OT - What the UAW has to say about a bailout

[Pete Serotta]

:rolleyes: :butt: This is from WSJ and what the UAW has to say about a "bailout"
DETROIT -- The president of the United Auto Workers union said the dire financial troubles of the three U.S. auto makers is the result this year's spike in gasoline prices and the meltdown on Wall Street, not missteps by management or high labor costs.

"This industry is in a crisis situation not of its own making," Ron Gettelfinger said in an interview Saturday afternoon with The Wall Street Journal.

Mr. Gettelfinger also urged Congress to provide financial help to prevent General Motors Corp., Ford Motor Co. or Chrysler LLC from sliding into bankruptcy protection.

Bankruptcy is "the worst possible route that any of these companies could go down," Mr. Gettelfinger said. The union believes the auto makers would not be able to recover from a bankruptcy filing and would have to "liquidate everything," he said. "It would be the beginning of the demise of the industry."

For decades, the UAW waged bitter battles with management over wages, benefits, executive pay and jobs. Only a year ago, the union called short strikes against GM and Chrysler during their contract negotiations a year ago, and Mr. Gettelfinger suggested top executives earnings millions were "hogs slopping at the trough of corporate greed" while trying to force workers to bear the brunt of cost cuts.

Now, with GM at risk of collapse, the union representing about 150,000 U.S. auto workers is joining forces with the companies in a blitzkrieg public campaign to plead for a federal bail out. Although Mr. Gettelfinger rarely talks to the media aside from local radio stations in Detroit, he has reached out over the weekend to make the union's viewpoint clear.

Although GM Chief Executive Rick Wagoner has come under heavy criticism, Mr. Gettelfinger said management is not needed. ""It's a stretch to say that management is responsible for all of the things happening now that no one anticipated or expected," he said.

That's a shift from the past when union rhetoric typically pointed the finger at management mistakes as the main reason for Detroit's troubles.

On Monday, Senate Majority Leader Harry Reid is expected Monday to put forth a bill giving the industry access to the $700 billion Troubled Asset Relief Program. That entity, known as TARP, was set up by the government in October to help ailing banks and other financial firms. The Bush administration and many Senate Republicans oppose giving auto makers access to TARP.

Mr. Gettelfinger is expected to join Mr. Wagoner and the CEOs of Ford and Chrysler at congressional hearings in Washington starting Tuesday. The union is urging Congress to pass a bill providing a "bridge loan" to keep the Detroit auto makers going until the economy and auto sales pick up.

Without immediate aid, Mr. Gettelfinger argued that at least one of the three U.S. auto makers would file for bankruptcy, increasing the likelihood that at least one other auto maker follow and an untold number of other businesses, including auto parts suppliers, dealership and related enterprises would go out of business.

The UAW president said the industry's predicament is a direct result of an unprecedented drop-off in auto sales that started with high gas prices this summer. Eroding consumer confidence to make big-ticket purchases was fueled by a credit crunch that limited customers' ability to buy a new car or truck and forced the companies to spend more money then they were bringing in, according to Mr. Gettelfinger.

Earlier this month, GM acknowledged its cash reserves could approach the minimum levels it needs to keep its operations going later this year, if it doesn't get government help or see a dramatic turnaround in vehicle sales.

The union will not make concessions in order to seal a deal for governmental aid, Mr. Gettelfinger said. He cited significant concessions already made by the UAW in its 2007 contract with the auto makers. They include the establishment of a separate health-care trust for retired auto workers and the introduction of a two-tiered system wages that allow the Big Three to hire new workers at significantly lower wages and without fixed pensions.

Many analysts believe the concessions will eliminate the labor cost advantage foreign auto makers have had in their non-union plants in the U.S.

Pointing to other bailouts in the financial sectors, Mr. Gettelfinger added that "bankers and even the people who clean their offices" were not demonized in the way the debate in Washington has turned against the people who work in U.S. auto factories.

"It's unfair for people to single out auto workers," he said.

Write to Matthew Dolan at matthew.dolan@wsj.com

[gemship]

Maybe the big three should learn how to make better vehicles that are cheaper too. What a bunch of BS.

Lots of expensive imports out there, Volvo for ex. they don't get great fuel mileage but they're designed well enough with out half the recalls. Quality in this industry actually sells depite high fuel costs.

This whole situation smells fishy and now we the taxpayers are footing the bill. I don't know about you but I think we all deserve at least a free geo metro from all this :D

[A.L.Breguet]

I understand Saab, among others, is hurting in the U.S.
Apparently some other brands are pulling out of the U.S. market.
That being said, you're correct, the market always has room for a quality product.
Maybe the big three should learn how to make better vehicles that are cheaper too. What a bunch of BS.

Lots of expensive imports out there, Volvo for ex. they don't get great fuel mileage but they're designed well enough with out half the recalls. Quality in this industry actually sells depite high fuel costs.

This whole situation smells fishy and now we the taxpayers are footing the bill. I don't know about you but I think we all deserve at least a free geo metro from all this :D

[gemship]

I understand Saab, among others, is hurting in the U.S.
Apparently some other brands are pulling out of the U.S. market.
That being said, you're correct, the market always has room for a quality product.

The us market is a sketchy place, I don't blame them. I sort of feel bad for the big three,I mean I know a lot of folks who work for themselves and need their work trucks.Outside of that product I don't think the big three seem to have it together and even the worktrucks break alot.... Anyway that's just crazy to say the autoworkers should'nt be blamed, for semi skilled, limited educated employees they are somewhat overpaid. If not them then hold the fat mentality of the unions accountable.

[eddief]

Think if you check Volvo and Saab sales numbers you will see they are way way down. Letting em go bankrupt would probably force us into an economic situation not seen in this lifetime, ie depression. Bailing out idiots seems like a waste of my money...again. Who needs dealerships that sell the same crap; Buick, Chev, Pontiac, GMC --- Ford, Lincoln, Mercury? When and how do they and we smarten up enough? I say let em go...or make sure a panel of the smartest industrialists on the planet oversee the spending of our money. Insanity is doing the same thing over and over again and then expecting a different result.

[gemship]

true and I did think of that briefly that both Volvo and Saab are American owned. Can't help to say they must have a better design staff and quality control that the big three could certainly benefit from, oh well. Too late now.

[RPS]

Who is going to draw the line? And where? :no: :confused:

[Climb01742]

if they get_any_money, it needs to come with 100% new management, new labor contracts and revamped line-up of cars. the question isn't whether the big 3 need to completely changed how they do business but how will they get there: bankruptcy or bail-out with ironclad strings attached. given how the gov't has bungled the financial bailout, i guess bankruptcy is the best route.

[Pete Serotta]

Ford owns VOLVO and GM owns SAAB....In fact some of the platforms are used by all....VOLVo/FORD platform and GM/SAAB platform

Wether SAAB would have made it to this point without GM is anyone's guess . THey were acquired at a time when GM, FORD, MERCEDES, BMW were buying other brands. In fact at one time GM had an option on a piece of FIAT (now would that not have made a pretty site in losing $$s)

A revolution not an evolution is required in the management and union ways of DETROIT. I can not even began to know what that is BUT when I see guys like LUTZ not able to make significant change for the positive - it is not an easy revolution!!!

true and I did think of that briefly that both Volvo and Saab are American owned. Can't help to say they must have a better design staff and quality control that the big three could certainly benefit from, oh well. Too late now.

[93legendti]

If I understand it correctly, the Big 3 does well outside of the USA...
If I understand it correctly, the Big 3 has $80 Billion in costs mandated by Congress...
If I understand it correctly, each car built by the Big 3 has ~$1,500 in Union costs built into the cost of the car. Japanese cars have ~$400.

If you ask me, bailing out the Big 3 is throwing good money after bad.

[Birddog]

This is but asmall part of the problem.
http://www.consumeraffairs.com/news04/2006/04/gm_viagra.html

And I thought they quit making "woodies" in the 50's.

Birddog

[Viper]

We should have soup lines and get it over with. Seriously, let's do it. Of course Martha Stewart can serve the soup while Madonna walks/works the line handing out 3x5 cards inviting all to the next meeting. Lance Armstrong and Tiger Woods will be the only Big News next year, dunno which of them will win the Espy Comeback Award? I say true capitalism should work or fail and done so with a Star Trek Prime Directive in tact.

[happycampyer]

The UAW wonders why people are critical of their stance. The number of jobs that are being cut in the financial sector is staggering--Citigroup alone just announced layoffs of roughly 35,000 employees, which is on top of 23,000 already cut this year. Every major financial firm that has survived is downsizing, with cuts coming at all levels, and compensation will be cut way back. Of course, given the way they leveraged and then blew themselves up, it's only right that the employment ranks are scaled back. With the Big 3 in disarray, why should the UAW expect labor to be untouchable?

eddif pointed out something that has bothered me about the US auto industry for decades--it's such a waste to have multiple, mediocre brands competing against each other (e.g., GM with Chevy, Olds (BITD), Pontiac, Cadillac, etc.). That model might have worked up until the 70's or so, but ever since the Japanese auto makers got a foothold with the energy crisis, the gap had just continued to widen. And forget about the gap that always existed with the high-end European makers. To subsidize agricultural production, the US buys up grain etc. and destroys it. Maybe we should do the same with the cars coming out of Detroit...

[RPS]

if they get_any_money, it needs to come with 100% new management, new labor contracts and revamped line-up of cars. the question isn't whether the big 3 need to completely changed how they do business but how will they get there: bankruptcy or bail-out with ironclad strings attached. given how the gov't has bungled the financial bailout, i guess bankruptcy is the best route.+1 on bankruptcy

I think bailouts in principle are a bad idea. For them to make any sense, investors (i.e. – government/taxpayers) should have a say on the business as you suggest, but how do we actually do that sensibly? Do government types know more about the auto industry than Detroit? I doubt it. Who would we hire as management? Which models would we approve? Which technologies would we pursue and which would we abandon?

In retrospect we should have allowed Chrysler to go under decades ago. If so, the remaining Big Two would likely be healthier today due to reduced competition, greater talent pool, improved labor costs (line and management), etc… A bailout of the auto industry will just delay the inevitable. I’m for letting free markets sort it out.

The difficult part for me to accept is that all three seem to be hurting equally; and having all three go under simultaneously is too big a hit.

[Viper]

In retrospect we should have allowed Chrysler to go under decades ago. If so, the remaining Big Two would likely be healthier today due to reduced competition, greater talent pool, improved labor costs (line and management), etc… A bailout of the auto industry will just delay the inevitable. I’m for letting free markets sort it out.

"Lead, follow or get out of the way."

Frank Sinatra invented this quote in 1966, while walking into the Stardust Hotel's pool with vodka, Parlaments and 21 year old Mia Farrow in tow. Sinatra's mom said of Farrow, "This one don't talk, she don't eat. What does she do?" which Adam Ant then used to grab his fifteen minutes of fame some twenty years later.

Thomas Paine, General Patton and Lee Iocca quoted Sinatra, not the other way around. :beer:

Back when some reds, coke and doing a theatrical interpretation of your own song wasn't considered lip-synching:

http://www.youtube.com/watch?v=grScr1Ivnxo

http://www.youtube.com/watch?v=j-NBZ_pKNOc

http://www.youtube.com/watch?v=f5BV9Z42D-E

(he sang it once, in the studio then sang about it for years)

[TMB]

If I understand it correctly, each car built by the Big 3 has ~$1,500 in Union costs built into the cost of the car. .


Closer to $6,000 per unit.

[stuckey]

Closer to $6,000 per unit.

Labor costs? Labor creates all wealth, without it there would be no cars. So what if the workers want to make a living wage. I guess not anymore under new contract GM employees are hired at 14 a hour with no pension. The top dogs are still raking it in though for making bad choices no need to mention that though. Damn unions that gave us the weekend, OSHA, 8 hour day, and so forth, bastards.

[cdimattio]

Ford, GM and Chrysler are legacy automakers who are unionized, saddled with archaic work rules, and staffed with older, higher paid workers along with a crushing burden of gold plated health care and retirement benefits. Union labor has priced itself out of the global marketplace.

I am not sure a Chrysler bankruptcy would have made GM or Ford more efficient. The big three have huge handicaps that any management would have had difficulty overcoming.

How does a bailout make their future look any less bleak? While bankruptcy would be painful, it is preferable to a government bailout that will only delay (at taxpayer cost), the wrenching but necessary steps Detroit needs to take to create stronger, leaner and viable automakers.

Why bail out automakers but not airlines? Why GM but not Lehmann Brothers?

Labor contracts would be at risk of termination in a bankruptcy, and the UAW wants to postpone the inevitable. I guess the UAW money invested in Harry Reid is now paying dividends.

[stuckey]

Ford, GM and Chrysler are legacy automakers who are unionized, saddled with archaic work rules, and staffed with older, higher paid workers along with a crushing burden of gold plated health care and retirement benefits. Union labor has priced itself out of the global marketplace.


It did not really price itself out it was forced out by exploiting the third world and using Canada because of there health care system.

I say let the big three fail there badly built products are of no use. We need less gas guzzlers...

[93legendti]

Closer to $6,000 per unit.
Wow. That's a staggering amount.

[TMB]

It did not really price itself out



.

Yes it did.

There are currently 3 times as many union members receiving benefits, health care and cola adjustments in retirement as there are working.

The customer is being asked to pay those costs for products which are less desireable and less reliable.

The company management dropped the ball, the labour costs killed them and now they asking for a "bailout" of cash which will not do a thing to address the problems the companies have. The "bailout" will merely delay the inevitable.

You entire post in fact points out the efforts that the companies have made to try and control costs. Clearly the costs are, therefore, an issue.

[93legendti]

If Congress wants to design cars, I suggest they enact one law and repeal all other non-safety/emission laws:

USA automakers can not make more than 10 models at one time. Maybe it's me, but it seems like the Big 3 have 30-40 models and the foreign auto makers have less than 10. The tooling costs to build so many models has got to be ridiculously high.

[cdimattio]

Without the UAW and the crushing legacy benefit and retirement burdens, many are able to build cars in the US while paying competitive wages.

Toyota, Honda, Mercedes, and Subaru are a few that come to mind.

For the Big Three, how do you survive when you make unpopular products with a significant cost disadvantage?

[TMB]

Wow. That's a staggering amount.

It is approximately $1800 per vehicle for current wages and benefits.

The remainder is the legacy overhead to keep the retirees in cola adjustments, health plans and pension.

It is a staggering amount per vehicle, both current and legacy. The total is simply crushing.

[sloji]

Houses on credit, cars on credit, credit cards...where does it end?


"You sharpen the human appetite to the point where it can split atoms with its desire; you build egos the size of cathedrals; fiber-optically connect the world to every eager impulse; grease even the dullest dreams with these dollar-green, gold-plated fantasies, until every human becomes an aspiring emperor, becomes his own God... and where can you go from there?"

[93legendti]

It is approximately $1800 per vehicle for current wages and benefits.

The remainder is the legacy overhead to keep the retirees in cola adjustments, health plans and pension.

It is a staggering amount per vehicle, both current and legacy. The total is simply crushing.
Wow.

[Climb01742]

an interesting idea might be to let a proven effective car exec -- right now they all seem to run foreign car companies -- take over GM. someone like carlos ghosn. let it go into bankruptcy and put him in as ceo.

http://en.wikipedia.org/wiki/Carlos_Ghosn

another vote for bankruptcy:

http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/09/Can-Bankruptcy-Save-US-Carmakers

[CNY rider]

Another idea:

Let them go through the bankruptcy process.
If the unions don't want to play ball, have the government bail-out be a total take-over. Crunch the equity and most of the debt and GIVE GM to the union, lock stock and barrel. Let them have 100% of it. Why not? It's worthless in a financial sense right now anyway. They can deal with their legacy issues however they want, but they will not receive further govt. intervention.

I think then they might actually have a shot at turning it around. Otherwise it's hopeless and not worth my tax dollars.

[saab2000]

While unions have had their excesses and are surely not blameless, why is it that they are the frequent targets for blame in tough times when it is management that has made the strategic decisions that led them to where they are?

Also, why are unions criticized for wanting things like living wages, safe working conditions, vacation, pensions for their workers when at the same time upper management has paid themselves giant bonuses and other perks as a reward for ever falling market share?

Unions are surely not blameless, but are not the reason for the horrific product that the companies have produced. Strategy is ultimately the job of upper management and it has been clear that the US automakers have been going down a dead-end path with mediocre, gas guzzling pickup trucks and SUVs as their bread and butter for a long, long time. They have never given anything other than lip service to competing with the Japanese and German automakers.

These are strategic decisions made in a board room, not by labor.

[93legendti]

The owners of the company get to pay themselves whatever they want, within corporate requirements. We still have some vestiges of capitalism, yes?

While the Union has its benefits, ensuring pay at the expense of merit pay means the worst and best performing employees get paid the same. Similarly, ensuring pay regardless of the company's financial well being in a given year seems hardly capitalistic. To whose benefit are those principles?

[zap]

snipped

While unions have had their excesses and are surely not blameless, why is it that they are the frequent targets for blame in tough times when it is management that has made the strategic decisions that led them to where they are?



True, however, the not so big three have been and still are saddled with significant legacy costs. Currently, in order for these companies to compete on price, they need low material costs which ultimately impacts quality.

If the US owned auto industry has any chance in the future, reorganizing under bankruptcy protection is probably the best bet. Rather than sending monies to the firms, maybe the feds should take over pension obligations.

Climb, last I heard, ghosn is under fire too.

Porsche however seems to have done bloody well over the last two-three years. Who knew they bested some of the biggest hedge funds in the world.

[TMB]

While unions have had their excesses and are surely not blameless, why is it that they are the frequent targets for blame in tough times when it is management that has made the strategic decisions that led them to where they are?

Also, why are unions criticized for wanting things like living wages, safe working conditions, vacation, pensions for their workers when at the same time upper management has paid themselves giant bonuses and other perks as a reward for ever falling market share?

Unions are surely not blameless, but are not the reason for the horrific product that the companies have produced. Strategy is ultimately the job of upper management and it has been clear that the US automakers have been going down a dead-end path with mediocre, gas guzzling pickup trucks and SUVs as their bread and butter for a long, long time. They have never given anything other than lip service to competing with the Japanese and German automakers.

These are strategic decisions made in a board room, not by labor.

No one is "blaming" labour for the problems, merely stating fact.

The auto makers have, over the course of years, in an attempt to buy labour peace, entered into a series of agreements that now put them in a position where the accumulated costs of current and past labour are starngling the entities.

They must be rectified.

The only way for these issues to be dealt with is through a bankruptcy filing and, yes, many people will be hurt and all of the shareholders will be wiped out.

The notion of a cash "bailout" by the Treasury is absurd, and yet will probably happen. It will do noting to address the very real structural problems that all of these companies have, will certainly not address the legacy issues and will only delay the inevitable bankruptcies. The cash burn rate in each of these companies is so high that even the talked about $50 Billion "aid package" would not last 2 months.

What have you got then?

The same entities in the same industry with the same problems, because they didn't have to deal with any of them.

Yes, management salaries and bonuses have been ridiculous, but - and here is the thing - as high as they have been - they have been immaterial in the current position of the companies, and they have largely been paid at the expense of diluting stockholders since they have been paid in stock.

The costs of current and past labour are current period cash costs which are crippling the, already sick, businesses.

For the head of the UAW to come out, knowing he has a sympathetic ear on Capital Hill, and say we are not giving any ground at all it's up to everyone else - is really not doing anything to address the problem or get to a solution. It is pretending that 1959 Scotland is the right sandbox.

Well surorise, this 2008 and it's not a Union HAll in Glasgow.

The current agreements with the Big 3 include provision for something called the "Jobs Bank" - this is a place where the workers no longer needed for production, but safe from lay-off, go and clock in every day, then sit around and play cards or read books, or whatever. They get a lunch break and they clock out at night - to go home.

They are getting full pay and benefits which is built into the cost of the cars you buy, or the loss of the company when the cars are not bought.

The "Jobs Bank" cost GM alone, close to $2 Billion last fiscal year. $2 Billion dollars to pay people to sit around and do nothing because the contract "guarantees job security".

Bankruptcy is the only answer for these companies.

[stuckey]

Too many people to quote so I will do it this way.
The UAW does not directly speak for the workers a lot of times they speak of the opposite of what they want and force them into crap contracts and make bad decisions. They have helped the workers eek out a decent wage until the last contract which is garbage that I would never work under. Major unions are like a double sided sword, they are good and deadly at the same time. There needs to be more workers control of them without so many corrupt bosses.
The legacy is deserved in my opinion, if for 30 years you made some bastard rich. Gm was suppose to set up a separate fund for this by law and they did not. I know it is not a surprise but they never did. GM has made horrible cars for years and the workers did not have a say in any of it, it is not there fault wanting to live... Retirement should not be a f-cking privilege in this country it should be guaranteed like healthcare. Maybe I am a bit biased after doing grunt work in a small direct democracy union but some things should be given and some top dogs make way too much money to make bad choices or even right ones. I guess privilege is what makes most people hate workers... Everyone should grow up without food and heat in the winter to see the other side. Let the big three fail but workers wanting to be able to live a meager life should not be a question.

Oh Mercedes is not union in the "US" but there cars are still overpriced and there fuel milage sucks like BMW.

[1centaur]

While it's true that the Big 3 have to cut tons of costs (many of them related to union contracts) to be cost competitive, bankruptcy is merely the most efficient way to make them competitive. Is that the US policy goal? I think not. Bankruptcy properly done would kill millions of jobs quickly, including through the supply chain and through local dealerships. Pure capitalists might like the idea of taking one's medicine now, but creating a midwestern wasteland that drags down the country for a decade might be the result. If government money came in with strings so the layoff pattern could be more gradual, it might be better for all of us. It's not like there are two choices - bankruptcy or unlimited cash to keep doing what they are doing. As far as that goes, bankruptcy might be not as expected either, because the companies would need billions in cash to operate in bankruptcy. That cash would normally be provided by banks/institutions in the form of something called a DIP, but in this market banks don't want to spend their capital on DIPs, so the automakers might file for bankruptcy AND get taxpayer money in the form of a DIP AND a government guaranty on warranties so that people still buy American cars (the big fear is they would stop). Any way you look at it, taxpayer money is highly likely to be needed in large size - now what's the best choice economically and what's the realistic choice politically? BTW, most people think if one car company files they all file because customers will treat them as if they will and they can't get behind on costs.

Carlos Ghosn picked some low hanging fruit at Nissan. There are other talented auto executives.

The US is about to figure out its industrial policy, a scary thought for capitalists because bureaucrats are not as efficient as free markets.

Airlines fail because they keep right on flying with minor tweaks. Not the case for auto companies.

Lehman failed because the government made a mistake.

[Lifelover]

Maybe I have been lucky or I'm just stupid, but I think since the early 90's american made cars are pretty damn good. When you figure in the elevated repair cost of Jap cars, the big 3 are often a better value.

I drive a 96' Taurus Wagon with 170K. The only big ticket repair has been 2K for a transmission at 160K. My friend with the 5 year old Honda Odyssey was quoted close to that to fix his auto opening sliding door.

[Ray]

While it's true that the Big 3 have to cut tons of costs (many of them related to union contracts) to be cost competitive, bankruptcy is merely the most efficient way to make them competitive. Is that the US policy goal? I think not. Bankruptcy properly done would kill millions of jobs quickly, including through the supply chain and through local dealerships. Pure capitalists might like the idea of taking one's medicine now, but creating a midwestern wasteland that drags down the country for a decade might be the result. If government money came in with strings so the layoff pattern could be more gradual, it might be better for all of us. It's not like there are two choices - bankruptcy or unlimited cash to keep doing what they are doing. As far as that goes, bankruptcy might be not as expected either, because the companies would need billions in cash to operate in bankruptcy. That cash would normally be provided by banks/institutions in the form of something called a DIP, but in this market banks don't want to spend their capital on DIPs, so the automakers might file for bankruptcy AND get taxpayer money in the form of a DIP AND a government guaranty on warranties so that people still buy American cars (the big fear is they would stop). Any way you look at it, taxpayer money is highly likely to be needed in large size - now what's the best choice economically and what's the realistic choice politically?
I heard this same argument a couple of times on the Sunday talk shows this morning. That during prosperous or even "ordinary" times, letting the auto companies go into bankruptcy would be the way to go (even Krugman agreed with that). But right now it would be nearly suicidal. In addition to the points 1centaur raised about their inability to come up with the cash to keep operating through the bankruptcy process, letting them go down would totally counteract any stimulus the government hopes to put in place. In addition to costing the govt appox $200 billion in lost tax revenues - I'm not sure how good that number is but it seems to be approaching the level of conventional wisdom. What a mess - they clearly DESERVE to fail and essentially have - but this is not the time to allow such a huge additional black hole to form in the middle of the economy. So a bailout is probably inevitable, the only question being what sorts of conditions are tacked on.

Or maybe the government could just short a whole *****load of auto company stock. Yeah, that'd do it.

-Ray

[TMB]

While it's true that the Big 3 have to cut tons of costs (many of them related to union contracts) to be cost competitive, bankruptcy is merely the most efficient way to make them competitive. Is that the US policy goal? I think not. Bankruptcy properly done would kill millions of jobs quickly, including through the supply chain and through local dealerships. Pure capitalists might like the idea of taking one's medicine now, but creating a midwestern wasteland that drags down the country for a decade might be the result. If government money came in with strings so the layoff pattern could be more gradual, it might be better for all of us. It's not like there are two choices - bankruptcy or unlimited cash to keep doing what they are doing. As far as that goes, bankruptcy might be not as expected either, because the companies would need billions in cash to operate in bankruptcy. That cash would normally be provided by banks/institutions in the form of something called a DIP, but in this market banks don't want to spend their capital on DIPs, so the automakers might file for bankruptcy AND get taxpayer money in the form of a DIP AND a government guaranty on warranties so that people still buy American cars (the big fear is they would stop). Any way you look at it, taxpayer money is highly likely to be needed in large size - now what's the best choice economically and what's the realistic choice politically? BTW, most people think if one car company files they all file because customers will treat them as if they will and they can't get behind on costs.

Carlos Ghosn picked some low hanging fruit at Nissan. There are other talented auto executives.

The US is about to figure out its industrial policy, a scary thought for capitalists because bureaucrats are not as efficient as free markets.

Airlines fail because they keep right on flying with minor tweaks. Not the case for auto companies.

Lehman failed because the government made a mistake.


DIP is actually fairly readily available right now.

The lender gets court sanctioned priority over all other creditors, they can charge a premium for the cash, it is the safest and easiest lending they can do right now.

[saab2000]

Maybe I have been lucky or I'm just stupid, but I think since the early 90's american made cars are pretty damn good. When you figure in the elevated repair cost of Jap cars, the big 3 are often a better value.

I drive a 96' Taurus Wagon with 170K. The only big ticket repair has been 2K for a transmission at 160K. My friend with the 5 year old Honda Odyssey was quoted close to that to fix his auto opening sliding door.

I actually don't have a problem with the quality of US cars. I'd buy a Chevy Malibu today if I needed a car in that class. My family has owned GM cars for a long time. I am sympathetic.

The issue is that most of what they produce doesn't appeal to me. And for many folks a US made car is just not in the cards because of the image problem. Product may or may not be mediocre, but the image is. And image is, after all, everything. Mercedes are really not better quality (JD Powers quality is not always enviable for Mercedes), but there is that perception.

My other bone to pick is not just that they made cars like SUVs and trucks that use gas. It's that now that segment has ground to a halt the US makers are left with their pants down, with little else to offer.

The problems in the economy are deep, without doubt.

FWIW, I am not really in favor of a bailout. It would not fix the underlying issues.

One more thing. Even though I am generally sympathetic to unions (I am a union member myself) I tend to be condemning of union actions that are the ones that have given them a bad name. I don't like their reputation for inflexibility. I don't like the fact that they sometimes are obliged to defend all members, even the indefensible. Etc. I do not think they should be given carte blanche to do what they want. But their power has been greatly diminished over the past generation.

I also do not really blame management. Who can blame them for selling profitable cars like the SUVs and trucks? The problem there was the lack of a longer term strategy (there's that word again).

The problems in the US economy are very deep in my opinion and go to the basics of this society. If we are to become competitive again with a foundation of strength we must invest in education as a society. Only with an educated populace can we grow and become competitive. With some urban areas with high school dropout rates of nearly 50% it is no wonder there is a crisis in this country.

And that's my opinion. Now go out and ride your bikes. :beer:

[Viper]

It all smells like a Michael Keaton movie, a cross between Mr. Mom and Gung Ho. Heck, mebbe some Johnny Dangerously too.

http://www.imdb.com/title/tt0091159/

http://www.imdb.com/title/tt0085970/

[1centaur]

DIP is actually fairly readily available right now.

The lender gets court sanctioned priority over all other creditors, they can charge a premium for the cash, it is the safest and easiest lending they can do right now.

I deal with credits looking at bankruptcy every day. Lack of DIP financing is high on everybody's radar in the business. Word is that Circuit City filed early because DIP was available now, to them, but there is significant fear that many bankruptcies, including those of large companies, will turn into Chapter 7 liquidations for want of a DIP. Why are DIPs scarce? Because there are fewer banks, banks are hording capital, and lots of decent loans are returning L+1000 or more on a yield basis, so L+600, say, for a superpriority loan makes little sense. Cerberus is said to be looking at doing DIPS - my advice is to charge L+1000 and get warrants for 20% of the company, because the market might bear that.

Yes I agree that DIPs are pretty safe. I have talked to loan officers in recent months who perceive some other loans as safe too but they can't get upper management to sign off because capital is more important than anything. A GM DIP would take billions of dollars, which would mean many banks would have to be involved. That's a tough sale. And if they are arm twisted into it, perhaps one might view capital put into them by the government as being re-lent to GM in DIP form. One way or another...

[michael white]

The conditions that led to the former big 3 (now the Detroit 3) teetering on the edge are nothing compared to what the industry is about to face. I would buy a Malibu too--in a heartbeat--but if I sure as heck wouldn't put my life savings in Chevy. Although that's what the govt. wants to do for me.

although I know there's a much bigger picture, still: shouldn't we be backing domestic winners rather than losers?

[RPS]

The problems in the US economy are very deep in my opinion and go to the basics of this society. If we are to become competitive again with a foundation of strength we must invest in education as a society. Only with an educated populace can we grow and become competitive. With some urban areas with high school dropout rates of nearly 50% it is no wonder there is a crisis in this country.That’s a concept that must have limits, right? If all Americans were highly educated who would man the auto assembly lines? Who would wash cars, build houses, work at McDonalds, drive school buses, etc…….

No doubt we need better education, and I certainly agree that improved education ultimately helps society. However, we need to accept that not everyone wants to be or is meant to be highly educated, and that we must also find them a viable role in society that doesn’t lead them to threaten businesses to the point of extinction.

[TMB]

I deal with credits looking at bankruptcy every day. ..

..

As do I .

For 25 years now.

[csm]

it is the old "bad management, bad union, etc argument.
there have been bad decisions on BOTH sides of the agreement. where is the line drawn for bailouts tho?
I'm in the trucking industry and we are going through unheard of issues now; freight levels are down, fuel costs are up, etc. do we get a bailout? and what about the airline industry? travel is down; should we bail them out also?

[acorn_user]

Those suggesting no bail out for the auto industry have never had to condemn 4 million people to joblessness. Regardless of what is capitalistically correct, that is an impossible judgment. Furthermore, part of the whole mess was caused by low production and huge trade deficits in countries like the US and the UK. Not a good time to eliminate a huge chunk of industry.

Also, I would point out that the argument that jobs will be replaced by more efficient industries has really not turned out that will in my home country. When auto, steel and ship building died, nothing really replaced them.

Finally, there is a new agreement with the union that will allow the big three to make considerable cost savings. The financial crisis has hit them just before this occurs.

I say follow the Austrian Daimler-Steyr model. Don't kill it just because it doesn't work now. Fix and and sell it on (in this case to Magna, Bianchi, M.A.N. and General Dynamics).

[1centaur]

As do I .

For 25 years now.

What is your understanding of DIP availability in the hundreds of millions and up? Is the story I am hearing wrong? B of A, Deutsche, JPM, etc. all say they are willing to fund DIPs of size? If so, there's a lot of unwarranted fear - that would be a market mover positively.

[rounder]

Question: What is a DIP and how does it work?? Thanks.

[saab2000]

it is the old "bad management, bad union, etc argument.
there have been bad decisions on BOTH sides of the agreement. where is the line drawn for bailouts tho?
I'm in the trucking industry and we are going through unheard of issues now; freight levels are down, fuel costs are up, etc. do we get a bailout? and what about the airline industry? travel is down; should we bail them out also?

In my opinion? No. And I work in the airline world.

[saab2000]

That’s a concept that must have limits, right? If all Americans were highly educated who would man the auto assembly lines? Who would wash cars, build houses, work at McDonalds, drive school buses, etc…….

No doubt we need better education, and I certainly agree that improved education ultimately helps society. However, we need to accept that not everyone wants to be or is meant to be highly educated, and that we must also find them a viable role in society that doesn’t lead them to threaten businesses to the point of extinction.

Your point is taken, but if we look throughout history and across the world, those societies which have placed education as a high priority have a higher standard of living and are more prosperous.

[RPS]

Looks like bailout versus bankruptcy debate is becoming political. :rolleyes:

GOP to Detroit: Drop dead

http://articles.moneycentral.msn.com/Investing/Extra/gop-to-detroit-drop-dead.aspx?page=1

[1centaur]

DIP stands for Debtor in Possession. In order to operate while in bankruptcy, many companies need cash. Normally, there are existing secured lenders when a company enters bankruptcy, and their security includes cash. In order to attract financing to allow companies to reorganize, the bankruptcy judge allows (after a hearing to argue need) new DIP lenders to provide cash in return for a superpriority security interest in the collateral that would otherwise be controlled by the pre-bankruptcy banks. Since the DIP sometimes is converted into more permanent debt when a company exits bankruptcy, the pre-bankruptcy banks try to limit the size of the DIP in order to maximize the value they get from their previous collateral. Ideally, cash generated by operations during the bankruptcy pays off the DIP so the value of the firm at exit all goes to pre-existing creditors.

If the government provides DIP money to big automakers, it will be in the billions and thus might significantly reduce the recovery values not only of the existing bank debt but the bonds and other securities lower in the capital structure.

If the automakers go into bankruptcy, a bankruptcy judge will have enormous power to decide the future of the industry. Attempts by politicians to assert governmental authority over bankruptcy judges have been thwarted in the past (see Nextwave case). Politicians probably don't want that power to go to someone other than themselves, which should mean they will try to keep the companies out of bankruptcy. Per the Wall Street Journal on Saturday, which I just read today, auto dealers are one of the largest employers in most states. Every auto brand that goes away could mean dealerships that go out of business.

[TMB]

We are getting big dollar DIP on Industrial production equipment ( much heavier than auto mfg); royalty leases and very surprising to me - real property.

I would not have given the debtor 10% chance of getting $$ on the real property and told them that. After I wiped the egg off my face .....................

The Royalty leases do not surprise me, the heavy industrial equip doesn't surprise me either.

The real property did.

[Tobias]

Just like no one company should be allowed to become so big that its downfall could threaten the US economy, IMO no one union entity should be allowed to represent an entire industry. I support unions, but not to the extent that they essentially become a monopoly over an industry. The result is that we lose too much diversification and competition within the industry in question.

[Volant]

This too shall pass. I hope there isn't a bailout. Job losses at the Big 3 will be painful, however, majority will transfer to other industries or competitors (will only 1 go under or 2 or all three?). Supply chain will supply where demand moves. I know of a few owners of parts suppliers, they've already moved majority of their business to U.S.-produced foreign-owned auto manufacturers. They say they'll be, "Just fine."
The gub-mint should let the market play-out. America is in need of a major reset in many areas - the U.S. auto industry just being one of them.

[Birddog]

Per the Wall Street Journal on Saturday, which I just read today, auto dealers are one of the largest employers in most states.

Every auto brand that goes away could mean dealerships that go out of business.

About a week ago I heard a couple of "auto people" on a radio show, and they said they wouldn't be surprised if 25% of dealers closed their doors.

Birddog

[keno]

as many realize but others do not, is not always the liquidation and elimination of a business. Reorganization is what is needed in a bankruptcy setting rather than an infusion of cash into a broken company. That keeps the company going and employees and supply chain alive yet cleans up the company in order to go forward. All parties have to cooperate to survive. It is not an all or nothing solution.

keno

[rounder]

DIP stands for Debtor in Possession.

Your discussion was clear. Thanks 1centaur.

[RPS]

“THE AUTO INDUSTRY MATTERS – TELLING IT LIKE IT IS”

Chevy, Buick, Pontiac, GMC, and Cadillac dealers took out an entire page add in the Houston Chronicle making a case for the importance of the auto industry to the economy. It’s interesting that Saturn didn’t participate.

One of the claims caught my eye: “Domestic automobile production would more than likely fall to zero – even by international producers, due to supplier bankruptcies.”

The whole mess is so unfortunate because there are some really cool models and technologies in the pipeline for introduction over the next few years. Total industry failure (which I agree is highly unlikely) could easily delay the shift towards greener models.

[Ray]

The whole mess is so unfortunate because there are some really cool models and technologies in the pipeline for introduction over the next few years. Total industry failure (which I agree is highly unlikely) could easily delay the shift towards greener models.
Agreed. So are we better off letting the market work and killing the companies just when they might FINALLY be getting it about what kind of cars they need to be building? Or should the govt help keep them going through this crisis with enough conditions to make sure that they don't go back to reliance on SUVs during this temporary period of cheap gas but without such a heavy hand that they can't innovate? I hate to reward ANYone for the level of performance these companies have "achieved" over the past few decades, but if letting them go takes down the whole economy (yeah, I understand that may happen anyway, in which case the deckchair rearranging won't have done any good, or probably much harm either) AND delays the transition to better technology, I say jump in. That's assuming they couldn't achieve the same thing through the bankruptcy process which others can argue either way and to which I can contribute less than nothing.

-Ray

[RPS]

Agreed. So are we better off letting the market work and killing the companies just when they might FINALLY be getting it about what kind of cars they need to be building?Ray, I’m torn on this because any form of assistance (i.e. -- bailout) goes against my basic belief that we are better off in the long run to keep government out of businesses. Yeah, I know we do it often, and from what I can see it normally doesn’t work out well – or as expected.

The biggest problem I see is uncertainty as to what the American public will actually buy. Beyond lip service to small, green, fuel-efficient options will they part with their cash to buy expensive new technologies? I have no idea but remain skeptical. How many Chevy Volts will actually be purchased? It’s a great step forward in electric/hybrid design beyond what Honda and Toyota have done, but will enough Americans buy them at the incredibly high prices to make a profit? I doubt it; although it may get more people into showrooms.

The short-term answer for all three may well be in cars like the Chevy Cruze (based on Motor Trend preview) which are powered by new direct injection small engines that operate with some of the benefits of diesels but run cleaner and on gasoline. However, I just don’t see how the Big Three can make enough profits to survive on small models if SUV and Truck sales evaporate completely. Having gasoline prices remain somewhat low for a short time to help transition may be what is needed to save them.

[goonster]

GM can't be allowed to go under, and here's why:

1. If GM goes bankrupt, doesn't the federal gov't assume the pensions via the "insurance" program? Seems to me it's cheaper to bail out GM (even in the medium term) than shoulder the massive direct and indirect costs of a failure. We should throw good money after bad because it is cheaper than the alternative. $25MMM to keep 2MM people employed for a quarter during a financial crisis? Sounds like a pretty good deal to me.

2. The products are not that bad. People who don't know anything about cars have an exaggerated disdain for GM/Ford and inflated regard for Toyota. GM gave people what they wanted while gas was cheap. Now those same people are crying for a car that gets 100 mpg but still makes 200 hp. I can find a GM or Ford product I'd be willing to buy in almost every segment.

3. If the UAW is so afraid of Ch. 11, let them make their best offer in terms of concessions. This is an opportunity to sit GM/Ford, the UAW and the Feds down at the table and find a role for big labor to help this recovery effort.

4. Do you care if we still make stuff in this country? If yes, we need to find a way to keep GM viable.

Oh, just so we're clear:

1. The Chevy Volt will not save GM on its own. What I hear about the car so far is not encouraging. A medium-size pickup truck with a diesel engine that gets a real 25 mpg and can still tow a boat or haul a load of rocks, would be a step in the right direction.

2. Fuel efficiency is not rocket science. Smaller cars, smaller engines. Period. Nobody needs a V8.

3. All car makers are hurting right now. (Porsche is a notable exception.)

[Birddog]

If GM goes bankrupt, doesn't the federal gov't assume the pensions via the "insurance" program?
I don't think for a minute that we won't be shouldering this burden regardless of any "rescue" plan. The Federal plan, the name of which escapes me just now has limits, but I'd bet a bundle on them making exceptions to the limits in the case of these autoworkers as well. Bend over and grab some soap, the "rescues" are just in their infancy.
There is some good news however.http://finance.yahoo.com/tech-ticker/article/129101/Wall-Street-Woe-Citi-Slashes-Jobs-Goldman-UBS-Execs-Give-Up-Bonuses?tickers=GS,C,UBS,JPM,MS,XLF,BAC

Birddog

[RPS]

A medium-size pickup truck with a diesel engine that gets a real 25 mpg and can still tow a boat or haul a load of rocks, would be a step in the right direction.We can give our government credit for not having those options available here. For years the only diesels that could be sold were the heavy duty variety, so instead of encouraging buyers who wanted diesels to buy the smallest pick-up, van, or other work-type truck that met their needs, they were essentially forced into buying larger vehicles. And it’s not like the technology wasn’t well proven and available.

As an example, in South America and Europe Ford sells the small Ford Ranger with a 4-cylinder Power Stroke diesel that can easily exceed 25 MPG on the highway – and can tow and haul a respectable amount too. But here because the Ranger is a “light-duty” pick-up it can’t be sold with “half” a Power Stroke. For that you have to step up to an F-250.

I understand the arguments against older diesels; but why the inconsistency in allowing me to buy a F-250 with a V-8 Power Stroke diesel to tow a little jet ski or motorcycle trailer and not allow me to buy a Ranger with a I-4 Power Stroke? Half the size, half the engine, half the pollution, and twice the economy? :crap:

[goonster]

We can give our government credit for not having those options available here.

I'm not sure the government is to blame.

Federal emissions standards have gotten tighter in the last three or four years, but prior to that I don't think there were regulatory barriers against small diesels. Remember the Jeep Liberty CRD, which was available only as a fully-loaded package, returned unimpressive fuel mileage, and sold poorly.

Perhaps you can point me to the regulations that encourage 6 liter V8 diesels, but discourage smaller ones in smaller vehicles. I'm sincerely interested.

(I bought a diesel that gets 50 mpg in '98, when gas was $1.25/gal. Still have it.)

[csm]

the hardcore "greenies" are against diesels.

[RPS]

I'm not sure the government is to blame.

Federal emissions standards have gotten tighter in the last three or four years, but prior to that I don't think there were regulatory barriers against small diesels. Remember the Jeep Liberty CRD, which was available only as a fully-loaded package, returned unimpressive fuel mileage, and sold poorly.

Perhaps you can point me to the regulations that encourage 6 liter V8 diesels, but discourage smaller ones in smaller vehicles. I'm sincerely interested.

(I bought a diesel that gets 50 mpg in '98, when gas was $1.25/gal. Still have it.)The government, encouraged by environmentalist, made it next to impossible for smaller diesels to exist because the requirements were much tougher than on larger vehicles. Once a truck/van gets over 8,500 or 8,600 pound gross vehicle weight class (can’t remember the exact number) they don’t have to pass the same emissions test. They also didn’t have to display their fuel economy MPG on the sticker.

The Jeep Liberty with high-pressure common rail fuel injection was one of the new attempts at repopulating diesels in the US. With electronically-controlled high-pressure fuel injection (versus mechanical fuel pump) they are much cleaner – yet not clean enough to meet present standards. That’s were the filters and other after-treatments are coming into play.

Going back to heavy duty, once a truck goes over the 8500 or 8600 GVWR, emissions requirements are simpler to meet (even today) which is why we don’t have ½-ton diesel pickups. Hence we still can’t buy a light-duty Ford Ranger with 4 cylinders of essentially the same engine design as a V-8 because it is held to a higher standard – even though it would pollute much less. I think it is freaking stupid that I can buy a V-8 in a 7,000-pound F-350 4X4 pickup to drive to the mall but can’t buy a Ranger with an I-4 of the same design (just like sold in England and other countries).

[DukeHorn]

What does it mean if Ben Stein is actually supporting the bail-out?

http://larrykinglive.blogs.cnn.com/few-humble-thoughts-about-the-economy-by-ben-stein/

Since some of you believe in trickle-down economics, what is the effect of one of the Big 3 going down with SOME of its attendant industries?

What are the practical effects of writing off the economic development of Detroit? And I'm not being snide. What are we going to do with a city that will be hitting 10-15% unemployment and with retirees that are (I believe) going to lose all their GM health benefits? The UAW retirees are safe but not the white collar retirees that weren't part of the UAW. You don't think that the government is going to have to step in anyways to save them (because we all know that the government will have to do something on that front).

What's the cost-benefit analysis of coming in after the mess and spending to clean it up versus just keeping GM propped up till the credit crunch is over?

I don't pretend to know the answers though it seems a number of posters here aren't looking downstream at other cost factors that will invariably come into play.

Like Paul Krugman said yesterday arguing with George Will, it's one thing to let GM die if it was 5 or 10 years ago, it's entirely another scenario to let GM go down in the current economic environment. Considering Will has his PhD in politics and Krugman won his Nobel Prize in economics, I'll let you figure out the one that I thinks has a better grasp of economics.

As for criticizing regulations, I for one am still baffled why we didn't crack down on mortgage application fraud when there were numerous stories in the newspapers all throughout 04-07 or why these mortgage derivative products were given AAA ratings. Oh wait, that's because we weren't enforcing anything. Hmmm the beauty of a rational free market system run by irrational human beings (sort of ironic how wrong Milton Friedman's theory has been the past 20 years). Just look at Keno's OT thread on the subprime crisis.

[goonster]

I think it is freaking stupid that I can buy a V-8 in a 7,000-pound F-350 4X4 pickup to drive to the mall but can’t buy a Ranger with an I-4 of the same design (just like sold in England and other countries).

Hey, I agree with you, but if you check the history of the regulations these restrictions did not apply until '04, or so. Small diesels were restricted in NY and CA (where smog is a legitimate concern), but available freely everywhere else. You could get a Dodge Ram with the Cummins 6 cyl. in a truck that did not exceed the GWVR figure you list, iirc. I know plenty of people that tore their out for years because of the great diesel cars and trucks that GM and VW refused to sell here, before the government gave them an excuse not to.

As a long-time diesel owner I can tell you there was negligible demand for smaller diesel vehicles. The VW's did not fly off the lots. None of my friends were interested. If GM can lobby (successfully) to get the zero-emissions fleet quota dropped by CARB, they could have lobbied to loosen the federal NOx and particulate regulations.

Most greenies are not as opposed to diesels as you might think. They are too busy pouring old fryer oil into their old Benz's.

[RPS]

You could get a Dodge Ram with the Cummins 6 cyl. in a truck that did not exceed the GWVR figure you list, iirc.You may be correct, but I thought Dodge only offered the Cummins 5.9 liter straight six in ¾- and 1-ton trucks (which would make them above 8,500 lb GVWR). I don’t recall Cummins in 1/2-ton trucks – at least not in a very long time.

The following gives an overview of the Tier 1 and 2 and the implementation schedule. Note that the cutoff is at 8,500 pounds. There is a definite step in requirements at that point.

http://www.dieselnet.com/standards/us/ld.php

I’d still like to think that consumers will accept modern electronic high-pressure diesels which are much faster and quieter than old mechanical designs. It’s a matter of whether the cost can be kept low and if direct gasoline injection makes the diesel somewhat obsolete.

[rounder]

I remember years ago when my father had a diesel VW rabbit. It was a cool car, but you had to turn the AC off when starting off, especially if you were going up a hill. It seems like he used to get 50 mpg, plus diesel was cheaper than regular fuel. Today, diesel audi race cars are blowing other cars off the road, and i think BMW is coming out with a new diesel passenger car. What is different and are they the future rather than hybrids (diesels...not audis) and how come diesel fuel today is so much more expensive than regular?? Just wondering. Thanks.

[MMM]

"What is different and are they the future rather than hybrids (diesels...not audis) and how come diesel fuel today is so much more expensive than regular?? "

The main difference in the new diesels is exhaust after-treatment and EGR. Even the >8500lb trucks are using NOx traps or particulate filters to meet the emissions requirements. Adding after-treatment adds cost to the already expensive diesel system (high-pressure fuel, turbos, intercoolers, EGR, higher cylinder pressures/torques). Furthermore, some of these systems require running rich or injecting fuel into the exhaust to regenerate/clean the after-treatment system thereby negating some fuel economy gains (regen depends on drive schedule). Some systems are using urea to regenerate their systems.

As far as hybrid versus diesel, it depends on your drive schedule, gas cost, hardware cost, what you seek to minimize (fuel cost, CO2, emissions).

Diesel is expensive relative to gasoline due to the low-sulfur requirements that enable the exhaust after-treatment systems (prevent them from being plugged/fouled, requiring more regen). I believe Low-Sulfur Diesel is currently capacity constrained causing the higher cost.

http://www.fueleconomy.gov/feg/lowsulfurdiesel.shtml

Matt

[RPS]

I remember years ago when my father had a diesel VW rabbit. .......snipped..........What is different.......snipped.....You can look it up on the net very easily, but the main difference comes down to technological advancements in diesel fuel injection. New engines rely on very high pressure pumps and electronically controlled fuel injectors. Old diesel engines on the other hand relied on a mechanical pump and separate fuel lines to each cylinder that couldn’t be controlled like is possible today. They were loud because injection occurred as one shot into the cylinder (producing a mini explosion, or the loud diesel rattle). And at high engine load they smoked a lot because the fuel couldn’t burn completely (hence the black smoke).

The other very big difference is that diesel engines can now use a lot more turbo boost and run faster, which means they can produce a lot more horsepower from the same engine size. This is also now possible because of the advancements in fuel injection. For example, a 3-liter turbo diesel can produce as much horsepower as many 3-liter non-turbo gasoline engines. Acceleration is on par or even better than some comparable gas engines.

[rounder]

Good post MMM. I have read some things about transit. A lot of the the vehicles are running these days on LNG or CNG. I think i read that it must be stored at cold temperatures...about -30 degrees or something like that. Also, have read about LNG or CNG tansit buses that were acquired to run on alternative fuels. The problem was that their runs were so long, that they could not refuel before they got to empty and could not get back to the stations. There was a place in Chatanooga TN (believe) where buses were running on all electric. They would run their routes and get recharged (stop on a charging station), then go on their way for another 30 miles (max). It seemed like a good idea so long as you were not going very far. There are major problems with all of the alternate sources of fuel, or we would already be using them.

Anyway, i believe in the research but don't believe we are anywhere close to being able to give up regular fuel for an alterative technology. For the time being, plan on keep riding the train to work.

[rounder]

You can look it up on the net very easily, but the main difference comes down to technological advancements in diesel fuel injection. New engines rely on very high pressure pumps and electronically controlled fuel injectors. Old diesel engines on the other hand relied on a mechanical pump and separate fuel lines to each cylinder that couldn’t be controlled like is possible today. They were loud because injection occurred as one shot into the cylinder (producing a mini explosion, or the loud diesel rattle). And at high engine load they smoked a lot because the fuel couldn’t burn completely (hence the black smoke).

The other very big difference is that diesel engines can now use a lot more turbo boost and run faster, which means they can produce a lot more horsepower from the same engine size. This is also now possible because of the advancements in fuel injection. For example, a 3-liter turbo diesel can produce as much horsepower as many 3-liter non-turbo gasoline engines. Acceleration is on par or even better than some comparable gas engines.

Thanks RPS.

[csm]

maybe Joe Biden could convince the 50% or so that voted for his ticket that buying a vehicle from the big 3 is as patriotic as paying more income taxes.

[dancinkozmo]

GM can't be allowed to go under, and here's why:

1. If GM goes bankrupt, doesn't the federal gov't assume the pensions via the "insurance" program? Seems to me it's cheaper to bail out GM (even in the medium term) than shoulder the massive direct and indirect costs of a failure. We should throw good money after bad because it is cheaper than the alternative. $25MMM to keep 2MM people employed for a quarter during a financial crisis? Sounds like a pretty good deal to me.

2. The products are not that bad. People who don't know anything about cars have an exaggerated disdain for GM/Ford and inflated regard for Toyota. GM gave people what they wanted while gas was cheap. Now those same people are crying for a car that gets 100 mpg but still makes 200 hp. I can find a GM or Ford product I'd be willing to buy in almost every segment.

3. If the UAW is so afraid of Ch. 11, let them make their best offer in terms of concessions. This is an opportunity to sit GM/Ford, the UAW and the Feds down at the table and find a role for big labor to help this recovery effort.

4. Do you care if we still make stuff in this country? If yes, we need to find a way to keep GM viable.

Oh, just so we're clear:

1. The Chevy Volt will not save GM on its own. What I hear about the car so far is not encouraging. A medium-size pickup truck with a diesel engine that gets a real 25 mpg and can still tow a boat or haul a load of rocks, would be a step in the right direction.

2. Fuel efficiency is not rocket science. Smaller cars, smaller engines. Period. Nobody needs a V8.

3. All car makers are hurting right now. (Porsche is a notable exception.)

good post goonster....just curious, a friend of mine is an engineer working on the Volt, what have you heard thats "not encouraging" ?

[soulspinner]

if they get_any_money, it needs to come with 100% new management, new labor contracts and revamped line-up of cars. the question isn't whether the big 3 need to completely changed how they do business but how will they get there: bankruptcy or bail-out with ironclad strings attached. given how the gov't has bungled the financial bailout, i guess bankruptcy is the best route.


+1-I remember doing a paper in grad school on GM and their bloated middle management-and that was in the early 90s. The American car makers staked their future on trucks and vehicles based on those chassis. With fuel spiking as it has periodically they never made a plan for today. I worked at a dealership that sold Toyotas and Chevrolets. The difference in quality was even more pronounced than the numbers indicated-the Chev technicians were cherry picking bad engines for some time and sending those cars back to the factory before they could be statitistics. And Toyotas have more American made parts than any manufacturer so dont blame it on American made quality(lack of).

[goonster]

what have you heard thats "not encouraging"

There will be too few of them, and GM won't make money on them. Remember, they'll sticker at around $40k.

Technologically, it sounds terrific. They've really committed to the electric drivetrain and it obviously represents a real leap forward.

The EV1 was a great car too, but it was always a subsidized program intended to appease legislators.

[csm]

another issue I see with the Volt is at the dealerships. Because this is the "next hot thing" they will undoubtably add lots of mark-up on the already bloated base price. same thing happened and is still happening to some extent with the Prious.
I think the concept of the Volt is solid; it is just unfortunate that it will be a GM product. I recently dealt with a GM dealer when I was car shopping. I was looking at the Caddy CTS and wanted to buy American (as it may be). I had such a bad dealership experience that I would probably not consider one again. And I am still getting emails from them 4 months later! I've actually added their address to my spam filter.
the owner of said dealer was in the local paper yesterday touting a $2/gallon additional gas tax to "bail" out Detroit. The family of this guy have owned GM dealerships since 1931 and have done very well.
obviously he is one idiot in a storm about this gas tax but still.... what kind of thinking is that?

[RPS]

The EV1 was a great car too, but it was always a subsidized program intended to appease legislators.In retrospect I’m not sure the costs were worth it. Nearly 20 years later we still don’t have a bunch of electric cars running around California, but we do have an industry on the verge of bankruptcy. That’s not to say the EV-1 program cost the downfall of GM, but it should serve as a reminder that government should set broad goals and stay out of mandating specifics on how those goals should be met.

[goonster]

it should serve as a reminder that government should set broad goals and stay out of mandating specifics on how those goals should be met.

Ha! The gummint did not mandate any specifics.

In brief:

California mandated that some portion of all major manufacturer's fleets be zero emissions vehicles.

GM hedged its bets: They immediately began to lobby against the regulation, and they also allocated some money for a program that would let them comply.

To GM's credit, there were apparently some execs who thought big and long-term, so the money was spent to develop and build a brand new car. In effect, the cars were the usable product of a larger scale research project, built in limited numbers and leased for a symbolic amount to select customers.

As a global organization, GM were never fully committed to scale the EV1 to national production. I can fully understand that the project did not appear profitable in the big picture. Today, Rick Wagoner acknowledges that the decision to kill the EV1 was, if nothing else, a massive PR mistake.

At any rate, although the California mandate sparked the impetus for the project, it did not dictate the specifics. There were easier and cheaper ways to comply. Ford and Toyota simply packed a bunch of batteries into existing Explorer and RAV4 bodies, and called it a day.

As an engineer, car fan and guy who bought a fuel-miser when gas was cheap, I give you one reason why the Big Three do not offer energy-efficient cars today. Their American customers did not want them*. To blame them today with a "failure to lead" constitutes massive hypocrisy.

(* = VW diesels sold in small numbers. The Honda Insight sold slowly, despite heavily subsidized pricing. The Prius became profitable only recently, and its sales were supported by tax rebates, HOV lane privileges, etc. All these vehicles were bought primarily by folks widely derided as greenies, treehugging dirt worshippers, etc.)

In the big picture though, all this talk about the product is mostly moot. GM and Ford sales are not that bad, compared to the competition. It's not that they're not selling cars (because they are), it's that they can't figure out how to make money on those cars. And the reason for that is the legacy costs.

And while the unions are easy targets, I'd like to remind everyone that those legacy costs are just a harbinger of what is to come for all of us. I'm talking about the entitlements (Medicare, Medicaid, Social Security) that not even John McCain dared to propose cutting. It may seem expedient to suggest that GM get out from under its obligations via Chapter 11, but it won't be so easy for the nation.

[DukeHorn]

Krugman seems to think that with the credit crunch that GM will go from Chapter 11 to Chapter 7 fairly quickly.

Does that change anyone's opinion if GM is liquidated?

[Karin Kirk]

As an engineer, car fan and guy who bought a fuel-miser when gas was cheap, I give you one reason why the Big Three do not offer energy-efficient cars today. Their American customers did not want them*. To blame them today with a "failure to lead" constitutes massive hypocrisy.


I disagree. Yes, Americans have largely bought gas-guzzlers, but is that because that's what people truly wanted, or is it because
a) by and large, that's all that is available? (for example how many station wagon models are out there?)
b) people responded to massive advertising and imaging campaigns that equated the size of your truck to the size of your manhood, or the size of your SUV to the safety of your kids in back?

I think people have bought what has been fed to them.

Secondly, even if people did really truly want 18 mpg cars, it still constitutes a massive failure in leadership to not have something in the 35 mpg range ready and waiting for when the tide shifted. How can these companies really believe that putting all their eggs in the 18 mpg basket is going to pan out in the long haul?

Now all they can do is run repeated ads marveling at how awesome their 23 mpg offering is, as if that is anything to brag about.

Lastly, the govt has played a role here too in not forcing better fuel economy sooner. But still the auto companies have got to see higher gas prices coming and not act all shocked and victimized when the inevitable happens.

[RPS]

Ha! The gummint did not mandate any specifics.

In brief:

California mandated that some portion of all major manufacturer's fleets be zero emissions vehicles.Respectfully, we are not really disagreeing on much here, so I’m not going to argue about GM’s EV-1.

However, what I’m talking about is thinking much broader and not specifically mandating Zero Emissions Vehicles, or “ZEVs”. Obviously a car can be made with zero emissions at the point of use by utilizing different technologies, but in reality battery/electric is/was the only close to viable. GM and others could have tried using flywheels, compressed air, or something else like fuel cells that were far ahead of its development time, but the point remains that to store energy on the vehicle did not address the problem at hand directly, did it?

The goals should have been set towards solving the real problem; and not telling GM and other manufacturers that they needed to make a few cars with zero emissions. And what really troubles me is the approach used by CA – do what we want or else you can’t sell vehicles in our state. If done at a personal and not government/corporate level, most of us would be insulted by that kind of ultimatum and tell them to drop dead.

[fiamme red]

I disagree. Yes, Americans have largely bought gas-guzzlers, but is that because that's what people truly wanted, or is it because
a) by and large, that's all that is available? (for example how many station wagon models are out there?)
b) people responded to massive advertising and imaging campaigns that equated the size of your truck to the size of your manhood, or the size of your SUV to the safety of your kids in back?Don't forget the tax credits that encouraged small business owners to purchase SUV's and Hummers.

http://abcnews.go.com/Technology/Hybrid/Story?id=97505&page=1

[csm]

a "zero-emissions" vehicle is basically offsetting enviromental damage elsewhere. those batteries use lots of heavy metals and chemicals. and those don't come without a price.

[soulspinner]

a "zero-emissions" vehicle is basically offsetting enviromental damage elsewhere. those batteries use lots of heavy metals and chemicals. and those don't come without a price.

Batterys and chemicals are 100 percent recyclable, bad air aint...

[Pete Serotta]

Don't forget the tax credits that encouraged small business owners to purchase SUV's and Hummers.

http://abcnews.go.com/Technology/Hybrid/Story?


id=97505&page=1

I paid a $1000 gas tax for my BMW M3 and I get 20+ miles per gallon. This was at the same time that I would have gotten a credit for buying an Explorer or Hummer. Yep I bought the BMW and had a glass of red! LOGIC and POLITICS do not occupy the same universe :D

[Pete Serotta]

Dave should be thankful!!!

I disagree. Yes, Americans have largely bought gas-guzzlers, but is that because that's what people truly wanted, or is it because
a) by and large, that's all that is available? (for example how many station wagon models are out there?)
b) people responded to massive advertising and imaging campaigns that equated the size of your truck to the size of your manhood, or the size of your SUV to the safety of your kids in back?

I think people have bought what has been fed to them.

Secondly, even if people did really truly want 18 mpg cars, it still constitutes a massive failure in leadership to not have something in the 35 mpg range ready and waiting for when the tide shifted. How can these companies really believe that putting all their eggs in the 18 mpg basket is going to pan out in the long haul?

Now all they can do is run repeated ads marveling at how awesome their 23 mpg offering is, as if that is anything to brag about.

Lastly, the govt has played a role here too in not forcing better fuel economy sooner. But still the auto companies have got to see higher gas prices coming and not act all shocked and victimized when the inevitable happens.

[csm]

those chemicals and metals come out of the ground on their own and leave no lasting damage through mining and water run-off.
not to mention the air pollution put out from the equipment used.

[Pete Serotta]

Both have environmental considerations, Hopefully when it becomes time to get rid of batteries (for new ones) their is a environmental friendly process. Additionally when we have "all electric" cars that we will recharge, the UTILITY company will have updates to their COAL plants. :confused:

Their is no single sugar pill for the environment BUT many small steps that we ALL can take. :)

those chemicals and metals come out of the ground on their own and leave no lasting damage through mining and water run-off.
not to mention the air pollution put out from the equipment used.

[RPS]

Batterys and chemicals are 100 percent recyclable, bad air aint...Did you happen to see the 60-Minutes piece on illegal electronics recycling in China?

It’s one thing to say we can recycle anything (usually in a lab setting to prove a concept) and another to actually recycle them in the real world. All the electronic stuff loaded with heavy metals that we and other nations are sending to China (illegally :rolleyes: ) to be recycled is causing a nightmare there. Heavy metals are going down the river, into the groundwater, and people are dying from the pollution.

Engines today are so clean they should be very low on our list of things to worry about as they relate to pollution – except for global warming if you include CO2 as a form of pollution.

[soulspinner]

those chemicals and metals come out of the ground on their own and leave no lasting damage through mining and water run-off.
not to mention the air pollution put out from the equipment used.

Ok, lets walk

[soulspinner]

Did you happen to see the 60-Minutes piece on illegal electronics recycling in China?

It’s one thing to say we can recycle anything (usually in a lab setting to prove a concept) and another to actually recycle them in the real world. All the electronic stuff loaded with heavy metals that we and other nations are sending to China (illegally :rolleyes: ) to be recycled is causing a nightmare there. Heavy metals are going down the river, into the groundwater, and people are dying from the pollution.

Engines today are so clean they should be very low on our list of things to worry about as they relate to pollution – except for global warming if you include CO2 as a form of pollution.

Read on car labels how much CO2 comes out every mile from a small clean burning 4 cyclinder...its given in pounds.

[gemship]

I paid a $1000 gas tax for my BMW M3 and I get 20+ miles per gallon. This was at the same time that I would have gotten a credit for buying an Explorer or Hummer. Yep I bought the BMW and had a glass of red! LOGIC and POLITICS do not occupy the same universe :D


why do they tax that model? Is it because its a sporty car making a lot of power? Does a Subaru wrx turbo get a similar tax?

I would love to own a car like that but unfornately I'm a one truck guy. Need the truck for free firewood. However I have been contemplating a Subaru Forester with a tow ball attachment for a trailer. I love free wood for my wood stove.

[1centaur]

I disagree. Yes, Americans have largely bought gas-guzzlers, but is that because that's what people truly wanted, or is it because
a) by and large, that's all that is available? (for example how many station wagon models are out there?)
b) people responded to massive advertising and imaging campaigns that equated the size of your truck to the size of your manhood, or the size of your SUV to the safety of your kids in back?

I think people have bought what has been fed to them.

Secondly, even if people did really truly want 18 mpg cars, it still constitutes a massive failure in leadership to not have something in the 35 mpg range ready and waiting for when the tide shifted. How can these companies really believe that putting all their eggs in the 18 mpg basket is going to pan out in the long haul?

Now all they can do is run repeated ads marveling at how awesome their 23 mpg offering is, as if that is anything to brag about.

Lastly, the govt has played a role here too in not forcing better fuel economy sooner. But still the auto companies have got to see higher gas prices coming and not act all shocked and victimized when the inevitable happens.

I disagree back.

Lots of people really loved/love SUVs. I don't seem to remember that sentiment about station wagons. If manhood was the issue a lot more of those drivers would be in pick-ups. And yes, safety was something people liked, men and women. I am not a big believer in mass long-term delusion created by advertising. I am profoundly not a believer in inventing a new vehicle type, spending billions to ramp it up, and then seeing if ad campaigns will create demand.

As for having high gas mileage cars in the wings, that would be a luxury not available given low profit margins and vigilant shareholders. Consumer products managers are in the business of producing what sells, not what might sell five years from now if the world changes in a way most people don't expect. Car companies have it worse than most consumer products companies because they need five years to develop a new model, tool for it and start rolling it off the line.

As noted elsewhere, the BIG 3 were not alone in their pursuit of SUV buyers, and the econobox market was wide open lo these many years to all who wished to pursue it. Bueller? Bueller? Detroit pushed that angle hard in part because the CAFE standards granted truck exceptions and the politicians were focused on a market they imagined, not one that existed.

As for politicians pushing fuel standards, well, that's not what voters wanted to drive so that was a threat to union jobs. How hard was that going to get pushed? As geopolitical policy it makes sense. As politics, it was a loser.

[RPS]

Read on car labels how much CO2 comes out every mile from a small clean burning 4 cyclinder...its given in pounds.I have a hard time thinking of carbon dioxide as pollution because it would suggest that when out riding my bike I’m polluting a lot more than if I sit on the couch. Technically correct yet personally irrelevant.

BTW, do these car labels list CO2 for electric vehicles? That is, do labels include producing the electricity to power them and any incremental recycling associated with batteries, controllers, etc... I honestly don’t know but would like to learn.

[andy mac]

I disagree back.



As for having high gas mileage cars in the wings, that would be a luxury not available given low profit margins and vigilant shareholders. Consumer products managers are in the business of producing what sells, not what might sell five years from now if the world changes in a way most people don't expect. Car companies have it worse than most consumer products companies because they need five years to develop a new model, tool for it and start rolling it off the line.


(this dates back to may, wonder what figures are now?)


Toyota has announced today that worldwide cumulative sales of the Toyota Prius – the world’s first mass-produced petrol/electric hybrid vehicle – have passed the 1 million mark, with approximately 1,028,000 units sold as of the end of April this year*1.

Prius sales are strong in more than 40 countries and regions, including over 100,000 cumulative sales in Europe of which 23,893 have been in the UK. For 2008 Prius sales are up 7.1 per cent in the UK over the same period last year.

Based on sales figures collected up to April 30, 2008, Toyota believes that Prius vehicles worldwide have contributed to a reduction in CO2 emissions (considered a cause of global warming) by producing approximately 4.5 million tons*2. less CO2 when compared with conventional petrol-powered vehicles in the same class and of similar size and driving performance.

The Prius was launched in Japan in 1997 and began selling in Europe, North America and other markets in 2000. In 2005, Toyota began first overseas production of the Prius in Changchun, China, and sales of Prius vehicles in South Korea are expected to begin in the latter half of 2009.

In 2003, the second-generation Prius, equipped with the Toyota Hybrid System II, was introduced with improved environmental performance and power.

As part of its high-priority environment-management policies, Toyota has made a concerted effort to promote and popularise hybrid technology, chiefly through the Prius. Toyota aims to sell 1 million or more hybrid vehicles annually as early as possible in the 2010s.

1. Based on TMC data.
2. Number of registered vehicles Î distance travelled Î actual fuel efficiency in each country CO2 conversion factor.

[PacNW2Ford]

one million vehicles in ten years in 40 countries isn't a lot. Ford sold over 3.7 million Explorers in the US alone in approximately the same period.

Not saying that's a good thing, it's just the math.

[andy mac]

one million vehicles in ten years in 40 countries isn't a lot. Ford sold over 3.7 million Explorers in the US alone in approximately the same period.

Not saying that's a good thing, it's just the math.



what's the trend?

[michael white]

I am not a big believer in mass long-term delusion created by advertising. .


if mass long-term delusion doesn't come from advertising, then where does it come from?

anyone who has spent a lot of time in Europe in the past couple of decades knows that we've been living in a house of cards as far as our transportation model. It was always set up to fail as business practice, and now that it is actually coming unglued, clearly there's no surprise.

America is great and all that, but living abroad and then coming back and looking at the vehicles clogging a normal road here can only bring a sense of shock: what in heck are these people thinking? It's as if virtually every single person on the road had completely lost their senses in that one regard. It is not, at all, just a question of econoboxes vs. SUV's . . . Europe is full of very nice, premium-level smaller vehicles that mostly outperform their American counterparts pound for pound. This is widely known. Car enthusiasts have long lamented the fact that Ford won't bring the GOOD Ford Escort, preferring to continue to give us the bad domestic Escort with its primitive twist-beam suspension, letting that whole market segment moulder as it dies under its fake chrome fake air vents (I read they finally will be bringing the good one next year). So if Americans feel this way, as much as the rest of the world--then whose fault is it, this mass delusion? Do you think that we've actively chosen to kill our own auto industry? Like, maybe, Americans just feel enough is enough, so go to hell, Detroit, we're buying Korean? Who takes the fall for bad design/industry failure?

[soulspinner]

I have a hard time thinking of carbon dioxide as pollution because it would suggest that when out riding my bike I’m polluting a lot more than if I sit on the couch. Technically correct yet personally irrelevant.

BTW, do these car labels list CO2 for electric vehicles? That is, do labels include producing the electricity to power them and any incremental recycling associated with batteries, controllers, etc... I honestly don’t know but would like to learn.

Its a matter of degree. Driving your car to another state produces tons of CO2. Exhaling while excercising can be handled by x number of plants in the atmosphere and changed to O2. Pure electric cars produce no CO2. Hybrids do(much less), and their pollution numbers are required on the fed label.
No,the labels do not include any recycling data,or info about the production of electricity etc. The batteries are nickel hydride.

[rwsaunders]

While Toyota sings the hybrid tune (3 models), what about these six models.... all SUV's.....Highlander, RAV4, 4Runner, FJ Cruiser, Sequoia, Land Cruiser. Ford makes four SUV models. two hybrids.

[Birddog]

This upstart co was paying too much attention to the Big 3. Maybe it was envy.
http://www.kia.com/borrego/microsite/?cmp=bormicro&src=kia
http://www.thetruthaboutcars.com/2009-kia-borrego-review/
It’s hard to know what Kia was thinking when it decided to carve out a slice of a shrinking not to say anorexic vehicle genre. Place holder? Small bet on the formerly high-profit American SUV market’s resurrection? Or just bad timing, given the average model’s four-year development cycle. One thing’s for sure: even at $27k, the powerful Kia Borrego is heading nowhere fast. The problem isn’t that the Borrego isn’t a decent vehicle. Just that it’s a safe, conventional play in a dying segment.

Birddog

[dancinkozmo]

Wagoner: "Guys check out my new ride ...it parallell parks by itself"

Mullalley: "Nice... you got the Lexus, Im a Acura man myself ...I love my TL"

Chrysler Guy: "I cant believe you guys ! What ever happened to buying American Made ? Supporting your neighbour ? My BMW X5 was made in godd ol' South Carolina .... USA ! USA ! USA !

[Viper]

A fantastic Op-ed in today's NY Times, by Mitt Romney:

http://www.nytimes.com/2008/11/19/opinion/19romney.html?ref=opinion

[Birddog]

But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

Yeah, just ask the French.

[Viper]

Yeah, just ask the French.

Ask Randi Weingarten too. Detroit is broken, so is our educational system. We pay more and more, getting less and less. Tenure should not exist, it's the equivalency of the packages/buy-outs failed corporate execs receive. America spent $553 billion on public elementary/secondary education (K-12) in 2006-2007 (4.2% of GDP). How's it working for us?

http://64.233.169.132/search?q=cache:SvLEAXdboCAJ:www.amazon.com/Inside-American-Education-Thomas-Sowell/dp/0029303303+america+education+system+bankrupt&hl=en&ct=clnk&cd=5&gl=us

http://74.125.95.132/search?q=cache:IuaNn3y7lDQJ:www.heritage.org/research/Education/bg2179.cfm+america+spends+on+education+annually&hl=en&ct=clnk&cd=1&gl=us

[johnnymossville]

I'm totally against this bailout. It's hard enough trying to run a company with Unions and Management sharing power. Imagine having an Incompetent Government, Greedy Unions with Govt. Sympathy AND Management trying to run it. 2 against 1 isn't exactly good odds, especially if you add in the fact so many foolish people in this country believe Corporations are EVIL.

Let them go bankrupt and breakup the union. I'm amazed they've managed to stay in business this long.

[goonster]

Read on car labels how much CO2 comes out every mile from a small clean burning 4 cyclinder...its given in pounds.

Perhaps, but they are fractions of pounds.

VW 2.0L FSI Turbo (GTI) = 189 g/km = 0.669 lb/mi
Honda 1.8L VTEC (Civic) = 158 g/km = 0.559 lb/mi

Still, your point is well taken. It is a lot. Certainly not a neglible amount.

"Clean burning" engines don't reduce the amount of CO2 produced, since that (along with water vapor) is an end product of combustion. They reduce the amount of unburned fuel and other byproducts.

For comparison:

GM 6.2L V8 (Corvette) = 317 g/km = 1.12 lb/mi

[Karin Kirk]

Consumer products managers are in the business of producing what sells, not what might sell five years from now if the world changes in a way most people don't expect. Car companies have it worse than most consumer products companies because they need five years to develop a new model, tool for it and start rolling it off the line.
Yes, you are making my point exactly! Leadership means looking forward beyond the present day. Leadership means forecasting market trends and creating various strategies based on that. Car companies need 5 years to develop new models so that only reinforces their need to be on their toes and looking ahead. As for people not expecting gas prices to rise -- really? How could someone not expect that over the long term?



As for politicians pushing fuel standards, well, that's not what voters wanted to drive so that was a threat to union jobs. How hard was that going to get pushed? As geopolitical policy it makes sense. As politics, it was a loser.
Agreed, but looking at the situation now, it would have made sense politically wouldn't it? The Big 3 wouldn't be caught with their pants down in terms of having something efficient to offer.

[csm]

when I bought my '08 WRX STI in July I paid no extra tax.

[gemship]

A fantastic Op-ed in today's NY Times, by Mitt Romney:

http://www.nytimes.com/2008/11/19/opinion/19romney.html?ref=opinion


that was great, he's speaking the truth. I was very surprised when Mc cain didn't pick him.

[goonster]

Leadership means forecasting market trends and creating various strategies based on that. Car companies need 5 years to develop new models so that only reinforces their need to be on their toes and looking ahead. As for people not expecting gas prices to rise -- really? How could someone not expect that over the long term?

You're absolutely right about this. The Big 3 failed miserably in this regard.

I still contend that consumers wanted SUV's. Mostly this had to do with the perception of safety and what I like to call the "snowy dirt road fantasy", i.e. consumers picture a scenario of nearly impassable conditions where they "need" the truck to avoid a fate of freezing to death or being eaten by wolves.

There have been plenty of station wagons available over the last ten years, and all sold relatively poorly. Why would Toyota and Honda discontinue the wagon versions of the Camry and Accord respectively if there was decent demand? Friends of mine traded an A4 wagon for a Pathfinder because the SUV "had more room". Doesn't make sense to me either, but there was a lot of that going on. (I'm a big fan of wagons, by the way)

[93legendti]

You're absolutely right about this. The Big 3 failed miserably in this regard.

I still contend that consumers wanted SUV's. Mostly this had to do with the perception of safety and what I like to call the "snowy dirt road fantasy", i.e. consumers picture a scenario of nearly impassable conditions where they "need" the truck to avoid a fate of freezing to death or being eaten by wolves.

There have been plenty of station wagons available over the last ten years, and all sold relatively poorly. Why would Toyota and Honda discontinue the wagon versions of the Camry and Accord respectively if there was decent demand? Friends of mine traded an A4 wagon for a Pathfinder because the SUV "had more room". Doesn't make sense to me either, but there was a lot of that going on. (I'm a big fan of wagons, by the way)

I sure do.


I used to have a car that couldn't get up my driveway without a flying start if there was the least bit of snow.

And I'll never forget a 13" snowfall soon after New Years where rear wheel drive cars were literally stuck spinning there wheels trying to climb a hill on a side street. I passed them like a slalom skier.

Even if my 4000 lb suv wasn't safer than a 2000lb car (of course it is), 4 wheel or AWd is a safety feature. With 2 young kids, car seats and the need to haul stuff when we go on a driving vacation (no private jet ala Al Gore), space is a valuable commodity. Heck, we barely made it to the airport in May, because the double stroller JUST squeezed in the car. If not we would have had to take 2 small cars just to go the airport to go on vacation.

I compared my XC90 to the Cross Country - there's more room in my XC90.

[Viper]

when I bought my '08 WRX STI in July I paid no extra tax.

That's the only Subaru I like:

http://www.youtube.com/watch?v=SSCcqcpvPjA

:beer:

[Elefantino]

It's OK. Ford announced the new Mustang has ... MORE HORSEPOWER!

(OK, so it also is debuting a new, 33 mpg Fusion that no one will buy.)

But the Mustang has ... MORE HORSEPOWER!

(And it also has a solid-axle rear suspension, which I think the Model T did, also.)

Gas is under $2!

Buy more Mustangs!

[csm]

viper, yup that's the one. 'cept mine's charcoal gray instead of world rally blue.
I need to order the winter tires/wheels soon.

[RPS]

Yes, you are making my point exactly! Leadership means looking forward beyond the present day. Leadership means forecasting market trends and creating various strategies based on that. Car companies need 5 years to develop new models so that only reinforces their need to be on their toes and looking ahead. As for people not expecting gas prices to rise -- really? How could someone not expect that over the long term?In fairness to auto senior managers, if it was so easy to predict gas was going to go from $2 to $4 so quickly, why did so many millions of smart Americans suddenly end up with relatively new large SUVs and trucks bought over the last few years? And for a while not only could they not afford to drive them, but couldn't sell them either (i.e. -- they had so little trade-in value). Obviously the only answer is that they too didn’t see it coming, did they? Nor did I, or I could have made some money from it.

Predicting the future is not as easy as it sounds IMHO -- except in hindsight. ;)

[RPS]

Pure electric cars produce no CO2. Hybrids do(much less), and their pollution numbers are required on the fed label.At the point of use. For now most all incremental electric power comes from coal. How much CO2 per mile is that?

[soulspinner]

At the point of use. For now most all incremental electric power comes from coal. How much CO2 per mile is that?


Point taken. And what I still dont get is what IS clean burning coal? And what percentage(almost all) of incremental(is that household and industrial) power. I live in NY state and was under the impression that most of our electric comes from water power...

[RPS]

Car enthusiasts have long lamented the fact that Ford won't bring the GOOD Ford Escort, preferring to continue to give us the bad domestic Escort with its primitive twist-beam suspension, letting that whole market segment moulder as it dies under its fake chrome fake air vents (I read they finally will be bringing the good one next year). So if Americans feel this way, as much as the rest of the world--then whose fault is it, this mass delusion?The main difference in my opinion is the higher gas prices in Europe. If you brought or produced high-end small cars here and priced them accordingly so they would compete on an equal price basis with much larger yet simpler vehicles, a very large number of Americans will take space, safety, and capability over small luxury. It is the higher gas prices in Europe that shifts that tradeoff.

The same exact thing happened here in the US in the RV industry. High-end models of small size had limited market penetration or failed miserably. Given a certain budget, “most” buyers would buy a 35-foot inexpensive motorhome that got 6 MPG than a 24-foot luxury unit that got up to 10 MPG.

[soulspinner]

Perhaps, but they are fractions of pounds.

VW 2.0L FSI Turbo (GTI) = 189 g/km = 0.669 lb/mi
Honda 1.8L VTEC (Civic) = 158 g/km = 0.559 lb/mi

Still, your point is well taken. It is a lot. Certainly not a neglible amount.

"Clean burning" engines don't reduce the amount of CO2 produced, since that (along with water vapor) is an end product of combustion. They reduce the amount of unburned fuel and other byproducts.

For comparison:

GM 6.2L V8 (Corvette) = 317 g/km = 1.12 lb/mi
Thinl about what you just wrote. Thats, for the vw for instance, 2/3 of a pound every mile. And Americans average over 12000 mile per year per driver...just sayin

[RPS]

Point taken. And what I still dont get is what IS clean burning coal?I guess it depends on whether you see CO2 as pollution or merely as a gas that makes the earth warmer. Is there such a thing as heat pollution? :confused: Maybe just semantics? If you see it as pollution then there is no such thing as clean coal IMHO. If you consider global warming a different and stand-alone issue then a coal plant that burns cleanly with only/mostly CO2 and water vapor as emission would be clean.

Personally I don’t like to think of CO2 as a “pollutant”.

[michael white]

The main difference in my opinion is the higher gas prices in Europe. If you brought or produced high-end small cars here and priced them accordingly so they would compete on an equal price basis with much larger yet simpler vehicles, a very large number of Americans will take space, safety, and capability over small luxury. It is the higher gas prices in Europe that shifts that tradeoff.

The same exact thing happened here in the US in the RV industry. High-end models of small size had limited market penetration or failed miserably. Given a certain budget, “most” buyers would buy a 35-foot inexpensive motorhome that got 6 MPG than a 24-foot luxury unit that got up to 10 MPG.


Well, we're starting to see European style cars like the Fit selling like hotcakes here. There are lots and lots of em on the other side of the pond, these relentlessly developed cars which are fun, pleasant, and competent--everything the domestic small car has never been. You actually don't give up space or capability in these cars, and probably not much in terms of safety. It's just a good design for a new age. Just ask Ray. But where's the US version? I know Saturn has the Astra, a rebranded Opel . . . I'm just sayin: here's the market, here's the need . . . Detroit, you want a bailout, give us the friggin car!

[Karin Kirk]

I still contend that consumers wanted SUV's. Mostly this had to do with the perception of safety and what I like to call the "snowy dirt road fantasy", i.e. consumers picture a scenario of nearly impassable conditions where they "need" the truck to avoid a fate of freezing to death or being eaten by wolves.

Exactly! All of these "wants" are driven by marketing. They are not true, rather they are pushed along by advertising. Maybe we are arguing opposite sides of the same coin, but I maintain that the auto industry propagated the "need" for SUVs and therefore people lined up to buy them. That's all well and good but in the meantime the manufacturers should have been taking their money and investing it in something other than the same ol' thing.

And RPS, I contend that's why people continued to buy big cars despite the likelihood of high gas prices. The perceived advantages seemed to override the disadvantages.

Of course it's hard to predict exactly when oil prices will rise, and by how much. But the overall trend is undeniable.

[Karin Kirk]

And what I still dont get is what IS clean burning coal?

Oh, I know the answer to that one.
Clean coal is fiction.

[jmr986]

they bailed out Chrysler once before and what good did that do?

My brother can't wait to get rid of his Chrysler minivan. Three years old 35k miles. Been in 18 times and still has 5 unresolved issues. Once he unloads it he will only look at a Honda or Toyota.

My 81 year old dad just bought his first non-domestic Nissan Altima and loves it. And, he was driving Cadillacs for the last 2o+ years.

I have a golf buddy who works at the Ford Factory. He leaves 2 hours early during the summer to golf and has a buddy swipe him out at the end of his shift. Then he goes in on the weekends for time and a half. Oh and he's planning on retiring at 55, around my age while Ill be working for another 10 years at least.

Until the infrastructure is changed at the manufacturers, and with the union I wouldn't give them a dime. :argue:

[1happygirl]

I have been short on time and admit I haven't read all of this thread, but will, and what I have read is great. Anyway, unless its been mentioned, I think the Dallas Morning News had an op ed that gave the idea of converting the plants to producing the war machinery. We will always need armament (conflicts or not) and this would not be a hand out. It would also allow the automakers time to re-tool into more effecient cars while having an income stream. I dunno the ins and outs but it sounded good to me.

I always get great info and articles from the OT content here. I love this site and info. The Romney article was great. Thanks all.

[Ahneida Ride]

The USA is almost bankrupt with a real debt exceeding 110 Trillion
(estimate by CEO of Dallas fed ). That estimate excludes private and
corporation debt.

So ... just where is all this bail out "money" coming from ?

How come no one dare asks this question ?

Will is come in the form of more frns created outa thin air on which we
the taxpayers pay interest?

Liquidity is the banker euphemism for debt.
War is peace.

Iceland is now bankrupt. Think it can't happen here?
One frn won't even buy a can of Soda Pop.

[Viper]

Oh, I know the answer to that one.
Clean coal is fiction.

Yes, but so is completely safe nuclear power, zero ecological impact hydropower, efficient solar power, consistent wind power...

Great episode of The West Wing, The Hubbert Peak:

The "quote" indicates actual dialogue from the episode:


HUBBERT PEAK:
"Hubbert's a guy who accurately predicted the drop in U.S. oil production. He predicts world production will peak 10 years from now, and after that oil will be scarce & expensive."


SOLAR:
- clean, accessible, only requires 220,000 km^2
- a square 300x300 miles in the Las Vegas region
- problem - we've only manufactured 10 square kilometers to date. We have 219,990 to go! (huge production obstacle to overcome)


WIND:
- windmills provide electricity to "light up San Francisco"
- problem - that's only 1.3%/30,000 windmills - California needs 1 million more! (huge production obstacle)
- "plus they are an eyesore & no one wants them"


ETHANOL/BIODIESEL:
- corn "made in America" -practical NOW
- reduces CO2/HC output by 30%
- problem - increases HC Evaporative & NOx - only replaces 10% of gasoline


HYDROGEN:
- burns clean (exhaust = water)
- problems - distribution requires liquified hydrogen & arctic temperatures in tanker trucks and at the pump - "extreme pressures leads to a tendency to explode (like the Hindenberg)"


PRESIDENT:
"Improving fuel economy deserves more than a 20 minute debate. Hummer sales has their best month & Prius is increasing production 50%. The market's doing what markets do - sorting itself - messily - and with contradiction. A presidential veto forces Congressional debate & jumpstarts a national debate for better fuel economy.

"And continue looking at alternative fuels. If we wait 'til alternatives are perfect, it's all going to be too late."

[93legendti]

Oh, I know the answer to that one.
Clean coal is fiction.

Someone better tell our Pres. Elect...


http://my.barackobama.com/page/content/newenergy

The Obama-Biden comprehensive New Energy for America plan will:
...• Develop and Deploy Clean Coal Technology...

[Ahneida Ride]

Our family has owned numerous American autos.

For the most part they have been trouble. Dodge could care less
if their paint peels off their cars. They Plymoth Horizon should have been
named the Sunset...

Now ... on the other hand, All the Jap cars we have owned have lasted.
Toyota even payed a 500 frn repair bill (performed by a local gas station)
25K mikes outside of warranty !!!! Think Pontiac would have done that?

American cars may now be equal to or surpass their foreign counterparts,
but am I willing to risk the expense to find out?

Detriot has gained the reputation that they have earned.

[Karin Kirk]

Someone better tell our Pres. Elect...
http://my.barackobama.com/page/content/newenergy

The Obama-Biden comprehensive New Energy for America plan will:
...• Develop and Deploy Clean Coal Technology...

"Develop" being a key difference. If carbon sequestration works (and honestly I am not sure), then clean coal is doable. It's absolutely essential to pursue that, and it could be worth billions to our economy. So yep, I'm on board with developing that possibility.

However, that's not normally how the phrase is used. Most often it's used in a gimmicky fashion that implies that such a thing exists. I give the Obama admin bonus points for correctly putting clean coal in the future tense, rather than present tense.

[DukeHorn]

Imagine having an Incompetent Government, Greedy Unions with Govt. Sympathy AND Management trying to run it. --Johnymossvile

Fair enough, so then I have to ask if the government is so incompetent, why did you give it a pass on two wars in the past 7 years?? And if you don't want government regulations, then you really can only blame the "free market" for these creative mortgage derivatives and the subsequent fraud on mortgage applications, right? Ergo, in your world, everything is ????ed then.

[Karin Kirk]

I think you're both right.

CO2 is not a pollutant in the traditional sense of the word. However very few would argue that it's not a major problem (like my careful wording there?). The EPA has been going back and forth about whether to call CO2 a pollutant or not, and I think the most recent ruling is that it is. But that is semantics of course. What's important is that there are two different definitions of "clean." On one hand clean means complete combustion without impurities leaving only CO2 and water vapor. On the other hand clean can also mean carbon-free or some sort of a CO2 reduction. The bummer is that this is confusing to consumers, which is probably intentional in many cases.

[soulspinner]

I think you're both right.

CO2 is not a pollutant in the traditional sense of the word. However very few would argue that it's not a major problem (like my careful wording there?). The EPA has been going back and forth about whether to call CO2 a pollutant or not, and I think the most recent ruling is that it is. But that is semantics of course. What's important is that there are two different definitions of "clean." On one hand clean means complete combustion without impurities leaving only CO2 and water vapor. On the other hand clean can also mean carbon-free or some sort of a CO2 reduction. The bummer is that this is confusing to consumers, which is probably intentional in many cases.

CO2 has increased in atmospheric concentration by 35 percent since the industrial revolution. That much we know(source US gov). Grow more greenery...Hows the skiing in Montana? Wifey used to be a public defender there, and wants to move back :argue:

[Karin Kirk]

CO2 has increased in atmospheric concentration by 35 percent since the industrial revolution. That much we know(source US gov). Grow more greenery...Hows the skiing in Montana? Wifey used to be a public defender there, and wants to move back :argue:

Oh, I'm on board with all of that, trust me!
I was just trying to clarify the different definitions that various people were using.

[EDS]

I sure do.


I used to have a car that couldn't get up my driveway without a flying start if there was the least bit of snow.

And I'll never forget a 13" snowfall soon after New Years where rear wheel drive cars were literally stuck spinning there wheels trying to climb a hill on a side street. I passed them like a slalom skier.

Even if my 4000 lb suv wasn't safer than a 2000lb car (of course it is), 4 wheel or AWd is a safety feature. With 2 young kids, car seats and the need to haul stuff when we go on a driving vacation (no private jet ala Al Gore), space is a valuable commodity. Heck, we barely made it to the airport in May, because the double stroller JUST squeezed in the car. If not we would have had to take 2 small cars just to go the airport to go on vacation.

I compared my XC90 to the Cross Country - there's more room in my XC90.

I don't have kids, but I have fit four adults, two huskies and camping and climbing gear for ten days in a honda civic with a Thule roof pod, so I can't imagine a station wagon being unable to accomodate two adults, two kids and luggage.

[zap]

"Develop" being a key difference. If carbon sequestration works (and honestly I am not sure), then clean coal is doable. It's absolutely essential to pursue that, and it could be worth billions to our economy. So yep, I'm on board with developing that possibility.


Germany has one. Clean coal plant.

Carbon in tanks, transported then buried deep.

No idea what happens to the mercury or does that only come from certain types of coal?

[93legendti]

I don't have kids, but I have fit four adults, two huskies and camping and climbing gear for ten days in a honda civic with a Thule roof pod, so I can't imagine a station wagon being unable to accomodate two adults, two kids and luggage.

OK, we're comparing a car without a roof pod and one with a roof pod? Gotcha. OK:

I'll take a picture when I pack for the next trip ( I can't mention where, 'cuz that might cause the thread to get locked...way to controverisal I am told). You can't imagine how much room child car seats and a double stroller take up...as a bonus their sizes and shapes are such they take up much more room then you would think.

Oh yes, I also had bike box in my car...did you?

I can't imagine that a Thule roof pod increases gas mileage. In fact, I heard they decrease mileage by at least 3-4 mpg.

Try putting the roof pod IN your car and see how you all fit...that would be an apples to apples comparison. :D

Wait, were you calling me a liar?

[RPS]

Exactly! All of these "wants" are driven by marketing. They are not true, rather they are pushed along by advertising.Relative size does matter when it comes to safety -- it's not a perception. The physics of a collision between two vehicles of dissimilar sizes is too obvious to argue against. I love small cars but will concede size generally buys safety – albeit at the expense of our neighbors who drive smaller vehicles. To argue otherwise risks losing credibility.

Unless of course the government mandates everyone drive small vehicles. ;)

[RPS]

Oh, I know the answer to that one.
Clean coal is fiction.There is no perfect solution -- not even solar. :confused:
The best truly "green" solution is to stop or reduce using energy.
Beyond that it's only a matter of the quantity, isn't it?

[EDS]

OK, we're comparing a car without a roof pod and one with a roof pod? Gotcha. OK:

I'll take a picture when I pack for the next trip ( I can't mention where, 'cuz that might cause the thread to get locked...way to controverisal I am told). You can't imagine how much room child car seats and a double stroller take up...as a bonus their sizes and shapes are such they take up much more room then you would think.

Oh yes, I also had bike box in my car...did you?

I can't imagine that a Thule roof pod increases gas mileage. In fact, I heard they decrease mileage by at least 3-4 mpg.

Try putting the roof pod IN your car and see how you all fit...that would be an apples to apples comparison. :D

Wait, were you calling me a liar?

Dude, relax. I wasn't calling you anything. The XC90 is a beautiful vehicle and I would love to have one. I just always assumed that a station wagon would fit the bill for a family since that is what my parents hauled three kids around in.

The xc70 (probably used) is actually on our short list when we do have kids. I have heard from many people that it is a good idea to take the stroller to the car dealership when deciding on a new car (or, alternatively, take the car when stroller shoping).

We "sold" my wifes S40 to her brother when he had a kid (the two-seater had to go). Now they have to young ones and that thing is stuffed to the gills when they come to visit (obviously, no bike box but the double stroller fits in the trunk).

And the Thule roof pod definitely decreases fuel efficiency and noise, as does a roof rack. Fortunately, they can be removed.

[harlond]

Relative size does matter when it comes to safety -- it's not a perception. The physics of a collision between two vehicles of dissimilar sizes is too obvious to argue against. I love small cars but will concede size generally buys safety – albeit at the expense of our neighbors who drive smaller vehicles. To argue otherwise risks losing credibility.

Unless of course the government mandates everyone drive small vehicles. ;)Is there a difference between small and big in the likelihood of being involved in a collision?

[Pete Serotta]

Yep, I started the thread for it is a hot topic to me - so feel free to start another. Sorry it got so long. PETE