Reading For Those Who Think Domestics Should Drown

[FordBuyer]

THE AUTOEXTREMIST

Posted on Monday, November 10, 2008 at 07:41PM by Janice Putman | Comments Off

November 12, 2008

 

 

 

Tick, tick, tick...

 

 

By Peter M. De Lorenzo

 

 

Detroit. So it has come down to this for General Motors: 100 years of living, breathing American industrial and social history is on the precipice of total disaster, with the once-glittering corporate icon facing certain collapse if some sort of government financial aid package is not put together in the next 60 days.

 

Think about that for a moment.

 

The company that basically powered this nation through a century of progress and helped this country muster the strength to fight world wars - while contributing immeasurably to the fabric of America and the development of our vast middle class - is on the verge of filing bankruptcy.

 

Unbeknownst to the legions of people out there in “fractured” America, the ones who fill the Internet with bile and who project such a level of viciousness and unbridled glee at the thought of the collapse of our domestic automobile industry as if it were – amazingly enough - some warped opportunity for celebration, there are countless towns, big and small, scattered all across this nation that have grown up with GM as their main employer and the main source of income for thousands of American families.

 

I am absolutely convinced that the people who hate “Detroit” and want it to implode have not even the faintest of clues as to what it really means if it were allowed to happen. To those instant experts out there who are reveling at the thought of a major part of our country’s industrial fabric collapsing, I say be careful what you wish for - because if GM is allowed to fail, it will take the entire domestic auto industry down with it - meaning thousands of suppliers and dealers in towns making up a cross-section of America will go under too.

 

For the record, there are around14,000 domestic-oriented dealers in the U.S. employing approximately 740,000 people with a payroll of around $35 billion – that’s billion with a “B.” But that’s just the dealer side of the equation. When you add in the suppliers and all of the associated businesses that either directly or indirectly depend on Detroit for their livelihoods, we’re talking almost three million people who would be out of work in a matter of just a few months, adding up to a $150 billion loss in personal income.

 

Let’s take California, for instance. Judging by our reader mail, there seems to be a large contingent of people out there who adamantly believe that “Detroit deserves to die” etc., etc., and that whatever happens “won’t affect me.” But GM and the domestic auto industry’s collapse will most definitely affect Californians as well. NUMMI, a joint operation between GM and Toyota (the Toyota Corolla, Toyota Tacoma and Pontiac Vibe are built there) and the only San Francisco Bay Area car factory, is already reducing shifts and may even shut down its Tacoma pickup truck line due to the burgeoning economic slowdown. One of our readers who understands the ramifications of a domestic industry collapse passed this interesting local news report along about NUMMI, which said, "There are tens of thousands of additional jobs on the line besides the 5,000 at NUMMI. There are over 1,000 suppliers in California that provide parts. They in turn employ 50,000 people."

 

That’s just one factory. Now multiply that by the staggering totals involved if GM - which has 22 stamping plants and 26 powertrain plants in North America on top of its assembly facilities - and the rest of the domestic automobile industry is allowed to fail. The tentacles of this kind of cataclysmic disaster would spread throughout the nation like a virus that could not be contained.

 

I really don’t know why it’s so easy for people out there to dismiss the collapse of the domestic automobile industry as being some minor event that won’t affect them in the least, because each person who is part of that figure of three million represents a real family and real human story, all across this nation. It’s the mom and pop diners, stores and peripheral neighborhood businesses that depend on the workers who toil at these factories and plants for their livelihoods too. There are towns all across America that would simply dry up and blow away if the local GM or supplier plant shut down. That’s not an exaggeration, that’s a simple fact.

 

I have been vilified of late by numerous critics for shifting my commentary to a more political tone over this election year, but I don’t offer any apologies. This country is not only in the throes of a financial crisis, it’s in the throes of a fundamental identity crisis as well. We as a nation have been lulled into thinking that things will work out and that any unpleasantness headed our way will be mere speed bumps on our journey to becoming a state of perpetual consumer bliss.

 

Well, it just doesn’t work that way, folks.

 

We live in a global economy that isn’t big on history or what we as a nation once did or stood for. We have to compete, or else we will arrive at a point when our national future will transition from being one of destiny to one being dictated to us by a unsavory set of circumstances and interests not in line in the least with our hopes, our dreams or our thinking.

 

In order to compete in this global economy we have to get smarter in our schools and with our educational policies. A high school graduation rate of 50-60 percent should be anathema in our inner cities instead of too often the rule. Remedial classes for kids entering college (who are not able to handle freshman classes) should become a thing of the past. And our teachers need to be compensated realistically and properly so more of our brightest people can sign up to help shape our kids’ futures.

 

Even though we as a nation don’t seem to have the stomach for hard work and sacrifice any longer - hell, I’m not sure those words and their meanings are even in the lexicon of vast swaths of our population - we must get tougher in the midst of this global economy, and we have to steel ourselves for the kind of battles we’ll face. And that means shoring up our manufacturing and supporting our homegrown industries that are so intertwined with communities all across this still great nation. It also means that President elect Obama will not only be President of the United States, he will have to be CEO of America, Inc. too.

 

And America Inc. not only needs to be rebuilt, it needs to be fortified with new determination because there are far too many talented and creative people in this nation who can do extraordinary things and we need to make the idea – the idea that we can innovate, create, build and manufacture things that are the envy of the world - cool again, and take pride in doing so as well.

 

In short, this nation needs a wake-up call.

 

Anyone who thinks this country will not be thrown into a full-blown depression if the domestic automobile industry is allowed to fail is simply kidding themselves. We are facing a perfect storm of events that could spell disaster if we as a nation don’t act and act fast. And it would take years for this country to recover too.

 

As I’ve said repeatedly the time for all of the idyllic, “let the free market run its course” hand-wringing is over. It’s far too late for that. This country’s leadership needs to get these loans to GM and the rest of the domestic automobile industry in the next 60 days, or life as we’ve come to know it in this country – and I mean every part of this country – not just here in the Motor City, will be severely and unequivocally altered.

 

That tick, tick, tick you hear?

 

It's the time running out on the future of America.

 

Let’s hope that what needs to get done will in fact get done, before it's too late.

 

Thanks for listening.

[LSFan00]

Peter's wrong. And if GM/Cerberus fail, almost around 10 to 20 percent of their facilities will close, quickly. Debt will be wiped out (here's a hint; the creditors know this is coming), labor agreements will be voided, and the cars rolling down the line next month will be very much so identical to those being produced this month.

 

Decreased overhead healthcare costs for retirees will be the main reason GM/Cerberus/Ford do survive. Obama himself knows this, but the current CEO's would lose their jobs likely in a bankruptcy so they want to forestall it. Labor will either lose big or lose bigger, and that's why the Dem's want a bailout/give-away this month, not in Feb. Even 50 billion ain't gonna make GM/Cerberus "working business models" in the present or near term. They need to off-shore more production/parts.

[Daryll40]

I am inclined to support some intervention but not sure if it should be before or part of Chapter 11.

 

That being said, the thing that the original poster misses is all the customer abuse we've customers took during most of my 48 year lifetime. THAT is why many of us are ambivalent, AT BEST, about saving the industry.

 

Pinto,Vega, Volare-Aspen, Cadillac 8-6-4, GM diesels, 12 MPG Granadas...this is the stuff I was raised on. It's hard to shake that crap from our psyche.

[FordBuyer]

I am inclined to support some intervention but not sure if it should be before or part of Chapter 11.

 

That being said, the thing that the original poster misses is all the customer abuse we've customers took during most of my 48 year lifetime. THAT is why many of us are ambivalent, AT BEST, about saving the industry.

 

Pinto,Vega, Volare-Aspen, Cadillac 8-6-4, GM diesels, 12 MPG Granadas...this is the stuff I was raised on. It's hard to shake that crap from our psyche.

 

How about Honda Accords with rusted out floor boards, defective gas tanks, exhaust systems that cost $300, and brakes twice as expensive as domestics? Accords weren't the only Japanese junk that turned into Freddie Flinstonemobiles after only 5-7 years and suffered from horrible skin cancer making vehicle totally useless. So why pick on the domestics? Everyone made junk back then. Funny how I've driven Ford's all my life, I'm 60 years old, and never had a bad one that caused me much trouble. None of them rusted out either. I drive a Ford now, no rust, no rattles, and it's 6 years old. The '83 Mustang 5.0 I had was sold in 2000 17 years later with no rust and I got $3,500 for it. Ran like a charm with only a new clutch and that was it. Also had a Bronco ll, put 250,000 miles on it with same motor, and sold it 11 years later for $2,000.

[RichardJensen]

I made a conscious effort to cut my blog entries short because Pete's blogs, lately, have given me major league eye-fatigue. My eyes glaze over about 3 paragraphs into it and that's it. I stop reading.

 

Still read the 'on the table' stuff. It's shorter.

[FordBuyer]

The Big Three have been in business for about 100 years, have paid billions in taxes to U.S. Treasury over all those years, helped us win two world wars, helped get us out of Great Depression, pay taxes to many municipalities, built up many neighborhoods throughout America, made the American middle class into what it is today, and many Americans don't think they are worthy of loan that will be paid back in time when things improve? What happened to America over the years for them to turn their back on a national treasure. They would rather see every third home empty than give a loan to an iconic American manufacturer. All that $700 billion Resuce Plan will be lost money if GM goes under as foreclosures leap at much higher rate. NO ONE WILL BUY A VEHICLE FROM A BANKRUPT GM. It's not a viable option. GM will just fade away if it can't do well in better times.

[RichardJensen]

See, there you go, it's Petey D's blog in one paragraph.

 

Pete needs an editor bad.

[CSMJ]

Peter's wrong. And if GM/Cerberus fail, almost around 10 to 20 percent of their facilities will close, quickly. Debt will be wiped out (here's a hint; the creditors know this is coming), labor agreements will be voided, and the cars rolling down the line next month will be very much so identical to those being produced this month.

 

Decreased overhead healthcare costs for retirees will be the main reason GM/Cerberus/Ford do survive. Obama himself knows this, but the current CEO's would lose their jobs likely in a bankruptcy so they want to forestall it. Labor will either lose big or lose bigger, and that's why the Dem's want a bailout/give-away this month, not in Feb. Even 50 billion ain't gonna make GM/Cerberus "working business models" in the present or near term. They need to off-shore more production/parts.

GM will be out of business if they go bankrupt! Tens of thousands os school teachers will be laidoff due to less tax money for schools. Cities will go bankrupt also and states like Michigan,Ohio,Indiana,Penn will o under as well as the steel plants and suppliers will go out of business also.

Home prices will collapse in Mich. and surrounding states as well. tens of thousands of City,state workers will be laidoff. And we will have civil unrest in the big cities when no one can get a job.

Good thing is in 2-5 yrs China will have 2 million more jobs for there country is what u want though right?

And the govt pension guarantee will have to get bailed out and govt insurance like medicaid will be at record levels.

And within 3-4 yrs all of the foreign car companies will pull out of america also.

Other then that I hope your prediction does happen because all of the banks will have no one to lend $ too.

[mettech]

The Big Three have been in business for about 100 years, have paid billions in taxes to U.S. Treasury over all those years, helped us win two world wars, helped get us out of Great Depression, pay taxes to many municipalities, built up many neighborhoods throughout America, made the American middle class into what it is today, and many Americans don't think they are worthy of loan that will be paid back in time when things improve? What happened to America over the years for them to turn their back on a national treasure. They would rather see every third home empty than give a loan to an iconic American manufacturer. All that $700 billion Resuce Plan will be lost money if GM goes under as foreclosures leap at much higher rate. NO ONE WILL BUY A VEHICLE FROM A BANKRUPT GM. It's not a viable option. GM will just fade away if it can't do well in better times.

 

That is the major problem..... many don't see how the loan can be paid back.

 

Throwing good money at a poor decision making company is not the solution.

 

Every time a EPA or CAFE topic came up in Congress, the Big 3 would fight it.

 

Noooowww they want help to make fuel efficient cars........

 

The American 3 might be' "a day late and a dollar short."

 

Next.

[mettech]

GM will be out of business if they go bankrupt! Tens of thousands os school teachers will be laidoff due to less tax money for schools. Cities will go bankrupt also and states like Michigan,Ohio,Indiana,Penn will o under as well as the steel plants and suppliers will go out of business also.

Home prices will collapse in Mich. and surrounding states as well. tens of thousands of City,state workers will be laidoff. And we will have civil unrest in the big cities when no one can get a job.

Good thing is in 2-5 yrs China will have 2 million more jobs for there country is what u want though right?

And the govt pension guarantee will have to get bailed out and govt insurance like medicaid will be at record levels.

And within 3-4 yrs all of the foreign car companies will pull out of america also.

Other then that I hope your prediction does happen because all of the banks will have no one to lend $ too.

 

Bull

 

Some company will buy them out before they close the production line. And then they will cut 4-6 brands. Everything outside of Chevy, Cadillac, Buick (for China), JEEP, Ford and Lincoln should be closed this year.

 

You make it sound like no one will buy another car in the USA,

 

The group that will be affected most is the UAW. period.

 

The Big 3 refused to change to fuel efficient cars when they had a chance. Now fuck'em. And that means I'll lose a few $K. And fuck me too.

 

The Big 3 arrogances is they only reason I need to see them not to get aid from the Feds.

[NickF1011]

Bull

 

Some company will buy them out before they close the production line. And then they will cut 4-6 brands. Everything outside of Chevy, Cadillac, Buick (for China), JEEP, Ford and Lincoln should be closed this year.

 

You make it sound like no one will buy another car in the USA,

 

The group that will be affected most is the UAW. period.

 

The Big 3 refused to change to fuel efficient cars when they had a chance. Now fuck'em. And that means I'll lose a few $K. And fuck me too.

 

The Big 3 arrogances is they only reason I need to see them not to get aid from the Feds.

 

Do you really think that any foreign company that bought up the remains of the American auto industry would bother to use American suppliers and assembly plants to build those products? They might keep the newest of the new plants, but that's about it. Everything else would go to China.

[sranger]

The Big Three have been in business for about 100 years, have paid billions in taxes to U.S. Treasury over all those years, helped us win two world wars, helped get us out of Great Depression, pay taxes to many municipalities, built up many neighborhoods throughout America, made the American middle class into what it is today, and many Americans don't think they are worthy of loan that will be paid back in time when things improve? What happened to America over the years for them to turn their back on a national treasure. They would rather see every third home empty than give a loan to an iconic American manufacturer. All that $700 billion Resuce Plan will be lost money if GM goes under as foreclosures leap at much higher rate. NO ONE WILL BUY A VEHICLE FROM A BANKRUPT GM. It's not a viable option. GM will just fade away if it can't do well in better times.

 

That more or less sums up my thoughts....

 

If we can bail out a bunch of crooked wallstreet bankers so that they can get their bonuses, WE CAN DAMN WELL BAIL OUT AN INDUSTRY THAT HAS CREATED SO MANY AMERICAN JOBS OVER THE YEARS...!!!!!

 

And NO, I have no relationship with any of the auto unions...

[RichardJensen]

You know, banks create jobs too...... In fact the relationship between direct and indirect employees probably dwarfs that of any other industry.

 

BTW, the 'fat cats' at banks bailed out by the government are done in that industry. If you ran WaMu, guess what? You'd best figure out what your second favorite industry is, because you'll never work in banking again.

[Extreme4x4]

Somewhere along the line, it became "in" to hate America. Americans are embarrased to be Americans. Many of them feel that we somehow deserve to have nothing but bad things happen to us................. since we have done so many bad things in the past.

 

I'm trying to remember when it was good to be patriotic. I guess it was after 9/11. However, everyone has forgotten about that. That was just a short lived documentary series, that was cancelled. The war in Iraq isn't about removing a tyrant, and keeping the crazies fighting our military "over there." It is about collateral damage, and how much pain "we" have inflicted.................. completely ignoring the wholesale slaughter that was going on before.

 

However, what strikes me the most, is that this apathy or disgust of America seems to be in line with the general rise in selfishness of the population. Since the majority of the population has never known real sacrifice, or true "bad times," it seems as if they feel entitled to have everything. This "everything" needs to be given to them, because they deserve it. There should be no pain, and no sacrifice. We don't invest anymore............... we day trade. We don't try to make the future for our children better than ours, because, frankly................. what does that do for me today??? It doesn't take a community to raise a child................. it takes daycare, school, and a multitude of activities............... so the kids don't realize that mommy and daddy are so busy at the spa, or whatever other useless endeavor, that they don't spend time with their children................ or even care that they don't. You don't "help thy neighbor," ............... hell, you don't even know your neighbor.

 

It disgusts me, to see this around me every single day. The sad reality is that the people didn't vote for the Presidential candidate that would help "the country,"................. they voted for the one who promised to give them the most for free.

 

What will change this............... I have no idea. All I can do is sit here and try to raise my son to be the best human being that he can be. At this point in time, that is my contribution to the world.

[timmm55]

I recently had a conversation with someone who bought a new Toyota about three years ago....roughly the same time I bought my new Mustang GT. He said he was "glad I bought a Toyota and I have never looked back, it's been problem free." He seemed proud, as if he made a intelligent and valued decision.

 

I said my Mustang has been problem free too (as Consumer Report says of most Fords) .....in 21K miles I haven't even had to change the wiper blades! So I asked, when you buy a Toyota where do the profits go, even if your Toyota was made here in the USA? (Back to Japan I answered)....and where do the profits go if a Ford Fusion that is made in Mexico, go? (profits stay in the USA I answered retorically).

 

People don't get it! To Toyota we are merely a cheap work force (like the Koreans). They get million dollar concessions from states to build their assembly plants...then they make BILLIONS on us.

To paraphrase Bill Clinton "It's (OUR) Economy, stupid!"

 

I'm in favor of free trade, but all things being equal (in Ford's case they are), we also need to have a bit of our own Patriotism/Nationalism and protectionism.

 

I'm not a big GM fan, but I'd surely buy one over an import.

[timmm55]

It disgusts me, to see this around me every single day. The sad reality is that the people didn't vote for the Presidential candidate that would help "the country,"................. they voted for the one who promised to give them the most for free.

 

Funny, it was McCain who said the jobs weren't coming back to Michigan. It was Obama who proposed....early.......Federal help....and HOPE. McCain threw in the towel on OUR auto industry....early.

 

The war is wrong on so many levels (outright lies.....WMDs????) and corruption (Haliburton?) and is bankrupting our country.

[mettech]

Do you really think that any foreign company that bought up the remains of the American auto industry would bother to use American suppliers and assembly plants to build those products? They might keep the newest of the new plants, but that's about it. Everything else would go to China.

 

The American 3 are already using more parts from overseas in their products.

 

What's the difference?

 

To answer your question... yes...

 

This will shake out much like U.S. Steel did.

 

or maybe like the USA textile industry.

[mettech]

I recently had a conversation with someone who bought a new Toyota about three years ago....roughly the same time I bought my new Mustang GT. He said he was "glad I bought a Toyota and I have never looked back, it's been problem free." He seemed proud, as if he made a intelligent and valued decision.

 

I said my Mustang has been problem free too (as Consumer Report says of most Fords) .....in 21K miles I haven't even had to change the wiper blades! So I asked, when you buy a Toyota where do the profits go, even if your Toyota was made here in the USA? (Back to Japan I answered)....and where do the profits go if a Ford Fusion that is made in Mexico, go? (profits stay in the USA I answered retorically).

 

People don't get it! To Toyota we are merely a cheap work force (like the Koreans). They get million dollar concessions from states to build their assembly plants...then they make BILLIONS on us.

To paraphrase Bill Clinton "It's (OUR) Economy, stupid!"

 

I'm in favor of free trade, but all things being equal (in Ford's case they are), we also need to have a bit of our own Patriotism/Nationalism and protectionism.

 

I'm not a big GM fan, but I'd surely buy one over an import.

 

 

That generalization is so wrong on many different levels.

 

ALL of the profits that Toyota makes does not return to Japan.

 

ALL of the profits that the American 3 makes does not stay in the USA.

 

The labor force is not "cheap", compared to the world manufacturing scale. However we can say that, the UAW is overpriced by the same scale.

 

:shades:

[FordBuyer]

That generalization is so wrong on many different levels.

 

ALL of the profits that Toyota makes does not return to Japan.

 

ALL of the profits that the American 3 makes does not stay in the USA.

 

The labor force is not "cheap", compared to the world manufacturing scale. However we can say that, the UAW is overpriced by the same scale.

 

:shades:

 

Why do you talk about the UAW as if it's 1975? It's 2008 and the Big Three just off loaded their health care to a VEBA plan, and new workers hired when the economy imrproves will be working for about $14/hour plus greatly reduced benefits package. On top of that, every domestic plant has a new set or work rules that favors the company, not the employee. All of this undercuts what Toyota and Honda workers make and greatly undercuts Toyota/Honda workers in Japan. The Domestics also spun off their parts plants 7-8 years ago and some of those guys barely make $12/hour.

 

If you want to argue in favore of the foreign transplants, at least get your facts straight. Quit arguing like you just came out of a time machine. The world you are in no longer exists.

[timmm55]

That generalization is so wrong on many different levels.

 

ALL of the profits that Toyota makes does not return to Japan.

 

ALL of the profits that the American 3 makes does not stay in the USA.

 

The labor force is not "cheap", compared to the world manufacturing scale. However we can say that, the UAW is overpriced by the same scale.

 

:shades:

 

I didn't say ALL of the profits. Company Profits are after expenditures. Expenditures include manufacturing........what else do we profit from in Toyota's manufacturing here besides jobs and taxes?

 

It is cheap considering what profits they take away. It's part of the financial equation, and necessity, and it makes people feel better about buying an import/transplant because it's made here. God knows C&D and MT have blurred the distinction, like they are on par.

[jpd80]

The whole Auto Industry needs to downsize, car makers, parts suppliers and dealer chains.

You cannot downsize car makers without upstream and down stream consequences.

[NickF1011]

The whole Auto Industry needs to downsize, car makers, parts suppliers and dealer chains.

You cannot downsize car makers without upstream and down stream consequences.

 

Can't we downsize at Toyota's expense?

[F150 Man]

Bull

 

Some company will buy them out before they close the production line. And then they will cut 4-6 brands. Everything outside of Chevy, Cadillac, Buick (for China), JEEP, Ford and Lincoln should be closed this year.

 

Double Bull..

 

What company would buy or has the conjonas to buy something as big and dated as GM?? Simply buying the company, would not absolve their billions of outstanding debt... there is a long list of first claim creditors that would pick the carcass clean of any significant assets.

 

Ever wonder what happened to all those little towns along Route 66 on the way to California? While it orginated in Chicago, the point is.. they were bypassed by a more progressive form of travel.... Interstate Highways.

 

Same here, a more progressive transportation solution will prevail.

Edited November 12, 2008 by F150 Man

[jpd80]

Maybe people are realising the amount of cars being pumped out by Detroit is far more than needed,

domestics now account for 42% of vehicle sales which means the supplier base is going away already.

[mettech]

I didn't say ALL of the profits. Company Profits are after expenditures. Expenditures include manufacturing........what else do we profit from in Toyota's manufacturing here besides jobs and taxes?

 

It is cheap considering what profits they take away. It's part of the financial equation, and necessity, and it makes people feel better about buying an import/transplant because it's made here. God knows C&D and MT have blurred the distinction, like they are on par.

 

Toyota USA Investment

 

 

In Billions $