Chapter 11 Threat for Big 3

WWJ Radio ^ | 7-5-2008 | Ed Coury

[Westlander]

The Wall Street Journal reports that the stagnant economy and spiraling commodity prices have brought back the specter of a Chapter 11 bankruptcy filing for a Detroit Three automaker – especially for General Motors.

Market prices for GM's credit-default swaps imply a greater risk of bankruptcy for GM than for Ford, according to the Journal report, and the smaller car maker also now sports a stock-market value almost 50 percent higher than GM's.

[Westlander]

Nothing was learned from the '70s Arab oil fiasco.

[ripley]

“nothing was learned from the ‘70’s arab oil fiasco.”

the fifth column is in the city.

[RU88]

Why does it seem that the U.S. car companies are continually behind the curve when it comes to innovation and predicting market forces? We've got $4 gas and they keep pumping out SUV’s and trucks!? Just look at the new cars you see on the road today. I know at least where I live here in the Philly suburbs all you see now in the way of new cars are small. Suggestion to the Big 3: Build a solid small car that's dependable and good on gas at an affordable price and you'll be building more plants, not closing them.

[Leisler]

Who cares? Honda, Kia, Audi, etc will solve the problem. Anyone miss Magnavox or Admiral TVs?

The only thing that suck is the federal bailouts of union pensions, federal taxes going up to fund thieving local and city political hacks and their contractor friends with 'assistance'.

[caseinpoint]

Shoot. I thought (hoped) it was talking about the networks.

[pburgh01]

Well Detroit is going through what we did here in Pittsburgh from the Mid 70’s to the early 90’s with the steel and glass biz. They did it to themselves, all due respect to the closet socialist Michael Weiner and Weiner Nation if the big 3 can’t out compete the imports they deserve it. Yea I know Japan dumps cars below market price to kill our automakers, The Pat Buchanan Protectionist wing has been floating this crappola since the 80’s. GM has been getting real about the Volt and changing direction is a step in the right path, out innovate your competition. I saw that Toyota or Honda is not even near retooling for a plug in electric yet. Maybe GM can change the calculus here and make the 35 MPG Civic look like a gas guzzler.

[pierrem15]

Because of stupid contract decisions with the UAW they cannot make enough money from small cars to cover their costs. This also cuts into R&D and new plant and equipment.

Excess cost in a highly competitive market results in an economic death spiral as the company has less and less cash for R&D and new equipment, becomes less & less competitive, lays people off & gets whacked with high unemployment taxes, etc.

The Big 3 only survived the 70's and 80's because of corporate bailouts (like Chrysler) or 'voluntary' import restrictions like those negotiated by Reagan with the Japanese.

The last technically innovative period I can think of in the US auto industry vis a vis the foreign competition was in the 50's and 60's.