I was hoping GM would go Chapter 11, shake up the unions (and maybe healthcare, too), and then get a bailout from the feds. The unions need to wake up and start being part of the solution, rather than a huge part of the problem.

I have to admit, as much as I like to let the market take its course, that a bailout seemed necessary to keep our economy from falling into a bigger black hole. Jobs are fairly important things.

Would $25 B be enough to raise productivity (by about 21%) to reduce the 24 man-hours required per car for the Big-3 to the non-Big-3 average of 19 man-hours?

Would this bail out reduce the man-hour cost (by about 35%) from $73 for the Big-3 to $48 for the non-Big-3.

Will the Big-s mass produce affordable efficient hybrids, PHEVs and BEVs?

If not, the bail out $$B will be a waste of funds and the lost of an opportunity to rid the industry of non-productive managers and workers.

Quite odd how only United Auto Worker staffed companies are about to go bankrupt. I believe GM lost $10 billion in the economic boom that we were having three years ago. Non UAW companies are doing just fine. Let the union people decide whether they want jobs that pay reasonable wages with reasonable benefits, or would rather have no job that **used** to pay very high wages (including benefits). Bankruptcy reorganization is the correct way to go.

"The government gets an equity stake in firms that get loans."

Wow... the definition of Socialism written into the bill!

Wow... the definition of Socialism written into the bill!
And thats why Chapter 11 is the ONLY way to go unless
we start to call each other Comrad.

The CEO's are very resistant of Capter 11 and mentioned allowing the companies to go to Chatper 7.
Chatper 7 would be a joke. What company has the cash to buy the assets or desire to buy huges parts of GM?
The stock owners would have to be nuts to go 7.

BobT: Welcome to the brave new world order, comrad.

These same executives who would have been talking like you about socialism during the presidential campaign now see nothing wrong with socialism. When you loose your job and get in the bread line, you may see the world differently as well. Not that I like it, but that is how I see it.

I am coming to the opinion that Chapter 7 would be a cleaner, faster, cheaper way out to the Auto mess. It would be quicker, have fewer lawyers involved, and be less dramatic. If there are units that can be profitable, someone will buy them, even if at firesale prices, and not have the problems of dealer contracts, UAW pay scales and contracts, or needless manufacturing capacity.

Suppliers could then quickly sell, and get paid by what is left of the auto manufacturers -- much sooner than waiting for courts to make decisions. The investors and lenders will lose money just as the capitalist paradym requires. Live by the sword and die by the sword.

JMartin:

Industries (managers, share holders and union members) don't like chapter 7 bankruptcies because it is a quick liquidation option where large corporations are dismembered and sold in small pieces to the highest bidders. Existing overpaid managers and overpaid union members are the first one to go (permanently). Share holders get what is left (if any thing is left) after all creditors are paid. Creditors get a proportional part of the sales return based a various accepted rules. Bail out $$ are not normally required.

Chapter 11 is the prefered route because it is a rehabilitation processus, where a bankrupt organisation is allowed time to restructure, reorganize and renegotiate workers contracts etc. During the 6 to 24 months normally allowed, business carries on, most overpaid workers have a job, most if not all overpaid managers have a job etc. It is almost business as usual under banruptcy court. Rats have time to jump the sinking ship. Bail outs $$ are required to keep the chapter 11 bankrupt organization going. Lawyers make a fortune for months.

Without $$B bail out, GM-Ford-Chrysler Chapter 11 bankruptcies would quickly end up into Chapter 7 liquidation bankruptcies.

What is the best avenue:

1) Chapter 7 and the whole episode is over in a few months.

2) Chapter 11 without $$B bail outs followed by Chapter 7 within 12 to 18 months.

3) Chapter 11 with $$$B bail outs and leave the processus drag on for 24 to 48 months or until such times as bail out $$ run out.....followed by Chapter 7.

There is another route. Each Big-3 could sell or merge with another more sucessful vehicle manufacturer for whatever it is worth. IBM has done that with its PC production + sales organisation. Many other large USA corporations have done that, so could GM, Ford and Chrysler, if it is not too late already.

The world is not short of car builders and would continue to exist after the Big-3 are gone.

quote:

"The world is not short of car builders and would continue to exist after the Big-3 are gone."

Yeah but at us North Americans' loss

As someone said a few days ago, "Privatize the profits and socialize the losses". That's capitalism for ya!

Total farce since they are not viable under their current plan. GM owes the UAW pension fund over $25 billion alone by 2010, where is that money coming from? Last month GM said they could make it to mid next year, as the started talking bailout their estimates got shorter and shorter to the point they claim they need the money before the end of the year, isnt that the same high pressure tactics their slimy dealers use when they are lying? Ford negotiated loans of $28 billion in 2006 which they havent repaid yet, what makes them think they can repay those and the new loans unless they make higher profits from lower worker costs?The UAW keeps talking about concessions they have made, but none of them have an effect until 2011, and then only on newhires ( and they wont have any newhires because laid off union workers get first callback). And while they are laid off they get 95% of their pay for up to 2 years ( what profitable industry can do that?). UAW workers make 50% more than nonunion Honda and Toyota workers, and 50% more than the market for any manufacturing job. The pompous senator from Ohio was pointing out that no one asked AIG workers to give back salary, in reference to UAw, but AIG workers were paid market and required to perform, not a product of strike extortion with no quality requirement to perform. GM announced today that they are returning 2 of their learjets.....out of 7 that they had at the beginning of the year!!!!!!!!! While they may claim they are required for "security" reasons, no one has given an example of what security they provide. Are they afraid someone might hear their business plans?No one wants to know how to fail!!! Gm today said it would be difficult to explain their plans to congress since any leaks would give the competition an advantage - sounds like they just havent gotten it that the competition has left them in the dust. Nothing will work until they can fix their union and management, which can only be done with bankruptcy. unless Exxon, which made $12 billion profit last quarter decides to buy GM which is worth about $4 billion right now. at least that would guarantee gas guzzlers for customers forever.

quote:

"unless Exxon, which made $12 billion profit last quarter decides to buy GM which is worth about $4 billion right now. at least that would guarantee gas guzzlers for customers forever."

The entire economic / power structure of this continent is (was) CORRUPT in favor of shafting YOU, ME, and EVERYONE else the consumer, out of as much money in as many different ways as possible, and transferring it in as inefficient a way as possible, to corrupt lazy unions, to corrupt Republican ex-oil company execs, and corrupt fat CEO's.

Why do we accept this as a society? You know why? Because they keep us JUST SATISFIED ENOUGH with our brainwashing TV garbage and garbage junk food from garbage chainstores, JUST ENOUGH to make us grumble and feel the need to go to work every day to produce, but not enough to instigate a revolt against the festering smoldering ashes that used to be the great ideals and work ethics of our continent.

Sorry, that felt good.

Mark-BC

...how about us North Americans...

Well....there are enough other car factories in USA/Canada to supply most of the (non-imported) gas guzzlers required, if they produce 24/7. Many laid-off Big-3 workers could be re-hired (at a much lower pay and fringe benefits). Others could be retrained and eventually be re-hired in the new ESSU + e-vehicle factories.

Buyers would get better lower cost cars, hybrids, PHEVs and BEVs than they would from the Big-3.

In the mid to long terms, it would be very positive for the North American auto industry and for our economies. North America may even export cars again.

The status quo (building heavy over sized gas guzzlers) has to go and the car industry has to be partially and/or fully electrified quickly.

Why electrified, HarveyD ? The cheapest car/truck/bus is petrol one, than a natural gas one, than a coal one, and last an electric one.

The future is clear: the Chinese will buy GM.

As for those who blame the employees (UAW) instead of the management must ask themselves what union do the employees of Citi and Lehman Bro belong to. Somehow offering 6 figure incomes to employees fresh out of college had nothing to do with their failures but paying UAW members a fraction of that brought down the Big 3.

plop:

...why electrified vehicles....

Because it is the best cleanest sustainable technology to move us and merchandise around in the 21st century.

Future ESSUs will have energy density of up to 1000 Wh/Kg, will recharge quickly, last up to 15 years and cost less than $300/KWh. Electric motors and essental accessories will also last 15+ years.

A clean trouble free e-vehicle that cost four times less to operate, last 15+ years and/or 150 000 + miles, does not use imported oil etc are all excellent reasons to electrify.

The Big-3 (with their gas guzzlers, over-paid managers and under-productive union members) and current ICE vehicle parts manufacturers may not agree and will try to survive with tax payers money, but they will have to go, just as horses and buggies did.

Resistance to change is futile.

"It's the health care, stupid"
Bottom line is all the bailout plans dance around the issue:
A Much Better Bailout Plan
For years now, the Big Three automakers have been unable to produce cars competitively, largely because they have to buy their employees’ and retirees’ healthcare through private insurance, whereas workers in all other industrialized nations are covered by cost-effective national healthcare plans. Even the foreign manufacturers who produce here undercut Detroit by recruiting a younger, healthier workforce.
Now that the bottom has dropped out of the market for SUVs and light trucks, the Big Three are facing certain bankruptcy and need a bailout, possibly for loans to fund the $51 billion they owe to the VEBAs they promised to set up for their retirees’ healthcare. However, the VEBAs will purchase health insurance through private, for-profit providers, which skim off up to 30% from the top, as compared to Medicare, with only a 3% overhead. It would be far better for Congress to allow the UAW workers and retirees to be the first to enroll in a program based on the Conyers-Kucinich Bill (H.R. 676), an expanded Medicare. Like Social Security, the H.R. 676 program would be funded by a payroll tax of 4.5% from employers and 3.3% from employees.
Will this save money for Detroit? You bet. If we’re going to bail out the Big Three, let’s do it in a way that solves a real problem that is strangling U.S. manufacturing: the burden of private health insurance

tom deplume:

Yes, problems exist outside the Big-3 management and unions but they are not necessarily the same.

Unregulated banks and Wall Street brokers are major money speculators. They are as close to raketeering as you can get. Their participation played an important role in the current financial turmoil.

Widespread deregualtions and the lack of basic business rules and ethics are dangerous ingredients for a gold digging society.

geoff-t:

....its the health care stupid?...

With or without health care, selling 100 million unjustified and unwanted 2+ton, gas guzzling VUS and pick-ups to Americans and Canadians in the last 10-15 years was a huge mistake.

Note: Most health care is paid by the government in Canada but the Big-3 and their unions have done the same mistakes.

Giving in to Unions at the rate of $73/hour was another huge mistake.

Reducing productivity by 25 + % was another huge mistake. Ford could assemble a car with 1.5 man hours in 1929 but today's union employees, with automated assembly lines, require 24 man hours. Non-Big-3 plants require less than 19 hours.

It seems that Big-3 managers forgot how to manage and union members forgot how to perform. They don't deserve $25B or $100B bail outs. Let them fold. Others will do it better.