Does Anyone Actually Support The Auto Bailout?
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The current arrangement is clearly not efficient. Then it is the duty of management -- as fiduciaries -- to chose another system, modify their policies, or in the worst case to wrap up operations if the business is unsustainable. It is not their company, they only run it on behalf of shareholders -- if it cannot be profitable they have a duty to shut down.
They have the ultimate responsibility for these decisions. Instead, they played along for decades under an inferior policy (amongst many others), in order to profit themselves, and they're continuing to do so now.
There'll be some token changes very much along the lines of (say) driving to DC or working for a dollar. And when <A href="http://www.elitetrader.com/vb/showthread.php?s=&postid=2213328#post2213328">Automaker Bailout 2.0</a> gets here in February, the ObamaNation will assume some pensions and/or healthcare and/or other parts of the union problems in exchange for more cash. Plus you can count on the usual things being enforced like affirmative action standards, all US parts, new or expanded plants in key districts, parts/services being supplied not by lowest price but by which congress critter gets money from them, crappy green cars that don't sell, etc. All the usual corruption and general inefficiency that government brings will be introduced to the mess that is the US Auto Industry. That's not going to help.
You may be right, but I am not trying to blame anyone. I am just pointing out that you can't compete with this cost structure against companies that have far lower costs, and supportive governments behind them as well.
At this point, it seems to me we need to ask ourselves as a country if we are ok with basically not having any manufacturing anymore, because that is clearly where our current policies are leading us. "Free" trade, powerful unions, high taxes, etc, all undermine domestic manufacturing. It is ludicrous to pretend that the auto companies will be fine if only they could come up with some better cars and somehow convince people to buy them. They will not be fine for the simple reason they are not cost-competitive with their major competition. The situation is made worse by the fact that the only way they can sell cars is to discount them heavily.
The idea that they somehow missed the ball by not having fuel efficient cars, hybrids, etc is also suspect. Demand for small econoboxes rises and falls with gas prices. Detroit's costs are such that they need the big profit per vehicle they got from trucks and SUVs. If they had done what congress says they should have, ie turned their product lines over to small cars, they would probably have gone broke sooner. Peoiple were lining up to buy hummers until this past year. Now that gas is <$2, they probably will be again.
This is what will be on the show room floors. Any man that wants one of these should be forced to wear a prom dress and preform some "salad tossing" for Barney Frank.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2213857
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2213857
Having worked in union shops I can attest to the inefficiencies, costs, and overall hostility between management and labor that they can cause, and how they can set the interests of the company and its employees against each other. Clearly they are a huge factor here.
But they have been a factor for decades, there's nothing new here. Ultimately it is the job of management to steer the company on a profitable path, and they have not done that, despite having paid themselves obscene amounts of shareholder money. They bear the responsibility.
Unreal..
No Chrysler Bailout Until It Opens Up Its Books: Jonathan Weil
Commentary by Jonathan Weil
Dec. 9 (Bloomberg) -- Chrysler LLC says itâs almost broke and needs federal aid to survive. Perhaps thatâs true. Yet taxpayers should be asking: How do we know?
Sure, we can surmise from all the awful vehicles Chrysler makes that itâs losing mountains of dough. Really, though, we have no idea. We donât even know who sits on the companyâs board of directors. Thatâs because Chrysler and its owner, Cerberus Capital Management LP, wonât disclose the information.
There ought to be a law: If a company is so desperate and devoid of dignity that itâs willing to beg for a government bailout, the least it should be required to do is disclose its latest financial statements, fully footnoted, independently audited, and sworn to by each of its officers and directors.
Itâs the only way for taxpayers to know if the mess is as ugly as Chrysler says. Trust but verify, the old Cold War saying goes. And we should be just as wary of Chrysler and Cerberus as Ronald Reagan was of the Soviet Union.
Secrecy in financial matters is fine for closely held corporations and partnerships, as long as their profits and losses are none of our business. Chryslerâs owners crossed that line the moment they started asking for public handouts.
If the government, for political or economic reasons, decides to lend billions of dollars to General Motors Corp. or Ford Motor Co., fine, whatever. The American people are too numb now to get outraged over just any old bailout, even when itâs more money down the drain. As public companies, GM and Ford at least disclose their financials.
No Transparency
With Chrysler, we donât even know what the drain looks like, or where the plumbing leads. To be sure, one winner would be Cerberus, whose chairman is former Treasury Secretary John Snow. Transparency, this is not.
Whatâs remarkable about the 14-page business plan that Chrysler Chief Executive Officer Robert Nardelli delivered to the Senate Banking Committee last week is how little information it contains.
The summary starts out with so much blather about how well managed and innovative Chrysler is, you might wonder why it needs a bailout. Nardelli blamed Chryslerâs problems on the âperfect stormâ of declining vehicle sales, the financial crisis and the global economic downturn -- as if the company were a finely tuned vessel before the waves unexpectedly kicked up.
Nardelliâs Warnings
He also provided some crystal-ball numbers for how much cash and sales Chrysler would have for the next few years, assuming it gets our money. He wrapped up with the usual doom-and-gloom threats if Congress doesnât buckle -- as much as â3 million in lost jobsâ and â$400 billion in lost wages,â etcetera.
Not once did Nardelli disclose any of the historical information found on a customary set of financial statements. There was nothing about total assets or liabilities, year-to-date losses or cash flows, let alone pesky details like deferred compensation that might be owed to Chrysler executives.
Nardelli did hand the committeeâs members a lengthier presentation, which he asked them to keep secret because it is âcompetitively sensitive and proprietary.â If he wants to sink Chryslerâs foreign competitors, perhaps he should encourage them to copy his companyâs plans.
A Chrysler spokeswoman, Shawn Morgan, confirmed that the secret package didnât include the companyâs financial statements, audited or otherwise. She said the reason Chrysler doesnât divulge such information, or the names of its board members, is âbecause weâre a private company.â A spokesman for Cerberus, Peter Duda, gave me a similar answer. When taxpayers rescue an outfit like Citigroup Inc., at least we know whom to blame.
If Chrysler and Cerberus want the rights and privileges of private companies, they should stay away from our money. And if this is really just about saving jobs and helping the U.S. economy, then they should bare all and stop using American auto workers as human shields.
Until they do, Congress should tell Chrysler to get lost.
(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: Jonathan Weil in New York at jweil6@bloomberg.net
Last Updated: December 9, 2008 00:02 EST
No Chrysler Bailout Until It Opens Up Its Books: Jonathan Weil
Commentary by Jonathan Weil
Dec. 9 (Bloomberg) -- Chrysler LLC says itâs almost broke and needs federal aid to survive. Perhaps thatâs true. Yet taxpayers should be asking: How do we know?
Sure, we can surmise from all the awful vehicles Chrysler makes that itâs losing mountains of dough. Really, though, we have no idea. We donât even know who sits on the companyâs board of directors. Thatâs because Chrysler and its owner, Cerberus Capital Management LP, wonât disclose the information.
There ought to be a law: If a company is so desperate and devoid of dignity that itâs willing to beg for a government bailout, the least it should be required to do is disclose its latest financial statements, fully footnoted, independently audited, and sworn to by each of its officers and directors.
Itâs the only way for taxpayers to know if the mess is as ugly as Chrysler says. Trust but verify, the old Cold War saying goes. And we should be just as wary of Chrysler and Cerberus as Ronald Reagan was of the Soviet Union.
Secrecy in financial matters is fine for closely held corporations and partnerships, as long as their profits and losses are none of our business. Chryslerâs owners crossed that line the moment they started asking for public handouts.
If the government, for political or economic reasons, decides to lend billions of dollars to General Motors Corp. or Ford Motor Co., fine, whatever. The American people are too numb now to get outraged over just any old bailout, even when itâs more money down the drain. As public companies, GM and Ford at least disclose their financials.
No Transparency
With Chrysler, we donât even know what the drain looks like, or where the plumbing leads. To be sure, one winner would be Cerberus, whose chairman is former Treasury Secretary John Snow. Transparency, this is not.
Whatâs remarkable about the 14-page business plan that Chrysler Chief Executive Officer Robert Nardelli delivered to the Senate Banking Committee last week is how little information it contains.
The summary starts out with so much blather about how well managed and innovative Chrysler is, you might wonder why it needs a bailout. Nardelli blamed Chryslerâs problems on the âperfect stormâ of declining vehicle sales, the financial crisis and the global economic downturn -- as if the company were a finely tuned vessel before the waves unexpectedly kicked up.
Nardelliâs Warnings
He also provided some crystal-ball numbers for how much cash and sales Chrysler would have for the next few years, assuming it gets our money. He wrapped up with the usual doom-and-gloom threats if Congress doesnât buckle -- as much as â3 million in lost jobsâ and â$400 billion in lost wages,â etcetera.
Not once did Nardelli disclose any of the historical information found on a customary set of financial statements. There was nothing about total assets or liabilities, year-to-date losses or cash flows, let alone pesky details like deferred compensation that might be owed to Chrysler executives.
Nardelli did hand the committeeâs members a lengthier presentation, which he asked them to keep secret because it is âcompetitively sensitive and proprietary.â If he wants to sink Chryslerâs foreign competitors, perhaps he should encourage them to copy his companyâs plans.
A Chrysler spokeswoman, Shawn Morgan, confirmed that the secret package didnât include the companyâs financial statements, audited or otherwise. She said the reason Chrysler doesnât divulge such information, or the names of its board members, is âbecause weâre a private company.â A spokesman for Cerberus, Peter Duda, gave me a similar answer. When taxpayers rescue an outfit like Citigroup Inc., at least we know whom to blame.
If Chrysler and Cerberus want the rights and privileges of private companies, they should stay away from our money. And if this is really just about saving jobs and helping the U.S. economy, then they should bare all and stop using American auto workers as human shields.
Until they do, Congress should tell Chrysler to get lost.
(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: Jonathan Weil in New York at jweil6@bloomberg.net
Last Updated: December 9, 2008 00:02 EST
Oh yeah, let's not forget Daimler Benz still owns 20% of Chrysler, so the American taxpayers will be bailing out a rich german company. What a plan.
Maybe Obama can appoint rod Bolgajevich as the car czar to oversee all this, since it will take someone with his level of ethics to stomach it all.
Maybe Obama can appoint rod Bolgajevich as the car czar to oversee all this, since it will take someone with his level of ethics to stomach it all.