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Old 12-16-2008, 02:39 PM   #1
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ANOTHER interesting read -- how we subsidize foreign brands.....

Tax Fairness for U.S. Auto Makers – The Wall Street Journal
December 16, 2008
Your Dec. 1 editorial "America's Other Auto Industry" questions whether taxpayers should provide temporary federal loans to American automakers, but conveniently ignores one fact: Our taxpayers already give huge sums of financial assistance to foreign car companies right here in the U.S.
As proposed, the requested bridge loans represent roughly $4 billion in assistance to U.S. auto makers, that is, the cost of a low-interest loan. With 240,000 employees spread among the three U.S. companies, that works out to less than $16,000 in temporary taxpayer assistance per job.
By contrast, foreign auto makers receive far more from U.S. taxpayers in various forms of government assistance. In Tennessee, for example, state and local authorities offered Volkswagen $577 million in lowered taxes and other benefits in exchange for the plants it is constructing, at a staggering cost of $288,000 per job created.
Similarly, Toyota is receiving $300 million in support for its plant in Texas, or $150,000 per job created. Alabama provided Hyundai, Toyota, Honda and Mercedes an average of $111,000 in incentives per job. The list goes on. Unlike the temporary assistance GM, Ford and Chrysler are seeking, in almost all the cases, U.S. taxpayer subsidies to foreign companies never need to be paid back.
Let's make sure to keep the discussion balanced. Toyota, Nissan, Honda, Mercedes, BMW, Kia and Hyundai already receive far more in permanent financial support from our own taxpayers than what the U.S. auto industry is seeking. Our own companies deserve equal consideration, no more, no less.
Stephen Collins
President
Automotive Trade Policy Council
Washington
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Old 12-16-2008, 03:25 PM   #2
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FIRST!!!!

good read btw i think this whole situation is stupid and i wish that they would just give them the loan
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Old 12-16-2008, 03:26 PM   #3
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Just goes to show how much America really does hate its own corporations.
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Old 12-16-2008, 05:33 PM   #4
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The more I read, the sicker I get. What really annoys me is that over 50% of the general public opposes any type of government loan to our auto manufacturers. I'm sure these people have some type of Korean or Japanese appliance in their driveways.

Do your part...and...BUY AMERICAN! Buy a Camaro or even a Mustang or Challenger or a Malibu or a CTS or a Silverado or a Cobalt or...... Have intelligent conversations with your import loving friends. Point them to independent research that shows the quality of our domestic brands.
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Old 12-16-2008, 07:41 PM   #5
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The more I read, the sicker I get. What really annoys me is that over 50% of the general public opposes any type of government loan to our auto manufacturers. I'm sure these people have some type of Korean or Japanese appliance in their driveways.

Do your part...and...BUY AMERICAN! Buy a Camaro or even a Mustang or Challenger or a Malibu or a CTS or a Silverado or a Cobalt or...... Have intelligent conversations with your import loving friends. Point them to independent research that shows the quality of our domestic brands.
converting 'em one at a time
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Old 12-16-2008, 08:24 PM   #6
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Never thought I would see the time when the US Government and US tax payers would be so willing to turn against their own. It seems that at times the US sells itself short. I have hope theirs a brighter future ahead.
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Old 12-16-2008, 09:13 PM   #7
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It sort of goes along with... what's that word... outsourcing. Its sad, but true. Take jobs away from (north) Americans to make items cheaper in China/korea/etc.

A good read Fbodfather!
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Old 12-17-2008, 09:46 AM   #8
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Double standard much?
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Old 12-17-2008, 11:32 AM   #9
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Guess I have to be the devils advocate here.. but if the states where giving "extras" to these foreign companies.. why didnt GM/Ford/DCX jump on the boat and build some plants there? Especially if its such a huge issue....

Personally I just don't see how this article is related (oh and I am in favor of the loan).
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Old 12-17-2008, 12:55 PM   #10
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Guess I have to be the devils advocate here.. but if the states where giving "extras" to these foreign companies.. why didnt GM/Ford/DCX jump on the boat and build some plants there? Especially if its such a huge issue....

Personally I just don't see how this article is related (oh and I am in favor of the loan).



Good Point these are state tax dollars not federal. GM has the same ability to open up plants in these locations as well and recieve the same tax breaks. In fact they often negoitiate retooling a plant for tax breaks and other incentives vs. just closing down and building somewhere else.

Another point to consider is that these states in question are trying to attract manufacturing to boost their economies. Is Michigan doing this as well? Or to put it another way, say you are state "A" and a car company is thinking about opening up in your state vs. another, you have to compete for their business to gain more employment for your citizens.

Should we tell foreign manufacturers not to build here and layoff some more Americans???
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Old 12-17-2008, 12:57 PM   #11
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Should we tell foreign manufacturers not to build here and layoff some more Americans???
It's not that we don't want them here paying our citizens to do their dirty work. But we shouldn't help them compete against us. Which is what all these subsidies are doing!
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Old 12-17-2008, 12:58 PM   #12
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Guess I have to be the devils advocate here.. but if the states where giving "extras" to these foreign companies.. why didnt GM/Ford/DCX jump on the boat and build some plants there? Especially if its such a huge issue....

Personally I just don't see how this article is related (oh and I am in favor of the loan).
The insinuation is that the big three are under such pressure to be tied to the unions that they don't want them to build plants in Right to work states. Meaning they wouldn't have to use unions...

If I were the Gov of a RTW state. I'd do everything in my power to entice the Big three to move to my state. Can you image the long term benefits.

Having said that, if the Big three move from Michigan, that state would self destruct. So, it's probably much harder than I make it out to be.

And what Dragon said.
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Old 12-17-2008, 01:11 PM   #13
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It's not that we don't want them here paying our citizens to do their dirty work. But we shouldn't help them compete against us. Which is what all these subsidies are doing!
Actually these tax breaks and subsidies are enabling manufacturing(all, not just cars) to even exist in the states. Taiwanese labor costs about 1/2 of American and Chinese is a 1/4 of that. I've spent a fair amount of time with them and we are just not competitive with labor costs and thats not likely to change so we have to keep subsidizing manufacturing to keep jobs.

If states did not offer this to any company they would likely build in another country and again we all loose.

So I say to GM, Ford and Chrysler(even though I can't stand Chrysler), move your plants to RTW states where you get better deals on taxes and labor. It's funny the state that you helped build is holding you back with taxes and rudimentary labor laws.
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Old 12-17-2008, 01:25 PM   #14
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Then let them build in their country if we're too high-priced. That's due to our Nation's standard of living (thanks in no small part to the big three), and I'd rather not compromise that for the sake of a few thousand jobs. Sounds harsh, but
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Old 12-17-2008, 01:31 PM   #15
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Originally Posted by diarmadhi View Post
Guess I have to be the devils advocate here.. but if the states where giving "extras" to these foreign companies.. why didnt GM/Ford/DCX jump on the boat and build some plants there? Especially if its such a huge issue....

Personally I just don't see how this article is related (oh and I am in favor of the loan).
When Saturn built their plant in Spring Hill, Tennessee they got tax breaks for 10 years, that is one reason the plant was built here. Unfortunately the UAW had GM under their thumb with their contracts so GM had offer the jobs to laid off workers from other GM plants first, before opening job offers up to local people...
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Old 12-17-2008, 01:42 PM   #16
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Then let them build in their country if we're too high-priced. That's due to our Nation's standard of living (thanks in no small part to the big three), and I'd rather not compromise that for the sake of a few thousand jobs. Sounds harsh, but
Each plant might only employ a "few thousand jobs" but just as with the Big 3 many more jobs are at stake(suppliers and other support services), and you are missing the point.

The Big 3 can move to these other states as well and get the same and possibly even better deals. Unless the unions strike against them for leaving to go to RTW states, but thats another story.

Thats why I don't support the bailout(and also because I am a capitalist), because they should have moved ops to other states where they see better incentives, a few hundred million here and there add up to billions.

When I got laid-off some time back, and likely again in June, there is no government bailout for me or my company to keep me. It's called capitalism. The bail-out for the financial markets was a joke and goes against everything in capitalist economics.
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Old 12-17-2008, 02:10 PM   #17
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Each plant might only employ a "few thousand jobs" but just as with the Big 3 many more jobs are at stake(suppliers and other support services), and you are missing the point.

The Big 3 can move to these other states as well and get the same and possibly even better deals. Unless the unions strike against them for leaving to go to RTW states, but thats another story.

Thats why I don't support the bailout(and also because I am a capitalist), because they should have moved ops to other states where they see better incentives, a few hundred million here and there add up to billions.

When I got laid-off some time back, and likely again in June, there is no government bailout for me or my company to keep me. It's called capitalism. The bail-out for the financial markets was a joke and goes against everything in capitalist economics.
You don't understand, They just can't do what you said, pull up stakes and move to a RTW state. the Unions have a big foot in the door already and their contracts hold the companies to the fire so to speak on them. they would lose much more trying to move a plant than just building one from scratch like the foreign ones do. Since like with the Saturn plant they were forced to rehire union workers under existing contracts, it does not benefit the companies much unless they can renegoiate the contract.
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Old 12-17-2008, 02:21 PM   #18
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Actually I do understand thats why I brought up union issues and the states laws regarding unions. Controlled bankruptcy allows them to break the union deals and contracts which I believe is needed at this point.
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Old 12-17-2008, 02:40 PM   #19
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Actually I do understand thats why I brought up union issues and the states laws regarding unions. Controlled bankruptcy allows them to break the union deals and contracts which I believe is needed at this point.
Bankruptcy is not a union-buster, and it won't be used that way. Contracts will simply be renegotiated with a third party, not broken. Besides the point, any bankruptcy will take place under the direction of a democratic president. That's neither a good nor bad thing. Just a consideration...

Secondly...since when can a manufacturer already in the red just pickup and move shop? They have over 40 plants; and they'd have to move at least half to make any reasonable impact. Now you're shifting employment; and laying off tens of thousands of people in some places, just to hire more in others. The local economies aren't ready for something like that -- and the company isn't ready for such an investment. The money they'd have to pour into building needless plants and closing perfectly fine ones would far outweigh any labor savings...especially since the labor cost discrepancy is non-existant.
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Old 12-17-2008, 02:46 PM   #20
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Bankruptcy is not a union-buster, and it won't be used that way. Contracts will simply be renegotiated with a third party, not broken. Besides the point, any bankruptcy will take place under the direction of a democratic president. That's neither a good nor bad thing. Just a consideration...
Clarifiaction: Bankruptcy can be a total union contract buster if determined by the judge if it gets to that point. The president, regardless of Bush or Obama, and Congress should have no say in the banruptcy if it went that route as neither has the expertise to do so. However we are dealing with politicians who think that they are the all encompassing experts on everything for us.

I was not trying to say that the union itself would go away.
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Old 12-17-2008, 02:50 PM   #21
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To your 2nd point I was trying to say that this is something along with a lot of other things that they should have been doing all along. If Michigan wasn't being competitive over the last 20 years or so then they should have looked elsewhere. You let the old factories die out after they can not be retooled while bringing up new factories in locations that are more favorable to your existing business.

This is standard in manufacturing to remain competitive. I work in the Semiconductor and Hard disk drive manufacturing industry and see this all the time. After plants can no longer be reasonably retooled you look elsewhere to build your next plants, however the big 3 were not as opportunistic as others and get left behind because of this. I know, I know .... Unions(see UAW) are centralized in Detroit and held them back a great deal. Now the Unions get to reap their benefits and drag down others while they are at it...
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