Detroit Calling Washington's Bluff 20 comments
Andrew Snyder
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I am not one to pick on a company’s management and blame all of its problems on its top decision makers. Until recently, I said very little about Detroit’s CEOs. After all, they were dealt a bad hand from the start.
But my opinion of respect is waning fast. In fact, I am starting to think the Big Three are run by a set of incompetent suites that are nearly mirror images of our even more incompetent elected politicians. For proof, look at the so-called detailed business plans the automakers handed Washington today.
Ford (NYSE:F) tells us absolutely nothing new except that it may not even need bailout money and if it does take the money, its CEO will work for a buck a year. After coming back to Washington with this less-than-informative report, I say we give Alan Mulally nothing and hold the door for him on his way out.
Here’s what the report should have said, but did not. First, if Detroit is to survive, it must deal with its expensive wages and legacy costs. Mulally may miss his annual bonus this year, but if assembly line workers are still earning the equivalent of more than $70 an hour, a $20 million CEO package looks downright cheap.
And what about all of those expensive brands Ford is wasting money to support? Mercury and Volvo must go if the company is going to compete in a long-term fight with Japan, but today’s report mentions nothing about how Ford can unload these burdens.
It did mention, however, that Ford plans to hurry its development of hybrid and electric vehicles. Unfortunately, the company is about ten years too late. If it hurries, Ford can put electric cars on dealer’s lots just about the time gas is selling for a buck a gallon.
When consumers want hybrids, Detroit sells Hummers. When we want Hummers, here come the hybrids.
Dumb and Dumber Lead the Nation
Unfortunately, Detroit knows Washington is an easy mark. It would be political suicide to let an automaker go down in flames. A cash infusion has been a near-certainty for almost two months.
So why should Ford, General Motors (NYSE:GM) or Chrysler make public concessions and risk creating burdensome goals to meet in the future?
The business plans these CEOs were told to create were no more than a decoy used to take heat off of Congress. If any of the automakers fail, Congress is essentially off the hook. The less detailed the plan, the more room Washington has to wiggle its way to re-election. Detroit knows it and is calling Congress’ bluff.
Why any American would believe Washington has the cognitive skills to figure out if a business plan is viable is beyond me. The city has been the capital of wasteful spending since right about 1776.
Need proof? Head down to the brand new Capital Visitor Center on Capitol Hill. When the plans were first approved, the building was scheduled to cost you and I just $71 million. When they finally cut the ribbon three years behind schedule, it cost the American taxpayer more than $620 million.
If we give them a dollar, they spend ten.
If this is not enough political spit in your face, just wait until you see what Washington does in Detroit.
If our lawmakers cannot figure out how to build a visitors center on time and under budget, there is no way they will ever figure out how to turn around a devastated manufacturing industry.
The “Automaker’s Memorial” should be unveiled sometime around 2010.
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This article has 20 comments:
The taxpayers were duped by TReasury & Fed for over $700BB, so why wouldn't we expect to continue to be the object of our leaders disdain????
It's called THE MUSHROOM THEORY-----ALIVE & WELL IN CONGRESS!!!!!
IMHO
..."but if assembly line workers are still earning the equivalent of more than $70 an hour, a $20 million CEO package looks downright cheap."
When are you people EVER going to get you facts RIGHT? GM's hourly workers DO NOT earn that much per hour...not even with their benefits...Seeking Alpha is starting to sound like a broken record...repeating the same old falsehoods.
Here is a couple year old analysis of UAW wages.
www.cargroup.org/pdfs/...
It includes 2003 actual and 2007 projected values. See page 31 of this PDF for the original. For convenience of readers I typed the 2007 projected values below:
I’ve been to the UAW website and they are denying the $70 per hour figure, and alleging that money for pensions to retired people are allocated to the current workers. They would indeed be an unfair comparison. But the below figure of $4.94 per hour seems reasonable to fund a working persons 30 and out pension. The figure for health care of $13.38 looks high, but the UAW has only 5% co-pay and probably wastes a lot of services.
If the UAW does not like the $70 per hour figure being floated then they should publish a revised figure that shows all of the below categories for actual workers only, instead of blowing a lot of smoke.
Wages:
Wages and Cola (28.44),
Overtime (3.90),
Vacation (6.62),
Bonus (0.60),
Other Misc.( 2.09),
Total Wages( 41.65)
Benefits:
Pensions (4.94),
group life (1.40),
healthcare (13.38),
FICA and UC (3.26),
other misc( 0.35),
total Benefits (23.34)
Grand total (64.99)
To The PA Kid, They don't care what the auto worker makes, or the CEO, or about their private jets, its all a show. They will give them all the money, and loans they need in the end, and you will pay for it, TAX's.
National Health care will also break us, again, TAX's. I have been to China, and been in four hospital's with my wife, a Chinese citizen. Heres what you get. In the winter, hardly any heat, cold, people in chairs, and cots all up and down the halls, with bags of food, and family all around them. The janitor sweeping around you smoking, then later the same man in dirty clothes sitting on a milk carton putting labels on IV bottles, oh, and with the cigarette hanging between his lip dropping ash's all over the IV bottles. Nurses with dirty whites on, and smuges of blood where they wipe their hands, that don't care if you live or die. Oh, the IV my wife got. They missed the vein, her arm got fat, filled up, the nurse pulls out the nasty black looking needle, big too, and sticks it in her other arm, and walks off. If you want to see if you have a fever, you have to pay 5 rmb to use a thermomiter, has it been cleaned you ask your self, its the old glass kind you put in your mouth. If you need toilet paper you have to pay 5 rmb, or you better bring your own. You go in, wait maybe all day to see the Doctor, unless you know someone, or pay someone, its very corupt, and money talks. After you see the Doc. you go to a glass window like a bank, and must pay your share first, then go sit in the hall, say waiting for your Xray, oh, here comes a lady in a wheel chair being pushed by a nurse which she had to pay to be pushed about, but also, this nurse is your agent, so to speak, they try to cut in front of everyone else, and the lady, and the nurse start fighting, with my wife also, she knows how its played. The nurse, being paid, has to argue to get her lady in ahead of everyone else, the game. I'm getting pissed, not knowing the game, and pretty soon there are about 15 people in a close riot, and the gaurds. The lady lost, and must wait, sitting there bitching, and cussing the entire time, so I sit there for an hour, smoking by the way, and wait. When we left, I told my wife, if I ever get sick over here, don't take me to the hospital. Now, is that graphic enough for you, and your wonderful national health idea, oh, and you get to pay for that too, TAX's. Now, in the end. We have good health care that most country's envy, and besides, we have about 40% of our people getting free health care already, SHUT YOUR MOUTH, AND LET THE REST OF US CHOOSE HOW, AND WHERE WE WILL BE TAKEN CARE OF,
JESUS CHRIST
Long live Kennedy, Clinton and the rest of the robbers.
1. Give us thier check book balance now. (add the amount they are asking for)
2 Provide thier best and worst case estimates of spending compared to best and worst case estimates of income. (We can then plot the check book balance over time best/worst case.)
3.Have them tell us when they believe they will be profitable.
I believe that this would show at best they will last 2 years and at worst 1 year before the check book has no more money and they will come back for more money since they will not be profitable by this time. I also think the CEO'S estimates of when they think they will become profitable will be ridiculous speculation because they will never have simple looked at this simple cash flow projection for the next 3 years.
Pouring buckets of water on a beached fish will still result in a rotten stinking corpse. It just takes a little longer but not much longer. We should not waste our time hauling buckets of money to these beached whales just waiting to stink the place up. Only Chapt 11 can get them back into the waters.
On Dec 03 10:54 AM Mike_I_N_Mich wrote:
>
> Here is a couple year old analysis of UAW wages.
>
> www.cargroup.org/pdfs/...
>
> It includes 2003 actual and 2007 projected values. See page 31 of
> this PDF for the original. For convenience of readers I typed the
> 2007 projected values below:
>
> I’ve been to the UAW website and they are denying the $70 per hour
> figure, and alleging that money for pensions to retired people are
> allocated to the current workers. They would indeed be an unfair
> comparison. But the below figure of $4.94 per hour seems reasonable
> to fund a working persons 30 and out pension. The figure for health
> care of $13.38 looks high, but the UAW has only 5% co-pay and probably
> wastes a lot of services.
>
> If the UAW does not like the $70 per hour figure being floated then
> they should publish a revised figure that shows all of the below
> categories for actual workers only, instead of blowing a lot of smoke.
>
>
> Wages:
>
> Wages and Cola (28.44),
> Overtime (3.90),
> Vacation (6.62),
> Bonus (0.60),
> Other Misc.( 2.09),
>
> Total Wages( 41.65)
>
> Benefits:
> Pensions (4.94),
> group life (1.40),
> healthcare (13.38),
> FICA and UC (3.26),
> other misc( 0.35),
>
> total Benefits (23.34)
>
> Grand total (64.99)
Unfortunately, the workers will continue to bear the brunt of short sighted management decisions at the Big Three. Let us all remember who it was that suggested the domestic auto companies make smaller, fuel efficient cars almost 40 years ago--the UAW.
We should also remember the massive concessions given the Big Three over the course of the contract just ratified last year. Again, the UAW. These workers, who make around $40/hr with benefits included, have proven over the course of time that they are willing to sacrifice for their employers.
Let us remember who wanted to tie wages to profits--the UAW. The Big Three in their greed and shortsightedness denied this request years ago.
The problems with The Big Three are simple: they ignored the car market for years to focus on SUVs. No one denies this, now, when they are in the middle of a massive restructuring (many of these execs are brand new, something that is NEVER mentioned by the media), the Republican created economy, that relies on speculation rather than production, has dried up. Of course, none of these anti-bridge loans to the Big Three people has any problem with throwing a Trillion dollars at bankers and stockbrokers. Those companies have completely collapsed because of mismanagement (no union to blame there) and continue to get government handouts that dwarf that of the requests made by the Big Three.
One Trillion for (nonunion) bankers and Wall Street, nothing for Main Street.
a question unanswered yet in the ongong debate--
if the north american part of honda, hundai. toyota, VW, BMW,etc were to have financial problems[equivlent to GM, F], would there be the same bailout support discussed? if not, WHY, as the consequences to the USA economy would be almost the same.
will we next be discusssing same support for HPQ, IBM, DNA if they hit the same GM, F speedbump. as international corps, why not the same exposure in the future? when/why not clear.
BETTER THINK IT THRU MR/MS AMERICA. your form of gov't and level of freedom for your children are at risk. DON'T RELY ON THE POLS OR GOV'T APPARATUS OR MEDIA-- they got you this far.
signed: GERRY MANDER
On Dec 03 08:36 AM Fcountry wrote:
> QOUTE:
> ..."but if assembly line workers are still earning the equivalent
> of more than $70 an hour, a $20 million CEO package looks downright
> cheap."
>
> When are you people EVER going to get you facts RIGHT? GM's hourly
> workers DO NOT earn that much per hour...not even with their benefits...Seeking
> Alpha is starting to sound like a broken record...repeating the same
> old falsehoods.
Congress has no balls to do the right thing which is a pre planned bankruptcy.
These 3 companies are not American ONLY. They are artound the world. Let Europe fund them. Let Brazil fund them. Let Saudi Arabia fund them. Hello?
I really want to know the total cost of a UAW worker. I've looked at the UAW site and see two possible articles you may be referring to:
1) A rant by idiot Keith Oberman that pulls $20 per hour of benefits out of thin air.
2) A article by the leftist New Republic which quotes a group called International Motor Vehicle Program that says the benefits are:
"Instead, each active worker is getting benefits equal only to a fraction of that -- probably around $10 per hour, according to estimates from the International Motor Vehicle Program".
This is very suspect. The only number that seems out of line in my detailed list of costs is the health care. The vacation may seem high, but in 2004 the UAW got the following vacation according to a UAW local website:
"Employees shall receive an annual vacation with full pay at the rate of four (4) weeks after one (1) year’s service and five (5) weeks after fifteen (15) years service."
In addition to this there is Christmas week off and many other holidays.No one else gets this kind of days off. $6.63 for vacation seems about right.
I'd be interested in a detailed breakdown of what the UAW thinks they are getting. I'm pretty sure the $70 per hour number is closer than the third part sources on the UAW website. (Keith Oberman is a source??)