Like anything else, the bailout being asked for by the auto companies turns out to be more complex than most of us can see.

My son runs a department for Ford that schedules all the North American car and truck assembly plants. They know the dire straights that GM is in. Ford, by itself, is in somewhat better shape, having enough cash to keep them going until the end of next summer with the current dramatically reduced sales and build rates. And he tells me that they have a terrific lineup of both fuel efficient and electric-gas crossover cars ready to launch in 2009 and 2010.

But if GM goes into bankruptcy, unless the suppliers can be paid very, very quickly using what's called "debtor-in-possession" financing, the suppliers will close down very quickly. Because many of the same suppliers serve GM, Ford and Chrysler, a GM shutdown will very likely shut all three companies down in a matter of days. With what they call "just-in-time" scheduling of the delivery of component parts to the assembly plants, all it take is one key supplier to shut down and assembly plants all over the U.S. will quickly follow. Ford has dozens of people analyzing their entire supply chain to determine the pinch points if GM goes down and brings suppliers with them. He tells me that it's not a pretty picture.

This situation is beginning to look like the Congress debating whether or not to authorize the bailout fund until the damage to the credit markets was already done and the damage to our economy that we now all see so well was unavoidable. It appears that the Congress is not inclined to provide any help to the auto companies--with or without conditions. If they don't and GM shuts down, bringing the others with them, we can forget about calling this a "recession". this will be come a near-1929 like depression.

The problem I have is giving money to the same leadership that managed these companies to this point. The same management that allowed continuation of operations and executive life styles that do little or nothing to improve their situation.

The federal government should bail out the suppliers to protect their continuity.
Let the likes of GM go through Chapter 11 where they will be held accountable for a recovery plan.

I know too many small business owners who are trimming every nickel they can to survive during the current slow down. They do not have the luxury of a bail out. CEO's and boards of directors used to be accountable to share holder wealth. That has drastically shifted to being accountable for each others wealth and to with the needs of the company or Country.

The system needs an enema!!!!

BTK

Originally Posted by Villages Kahuna

Like anything else, the bailout being asked for by the auto companies turns out to be more complex than most of us can see.

My son runs a department for Ford that schedules all the North American car and truck assembly plants. They know the dire straights that GM is in. Ford, by itself, is in somewhat better shape, having enough cash to keep them going until the end of next summer with the current dramatically reduced sales and build rates. And he tells me that they have a terrific lineup of both fuel efficient and electric-gas crossover cars ready to launch in 2009 and 2010.

But if GM goes into bankruptcy, unless the suppliers can be paid very, very quickly using what's called "debtor-in-possession" financing, the suppliers will close down very quickly. Because many of the same suppliers serve GM, Ford and Chrysler, a GM shutdown will very likely shut all three companies down in a matter of days. With what they call "just-in-time" scheduling of the delivery of component parts to the assembly plants, all it take is one key supplier to shut down and assembly plants all over the U.S. will quickly follow. Ford has dozens of people analyzing their entire supply chain to determine the pinch points if GM goes down and brings suppliers with them. He tells me that it's not a pretty picture.

This situation is beginning to look like the Congress debating whether or not to authorize the bailout fund until the damage to the credit markets was already done and the damage to our economy that we now all see so well was unavoidable. It appears that the Congress is not inclined to provide any help to the auto companies--with or without conditions. If they don't and GM shuts down, bringing the others with them, we can forget about calling this a "recession". this will be come a near-1929 like depression.

"Just-in-time" is used to reduce carrying costs for maintaining a significant inventory stockage (costs for warehousing, debt interest, etc.) of materials. Any logistician worth a d@.. applies risk management principles to programming deliveries of key materials, with specific concern on single-or-multiple source for the material(s).

When you push the boundaries of reasonable risk management to save too much by applying "just-in-time" when its illogical, you are gambling that all circumstances will remain "perfect."

There is no question that a Big-Three Chapter 11 will probably cause a domino effect for certain suppliers who run the same risk, and also those who get impacted if/when the Big-Three get debt-protection. That's business and the risks that go with it. Those with decent credit will get "bridged" by the existing credit market because it's their business to sell money to good credit customers. The rest may have to Chapter 11 themselves.

Let's remember - 1929 did not have the bankruptcy laws we have today, especially the Chapter 11 protections. Chapter 11 is a key protection to a 1929 event happening again. That's why we need to employ the laws and protection we have on the books, instead of shovelling money out as payback for votes.

If you give them the money, you got to make changes. Change the whole structure of the company. You can not have the same exec's in charge after such a deal takes place. Watching the news yesterday and seeing the Exec's fly to DC on Company Jets is not a good thing to do when your in the hole and need money. I wonder how much more that put them down. Take away the jets, the limos, the Exec Conference Rooms and Breakrooms, and Get-A-ways. Stop all that. Take all stock options and confiscate their holdings to help pay for this mess. That is what America is seeing, they want the bail out but also want to keep all that is GOLDEN. That cant happen!!!!! Need to make a change, so start from the top. Why lay off the workers that are trying to make the darn cars and give the SUITS they Golden Nest Egg at our expense. I am not wasting time trying to figure out the Million Dollar way of stating this. JUST DO WHAT NEEDS TO BE DONE, AND DO IT RIGHT!!!!

Originally Posted by GMONEY

If you give them the money, you got to make changes. Change the whole structure of the company. You can not have the same exec's in charge after such a deal takes place. Watching the news yesterday and seeing the Exec's fly to DC on Company Jets is not a good thing to do when your in the hole and need money. I wonder how much more that put them down. Take away the jets, the limos, the Exec Conference Rooms and Breakrooms, and Get-A-ways. Stop all that. Take all stock options and confiscate their holdings to help pay for this mess. That is what America is seeing, they want the bail out but also want to keep all that is GOLDEN. That cant happen!!!!! Need to make a change, so start from the top. Why lay off the workers that are trying to make the darn cars and give the SUITS they Golden Nest Egg at our expense. I am not wasting time trying to figure out the Million Dollar way of stating this. JUST DO WHAT NEEDS TO BE DONE, AND DO IT RIGHT!!!!

The problem is, they can huff and puff all they want at Congressional hearings (Auto execs and congressfolk), but the reality is, the federal government does not have any way to enforce any restructuring demand other than Bankruptcy Court. There is no federal agency structured to oversee these "bailout" situations, and Congress doesn't have the staffing to do it either. So, how would the fed enforce any proviso to cash-giving?

The bailout - AGAIN -- to these automakers is not going to change anything. It will just prolong this recession. It is NOT a depression nor a great depression unless the Obama administration keeps printing money. Remember, it was the great depression because of government intervention.

Let the free markets work. The big 3 will survive under reorganization and new management. These companies have lots of assets. Someone will buy them. They aren't going away altogether.

This bailout to them will not work. How many times can you throw good money after bad! I hate the idea of tax payer money going to these failed companies time and again. Why should the taxpayers have to bail out bad contracts, bloated retirement benefits, etc. Who's next for a handout?

Originally Posted by TallerTrees

The bailout - AGAIN -- to these automakers is not going to change anything. It will just prolong this recession. It is NOT a depression nor a great depression unless the Obama administration keeps printing money. Remember, it was the great depression because of government intervention.

Let the free markets work. The big 3 will survive under reorganization and new management. These companies have lots of assets. Someone will buy them. They aren't going away altogether.

This bailout to them will not work. How many times can you throw good money after bad! I hate the idea of tax payer money going to these failed companies time and again. Why should the taxpayers have to bail out bad contracts, bloated retirement benefits, etc. Who's next for a handout?

The 3 auto execs flew from Detroit to DC on separate corporate jets (approx cost of $20,000 each round-trip).

In contrast, Southwest Airlines charges $350 round trip Business-Select Detroit-Baltimore (BW)), and round trip taxi DC-BWi is $200 with tip.

In contrast, Northwest Airlines charges $1,200 round trip First Class Detroit-DC (DCA), and round trip taxi from the Capitol Bldg to DCA is $40.

Giving (because it IS a gift, not a loan when the taxpayer has to borrow the money, and then re-lend it to them, and payback is iffy) these "industry leaders" the cash is silly, when they cannot exercise even the most minor fiscal discipline when they come a-begging.

As a retired GM employee I would just like to offer another twist...

Many of you who wrote only read about the wage auto workers earn, the benefits they have, the jets the exec's travel in..and so on.

How quickly you forget !!! in the days following 911 the Big 3 employees rallied together to raise billions of dollars ( MATCHED DOLLAR FOR DOLLAR ) by the company to support the thousands of families affected by this event. All 3 companies sent thousands of trucks and cars FREE to NYC to replace vehicles destroyed by the blast. Most of all, the Big 3 was responsible for kick-starting the economy by offering zero interest and employee pricing. IT WORKED !!!

In the days following the hurricane that affected LA.& ALA...who raised billions of dollars and sent FREE vehicles again? you guessed it the BIG 3...What did Toyota send...NOTHING what did the Middle East send...NOTHING

You bet the BIG 3 have made mistakes...we are making mistakes as a country right now !!! How much money, are we the USA,pouring into rebuilding IRAQ...THEY DO NOT EVEN WANT US THERE !!! They have more money then we'll ever see.Yet we have kids that go to bed hungery, people who have no health care,home values falling, hard working middle class americans losing homes yet we worrying about an executive using a corp jet. AIG who got 150billon dollars(from us) threw a golf outing spending $343,000.00...WHY ARE YOU NOT ANGRY ABOUT THAT !!!!!!I bet that corp jet didn't cost 1% of that...

Keep an open mind...is putting 3 Million people out of work worth being right? I say give them a chance to "show us NOT tell us" . The BIG 3 comes to the aid of this country and it's people time after time..with NO STRINGS ATTACHED...it's time for us to KEEP AMERICA ROLLING and WORKING.

What is at issue is the management of GM. The execs that get millions per year that allowed this pillar of manufacturing strength in the world, to decompose to it's current low. Giving the same team more money to continue doing the same is not going to work.
At least in Chapter 11 they will be FORCED to reorganize. Usually the incumbents are tossed...the company restructured...they are accountable to the courts to develop a plan how to emerge as a better company.
The current "administration" including the board of directors need to be ousted.
Replaced with people of action.
Having been through it with a major company that also was complacent and fleecing the public...Chapter 11 is the enema most big, over weight, over paid, inefficient companies need. It does not mean they will go out of business.
Some how the airlines managed to get through it.
GM will too!.

BTK

The question is always the same one - where does the money come from? The taxpayer borrows the money, pays interest on it (the National Debt) and then re-lends it on a gamble of repayment from a company(ies) in lousy financial shape and making more products than the market will absorb.

GM may have "donated" vehicles, but these were vehicles built-to-inventory and not-to-order. GM was able to write them off and take the tax break - something which did not recover the full cost of manufacture, but was better than nothing. GM did a lot of good in the past, and having that manufacturing capacity in the US is important for the national security as critical infrastructure.

So, we're back to the beginning. What will keep the manufacturing capacity, maintain GM (and the others) as viable and profitable companies, and keep the US Government out of the auto industry where the government knows nothing about running? Still sounds like Chapter 11 fits the bill.

Anyone remember what Lee Iacocca's salary was when the government bailed out Chrysler years ago?

Bail-out or no, the biggest problem is that Detroit is NOT making cars that people will buy.
Poor product, bad after-sale service, dishonest dealerships, and salespeople from H*ll, have all left a bad taste in peoples mouth.
What's next, asking for a huge tariff on foreign cars? It may be the only way they can compete, in today's shrinking market.
Ford may survive, GM and Chrysler are probably toast.

Originally Posted by SteveZ

The problem is, they can huff and puff all they want at Congressional hearings (Auto execs and congressfolk), but the reality is, the federal government does not have any way to enforce any restructuring demand other than Bankruptcy Court. There is no federal agency structured to oversee these "bailout" situations, and Congress doesn't have the staffing to do it either. So, how would the fed enforce any proviso to cash-giving?

thus, listen to Mitt Romney.

Originally Posted by Guest

What is at issue is the management of GM. The execs that get millions per year that allowed this pillar of manufacturing strength in the world, to decompose to it's current low. Giving the same team more money to continue doing the same is not going to work.
At least in Chapter 11 they will be FORCED to reorganize. Usually the incumbents are tossed...the company restructured...they are accountable to the courts to develop a plan how to emerge as a better company.
The current "administration" including the board of directors need to be ousted.
Replaced with people of action.
Having been through it with a major company that also was complacent and fleecing the public...Chapter 11 is the enema most big, over weight, over paid, inefficient companies need. It does not mean they will go out of business.
Some how the airlines managed to get through it.
GM will too!.

BTK

perfectly stated...

Iacocca = $1.00 annual salary. The best $1.00 Chrysler ever spent!