| Author | Thread |
|
|
12/04/2008 08:52:01 AM · #101 |
Originally posted by Patents4u:
Originally posted by Matthew:
I would say that there are two solutions: Chapter 11 proceedings to reduce the debt burden, or multi-billion bail out to reduce the debt burden. Either process would work and there are pros and cons to each. |
No one knows for sure, but most economists I've heard suggest chapter 11 is not the way to go - not at this time, in this economy. The theory of and arguments for chapter 11 restructuring seem to assume sane financial markets and consumer decisions. That is not the reality of today.
To further the point, other governments in today's world seem intent on not letting that happen to their companies. This is not an issue only for the US companies. |
I think that the only real difference is in who is burdened with the liability. Either tax-payers, or creditors. In normal circumstances the creditors would unquestionably take the hit because they contracted with the insolvent company with their eyes open.
The struggle in the current climate would be in finding good rescue finance - and the value would be very depressed at the moment. Car manufacturers are probably also sufficiently valuable in terms of tax revenue that it would be a blow for them to be bought out and for the tax revenues to be realised in another country. I can see the arguable economic benefits of putting the burden on the tax payer in these circumstances.
As I say - there are pros and cons of each.
|
|
|
|
12/04/2008 09:06:54 AM · #102 |
Originally posted by Matthew:
I think that the only real difference is in who is burdened with the liability. |
By any estimate that I've heard, the cost to taxpayers of the bankruptcy option will be very significant. And I'm not speaking of the doomsayer's predictions of 3 million immediately out of jobs. I'm speaking of fairly conservative estimates of the long-term burden on the government and taxpayers from a bankruptcy of any of the US auto companies.
In fact, I haven't heard anyone debate that point. The debate seems to be whether we should add $25 (or $35) billion to the taxpayers risk because these companies might still go bankrupt even after receiving the money. In that case, the total would be the enormous taxpayer burden from bankruptcy + $25-$35 billion. |
|
|
|
12/04/2008 09:16:54 AM · #103 |
Originally posted by DrAchoo:
Most of those wounds are self-inflicted, although perhaps from previous CEOs. If, for example, one problem is the unions are too greedy (I'm not against unions at all, but it IS possible to bite the hand that feeds you) then bailing GM out so they can keep the current union contract doesn't teach the unions anything. If, however, GM goes into Chapter 11, the union might realize that "as much as we can get" might not always be the best strategy. |
And while self-inflicted (in addition to the numerous bite marks on their hands), many of the wounds were undertaken for decent reasons. GM paid good wages and provided good benefits to its employees and retirees. Sadly, such luxuries are a thing of the past. I'm pretty sure we are not better off because of it.
So while I don't disagree with the first part of your message, it seems a little far to go for a schooling, no? Concessions from the unions are on the way without bankruptcy. Hopefully, the concessions will go far enough.
I'll note again that this issue is not limited to GM or even to the US auto industry. Take note of what the rest of the world is doing in response to this crisis. |
|
|
|
12/04/2008 09:34:59 AM · #104 |
Originally posted by DrAchoo:
GM did sell more cars than anybody else in 2007. |
great point!
They sold more cars then anyone in 2006, 2005, 2004... as well!
Yet in the last 4 years they have lost nearly $100,000,000,000!!!
How do you lead the world in sales on a product you've made and sold for 100 years and not turn a profit? Can't even break even! I can't understand how that is even possible. How many do they need to sell to make a profit? Considering the money they are losing they'd have to increase sales quite a bit just to break even (if I get bored i might go do the math)!
And, With all the money lost over the last 4 years how many executives at GM lost their jobs? Take a guess! |
|
|
|
12/04/2008 01:44:05 PM · #105 |
Originally posted by Patents4u:
Originally posted by Matthew:
I think that the only real difference is in who is burdened with the liability. |
By any estimate that I've heard, the cost to taxpayers of the bankruptcy option will be very significant. And I'm not speaking of the doomsayer's predictions of 3 million immediately out of jobs. I'm speaking of fairly conservative estimates of the long-term burden on the government and taxpayers from a bankruptcy of any of the US auto companies.
In fact, I haven't heard anyone debate that point. The debate seems to be whether we should add $25 (or $35) billion to the taxpayers risk because these companies might still go bankrupt even after receiving the money. In that case, the total would be the enormous taxpayer burden from bankruptcy + $25-$35 billion. |
Care needs to be taken to distinguish Ch 11 from Ch 7.
There is a cost to an economy resulting from restructuring through Ch 11 via the impact on creditors whose claims are compromised. But the cost that you seem to be referencing is that attached to business collapse and Ch 7.
|
|
|
|
12/04/2008 02:08:04 PM · #106 |
Originally posted by Matthew:
Care needs to be taken to distinguish Ch 11 from Ch 7.
There is a cost to an economy resulting from restructuring through Ch 11 via the impact on creditors whose claims are compromised. But the cost that you seem to be referencing is that attached to business collapse and Ch 7. |
There are plenty of things I'd buy from a company in Ch11 bankruptcy. I'd buy TVs from them. I'd not buy a car. |
|
|
|
12/04/2008 03:22:43 PM · #107 |
Originally posted by Gordon:
Originally posted by Matthew:
Care needs to be taken to distinguish Ch 11 from Ch 7.
There is a cost to an economy resulting from restructuring through Ch 11 via the impact on creditors whose claims are compromised. But the cost that you seem to be referencing is that attached to business collapse and Ch 7. |
There are plenty of things I'd buy from a company in Ch11 bankruptcy. I'd buy TVs from them. I'd not buy a car. |
I acknowledge that they would have to move through Ch 11 and restructure very quickly. And offer low prices in the meantime (because everyone has their price).
|
|
|
|
12/04/2008 03:55:21 PM · #108 |
| Everyone seems to think that the global auto market is a level playing field. Unfortunately, it's not. Foreign governments subsidize their automakers, often in amounts that make $35 Billion look like peanuts. Foreign automakers who locate portions of their operations in the U.S. are subsidized to a great extent by our Federal, State and Local governments. The fact that the D3 have done as well as they have is pretty amazing. |
|
|
|
12/04/2008 04:02:19 PM · #109 |
| I'm confused, how will 32 billion buy out a company worth over 320 billion? Toyota is the biggest auto manufacture group on the world. Honda, while 5th and a spot behind ford is still worth 125 billion. Am I missing something? |
|
|
|
12/04/2008 05:16:41 PM · #110 |
Originally posted by Matthew:
Care needs to be taken to distinguish Ch 11 from Ch 7.
There is a cost to an economy resulting from restructuring through Ch 11 via the impact on creditors whose claims are compromised. But the cost that you seem to be referencing is that attached to business collapse and Ch 7. |
I was referring only to Ch 11 and am very aware of the difference. |
|
|
|
12/04/2008 06:18:27 PM · #111 |
Originally posted by Matthew:
Originally posted by Gordon:
Originally posted by Matthew:
Care needs to be taken to distinguish Ch 11 from Ch 7.
There is a cost to an economy resulting from restructuring through Ch 11 via the impact on creditors whose claims are compromised. But the cost that you seem to be referencing is that attached to business collapse and Ch 7. |
There are plenty of things I'd buy from a company in Ch11 bankruptcy. I'd buy TVs from them. I'd not buy a car. |
I acknowledge that they would have to move through Ch 11 and restructure very quickly. And offer low prices in the meantime (because everyone has their price). |
That's the problem, this is such a huge industry with so many suppliers, creditors, and other effected 3rd parties that to say they just need to "move through Ch 11 and restructure very quickly" is overly simplistic. In the mean time they would lose too much market share to survive and would move rapidly into chapter 7. Their surviving bankruptcy would be akin to spitting into hurricane force winds and expecting that you can just duck out of the way quick enough for it to not hit you :-/ |
|
|
|
12/04/2008 08:44:52 PM · #112 |
Originally posted by LoudDog:
Originally posted by DrAchoo:
GM did sell more cars than anybody else in 2007. |
great point!
They sold more cars then anyone in 2006, 2005, 2004... as well!
Yet in the last 4 years they have lost nearly $100,000,000,000!!!
How do you lead the world in sales on a product you've made and sold for 100 years and not turn a profit? Can't even break even! I can't understand how that is even possible. How many do they need to sell to make a profit? Considering the money they are losing they'd have to increase sales quite a bit just to break even (if I get bored i might go do the math)!
And, With all the money lost over the last 4 years how many executives at GM lost their jobs? Take a guess! |
I've never really understood it either. My BIL works for GM - he got moved from Ft Wayne assy (full size trucks and SUVs) to Lordstown (cobalts - and it's GM's largest assembly plant-they did a very big expansion to it about 3 years ago). They added a third shift at Lordstown becuase of the price of gas small cars are selling again. But is GM making a profit on them?
The feds have a law that states car companies must have a fleet average MPG of 27. Big suv's dont come close so the companies must sell cars - which until recently folks aren't buying, so I've read the companies sell them at a loss, on purpose, to meet the CAFE rules. And congress raised it not too long at to 35 (by 2015 or something like that).
What is a company to do?
|
|
|
|
12/05/2008 06:47:11 AM · #113 |
Originally posted by Prof_Fate:
I've never really understood it either. |
I think looking at a couple things will help...First, you have to dive into accounting practices to get more of the picture. Example: 3rd quarter 2007 - GM posted a $40B (yes, that's a 'B') loss even though its car making operations were profitable that quarter. The info on why is readily available if anyone wants to bother looking (I'm not going to waste my time because I sense most have this "all figured out" already and aren't interested). Second, remember that GM is more than just a car company (remember GMAC?). Look at GE and its performance because of GE Capital and you'll get some of the picture.
I'm not saying GM has been as well-run as GE has been; I am saying that it's never as simple as throwing out random numbers and putting a lot of !!!!!! behind them. |
|
|
|
12/05/2008 07:06:55 AM · #114 |
Originally posted by Patents4u:
I am saying that it's never as simple as throwing out random numbers and putting a lot of !!!!!! behind them. |
That's the internet forum equivalent of the sound byte. Oversimplified, out of context and often pointing people in the wrong direction. |
|
|
|
12/05/2008 08:41:20 AM · #115 |
Originally posted by LoudDog:
Yet in the last 4 years they have lost nearly $100,000,000,000!!! |
So good companies loose 100 billion over 4 years all the time? No problem, just a sound a byte. Or are you saying that number is incorrect? Or it doesn't mean anything. How much stock are you buying since they are doing so well? It's a bargain now under $4.00/share. Put your money where your mouth is.
I would not consider buying GM stock right now, I don't know if anyone would say it's a good time to buy it, thus I don't want my government loaning them my money.
True, the $100,000,000,000 is a guess on my part. Dec 05 GM net assets was 10.2 billion. As of June 08 it was -58 billion. So that's 68 billion loss over 2.75 years. Plus what they lost the last three months (which I'm guesing is HUGE) and what they lost in 2005 (I read somewhere else it was a loss in 2005 but forgot the number). If you want to prove my 100 billion wrong, have at it. Even if i'm wrong, I doubt it's by much, and i could actually be low (depending on how bad the last three months were). However, I did not base my statement on "random numbers".
And yeah, a big loss in one quarter is no big deal, but that is not where all my !!!!!s were. Maybe you need to pay closer attention?
Message edited by author 2008-12-05 13:42:14. |
|
|
|
12/05/2008 06:18:37 PM · #116 |
Originally posted by LoudDog:
Originally posted by LoudDog:
Yet in the last 4 years they have lost nearly $100,000,000,000!!! |
So good companies loose 100 billion over 4 years all the time? No problem, just a sound a byte. Or are you saying that number is incorrect? Or it doesn't mean anything. How much stock are you buying since they are doing so well? It's a bargain now under $4.00/share. Put your money where your mouth is.
I would not consider buying GM stock right now, I don't know if anyone would say it's a good time to buy it, thus I don't want my government loaning them my money.
True, the $100,000,000,000 is a guess on my part. Dec 05 GM net assets was 10.2 billion. As of June 08 it was -58 billion. So that's 68 billion loss over 2.75 years. Plus what they lost the last three months (which I'm guesing is HUGE) and what they lost in 2005 (I read somewhere else it was a loss in 2005 but forgot the number). If you want to prove my 100 billion wrong, have at it. Even if i'm wrong, I doubt it's by much, and i could actually be low (depending on how bad the last three months were). However, I did not base my statement on "random numbers".
And yeah, a big loss in one quarter is no big deal, but that is not where all my !!!!!s were. Maybe you need to pay closer attention? |
I think I get the part about your post being based on a guess but not random numbers -- although I gotta say that's an odd one to be concerned about. So if I said your guesses were random, I apologize.
But I'm scratching my head about the rest of your post. When did I say they were doing well? Would we be discussing a government loan if they were? When did I suggest a big loss in one quarter is no big deal? When did I quibble with your "guess"? Maybe I need to pay closer attention? Seriously? You seem concerned that I said the situation is a lot more complex than just throwing out guessed at large numbers and a lot of !!!!!!!. I stand by that.
Oh, and about your concern for your tax dollars being used in this way - care to throw out a guess how many tax dollars have been used already to support the hundreds of thousands that already have lost jobs in the US auto industry? Care to guess the further taxpayer burden if one of the US companies heads into bankruptcy? You must realize that $25-35B is chump change at that level, right? I mean, the European auto companies are asking for a heck of a lot more than that from their governments (and the JP auto companies are seeking help from their government, too). |
|
|
|
12/08/2008 07:55:07 AM · #117 |
A company can get into trouble, run into tough times, encounter unforeseen blips, lose money, need financial assistance, and still be a good profitable company. In my opinion GM is not in that boat. GM has not been doing well for a long time. Ford may be in that boat?
As for the other issue, you said random numbers with !!!!̢۪s behind it and said a big loss in one quarter isn̢۪t a big deal appearing to counter or minimize my point. I just wanted to be clear that my number was not random and I wasn̢۪t talking about just one quarter of loss. If I misinterpreted your comment or if it was not directed at me I apologize.
|
|
|
|
12/08/2008 09:24:58 AM · #118 |
| I just heard on the radio that, two years ago, Ford made a profit of $38 billion. |
|
|
|
12/08/2008 09:58:35 AM · #119 |
Originally posted by GeneralE:
I just heard on the radio that, two years ago, Ford made a profit of $38 billion. |
Can't be true. Not even close. That probably is a number relating to the liquidity it had at one point or some such thing. Ford aggressively mortgaged its assets a couple years ago to secure considerable financing for its "Way Forward" restructuring plan. |
|
|
|
12/08/2008 10:54:29 AM · #120 |
Originally posted by Gordon:
There are plenty of things I'd buy from a company in Ch11 bankruptcy. I'd buy TVs from them. I'd not buy a car. |
Actually I'd do just the opposite. I'd buy a car, before I'd buy a TV from a company going through chapter 11. First and foremost because most of the parts are made by third party vendors. I can still get parts for cars made over 50 years ago, by companies that no longer exist. Try that with a TV/VCR/Computer. Sorry, custom chips that nobody has.
Now might also be a very good time to buy stock. If the mood of congress is not to go through chapter 11, then the stock will increase in value IF and when the company turns around. When Chrysler is down the tubes 30 years ago, a good friend of mine implored me to sell everything I had and put every dime I had in Chrysler stock. At the time it was around $3 a share. His reasoning was that there were too many jobs of too many democrat voters that would be lost for congress to allow it to happen. Well, I didn't do it. He did. Chrysler came back, and the value soared to over $30 a share.
Will history repeat itself? I don't know. I'm not going to sell everything I own, this time either. However, I am going to put some spare money out there and see what happens.
|
|
|
|
12/08/2008 11:19:24 AM · #121 |
Myth No. 1: Nobody buys their vehicles
Reality: General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.
Myth No. 2: They build unreliable junk
Reality: The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers."
The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.
Myth No. 3: They build gas-guzzlers
Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway.
The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic.
A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.
Myth No. 4: They already got a $25-billion bailout
Reality: None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.
Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs
Reality: The domestics' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.
The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than Toyota and Nissan's full-size pickups.
Myth No. 6: They don't build hybrids
Reality: The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.
Myth No. 7: Their union workers are lazy and overpaid
Reality: Chrysler tied Toyota as the most productive automaker in North America this year, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM.
The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That's like assuming you get your parents' retirement and Social Security benefits in addition to your own income.
Hourly pay for assembly line workers tops out around $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There's no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they're working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis.
Reprint from the Detroit Free Press, December 5, 2008, Mark Phelan Columnist
|
|
|
|
12/08/2008 11:37:18 AM · #122 |
Originally posted by ambaker:
Originally posted by Gordon:
There are plenty of things I'd buy from a company in Ch11 bankruptcy. I'd buy TVs from them. I'd not buy a car. |
Actually I'd do just the opposite. I'd buy a car, before I'd buy a TV from a company going through chapter 11. First and foremost because most of the parts are made by third party vendors. I can still get parts for cars made over 50 years ago, by companies that no longer exist. |
And when you wanted warranty service? A warranty that's part of the price you pay? Also, keep in mind that many of those 2nd and 3rd tier suppliers that are making those parts you're counting on will disappear as well |
|
|
|
12/08/2008 12:54:56 PM · #123 |
Originally posted by Spazmo99:
Originally posted by ambaker:
Originally posted by Gordon:
There are plenty of things I'd buy from a company in Ch11 bankruptcy. I'd buy TVs from them. I'd not buy a car. |
Actually I'd do just the opposite. I'd buy a car, before I'd buy a TV from a company going through chapter 11. First and foremost because most of the parts are made by third party vendors. I can still get parts for cars made over 50 years ago, by companies that no longer exist. |
And when you wanted warranty service? A warranty that's part of the price you pay? Also, keep in mind that many of those 2nd and 3rd tier suppliers that are making those parts you're counting on will disappear as well |
Well if the quality is as good as people say there is no need to worry about lack of warranty service :)
Seriously, the two Toyotas we recently bought passed the warranty period without ever needing anything done.
And honestly, if it were a smoking deal on the car, a non manufacturer waranty (available on used cars - not sure about new?) isn't that expensive. Fear of not having a warranty would only be a minor negative if i were in the market for a new car and the price were right. |
|
|
|
12/08/2008 02:09:17 PM · #124 |
Originally posted by wdamman:
[b]Myth No. 1:...(snipped for brevity) |
Well, hell, if that is unbiased, I'm surprised they aren't making money hand over fist! Whoops. Reality has something to say about that... |
|
|
|
12/08/2008 02:34:47 PM · #125 |
//videos.streetfire.net/video/Top-Gear-Ford-Fiesta_204097.htm
I would like everyone to watch this video at around the 7:34 mark. i think this might be my next car, lol
|
|
