So Ford, Gm and Cry-sler can’t make money on cars in America? So how did Toyota, Honda, Nissan even Hyundai do it?

By not having massive legacy costs, and by having flexible labor contracts. They were able to watch the Big Three and their labor contracts and say “let’s not get ourselves some of that.”

The Chrysler bailout was a failure; today’s events prove that. Chrysler SHOULD have been allowed to die, and THAT might have proved to be the best thing that could ever have happened to GM and Ford.

Bull. It did work. During the 90’s, Chrysler was on top of the world. They could design cars with the best of them, and could do it cheaper and faster.

But instead of correcting the problems with the cars by using better materials and what not, Eaton bailed and threw Chrysler to Daimler, who proceeded to drop Chrysler off a cliff to make Mercedes look good.

It had nothing to do with the 1979 bailout. Chrysler was a successful business in between there and now.

It worked? So Chrysler’s NOT in Washington right now with the beggar’s cup outstretched? It’s OK for a company to have to be bailed out by the federal government every 20 years?

The Chrysler bailout was a failure; today’s events prove that. Chrysler SHOULD have been allowed to die, and THAT might have proved to be the best thing that could ever have happened to GM and Ford.

A good economists’ take on this: http://www.georgereisman.com/blog/

Can you just imagine what kind of cars the government will tell GM to build? And if we don’t buy them the government will install taxes and tariffs on cars they DON”T have a business interest in. Even if they make other cars cost way more people are still going to buy them, and buy used ones in greater numbers than domestics.

Politicizing the auto industry is not going to save jobs, for the transplants are going to cut too if they start to lose market share to US motors Inc.

“Removing the executive bonus system to satisfy a politician’s idea of class warfare is patently ridiculous. If GM is to recover, it needs [NEW] top executive talent. To attract same, it can either pay-out bonuses for top performance or… what?”

Point taken, of course, but I, uh, suspect that you, or I, or Stephen Lang or many others among us would do the job way better, for free.

No ? C’mon, nice view of Canada from RenCen, corner office at Saarinen’s Tech Center, unlimited track time at Milford, (and the Nordschliefe), Design Studio tours, travel to Europe, Australia, Japan, China ?

I’d pay them for this gig…

I’m trying to see how this economy is going to recover, but frankly, I can’t.

First I graduate from college into a jobless recovery, now I graduate from law school into a recession. Wonderful.

And another thing: I heard people using the words “jobless recovery” up until like, last year. You mean to tell me that for the past 7 years we’ve just been “recovering” from the .com collapse?

Its no wonder people like Western European Social Democracy. At least over there when you get so frustrated looking for a job you give up you can walk around town and see pretty buildings!

The government “suggested” that Chrysler kill the R-bodies and larger V-8s as a condition for the loan guarantees (which effectively put Chrysler out of the recreational vehicle business). Since R-body sales had collapsed for 1980, and everyone thought that gas would be $3 a gallon (in 1979 dollars) by 1985, Chrysler didn’t put up any protest.

It transferred the Fifth Avenue nameplate to the M-body LeBaron…and watched sales skyrocket in the mid-1980s, as many traditional customers went back to real-wheel-drive cars.

Recreational vehicle sales eventually recovered, too, but Chrysler was basically out of that business by then.

faster_than_rabbit: If I recall correctly (I may not after all this time), Chrysler actually made too many of the loaded luxury models, where customers were expecting to buy low-end (cheap) strippers.

Yes, Chrysler initially sent well-optioned K-cars to dealers, as it was desperate for the profits from the loaded models. Only problem was that we were in a severe recession in the fall of 1980 (when the K-cars were launched), and historically buyers of Dodge and Plymouth compacts were more interested in basic transportation than luxury compacts.

faster_than_rabbit: The free market never cleans up the messes it makes. It just makes them larger and larger until corrected through regulation.

The free market is doing a good job of punishing auto makers who have failed to produce vehicles that customers want, or are poorly managed with too many brands or too high structural costs. The only problem is that management, labor and the sky-is-falling-because-GM-may-collapse crowd expect government to intervene and prevent the free market from working as it should. People love success, but have to accept that for the free market to work, failure is a critical part of the equation.

“If approved, it will allow your duly elected representatives to gain control of an American carmaker to manipulate it for their own ends. Anyone who thinks those ends will be determined by a desire to create product and customer service excellence is seriously, dangerously deluded.”

Regardless of your political affiliation, I don’t see how you could disagree with this statement.

Many times, the system works (hence its existence). Other times (i.e. Rick Wagoner), it doesn’t (hence GM’s destruction). Normally, the free market cleans up the mess.

I cannot recall ever seeing, hearing of, or witnessing a time when, applied at the level of executive managment, this system worked. Individual contributors and lower-level management, yes. The free market never cleans up the messes it makes. It just makes them larger and larger until corrected through regulation.

Man, McCain has really freed the nascent socialism in this country. Pretty awesome.

If you liked the “thought” behind the 85 mph speedo, get ready !

After all, saving fuel was all-important. Whether anybody would buy those cars was another issue.

I understand there are lots of unemployed five year planners from the x-Soviet Union who are looking for employment.

If this passes without major concessions by management and the unions, then every citizen should boycott these products in principle, not just because they are uncompetitive.

There was the RTC in the early 90s. Conrail started life as a fully nationalized entity and was brought to profitability and sold to the private sector. Maybe the followup question should be, “Which governmental organizations were created to deal with the sorts of problems that can be ’solved’ and then forgotten about?” Because it’s not like we’re going to some day say, “Wow, we sure licked that national defense problem, time to plywood up the doors to the Pentagon.”

I think the absolute worst case scenario would be the blank check. Second worse would be out-and-out nationalization a la Conrail. Ideally, have the feds provide DIP financing after the Big 3 go Chapter 11.

Even Chapter 7 wouldn’t be too bad, in the long run; maybe some better-run organization could enter the domestic market with a low enough cost basis to be profitable.

That guy’s going to do to GM what he did for Freddie and Fannie!!

So RedInk Rick’s renewed contract will be for $199,999.00 plus bonuses of $24 Million?

Gov’t oversite??? I’m reaching for my bourbon and a very large tumbler when I click the Submit Comment button…

As a poster here for about a year, and a reader of TTAC for I think two years now, I’ve never seen such relative support for the latest D3 fiasco. The Yanks have been hammered on this site when it comes to things like mind-boggling product decisions (Sclade hybrid anyone?), bone-headed branding, slacktastic workmanship and quality control in the product…the list goes on. But when the bell actually is pulled back for the final toll, everyone gets all teary eyed and remembers that lovably broken and dangerous Vega they had back in college as the good ‘ol days. Weird.

Everything has been according to Farago’s plan, the horse is behind the barn and the gun is drawn, PULL THAT TRIGGER ALREADY!

If this oversight board vetoes money for the next Corvette or Camaro, God help us all…

I doubt it is an onset of sanity, but we will take what we can get. Perhaps if GM has to declare before Barry,Harry, Nancy and co. can act, and the world doesn’t end (shock), we may get a shot at a new Debt-roit.

I’m curious-does anyone have an estimate on the cost per GM vehicle of the interest on their debt?
I am truely curious as to what the figure would be.
RF-Might make an interesting topic for a deathwatch.

Bunter

What it is all about, is embezzlement and extortion on a very high scale, an economic system that has built into itself the right to steal money, legally. It has nothing to do with keeping talents in town, but everything to do with grand theft on a large scale. Greed is good? Not so, when You end up paying the bill.

This is very true. The best in almost any field do it for the love of the ‘game’, of the challenge, of seeing just how far they can go. For most corporate execs in America today the ‘game’ is how big a paycheck they can pull down and not how they can better a company or change an industry. (Compare a Wagoner to a Steve Jobs.) Their game is not too inspiring when you get right down to it: “I bankrupted the company but I got a huge payout!” (Looking at you Nardelli.)

In short, they could do anything and everything they want. And the cost to own is far less than the bailout amounts that are being bandied about.

I pick only on one issue that I believe is a lot more important that it’s understood, the revenue distribution within a private enterprise.

It’s a standard defense the executives put out when their exorbitant salaries and bonuses are questioned; “we have to pay top dollar to top talent to attract it”. Except you and they have it backwards. The top talent doesn’t work too hard and is not motivated once the top dollar is paid. The top dollar is what motivates some of the top talent. But the real top talent is rarely motivated by dollars but rather various other aspects of the job.