I am beyond frustrated at this potential bailout of auto manufacturers.

[Jennifer in NH]

Check out the CNN.com story that ran this morning: Big Three auto CEOs flew private jets to ask for taxpayer money.

 

http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html

 

It really inspires confidence that they will use the bailout money wisely, doesn't it?:glare::banghead: ( please note the sarcasm expressed through my computer).

jenny

[Renee in NC]

I have not read ahead, so forgive me if this has been mentioned.

 

One of the US companies (Chrysler? Not sure.) has talked about letting people go with HUGE severance packages. As in, $100,000 for employees who have been working less than 10 years.

 

Meanwhile, my step-sister works the night shift at a foreign auto manufacturer with relatively low pay to support her entire family. Because her company isn't as stupid as the US companies, she will still have a job. However, her hours will be cut, bringing in even less money.

 

If she were working for a domestic company, she could have potentially hit the lottery.

 

Not that I think the cuts and enormous severance are *good*. I'm just disgusted with some people's definitions of "fair" and "needed."

 

Can you elaborate a little futher, Carrie? Is your sister low paid? My cousin was making ~ $50K per year at Toyota (without much experience), so I base my thoughts of foreign auto worker pay on that. Am I way off?

 

ETA: I am asking because I am assuming that auto workers are still well paid even in companies without unions, so I want to make sure that my assumption is correct.

Edited November 20, 2008 by Renee in FL

[Carrie12345]

Can you elaborate a little futher, Carrie? Is your sister low paid? My cousin was making ~ $50K per year at Toyota (without much experience), so I base my thoughts of foreign auto worker pay on that. Am I way off?

 

ETA: I am asking because I am assuming that auto workers are still well paid even in companies without unions, so I want to make sure that my assumption is correct.

 

I honestly don't know her actual income. I only know that she recently broke down and went back on government assistance so, whatever she's making, it's below the threshold for a family of 5. She's been with the company for at least 4 years now.

[Renee in NC]

I honestly don't know her actual income. I only know that she recently broke down and went back on government assistance so, whatever she's making, it's below the threshold for a family of 5. She's been with the company for at least 4 years now.

 

:grouphug: to your sister. It's just rough for lots of people. It seems that everywhere jobs are getting cut, hours, pay - is anyone immune anymore? My dh has started looking for a job for when we are closed and there isn't much full-time out there!

[Demal]

The serious flaw with this argument is the leap to Chpt 7 bankruptcy.

 

What happened to Chpt 11 bankruptcy?

 

Chapter 11 bankruptcy requires Debtor-In-Possession financing. DIP financing for GM would not be available from financial institutions in the current environment (credit and liquidity crisis), only from the federal government. That would be a form of a bailout. If we leave it entirely to market forces (no government money or guarantees), GM would have to go into Chapter 7.

 

I think the SAIC acquires GM is a likely scenario, but by no means the only scenario.

 

I don't have a problem with the federal government providing DIP financing to GM in Chapter 11. I don't think we should leave the automotive industry to "the market."

[Renee in NC]

Chapter 11 bankruptcy requires Debtor-In-Possession financing. DIP financing for GM would not be available from financial institutions in the current environment (credit and liquidity crisis), only from the federal government. That would be a form of a bailout. If we leave it entirely to market forces (no government money or guarantees), GM would have to go into Chapter 7.

 

I think the SAIC acquires GM is a likely scenario, but by no means the only scenario.

 

I don't have a problem with the federal government providing DIP financing to GM in Chapter 11. I don't think we should leave the automotive industry to "the market."

 

That sounds like a middle ground approach.

 

However, there isn't anyone for DIP financing with the major amounts of money the Fed has injected into the market? I thought the whole point of the $700 Billion was to free up the credit market!

[kzdaisy]

The fear of failure if taken away from business will only make greed more prevalent. No failure, no losses, no problem these CEO's figure.

[Renee in NC]

Can I get an Amen?

 

Amen.;)

[Margaret in GA]

I watched Pat Buchanon this morning on Morning Joe and now I'm more confused than ever. He actually made a lot of sense. He seems to think that it's not just Chaper 11, it's Chapter 7.

 

The biggest problem I have with this is Henry Paulson's bailout. If he hadn't squandered that money and our goodwill we might be more willing to help out Detroit (I was against that bailout, though). Instead, we've lost millions of dollars so far to what? So what if Detroit' CEOs fly jets--that's a drop in the bucket compared to the lifestyle these Wall Street guys are living. If we were willing to help AIG, we should be willing to help Detroit's workers who actually *produce* something.

 

Margaret, confused

[Renee in NC]

I watched Pat Buchanon this morning on Morning Joe and now I'm more confused than ever. He actually made a lot of sense. He seems to think that it's not just Chaper 11, it's Chapter 7.

 

The biggest problem I have with this is Henry Paulson's bailout. If he hadn't squandered that money and our goodwill we might be more willing to help out Detroit (I was against that bailout, though). Instead, we've lost millions of dollars so far to what? So what if Detroit' CEOs fly jets--that's a drop in the bucket compared to the lifestyle these Wall Street guys are living. If we were willing to help AIG, we should be willing to help Detroit's workers who actually *produce* something.

 

Margaret, confused

 

That's what frustrates me even more. Money should always come with strings - otherwise, nothing changes. The jet thing *is* a drop in the bucket, but start adding in high salaries at the executive level, the inability of the Big 3 to lower production without MASSIVE costs, and a refusal to solve the problem rather than the symptoms leads to more money wasted (whether it is AIG or GM.)

 

The government has bailed companies out before, but when you see that GMAC wants to become a bank, too (like AMEX) in order to get their piece of the pie, it starts to really stink.

[WagsWife]

See, that's the thing. Some of us think we are in for at least a decade of depression come hell or high water and don't see any point in throwing away money on something that is dying. It's just delaying the catastrophe and making it worse.

 

Sorry, I have to disagree with you on this one Bill. Nothing will stop the depression. Millions will be out of work. It will be a huge disaster and our government going further into debt to prop up a dying industry isn't going to help us back out of said depression.

 

:iagree: AND, I would rather the collapse happen sooner...when it is OUR problem, not our kids. WE did this, our kids should not have to pay for it any more than they have to!

[Delighted3]

everyone said we needed this to stop a major economic depression, but guess what, they got the bailout and the average citizen is no better off and and we are in tough economic times with a long depression looming. All over, businesses are closing and people are losing their jobs. I have a lot of friends and family who work in industry associated with the car companies and none of them live in Detroit.

A couple of months ago, my brother already lost his job in middle management at a plant in OH that made parts for Ford. He had worked there for ten years and went to work one day and they laid of 10 guys with no warning or severance. So one day, he went to work making $60,000 a year and he went home on umemployment making what? $1,000 a month.

I have a friend in MO who works at the KC Ford plant. He also is in middle management (line supervisor). They are talking about shutting down the plant for the whole month of Dec. Middle management employees are not in the union. Union benefits guarantee the line workers 80% of their salaries during time of layoff, but their is nothing like that for supervisors, they may just be on unemployment for the entire month. With 5 children and it being Christmas, this is terrifying for them.

So while, I was totally against the first bailout because I felt like it really was going to be nothing, but a big spending spree for bankers, wall street, and executives and not really affect the average person in any positive way, I have mixed feeling about the car industry bailout because it really will affect average people's lives.

Joy

[NicksMama-Zack's Mama Too]

Union benefits guarantee the line workers 80% of their salaries during time of layoff....

 

Union benefits guarantee the line workers 80% of their salaries during time of layoff...

Now, it's pretty clear what is wrong with the Big 3.

 

U

A

W

 

Ugh.

K

[5kidsforME]

everyone said we needed this to stop a major economic depression, but guess what, they got the bailout and the average citizen is no better off and and we are in tough economic times with a long depression looming. All over, businesses are closing and people are losing their jobs.

 

I am pretty sure over 80% of the populationi was NOT in favor of the original bailout.

 

The average citizen knew all along that they were not going to be better off after it went through.

 

The problem is all these big companies saw how the gov't bailed out a lot of the banks and thought hey all look at all the money they are giving the banks, we want a piece of that action!

 

What is happening with the auto indusrty would have happened even if the first bailout did NOT happen. It has been heading down the drain for a LOOOOng time now.

 

What is the next industry that we will hear screaming for 'help'? All for the good of the people of course. :glare:

 

When is enough, enough?

[dirty ethel rackham]

My dh is convinced that at least one of the big 3 will have to go under, freeing up the market for smaller companies to compete by innovating. This happened with the dot com companies and ended up being great for the consumer in the end.

 

 

 

While I do not support this bailout, I don't think that this can be compared with the dot coms at all. The initial capital required to mass produce the complex machine of an automobile is staggering. The start up cost for a dot com was so small in comparison, which is why we had such an influx of new companies in such a short time.

[Sara R]

Losing an entire industry, one that will be vital to our transition to a green economy, would be a devastating and unnecessary loss.

 

Bankruptcy does not translate into losing an entire industry. The industry would come back stronger and healthier. Bankruptcy would allow them to renegotiate their obligations so they can be competitive.

[KidsHappen]

First the banks, the auto industry, what's next? We obviously need to fundementally change the way we do business in this country. I am not an econimist and I don't claim to have the answers but I have read the Fair Tax Plan and it seems like a good start to me. In the mean time, stop all this bailouts and don't even get me started on all the social programs because then it really will get political. I'll just say :banghead: to the whole mess.

[Renee in NC]

First the banks, the auto industry, what's next? We obviously need to fundementally change the way we do business in this country. I am not an econimist and I don't claim to have the answers but I have read the Fair Tax Plan and it seems like a good start to me. In the mean time, stop all this bailouts and don't even get me started on all the social programs because then it really will get political. I'll just say :banghead: to the whole mess.

 

Well, none of this has anything to do with the Fair Tax or social programs, so can we just leave those out of it? SWB said we could discuss it, but those things are off limits.

[rafiki]

.

[shell in SC]

I honestly don't know her actual income. I only know that she recently broke down and went back on government assistance so, whatever she's making, it's below the threshold for a family of 5. She's been with the company for at least 4 years now.

 

I can believe that. . .I work in a manuf. plant. . .not auto industry, but our salaries in the plant range from $9.00 up to probably about $17.00 depends on what you do and how long you've been doing it. We're not that big, so I can imagine some salaries getting pretty high up there, while there are still some making $9.00 and if the economy slows you have unscheduled shutdowns to worry about. We took a 4 day shutdown in Oct, and our usual 2 day Thanksgiving shutdown was extended to 6. Unless you got extra vacation, you don't get paid.

[AuntieM]

reportedly being offered by Chrysler.

 

My own dh is in management at the mid-range level, a field staff member employed directly by the manufacturer. He is not a union worker.

 

He has been working for Chrysler for 20 years. This month EVERY SINGLE WHITE COLLAR EMPLOYEE was offered a voluntary severance package. These packages range in value depending on the number of years of service with the company. Generally speaking, those who have only worked for the company a short period of time are getting a better deal, because they are still being offered a substantial amount of money to leave, and they are often the young, possibly single folks who do not have many (if any) children. My dh, on the other hand, has been there 20 years and would get just a bit more than those newbies if he were to take the deal. Yet his severance pay would have to be spread out thinner, with a more established homestead and four children.

 

We have heard of no company employee being offered $100,000. The highest cash offer we know of is $75,000, to be taxed at a federal tax rate of appx 26%, plus state & local taxes. That may sound like a lot of money, but if you really crunch the numbers, that is not enough to invest in a small business or support the family for all that long (and certainly not enough to do both at the same time). It is certainly no golden parachute.

 

The only people we hear that will make in the 100K's for severance are some of the UAW member plant workers. That's a whole 'nother can of worms. Suffice it to say that I personally do not believe that the conditions under which unions were born are still in existence. Between OSHA to police safety, and robotic automation, I just don't think there's any comparison to the kind of work required now verses a generation or two ago.

 

One of the highest cost factors for automakers is the requirement to build vehicles to restrictive CAFE standards. Yes, I believe they should be manufacturing environmentally responsible products, but there's a lot of costly red tape involved in the way things are currently handled.

 

The ease with which imported competition can enter the market has also hurt Detroit. The dealership distribution system probably needs to shrink. Overall, I believe it's a complex situation and you can't just point to one thing as "the problem." Not even the execs flying around on corporate jets. That's just a symptom.

 

I am a free-market kind of gal, and I opposed the $700B+ bailout. I oppose this bailout, too, to be honest (I just don't say it too loud in front of dh). I believe that restructuring and cost-cutting should take place in bankruptcy proceedings, though it's tragic to have come to this point. Still, I will be watching the outcome closely because I have to know when I might have to look for other ways to feed my family in the coming year.

[KidsHappen]

Well, none of this has anything to do with the Fair Tax or social programs, so can we just leave those out of it? SWB said we could discuss it, but those things are off limits.

 

Why would the Fair Tax Plan be political? My understanding is that it has some support from at least three parties. Honest question here. Is there something that I am missing? You can PM me so as to not co-opt or close the thread.

[Melissa in FL]

Bankruptcy does not translate into losing an entire industry. The industry would come back stronger and healthier. Bankruptcy would allow them to renegotiate their obligations so they can be competitive.

 

Just like our textile industry is so strong? There are a lot of industries that have chosen to move out of the country because it's so expensive to manufacture anything here. Between taxes (which will be raised on companies soon) and the Union demanding so much, why would an industry stay here? The only thing that has kept the big three a float the last year was their sales in other countries. Why would they stay here when they can pay pennies on the dollar for labor in another country and have tax incentives there to help their bottom line? We've lost a lot of industry here in the USA, maybe we have to give up the attitude that they'll get stronger and healthier.

Melissa

[KatieJ]

I have a solution.

 

Let the Oil companies bail out the Big 3 auto companies.

[cathmom]

But those poor oil companies don't have any money...