Should we bail out Landi & Jag?

[DrDee]

I genuinelly beleive that this situation and how things work is too complicated for most people to fully appreciate, hence the OMG FAT CATS LET THEM DIE LOLZ comments.

Care to explain it in a basic way?

 

[[TW]Fox]

If cost to society of Jag/LR demise > cost to society of Jag/LR bailout then bailout = winz

 

[Rob_S]

They'll be interested in whatever can be done to ensure maximum revenue generation and upside on that. That doesn't neccessarily include keeping everyone in a job in the UK.

I agree, this is the biggest problem, for this to work then there must be some sort of guarantee for UK employees. Perhaps some sort of law for the future, whereby non UK companies buying into the UK should not be allowed to move production to another country, not much use for the current situation, I know, but it's a thought. Of course this would bring the added problem of companies not wanting to invest in the UK in the first place - a bit of a catch 22.

 

[Mad old tory]

If cost to society of Jag/LR demise > cost to society of Jag/LR bailout then bailout = winz

Bingo.

 

[The Edge]

BLMC was created in 1968 by the merger of British Motor Holdings (BMH) and Leyland Motor Corporation (LMC), encouraged by Tony Benn as chair of the Industrial Reorganisation Committee created by the Wilson Labour Government (1964–1970).[3] At the time, LMC was a successful manufacturer, while BMH was perilously close to collapse. The Government was hopeful LMC's expertise would revive the ailing BMH. The merger combined most of the remaining independent British car manufacturing companies and included car, bus and truck manufacturers and more diverse enterprises including construction equipment, refrigerators, metal casting companies, road surface manufacturers; in all, nearly 100 different companies. The new corporation was arranged into seven divisions under its new chairman, Sir Donald Stokes (formerly the chairman of LMC).

We've been here before

 

[Mad old tory]

We've been here before

Not really relevant is it? This case is about helping out two manufacturers who already have close links, not about creating a large manufacturer out fo lots of little ones.

 

[The Edge]

Not really relevant is it? This case is about helping out two manufacturers who already have close links, not about creating a large manufacturer out fo lots of little ones.

It is because you're partially nationalising the company. The effect could/would end up the same, with the government pumping money into a dying horse.

I don't know what the answer is, but Tata must have some sort of obligation to keep it afloat before we go down the road of bailouts. Of course there is the risk that they shut down in the UK and move it all out but didn't Jag record it's first profit in years the last quarter? It seems odd that they need help to keep a profit making business afloat.

 

[stockhausen]

That's because the cost of bailing them out would be lower than the cost of not bailing them out.

Except that that doesn't take account of the message that is given to future risk-takers - "No risk there Guv, if it all goes horribly wrong, the Government will bail you out".

Bail-outs should be accompanied by the Government having first claim on any profits and/or acquiring partial ownership.

 

[rypt]

Tata are rich enough to weather the storm, don't see why we need to help them do it.

 

[The Edge]

Bail-outs should be accompanied by the Government having first claim on any profits and/or acquiring partial ownership.

As I said above we've been down this road before, albeit under a differant set of circumstances.

 

[cheets64]

If they are bailed out we the tax payer should be able to have cheaper cars. NO?

 

[[TW]Fox]

If they are bailed out we the tax payer should be able to have cheaper cars. NO?

Errr no

 

[Jonnycoupe]

why should the tax payer bail out an unprofitable company, .

Dunno, JLR are profitable, they are short of cash. They may well still report a profit for this year, just lower than expected. Ford were very good as accounting and covering JLR stuff into the corporate machine so the marques part of PAG were never really shown to show as much profit as they were making.

 

[Jonnycoupe]

If they are bailed out we the tax payer should be able to have cheaper cars. NO?

Does the bank that provides your mortage have use of your spare room at the weekend? Its a loan they are asking for, not a media fueled 'bailout', people who want to buy the cars cant get credit just like large companys. Its a short term problem which is being unfairly compared to the GM and ford fiasco in the states.

 

[rypt]

Its a loan they are asking for, not a media fueled 'bailout', people who want to buy the cars cant get credit just like large companys.

So?

If they want a loan they can go to a normal bank, the taxpayer is not a bank.

 

[Jonnycoupe]

Thats the problem though, its not poor companys structure or lame product, its the silly credit crunch where in this cash its an accurate use of the word. The exact credit they planned to use is no available, this wont kill the company, just mean cost saving through programme delays/cancelations and mainly labour cost reduction.

 

[rypt]

Thats the problem though, its not poor companys structure or lame product, its the silly credit crunch where in this cash its an accurate use of the word. The exact credit they planned to use is no available, this wont kill the company, just mean cost saving through programme delays/cancelations and mainly labour cost reduction.

So why should the companies get money from the taxpayer, when the taxpayer is int he same boat with regards to getting any form of a loan?

Besides, Tata are rich enough to not need any form of a loan.

 

[[TW]Fox]

So why should the companies get money from the taxpayer

Becuase if the company collapses the cost to the taxpayer and the economy of the large amount of additional people claiming benefits, the reduction in our exports and the collapse of smaller, 100% British suppliers who depend on Jaguar/Land Rover for their survival will be higher than simply loaning them the cash.

Why are so many people finding this so difficult to comprehend?

 

[rypt]

snippity snip

Free market...

If a company is not strough enough to weather the storm it should be let to fail, this allows for better and smarter companies to take over. British Leyland was bailed out multiple times, and look how well they've survived...

Government bailout of non-essential companies hinders competition and innovation. If Jag was the LAST car maker left on the planet, and without them we'd have no more cars then they can be classed as essential. In the same way that any consumer bank, holding money of PEOPLE is essential; however corporate banks or investment banks are not essential.

Fact is, if there are currently 10k cars being produced in the UK, and there is demand for 10k, and Jag makes 1k of these, then should Jag stop making that 1k ... there is still demand for 10k but only 9k are being made. This means that the other car companies will ramp up production to make those extra 1k cars, hiring some of the people who used to work for Jag.


Besides, you have still not answered by question, why should Jag be bailed out if Tata have a few billion that they could use themselves?

 

[stockhausen]

Becuase if the company collapses the cost to the taxpayer and the economy of the large amount of additional people claiming benefits, the reduction in our exports and the collapse of smaller, 100% British suppliers who depend on Jaguar/Land Rover for their survival will be higher than simply loaning them the cash.

Why are so many people finding this so difficult to comprehend?

What would the saintly Mrs Thatcher have done I wonder