Category Archives: Big Three
Well… it’s happening.
CNN reports that, although they are still optimistic for a different course, GM officials are paving the way for bankruptcy. I don’t have to tell you all what this would mean for Michigan and our country as a whole, but suffice it to say that it would be catastrophic. CNN writes:
Preparations for a possible bankruptcy filing at General Motors have become “intense and earnest”, according to a source familiar with the company’s plans.
The source, who spoke on the condition of anonymity, said GM still hopes to win concessions from its creditors and unions that will allow it to avoid bankruptcy. But the June 1 deadline given to the company by President Obama and the Treasury Department to reach deals or go into bankruptcy has caused a pick-up in preparations, the source said.
“We’re talking about what could be the largest industrial company to ever go bankrupt. The preparations better be intense and earnest,” the source said. “The preparations are being made because there’s a short time frame here.”
President Obama exits following his address on Monday.
Many of you have been going through tough times for longer than you care to remember.Â And I won’t pretend that the tough times are over.Â I can’t promise you there isn’t more difficulty to come.Â But what I can promise you is this:Â I will fight for you.Â You’re the reason I’m here today.Â I got my start fighting for working families in the shadows of a shuttered steel plant.Â I wake up every single day asking myself what can I do to give you and working people all across this country a fair shot at the American Dream. (March 30, 2009)
“Good, but not good enough.” President Obama emphasized this particular point in yesterday’s address that focused on the administration’s recommendations for the struggling U.S. auto industry. Recall in February, GM and Chrysler both offered to restructure their companies and provide the government with comprehensive plans to stay afloat. After thorough evaluation, Obama’s Auto Task Force decided that the the plans don’t go far enough in attacking the problems plaguing the auto companies and put a date on company restructuring.
The reactions to the administration’sÂ have varied from agreement to resigned dissent. Unsurprisingly, the Michigan delegation, though voicing support for the plan, is deeply concerned with the possible repercussions of the recommendations on an already struggling state. Rep. John Dingell (D-MI) wrote only today, “I urge the Obama administration to review carefully the progress made by Chrysler and GM in 30 and 60 days, respectively, and give strong consideration to allowing more time for restructuring. The fate of these corporations and their cumulative impact on the national economy are too important to be subjected to an arbitrary deadline” (USA Today).
Is the deadline “arbitrary” and unjustified? There’s obviously multiple perspectives. Take a look at the actual plan and then make your own decision.
TheÂ President’sÂ rejection of loans for GM and Chrysler may prove to be the worst decision of his presidency so far.
The President claims neither car company has presented a viable plan for success. Â With all due respect, Mr. President, this isn’t 1970, or even 1990. Â American cars are now equivalent to theirÂ JapaneseÂ and German rivals inÂ reliabilityÂ and quality. Â They are often equally fuel-efficient. Â UAWÂ salaries, which wereÂ admittedlyÂ once obscene are nowÂ competitiveÂ with salaries of non-unionÂ transplantÂ employees. Â Sure American cars aren’t selling right now, but neither are imported cars. (more…)
Two very interesting and totally unrelated articles that I found whilst browsing for totally unrelated things and watching Memphis struggle inexplicably with Cal-State-WhoCaresVille.
The NY Times made a cool interactive map of The US that’s color coded by unemployment rates. Michigan does have a ridiculous amount of unemployment and seems to boast 14 counties with 15+% unemployment rates. It’s sad. But, you guys should check it out. You can filter the counties out based on cool things like if they are around manufacturing centers to look at trends on how things like the auto industry may have affected it.Â
There has been a lot of talk since last fall about corporate citizenship and corporate responsibility to the health and success of the United States. The argument being that if companies operate and are granted the same privileges as citizens in the United States, then they must abide by the same standards of citizenship that we as individuals do.Â Most of these stories have been a reaction to the poor corporate citizenship many of our financial institutions have demonstrated over the past six months.
Today, AT&T announced that they will spend $565 million to replace their enormous fleet of vehicles withÂ 15,000 hybrid and natural gas-powered cars from Ford Motor Co. The company is making this major invest not only for cost saving and environment concerns, but to do their part in revitalizing our economy.
From AT&T CEO Randall Stephenson (my emphasis added):
“While there are no easy solutions to the challenges facing our nation, this investment is a first step on our part to help boost other industries while at the same time encouraging wider use and production of efficient vehicles and domestic fuel alternatives.”
Major kudos has to go out to a telecommunications company that realizes the impact of their decisions and the role they play in our economy. To invest this much in Ford Motor Co. is a pretty strong statement of faith on behalf of the American auto industry and the future of our economy. Kudos to AT&T
Sorry Eric Cantor – your run couldn’t last.Â Not with the epic douchebaggery of Senator Richard Shelby of Alabama.Â For those of you who don’t remember him, he was one of the Senators who promised to filibuster the auto bailout because the government shouldn’t be picking winners and losers in the marketplace (and also leaked confidential information.)Â But it turns out (the apltly named) Dick doesn’t have so much of a problem with picking winners and losers after all – so long as Alabama (already a huge leach on the federal budget) wins and Michigan loses.Â With $114 million in earmarks, he ranks second in the Senate in pork-barrel spending.Â Hypocrisy — the worst kind of douchebaggery.
Turning a corner, or going in a circle?
There is no word on what this what the deal entails, but on the day when Chrysler and GM were required to submit their proposal on long-term survival in exchange for the second half of the bridge loan, the Big Three automakers have reached a tentative agreement with the UAW.Â I would say that there is more here and here but there really isn’t because neither the companies nor the UAW have released the terms of the deal.
Labor costs, at least for current workers, are not substantially higher for American companies than they are for foreign (and largely non-union automakers).Â Legacy costs are the big drag (other than outdated perceptions like those of my father who refuse to buy American cars because they sucked in his childhood) and VEBA discussions (on benefits) are continuing.Â There’ll be more on this issue when it comes out… and when I finish midterms.
Sometimes it feels like everything we ever knew is falling apart. When I was younger, my mom always assured me that the US was the best country to live in, that we were so powerful and so prosperous and so free. But as I got older and started learning more about the world around me in light of the war and economy over these past years I started to doubt my mother’s beliefs. The outlook for our entire situation is looking better, but it still frightens me. And sometimes I forget that it’s not just us. Every part of the world is enduring something similar.
+France just promised a â‚¬6.5 billion euro loan to their (similarly) hurting auto industry. The money is being split up amongÂ PSA Peugeot CitroÃ«n, Renault and Renault Trucks.Â
+Italy announced a $1.7 billion bailout package for it’s auto industry last week saying that it faced losing 60,000 jobs otherwise.
+Britain is loaning $1.9 billion to it’s auto industry as well despite most of their manufacturers being foreign owned they employ a significant number of Brits. And British company Bentley will cut all salaries by 10%.
+Even in Asia, Nissan has announced it will be cutting 20,000 jobs.
As American automakers continue to try and dig themselves up out of the massive holes they’ve gotten themselves into, one issue that does not get nearly enough attention is health care. We heard a lot about the need for universal health care during the election, but the link to the automotive industry has not been discussed very often.
Pretty much, when the difference between labor costs for GM here and Toyota comes down to benefits like health care, not actual hourly wages, that should make you stop and think. Questions should pop into your head like, “Why is the difference in labor costs from $53 at Toyota to $69 at GM if hourly wages are about the same?”
One answer you could give to this question is that in Japan, Toyota does not have to pay for health care. The Japanese government pays for it. If the United States were to step up and take on the responsibility of providing health care coverage, companies like GM would not have to bear that burden, freeing them up to invest in what they need to turn themselves around.
This investment could then go into things like research and development of hybrid cars and other environmentally friendly technologies that are the future of the automotive industry. That kind of investment would bring about the change in the industry that people demanded while Congress was debating whether or not to bail out auto companies.
It’s about time to put the automotive industry on the right track. We need universal health care, so that we can remove the burden of paying for it from auto companies.