Automakers say if they go, millions of jobs will vanish

Moody’s Economy.com chief economist Mark Zandi estimates that 2.6 million jobs — about 1.9% of the U.S. workforce — would be lost if GM, Chrysler and Ford were to go under.

That includes more than 255,000 people directly tied to the three companies and an additional 2.3 million whose jobs are indirectly dependent — everything from people who work in the steel, glass, fabric, tire and electronic industries to the barista who makes $4 cappuccinos for the ad executive who’ll be out of work when his auto industry business ceases to exist.

Zandi argues the economy is too weak to absorb the fallout from an auto industry crisis.

“We are in a very fragile state. This could be the thing to push us over,” he says. “The ripple effect is like throwing a big boulder into the economic pond.”

usatoday.com/money/autos/2008-11-17-automakers-bailout-impact_N.htm

The Detroit automakers are arguing that the $25 billion in federal aid for which they are asking is peanuts compared to the economic devastation which will result if they go under.

What do you think? Are they too big to fail? Does the US government have a responsibility to support companies in order to protect its economy? What’s the right thing to do?

Maybe it is time to break them up.

Split Ford into Ford and Lincoln
Split GM into Chevy, Cadillac, Pontiac, …
Chrysler? Who cares. Other than Jeep, their cars are UGLY!!!

I am not yet persuaded.

The creditors (which doubtless would include suppliers) of the Big Three are not children. Many are competent manufactories themselves. If the auto companies were forced into bankruptcy, I have no doubt a creditors’ committee would be formed very quickly, and I suspect most already know each other and know what they would do immediately. They would either force very significant reorganization or liquidate those things of value. The things of value; machinery, brands, trademarks, etc, would lose value if not restarted quickly. I doubt, for example, it would take Honda very long to start manufacturing Jeeps again if it bought that brand and the machinery peculiar to its construction. Likely consumers would prefer a Jeep built by Honda, since the perception of likely quality would almost certainly improve.

Someone would unquestionably buy the defense-related segments, since profitability of those is guaranteed. If the government objected to a foreign owner (and I’m not sure it would) of those segments, I doubt it would take the suppliers any time at all to form a new company to take them over. Again, one has to remember that those suppliers are, themselves, manufacturers.

Now, buyers might move a segment or two to right-to-work states, which is why the Democrats will spend every cent every taxpayer has, if need be, in order to keep that from happening.

But if it happened, consumers would love the result. What country boy, for example, wouldn’t love to buy a less expensive Chevy pickup built in, say, Rogers, Arkansas by a manufacturer that actually tightened all the bolts and sealed the windows? And Ford trucks built in Texas by BMW? I can picture the ads already.

If there is a demand for cars, somebody will make them.

You know, in our capitalistic society we’ve always been told that we send companies a message by buying or not buying their products. If we don’t buy, then they will see the error of their ways and make something we do want to buy. But in the case of the U.S. automakers, this didn’t happen. They went for short term profits buy building huge, gas guzzling vehicles. We didn’t buy them (or enough of them) and now they are broke. So we are faced with the problem of either saving them from themselves and thereby saving the jobs in the industry, or letting them fail and watching unemployment go up and the average worker suffer. This stinks. If we help them, then there need to be some real strings attached - no more big car free for all. Otherwise, why should they bother to change? Personally, since they worked hand-in-glove with the big oil for years, pushing out those gas guzzlers, I think big oil should bail them out.

the news was also reporting that their millions of jobs lost included part makers and sellers like NAPA and O’Riely, as well as car wash employes. like if they stop making new cars all the old ones would disappear that day too.

I have nothing against the automakers as far as their social policies go, but if we can find the money to bail them out and the banks and mortgage companies, where was all this money when poverty needed to be addressed? If we don’t have the money to assist the poor then we don’t have it for these either.

Neither party does anything for the truly needy, because the needy don’t contribute to campaigns and because, as Saul Alinsky pointed out, there aren’t enough of them to affect elections.

I wish I had a little more time to write about this, but this Big Three asking for the “Big Handout” from Uncle Sam is so disgusting IMO.

This isn’t about jobs. I live in Detroit and the CEOs that run these companies have been shipping jobs over seas and building plants in Shanghai, Red China, and places like Bratislava, Slovak Republic as fast as they have been able to and they have closed many auto factories in Michigan (Wixom Assembly; GM’s Flint) and throughout the United States

So , it isn’t about jobs. The Big Three have been cutting tens of thousands of jobs each year, every year, for decades in the country now…

They hate the UAW Auto workers union. They always have, and their entire goal is to close as many auto plants and fire or buyout as many U.S. Auto Workers jobs as fast as they are able to, and reduce their labor costs by shipping the jobs to places like Red China and Eastern Europe.

I really hate to say it, but bailing them out is not Free Market Adam Smith laizzez-faire Capitalism.

Bailing out Wall Street was not the silver bullet, and did not solve the economic crisis and bailing out GM, Ford, and Chrysler is not going to either.

Bush and pals already loaned the Big Three 25 Billion bucks just a month or two ago in September / October of this year.

Now GM, Ford, and Chrysler want another 50 Billion bucks!

That’s 75 Billion altogether now.

Under Bush, the so called “Conservative”, we’re rapidly descending into a European Socialist nation state.

The Federal Government now owns 80% of A.I.G.

Undoubtedly, President-Elect Obama and the Democrats are going to continue and maybe even expand these policies.

I’m just saying once you start doling out billions and billions of bucks to these American corporations, you are opening up the Pandora’s Box of Socialism in the United States, and that was not the Free Market economic system on which the economy of this nation was based.

Again, I really hate to say it, but with that Wall Street 700 Billion dollar Bailout, we have already crossed the threshold to the United Socialist States of America.

We need to stop the Federal Government from dumping billions of dollars of our money into poorly run, mismanaged, private businesses.

And if people suffer; if this brings on the Great Depression Part II, well so be it.

It is better to live in a free society and suffer a lot than be beholden to an Oligarchy of businessmen who possess poor judgement and have mismanaged their business industry.

I already will tell you it will be 50 Billion right now; down the road say 6 month- One year, they will need another 50-100 Billion to keep afloat.

There appears to be some major doubts in Congress…let’s hope they follow through.

If you consider the United States of America to be socialist, do you consider Sweden, Denmark, Finland, and Norway socialist? They do have nationalized oil and a free nationalized companies.

Sounds like hostage holding to me. There isn’t enough ink in the world for Bernanke to print us out of this. Someone will have to fail at some point come what may.

Bottom line. As someone said recently, if you’re too big to fail, you’re too big. In the future no corporation should be allowed to grow so big that their failure would scuttle the economy.

with either a chapter 11 bankruptcy, or full bankruptucy and implosion of the US auto industry, millions of jobs will vanish, and the thousands who have already lost there jobs will never work in that industry again. Either way, their pensioners who are their biggest class of creditors, will be the biggest losers, in what is poised to become the biggest government assisted shaft of all time.

I agree. Let 'em sink. The assets that remain will still be used to make cars in this country. They will not go idle. The UAW will be huge losers, as they should be. They helped to drive these companies into ruin and have killed their golden goose. With bankruptcy, their contracts and guaranteed jobs will be worthless and they will have to get paid a fair market wage or go elsewhere and try to ruin another industry.

I just hope you all can keep us in your prayers. My husband is 1 that might loose his job. At 51 not much out there. My nephew just lost his and he has his 4 child on the way.

i dont think the U.S.A. is fully socalized, yet, but as to your other examples. yes they fit the bill. they also tax the citizens more than anyone should be willing to pay. God wants 10% but they want half or more? thats revolution time in my book.

Another thought: has the UAW made any overtures about cutting excessive jobs and re-writing a contract for lower wages like the airlines did a few years back? If a bailout is to come, this should be a mandatory first step, along with an elimination of all bonuses and deep corporate salary cuts. Those that caused the bankruptcy should bear the brunt before taxpayers.

My husband will lose his job also. He’s a GM technician who has worked his way into management. Very good chance my mom could lose hers also. She works for FedEx and she said a good chunk of their business comes from the auto makers. My Dad’s company would probably be on the line too. Both of my BIL’s would lose their jobs.

If these companies fail, these people will unlikely be able to just “start over” with the economy in the state it’s in right now. DH and I will be toast. Toast.

If this crisis had happened a few years ago when the economy was relatively stable, we’d all have hope of starting over in another industry. It’d be hard, may have to take a pay cut, but there’d be hope. Right now that’ll never happen. There will be millions of people in this country left in ruins. We can NOT afford to let this happen.

Millions of jobs will vanish? I really hate it for them and pray they make it through. I guess the automakers should have had enough guts to stand up to the UAW or used better business models to survive.

i personally feel that these automakers should not be bailed out.
i do feel sorry for the workers and their families, but where do we stop? who will next want to be bailed out? i feel these companies are responsible for what is happening to them now. maybe our countries economy shouldn’t be so dependent on the automakers as we are also dependent on oil. there will still be a need for vehicles and someone will make them. the CEO’s of these companies have been living like kings. i read what mitt romney said on the drudge report and his father worked in the auto industry and mitt romney remembers what his father went through.
i wish mitt romney were our president because i think he has a good economic mind. he feels they should not be bailed out.
in my personal opinion, the auto industry has been corrupt for a long time.

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