Re: OT: labor costs, auto bailout


"Ed Huntress" <huntres23@xxxxxxxxxxxxx> wrote in message
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"F. George McDuffee" <gmcduffee@xxxxxxxxxxxxxxxxxxxxxx> wrote in message
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<snip>

In the meantime, as the article says, 2009 is not the year to let Detroit
tank. Maybe 2010. It's cheaper for us now, and better for short-term
economic recovery, to keep them afloat. But as soon as possible, I'd cut
the lifelines and let them break up.

OK Ed but you have excluded something important. I'd be surprised if you
weren't aware but that migh be the case.
Being here in the Los Angeles basin this is pretty much in my face.


All of the importers, without a single exception, have a very large and
increasing inventory of unsold vehicles moving from the ports onto rented
land in the local area. Large tracts of vacant land, hundreds of acres, are
becoming populated with Asia and Europes latest creations.
They can't ship them to dealers because the dealer networks can't finance
floor planned inventory.

The Asian builders have plenty of cash and their governments will step in if
required to provide more if necessary.

Demand for new cars is headed for just about zero in the NA market and it
will arrive at that point in January.
None of the Big Three can finance new vehicle sales today and in January the
importers will start to broom their inventories at fire sale prices and
provide whatever financing is needed in order to convert their inventory to
whatever cash they can.

I think it's safe to say that with the exception of trucks and specialty
vehicles, the Big Three or even the Big Six, won't need to produce a single
passenger vehicle in North America for three to six months.

Do I need to draw you a better map than that?


JC


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