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U.S Government Complaint - Detroit Automakers Ask Congress For $25 Billion - Don't Give It To Them!

Review by nanomarket on 2008-11-19
Today, GM’s Wagoner, Ford’s Alan Mulally, Chrysler’s Bob Nardelli and United Autoworkers president Ron Gettelfinger asked Congress for $25 billion to save the American auto industry. As they put it, millions and millions of jobs are on the line, and the future of American manufacturing is at stake.

The $25 billion would only plug the hole for a few months. Detroit automakers will soon be back hat in hand. Also, the $25 billion will not save all three, so which should survive and which shouldn’t? When asked this question today, the “impartial” Gettelfinger — whose UAW has fleeced all three — ranked their viability as: Ford, then Chrysler, then last, GM. One, maybe two companies will have to go. That’s the way business works.

As this recession takes it toll on hundreds of small businesses and thousands of people loose their homes, we need to prioritize what is best for America, and the Detroit automakers aren’t it!!!
Comments:24 Replies - Latest reply on 2008-11-20
Posted by Anonymous on 2008-11-19:
Why are people pissed about the domestic automakers getting a bailout. AIG got 150 billion dollars and some of it went to the execs to party hardy. I rather the money go to the automakers and maybe save a few million jobs then greedy crooks.
Posted by Anonymous on 2008-11-19:
And how did each CEO get to Washington to beg for money you ask? Did they each take one of their own cars? No. Did they each fly commercially? No. They each took their own company furnished private jet at a cost of around 20k round trip. Another site I frequent showed a commercial ticket from DTW-WAS at about $290 for coach and around $900 for first.

The audacity to fly to Washington in a private jet, each, to ask for 25 billion dollars is a crime.
Posted by Anonymous on 2008-11-19:
That 700 billion is going to go down the toilet anyway why not save a few jobs while at it. It will cost the Taxpayer even more if they companies go belly up.
Posted by Anonymous on 2008-11-20:
Judge, well said.

Wally, I am pissed off about AIG getting so much money in bail outs! If the American car makers would put out a good quality car, I would willingly buy one. I've tried three american cars and they all were close to dead by 50,000 miles. The American people have spoken by NOT buying American cars.

In addition to having them build better quality cars, here are the conditions that would lead me to support a government bail out of the American car companies:

1) Upper manamgenent, beginning with the CEO of each company is replaced and no golden parachute paid.

2) Removal and replacement of the board of directors of each company.

3) Each UAW union contract is renegotiated.

And whats with hearing on the news that the executives taking private planes to Washington to attend the hearings. $20,000 minimum! Please! Let them fly economy like most Americans.

There, thats My3Cents.
Posted by nanomarket on 2008-11-20:
I agree with Judge & John - Wally, GM CEO Wagner made $17 million last year and the average UAW worker makes $75.00 / hr, which is more than most professionals. At this rate of compensation, how long do you think the $25 billion will last? And why should taxpayers reward management and workers for producing inferior, over-priced autos?
Posted by Aerocave on 2008-11-20:
The automakers should receive some help...with conditions similiar to what John stated. The group of people that I think are being forgetten here is the Suppliers and the dealer network. Many automotive dealers have their "life" invested in their stores...and while I think this downturn will get rid of the "fly by night stores," which I am certainly for, it still will affect the good stores as well--especially if one goes into bankruptcy. At our dealership we now have a new objection to overcome, which is "What happens to my warranty if GM goes bankrupt?"--Just another challenge to overcome in an already challenging year. I agree, get rid of the "fat" but help us out!
Posted by yoke on 2008-11-20:
After watching Robin Meade last night and hearing they went to Washington in the private jets, one worth 36 million and when congress asked one of the execs if he would be willing to accept $1 for next years salary and the exec said he had no comment on it I then decided they do not need to be bailed out they need to be restructured. They can start by getting rid of all the perks the execs are getting. The execs had no remorse for what they had done the the Big 3, but just expect the goverment to bail them out.
Posted by BobJohn on 2008-11-20:
In addition, the money is a loan not a gift - sound like a good investment, keep hundreds of thousands people working.
Posted by Principissa on 2008-11-20:
You know what, I'm more pissed off that AIG and all it's crooked business practice glory got a bailout. If it were up to me, I would have told AIshady where to shove it.

If anything these auto makers deserve it. It's a loan, not a gift. This money will have to be paid back.

If you ask me, this money is an excellent way to keep hundreds of thousands of American's employed!

Posted by yoke on 2008-11-20:
The only ones benefiting from all the bailouts are the top execs.
What is going on is reminding me of my kids when one gets more than the other. First we give the automakers 25 million. WallStreet gets wind of it and say they need money to bail them out also. Once the automakers find out Wallsteet got more than them the automakers cry they need more and if we don't give them more jobs will be lost.

During all of the bailoits not once have we heard from any exec coming in and saying I will step down from the company I put into the ground. Not once have we seen them give up anything, yet we are expected to give up.

IMO we should not bail them out again, but what we should do is bail out all the small companies it will effect by not giving into the demands. The big 3 execs can give up the luxuries to pay the salaries of it's workers. It happens all the time in the real world. My husbands boss went without a paycheck when they were in Chapter 11 just so his employees got paid and were able to get the overtime and bonuses they depend on. The owner sold his dream house and vacation home to bail out his company, this was all done before he filed for Chapter 11. The company came out of Chapter 11 with new owners and is doing better than ever.
Posted by Principissa on 2008-11-20:
yoke, I think that any executive requesting these bailouts be forced to resign and have his "golden parachute" used to pay back the loan from the bailout. I only care about the little guys.
Posted by yoke on 2008-11-20:
princi, I agree. I do care about the workers at the plants and when the execs give up the perks there will be plenty of money to pay the little guys salaries. By selling the jet, the one the workers will never see, that is $36 million. That is alot of salaries, for the workers not the execs. By giving up one years salary for one exec is well into the millions. They can do it without a bailout, if the execs are willing to give a little, which it sounds like they are not.
Posted by Anonymous on 2008-11-20:
I think the executive salaries are only the tip of the iceberg. Iplace the blame for their mess almost solely on the unions. For 30 years UAW has forced unrealistic salaries and benefits on the industry, and they have reached the breaking point where they just cannot be sustained any longer. Yet UAW jumped right up and yelled 'no concessions!'
Bankruptcy will be tough, but it is the only way that these companies can possibly get out from under the current union agreements and restructure into a new company that has a possibility of surviving.
Posted by Principissa on 2008-11-20:
These executives are greedy and it's the little guy who suffers because of them. Any company that requests or is granted a bail out should have all of their top execs resign and give up their severance bonuses as repayment for the bailout money.

I just don't want to see all these families out of jobs. Right before the holiday's too. I can't imagine the stress these families are going through right now trying to decide between having a holiday and paying the bills. How do these executives sleep at night knowing what they are doing to innocent hardworking people?
Posted by TGT101 on 2008-11-20:
I completely agree with Ken.
Posted by Slimjim on 2008-11-20:
Bottom line is this is a critical industry to our country. Offer the bailout with conditions of research and developement budgets going into making hybrid cars more affordable to buy and own. If you can get these cars on the market for a similar price as current non- hybrid models, and work out the problem of battery upkeep costs, people will buy these cars over assumingly now falling behind imports. Now you have two benefits going.
Posted by madconsumer on 2008-11-20:
do we have to read this again?
Posted by Anonymous on 2008-11-20:
Why is it when a consumer signs an unfair contract they are scolded for agreeing to a contract that they find unfair yet when the US automakers sign an unfair contract then the blame lies not with the automakers but with the UAW? Yes those evil laborers conjured up some mojo that rendered those poor innocent CEO'S and board of directors powerless to make rational business decisions. Damn those evil unions and their black magic of persuasion.

Point of order -- The average hourly wage for a non-Skilled GM Assembly Line Worker is around $32 not $75. The $75 figure is not an hourly wage it's a cost accounting figure overly inflated by a lot of bad GM management decisions over the years....wait I forgot --- It was inflated by UAW mojo. Holy smokes.

Posted by Anonymous on 2008-11-20:
I hope that my post did not sound like I was blaming the auto workers. I am sure that those working on the lines are hard working average people like us. That is why I am saying that the whole industry needs to be cleaned up, starting with the arrogant CEO's who fly to Washington in private planes to beg for money to "save" the industy. There is something wrong with that picture and they need to be called to task.

I apologize if I came across as sounding uncaring to those that would be impacted by the loss of jobs. It is going to have an enormous impact on the country . . . I understand that. The concept is not lost on me but I do not think that the American people should be throwing good money after bad. I understand that this is suppose to be a loan. Someone please explain to me how an industry is going to pay back a loan if they end up going out of business after the loan is made but before it is paid back? If I do not understand the term of the loan or if there is a plan to have it paid back regardless of the auto industries financial status, please tell me. I really do want to be educated and know how the American people are guaranteed that this loan was not given to a bunch of schmucks who are going to line their wallets with golden parachutes.

The bottom line from where I come from is that American car dealerships are folding. Why? Because the American auto industry have been putting out a less than adequate product and have not kept up with new technologies. In my opinion the American people are speaking loudly and clearly by not buying the American made product. That should send a huge message to the automakers. Keep up with the times! Produce a product that will not fall apart. Keep up with the new technologies. GM "killed the electric car". I am not sure how much of that documentary was true but if what was portrayed is the truth they could have been one of the front runners and made a fortune. Would they need a bail out now if they had not been greedy?

I hope that everyone understands what I am trying to say. I am not a writer or an economist; I just put down my thoughts and opinions and I know that not everyone will agree with me. That is why we're all here. To learn from each other and share opinions.
Posted by Anonymous on 2008-11-20:
Unions do some good things, and some bad. This fiasco is an example of the bad. I guess the Government could keep throwing cash bandaids at the big 3 until the Country goes belly up, then the auto workers could join the rest of us nomads as we walk the hillsides in search of food and shelter.
Posted by Anonymous on 2008-11-20:
This is a mess. The ramifications of the big three going bankrupt is far reaching. It's not just labor contracts. How about supplier contracts, pension funds, promises made to retirees and not to mention the average GM stockholder who's gotten reamed.

So here's what happens...GM files bankruptcy. The pension funds would most certainly be handed to the US taxpayers just like with united. Dealership contracts would be broken which would cause a massive consolidation or should I say many dealerships going under. Supplier contracts would be broken which would definitely cause Delphi to go bankrupt due to some pension plan agreements with GM. Other suppliers would go under as well. And then of course there would be a constant stream of litigation as everybody and their dog starts suing everybody else to garner those last few nickles. The ripple effect of just GM going bankrupt is going to be painful beyond belief and that's assuming GM can survive bankruptcy reorganization which is by far no guarantee. It's indeed an ugly situation.

That being said the best thing to do for this country is to deal with the pain. These bailouts are not going to solve anything... It's a band aid. I liken this to forest fires. The more we tried to prevent them the worse they got... and in fact we discovered forest fires are a vital ingredient to healthy forests. Depression / recession is vital to healthy capitalism. It sucks... it destroys... but it has to occur. It makes way for new growth, new ideas and new men of great talent and innovation. When we look to government to save private business then that is fascism in its most purest form. Some times pain is necessary. It is the best motivator and the best innovator. Let's not kill who we are as a country to merely avert a little transitory pain now matter how severe it may be... that's all I'm saying.
Posted by old fart on 2008-11-20:
Crabs...your $32 per hour figure doesn't account for legacy cost, i.e. retirement benefits accrued over 25 or 30 years for doing jobs that you could train an ape to do with enough practice and the incentive of an occasional banana...
Why should a union worker make 60,000 a year plus benefits for doing a repetitive task requiring NO particular training or education when a nurse or teacher makes half of that after attending school for 16 or 17 years to learn their "craft"..
If you've never worked in an auto plant you cannot imagine the lackadaisical attitude and the "I got mine" thinking that pervades the air in a union shop..
Posted by azspots on 2008-11-20:
If I ever get to the point of panhandling....I will have to remember to be dropped off on my corner with my limo, wear a mink and a rolex. I'm sure this will help my cause.

Yup, sell a jet or two...that will help the greedy cretins that lead the automakers into near insolvency.

Posted by nanomarket on 2008-11-20:
Some clarifications:

Executive compensation comprises a very small percentage of the $25 billion bailout. Most of the money would pay debts and UAW salaries and benefits. The money would not be spent on R&D.

The $25 billion is indeed a loan, but it is unsecured. The US Government would have to take a position behind other creditors.

Many of the recommended condtions that would be attached to the loan can only happen via bankruptcy i.e. renegotiate union contracts. The airlines survived bankruptcy; why can't the automakers?

Detroit and foreign automakers use many of the same suppliers. Detroit's failure does not necessarily mean that suppliers will fail too.

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