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Bloviating Zeppelin: Big 3 Bailout

Bloviating Zeppelin

(in-ep-toc'-ra-cy) - a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

Thursday, December 04, 2008

Big 3 Bailout

Today, the Big 3 automakers arrive back in Washington with their hats in one hand, and the other hand outstretched, palm up, for free money. This time they arrived in their own hybrid vehicles, as opposed to their corporate jets. Not a good PR move on their part, that first time.

They arrive to ask for $34 billion dollars, in front of the House Financial Services Committee and the Senate Banking Committee.


I've already indicated that I believe a Big 3 bailout is a very bad idea. And 61% of Americans think so too.

Fiscally speaking -- not politically speaking -- it is a very bad idea. Here's why, via a supporting example:

Sales of Chrysler vehicles are down 50%; GM vehicle sales are down about 40% and FoMoCo vehicle sales are down 30%. Capitalism and the free market say that Americans want "foreign" products more than "domestic" products (though that's a topic for an entirely separate blog post). The consumers have voted with the feet and their checkbooks; they want cars from an automaker invested in a diversity of automobiles, from small and frugal, to mid-sized to large; pickups, SUVs, cars, wagons, crossovers. The vehicles must be reliable, they must be reasonably priced, they must be well styled, they must incorporate the latest technology. And any automaker must be lighter, mobile, ready to re-tool for current and coming trends.

But is it the individual autoworker responsible for the plight of the Big 3, or is it the management of the Big 3? Let's consider, as an example, GM's former vehicle plant near Fremont, Fornicalia:

The General Motors vehicle assembly plant in Warm Springs, which opened in 1962, was that region's largest employer. The plant was shut down due to inefficiency and a host of other problematic issues, not to mention high absenteeism. It was then known as one of the worst assembly plants in the auto industry.

In 1984 that GM plant was sold to Toyota, with the agreement that GM would market Toyota vehicles under a GM badge, and the joint-venture auto assembly plant was called NUMMI. This resulted in the Geo and Chevrolet Prizm (a re-badged Toyota Corolla). As of this month, the NUMMI plant produces the Toyota Corolla compact car, Toyota Tacoma pickup truck, the Toyota Matrix hatchback, and the Pontiac Vibe hatchback.

But here's the kicker: after Toyota took the plant over, they hired back the exact same workers who were employed there under GM; it went from worst to first within 2 years. Now, this same plant is an award-winning facility which ranks, with other Toyota plants, among the most productive manufacturing operations in North America. GM places around 12 managers each year at the plant to learn lean techniques and has improved quality enough across the rest of its operations for it to show through on J.D. Power quality rankings.

The bottom line is this: with the right management, with the right Leadership, with the right vision, any Detroit carmaker could have made it and can make it now. It's NOT the responsibility of the US taxpayer to bail out the Big 3 for inept management and lack of Leadership.

Let the companies that cannot support themselves fail under Chapter 11. Reorganization will occur and bring a leaner, meaner company or companies. Let the chips fall where they may. Capitalism abhors a vacuum -- and any vacuum created by a loss like that will be filled. There shall be pain. But it will be temporary.

On the other hand, be very cognizant of why Washington, at the behest of Pelosi and Reid, want to provide bailout cash to American automakers: so that they decide what the Big 3 companies will produce in terms of "green" vehicles. It doesn't matter if they'll sell or not. It's just a matter of, at this point, e-mo-tions. And, quite frankly, social engineering.
BZ

20 Comments:

Blogger TexasFred said...

The United Auto Workers union called an emergency meeting for December 3 to decide what it is prepared to concede to help the Big Three U.S. automakers stay solvent.

It's UAW Concession
*********************
I don't begrudge anyone a good living but the unions are KNOWN for their corruption and when a guy makes $77 an hour, that's WITH all bennies thrown in?? C'mon, these guys have priced themselves OUT of a job...

Japanese automakers pay in the neighborhood of $44 and hour, all told, and they have VERY happy employees...

Ask yourself, do I but an American name (GM, Ford, Chrysler) that's mostly MADE elsewhere or do I buy a Japanese name that's made here too, BY Americans...

Oh yeah, and it's not only cheaper, it's better made too...

Detroit and the gluttonous UAW needs to ask themselves, what can WE do to make this better?? And then they need to take a long, hard look in the mirror...

Wed Dec 03, 04:53:00 PM PST  
Blogger Bloviating Zeppelin said...

Fred: but here's the additional rub. "American" plants don't manufacture anything anymore. Everything is subbed-out. "American" plants are nothing more than assembly plants so, as far as that goes, "foreign" nameplates with plants HERE are every bit as American as "American" cars. We don't make our own steel, we don't create our own fabric, motors as assembled mostly in Mexico. So what's "American" about an American car? Not much. So the difference is management, leadership, organization, flexibility -- all the things the Big 3 primarily lack.

That's PRECISELY WHY Big Unions want to do away with the secret ballot -- so they can CRUSH anyone who may remotely oppose a union.

The Big 3 are nothing but venal unions that occasionly pump out some mediocre vehicles.

BZ

Wed Dec 03, 08:17:00 PM PST  
Blogger TexasFred said...

BZ, you don't have to convince me, I am the most anti-Union guy you ever saw..

It ALL starts at the top, the execs, the Union officials, then it's a simple case of *follow the money*...

Wed Dec 03, 08:41:00 PM PST  
Blogger Pasadena Closet Conservative said...

Those three guys look so very grateful. Uh-huh.

Wed Dec 03, 11:38:00 PM PST  
Blogger Mberenis said...

Don't oppose the bailouts because it's money coming directly to you. Car prices will probably drop drastically as loans and apr's have dropped in the credit industry due to wall street and citigroup bailouts. I've been doing some research, and there's more grants and lower APR's out there now than before. Bailout is for you too!

Thu Dec 04, 12:18:00 AM PST  
Blogger A Jacksonian said...

Without any structural change to the auto companies, any changes in prices will be temporary, and most of the money going to them is for upkeep of facilities they don't use, maintenance of overstretched dealer networks they can't cut, and a huge and underfunded pension system they can't afford.

Consider that actual auto workers make about the same in either a GM or Toyota plant in the US. One has relatively low overhead, an efficient retirement system and the ability to ensure that its workers understand the cost of providing them with any benefits... the other is GM. Toyota runs a good company, can change its dealer networks, can actually rid itself of old plants and has no 'agreements' with municipalities on how much property it *must* own or people it *must* employ... GM can't do that due to UAW contracts and the agreements with municipalities.

Going into Chapter 11 is 'reorganization': cutting contracts, facilities, dealerships, changing benefits packages, lessening expected retirement and health benefits and doing all the things necessary to shut down and sell old facilities. Any 'bailout' does NOT address those things. Bankruptcy is *rarely* going completely under these days. When one company has a per worker cost of $70/hr and the other has something close to half that, you get the idea of what the burdened cost is to GM for having this 'bailout'.

Let these companies go into Ch. 11, fire their top staff and have the creditors come in and install a new staff and re-organize all of the Big Three. People will still be employed, cars will be made and soon profits will start to rise... and my guess is some auto lines will be cut. Paying *now* puts these companies fates off by a few months with even deeper debt and less solubility... and the final retirement systems going into default to be picked up by the federal system set to guarantee that.

That sucker should have been killed ages ago, BTW. The American people should *not* be paying for the poor investment of companies and their greedy boards raiding retirement funds. Retirees should hold those companies accountable and get a major stake in the receivership if they go into bankruptcy.

If you think things are bad *now* just wait until you see these bozos get a bailout. The Democrats are working very hard to cause a next 'Great Depression' and huge federal power grab - and being nice *now* is their way to make things *worse* in a year.

Thu Dec 04, 05:31:00 AM PST  
Blogger Bloviating Zeppelin said...

Mberenis: thank you for visiting my blog, and thank you for taking the time to comment.

When I view the bailout, I take even a larger step back, beyond me, beyond my personal interests. I tend to look at it in terms of parent and child because, after all, the child is asking the parent for cash. The parent, in turn, should be attempting to educate the child with regard to irresponsibility, and the parent has a responsibility NOT to set a poor pattern and precedent for the child.

Children should definitely NOT be rewarded for irresponsibility. It is the purpose of a parent to attempt to set an example (okay, so there's where my analysis tends to go, admittedly, a tad south) and, further, to INSTRUCT the child with regard to future actions. A child, any child, should NOT be rewarded for irresponsible, damaging or self-destructive behavior.

We are essentially rewarding various aspects of business and industry for their poor behavior when we proffer up absolutely STAGGERING AMOUNTS OF CASH from the federal government. And then we have set an horrendous precedent: get in a bit of trouble and go back to the fiscal trough.

The states now want cash. Other businesses want cash. Airlines. Now newspapers and other media forms. Where does it stop?

When Mom and Dad pull their pockets out and find only lint, who bails THEM out?

BZ

Thu Dec 04, 05:36:00 AM PST  
Blogger Bloviating Zeppelin said...

And AJ: precisely. This is another venue in which to pave a social engineering path with capitalism.

BZ

Thu Dec 04, 05:37:00 AM PST  
Blogger Rivka said...

What do we get out of this for helping them with our money? Perhaps $20k off on a new GM SUV? That is what they should do. Give us the SUV or car of our choice at 1/2 off, brand new with all the bells and whistles. It makes sense because they are a 'private' entity who will make a 'profit' off of our tax money. This isn't going to some government entity that is crucial to our survival, like let's say our veterans or military people who need to get pay hikes and need to be better taken care of.. O.K. here I go.. now that I am thinking about this, I am mad.

Why do they treat our military men and women like crap financially, yet bailout these big time CEO types who mismanaged their business??

I want my bailout money to go to the military!! Shoot they give us so much in return we could never pay them enough.

Sounds like a good idea for a post.

Thu Dec 04, 07:48:00 AM PST  
Anonymous kaveman said...

Hmmm....

So the Big 3 douche-nozzles fly in on corporate jets and ask for 25 billion, then drive into DC in hybrid cars for a staged photo-op and ask for 34 billion?

What can we learn from this?

Thank God they didn't roll into Washington on mopeds.

Thu Dec 04, 08:54:00 AM PST  
Blogger Bloviating Zeppelin said...

Rivka: precisely; your bailout money won't come back to you. You are to be sufficiently satisfied that they will only remain in business, but here's the thing few report: that $34 billion dollars, say, will only enable them to continue for a semblance of months -- they'll be BACK FOR MORE.

Kaveman: moped; what if they'd WALKED? We'd be BLEEDING to SHOWER them with cash. Nice insight.

BZ

Thu Dec 04, 09:25:00 AM PST  
Blogger A Jacksonian said...

My idea on the bailout: give each and every taxpayer a single share of the 'bailout' as interest in the companies involved. The companies get to pay *you* back... until then you get one vote in what they should do and it would supercede all other forms of guidance for the company.

You want taxpayer money?

Give me a piece of the action to tell these twits what to do.

It is my money and yours, and I want *my* say in it. And that would fix these bozos from ever coming and asking for a single, red cent.

Thu Dec 04, 11:27:00 AM PST  
Blogger Liz said...

I am tired of our government bailing everyone and their mother out. We get nothing, we always get nothing.

Think about a worker who becomes disabled and then applies for disability. He/she applies, then is told they do not qualify for Social Security Disability because they missed it by a point, but may be qualified for Social Security Insurance. The worker did not pay for the insurance out of his/her check, they paid for disability.

So what happens to all those people that miss the "disability" by the "points" system? Our government literally is stealing our money.

I have no sympathy for the auto companies - we allowed them all to years ago out everything to China or South America. Screw them! And blame ourselves for allowing it.

Too late now. Boo hoo freaking hoo, they can go bankrupt for all I care. I am tired of the government stealing from us to give to mobsters and freaks.

Thu Dec 04, 12:35:00 PM PST  
Anonymous kaveman said...

This is too funny not to share. Had a co-worker just tell me General Motors should have this as their next auto line.

The BB(beebee), short for Bailout Buggy...model 34.

Thu Dec 04, 01:35:00 PM PST  
Blogger Jenn of the Jungle said...

NO NO NO NO NO NO MORE DAMN BAILOUTS!!!! STOP!!!

Thu Dec 04, 02:33:00 PM PST  
Blogger Gayle said...

BZ, you said "When Mom and Dad pull their pockets out and find only lint, who bails THEM out?" That's a great anology and exactly right. You know that I'm also one of the 61% of Americans against this bailout. I understand perfectly what is going on here, and it's disgusting, but they'll get the bailout, we know they will.

Apologies for not being around as often. I'm swamped with personal stuff.

Thu Dec 04, 06:30:00 PM PST  
Blogger Rivka said...

A jacksonian,
I agree. Let's tell them what to do and see if they come back for more. ;0)

Another thing that is annoying is watching 'our' congressmen acting as if this money is theirs not ours. It is the same Reid mentality that we the people 'stink' and are nothing but diry peasants who don't know what's good for us. We aren't smart or elitist enough to sit in their chairs.

Fri Dec 05, 07:00:00 AM PST  
Blogger Bloviating Zeppelin said...

Gayle: perfectly understandable.

Rivka: the "elitist bastards," if I may be so blunt.

BZ

Fri Dec 05, 04:31:00 PM PST  
Blogger A Jacksonian said...

Remember, when President Jackson wanted to get rid of the National Bank one of his preferred options was to let taxpayers get a piece of it... yeah, I do like that idea. Bailout?

Where is *my* share in the process?

That is what a representative democracy would do: share the burden, spread the wisdom and get the government out of the loop.

Sat Dec 06, 06:36:00 PM PST  
OpenID mksviews said...

"But is it the individual autoworker responsible for the plight of the Big 3, or is it the management of the Big 3?"

The rot always starts at the top, they haven't made the tough decisions and turned the Big 3 towards the right path, that's why the customers are punishing them.

"It's NOT the responsibility of the US taxpayer to bail out the Big 3 for inept management and lack of Leadership."

Exactly, but thanks to the left running congress, that's exactly what will happen. So Toyota will continue to do well and the big 3 will struggle along, only to die out in the long run.

Tue Dec 09, 01:13:00 AM PST  

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