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AUTO INDUSTRY : KRUGMAN SEES LITTLE HOPE

 
 
Reply Sun 7 Dec, 2008 11:50 am
speaking to reporters in stockholm , sweden , paul krugman has little hope that the U.S. automobile industry will survive .

my questions are :
- is there no place for any kind of automotive manufacturing left in the U.S. (and canada ) ?
- will mexico still have a "rump" automobile industry to supply cars to the U.S. and canada ?
- is there any place for truck manufacturing left in north-america ?
- if the answer is NO to all three questions , will the millions of people employed in the automobile manufacturing and associated businesses be able to find work in other (established or new) industries or will they essentially become unemployed or live a marginal existence ?
- will north-america's economy go from a recession into an unstoppable downward spiral ?

anyone being able to predict the outcome correctly should qualify for a nobel prize .
hbg


Quote:
Krugman: US auto industry will probably disappear
By MALIN RISING " 5 hours ago

STOCKHOLM, Sweden (AP) " Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.

"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."

Krugman won the 10 million kronor (US$1.4 million) Nobel Memorial Prize in economics for his work on international trade patterns. Some of his research on economic geography seeks to explain why production resources are concentrated in certain locations.

Speaking to reporters three days ahead of the Nobel Prize ceremony, Krugman said plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."

Facing massive job losses, the White House and congressional Democrats are negotiating a deal to provide about $15 billion in loans to prevent the weakened U.S. auto industry from collapsing.



link : http://www.google.com/hostednews/ap/article/ALeqM5iTDu0_1uS4AJHEN10aFE75hDSZFQD94TS8KO4
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Type: Discussion • Score: 7 • Views: 3,003 • Replies: 30
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hawkeye10
 
  1  
Reply Sun 7 Dec, 2008 12:09 pm
let's review shall we?

no money
massive debts
incompetent management
so-so engineers
so-so to poor design team
mostly out dated factories
high priced labor
a parts industry that has been abused for well over a decade with enforced microscopic profit margins thus a relentless lowering of wages
a complete lack of any development of new technologies or improvements on old technologies
lack of political support due to decades of bone headed management decisions
a history of producing poor product, or at best product that is not the best for sale


how does this industry survive? The only way it could is with massive government intervention, which is illegal under international trade laws.
cicerone imposter
 
  1  
Reply Sun 7 Dec, 2008 01:38 pm
@hawkeye10,
I agree with your list; also, this economic crisis means less car sales. Any infusion of cash means nothing when any factory cannot sell their product(s).

That's the bottom line. Maybe in five to ten years, the economic landscape would have changed for new auto factories to sprout up around North America, but not for many years. Those in existence today should be allowed to go bankrupt. All those auto related businesses should also go bankrupt; taxpayers should not be held hostage to any one industry during this economic crisis around the world.
0 Replies
 
hamburger
 
  1  
Reply Sun 7 Dec, 2008 01:53 pm
anyone foresee an increase of welfare receipients ? soupkitchens ?

http://www.businessweek.com/ap/financialnews/D94LC7VG0.htm

will this become common ?


Quote:
PLATTEVILLE, Colo.

A farm couple got a huge surprise when they opened their fields to anyone who wanted to pick up free vegetables left over after the harvest -- 40,000 people showed up.

Joe and Chris Miller's fields were picked so clean Saturday that a second day of gleaning -- the ancient practice of picking up leftover food in farm fields -- was canceled Sunday.

"Overwhelmed is putting it mildly," Chris Miller said. "People obviously need food."

She said she expected 5,000 to 10,000 people would show up Saturday to collect free potatoes, carrots and leeks. Instead, an estimated 11,000 vehicles snaked around cornfields and backed up more than two miles. About 30 acres of the 600-acre farm 37 miles north of Denver became a parking lot.

cicerone imposter
 
  1  
Reply Sun 7 Dec, 2008 01:58 pm
@hamburger,
When soup kitchens began to see donors becoming recipients in their food lines, that foretold of things to come - for the long haul.
hawkeye10
 
  1  
Reply Sun 7 Dec, 2008 02:03 pm
@cicerone imposter,
I think soup kitchens will be big, the food bank system does not work as well. Soup kitchens are more efficient with use of product and labor, Those in need of food to live will understand that their desire to prepare their own food to their own liking can not be supported when so many need to be fed.
0 Replies
 
Butrflynet
 
  1  
Reply Sun 7 Dec, 2008 02:05 pm
I would amend it to say the petroleum-powered auto industry has little hope of survival.

If the auto industry wants to have some form of business enterprise in the U.S., they need to immediately adopt, adapt and recreate their industry based on non-petroleum energy. If there is any tax payer money loaned to the industry it should be for that purpose and nothing else.

That may mean that the industry has to shut down for a couple years to preserve the capital it has left while it retools. This is as good a time as any since no matter what happens, they will be restructuring and laying off massive numbers of workers.

The government should provide some incentive and competition to get the conversion done and done quickly. Sponsor contests much like those in the days of the Wright Brothers and space travel's Ansari X Prize and set a deadline as a goal to meet much like Kennedy did with the moon missions.

cicerone imposter
 
  1  
Reply Sun 7 Dec, 2008 02:09 pm
@Butrflynet,
That simply will not work with the same management. It has to be a complete retooling of management and products.
0 Replies
 
hawkeye10
 
  1  
Reply Sun 7 Dec, 2008 02:16 pm
@Butrflynet,
The only thing out there right now is hybrid and electric. The auto companies don't have the money for either so if the tax payers are going to fund the research then the taxpayers need to own the patients. We are not going through the drug mess again, where taxpayers fund the research and then we get socked with huge drug bills as the corporate class gets rich because they can charge as much as the market will bear because they ended up owning the patients. I don't think we taxpayers have any need for the current companies, let them go bust, set up a government research project ala the Manhattan Project, and then sell of the rights to production to the highest bidder.

If we do electric then we also need a rebuilt electric generating industry and a new transmission system. But that is another story.
0 Replies
 
cicerone imposter
 
  1  
Reply Sun 7 Dec, 2008 02:18 pm
From AP:

Quote:
CHICAGO " President-elect Barack Obama announced support Sunday for a short-term government bailout of the nation's carmakers that is tied to industry restructuring. He also accused auto executives of a persistent "head-in-the sand approach" to long-festering problems.

Obama said Congress was doing "the exact right thing" in drafting legislation that "holds the auto industry's feet to the fire" at the same time it tries to prevent its demise.

In an appearance on NBC's "Meet the Press" and later at a news conference, Obama at one point suggested some executives should lose their jobs.

One leading Democrat in Congress, Sen. Christopher Dodd of Connecticut, was far blunter. Rick Wagoner, the chief executive of General Motors Corp., "has to move on," said Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee.
gungasnake
 
  1  
Reply Sun 7 Dec, 2008 02:23 pm
The only meaningful shot there is at electric cars is the super capacitor idea which, at present, is starving for funding.
0 Replies
 
hawkeye10
 
  1  
Reply Sun 7 Dec, 2008 02:28 pm
@cicerone imposter,
Wagoner is the poster child for all of the insanely overpaid incompetent CEO around. But you know what? there was a board of directors who hired him, paid him, and let him stick around. Let's blame the people who are at fault here.
cicerone imposter
 
  1  
Reply Sun 7 Dec, 2008 02:41 pm
@hawkeye10,
There's many like him - in most industries in the US. Overpaid and incompetent; most are failures, but are rewarded handsomely in both pay, benefits, and golden parachutes. This has to end, so that the middle class workers get paid more.
0 Replies
 
JLNobody
 
  1  
Reply Sun 7 Dec, 2008 10:19 pm
@Butrflynet,
I agree with Butrflynet. Survival of the auto industry and its employees demands adaptability. They must alter--"reinvent"--themselves. And society--and its government--should encourage and support such efforts.
maporsche
 
  1  
Reply Sun 7 Dec, 2008 10:54 pm
@JLNobody,
Yes, encourage and support.....but not BORROW and FINANCE.
0 Replies
 
Thomas
 
  1  
Reply Mon 8 Dec, 2008 10:43 am
@hamburger,
hamburger wrote:
- is there no place for any kind of automotive manufacturing left in the U.S. (and canada ) ?

I'd say there is. Foreign-owned companies have manufacturing plants in the US. Generally they seem to be doing okay -- well enough, anyway, to survive without bailouts for now.

Hamburger wrote:
will mexico still have a "rump" automobile industry to supply cars to the U.S. and canada ?

I don't see why not.

Hamburger wrote:
- is there any place for truck manufacturing left in north-america ?

Again, I don't see why not.

Hamburger wrote:
- if the answer is NO to all three questions , will the millions of people employed in the automobile manufacturing and associated businesses be able to find work in other (established or new) industries or will they essentially become unemployed or live a marginal existence ?
- will north-america's economy go from a recession into an unstoppable downward spiral ?

Not applicable. I don't think the anser to all of the three first questions is "no".
hamburger
 
  1  
Reply Mon 8 Dec, 2008 02:40 pm
@Thomas,
thomas wrote :

Quote:
hamburger wrote:
- is there no place for any kind of automotive manufacturing left in the U.S. (and canada ) ?

Quote:
I'd say there is. Foreign-owned companies have manufacturing plants in the US. Generally they seem to be doing okay -- well enough, anyway, to survive without bailouts for now.




most - if not all - of the foreign car manufacturers in the U.S. have had quite sizeable "incentives" from state governments - at taxpayers expense .
in canada too , toyota has received generous "support" from the ontario government - and so have the big three .
they all seem to be able to milk the taxpayer for their own benefit .

this seems very much like a "dog eats man" story - each state fights the other states by feeding the hungry dog .
hbg

just a small sampling of "incentives" :

http://www.al.com/business/birminghamnews/news.ssf?/base/business/1227258990325230.xml&coll=2

alabama pays up :

Quote:
In the past 15 years, Mercedes-Benz, Honda and Hyundai have together received more than $873 million in incentives to locate in the state and expand their operations. Those assembly plants represent a combined investment that tops $3.8 billion and supports an industry that employs more than 134,000 people statewide.

..............................................................................................................

http://www.huffingtonpost.com/jane-hamsher/what-about-the-government_b_148380.html?page=2

bailout for foreign automakers ?

Quote:
The current Detroit bailout debate has the Washington source-dependent press corps reporting that the Michiganders are seeking favors, but not the Alabama/South Carolina/Tennessee/etc. crowd, ignoring the huge state subsidies to foreign-owned auto plants, the implicit subsidy in federal law that makes union organizing almost impossible and the advantage that new plants have over older ones. I get sooooo frustrated at the awfulness of so much DC coverage.....which could be cured by actually reading the voluminous public record, resulting in less reliance on access to sources.

.......................................................................................................

http://www.goodjobsfirst.org/corporate_subsidy/automobile_assembly_plants.cfm

let the goood times roll !

Quote:
In 1992 South Carolina ushered in the new wave of investment by foreign carmakers in the South by offering BMW a package that was ultimately worth an estimated $150 million. A decade later, the state put up an additional $80 million in infrastructure aid when BMW decided to expand its operations in the state.


In 1993 officials in Alabama lured a Mercedes-Benz facility, the first foreign auto plant in the state, with a package worth $258 million.


In 1999 Alabama put together a $158 million subsidy deal to land a $400 million, 1.7 million-square-foot Honda plant. In 2002 state and local officials provided an additional package worth $90 million, including $33 million in tax breaks over 20 years, when Honda decided to expand the facility.


In 2000 officials in Mississippi lured a $950 million Nissan plant with a $295 million subsidy deal. While the plant was still under construction, the company announced an expansion of the project that also involved an increase in the subsidy package to $363 million.


When South Korean carmakers Hyundai staged a competition for a $1 billion plant, various states put together bids, but it was Alabama that won the contest in 2002 with a package worth $252 million.


Commentators much made of the fact that when Toyota chose San Antonio, Texas in 2003 as the location for an $800 million assembly plant, the company had not selected the site with the most generous subsidy package. In another example of the fact that subsidies are not the most important factor in investment decisions, Toyota highlighted criteria such as access to the large Texas market for the pickup trucks that would be built at the plant. This is not to say that Toyota passed up all government assistance. The company received a package valued at $133 million, including $47 million in tax phase-ins and waived fees.

......................................................................................................

http://www.premier.gov.on.ca/news/Product.asp?ProductID=478

ontario premier offers $70 million chump change to toyota

Quote:
Ontario is providing $70 million to support skills training and infrastructure at the new Toyota plant. The government’s auto sector investment strategy has attracted more than $4.5 billion in new automotive investment in just 18 months.

"By supporting our people, by investing in their health, their skills, and their prosperity, we’re making Ontario the place to be," said Premier McGuinty.

"It’s the place for progressive, innovative and successful companies like Toyota " companies that are looking for the best people doing their best work."

Toyota’s state-of-the-art new production facility in Woodstock is the first greenfield plant in Canada in more than a decade.

...................................................................................................
cicerone imposter
 
  1  
Reply Mon 8 Dec, 2008 03:04 pm
@hamburger,
You're approaching this government debacle to bailout the big three in Detroit in the most practical way; it doesn't make any sense for the feds to bailout already dead animals. Car companies without all the handicaps of the big three will survive much better, more efficiently, and for much longer - without taxpayer bailouts.

The feds are now talking about all the Detroit car makers must lose their CEOs for any bailout; but that doesn't solve the inherent problems of the out-dated factories, the workers's higher pay and benefits, and the over-all higher cost of making a car.

All the bailout does is delay the obvious; bankruptcy.
hamburger
 
  1  
Reply Mon 8 Dec, 2008 04:00 pm
@cicerone imposter,
if the foreign automakers can build factories with "state incentives" , why are those "state incentives" not given the big three (or even one) to build a NEW factory from the ground up .
there must be some value in the land and other assets that could be sold by the the big three to build at least ONE NEW FACTORY ?
it should also save a bundle on unemployment insurance benefits and welfare payments .
the rest of the working americans might have a hard time keeping the unemployed auto workers from starvation - or will they be asked to move to mexico as a reverse "immigration" ???
hbg
maporsche
 
  1  
Reply Mon 8 Dec, 2008 04:14 pm
@hamburger,
When was the last time the big 3 built a factory?

All the incentives in the world mean nothing if the big 3 don't need another factory.
 

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