I agree with Meadmaker's analysis. What is likely to happen is that at least ONE of the Detroit majors has to sell its major assets--at fire sale prices--to an overseas manufacturing conglomerate. The car line(s) are retooled to match the international market and the new US market, and within a year or so, the new models of the old marque are available. Because the assets are sold, not the company itself, the old UAW contracts and pensions liabilities are not the responsibility of the new owner, and that in and of itself will pretty much cover the issue of making a profit.
I am amazed by people who squak about the impact of the reduced spending of the laid-off car plant workers and supplier workers (they would undoubtedly cut back, but likely stay in business)--but blithely assume that the billions of dollars from the government would just be pumped out of the magic money well in DC. That money is, and can only be, from tax dollars; tax dollars collected from businesses and individuals who have done a better job of facing the facts than GM and friends.
There's also the interesting issue of the vastly overpopulated dealer market. Apparently, car dealerships have some special protections in state laws all over the US, such that they are not subject to the normal market pressures. A quick check via Google reveals TEN GM dealers in the Greater Seattle area alone. And that's just new car dealers on the official GM dealer site! Contrast this with 5 Subaru dealers, and 6 VW dealers. Does GM really sell that many more cars?
The other issue is that US carmakers have been 'priming the pump' by providing big rebates and incentives, which are reimburseable to the dealerships--and GM has postponed making those payments. So the local dealers are the ones absorbing that cost at the moment -- GM central is in worse shape than is perhaps realized.
As another post noted above, the US automakers have been ignoring market trends for decades. I freely acknowledge that the refusal of the US Government to include SUVs in the automobile mpg requirements is part of the issue, but a smart business would have not waited for the regulatory issue before moving their production towards the smart longer-term market. They would be creating more quality vehicles, and fewer DVD fold-down screens on clunkers.
I haven't bought a US brand car in my adult life. I've had too many object lessons in my parents' and friends' cars. I don't have a whole lot of sympathy for the people who are 'in the bucket' on their SUVs and big pickups that never seen anything more uncivilized than a school parking lot. I'm sorry for the people who are going to get hit by the cycle of consolidation and reorganization; but as a Boeing brat who grew up when "Will the last person leaving Seattle please turn out the lights?" was an actual billboard, I've seen that people adapt and survive.
Nobody has a right to make the taxpayers support them in an untenable business, whether they are the CEO or the guy pushing rivets. The world grows and changes, and what is a viable business changes, too. There are some winners and losers in the short-term, but in the long term, it's a win for everyone to let the more effective, efficient, smart and flexible manufacturers produce goods that will meet people's needs.
No bailout! I can see there being a role for 'bridge loans' while a bankruptcy or piecemeal sale is being worked through--specifically, to keep the suppliers who support multiple lines of car manufacturers solvent as they adjust to not having a big customer pay its bills--but I don't want to reward Detroit's auto industry for their short-sightedness. I don't want to have them saved from the mistake of believing that they were right to spend their money on lobbying Congress for special treatment, instead of investing in R&D. I don't think car dealers or line workers at the plants are any more entitled to their jobs than the people who worked for phonograph manufacturers or gas streetlight servicemen. Technology marches on; the market changes. Old firms go under, or change; new firms fill new needs.
Just my thoughts, MK
I am amazed by people who squak about the impact of the reduced spending of the laid-off car plant workers and supplier workers (they would undoubtedly cut back, but likely stay in business)--but blithely assume that the billions of dollars from the government would just be pumped out of the magic money well in DC. That money is, and can only be, from tax dollars; tax dollars collected from businesses and individuals who have done a better job of facing the facts than GM and friends.
There's also the interesting issue of the vastly overpopulated dealer market. Apparently, car dealerships have some special protections in state laws all over the US, such that they are not subject to the normal market pressures. A quick check via Google reveals TEN GM dealers in the Greater Seattle area alone. And that's just new car dealers on the official GM dealer site! Contrast this with 5 Subaru dealers, and 6 VW dealers. Does GM really sell that many more cars?
The other issue is that US carmakers have been 'priming the pump' by providing big rebates and incentives, which are reimburseable to the dealerships--and GM has postponed making those payments. So the local dealers are the ones absorbing that cost at the moment -- GM central is in worse shape than is perhaps realized.
As another post noted above, the US automakers have been ignoring market trends for decades. I freely acknowledge that the refusal of the US Government to include SUVs in the automobile mpg requirements is part of the issue, but a smart business would have not waited for the regulatory issue before moving their production towards the smart longer-term market. They would be creating more quality vehicles, and fewer DVD fold-down screens on clunkers.
I haven't bought a US brand car in my adult life. I've had too many object lessons in my parents' and friends' cars. I don't have a whole lot of sympathy for the people who are 'in the bucket' on their SUVs and big pickups that never seen anything more uncivilized than a school parking lot. I'm sorry for the people who are going to get hit by the cycle of consolidation and reorganization; but as a Boeing brat who grew up when "Will the last person leaving Seattle please turn out the lights?" was an actual billboard, I've seen that people adapt and survive.
Nobody has a right to make the taxpayers support them in an untenable business, whether they are the CEO or the guy pushing rivets. The world grows and changes, and what is a viable business changes, too. There are some winners and losers in the short-term, but in the long term, it's a win for everyone to let the more effective, efficient, smart and flexible manufacturers produce goods that will meet people's needs.
No bailout! I can see there being a role for 'bridge loans' while a bankruptcy or piecemeal sale is being worked through--specifically, to keep the suppliers who support multiple lines of car manufacturers solvent as they adjust to not having a big customer pay its bills--but I don't want to reward Detroit's auto industry for their short-sightedness. I don't want to have them saved from the mistake of believing that they were right to spend their money on lobbying Congress for special treatment, instead of investing in R&D. I don't think car dealers or line workers at the plants are any more entitled to their jobs than the people who worked for phonograph manufacturers or gas streetlight servicemen. Technology marches on; the market changes. Old firms go under, or change; new firms fill new needs.
Just my thoughts, MK
