Why people hate Detroit

"People know Japanese-made cars are reliable."

lets be specific here. they are Japanese designed American built. Toyota and Honda both have American plants that are building cars here. Yes many Japanese-designed cars are still built in Japan, but many are also built here.

Both Ford and GM build cars in the rest of the world that others are buying. One of the problems is that our laws will not allow these cars to be brought to the US. You see the Ford badge all over Europe

There's another reinforcing bias at work too, Rod.

Anyone who lives in the rust belt knows stories that go roughly like this: New, young, energetic worker shows up rarin' to go at his new union auto job. In no time at all he is beating every quota, until that is, he himself is beaten up for making everyone else look bad. That's his first lesson on how to milk the system.

Before union folks out there get upset: I myself don't know if stories like that are really representative, but I do know that they are common.

The auto workers' union has a *horrible* rep. If reality is anything like their rep, I'm amazed that the Big 3 have sustained themselves this long.

In addition to real and perceived quality problems, for many years American cars were just not that attractive either. Some of them were downright ugly and ungainly. Does anybody here remember that GM minivan that looked like a pregnant dustbuster? Who signed off on that one? What were they thinking?

I'm not indifferent to Detroit. I actively dislike Detroit. Here's why in a nutshell: The Hummer. The Hummer stands for everything that's wrong with the American auto industry. For 35 years they have lobbied against fuel economy standards, and worse, persist in building behemoth SUVs and F250s that get lower gas mileage than vehicles in the 1970s. They have not innovated in hybrid technology or alternative fuels (or at least have not broad their inventions to market). They still don't have anything comparable to the Prius, the Fit, or the Smart Car. And they've lobbied at every turn against mass transit and electric vehicles (See James Howard Kunstler and "Who Killed the Electric Car.") They're an environmental menace and compromise our national security.

They don't have to be this way. They could be innovating in alternatives and bringing environmentally friendly cars to market. Instead they get beat by Honda, Toyota, and now even Hyundai on looks, style, reliability, price and efficiency. Why on earth should we reward this?

Still, I'll back a bailout. But if and only if Detroit converts every car they make to alternative fuels or guarantees a fleet of minimum 35 mpg vehicles in 5-10 years.

"The only way to get the Big 3 able to compete head to head with their foreign rivals is to equalize their labor and legacy costs. And the only way to do that is to let them go bankrupt and have a bankruptcy judge void those obligations."

Which comes at the expense of workers. You know, "real America." When the Big Three fail, it means average people lose their jobs, lose their livelihoods, incur greater costs, lose their pensions. These are the people living in small towns, in Rust Belt cities. People who work with their hands, who go to church every Sunday, who get treated with condescension by elitists.

Do you think its because people think the workers are... believe it or not... paid too much? While I am extremely pro worker and pro-union, I think factory work averaging 67g a year is a bit much...

Also, I think it will be increasingly difficult in the future for US companies to compete against companies from nations with nationalized health care picking up the tab for worker benefits.

Bad workers make bad cars. People are just salivating at the thought of all those overpaid autoworkers fighting for jobs flipping burgers, though I doubt that many of them are smart enough to figure out how to flip the burger.

I saw Michael Moore on Larry King the other night who had mixed feelings on the bailout, saying that the only way he'd support it would be if the government took over management of the Big 3 which, he said would signal the end of capitalism, which he would be glad to see.

Because we still marvel at the wonders which were the Trabant and the Lada.

Which comes at the expense of workers. You know, "real America." When the Big Three fail, it means average people lose their jobs, lose their livelihoods, incur greater costs, lose their pensions. These are the people living in small towns, in Rust Belt cities. People who work with their hands, who go to church every Sunday, who get treated with condescension by elitists.

So we should subsidize them with taxes from people who often earn a fraction of a what U.A.W. worker makes? Some kind of reorganization is going to have to take place, otherwise we're back to Lada-land.

Do you think its because people think the workers are... believe it or not... paid too much? While I am extremely pro worker and pro-union, I think factory work averaging 67g a year is a bit much...

Compared to a CEO who makes 67M a year? (And would consider himself underpaid if that was all he got). Alan Mulally of Ford got 28 million for 4 months of work.

I just typed a lengthy paragraph that was lost upon submission for no logical reason. I entered in the captcha, but some mysterious error happened, I clicked "try again" but all of my paragraph, but one line, was gone. Can someone give the tech wizards at Beliefnet a boot to the head forme? Thanks.

Pyrrho - that was the Aztek. Man, was that an ugly ride.

My last American ride was a Pontiac Grand Prix '89. What a piece of crap, but I got a deal on it and was in college so I kept it. I even took it with me to Germany when I was stationed there (big mistake, that). I ended up selling it for scrap, 7 years later, after numerous, numerous trips to the shop and lots of money down the drain. I switched after that, eventually to a VW New Beetle (which was a disappointment, on the mechanical reliability front), and now to a Honda Civic (2006), which is a fantastic car. My wife has driven Hondas all her life. I am definitely a Honda guy now.

Echoing those here earlier who said it, American cars also seem cheap and badly fitted out compared to foreign marks. It is amazing - GM owns Opel, and when I go on travel to Germany I often drive rental Opels. They are really nice cars (I last drove a Vectra, loved it), couldn't believe it was GM mark - it was worlds away from domestic GMs. WTF, GM?

I have very mixed feelings about not bailing out the Big Three, because I like most of you am worried about the further destruction of our industrial base. But you come to the depression with the industry you have, and the American Auto Industry has been run by fools and incompetents for decades now - no amount of money could probably save them.

Oh, come on, Baldy. "We need real trucks." So we do, but that has nothing to do with a Hummer, which, in these parts at least, is much more likely to be driven by a diminutive blonde trophy wife who needs a booster seat to see over the steering wheel than by a rugged construction worker. Are you sure, Baldy, that you're really not our old pal Nightstalker in another guise? The corporatist rah-rah you dispense certainly sounds familiar.

Well, I drive a 15 year old Ford Aerostar minivan that has needed one repair (broken water hose) in all that time. It's only the second American car I've ever driven (grew up with VWs and other German cars in the sixties and seventies).____Based on my experience, I've come to believe that Ford is getting a bum rap by being lumped in with GM and Chrysler. But I may be reading too much into one absolutely wonderful car.

That post about the Aerostar was me. Did you know that if you have to retype the magic letters it strips off your name? Obviously, I didn't.

Are you sure, Baldy, that you're really not our old pal Nightstalker in another guise? The corporatist rah-rah you dispense certainly sounds familiar.

I agree with your point about the Hummer, Scott, but Baldy has a great post in the AIG thread.

Actually, I think Pyrrho was thinking of the Chevy Lumina/Pontiac Trans Sport. That thing was hideous. It was the second GM made after the Astro was judged too truck-like for the minivan market, though to this day Astros/Safaris have a loyal following, but it's more of a niche market. They finally got it close to right with the Venture.

I own a 2001 Ford Windstar myself. I haven't had any real problems other than an oxygen sensor. I owned a Honda Accord that was just about dead at 140K miles. I sold new Toyotas and used everything. Much of this talk is confirmation bias. I can find people that have driven the wheels off almost any mass produced car. I can find people that have had to do an engine rebuild or replacement before 10,000 miles, under warranty of course.

The dirty secret is that the driver can really affect how good a vehicle is. Compare the issues with the Scion with those of Toyota. All the major parts are common between them. The Scion has more "quality" issues though. The reason is that a younger demographic drives them. Toyota's common demographic has been older people, generally in engineeering and accounting.

two interesting stories today about the auto industry

"Honda Motor Co. said today that it plans to reduce its planned production in North America by an additional 18,000 vehicles, raising its total announced cuts to 50,000.
Honda now plans to produce 1.41 million vehicles in North America for its fiscal year ending March 31, down from 1.43 million in 2007.
Honda spokesman Ed Miller said reduce production of Odyssey minivans and Pilot SUVs by 12,000 units at its plant in Alabama where the Odyssey minivan and Pilot SUVs are made, and where Ridgeline pickup production will begin in early 2009, will be reduced by 12,000 units."
http://freep.com/article/20081120/BUSINESS01/81120061

How many are familiar with the Big 3 Jobs Bank?
not many unless you are a auto industry nut

"Reports that the United Auto Workers union is in talks to dismantle the controversial jobs bank program are premature, according to people familiar with the situation.
The possibility of more concessions from the union has emerged as Detroit's Big Three automakers are seeking $25 billion in emergency loans from the federal government as they burn through cash amid plunging car and truck sales. "
http://www.detnews.com/apps/pbcs.dll/article?AID=/20081121/AUTO01/811210418/1148

here is the math from the Carpe Diem blog
"Total Annual Cost of the Jobs Bank to the Big 3 = $478 million (almost half a billion dollars) for 3,591 "workers," and that does not include any support costs, administrative costs, or other costs to handle these workers all year long.
Ford: 1,476 workers x [$70 per hour base pay plus cost-of-living adjustments, holiday and vacation pay, health-care, pension and other benefits ) x 95% pay while on layoff] x 40 hours per week x 50 weeks per year = $196M per year.

GM: 1,404 workers x [$70 per hour (salary and benefits) x 95%] x 40 hours per week x 50 weeks per year = $187M per year.

Chrysler: 711 workers x [$70 per hour (salary and benefits) x 95% pay while on layoff] x 40 hours per week x 50 weeks per year = $95M per year. "
http://mjperry.blogspot.com/2008/11/jobs-bank-500-million-annual-cost-to.html

WSJ article from a year ago
"Legacy health-care liabilities are the biggest factor. UAW contracts with GM, Ford and Chrysler cover not only 180,000 active U.S. workers but some 400,000 retirees as well. GM's obligations alone are an estimated $50 billion and cost the company $3 billion in cash annually."
"The Big Three's woes -- from shrinking market share to high benefit costs to overcapacity -- were built up over decades. They're the fault of both management and the UAW, which saw these problems coming but refused to do anything real to address them. The great tragedy is that the two sides didn't make these hard choices 20 years ago, when they might have saved tens of thousands of jobs and spared a region much economic distress. Better to take a strike and its costs now, than continue the slow slide toward Chapter 11."
http://online.wsj.com/article/SB119068438605038283.html?mod=opinion_main_review_and_outlooks

Like most American monoliths... the auto industry got lazy, indifferent adn fat. Union protection, big salaries from the top to the bottom, big vacations... the list go on. Plus, while the industry was getting fat, it was producing inferior products. Don't believe me? Pick up any Consumer Reports from 1970 to the present and the Big Three lead the day in bad marks on all their lines. The 3 did have a chance a number of years ago to be the first to get "green" and what did they do? They dumped the green cars and sold out for green backs... by selling gas guzzling ozone piercing steel plated urban assault vehicles.

Detroit lived by greed and is now dying by greed.

Why is it that we don't see those great little cars the Big Three sell in Europe over here? I was in Italy a couple of years ago and could not get over all the wonderful little cars, wonderful little AMERICAN cars. We have only just now begun to see a few of them (the Focus and the Aveo), but what kept them away for so many years? Please don't tell me it was the SUV.

Well, I once owned a 1984 Buick Skylark. It was okay. We owned a Ford Escort, total piece of crap. We owned a Ford Windstar; total piece of Crap. I now own a Saturn L200, great car. And we drive a Toyota Avalon, great car. In the future, I will only buy foreign cars or possibly another Saturn. I honestly don't really care what happens to the big three.

Oh, and by the way, I will never under any condition ever own a Ford again. Henry Ford was an anti-semite and Nazi sympathizer and should have been arrested and tried for treason. Look up "Protocols for the Elders of Zion" and Henry Ford and you will see that he was a big promoter of this anti-Jewish hoax.

In the mid-1990s, I went looking for an American car for the specific purpose of supporting American industry. I got a 1996 Saturn SL1. It wasn't a bad car, for the most part. The power to part of the console (radio, etc.) would occasionally fail, but I discovered that if I whacked the steering wheel really hard, it would come back on. Anyway, other than a couple minor repairs, it lasted 7 years and about 90,000 miles. Then the engine developed a fatal problem. To replace the engine would have been about what the car was worth. The mechanic showed me a warning sent out by Saturn that was a couple years old at that point. It said my year and make sometimes had this problem. I asked why, if it led to the death of a car for all practical purposes, was there not a recall? He said that because it wasn't a safety issue but rather a financial one, they weren't recalled. I was steamed, to say the least.

Raymond Martin: I never hear people say they hate Houston for the oil problems....

On the other hand, I have heard a few executives and attorneys who said that Enron was the type of thing that could only happen in Houston.

"Why is it that we don't see those great little cars the Big Three sell in Europe over here?"

NHTSA and EPA

part of the green program. Ford has a great diesel powered car great mileage, good styling, but our prejudice against diesel has prevented it from being imported or built here.

Government regulations play a role in what has happened to the Big 3 here

It isn't like Toyota and Honda place their European cars in the U.S. either. Different lifestyles. America (and Canada) are the only places that drive the types of cars that they do. That is why Toyota, Hyundai, etc. moved production to these countries. That is also why Ford and GM don't export (for the most part) from their plants in the U.S.

Now this is interesting reading about what you (Rod) think about American rattletraps (OOPS---I mean cars). When I was a kid growing up in the 60's and 70's, my parents always had american cars. I noticed many of the families in our neighborhood had foreign cars. But my parents always bought american. And those things were always having something go wrong. They were always breaking, or overheating, or having the same unfixable problems. That's unfortunate for the big 3 that they made that kind of impression on our generation, because I told myself "When I grow up, I'm not going to buy any of those american rattletraps. I'm gonna buy a GOOD car."

So I did. My parents only ever continued to buy american cars. My dad did not like japanese cars. I think he had issues over WWII. In any case, my first car was a four-year-old 1982 Nissan Maxima. LOVED that car. Then I bought a 5-yr-old 1985 Honda Accord. REALLY LOVED that car. Followed by a 2000 Odyssey minivan. My hubby is in love with Lexus. I am a diehard HONDA GIRL. And that's just how it is. I can't imagine plunking down

As someone who lived in Detroit for 38 years and still lives in Michigan, I can tell you why people hate detroit. Its for may of the same reasons people have brought up. The unions have helped drive these companies into the ground with all their benefits and healthcare costs. It really does add up in the final cost and it did help effect what ype of cars were built. The unions, with their constant demands and threats had/have a chokehold on the big three. You are dead on about new workers getting the union talk when they start about not outdoindg or showing up other workers by actually doing your job properly. And like most things, this mentality spills over into the culture, this mentality of entitlement, of seniority, of the idea that they are owed a living by someone else. I hate it and what it does to peoples minds. I personaly don't want to see the big three to fail, but I do salivate at all the union types having to actually compete for a job in which they actually have to do some work like the rest of us. Time for their comepuppance. If that's what it akes to cleanse the union albatross and make the manufacturing company in america more of a realistic alternative, then lets get it on.

Spare me the talk about how this sounds like i'm picking on the "real" american or the "average" worker. I've been there, done that. People with no education earning 60-90k to do the simplest of tasks and still find a way to bitch about wanting more is not my idea of a real american or the "average worker", and is just as much a greedy monster as any CEO with stock options and a golden parachute. Please.

Scott Walker:

Look, you're joining in support of the argument that the carmakers need to die or be directed by Congress due to GM having produced the Hummer. Whether you agree fully with that notion or not, you're lending your voice to it.

I don't "hate" Detroit, and I really don't think all that many do. Import cars are not all they are cracked up to be. The problem is that legends are what they are, and you have a hard time dispelling them. Even our lowly Neon and Dodge Aries were very inexpensive to own and drive. With 180,000 on the Odometer, the Neon has had less tahn $200 in repairs, and only maintenance since we bought it with just over 100K on the odometer.

My old K-car based 80's Caravans have now accumulated 170K and 208K on the odometers and still perform their work duties cheaply.

The point here, is that even mentioning the Hummer starts coloring the argument with symbolism and ends up leading to unwarranted and untrue conclusions. A dispassionate analysis of what's gone on doesn't particularly reveal the "common narrative". It is quite different.

In GM's case, somewhat more than the others, for instance, vehicle production choice had to be driven by profit per vehicle, because GM carries such an enormous labor burden.

I have no information for later vehicles, but mid-90's, there was FAR less man hours involved in building a pickup than in building an ordinary sedan. I doubt that changed. Chrysler designed the current truck design that debuted in '94 for less than 4 billion dollars. Total investment in engineering, production capability, etc. Equivalently priced minivans and trucks meant half the profit for a minivan compared to a truck - and it's mostly about how much labor is involved.

If memory serves, a 1995 Dodge Diesel, which sold for 30,000 new, had a profit margin of some 7,000 dollars. But an optioned out Town and Country minivan of only 5000 less in MSRP had more like $3000 profit.

Neons, which started at under 10 grand back then had very small gross profit margins. And for the most part, the difference was labor.

It is unlikely that the costs were much different proportion-wise for GM or Ford.

Today, Chrysler has stated publicly that it can build a car for the same number of man hours or less than the best the Japanese can do - and Chrysler is well ahead of Ford and GM. It just costs them almost double for each of those man hours.

Rumors are, that from testing, the next generation of jeep liberty will get almost equal fuel economy to our 01 Neon.

Are you REALLY and I mean REALLY going to demagogue the issue about Americans buying trucks to use? And about all three automakers building and selling them? Labor costs, for most of the Jeeps, for instance, are less than that for a Sebring, to my understanding.

Again, these relationships are likely not different between all three automakers. Those Dodge and Ford trucks on the road made it possible for the Neons and Cobalts and other small cars to be built. They're what keep the companies surviving those huge labor cost disadvantages compared the import brands.

This is why I react so stridently to the meme about 'downsizing' and the endless drumbeat for the near impossible economy mandates. So, you're going bail them out, expect them to work "on the cheap", but at the same time, bail out of the markets that provide them the cash to keep going? This isn't rational, people. Even with gasoline over 4.00 per gallon and diesel at almost 5.00 per gallon, I still had to buy it and we still HAD to have the truck operating. There is no alternative for millions. And most of those millions are why you have light and heat and food and water and a home...

I'm sorry, I just can't buy a 3500 lb truck and put a 27 foot Altec hoist on it. I need that 12,000 to 16,000 GVW and all wheel drive.

There's hardly a home in my region without a pickup. And the vast majority of are used as trucks. That some are not... is that some reason to get all offsides about who builds what?

The reason Big 3 cars made in the Euro Zone are not sold here in the US is that they are not made by members of the local UAW! Many of the regulations in place are there to protect the unions.
---
Full disclosure - I drive a Ford Fusion - v6 awd sedan - it is a great car!

Rumors are, that from testing, the next generation of jeep liberty will get almost equal fuel economy to our 01 Neon.

Hopefully, they'll bring back their previous exterior. The new boxy Commander-looking Liberty is just ugly.

Baldy, ever lived in Europe? No? Why am I not surprised.

Look it up. The USA spends more, by far, per capita, for health care than any country in the world, and has health statistics - your pick, longevity, infant mortality, whatever, your preference - in the cellar.

Mmmm, socialized medicine bad. So, what would work? Seems like everyone else but us can figure it out. You're pretty good at claiming that other solutions than ours are bad (in defiance of the statistics).....we'd all be interested in hearing your ideas to decrease per capita cost and improve results. Your turn.

The French, for example, who cannot mostly find their butt with both hands, have what is said to be the best health care system on earth. So, your argument is.....we're not as smart as the French?

Daddy was Olds' Gen. Sales Man.
Early retired in '95
Bought Mom a Camry two years hence
Son's since '01, great drive

- after The Clash, Bank Robber

Missing title for my 4:40 post:

Jalopy Seconds

The figure of $76/hr for auto jobs is an outright fraudulent number: it isn't true. The average UAW hourly wage is $28.00. Feel free to suggest that that is too much too, but it's not $76.00.
Also, what's wrong with the USA having a prosperous working class? Once upon a time that would have been a source of national pride and bragging rights. Why are some people so desirous of seeing working people live lives of penury? Envy is a sin when expressed toward the upper classes. It's not just a sin but utterly idiotic when expressed toward the lower classes.

I grew up in a world where buying an American car was the default. In the '60s, aside from the VW bug, there weren't a lot of other options. And the US cars of the late '60s were just terrible. People kind of took it for granted that your glove compartment door could not be re-closed after you opened it, that the clock in the dashboard never told the right time, that the knobs on the window crank handles would come off, that doors didn't close flush and rear view mirrors wouldn't quite stay in place. The quality problems were so severe that the auto companies found every excuse to evade even the crappy 12 month/12,000 mile warranties that came with new cars. Well before the 1973 oil shock, people were getting awfully sick of it.

Then when the new Japanese imports started coming in they rapidly overcame the old prejudice against "made in Japan" products. I'll never forget the first Toyota Corolla I saw, with its door that closed with a definitive "choomph" and its well-designed, well-made glove compartment and trunk latches--the clocks even worked! The result: I'm 50 years old and have never bought an American car in my life. Now Detroit wants to get my money anyway via the IRS.

I think the "UNIONS" is a good point. I have a tough time, as I battle my rising health insurance costs, work longer hours for less money and feel daily fear of loss of employment, feeling any kind of sympathy for those watching DVDs at the job bank. And I've known too many people and heard too many stories about life inside those plants and their subsidiaries to believe that those people are making an honest wage. That makes this whole business completely annoying...particularly after spending hard-earned money on a repair to one of their cars, what with their built-in obsolescence.

"as I battle my rising health insurance costs, work longer hours for less money and feel daily fear of loss of employment,"

Sounds like you need a union.

Well...it was okay to give the Wall St. scumbags a TRILLION dollars of taxpayer money, but Detroit can't even get a measly 25 billion dollar loan.
The administration is in bed with Wall St., and Wall St. runs the country if you wanna know the truth. Wall St. has basically sucked the life out of this once great country.
Easy to say to hell with autoworkers, but that's damn hard work. Do you think that those people should lose their pensions and be thrown to the wolves? While Wall St. throws parties on our dime?
I can't make sense of it.

"Men who fly in private jets to Washington to beg for money from working American men and women are clearly out of touch with reality in more ways than one."

Actually they are guilty of having a tin ear. Everyone assumes that these planes had only the CEO on it. I bet that every seat on the plane was filled with folks who could do business in DC. And during that flight time they would be discussing what to do in DC. You could not do that on a commercial flight. On a commercial flight you are stuck in your seat. you are not allowed to congregate, etc.

Now the smart PR move would have been. Book a seat on a commercial flight in coach (if available) for the CEO send him to DC on that commercial flight, but still send the corporate jet filled with the ofher folks. The CEO can review briefing papers on the plane or listen to verbal reports via an mp3 or ipod. Then when asked the snarky question? (and I can't imagine them not thinking this wouldn't be asked) "How did you get here?" the ceo could answer honestly "by commercial airline in coach class" talk about a balloon deflating fast.

I've traveled virtually every other week via commercial jet for my employer. It ain't glamorous. Crowded seats, high cost, terrible snack (if available). crowded airports and no room to do any work. Companies that have corporate jets have them not as a luxury, but rather as a means to quickly move employees around the country. And they don't fly empty either.

Re: If the US used European methodology, our unemployment figures would look worse than theirs

??
How so?
a lot of people have some very odd notions about how these figures are tabulated, and it's possible you are one of them. For example, it is absolutely NOT the case that unemployment numbers only count people who are collecting benefits.
I do believe our stats do a good job of capturing the number of people who are not working, but want to be. What they don't capture are people who are underemployed, since anyone working at least an hour a week (!) is counted as employed. Europe, at a guess, has fewer part-time jobs, fewer temps and fewer people relegated to the status of "independent contractor". And yes, US underemployment is a problem that is too often ignored. However I don't think there's warrant for a claim that if we compare people who are aboslutely not working at all (but want to be) Europe comes off better than the US.

The interesting thing about statistics is that they don't tell lies as long as you know what they mean. I remember reading a few years ago that France has as higher unemployment rate than the US but it also has a higher employment rate.

The author's own words illustrate the perception problem: "I bought my first car not long after I graduated college in 1989. There was no question but that I was going to get a Japanese car. If you're old enough to remember the quality problems American marques had back then.

That's funny, because I own 3 1989 Chrysler products. Reliable, very inexpensive to own and to fix if they do break. They are a massively better value for your ownership dollar than ANY import. Why? Because Chrysler did not engage in the typical Japanese fashion planned obsolescence of changing parts EVERY year for EVERY aspect of a car. You can bolt in and bolt on stuff from several years before and after, and maintenance parts like brakes and tuneup stuff and "wear parts" are common to a gazillion models over 3-8 years, which has brought the price down to almost startling lows.

Today, at least, American made used cars are incredibly better value than imports. There's very little, if any "reliability" difference, and the cost of service and repairs for imports has skyrocketed to the point where any major need makes the car not worth repairing.

Folks, we need to be FOR this bailout package.

1) The playing field isn't level for the domestics. The foreign manufacturers got HUGE tax breaks for building plants in states where unionization wasn't strong at all. They paid their workers half of what the Big 3 did, and without any legacy costs from having been here for 80 years-plus. No matter where in America the Big 3 go, the UAW is right there. GM pays its workers $70/hr in wages and benefits. Nissan, Toyota, Honda, M-B, BMW, and Hyundai/Kia pay theirs less than half that in this country.

GM paid $8B in healthcare benefits ALONE last year. The Big 3 put together employ 267,000 people in America, but pay benefits to more than one million. Do Japan, France, and Germany burden their industries with healthcare costs? I don't think so.

Three years ago, the government was ready to slap fines all over Nissan for failing to meet CAFE standards with its American plants. Nissan threatened to pull all of their Alabama and Tennessee production (where they make mostly SUVs, pickups, and minivans) were they to get fined, and asked that the government count the Mexican Sentra plant as part of the CAFE requirements. So the government relented. GM, Ford, and Chrysler do not have that option.

Truth of the matter is, if Toyota builds 4 plants in Mexico, no one cares. But if GM builds one, Michael Moore drags out the camera and makes another documentary. But the cars Toyota builds will be sold on our market without a problem. And let's not even start on Japanese trade rules. We can't sell them our cars. But they can import to us to their heart's content.

Japan subsidizes its car industry. France OWNS part of Renault-Nissan. Lower Saxony owns 20% of VW.

2) NAFTA and our trade agreements with Europe and Asia created this giant sucking sound of manufacturing jobs because they broadened the market, and American union labor couldn't compete from a cost perspective. The cost differentials alone meant that GM, Ford, and Chrysler cars cost an average of $1500-2000 more to build, per unit. In trucks and SUVs, this can be recovered due to high profit margins. But in small cars, where there are almost no profit margins, GM either had to cheapen its vehicles to the tune of $1500-$2000 per unit to get them cost competitive (and these are the most price-sensitive areas of the market), or they had to price them $1500-2000 higher. That matters much less with a $40k SUV. But with a $12k compact, it's the whole world. The reason GM, Ford, and Chrysler spent all their money on trucks and SUVs is because those were the only vehicles that gave them a return on their investments. They had to make money somehow. And if you note, GM's full-size SUVs and trucks have the highest fuel economy in that class, and are generally acclaimed to be class leaders.

GM, Ford, and Chrysler producing trucks and SUVs had NOTHING to do with the oil companies. They had to make money somewhere so they could build those smaller cars.

3) The management that got the Big 3 into this mess is long gone. Rick Wagoner of GM came to the helm in 2000. Alan Mulally came to Ford in September '06. And Bob Nardelli joined Chrysler in January '07. With the exception of Chrysler (which was run totally aground by Daimler), the Big 3 have gone to massive lengths to turn their product portfolios and their business models around. Ford and GM quality, according to most major publications, has improved to parity with Toyota, Honda, and Nissan. The current Pontiac G6 and Chevy Malibu get the same highway gas mileage as the Camry Hybrid does. GM's sunk more money into its upcoming hybrid program (Toyota's was subsidized by the Japanese government, and Toyota made a loss on every unit built up until about a year ago), hydrogen fuel cell technology, and a host of other alternative energy options (including cellulosic ethanol) than anyone else, by far. So product quality, design, engineering, and fuel efficiency have improved vastly, basically to parity in most cases. Whereas the Japanese automakers keep enlarging their cars after every redesign. The 2008 Honda Fit got 35mpg highway. The 2009 is 4" longer, a few hundred pounds heavier, and gets 33hwy. A Malibu with an automatic gets the same highway mileage. The Civic of today is bigger (and much heavier) than the Accord was in '94. And if you'll notice, Consumer Reports no longer recommends the V6 Camry, or the Tundra, due to massive recalls and reliability issues.

GM's about to release the Volt, which will get the equivalent of 100mpg. They're about to release the Cruze compact, which will get well into the 40s in fuel economy. They're spending their precious few funds on exactly what the market needs. Toyota just released an all-new Tundra and Tundra-based Sequoia that went BACKWARD in fuel economy.

4) The Big 3 JUST negotiated a contract with the UAW, set to take effect in 2010, that brings the aforementioned legacy costs back to parity with the Japanese. The reason this didn't happen a decade earlier can be seen with the GM supplier strike of summer '98. They shut GM down for weeks. And that was the last time GM market share was at 30%. Back in the '60s, if the unions struck, there were only one or two major competitors to take up the slack in lack of product availability and bad PR driving consumer decisions. Today, if GM has a strike, about 9 major companies are poised to take sales away from GM.

So this new union contract gets the employee costs under control, finally, so that the companies WILL be able to compete from a cost perspective, as well.

5) Unlike Wall Street, the auto industry worldwide averages only 1-3% profits on earnings. Executives won't be getting rich off of taxpayer money here like they did with Wall Street. This money will go to ensuring that the vehicles GM, Ford, and Chrysler produce will come out in a timely manner, and with competitive quality. They're doing it now, but it's costing them too much. The execs are willing to drop their salaries to $1/year and give up their bonuses (which were FAR less than those on Wall Street).

6) Bankruptcy isn't an option. Flying on a bankrupt airline works because one's investment in that company ends when the consumer gets off the plane and picks up his bags. No automaker has EVER emerged from bankruptcy and survived more than 18 months afterward. No one wants to spend $20k-plus on an orphan that they can't get service for, that they're afraid the warranty will be worthless (GM's warranty, by the way, is industry-leading, and possible because quality improved so much that warranty claims plummeted 40%). Not to mention the fact that bankruptcy will kill the resale and residual value of the vehicles out there now, putting owners even further upside-down in their loans. And with no warranty and little way to service their vehicles if something goes wrong, you can bet your boots that car loan defaults will skyrocket once resale values plummet.

7) The real reason that they're in need of the money now is that poor foreign policy and economic short-selling laws led to fuel getting so expensive so fast (and no one...NO ONE in the industry predicted that it would happen when it did as quickly and severely as it did) that it killed demand for the only vehicles on which GM, Ford, and Chrysler were actually making money. Then the credit crisis kept banks from lending, and sales for all vehicles (not just SUVs) plummeted. And short-sellers drove GM and Ford stock into the dirt, creating real liquidity issues.

In short, the Big 3 finally have management that is cutting costs, turning their companies around, and seeing to it that quality, competitive products are made. They've stared down the unions and picked up massive concessions that make them competitive long-term. They're heavily invested in the future with fuel-saving technologies and the products that obviate that are just now coming down the factory lines.

If GM goes down, countless suppliers will, too. Suppliers that make seats for Toyota and shocks for Hyundai, and window regulators for Ford. And 3 million jobs will go from contributing to the economy and tax base, to becoming dependent on the tax base. We can pay for the bailout now, or we can lose the tax base and pay people in welfare benefits to not work.

These companies are finally doing the right thing, and have been for a few years now. And though they were certainly poorly managed in the '70s, '80s, and '90s, and have deserved the bad public perception you indicate, they're finally on the right road. But they're working heroically to correct that. It's just that forces beyond their control have hit them while they're too weak to withstand them.

Re: No one wants to spend $20k-plus on an orphan that they can't get service for

There are plnety of places to service one's car other than dealerships (I generally go to Firestone). I agree there are issues with warrnties to consider, but once a car is no longer on warranty it's generally cheaper to go elsewhere for service.

Here is an example of what I meant about loop California. In Salon Magazine SF mayor Gavin Newsome wrote;
"Electric vehicles represent an overarching, game-changing solution that allows us to transform, and recharge the American transportation sector for the 21st century. By accelerating the conversion of the car industry from its oil dependent past, to a new electric century, we can jump start the car industry, eliminate our dependence on oil, reduce our required presence in the middle east, create millions of jobs, and eliminate a significant portion of our CO2 emissions."

they only thing he forgot was a chicken in every pot. What is he going to do? Force every SF'an to turn in their gas powered vehicle for an electric car?

As for "eliminating our dependence on oil" its obvious to me that he is totally clueless as to the role that oil plays in our economy. It isn't just about gasoline. What about plastics, electricity generation, fertilizers and much, much more.

http://open.salon.com/content.php?cid=47683&source=newsletter

What if in return for federal aid, Chrysler, Ford and General Motors agreed to merge?

Freeway Threeway, or, Ménage D'etroit

Even if Americans built good cars that lasted years the outcome would still be the same. People would still buy foreign due to the fact that cars are more based on class now then they were in the 70s. American cars lack class, boring designs,reliability,. A rich person would probably want a mercedes,bmw,audi etc... While an middle class person would want a acura,infiniti,cadillac etc..... and a poor person would want whatever moves. The problem is a rich person wants to drive something that shows his wealth a mercedes(feels more important than the middle class guy and poor guy). The middle class guy wants the rich guys car but settles for less a cadillac (fells more important than the poor guy but closer to the rich guy). The poor guy wants the two but settles for a geo(No Respect). Just The way the way foreign car makers want it.

Domestic to americans=poor Foreign to us= Rich/middle class

Why People Hate Christian Conservatives.

No compassion. Care more about money than the millions of people that rely on the American auto industry. CC are nothing like Jesus.