Automaker viability - Holy Sh#t
What will the White House do?Wow. Another $22 billion. Tens of thousands of jobs on the chopping block. Yet, if the yearly run rate for auto sales doesn't climb above 11 million units per year in the next couple years, much more tax-payer money will be quickly needed.
Plus, the UAW healthcare fund is still not resolved. $27 billion in debt still needs to be secured. Thus, there is still no guarantee that either Chrysler or GM won't need even more money as part of this plan.
Add California's EPA waiver and, suddenly, the Big 3 are supposed to focus significantly more product development on products that the Big 3 can't seem to make a profit developing?
How viable does that sound?
Labels: bailout
posted by Dahcredyns at
6:54 AM
4 Comments:
Saturn, Saab and Hummer are dead. 47,000 jobs to be axed.
What took GM so long to clean house? Is it bad management? Does the Union have a stranglehold over management's options?
Obviously, the business model running GM and Chrysler is and has been fatally flawed and their ability to execute new plans is and has been clearly inept.
Doesn't that make bankruptcy seem the more intelligent decision?
Either bankruptcy or accept the fact that massive subsidies are almost certainly going to be part of this business model for a long time.
If we take the subsidy path, why not make it part of a national moonshot - let's end foreign oil dependency for instance so there is some sort of bigger payback in the long run?
What is happening to the American auto industry and to our economy in general is the result of wage calcification. We happily accept wage increases when they happen, but we have no good mechanism to respond to conditions within the labor market that tend to force wages and salaries down. So long as the UAW keeps wages at unrealistic levels, the car makers will remain non-competitive. Those market conditions are the direct result of America joining the international labor pool. Our wages must go down as their wages go up until we meet in the middle. Unfortunately, the only mechanism that our system has for wage reduction is layoffs, and that is extremely disruptive. People who are layed off are typically transferred from high productivity jobs to low productivity jobs or no jobs at all. Panic reduces spending, which results in more layoffs. Americans need a graceful way of accomodating the demands of the world economy or else we need to isolate ourselves from it. We don't need to maintain wages at current levels. We only need to maintain productivity. Prosperity follows productivity, not wages. This is a case of unrecognized deflation, just like in 1929.
Flexibility. Efficiency. Change.
No one wants to have their wages go down, but if its your job, or a lower wage, i'd take the lower wage in most circumstances.
You bring up some very interesting arguments. We live in a very dynamic world. Get used to it or get out of the way. That's reality.
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