Thursday, November 13, 2008

Quotes From Around Yon Autosphere

In addition to the banks, savings and loans, financial services companies, insurance giants, and any corporation that can redefine itself as being either a crazy uncle or poor cousin of one of the above, there is also Detroit seeking to be rewarded for designing ugly cars that no one wants and that get less gas mileage than the Space Shuttle. It appears that no level of failure, no limit on incompetence and stupidity, will stay the government from handing out cash to the unworthies, the profligates, the dimwitted sots who run American corporations.

And of course, we hear the tocsin sound among Democrats, calling the faithful to class warfare as an effort is still underway to find some means of making the rest of us pay for the stupidity of those who got tangled up in the sub prime mortgage mess.


Ford, General Motors and Chrysler are American institutions. They have helped define the character, the shape and the economy of the nation for a century. They're also just companies – corporate entities designed to provide goods and services at a profit. For too long, these firms have failed at that goal, and they've dragged down an entire region with them. We can spend that $50bn simply perpetuating, for a while longer, the names and structures of these companies. Or we can spend that $50bn helping the people and the cities of the Midwest. I don't think we can do both.

Ford, GM, and Chrysler are done for regardless, Obama. Bailing them out yet again won't fix them. It will just prolong the agony.

. . . Throwing another $25 billion of taxpayer money down the rat hole won't do anything other than postpone the crisis. Just let the companies go bankrupt, Obama. That's what bankruptcy is for. Let the shareholders and debt holders take the hit. Not the American taxpayers.

Ford, GM, and Chrysler will continue to make cars. They will continue to employ Americans. (When airlines go bankrupt, they keep flying). Most importantly, they will finally be able to do the major restructuring that they have been postponing for decades.

Help retrain the workers, obviously. Help bail out some of the pensions. But don't blow your first tough test on the economy and bail out an industry that should have died 20 years ago.


We're all about free enterprise. But if a corporation is so poorly managed to require massive government assistance to stay afloat, that management should get the boot and the government (and, by extension, the taxpayers) get some oversight into the management of the bailed out company.

And about those companies that are too big to fail? How about this; if a company is too big to fail, it's just flat out too big.


America has two auto industries. The one represented by GM, Ford and Chrysler is Midwestern, unionized, burdened with massive obligations to retirees, and shackled to marketing and product strategies that have roots reaching back to the early 1900s.

The other American auto industry is largely Southern and non-union, owes relatively little to the few retirees it has, and enjoys a variety of advantages because its Japanese, European and Korean owners launched operations in this country relatively recently. Their factories are newer, their brand images and marketing strategies are more coherent -- Toyota uses three brands in the U.S. to GM's eight -- and they have cars designed for the competitive global market that exists today.


Think you got it rough? Well, what if you built a sleek, energy efficient 181,000 square foot corporate headquarters for $68m and seven years later you had to lease it to Taco Bell for ten years? More specifically FoMoCo leased their former Premier Automotive Group (PAG) headquarters to Yum Brands, Inc., of Louisville, Ky. Yum was spun off from PepsiCo in 1997 and currently operates over 35,000 Taco Bell, KFC, Pizza Hut, A&W and Long John Silver "restaurants." Annual revenues are more than $10 billion and their stock is trading at $25.87 per share. Meanwhile, Ford sold Aston Martin to some Kuwaiti investors, Jaguar and Land Rover went to Tata (in India) and is moving Volvo to . . . New Jersey! Meanwhile a share of Ford stock is worth $1.80 — still somehow cheaper than a gallon of gas.


How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.

The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competition that could have forced Detroit to adapt long ago.

Folks, we're in a very fragile time right now in our economy and all you free marketers and deficit hawks are just going to have to face that fact that the government must get involved in this economy on a grand scale.

And I'm literally talking a trillion dollars or more. The auto sector will see some of that money, but a bunch of it will go to infrastructure improvements. But it needs to happen quickly and it needs to be big.

There is literally no other way. Well, unless you don’t mind 10% unemployment and millions applying for unemployment benefits and government subsidized healthcare which will cost billions and we’ll get nothing in return for it.

The choice is yours.

The big three U.S. automakers deserve to go down, in no small party because the government has enabled them to stagnate for decades. Yeah, it’s going to hurt. But that’s capitalism. It would have hurt a lot less if they’d adapted or disappeared years ago.

The auto industry and auto exports have top billing in China's current 5 Year Plan. (Yes, for sentimental reasons, they still have one of those.) Yet when it comes to the car export part, China is still light years away from fulfilling their master plan. The Vice Director General of the Department of Mechanic, Electronic and Hi-Tech Industry, Ministry of Commerce, made the startling admission. "China's auto exports are still in the early stage, leaving a large gap in global exports," Zhou Shijie told Xinhua.

Translation: China's auto exports are in the doghouse of the export powerhouse. "It is difficult for export companies to master the vehicle entry policy in foreign countries." Translation: Our cars failed miserably in crash tests, we have trouble with pesky U.S. FMVSS and European ECE regulations, which we can barely comprehend (let alone satisfy). We’re fed up and we're not gonna take it. No, we're not gonna take it. Uh-oh.

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