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Auto industry still waiting
Published Wednesday, December 17, 2008
By Kendra Majors
Detroit’s Big Three are still awaiting a possible financial intervention from the White House, after the U.S. Senate voted down a bill that would have provided $14 billion in bailout money.
Earlier last week, the House of Representatives voted in favor of the bailout, but it was met by strong Republican opposition.
The White House has stepped in, and is considering options to help ailing automotive companies.
One scenario White House officials are looking into is tapping into the $700 billion financial bailout package approved in October.
There is a push to make a decision quickly, as two of the three U.S. automakers are believed to be weeks or even days away from bankruptcy.
“An abrupt bankruptcy for autos could be devastating for the economy,” President George W. Bush told reporters Monday aboard Air Force One.
White House Spokeswoman Dana Perino said the president will not be rushed into making a hurried decision when it comes to the bailout.
“If we’re going to use taxpayer financing to assist the automakers, all stakeholders are going to have to come to the table and be willing to show that they are capable and willing to make really tough decisions about the way forward,” Perino said.
A main concern is millions of American jobs could be lost; many are directly and indirectly tied to the automotive industry.
With the nation already in a recession, and many without jobs, there is a strong urgency to help the automakers get back on their feet before the U.S. plunges into a deeper recession.
In November, national unemployment rate increased from 6.5 to 6.7 percent, according to the U.S. Department of Labor. The number of Americans unemployed equates to about 10.3 million people.
Vice President Dick Cheney echoed concerns in an interview with talk show host Rush Limbaugh saying, “if the automotive industry goes belly up now, there’s a deep concern that would be a major shock to they system.”
Locally, the main concern among dealerships is the negative publicity General Motors Corp., Chrysler and Ford received in the past weeks.
According to Jim Jackson, co-owner of Bill Jackson Chevrolet, if the bailout doesn’t pass the public perception of GM would become the biggest issue because consumers have the misconception that it would automatically void auto warranties if GM was forced into bankruptcy.
While Ford appears to be in much better shape than Chrysler or GM, they too are faced with negative publicity, which could affect sales greatly.
“No one wants to buy a car from a company that is bankrupt,” Ray O’Brien, general sales manager at Ken Cox Ford said.
Still, both Jackson and O’Brien agree that they have experienced a slight decrease in the number of new cars sold over the past months, but have not experienced as much of a loss as the majority of dealerships across the country
According to Jackson, his dealership was off 21 percent compared to GM’s 41 percent in November.
According to Robert Earl Stewart, professor of finance at Troy University, a bailout would provide an advantage to help keep car dealerships of GM, Ford and Chrysler operating for a longer period of time.
A bailout would continue to allow employees of the dealerships to keep their jobs for a period of time.
According to Stewart, the lifeline of the automotive industry will be the people.
Unless people buy cars, a bailout will not secure jobs or company stability, he said.
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Comments
Posted by yatta (anonymous) on December 17, 2008 at 10:21 p.m. (Suggest removal)
Throwing money at a problem is never the answer.
Posted by uglydog65 (anonymous) on December 18, 2008 at 6:57 a.m. (Suggest removal)
Is any one surprised? The big 3 have ignored the people they want to sell cars to sense the 1970's. The big 3 are not that big any more. The first thing the UAW president said we are not making any concessions. Do they really make $45 to $70 an hr, I never made that much have you? Dose your auto out last the payments?
Posted by lefty (anonymous) on December 18, 2008 at 7:56 a.m. (Suggest removal)
To ugly dog
I agree with you totally. When the big 3 make a vehicle that is dependable as Toyota, Honda and Nissan, and competitvely priced, I'll buy one. I tried to support American made autos but I had nothing but problems with the Fords & Chevys. Working people in our area making $10 to $15 an hour can't afford to buy a car being built by people who make $45 to $70 an hour. I have worked on contract jobs where union labor was used and it was rediculous how inefficient most of their workers were. My workers could turn out twice as much work as them and make a good paycheck at the end of the week. The UAW is so upset with Senator Shelby one of their retired workers have opened a website called boycottalabama. For my part we have been poor a long time here and we're used to surviving on less. Let them find out how we've been living for a while and maybe they can take more pride in what they produce rather than watching the timeclock for their fat paycheck.
Posted by EMONIQUE989 (anonymous) on December 18, 2008 at 8:47 a.m. (Suggest removal)
uglydog65:
Workers from the Big Three do not make $45-70 dollars an hour. Being raised up North where a lot of my family members and friends worked for those companies they make around $25 dollars an hour which is not that far off from what workers at the Hyundai and Mercedes Benz plants in Alabama make. Let’s not forget that the cost of living is higher up North so of course you would expect higher wages than let’s say Alabama?
Posted by elvis2 (anonymous) on December 18, 2008 at 9:13 a.m. (Suggest removal)
EMONIQUE , if what you say is true WHY do the newspapers and TV newspeople quote those higher figures ?? I can't believe they would out and out lie about the salaries .
Posted by turtle (anonymous) on December 18, 2008 at 10:49 a.m. (Suggest removal)
I don't care how much they make an hour, 25 or 75.00 the point still remains the people who are asking for the money are the ones who fly the private planes, first class on commercial, have million dollar homes, etc. Why keep bailing these companies out? They are in these situations because the ones in charge are greedy and wanted the money for themselves so now the companies are failing. You know a bank won't give me a loan or I can't get a car if I can't manage my finances properly yet these are the very ones who are asking for money to keep them out of bankruptcy because they didn't properly manage their money. This didn't happen overnight. I'm with Richard Shelby, let them file for bankruptcy, reassess the way they handled their finances and start over. That's what the normal American has to do because the government isn't bailing us out!
Posted by yatta (anonymous) on December 18, 2008 at 11:25 a.m. (Suggest removal)
Hard times call for hard decisions. Cut salaries and try to keep as many jobs as possible.
Posted by Showdown2 (anonymous) on December 18, 2008 at 11:36 a.m. (Suggest removal)
UAW members do not take home $70/hour. That is the automaker's cost per active employee. What's the difference? The latter figure is total spent by automakers on wages and benefits divided by the number of active employees. The cost of benefits includes the pensions and health care costs for the hundreds of thousands of living retirees in addition to active workers. Those punching the clock every day, don't get a dime of that. As of last year, UAW workers made an average of $28/hour in wages + $10/hour in benefits. The rest went to retirees, a cost that is borne by the automakers. The reality is that unionized and non-unionized autoworkers actually make very similar wages and benefits. Continue reading after the jump.
Posted by toddgoeber (anonymous) on December 18, 2008 at 12:31 p.m. (Suggest removal)
its real simple,I own a Chevy Truck and i paid for it...my obligation to GM or the unions ended right there.
Posted by lefty (anonymous) on December 18, 2008 at 12:52 p.m. (Suggest removal)
It's even simpler. Fire the CEO'S, sell the private jets, recoup the money they have stolen and put it back in the company. Then the workers will probably get a raise. While we're at it lock up the Wall Street CEO'S too and do the same thing. I don't understand why the auto industry was scrutinized so much and Wall Street wasn't. The Wall Street bailout was 700 Billion and counting. I guess our congressmen had a lot of money invested in the stock market.
Posted by WDM (anonymous) on December 18, 2008 at 1:09 p.m. (Suggest removal)
Did any of you see on NBC last night where so far not one person has gotten any help with their home mortgage.
Posted by Showdown2 (anonymous) on December 18, 2008 at 1:54 p.m. (Suggest removal)
No, buy I did see where Chrysler was closing all their manufacturing facilities for at least a month.
Posted by inaword (anonymous) on December 18, 2008 at 7:34 p.m. (Suggest removal)
They close for two to three weeks every year anyway.
And how do you get to be a retiree? You work for the company because you know that after X number of years you will be able to retire and reap all the benefits.
Ford is not in the same boat as the other two...Could management have anything to do with it?
Posted by inaword (anonymous) on December 18, 2008 at 7:38 p.m. (Suggest removal)
Don't get me wrong; If they are in trouble, let them file bankrupt, and reorganize.
Posted by jaxon8 (anonymous) on December 19, 2008 at 8:25 a.m. (Suggest removal)
Simple solution - Let the big oil companies bail them out because without the vehicles the demand for gas plummets along with the price and their enormous profits.
Posted by OldSchoolPike3Worker (anonymous) on December 19, 2008 at 10:35 a.m. (Suggest removal)
“No one wants to buy a car from a company that is bankrupt." I don't think that is a worthy defense. Everytime I go to Movie Gallery, people are still renting movies. Also, there has been enough press in this thing that anyone who doesn't see that a bankruptcy would be the best thing for these American car companies to re-neg these labor contracts, is probably not buying new cars anyway. If the products that these companies were putting out were a better value that the competition, we would not even be discussing this problem. In addition, a bankruptcy would also mean that these companies would not be so affected by government regulations on product requirements and in turn be able to build more cars that consumers want. But hey, look on the bright side, the Ford F150 is the top seller of 2008. Rock on!!!
Posted by eastgate (anonymous) on December 20, 2008 at 9:50 a.m. (Suggest removal)
$1,600 of every GM vehicle sold goes to pay "legacy-costs" which is retiree health and benefits. How does this make GM more competitive? It doesn't. In fact, this inhibits GM spending on research and development to improve product lines by a 2:1 margin when compared to Japanese and Korean auto makers. Nobody is freaking out about Carlos Ghosn, Nissan CEO and his salary and his private jet because his company is not bankrupt and it is not bankrupt because it is competitive and not unionized! The unions are killing the American automibile industry. In order to be competitive, the union contracts have to be broken. Unions are outdated and serve no real purpose in a global environment.
Has anyone else connected the dots here? The public school teachers' union is doing the same for the education of our children. There is nothing wrong with public education that the elimination of tenure could not begin to fix. Then stop this silly business about across the board pay raises. Tie pay to performance!!! It infuriates me to see really good teachers who do all the right things to help kids learn get the same 3% that the illerate, tenured low-life that hates kids and is just drawing a paycheck gets. And what is this crazy deal about giving tenure to lunchroom workers, custodians and bus drivers. For this reason alone, tenure should be abolished!!!!! These are all things that teachers' unions have lobbied for. Paul Hubbard has never once lobbied for anything to improve the children's learning just for more money and more benefits for union members. Sorry children, until you can vote and pay union dues, and hire an expensive lobbiest it won't get any better for you. It makes no sense to expect any better than what we get given the socialized system that public education is.
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