On Thu, 4 Dec 2008 16:18:46 -0800 (PST), oldjag
wrote:

Well, I guess most folks don't really care to much if the US auto
companies fold, judging by the internet postings. If one or more does
fold, who has the capital in the US right now buy up any of the
assets? The cost of admission for new vehicle design is very high.

I think everyone does care, the problem is that it is by no means
clear that dumping tens of billions into the car companies will
do more than buy a few weeks to a few months of existence.
----------------
Consider the crash, emission control and fuel economy regs that have
to be met. Some US auto startups have made it for a few years, but
none have ever been sustainable. Will Tesla Motors break the mold? It
would seem that perhaps a Chinese or other foreign company may want
some of the assets, but maybe not.
Why would anyone want to buy into this mess? Much of the
problem is that many of the "assets" are grossly overvalued,
obsolescent, located in high tax areas, located in high labor
cost areas with a "history," located in the wrong locations for
the current traffic patterns, etc.
...................
Meanwhile a huge loss of jobs in
the US, for steel, semiconductor, plastics, software etc etc. I doubt
many US consumers realize how many of their own jobs could be affected
by supply chain fallout.
While the US job fall-out could be substantial, the impact will
be greater on the import suppliers of the higher valued
components such as electronics, engines, transmissions, etc.
.............
One last consideration, during WII, many auto plants and suppliers
were leaned on to mass produce items needed for the war effort. With
one of our last major manufacturing industries potentially going belly
up, what does that say about our emergency manufacturing capabilities
in the USA?
We are all screwed, glued and tattooed!!!

Unfortunately this is *NOT* strictly an automotive related
problem, but is the result of a generation of
de-industrialization under NAFTA and other "trade" pacts. In
many cases the US "manufacturing" organizations are now shells,
packing and shipping products [or assembling major high value
components/sub-assemblies] manufactured off-shore. In too many
cases the only thing made in USA is the label and the box.

Currently the US would be unable to supply even uniforms and
boots for a major military build-up from domestic sources.
...............
Seems like a $35Bn loan to the car companies would be a better
investment than AIG etc, especially if the unions provide some
concessions to help. We don't have much history to go on other than
Chrysler's loan in the K car era, which they paid back with interest.
Will the Banks pay back their $700Bn in loans any time soon?
-----------
If this was a liquidity/cash-flow problem, possibly.

Unfortunately the primary problem is one of solvency, i.e. the
companies/individuals involved are "busted," and the "liquidity"
problem is only a major symptom of this.

Based on independent outside evaluation, the 25/34 billion to
"save" the domestic automotive industry is a low-ball down
payment. I don't have the link, but just saw one estimate about
5X this amount [150-175 billion] by an independent
economist/accountant, and even this huge "investment" does *NOT*
guarantee survival, only the continued existence of the domestic
auto industry into the start of the next up cycle.

The continued existence of domestically owned/controlled
automotive production at this point [start of the next up cycle]
will depend on product design [looking good is far from enough];
build quality, durability/maintainability, value for money, and
response to customer requirements such as fuel economy. This is
far from assured.

FWIW -- it is doubtful that any non-subsidized organization could
exist with the excessive blue collar, white collar, and
management labor costs/benies/perks, exhibited by the "big
three," in comparison to the equivalent positions in the rest of
the economy. Indeed, even with the inflated blue collar wages,
the management wage multiplier is still many times that of the
transplants, so while the UAW may have been better negotiators
than the companies, they are not *THE* cause of the problem.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).