Chrysler Bankrupt - Gets $3bn from Canadian Governments

[M.Dancer]

Canadians have not in any way shunned Chrysler.

They are 3rd and falling against the asians fast.

[Smallc]

They are 3rd and falling against the asians fast.

Yes, they are doing bad right now...but Canadians are still buying their product...and a large number of Canadians still work for them.

[M.Dancer]

...and a large number of Canadians still work for them.

But is getting smaller....

...better to attract new investment than to hang with an albatross

[August1991]

Toyota doesn't sell more than Chrysler in Canada...and recently, Dodge has sold more vehicles than Chevrolet.

You're wrong, but not by much.

For 2008, Chrysler sales (cars, trucks, jeeps, Dodge, etc.) were 221580. Toyota/Lexus sales were 224158. GM (all in) was 356740 and Ford was 210321.

Link

Of course, there are more Japanese/European manufacturers so their numbers are somewhat diluted. In addition, there is no info about where these vehicles are built or where their parts are made.

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If I understand properly, Chrysler has about 10,000 employees in Canada. That is a small proportion of the Canadian auto manufacturing sector and I fail to see why everyone else should be taxed so that this small group receives a subsidy.

As I argued in the OP, this is going to hurt Harper politically elsewhere in Canada and he will gain little in Ontario.

[Smallc]

If they were allowed to fail, economic confidence would take a giant hit and people from both the manufacturer and its suppliers would be out of work. It really wasn't an option given the timing.

[bush_cheney2004]

Yes, they are doing bad right now...but Canadians are still buying their product...and a large number of Canadians still work for them.

How large a number is that? Why spend BILLIONS just on that small group and related jobs in the food chain.

[M.Dancer]

You're wrong, but not by much.

For 2008, Chrysler sales (cars, trucks, jeeps, Dodge, etc.) were 221580. Toyota/Lexus sales were 224158. GM (all in) was 356740 and Ford was 210321.

70% of the toyotas sold in Canada are made in canada...

[Smallc]

If I understand properly, Chrysler has about 10,000 employees in Canada. That is a small proportion of the Canadian auto manufacturing sector and I fail to see why everyone else should be taxed so that this small group receives a subsidy.

Because there is more at stake than the employees of the company. This has been gone through over and over again. The suppliers, other workers that need those workers, etc. It's a large domino effect....not to mention the loss of confidence.

And yes, I was off on the numbers...don't know how that happened.

[GostHacked]

I am surprised this comes as a surprise to anyone.

[August1991]

Because there is more at stake than the employees of the company. This has been gone through over and over again. The suppliers, other workers that need those workers, etc. It's a large domino effect....not to mention the loss of confidence.

And yes, I was off on the numbers...don't know how that happened.

But the subsidy/bailout/loan guarantee is not given to those other people - it is given to Chrysler employees, shareholders or debtholders.

It is wrong to assume that if Chrysler stops making cars, its suppliers will stop making windshield wipers or car radios. They will still make them but for other manufacturers.

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The problem here is Chrysler, not the automobile manufacturing sector. This is what bothers me when I hear the CAW or Chrysler/GM managers speak as if they represent the auto manufacturing sector. They don't.

If Pizza Pizza were to go bankrupt, it would not be the end of grain farming or tomato production. In this case, it's specious to use suppliers as an argument to justify a subsidy.

Edited April 30, 2009 by August1991

[Smallc]

It is wrong to assume that if Chrysler stops making cars, its suppliers will stop making windshield wipers or car radios. They will still make them but for other manufacturers.

Other manufacturers have no use for Chrysler radios or Chrysler specific windshield wipers. It isn't the same as making pizza.

Edited April 30, 2009 by Smallc

[jdobbin]

It is wrong to assume that if Chrysler stops making cars, its suppliers will stop making windshield wipers or car radios. They will still make them but for other manufacturers.

It is wrong to think that liquidation of Chrysler in Canada would not mean large job losses in parts suppliers.

The estimates I have heard from experts is between 15,000 and 40,000 direct and indirect jobs. You think Pizza Hut accounts for that many jobs?

[M.Dancer]

Other manufacturers have no use for Chrysler radios or Chrysler specific windshield wipers. It isn't the same as making pizza.

Chrsler doesn't make radios. They do however use Sirius which I understand to be popular even outside the Chysler line up...

...i doubt there is a chrysler specfic windshield wiper....

[Smallc]

Chrsler doesn't make radios. They do however use Sirius which I understand to be popular even outside the Chysler line up...

I never said that. Chrysler buys radios from their suppliers....radios that other manufacturers would have no use for.

...i doubt there is a Chrysler specific windshield wiper....

Maybe not windshield anymore (although there are some wipers that because of their length are specific to one vehicle) but the wipers on the back of a vehicle would most likely be specific to that vehicle.

[madmax]

Good money chasing bad....

Much like , too little too late. Definitely problems associated with this decision.

A better investment would be getting Subaru or Hyundai to open a plant here...buiding cars that canadians want....What a concept!!!

Auto manufacturers located here because of the strong industrial base, and the many support mechanisms and suppliers that "were" located within a central triangle.

This base is decimated. There is little rational to open an assembly plant located in Ontario when the suppliers are moving to Mexico and China or are now officially bankrupted.

As for building cars that "Canadians want, you might be rather biased in your choice of vehicle. Every dealership is sitting there with tonnes of steel and plastic parked on the pavement. Every purchaser has a different opinion of what they want.

I am a big fan of Subaru, and yet I know how fragile their engines can be. Its just that a hell of a lot of them make it to 300,000km problem free.

For a Cyclist like you.... that would mean a "Car for life". Or more properly, if it isn't a Wagon, I am not interested in a Subaru.

[Jerry J. Fortin]

In my view, the government has made a very large mistake. They have just entered a new phase of bureaucratic foolishness and have begun to throw good money(OUR TAX dollars) after bad (private equity) in order to make an attempt that is hoped to save some citizen employment.

Even taking a very shallow and uninformed view, such as my own, these are the first steps in the socialization of the no longer free market economy. All kinds of doors have been opened and it will be no mean feat to put the genie back in the bottle. All the big corporate dogs who get themselves into trouble now eye federal help and our tax dollars as a way out for their problems.

It is time to reconsider our politics people before we give away the rest of the store.

[bush_cheney2004]

....It is wrong to assume that if Chrysler stops making cars, its suppliers will stop making windshield wipers or car radios. They will still make them but for other manufacturers.

True.....Visteon and Boston Acoustics make most of the current car audio offerings for Chrysler LLC. They will continue to make such things whether Chrysler survives or not. Aftermarket demand for their products will also remain.

[madmax]

In my view, the government has made a very large mistake. They have just entered a new phase of bureaucratic foolishness and have begun to throw good money(OUR TAX dollars) after bad (private equity) in order to make an attempt that is hoped to save some citizen employment.

Even taking a very shallow and uninformed view, such as my own, these are the first steps in the socialization of the no longer free market economy.

There is no such thing as a "Free Market" economy. THere never was, and there never will be.

However, I do agree that this money is intended to save the corporate entity known as "Chrysler" and there is no guarrantee attached with this "investment". THere isn't any intent to save "some citizen employment" but there is intent to give corporations free money. Corporations like free money. Its FREE!!!

All kinds of doors have been opened and it will be no mean feat to put the genie back in the bottle. All the big corporate dogs who get themselves into trouble now eye federal help and our tax dollars as a way out for their problems.

It is time to reconsider our politics people before we give away the rest of the store.

Well Jerry, if you can get the government to stop this nonsense, I am all ears.

[Molly]

From here, I'd say that the 'suppliers will be fine' crowd are out to lunch.

There are dozens of small enterprises around here that specifically serve Honda. They came into being solely to support Honda, and when Honda suspends production, there is ZERO alternate market for their product.

The Frank Stronachs of the world will be fine... but the folks who assemble wiring harnesses, or the guys down the road who manufacture struts, or that little shop in town that makes seat belt assemblies... they're the sort of guys who will be dust. They aren't big enough to be portable. They aren't unique/high skill enough to be worth the corporate bother. They are replaceable elsewhere.

[Jerry J. Fortin]

There is no such thing as a "Free Market" economy. THere never was, and there never will be.

However, I do agree that this money is intended to save the corporate entity known as "Chrysler" and there is no guarrantee attached with this "investment". THere isn't any intent to save "some citizen employment" but there is intent to give corporations free money. Corporations like free money. Its FREE!!!

Well Jerry, if you can get the government to stop this nonsense, I am all ears.

We can get off our collective behinds and start doing something. What we can do is write our MP's and give them a piece of our mind. We can also collect signatures from our neighbors and deliver them to the MP's as a petition. The question is should we do something? I say that we should, but I am only one man.

WE can't turn back the clock, so the money given to GM and Chrysler should be considered gone. But there is an opportunity to start putting things together in a manner that would serve the purpose of the nation. Specifically a little forward planning is in order. The idea in the forefront of my mind is that citizens should petition the government to institute a system whereby individual participation on a voluntary basis should be made available in a forum that would facilitate the organization of concepts relative to the public will. I know that this sounds like a rather convoluted statement, but I simply doubt know how else to phrase it! We need the opportunity to have a national will created and utilized in the best interests of the nation. It seems to me that the House of Commons is incapable of undertaking such a role, it is a very partisan environment. We need solutions for Canadians, not politicians. They are their own problem. We need our problems addressed.

[August1991]

There are dozens of small enterprises around here that specifically serve Honda. They came into being solely to support Honda, and when Honda suspends production, there is ZERO alternate market for their product.

If they came into being solely to support Honda, then I suspect that they can also come into another being to support Ford, Toyota or Fiat.

Molly, give more credit to the people around you. Like you probably do, they manage to deal with life's various problems. IMV, a society based on such a principle is both a civilized society and a successful society.

[Smallc]

IMV, a society based on such a principle is both a civilized society and a successful society.

And in this case, the government that runs this civilized society is helping to deal with the problems.

[August1991]

And in this case, the government that runs this civilized society is helping to deal with the problems.

Government? Who said anything about government?

Smallc, why do people in Haiti have more difficult lives than people in the Dominican Republic?

IOW, maybe government is part of the problem rather than part of the solution. More specifically, Haiti has received for over 50 years various forms of Left Wing style aid, government welfare and yet Haiti is still a basket case.

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What a thread hijack.

[Smallc]

Smallc, why do people in Haiti have more difficult lives than people in the Dominican Republic?

IOW, maybe government is part of the problem rather than part of the solution.

I don't know if you've looked outside lately, but this isn't Haiti. In this country, we enjoy one of the highest standards of life in the world (very close to the highest in fact) and we are some of the richest people on the face of the Earth. To claim that that has nothing to do with our government, and that government is always a negative...well...that would be plain wrong.

[August1991]

I don't know if you've looked outside lately, but this isn't Haiti. In this country, we enjoy one of the highest standards of life in the world (very close to the highest in fact) and we are some of the richest people on the face of the Earth. To claim that that has nothing to do with our government, and that government is always a negative...well...that would be plain wrong.

I'm no Libertarian and I appreciate the importance of the State as part of a civilized society.

With that said, I also adhere to the supposed phrase of George Washington: "Like fire, government is a useful servant but a terrible master." IMV, our governments are too large.

Prior to the Great Depression, in the 1920s, various levels of governments took about 25% of our national income and used about half of that to buy stuff on our behalf and used the other half to transfer money between us. Nowadays, governments take about 50% of our national income and spend a little less than half on stuff (that we may or may not want) and a little more than half on transfers between us.

Simply stated, the State has gotten bigger and bigger in Canada and other countries over the past 80 years (except in places like Russia where it catastrophically became smaller). Smallc, think what this means. Canadian governments cannot grow until they are 100% of the economy. How will this end?

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Returning to the thread's topic, consider this:

Chrysler’s union plans to sell its shares in the struggling carmaker as quickly as possible, the United Auto Workers’ (UAW) president revealed today, as the company prepared for its third hearing in bankruptcy court.

Times

Or this:

Finance Minister Jim Flaherty conceded Tuesday that there's a chance the government's loans to Chrysler LLC will never be repaid, although he stressed that the company's planned merger with Italy's Fiat SpA stands a “reasonable” chance of success.

G&M

Is this why governments exist?

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The world of 2009 is different from the world of 1929. Nowadays, our western governments take a larger share of the economic pie and true, there is a much larger pie to be shared. IMV, the modern State has partly contributed to this larger pie but more government is not better government. Government has exceeded any positive contribution and as Ronald Reagan said, "Government isn't the solution to our problem. Government is the problem."

John Maynard Keynes developed his theories in the 1930s when governments were relatively small. That's not the case now.

Edited May 7, 2009 by August1991