[staff]

Auto Loan Decision Rests With Poor Decision Makers

Al Rozzi

BlueOvalNews.com - Considering the current unfortunate state of the nation from education, health care, infrastructure and most especially the economy, it is evident that our politicians have made exceptionally poor and misguided decisions in recent years. If bridge loans to U.S. automakers are not approved now, decision makers will yet again have made a bad choice for the long-term health of this nation.

It should be unthinkable to allow the collapse of a U.S.-based auto manufacturing industry. Already the manufacturing revenue base in this country has eroded to a point where only 12% of GDP is derived from manufacturing. In fact, Manufacturing is the primary generator of a nation’s wealth and as such, U.S. based manufacturers must be nurtured rather than eradicated.

While some foreign automakers assemble autos in this country, we should not be willing to accept the loss of industrial engineering, development and research related to autos. Technology transfer and outsourcing is resulting in an America where our workers do the grunt labor while the rest of the world takes care of the intellectual occupation.

PLACING BLAME

Politicians accuse auto CEOs of having made bad decisions that got them to where they are now, yet it is exceptionally bad decision making by politicians that has the economy teetering on the brink of collapse and ultimately undermining auto sales and industry revenue.

For example, the decline in automobile sales in November was shared by all manufactures, American and foreign alike. Economic mismanagement, rather than erroneous auto executive decision-making, is ultimately to blame for reduced auto revenue.

None of the auto executives has a crystal ball into future economic events. Who could have forecasted the run-up in oil prices to over $147 a barrel in July, only to dramatically fall below $50 a barrel four months later? High oil prices were expected to be permanent and as a result, many of the auto execs changed future production plans to include more small cars and smaller displacement engines.

Furthermore, two or three years ago not many in the political circuit were talking about the mortgage/credit pyramid scheme possibly collapsing, and in fact most rhetoric coming from Washington was denial that anything was wrong. So how is it an auto executive should have been expected to prepare for a 50% drop in revenue due to financial credit market disintegration?

MISPLACED PRIORITIES

It could well be argued that political leaders too easily pour money outside the country while not putting enough emphasis right here at home.

For example, the money automakers need to borrow to survive the economic downturn is argued to be too expensive, yet funding an Iraq war to the tune of $577.6 billion isn’t too much to ask American taxpayers. The war effort in Iraq consumes 341.4 million taxpayer dollars a day and has a total cost of $1,721 per American, and counting.

ECONOMIC TRACK RECORD

Is it not mismanagement when the nation’s debt nearly doubles just since president Bush took office? National debt has in fact gone from $5.7 trillion when Bush took office to $10.7 trillion in 2009. It is lousy management like this, which results in Bush’s approval rating being at best, 29%.

U.S. national debt now equates to nearly $35,000 in debt for every American, young and old. The result of this economic mismanagement means that the U.S. government may face debt rolling over into higher interest rates on bonds. Higher interest payments will lead to higher taxes and cuts in basic social services.

American’s are even less enthusiastic with legislators. Congress’ approval rating has been a mere half that of president Bush. Approval hit an all-time low of 14% on November17, 2008 and according to a recent Gallup poll, “As the 110th Congress returns for its final lame-duck session Monday, new Gallup polling shows that only 19% of Americans approve of the job Congress is doing, while about three-quarters disapprove.”

POLITICIANS DO NOT KNOW HOW TO RUN A CAR COMPANY

Congressional and Senate demands on changes the auto companies must make to qualify for loans should not even be part of the discussion. Politicians are going to legislate into production automobiles that most consumers do not want to buy.

Gasoline has been historically inexpensive in the U.S. and as a result, Americans have desired larger cars and trucks, while at the same time choosing models with greater horsepower. Link onto any auto blog and auto comparisons almost always criticize those vehicles that offer less horsepower.

“Brilliant” politicians with their demands on automakers and the kind of cars they produce will be forcing the American auto companies to manufacture small, underpowered, or worse yet, electric cars, while foreign manufacturers will gain more market share producing the V-8 powered cars that Americans really desire. According to a Detroit News article, legislators are saying “Everything - from the companies’ attitude toward emission lawsuits, their ownership and corporate structures to just how they will go about making the cars and trucks of the future – may be on the table…”

Lindsey Graham himself even admitted to not understanding the auto business when he said, “I think they need to consolidate, go into bankruptcy, come out stronger, but at the end of the day, what do I know about running a car company?”

Senate Banking Committee Chairman Chris Dodd is demanding General Motor’s CEO Rick Wagoner should have to step down and that Chrysler should merge with another automaker. “Chrysler, is, I think, basically gone, probably ought to be merged,” he said.

Some of these points may or may not be true, but management within the companies themselves better serves decisions related to the auto companies. For example, the timing may not be right to change leadership when the lead-time to understand what is needed may take longer than the time required to act upon what is needed.

Or worse yet, to say that Chrysler is “gone” and should be “merged” basically runs off any possible suitors for Chrysler.

Then, there is Senator Shelby of Alabama who said the bridge loans are a “bridge loan to nowhere,” when in fact they are a bridge loan to somewhere and that somewhere is better economic times. Then again, maybe he knows something the rest of us don’t know, that better economic times won’t come anytime soon?

MAKING A BETTER DECISION

An American automobile industry is important to the economic vitality and prosperity of this country. Furthermore, the money required to save our three auto companies is comparatively small to the major blunders made by our political leaders. A strong manufacturing base must be rebuilt and sustained and America must have a leadership role in the design and development of automobiles.

Political leadership in this nation continues to be flawed and has seen a disproportionate share of contemptible decision-making, with a track record that reflects this as is evidenced by the state of the nation today. Considering that most in Congress and the Senate are ready to deny the American auto industry a survival lifeline – one which is necessary because of poor political and economic leadership – and considering that governmental leadership has been almost exclusively unsound, then it must be that to deny the industry now would in fact be the wrong decision once again.

[Critic]

my thoughts.... buy more ammo.

[RangerM]

I'm sorry, but this article smacks of what is wrong with America.

"What has the Government done for me, lately?" seems to be the prevailing attitude of many Americans.

To put the blame on politicians, whose only wish is to pass the buck to the CEOs, only serves to put the blame where the American people expect: someone else

We lament the lack of adequate education, healthcare, and infrastructure. We protest the souring of the ecomony.

I say, LOOK IN THE MIRROR.

Many (most?) of the American people seem to have all the motivation of a stoner in a room full of DVDs and junk food. People expect to keep their jobs forever because (dammit), they're Americans and they're entitled! They mask this sense of entitlement under the concept of patriotism.

Never mind that many in society decided on their own to circumvent the limitations of public education. Never mind that many in society decided on their own that they would do more than simply "show up at work". The concept of "an honest day's work for an honest day's pay" has always been (and still is) meritorious, but it has always been (and still is) limited to that one day.

By merely showing up at work, you have traded a portion of your life for a given amount of money. This is no different than when you traded your money for an I-Pod, a "Super-Sized" value meal, or anything else.

For too long, too many people have coasted through life on the achievements and sacrifices of their forebears. The rest of the world caught up, and this is what happened. :fan:

Unfortunately for many, the achievers of society didn't invite everyone else along on their ride.

BUT, there is a way out. Simply put, go back........

Go back to the idea that the Federal Government is not (and should not be) the Supreme power in our daily lives. Go back to the idea that the most important governing body in peoples' lives should be their local/State government (and let the State citizens pay for whatever they wish). Go back to believing that it isn't what the Government should be doing; it's what YOU should be doing.

Give the automakers the money they need, with absolutely no restrictions whatsoever including oversight, environmental, safety, and any other restrictions the House Bill contains.

Prop up the Big 3, reset the regulatory clock (ALL regulatory clocks), and cut them loose.

[Ralph Greene]

I believe all of us...including the Senate, would like to see a viable and thriving GM, Ford, and Chrysler.

However, they know the big 3 are geared toward a market that absorbes about 16-17,000,000 new cars per year, and which needs to sell at least 15,0000,000 to break even. They know the market now is selling at a rate of 10-11,000,000 new cars each year. Even with some economic recovery next year, that break even point is probably not attainable in near future.

So how can they survive even if you loan them some money? How do you take out that excess capacity and cost from them? Who goes or has to be merged? Can they only do this thru a structured bankrupcy? That is the issue they ponder.

They also know we have a fairly healthy, though suffering, auto manufacturing business going on outside of the big three who are not asking for help. Companies who operate legally within the laws of the USA, and who have jumped thru all the hoops we put in front of them. Is it fair to them to prop up the big 3? Again....these are questions they ponder.

And then there is the politics of the issue.

[LSFan00]

$50-70/hour manuf. labor costs in today's global economy=FAIL. Even a congressman should be able to figure that out.

I support a bailout if as collateral the Reps/Sen's who vote for it pledge to resign their seats if it doesn't work (i.e.; if the companies getting the money either (a) go bankrupt anyway within 2 years or (B) totter back for more taxpayer support. This "bailout" will do nothing but kick the can down the street to June-December next year. And guess what? Ford is being lumped in by consumers 250% with Chrysler/GM. Here's the latest viral joke on it I have seen. Like the pictured van?


http://www.netzkobold.com/uploads/pictures/bailout_25_billion_gm_chrysler_ford.jpg

[Michael Reynolds]

Ralph Greene, on Dec 11 2008, 05:14 AM, said:

They also know we have a fairly healthy, though suffering, auto manufacturing business going on outside of the big three who are not asking for help. Companies who operate legally within the laws of the USA, and who have jumped thru all the hoops we put in front of them. Is it fair to them to prop up the big 3? Again....these are questions they ponder.

And then there is the politics of the issue.

I'd have to agree with you there. When M-B, BMW, Hyundai, Nissan, VW and possibly Toyota and Honda shopped new assembly and component plants stateside you best believe they had their hands out for some sort of tax incentives. Your statements also ignore the assistance provided by their own countries government that we may or may not be aware of. A great example is the hybrid technology that many have gone back and forth on for years claiming that the Japanese gov't subsidized hybrid development.

[Michael Reynolds]

LSFan00, on Dec 11 2008, 05:35 AM, said:

$50-70/hour manuf. labor costs in today's global economy=FAIL. Even a congressman should be able to figure that out.

I support a bailout if as collateral the Reps/Sen's who vote for it pledge to resign their seats if it doesn't work (i.e.; if the companies getting the money either (a) go bankrupt anyway within 2 years or (B) totter back for more taxpayer support. This "bailout" will do nothing but kick the can down the street to June-December next year. And guess what? Ford is being lumped in by consumers 250% with Chrysler/GM. Here's the latest viral joke on it I have seen. Like the pictured van?

Well you should have called for their resignation when AIG went begging for more money.

[Ralph Greene]

Yes....But when BMW went to SC, and Hyundai went to Alabama, and others went to the states that gave them a big incemtive package....those states weren't asking others around the country to help pay for those incentives. The state of Alabama made a decision to entice Daimler and Hyundai to get jobs for people in Alabama, to get revenue from those plants, and eventually make the money back for Alabama. They made a business decision for their state and for their residents. That is different than bailing out the national auto companies who can't make it in this current environment in their current business state.

And....I hope something gets worked out for GM and Chrysler. But it seems to me, one has to go. or the best of both need to be merged together.

[NickF1011]

Ralph Greene, on Dec 11 2008, 03:12 PM, said:

Yes....But when BMW went to SC, and Hyundai went to Alabama, and others went to the states that gave them a big incemtive package....those states weren't asking others around the country to help pay for those incentives. The state of Alabama made a decision to entice Daimler and Hyundai to get jobs for people in Alabama, to get revenue from those plants, and eventually make the money back for Alabama. They made a business decision for their state and for their residents. That is different than bailing out the national auto companies who can't make it in this current environment in their current business state.

And....I hope something gets worked out for GM and Chrysler. But it seems to me, one has to go. or the best of both need to be merged together.

The only difference you are talking about is between what a state decided to do and what the federal government is deciding to do. What about the people who live in the state who are nowhere near the factory? How does their tax money going toward incentives for a plant help them? It doesn't. It's all the same though. It all just depends on how macro or micro of a level you want to look at it.

[grbeck]

Soooo...the basic gist of your editorial is that we should just hand over the bailout money, without making anyone answer those mean questions from legislators, to the same bunch of geniuses who have run GM and Chrysler into the ground?

Sorry, you'll have to do better...

And these companies were in trouble BEFORE the recent credit collapse. GM hasn't been consistently profitable for YEARS.

This post has been edited by grbeck: 11 December 2008 - 03:48 PM

[NickF1011]

grbeck, on Dec 11 2008, 03:46 PM, said:

Soooo...the basic gist of your editorial is that we should just hand over the bailout money, without making anyone answer those mean questions from legislators, to the same bunch of geniuses who have run GM and Chrysler into the ground?

Sorry, you'll have to do better...

I don't think he was criticizing them for asking the questions. It appears to me he was criticizing them for doing so in such a hypcritical and uneducated manner. With trillions in debt, I don't think the federal government is in any position to be scorning someone else for their poor spending decisions, especially since the spending of the Detroit 3 has been decidedly wiser over the past several years than the federal government's.

Quote

And these companies were in trouble BEFORE the recent credit collapse. GM hasn't been consistently profitable for YEARS.

When was the last year the U.S. government was profitable?

This post has been edited by NickF1011: 11 December 2008 - 03:52 PM

[Versa-Tech]

grbeck, on Dec 11 2008, 03:46 PM, said:

Soooo...the basic gist of your editorial is that we should just hand over the bailout money, without making anyone answer those mean questions from legislators, to the same bunch of geniuses who have run GM and Chrysler into the ground?

Sorry, you'll have to do better...

And these companies were in trouble BEFORE the recent credit collapse. GM hasn't been consistently profitable for YEARS.

The point he's making is that we all got ourselves into this mess and evidently only Detroit should have to answer for it. The big 3 would not be in near as much trouble if all Americans would have started taking responsibility for their actions 15 years ago. Hell, I could go as far as to say that congress is responsible [along with Bill Clinton] for this entire economic downturn. Does anyone remember why so many sub-prime mortgages were approved? What caused the start of this recession? Think about it. The same guys who are grilling the Big 3 CEOs about their mismanagement of their respected companies are largely responsible for the mismanagement of our entire economy.

[Michael Reynolds]

NickF1011, on Dec 11 2008, 12:16 PM, said:

The only difference you are talking about is between what a state decided to do and what the federal government is deciding to do. What about the people who live in the state who are nowhere near the factory? How does their tax money going toward incentives for a plant help them? It doesn't. It's all the same though. It all just depends on how macro or micro of a level you want to look at it.

Exactly my point.

[Versa-Tech]

Michael Reynolds, on Dec 11 2008, 04:12 PM, said:

Exactly my point.

Everyone that works at your domestic dealerships will still suffer.

[Michael Reynolds]

Versa-Tech, on Dec 11 2008, 01:32 PM, said:

Everyone that works at your domestic dealerships will still suffer.

They already are. Domestic and Import.

Even still, I fail to see how that directly correlates to the comments above. Not sure what your point even is there.

[Versa-Tech]

Michael Reynolds, on Dec 11 2008, 06:24 PM, said:

They already are. Domestic and Import.

Even still, I fail to see how that directly correlates to the comments above. Not sure what your point even is there.

I'm not even sure what my point was, the fact is that I said it :shades:

[Critic]

I'm beginning to wonder about the Constitutionality of Congress meddling in a personal matter between 2 parties in the private sector. Congress setting wage and benefit levels.

So if they can do this to the automakers, where does that stop?

Might be a way to get the short term loan passed til March 1. But I now expect a challenge to the Supreme Court and I expect it to be tossed out, followed by another howling from the arm-chair experts.

[Versa-Tech]

Critic, on Dec 11 2008, 07:15 PM, said:

I'm beginning to wonder about the Constitutionality of Congress meddling in a personal matter between 2 parties in the private sector. Congress setting wage and benefit levels.

So if they can do this to the automakers, where does that stop?

Might be a way to get the short term loan passed til March 1. But I now expect a challenge to the Supreme Court and I expect it to be tossed out, followed by another howling from the arm-chair experts.

The whole idea of it does sound very unconstitutional...

[probeGT]

NickF1011, on Dec 11 2008, 03:52 PM, said:

When was the last year the U.S. government was profitable?

Ummmm. . . . Clinton Administration?

[F250]

If 70% of the homes in this country were built by just 3 massive nationwide construction companies that employed millions of people would they be in the same situation?

I keep hearing how the big 3 are in trouble because they build vehicles Americans do not want...yet GM still sells the most cars in America and Ford's F-Series is still the best selling vehicle in the country. Foreign car companies are not immune, better supported by their governments perhaps. No, even Toyzilla and BMW's sales have fallen by record levels.

It would never have come to this if the economy had not collapsed.

Many long standing local companies of all types have gone under this year and unfortunately more will follow. It certainly isn't because they provide inferior products or services. But they aren't big enough to blow a huge hole in the nation's economy if they go under so they just get an article in the local paper when it happens.