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Question of the Day - Lets talk bailouts

Alabama, Indiana, Kentucky, California, West Virginia. These are all states in which Toyota manufactures cars in the United States.

And how are sales for Toyota this year? Down 23%. Toyota has already set up plans to cut production, which for everyone but GM/Ford/Chrysler is probably the first thing you would naturally do. Surely this slowdown at Toyota will impact the bottom line domestic US suppliers that have Toyota as a customer, right?

Question of the day: Given the information above, How willing would you be to giving Toyota some bailout money?

Here's a shocker for you, I'd be far more willing to give Toyota some money than I would to GM, and thats not just because I own a Toyota, its because I think they would invest the money better for a greater result for everyone involved. How do I know this for sure? Because they havent asked for it! And thats because they know the strings attached from Washington would keep them from ever being able to make enough money to pay back the loans. While GM has run to 'Big Mama Washington' for a big smothering hug, Toyota has concentrated on making products people want and when people dont want them, they stop making them.

Thats smart. That usually means its a good investment.

I'm not saying we should give Toyota money, I'm just saying that when people say "US Auto Manufacturing", I just dont know what that means. Is that the old companies in Detroit, or is that autos that are built in the US? Toyota is built here, Honda, Subaru, and Nissan, are they US Auto Manufacters? Why not? the CEO of Nissan isnt Japanese, he's Carlos Ghosn, a Brazilian Lebanese guy who used to work for a French Company. Technically, Nissan is half French now since the merger with Renault, yet no one thinks of Nissan as anything other than a Japanese company. This seems wrong to me.

When companies become multinational corporations which almost all of them are now, should we really refer to them after their originating country or does the ethnic background of the CEO matter? or is it what Stock Exchange they operate on that matters when we refer to a company by its 'country of origin'? In my view, GM is no more an 'American Company' than is Toyota. History says GM came from the United States, but it surely didn't stay there. If you were to give the GM shareholders a chance to vote on whether or not to continue US operations or just concentrate on China, and its my guess that most of their investors would just as soon jettison the US market in favor on China. Does that mean that GM would be a "Chinese company"? Just because a company has their headquarters is based here, doesnt really mean that much to me. Does anyone refer to Boeing as a 'Chicago company' just because they moved their HQ to Chicago from Seattle in a dispute of taxes? No. Boeing could move to Baja California, and it will still be thought of as "a Seattle company", but a sense of misplaced nostalgia for what it once was doesnt make it into one now.

A multinational company is just exactly that, so dont be so "unilateral" when you ask for taxpayer bailout money.

Summary: If GM wants more money then sell bonds and stock and maybe look into making a car that actually works after 5 years. Don't talk to congress or taxpayers because once you do, you will never get another buyer on the market again. People who say no one will buy a car from a bankrupt car company need to tell me why anyone would buy a car from a company so poorly run its only hope was to get money from Washington. I can respect bankruptcy as a business strategy because that is fundamentally what it is and what it is used for, but getting more goverment 'help' is almost always a really bad idea that never turns out well for the government, the taxpayers or the companies in trouble in the first place.

Posted @ November 19, 2008 01:47 PM | Current Affairs

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Comments

The reason we have Bankruptcy Ch.11 laws is for failing businesses to get relief from creditors so they can reorganize and stay in business. Bankruptcy Ch.7 is liquidation and maybe one or more of the 3 whining auto manufacturers should go into Ch.7. The obviously needs to be some consolidation in the 'Big 3', but American taxpayers should not be footing the poor management and stranglehold the UAW has on them. Congress should not be in a position to be the bankruptcy court, we have very competent judges and trustees capable of adjudicating much more efficiently than the US Congress.

The whole point of getting the American taxpayers to bailout Ford, GM and Chrysler is to keep the UAW floating in a sea of money. If the auto companies file for Ch.11 protection, the UAW, in all probability, will lose their strangle hold on the auto industry. If the 'Big 3' auto companies were such a good investment for the US taxpayer, then it should be a better deal for the UAW. The UAW has plenty of money to invest in Ford, GM, and Chrysler and then the UAW would have a self interest to make sure that the auto companies were successful. They would have a stake in the successful outcome and therefore would want to perform more efficiently. I doubt the UAW would be interested in loaning the car companies the funding because the UAW knows that the current business model can not be sustained and they would have to change the terms and work rules they currently have with the companies.

Pelosi and Reid have more than just a slight interest in keeping the UAW happy, therefore they will stop at nothing to get the American taxpayers to finance this failing business model.

Where am I wrong about this?

Posted by: Dale Buckmaster at November 20, 2008 05:57 PM

what abut the backbone of america itself and the domestic trade.barter and mom and pop small businesses..millions were downed by big box and major corps and congress.what about bailing out or have a restructuring plan models to help Americans and their ex employees.this baffles me as I know if we are bailing out.in essence we are starting anew again and the very core I believe the small business is what is needed after many lost their livelyhood and would love that same chance and I am not saying all will be able .but most in all probability would.just my opinion.

Posted by: joe e at December 9, 2008 09:03 AM