Tag Archives: chrysler
TheÂ President’sÂ rejection of loans for GM and Chrysler may prove to be the worst decision of his presidency so far.
The President claims neither car company has presented a viable plan for success. Â With all due respect, Mr. President, this isn’t 1970, or even 1990. Â American cars are now equivalent to theirÂ JapaneseÂ and German rivals inÂ reliabilityÂ and quality. Â They are often equally fuel-efficient. Â UAWÂ salaries, which wereÂ admittedlyÂ once obscene are nowÂ competitiveÂ with salaries of non-unionÂ transplantÂ employees. Â Sure American cars aren’t selling right now, but neither are imported cars. (more…)
And it’s understandably a mitten’s great fear
That the automotive industry will dissolve, disappear.
So then tell me your take
On this new driving stake
Just whisper sweet wheels to my out of state ear.
Turning a corner, or going in a circle?
There is no word on what this what the deal entails, but on the day when Chrysler and GM were required to submit their proposal on long-term survival in exchange for the second half of the bridge loan, the Big Three automakers have reached a tentative agreement with the UAW.Â I would say that there is more here and here but there really isn’t because neither the companies nor the UAW have released the terms of the deal.
Labor costs, at least for current workers, are not substantially higher for American companies than they are for foreign (and largely non-union automakers).Â Legacy costs are the big drag (other than outdated perceptions like those of my father who refuse to buy American cars because they sucked in his childhood) and VEBA discussions (on benefits) are continuing.Â There’ll be more on this issue when it comes out… and when I finish midterms.
Yes, true, there’s much more to this news
Yet it’s Obama’s rhyming that fore me does amuse!
But for the sake of intellect
Please go ahead and dissect
What you think of this car plan, does it help or abuse?
We all know that the “big three” will have to make significant changes in order to become profitable. This includes closing many of their dealerships. For GM and Chrysler, this challenge has just begun as these dealerships are protected by franchise laws and will need to be bought out. However with the idea that these companies are getting made over to become more profitable it doesn’t sound very enticing to a dealer to sell their dealership after these past years of financial decline that has hit the auto industry particularly hard. Thus these companies will have to come up with a large amount of money to purchase them. Had GM and Chrysler filed for bankruptcy they would have been able to use courts to close the contracts of some less profitable dealerships. They will now need to close hundreds if not thousands of dealerships nationally out of their own (or taxpayers) pocket. Â
Read the CNBC article here.
I’ve heard over and over that Toyota and Honda will continue to produce their cars here in America even if GM and Chrysler fail.Â By now we all know that if GM or Chrysler go under, it will undermine their suppliers which will in turn undermine the other car manufacturers in America.Â Now the media is reporting that the ripple effect will be worldwide and affect not only the Big Three’s operations in Europe, but also European automakers like BMW and Mercedes and Japanese automakers like Toyota.Â It looks like the Nero Republicans might bring down not just the Michigan economy, not just the national economy, but the entire world’s economy as well.
Let’s stop using the word bailout.Â It implies that the taxpayer is giving the Big Three a gift.Â It’s not a gift.Â It’s a loan.Â It’s a loan that will be payed back with interest, a loan that the companies would be able to get from other sources if the credit functions were functioning.Â Chrysler sought loans before and paid them back early with a $336 million dollar profit for the taxpayers.Â Language matters in the framing of a debate – things like “death tax” and “partial-birth abortion” are misleading phrases created by the right that have become part of the general vernacular.Â The same shouldn’t happen to bailout.
Credit to the Detroit Free Press
This time it’s financial giant Citigroup who will be the recipient of another $20 billion in federal money in addition to backing for $306 billion of bad assents, just two weeks after receiving $25 billion.Â Under the plan, “the government could soak up billions of dollars in losses at the struggling bank.” (NYT).Â Efficient flow of capital is vital to our economy, and I don’t begrudge a bailout to Citi or any other bank.Â But the government’s willingness to throw billions of taxpayer dollars at another failing bank undermines their excuses for not helping America’s struggling auto industry.
So I know many democratic leaders are pushing for the “Big Three Bailout” (Barack Obama included). Since so many jobs are connected to the auto industry, many believe that we have to bailout Chrysler, Ford, and GM in order to keep Americans employed (I heard on MSNBC that 1/10 jobs have something to do with American cars). Of course, Michigan politicians are pushing for this bailout because a large portion of their constituent base are employees of the auto industry. (more…)