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Give the Detroit three a $50-billion handout

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Latest comment posted at 8:57 PM EST 19/09/08

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  1. Thomas Toronto from Toronto, Canada writes: I don't disagree with the concept of lending to help business that are struggling with an unusual business environment, unforseen. My concern with this notion of massive government financing by tax payers is that taxpayers chose to let the companies go by not purchasing their products in the first place. Now you're recommending, to save jobs that are clearly over pricing in the first place, the tax payer reverse their position and buy the product through government financing.
    I recommend that we uncover the reason these business are failing, get the politicians out of the room, fire the senior executives (why does Rick still have a job?) and fire the unions and leaders. Now we can begin the road to recovery and financing.
  2. greg panke from Canada writes: I agree that supporting the US/Canadian auto industry is a good idea, but a lot of that support has to come from the unions. They keep pushing for better and better deals for their members at the expense of the short and long health of the companies; on the other hand the management seemed to cave each time instead of fighting to keep their companies profitable. The unions and management are largely responsible for their current predicaments and both need to accept the consequences which is lower pay, less security and being more attentive to the medium and long term needs of the driving public. If government is going to invest in the auto companies so should the unions and management by turning 15% or more of their incomes into stock.
  3. Dwight Thomas from Saint Albert, Canada writes: I agree with Jeremy's perspective on affordable loans to the auto industry on one condition. Ensure that the pricing of autos sold to Canadians is moved even closer to the US offer prices on all lines of vehicles (taking into account the exchange rate of course-like a 10% max differential) and, in the case of Chrysler (and any other offshore manufacturers) stop discriminating against Canadian consumers by offering the same generous powertrain warrantees as you do in the US.

    I think that sometimes the auto manufacturers forget that the NAFTA accord was not simply intended to benefit the manufacturers but the consumers as well

    D. Thomas
  4. scamp the from Canada writes:
    Here's a novel idea.
    If GM, Ford, Chrysler workers actually believe in the product, how about they let the company borrow money from their pension or retirement plans?

    Go ahead GM workers (old and new) buy lots of GM stock and give loans to GM.

    Obviously a bit harder when it's your own money instead of the tax payers.
  5. R M from Ottawa, Canada writes:
    Agree with the other posters, both the management and unions need to put THEIR money where they want OUR money. Cato says the industry is important, but THEY don't treat it that way, do they?

    So, how about major salary reductions for upper management and execs, they only get paid the rest if they make, sell, and earn a profit.

    They've ignored everything that everyone knew was coming, and was needed to be done. And they will again, unless there's a real incentive for them to be on board....or dis-incentive for them not to.
  6. Alistair McLaughlin from Canada writes: I'm not sure about this. How about we let them go bankrupt and re-organize under Chapter 11 protection? The creditors lent them the money; it should be the creditors who lose out if they can't pay their debts. Or would that force too many creditors out of business, setting off a cascade of insolvencies that would threaten the entire North American economy?
  7. guy tozer from Saskatoon, Canada writes: scamp the from canada: I like that idea . Let the workers pension plans back the loans.......Yeah!!
  8. Wir sind das Volk from Canada writes: The question is what recourse does the taxpayer have if these loans are not repaid? there is a reason the banks won't lend to the big three (or only at highrates of interest). Maybe these could be structured as convertible bonds although I'm not sure the taxpayer really wants to end up owning equity (especially if it too becomes worthless). Britain let its auto industry slide into the dustbin of history, and seems to be doing okay (there is actually still many cars manufactured there, although by companies that actually make money). Maybe its time to say enough is enough - these companies have had 40 years to get their act together and have consistently failed.
  9. paul st pierre from fort langley, Canada writes: Let the Big 3 aujtomaakers die. They had me by the family jewels for umpteen years, selling me crap with tailfins and telling me I was supposed to like it. Message to tgrit: shskke4eenmker
  10. paul st pierre from fort langley, Canada writes: Ket tge Vuf 3 diel They had me by the short hairs for decades, tellingd me I had a patgriotic duty tdo like tailfins on junk. My turn. j
  11. Bob Seven from Edmonton, Canada writes: The best thing we can do with the "north american auto industry" is to let the Detroit 3 (not the big 3 anymore) to die. There are many reasons why they are suffering.....1, crappy products, 2, overpriced, 3, union jobs paying too much money for some guy to put a bolt in a door. Gov't loans are not an option as there is no recourse to get our money back. That is right, gov't money is OUR money. Like someone already mentioned, the banks don't want to lend to them at 'affordable rates', so why should the gov't?? Why is it that the Honda and Toyota factories in Ontario are not singing the blues??? Better products, employees who truly believe in their products and effective management of resources/funds. The next best thing that could happen is that the detroit 3 close some dealerships! Why is it that a city of 800,000 needs 10 ford dealers, 12 Chrysler dealers and 18 GM dealers??? Some GM dealers are right down the street, 2 Chrysler dealers are 3 blocks apart! This is insanity, really. close down some stores, reduce the brands and quit making the same vehicle for different brands (Acadia, Enclave, Outlook for one example, Sebring and Avenger, caliber and compass, the list goes on) the sooner the detroit 3 realize that they are no longer the big kids on the block, the sooner they will make better vehicles that people will want.
  12. S H from Windsor, Canada writes: The big 3 are guilty of doing business the American way. In other words, they cannot look more than 1 year into the future. How much money can I make "now" attitude, has got to stop. Ceo's of today's corporations, need to lead by example. There is more to running a business than just making money.....especially if they want to keep making it. Greed is killing North America, plain and simple!

    It takes on average 5 years from drawing board to showroom for cars to come to market. The big 3 were once again caught with their heads in the sand. The price of fuel has gone nuts for 2 yrs. now, so I guess we should see smaller cars in about 2 to 3 yrs?

    If any money is handed out, it should be a loan. At least with this aid to Ford here in Windsor, the gov't does have guarantees or money will come back to them. The money is also going into a future investment, as Ford is making Windsor it's R&D for all of Ford's vehicles of the future. All types of future engines will be produced here from 8 cyl. engines to hybrid engines!!! Hopefully, this keeps jobs here for a very long time and hopefully create more in the future.
  13. Paul G from Toronto, Canada writes: Not a word here about electric cars...

    A car company that does not embrace this technology now will be dead in a few years without question.

    ...
  14. joey Bananas from Victoria, Canada writes: I can't feel sorry for companies that continually ignored warnings of fuel efficiency for years. They've been talking about electric vehicles since the 1980's. Who's laughing now in the auto industry? Toyota, Honda and others. Why? Cause they engineered fuel efficient vehicles.

    IT's hard to feel sorry for car companies who could be arguably involved in sustaining the status quo of gas guzzling vehicles.
  15. Max Canuck from Gatineau, Canada writes: Why is that every time someone bemoans the loss of manufacturing jobs they automatically make reference, in a demeaning manner, to the alternative as being the most low-paying types of service industry jobs, e.g. McDonalds, Starbucks, etc.? What about high tech, starting a small business and the myriad other sectors one might attempt to enter instead?
  16. Andrew MacKinnon from Toronto, Canada writes: Let the big 3 go bust and for heaven's sake, don't bail them out with taxpayer money. They are on the brink of bankruptcy for a good reason: they bet heavily on big cars that we no longer want to buy. In fact, we shouldn't be subsidizing manufacturing at all. Instead, the government should be investing in education to create high-skill service jobs, which are the only jobs that have a fighting chance of not being outsourced in our 21st century economy.
  17. Tough Camper from Squamish, Canada writes: I am sick and tired of subsidizing these losers. Their products suck large, and the corporations take take take, and rarely if ever put back in to our communities. When times are good, they rake in the dollars, and avoid taxes. When times are bad, they close factories and suck at the public teat. ENOUGH IS ENOUGH!!!

    Sink or swim on your own merits, "BIG 3."
  18. Comments are Closed from Toronto, Canada writes: No no no No no no No no no No no no.

    What's the point of this column? Just to annoy people? The above posters have said it. They created their problems while reaping the profits. Let them bear the downside of their avarice and leave me out of it.
  19. Dale Brown from Victoria, Canada writes: The party is indeed over for cars generally. Cry your hearts out car lovers but oil is running out and the alternatives are not very good. Oh there is lots of talk (not much action, mind you which says something in itself) about electric cars, biofuels, hydrogen cars, perpetual motion levitation vehicles, etc. There is a problem with each and every alternative, at least, in terms of anywhere near matching the speed, size and convenience of the gasoline powered vehicle. So in the future Cato you will be writing columns about electric bikes, funny little three wheel vehicles, crowded public transit, and just plan walking.
  20. emilio D from Canada writes: The solution is simple. The american car industry should lead the way in using natural gas instead of using regular gas, diesel, electric and
    hybrid. Convertion to natural gas is cheap and no additional reaserch needed to maintain status quo. All they have to do is incorporate space for the natural gas tank and and connect it to the fuel injection system. Natural gas is clean burning. And most important of all is that Canada and the States got plenty of it for another 100 years. Then maybe hydrogen fuel cell technology will have matured by then. We should not give in to the black mail that is already weakening our economy. We should reduce our dependence on foreign oil and natural gas is the fastest means to make Hugo Chavez and OPEC
    reduced to selling lemonade. The same oil tha t we buy from the Arabs is the same money being used to finance terrorism. Think about it.
  21. Angry West Coast Canuck from Canada writes: Bullhooey. The auto makers already get huge subsidies, both direct and indirect. These loans are nothing more than pork-barrels for an American industry that is increasingly irrelevant. Of course, American government is busy demanding that other countries reduce subsidies, while at the same time maintaining or increasing the levels of its subsidies to manufacturers (airplane, car and weapons), agriculture, and other industries.

    The money would be better spent on supporting better public transit infrastructures, from equipment manufacture to deployment. Just as many of those precious jobs, and a hell of lot better return on investment. Of course, the "captains" (read:pirates) of industry won't get their 500 million dollar bonuses if that happens. Which, to me, is a good thing.
  22. doctor business from vancouver, Canada writes: The only thing correct is the phrase (minus the "diesel")

    There is no future for the Cars.

    So let's stem the tide of subsidy. $50GB is just a drop in the bucket. Let's stop subsidising automobile-only roads too!
  23. Edward Eh from Bathurst, NB, Canada writes: Well, the Chinese have the bucks, and they're tough and smart. Too smart to buy out the big three, sadly. Then we have the unions, let them but the big three a la UPS model. They want a fat salary, let them justify it or lose their company. Even the unions aren't that stupid. But governments have shown all along that they can be manipulated. Let the Big Three die, maybe the shock will force a change in the near-sighted MBA programs that taught the managers how to perpetuate this mess. Hell, the Pres is an MBA, which about says it all. The business model is broken!
  24. D P from Oakville, Canada writes: WOW!! Jeremy you actually said something that made some sense. My little Jeremy is growing up, I think I'm going to cry.
  25. JFD Hamilton from Hanwell, NB, Canada writes: It alarms me no end that there are so many negative postings re: the domestic auto makers, I fear that many readers do not: a)under- stand the history here and, b)have no inkling of the economic principles involved. Those of you who are so quick to blame the "Big Three" for the "gas guzzling" SUV have only to look at the fact that they are (or were) the hottest segment of the auto industry and have been for nearly a decade or so. Further, the sainted Japanese auto industry has spent billions to develop, gas guzzling mamoths of their own (I offer this only as proof). You see dear friends it is we, the market, who decides what products are made by the auto makers, they would not make such absurdities if they did not sell, despite the even more absurdly high profit margins, as Mr. Cato would have you believe. Observe the rise of the gas/electric Hybrids, until they sold, they were not much more than a blip on the market, sold only by companies which could afford to sell them at a loss. And even now they are an expensive answer to high fuel costs; as at even at the latest oil increases, their payback period extends years beyond the length of average ownership as our learned media "friends" have long pointed out. And where are the domestics, well they are developing cheaper hybrid technology which will pay back their owners within the loan period but they have been called "just barely" hybrids by a mostly dismissive media, who advise us to go with the proven (but much more expensive) Japanese technology. And why do Japanese firms have these more expensive, technologically advanced hybrids and how could they afford them ? Well, this is the historical part, they were born out of WWII when the Japanese got to start over and thus don't have an overwhelming tradition of unions, government interference, and poor management practice to fight against. Add to this the fact that they have VERY restrictive import laws and see how they are winning WWII's last battle !
  26. R Rrr from Canada writes: We are in global a economy. Asking governments to bail out bad decisions by business is wrong. The big three built big gas guzzler cars that people can't afford to put gas in. There is no reason to bail them out. Let them sink or swim on their own. But then what about those good paying auto jobs that pay 80, 000 a year and big health care costs (in the US). I think that has something to do with big three loosing billions. This is just as big mess as the sub prime and ABCP mess. Let them survive on their own. No government (i.e tax payer handouts) handouts.
  27. Trudeau's Apricot poodle from Canada writes: Reports of the automobile dissapearing are premature. It's very nice to imagine a wonderful world where everything is rainbows and lolli pops, but reality does tend to intrude. It dosen't matter what the green man say, gas engies are going to be around for a very long time. The pendulum swings both ways, all the little fuel efficent experements of past oil crisis have been melted down into todays models. As soon as fashon gets large again, so will cars.

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