Ceterum autem censeo, GM esse delendam

[Darius871]

Originally posted by Kontiki


That actually raises an interesting question - ignoring all the woe-is-us economic effects, what would likely happen if the Big Three ceased to exist? Those guys hold an impressive amount of global market share right now. Would there be a fairly uniform grab by all other manufacturers? Would Toyota become an even bigger behemoth?

I knew this all sounded familiar...



Hokey, but prescient

Originally posted by Arrian
I've seen the claim made (by lefty types on the 'net) that if we had universal healthcare, GM/Ford/Chrysler would be fixable, because it's primarily the healthcare costs that are killing them.

The argument continues that Honda & Toyota have built-in advantages b/c their Japanese employees have socialized health care, which keeps the companies overall healthcare costs down. Stealth subsidy.

So... here you have Dems elected on a platform of health care reform. Setting aside the fact that we don't know for sure what form it will take (if indeed the Dems succeed in passing anything at all), could that be the bailout GM really needs?

-Arrian

The companies can't get enough credit to last more than a few months, while true universal health care (whether single-payer or not) would take several years to fully implement, as would modification of union contracts to take it into account. Even if healthcare is the solution, there would have to be something now to keep them afloat in the meantime.

[DanS]

Originally posted by The Mad Monk
I feel like I'm riding an avalanche.

Didn't catch your cross-edit. Thanks for saying what you are experiencing. Please continue to do so.

Some industries, especially the auto industry, have inventory that they are selling off and are shutting plants in the meantime. That's what I'm gathering from reading the tea leaves.

The good news is that eventually they will sell off their inventory and will have to restart production.

[Arrian]

The companies can't get enough credit to last more than a few months, while implementing true universal health care (whether single-payer or not) would take several years to fully implement, as would modification of union contracts to take it into account. Even if healthcare is the solution, there would have to be something now to keep them afloat in the meantime.

I get that. However, if healthcare is a legit solution, then it is defensible to extend the loan whilst working out healthcare. My main worry with this whole thing is that they will get their loan, limp along for another year or two and then fail anyway.

-Arrian

[DanS]

1) We already have socialized medicine for those 65+.

2) It is debatable whether the car companies should be filling the health care gap between retirement and 65.

3) Foreign car companies operating in the US provide adequate health insurance and compete just fine. Detroit provides absolutely gold-plated coverage, unmatched by other businesses.

[Arrian]

Originally posted by DanS
1) We already have socialized medicine for those 65+.

Medicare/Medicaid. Yeah?

2) It is debatable whether the car companies should be filling the health care gap between their retirement and 65.

Indeed. Some are arguing that employers shouldn't be responsible for healthcare at all.

3) Foreign car companies operating in the US provide adequate health insurance and compete just fine. Detroit provides absolutely gold-plated coverage, unmatched by other businesses.

Two things here:

1. The argument I've seen discusses the advantage of their Japanese operations not having healthcare costs (b/c Japan has socialized medicine). I know that that doesn't apply to US operations.

2. I know the big three have crazy healthcare costs. I'm not arguing about whether or not they're reasonable. My question was if those costs were removed from them because the government implemented socialized medicine, would that be enough to make them salvagable?

-Arrian

[DanS]

Items 1 & 2 that I mentioned are part of the contract. One way to remove those costs is to renegotiate the contract. Further steps from the government would not be needed.

Removing Items 1 & 2 would decrease the labor cost base by roughly $24/hour, as I understand. Detroit would then be on par with Toyota's US operations, at roughly $48/hour in wages and benefits.

[Arrian]

Thanks for the edit, because the edited bit is what I'm really getting at.

You and I can disagree on whether or not full-blown socialized healthcare is a good idea. However, *if* we went the route of full coverage via the government - such that employers would simply cease to have a role in the healthcare system - that would go a long way toward making the US automakers competitive again*.

Since the Dems were elected in part to deal with healthcare, there's your bailout, folks. 2 birds, 1 stone.

-Arrian

* - unless, of course, that you believe socialized medicine will be so horrifically expensive that it will require big tax increases that will in turn supress demand for new cars. I don't think that has to be so - it seems to me we can actually save money by doing this right - but I can understand the view.

[DanS]

What makes you think we'll have socialized medicine in 2 years or 10? You're willing to fund these gold-plated plans in the meantime?

[Arrian]

I didn't say we will, Dan. I thought I was clear in my first post on this particular issue that this was a hypothetical dependant on: a) the ability of the Dems to actually DO something; and b) the details of what they do (if they do it).

-Arrian

[Arrian]

You're willing to fund these gold-plated plans in the meantime?

No. I'd prefer upper management at the companies in question fund it, via paycuts & layoffs.

Actually, I'm just exploring the idea. I remain anti-bailout, but I'm keeping an open mind about possible alternative solutions.

-Arrian

[KrazyHorse]

Originally posted by Arrian
I've seen the claim made (by lefty types on the 'net) that if we had universal healthcare, GM/Ford/Chrysler would be fixable, because it's primarily the healthcare costs that are killing them.

Even if true, so what?

They should be thanking the Japanese for subsidizing their consumption of automobiles by paying the health costs of employees.

[OneFootInTheGrave]

http://online.wsj.com/article/SB122714450941743143.html?mod=googlenews_wsj

The first global cost of a bailout could be less foreign direct investment (FDI) coming into the United States. On Sunday, President-elect Barack Obama asked, "What does a sustainable U.S. auto industry look like?"

Well, it looks a lot like the automotive industry run by "foreign" car companies that insource jobs into the U.S. In 2006 these foreign auto makers (multinational auto or auto-parts companies that are headquartered outside of the U.S.) employed 402,800 Americans. The average annual compensation for these employees was $63,538.

At the head of the line of sustainable auto companies stands Toyota. In its 2008 fiscal year, it earned a remarkable $17.1 billion world-wide and assembled 1.66 million motor vehicles in North America. Toyota has production facilities in seven states and R&D facilities in three others. Honda, another sustainable auto company, operates in five states and earned $6 billion in net income in 2008. In contrast, General Motors lost $38.7 billion last year.

how on earth will 25bn only save them???

[KrazyHorse]

It won't.

[OneFootInTheGrave]

sure it won't - why waste congress and everyone else time arguing about 25bn???

what about 150bn bailout (if they want one) instead

[DanS]

I have no confidence that $150 billion would cover GM only. Most of its assets are imaginary, its obligations on the books are $170 billion, and there are at least several tens of billions of dollars in obligations off the books.