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Would we be better off if Detroit went bankrupt

Discussion in 'Uncategorized Threads' started by bigdogtx, Nov 19, 2008.

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  1. bigdogtx

    bigdogtx Well-Known Member

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    Different perspective,,,,I sure would feel better for our economy if Mitt was getting sworn in in January than those who were running,,,,but that's another day.

    Let Detroit Go Bankrupt
    By MITT ROMNEY
    New York Times
    Op-Ed Contributor
    11/18/08

    IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

    Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

    I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

    First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

    That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

    Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

    The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

    You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

    The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

    Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

    Just as important to the future of American car-makers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

    It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

    But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

    The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

    In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

    Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.
     
  2. JBrooks

    JBrooks TS Member

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    The problem is obvious.
     
  3. 391 shooter

    391 shooter Well-Known Member

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    Yes Yes Yes
     
  4. bobdog

    bobdog Active Member

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    But will the Democrats do what's right or will they pay off their friends in the UAW yet again at the country's expense?
     
  5. dbcook

    dbcook TS Member

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    i would like to see a chart such as the one jbrooks posted for hourly workers at the big three compared to the japanese.only this one show white color executive salaries bonus etc.compared to the japanese & the rest of the private sector. dwain
     
  6. CalvinMD

    CalvinMD Well-Known Member

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    No wonder the push to automate with robots...they don't complain or refuse to work without a raise, they rarely get sick and upon retirement they just get melted down.

    My dad was a Dept Supervisor at the GM Plant in Baltimore...he always was amazed at the heights that the union would go at contract time even when they were warned that the plant was one step from going to Mexico...lets face it ...being an autoworker is hard work but all but a handful of those are "skilled" labor...or as dad used to say ...Get this dumb bastard outta here and send me another monkey
     
  7. cubancigar2000

    cubancigar2000 Well-Known Member

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    Brooks is right, there is no point in a bailout as it will only extend the problem down the road to be dealt with again. The unions helped break these big three companies along with US regulations. They cannot be restructured effectively without hiring a complete new staff all the way from the top to the bottom. People dont deal with change so there will be no change. The end is inevitable for them. I have seen hundreds of companies go down this road. So the answer to this topic is yes, we will be better off but it will take time
     
  8. grnberetcj

    grnberetcj Active Member

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    Chapter 11....

    FEAB9

    Curt
     
  9. nipper

    nipper TS Member

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    yes we would be better off in the long run

    bill
     
  10. highflyer

    highflyer TS Member

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    I have been all over this country and Detroit is the dirtiest city I have ever been through. Maybe they can take a few billion and clean it up.
     
  11. bigdogtx

    bigdogtx Well-Known Member

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    A couple more points to ponder:

    If the government takes an ownership in the auto makers, which the management does not object to, and force the "green" cars to be made,,,, which most consumers will NOT buy,,,,then what will happen to them?? Will we then just own some corporate shells and buildings, and have billions more in debt?

    What happens to the union if they become, "government owned" as you cannot strike in a government job, i.e. air traffic controllers?
     
  12. JBrooks

    JBrooks TS Member

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    As we know, Barney Frank is a certifiable fool, idiot, scumbag and crook. Ain't it grand he is "in control".

    AIG, through their bonding operations, is one of the underpinnings of the entire construction industry. It needed liquidity because of its investments in the securitized mortgage instruments generated by the Barney Frank "controlled" Freddie Mac and Fannie Mae.

    Barney Frank is one of the prime architects of this whole mess. He should be in jail, not in charge.
     
  13. Gold E

    Gold E TS Member

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    The link is to the text to go with Mr. Brooks chart. It's worth reading.
     
  14. Frank C

    Frank C Well-Known Member

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    UAW comment...
     
  15. rodbuster

    rodbuster TS Member

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    The way I see it is, the problem is not with the price of the big three's autos. It is the perceived quality. The consumer believes that the Hondas, Toyotas, etc are better cars than those produced by the big three. Maybe I am in the minority here by believing that the the American worker is the best in the world at what he or she does?
     
  16. H82MIS

    H82MIS TS Member

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    don't ya just love it,,,,,,,
     
  17. Chango2

    Chango2 Active Member

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    I think all the posts have strong and logical points thus far. I am amazed that the workers for U.S. cars earn so much more. Toyota pays 47.00 bucks per hour...not bad, not bad at all.

    One would think U.S. auto workers would settle for that with the perk of profit sharing as a perk.

    Romney makes lots of sense.

    Where is Maggie Thatcher when we need her advice? Well..unfortunately, she retired and now suffers from dementia. A healthy Ms. Thatcher and Mr. Romney could, maybe really lay down the law and get the automakers going again.

    I do have one question. Despite Mark Donahue's and Craig Breedlove's best efforts to improve the sporty image of AMC, the company still went away. How come?

    Shoot Often, Shoot Well

    David
     
  18. bigdogtx

    bigdogtx Well-Known Member

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    812,,,,just showing the audacity of many of those who don't realize who is watching....barney fwank showing his disdain for America as well,,,,doesn't look like "change" to me????
     
  19. H82MIS

    H82MIS TS Member

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    got change for a buck? thats about all I got left,,,dow down another 430 today,,,thanks osama,,,,geeeeezzzzzz h christ,,,

    My azz is really starting to hurt,,,,,
     
  20. rodbuster

    rodbuster TS Member

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    This is from OICU812's post above;

    The CEOs of the Big Three automakers reportedly flew private luxury jets to Washington to plead for a $25 billion taxpayer bailout to save their debt-ridden industry — ringing up tens of thousands in charges even as they cried poverty.

    Recipients of eight-figure bonuses in 2007, the corporate cowboys used their executive perks — which for GM's Rick Wagoner include the run of a $36 million Gulfstream IV jet — to arrive in style as they went begging before Congress.

    Wagoner, whose flight reportedly cost $20,000 round-trip — about 70 times more than a commercial airline ticket — told Congress he expected about $10-$12 billion from the requested bailout.

    These big wheels think they can do anything they want. The top brass is the real problem with the big three. Is this like Nero playing the fiddle while Rome was burning?
     
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