Thread: American Automakers get their money.

the reason one going down can take the other with it is (or can be) to do with raw material supplies.

if both are getting say the left handed widgle pin from one supplier and that supplier is geared to providing both companies if one of the copmanies goes down you can wind up with the company that makes left handed widgle pins is now only selling half as many so it cant maintain production.

Once you cant get left handed widgle pins you can make cars until you get more widgle pins which can take time and while your doing that the cost of the remaining widgle pins goes up.

Customers dont car that the 08 version of the car had the cheaper easily obtained widgle pin in it and the 09 had the rare as rocking horse poo ones they only want to pay the existing list price for an existing style of vehicle.

so your stuck with having to buy expensive widgle pins and selling them in your vehicle at a loss.

picture that problem on a scale where every other little thing in the vehicle (or range of vehicles) fits into the catagory of that left handed widgle pin.

now thats a pretty simple version of why it can happen but I had it happen to me when the burger shop next door to my pizza shop shut, we were both buying our ingredients as a single bulk order from the local deli which worked well but once the burger shop shut I coudnt make the break over point for bulk orders of raw ingredients so for 5 weeks while the burger shop was redone into a yuppie burger joint I had to hold off all my casual's and park up 2 of the delivery vehicles.

I thought that with the burger shop gone was going to get me some huge profits. Apparently Burger eaters dont like pizza.

Dave is right. Sixty years ago (and earlier back to about 1914) Ford made just about everything that went into their cars except rubber and glass and semi finished things like wire and pipe. GM was a bit the same way, but not as extreme

Since then more and more parts have been bought from independent parts suppliers, partly as cars have got more complex, and as Dave says - if, for example, GM folds it is almost certain that several of the myriad of suppliers that supply both Ford and GM will fold - and a number of critical parts will cease to be available. And it will take time (and money) to set up alternative suppliers - and thanks to "just in time" the production lines will stop within a day or two of a single supplier ceasing operations. Whether even Ford could survive a stoppage like that in the current climate is doubtful; in fact even Toyota's US operation might fold as a result.

John

I wonder how much of the "Bail out" goes in over paying executives

If they go under the ripple effect will be far reaching,for every one production line worker there is 10 behind the scenes,the feeder factories make up a huge employment base for many small towns. Pat

Originally Posted by PAT303

If they go under the ripple effect will be far reaching,for every one production line worker there is 10 behind the scenes,the feeder factories make up a huge employment base for many small towns. Pat

Yes I agree with you and on the top of that if we multiplying by a conservative figure of 3 people per family just think about what social and economical implications will bring the closure of the 3 big companies.

Originally Posted by Chucaro

If Jeep go broke will Tata be interested on the brand name ?
Will be interesting to see a Jee Rover made in India

Mahindra have been buying the old body dies, etc for years from whoever was Jeeps owner at the time.

All this is correct, however we are talking about GM who bought out the city electric trams and rail cars, then ripped them up to force commuters to buy cars. The same company who killed the EV in the 90's and introduced the hummer while doing so. They also took the Californian EPA to court (along with many other car companies and the white house - read George bush) and successfully stopped the mandate forcing zero emission cars to be sold by all companies by 2000. This put electric technology and others behind 15 years in the middle of what looks to be human population killing environmental climate change.

Remember while toyota are banging on about how good their hybrid is, they didnt choose to make it, California forced them to make it. As California is the 7th biggest economy in the world they have power to make things happen in the world with help everyone else. Victoria was the first state in the world to legally force cars to have seat belts, we all know where that eneded, every car in the world with seatbelts. It was American government which forced airbags.

Near 2000 I was keenly following all the amazing technology coming about with excitement including ford with the electric "think" car, BMW had a small 1 series type elec, holden obviously had the ground breaking EV1 (see the movie who killed the elec car for an overview) hydrogen (which I dont believe in) was around the corner, 100% ethanol engines, hybrids were coming from everyone, and the world seemed to be going somewhere, but then,,,, as the EPA lost in court all this stuff went away virtually overnight. Only toyota and honda did something with their developed technology and the boss GM (bob lutz still leads gm today and is now behind the chevy volt pure elec car) at the time announced a v16 and said hybrids were a bad business case.

Now after a decade these same people pretend they want to change, money is available and they want in, they are the people who are not sad they flew in an expensive jet, they are sad they were caught, they have no care or worry, they have forced good change out and used delay tactics to stop innovation when it was possible and now tell the public they didnt see this coming.

As far as I am concerned I dont want them to have a chance with public money. The crisis has screwed the world, while the pain is here we may as well make a fresh start and clean out the last pieces of infection.

I do understand why the US government is doing all in its power to ensure these companies remain in operation (even though they are listed companies that try and avoid tax like the black death); however, i thought the whole idea of the open market place, (Capitalism) was that the weak, inefficient, poorly managed companies die off and the stronger more efficient companies that produce a better product live and prosper. This occurs so that in years to come we have better cars that are what the consumer wants and needs. Clearly, as a result of people not wanting their crappy product, these companies are going down the drain.

I do realise what the flow on effects would be, in the short term, but in the long run isn't it smarter to get rid of those inefficient companies so that in the future we produce what is a better product more efficiently? This is what governments tell us all of the time when they sit back and let companies go under or move over seas...

Just my two cents worth.