Congressman responded to letter

[fRenzy]

Here is what my guy had to say:

Dear Mr. Johnson:

Thank you for contacting me with regard to the proposed bridge loans for the American automobile industry. I appreciate learning your views on this important issue.

As you well know, the domestic economic downturn has placed significant stress on almost every sector of the American economy. The "Big Three" - General Motors, Ford, and Chrysler - have been especially hard hit during this current economic recession. Low consumer confidence, diminished access to credit, high legacy costs, increased competition from foreign automakers, failures to modernize and stricter Corporate Average Fuel Economy (CAFE) standards have all contributed to a precipitous decline that threatens the future of these companies.

During Congressional hearings, executives from the auto industry recently requested a combined $34 billion in loans they say are needed to provide financial liquidity through the first quarter of 2009. All three companies pledged to refinance current debts, cut executive pay and work with the United Auto Workers (UAW) union to seek worker concessions. Additionally, they have proposed restructured business models that streamline the companies and refocus development on higher quality, energy-efficient vehicles.

The overall economic impact of the domestic auto industry is substantial. The Big Three companies employ roughly a quarter of a million workers directly. And, the auto manufacturing supply chain includes an estimated 2.3 million jobs - or about 20 percent of all American manufacturing jobs. Though North Carolina is not home to any major auto manufacturers, the supply chain provides more than 130,000 manufacturing jobs in our state.

I am deeply concerned about the future of the American auto industry and manufacturing as a whole. Manufacturing jobs have long provided the backbone of our economy and our middle class. For years, the American auto industry failed to modernize its corporate structure and product line and fell well behind its foreign competitors in quality and sales. Coupled with the current recession these companies are being pushed to the brink of failure.

Given the millions of jobs at stake and the possible impact on our overall economy, this request must be carefully considered by Congress. In order to protect taxpayers, Congress must require much stronger commitments from the Big 3 on fuel economy standards and establish a stringent system to ensure compliance. Congress must also demand that top management be replaced. In the end, if this proposal is going to win the support of the American people and Congress, it must offer a reasonable chance that the companies can emerge as viable businesses that are able to successfully compete with their foreign counterparts.

Thank you very much for your correspondence. I look forward to hearing from you again.

Very truly yours,

G.K. Butterfield
Member of Congress

[Inspector 17]

Originally Posted by fRenzy

Here is what my guy had to say:

Dear Mr. Johnson:

Seems like a person who actually gets it.

[NAHURRY]

Originally Posted by camaropete

Seems like a person who actually gets it.

yes he does, Im ashamed of ours (SC ) after reading that rediculous letter he wrote me.

[Chemical]

Originally Posted by zebra

did he really just compare the Big 3 to BMW? Detroit's auto makers are in the business of selling vehicles to everybody, not just the ones who can afford high-end luxury vehicles. that means lots more cars have to be sold in order to recoup the costs of extensive R&D, safety engineering, emissions, and economy standards. selling lots of $50k cars will keep you in the green easier than the same number of $20k cars.

True, BUT BMW also spends more on those vehicles, profits are higher on the BMW side but they arn't lauging all the way to the bank as if they stole money from consumers.

[Chemical]

Originally Posted by The_Blur

I also take issue with the argument that Detroit's automakers fundamentally are inefficient or not green. How can this guy argue that they need to break with the past? Ford and GM have been in the market for as long as Mercedes and longer than anyone else. It is a past of success and market dominance. Is that somehow un-American or inefficient?

The past is hurting a lot more than you think. The union, pensions and all other contracts keeping GM from actually making a profit is what's holding them back. It's not necesarily the fact that they have a union and pensions but what those contracts entail.

Contracts in the past that are still followed today can really hurt a company.

A bunkruptcy will cleanly break all bonds of that sort. GM will NOT go away, its just going to regroup and organize the financial side following Chapter 11.

"keep the faith"

[Chemical]

Originally Posted by blackZbandit

One thing that legislators have failed to realize that I'm glad Mullaly brught up during his testimony is that all three companies were viable and profitable or nearing profitablity early this year. It wasn't until the gas crisis that that left large trucks and suv's (which are the products Americans wanted) filling up lots and the credit crunch slashed the amount of qualified buyers by 20% overnight that these companies ran into problems. Now granted, they weren't perfect before, but it almost impossible to weather this sort of economic storm when you're at such a stated disadvantage (union costs) compared to your foreign rivals (no union costs). Foreign auto makers are seeing their sales decline at a similar pace as the Big 3 but their better able to weather the storm as they have lower overhead and an already stronger focus on cars. Besides, didn't Germany provide a bailout for their auto industry? Quickly? Before this year all of the Big 3 had begun shifting their focus away from larger inefficient vehicles to new, more efficient technology, but even the people who suspected the impending doom the economy was headed for had no idea how quickly it would arise.

Sorry for the rant, but I hate the way the media and our government has turned against its last bastion of manufacturing greatness. GM makes more 30+ mpg models than its foreign competitors and they're vehicles are all rated as high or nearly as high as their foreign competion in initial quality... all while offering great, exciting performance. I am somewhat glad that this has happened though because now the restructuring can be expidited and union contracts can reflect real-world, present day industyr/workplace conditions or better yet be dissolved.

*WARNING: RANT MAY BE CONTINUED AT LATER TIME WHEN I'M AM NOT AT WORK LOL!!*

I couldn't agree more!

Bankruptcy cuts all ties from outdated contracts.

[Chemical]

Originally Posted by DZbob

I am very offended that the media and many people seem to be blaming Union workers for the bad choices that the American auto industry has made. Under the current contract the big 3 UAW contract is very close to its foreign rivals. The American auto industry does not have the luxury of government backed research and development as does Japan, Korea and China. Many foreign nations building cars overseas have nationalized health plans and inferior wages that bring down the costs of foreign cars. Granted the foreign CEO’s do not have multi-million dollar contracts with multi-million dollar perks, they have regulations on how much the CEOs can make above and beyond the factory workers. Profits made in the USA from the foreign car makers go back to the country of origin. I think we all have to stand together and support things MADE IN THE USA or living the American dream might become a nightmare.:flag2:

I see your point, but when you have union workers getting laid off and still getting paid 95% of their salary, it can cause a huge problem for a company and country going through economic problems.

[Sierra]

Im not blaming unions.... but why couldnt the UAW take over the cost of its retirees before? Just a thought but i dont think thats what caused the issue. The issue was gas prices and everyone looked at trucks and SUVS as cancer. This was stated above, the big three were shifting to more fuel efficiency in the coming years, And how can they fault GM, they have been touting the volt for the past year. So come on... someone has a stick up there ass in washington about these three companies.. How can they not agree that if the big three go down it will be just as bad as athe depression if not worse. Same as the banks. Why not admonish the lending institutions for selling crap loans.. ( I work for a mtg co) Mtg companies are not all guilty though, the people who bought above thier means are also. We can go round and round on this also. BTW I am about to get laid off from my co.

[Captain Awesome]

Originally Posted by Chemical

I couldn't agree more!

Bankruptcy cuts all ties from outdated contracts.

Does that mean if I place an order and put in a down payment and they declare bankruptcy that they can cancel my order and not owe me the money?

[Chemical]

Originally Posted by Captain Awesome

Does that mean if I place an order and put in a down payment and they declare bankruptcy that they can cancel my order and not owe me the money?

Bankruptcy doesn't mean the end of the company. Worst case they'll do Chapter 11, which I believe freezes all dept payments gives the company a chance reorganize (while still in operation). That means anyone who orders a vehicle will get their vehicle.

[StuMac]

Originally Posted by Captain Awesome

Does that mean if I place an order and put in a down payment and they declare bankruptcy that they can cancel my order and not owe me the money?

Your contract is with a dealership, not GM. You only loose your deposit if your dealership goes bankrupt, not GM.

[swifttal]

What's killing me after watching the proceedings this week is why aren't the CEOs standing up for their product? They're getting hammered by congress on why they haven't modernized and how unreliable and un-green our cars are and all the CEOs had to offer back this week is being apologetic and how they've made mistakes. Why aren't they standing up for their product. Why didn't they tell congress how they've already embraced global platforms, how GM makes more 30+ mph cars than any other company, show them they HUGE quality improvements that have already been made without help, how their styling on both exterior and interior are world class, etc, etc.

It did nothing to improve consumer confidence and only reinforced the incorrect assumption a lot of Americans had about their own cars. Made me mad. Understand the need to be humble, but as most of congress has these incorrect assumptions themselves, they should've done a better job of educating how good their cars are - would've inspired consumers with all the free press "advertising" a lot more than the "we screwed up" approach they took

[swifttal]

Originally Posted by Chemical

Bankruptcy doesn't mean the end of the company. Worst case they'll do Chapter 11, which I believe freezes all dept payments gives the company a chance reorganize (while still in operation). That means anyone who orders a vehicle will get their vehicle.

Worst case is chapter 7 as in liquidation and perhaps China making camaros in the future (Nooooooooo! shudder). Best case is chapter 11 if bankruptcy happens - but where will the money to reorganize come from ? Also I doubt operations would be ongoing during bankruptcy as they've already said they can't sustain ops past this month on the money they currently have - Not to mention the time it takes to do this. I admire GMs stance on this isn't an option, I tend to agree, but what do I know

[Chemical]

Originally Posted by swifttal

Worst case is chapter 7 as in liquidation and perhaps China making camaros in the future (Nooooooooo! shudder). Best case is chapter 11 if bankruptcy happens - but where will the money to reorganize come from ? Also I doubt operations would be ongoing during bankruptcy as they've already said they can't sustain ops past this month on the money they currently have - Not to mention the time it takes to do this. I admire GMs stance on this isn't an option, I tend to agree, but what do I know

I'm not quite clear on the regulations on Chapter 7 but Congress has been talking about an agreement that if in Chapter 11 the loan that GM recieves will help the reorganize.

I think most importantly the out dated contracts can be updated to save the comany billions.

the reason they cant last past this month is because of the legal requirements to pay union contracts and pensions I believe + of course opertion cost.

Everything seems to be on the way to working out but the cost will be most to the invester, especially if the government owns a piece of GM. The cost will be that anyone who owns GM stock will be diluted to... lets say for example 1/10 the value (maybe not as bad or maybe worse).

... but GM will stay above water so to speak.

I'd like to help out GM by purchasing a Camaro right now but I must graduate first, until then I hope GM can hold on.