No bailout for teh Car Industry

[Thomas Beyer]

To: Stephen Harper, PM and Jim Flaherty, Minister of Finance Nov. 17, 2008
Cc: Editors of Calgary Herald, Globe&Mail & National Post, Canadian Taxpayers Federation

No bailouts to the car industry, please. Any industry has to stand on its own feet – especially ones that have been uncompetitive for years in light of poor products and overpaying their employees and managers.

If you decide to use my tax money to bailout the car industry, please also send corresponding cheques to the following industries, all affected by the global credit crisis, all of which employ hundreds of thousands of tax paying Canadians who have lost jobs or may lose jobs or face the threat of layoffs:

Restaurants, watchmakers, jewellery stores, clothing stores, belt makers, luxury boat makers, coffee roaster, beer mug manufacturers, music industry, concert organizers, special event decorators, pubs, breweries, champagne importers, cheese manufacturers, software manufacturers, IT equipment servicing firms, poultry producers, cement mixers, truck drivers, framers, window manufacturers, lamp designers, interior decorators, furniture stores, slaughterhouses, gold courses, golf equipment manufacturers, golf equipment importers, cell phone manufacturers, cell phone stores, speaker system distributors, TV importers, movie producers, mortgage brokers, insurance agents, drill mud distributors, drilling rig operators, steel factories, nickel mines, accounting firms, architects, roofers, chimney sweepers, solar panel manufacturers, hot water tank installers, plumbers, electricians, cooks, dishwashers, window cleaners, landscape architects, highrise crane operators, pen manufacturers, secretaries, typewriter repairmen, gas plants, coal mines, ski hill operators, ski lifties, ski manufacturers, ski importers, ski retail stores, bicycle manufactures, bicycle importers, bike stores, motorcycle manufacturers, cement engineers, landmen, dentists, ... hundreds and hundreds more !!

Why is a firm like GM, the producer of the Hummer and other gas guzzling and money losing vehicles getting bailed out, while Toyota makes a profit ? Why don’t oilsands producers or nickel mines or ski operators or software manufacturers or IT equipment services firms who have thousands of jobs at stake also get nothing ?

No bailouts to the car industry, please. No, No, No, NO !!

Respectfully submitted by:
Thomas Beyer
Canmore, AB T1W 3C9
T: 403-609-3988 - E: [email protected]

 

[Lucas]

QUOTE (thomasbeyer2000 @ Nov 16 2008, 08:50 PM) To: Stephen Harper, PM and Jim Flaherty, Minister of Finance Nov. 17, 2008
Cc: Editors of Calgary Herald, Globe&Mail & National Post, Canadian Taxpayers Federation

No bailouts to the car industry, please. Any industry has to stand on its own feet – especially ones that have been uncompetitive for years in light of poor products and overpaying their employees and managers.

If you decide to us my tax money to bailout the car industry, please also send corresponding cheques to the following industries, all affected by the global credit crisis, all of which employ hundreds of thousands of tax paying Canadians who have lost jobs or may lose jobs or face the threat of layoffs:

Restaurants, watchmakers, jewellery stores, clothing stores, belt makers, luxury boat makers, coffee roaster, beer mug manufacturers, music industry, concert organizers, special event decorators, pubs, breweries, champagne importers, cheese manufacturers, software manufacturers, IT equipment servicing firms, poultry producers, cement mixers, truck drivers, framers, window manufacturers, lamp designers, interior decorators, furniture stores, slaughterhouses, gold courses, golf equipment manufacturers, golf equipment importers, cell phone manufacturers, cell phone stores, speaker system distributors, TV importers, movie producers, mortgage brokers, insurance agents, drill mud distributors, drilling rig operators, steel factories, nickel mines, accounting firms, architects, roofers, chimney sweepers, solar panel manufacturers, hot water tank installers, plumbers, electricians, cooks, dishwashers, window cleaners, landscape architects, highrise crane operators, pen manufacturers, secretaries, typewriter repairmen, gas plants, coal mines, ski hill operators, ski lifties, ski manufacturers, ski importers, ski retail stores, bicycle manufactures, bicycle importers, bike stores, motorcycle manufacturers, cement engineers, landmen, dentists, ... hundreds and hundreds more !!

Why is a firm like GM, the producer of the Hummer and other gas guzzling and money losing vehicles getting bailed out, while Toyota makes a profit ? Why don’t oilsands producers or nickel mines or ski operators or software manufacturers or IT equipment services firms who have thousands of jobs at stake also get nothing ?

No bailouts to the car industry, please. No, No, No, NO !!

Respectfully submitted by:
Thomas Beyer
Canmore, AB T1W 3C9
T: 403-609-3988 - E: [email protected]


Hi Thomas,

Where`s the love for us struggling Real Estate agents...I mean c`mon!!!......please??...he he

Lucas

 

[dwb]

Instead of sending your letter to the powers that be, maybe its best to slip the moron CEOs trying to sell inefficient fuel guzzlers a memo letting them know the public consumers are no longer interested... consumers want smaller fuel efficiency vehicles, plain and simple... take note of Toyota and follow the lead. Find a way to adapt to today`s market & produce smaller fuel efficient vehicles and sell them. Profitability will follow.

Capitalism = survival of the fittest. And GM trying to sell Hummers and other fuel inefficient vehicles is like a slow overweight gazelle trying to run from an oncoming aggressive, focused pack of hungry lions.

Why should taxpayers bail out an unprofitable & stupid business plan?

 

[invst4profit]

"Restaurants, watchmakers, jewellery stores, clothing stores, belt makers, luxury boat makers, coffee roaster, beer mug manufacturers, music industry, concert organizers, special event decorators, pubs, breweries, champagne importers, cheese manufacturers, software manufacturers, IT equipment servicing firms, poultry producers, cement mixers, truck drivers, framers, window manufacturers, lamp designers, interior decorators, furniture stores, slaughterhouses, gold courses, golf equipment manufacturers, golf equipment importers, cell phone manufacturers, cell phone stores, speaker system distributors, TV importers, movie producers, mortgage brokers, insurance agents, drill mud distributors, drilling rig operators, steel factories, nickel mines, accounting firms, architects, roofers, chimney sweepers, solar panel manufacturers, hot water tank installers, plumbers, electricians, cooks, dishwashers, window cleaners, landscape architects, high rise crane operators, pen manufacturers, secretaries, typewriter repairmen, gas plants, coal mines, ski hill operators, ski lifts, ski manufacturers, ski importers, ski retail stores, bicycle manufactures, bicycle importers, bike stores, motorcycle manufacturers, cement engineers, landmen, dentists, ... hundreds and hundreds more !!"

I can`t say that I fully understand the economic fall out that we are about to see but I do believe we have not had a repeat of the depression of the 30s because of the actions of government in the past.
When large sectors of the employment base such as the auto industry fail the ripple effect to all of the above mentioned employers is inevitable.
I do not know if I support a bailout of the auto industry, or others, but I do know when you are unemployed you have no money to recirculate in your community.
The failure of the auto industry will not cause a total collapse of the economy it will simply be the trigger for the inevitable collapse as I see it.

 

[wealthyboomer]

QUOTE (invst4profit @ Nov 17 2008, 08:35 AM) "Restaurants, watchmakers, jewellery stores, clothing stores, belt makers, luxury boat makers, coffee roaster, beer mug manufacturers, music industry, concert organizers, special event decorators, pubs, breweries, champagne importers, cheese manufacturers, software manufacturers, IT equipment servicing firms, poultry producers, cement mixers, truck drivers, framers, window manufacturers, lamp designers, interior decorators, furniture stores, slaughterhouses, gold courses, golf equipment manufacturers, golf equipment importers, cell phone manufacturers, cell phone stores, speaker system distributors, TV importers, movie producers, mortgage brokers, insurance agents, drill mud distributors, drilling rig operators, steel factories, nickel mines, accounting firms, architects, roofers, chimney sweepers, solar panel manufacturers, hot water tank installers, plumbers, electricians, cooks, dishwashers, window cleaners, landscape architects, high rise crane operators, pen manufacturers, secretaries, typewriter repairmen, gas plants, coal mines, ski hill operators, ski lifts, ski manufacturers, ski importers, ski retail stores, bicycle manufactures, bicycle importers, bike stores, motorcycle manufacturers, cement engineers, landmen, dentists, ... hundreds and hundreds more !!"

I can`t say that I fully understand the economic fall out that we are about to see but I do believe we have not had a repeat of the depression of the 30s because of the actions of government in the past.
When large sectors of the employment base such as the auto industry fail the ripple effect to all of the above mentioned employers is inevitable.
I do not know if I support a bailout of the auto industry, or others, but I do know when you are unemployed you have no money to recirculate in your community.
The failure of the auto industry will not cause a total collapse of the economy it will simply be the trigger for the inevitable collapse as I see it.

I also question the `Bailout`, mainly because the word itself sounds like win/lose proposition. One person gets something, while the other gets nothing.
Is there a way that the government can MAKE money from this situation?

We in the West, tend to think of the auto sector as something in Ontario, that doesn`t affect us here. It is the `ripple` effect that is concerning.
How many local/area car dealers would be in jeopardy? (there are more than 3400 dealerships across Canada, employing about 155,000 people)
How many local/area businesses rely on those car dealers and/or their employees?

On a lending question...what is the auto industries FICO Score?

 

[Nir]

Hello Thomas,

Whenever criticizing a solution I always try to suggest a better one. Remember doing nothing (i.e. no government bailout) is an alternative we have to justify too.

It is not clear from your note if you oppose any government bailout or just recommend helping other sectors as well/more evenly? .

If you believe government should not bailout any industry then explain why it is better economically not helping than helping?

If your issue is helping the auto sector only or with the way help is distributed then we need to remember government is obviously limited and can not help everyone plus the advantage to size meaning helping the biggest industry/ies most in need is more efficient, easier and more realistic than helping many.

I like the pareto rule and even use it a lot personally: it means the TOP 20% of the products generate 80% of the revenue or TOP 20% of all possible reasons explain 80% of the problem (emphasis on "top"). Once we understand the idea we can phrase it as we like and it always works statistically. It is beyond the scope of this forum to prove the rule, basically it is based on the normal distribution where you can see TOP 20% cover 80% of the area under the graph.

I am not an economist and not even sure what is the best solution to the current situation. Just wanted to remind everyone that finding the best solution is more complex. Criticizing a specific solution is not complete until you recommend a better alternative.

Regards,
Neil

 

[Thomas Beyer]

QUOTE (investmart @ Nov 17 2008, 07:18 PM) Hello Thomas,

Whenever criticizing a solution I always try to suggest a better one. ... Just wanted to remind everyone that finding the best solution is more complex. Criticizing a specific solution is not complete until you recommend a better alternative.

Indeed .. this is a complex problem .. and complex problems have simple, easy to understand, wrong answers ..

Honestly, I do not have a good answer except to do NOTHING, which is preferred here.

Another solution is to give accelerated tax breaks, i.e. depreciate investments over 2 years vs. 10 .. but this was done last year to my knowledge.

We can also give each Canadian an incentive of say $12,000 to buy a car made in Canada by April 30, 2009. I am sure there is a hundred other ideas .. but why don`t we give landlords free bathroom upgrades or free new roofs or free triple glazed windows (good for the environment and less energy consumption) ? Is our service less desirable to millions of tenants than 3 car companies ?

I am sure restaurant spending is down, so why not give vouchers to each Canadian for a free meal for 20 weeks ? I am just opposed to these kind of bailouts to an industry with a strong lobby, as opposed to many smaller firms that have no concentrated lobby.

Realtors have a harder time selling real estate, how about a commission subsidy program ?

New free skis including 50% off lift passes c/o the government also certainly would stimulate the ailing ski hill industry ... etc. etc. etc. ....

Fell free to write your own letter / fax suggesting ideas .. I`d love to hear them too !

 

[GarthChapman]

The media has mis-represented this thing. It will be loan guarantees, not a cash bail-out.

And it has to happen. We are not alone in this. The Americans will act, and we will have to act in concert. If not we will lose our out-sized position in the North American car making market. Remember that we make about 8-9 times the number of vehicles that we actually purchase.

Does anyone think we could let this thing go - lose 100,000 to 200,000 jobs? Does anyone think a minority government could survive that?

So let`s push for a sane loan guarantee program that we won`t likely have to pay out on later on. One that requires the recipients to reach signposts along the way. Maybe something as simple as fuel economy signposts.

 

[SeanMcAllister]

I would surmise you do not work in the automotive industry and you probably think that in some way because you live in Alberta that you will be insulated from this problem. I can assure that this is not the case. First and foremost yes the Detroit managed their house very badly. No one is advocating a hand out. But please remember that every assembly job has somewhere between 5-10 jobs that it creates. Well this translates to millions of jobs accross Canada and the USA.
I work for one of the Japanese companies and we all use the same Tier 1`s, 2`s & 3`s. Which is a fancy way of saying that we use the same parts suppliers the Detroit 3 use. Which means if they go down. Hordes of Tier 1s, 2s & 3s will go with them. We wont be able to make cars.

Under that scenario substitute millions with possibly tens of millions of jobs at risk. Who is going to buy the oil that Alberta produces then or any of the other consumer goods that are made from it, etc? We are talking about possibly the largest downturn north america has ever seen, we are in the midst of a perfect storm. What is the answer? Im not paid enough to answer that question, what I can say is a laissez faire approach is probably not the right one.

Finally to your statement "Why is a firm like GM, the producer of the Hummer and other gas guzzling and money losing vehicles getting bailed out, while Toyota makes a profit ? Why don’t oilsands producers or nickel mines or ski operators or software manufacturers or IT equipment services firms who have thousands of jobs at stake also get nothing ?"

To my understanding they (oil sands firms) operated with Govt subsidies for years and special tax incentives.

But send your letter if you must.

Regards,

Sean McAllister, P.Eng.
Real Estate investor

 

[wealthyboomer]

What will become of the GM pension funds?
Will retired auto workers lose their pensions?
What will they eat? Where will they live?

What happens with GMAC? Do they get funds from the `bank` bailout, or does it fall under the `auto` bailout? Or will they be able to `double-dip`, and get funding from both types of bailouts?
What will happen to all of those GMAC mortgages?

 

[wealthyboomer]

QUOTE (SeanMcAllister @ Nov 19 2008, 12:05 PM)
To my understanding they (oil sands firms) operated with Govt subsidies for years and special tax incentives.




Didn't the auto industry also get Gov't subsidies?

Oh...I get it...Only companies that get Gov't subsidies, get 'bailouts'!

 

[RedlineBrett]

My thoughts, for what they`re worth:

- I have not heard one single iota of press or anything that supports the notion that the big three will somehow be able to become profitable with an extra dose of cash. The money is only supposed to keep the doors open, yet the big 3 have been struggling for years. They weren`t able to make money in a BOOM so how does it make sense to give taxpayer dollars to them during a recession? I say don`t throw good money after bad.

- A bailout to the automakers because of the amount of people they employ, directly or indirectly, is only going to delay the problem. Will the answer be the same 5, 10 years from now when they still aren`t profitable companies? Would the fallout be worse than biting the bullet now?

- Bankruptcy may be the fastest and quickest solution to turn these companies around, or start fresh from the ashes. These companies are inefficient, lumbering bureaucratic monsters. One or two of them need to go so that the remaining one or two can make a competitive, honest go of it.

- Bankruptcy/failure of the big three is probably the only way to get rid of the unions. Which I think is the real reason the US automakers cannot compete with the imports.

$0.02

 

[ZanderRobertson]

I wouldn`t equate a provincial government having the vision to aid a profitable industry in it`s formative years to a national government being forced to bail out unprofitable companies. that`s a pretty big leap.
that being said, i agree the industry can`t die, too many repercussions. no answers here either, but you must agree with thomas that it`s a big stinking mess and most likely a handout when all is said and done.

QUOTE (SeanMcAllister @ Nov 19 2008, 11:05 AM) I would surmise you do not work in the automotive industry and you probably think that in some way because you live in Alberta that you will be insulated from this problem. I can assure that this is not the case. First and foremost yes the Detroit managed their house very badly. No one is advocating a hand out. But please remember that every assembly job has somewhere between 5-10 jobs that it creates. Well this translates to millions of jobs accross Canada and the USA.

I work for one of the Japanese companies and we all use the same Tier 1`s, 2`s & 3`s. Which is a fancy way of saying that we use the same parts suppliers the Detroit 3 use. Which means if they go down. Hordes of Tier 1s, 2s & 3s will go with them. We wont be able to make cars.

Under that scenario substitute millions with possibly tens of millions of jobs at risk. Who is going to buy the oil that Alberta produces then or any of the other consumer goods that are made from it, etc? We are talking about possibly the largest downturn north america has ever seen, we are in the midst of a perfect storm. What is the answer? Im not paid enough to answer that question, what I can say is a laissez faire approach is probably not the right one.

Finally to your statement "Why is a firm like GM, the producer of the Hummer and other gas guzzling and money losing vehicles getting bailed out, while Toyota makes a profit ? Why don`t oilsands producers or nickel mines or ski operators or software manufacturers or IT equipment services firms who have thousands of jobs at stake also get nothing ?"

To my understanding they (oil sands firms) operated with Govt subsidies for years and special tax incentives.

But send your letter if you must.

Regards,

Sean McAllister, P.Eng.
Real Estate investor

 

[JimWhitelaw]

Don`t have an answer either, but these guys don`t make it easy to have compassion for them:

"Big Three auto CEOs flew private jets to ask for taxpayer money"

http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html

 

[RedlineBrett]

QUOTE (CLW @ Nov 19 2008, 08:09 PM) Don`t have an answer either, but these guys don`t make it easy to have compassion for them:

"Big Three auto CEOs flew private jets to ask for taxpayer money"

http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html



And it appears this is now they plan to work their way out of it...lol

http://www.universitydodge.com/specials/index.htm

 

[willy]

QUOTE (CLW @ Nov 19 2008, 09:09 PM)
Don't have an answer either, but these guys don't make it easy to have compassion for them:



"Big Three auto CEOs flew private jets to ask for taxpayer money"



http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html




They could be like Pierre Trudeau who, when criticized by the opposition for his travel expenses, decided to fly coach to his next official function. The opposition backed down.



Certain privileges come with position. Prime Ministers and CEO's don't fly coach.



w

 

[GarthChapman]

QUOTE (willy @ Nov 19 2008, 10:16 PM) They could be like Pierre Trudeau who, when criticized by the opposition for his travel expenses, decided to fly coach to his next official function. The opposition backed down.

Certain privileges come with position. Prime Ministers and CEO`s don`t fly coach.

w

They should when they come begging for taxpayer`s money, at least if they want the taxpayers to feel like they might want to help `em.

These three guys are failed capitalists, yet they are still acting like succesful big shots. They just don`t get it...

 

[willy]

They`re not failed capitalists, they`re just playing the game, as they see it, which I`m sure they understand much better than most of us. What they`re failing horribly at, is public relations.

w

 

[GarthChapman]

QUOTE They`re not failed capitalists, they`re just playing the game, as they see it, which I`m sure they understand much better than most of us.

What they`re failing horribly at, is public relations.


If they`re not failed capitalists - by what measure have they succeeded as capitalists?

Their public relations failure is my point exactly.

 

[jarrettvaughan]

QUOTE (CLW @ Nov 19 2008, 06:09 PM)
Don't have an answer either, but these guys don't make it easy to have compassion for them:



"Big Three auto CEOs flew private jets to ask for taxpayer money"



http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html








Although I do not support the way these guys spend their money, I must say that flying a person jet can be a great saving technique if your plane is full. Assuming these guys didn't fly alone and that they brought a team of people with them, they most likely saved a large amount of cash, rather than buying airline tickets with a commercial carrier.



This week I spoke to the VP of Sales and Marketing for Carlson Wagonlit Travel Europe (2nd largest coroporate travel company in the world) and he says that many companies will purchase or lease jets into the future to save money if they are flying large teams of people around the world as cost savings effort.



Of course, this is a side note but a reminder that not everything is as it appears.