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A centre-left country?
November 20, 2008
The Inn Between’s waitress is busy delivering the lunch special of breaded chicken, mashed potatoes and green beans to a stream of customers who work at different places but all seem to know one another.
The banter is raucous and sustained, and when the conversation turns to a proposed federal bailout for U.S. automakers, there is little support for the idea.
“I don’t think they should bail them out because … obviously something’s not right in the way they’re running their business, and why should the American people have to bail them out if they can’t figure out how to do it right?” September Quinn, the busy waitress, said after the lunch rush at the Inn Between.
It looks like the CEO’s have been paid very well. Why don’t they take responsibility and shell out there millions they have sucked out of these companies.Salary cap on CEO’s!!!! No bonuses!!!!!!!! Take back some of their millions! Sell their cooporate jets!
Posted by: Frank | November 20th, 2008 at 11:33 pm | Report this commentHell they could bail themselves out! Bunch of greedy losers!
Posted by: Frank | November 20th, 2008 at 11:35 pm | Report this commentIts always the Union peoples fault. Never Upper Management, lower management middle management. Could someone tell me how many people that involves. Im not Union but i get tired of the people who are on the lines actually doing this boring work who take the cuts and the blame for everything.
Posted by: Chevy | November 20th, 2008 at 11:37 pm | Report this commentPlenty of blame to go around, but what good does it do blaming? Detroit makes great SUV’s and luxury cars. Washington DC doesn’t like SUV’s and luxury cars.
It comes down to a question of power, and the UAW folks and the Big 3 don’t hold a candle to DC.
JBP
Posted by: John Powers | November 21st, 2008 at 12:13 am | Report this commentI am a Union aircraft worker. And yes Chevy,..what a name,..you are wrong. Like you said,..tired of the workers Union or no-Union taking the blame. Who else is there,..hmmmmmmmmm,..could it start with your filthy rich CEO? That is problem number 1. Then he has all his cronies underneath him making their millons. Also why keep building gas guzzlers,..big trucks,SUVS. Another poor management problem.I personally hope you do not get bailout. Bankrupcy then try to restucture. Fire your CEO’s!
Posted by: Frank | November 21st, 2008 at 12:20 am | Report this commentAccording to the taxfoundation.org Richard (Dick) Shelby’s home state of Alabama ranks 7th in states that receive money from the federal government. Shelby grilled the Big 3 CEOs yesterday. Simply put Alabama (like most red states except TX, Nebraska & NDakota) get more money from the federal government than they send.
What name do you prefer, Red State Socialism or Red State Welfare or Republican Welfare? In fact Alabama gets $1.66 for every $1.00 they send. Mississippi gets $2.02. Not bad huh auto-working folks? It must feel good to subsidize “poor red states” with booming auto industries and then have their hypocrite congressman tell Detroit to jump off a cliff? All those so-called $65 an hour janitors must be so happy they worked their tails off to subsidize low-wage-leech states down south. Now that the Midwest needs help we’re told to go to hell. Thanks!
Oh and what do we in the Midwest get in return for our federal dollars? Well let?s see: Michigan .81¢, Ohio .86¢, Ind .81¢, Illinois .71¢, Minn .86¢.
What happens if there?s a conflict like WWII? Are you going to trust tanks and vehicles built in companies that are foreign owned? The Chinese are making cars now too. Maybe they can make our tanks huh geniuses?
Posted by: Mike65 | November 21st, 2008 at 12:50 am | Report this commentVery funny Mike. Number 1 these little 3 do not make our tanks. But maybe they do as far as gas guzzlers. Let them go bankrupt,..let them restructure,..build BETTER vehicls. Fire overhead that have lead them on this tin cup handout. They will not go away,..they can cut WAY back and survive. Who’s next MIke,..the poor oil companies,..then who??? Its survival of the best!!! I do not want to bail out these looser CEO’s,..want them all fired!!!!!!!!!!!!!!!!!!!!
Posted by: Frank | November 21st, 2008 at 1:06 am | Report this commentSometimes there are acts of God, and provident people are hurt. And we all know that a helping hand to these people is all they need–because their life has demonstrated their capabilities.
But we also know down in our bones–because life has taught us– that money alone won’t help when someone has failed the competitive test. It matters not if it be your child, or Wall Street, or Detroit–money will merely enable them to keep screwing up a bit longer. Waitresses know this; Moms and Dads know this; everybody who ever made an honest dollar knows it. If no change is made, then they’re going to end up where they’re headed. We all know this.
Mercedes couldn’t make anything out of Chrysler. Took their beating and went home. Long Term Capital Management didn’t teach us a thing. Traders and investment bankers will leverage down to a zillion to one if you let them.
Tough love is the only way, if saving someone is the goal. They have to show you change, before you hand over money. If they don’t change, you’re enabling failure to fail again.
I can’t believe those top execs just went to Washington without a change plan and program to sell; but no, they just went and said ‘gimme some money’. Just like AIG is still doing–they think they have a call on the US Treasury. We need to jerk a knot in these folks before any money flows, because their parents didn’t teach them when they were kids.
F. Horne
Posted by: F. Horne--USA | November 21st, 2008 at 1:19 am | Report this commentThe preponderance of Americans who express their views on such things are idiots. They do not realize the earthquake effect the downfall of any one of these companies might have. They won’t realize until one of the 3 million Americans who lose their jobs because the bailout is disapproved is in their living room with their wife and kids hog-tied, robbing them for everything they have, because they have just lost their job. The preponderance of ignorant people with views on this subject fail to realize that 25 billion dollars, is about $100 of each tax payers already payed taxes. They are too mean-spirited and greedy to understand what it means to do something for the good of the people.
One more thing. These CEO’s didn’t start these companies. They are just paid to run them. So why would they pay out of their pockets to fix them? Another thing. These companies have plants all over the GLOBE. They don’t have time to wait in line in an airport when they are running companies with hundreds and thousands of business locations.
Get it together America.
Posted by: Sadly | November 21st, 2008 at 2:07 am | Report this commentFrank, the oil companies made record profits. Why would they need a loan? That doesn’t even make sense. It’s estimated they already receive 15 to 35 billion in subsidies from the US government.
So you think it’s funny about possibly three million people losing their incomes? The big three were making what the people (i.e markets) wanted at the time (Trucks and SUVs). Full disclosure: I am biased because I live in Metro Detroit. I also worked in the advertising business here as well. I worked on all three auto accounts. It’s not just the execs and the line-workers who will be affected. Besides show me an industry that does not get some type of federal assistance or grant, as mentioned above? Let’s get terms correct as well. It’s a loan not a bailout.
F.Horne in response to your remark about Chrysler. I had a close friend who worked there during the Daimler-Chrysler period. If filling out 2 forms for sticky notes sounds like a productive use of time? This is how the Germans ran things. Well, no wonder they went back to Germany.
Posted by: Mike65 | November 21st, 2008 at 2:29 am | Report this commentThere are three Tier One suppliers and 5 Tier Two here in my town that not only supply Ford and GM but also Honda and Toyota. So when the Ford and GM business is lost or their payment for money due to our company is tied up in bankruptcy and we have to downsize or close because of the reduced volume and no money coming in, just how many HONDA AND TOYOTA workers will sing the same tune as in this article. Some of our brackets ship to defense assembly facilities. Reckon where they will get their parts for our Military?
Something to think about before getting too smug.
Posted by: Linda | November 21st, 2008 at 2:37 am | Report this commentFRANK says “Very funny Mike. Number 1 these little 3 do not make our tanks”…how wrong you are. The PARTS/COMPONENTS for our tanks ARE made by the SUPPLIERS to GM, Ford and Chrysler. Not only our tanks but helicopters, aircraft and ships to include electronics.
There are over 3300 parts that make up an average vehicle. GM, Ford and Chrysler BUY these components from Tier One and Tier Two suppliers, they don’t make them! They only assembly the completed components into the final product.
Posted by: Linda | November 21st, 2008 at 2:54 am | Report this comment“It’s a loan not a bailout”
Whether loan, loan guarantee or equity infusion, the investment is a bailout. The tax-payer is on the hook for default.
The only argument that the top management at the 3 USA-based manufacturers offered in its testimony that makes any sense is that it is better to keep the companies going as going businesses rather than disrupting operations through “normal” bankruptcy. Any other argument made - notably top management’s retention if more tax-payers funds are advanced - is ridiculous.
Posted by: Wendell Murray | November 21st, 2008 at 2:55 am | Report this commentObama is committed to saving the US automakers.
In Germany BMW workers are having to take 4 or 5 weeks unpaid vacation over Xmas; the layoffs at Peugeot in France will be via retirements.
In the US auto industry some unpaid vacation right down the vertical chain in the industry might have to happen until Obama becomes president.
Btw, it seems to me that there should be an “overlord” appointed to manage the restructuring of the 3 automakers in trouble. In other words, the auto industry needs its own “Hank Paulson” for the job. But who?
Posted by: J.J. | November 21st, 2008 at 7:14 am | Report this commentDear Mr. Crook,
I’m confused. What does “bailing out” (I know its really a loan) the auto motive industry, have to do with being a centre-left country?
Was it a centre left approach to bail out the financial industry? (that was NOT a loan)
Is the US government exerting socialist tendencies when it comes to the banks, but sticking to its capitalists roots when it comes to the car companies?
I’m confused. Which is it?
Posted by: meljomur | November 21st, 2008 at 10:34 am | Report this commentJ.J. ““overlord” appointed to manage the restructuring of the 3 automakers in trouble”
New top management is needed. Current top management has no credibility, even if the individuals in top management are likely very competent people. Unfortunately they have been at the helm as the ships have been sinking.
As it stands now it seems clear that the Bush Administration has already gone on vacation until the new Administration takes office. Unbelievably irresponsible, but what can one expect, I guess, given the past 8 years of aggressive irresponsibility. Maybe passive irresponsibility is better.
An governmental “overlord” will have to at least appoint new top management. I assume there are sufficient competent individuals out there that the Obama Administration can appoint to handle that. Then it is up to new top management to come up with a restructuring plan for the industry. European countries do this on a regular basis, so I assume someone could talk to European governments on what they recommend. It looks likely that Congress now or the new Congress is willing to advance funds if the “Big 3″ can come up with a credible plan.
The recent testimony was disastrous. Not least the emblematic flying in on private, corporate jets and the tin-eared response to criticism of that that it is “company policy” that executives not fly on commercial jets. Absurd.
Reportedly (I am not interested in looking through automotive company financials myself) however any one of the “Big 3″ or an important supplier could run out of money before the new Administration takes office. Liquidation, triggered by illiquidity, is the worst possible outcome, so let’s hope not.
The grossly inept response, or more accurately I guess non-response, of the Bush Administration with little help from Republicans in Congress is truly unbelievable. Democrats in Congress are foundering, but at least they want to do something.
Posted by: Wendell Murray | November 21st, 2008 at 3:25 pm | Report this commentI bet Obama has some bang-up ideas on running a manufacturing business, he has so much experience in industrial engineering and management.
Washington needs to get out of the Car business. Get out of CAFE, get out of anti-trust manias concerning dealer groups and service parts, and don’t even think about bailing out this bunch of bad apples.
JBP
Posted by: John Powers | November 21st, 2008 at 4:03 pm | Report this commentElesewhere on an FT blog, I recommended a look at how Chapter 11 for GM and Ford might work:
www;voxeu.org/index.php?q=node/2574
In this article, Jshua Rauh and Luigi Zingales include, a priori, the restructuration of those companies (and the failure of Chevrolet).
Having thought further, I consider that, whilst the current model range of Ford is sustainable, that of GM looks trickier. How do you restructure an auto-maker when they have sush low market potential?
Posted by: Derek Tunnicliffe | November 21st, 2008 at 4:24 pm | Report this commentDT,
Dump CAFE. Gasoline is $1/gallon. Bring on the Corvettes, Surburbans, Escalades.
JBP
Posted by: John Powers | November 21st, 2008 at 5:28 pm | Report this commentthe car industry should not be bailed out. they should be allowed to go into bankruptcy –>the structural kind, not the complete liquidation kind, then they will re-emerge 3 or 5 years later stronger and leaner.
this will enable a lot employees to keep their jobs and for the companies to not default on their loans.
it is far more efficient than letting nancy pelosi, harry reid, and people like barney frank oversee a budget that will end up blossoming to around $100B after they tack on all of their ridiculous spending requests for their cronies.
Posted by: Michelle | November 21st, 2008 at 6:10 pm | Report this commentI don’t know where you would ever get such a notion, Clive.
America is firmly on the right.
Have you ever heard of a center-left imperial power?
Is that even possible?
Obama is one of those little miracles of history.
But, remember, it took eight years of bloody stupidity and utter waste to set the conditions for Obama’s election.
You might decribe it as beating your head against a wall for eight years. I’m not sure it is a revolutionary thing when you stop doing so.
America learns and changes very slowly - that’s part of the definition of a truly conservative country.
But I do belioeve over coming decades, great changes are going to take place. The rise of China and India and the imperial over-reach of America is going to create a new world environment in which the U.S. loses its ability to stand alone.
The economic realities of this new world have only begun to sink into the average American’s consciousness.
The silly politician’s phrase “the American dream” is coming to an end within the lifetime of many readers.
Posted by: JOHN CHUCKMAN, TORONTO | November 23rd, 2008 at 5:20 pm | Report this comment“it is far more efficient than letting nancy pelosi, harry reid, and people like barney frank oversee a budget”
I agree that it looks like the Democratic “leadership” in Congress (I leave Barney Frank out of that group however) would likely throw away tax-payer funds to satisfy union supporters. There are insufficient votes however. The Bush Administration and the Republicans in Congress as usual have their heads in the sand on the issue - even worse.
The brief paper on the issue by the two professors at the University of Chicago recommending a federal government-sponsored debtor-in-possession restructuring seems to make a lot of sense for the reasons the authors cite.
Permitting the liquidation of any of the 3 major auto-makers would truly be disastrous as of course would be an advance in any form of another $25 billion from the public treasury.
Posted by: Wendell Murray | November 23rd, 2008 at 7:30 pm | Report this comment