A Money Coach in Canada

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Photo Credit:  Metapede

 

You’ve heard by now that the US auto industry is in it up to the tops of their heads.

The Big Three  are experiencing a drop in sales the likes of which they haven’t seen in a quarter century.

And as Charles Wilson (as in  Charlie Wilson’s War) said, “What’s good for GM is good for America.”

The auto-industry is now extending this to,  “What’s good for the auto-industry is good for Ontario” – or rather, “help us out to the tune of $2.5+Billion, or you’re gonna fail the pain.”  (sotto voce:  we already gave Ford Canada $100M in 2004)

And it’s true:  this year, 15,000 jobs have been lost to date, and there would be many more – “hundreds of thousands“, says CAW president, bleakly.

It’s galling that Canadians should have to help out US car manufacturers – the very ones who snuffed out the electric car in favour of SUVs, ’nuff said.

But if we don’t, and if the US Gov’t does, all the jobs will go to the States (and Obama may be protectionist enough to want this anyway), never to return to Canada.

Readers:  What do you think?  Given the Cdn auto industry accounts for 12% of all manufacturing in Canada, and that refusing to help bail out likely would cost well over 100,000 jobs plus the economic spin-offs, should we cough up the money?

 

 

 

 

 

 

About the Author


Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com

8 Comments

  1. Traciatim

    Comment 1) Who killed the electric car? I hate to break it to you, but reality killed the electric car.

    Comment 2) There is a way for the car manufactures to continue operation and restructure at the same time, also getting protection from creditors. It’s called chapter 11.

    [Reply]

    Nov 19, 2008
  2. Uh, ‘reality’ killed the electric car? From what I’ve seen, the people who owned the early prototypes them loved them so much that they protested for years to get them back, and GM smashed the remaining cars into cubes in order to destroy the evidence or have anyone copy (and reverse engineer) them. Check out the documentary, which does go to some lengths to determine what led to Detroit’s cover-up of what was effectively a management decision, not a reflection on the viability of the technology.

    As for Chapter 11, while it is an option, it would affect already low sales numbers, probably bringing them to next to zero. It was one thing for people to fly on airlines in Chapter 11, but who would pay a large amount of money for a car that could conceivably be impossible to service in a few year’s time because the company that you bought it from was not able to restructure and return to business? Seen many American Motors Gremlins, Pacers or Matadors? They all went off the road early when the company was sold to Renault in the early 1980s. While I would love to see a message of ‘You blew it, and we’re not going to clean up your mess’, it would effectively be a death sentence, and would take down so many other jobs along with them (at a disastrous time with a fragile economy just on the edge of another Great Depression for that to happen), that I’d say that leaders just have to hold their noses and vote to give them the money, no matter how stupid such an idea seems on the surface.

    [Reply]

    Nov 19, 2008
  3. This blog post just got bookmarked at http://automotive.zoomit.ca/econ-101-us-automakers-ask-canada-for-2-5-billion-bailout/ The headline made it most interesting.

    [Reply]

    Nov 19, 2008
  4. Lior

    The bailout should be contingent on their business plans. We have to tell them “Ok, you’ll get what you’re asking – now what are you planning to do with it?”

    They have to come up with some kind of commitment to streamline their model line up and operations. If they refuse and things remain as they are, then it’s really just a matter of time before they knock on the government’s door again asking for yet another bailout.

    We should help them, yes. There is too much at stake for the economies of both the US and Canada. But there has to be a solid plan from them about their future prospects. So far, I have not heard or read anything that says things will change.

    Bear in mind, in the case of Chrysler, this isn’t the first time they will be getting a government bailout. And why exactly should the government bail out a company that’s now owned by a private equity firm? Chrysler is currently in the weakest position.

    [Reply]

    Nov 19, 2008
  5. Heh, maybe they should avoid flying to Washington on their private jets first.

    http://www.krupo.ca/archive/2008/11/21/american-automakers-what-are-you-on.aspx

    Maybe they should SELL those jets first.

    [Reply]

    Nov 22, 2008
  6. @traciatim I think it’s not simply protection from creditors, but they have run out of cash to pay their employees (I think this is the case for Chrysler, effective January 09??)
    @david Even if they get the bailout, your points are valid. I just can’t imagine people still buying – — wait. wait. yes I can
    @zommit – wow, thanks for the shout-out
    @Lior Some people have posited: create a business plan for an entirely different kind of car (ie. green) altogether. (again. oops, did I say that?)
    @Krupo Know what’s tragic? The whole jet thing didn’t even surprise me. I’m starting to think every top exec needs to go see WALL-E (we’d pretend it was just for fun) for reprogramming.

    [Reply]

    Nov 23, 2008
  7. The GM quotation you had in mind was not from Congressman Charlie Wilson, but rather Charles E. Wilson, president of General Motors during World War II. Eisenhower nominated him as Secretary of Defense in 1953. During Senate hearings, Wilson was asked if as secretary he could make a decision that might have an adverse impact on GM. He said that he could but didn’t think it likely, “because for years I thought what was good for the country was good for General Motors and vice versa.”

    I don’t think anyone in the U.S. or in Canada is happy about any form of aid for the auto industry. “Bailout” is too general a term, I think — recall that the U.S. government actually made money on the Chrysler deal. No, that isn’t the same as thinking it was a great idea. On the other hand, it’s not like the money was simply set on fire to keep Iacocca warm.

    I was born in Canada, grew up in Detroit, went to college on a Chrysler scholarship, and have a retired auto-worker parent — so I’ve got some standing here. Sadly, both management and the union share responsibility, as do many car buyers who willingly paid for overchromed, underperforming behemoths, as do governments on both sides of the border who enabled management for so long.

    Maybe one solution, as a columnist here suggested, is formal bankrupty, coupled with government-backed auto loans — to give consumers some feeling of confidence and some incentive. The clueless performance of the CEOs, though (don’t they have PR departments?), probably means every C-level official, and the next level or two down, needs to go. But who’ll mind the store?

    [Reply]

    Nov 24, 2008
  8. @Dave Thank you for such a thoughtful, informed comment, and for setting the record straight re: C. Wilson quote.

    [Reply]

    Nov 24, 2008

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