I have been listening to the breaking news about the auto loan situation since it came about and very rarely do I hear people talking about what I think is the real problem, let alone agree with what I think about it. In my opinion the UAW is a very large part of the original problem. My reasonings for this are simple. 1. Toyota and Honda and other foreign auto makers have made money over the last 5-10 years whereas US companies havent. 2. The average hourly rate including all benefits and retirement costs for Toyota are in the mid 40s where GMs are in the lower 70s. 3. Why is it that only the US companies need money at this time, because they are the ones that have had problems prior to this change of events.
These points make a strong case that the union just takes too much out of these companies for them to make steady profits especially with all the research and design they do for new cars and technologies. How does somebody who sits and watches a machine put a part on all day deserve 30 dollars or more an hour plus benefits and retirement. It just doesnt make sense. And people wonder why the foreign auto makers can make more profits and arent in this situation, it's because THEY ARE NOT PART OF THE UAW.
Bankruptcy is the best option for these companies because that is the only way they will truly restructure and put together a business model that can make profits in this new economic environment. And the best way to make that model better in my humble opinion is to make more fuel efficient cars, work on getting alternative fuel vehicles on the market quickly and NOT HAVE EMPLOYEES THAT ARE MEMBERS OF THE UAW. I think this would solve everything and allow them to make more profits than ever.
Well, if it could not be the Seahawks...
6 years ago
There are two face to this issue, with the Federal Reserve approved GMAC Financial Services' request to become a bank holding company, allowing it to apply for a portion of the $700 billion bailout fund and get emergency loans directly from the Fed.This development is seen as a very good option because if GMAC had declared bankruptcy they would not be able to provide funds for its subsidiaries. And the idea of restructure car manufacturing to become more fuel efficient would not arise.
ReplyDeleteHowever, the downside to this issue is that there seems to be no immediate action taken to rescue home owner. Auto Bailout seems to be getting the chuck of the $700 billion package.
While some of the problem could stem from the union, I do think it's valid to argue that part of the reason American auto makers are struggling is because they've failed to keep up with the standards of foreign cars. I drive a Honda accord with well over 200,000 miles, and it still runs as well as the day I got it. My father has a Chevy pickup with less than half that, and he's has far more maintenance-related problems with it than I've ever had with my car.
ReplyDeleteJim Rogers Interview on Stock Shotz January 15,2009
ReplyDeleteI am so pleased to have legendary investor Mr. Jim Rogers back on our show. Jim talks about anamolies in the markets today and the long term outlook for inflation. I asked him about future growth in China and whether or not the Chinese will continue to finance our debt. He argues that we are still seeing deleveraging and does not term the current situation as DEFLATION.
visit www.stockshotz.blogspot.com to hear our interview with Jim Rogers and hear his opinion about the bailout