Good post! Even with tariffs, foreign comanies will continue to expand their non union manufacturing presence in the US, eventually putting UAW plants out of business. US companies are moving more and more work to Mexico, where the much lower overall wage rates allow them to be competitive. The Ford Fusion and the new Fiesta will be manufctured there. Volkswagen has done this for years; at one time they had a plant in Westmoreland, Pennsylvania, and closed it because they could get neither the cost or the quality right.

In other words, I think union car plants in the US and Canada are doomed.

Let me suggest that there are two questions here rather than one.

The first and most often discussed is whether taxpayers should be exposed to any form of government bailout or loan for the Big Three. I'd contend that asking this question and demand very specific answers isn't at all a critique of the the domestic industry but rather a healthy debate about the roll of Government. In fact, there should have been a more rigorous debate on this point before we tossed a trillion dollars at the financial services industry with almost no planning and oversight. I would personally contend that there are times when a "deft touch" by the Government is a good thing, but I would also suggest that we need to do this only ocassionally and then with great trepidation.

Presuming we do choose to walk over this line of Government engagement in private commerce, you should then always ask the second question: Do we understand the true cost of NOT interfering?

In the case of the Big Three, it's not clear to me that we understand the price of success or the price of failure, but I have a gut feeling that the sum of all the direct and indirect costs associated with allowing them to fail may be higher then the costs of propping them up.

That's hardly a scientific analysis, mind you, and it's probably a very bad idea to spend billions on a gut feel, but there it is.

Yes, this is going to cost a LOT of money, but do we understand the costs of we don't do it?

Just a short feedback. YES we should...... but ensure the conditions are set to improve the overall position of these manufacturers. The US should preserve their manufacturing capability..

not unless the union workers agree to work for less like the rest of the country has had to do in recent years . if they do not agree then let them do without and draw unemployment for awahile . in my hometown a former big three automaker sold the local factory and guess what ? the new owner only agreed to pay the employees half of what they were making or else . the big three's benefit package is just totally outrageous in todays time .i drive a american ford product , but give me a brake ! the gravy train needs to stop .

What really sets me off is that the governmentmapparently jumped through hoops to bail out the banks, whose bad decisions and poor management brought about the majority of their problems, and yet when our automakers go to them, they have to meet all kinds of requirements just to get congress to think about it. When you look at the bigger picture of how many potential jobs could be affected or even lost, it amazes me the potential consequences of not helping them. And, If the big 3 go under, then who gets the business for future auto sales in this country? Foreign investors own enough of this country as it is. We should be investing in our own country and our own workers to bring us out of this, and take us back to the lead economically, that this country spent most the last century in. We've done this to ourselves, sadly enough, but we can dig ourselves out.

I think a bailout has to occur, enough Americans have lost their jobs, without adding a few hundred thousand more.
This, to me, is typical of American automative thinking. There are no "long term thinkers" around anymore. How easy it would have been for Detroit to buy a Toyota Camry, take it apart a bolt at a time, and see why it was Americas best selling and reliable car. Instead, Detroit, thinking short term, continued to make huge trucks and count their quarterly profits, instead of looking a bit further down the road and asking themselves the "what if" question regarding the future cost of gasoline.
The GMC dealer a mile from my home is a ghost town, and they have no one to blame but themselves. I think a lifeline is in order, but only with huge strings attached and criteria that needs to be met before their second payment is made.

Have the Detroit auto makers planned to cut their sponsorship of NASCAR yet? I don't want to indirectly subsidize NASCAR with our tax dollars any more than I want to subsidize the failures or Chrysler and General Motors.

I hope NASCAR can survive without sponsorship from Detroit, but if they can't, say goodbye to NASCAR.

Sad to say, the survival of America depends on keeping these manufacturing dinosaurs alive, no matter how poorly they may have been operated in the past; it is a national security issue. Imagine how insecure you would feel if you woke up to an attack by the next new kid on the block intent on taking America down, like say the Pearl Harbor attack. If we don't have the ability to manufacture vehicles, how in the world could we suddenly begin building rolling stock for that war? We COULDN'T! We could try to get Japan to build them for us, or Germany, or China, but what if they were the new kid on the block?

Start with strings on the money given them, and follow that with dramatic changes to the so-called "free trade" laws level the playing field in a way that our unionized workers aren't considered the problem, because they are not the problem. The problem is traitorous people skilled in the fine arts of business and finance who have sold us to the highest bidder over the past thirty five years.

Our problem is basically monopolies and oligopolies that have been permitted to grow under the rubric of GLOBALIZATION. . . we let our business and finance (and legal) people run our country into the ground at the expense of all those patriotic people who studied hard and learned how to invent and manufacture those things that are now owned by a very few filthy rich people, around the world.

Bring back the capitalism that once had many competitors in all areas of production, so the competition will drive the market to do all those things we truly need.

My wife had an interesting proposal. Do not give the big three any money directly. Provide a voucher for anyone making < $??? for an auto that gets > 40 mpg. If the big three wants to get some of the money, they can produce such a car. This would boost the economy by the government giving cash to the auto maker and put fuel efficient autos on the road. If the voucher user did not want a car, he could sell it; it would still be on the road and low income people would likely boost the economy by spending the all the money (probably for gas for their gas hogs).

Net result is cash for a quick economy boost and fuel efficient cars on the road.

The vouchers could have and expiration date. If for more than one year, 40 mpg could be increased to 45, 50 or ?? in the future years.

Lower income people spend most of their fallout from the voucher to boost the economy. Higher income people could benefit by purchasing a fuel efficient automobile from voucher holders not needing a car. Auto makers could profit by producing something useful. Government would look good when the oil imports are reduced. The universe would be a happier place.

I recommend watching a Frontline show called HEAT. GM made a really promising hybrid that if I'd known about it I would have eagerly bought. But they decided the profit margin of their SUV's was better so they scrapped the 1000's of cars they made - just crushed them. Now they are wanting to bring it back as a ploy to get tax dollars. No one is bailing out any business' in my area, and I think we've wasted enough of our money on corporations.

They want a Bail Out? Let the Wall Street Bankers do it.

Consumer ignorance plays a big part in the woes of the big 3. Americans are resistant to change. They get these old world notions and take them to their graves. How many of you had to wait after eating before going swimming as a child? (See: http://www...urwait.asp) Americans are under the impression that American made cares are inferior. Well then why oh why do we use American made cars for emergency vehicles? People also think they are "Buying American" when they get a foreign car assembled in the United States. The profits go overseas. To those stubborn people I say, "Just watch and see what you have done". You, yes YOU have put this country where it is today. You have forced millions of Americans out of work. I have never owned a foreign car and I NEVER will because I am an American. I have owned American made electronic equipment for over 30 years and it all works as good as the day I bought it. Buy American and take care of our country.

For years, the whole scene at the UAW has been grim. Which one would strike, hold out for more. They went in cycles and the guys at the top just kept getting bigger and bigger paychecks. They refused to see the need for smaller, or more fuel efficient cars, and now they got their tails between their legs and want more from us? Uh, NO! The last American car we got was a 2004 Pontiac Vibe, because it was essentially a Toyota.





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Now that a "bailout" of some sorts has been approved by he White House, let's see if they will meet the conditions of restructuring beforeMarch 31, and repaing the loans if they can't reduce their debt. This is actually the best option for everyone; the country, the taxpayer and the industry.

The ball is squarely in GM's and Chrysler's court; restructure or go out of business!

I note GM has already postponed some investments, such as building a plant to make the Volt!!

Isn't it important to change the basic culture of the American car companies before giving them a bailout? Bailing them out without a change in thinking and culture will not change anything, I think.

Consider, for example, innovation in detroit. I'd like to know: of the major technological innovations of the past few years--say, antilock brake systems, fuel injection, etc--how many came from Detroit, and how many from offshore?

From my perspective, the US auto industry seems to be suffering from several key issues.

1> Labor costs. Unions have done an amazing job of protecting their members from abuses by their employers, to include areas of safety and wages. However, they have in many cases abused their ability to negotiate wages up to the point of endangering the jobs of those workers by pricing them out of jobs. This certainly appears to be the case for the auto industry as well as the airline manufacturing industry, and perhaps a few others.

2> Arrogance. They seem to think that nothing needs to change from a design standpoint - neither product nor process design.
We've been asking for an electric car for over a long time. We've been asking for higher mpg for a long time. Saturn did an amazing job, until GM decided to have it act like any other division of the company.
Why is the Toyota Prius selling like hotcakes? Because it isn't a perfect car, but it's here. Now. Why are people paying way too much money for the Smart Car? Because it's here. Now.
I heard one of the car execs say that they are planning on bringing some of their more efficient models from Europe to the US. To me, that reads as -- we have better cars, we just choose not to try to sell them here.

3> Like WAY too many companies, they don't focus enough on profitability and long term viability. Instead, they are lead by ridiculous Wall Street desires for higher revenues in the short term. Dividends, executive compensation, and ideally stock values should be based on long term performance of profitability, not on simple revenue targets.

Will a loan from the US Government fix any of these problems?
- It will allow labor to keep from having to renegotiate - so no on that item
- It will allow the industry to keep more of the status quo in the realm of processes - so maybe at best on that item
- It may kick the car makers into changing designs for a little while, but they've long said it takes years to design new cars - so unlikely on that item
- It could force some comp plan changes, but it can't get Wall Street to re-evaluate how they value stocks and companies - so a maybe there

Would bankruptcy help on any of those items?
- On labor - absolutely. There would be a LOT of pain, but it comes at the cost of all of the protection labor has had for the last several decades
- On processes - absolutely. They'd either have to fix it or go under. Either way, the current process changes.
- On product - absolutely. They'd have to be nimbler and more attentive to customer needs or go under. I think we'd end up with fewer, more capable and reliable vehicles, possibly from a larger number of split up manufacturers.
- On profitability - I would think so. If a product isn't doing well, it's company will have to rework itself or go under. The survivors will show more profits.

I don't think any sort of bailout will do anything except delay the problem and make it worse.

Good post! To George Bush's credit, he tied the loans to a restructuring by March 31 to make the conpanies viable, and the wage s and benefits competitive wiuth the Asian plants in the US. The Canadian government has insisted on the same thing.

In other words, a forced restructuring with wage and benefit rollbacks is in the cards. Will GM and Chrysler succeed in a very flat market, down from 16 million to 10 million, remains to be seen. The industry will SHRINK, with fewer plants, brands, dealers, etc. I would not count on any technological breakthroughs from Detroit any time soon. GM has already postponed building a new plant to amke the Volt. The Chinese already have a plug-in hybrid on the market!

However, look forward to GM dropping Pontiac, Hummer, SAAB, and Saturn in a downsized GM, with half the dealers gone as well.

One thing is almost certain, Obama will need to give out more money in the 1st quarter of 2009 to help the process along. And the US government will need to partially replace the liquidated pensions and health benefits the retirees get now.

Since there is so much profit in the oil industry, why not have the car industry reach out to the oil industry for bailout money?

I enjoyed listening about Ray's proposal of raising the gas tax now to help the economy. Paying $2.50 a gallon for gas tax would intice people to drive less.

When I grew up, I rode my bicycle to school each day, 3 miles one way. Nowadays, I ride my bicycle 8 miles one way to work, on the days that I drive my car, I get stuck behind a gas guzzling school bus that stops every couple of blocks to pick up less than a handful of children. Why can't kids today walk a distance of a few blocks to get to a centralized location for school bus rides?

Why is our infostructure/traffic pattern so difficult for bicycles to be on the roads safely?

I support Ray's $2.50 per gallon gas tax proposal.

Lots of blame can be passed around. But at the end of the day, do we really want to be importing 100% of our vehicles? What an embarrassment to America as a nation. And should we just throw hundreds of thousands of workers out on the street? I think not. But if we don't get our labor costs inline with what is being paid by Nissan in TN, Honda in Ohio, etc etc, we are just whistling past the graveyard. The UAW needs to wake up and face the hard core reality. They also need to get the legacy healthcare costs trimmed today. Start by putting all eligible retirees onto Medicare, just like the rest of us. Cutting executive compensation should be a part of the pain sharing, but in terms of impact to the bottomline it would be negligible. But highly symbolic. If the UAW won't roll, an orderly bankruptcy with an empowered administrator may be the best way to go. The airlines were saved that way. Maybe the automotive industry can as well. Maybe when it all shakes out, there is only a "big two" or a big one left over. But to let the industry collapse would be a travesty.

I agree that there is plenty of blame to be spread around. I think that those who put that blame onto the UAW are mislead. Toyota, as just one example, actually pays their workers more then GM and Chrysler. The main difference is that they don't have a large population of retired employees. Toyota as well as most of the Foreign owned auto makers in the U.S. have been building cars and employing American workers for less then twenty years. Had they been employing American workers as long as the "Big Three" they would have the same "heritage" wage issues that are facing the American owned companies. Yes, Toyota does pay their retired workers a pension and health benefits. But, they only have a few retired workers to deal with, not the thousands that GM, Ford and Chrysler have to deal with. It's unfair to include those "wages" when talking about any sort of "bail out" or comparing the wages of American owned plants with Foreign owned plants. Taking these benefits away from the American owned plants will give the Foreign owned plants more hiring power then the "Big Three". That would only add an even larger burden to our American auto industry by giving the Foreign owned plants higher wages and better benefits then the "Big Three".

America needs it's auto industry. It needs to be saved, but at what cost? Yes, the UAW needs to be flexible. They need to give some concessions. But, those concessions should be in line with what the Foreign owned, non-union plants are paying. And, in actuality the only reason those Foreign owned plants are non-union is because their wages and beneifts are in line with the Union plants.

When your product isn't selling it's not because those making the product, those inspecting the product and those ensuring that it's a quality product have made mistakes. It's because your product doesn't meet what the market wants. That's not the fault of the workers on the floor...

How much of the average big three car is made in America? What per centage of the selling price goes out of the USA?

The answer to these question would help me decide on the bail out.