Bailing out the automakers. Here's an idea.

[drm604]

Probably someone will point out why this is a stupid idea, but here goes.

It strikes me that just making loans to or buying stock in automakers won't help if no one is buying their products anyway.

Instead of the government buying stock in, or making loans to, automakers, why don't they order a large number of cars, preferably plug-in hybrids. They could use them for federal, state, or local government fleets.

This way the money would help the automakers but it would also spread throughout the economy since it would require the purchase of parts and raw materials. We could require that some high percentage of materials must be purchased within the U.S.

This could help the automakers while at the same time stimulating the economy as a whole.

[HowHasItComeToThis]

1. BINGO, CITIZEN

[merwin]

2. Still doesn't solve the problem...

What is going to change after these purchases are made? They'll just make the same shitty gas guzzling cars they've always made. It will not change their habits or business practices at all.

What I think should happen is the 750 billion bailout should go to the people. Make it so the least wealthy get the biggest chunk of it, and those making over 250k get NONE of it. That would bail out our entire economy, ensure that the people responsible get NO money out of it, and help the people who need it most.

[drm604]

4. But why would they continue to make the same cars they're making now?

To fill the large order they will have to retool to make the new kind of vehicle. Once they've retooled, why go back to the old way when they're all set up to supply the efficient vehicles that people will want?

[bean fidhleir]

38. They would continue because they're ARROGANT and STUPID

They're not short of the ability to understand what's going on. It's that they don't care. They didn't get blindsided by a sudden change in the world. They had plenty time to see it coming.

It's just like it was 40-50 years ago, when the VW started chewing away at their share, opening the way to other small cars from Germany, France, Britain, and Japan. They didn't take the hint, they denied that there was anything important happening. They were still selling cars, weren't they. And yes, they were - but they were selling into their installed base, largely conservative people with a long history of buying Detroit iron. Once their base started falling off the perch, Detroit's share started dropping again. But they still clung like grim Death to their mythology. And none of the problems hurt the top managers who were the ones effing up - they were still drawing down their multi-million dollar salaries. Life was fine.

[Kalyke]

39. No they won't.

They just got a loan about a month ago to re-tool their factories to make eco-friendly cars. They know the gig is up on trucks and SUVs (but, the American public is firmly to blame for demanding those cars for years and years - even if people here won't admit that).

Their challenge, from everything I've read and seen, is to make a better hybrid while still keeping the price low enough for the average American to purchase it. Prius's are too damn expensive for most people, for example.

[cliffordu]

3. I sure the hell hope someone on the Obama team reads this K&R!!

[Winnipegosis]

5. Not a bad idead.

After all, somebody has to buy their product.

Note to American automakers: Make cars Americans actually WANT to buy.

[Kalyke]

40. They were.

Americans were demanding the big trucks and SUVs until the Summer of $5-gallon gas happened.

[drm604]

43. They were demanding them because detroit was pushing them in their advertising. n/t

[DainBramaged]

6. Uh, Government fleet sales are unfortunately very unprofitable

At the Local, State and Federal levels, fleet sales (large numbers of vehicles sold to singular customers) are very unpopular with the automakers. GM and Ford have dramatically cut back on their fleet sales to the rental companies, because not only do they make little or no profit (simply moving units does not keep a company in business) in most cases, the equipment requirements cause changes in the assembly line procedures, and time spent changing out parts from the 'standard' is very costly. Additionally, NO ONE has a plug in hybrid available yet.The Chevy Volt will not be available in any quantity until late 2010, and even then, restrictions placed on the quantity of battery systems available may limit first year production to only 6000.

GM dropped out of the police car and taxi business when production of the last rear wheel drive Impalas ended in 1997 because they could not afford to keep making one car for such limited production. The Ford police cars you may or may not notice are a dying breed also. The ONLY company offering a rear wheel drive police car now is Chrysler with the Hemi powered 300, but those are 'budget busters' because they are 20% or more expensive than previous models from Ford or Chevy, and many municipalities are wary of buying Chrysler, so they keep their antiquated Fords on the road at great expense.


The Japanese have NEVER stepped up to the plate with a police version of any of their rear wheel drive cars, because the know how unprofitable that market is.

It's all about profit, and when gas went to $4 a gallon, the most profitable vehicles in ALL of the manufacturer's line ups stopped selling.

There just isn't an easy answer to this dilemma. When the banks stop kicking people out of their homes, maybe we're on the road to recovery, but greed and outright theft put this economy where we are today.

[drm604]

7. Okay.

They could order standard hybrids to start, with the plug ins coming later. Does the battery shortage apply to the standard hybrids also?

Worse case, they could order whatever is currently being produced without any special requirements. That still has to be better than throwing money at a company that has no customers, doesn't it?

You seem to be knowledgeable about this so maybe I'm totally off base.

[DainBramaged]

16. NO NO you're not off base, only a couple of years early.

The US Government keeps vehicles for YEARS past their expected lifespan. They don't buy anything but Domestics, but their requirements are weird. Example. Air conditioning and power windows are standard in just about every GM car, truck and SUV except the most basic, economy models. But the Government wants them to go even further. Take out the air conditioning, crank windows, AM/FM mono radios, cloth INSERTS instead of cloth seats so they can sew in damaged cloth, the cheapest braking systems, and on and on.

The new generation of plug in Hybrids will use HUGE Lithium Ion battery packs instead of nickel-hydride, standard in cell phones and computers, untested in large applications, and because it's new technology for cars, VERY expensive, and GM (for once) is leading the way.

Another dumb problem. The Government mandated a couple of years ago that fleet cars be dual fuel capable (ethanol/gasoline) to "help" the ethanol industry. But now the problem is gas is cheaper than ethanol (I posted an article in the energy/environment forum about this) and gets TWICE the millage of ethanol. So, now with gas cheaper and more economical than ethanol, and NO ONE screaming for an electric solution, where do we go?

We as a Nation, have to change the way we do business. With President Elect Obama, maybe in the balance of my lifetime, we will.

Be well.

:hi:

[drm604]

20. So we do away with the goofy requirements, this is a crisis after all.

We don't have a couple of years to wait. GM will go under much sooner than that. I want to keep people employed and stimulate the economy.

While we're thinking outside the box, how about the government guaranteeing the sale of X number of vehicles. They would then make VERY reasonable loans available to consumers with the goal of selling all of the vehicles. They would then purchase any that are not sold in order to meet the guarantee.

It has to be better than just throwing money at the companies.

[DainBramaged]

24. Well, some of that money goes to finishing the Volt and fuel cell

technologies, which have been burning huge amounts of resources. I keep referring back to how Toyota became the 'king' of hybrids. They didn't finance the Prius, the Japanese government did, and the retiring Toyota USA President confirmed that a coupe of years ago. It cost BILLIONS to get the Hybrids up and running a decade ago, and it costs more to go to the next level now.

I don't have the solutions, but if GM goes down, over 3,000,000 people directly and indirectly connected to the auto industry from parts suppliers to dealers, to insurance firms, to after-market parts suppliers to the diner down the street from their manufacturing plants go with them.

It is a scary scary scenario, and I think the small amount of money they require to stay solvent is far better spent than the theft from the treasury of the billions Booshe threw at his buddies on Wall Street.

[drm604]

28. No argument.

But the money needs to be used for something productive beyond finishing the Volt and the fuel cell. Will the work required to finish the volt employ 3,000,000 people? Somehow I doubt it. Keeping the company afloat while idling all of those workers isn't much better than throwing money at Wall Street.

[CRF450]

17. Current hybrids are in NO WAY up to the task in police work.

A prius and current hybrids on regular police duty would fall apart in no time. Not only that but there slow as hell, when they are called to an emergency time cannot be waisted because of an underpowered car.

[DainBramaged]

19. Hello my friend, it's late for BOTH of us!

:hi: :hi: :hi: :hi: :hi: :yourock:

[CRF450]

22. Yeah, friggin 3:30 in the morning here because I havent worked for a month.

[DainBramaged]

25. Oh shit man I am sorry.

:hug:

[drm604]

31. Very sorry to hear that.

I'm out of work myself. I have an interview Monday, so I'm keeping my fingers crossed.

[CRF450]

34. I'm only out of work because my seasonal summer jobs are over.

Right now I'm on un-employment and looking for work but I cant find shit. I can easily get a job at a fast food joint, but 1. I refuse to work a shitty fast food or resturant job. And 2. I'm getting way more in unemployment than I would get in $7/hour part time job :D

Untill next April, the only thing I can probably get is working for UPS again as a driver helper for the Christmas season. Did that last year, and it wasent bad at all, only lasts a few weeks though...

[drm604]

36. I work in IT so my chances are slightly better than most.

I've had a few interviews and I'm getting phone calls nearly every day so I have some hope.

[drm604]

21. They could also make whatever is needed by police forces. n/t

[DainBramaged]

27. But they still need to make a profit, and they currently don't

have anything rear wheel drive police capable (unless the new 550HP, $75,000 limited production Cadillac CTS-V could be 'de-optioned' LOL).

[drm604]

29. Okay. So who says that we have to make police vehicles?

Or, if we do make them then pay enough to at least cover all costs. That will keep people employed and profits can be made on other types of vehicles.

[me b zola]

42. The military branches each have their own fleet of civilian vehicles

Sedans, pickups, flatbeds, etc. Many of them are old and on their last leg. This could be a good match.

[AdHocSolver]

15. The purpose of this plan is not to give GM big profits, but to put Americans to work.

If GM management doesn't want to pursue this business, then offer the contract to one of the other auto companies with the same stipulations that the vehicles be fuel efficient and they must use American labor.

[DainBramaged]

18. What business? I have a pretty good idea as to what business they are pursuing.

http://www.chevrolet.com/fuelsolutions/

Read here. Get back to me wth any questions.

[JVS]

41. Hey, if the big three doesn't want to make cars, that can be arranged.

[drm604]

8. I submitted this idea to change.gov.

If DainBramaged is correct in his assessment, and he does seem to be knowledgeable, then at worst I wasted my time. But maybe it will give them a starting point for some ideas. (That's if anybody important actually reads it, which is probably unlikely.)

[TexasObserver]

9. That's exactly the kind of action needed. Great idea.

We have to find ways to create DEMAND for manufacturing and other industries. Government programs can do that.

I greatly favor immediate funding of a wide array of long needed infrastructure projects. We're talking about levees, dams, roads, highways, overpasses, railroad crossings, roadside parks, bridges and national parks in every community in America. Those programs mean the concrete, metal and construction industries put idle people to work building things the country really needs. All those jobs create demand for others to service those people.

Get Americans working, get workers a paycheck, and the economy will right itself.

[drm604]

10. If you like the idea, then please recommend this thread.

Hopefully someone with connections will see it.

[TexasObserver]

30. I did.

[drm604]

26. Exactly.

Going by some of the responses here from obviously knowledgeable people, my idea is not perfect. But surely something like it might work.

[AdHocSolver]

11. Just giving GM a bunch of money is "trickle down" economics. Your idea is the more intelligent plan.

As another poster pointed out, if given a "blank check" bailout, GM will just use the infusion of money to boost their stock price, and continue with the same failed policies that got them into the mess.

The problem with GM has been greedy, incompetent management. Even as the technology improved and gasoline prices steadily increased, GM management continued to manufacture and promote the sale of mediocre-quality, over-sized gas guzzlers. The top executives should all be fired and not allowed to collect one dime of any "bailout" package.

The purchase of these fuel-efficient, "green" vehicles should also include the stipulation that they contain 80 percent American-made content and be assembled in the U.S. by American citizens. If GM offshores the work, they should be fined and their executives liable for breech of contract.

All economic activity is demand driven. The bailout schemes are nothing more than a disguised version of "supply side", "trickle-down", "voodoo" economics.

Your suggestion is the first intelligent one for helping Americans and the "real" economy.

[drm604]

12. Anyone who thinks this is a good idea...

please kick and recommend it, and submit the idea to change.gov on this page: http://change.gov/page/s/yourvision

Maybe if enough of us submit it, the idea will get to someone important.

[Chulanowa]

13. Bingo

A corporate version of the new deal. "You do work for me, I give you money for your time and costs. You stay afloat, your employees eat, and the economy is stimulated like a drunk prom date"

[petgoat]

14. Let's have UAW buy GM. If they make good cars, then let the feds buy them. nt

[drm604]

23. Sounds good if UAW can do that. n/t

[JohnnyRingo]

32. That's the way government used to work.

through all the wars and economic downturns, the US bureaucrats would always look to companies that were disadvantaged. Whether it was American Motors, Studebaker, or Willys/Nash, the government would help the little guy with a contract that spurred production. This used to spawn innovation and expansion.

Since then, the big corporations swallowed up the little guys and claimed the government windfalls for themselves. With no domestic competitors, the "big three" became complacent with the status quo:

"Just build gas guzzling SUVs, and pay the stockholders."

[DU GrovelBot]

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[randr]

35. Bail outs to the auto industry should be tied to emission reduction

and fuel efficiency.
Reward good citizenship!
Same principle could be applied to all government bail out programs.

[drm604]

37. Yes.

Whether or not they use my idea, any bailout should be conditional on emission reduction and efficiency. There should also be requirements that the vehicles be manufactured in the U.S. with U.S. labor and that some large percentage of parts and raw materials be provided by U.S. labor.

[Blaze Diem]

44. Actually Obama did refer to this same idea in his speech (part) as to making our

government more energy efficient. Believing that cutting excess at the top is a great way to save on tax dollars as well as fuel & ozone efficiency.
-------------
don't ask for a link cuz I cannot cite the time or place of this particular speech.