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Chart, automotive industry supply chain
By now many of the regulars here in DailyKos's and Firedoglake's community have read about and signed the petition to boycott JP Morgan Chase; we know there are a lot of jobs on the line and the economy in Michigan let alone the country cannot support the weight of another 300,000 to a million more unemployed if we lose one more of the Big Three automakers.

Sure, some will scoff at the numbers, but they're the real deal. My household is one of those which has already been impacted by the tanking automobile market, providing evidence as to the scale of the problem.

You see, one of the big misconceptions most people outside of the state of Michigan and outside of the automotive industry have is that the Big Three are automakers. In truth, they have become auto designers and auto assemblers. Everything else in between these two points can be made by another company, and in many cases, already has been made and supplied to one or all of the Big Three by a veritable shadow auto industry made up of a myriad of companies.

Take any one component of your car and it's likely that some other supplier had a considerable role in its manufacture, perhaps even its design.

Just ask Emptywheel; her spouse worked for a supplier which manufactured the wiring harness for Chrysler vehicles.

The supply industry is a story of my family and friends. My father used to be a plant manager for an outfit that made door seals, and before that worked at a firm that made pistons and other engine components. Some of my acquaintances work for another company that manufacturers the seats in many American cars. And yet more of my friends work for a chemical company which makes the plastic resins for many automotive components.

None of these people work for the Big Three, but all of them have counted on the Big Three for their livelihood.  And all of them have felt the real threat to their jobs; some have had pay cuts, cuts to benefits, cut to hours, and some have simply lost their jobs with no prospects of returning to the same kind of job in the same industry.

Many of these much smaller companies supporting the Big Three have operated for years on bare margins; it's been this way since the late 1980s after changes to purchasing practices and ethics at the Big Three changed under the leadership of General Motors' VP Jose Ignacio Lopez de Arriortua. There was a radical shift away from a nascent total quality management process embedded in purchasing to a process totally driven by price -- and there've been casualties along the way, including the quality of American cars. The pressure on suppliers has been intense for years to find a way to make any profits at all, since at any time the automakers might expect a "rebate" on their purchase.

Yeah, imagine fighting a tough and bloody bidding war to supply a well-designed and inexpensive component or system, winning the low bid and making a very slim margin (or sometimes none, expecting to make it up on cost savings throughout course of the contract), only to have your 800-pound gorilla of a customer ask for a rebate at the end of the contract, before they make the last payment, so that they could make their own scanty profit, pressed as they were by rising health care costs.

It's happened, and a lot more frequently than the average car-buying Joe SixPack realizes. It's a dog-eat-dog, rough-and-tumble world servicing the automakers.

As we all know well, the economy took a nose dive in 2008 after a very grim summer with $4 a gallon gasoline; the stock market tanked, reducing the amount of assets people have to spend on vehicles while suppressing their urge to spend money at all. And voila, automakers which may have been flirting with profitability -- and on the backs of suppliers -- are now in free-fall, taking the entire industry with them. Suppliers which were on the bubble before are now up against bankruptcy and may not survive long enough to be a part of the newly revamped auto industry.

The Obama administration must have heard the pleas of auto suppliers as they've ponied up $5 billion in assistance. It's a pittance considering the size of this shadow auto industry, but it's something.

But look at the nifty graphic here, taking note of the lone green bubble labeled OEM capital equipment manufacturers...yup, they are getting bupkis. Nil. Nada.

And yet they are expected to be there when all the dust settles, after the economic hurricane has done its worst, waiting eagerly to begin the business of supplying all the equipment used by the entire industry, from the chemical companies mixing and forming resin to the assembly line itself on the plant floor of a Big Three automaker.

They may not be there.

Some of them are already gone. I think of the tiny firms, some of them only a handful of people, who represented the entire business, who provided highly unique products; they've had to shut their doors and walk away from their entire lives which were wrapped up in those businesses.

This week has been grueling in this household; my spouse has been working late into the evening each day pulling together all the financials, in preparation for what appears to be an orderly shutdown. His company makes equipment which moves parts and vehicles around on plant floors (reducing the number of workers required) and tests the parts before they are released into production (improving quality); their largest customers have been Big Three automakers, including Chrysler, as well as other kinds of vehicle and construction equipment firms.

But nobody is buying cars; in spite of federal stimulus monies released and stock prices trending up, nobody yet is buying construction equipment, and sales of other vehicles like trucks have similarly plummeted.  Which means nobody is buying the equipment to make these items.

Nobody around the entire world is buying. It's not just a domestic problem; requests for quotes and sales from all across Asia were common over the last two years, but they are now dried up.

And now after wage/salary cuts, and after cutting staff, there's nothing more to cut; the waiting can't go on as the bank financing the business won't tolerate any losses from what it has deemed a "high-risk" business. Yes, if a company sells to the auto industry and is capital intensive, they are high-risk and their credit is cut off in a heartbeat.

Which makes Chrysler's situation all the more trying; we know that Americans want to buy cars, but they have had difficulty with getting credit when they haven't had difficulty with keeping their jobs. And the credit squeeze on the entire supply chain is problematic, making it difficult for the supply chain to meet customers' needs at some nebulous point in the future. A liquidation of Chrysler will not fix any of this, will only make it catastrophically worse.

And while we're all waiting for the soft-handed, expensively suited giants of banking to wring out of the entire auto industry whatever it is they are seeking, there are hundreds of thousands of people who are stuck in limbo and planning for the worst, suffering mental torment in advance of what appears to be the inevitable hell of job loss.

Sometime in the next few weeks, this household will likely make that final transition; the chances of any other option are extremely slim. The bank will tell the holding company to yank the plug on the plants which make capital equipment, and my spouse will have to tell his workers they are done. There will be no employee left behind, not the person whose recently had surgery and is in chemotherapy, nor the single parent struggling to keep a roof over their head and feed and clothe their child.

And there will be no sparing us; my spouse will collect his first-ever unemployment checks which won't cover the COBRA for health care, and we will have effectively lost our investment in the company. We'd hoped it would be enough to pay for a kid's college tuition...

At least we'll be so happy -- we and the hundreds of thousands of other working families who exist in this netherland between automaker and suppliers -- that JP Morgan Chase will get all of their $2.5 billion loan back from what's left of Chrysler after liquidation.

After all we've been through, won't that be a shot in the arm for us all?

Sign the petition here. Boycott JP Morgan Chase.

Originally posted to Rayne on Fri Apr 10, 2009 at 07:02 AM PDT.

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Comment Preferences

  •  Tips for job losses (12+ / 0-)

    And for the loss of our manufacturing base and our innovation...

    [sigh]

  •  Americans want to buy cars (5+ / 0-)
    Recommended by:
    Urizen, TooFolkGR, atlliberal, yg17, SilverOz

    that aren't shitboxes. Chrysler makes shitboxes. Yes, it's terrible what is going to happen to the parts suppliers, but this was a long, long time coming and no one did anything.

    •  Cerberus Isn't Doing Chrysler Any Favors Either (2+ / 0-)
      Recommended by:
      Rayne, Arken

      When they acquired the company they started "Cerberizing" random assets.  Like Chrysler's headquarters.  Yeah that's right:  Shortly after Chrysler's acquisition, Cerberus told them "Your headquarters?  That's not Chrysler anymore, that's Cerberus."  They wanted to isolate as many assets as possible so that if Chrysler DID get taken down, they could mitigate some of the risk.

      What it ALSO means though is that those assets are no longer part of Chrysler's borrwing power (vis-a-vis collateral).

      If spittle & tooth=vigor & youth Bill-O & Savage won't grow any older If wishes & dreams=bitches & beams We'll all live in skyscrapers bu

      by TooFolkGR on Fri Apr 10, 2009 at 07:11:15 AM PDT

      [ Parent ]

      •  Not just Cerberus (0+ / 0-)

        Daimler did its fair share of damage.

        As far as I'm concerned, Kirk Krekorian was screwed by the court; the merger of Daimler and Chrysler wasn't a "merger of equals", but an acquisition of an American automaker by a German automaker who tried to change the culture of its acquisition unsuccessfully, due in no small part to its own inability to understand what it was trying to do with re-acculturation.  

        Remember those Chrysler ads with Dr. Z in them?  Jeebus, totally clueless.

    •  Chrysler makes nice looking cars (6+ / 0-)

      That can't be relied on. I have a sebring convertible. Beautiful car, but it needed a new transmission at 40,000 miles. It's been a huge money pit. The engine in that car has a defect that makes it clog with sludge and seize. Something to look forward to.

      I'll not be too upset of they go bankrupt because they didn't stand behind their products and treated their customers like suckers.

      "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

      by atlliberal on Fri Apr 10, 2009 at 07:12:24 AM PDT

      [ Parent ]

    •  You just pointed to a key problem (4+ / 0-)

      The American auto industry has had a crisis of marketing.

      Their quality has been improving for years, and yet people like you are uninformed about this change.

      Are you even aware that brands like Mazda, Volkswagen, Mitsubishi were actually worse in quality than American cars?

      American auto companies haven't been making shitboxes of late -- but they have a lifetime problem of damage to branding and marketing to overcome.

      And by the way, the very same equipment which makes Nissans and Toyotas is used by the Big Three -- I am absolutely certain of that. So what's the REAL problem?

      •  Volkswagen worse in quality? (0+ / 0-)

        Bullshit. Provide evidence for that.

        •  Bullshit yourself (1+ / 0-)
          Recommended by:
          Fossil

          Anecdotal evidence: Had a friend who deliberately bought a Rabbit Diesel because the damned thing wouldn't accelerate over 45 miles an hour. Kept her from getting a third speeding ticket and losing her license.

          Documented evidence: Ford moves up in quality survey, USA Today, 7 June 2007 -- read the table.  Apparently you didn't get the memo two years ago about this.

          Oh, and take a good look at the average American's wallet; do you think they can afford to buy a Porsche or a Lexus? Maybe the American car is average in quality because it's built for the average income?

          Now piss off with your unhelpful attitude. You have no idea what you're talking about. Really. The production line equipment which makes Toyotas is the same as that sold to American firms; in fact, many FOREIGN automakers POACH technology originally designed for American automakers. They keep costs down by doing that, and on the backs of American car buyers.

          •  Okay, well you can get as pissed off as you like, (0+ / 0-)

            but-

            1. Anecdotal evidence proves nothing.
            1. Ford isn't Chrysler and isn't about to go bankrupt.
            1. VW doesn't poach designs. They have a huge R&D department funded by one of the few stable economies left in the world- Germany.
          •  See my post below (5+ / 0-)

            I think that many people actually have cognitive dissonance.  Believing that they are buying a product that has been hyped as having superior engineering and quality they refuse to recognize just how poor the engineering and quality of the car they own is.

            Distrust of authority should be the first civic duty. - Norman Douglas

            by Fossil on Fri Apr 10, 2009 at 07:26:31 AM PDT

            [ Parent ]

            •  VW has superb advertising (1+ / 0-)
              Recommended by:
              Rayne

              Their great Jetta campaign a few years back was deliberately aimed to overcome their then widely acknowledged quality problems (and I say this as a reasonably happy 2000 Passat owner).

              And the campaign worked.

              On the other hand, I've had Ford people from four different continents complain about how incompetent JWT's advertising for Ford is.

              This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

              by emptywheel on Fri Apr 10, 2009 at 07:32:28 AM PDT

              [ Parent ]

        •  Evidently you haven't owned a Rabbit or . . (2+ / 0-)
          Recommended by:
          Birdman, TooFolkGR

          drove a Passat or Jetta, not to mention maintaining one of their new offerings.

          Where to start with the Rabbit?  Faulty fuel pump control, inadequate suspension, distributor rotor prone to failure, faulty valves to the heater core (not to mention rubber hose through the firewall to the heater core that, if split, dumped scalding coolant onto the driver's legs).

          Want me to continue.

          VW's cars have always been poorly engineered and rife with quality issues.

          Distrust of authority should be the first civic duty. - Norman Douglas

          by Fossil on Fri Apr 10, 2009 at 07:23:59 AM PDT

          [ Parent ]

          •  I see a lot more classic beetles on the road (1+ / 0-)
            Recommended by:
            Santa Susanna Kid

            than classic Le Barons...

            •  I would not make the comparison that way. (0+ / 0-)

              Especially when many of us have a great fondness for those classic Beetle shitboxes.  They were the first affordable car that we, growing up poor in the 60's, could own without our parents shelling out the bucks for a gift car.

              That nostalgia is what is keeping them alive.  I don't know of anybody who has nostalgia for a Le Baron.

              Distrust of authority should be the first civic duty. - Norman Douglas

              by Fossil on Fri Apr 10, 2009 at 07:29:28 AM PDT

              [ Parent ]

              •  Yes, agreed about the nostalgia (0+ / 0-)

                Not unlike that which keeps many other American cars on the road, like the old muscle cars.

                Like the '67 Pontiac GTO or the '68 Camaro Z-28 or Rally Sport, which were of similar age to the old Beetles.

                I think my grandfather had a '68 Beetle, come to think of it. Cute, but it burned oil.

                •  Yep (0+ / 0-)

                  And, sometimes nostalgia is fun if not taken to an extreme.

                  Working at Chrysler Lynch Road Assembly as a kid (put me through college) I sometimes got to drive a Hemi Cuda that was in the car pool.  A thrilling gas-slurping single car environmental disaster, but still, I'd love to be able to have one of these now just for kicks.  But then, nowadays when I want thrills I'll get on my cycle.  45 mpg with me sitting on an engine that rockets me faster than all but one ot two production cars - and handles twice as better - however, commuting to work I'm much, much, more conservative.

                  Cheers

                  Distrust of authority should be the first civic duty. - Norman Douglas

                  by Fossil on Fri Apr 10, 2009 at 11:38:31 AM PDT

                  [ Parent ]

            •  I Don't Think Anyone Would Disagree (1+ / 0-)
              Recommended by:
              Arken

              That prior to the mid-to-late 90's, American Car Quality was a pretty superficial measurement.

              If spittle & tooth=vigor & youth Bill-O & Savage won't grow any older If wishes & dreams=bitches & beams We'll all live in skyscrapers bu

              by TooFolkGR on Fri Apr 10, 2009 at 07:31:03 AM PDT

              [ Parent ]

          •  I had a 2008 GTI (1+ / 0-)
            Recommended by:
            theran

            Loved the car, it didn't have any problem whatsoever in a year of ownership. And when I was in a pretty bad accident last month, the car lived up to VW's reputation of being one of the safest cars on the road and I walked away from it without a scratch on me. It was such a great car that I bought a 2009 GTI to replace it. And I personally haven't heard any of those problems about the Rabbit, I know several Rabbit owners and they haven't had any problems with theirs either.

            And BTW, my GTI, with less than 500 miles on the odometer (not even broken in yet, MPG is worse during the break-in period) got 33 MPG on the way to work today with me averaging about 65 MPH on the highway. Not bad for a performance hatch. GM, Chrysler and Ford could only dream of a car as fun to drive as the GTI with the gas mileage of the GTI.

            •  Or (2+ / 0-)
              Recommended by:
              Rayne, theran

              They could drive the Focus, which routinely gets great marks for handling (it used to have, and may still, the best suspension in the class). And it gets 35 MPG hwy.

              So I guess you don't know squat about American car dreams, huh?

              This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

              by emptywheel on Fri Apr 10, 2009 at 08:07:32 AM PDT

              [ Parent ]

              •  There is no point going back and forth (0+ / 0-)

                on this.  You aren't going to convince each other (or me, who has seen both of these cars and would say to just get a Honda or Subaru if you want a cool hatchback).

                Mac vs. PC isn't the issue here.

                "Dream for just a second and then do it!" -- Kolmogorov

                by theran on Fri Apr 10, 2009 at 08:16:06 AM PDT

                [ Parent ]

                •  Not trying to convince (0+ / 0-)

                  Just trying to point out that on a statistical basis, he is dead wrong about his claims.

                  He may not want to believe those facts. But that doesn't change them.

                  This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

                  by emptywheel on Fri Apr 10, 2009 at 08:19:24 AM PDT

                  [ Parent ]

                  •  Every manufacturer has their own "facts" (0+ / 0-)

                    Which either means somebody is lying or that they are all good enough (or both).

                    The used market has its own "facts" too, I guess.

                    "Dream for just a second and then do it!" -- Kolmogorov

                    by theran on Fri Apr 10, 2009 at 08:22:26 AM PDT

                    [ Parent ]

                    •  Funny (1+ / 0-)
                      Recommended by:
                      Rayne

                      Since I didn't linke to a manufacturer's site. I linked to a Green Vehicle site. I guess the environmentalists are now secretly pumping up Ford, according to you?

                      And Edmunds would support this argument.

                      There are facts, you know. Much as they may not support your perception of reality.

                      This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

                      by emptywheel on Fri Apr 10, 2009 at 08:27:18 AM PDT

                      [ Parent ]

                      •  Oh and CR woudl support that as well (1+ / 0-)
                        Recommended by:
                        Rayne

                        There are reasons to buy a Honda or VW over a FOrd (though not so much the Civic, IMO).

                        But handling and gas mileage are not those reasons (unless you're talking a hybrid Civic or until VW brings back the diesel Golf).

                        This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

                        by emptywheel on Fri Apr 10, 2009 at 08:28:46 AM PDT

                        [ Parent ]

                  •  Like I said in a previous comment (0+ / 0-)

                    You can't compare the GTI to a fucking Focus. There's only about a 60 horsepower and $10,000 difference between the two.

              •  Did you seriously just compare a GTI to (0+ / 0-)

                a Focus? The two cars aren't even in the same class or price range. You can't compare a GTI and a Focus. They're nowhere close in terms of performance, price or features. If I wanted to drive an economy car, then I'd buy a Focus. But I want to drive a fun, sporty car with a decent amount of power under the hood, that also happens to get pretty good gas mileage, and none of the big 3 have anything to offer in that field. And they probably never will. I drove a Pontiac G6 GT for a few weeks which is close to the GTI in terms of power and that shitbox was getting 25 MPG highway on a good day.

                •  Sorry to insult your manhood (1+ / 0-)
                  Recommended by:
                  Rayne

                  And your spending habits.

                  Hey!! Everyone!!! yg17 wants you to know he spent $23,000!

                  And he wants you to know that for that price, he bought a car ranked "mediocre" in reliability.

                  Oh, and btw, Edmunds (a neutral observer) seems to think you might have been better with the Cobalt SS or the still partly owned Ford product, Mazda 3, though I'll grant you the Cobalt SS only gets 30 MPG hwy.

                  Choosing a sport compact these days is all about priorities. If you value powertrain excellence over styling and refinement, the Cobalt SS or Civic Si could be for you. If you want neck-snapping acceleration and sharp cornering in a practical package, the Mazda 3 is an excellent choice. If you're looking for go-kart handling (and go-kart ride comfort) along with an extra dollop of character, the Mini is the way to go. But if you prefer a more mature sport compact with a civilized demeanor, upscale appointments and hatchback utility, the 2009 Volkswagen GTI is still the only game in town.

                  But I'm glad you manhood is intact.

                  This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

                  by emptywheel on Fri Apr 10, 2009 at 10:17:54 AM PDT

                  [ Parent ]

        •  This Isn't Really A Conversation People Can (4+ / 0-)
          Recommended by:
          emptywheel, Arken, Youffraita, Fedallah

          ...have anymore, since if you pick a car company, they ALL have some pretty reliable offerings and some pretty unreliable offerings.  

          Volkswagen specifically has six cars in Consumer Reports "Least reliable used cars" since 1999 out of 30... that means 20% of the Least Reliable cars released in the last ten years have been Volkswagens.  Chrysler specifically has four cars on that same list, which isn't much better.  Dunno what the commentor means by Mazda & Mitsubishi though.  For a spate of years there a Chrysler Sebring WAS a Mitsubishi.

          If spittle & tooth=vigor & youth Bill-O & Savage won't grow any older If wishes & dreams=bitches & beams We'll all live in skyscrapers bu

          by TooFolkGR on Fri Apr 10, 2009 at 07:30:13 AM PDT

          [ Parent ]

        •  Wow (2+ / 0-)
          Recommended by:
          Rayne, happy camper

          VW had legion problems with its wiring from 2001 until recently--they may be turning around. But those are some of the hardest problems to fix.

          This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

          by emptywheel on Fri Apr 10, 2009 at 07:30:23 AM PDT

          [ Parent ]

      •  It's not marketing with chrysler (2+ / 0-)
        Recommended by:
        Urizen, Arken

        It's quality. There's no reason on earth that a car with 40,000 miles should need a new transmission. If you google chrysler transmission problems, you'll come up with hundreds of pages of complaints. Chrysler blames the customers for all of them rather than taking responsibility for making a defective product. Same with the engine problem. Blame the customer  rather than fix the engine.

        "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

        by atlliberal on Fri Apr 10, 2009 at 07:18:38 AM PDT

        [ Parent ]

        •  Got a Chrysler in my garage (0+ / 0-)

          Has over 100K put on it over the last 3 years, and dammit, it's probably got another 100K in it to come.

          Means we'll be stuck with that yucky shade of grey-green my spouse picked out for years to come. But you know, people like you don't parrot about good quality in American vehicles; it's boring.

          There's a rule of thumb in customer service; a single bad customer experience yields 6 people who won't buy.

          I suspect that this is very much a marketing problem, because anybody with a bad transmission should have been treated better by the frontline persons who are the face of Chrysler, in order to prevent people complaining about a single quality problem from becoming 6 people who won't buy.

          •  I've owned American cars all my life (0+ / 0-)

            It's not just me, it's alot of other people. The car is defective and Chrysler won't back it up. Google it and you'll see. (2002 sebring transmission problem)

             I've owned Ford's and GM's in the past. I'm not one of those who parrots anything. I did the research and discovered that I bought a car that hundreds of other people have problems with. The engine is also in the Intrepid, so if that's what you're driving (we also own one of those) I'll bet you won't make it another 100,000 miles.

            My brother just traded in a Ford van with 400,000 miles on it.

            "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

            by atlliberal on Fri Apr 10, 2009 at 07:34:07 AM PDT

            [ Parent ]

            •  I did my research (1+ / 0-)
              Recommended by:
              emptywheel

              As did my spouse.

              Bought a 300 to replace the last 300 which went over 190K.

              But look at the damage you've done with your one comment about a Chrysler transmission.

              You had info about a GREAT Ford van that went 400K and it wasn't the first thing you brought up. (Jeebus, even I don't think much of Ford's vans!)

              If anybody reading this thread stopped reading at your first comment trashing Chrysler, they'd extrapolate and assume ALL Chrysler products were bad.

              Now let me point out for others who may not have been business students: Marketing is responsible for the 5 P's -- product, price, positioning, placement, promotion.  Obviously the product with a systematically bad transmission should have been dealt with earlier by Chrysler's marketing people, who should have demanded changes to manufacturing. Not doing so affects the other 4 P's, and allows that single customer with a bad experience to create 6 other lost potential customers. Big, BIG marketing problem at Chrysler, which still has the ability to make great quality cars.

              •  My point wansn't that ALL Chryslers are bad (1+ / 0-)
                Recommended by:
                theran

                My point is that Chrysler doesn't stand behind their products and when you have a problem with a defective product, they will blame you. It is impossible for ANY car company to avoid defects that don't show up until people start driving the car, but how they handle it makes a huge difference. Chrysler doesn't care how many people out there are dissatisfied with their treatment as customers, and that's a big part of why they are going bakrupt and Ford isn't.
                 I hope your new Chrysler is as good as your old one, because if it isn't you will have no recourse. They won't honor the warranty if they think they can get away with it.

                I brought up the Ford van last because the Diary was about Chrysler.My first car was my dad's old Lincoln with over 200k miles on it (which they guy who bought it from me 3 years later, drove for at least 10 more years)  You assumed from my comment that I was one of those people who put down american cars, and that's not true. I have told everyone who I've talked to  about car buying that I'd never buy another Chrysler because they won't stand behind their products. Chrysler doesn't care if I do that. If they did they would have treated their customers with more respect.

                Boy, I'm angrier about this than I thought I was. (I thought i was over it by now) I've been in sales for the last 20 years, and have always been able to honestly stand behind what I sold. One of the first things I learned in sales was that every happy customer will tell two people, every unhappy customer will tell ten. Chrysler has been in business long enough to have learned this lesson, but they are looking at short term costs and profit (as were most companies over the last 10 years) rather than their long term reputation.
                 

                "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

                by atlliberal on Fri Apr 10, 2009 at 08:11:04 AM PDT

                [ Parent ]

                •  Are you confusing two things? (0+ / 0-)

                  One of the other really big resets this country needs is where it assigns blame.

                  Are you, as many Americans do, blaming Chrysler for decisions which shareholders are ultimately responsible for?

                  You see, most of the problems we are facing right now, including the fraudulent activities of banks, goes right back to shareholders and owners.

                  As long as Chrysler was public, shareholders demanded yields quarter after quarter, year after year. Their private owners like Cerberus also expected the same.

                  If the mission of the top dogs in the organization isn't to make a quality car but to provide profits quarter after quarter, what do you think is going to happen?

                  Ditto for all other American car companies.

                  And when you look at it from that perspective, you can see why Ford isn't in exactly the same boat. The Ford FAMILY still has the ability to inject their own expectations into the company's operations, and they want their name to be respected. That changes entirely the steps one might take to making a profit for shareholders if a corporation has to do both.

                  •  Regardless of who is to blame (0+ / 0-)

                    If the mission of the company is short term profit at the cost of making a quality car,or denying defects to avoid paying for mistakes, then the company can't expect us to continue to buy their cars.

                    "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

                    by atlliberal on Fri Apr 10, 2009 at 09:10:38 AM PDT

                    [ Parent ]

                    •  And we can't expect miracles (0+ / 0-)

                      The American public got what it asked for of its car companies in so many ways; the Big Three really are a mirror image of us. We can't expect them to change on a dime when we have been demanding unreasonable outcomes. Just like the financial industry crisis, we bought into it, demanded more, never really asking why it was soooo damned easy to get credit or to buy a house.  

                      And nobody asked why the market kept going up, and up and up...

                      Nobody asked why it was far too easy to get a Hummer and write it off if you were a business person. Nobody asked why Corvettes became cult objects. The list goes on, bubble after bubble, cultural embed after cultural embed...

                      It's really easy to slap it down with a sneer and walk away when you don't recognize your own role in the process.

        •  Well My 1998 Chrysler Sebring (1+ / 0-)
          Recommended by:
          Rayne

          Went 189k miles on nothing but standard maintenance and one CV joint replacement.  Maybe you were just unlukcy?

          If spittle & tooth=vigor & youth Bill-O & Savage won't grow any older If wishes & dreams=bitches & beams We'll all live in skyscrapers bu

          by TooFolkGR on Fri Apr 10, 2009 at 07:32:29 AM PDT

          [ Parent ]

          •  It's the year (1+ / 0-)
            Recommended by:
            TooFolkGR

            There are several years that have this particular problem.

            "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

            by atlliberal on Fri Apr 10, 2009 at 07:34:46 AM PDT

            [ Parent ]

            •  Mid-90s Chryslers had awful paint problems, too, (1+ / 0-)
              Recommended by:
              atlliberal

              related to a switch in the painting process that threw fewer VOCs into the air. A good thing, except that the paint didn't adhere properly and came off in sheets.

              Eventually I got mine repainted. At 180,000 miles.

              Good car. No snark.

              As God is my witness, I thought turkeys could fly.

              by ticket punch on Fri Apr 10, 2009 at 07:40:19 AM PDT

              [ Parent ]

    •  This discussion is pointless to have (0+ / 0-)

      and only hurts people's feelings.  What's a long time coming is the realization of peak oil, that the consumer's balance sheet is as bad some SIV for buying mortgage-backed securities, that there are more cars than people with licenses, and that at least Honda and Toyota make cars that last 10 years.

      This basically means less sales, absent mass hysteria.  The D3 are just the manufacturers that are in the worst financial shape when the big contraction happened.

      "Dream for just a second and then do it!" -- Kolmogorov

      by theran on Fri Apr 10, 2009 at 08:06:04 AM PDT

      [ Parent ]

      •  Are you trying to shut down conversation? (0+ / 0-)

        You make a similar comment downthread.

        Because in this state it's the core of our economy; there's nothing we talk about which doesn't come back to this.

        It's bad enough to have some butthead tell me that American cars are "shitboxes" -- even thought the same kind of capital equipment makes both U.S. and foreign cars.

        But to have somebody tell me a discussion about killing off hundreds of thousands of jobs to let a bailed out bank have its way is pointless?

        Maybe you just need to use the Back button in your browser.

  •  I know I've said this before... (7+ / 0-)

    ...but here ya go: living in Michigan, we're never more than a stone's throw from the auto industry. I'm basically a hermit with very few friends, and yet in 30 seconds I can name ten of my friends and coworkers whose families depend on the auto industry for their livelihood. Everyone I know can do the same, name ten other people who work for one of the D3 or a Tier 1 supplier. We're not statistics. We're not "300,000 nameless, faceless people." We're people. Without the D3, we're broke and hungry people. We can push them to be better, but we can't let them die.

    What have you done today to make you feel proud?

    by PerfectStormer on Fri Apr 10, 2009 at 07:12:41 AM PDT

    •  Thanks, Stormy (5+ / 0-)

      One can't swing a stick in this state without hitting somebody who is in some way related to the auto industry.

      Nearly 10 million people, all entwined in this business.

      And I have to put up with people who don't live here or work in these businesses which serve not only the American automakers but FOREIGN automakers tell us that the stuff we make and support is "shitboxes."

      Ignorant. As if globalization had never happened.

  •  Our friends had a supply company (4+ / 0-)
    Recommended by:
    Rayne, global citizen, Youffraita, MsGrin

    they inherited from their parents and grandparents. In the last 5 years they went from 300 employees to 30 employees to bankruptcy.

    That company had been an important part of the local economy for over 100 years. They supplied GM before it was GM!

    You don't have to feel sorry for the heirs, it is their employees who are truly suffering.

    •  Yes, and we feel their pain (2+ / 0-)
      Recommended by:
      paul2port, Youffraita

      The employees and their circumstances have been part of the pillow talk in our house. We feel deeply the pain that they are going to have to bear; they are like family.

      I just wish we could have had something to pass on to our kids from this business. Not going to happen, not even a buck for the college fund.

  •  Prof. Ravi Batra of SMU (2+ / 0-)
    Recommended by:
    Rayne, global citizen

    has been saying that we would have done better to use stimulus money to (among other things) give consumers massive rebates for purchasing new cars... THAT would actually inject money into the economy rather than into coporate exec bonuses.

    For Kant, humility is the attitude that the moral agent's proper perspective on himself is as a dependent and corrupt but capable and dignified rational agent.

    by MsGrin on Fri Apr 10, 2009 at 07:20:13 AM PDT

    •  That idea originated (3+ / 0-)
      Recommended by:
      Rayne, happy camper, MsGrin

      with disgraced former Flint Mayor Don Williamson, who seems to think he's running for Governor of Michigan next year (despite the threat of indictment). Everyone said "Oooooh shiny!" until they realized Don's wife is a car dealer.

      What have you done today to make you feel proud?

      by PerfectStormer on Fri Apr 10, 2009 at 07:27:22 AM PDT

      [ Parent ]

      •  They have it in Germany now (2+ / 0-)
        Recommended by:
        Rayne, MsGrin

        I don't think it originated here at all.

        On the other hand, cars aren't subsidized normally in Germany.

        "Dream for just a second and then do it!" -- Kolmogorov

        by theran on Fri Apr 10, 2009 at 07:59:29 AM PDT

        [ Parent ]

        •  Yes, and it's not just the German car industry (2+ / 0-)
          Recommended by:
          theran, MsGrin

          Germans are highly protective of their markets. Non-German companies can't just sell anything they want there; they have to meet extremely specific standards which mask protections for other industries like their steel industry.

          I suspect this has been part of the reason why Germany has been reluctant to participate in global stimulus efforts, because doing so might be in conflict with protecting German industry even if in the long run it helped them.

          •  They have other reasons (0+ / 0-)

            Germans are culturally frugal, so no housing bubble.  They have built in triggers, like everybody taking fewer hours, to avoid mass unemployment, and a social safety net that is already stimulus-like.

            They also have an aging population and are resistant to immigration, so they don't necessarily expect their economy to expand far into the future.

            In other words, most of the reasoning that would apply here or in China wouldn't necessarily make sense for Germany.

            "Dream for just a second and then do it!" -- Kolmogorov

            by theran on Fri Apr 10, 2009 at 08:09:33 AM PDT

            [ Parent ]

    •  Not certain I agree (1+ / 0-)
      Recommended by:
      MsGrin

      I think that's only a part of the equation; there has to be a complete overhaul of the industry, in order to deal with the people upthread who insist that all American cars are "shitboxes."

      Until they see everything turned upside down, they won't be happy.

      I also think we do need a reset on our notion of transportation, and giving stimulus money in the form of rebates wouldn't accomplish this, might only encourage the kind of marketing feedback which brought us here.

      •  Am all for reprioritization and revisitation (0+ / 0-)

        and for better efficiency.  That said, having people buy cars would have still be more equitable than flushing the money into the pockets of the jerkwads who created the problem and think they are above the frey.

        For Kant, humility is the attitude that the moral agent's proper perspective on himself is as a dependent and corrupt but capable and dignified rational agent.

        by MsGrin on Fri Apr 10, 2009 at 03:41:28 PM PDT

        [ Parent ]

    •  predicted "The Great Depression of 1990." (0+ / 0-)

      So I wouldn't place too much stock in the professor's advice.

      As God is my witness, I thought turkeys could fly.

      by ticket punch on Fri Apr 10, 2009 at 07:41:10 AM PDT

      [ Parent ]

      •  He's predicting another one (0+ / 0-)

        for the end of this year.

        He's gotten a lot correct.  And certainly a lot MORE correct than some of the clowns running around now.

        For Kant, humility is the attitude that the moral agent's proper perspective on himself is as a dependent and corrupt but capable and dignified rational agent.

        by MsGrin on Fri Apr 10, 2009 at 03:42:45 PM PDT

        [ Parent ]

  •  There are some companies thinking (1+ / 0-)
    Recommended by:
    theran

    Outside the box. Tessla is one (even though they're expensive) and this is another one:

    Phoenix Motorcars

    Why couldn't these companies get some of the stimulus money or get money to buy one of the failing auto makers to merge their technology with the old company's mass marketing capability?

    "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

    by atlliberal on Fri Apr 10, 2009 at 07:23:42 AM PDT

    •  Take a close look at Tesla (3+ / 0-)
      Recommended by:
      happy camper, TooFolkGR, ticket punch

      Doesn't it seem very odd to you that a firm with such a great product has struggled to find a production facility? And is now going to build one in New Mexica, where water will be a challenge?

      A lot of people are easily distracted by the novelty and are not doing real due diligence into these new firms.

      •  Elon Musk is the new Preston Tucker. n/t (1+ / 0-)
        Recommended by:
        Rayne

        As God is my witness, I thought turkeys could fly.

        by ticket punch on Fri Apr 10, 2009 at 07:41:40 AM PDT

        [ Parent ]

      •  The people who (1+ / 0-)
        Recommended by:
        Rayne

        pump up Tesla as the answer are the same ones who say the Volt is too expensive.

        "All that serves labor serves the nation. All that harms labor is treason. -Abraham Lincoln

        by happy camper on Fri Apr 10, 2009 at 07:53:23 AM PDT

        [ Parent ]

        •  Still waiting for people to clue in (0+ / 0-)

          Lithium battery technology is highly problematic.

          Toyota killed development of a lithium cobalt product after investing years of R&D because the damned thing had a nasty habit of blowing up.

          (Rather like the problem with the EV-1 which people who deify EV-1 conveniently ignore.)

          Supply of lithium is a bigger problem; 50% of the supply is in Bolivia, making the source problem even more challenging than relying on oil from Saudi Arabia.

          Pumping up Tesla isn't going to make any of this go away, only defers the problem.

          •  Ironically (0+ / 0-)

            You are basically arguing for pressing the panic button and spending all the bailout on reshaping American geography not to needs cars so much.  I agree.

            "Dream for just a second and then do it!" -- Kolmogorov

            by theran on Fri Apr 10, 2009 at 08:02:20 AM PDT

            [ Parent ]

            •  There needs to be a reset (1+ / 0-)
              Recommended by:
              theran

              Of that I have no doubt; Americans were far too eager to snap up Hummers, as just one example, for far too long.

              And without some reset, there would simply be a shift towards lithium battery powered Hummers, instead of pushback against that model.

              But without some orderly path back, wherein our manufacturing and innovation is preserved while generating new products, we'd be totally at the whim of foreign companies which are decades ahead of startups like Tesla.

              Forcing Chrysler into bankruptcy is only going to feed this cycle of economic contraction, making it more difficult to fund the kind of hurry-and-catch-up R&D we need to build a different kind of transportation system -- including cars where appropriate.

              Just look at the announcement this past week by GM and Segway about the two-seater transport; I doubt that would have happened without this economic reset, but forcing an economic collapse will altogether kill that kind of promise.  

              Especially when you realize that Chrysler's suppliers = GM's suppliers = Toyota's suppliers and so on; there will be dramatically fewer suppliers to build that fledgling technology if we can't figure out how to make this transition orderly.

              •  I agree about the path dependence issues (0+ / 0-)

                and about electric cars, which have the appearance of putting off the inevitable more than a real solution.

                On the other hand, we got where we are because two politically powerful groups (the autos and their lenders) had a failure of imagination and very large implicit subsidies.  If the IMF came to the US right now, it would definitely demand that control be wrested away from these people.

                I can't think of another way to send the message to the execs and PE guys but to give them the choice of:

                1. Take a haircut and Obama's $6B bailout.
                1. Take your chances in court.

                Clearly they should choose 1, but short of nationalization, they can only be induced.

                "Dream for just a second and then do it!" -- Kolmogorov

                by theran on Fri Apr 10, 2009 at 08:19:34 AM PDT

                [ Parent ]

                •  No taking chances in court (0+ / 0-)

                  You see, JP Morgan Chase already knows the rules of the game.

                  Bankruptcy court has a structure they are quite familiar with, and secured creditors come first before everybody else. Period.

                  That's not a gamble, that's a sure thing.

                  •  If it was a sure thing (0+ / 0-)

                    they would take equity, no?

                    "Dream for just a second and then do it!" -- Kolmogorov

                    by theran on Fri Apr 10, 2009 at 08:37:51 AM PDT

                    [ Parent ]

                    •  No. (0+ / 0-)

                      The first option IS the equity option.

                      But they have to take a haircut by taking equity.

                      They don't get a dollar-for-dollar debt-for-equity swap.

                      Seems rather stupid to me that they wouldn't do it, because they are getting Chrysler's distribution channel and Fiat's new vehicles at a discount. The new cars Fiat will be offering in the next 2 years are likely to be hits here.

          •  Supercapacitors will (0+ / 0-)

            be the answer to the battery issue.

            "All that serves labor serves the nation. All that harms labor is treason. -Abraham Lincoln

            by happy camper on Fri Apr 10, 2009 at 08:14:21 AM PDT

            [ Parent ]

        •  Given it can be produced in sufficient quantity; (0+ / 0-)

          the Tesla S will use the Chevy Volt to mop the floor.

      •  Not really (0+ / 0-)

        As you GM boosters are fond of saying, production of complicated things is really complicated. Turning an intellectual property company into one with its own manufacturing lines isn't easy.

        "Dream for just a second and then do it!" -- Kolmogorov

        by theran on Fri Apr 10, 2009 at 08:01:04 AM PDT

        [ Parent ]

  •  No doubt about it (0+ / 0-)

    The domino effect is going to cause a LOT of pain
    for the down line parts suppliers. If the domestic
    carmakers survive, they will definitely be much
    smaller than they are now.
    I know that means a lot less jobs for the little people.
    Not good News.

    I could write an encyclopedia sized comment talking
    about how we got here and who is to blame. That has
    become irrelevant. We Are Here. The real question
    has become "How do we Fix it?"

    While Bankruptcy would be quite painfull, it would
    allow the Domestic Carmakers to restructure. That
    restructuring is LONG overdue. That includes the
    multiple levels of redundant management and the
    BLOATED white-collar salaries.

    •  BK (1+ / 0-)
      Recommended by:
      Rayne

      Nice thought, and potentially true with GM, which will have US support through BK.

      But Chrysler's BK will be a liquidation, not least bc it's not going to have DIP.

      One of the better case scenario is that DongFeng buys Jeep, and takes 10 years or so to move design and production to China, leaving the existing workers on Jeep in place in the interim (but trashing the UAW contract).

      Of course, from that point forward, every car maker would be competing with Chinese assembled cars in the US, which would be a problem even for the Japanese to compete with, if China can sustain Jeep's brand.

      This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

      by emptywheel on Fri Apr 10, 2009 at 07:43:08 AM PDT

      [ Parent ]

  •  Once upon a time (2+ / 0-)
    Recommended by:
    Rayne, Fedallah

    each carmaker made virtually all their own parts. Now, none of them do.

    Instead, all the various parts of the vehicles are made by independent suppliers. The workers at these facilities earn less than half the wages of a GM worker, but that's another subject. These are the same suppliers that make parts for Toyota, Honda, and all the rest who assemble cars in the US. If they go down, every manufacturer--not just GM and Chrysler, but ALL of them--will be crippled.

    The results will be catastrophic, for the entire country, not just Michigan.

    "All that serves labor serves the nation. All that harms labor is treason. -Abraham Lincoln

    by happy camper on Fri Apr 10, 2009 at 08:10:55 AM PDT

  •  Trying To Help (1+ / 0-)
    Recommended by:
    Rayne

    I have just signed up for a local credit union, and will be transferring my funds from Chase today. Chase will get a letter explaining why I am leaving. Hopefully this will not be too late for you.

    T.

    "There are four boxes to be used in defense of liberty: soap, ballot, jury, and ammo. Please use in that order." -- Ed Howdershelt

    by troutwaxer on Fri Apr 10, 2009 at 08:59:04 AM PDT

    •  Not too late (1+ / 0-)
      Recommended by:
      troutwaxer

      There's still a couple of weeks left for the players involved to negotiate -- at least where Chrysler's involved.

      For my spouse's firm, unless one of the other companies who've submitted RFQ's makes a purchase inside the next couple of weeks, it's a no-go.  

      But the chances of this being a permanent shutdown increase with a liquidation of Chrysler.

      Thanks for taking action, it's appreciated.

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