Flaherty Says No to Chrysler & Hargrove

[Amazing Atheist]

You view it as a debt. Fine.

But how would you describe a young couple that walks out of a credit union with their first mortgage and into their first home?

You take out a mortgage on a home you are in debt. You then have to pay off that debt and if you can't you lose everything.

The credit union lends to them because they're a good investment choice. They're young, energetic, have potential and have a track record. Such is the US on the world stage

Not entirely China has recently stated that the are becoming weary of the US economy. It won't be long before the nations giving the US money for government bonds restrict what they lend the US due to it's shaky economy and shrinking dollar.

The world is shipping its stuff to the US and accepting financial claims in return because the US is the best place to invest on the planet.

According to whom the US, I'm sorry I won't play a game I don't think I can win and I don't think for the long term that the US is a winner. India, Japan, China, Canada among other nations are becoming the new big power players in the worlds economy.

All things considered, it offers the best potential returns. When someone lends you money, it's a statement of their confidence in you. In the case of the US, there's a little more than confidence involved. The foreigners are not doing to be nice. They know that they'll get a good return - better than they can get elsewhere.

Or maybe they all know it's a matter of time before they bankroll the White House. Endless spending is not a wise or sustainable practice for all parties involved. The debt is at what now in the US almost 9 trillion dollars! That is some heavy debt right there.

[bush_cheney2004]

According to whom the US, I'm sorry I won't play a game I don't think I can win and I don't think for the long term that the US is a winner. India, Japan, China, Canada among other nations are becoming the new big power players in the worlds economy.

Interesting...so when will divesting begin? How long to wait for the "new big power players"? How much of Canada to continue selling to both? The reality is that Canada will play the "game" the way it is dealt, because it has never been the dealer.

Edited November 4, 2007 by bush_cheney2004

[Topaz]

In the US the UAW has made concessions to the auto companies to cut costs - eg, two-tier wages.

Buzz has said he won't along. Uh-huh?

That's not totally true. I know a trucking company that the guys did just that to save their jobs! They gave up COLA, took a pay cut, so new workers make only half of what the older guys do, took a hit on their fringe benefits etc. The company will still make threatens of pulling out of country to get what they want. The CAW is important to the communities in which they live. They make big donations to charities like the United Way.

[Guest American Woman]

You view it as a debt. Fine.

But how would you describe a young couple that walks out of a credit union with their first mortgage and into their first home?

You take out a mortgage on a home you are in debt. You then have to pay off that debt and if you can't you lose everything.

If you can't pay off the mortgage, you sell the house. Since the mortgage is for less than the value of the house, you hardly "lose everything." Since the value of homes goes up, most likely you've gained.

[geoffrey]

I agree that provinces need to lower their tax rates as well. However, I don't think a 3% margin with the U.S. is enough incentive for businesses in Canada. It needs to be lower still. Moreover, the U.S. is going to lower their corporate taxes again shortly so we will have to move down even more to compete.

The US rate is 35% and the Canadian rate is currently 22.1% and moving to 15%.

Where are you getting this 3% number?

[Wilber]

I'll agree with Hargrove on one point, Japan and Korea are very protectionist when it comes to their auto industries and more should be done to remove obstacles they put in the way of foreign products.

[geoffrey]

I'll agree with Hargrove on one point, Japan and Korea are very protectionist when it comes to their auto industries and more should be done to remove obstacles they put in the way of foreign products.

Asians aren't going to buy low end GM cars. Canadians don't even anymore.

There is actually no real reason to buy domestic anymore. Japanese provide better value and Euros provide better performance/luxury. So for whatever your looking for, there is a much better non-domestic solution to your needs. Why would I spend a comparable amount on a Cobalt rather than buy a Corrolla? Why would I buy a base model Cadillac for the same price as a reasonably equiped BMW?

This shows rather clearly in sales numbers.

The only possible reason to buy American is pickup trucks. Even then, Toyota is cutting into that market with the Tundra and Tacoma... in my opinion the best two trucks on the market.

[old_bold&cold]

If Chrysler wants to stop having to lay off people they can do it themselves simply by being the first North American manufacturer to make Canadian prices comparable to the USA prices. It would give them much good will and increase demand for their products. Instead they want hand outs? Hargrove is not the sharpest knife in the drawer and has not earned his pay for quite some time. There is an opportunity for any of the car manufacturers to do this and be the one who the Canadian public will look at as being fair in their trades etc.. This will be better then any amount of money the government can give them.

So Buzz if you want to stop the lay offs, give the manufacturers the best possible deal on workers and the car companies, be the first to give parity on pricing to the public and you will have then the demend to keep the workers working. It is all up to you, and quit looking for hand outs.

[bush_cheney2004]

Asians aren't going to buy low end GM cars. Canadians don't even anymore.

There is actually no real reason to buy domestic anymore. Japanese provide better value and Euros provide better performance/luxury. So for whatever your looking for, there is a much better non-domestic solution to your needs. Why would I spend a comparable amount on a Cobalt rather than buy a Corrolla? Why would I buy a base model Cadillac for the same price as a reasonably equiped BMW?

This shows rather clearly in sales numbers.

The only possible reason to buy American is pickup trucks. Even then, Toyota is cutting into that market with the Tundra and Tacoma... in my opinion the best two trucks on the market.

Guess again....you might buy American if you wanted a fleet of police squad cars, or a fleet of trucks compatible with aftermarket conversions, or maybe you want to have a few ambulances for EMT teams, or perhaps your business needs a van for mobile services, or maybe you own a taxi service, etc. etc.

[Canuck E Stan]

If Chrysler wants to stop having to lay off people they can do it themselves simply by being the first North American manufacturer to make Canadian prices comparable to the USA prices. It would give them much good will and increase demand for their products. Instead they want hand outs? Hargrove is not the sharpest knife in the drawer and has not earned his pay for quite some time. There is an opportunity for any of the car manufacturers to do this and be the one who the Canadian public will look at as being fair in their trades etc.. This will be better then any amount of money the government can give them.

So Buzz if you want to stop the lay offs, give the manufacturers the best possible deal on workers and the car companies, be the first to give parity on pricing to the public and you will have then the demend to keep the workers working. It is all up to you, and quit looking for hand outs.

Most of the cars and trucks Canadians make for Chrysler go to the U.S., although the price will help somewhat. The answer is to build cars that the consumer wants.

Chrysler makes too many vehicles that actually compete with itself,that's why models are being taked off the line and hence the layoffs.

Edited November 4, 2007 by Canuck E Stan

[geoffrey]

Guess again....you might buy American if you wanted a fleet of police squad cars, or a fleet of trucks compatible with aftermarket conversions, or maybe you want to have a few ambulances for EMT teams, or perhaps your business needs a van for mobile services, or maybe you own a taxi service, etc. etc.

Absolutely. Europeans though use European made police cars and Asians use Asian made police cars. So really, I'm willing to wager that's simply protectionism. You can customize more American vehicles because that's a business segement they've targeted in North America. Said, it's not the most lucrative area. Custom orders of a few dozen cars don't have the same economies of scale of selling 25,000 Honda Civics.

The big 3 won't maintain any of their market share selling police cars.

[M.Dancer]

The issues which forced Chrysler to close down production have zero to do with either the loon or free trade so Hargroves posturing is just that, he is trying to seem that he can work for the workers but really he is impotent and like the workers, redundant....the main reason the plant closed is that very few buyers ae to be had for the gawd ugly models that they were producing.

Fact, the loon and trade restrictions had no bearing on the 12,000 workers laid off in the US....

Fact, No layoff warnings from Toyota.

[bush_cheney2004]

Absolutely. Europeans though use European made police cars and Asians use Asian made police cars. So really, I'm willing to wager that's simply protectionism. You can customize more American vehicles because that's a business segement they've targeted in North America. Said, it's not the most lucrative area. Custom orders of a few dozen cars don't have the same economies of scale of selling 25,000 Honda Civics.

The big 3 won't maintain any of their market share selling police cars.

Ford maintained one platform based just on police and taxi sales. There is no more Big 3.

Edited November 4, 2007 by bush_cheney2004

[capricorn]

Chrysler does not appear to be too concerned about the loss of jobs in the US and Canada. They recently entered into a joint venture with Chinese automakers to manufacture the Chery for the North American market. So why would the Canadian government bail out a company that is in effect working in favour of reducing its workforce? I wish this question could be put to Hargrove for his reaction.

Chery's move to break into the U.S. market follows the successful efforts of a number of Japanese and South Korean automakers over the past three decades. After years of exporting cars for sale in the United States, those pioneers built auto plants throughout the country. From that base, their U.S. sales expanded sharply.

Chery will still manufacture its cars in China, but by tying itself to a partner with thousands of outlets in the United States, it might be taking a shortcut.

http://www.washingtonpost.com/wp-dyn/conte...7070302177.html

As the article says, Chinese autoworkers earn 57 cents a day and are prohibited from forming a union. I guess Chrysler's on to something.

The base price of the Chery is around $19,000 US. Lots of pictures of the Chery here:

http://www.cheryforums.com/

[bush_cheney2004]

As the article says, Chinese autoworkers earn 57 cents a day and are prohibited from forming a union. I guess Chrysler's on to something.

Ummm...are all autoworkers in Canada unionized? Why was it OK for Chrysler to move American autoworker jobs to Canada?

[capricorn]

Ummm...are all autoworkers in Canada unionized?

The big three, other than management, are virtually 100% unionized. I'm not sure about the others (Nissan, Subaru etc.). As far as I know, about half of auto parts manufacturers are non-unionized.

Why was it OK for Chrysler to move American autoworker jobs to Canada?

You got me there bc. If you have a theory, please share.

[bush_cheney2004]

The big three, other than management, are virtually 100% unionized. I'm not sure about the others (Nissan, Subaru etc.). As far as I know, about half of auto parts manufacturers are non-unionized.

So, like right-to-work-states in the USA which also uses non-union labor, China is not doing anything out of the ordinary.

You got me there bc. If you have a theory, please share.

My theory is that Canadians had no problem when the "Big 3" relocated many thousands of US autoworker jobs to Ontario, but cry foul when "their" jobs go to China.

[capricorn]

My theory is that Canadians had no problem when the "Big 3" relocated many thousands of US autoworker jobs to Ontario, but cry foul when "their" jobs go to China.

The loss of unionized jobs in Canada is always a cause to hold a funeral by our socialistic union establishments.

[Wilber]

Asians aren't going to buy low end GM cars. Canadians don't even anymore.

There is actually no real reason to buy domestic anymore. Japanese provide better value and Euros provide better performance/luxury. So for whatever your looking for, there is a much better non-domestic solution to your needs. Why would I spend a comparable amount on a Cobalt rather than buy a Corrolla? Why would I buy a base model Cadillac for the same price as a reasonably equiped BMW?

This shows rather clearly in sales numbers.

The only possible reason to buy American is pickup trucks. Even then, Toyota is cutting into that market with the Tundra and Tacoma... in my opinion the best two trucks on the market.

Thats your opinion and many would agree with you but you are not Japanese or Korean and the fact remains, the Japanese and Koreans are very protectionist when it comes to their auto industry.

[Higgly]

They brought these extraordinary challenges on themselves. Canada has a very unproductive, uninnovative industrial culture. It was kept on life support through the low dollar. Now that the rest of Canada has picked up their socks enough to have the dollar climb, the innovation laggards are paying the price. And let them pay.

A bailout now would send the wrong message and distort the market in all sorts of ways. The only thing worse than welfare is the corporate welfare.

Yes and no (Canada has a very unproductive, uninnovative industrial culture). Look at RIM. Look at CNR.

On the other hand, look at the (protected) Canadian Banks. There was a time when the Royal Bank was one of the 20 biggest banks in the world. What did they do with it? Since that time, lesser banks like ING have leaped over them.

As for your comment "A bailout now would send the wrong message", I agree.

[Wilber]

Yes and no (Canada has a very unproductive, uninnovative industrial culture). Look at RIM. Look at CNR.

RIM yes, the CNR has a tough time keeping its trains on the tracks out here.

[Higgly]

RIM yes, the CNR has a tough time keeping its trains on the tracks out here.

Good point. Who else ya' got?

[jdobbin]

The US rate is 35% and the Canadian rate is currently 22.1% and moving to 15%.

Where are you getting this 3% number?

It is a combination of federal and provincial rates.

http://www.reportonbusiness.com/servlet/st....wcorporate1030

“Our government is moving to 15 per cent. If the provinces move as well, a 25-per-cent combined rate will be a powerful brand for Canada globally,” he said.

He suggested that all provinces match Alberta's corporate tax rate of 10 per cent – a move that is unlikely, analysts said, given that most provinces are barely in surplus territory, and some provinces, such as Quebec and Ontario, are struggling to deal with slowing economies.

[geoffrey]

It is a combination of federal and provincial rates.

Right. And that shows that this is a provincial issue, not a Federal one. States average 6-7%... provinces 10-18%. Some jurisdictions (Alberta, BC and depending on what your doing Quebec) are competitive. Some (Newfoundland, New Brunswick) are not.

That said, Newfoundland, the highest taxed jurisdiction in Canada (~40.1%) just comes in slightly worse off than the lowest taxed jurisdiction in the US (Kansas at 39%).

Alberta at 32% is way below anything in the US, at least 7%, sometimes as high as 12%.

So ya. This is a provincial issue now. Once the Canadian rate is at 15% (at 15%, Alberta will have a 15-20 point advantage over anywhere in the US), the provinces can no longer complain. We will have the most competitive regime in the OECD all things factored in.

Edited November 5, 2007 by geoffrey

[jdobbin]

Right. And that shows that this is a provincial issue, not a Federal one. States average 6-7%... provinces 10-18%. Some jurisdictions (Alberta, BC and depending on what your doing Quebec) are competitive. Some (Newfoundland, New Brunswick) are not.

That said, Newfoundland, the highest taxed jurisdiction in Canada (~40.1%) just comes in slightly worse off than the lowest taxed jurisdiction in the US (Kansas at 39%).

Alberta at 32% is way below anything in the US, at least 7%, sometimes as high as 12%.

So ya. This is a provincial issue now. Once the Canadian rate is at 15% (at 15%, Alberta will have a 15-20 point advantage over anywhere in the US), the provinces can no longer complain. We will have the most competitive regime in the OECD all things factored in.

I mentioned in the post you responded to that the provinces had to bring their rates down.

However, I think the Feds should have cut their rate right now rather wait to 2012. That is how important I think the issue is with the dollar rising as fast it has been rising.