What Happens If The Domestic Auto Industry Collapses? The Hard Facts

[Better Believe It]

Run time: 03:58 https://www.youtube.com/watch?v=2rfM4n1gdjM   Posted on YouTube: November 17, 2008 By YouTube Member: Views on YouTube: 0   Posted on DU: November 20, 2008 By DU Member: Better Believe It Views on DU: 2810

 

[FedUpWithIt All]

1. Damn. n/t

[aviationpm]

2. Well we better prepare for this...

because forking over money to poorly managed companies will only delay their demise. The CEO's all flew private jets to DC to beg for money instead of saving money by flying first class commercially... that is poor management.

On edit: As much as I would love an American small car, I can't think of ONE I would like when I could get something much safer and of better quality for thousands less.

[bjobotts]

16. You won't be able to buy a foreign car with no economy

[aviationpm]

17. The one I have will last n/t.

[bjobotts]

18. You can't prepare for this. A .3% drop in ADP caused our current economy crisis

[bjobotts]

19. this would amount in a 4% drop. $-.3 = 3.7% worse than now. That's 370%

worse than now.

[4lbs]

3. Paul Krugman was saying some of this on his appearance today on Rachel Maddow/Alison Stewart.

He said that as much as we believe in the truth that the management of the Big 3 over the past decade have really screwed things up for the American auto industry, we can't just afford to let them fail or even go bankrupt.

Punishing millions of laborers for the stupidity of a few dozen people at the top won't solve anything.

We must bail them out, but make management change greatly.

[Better Believe It]

4. That's only half the story.

And they aren't even talk about it's impact on the stock market, what remains of 401K's. etc., A slippery slope into a full-scale depression.

During the great depression in the 1930's the auto industry survived and recovered. Will the politicians let it collapse this time around?

Obama needs to speak out loudly and clearly on this right now .... yesterday.

[Terry_M]

5. Eh

This stretches things a bit too far. Sure the auto industry takes in a lot of steel, copper, etc, but if the US companies went down, presumably the Japanese companies would be purchasing more of those same products to make up for the increase in supply they will need... Unless a large chunk of the natural resources end up going to over-supply, those particular suppliers wouldn't really feel much of an impact. The same can be said of dealerships, etc unless again there is over-supply. I don't think it's a good idea to keep paying companies to make things people don't need / won't buy in general.

I'm not disagreeing with the general message, just disagreeing with the video where it stretches things too far.

[NMDemDist2]

9. Nissan and Toyota are crying the blues too

check out this article from the NYT

LONG BEACH, Calif. — Gleaming new Mercedes cars roll one by one out of a huge container ship here and onto a pier. Ordinarily the cars would be loaded on trucks within hours, destined for dealerships around the country. But these are not ordinary times.

For now, the port itself is the destination. Unwelcome by dealers and buyers, thousands of cars worth tens of millions of dollars are being warehoused on increasingly crowded port property.

And for the first time, Mercedes-Benz, Toyota, and Nissan have each asked to lease space from the port for these orphan vehicles. They are turning dozens of acres of the nation’s second-largest container port into a parking lot, creating a vivid picture of a paralyzed auto business and an economy in peril.......

snippity....

For its part, Toyota says the higher-than-usual inventories at the Long Beach port are a result of shrinking demand, particularly in Southern California, which is one of its biggest markets. The company declined to say how many cars were at the port or how long they would be warehoused.

Toyota has adjusted its output to reflect falling demand, said Sona Iliffe-Moon, a Toyota spokeswoman.

Ms. Wasil said Nissan, whose cars arrive through the port of Los Angeles, sought a deal with Long Beach to park its overflow vehicles there. Mercedes struck a deal to use more acres just a few weeks ago, she said.

read it all here... http://www.nytimes.com/2008/11/19/business/economy/19ports.html?_r=1&adxnnlx=1227106919-XXpehRAF01IwhrQLAufDdg&pagewanted=all

[Terry_M]

10. So there is a large amount of over-supply

in the industry as a whole. Simply throwing money at the big companies won't really fix that, either way the suppliers will suffer because of lack of demand, and the production lines would have to slow down, so there would be job cuts anyway. The only way to really fix that would be to instead throw money at people to have them buy cars, but that's not a good solution either with the melting polar icecaps and such...

[tclambert]

24. No, no, no. This is more fallout from the meltdown in the financial sector.

People buy cars with credit. The October sales figures for ALL auto companies stank. Toyota was down 26%. Chrysler, GM, and Ford even more. The American companies are making themselves competitive with the foreign companies. In two years, they will have them licked. While they were busy spending a fortune on restructuring and fixing their other problems, this new problem, NOT of their making, hit and caused sales to plummet.

And it is not really an over-supply. The usual scenario is that during tough economic times, car sales go down. People delay new car purchases. When the economy recovers, car sales boom as the latent demand drives customers to showrooms. What seems like an over-supply during a downturn helps deal with what will seem like a shortage during boom times. The effects of the economy on car companies is amplified.

[prostock69]

25. You haven't considered the racing industry and all the tentacles

is has as well. NHRA, IHRA, NASCAR, etc. all employ thousands of individuals. There are even more people, such as my husband, who builds racing engines for a living. There are thousands of these shops and other type of racing-related shops around the country. What about about all the colleges that employ thousands of professors that teach automotive/racing technology. If GM goes down, the racing industry will die. So you are looking at close to a million jobs inside the racing industry alone that would be lost that no one has talked about.

[safeinOhio]

26. Not to worry

Markets are GOD. Horses will take over at the track and on the roads. No one to blame on the quality of you steed. No more CEOs to screw you, only your friendly used horse salesperson. The free market ALWAYS works.
Me, I think the hand is invisible because it is not there. Ok, I'm not a person of faith.

[prostock69]

27. I'm not a person of faith either. However, we are considering....

converting to the Amish faith. (We live in Ohio as well) Look at all the perks: Awesome homecooked food, beautiful dresses and bonnets. Never having to shave. (both sexes). Don't have to do hair or makeup. No taxes. Great neighbors who are always there if you need a barn raised. I'll just have to pretend to be a radical worshiper of God. I really think I could do this. :)

[sjdnb]

6. Given the billions blown on Iraq rebuilding and Wall Street bailouts

while Iraqis sit on their reserves and Wall Street execs spend hundreds of thousands on executive 'get aways' aka seminars ... the fact that anyone is up in arms that a couple of auto execs flew on private planes is laughable.

We spend billions upon billions subsidizing greedy corporations and the Iraqi fiasco, but bitch about a few billion to save 4 million jobs for hard working Americans. It might even, if structured properly, make us a leader in the manufacturing of alternatively fueled transportation. Have a little faith in America.

[Terry_M]

7. "If Structured Properly"

At this point, I have as much faith in congress putting something together that works in the way you describe as the faith I have in that they did the 700 billion $ bailout for the banks right.

[DAMANgoldberg]

13. Two Words...

Pre-packaged Bankruptcy.

Chapter 11 is filed with GM and Chrysler. The US is the Debtor-in-financing agent. Management will be replaced, labor contracts reworked, and a business plan revealed that is exclusively GREEN with existing technologies, some of which are overseas right now.

[bjobotts]

20. Roll back the Bush and Reagan tax breaks on the wealthy would pay for it

[12string]

29. wrong

people won't buy from a carmaker in bankruptcy.The automakers are asking for a loan.If they survive America just might make it also.The consequences if we let them go under would likely be a death knell for us.The benefits outweigh the risk substantially.They only want to BORROW the amount that is forever wasted in Iraq every ten fucking weeks.If Congress was really concerned about being good stewards of taxpayer money that heist would have been stopped long ago.I am so sick of idiots.

[DaDeacon]

32. Wrong ? Sorry speak up ...

The idea that Americans won't buy cheep cars is crazy . That's what people WILL buy; a $ 9000 or $7000 car made in the USA that gets great gas millage from a company only making 3 to 6 models sells very well ( re: Hyundai). The big three need to learn how to do. Bankruptcy will make the big three really think about what products they can offer. They will always have a high end or sports brand but the standard family sedan can be sold for much cheaper than $24, 125

[Fiendish Thingy]

8. Well, this clip appears to be the work of GM's lobbyists...

but it's still a serious problem that can't be ignored. I think loans with not just strings, but Golden Gate bridge sized steel cables attached (i.e. regulations about minimum MPG, no job outsourcing, etc) would be in order.

[bjobotts]

21. The info in this clip is from the US Chamber of Congress report

[bjobotts]

22. driftglass has the print copy and why we can't let them fail.

[bjobotts]

23. In fact here's the report below:

From drift glass…by the U.S. Chamber of Commerce:
“Directly and indirectly, the economic breadth and contribution of the U.S. automotive industry is deep and far reaching across the country. U.S. automakers directly employ approximately 355,000 American workers and indirectly employ nearly 5 million additional jobs through related industries that are dependent on auto manufacturing, sales, and related activities. Over the last two decades, the automotive industry has invested nearly a quarter of a trillion dollars in the U.S. and is among this country’s top industries for R&D spending. Automakers also are among the largest purchasers of U.S.-manufactured steel, aluminum, iron, copper, plastics, rubber, electronics, and computer chips.”


"...Manufacturing directly employs 14 million America and supports 8 million more.

Each manufacturing job supports as many as four other jobs, providing a boost to local economies. For example, every 100 steel or every 100 auto jobs create between 400 and 500 new jobs in the rest of the economy. This contrasts with the retail sector, where every 100 jobs generate 94 new jobs elsewhere, and the personal and service sectors, where 100 jobs create 147 new jobs.


Well, there are a lot of good, compassionate reasons for picking those three, but if your goal is to save the Middle Class from extinction, then you…

Enact health care reform…to take the burden of wildly-overpriced employer-based health-care off the backs of American business, in order to make them more competitive in the global marketplace.

Enact education reform…because the days of a million high-school drop outs making a Middle Class living pounding anvils and running lathes is over; because the new good jobs (and the prosperity of the nation) depends entirely on a skilled and adaptable labor force.

Pour real money into a green energy portfolio…first, because tethering your manufacturing and distribution systems to a variable like oil which is controlled by hostile foreign powers is suicidal. Second, because somebody’s gonna have to actually man-u-fac-ture the solar cells, fuels cells, windmills and so forth.

To pull us back from the feudal abyss, all these pistons (and more) need to be firing harmoniously in a 21st industrial engine powered by manufacturing.

Yes, the Big Three automakers have been run by short-sighted dolts with ridiculous business models.

So has the financial sector.
So shut up and fix them already..."

Republicans have no trouble bailing out AIG etc but the auto companies have "Unions" they would love to see destroyed.

Go check out what driftglass says about it at www.driftglass.blogspot.com

[Better Believe It]

31. And supported by the auto workers. They don't count?

[baldguy]

11. And what happens if we hand over $25B, and they continue with their inept management?

SAME THING.

[Better Believe It]

33. They Are Selling Fewer Cars Because Of The Economic Crisis

and they can't get loans from banks. Meanwhile the European car makers will be getting a much bigger loan to keep them in business.

Their has been little or no opposition in Washington to giving over 100 billion dollars (that will never be paid back to AIG and over 200 billion dollars to banks (that refuse to use it to make loans and won't be paid back) while suddenly Congress is all upset about loaning 25 billion to save the entire domestic auto industry from collapse.

So what happens if the bridge loan doesn't work? Well, we lose millions of jobs which is guaranteed to happen if the auto industry doesn't get assistance.

But, look at the good side. What you'll have left is a totally non-union industry in auto and that can be a huge step toward achieving the employers central goal .... a "union free nation" taking us back to the early days of "do whatever the fu*k you please" free market capitalism.

Is that what you want?

[baldguy]

37. And what was their excuse 6 months ago? or 12? or 5 or 10 yrs ago?

The world market share for American autos has been declining for 40 yrs - and industry execs not only have done nothing to alleviate that trend, they've accelerated it.

[Better Believe It]

38. You don't know very much about the auto industry, next to nothing actually

[baldguy]

39. OH? Other than having worked in it, along with my brother, my father & my grandfather?

Statements like that indicate to me that you haven't been paying attention to what the auto makers have actually been doing for the last 30 yrs. Or are you just one of those fools who believe that corporate suits are always right & working stiffs are always wrong - no matter what?

[Better Believe It]

40. So What? That Doesn't Make You An Authority Or Expert

I'm a former UAW member, had friends who worked in the auto industry and have been a union member for over 40 years.

I also knew a lot of dumbshits and company minded men in the UAW and other unions who believed corporate propaganda.

However, the mere fact that you worked in an industry does not automatically make you an authority in that industry.

So do you favor "bailing out" the automakers or do you want to see them go under?

I support the 25 billion dollar "bailout". That's what the Democrats and Republicans vote to spend for the Iraq war every two months!

[baldguy]

41. Not without major concessions by the manufacturers.

Bring manufacturing jobs home. Drastically increase fuel efficiency standards. Offer electric & hybrid options for every model. Offer fewer petroleum fueled vehicles. Build cars that can compete on the world market. And make them spend their advertising money to generate demand for them.

All these things are well within their capabilities - and are required to keep them alive. If we've determined as a nation that a domestic manufacturing capability is necessary to maintain our historic dominance in the world economically, politically & militarily - and I think we have - then those manufacturers have a duty to maintain that capability. By allowing their companies to stagnate & fail - which they've been doing for decades, not just in the last month or two - they've abdicated that responsibility.

Without real changes in the manner in which the auto manufacturers do business, the bailout will be just another corporate extortion scam.

[Britethorn]

12. Lies

Bottom line is that Management in Detroit SUCKS and refuses to take any responsibility for driving the industry into a ditch.

[Better Believe It]

34. That'll Free Up An Extra 25 billion for the Iraq war! Whoopppeee!

[Raston]

14. You guys are actually paying attention to this?!

It's obviously intended to frighten you into supporting the bailout package - c'mon, we just got through the election propaganda, I'd figure you can all spot it in a nanosecond by now.

Of course it'll have a ripple, think about how it happened - huge companies move into broke little towns to offer jobs (while dumping their waste into the local river) and over time the towns are, for the most part, able to live above poverty line. These huge companies close a factory and OH NO! They're right back where they started, except that now their environment's trashed and the whole town realizes it's been used up and put away wet.

LET THEM DIE, for pete's sake! Have you seen the business decisions they've been making? Have you driven a Ford in the last 10 years?! What pieces of junk. The first obvious tell in this video is that they say that these companies are failing despite advances in the auto industry - my Honda is 10 years old and gets 40 miles to the gallon.

Of course their businesses are failing, but how much do you want to bet their CEO's and boards of directors aren't?

Don't let them hold our towns by the balls. If anybody, give the TOWNS the bailout packages and let these companies go straight to h311.

[Better Believe It]

35. You Sound Like A Republican Free Market Lobbyist For Foreign Auto Makers

who will be getting over 50 billion dollars in loans from European governments!

That will help them to destroy the domestic auto industry in the United States.

[bjobotts]

15. A collapse would mean the end of our economy and a greater depression

[ccinamon]

28. If the big 3 weren't around....wouldn't it be easier for some of the

newer type cars currently being developed (usually more fuel efficient, using alternative fuel, etc) by entrepreneurs have a better chance of being successful?

I think if the big 3 lowered all the salaries of the board of directors and the top officers, that would be a big start in the right direction....then come back and ask for help.

[Better Believe It]

36. No Because the banks and government won't loan them the tens of billions of dollars needed

to build the necessary facilities. Besides, it appears that Congress (Democrats & Republicans) have decided to let the European automakers have a monopoly in production and sales in the United States.

[LatteLibertine]

30. I'm so scared

someone hold me. :)

Let China buy 'em. They will want to sell them back in under 10 years after dumping money down that hole.