The Political Dogfight

Actual Big 3 CEO's Opening Statements To Congress

I've been pounding an unpopular table in several places trying to show people that a $25 Billion investment/loan is critical for the US and makes common sense. I've taken a couple of days off from working on the subject. Today, I've finally found the opening statements of all three automakers to Congress.

I'm providing them below as they offer more understanding of the automakers request of the Congress. They better frame the extent of the influence they collectively have in the American economy, the steps already in progress to reshape their product lines and their operating costs.

Each of these automaker CEO's brings, at one point or another a different fact or figure that flesh out a better understanding of the reality of the automaking industry in the US.

 I ask you to watch all three. They are only about 5 minutes each and, collectively, give each of us a better understand of the situation.

[CNBC hasn't set up their video for full embedding. Idiots. Please use these links.] 

General Motors , Ford and Chrysler.

Quote of The Day

In contrast to the late President Kennedy:

"I think he's impatient. I think, my summation: He doesn't like homework. And homework means reading or getting briefed or having a debate. And part of the presidency, part of governing, particularly in this area, is homework, homework, homework." -- Bob Woodward, reflecting on President Bush's governing style.

H/T Political Wire

Detroit Part 4: Necessary Leadership And Reality

[First, let me say these are my own suggestions to help the situation. These are the changes I wish to see in the automakers. I agree with Rachel Maddow video below that the attack on the UAW and the automakers could begin a time where white collar workers are far more valued than blue-collar workers. The fallacies being used as fact about the UAW, as just one example, taint the debate in all communities whether progressive left, center or moderate right. We can only deal with the overall situation in the US, and our trade relationships around the world, from a fact-based, reality based perspective.]

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As part of a necessary Federal investment in the auto industry, (yes I believe it absolutely necessary and potentially far larger than the $26 billion currently under consideration), here are some simple steps that the Big Three can take to show leadership to the nation, the world and their own workers:

1. Every automaker president, like Lee Iaocca in the 70's during the successful Federal investment in Chrysler (1.2 billion which was paid back early), should reduce his salary to $1 per year and freeze the issuance of any additional stock options beyond his current portfolio.
2. Every senior executive, and that's a tangible definition that I don't have the skill to make, should take a 25% to 50% cut in salary.
3. Every remaining executive should take a 10% salary cut. (This assumes that this class has a salary sufficient to allow for a cut. I assume, without data, that it does.)
4. All efforts at acquisition by a foreign entity, such as being discussed by Renault/Nisson by Chrysler, should cease immediately. The recent glaring failure of the acquisition of Chrysler by Damiler Benz shows the fallacy of thinking that simply having foreign ownership, without regard to culture clashes or economics, is a solution. (Oh, you didn't know that Nissan had merged with European Renault? They have.)
5. The UAW President should likewise take a salary cut to $1 per year. The workers, by the way, have renegotiated their contract three times in the last 3 years, while having a valid existing contract, to recognize the reality of their employers situation.

What do these essentially symbolic moves do for each of these companies? They show leadership and a commitment to seeking a solution while demonstrating a willingness to

Detroit Part 3: Detroit Only? Not Hardly. Potential US Consequences of GM BK

One of the major fallacies of the public perception of a 'Detroit' auto crisis is based on simple lack of information. The public doesn't understand that this is global crisis with, just in the US, 3 million direct jobs at stake and millions of other indirect jobs at stake, and having global bailout requests. Just in the Euorpean Union the automakers there, including Toyota, have asked for $56 Billion in assistance. The average American citizen doesn't know that reality and they surely don't know that Toyota is part of the package. Like the US millions of jobs are at stake in the EU as well. Potential U.S. consequences of simply having GM alone filing bankruptcy?

A report by IHS Global Insight Inc., a financial forecasting group, predicted that the bankruptcy of General Motors could push the U.S. unemployment rate as high as 9.5 percent from the current 6.5 percent, which might cost taxpayers an additional $200 billion in jobless benefits and other costs.

A reorganization bankruptcy is a viable alternative when your financial partners and suppliers agree to stay on board. A normal element of a reorganization bankruptcy is for the court to approve working capital. Working capital is exactly what Detroit is unable to acquire. What happens without working capital? Lines shut down for lack of parts because parts suppliers won't work on a wish and a guess. They begin to lay off their workers. Automaker payroll may not be met because the company may simply not have the cash, What are the consequences? To avoid criminal liability the workers are laid off. Period. All of this danger exists, just from a potential GM bankruptcy, without a government guarantee or loan of working capital. Does it make sense to even think about taking the risk? Shall we put at risk millions of jobs just when jobs are scarce? $25 billion, even if it is a gamble, is a cheap bet compared to the consequences of failure. Citi Group is getting $20 billion cash and $306 billion is guarantees. If that action is absolutely necessary, and it is, then why isn't a $25 billion dollar loan for Detroit with millions upon millions of jobs at risk even a debate?

Detroit Part 2: David Axelrod's, and Others, Idiotic Statements

Let's look at one segment of why the automakers were big targets last week in Senate and Congressional hearings. There was one glaring reason, according to the politicians, that showed the incompetency of the automaker CEO's. The executives flew corporate jets to the hearings. They took huge amount of flack for being insensitive and wasting corporate assets while asking for a $25 billion dollar loan. David Axelrod, on ABC said yesterday morning:

We all have a stake in the survival and the prosperity of the auto industry. Millions of jobs depend on that. But in order to do that, they're going to have to retool and rationalize their industry for the future. And if they don't do that, then there's very little that taxpayers can do to help them. So, my hope is that the Big Three auto executives come back to Congress in early December -- hopefully on commercial flights -- and come back with a plan, and not just an expression of need. And if they do, that Congress will respond.

Here's the idiocy in two segments:

A. But in order to do that, they're going to have to retool and rationalize their industry for the future. And if they don't do that, then there's very little that taxpayers can do to help them.

Is it possible that the CEO's who have to stay abreast of industry moves on a daily basis, might have assumed that The Hill staffers might have at least read the industry press releases and magazines to prepare their officeholders? If they had at least done that at least two of the three, as I won't speak for GM as I haven't done any research, have announced far and wide their intent and broad plans. The only reason they need any money whatsoever is that they can't get the normal 'rollover operating loans' that any huge industry uses on a daily basis. Ford, as my earlier article shows is the most explicit and far reaching about their plans.

B. So, my hope is that the Big Three auto executives come back to Congress in early December -- hopefully on commercial flights --

Ok. What the hell does Axelrod think happens on a private corporate jet going from point A to point B? It's the same damn thing that happened on his campaign plane! The working team is there doing just that...working! The CEO, in this case Obama, is working the phones to raise money and spending valuable time with staff to create plans and policy. Now the CEO's of three of the biggest companies in the US are supposed to take hours out of valuable day, in the middle of crisis, to fly on some dingbat, usually late,

The Political Internet Comes Of Age

This gets straight to the point. I hope you take the time to follow through on the links. Barack Obama's campaign, powered by organization and eloquence, created an entity that has never existed before and will be the yardstick for many in the future. h/t to Political Wire.

Obama Raised More than $500 Million Online

Barack Obama raised more than half a billion dollars online from 6.5 million visitors in his 21-month campaign for the White House, "dramatically ushering in a new digital era in presidential fundraising," the Washington Post reports. Andrew Sullivan: "This changes everything in every future campaign, and has just as much resonance for media and fundraising in general. I don't believe that Obama would have ever been able to become president in the era before the Internet. And I don't believe the implications of that have yet to fully sink in."

I believe, as someone involved in creating political sites, blogs and communications systems, that Sullivan's comment that we don't even know the implications of Obama's campaign is stone-cold right on the mark. We can't imagine what the campaign's of 2012 will even look like yet. Just as the campaign sites of 2006 are outdated compared to 2008 so the campaigns of 2010 and 2012 will be very different. How? No one's got that one figured out yet. I'm betting on better communication between voters and candidate. But who knows?

Detroit Part 1: Big 3 Not Making Any Efforts? Let's Look At Ford

Let's focus on Ford as it has very available data. In the first move of an announced global manufacturing strategy the newly redesigned Ford Focus, currently a high demand vehicle that as caused one US manufacturing plant to add a third shift, will have it's new model built both in Europe and the US. Ford will be adding one new plant for that vehicle domestically as well as retooling it's Mexico plant to switch from the F-150 to the new Focus. These plans were announced in June well before the liquidity problems of today. In addition;

With every new product, Ford expects to be the best or among the best for fuel economy. This is aided by one of the most extensive powertrain upgrades ever for Ford. By the end of 2010, nearly all of Ford’s North American engines will be upgraded or replaced. In addition, within two years, nearly all of Ford’s North American lineup will offer fuel-saving six-speed automatic transmissions or be available with an optional PowerShift dual-clutch unit. Furthermore, Ford will offer EcoBoost on more than 80% of its North American lineup by the end of 2012, and capacity for North American four-cylinder engines to more than one million units by 2011. (July 2008)

Ford has also already leaked they are retooling two plants in the US to bring to domestic production two of their European models that are smaller and gas efficient (June 2008). Ford has also added a third shift to it's Wayne, Indiana plant to build the high demand Ford Focus. The two Euro models, currently built in Europe for European production, are the Kuga and C-Max both small vehicles to be introduced for the 2011 model year. (David Axelrods Saturday statement that Detroit must include plans for 'retooling' for it's short term $25 Billion loan shows only the lack of knowledge of manufacturing industries.)

Goddamn Idiots In Washington and The Big 3 Investment Plan

I put up a post a bit ago about my view of the The Big Three auto industry investment. But I just found out that nowhere are they talking about slapping these jerk-off's around. Chris Matthews is suggesting that the executive compensation be limited to the President's salary which, I believe, is $200,000. And now on Hardball there's a goddamn idiot f***king Republican from Georgia saying let them fail if necessary. Matthews says 3 million jobs lost total. Shit, that isn't even the beginning. I'll be surprised if it isn't nearly 7 million. The ripples in this pond go forever. Here's what I want, beyond a plan that shows they know what the hell to do next;

1. Your pay, Mr. Executive, is exactly $1 a month. That's it asshole. $1 a month. Get some new products that can lead to your company getting turned around and you get your money back.
2. All members of the Boards of Directors are hereby paid at $1 per meeting. All meetings to be held on the empty plant floors of whatever factory you have to shut down. You shut 'em down, you sumabitchs, because you didn't want to admit the reality that someday, somehow, an oil shortage would happen so then you can sit your ass on a folding chair, at a folding table and have your fancy ass meeting.
3. UAW to come up with their own plan for helping out the situation. UAW Executives will be limited to $100K since they aren't the millionaires in the corporation. If I'm wrong on that fact then screw 'em they can get a $1 a month. But the UAW has to come up with innovations and ideas that will help the long term prospects of our auto industry. And the UAW better remember how the members used to rumble when their livelihoods were threatened. Go ahead and dog it, UAW Exec's, and see how long it takes for you to wake up to a group of the brotherhood outside your damn big house. Unions guys will not let you take their industry away from them.

I'm pissed, as you can tell. By god, there are ways to make this work and get the idiots to pay a price. And, yes, I did send an email to Lee Iacocca.

A Reply to The Frameshop's Rust Covered Car Exec's? Kick 'em To The Curb

Jeffrey Feldman's Frameshop is a must read for anyone who want to see thoughtful concepts and ideas about the reading of the day. His post for today is 'Rust Covered Car Exec's? Kick 'em To The Curb' My comment on his blog follows as I've seen some of trouble when a major industry is destroyed.

Jeffrey, here's some direct experience. I've seen what happens when a plant, the only steel making plant west of the Mississippi, closes down. Fontana, CA nearly blew off the map.

In this case, I believe that we literally do not know what are on the design tables for 2009/10/12/-15. It takes about 5-7 years for a car to be designed. That's actually quicker than it used to be. What do they have in process? We don't know.

I think if we actually KNEW what was on the drawing boards everyone would be amazed.

 GM, as the worst of the bunch, is slow but not as stupid as a rock. They see the future and are retooling like every other manufacturer, even Honda.

We need experienced people, perhaps I don't give a damn about the boardroom level, but we need experienced people already working on the

Quote Of The Day

"The secret of good old age is simply an honorable pact with solitude."

Gabriel García Márquez

And I would add not a bad idea for any of us from time to time.