I'm honestly scared now.

[Scorcher214]

Well Obama gave his verdict about the auto companies. they are not getting anymore help. If Gm and Chrysler go under, then ford will be sure to follow. I live in Michigan, I'm right in the middle of the auto industry, just about everyone is involved with the auto industry here. I may be only 16, but if Ford, GM, and Chrysler go down, this isn't gonna be a little speed bump, there is gonna be a lot of trouble. How come companies like AIG get help even though they are giving out millions in bonus', but no help is given the American auto industry, which tried to adjust. They made more fuel efficient cars, but then gas went down, they got the short end of the stick and they need help now. If i don't have some of my facts straight feel free to correct, me, ide like some good news... :-/

So now i wanna ask 2 questions and see what you guys think:

1. Watup with the economy? Are we still in a recession, is it getting better, is it going to get worse?

2. How badly do you think the US will be affected if the automakers fail.

[1inStripes]

Hopefully Ford will be okay at least.  They have done a better job overall protecting their money.  Its a shame that its gotten to this point though for any of the companies.

[frogtog]

I think we did give GM a bunch of BILLONS and they just went through it in no time. Never even tryed to make any changes. :

[Jaheff]

Because AIG is the insurance of the government pensions!

But GM should just go file chapter 11 like anyother business.

[ilovefooffur]

Unless American auto companies are willing change their ways of doing business (especially when it comes to employee retirement benefits), no matter how much money they get from the government, they will always have a hard time being profitable.  Maybe it's time to wipe the slate clean and start over.

[Long Mike]

IMO, the only way GM will survive in the long term is to file Chapter 11.

[South FLA]

My college professor predicted this 3 years ago!

Many problems have plagued domestic auto makers for a while including, but not limited to:

union contracts/benefits, recent history of increased gas prices, bad management decisions, product lines spread too wide creating a backlog of huge inventories, lack of focus on core business (GMAC Finance for example), and competition.  

I hate to say, but they (GM, Ford, Chrysler) had it coming.  Unions should have been more flexible, management should have better positioned their companies in today's competitive market, and government should not have provided the crutch for a failed business model.  Bankruptcy is not a bad thing if they could reorganize, clean their balance sheets and start anew, yet for some reason politicians made decisions that kept these non viable businesses afloat.  

I hope Ford can survive this mess, but it would not surprise me to see Chrysler disappear, Daimler dropped them like a toxic asset for a reason, so I feel bad for the private equity holders that bought them up, but that is business.  GM should declare bankruptcy in my opinion and start fresh.  Government intervention is not the way to go here, I am sure many new businesses will step in.  

Think as the business landscape as a natural wooded forest, old growth sets in and all is well and green!  Then a disaster occurs such as a forest fire taking out a large portion of the woods and ecosystem.  Its sad for the animal inhabitants, plants, and trees, but new growth sets and those who survive will start a new cycle.

[grimlin]

I'm looking for another state to live in....

100 applications that include walk ins & online,i've found nothing.There's like 20-30 plus people going for the same job..competition is tough out there.Since i've worked in steel plants all my working career,I have nothing to really offer for other hiring positions out there.

I don't know,but my position i'm stuck in really blows.

I've found a few places only hiring $7.50-$8.00 an hour that i may be able to get into....but it's not enough to feed my family.

You think you're scared?

In the next 4 months i'll be shutting off cable,internet,phone,dropping payments,selling fishing gear if i don't find something i can atleast live off of.I got a kid to take care of too.

Even more scarier,I'm getting married in May and now i'm thinking twice if i should have done that now.We've been trying to get married the last 3 years...since we are going on our fourth year and pretty much all the plans are done for.I think we kinda messed up.Should have skipped it again this year....I don't know...i'm flat out confused right now.... :-/

[SirSnookalot]

I'm originally from Michigan, now retired, and my business had direct links to the auto biz, I serviced many of the tier 1 and 2 suppliers.

Your college professor is about 20 years behind the curve, books were being written about the problems 25 years ago. In comparison to the financial industry the autos have received a pittance.  They are a victim of the economy and their legacy costs, not production.

They will survive, there is not a doubt in my mind about it. As Cramer said yesterday the depression is over, not the recession and we are now in recovery mode, however as in any downturn sadly there will be more layoffs.

Be patient, there are many positive signs out there now. Credit is loosening, backlog of homes on the market is easing a bit, mortgage business is getting hot, car sales are trending up, retail sales improving and factory orders are up ( for me that's one of the premier indicators). Still a lot of negativity but I would rather focus on the positive but depressing the public has adverse affect.

China will lead the U.S. out of recession, they have no other choice.

[Wesley]

The auto industry will survive it may be painful, they may have a lot of layoffs.  In the end everything will work out, people just have to keep moveing forward.

[Sam]

Scorch,

Get your college degree and MOVE out of Michigan.

Go to a southern state where the girls are beautiful; the weather much friendlier; and the food outstanding.

Plus the fishing is great.

Don't be surprised if the Big-3 go bankrupt and move their headquarters and plants down south, to get away from the unions.

[MitchIsFishin]

I agree with Sam - get the degree (transfer if you have to), but get h*ll out of Michigan. The big(?) 3 will somehow survive, Ford probably doing the best. GM & Chrysler possibly filing Chptr 11 is NOT that big of deal, other companies have done it (Delta) and came back to do well. The UAW is going to have to make some additional and severe concessions if it expects it's members to have jobs. They are part & parcel to the problem as is poor management.

[dave]

It is hard to sell the unions on concessions when there are so many 6 and 7 figure salaries being paid to executives.

[done]

I am torn on the automakers. Let's be honest, their horrendous management and the greedy unions created this long ago.

They new they had an unsustainable business model years ago. The UAW was unwilling to adjust then and now instead of years of small adjustments, the entire company is going to get hit with HUGE shifts or go extinct. I know pay cuts are real bad, as it is to lose bene's.

However, the rest of us non-union folks have been having this happen us plenty og the last few decades. Pensions gave way to 401K's. We started paying more and more for health coverage. it was slow, and it was over many years and union folks laughed at us all that time. Well, now the chickens have come home to roost. All those years when those adjustments should have been made they weren't. GM is now in the hole. Chrysler doubly so. If the workers want to continue to have jobs, they will be making HUGE sacrifices that will make their lives extremely difficult.

And guys, please do not think me cold. Even with the chickens come home to roost talk, I do not find any pleasure in the situation the employees at GM an Chrysler find themselves in. "It sucks" just does not do it justice.

[Root beer]

It is hard to sell the unions on concessions when there are so many 6 and 7 figure salaries being paid to executives.

Don't the average auto worker makes 76 some dollar an hour? That should translate to 150k a year just screwing in bolts. I heard a news report they made that much. Correct me if I'm wrong, but what I saw on CNN. While the non-union workers make around 40.00 an hour here in the south working for other auto makers.

I blame both the management and the union. Neither one of 'em were flexible in money management nor adjusting to trends. They should have made the "fuel efficiency" cars years ago not just the last year. Should have predicted gas was not going to be 1.50 for rest of our lives. We saw it in the 70s and now we see it again.

Alias, I would expect them to slow productions and keep strictly to a guarantee demand. They over calculated the demand on some vehicles. That why there was such a build up in inventory which help drives them under. You cannot produce 50,000 cars and sell barely half of 'em then end up cutting the other half price and expect to continue to operate in the long run.

[done]

It is hard to sell the unions on concessions when there are so many 6 and 7 figure salaries being paid to executives.

Yeah executive pay is nuts. I remember when I worked at HP. Carly was there, failed in almost every way imaginable, got fired, and got 40 million in severance. How a company makes that kind of employment contract with someone I will never understand.

IMO, a CEO who is real good at their job is work 7 figures for a large company like HP, GM, Microsoft, etc. The job requires such a high level of skill, intelligence, and experience. However, how they still get paid for sucking....that blows me away.

Don't the average auto worker makes 76 some dollar an hour? That should translate to 150k a year just screwing in bolts. I heard a news report they made that much. Correct me if I'm wrong, but what I saw on CNN. While the non-union workers make around 40.00 an hour here in the south working for other auto makers.

I blame both the management and the union. Neither one of 'em were flexible in money management nor adjusting to trends. They should have made the "fuel efficiency" cars years ago not just the last year. Should have predicted gas was not going to be 1.50 for rest of our lives. We saw it in the 70s and now we see it again.

Alias, I would expect them to slow productions and keep strictly to a guarantee demand. They over calculated the demand on some vehicles. That why there was such a build up in inventory which help drives them under. You cannot produce 50,000 cars and sell barely half of 'em then end up cutting the other half price and expect to continue to operate in the long run.

[tyrius.]

I'm going to keep this non-political.

GM and Chrysler have labor costs and financing costs that make them unsustainable. This is due to decades of bad decisions of both the management AND the unions. GM's unions and the bondholders have given in very little in the latest round of negotiations. They likely simply assumed that a democratic president would continue to bail them out. Now they have to go back to the negotiating table and come up with some real cuts or the bondholders are going to be left with basically nothing and the employees will lose a LARGE number of jobs (much larger than if they don't go bankrupt). The bondholders are currently sitting on bonds worth about 22 cents on the dollar. They will likely need to come down close to that value. The unions will likely need to start giving up retiree healthcare, members will have to start paying a portion of healthcare expenses (co-pays, deductibles, percentage of the actual cost), work longer before they retire with a full pension, relax some of the work rules (only certain people can do certain tasks, etc), and many other frivolous things in their contracts. Chrysler is toast.

There is A LOT of work to do.

Oh and the GM situation is VASTLY different than AIG. AIG insured many of the banks losses. Without those insurance payments those banks would have folded or had to be bailed out themselves. Once the banks start falling that would cause other banks to fall. This would happen because banks lend vast sums of money to each other and the losses that would be incurred in that situation would be catastrophic for many banks. Then as those banks failed the FDIC would've had to come up with money to cover the deposits so no matter how you slice it the government was going to be on the hook for a LARGE sum of money. And it's easier to try to stop the problem before it gets out of hand so they bailed out AIG. GM will survive a bankruptcy, the banking system wouldn't have.

[grimlin]

Oh and the GM situation is VASTLY different than AIG. AIG insured many of the banks losses. Without those insurance payments those banks would have folded or had to be bailed out themselves. Once the banks start falling that would cause other banks to fall. This would happen because banks lend vast sums of money to each other and the losses that would be incurred in that situation would be catastrophic for many banks. Then as those banks failed the FDIC would've had to come up with money to cover the deposits so no matter how you slice it the government was going to be on the hook for a LARGE sum of money. And it's easier to try to stop the problem before it gets out of hand so they bailed out AIG. GM will survive a bankruptcy, the banking system wouldn't have.

That might be true....but then again,if they are losing money and going bankrupt no bonuses should have been given out at this time.

If they can change automakers contract they can change AIG's contracts.Handing out millions of dollars of bonuses for a corporation like AIG on taxpayers money is just "unacceptable".

[done]

Oh and the GM situation is VASTLY different than AIG. AIG insured many of the banks losses. Without those insurance payments those banks would have folded or had to be bailed out themselves. Once the banks start falling that would cause other banks to fall. This would happen because banks lend vast sums of money to each other and the losses that would be incurred in that situation would be catastrophic for many banks. Then as those banks failed the FDIC would've had to come up with money to cover the deposits so no matter how you slice it the government was going to be on the hook for a LARGE sum of money. And it's easier to try to stop the problem before it gets out of hand so they bailed out AIG. GM will survive a bankruptcy, the banking system wouldn't have.

That might be true....but then again,if they are losing money and going bankrupt no bonuses should have been given out at this time.

If they can change automakers contract they can change AIG's contracts.Handing out millions of dollars of bonuses for a corporation like AIG on taxpayers money is just "unacceptable".

grimlin, I hear ya on the bonuses but I do not think they can be that black and white. Not all the people who got bonuses were from that group. I know with my job, I get a bonus based on personal performance. It is part of my compensation package that I and my employer sign each year. Some of the folks at AIG took huge salary cuts and instead opted for performance based bonuses IF they met their personal goals. They met their goals and earned their bonuses.

While I do not think any company should be frivolous with cash, especially one taking public money, I think the demonization of bonuses has been way overdone with AIG and all of them have been lumped in as some example of greed that just is not always the case.

I realize I am treading awfully close to the restriction on politics and this is a discussion that could go explosive rapidly so I will cut myself off here and end with this,

Try not to be too scared, this will pass like every other depression/recession. Even the great depression ended eventually. Things will get better, the labor market will improve (hopefully sooner rather than later). For those of you already unemployed, I pray daily for you and I hope you will find work soon.

That being said, anyone in the Charlotte, NC area working in IT looking for work PM me. I can plug you into some of my headhunter and client contacts and see of we cannot lower those unemployment figures a bit.

[BUCKEYEone]

I agree that U.S. Auto makers have had this coming for some time.  Where I live in Ohio, there are 4 Honda plants within about 20 mile radius.  Needless to say, our area depends on Honda plants and the many local parts/service suppliers.  I've worked in the Honda Marysville plant and have always admired their eye on the future, and their expectations for what the auto market would bring.  Honda has been making great fuel-efficient cars for years and for far too long the U.S. auto makers have only seemed to care about towing capacity and horsepower rating.  Simply put, U.S. auto companies just assumed they would continue selling cars and never planned on adapting their plans

[tyrius.]

That might be true....but then again,if they are losing money and going bankrupt no bonuses should have been given out at this time.

Just to clarify the whole bonus situation.  These bonuses are not performance based bonuses.  They are termed bonuses as they are paid in one lump sum, however, they are actually more like the employee's salary.  The corporations rig the employee's salary so that they pay them a small percentage of their salary throughout the year and then pay a large percentage of it in one lump sum (the "bonus").  This is done to provide an incentive for that employee to remain at the company.  That's why they call them "retention bonuses".

BTW I'm not arguing whether or not those people should have received their bonus, I'm just trying to clarify the situation a bit because the news reporting has been pretty bad about the whole thing.

[Scorcher214]

That might be true....but then again,if they are losing money and going bankrupt no bonuses should have been given out at this time.

Just to clarify the whole bonus situation. These bonuses are not performance based bonuses. They are termed bonuses as they are paid in one lump sum, however, they are actually more like the employee's salary. The corporations rig the employee's salary so that they pay them a small percentage of their salary throughout the year and then pay a large percentage of it in one lump sum (the "bonus"). This is done to provide an incentive for that employee to remain at the company. That's why they call them "retention bonuses".

BTW I'm not arguing whether or not those people should have received their bonus, I'm just trying to clarify the situation a bit because the news reporting has been pretty bad about the whole thing.

Thxs, i dint really know much about the bonus situation.

I hope everything turns out okay.

[done]

That might be true....but then again,if they are losing money and going bankrupt no bonuses should have been given out at this time.

Just to clarify the whole bonus situation. These bonuses are not performance based bonuses. They are termed bonuses as they are paid in one lump sum, however, they are actually more like the employee's salary. The corporations rig the employee's salary so that they pay them a small percentage of their salary throughout the year and then pay a large percentage of it in one lump sum (the "bonus"). This is done to provide an incentive for that employee to remain at the company. That's why they call them "retention bonuses".

BTW I'm not arguing whether or not those people should have received their bonus, I'm just trying to clarify the situation a bit because the news reporting has been pretty bad about the whole thing.

Thxs, i dint really know much about the bonus situation.

I hope everything turns out okay.

Scorcher, always good to ask as you did. As long as folks can remain civil and debate the facts even if we totally disagree, everyone gains from the experience. Nobody on this board knows everything and none of us are always right. The way I look at it, if I walk away from a discussion with more information I went into it with, it is a win/win no matter the outcome.

Have a good one!

[grimlin]

How exactly does a retention bonus work? Because right now it doesn't sound like a bonus...as what they are calling it.I'm guessing they get a contract for working for $80,000.Through out the year they make let's say $40,000....then they lump the next $40,000 as a bonus...which they were promised to in the first place?

[done]

That's about right in some cases. There are variants depending on the company and position. I worked at companies where I got a "retention" bonus. For my position they usually are tied to revenue brought in. When I hit a certain threshhold, after that I get a percentage of the $$ i bring in.

So it is on me to get training and keep my skillset in demand. For some stock/investor it is how well the generate revenue for their company sometimes it is tied to a business unit, sometimes it is like the conventional meaning where it is a profit sharing company wide.

Today you need them. Companies to not inspire loyalty to employees anymore. Think MS, they have not become anywhere near unprofitable, but their profits went down and they let 5,000 people go. They have no loyalty to us and as a result now they have to pay for retention and the like cause I have no incentive to help my company who will drop me at the drop of a hat.