

oc

If that's what you want... ;)


In the business plan it sent to Congress, GM said it is spending more than $750 million to develop the Volt, much of which is going into battery research.

"The Volt is the first step in a long-term viability plan," said Rob Petersen, a spokesman for GM's electric vehicle programs.

GM executives have said the Volt's extended range electric drive technology will probably not be profitable for the company in at least its first generation. That pushes any return on investment out until at least 2016, GM CEO Wagoner told a Congressional panel on Friday.

But GM says it wants to be ahead of the next trend, not behind it.

http://money.cnn.com/2008/12/04/autos/bailout_hybrids/index.htm?postversion=2008120518

[Andrew Longman]

OK, it's official. "Transformational" is the new corporate buzzword, replacing the now obselete "paradigm shift"

Saying "we need to transform" really means "we have no idea how this happened or what to do about it, so we will do the only thing we know how to do, and that is mix up the org charts, fire a bunch of middle managers and line workers and pay the execs huge bonuses so that we can continue to benefit from their awesome strategery skills"

Rearranging the deck chairs is not transformation and you are right it will simply fail.

Transformation requires transformational leadership from the top down. It requires self aware leaders who hold themselves and everyone down the organization accountable for more than just results but also behaving in a way that engenders positive relationships of trust, contribution, learning, action now with the future in mind, and productive use of power and conflict.

That may all sound like happy talk but there are countless firms out there fully committed to transformational leadership and are doing fabulously even in this economy. In fact, I think coming out the other side of this recession, the economy will be changed such that managing for collaboration and shared interest within and among organizations will not just be a competitive advantage but a necessity.

It will simply not be enough to manage the balance sheet and P&L but also the relationships organizations have internally and with their customers, suppliers, partners, alliances, community, former employees, the environment, perhaps even competitor (as companies now look to share common supply chains).

[Andrew Longman]

That's why the changes have to be transformational. They need to leapfrog their competition.

I completely agree. GM almost pulled that off with Saturn but the product wasn't that much better and more importantly the Saturn culture wasn't strong enough to keep itself from being eaten by GM.

But what would be leapfrogging. T and H are far ahead of them (Chrysler and GM anyway) in fuel economy and hybrids and incorporating information technology. I'm not sure those are game changers anyway. And they are largely stuck with the mediocre dealer and service network they have.

[Ankf00]

I disagree. They have been adapting and putting out decent cars. Yes, many new buyers prefer foreign cars to domestic, but it doesn't make them crap. Listening to people, you'd assume all they made was junk, SUVs and gas guzzlers. It's simply untrue. Now the problem is they can't turn a profit on their other cars. The stats may be cherry picked, and they don't highlight the falling market share and sales numbers, but they're in the fight still.

while chevy may make fuel efficient sedans, they are not intended to bring in meaningful revenue. they are intended to subsidize the CAFE hit from the big margin vehicles. the guzzlers. if one is designing cheap crap with the intention of cheap crap allowing one to make a healthy profit on another item, why bother investing legit design effort worth a damn into said cheap crap?

[Insomniac]

while chevy may make fuel efficient sedans, they are not intended to bring in meaningful revenue. they are intended to subsidize the CAFE hit from the big margin vehicles. the guzzlers. if one is designing cheap crap with the intention of cheap crap allowing one to make a healthy profit on another item, why bother investing legit design effort worth a damn into said cheap crap?

That's a fair point that those cars likely were born out of necessity rather than desire. But they have put R&D behind it. Not as much as other more lucrative lines, but I don't know who would. It seems to me that Detroit was crushing the foreign guys with gas guzzlers and SUVs. It worked well for a while when they could prop up the bottom line. Now, not so much. How would T&H look if (and this a big if given how the likelihood was so low) US consumers decided that SUVs were what they wanted? It's the same old status quo business model for almost everyone. They seek to try an maintain what works well for them instead of working towards the future. The Big 3 finally ran out of rope.

And courtesy of Congress, looks like TARP money will be used now. (Personally, I'd rather it be this money which they aren't even using for the intended purpose anyway. Rather bail out GM than Merrill.)

[nrc]

while chevy may make fuel efficient sedans, they are not intended to bring in meaningful revenue. they are intended to subsidize the CAFE hit from the big margin vehicles. the guzzlers. if one is designing cheap crap with the intention of cheap crap allowing one to make a healthy profit on another item, why bother investing legit design effort worth a damn into said cheap crap?

I don't think CAFE has that much to do with it. CAFE has been pretty easy for cars for about a decade. Cars don't count against truck numbers.

No, it's just that they've had the wrong attitude about the low margin end of their business for a long time. To them, it's a necessary evil that they tolerate to maintain volume sales. The cost cutting they do for those models shows up regardless of the option level. Taking a dashboard designed to be cheap for your stripper and trying to dress it up for higher end models just doesn't work.

[Ankf00]

well that's ****ing interesting [/jeffery lebowski]


did not know cars & light trucks were calculated separately

[Sean Malone]

well that's ****ing interesting [/jeffery lebowski]


did not know cars & light trucks were calculated separately

That's why Chrysler fought so hard to get the PT Cruiser classified as a truck IRC.

[coolhand]

It was a dead heat. General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion. Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion.

That was the second best sales total in GM's 100-year history and the biggest loss ever for any automaker in the world.

For Toyota, that was roughly $1,800 in profit for every vehicle sold. For GM, it was an average loss of $4,100 for every vehicle sold.

[Sean Malone]

Breaking News...Chrysler to close all plants for a month.


:eek:

[Gnam]

Breaking News...Chrysler to close all plants for a month.


:eek:

But will they reopen?

[oddlycalm]

What you are not seeing from many US media outlets.

German auto company bailout (http://www.spiegel.de/international/germany/0,1518,595834,00.html)

Why Toyota wants GM saved (http://money.cnn.com/2008/12/15/news/companies/overseas_automakers/?postversion=2008121517)

The US automakers are not alone. Every auto company in the world has a gun to it's head right now. The Japanese companies are each part of a keiretsu with a massive bank sitting on top, so they have access to capital for the moment, but they are vulnerable to a loss of suppliers. Our politicians don't seem to appreciate that if they allow Detroit to sink it will take Frankfort and Nagoya down with it.

oc

[extramundane]

But will they reopen?

The wording's a little vague...


In response, the Company confirmed that all Chrysler manufacturing operations will be idled at the end of the shift Friday, Dec. 19, and impacted employees will not return to work any sooner than Monday, Jan. 19, 2009.

[Insomniac]

Breaking News...Chrysler to close all plants for a month.


:eek:

You have to think that if Honda is doing it and Toyota is up to 70 some days of inventory, this is going to be happening industry wide.

(And in the case of GM, that might mean they lose less money.)

[oddlycalm]

You have to think that if Honda is doing it and Toyota is up to 70 some days of inventory, this is going to be happening industry wide.

Yep, and no sales = no income regardless of the country of origin or currency.

So far the talking heads and our illustrious representative in congress seem to have ignored the broader scope of what is going on.

oc

[Insomniac]

Yep, and no sales = no income regardless of the country of origin or currency.

So far the talking heads and our illustrious representative in congress seem to have ignored the broader scope of what is going on.

oc

Nobody is spending money. I hope the new administration discloses who has received money and how much and congress drags them all to Washington just like the Big 3 CEOs. Why aren't they lending money?

[extramundane]

Mergermania, Part Deux (http://www.msnbc.msn.com/id/28288616/).

http://farm4.static.flickr.com/3114/3118321562_c8b0eab98f.jpg?v=0

[JLMannin]

Nobody is spending money. I hope the new administration discloses who has received money and how much and congress drags them all to Washington just like the Big 3 CEOs. Why aren't they lending money?

I think the first four words of your post are the answer . . . . . . .

[G.]

WASHINGTON – Citing imminent danger to the national economy, President Bush ordered an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans and demanding tough concessions from the deeply troubled carmakers and their workers.

Detroit's Big Three cheered the action and vowed to rebuild their once-mighty industry, though they acknowledged the road would be anything but smooth as they fight their way back from the brink of bankruptcy.

17.4 really large (http://news.yahoo.com/s/ap/meltdown_autos;_ylt=AsbmZel64IZW3FjsUtLCv1ADW7oF)

[KLang]

IMO there was never a doubt the problem would be punted to the next administration. Let them try to strong-arm the UAW.

[Sean Malone]

If anyone ever thought of buying a POS GM or Chrysler product...now's the time. They are begging people to buy them.

[oddlycalm]

There was never any doubt it would happen because of how interelated these companies are. Here's a graphic example.

Magna content by model (http://www.magna.com/magna/en/products/content/default.aspx)

If GM or Chrysler went down hard and put even a single supplier like Magna into Chapter 7 the best case scenario is that shipments would be interrupted for 6 months minimum on the following: Mini Cooper, Mercedes C, Toyota Avensis, BMW X3, Suzuki XL, Honda Civic, Acura MDX, Porsche 911 Cabriolet and Nissan Altima.

That's bad enough in the current economic climate, but it wouldn't be just a single supplier. It would be every supplier. You might very well have a world where only Renault and Tata survived. Seriously.

oc