Let Detroit Go Bankrupt - by Romney

[Jaga]

I agree with Romney:

Let Detroit Go Bankrupt
www.nytimes.com/2008/11/19/opinion/19romney.html?_r=1

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.


...

[kaima]

Sorry to hijack your thread Jaga, but I didn't see it before I posted the Romney commentary under "Retirement age in US versus Europe"

The best I can say is that you, I and Karl are all impressed with his ideas.

Kai

[freetobe]

Kai, Karl and Jaga,
I am not impressed with Mitt's lack of candor. What ever happened to American Motors? Did he say? All he wants is status quo, no matter what kind of spin he puts on it. What huge disadvantage
in costs? Labor is the only one he cites. As if the labor costs and benefits were the reason and solution to the automotive debacle. The geniuses that ran the Big 3 automakers were not smart enough back in the 60's to realize the impact and the inroads that German and Japanese autos would make on the US market. Wow, forty some years later the geniuses and their replacements may finally be getting the message. So I ask you all and Mitt, isn't what Mitt says more of the same rhetoric that the auto industry uses and abuses to explain why they can't produce a reliable fuel efficient car that the foriegn guys do. In the meantime, what do we do about the thousands of workers who are or will be unemployed? Great, chapter 11 will allow these crooks to continue in business, but God help their shareowners, workers, retirees and many other retirees whose pension fund invested in GM, FORD and CHYRSLER. See you all on the bread line and Happy Thanksgiving Holiday.

[kaima]

Freetobe,
You got me to go back and reread to see what I had missed. I didn't find it as anti-union as you did. I have mixed feelings about unions, their good and their bad, and feel the workers have taken it in the shorts over the last decades, as reflected in our stagnant and sinking standard of living (speaking before the financial crisis). That is another topic for another time.

What I did read is to cut out the idea of subsidies. Let them reorganize and atone for their mistakes, and cut the bum CEO's and others who are trying to leach off the taxpayer. If they survive they should have a new management team from the top down. They won't get that through subsidies to continue business as usual. I agree, it is impressive how they have built dinosaurs for the last 36 years. I measure it by personal experience when I bought a new Datsun pickup in 1972. The US manufacturers failed miserably for decades to build cars comparable to the Japanese products, to address that segment of the market (me) who wanted smaller, handier vehicles. Some of the imitations were insults to engineering and consumers, as with the Pinto and the Vega, others were much closer to acceptable and they eventually did get to manufacturing US made small pickups.

Isn't it amazing how happy American workers are to bash American quality and place the blame on American workers? How then do the Japanese and Germans manufacture high quality vehicles with these same American workers?

I suspect American automobile Management has been out to lunch for a very, very long time.

The financial bailouts and now the auto bailout seem constructed to convert tax borrowings to current cash for the rich. There seems to be no accountability or restrictions on use of the money given or loaned to the companies. Some figures place 30% of the loaned money as going to stock holders in dividends .. instead of being pumped into loans. Subsidizing individual mortgages sounds as if it could be far more efficient!

Kai

[karl]

Nov 21, 2008 21:46:20 GMT -7 @freetobe said:

Kai, Karl and Jaga,
I am not impressed with Mitt's lack of candor. What ever happened to American Motors? Did he say? All he wants is status quo, no matter what kind of spin he puts on it. What huge disadvantage
in costs? Labor is the only one he cites. As if the labor costs and benefits were the reason and solution to the automotive debacle. The geniuses that ran the Big 3 automakers were not smart enough back in the 60's to realize the impact and the inroads that German and Japanese autos would make on the US market. Wow, forty some years later the geniuses and their replacements may finally be getting the message. So I ask you all and Mitt, isn't what Mitt says more of the same rhetoric that the auto industry uses and abuses to explain why they can't produce a reliable fuel efficient car that the foreign guys do. In the meantime, what do we do about the thousands of workers who are or will be unemployed? Great, chapter 11 will allow these crooks to continue in business, but God help their shareowners, workers, retirees and many other retirees whose pension fund invested in GM, FORD and CHYRSLER. See you all on the bread line and Happy Thanksgiving Holiday.

Freetobe


You do carry some very excellent points in your disclosure, and I do agree with you on those points.

I think perhaps though, there is much more to this, a very complicated issue. But, not so complicated. For there is very little to compare with methods used/employee-management relations between that of Europe {Germany} and American auto maker firm, other then the production of transportation, for that is the foundation of this discussion.

Some years past, our Daimler-Benz with Jürgen Schremp, constituted a buy out of Chrysler with the motive of reconstruction of the management {Management was not removed, but set aside for non-interference as business failures}. Then reengineering of a great portion of product line with infusion of quality engineering to bring up the intrinsic value of the product for public consumption.

It was a colossal failure interms of massive capital investment and reorganization of Management for return to profitability in product lines. To such extent, the firm was released upon the open market for sale. Cerberus Capital Management, then completed the purchase buy out.

www.christonium.com/automotive/ItemID=11938427189286

As an adventure of export of our factories to America. It is not a problem, for the American work force, is very much available and very rich in workers pride of accomplishment. Quality is not a problem, for with proper management tools and worker education, these people understand, they are not just occupying a spot as a worker {another solder ant so to say} for a company in manufacture of transportation.

But, in this stead, they learn they are the company, for each individual worker, is an important part of the business, and as so, are treated as so.

This is very much a world apart of the currant automotive establish manufacturing business in America and Canada to a great extent.

On the side of the auto ,manufacturing argument in regards to product line provability. Is the cost of conducting business.

For capital investment: It possesses the same cost in engineering/design/tooling/ to produce a small auto, as it is for a currant large model. But,,,,there is more profit in the final sale of each individual full size vehicle, and as the management must explain this to their investment people. As so, will go the focus of vehicle line up, the line up most favoured for profitability for the acceptance to the investors.

As you see, thus, the primary reason of foreign auto factories to prosper in the US market, is the removal of the encumbrances built in and maintained by the big 3 auto manufactures.

They begin with a complete blank paper. They then use the principals of management they bring with them. They remove the obstacles of Union interference. With each individual person hired, will began a process of education for that person in expectations to be realized by both the company and the new hired person. For each is an individual and are treated as such as an important part of the success of the company. As of their reward, they enjoy the success of their efforts for they are the company.

This is not the manner style of American management. For in this stead. The focus is on profitability in volume sales, to maintain the pleasure of their investors portfolio and to provide a nice quarterly report.

Yes, I have personally inspected several American produced auto. And they are very modern and user friendly. But, this has been brought about by forced government regulations at the home level and international level.

There is a reason also that should be not neglected and not so much hot coals placed upon the heads of American engineering and management. For we have a vast difference in geological terms of use these vehicles will be placed into service.

For the most part, American vehicles used in the continental US, will be placed into service on very fine roadway of both vast distance travel where comfort and passenger loading may be high. And of course the commuter service.

In Europe, our vehicles must be more throughly engineered for some of our near by high passes with mixed high speed, heavy braking and stability is a must. For to understand best those requirements, it would take an experience of 180 Kph trip on down hill slope crossing a very high over valley bridge, Whilst negotiated a slight, long gentle curve.

Very quick, yes. For the question of: why not of slow down? Best think once more, for there will be a vehicle on your butt in follow. The other reason, our vehicles are engineered for this, and it is not a problem. If a person were to be daft enough to touch of the brake at this critical time, it would most likely throw the vehicle off balance and give cause for some very nasty moments.

For some of above reasons of conditions of use. An imported American manufactured Auto, must face some alterations before it may be assigned a number plate.

[joyce]

The financial bailouts and now the auto bailout seem constructed to convert tax borrowings to current cash for the rich. There seems to be no accountability or restrictions on use of the money given or loaned to the companies. Kai[/quote]

Excellent sentence Kai. There is not accountablity not only in the companies but also in national and local state governmental spending. And who is held accountable when things get screwed up? You and me....

[freetobe]

To all,
Am I missing something? Mitt Romney is the Governor of Mass. He is first and foremost a politician. He states that his father was responsible for American Motors resurrection. Did he say who or what was responsible for it's demise? Since Mitt was not the Republican voters choice to run for president, maybe he should return to Detroit, and save the U.S. auto industry using his father's business practices. It seemed to me that Congress was not going to give auto makers money unless they came up with a business plan that demonstrate how they would tackle the problems that the Government wanted them to address. Of course the Congress, still Republican controlled, failed to act decisively and the bailout if any will be left to the incoming Democratic controlled Congress to deal with. More political shenanigans. The auto industry as a whole is to blame for this.The workers want the protection and advocacy of the unions, The Union officers want the big paycheck and perks that come with the job and management wants the even bigger paychecks, bonuses corporate jets and golden parachutes. And apparently nobody in management cared that they were producing an inferior product as long as the money continued to roll in. Detroit just waved the flag at Americans and told them to buy American and Americans did till they finally woke up and realized they were being screwed by the auto industry. And then there's the taxpayers, you and I, who are ultimately being screwed the most by all the actions of a greedy business system. I'd like to hear from our European based members as to what effect the global economic crisis has had on their countries and their lives.
Happy Thanksgiving to you all.

[archivist]

freetobe

You hit the nail on the head. A locally based bank (in my home city) just got hundreds of millions of pounds from the government, fired 2 or 3 thousand employees and declared that the new senior management will get huge bonuses. A minimum of 30 per cent of their salaries (which are sky high to start with). Can you believe it?

PS would you mind giving me a personal reference so I can get a big money job for being a total failure?

Thanks

Neville

[Bob S]

;D ;D Amen, Amen. If I go to Las Vegas and loose a lot of money gambling, "Uncle Sugar" can bail me out too. The lesson learned was "keep on loosing, Uncle Sugar will bail me out". Of course I won't say anything a bout my winnings, just keep it for myself. ;D ;D