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A couple more thoughts on the GM, Ford and Chrysler bailout.



November 19, 2008 – Comments (3) | RELATED TICKERS: F , GM , TM

As I listen to our representatives ask questions of the "big three" executives I hear them getting the executives to make promises in how they will spend the money. "You must build hybrids" - "already done" say the execs.  "You must build cars people want to buy" - "already done" say the execs. "You must give us oversight so we know you spend the money in the USA" - "ok" say the execs. And on it goes.

But my absolute favorite is when these executives assure Representative A that the money is desperately needed for their survival, and then assure Representative B that there will be no problems in paying the loan back.

Note to Representative B: It is a loan. You know there is risk. Shut up and make a decision.

Note to all the rest: These are executives of automobile companys. If you think you can tell them how to run the companys better... you are probably wrong.

The executives you are questioning were not there when their companys blundered by not following up when the US supported the development of hybrid technology in the late ninetys.

Most of you Representatives, however, were there when your decision to offer tax credits for hybrid automobiles put the "big three's" higher mpg offerings at a competitive disadvantage. You gave a boost to Toyota, at the expense of the domestics when you made that decision. And while you keep comparing the failure of the "big three" to not develop a hybrid to Toyota's smart decision to manufacture one, do not forget that the Prius was a bit player until you gave that tax credit. Without the credit it would have had one good year when oil prices skyrocketed.

You also failed to have the foresight to announce that credit would begin three years in advance of actually issuing it. You did not give enough time for the "big three" to prepare. That unbalanced the playing field in favor of what was until then a much less profitable decision by TM.

In the meantime, as you recommend the "big three" emulate the foreign car manufacturers decisions, do not forget the decisions they made to get into the big SUV market just as it prepared to collapse.

Or the fact that the legacy costs happened at a time when you were promoting unions, and Toyota expanded at a time when you were weakening unions.

So shut up, vote, give them the loan, and hope for the best.


3 Comments – Post Your Own

#1) On November 19, 2008 at 2:44 PM, JeanDavid (74.73) wrote:

Plus ça change, plus c'est toujours la même chose.

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#2) On November 19, 2008 at 4:40 PM, mrindependent (35.29) wrote:

This whole thing is a battle about the labor movement.  More money equals more union power.  Less money equals less union power.  I think unions offer no positive benefits but they offer unbelievable negatives in the form of lower productivity.  Accordingly, I want the UAW to take its licks in a bankruptcy.  If you look at their course of dealing, you can see they are in outer space.  Even today, they are unwilling to make significant concessions.  This pattern is identical to the stupidity of the steel workers unions.  The steel workers unions never compromised.  Eventually, their employers liquidated.  Later, new buyers came in and restarted the plants.  They were still stuck with the union, but the difference was that the union was finally willing to negotiate reasonable terms.

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#3) On November 19, 2008 at 6:11 PM, devoish (62.74) wrote:


To say the union offers no positive benefit completely ignores the benefits provided to the Americans who worked for the "big three". Without those benefits they would not have healthcare and you would not have a healthcare company to invest in. Without those benefits they would not have a pension investing in GE and improving the value of your stock holding. Without the higher pay they would not be able to afford Toyotas and Dells and Iphones.

Even today, they are unwilling to make significant concessions.

This phrase is the height of parroted bs. Anyone who listened to the UAW president testify today would be well aware of the concessions the UAW has made over the last five years. Including taking over the retiree health liability from Ford and GM beginning in 2010. Starting pay down to $12.00/hour. Letting the "big three" hire outside companys for maintainance and cleaning thereby weakening themselves to GM's benefit.

I mean really, how long am I going to hear that getting less money, less healthcare, less retirement, worse working conditions, longer hours and less time off is good for the person getting less money, less healthcare, less retirement, worse working conditions, longer hours and less time off? The problem is not the unions costing GM to much. The problem is the non-union employees cannot afford gotz. Certainly not a new car.

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