Should We Taxpayers Bail Out Gm, Ford ,chrysler?

[Patrick H. Crowe]

Bill:

I saw a few minutes of the congressional hearings this morning. The CEO's of the big 3 were there and a 4th guy (not sure what his role was)

Question from a congressman: You all flew here in mnulti million dollar corportate jets. You get off your planes holding a tin cup and ask us to put money in it. What should we do that?

20 Minutes later: If you flew here on a commercial airline, please raise your hand. No hands. If you plan to leave your corporate jet here and auction it off please rease your hands. No hands.

To me it became more and more clear these big shots just don't even begin to get it. At least some of the congressional folks are as tired as I am of their BS.

Patrick H. Crowe

 

[rph9168]

As I see it there are three options. 1- Give them money; 2 - Loan them money; 3 - Let them go bankrupt and reorganize. Although I agree with most here that 3 is the best way to go both in the short and long term I don't think that will happen. Politically, the Dems will not want to lose union support. Under reorganization the union and its members will be forced to take less than they are currently getting. In either case, unless GM can somehow stop doing what they having been doing for the last few decades, look for them to be back in a few years looking for another handout. It reminds me that FDR created welfare and work programs as a temporary solution to the financial problems of the time that we still are dealing with today. Seems like we have history repeating itself or as my grandfather used to say - man making the same stupid mistakes over again.

I heard a guy talking on the radio the other day that really made me think about what is happening. He said for generations people have always wanted their kids to have more than they did so they worked hard to make it happen. Now with the financial mess that has been created instead of a better situation for them we will be passing on a huge financial burden to the next several generations. What a sad thought.

 

[Sequoia]

Patrick,

Please check my math below. Surely you are much better at that than me. (These numbers would not fit in my abacus, he he.) I am trying to apply your auto industry salary limit theory to see how the same multiple would work in a car wash.

Take your $250,000 suggested maximum annual pay for the CEO of General Motors, and then divide it by their annual sales of 181,000,000,000. ($181 billion) Then apply the result of that calculation to see what the same pay would be for a manager of a car wash grossing $100,000.

The calcs I did resulted in an annual salary of $1.38 (one dollar and thirty eight cents) to manage a $100k wash. Please review and disprove this if you can, or provide correct info.

Thanking you in advance ....

 

[pitzerwm]

Pat, You missed the lady that said to the big 3, "well, we are here to ask you a bunch of questions , but in the end you will get your money, but here is my question".

 

[Patrick H. Crowe]

Dear Sequoia:

I do not object to management making lots of money. It's how they do it that counts. Warren Buffet has a salary of about 100K a year. The rest of his income is from profits.

I suggest that management at the big 3 get a salary like Buffet's (maybe a tad more) and then a share of profits. The footnotes woukd be very clear: 1. No profits, no bonus. 2. The amount of the bonus is subject to the approval of the stock holders.

The managers of my washes got a percentage of gross as their pay. Want more income, generate more business./ To me that's the core of free enterprise.

These crybabies who flew to DC in private jets should be told to get back to work and stop begging - - - you made the mess, you clean it up. How 'bout signing the CEO to a contract that specifies he's out if he can't show a profit?

Patrick H. Crowe

 

[ted mcmeekin]

Agree except the part about they made this mess. The non competitive wages and benefits were piled on with lots of support from liberals but I agree senior management should not have allowed this structure to get totally out of line with Toyoto and others. They must learn how to get tough. Restructure the labor contracts similar to the Toyotos and they would be very profitable. I recently read there is about a $30 per hour gap--can't be profitable that way.

Ted

 

[rph9168]

I have been involved in the corporate world in the past. Many times a company hires a CEO and executives that come in with lucrative contracts with many benefits and leave the company in bad shape. One company in particular that I worked at hired a CEO that had been fired from his previous company yet they paid him top dollar to come in a run a company that was doing pretty well. Five years later he was let go but not before he almost destroyed a profitable company.

Somehow there must be some accountability not only with the company executives but also the Board of Directors. These guys sit in on two or three meetings a year and collect nice paychecks for serving on the Board. The arrogance of the CEO's and Boards is incredible. I will never understand how they get away with it.

 

[Waxman]

When a company reaches the point of management who are not directly involved with the service or product the company provides, opportunities for big problems creep in. Companies can get too big. Just because someone is good at tweaking balance sheets and p&l's doesn't mean they can successfully guide an entire, large corporation.

Think of it in smaller terms. How would your accountant or bookkeeper run your carwash or detail shop? I know how mine would do; out of business in 3 months.

Yes, this is a microcosm example but it is relevant. These comanies took a wrong turn somewhere. Maybe a better idea is for them to implement the strategies of the more successful car companies. Yes, they have to hire American labor and work with the unions, but that is only one obstacle.

Kaizen!

 

[Sequoia]

Here is an interesting piece on the modern Ford plant in Brazil. Compare it against Ford's operations here in the USA .....

http://info.detnews.com/video/index.cfm?id=1189

 

[MikeV]

Given the right circumstances, some changes we may see...
GM will be called Toyota
Ford will be Nissan
Chrysler will be Mazda
All non union.

 

[mac]

One of the things that really bothered me about the hearings, and aparently bothered Mr Crow, was the part about the private jets. It bothered me though for a completely different reason. This is pure wealth envy. I wish one of the execs would have had the mojo to ask these government jerks back "How come you top people use personal jets?" When someones income reaches a certain point, it is cost effective ti fly them around rather than sit in a terminal for hours watiing for a flight. My airplane, a Mooney costs about four times to operate per hour as my van. Yet when I fly it on business it makes me money compared to driving. It leaves me more time for selling, which is where I make more. Pure wealth envy. Wish one would have asked Pelosi why we fly her around in a jet that we pay for.

 

[pitzerwm]

Mazda is owned by Ford, now)

 

[soapy]

Ford just sold 2/3rds of their 33% of Mazda back to Mazda to raise money. I think that the governemnt should give a $5000 to $7500 tax credit to anyone who buys a Big 3 vehicle between now and the end of the year. That will free up alot of spending and may get the economy moving again. It would reward the people who are actually paying the bill and keep the government out of the loop for now and keep the big 3 from going broke. Then the companies could renegatiate with the unions for pay that would let them be profitable. My biggest questions is why have the unions not come to the table and offer some consessions now. They are in a much better position to bargain now than if they let the big 3 go to bankrupcy. Unions have done nothing in this whole thing ensure they will be around. After 9/11 Gm came out with 0% fianancing that kept the country moving. They are in no position to do that now. Why not give the tax break I mentioned to the taxpayers who are actually buying the vehicle?

 

[Sequoia]

Isn't the travel-by-jet thing great theatre?

An elected official in Washington, whose salary is paid by the taxpayers, has a boss. Her name is Nancy Pelosi and her salary is also paid by the taxpayers. That boss, Pelosi, gets a private jet to fly her and her family from home to Washington and back. That doesn't make the news .... right now at least. Total taxpayer funding for private jet travel by an elite.

But let a private citizen, employed by a public company, travel to Washington in a private jet and look at the media storm that is kicked up.

Now, before the libs chime in about anyone asking for money after arriving by private jet, let me ask a simple question:

Who is more upside down financially, the auto companies or the U.S. Federal Government? Compared to the U.S. Govt the auto companies are a financial bonanza. So why is an elected official criticizing them?

The difference here is that the auto execs had to ask for a bridge-money loan in a public forum, and the stuffed shirt pols couldn't resist a cheap shot. Our elected officials, when they need more money, simply hold a vote to raise the debt ceiling and then borrow the money from the Chinese with a T-bill auction. But there are no cameras there and no media coverage.

 

[Patrick H. Crowe]

Mike V:
I'm pleased to see you mention Toyota. Bear in mind I remain a member (lifelong) of the teacher's union. Please let me provide some infrequently broadcast info about unions.

Bad management makes strong unions. Toyota proves the point. The Toyota plant in the USA had an election (NLRB) to go union. The workers voted not to. They beleived they were being treated fairly and justly by management and therefore did not need a union. That's just more proof of how badly the Big 3 have messed up.

In my view their testimony before congress was arrogant. It showed these fools just DO NOT begin to get it. They still don't. Now GM has announced they have "sidelined" 2 of their five corporate jets. Not sold, sidelined. I did not know there were five, did you? Bad, bad PR.

A pundit went to the union president in Detroit. His arrogant message was: It's gonna cost the tax payers far more to have us in bankruptcy than to bail us out. My reaction: Let's find out ASAP. That's from a "union" man.

Meantime Ford says they won't use the bail out money because thay have cash. What?

They made this mess, management did it. They are crybabies to the core. Bankruptcy has been earned, merited and abundantly deserved. Even a "union" man has his limits.

Patrick H. Crowe

 

[Ben's Car Wash]

You all are so fast to jump on the unions and what happened to the "end of the politics". That took less that one week and now you blame OBAMA already for bailing out the big three?

In the 1960's 60% of American workers belonged to unions, now only 15% of American workers belong to unions. Unions provided many things that you now take for granted, child labor laws, OSHA and pay equity. There is a lot of misinformation about the UAW wages and that "$70/hr wages". The average auto worker makes $28/hr. benifits add another $10-$15 per hour. The $70/hr is averaging in ALL the retires benifits... like we add in all the SSI recipients that are bankrupting our present social security system. It's a multipier as people retire and the insure increases as the age on the system. Why is that the present employees fault who belong to the UAW? Why villianize them? Management negotiated the contacts.. they should have been "forward thinking" into how much this would cost in the future (just like our government)!

Now, concessions have been made over years by employees and retiress on their pentions/healthcare benifits. Now the big three are in trouble. I say... let them go bankrupt. No one helped me and no one will help YOU! If not, give a bridge loan so you can stipulate HOW THAT MONEY IS USED.

My father was a union worker for 40+ years and a manager on the other side too. Both companies he worked for (TEXTILES) closed and moved south and he never got a penny of a pention. The only thing he got from them was ASBESTOSIS and lung cancer from the asbestos fibers in the fire mesh he made for 20 years! While the average workers salaries haven't risen (union included), the average CEO salary is now 700X the average US worker! It's 40X what it was in 1970! That's not rational nor proportional especially in a failing business model! The problem is not unions, it's absobanent cost for health care benifits, high cost of WC insurance and corporate greed and coruption.

 

[Patrick H. Crowe]

Dear Mac:

One of my former partners has owned five different planes - - from a 2 place Cessna 150 to a six place dancy one. My CPA has a twin engine plane. Neither supports your claim of how these "save" money for eother of them.

They do admit that there are some rare circumstances where a client/customer is located less then 500 miles away and has no commercial airline servce available that the use of a private plane COULD be cost effective.

Both admit (would you?) that their love of flying is the primary reason for the plane(s) and the business use gives a way to deduct some of the cost. My CPA has a lake house which would be 3-4 hour drive - - expecially on weekends - - and he can fly there to a general aviation airport where he can keep a 5th car for under a grand a year - - - in far less time. He admits the operational costs on his plane are very high and that for clients in distant major cities his little plane is of no use at all. Moreover no a/c, no bathroom and so on.

They see what you wrote as very typical of the rationalizations of guys who love to fly. So be it. Can you admit it?

Patrick H. Crowe

 

[Patrick H. Crowe]

I'm happy to see Doug speak up for unions. Please remember that management is in charge. It is management, not unions, which agreed to these labor contracts which they now tell us MUST be reduced. That merely proves how incompetent they were (are).

My union membership was on a college faculty. The highest paid big shot made 2-3 times the union pay and he worked year round, not 8 months. The idea of making 700x what a teacher made is preposterous - - to do so while you "manage" vast losses is insane. The level of arrogance is astounding.

These big shots just do not get it. Their private jets say it all - - then the GM guy takes 2 of his 5 "out of service" - - how could he tell us that as a claim to "getting it".
Did he sell them? No! These guys need to be fired; they need to be told to never, ever ask hard working taxpayers to give them money to support their incompetence, arrogance and lavishness.

Look up the Lincoln Electric model. Then read The Decline & Fall of the American Automobile Industry. These guys reek of self-serving arrogance.

Patrick H. Crowe

 

[pitzerwm]

Anyone that thinks in a union shop, management is in charge is silly. Once you go union they are in charge or you are out of business. As usual Doug's information is totally contradictory from all available info. The union & their perks are killing American competitiveness. They are only 7% today according to the media. Obama promised them support and they will get it. The pendulum never stops in the middle. Sure, when they started, there was abuse by management, now its the other way around. I also call BS on "the average" CEO is 700x.

 

[I.B. Washincars]

I too, doubt that enough "facts" can be produced to back up that 700X claim.