Comments on: The Auto Bailout

By: Ivan Ivanovich

Ivan Ivanovich — Thu, 04 Dec 2008 13:10:30 +0000

Hi all

I’m loving the show going on in DC. We had the Auto Execs there a few weeks ago asking for $25B and all our elected reps could talk about was private airplanes. So this time the AEs drove from Detroit in hybrid flex-fuel cars and asked for $34B. ROTFLMAO! The only thing they missed was wearing white cowboy hats to the hearings! Maybe when the Feds chough up the money then they will start talking about the value and quality of mother, apple pie and Chevrolet?

By: Ivan Ivanovich

Ivan Ivanovich — Tue, 02 Dec 2008 17:47:12 +0000

MM
Agreed!
I once met a fellow through a Townhall meetup and he complained about corporate wellfare. I asked if he meant tax breaks and he said “Yes. Why should corporations get tax breaks when they relocate?” I explained to him that a corporation is just a human invention of the mind and as such can not actualy pay taxes. It is the people who pay and in the case of corporate taxes it is the customers, employees, and stock holders who pay. Guess what? This so called conservative didn’t want to talk anymore:>) Something tells me he voted for Obama.

By: Mountain Man

Mountain Man — Tue, 02 Dec 2008 16:29:52 +0000

“Is it poor planning, or the sick-making confiscatory taxation schemes that leave companies with no wherewithal to ride out lean times?” The answer is yes. “The tax system is immoral and bankrupting us all. Get rid of tax already.” Agreed.

By: Ivan Ivanovich

Ivan Ivanovich — Tue, 02 Dec 2008 14:10:04 +0000

MM
When you think about economic Darwinism please understand that there are living things in this world that have been created by man for man. These entities, such as cows and sheep, would never survive in a world without an extensive human support system that has been around for thousands of years. Autos are somewhat similar. In only 100 years, autos had become ubiquitous and cheap gas made the “commute” a common theme for comedic monologues. The superhighways built in the 50’s changed the way we think about far away places. Just 10 years ago the question changed from “What kind of a car do you have?” to “What kind of SUV do you have?”. Then all of a sudden $4 gas! Now, it’s as if the whole country has converted to Hinduism, cows are scared, and you say “Let the cattle ranchers and meat packers go broke!”

By: AMAI

AMAI — Tue, 02 Dec 2008 11:56:01 +0000

Is it poor planning, or the sick-making confiscatory taxation schemes that leave companies with no wherewithal to ride out lean times? The tax system is immoral and bankrupting us all. Get rid of tax already.

By: Mountain Man

Mountain Man — Tue, 02 Dec 2008 00:08:01 +0000

I believe in economic darwinism. Let the fittest survive.

Not intending to bash automakers, but how healthy can a business be where they are bankrupt after only two or three months? It’s poor planning to not have cash reserves and a contingency paln for lean times.

I ad the same opinion when national airlines started going under a couple of years ago. Seems to me that part of proper management includes these kinds of things.

Also, it seems ironic to me that automakers are being criticized by senators and congressmen who are themselves presiding over this wasteful, bloated, fraud-ridden federal government.

By: Ivan Ivanovich

Ivan Ivanovich — Mon, 01 Dec 2008 21:51:49 +0000

Mickey
Yes, I think we agree. I own a Buick and a Dodge truck. Back in 94, I put a production line into Ford to build the 5.4 V-8 and 6.8L V-10. I can’t imagine they are building many V-10′s now. People were buying them like crazy back them.
That reminds me also of what Chrysler did with the 3.9 V-6. They had a line for making the old 318 V-8. Rather than build a new line they simply ran the V-6 down the V-8 line and then cut off the first two cylinders. It was not a perfect solution but it worked in that case. It is quite easy to downsize an engine a little bit by reducing the size of the cylinder or making the stroke on the crankshaft a little less, but major changes take time. Giving the auto companies a 5 year reprieve on CAFE would help some and cost very little.

By: Mickey G

Mickey G — Mon, 01 Dec 2008 20:14:25 +0000

Ivan, I think we are on the same wave length. Automakers did build what we wanted…witness my SUV. Market changed both in terms of ability to pay for the vehicle and ability to pay to drive it leaving those with a very high mix of both expensive and expensive to drive vehicles in the product line hung out to dry. Changing the mix is both expensive and time consuming guaranteeing that the pain is long term rather than a short pain followed by recovery.

By: Ivan Ivanovich

Ivan Ivanovich — Mon, 01 Dec 2008 16:06:15 +0000

Mickey

I’m not advocating a bail out! I simply want people to stop bashing the Detroit auto companies. Speaking and writing about them in a positive way would go a long way toward keeping this vital industry in America. The Chrysler loan helped them come out of a bad situation, but it was Lee Iacocca with his $1 per year salary, that spoke positively and brought the company back from the brink.

By: Mickey G

Mickey G — Mon, 01 Dec 2008 15:10:04 +0000

Ivan, there is no good reason to have bailed out AIG, however being stupid and continuing to be stupid are two different things. The collapse of AIG and the automakers does not guarantee that they go away rather it allows a chance to retarget their products, significantly reduce costs, improve quality, change business practices, and get rid of dead wood (particularly at the top since the golden parachutes are not protected in a bankruptcy). Those that survive the process often become stronger witness Chrysler’s journey into bankruptcy and exit from the process. Unfortunately Chrysler forgot all they learned.

Rescuing the big 3 without the improvement steps mentioned in my notes above will simply prove the comments by AreYouKiddingMe to be an absolute instead of a theory.