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  1. #1
    Good Enough weesfreewheelin's Avatar
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    07.19.17 @ 06:26 PM
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    Default Big Three Auto Handout Beg

    Havn't completely made up my mind on this issue yet, but found this article pretty much in-line with my current thoughts.

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    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. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

    Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

    The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

    You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

    The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

    Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

    Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

    It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

    But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

    The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

    In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

    Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.
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  2. #2
    Atomic Punk bsbll4's Avatar
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    12.15.17 @ 12:23 PM
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    Overall, I agree with him, however, I think he's missing the point that GM and Ford at least are beating the hell out of the foreign automakers in foreign markets. The key is that the cars that we need now in the US are 2-3 years from production and even the experts are predicting the Big 3 will turn profits (gasp) by 2011 - when many of their legacy costs are taken off the books. They just need a bridge to get there. Instead of a bailout, they should get a minimal interest loan directly from the Fed (since they can't get financing from anyone else).
    CNN may think my opinion matters, but you shouldn't.

  3. #3
    Gird your loins Daisy Hill's Avatar
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    12.17.17 @ 03:53 PM
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    Default

    The government is going to bail them out someway, somehow....I think the dog and pony show going on now is just so that congress can say "We gave them what they asked for, but we gave them a stern talking to beforehand"


    HUGE changes need to be made in this industry, but with the UAW wielding so much power come election time...who is going to that?...

  4. #4
    Future's in the past....
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    11.03.17 @ 01:35 PM
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    Fire Wagner and Lutz the putz from GM, that gets rid of a good portion of the problem with that company right there.
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  5. #5
    Hang 'Em High sickman's Avatar
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    12.16.17 @ 02:06 PM
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    I think that one thing that the incoming administration could do to help the automakers is to test out their idea of universal health care on the auto industry. That would help the automakers cut some of the labor costs if they didn't have to pay the healthcare of not only their current employees but also all the ones who have retired throughout the years.
    I used to jog but the ice cubes kept falling out of my glass.

  6. #6
    Atomic Punk edwardv's Avatar
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    12.17.17 @ 03:05 PM
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    My gut feeling is management is way overpaid ,the unions are overpaid,cars cost too much and everybody in the auto chain need to step back and take a pay cut.

  7. #7
    Sinner's Swing!
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    10.27.17 @ 06:31 PM
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    Somehow I don't see the UAW changing their ways, especially with an Obama administration. The auto industry has fell behind, but the root of why they are behind in R&D is the amount of money they spend on employees and retirement IMO.

    BTW, if people really wanted the economy fixed, Romney woulda been the man to do it. I know he never would, but Obama really should use him as an advisor.

  8. #8
    Hang 'Em High
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    12.16.17 @ 05:15 AM
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    Quote Originally Posted by edwardv View Post
    My gut feeling is management is way overpaid ,the unions are overpaid,cars cost too much and everybody in the auto chain need to step back and take a pay cut.
    Yup, this is one of those cases where inflation fucked itself.

  9. #9
    Hang 'Em High jetguy5150's Avatar
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    12.15.17 @ 11:56 AM
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    Quote Originally Posted by Ain't Talkin' Bout' Love View Post
    Yup, this is one of those cases where inflation fucked itself.
    Quote Originally Posted by edwardv View Post
    My gut feeling is management is way overpaid ,the unions are overpaid,cars cost too much and everybody in the auto chain need to step back and take a pay cut.
    I get into this discussion with my neighbor all the time. She is my girlfriends best friend so we have some pretty heated but good discussions. She works for Chrysler doing nothing. And I mean NOTHING. She stands on a line and makes sure that the person working a particular station never runs out of bolts. She has been doing this for 7 years and makes....$82000 per year!!!! She is one of the lowest paid employees at her plant. It gets better...they are closing plants in our area faster than you can print the newspaper article about the closings and the union is STILL demanding more from the company and accusing them of making false claims about the economic standing of the company. Do these people not listen to the news or read the paper???

    So here is the part I love...they were notified about 12 months ago that their plant is slated to close in 2010 but it could be as early as 2009. One of their benefits is that the company will pay for their employees to get a university degree. That's right...the piece of paper that students are paying ridiculous amounts of money for and going deep in to debt over are available to all of their employees for absolutely NO CHARGE. So what has she done with this information..knowing her plant is closing and knowing that she can get a free education? That's right...nothing. I asked her what she was going to do with herself when her plant closes and her thought is she will just get another manufacturing job at the same pay. I wished her good luck with this hopeless endeavor.

    My point....I know there are many variables in this argument but the standout for me is that labor has driven these companies into the ground and when the unions have been asked for the past 3 decades to help out with lower wages, benefits etc. they have not only said no but they have demanded more. No one makes more in manufacturing than auto workers. That quote by the former union leader that said "more and more money for less and less work is a dead end street" hit the nail squarely on the head.

    In the end I asked her if she would be willing to take a pay cut to keep the plant open her response was a resounding "no chance, we deserve every penny we get." The ship is sinking yet the people on the boat are not willing to help stop it from dipping below the surface. I work in the transportation industry. If the government bails out the auto industry are they going to step in and help all of the trucking companies that went bankrupt over the past 12 months? Not likely. A very dangerous precedent could be set.

    Rant over.
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  10. #10
    Sinner's Swing!
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    I hate to see people lose their jobs, but at the same time, you gotta pitch in and help out.

  11. #11
    Sinner's Swing! VH122's Avatar
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    I think the rising cost of health care has more to do with this than anything else.

  12. #12
    Forum Frontman It's Mike's Avatar
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    Pensions, health care, poor management, overpaid workers. These companies have so many problems that I'm not sure if there's a way out without completely re-inventing them.

  13. #13
    carpe damn diem billy007's Avatar
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    $82,000 for stocking bolts! I could do that, I'm pretty sure my 9 year old could do that. Even if that was Canadian back in the day when the Canadian dollar didn't stack up to the American dollar, that's still more than I make at my so-called "skill position"

  14. #14
    Hang 'Em High sickman's Avatar
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    Quote Originally Posted by billy007 View Post
    $82,000 for stocking bolts! I could do that, I'm pretty sure my 9 year old could do that. Even if that was Canadian back in the day when the Canadian dollar didn't stack up to the American dollar, that's still more than I make at my so-called "skill position"

    That is ridiculous. I first started to see this trend in manufacturing about 10 years ago. A large plant in Boston that we supply parts to started doing this. Usually it starts in the auto industry and trickles down the manufacturing chain. Instead of assembly lines or production lines they now have cells. One person stays in their work space all day putting together the same components. A cell manager oversees about 25 people in this particular plant and makes sure they don't have to move an inch to get parts for their assemblies. The problem for us was that in the past we were regulated by the unions to a maximum of 35 lbs per carton of parts we shipped in. Once they started this that limit was reduced to 5 lbs. . We have to use a special size box, we have had to incorporate barcode labeling and sometimes incur much more shipping costs which in turn do get passed on to our customer. This was supposed to be lean manufacturing. A way of cutting mfg costs. What they failed to see is that the parts they order were now going up in price to accommodate the new requirements, and their incoming freight costs were quadrupling. We have even tried to show them how their incoming freight costs were going to cost them more and they didn't have a care. One order alone for 500,000 pcs prior to this change used to cost about $500.00 in freight. Now that the box limit is 5 lbs the freight cost went to about $2100.00. Friggin' ridiculous.
    I used to jog but the ice cubes kept falling out of my glass.

  15. #15
    On Fire 318joe's Avatar
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    09.24.11 @ 05:29 AM
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    Quote Originally Posted by edwardv View Post
    My gut feeling is management is way overpaid ,the unions are overpaid,cars cost too much and everybody in the auto chain need to step back and take a pay cut.
    i fucking agree.
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