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Thread: Harry Reid: Auto Bailout Probably Saved Ford

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by NolaMan View Post
    It does not matter.
    Because....

    How about this scenario then, imagine Exxon (for example) has suppliers that specilize in equipment that only Exxon needs. If Exxon makes a new advancement, or no longer needs that product, are we to artificially prop up a supply company because demand has changed? No.
    To be valid, we'd first need to strip out at least 80% of the other competitors, consolidate them into a few big buyers and then structure the supply chain to where each supplier was extremely beholden to individual firms on individual equipment pieces. This is why your current and earlier oil comparison doesn't make any sense. Because that's not how the oil equipment market is run.

    I agree that propping up individual firms is a bad idea, however, the argument that nothing drastic would have changed doesn't make sense when you look at the integration of the supply chain. Without at least GM, there likely wouldn't be enough demand to support the supply chain. That's what got some of the other suppliers in trouble. They specialized too much.

    I am sorry if a company developed a specilaized business model which was 100% reliant on another company maintaining some level of production...If the company they are reliant on goes under, change your business model, or go under as well. That is no reason to save a company. It would be like paying to keep propeller manufacturors open even though the demand has plummetted with the rolling out of the jet engine.
    Yes, but Lord T and I are talking about an entire industry not just one firm as you are.

    Sorry you feel that way.
    I'm sorry you don't understand the difference between cyclical and structural.
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Lord Tammerlain View Post
    Many Japanese plants would have been shut down as well due to the lack of parts
    Is that true? As I understand at least how Mitsubishi runs, when they open a new plant, their suppliers follow them and set up shop nearby. And these suppliers generally don't sell to the Big Three. So any slow down on Detroit Sales and their respective supply chains wouldn't necessary affect the supplies for Mitsubishi. In some ways this is superior design as it locks in suppliers but without the negative impact of other firms buying parts from your suppliers.
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by NolaMan View Post
    It does not matter. How about this scenario then, imagine Exxon (for example) has suppliers that specilize in equipment that only Exxon needs. If Exxon makes a new advancement, or no longer needs that product, are we to artificially prop up a supply company because demand has changed? No.

    I am sorry if a company developed a specilaized business model which was 100% reliant on another company maintaining some level of production...If the company they are reliant on goes under, change your business model, or go under as well. That is no reason to save a company. It would be like paying to keep propeller manufacturors open even though the demand has plummetted with the rolling out of the jet engine.




    Sorry you feel that way.
    Most of the independant parts suppliers supply to a few different auto companies, Lear, Johnson Controls, Magna among others auto parts suppliers. Due to the nature of the business, they will typically have customers that they derive 30+% of their revenues from. The loss of that 30% would in the majority of parts suppliers mean bankruptcy (most have high debt loads). As such the auto companies that did not close would not be able to get parts to manufacture for a few months at least. Which during an economic crisis is not a good thing
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Lord Tammerlain View Post
    Most of the independant parts suppliers supply to a few different auto companies, Lear, Johnson Controls, Magna among others auto parts suppliers. Due to the nature of the business, they will typically have customers that they derive 30+% of their revenues from. The loss of that 30% would in the majority of parts suppliers mean bankruptcy (most have high debt loads). As such the auto companies that did not close would not be able to get parts to manufacture for a few months at least. Which during an economic crisis is not a good thing
    exactly...i work for a parts supplier, and a 30 percent loss would cripple my company.

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by obvious Child View Post
    Is that true? As I understand at least how Mitsubishi runs, when they open a new plant, their suppliers follow them and set up shop nearby. And these suppliers generally don't sell to the Big Three. So any slow down on Detroit Sales and their respective supply chains wouldn't necessary affect the supplies for Mitsubishi. In some ways this is superior design as it locks in suppliers but without the negative impact of other firms buying parts from your suppliers.
    To a point

    Magna manufactures auto parts that are primarily supplied to all major automakers including General Motors, Ford Motor Company, Chrysler Group LLC, Volkswagen, BMW, Mercedes, Nissan, Toyota, Honda and Hyundai. In Europe, Magna Steyr holds contracts for the assembly of the Jeep Grand Cherokee, Chrysler Voyager minivan and BMW X3 SUV.
    Magna International - Wikipedia, the free encyclopedia

    Of course Magna's biggest customer has been Chrysler and GM, but it does supply most others, along with the other big independant suppliers
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by obvious Child View Post
    Forgetting your profit=liquidity line eh?

    I see you never answered my question.
    So, you don't have clue one how an oil well works, therefore, you're not going to grace us with your knowledge. Right? Didn't think so!!!
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    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by randel View Post
    and the term 'downsize' means?....MORE PEOPLE WOULD HAVE LOST JOBS...and it would not have stopped at the automotive suppliers...that would have had and effect on everyone.....think of how many jobs in communities that are home to the suppliers, would have been lost.
    I know that more people would lose their jobs directly from the bailout. My assertion was that the industry would survive without GM and Chrysler.
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Lord Tammerlain View Post
    Do you have any understanding of corporate finances?

    What do you think would happen to an autoparts supplier whose profit margin is 2% and is deeply in debt, when 50% of that companies orders/revenue dry up? It cant pay back its debt, cover the wages and salaries, rent etc. It might have some customers but the loss of business means it cant cover its debts and it goes broke. Remember the US auto sales dropped from 15 million or so to less then 10 million, even very profitable car companies like Toyota had massive loss's during the crisis
    I know how it works. Most of it goes out of business. That's never been the issue of contention. Even Ford is still negatively affected, but to say that every auto parts manufacturer will go under when there is still demand from Ford, the Japanese, and still demand for cars from the public. There will be survivors of the contraction.
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by DrunkenAsparagus View Post
    I know that more people would lose their jobs directly from the bailout. My assertion was that the industry would survive without GM and Chrysler.
    They might. But the jobs loss when they fell would be painful. And no president would survive that. Not many congress critters either. That's why they keep getting bailed out.

    AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Boo Radley View Post
    They might. But the jobs loss when they fell would be painful. And no president would survive that. Not many congress critters either. That's why they keep getting bailed out.
    The bailout was only a band-aid. The pain was going to come sooner or later.
    "Doubleplusungood"

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