written by:
Andy Watkins
Editor
BusinessDetroit.com
The big three have now presented their business plans for recovery to Congress and will be in front of the Senators and House of Represenatives answering some more detailed questions about their plans. Even though Congress and most of the public view this as a bailout it actually is not a bailout. This request is a bridge loan to cover normal outstanding expenses and without this bridge loan each of these automakers would not be able to operate at the same way and would require major cut backs and layoffs of its employees and product lines.
If the credit markets wouldn't have gone South in recent months then the automakers would have just restructured the debt and refinanced their existing loans through their normal pathways, but due to the downturn and the credit markets being frozen that option was closed. The U.S. Government is the only group large enough to provide the cash they all need to keep operations moving.
Many would argue that the free markets suggest that the strong survive and the weak should fail, well I agree with that concept, except in this situation the credit markets are not acting as normal in the free market, so to use that arguement wouldn't be matching the situation as apples to apples. The automotive companies have been weakened by slower sales and increasing overhead, but they wouldn't be on the verge of closing their doors if the credit markets were still operating at full strength again.
So this local business person supports the Bridge Loan to the automakers as long as the request and plans are real. If the automakers are playing a shell game with our tax dollars and crying wolf then they should fail, but if they are telling the whole truth and nothing but the truth then we need to give them the bridge loan not only to save jobs, but to speed up the recovery of our nations economy.
Wednesday, December 3, 2008
Sunday, November 16, 2008
Do the Auto's Live of Die?
Written by: Andy Watkins
Editor - BusinessDetroit.com
The big question all over the media world wide is do we help save the automotive industry for a complete meltdown. Many say it worked for Chrysler years ago and that's where I would like to start my debate on this topic. Many years ago the U.S. government decided to give Chrysler a 1.5 billion dollar loan in which it got paid back and it seemed that it saved the company and industry from a huge loss...or did it? What if the U.S. government turned down the loan offer to Chrysler years ago and it closed it's doors. That would mean many indivduals would have lost their jobs, homes, business that were connected to that auto giant. Now that we placed bandaid on the situation back then my belief it has caused an even great problem today. Letting Chysler fail years ago and allowing the free market to work the way it should would have possibly saved the current automotive industry from it's complete failure.
Basically, the free market suggests that if you run your business correctly with a quality product and a fair market price you should be able to keep operating as long as the bad running companies go out of business. Why you ask?...well it's very simple...if the bad companies are saved then the market share for everyone shrinks and the great companies ove time get hurt even though they are doing everything right...they are limited on growth and then they implode due to the lack of new revenues because the bad companies have turned things around slightly and retained partial market share causing pain on the companies that should have taken all the left overs.
So now we (Detroit and Michigan tax payers) are begging congress to re-think the loan idea and save General Motors. Well this writer thinks that is a terrible idea and the free market really needs to work the way it is suppose too. So U.S. Government get out of the way on this one and let the chips fall as they are suppose to fall.
Editor - BusinessDetroit.com
The big question all over the media world wide is do we help save the automotive industry for a complete meltdown. Many say it worked for Chrysler years ago and that's where I would like to start my debate on this topic. Many years ago the U.S. government decided to give Chrysler a 1.5 billion dollar loan in which it got paid back and it seemed that it saved the company and industry from a huge loss...or did it? What if the U.S. government turned down the loan offer to Chrysler years ago and it closed it's doors. That would mean many indivduals would have lost their jobs, homes, business that were connected to that auto giant. Now that we placed bandaid on the situation back then my belief it has caused an even great problem today. Letting Chysler fail years ago and allowing the free market to work the way it should would have possibly saved the current automotive industry from it's complete failure.
Basically, the free market suggests that if you run your business correctly with a quality product and a fair market price you should be able to keep operating as long as the bad running companies go out of business. Why you ask?...well it's very simple...if the bad companies are saved then the market share for everyone shrinks and the great companies ove time get hurt even though they are doing everything right...they are limited on growth and then they implode due to the lack of new revenues because the bad companies have turned things around slightly and retained partial market share causing pain on the companies that should have taken all the left overs.
So now we (Detroit and Michigan tax payers) are begging congress to re-think the loan idea and save General Motors. Well this writer thinks that is a terrible idea and the free market really needs to work the way it is suppose too. So U.S. Government get out of the way on this one and let the chips fall as they are suppose to fall.
Tuesday, October 21, 2008
GM and Chrysler? Good or Bad?
Written by: Andy Watkins
Editor - BusinessDetroit.com
The media has been publishing story after story of a possible merger between two of the largest U.S. automakers this week. General Motors and Chrysler may become one very large auto company, but does this make any sense. If this does occur will it save them from going out of business, will it lower their overhead or will it just delay the inevitable distruction of both car companies. These are all great questions, but if it does happen, whoever does the buying the other will lay in waste. If GM decides to buy Chrysler in these uncertain times then it could destory their existence forever. Why don't they wait and just work on lowering their overhead internally first, get rid of all the bad assets, then merge as one making them a solid new company with little waste. If they decide to merge prior to the cut backs I fear that the UAW will fight them on every cut back the new company makes knowing perfectly well that they are in big trouble.
The merger between the two is a good idea because it will lower production costs, overhead and operation costs including labor costs. The auto industry needs less players in order for it to stay alive. Since the 1970's automakers have each lost market shares due to the large increase of new car companies around the globe. We currently have about 4 to 5 too many car companies, so if this merger does occur it will help all the automakers in the industry.
Editor - BusinessDetroit.com
The media has been publishing story after story of a possible merger between two of the largest U.S. automakers this week. General Motors and Chrysler may become one very large auto company, but does this make any sense. If this does occur will it save them from going out of business, will it lower their overhead or will it just delay the inevitable distruction of both car companies. These are all great questions, but if it does happen, whoever does the buying the other will lay in waste. If GM decides to buy Chrysler in these uncertain times then it could destory their existence forever. Why don't they wait and just work on lowering their overhead internally first, get rid of all the bad assets, then merge as one making them a solid new company with little waste. If they decide to merge prior to the cut backs I fear that the UAW will fight them on every cut back the new company makes knowing perfectly well that they are in big trouble.
The merger between the two is a good idea because it will lower production costs, overhead and operation costs including labor costs. The auto industry needs less players in order for it to stay alive. Since the 1970's automakers have each lost market shares due to the large increase of new car companies around the globe. We currently have about 4 to 5 too many car companies, so if this merger does occur it will help all the automakers in the industry.
Wednesday, October 15, 2008
What's Next for the big three or should I say small 3
written by: Andy Watkins - BusinessDetroit.com editor
Well today the stock market took another dive and everyone is shaking their heads wondering what went wrong. Well, we in Michigan weren't surprised because we've been in this mess for the last 8 years or more. Due to the fact that General Motors, Chysler and Ford Motor started to close their plants down across the state of Michigan years ago to move them to areas of this planet with low paying wages.
I spoke of these bad decisions years ago and again months ago regarding this massive move of labor to a low economic areas in a fast growing economy in China. Well guess what I was correct in saying it was a bad decision and now the big three are in a very big mess, but don't worry our wondeful government will bail them out like usual.
This is another bad idea where our government uses our tax dollars to help companies who basically turned their backs on the hard working auto worker. We need to let the free market make the proper adjustments and trust me it will if we let it. We need to share our thoughts with the elected officials and tell them to stop bailing out all these companies. The elected officials claim they are doing to protect main street, well guys and gals your dead wrong...you are hurting us more then ever...you need to get out of the way allow the free market make the adjustments it needs to. Yes, main street will suffer, but I strongly believe we will suffer less if the free market handles it directly without the help of the U.S. governement, who many of the individuals approving these bailouts couldn't run a company if their life depended on it.
Well, what would happen if General Motors, AIG, or Chase Bank went out of business? Simple, the free market would allow solid companies the opportunity to increase market share, assets, credit lines, labor etc... and they would be able to become more stable and grow as needed due to the competition being less in that market. Then free market would suggest that a possible opening would occur at the lower end of the industry and new businesses would be born that are more effect and would produce a better overall product.
Instead, we've lost our minds and dumped billions on top of billions in hopes that bad leaders, bad policies, bad ideas, bad companies, bad CEO's would all just fade away. Now we've given them time to stay in the game and delay the economic rebound by years.
As always our state felt the first blow of this bad economy and we will be the last to recover thanks to our great automakers bad decisions.
Well today the stock market took another dive and everyone is shaking their heads wondering what went wrong. Well, we in Michigan weren't surprised because we've been in this mess for the last 8 years or more. Due to the fact that General Motors, Chysler and Ford Motor started to close their plants down across the state of Michigan years ago to move them to areas of this planet with low paying wages.
I spoke of these bad decisions years ago and again months ago regarding this massive move of labor to a low economic areas in a fast growing economy in China. Well guess what I was correct in saying it was a bad decision and now the big three are in a very big mess, but don't worry our wondeful government will bail them out like usual.
This is another bad idea where our government uses our tax dollars to help companies who basically turned their backs on the hard working auto worker. We need to let the free market make the proper adjustments and trust me it will if we let it. We need to share our thoughts with the elected officials and tell them to stop bailing out all these companies. The elected officials claim they are doing to protect main street, well guys and gals your dead wrong...you are hurting us more then ever...you need to get out of the way allow the free market make the adjustments it needs to. Yes, main street will suffer, but I strongly believe we will suffer less if the free market handles it directly without the help of the U.S. governement, who many of the individuals approving these bailouts couldn't run a company if their life depended on it.
Well, what would happen if General Motors, AIG, or Chase Bank went out of business? Simple, the free market would allow solid companies the opportunity to increase market share, assets, credit lines, labor etc... and they would be able to become more stable and grow as needed due to the competition being less in that market. Then free market would suggest that a possible opening would occur at the lower end of the industry and new businesses would be born that are more effect and would produce a better overall product.
Instead, we've lost our minds and dumped billions on top of billions in hopes that bad leaders, bad policies, bad ideas, bad companies, bad CEO's would all just fade away. Now we've given them time to stay in the game and delay the economic rebound by years.
As always our state felt the first blow of this bad economy and we will be the last to recover thanks to our great automakers bad decisions.
Friday, July 25, 2008
Are U.S. Automakers done?
Written by: Andy Watkins
General Motors, Chrysler and Ford Motors all posted poor new car sales in the United States, but huge profits in China. So are the U.S. Automakers really doing poorly or are they just shifting their future business revenue stream from the United States to China? Yesterday I decided to go to a few auto dealers in the Metro Detroit area and I was shocked at the price tags. Then I was cracking up when the sales person told me about a new finance deal that I could get an 8 year auto loan....well that is crazy. No wonder why Toyota has passed General Motors in sales who is buying a $30,000 car in today's economy. General Motors and the rest have to get their heads out of the clouds and understand the supply and demand issue. If no one is buying your cars then lower the price tags. Stop blamming the auto workers and unions and start showing some executive accountiablity for your pricing structure. Stop being so greeding and price your products to sell.
General Motors plan they just rolled out is all about cost cutting, but has nothing to do with price corrections based on a basic supply and demand issue. If they don't change the pricing models then they will no longer exist in the near future.
Back in the 70's and 80's we spoke about buying American and it worked it got us out of some rough times. Well I think we need to send the message to the US Automakers like GM, Ford and Chrysler and buy REAL American made cars like Honda of Ohio and Toyota out of Michigan. My Pontiac Aztek was built in Mexico....and I thought I bought an American Auto....never again will I be fooled.
Buy American and remember....the Big Three aren't really American anymore.
General Motors, Chrysler and Ford Motors all posted poor new car sales in the United States, but huge profits in China. So are the U.S. Automakers really doing poorly or are they just shifting their future business revenue stream from the United States to China? Yesterday I decided to go to a few auto dealers in the Metro Detroit area and I was shocked at the price tags. Then I was cracking up when the sales person told me about a new finance deal that I could get an 8 year auto loan....well that is crazy. No wonder why Toyota has passed General Motors in sales who is buying a $30,000 car in today's economy. General Motors and the rest have to get their heads out of the clouds and understand the supply and demand issue. If no one is buying your cars then lower the price tags. Stop blamming the auto workers and unions and start showing some executive accountiablity for your pricing structure. Stop being so greeding and price your products to sell.
General Motors plan they just rolled out is all about cost cutting, but has nothing to do with price corrections based on a basic supply and demand issue. If they don't change the pricing models then they will no longer exist in the near future.
Back in the 70's and 80's we spoke about buying American and it worked it got us out of some rough times. Well I think we need to send the message to the US Automakers like GM, Ford and Chrysler and buy REAL American made cars like Honda of Ohio and Toyota out of Michigan. My Pontiac Aztek was built in Mexico....and I thought I bought an American Auto....never again will I be fooled.
Buy American and remember....the Big Three aren't really American anymore.
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