A Tale of Two Layoffs.....Auto workers vs. non Auto Workers

Interesting thoughts. Frankly, the auto companies policies are more socialistic/European in nature but the rest of the country isn't that way and doesn't want to bail out U.S. auto companies so they can continue to offer such benefits to their workers since most don't get comparable treatment themselves.

Dan Ross
http://www.BetterBizBooks.com

Roubini says Auto Debt/Equity holders to get wiped out...

He is basically saying the auto guys (shareholders/debtholders) are toast. I'd back his position because I agree with it.

There is simply significantly too much capacity and not enough demand. The auto companies would burn through $35 billion in NO TIME at all given the 35% Y-Y decline in auto sales. They need to shut down factories, DRASTICALLY reduce costs and eliminate brands/models that simply don't sell enough units to generate profits.

"Loss Leaders" for one model is one thing but an ENTIRE brand is another. I don't understand what most U.S. auto companies brands actually stand for in the first place! Chevy is value, Cadillac is supposed to be luxury (VERY expensive domestic luxury auto company).....what does Chrysler, buick, dodge, GMC (professional built?), Lincoln and Mercury Mean?

This is another reason for my "eternal pessimism" re: the markets of late....

Dan Ross
http://www.BetterBizBooks.com

Chrysler hired Bankruptcy Firm.....Interesting...

So this is the banking/death spiral that can occur.

If the auto companies file bankruptcy banks face up to $300 BILLION in write-downs on their balance sheets. Essentially, auto industry woes then pour back into the banking system, causing their balance sheets to erode further and re-endangering some banks. Does this completely diminish the benefit of the TARP program?

Everything I see and hope seems to indicate that there is political will t0 protect GM and Ford but I don't see any desire to bail out private equity funds that made a bad investment in Chrysler......



Dan Ross

American Car Companies Look to Uncle Sam for $50 billion in loans

1) They don't build quality cars - I think they are building better ones now but that is the perception...like it or not

A new recall of 850k cars. So much for that I guess.....
http://www.reuters.com/article/hotStocksNews/idUSN2942792520080829

2) They haven't gotten the FOGGIEST CLUE how to brand a company. What does a GM or Ford Car stand for? Do you have any idea? Honda makes great engines, Toyota builds a great overall quality car that will last a long time, Nissan has power bang for the buck & some sexiness. Each of these companies also own a luxury brand like Acura, Lexus or Infiniti so their main brand only has so many luxury touches....

Anyway, here are some interesting articles.

Delphi's bankruptcy is going to cause big, big pension problems by the end of September. Expect GM to be in on that news.....

http://www.reuters.com/article/businessNews/idUSBNG11638920080829?feedType=nl&feedName=usbeforethebell&pageNumber=2&virtualBrandChannel=0

Then They are asking for tons more $$$ because they can only sell gas guzzling cars and failed to innovate or brand a car company.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bD3A3D245-E2A2-4151-B5AD-D29C39880EEB%7d&siteid=yhoof2

I understand how important this industry is to the U.S. infrastructure, ability to have an industrial presence (in case of war)......but what I see are politicians/free enterprise/trade allowing cheaper cars into this country in DROVES. We shouldn't enable the destruction of an industry with one hand and then try and save them (without any hope) with the other hand. Just seems rational to me. The bottom line is that there are more health care costs in a GM car than STEEL costs! U.S. auto manufacturers, if they produce here, are at a competitive disdadvantage without some forms of tariffs. And then this starts the whole free enterprise/trade dilemna.....YIKES!

Dan Ross
http://www.BetterBizIdeas.com