Bailout debate: How the Big 3 came apart and how to fix them - Nov. 17, 2008
NEW YORK (CNNMoney.com) -- Why is the U.S. auto industry in such a precarious position? That question - and answers to it - will animate the debate this week over whether Washington should extend a lifeline to the Big Three. (For more, read Auto bailout: Showdown in Washington.) There are extreme answers at both ends. Either way, it's easy to see why so many people are troubled at the prospect of rewarding the automakers' management and workers with billions of taxpayer dollars. But the problems that have put General Motors (GM, Fortune 500) on the precipice of a bankruptcy filing, and left Ford Motor (F, Fortune 500) and Chrysler not far behind, are complicated. Why they are in this mess Years of market share losses by the Big Three are a major part of the problem. Another blow came earlier this year in the form of record high gas prices, which cut deeply into demand for pickups and SUVs. For years, pickups and SUVs brought strong sales and high profit margins.
Failure of Big Three could cost 3 million jobs, CAR says - Nov. 5, 2008
NEW YORK (CNNMoney.com) -- With auto sales at the weakest pace in 25 years and a government bailout far from certain, job losses in the struggling industry could potentially get much worse. If the Big Three carmakers were to cut U.S. operations by 50%, 2.5 million jobs could be lost in 2009, according to a study released Wednesday. The Center for Automotive Research reported that the total employment impact includes nearly 250,000 jobs lost at the automakers and nearly 800,000 at suppliers. In addition, the organization estimates another 1.4 million job losses outside the industry, such as those caused when stores go out of business in communities hit by plant closings. In economic terms, cutting operations in half would reduce personal income by more than $125.1 billion in the first year, and $275.7 billion over three years, the center said. But a larger fear is a complete shutdown.
Auto sales down sharply again in October - Nov. 3, 2008
NEW YORK (CNNMoney.com) -- Tight credit and worried consumers resulted in the weakest pace of U.S. auto sales in 25 years. Although gas prices fell significantly during the course of the month, they weren't enough to lure buyers back to dealer showrooms. Auto executives complained about the worst environment for sales since the severe recession in the early 1980's, if not longer. Mark LaNeve, the General Motors vice president in charge of sales in North America, said that when adjusted for population growth, October represents the worst month for U.S. auto sales overall since the end of World War II. According to preliminary figures from industry sales tracker Autodata, the seasonally-adjusted annual sales rate plunged to 10.6 million, the worst reading since February 1983. By way of comparison, this figure was 16 million a year ago and 12.5 million in September this year. But the CEO of auto industry sales tracker Edmunds.com said there is some hope that October may be as bad as it gets.
Detroit at the White House: Trump meets with Big Three auto CEOs - Jan. 23, 2017
In opening remarks to the press, Trump claimed he was already "bringing manufacturing back to the United States big league." He didn't talk about his threats to impose tariffs and border taxes on goods brought in from Mexico. Instead, he talked about incentives that would get automakers to build here, such as reduced corporate tax rates. The CEOs stayed at the meeting about an hour. Ford CEO Mark Fields praised the new administration as they left. "As an industry we're excited about working together with the president and his administration on tax policies, on regulation and on trade to really create a renaissance in American manufacturing," he said. He specifically praised Trump's decision to pull out of the TPP trade deal, which Fields said did not do enough to address currency manipulation, a major concern for U.S. automakers. But the auto industry is concerned about Trump's threat to impose a 35% tax on imports from Mexico to the United States.
A new Detroit: Can the Motor City come back?
ONE of this week's big American news stories was the release of new Census data for the state of Michigan, which revealed that the city of Detroit underwent a stunning population decline between 2000 and 2010. Detroit shrank by 25% during the decade, and its population fell to its lowest level since 1910—before the era of Big Three dominance. The city seems to be locked in a death spiral. But could there be a light on the horizon? Auto industry executives are trying to make Silicon Valley engineers feel at home in Detroit. Indeed, tech employment has been rising quickly in Detroit. Well, there are a few points to make. I think it's a little disconcerting that so much of the hiring seems to be driven by carmakers. This is one place where Detroit is at a significant disadvantage thanks to the condition of its broader economy. On the other hand, Detroit's ridiculously low costs are an advantage: Sure, Detroit salaries are 40% lower than Silicon Valley pay.
The rise and fall of Detroit: A timeline
Sign Up for Our free email newsletters On Thursday, Detroit made history — and not in a good way. The heart of the U.S. auto industry and home to the Detroit Tigers, Eminem and the White Stripes, Motown, and (maybe) Jimmy Hoffa's body became the largest city ever to file for bankruptcy. July 24, 1701Antoine de La Mothe Cadillac establishes a French settlement, Fort Ponchartrain du Détroit (the strait), along with 100 French soldiers and an equal number of Algonquins. 1760Britain wins the city from the French. 1796U.S. forces capture Detroit from the British. Feb. 1, 1802Detroit becomes a chartered city, covering about 20 acres. 1827Detroit adopts its forward-looking city motto: Speramus Meliora; Resurget Cineribus (We hope for better days; it shall rise from the ashes). 1850Bernhard Stroh opens Stroh Brewery Company. The Stroh Brewery Company, circa 1864. June 4, 1896Henry Ford test drives his first automobile on the streets of Detroit. 1899Ransom E. 1959Berry Gordy founds Motown Records.
Cookies are Not Accepted - New York Times
“The auto industry supports one of every 10 jobs in the United States,” Gov. Jennifer M. Granholm of Michigan wrote in a CNN.com plea for a bailout of Detroit’s Big Three. The day before, she told “The Early Show” on CBS that “this industry supports one in 10 jobs in the country,” adding, “If this industry is allowed to fail, there will be a ripple effect throughout the nation.” Many others have used the same statistic. That’s a scary figure.
The Detroit Bankruptcy
The Detroit Bankruptcy The City of Detroit’s bankruptcy was driven by a severe decline in revenues (and, importantly, not an increase in obligations to fund pensions). Depopulation and long-term unemployment caused Detroit’s property and income tax revenues to plummet. The Shortfall Detroit’s emergency manager, Kevyn Orr, asserts that the city is bankrupt because it has $18 billion in long-term debt. Cash flow crisis. In a corporate bankruptcy, the judge takes stock of a company’s total assets and liabilities because the company can be liquidated and all its assets sold to pay down its debts. This means that Detroit is bankrupt not because of its outstanding debt, but because it is no longer bringing in enough revenue to cover its immediate expenses. Total outstanding debt. Not only is the $18 billion outstanding debt figure irrelevant to Detroit’s bankruptcy, it is also misleading and inflated. Revenue Detroit has been in a state of decline for several decades. Tax revenue. Expenses
