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Let them fail!

I don't think a bailout is the answer, and it's certainly not going to heal any of the serious, serious problems plaguing the Big Three.  Not this late in the game.  I think the only sensible solution to this problem is massive restructuring, and getting rid of (or remodeling) the union.  Being that they don't want to budge a single inch on wages and benefits, I think they're going to be in for an awful shock when the Big Three have to say, okay, well, we're just going to have to shut it all down.  Then no one will have a job.  The entire situation is ridiculous.  

I'm just concerned for my in-laws.  If GM goes belly up and they lose their pensions, what will become of them?  
 
Lil_T said:
I don't think a bailout is the answer, and it's certainly not going to heal any of the serious, serious problems plaguing the Big Three.  Not this late in the game.  I think the only sensible solution to this problem is massive restructuring, and getting rid of (or remodeling) the union.  Being that they don't want to budge a single inch on wages and benefits, I think they're going to be in for an awful shock when the Big Three have to say, okay, well, we're just going to have to shut it all down.  Then no one will have a job.  The entire situation is ridiculous.  

I'm just concerned for my in-laws.  If GM goes belly up and they lose their pensions, what will become of them?  

Firstly, if governments decide there "has" to be a bail-out, it would be cheaper to just underwrite the pension plan than to fund the rolling catastrophe of the Big 3.

Secondly, as previously mentioned, any vacuum caused by the "threatened" disappearance of the Big 3 would quickly be filled by others taking over the useful assets and working to take over that market share of automotive sales. The failure of the Big 3 doesn't mean that demand for vehicles disappears, or that the infrastructure and workforce evaporates. It does mean that a new business model can evolve, leaner and more effective for today (instead of demanding tax dollars to sustain yesterday's illusions).
 
That's a good point you make as far as underwriting the pension fund. 

Secondly, as previously mentioned, any vacuum caused by the "threatened" disappearance of the Big 3 would quickly be filled by others taking over the useful assets and working to take over that market share of automotive sales. The failure of the Big 3 doesn't mean that demand for vehicles disappears, or that the infrastructure and workforce evaporates. It does mean that a new business model can evolve, leaner and more effective for today (instead of demanding tax dollars to sustain yesterday's illusions).

Another good point.  I'm sure there are plenty of fledgling (or established) automotive companies just waiting for space in the market to open up.  But in the interim between failure of the big 3 and new/ other companies commencing operation our unemployment rate is going to increase exponentially.  Hopefully there will be a sensible solution to this whole debacle and soon, though I'm not counting on it.
 
It looks like the supposed saviour of GM is really an overweight "Rube Goldberg" contraption. Series hybrids can be useful (most locomotives, the giant trucks at mine sites are series hybrids, and military applications can be easily envisioned: imagine a series hybrid LAV doing a silent runup). Without the 1000lbs of batteries, electric motor, control electronics etc. you would have a car that is much lighter, cost 1/2 as much and probably have similar performance (and would not have been under development since 2003(?) but on the market already).

Sorry guys, but the Chevy Volt was one of those "cool" ideas that didn't survive contact with the real world.

http://www.technologyreview.com/energy/21387/?a=f

Is GM's Volt Ready to Roll?
The production design is ready, but the electric vehicle's battery needs work.
By Kevin Bullis

General Motors (GM) unveiled the production design of its Chevrolet Volt electric vehicle on Tuesday, as part of its 100th-anniversary celebration. But significant hurdles remain before the car can start rolling off assembly lines, chief among them the need for continued development of the car's main battery pack.

The Volt is an electric car that can be recharged by plugging it into a wall socket or by running a small, onboard gasoline, ethanol, or diesel generator. The 16-kilowatt-hour lithium-ion battery pack stores enough energy for 40 miles of driving--enough to cover almost 80 percent of the daily driving in the United States, the company says. On longer trips, the generator kicks in to recharge the battery, giving the Volt as much range between fill-ups as a typical gas-powered car. For more than a year, GM has been showing off the concept-car version of the Volt in ads. The new production version looks considerably different--it has a more aerodynamic shape--but it will have the same performance specifications that the automaker has been advertising.

Plug-in hybrid vehicles like the Volt began to seem feasible because of new technology that made lithium-ion batteries safer, more durable, and less costly. But while individual battery cells using the technology seem to work well, yoking nearly 300 of them into a battery pack has proved challenging. That, in turn, is forcing GM to design systems that make the vehicle more expensive. "At the cell level, things look good," says Mark Verbrugge, the director of the materials and processes laboratory at GM's research-and-development center. "There are still issues at the pack level that we're trying to iron out, which gets pretty nerve-racking as we get close to production."

A battery pack for an electric vehicle is complex. The cells have to be wired together to deliver power reliably, despite the harsh vibrations and jolts encountered on the road. (For an example of what can happen when things go wrong, see "Electric Cars 2.0.") Even a few defective cells or connections can dramatically lower the performance of the pack. What's more, the pack includes complex electronic controls for charging each cell, delivering power, and capturing energy from braking to improve vehicle efficiency. And maximizing the battery's life requires a good cooling system. To make matters worse, methods for testing whether a battery pack will last for the life of the car are only now being developed.

"There's only so much known about how to accelerate the testing of batteries," says Greg Cesiel, GM's program director for the E-Flex Vehicle Team, which is developing the Volt and related electric vehicles. Questions remain about how to simulate driving the car and charging the pack, and how to confirm that the pack will survive vibrations and exposure to hot and cold temperatures over the life of a vehicle.

"The big risk when it comes to putting these on the road is, we don't have accelerated life testing," Verbrugge says. "We have some at the cell level, which gives us enough confidence to say we're going to do this thing. But I would contend that's still the big risk."

Verbrugge says that one of the biggest challenges is ensuring that the batteries won't fail in extreme climates, such as the deserts of Arizona. Conventional starter batteries already give automakers trouble in hot areas, he says. Today, they're the car part that most commonly fails under warranty in the Southwest. "Batteries don't like hot temperatures," Verbrugge says. "But we're not going to say to people in Arizona, 'We're not going to sell you our Chevy Volt. You can drive one, but we're not going to give you a warranty.' That's not an option."

To make up for uncertainties about the life of the battery packs, GM plans to coddle them, wrapping them in insulation and including heating and cooling systems to keep them at optimal temperatures. Questions remain about when these systems should operate, since they can eat into the energy savings that electric vehicles are supposed to provide. "Let's say you're charging," Verbrugge says. "Do you run your cooling system now to keep your battery cool over black asphalt? Then your energy efficiency doesn't look so hot. Do you do that only in Arizona? These become critical engineering issues."

GM is also oversizing the packs, adding several kilowatt-hours' worth of extra cells to make up for potential degradation over the life of the vehicle. That makes the packs, and the vehicle, much more expensive. "Cost is a major issue for us now," Verbrugge says. "We're not sure people are willing to pay."

Indeed, the Volt and other proposed cars like it are expected to cost thousands of dollars more than conventional cars, which could limit their appeal, says Paul Werbos, a program director for the National Science Foundation (NSF), who has been promoting research on better, cheaper batteries. "I don't expect most people are going to pay that," he says.

Werbos and Verbrugge spoke last week at an NSF-sponsored workshop focused on improving batteries for the next generation of hybrid and electric vehicles. Speakers at the workshop emphasized that better tests for battery lifetime, combined with improvements to battery design to make them last longer, will allow automakers to use fewer batteries and cut costs.

In spite of the remaining challenges, Cesiel is encouraged by the progress that the company's engineers have made so far and believes that the Volt will be ready for production on time. Based on its laboratory testing so far, he says, the company is "happy" with the capacity and performance of the batteries. GM also knows what the cooling system will look like and has physically integrated the pack into the vehicle. What's more, the entire propulsion system, including the battery pack, the electric motor, and the generator, was incorporated into a test vehicle and delivered to the company's Milford, MI, testing grounds at the end of August, just two days behind the schedule set last year. "I wouldn't say that the battery is ready," Cesiel says, "but we're right on track."

Copyright Technology Review 2008.
 
The Senate lacks the votes to approve this loan to the car companies. Instead the Senate will allow $25b previously allocated for green cars to be used by the big 3. :o
 
Slogan for a T-shirt or bumper sticker:

"You gave them a bail out, now I can't afford a car. Good thinking....."
 
While it is a "bailout", it is also a loan that will make the government a small amount of net present value money.  That is of course assuming the big 3 survive.  It's a risky investment to be sure, but there are 3 million auto worker jobs and 5 million support jobs on the line.  Of course they were going to do it.
 
Please don’t forget that Tata (India) and Chery (China) are both reported to be only a year or so away from being ready to make cars that will meet North American technical standards. The trick will be to produce them in quantity and, more importantly, to competitive price/quality standards. That can be accomplished by buying and retooling existing plants and hiring skilled, experienced assembly line workers – albeit for lower wages than the big three paid to CAW/UAW workers.

A $(CA)10,000 four passenger compact will sell – remember the Hyundai Pony? And, despite (inevitable) problems with reliability and quality (which now respectable Hyundai and Kia suffered - even the Honda Civic was junk in the '70s and early '80s) it is likely that Chery and Tata will grow and prosper in North America by building and selling the cars we need in the plants the big three will be forced to close – bail outs or not.

Many plants will close, with or without taxpayers’ money. Many, many workers will be out pounding the pavement, with or without a bail out. But a turn around will come, probably in/around 2010, and people will want new cars again – just not the expensive behemoths GM and Ford make now. It is likely that companies like Tata and Chery will have the cars we want in production, made by Canadian and American workers in Canadian and US plants, when we want them.

By the way, be prepared to have you car deader collocated with large Canadian Tire retailers in your area – one or two dealers in a city like Halifax or Saskatoon, maybe three in Calgary or Ottawa and four in Vancouver, Montreal and even Toronto. You will probably shop on line and take delivery at the Canadian Tire retailer which may, also, have the warranty servicing contracts for two or three Asian world auto brands.

One or, more likely two of the big three will not die, completely, if they are not bailed out, but they will be much smaller and will  likely specialize in larger cars, vans and trucks as they work hard to find their niche in the still rich North American market.

 
brave little soldier said:
Let's face it : only half of the population is actively working and too much of our pay goes back to the government to help support the other half that doesn't...

If someone you love came to you and said that they give 40% of their pay to a Cult Leader for eternal peace, you would have them committed ! Yet, we have been giving it to our government !  ::)

OK ... keep your 40%.

No healthcare for you or your spouse. Nor for your kids. No free schooling for your kids. You can fork out the 10K a year each it costs to send them off to Private Schools from your pocket. No fire service should your house catch fire. No police to help you if you're in an accident. ... and on an on and on. No military or other services coming in to help you out should forest fires threaten your lives and homes or floods. Gawd forbid no military resources to fight off an enemy invader ... Oh - and most of all - no government money forthcoming to pay for food for your kids should you be left without a job all of a sudden ...

::)

I'll continue paying my 40% thanks very much ... I actually prefer it. The benefits far outweigh the alternative. The vast majority aren't abusing the system. Why should the rest suffer for those few sycopants and cretans?
 
Army Vern

Very very well said, so many fail to stop and think where the taxes go.
 
missing1 said:
Army Vern

Very very well said, so many fail to stop and think where the taxes go.

Sadly, far too much in the way of taxes does NOT go to the Military, Police, protective services and Courts of Law (the essential minimums of Government). Much too much goes to the bureaucracies that surround the various government services, and often these services are available at very competitive prices from the private sector. Compare government provided garbage collection with multiple fleets of trucks picking up garbage, blue boxes, green boxes etc., carrying them to different facilities and processing three small streams of waste (using union labour and a big "front office" of unionized city workers to "supervise" them) with private garbage collection that uses one fleet of trucks and workers, delivers the waste to a "single stream" processing plant and sorts and recycles the usable stuff on the spot.

WRT the bailout; like Edward said, you can still buy cars from non "Big Three" manufacturers, and more are on the way. (Read back in this thread and you will find ten US companies that have cars ready for market). As well, Jeep will probably survive on its own, Chevy might only make the Corvette, Dodge might only make the iconic minivan and Ram pickup truck etc. Instead of the Big Three stifling competition and innovation, we might see the "Little 20", and many of these companies will need the services of the manufacturing industries that exist to service the Big Three, so millions of jobs will be secure.

Finally, since the American Auto Industry management and Unions have no plan to seriously restructure, the money being given in the bailout is just going to be burnt up in about two years, and they will be back for more of your money. The market cap for the Big Three combined is @ $7 billion USD; Stephen Harper could conceivably buy them all for less than the bailout would cost and then auction off the viable products (Jeep, Minivans), the factories, the land and the tools, make a bit of money and start a rebirth of the North American Auto industry for a fraction of the price of a bailout.
 
Thucydides said:
Sadly, far too much in the way of taxes does NOT go to the Military, Police, protective services and Courts of Law (the essential minimums of Government).
Let's not forget medical and education while we're at it.  Those are also essential.  I'm sure people could argue for a few more.
Thucydides said:
Instead of the Big Three stifling competition and innovation, we might see the "Little 20", and many of these companies will need the services of the manufacturing industries that exist to service the Big Three, so millions of jobs will be secure.
Maybe.  You can't just substitute twenty players for three and expect the manufacturers to be secure.  These companies have different sizes, production requirements, infrastructures, yadda yadda.  It's like jamming a square peg into something set up for a circle socket.

The problem with 20 market players means their products will ultimately need to be more carefully segmented.  Such specialisation makes it a real nightmare for the parts manufacturers; it would require them to hold huge amounts of inventory to support so many automakers, and a lot of it probably wouldn't be compatible with the other auto makers. The parts manufacturers would then have a pretty crappy choice on their hands; produce parts only for a few companies (thereby tying their wellbeing to a few untested automakers), or produce parts for a great many of them, but suffer from bloated inventories, credit issues, and low liquidity ratios. 

Thucydides said:
The market cap for the Big Three combined is @ $7 billion USD; Stephen Harper could conceivably buy them all for less than the bailout would cost and then auction off the viable products (Jeep, Minivans), the factories, the land and the tools, make a bit of money and start a rebirth of the North American Auto industry for a fraction of the price of a bailout.
No.  You buy the company, you incur the fiduciary responsibilities of the company.  The last thing Canada wants is to take on those pension plans, among other things like the amassing debt.
 
KingKikapu said:
... No.  You buy the company, you incur the fiduciary responsibilities of the company.  The last thing Canada wants is to take on those pension plans, among other things like the amassing debt.

- GM is a health care and pension provider that also builds cars on the side.  Bail-out the pension plans - let the companies fail.
 
When news of this "problem" first broke the very next thing I heard on the radio was "the union has given enough concessions".

I see this as an opportunity.  The companies don't evaporate if they need Chapter 11 protection. They restructure.
There is no good reason for the big three to struggle much less fail.  They need to address the reasons that exist.

The bailout will serve as a way for the government to buy into a restructuring plan.  Government is not in a position to legislate restructuring.
Restructuring in this manner will lead to the wrong result anyway.

Another issue is the obscene executive "compensation" in the US and to a lesser extent Canada.  I am a fully commited capitalist, but when a single executive is deemed to be worth hundreds of other employees we have a distortion. Unions exist to at least in part remedy this distortion.
If management robs the cookie jar - the unions' rank and file will rob the cookie jar the shareholders get what's left and there's nothing left to run the company on.  North American engineering culture could use a little shot in the arm as well, not much hope of that. ( as Dilbert wept )

 
KingKikapu said:
You can't just substitute twenty players for three and expect the manufacturers to be secure.  These companies have different sizes, production requirements, infrastructures, yadda yadda.  It's like jamming a square peg into something set up for a circle socket.

But those "little 20" won't all be trying to compete in every vehicle market sector, like the "big 3" do.  The little 20 would be market niche corporations picking the profitable elements out of the morass of the big 3's collapse.  The big 3 have created a market bloat as they fight for share in a world that was build on a dependence of you or me being a "Ford guy" or a Chevy guy" our entire lives.  That's not true anymore (at least not like it once was) and the big 3 have never created a realistic marketing model that accepts that they no longer exclusively own the North American market.

This is a "disaster" of their own making, bailing them out now only postpones their collapse, because they have no long term plan except to keep asking for more money to maintain the state of tragedy they want to convince us exists.  Evolution in industry is not necessarily a bad thing.

 
KingKikapu said:
Let's not forget medical and education while we're at it.  Those are also essential.  I'm sure people could argue for a few more.

That is exactly the problem; people are arguing and conniving for a few more at your and my expense. Military, Police and the Courts of Law cannot be dealt out to the private market in a society like ours (although in the past they actually were; see the Middle Ages), but virtually any other service that you can name can be provided by the free market, and usually at a better price and service than the bureaucratic "public service" provides.

Education? Do you want public schools where most of the money is vacuumed into pay and benefits while students share textbooks?
Health care? The current system treats patients as a drain on resources due to the perverse incentives built into the system. The idea outcome in our system is for you to die before you access expensive treatments.
Garbage pickup? Roads? Broadcasting? Art? There are no services that cannot be provided by the private sector, and once this fact is accepted and the parasites who can only survive by feeding off the public are sent packing, the better off we all will be.
 
Michael O`Leary said:
But those "little 20" won't all be trying to compete in every vehicle market sector, like the "big 3" do.  The little 20 would be market niche corporations picking the profitable elements out of the morass of the big 3's collapse.  The big 3 have created a market bloat as they fight for share in a world that was build on a dependence of you or me being a "Ford guy" or a Chevy guy" our entire lives.  That's not true anymore (at least not like it once was) and the big 3 have never created a realistic marketing model that accepts that they no longer exclusively own the North American market.

This is a "disaster" of their own making, bailing them out now only postpones their collapse, because they have no long term plan except to keep asking for more money to maintain the state of tragedy they want to convince us exists.  Evolution in industry is not necessarily a bad thing.
I think you misunderstood what I was trying to convey.  I already stated that the 20 companies would have to specialize their products in order to survive (which you have also aptly noticed).  Here's the problem:  even if the new auto manufacturers pick out profitable elements (as you put it) that in no certain circumstances mean the auto parts manufacturers can support this new collection of auto makers.  The parts manufacturers can either produce parts for a few specific makers and consequently tie their wellbeing to them, or they produce parts for all of them.  The latter option is a terrible idea.  Given the previously mentioned specialisation of these new companies, there is very little hope of mass scale part interoperability like there currently is for the big 3.  This small scale interoperability means the part manufacturers have to carry more company specific stock even when there is relatively low demand (compared to now) for one specific company's products.  The part manufacturers will suffer serious cash deficiencies because a large portion of their money will be tied up in slow moving inventories, which means they will have to finance more to stay afloat in the product cycle lulls that are endemic of the auto industry.  As most people have noticed, it is a lot harder to acquire loans these days.  Any banker worth their salt would look at these industry changes as tough times a comin' and be somewhat cautious in lending money to such in such a volatile market/situation.  Serious restructuring of the parts system would have to happen first, and who necessarily wants to put their money on the line at this moment to see that through when the auto makers (asia and europe included) themselves are in rough waters? 

I would also like to point out that the current situation is not entirely the big 3's fault.  They certainly have their share of the blame, but you can also add investment bankers, the US government de-regulating their banks (thank your lucky stars Canada didn't follow suit), the fluctuating price of oil for the last 40 years, the waning US collective buying power of oil in the last 25 years, the Nixxon administration changing the gold standard, as well as both the Vietnam and Iraq wars.  I'm dead serious about all of those factors.  There has been a LOT leading to this day.  It would be terribly shortsighted to think this was all their own doing.  That said, they certainly have hurt their cause a few times along the way.
 
Read today on the GM site that they sold 154,000 vehicles last month down 41% year to year. On top of that they are holding an inventory of 855,000 vehicles, more than five months worth. Stop bulding cars that are not selling !
 
I find your reasoning unsound. If it is going to be difficult to be a parts manufacturer supplying parts to 20 different car companies who make products for niche markets, then how is it easier to make parts for the 20 different product lines that one "Big Three" company makes in an attempt to fill all the market niches?

Even the argument that the survival of the parts manufacturers being dependent on filling niches is true regardless of supplying a "Big Three" or "Little Twenty" company. Many product lines fail and are replaced swiftly by the "Big Three", and ACME tool and die must be able to retool at the same speed or die.

Lets face it. The market cap of these companies is a small fraction of the monies they demand, and their losses ($2 billion/month for GM alone), cannot be tidied up with a "loan" that would be consumed in two or so years. The companies need to go Chapter 11 and do a top to bottom restructuring, which means shedding liabilities like an unproductive work force ["job bank" workers in particular], uncompetitive wage and benefit packages, bloated product lines, bloated dealership networks, etc.; and working on new business plans. Rube Goldberg contraptions like the Chevy Volt should be ditched in favor of simple and robust engineering (a Chevy "Gas' without the battery pack, electric motor and control electronics would weigh about half as much, cost much less than half of the Volt's price and have similar performance and much greater reliability.)

The Market demands a robust and reasonably priced product; the Big Three have failed to supply that demand so the Japanese moved in and filled it. Soon the Indians and Chinese will be adding to the supply, and many American companies are working to enter the market. Let them succeed.

Government malinvestment and regulatory failure (such as the proposed "Card Check" legislation favored by the Democratic Congress) will stifle the free market and keep good cars out of the hands of the American buyer, while transferring their hard earned dollars to the Democratic Party supporters in the UAW.

And BTW:

http://www.stephenbainbridge.com/punditry/comments/why_the_emerging_auto_bailout_sucks/

Why the emerging auto bailout sucks

AP report:

    A bailout plan for the failing U.S. auto industry could include a Cabinet-level oversight board and a provision to withdraw the money if the overseers decide the companies are failing to take steps to overhaul themselves.

    The plan would draw the emergency aid from an existing loan program meant to help the automakers build fuel-efficient vehicles. The size of the package hasn’t been finalized, but it is expected to be about $15 billion, several congressional aides said.

    It would create a board composed of Cabinet secretaries from the departments of Treasury, Energy, Labor, Commerce and Transportation plus the Environmental Protection Agency administrator to oversee a broad auto industry restructuring. ...

    Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, said Sunday that General Motors Corp. (GM)’s chief executive, Rick Wagoner, “has to move on” as part of a government-run restructuring.

    “I think you have got to consider new leadership,” Dodd said on CBS’"Face the Nation.”

Several thoughts.

1. Why would anyone with the common sense God gave gravel think that a board consisting of political appointees--none of whom as named to date have any auto experience--will bring anything useful to the table? They don’t know jack about the industry and none has experience as a turn around investor. (OTOH, they can’t do all that much worse than the current management of the Big Three.)

2. An oversight committee comprised of 6 cabinet level officers has way too many chiefs and no indians. Who’s going to be in charge?

3. If you want an oversight committee that might actually be helpful, how about hiring people with actual expertise and experience at turning around troubled businesses. How about John McAdam (ICI and Rentokil), Stephen Cooper (Enron clean up), or Bettina Whyte? You need people who specialize in getting to the heart of what’s ailing a company and finding new solutions to problems that are often deeply ingrained in a firm’s culture.

4. Where are provisions for dealing with rewriting the Big Three’s union contracts? Where are provisions for preempting state franchise laws so that dealer contracts can be cancelled or rewritten? The Big Three have to reduce labor costs. They have to shed brands, which means closing some dealers. They have to develop a modern distribution system, which means fundamental changes in their relationship with the dealers.

5. It’s interesting that Ford is asking only for a line of credit rather than cash in hand. I suspect that their reluctance to take the cash now has a lot to do with Dodd’s efforts to force Rick Waggoner out at GM. It’s no secret that the current generation of Fords are modest talents, at best. Yet, so long as the Fords have their super voting rights stock, they will exercise control. One wonders whether Dodd would try to force them to give up their voting control as a condition of taking the cash.

6. If Rick Waggoner has to go, why doesn’t Ron Gettelfinger? The UAW is just as much at fault here as management.

7. As I’ve said before, in assessing the merits of a government bailout of the automobile industry, it’s important to understand the distinction between the problems experienced by the financial sector and those being experienced by the automobile industry. Financial institutions were faced with a situation in which too many of their assets had either declined in value or simply had no known value. As a result, many financial institutions had negative equity positions or, at best, severely impaired equity. This made banks unwilling to lend, because banks are required by law—and good practice—to maintain an equity cushion on their balance sheet. In other words, they have to retain positive net assets in order to function. Injecting capital into the banks increased their assets, while holding their liabilities constant, which resulted in an increase in their equity. In effect, it increased their inventory.

The automobile makers face a very different set of problems. Their problem is not a shortage of capital. Their problem is that they are spending way more money than they are bringing in, “at a rate of least $4.9 billion a month”!

Injecting capital into the automobile makers does not address the underlying structural problems faced by this industry. It does nothing to give them leaner bureaucracies, less expensive legacy health and pension costs, more flexible work rules, less restrictive and costly union contracts, and, to put it bluntly, products somebody would want to buy. All it does is delay the inevitable by giving them more money to burn through.

Bush and the surviving GOPers in Congress should just say no.
 
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is an example of the sort of roughhouse politics we can expect over the next few days:

--------------------​
http://business.theglobeandmail.com/servlet/story/RTGAM.20081209.wrautoscanada09/BNStory/Business/home
Chrysler turns up the heat on Canada
Car maker warns production from two Ontario plants could be transferred to U.S. as it presses governments for emergency funding

SHAWN MCCARTHY , BARRIE MCKENNA and KAREN HOWLETT AND GREG KEENAN

From Tuesday's Globe and Mail
December 9, 2008 at 1:07 AM EST

OTTAWA, TORONTO AND WASHINGTON — Chrysler Canada Inc. has warned Ottawa and Queen's Park that it could close its two assembly plants in Canada, eliminating more than 8,000 direct jobs, and shift the work to the United States if the two governments fail to provide $1.6-billion in emergency financial help.

In a 14-page restructuring plan filed with officials last week, Chrysler compares the two assembly plants in Canada with facilities in the United States that could make the models now being produced here, according to people who have been briefed on the document. “In the context, it could be seen as a veiled threat,” said one of the people. The document talks about the challenges of maintaining a “Canadian footprint” and notes the company has the “same type of plant, set up exactly the same” on both sides of the border, the source said.

Government and industry sources have been worried that the U.S. government would attach strings to its final aid package that, in the absence of Canadian assistance, would favour the companies' operations south of the border.

As officials in the two governments digested the requests by Chrysler, Ford Motor Co. of Canada Ltd. and General Motors of Canada Ltd. for $6-billion in loans, loan guarantees and lines of credit, U.S. lawmakers reached a deal yesterday that would give their parent companies a $15-billion (U.S.) lifeline.

It is hoped these funds would keep the car makers alive until after the new administration of Barack Obama takes office in late January. The amount is about half of what the car companies are asking for, and the deal gives Washington the right to buy up to 20 per cent of the companies and would put the government ahead of other shareholders in getting its money back. Congress is expected to consider the legislation this week.

The U.S. deal increases the pressure on the Canadian governments to come through with a rescue package for the companies' Canadian arms, which submitted proposals for assistance that could amount to as much as $7.2-billion (Canadian) if the auto slump deepens and GM Canada needs to draw down an additional backstop of $1.2-billion, which would be on top of a $2.4-billion initial request.

Chrysler spells out the grim prospects for its Canadian operations in its restructuring proposal. The company said it could switch minivan production out of Windsor, Ont., to a plant in St. Louis that is now idled, the sources said. Production of large sedans made in Brampton, Ont., could be transferred to a plant in Detroit.

Closing the two Canadian plants would be a devastating blow to Ontario and especially to Windsor, which has already been battered by thousands of job losses at Ford and GM operations in the city.

It would also lead to the loss of tens of thousands of jobs at auto parts makers in the two cities and elsewhere in the province. Chrysler Canada president Reid Bigland said last week that 420 suppliers in Canada account for 50,000 jobs.

“Everything depends on whether there are strings attached to the U.S money,” according the person who had been briefed on Chrysler's proposal. In the initial round of assistance so far in Washington, the Canadian side is not seeing the U.S. government insist on conditions that would disadvantage assembly plants in Canada.

Democratic lawmakers in Washington said yesterday they have a draft $15-billion (U.S.) bailout bill they believe both the White House and Congress will support. The compromise would require the Detroit Three to produce detailed restructuring plans by March 31. The government would also designate a “car czar” to oversee the rescue, according to a draft of the bill.

Ontario Finance Minister Dwight Duncan said last night that he has not seen the restructuring plans proposed by the Canadian subsidiaries of the Detroit Three. “We have to ensure that whatever the outcome of the arrangement in the United States, that it doesn't prejudice the footprint of the auto sector here in Ontario,” he said. “But we will be there to do our fair share.”

Mr. Duncan said the Canadian governments will be asking the auto makers to make a commitment to produce certain vehicles in this country in return for financial aid.

“I think one of the challenges is that any package may not guarantee everything we want guaranteed on either side of the border,” he said.

It would be relatively easy for Chrysler to switch minivan production to the St. Louis plant, which closed this fall amid the slump and a decline in the minivan market. One problem in gearing it back up, however, would be in restoring the supplier base, because some companies, such as Magna International Inc., closed nearby plants that shipped components to the Chrysler factory.

The Windsor plant outperformed St. Louis in productivity last year according to the Harbour Report, an annual study of North American auto assembly plants.

Chrysler's Brampton plant ranked fifth of six in its category – large, non-premium conventional cars. The auto maker's Jefferson North Assembly Plant's performance on the Grand Cherokee topped the mid-size non-premium utility vehicle category.

Switching production of full-sized sedans to Detroit from Brampton “is not something you could do overnight,” said one industry source.

But the source noted that both plants are operating at less than full capacity.

The third shift at the Brampton plant was eliminated earlier this year amid poor demand for the Chrysler 300 and Dodge Charger models made there. The reborn Dodge Challenger muscle car has been a hit for Chrysler, but not enough to sustain a full shift of production.

Windsor is producing minivans on three shifts a day, but some of that is production of the Volkswagen Routan, a vehicle Chrysler is building for Volkswagen AG.

The Windsor plant will cease production for all of January because of poor sales, union officials said.

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I have said before that, bail-out or not, I expect to see only two of the big three making cars circa 2015. I believe every single red cent given to Chrysler will be wasted, flushed down the toilet of expediency and into the sewer of senseless subsidies.

In any event, if the US is going to ante up with $16 Billion then, surely, Canada’s fair share is $1.6 Billion divided between Chrysler, Ford and GM and a ‘stake’ in all three and a reaffirmation of the key principle of the 1965 auto pact: for every (American) car sold in Canada, one had to be built in Canada. Each vehicle built in Canada also had to have at least 60 percent Canadian content in both parts and labour.

If we cannot get those two things then we are sending good money after bad. Bring on the Chinese and Indians!


 
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