I dont get it.

Ford and GM are posting monumental loses and are now seeking govt intervention in order to help save them...

My question is, why dont they just stop making so many god damn cars? Whats the point of having 350 cars sitting at a single dealership? why not just make them as orders come in, or minimize the amount of cars they are producing?
Obv it would effect jobs, but they are already cutting so many, does it really matter?

Less production = less costs = less loss of capital.

Tig, I think you are way under-estimating the situation. Not sure if you are aware, but typically for an OEM, every minute that a vehicle production line is shut-down is a loss of hundreds of thousands of dollars. Keyword: "minute".

There are huge economic implications for the United States and the globe if any one of the big three fails. It is an impossibility.

I understand the implications if they shut down, but it just seems as though the demand is so low right now for new cars, why produce so many?

I am obv oblivious to how the auto manufacturing business works, but less demand in most instances normally = less supply in most industries. If the demand is not there, slow down production and cut costs...whats the point of producing 1,000,000 2008 vechiles when only 200,000 are in demand?

Detroit homies chime in... LOL.

I get what you are saying, but build to order or on demand is not that easy. The auto industry is crazy complex.

They do have that car production stuff down to a science with "just in time parts". It is like a ripple effect. Let's say Herrarra has a company that makes the Headlights for the car. We order 500 per week from him. They build them and ship them just in time for the stock to be re-uped.

If they do a build on demand, they would have to ALL stock parts in surplus. They work for a week to build my 1000 and his people get laid off for two or four weeks until my next order.

Even with the current system, if a shift goes down, the ripple is felt all over Southeastern Michigan. If Ford's second shift shut down today for a week or so, a few weeks from now, a little parts company will probably lay off a few workers because demand dropped. Not good for the economy (unemployment compensation checks all around the board so money is still being spent).

The solution in recent years is to just close a whole plant and shift production elsewhere.

^^^ I should have used something more complex, think Car Seats instead of headlights.

Art, I work for a company that has an 8 to 10 week production lead time on some products. Right now, all the OEMs have already cut shifts and in many cases are working four 10 hour days already. My lines are down right now. We won't build a new part until sometime in 2009.

Tig, as Art says, there are way more complexities to this industry than it appears on the surface. Even the price of components is tied to oil since most everything that isn't some type of metal/alloy is made of oil based materials and resins.

Just the component complexity alone is mind boggling. Let's say you have a ford focus with four basic grades each with varying option packages and single applicable options. You can have upward of 10,000 permutations of the vehicle in terms of component complextities. Its nuts. That is why you can never return to "build to order" for mass produced vehicles. If you think about it the only true "build-to-order" vehicles are high luxury vehicles (maybach, bugatti, etc.) and exotics/supercars (ferrari, lambo, aston martin, etc.) and these cost upwards of $500K each. Granted, they only produce minimal quantities per month.

Let Toyota, Honda and Tata buy 'em all out.

*runs and hides*

Pfft... What do you know about the auto industry Rex???

Completely agree what Art and D-Rex said, it is a very complex industry. The impact of all 3 disappearing completely will be TERRIBLE for millions of people and the US economy overall.

As for just cutting production down to meet with the demand, think of marginal cost ineffectiveness there. It would cause for a long wait for the consumers who are ready to buy the cars, increased break-even price for the car-makers, significantly higher inventory costs for everyone involved in manufacturing and sales, and hundreds of thousands of people who work in production and sales areas will be laid off across the USA.

He works for a high-end carwash! :P

We also do oil changes!

Q3 results: GM lost $7/share and is burning thru $2.3 billion a month. Ouch!

By the way, I think this is more of a marketing and brand differentiation problem for GM and Ford than a lack of demand for the cars. The demand dropped recently, with the high gas prices and an overall bad economic climate, but these brands have been struggling for at least 10 years now.

yeah. Its just quality really...

if someone can buy a foriegn car for the same price, get 10 more miles per gallon and have less repairs, they will obv go foriegn then domestic.

Does this mean sometime soon I'll be looking at driving a Toyota Camaro or a Nissan Suburban?

my brother in law worked for ford so I owned escorts for most of my life, my last vehicle was a used Honda crv - huge difference.

I just talked to a guy I know who works for Rouge steel (makes steel for big 3). He is getting laid off in 2 weeks but with unemployment comp & his union, he still will get about 95% of his pay. making fewer cars doesn't make a huge dent in savings.

Art, exactly right. With union contracts and laws the way they are they still have to pay on avg. about 60% of the cost of retaining the employee for about a year.

I saw on CNN Money that Ford is only worth around 4.5 billion and GM is only worth 4 billion (or vice versa). An analyst mentioned you could buy both companies for 8.5 billion. That's chump change to some.

In comparison: Toyota's value is 22 times both companies combined

They need to diversify. The japanese understood that.

Greedy ass unions helped to ruin Detroit as well.

I think the US auto industry would be saved if we could be the first to produce AND release hydrogen powered vehicles and the like...

i have no idea wtf im talking about, but i think itd work

In addition i think the big 3 expects that eventually these cars will bw sold...




with the exception of Bugatti, and Ferrari Enzo, I'm pretty sure the cars you listed start well under 1/2 a milli, more like upwards of $350,000

I work for Toyota South Africa Manu, and shit is bad! Talks of cutting to four days a week as per 2009 is on the way and laying off people. we use a system called the kanban system, Its building to order,So theres always a backlog of vehicles to make.

And yes the japs are crazy!!!

www.hyd-masti.com

They have implemented the same shit here....

Word is its not so much the cost of fuel thats fucking things up, its the economic factor..America sneezes and the whole world gets soaked lol

Fuck whitey and the yanks!!!

Just waiting on the world to blame more shit on us... haters...

wow, that is much different than the homies I see getting off work here in Detroit. I have seen Auto workers drunk off their ass immediately after doing a shift.

A shoe cleaner and white gloves- wtf

and you wonder why toyota sells more cars =lol.

All GM and Ford spend their marketing on is fuckin trucks when they need to be selling Focus's and Cobalts. Toyota is smart because they reacted to the gas crisis years ago and created numerous smaller, gas efficient, and more affordable cars and also did smart marketing with scion and prius. While Ford and GM were still thinking of ways to make the f150 better than the Silverado and vice versra. Now they're stuck with lots full of trucks and SUV's.

y dont they all combine to make one car company and make like 4 or 5 models... We can still have one of each class... pool resources design the cars and trucks right and be done with it.

Then when the market comes back they can resplit up... make it a temporary merger.

the problem is with the unions. toyota factory workers in the US are making about 40 per hour because all the union bs, gm ford and chrys are making like 70 per hr. the pensions are like 90 % of pay and all the money is going down the drain because the cars are shitty. they need to do a few things:

1. everyone should get a huge pay cut
2. design cars people actually want
3. take away the unions power...

congress is gonna help the unions, because they are the mass voters in the situation, and the fucking politicians are going to protect them. fubar

fyi, i think the big three sell a shitload of cars to china and foregn coutries.
they can't go under, they need a crazy restructure. i will pray forthem andour economy. politics sucks.

agreeed

i definitely concur with andrew b's assessment however does anyone agree that if in addition to taking a say 35% pay cut... higher paid should get more (say 75%) and consolidate into a temporary one american car company merger. could this save the american automotive industry

i agree with the rich peeps takin a bigger cut, fo shooo but , explain how a consolidation can be beneficial to america??

shit what about citi bank making a deal for 400 mil to the knicks stadium when they are broke ahahahhahahahha fucking rich people.


ps the bailout so far has costed every american man woman and child 24k

mets, not knicks

my bad. i forgot.

money.cnn.com

I started cracking up when the article mentioned how two of the CEOs were driven to the meeting in hybrid cars instead of their private corporate jets.

This whole thing about working for $1 a year and driving to meetings in hybrid cars sounds like such a front lol.

"The company made commitments to speed up the introduction of hybrid and electric vehicles..."

Hopefully by "speeding up" they don't mean that safety features in these vehicles are not compromised for the sake of rushing them to the market.

*are compromised, not "are not" compromised

Exactly what I was thinking. Ok, each company cuts about $60-70 million....not exactly chump change, but I was expecting some name brand dropping, some revolutionary changes that would cut BILLIONS. The salary cut and plane cuts are short term expense cuts....what happens after that? How are these companies cutting long term costs?

why doesnt congress get all these big economists together (the ones who officially announced we are in a recession) and have them vote whether or not giving the big 3 a bailout would be beneficial or not?

this whole thing is just a bunch of craziness

I find it odd that the same people who wrote a blank check for $700+ BILLION to completely irresponsible financial institutions is now demanding all kinds of explanations from the auto companies who are asking for about $25 billion. How about making these banks who received billions of dollars actually use that money to give out loans?

Banks have better lobbyists

our government cant be f*cked with!

the most crooked,lying dont care about the middle or lower class people in the world.

I think the Oil Industry should be forced to bail out the American Auto Industry.

Big auto has been loyal to oil companies, by producing gas-guzzlers. Now that the auto industry is hurting, gas prices are slowly cut in half. Big Oil gets themselves out of the political spotlight, when they were one of the main causes of the recession.

Oil companies made record profits aver the past couple years (I think Exxon/Mobil profited $30 billion last year). I'm sure they have plenty of cash that could help the auto industry.

and who has there hands in the oil company? BUSH and our government. the rich get money and lower mid class looses there house.

I agree that the rich usually get richer. But, the middle class could also get rich if they had more brains. Unfortunately, we all know that most people (general population) are a bunch of morons... or are less than educated about how finances work.

They always want to finance everything, no matter how high the interest is or how shady the deal may be. That includes housing.

Banks are like drug pushers.

I don't see how a bailout would resolve this situation at all. It would be like putting a bandaid over a gunshot wound. The only way I would be for bailing out these corporations was if they signed an agreement stating that 50% of the vehicles they output MUST get 45-50 MPG, and another 25% must be hybrid. There is an obvious shift in demand, and giving them 25 billion dollars to continue along the same path is like investing in a VHS manufacturer.

Lol VHS will make a comeback. Mark my words.

that mpg thing is controlled by the government.......not gonna happen!

i would not give them the money unless they keep all 3 businesses in the united states.

how are they gonna bail out the big three and have them take jobs over seas?

that is where they have the big three cornered.