CP Future Plans dependent on Auto Industry Bail Out?

I just started analysing the current economy in the Cleveland-Detroit area that is CP's market and wondered if this is the reason why we haven't heard any announcements from CP yet as to what their plans are for 2009. Are they waiting to see if the auto industry get's bailed out?

Nope. While that could have an effect on things down the road (mostly because the park could see decreased revenue) it is having no effect on their currently "not announcing" anything for next year. The reason no announcement has been made is because there are no major additions for next year. It's as simple as that.

Now wait a second...

It seems obvious that, despite Cedar Fair publicly saying they're not adding anything next year (several times now), that they probably actually are. Because that makes sense. Or something.

I'm all for keeping up that wishful thinking . . . ;)

I thought Tony and Tyler said something about an announcement of some kind coming at a later date. I really don't care if they don't add anything next year, I was just under the impression they were going make an announcement...at least on the Blog, if not anywhere else.

The press release for 2009 cap ex was released. That's an important release about a public company. They're not going to spontaneously announce anything of significance, no matter how tight you close your eyes and wish for it. Besides, don't you think it's good for pass sales when you announce in the fall?

If the auto makers massively fail, it'll be massively bad for Detroit, no doubt. It could actually become the place in Robocop. That said, I don't think it would be catastrophic for Cedar Point. It would impact the business, but not fatally.

Now, if the auto companies fail, and the medical business in Cleveland tanks, and Progressive and Nationwide take a dump, then you've got tens of thousands of people in trouble in the Ohio markets as well. That would suck.

Hmm all the webcams are down due to maintenance. Hmm. Maybe they are moving in the tracks. Maybe dragster fell thats why the camera wasn't working for the past few days. Lol

I thought there were already tens of thousands of people in Ohio who were in trouble. Keep in mind that what is bad for the auto manufacturers is bad for the auto industry suppliers. While there aren't a ton of plants in Ohio (there are plenty...to be sure) there are a lot of companies (like my father-in-law's company) that supply parts and so forth. It is trickle-down economics...in a really bad way.

The bigger problem for Ohio and Michigan might be the housing crisis and its effects on the government, both state and local. When homes go into forcloure then property taxes aren't paid and that is bad for government, schools, etc. There is a $2.8 Billion shortfall anticipated for Florida's State budget this year and that is expected to grow to $3.8 billion the next year. While governments all could operated more efficiently...those kinds of numbers mean loss of jobs, social services, etc.

So, when people pooh-pooh these bailouts they really need to look beyond the auto manufacteres and the banks that are getting the direct benefit. The indirect benefit is often elusive but very important as well.

And one thing that needs to be clarified. The banks got a bailout, and are not required to pay one cent of it back.

The auto companies are asking for a loan that will be paid back with interest. Unfortunately, that detail seems to be getting over looked by many.

Secondly, Chief, many of those people whose houses are being foreclosed on have moved to other states because that's where work can be found. So Michigan and Ohio are out not only the property tax, but also income and sales tax that would have been spent in state as well. Its a very slippery slope that things are on.

Good point about the income and sales tax. It is certainly all tied together and Ground Zero seems to be Michican and Ohio...Cedar Point's money trough back in the day.

The banks do need to pay back any money they accept.

So our governmental process didn't see the necessity to loan money on the current terms to the auto industry but good ole George I do whatever i want Bush is going to take some of the bail out money from the financial industry and slide it on over to the auto industry.

Wasn't all the money from the financial bail out deemed necessary for certain reasons? Meaning, how is there "extra" cash? If so, I want some.

What a freakin' joke. Why aren't the foreign car manufacturers located in the US doing so poorly? Because they have streamlined product lines. Not 37 of the same model with different options. You'd think by now the US manufacturers would take maybe ONE lesson, but no. Guess we shouldn't have sunk so much money into the truck and SUV industry.

Screw the auto industry.

A bunch of people lost their job when the .com bubble burst, and nobody was asking for bailouts then. Let them fail. Maybe Michigan will realize that they can't raise taxes and not be a right to work state and still attract new business.

CP_Obsessed_Freak1987 said:
Screw the auto industry.

After their arrogant rejection of the thought of reducing wages, I feel the same way. They can thank their unions for that reckless decision.

It's ridiculous that this conversation has become about unions and wages. What's killing Detroit has very little to do with how much the Big Three pay its workers.

Union autoworkers make on average, about $55/hour. That includes healthcare, 401K, vacation, sick days, the works. Non-union autoworkers make about $45/hour, on the same basis. Most of the difference is in better benefits for union workers.

If you took union wages at the Big Three and scaled them down to the equivalent of their non-union counterparts, it would save a few hundred bucks a car. But many American car lines are already sold for less than their foreign equivalents, and it's not inducing American consumers to buy "American" cars in droves. Most Americans don't drive American cars because they're simply not as good as foreign cars (Kia, Yugo, and maybe Hyundai not withstanding).

If any of the Big Three fail, it will have been because of the confluence of four factors:

(1) continuing underinvestment in R&D (I read that GM's hybrid powertrains are now about seven years behind Toyota, for example).

(2) falling behind the curve in understanding consumer demand -- whoda thunk gas would ever climb to $4/gallon? The Japanese, apparently.

(3) the falling ratio of the number of cars produced per year, divided by the number of retirees whose health and pension obligations must be serviced. GM, Ford, and to a lesser extent Chrysler, used to employ hundreds and hundreds of thousands of autoworkers. They contractually promised to take care of these people after retirement. That might have worked if they had continued to employ hundreds and hundreds of thousands of autoworkers, making 75% of the cars American buy, as in the old days. But market share and real production numbers dwindled, making that obligation a groaning, teetering stack of bricks that increasingly have threatened to bring the whole corporations down.

(4) the credit/subprime/derivative crisis that has shaken our capitalist economy to its very foundations. In a regular, run of the mill, sort of recession, there would still have been lots of credit floating around the financial universe to help tide them back over to good times. Remember that in the original Chrysler bailout of 1979, the U.S. government didn't actually loan Chrysler money. They merely guaranteed the $1.5 billion that Chrysler managed to obtain from other sources.

If any one of these four factors hadn't happened at the same exact time as the other three, the Big Three wouldn't be in the boat they're in now. Unfortunately, it means that their financial problems are a lot more complicated and difficult to put straight than simply cutting the line workers' benefits by 20%.

Ensign Smith said:
It's ridiculous that this conversation has become about unions and wages. What's killing Detroit has very little to do with how much the Big Three pay its workers.

Union autoworkers make on average, about $55/hour. That includes healthcare, 401K, vacation, sick days, the works. Non-union autoworkers make about $45/hour, on the same basis. Most of the difference is in better benefits for union workers.

Not sure where you got your figures from, Mike, but it's actually around $73 an hour to GM employees compared to $45 an hour to non-union ones.

At G.M., as of 2007, the average worker was paid about $70 an hour, including health care and pension costs.

The calculations show, accurately enough, that for every hour aunionized worker puts in, one of the Big Three really does spend about$73 on compensation.

Reference

Reference

The $73 an hour figure is what the actual car company has to pay out for each worker, not what the actual worker sees in benefits. We're not talking about the workers getting a fair shake, we're talking about the car companies not being able to make ends meet. For that you have to take into consideration what the company pays out per employee, not what the employee sees. So, yes, the GM auto worker is overpaid at an average of $28 per hour and your numbers would definitely change drastically if you take these facts into consideration. I have no disdain for unions other than the auto workers one. They have negotiated themselves into this mess and deserve everything they receive from it.

The other major issue that I alluded to earlier is that US manufacturers think that giving people so many options that their heads spin will make them more likely to buy their cars. This is completely untrue and is pretty obvious by looking at that foriegn manufacturers. It used to be that the majority of the US population wanted big cushy cars and trucks with as many options as the eyes could see. This costs the manufacturer a great deal of money to be able to produce. It's apparent that people are more worried about reliability and good gas mileage than 47 cup holders and wood accents but we can't seem to understand that so we keep making 152 different versions of the same car rather than making 3 and letting people decide from that.

That $73 figure (sometimes cited as being $70, sometimes $77) includes the cost per worker hour to service retiree pension and health care obligations. Strip that out, and you get the approximate $55/hour total individual worker compensation, not just salary. In fact, I saw a good link about this other day. Let me see if I can dig it up and I'll post it later.

Regardless, labor cost per Big Three vehicle tops out around 10%. Even if you were to somehow magically cut that cost in half, you would see at most a 5% reduction in the price of your American car. Not particularly earth-shaking, and not enough to change the playing field with foreign automakers.

It isn't fair, let alone accurate, to demonize union autoworkers as being the root of Detroit's problem. If anything, they are a very small twig.
P.S. Brian, I just read the two references you posted and they pretty much back everything I've said.

No matter how you feel on this situation weather your for a bail out or your against it. Weather your for union or against union. If the Big three takes a dump it will not only affect Detroit or the state of Michigan it will affect this entire country. This is would be a disaster. It would start with the Employees of the big three. then trickle down to there suppliers. it would send most of the suppliers out of business. those workers out of a job. next u see smaller business like little grocery stores because no one can buy anything. Its a mess its the biggest mess of all time. I believe bigger then the Great Depression. I work for a Grocery store (meijer) we are already seeing the affect it is having. Our holiday sales are down 35% from last year. Or gross sales for the year are down 25% from last year. I saw a report on WAL*MART there sales are also down 30% so its getting BAD. something needs to be done and quickly before its to late. thats if its not to late already.

No worker in the auto indrustry needs to make any more than 25 bucks an hour.