Is Chrysler worth to be bailed out?

polkatese

I've been watching the hearing, and one of the argument discussed was, after being dumped by Daimler, is chrysler was just getting caught up with the "me too" opportunistic begging, if the company has no long-term value to be saved by taxpayers? One of the panel Senators was badgering them on why Cerberus Capital (Private equity firm who own 80% of Chrysler) is not interested in putting more investment to save the company? I thought that is a valid point. Nardelly (Chrysler CEO) seems to have problem responding to that question.

Your thoughts?

ben62670

No. How many years have they been using the same crappy transmissions with no attempts to even try to make it right:rolleyes: Peace out C.P.D.

Oh yeah my thoughts. Help the ones that are at least trying to improve:)

polkatese

One more thing, Chrysler is asking for $7B when their stock worth $6B. Is my basic math off?

markmarc

I think Cerberus Capital's goal was to slice off the problem areas, then resell the company for a tidy profit. Daimler basically gave away the company.

All I know is that if they all go down, by the time it's all done and said, it will cost the taxpayers easily more than a half a trillion when you look at unemployment of 3 million, the takeover of the pension funds (which the gov't protects), bailouts of governments, and public works projects to create jobs.

I'd much rather roll the dice for $35 billion, then deal with $500 billion six months from now. Don't we want private companies to keep jobs, especially our manufacturing base which create something from nothing, then have the gov't create jobs temporary programs? Not to mention the national security issue of having Hyundai build or trucks and tanks?

Just my .02

ND13

markmarc wrote: »

I think Cerberus Capital's goal was to slice off the problem areas, then resell the company for a tidy profit. Daimler basically gave away the company.

All I know is that if they all go down, by the time it's all done and said, it will cost the taxpayers easily more than a half a trillion when you look at unemployment of 3 million, the takeover of the pension funds (which the gov't protects), bailouts of governments, and public works projects to create jobs.

I'd much rather roll the dice for $35 billion, then deal with $500 billion six months from now. Don't we want private companies to keep jobs, especially our manufacturing base which create something from nothing, then have the gov't create jobs temporary programs? Not to mention the national security issue of having Hyundai build or trucks and tanks?

Just my .02

Mark,


Some people just don't get it. Glad to see some do.

polkatese

The point being that, out of the three, Chrysler has the least reason to be bailed out.

I can see GM and Ford as the two worthy to be bailed out. I am not convinced on Chrysler. Make Cerberus be responsible for it, after all, they own Chrysler.

AsSiMiLaTeD

Can someone tell me, specifically, which military vehicles that are built by Chrysler that Gm or FORD is in capable of building?

I get that argument for debating whether or not to let all 3 of them go under, but not in this case.

ben62670

markmarc wrote: »

I think Cerberus Capital's goal was to slice off the problem areas, then resell the company for a tidy profit. Daimler basically gave away the company.

All I know is that if they all go down, by the time it's all done and said, it will cost the taxpayers easily more than a half a trillion when you look at unemployment of 3 million, the takeover of the pension funds (which the gov't protects), bailouts of governments, and public works projects to create jobs.

I'd much rather roll the dice for $35 billion, then deal with $500 billion six months from now. Don't we want private companies to keep jobs, especially our manufacturing base which create something from nothing, then have the gov't create jobs temporary programs? Not to mention the national security issue of having Hyundai build or trucks and tanks?

Just my .02

I am in partial agreement, but I don't see us being able to rescue all three. Jobs are going to be lost any way you cut it. I think it would be much better to focus on two rather than three, and I certainly wouldn't want to see just one US auto company. Correct me if I am wrong, but I think GM is the military king in the US now, and I feel Ford is plenty capable.
Ben

vonnie123

Sell off Chrysler to GM, and consolidate the two. Don't bail out Chrysler on its own. It had one bite at the apple already.

markmarc

I believe the A1 Abrams Tank is a Chrysler product. Correct me if I am wrong.

I can understand those who believe Chrysler ought to die. I do find the idea of gov't supporting a GM/Chrysler merger as a possibility. But if just Chrysler goes under, many non-union parts manufacturers will go down as well. Some of them do work for all three. The ripple effect is still enormous.

The problem with letting them go thru bankruptcy is that their are only 2-3 groups capable of financing a large bankruptcy restructuring in this economic climate. To be honest they are waiting for much riper pickings with a quicker profit turnaround.

treitz3

markmarc wrote: »

I think Cerberus Capital's goal was to slice off the problem areas, then resell the company for a tidy profit. Daimler basically gave away the company.

All I know is that if they all go down, by the time it's all done and said, it will cost the taxpayers easily more than a half a trillion when you look at unemployment of 3 million, the takeover of the pension funds (which the gov't protects), bailouts of governments, and public works projects to create jobs.

I'd much rather roll the dice for $35 billion, then deal with $500 billion six months from now. Don't we want private companies to keep jobs, especially our manufacturing base which create something from nothing, then have the gov't create jobs temporary programs? Not to mention the national security issue of having Hyundai build or trucks and tanks?

Just my .02

Nice post! It was said during the meeting with the big 3 and others that if they fail, it will be around 1 trillion dollars. Regardless of whether or not it's a half a trillion or a trillion, that's a hell of a lot more than what the automakers are asking for. Even if it goes up to 75 billion requested, it's still a hell of a lot less money.

Also, I'd like to point out that while some of the automakers have made mistakes, was it their fault that the economy tanked so quickly? No, it was the action and inaction of our elected officials that led to the housing collapse and consequent credit freeze that has shot sales down dramatically. It's not funny at all to me that our elected officials are now taking the high road and dangling a steak to the same companies that if they had done their job and prevented our current economic status, probably wouldn't be looking at the steak to begin with. At least that's how I see it, you may think otherwise.

Another thing to point out. If one manufacturer falls, it will have an effect on prices and parts availability to the other two due to some companies having to close up shop. This, as was explained today will therefore possibly cause the collapse of the other automobile makers. Is that a gamble that you are willing to take? One person said today that it's like taking America's economy and playing Russian roulette. That's NOT a game that I, as an American am willing to play.

ND13

vonnie123 wrote: »

Sell off Chrysler to GM, and consolidate the two. Don't bail out Chrysler on its own. It had one bite at the apple already.

And repayed the LOAN around 20 years early.:rolleyes:

Don't ya'll think foreign car prices will rise without competition from all of the big three.

AsSiMiLaTeD

treitz3 wrote: »

Also, I'd like to point out that while some of the automakers have made mistakes, was it their fault that the economy tanked so quickly? No, it was the action and inaction of our elected officials that led to the housing collapse and consequent credit freeze that has shot sales down dramatically. It's not funny at all to me that our elected officials are now taking the high road and dangling a steak to the same companies that if they had done their job and prevented our current economic status, probably wouldn't be looking at the steak to begin with. At least that's how I see it, you may think otherwise.

That's a good point and one I hadn't considered before. I'd say they should take some responsibility for where they're at and they're doing that, but it's not like they're in the mess because they loaned money to thousands of people who they knew could never repay it!!

AsSiMiLaTeD

But who's gonna fix all the faulty transmissions if Chrysler goes out of business?

ben62670

markmarc wrote: »

I believe the A1 Abrams Tank is a Chrysler product. Correct me if I am wrong.

I can understand those who believe Chrysler ought to die. I do find the idea of gov't supporting a GM/Chrysler merger as a possibility. But if just Chrysler goes under, many non-union parts manufacturers will go down as well. Some of them do work for all three. The ripple effect is still enormous.

The problem with letting them go thru bankruptcy is that their are only 2-3 groups capable of financing a large bankruptcy restructuring in this economic climate. To be honest they are waiting for much riper pickings with a quicker profit turnaround.

I did not know Chrysler made the tanks. The whole stinken economic situation sucks right now. I just don't see how to rescue the auto makers if the is no demand. The American people in general are not buying because they can't afford it, or people with good credit are being turned down. IMHO the creditors, unions, and free trade has really tanked this country. I do realize that we are not the only ones suffering. It is a global situation:(

Jstas

markmarc wrote: »

I believe the A1 Abrams Tank is a Chrysler product. Correct me if I am wrong.

General Dynamics makes the M1-A1 Abrams.

Y'all wanna know what Chrylser makes?

http://www.allpar.com/history/military/

Take a look. Guess what they have built? Missiles, rockets, radar systems, radar guided guns, a number of tanks and of course, they own Jeep which came out of WW2 in which Chrysler also manufactured said Jeeps as well as Sherman tanks, a number of hand held weapons and, the B-29.

You can see equal and even more expansive military histories for Ford and GM.

But yeah, what in the hell could the car manufacturers do in this day and age? I mean all they can handle is stuff for a ground war and bomb building, right? Yeah, right. :rolleyes:

ND13

" from CNNOne-fifth of the nation's retail purchases are automobiles. By getting automotive retailing back on track, Congress can effectively leverage the economic engine of the automobile industry to get this economy running on all cylinders again," she said, pleading with Congress not to let the Big Three file for bankruptcy. Video Watch what the automakers are asking for »

With the world's economy reeling, expensive items like cars are not high priorities for families and businesses. It doesn't help that the credit crunch is making it difficult to get loans, which the majority of U.S. consumers need to purchase vehicles.

Also compounding matters is consumer confidence, which hit an all-time low in October and didn't improve much in November, according to the nonprofit Conference Board, which maintains indices on consumers' trust in the marketplace.

According to Autodata, car sales have plummeted since last year. In the United States, the number of sales of passenger cars and light trucks in November 2008 was down 36.7 percent from November 2007 -- from about 1.18 million to 747,000.

Also, as of November 2008, automakers had sold about 12.35 million cars and light trucks, compared with 14.76 million during the same time period last year -- a drop of 16.3 percent, according to Autodata's summary of U.S. light vehicle retail sales.

Comparing November 2008 sales with those in November 2007, Autodata reported that General Motors saw a 41.3 percent drop, Ford a 30.5 percent drop and Chrysler 47.1 percent.

But it's not just U.S. automakers taking a hit: Toyota's vehicle sales declined 33.9 percent, Honda's dipped 31.6 percent and Nissan's dropped 42.2 percent during that time period, Autodata reported.

Hmmmm. So much for the quality arguement.

from CNN... If the Big Three file for bankruptcy, Sykora told Congress last month, sales and confidence will continue to plummet.

"Imagine how banks would react to a dealer who has asked for millions of dollars to finance new and used inventories from an automaker going through 'reorganization,' " she said. Video Watch whether a bailout would come too late for dealers »
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The government can help boost auto sales in many ways, Sykora said, citing two proposed tax incentives: one that would make interest payments on car loans tax deductible and another that would encourage consumers to upgrade their older cars for more fuel-efficient models. "Cash for clunkers" programs are in place in Texas and California, she said.

"Whether it's my dealerships in Texas or it's the dealership in your community, the fact is local dealerships will be a major factor in our economic recovery," she told the House committee. "To get the economy back on track, we must restore consumer demand, and the only way to do that is to restore consumer confidence."

I guess it'll just take it actually hitting home before some will realize.

polktiger

It is not just the big 3 that are hurting, all car sales are down including the foreign makes.

Another thing that can not be understated is the comp levels in the Big 3 is way out of line with many foreign makes, especially the **** makes. That applies in the executive suite as well as the production line. Bottom line is the comp and benefits for the union workers and the execs kills the ability to spend more on quality while still competing at the same price point.

AsSiMiLaTeD

Noel, you can't use the current situation to make or dispute the quality argument. What's happening now is (I hope) an anomaly, one would expect that with time people will again be able to afford new vehicles, especially once the credit crisis eases up. The quality argument is more about explaining why people in general have been buying Toyota more lately vs the big 3.

IIRC, didn't Toyota recently take over the spot as the # 1 selling automaker, or at least come close to gaining that spot? So how did they go from basically nothing decades ago to at least being in the discussion as the # 1 selling company - quality. I mean seriously, what else could it be?

You think people started buying Toyota in the 80s and 90s because their cars had style, were fun to drive, etc? Of course not, everyone knows the yotas from back then were fugly, had no style, etc. No, no that's not it either. They sold more because they were built well. Hell, you build a good product consistently year after year for decades and people begin to trust your brand, and eventually, over time, you begin to overtake your competitor.

Toyota didn't get big overnight, it's been accomplished through years of making quality products and more and more people getting tired of being screwed by the big 3 and finally breaking down and deciding to try something else - that's my situation exactly.

Yep, Toyota and Honda are hurting like everyone else because the issue right now is people being broke and not able to get credit, that's an issue outside of the automaker's control (which I mentioned in a post a bove where I gave the big 3 a pass for not being entirely responsible for where they're at).

is Toyota asking for a bailout? I don't believe they are, and that's probably because they have enough cash on hand to get them through the rough times, because they've been making money hand over fist for quite a while, whereas the big 3 have been struggling during that time.

obieone

I just don't get why people keep saying that this bailout is REQUIRED to keep these co.'s afloat.
Chapter 11 worked for the airlines, and K-Mart, who turned around and BOUGHT Sears 2 years later?
I'm sure there are other instances where it worked and didn't, but those two are the only ones that come to mind.

polktiger

AsSiMiLaTeD wrote: »

is Toyota asking for a bailout? I don't believe they are, and that's probably because they have enough cash on hand to get them through the rough times, because they've been making money hand over fist for quite a while, whereas the big 3 have been struggling during that time.

Toyota also does not have the massive benefit obligations to fund. The simple fact is Toyota and Honda (and other imports) do not have the labor and benefit costs (from top to bottom in the organization) to fund that the big 3 have.

sucks2beme

They improved "production quality" a great deal.
It's "design quality" that needs work. Weak designs
cause early breakdowns. Tossing the unions will lower costs,
but not fix that little stinger.

A lot of companies are in the tank right now. I don't see
the **** handing us money any time soon. a bunch of
co-workers and my last boss got the axe. Sales for everyone is
down. They shipped manufactoring off shore. Then tech jobs.
Then call center jobs. And the end result is people that lose jobs
or look like they might lose their jobs DON"T BUY NEW CARS.
OR BIG SCREENS. You lose a job now, where are you going to work?
Answer: Fast food. Anyone esle is sitting tight on hiring. With rare
exceptions, the tech sector is in limbo right now.
Tax rebates aren't going to fix crap. That little smoke and mirrors ploy
isn't going to work. Is bailing out these guys going to help?
Most likely not. Is offering 4.5% home loans going to help? Not likely.
The right answer is going to be hard. We need a huge back to basics
movement to get the ball rolling. Companies that make stuff here need
incentives to leave it here. We need stuff to come back to the U.S.
All my work lately involves helping companies move their stuff out of the
country. Mexico, South America, eastern Europe. Damn little going
on here in the states. The result will leave many cities looking a lot like
Camden.

Jstas

obieone wrote: »

K-Mart, who turned around and BOUGHT Sears 2 years later

Um, Sears and Kmart merged. They formed Sears Holdings Corporation. Kmart said they wanted to buy Sears but I don't think that ever really happened and the two merged after affirmative votes from shareholders of both companies. I don't know any more on it but I think Kmart could not secure the capital needed to purchase Sears outright so they merged.

rabies_70

I personally don't care if they all go under. I know that's really really harsh, but the executives have all been scamming and scheming and getting rich as have all the union reps and officers. Let it all go under, before it drags us all under with it. No more money to these companies. ANY of them

mantis

Build a good product and people will buy it, build crap and go out of business. I believe thats the bottom line. Look at the big 3 from Japan.

Jstas

sucks2beme wrote: »

The result will leave many cities looking a lot like
Camden.

Camden, NJ is a textbook example of what happens when large manufacturing operations close up shop, move somewhere else and take the jobs with them. No jobs, no money, the working class leaves to find the jobs again. That lets a less desirable element roll in. Not that the lower middle class and poor are undesirable, they just don't have the resources to support what is needed to combat that undesirable element. Property values drop because of the poor conditions and then tax revenues drop. No taxes, no police, ambulances, fire trucks, trash trucks, street maintenance and so on.

If the Big 3 go down and we put 3 million + out of jobs, there will be no where for those people to go to find the work again. Then way more than one city will go down the tubes.

The jobs are critical. The bailout needs to happen not to save the companies but to save what little jobs we have left here in this country. If there is ANY reason that is good enough, that's it.

F1nut

mantis wrote: »

Build a good product and people will buy it, build crap and go out of business. I believe thats the bottom line. Look at the big 3 from Japan.

We already did. "Toyota's vehicle sales declined 33.9 percent, Honda's dipped 31.6 percent and Nissan's dropped 42.2 percent during that time period, Autodata reported."



To answer the OP's question, HELL YES!!!

Motzart

My thoughts about Chrysler.......

IF they get bail $$$ they damn well better make better transmissions!

Serendipity

AsSiMiLaTeD wrote: »

IIRC, didn't Toyota recently take over the spot as the # 1 selling automaker, or at least come close to gaining that spot? So how did they go from basically nothing decades ago to at least being in the discussion as the # 1 selling company - quality. I mean seriously, what else could it be?

You think people started buying Toyota in the 80s and 90s because their cars had style, were fun to drive, etc? Of course not, everyone knows the yotas from back then were fugly, had no style, etc. No, no that's not it either. They sold more because they were built well. Hell, you build a good product consistently year after year for decades and people begin to trust your brand, and eventually, over time, you begin to overtake your competitor.

Toyota didn't get big overnight, it's been accomplished through years of making quality products and more and more people getting tired of being screwed by the big 3 and finally breaking down and deciding to try something else - that's my situation exactly.

If I understand correctly, Chrysler has been improving with regards to quality - I recently read a Consumer Reports article that stated Chrysler vehicles were more reliable for the past 2 model years so that's a good thing.

obieone

JMO, but I think this bailout is enabling bad behavior by both mgmt. & labor.
It'll be a band-aid for the inevitable, and then WE don't get the $$$ back, and the end result is the same.
And as far as Camden goes, never been there, but I lived in Fall River, MA, and I'm all too familiar with the towns of Lowell & Lawrence, MA. You want to talk about SH!THOLES!

sucks2beme

appadv wrote: »

If I understand correctly, Chrysler has been improving with regards to quality - I recently read a Consumer Reports article that stated Chrysler vehicles were more reliable for the past 2 model years so that's a good thing.

The big three do NOT do the continous improvement thing.
Defect free assembly is not the same as true quality improvemen.
All three are very slow to respond to
product design problems. Toyota uses dealer service info to spot
trouble spots, and makes tweaks to fix trouble. Toyota has as many
F-ups as the big three in their vehicles, they just don't last for
the run of a car design. Chrysler never fixes anything once the design
hits the dealers. I've seen TSBs for repairs, yet the problem in the factory
never gets addressed for years, if ever. I could go on and on, but
I've whipped up on way too many dead horses on the subject.