Slowdown of Auto industry
 

I'm interested to know what you all think about the slowdown in the US Auto Industry. A few of bike riders i've talked to say that's it's good the companies are failing, that it just means more bikes on the roads. While I would love to see this transition, I'm fairly sure the American People will keep their cars for the most part.
I would make this a poll, but I feel their is simply too many possible stances on the issue. I see the impending unemployment of thousands of workers as a huge issue. So how do you, as bike commuters, feel about this issue?
Discuss openly, and respectfully.

"Slowdown"? You're joking, right? Ford wants a $9 billion line of credit, GM says it needs $12 billion to keep operating. There are still plenty of auto companies in the world, and that is what people are buying. This has nothing to do with bicycles or whether people are riding them to work. Nothing whatsoever.

My guess is that people will just hang onto the cars they already have, or buy compact/subcompact imports. That's especially true now that the price of gas has gone back down for the moment.

IMO, the big 3 made a huge strategic mistake by trying to make people believe (via massive advertising campaigns) that they need 8 passenger 4WD gas guzzlers to drive (alone) a few miles to work. Some people might be becoming more eco-friendly or learning to live on smaller budgets, but not enough to take up cycling: maybe enough to buy a small, (relatively) cheap, reliable car. Most of the people in my neighborhood could get to work on a golf cart if they left 20 minutes earlier. Oh yeah, and if there was infrastructure (for a golf cart).

I agree that it won't put more bikes on the roads. I agree that's it's not about that. But, really, many aren't buying new cars. Unsure of job security, economy, whatever you want to pin it on, many people have reduced spending in general. Their are fewer overall new car sales, not people driving. It is a "slowdown" in US auto sales, foreign and domestic. You are right that people are buying with other companies, but as a whole, people are buying less. This is all IMHO.

edit: 'Fantasminha' has the right idea, this isn't worth a flame war, just a discussion. thanks.

Aahh, but it would be nice if more people did commute (via bike). I live in Dallas, and I swear if it wasn't for BF, I'd swear I was the only one in the state!

LBB hit it on the head. The US auto industry has been in trouble for decades...but overall there are more (many more) cars on the road today than there were in the 80s. People are still in love with the cars and see them as an essential part of life in the US. If GM, Ford and Chrysler go down, the other manufacturers will just increase their market share and the percentage of those who use a bike as a mode of transportation will remain tiny.

I think most people will continue to buy as expensive cars as they can('t) afford until they're physically forced to stop.

you tell em, Josef

Toyota and Honda sales are down more than Ford or Chrysler sales, though not quite as much as GM's. Within a few months, Toyota and Honda will be needing a bailout, and you can bet the Japanese government will give them whatever they need. The same is true for the Korean companies and all the Europeans.

The auto companies always have to be highly leveraged yo make a profit. That means they either make a lot of money or lose a lot of money. Usually they borrow more during a recession. But this recession is also a credit crunch, so they can't borrow money. The government is the only one who has the money they need to keep operating.

I think we better give it to them, or we're going to start a depression that won't stop for a very long time. Of course we need to put some very strict restrictions and concessions on the loans, so we don't have a repeat of the bailout debacle with AIG and the other finance companies.

I think the new administration is likely to handle bailouts a lot better than the lame ducks did.

I believe Roody to be correct. The auto industry is doomed as this small amount of money (in the larger picture) will not allow them to re-tool enough to revive their sales. Even if they do, they don't have the customers that they once did. What they need to do is scale back dramatically. Fire everyone that is a union employee and rehire them back but with the understanding no union workers will be hired. No idea if that would work or not though as there may be laws and such preventing that. But like Roody states, without some sort of bailout, we're going to be in a depression like no other. Personally, I think we're headed there regardless of what we do.

GM needs $18 Billion! If they do not get a severe cash infusion now they run out of money by the end of 2008 (less than a month away). Over $1,500 of every US made car goes to health-care for the workers. Money that the Asian and European car companies do not have to spend. Extrapolate that out to the compensation needed to pay for the US current and retired auto workers, health-care and pensions, and the US car costs more than $4,000 (than the competition).

We can no longer afford to make cars in this way in the USA. This is not good all around for the USA. Not at all.

The last thing I want is to see auto workers fired or forced to take permanent pay cuts. For one thing, this would cripple the industry, because you can't find people to do this kind of fatiguing and monotonous work unless you pay them well. And every worker in the world deserves a good pension and health care.

The UAW indicated yesterday that they're willing to take "sweeping pay cuts" and many other concessions. Don't forgot that they already agreed to cut the starting pay of many new hires IN HALF, so they clearly are willing to make sacrifices for their company. Let's see if the boards of directors care enough to make some sacrifices of their own.

(disclosure--I'm a member of the UAW and I live in one of the major car towns in Michigan, but I don't work in the auto industry.)

How are other companies such as Toyota doing it? They don't have unionized workers.

http://www.hyscience.com/archives/20...ompson_o_4.php

1 in 10 jobs in the US are directly tied to the US auto industry. If they go down, so goes the US economy (much worse than we've seen already). This is a really scary time.

However, the average Physician Assistant or Nurse Practitioner does not make $73 per hour in the US. Everyone is quick to say that health-care is too expensive in the USA. Do workers screwing bolts in a chassis need to cost this kind of money to employ?

I'm dead set against government bailouts. Uncompetitive companies go down. Innovative companies emerge from recessions with larger market shares. People lose jobs all the time. It's a fact of life. Are we going to start giving every road kill racoon a state funeral now?

Maybe if American automakers had put R&D into automobiles other than trucks, SUVs, and pony cars during the past decade... To be fair, the Mustang did make Ford a load of money. I wonder how well they'll sell next year though?

What they need to develop is a small diesel passenger car, or a fully electric vehicle that has milage comparable to that of internal combustion vehicles. That means putting money into research, instead of desperately pushing out $14,000 plastic and sheet metal pieces of crap without air conditioning. They should have started doing this before they ran out of liquidity. Now it's too late. Tough. Deal.

And for the workers who are out of jobs: don't blame the government for not bailing you out. Blame the unions who made sure you got paid more than most university graduate professions. Why should all tax payers suffer when the benefit is not mutual? Here's an idea: why don't you all give up your pensions and take paycuts before we do anything else? There are plenty of jobs out there that offer no job security, no pensions, and no benefits. I'd rather help the bike messengers. I'm glad Canada isn't offering any bailouts, or I won't be able to afford this socialism anymore.

This is actually peanuts compared to that Wall Street bailout. Those execs should sell their business jets and cut their own pay to $1million per year before they are given money. Thanks, US government. I was suprised there were no mass riots.

Well, yes, of course. As Fantasminha said, the Big Three's sales over the past 15 years or so have been fueled by timely and shrewd marketing of an impractical product to a public that was going through a period of highly irrational beliefs about what it "needed". One ad in particular exemplified this trend to me: the one where the punchline was, "It's not more than you need. It's just more than you're used to." It was the Big Lie in action: a complete reversal of the truth so audacious that it was paradoxically believable.

Now, as you note, things are different. Reality has finally set in hard. If you read back in these forums, you'll see that a lot of people here twigged to it years ago: there are many past discussions in which people have pointed out the unsustainability of American consumption. Although my impression is that most of us do not commute primarily to "be green" or to save money, I think that many people here do seem to have an atypical tendency to...how to put it...do things the hard way? That's not quite right, maybe I mean more "not take the easy way out", or "not assume that the easy way will always be there". So, I guess at least some of us were early adopters of the changes that are hitting a lot of the population now. Just a couple of years ago, driving a ten-year-old car marked you as eccentric or poor; now, hey -- if it'll still run and it's not a constant repair bill, hooray for you and you're a fool if you get rid of it. People no longer assume that the raise will be there, that the job will be there, and they are trying not to make big-ticket purchases until they have to. They'll still make them, but they'll defer them longer and buy value when they do buy. "Use it up, wear it out, make it do or do without" -- anyone hear that from a parent or grandparent? I predict a comeback.

I didn't read the blog. They lost me when they misspelled a one syllable word in the headline. :rolleyes:

$73 is not their hourly wage. It includes benefits like insurances, pension, disability, etc.

I work in a hospital in a GM town. PAs and even newly hired staff RNs make more than auto workers. Newly hired auto workers start at $14. New RNs (Associate's degree) make more than twice that, plus a a nice signing bonus.

I posted it for the video by Fred Thompson. Funny stuff about the economy and how we got ourselves in this mess.

You make it sound like car marketers put a gun to consumer's heads and forced them to buy big vehicles. The car companies were ALL (including Toyota and Subaru) selling SUVs and pickups because that's what people wanted. To say that people are too stupid to know what kind of car they "really want" marks you as arrogant or elitist. The only reason people aren't buying SUVs right now is that we're in a severe recession and they either can't get the credit or they're scared they'll lose their jobs before they get it paid off.

This is quite true. Unfortunately, much of our economy is tied to these companies with the grossly overpaid yahoos who ran them into the ground. I know many cyclists want to see the complete disappearance of cars and the auto industry; however, they fail to realize that if it does occur one in ten people will be unemployed. My capitalist beliefs want the automakers to go bankrupt as punishment for gross mismanagement and a lack of proactive technical innovation; however, I don't want to see the net result of such a failure. It would make the Great Depression look like a church social.:twitchy:

I'm afraid you're right. The massive unemployment would spiral and result in many others losing their jobs, far from the automotive centers.

That's the main concern, of course, but there are other reasons that losing the Detroit 3 would be bad for America.

• It would greatly lessen competition, which would leave consumers with fewer choices and higher car prices.
• Honda supports the bailout in order to protect the parts supply chain that all manufacturers depend on.
• Competition from millions of laid off auto workers would depress wages in other industries.
• The US would lose the strategic military and economic advantage of having a domestic auto industry.

BTW, Toyota spent $1.7 billion on a new US factory to build huge pickups. Opened about a year ago. Closed about three months ago.

Think Cuba. They've kept their cars going for 50 years now.

tcs

Using parts from Russians. When you have no readily adaptable parts the game is basically up..:notamused:

1. Some people suggest that the credit crunch should be what is fixed initially and then the Big 3 can once again borrow from them. In case y'all didn't know how bad the credit crunch is, the banks are no longer loaning to each other, hence the lowering of the Fed Funds rate which is essentially the rate for overnight lending between member (=all) banks. I wasn't truly aware for a while as well.

2. I do not fear a recession. Ben Bernanke is a great student of the depression, whether you like him or not. Volcker is balls-to-the-wall do whatever it takes, even at our expense, to prevent recession (at least these are my impressions). I would hope a auto industry bailout would be better; in this case, it would likely be an injection of cash whereas with the financials, it was a purchase of bad assets such as subprime mortgage packages. Do note that those of you that are considered subprime, you essentially mortgaged yourself now, kind of hurts the head like time-travel....

P.S. - thanks for the PM Roody.