Edited: 11/16/2008 5:32:20 PM by Pa Pa Dragger
A number of North American suppliers to the Detroit Big Three had their credit ratings placed on CreditWatch with negative implications by Standard & Poor's Ratings Services because of their ties to ailing automakers.
S&P singled out ArvinMeritor Inc., BorgWarner Inc., Cooper-Standard Automotive Inc., Federal-Mogul Corp., Goodyear Tire & Rubber Co., Hayes Lemmerz International Inc., Johnson Controls Inc., Lear Corp., MetoKote Corp., Shiloh Industries Inc., Stoneridge Inc., Tenneco Inc. and Visteon Corp. for their significant exposure to General Motors Corp. (CCC+), Ford Motor Co. (B-) and Chrysler LLC (CCC+). The rating service said almost all the potential scenarios envisioned are negative for the Big Three as they burn through cash.
Other auto suppliers, including American Axle & Manufacturing Inc. and TRW Automotive Inc. were already on CreditWatch, in part because of their dependence on the three automakers.
Detroit is asking for billions of dollars in federal aid (~$50 billion). This is a tremendous amount of money and we should be wise spending it. This crisis is actually an opportunity to radically overhaul our existing transit infrastructure. A simple proposal that will kill two birds with one stone: bail out the workers in Detroit and get us off foreign oil once and for all:
As
sumptions:1. The Big 3 are terribly run companies that are plagued by group-think, are inefficient, do everything possible to keep the status quo and stifle innovation in the process. If it weren't for the systemic risk problems associated with them, the market would have let the Big 3 die long ago.2. There will be no net job "loss" as long as manufacturing jobs don't actually leave a region.
2. Take aforementioned $50 Billion and give it to the following companies
---Tesla Motors: they've produced a road going, crash tested, street legal, all electric sports car with a 250 mile range that is available now (sans waiting list) for $100,000. They built the car from the ground up (read: no existing components) for a mere $250 million in venture capital money. Give them $5 Billion to build automated production facilities.
---Aptera Motors: the founder designed and built the Aptera P-1 prototype in his garage. They have six prototypes driving around California right now and with a mere $50 million in funding they have scaled production and will begin selling in California next spring. They have over 10,000 people signed up on their wait list. Give them $5 Billion to build automated production facilities.
---A123 Systems: they make the battery of the future. Google "killacycle" and watch the video. Their batteries are amazing. So far, they've received about $300 million from the private sector (50 came from GE) and will begin scaling production next spring. With a couple billion, they could scale their production massively. Give them $5 Billion.
---BorgWarner and Bosh: give them a couple $250 million to develop a high efficiency gasoline range extender and build necessary production facilities.
---Siemens/GE: give them a billion apiece to scale up factories for electric motors
---Toray: They are the largest producer of carbon fiber and carbon fiber bodies for cars. Give them a billion or so to open a new factory to produce carbon fiber bodies for Tesla and Aptera.
---Ricardo: a very capable engineering house from Italy. They have extensive capabilities in engine, powertrain, and chasis design. Give them a billion for a chasis production plant, a billion for an engine plant, and a billion for an R&D center.
---ECD Ovonic: Very innovative company that does everything from batteries to solar panels. They could use a couple billion to scale up battery and solar panel factories.
---Eaton Corporation: one of the great engineering houses of the world, Eaton has a technology for trucks of all sizes known as a "hydraulic hybrid" drivetrain. Give them a billion to build a factory to produce the drivetrains in mass.
---Bombardier Aerospace: a Canadian company that produces, among other things, trains. Give them a billion or so to build a new factory. Light rail is coming folks.
---Maxwell: a world class electrical engineering house and the largest producer of capacitors. Give them a billion for a new factory
---Toshiba: maker of a highly advanced fast charge battery that is a direct competitor to A123. Using a high voltage line and a special charger, they can fully charge a cars battery (with a 150 mile range) in 10 minutes! What's more, the battery can cycle over 5,000 times before it drops to 80% of its original capacity. Their battery might outlast your chassis! Give them a billion for a new factory.
---Use the remaining money to start a new finance company or use it for tax rebates for consumers that buy the new electric/PHEV cars.
3. These "handouts" would all be in the form of low cost government loans with long maturities.
When it came to buying new vehicles I always bought a domestic (mostly Chevrolet) and it will be a sad day for this country when they go belly up, which they will but who knows what the repercussions will be. I guess we will shortly find out. I know these green vehicles for now are expensive but set them up with automation and mass production & the vehicles will fall to an affordable price. Later...