UseMyFedTaxesInMyState

Remodeling the Auto Industry - Barron's

It is somewhat interesting to wonder how this automotive over-capacitiy situation would play out if it were to occur in countries other than USA.
For example if Japan were "Remodeling the Auto Industry", does anyone believe that the Japanese government would decide to reduce Toyota's workforce, dealer body etc... to allow a foreign company to become the largest manufacturer in Japan?

If Germany were "Remodeling the Auto Industry", does anyone believe that the German government would decide to reduce Volkswagen's workforce, dealer body etc... to allow a foreign company to become the largest manufacturer in Germany?

In what twisted reality does the "Un-United States" have its head?

Will 2009 Be Any Better for Car Companies?

In what sectors will the economy be better in 2009?

General Motors: The Next Growth Story?

The easiest way for GM to be successful would be to make all previous obligations to dealers, governments and employees disappear. If workers work for free and if vehicle prices are raised significantly higher, then GM would quickly get to profitability. Anything less than this scenario will take longer than most have the appetite for. It is interesting that our over-built housing market is basically undergoing the same economic disruption. Our over-capacitized retail footprint is also experiencing disruption.
If one considers the Japanese automotive market, one may recognize how restrictive it is to import foreign automobiles into Japan. Why is it that Japan does not offer financial or tax incentives to foreign auto manufacturers to build plants in Japan? Yet, in the US, we continue to incentivize foreign manufacturers to build additional auto manufacturing capacity. In their home market, the Japanese have learned it is not wise to misallocate human resources by “seeding” additional auto jobs.

Our land of the "free" eventually becomes the land of the "excess" in which the foreign companies get what they want, yet American taxpayers are left to financially reconcile the consequences of our own poor resources planning and strategy.

Buy a GM Car, Get 50 Shares Free?!

Malibu links:

Awards: www.chevrolet.com/2009.../
Best in Class Highway Mileage: www.chevrolet.com/pop/...
JDPower Highest Initial Quality: www.chevrolet.com/pop/...

Could It Be Bailout Envy?

The issue of Job Envy has motivated many state and local governments to incentivize auto manufacturers to build plants. This has lead to a significant overcapacity in the US.
It should not go unnoticed that Senator Bob Corker, as mayor of Chattanooga, probably played a significant role in marshalling over $0.5 Billion Dollars in incentives to have a foreign automaker, VW, build a plant in Chattanooga – all in the name of 2000 plus automaker jobs in Tennessee.

Check out this video:
www.youtube.com/watch?...

It should also not go unnoticed that Senator Richard Shelby has been instrumental in marshalling at least as much as Corker has to build foreign auto plants in Alabama – all in the name of jobs.

Other videos of interest:
www.youtube.com/watch?...
www.youtube.com/watch?...
www.youtube.com/watch?...
www.youtube.com/watch?...

Despite Everything, Capitalism Is Alive and Well

Favel believes that “labor unions such as the UAW are one of the biggest barriers to free market capitalism.” I believe that the issue is a bit more complex than he describes. It is generally thought that the “labor cost” of the average vehicle is approximately 10 percent of the total vehicle cost. If this is true, then how can this be the “biggest barrier”?
A few examples to larger impediments to “free market capitalism” are the following:
1] Legacy costs related to pensions and healthcare of older companies. If the US government does not “re-structure” this social environment, all companies will eventually shoulder this burden increasingly as they age. One potential solution in the current environment would be to only have companies that are less than 25 years old. That way a company would not have any employees retiring or requiring expensive medical care.
2] Currency manipulations by foreign governments that cause inconsistent economic value transfer into foreign markets.
3] Decades of "Bail-Ins" that state and local governments have provided primarily to transplant auto companies. Significant growth in taxpayer subsidized new auto manufacturing capacity – in the name of jobs – has demonstrated the consequences of an incoherent national industrial policy over the last 25 years. It should not go unnoticed that Senator Bob Corker, as mayor of Chattanooga, probably played a significant role in marshalling over $0.5 Billion Dollars in incentives to have a foreign automaker, VW, build a plant in Chattanooga – all in the name of 2000 plus automaker jobs in Tennessee.
The biggest paradox of so-called “free market capitalism” is that the market is NOT free of obligations and consequences. If one looks at any area where there have been incentives to grow markets like, automotive manufacturing, housing, and retail, - one can see an explosion of overcapacity that has lead to economic breakdowns for the constituents in those markets.
For many years, many have assumed that the lack of a coherent economic plan is a plan. The lack of a real US economic plan does not work in the context of foreign countries that have robust economic strategies.
Refer to this article: www.businessweek.com/m...

UAW Pricing Itself Out of the Auto Market

On Dec 14 09:05 AM rjynand wrote:
> Senator Bob Corker's proposal is in fact the solution. This gentleman
> is a true patriot and cares about us - strange but caring about "us"
> rarely if ever becomes a topic, it's always the so called "big three"
> and the "union".

It should not go unnoticed that Corker, as mayor of Chattanooga, probably played a significant role in marshalling over $0.5 Billion Dollars in incentives to have a foreign automaker, VW, build a plant in Chattanooga – all in the name of 2000 plus automaker jobs in Tennessee.

Offer Ford a Bridge Loan to Buy GM Assets

Kee is trying to answer a question that no one is asking. Why would Ford take on the unnecessary burden of reconciling the nation’s automotive manufacturing and retail over-capacity problem? By Ford’s behavior and words, they are much more inclined to “Stick to their own knitting.” Is this the typical investor advice that one receives on Stock Traders Daily?
Regarding Kee’s “Formal Proposal”:
-“Treat General Motors, Ford and Chrysler as separate entities.” – That is already what is being done – Nothing new about this.
-“Recognize that Ford is the most stable.” – Everyone already knows this – however, Ford’s stability is dependent on the rest of the industry being stable as well. Supplier- base stability is critical.
- “Offer a bridge loan to Ford”– Ford has not asked for this. Why give taxpayer money to someone who is not requesting it right now?
- “Allow General Motors to fail, and wipe out all legacy costs.” – Dumb idea. Legacy costs get transferred to Federal Government: Pensions and Healthcare costs would then be owned by the taxpayer- a “Wipe In”. In addition, a national economic disruption of this magnitude would cause many more businesses to take big hits with thousands or millions of people no longer employed.
- “Facilitate the purchase of GM assets by Ford using the bridge loan.” What specific assets would Ford purchase and for how much money?
- “The purchased assets should be lean and near profitable.” How would you specifically analyze and quantify this?
- “Ford should be able to repay the bridge loan with those revenues.” Again, specifically what amount are we talking about?
- “Chrysler should be left idle until they decide to declare bankruptcy too.” How do you quantify the economic effect of an automotive financing company, Chrysler Finance, not being solvent and it’s economic ramifications on the rest of the automotive industry.
- “Once Chrysler declares bankruptcy a similar transaction should occur.” – Are you suggesting that Ford also acquire Chrysler assets and perform a similar transaction?
In summary, most of Kee’s proposal does not make much sense, unless one wants a fairly complete unraveling of the US economy.

Offer Ford a Bridge Loan to Buy GM Assets

Kee is trying to answer a question that no one is asking. Why would Ford take on the unnecessary burden of reconciling the nation’s automotive manufacturing and retail over-capacity problem? By Ford’s behavior and words, they are much more inclined to “Stick to their own knitting.” Is this the typical investor advice that one receives on Stock Traders Daily?
Regarding Kee’s “Formal Proposal”:
• “Treat General Motors, Ford and Chrysler as separate entities.” – That is already what is being done – Nothing new about this.
• “Recognize that Ford is the most stable.” – Everyone already knows this – however, Ford’s stability is dependent on the rest of the industry being stable as well. Supplier- base stability is critical.
• “Offer a bridge loan to Ford”– Ford has not asked for this. Why give taxpayer money to someone who is not requesting it right now?
• “Allow General Motors to fail, and wipe out all legacy costs.” – Dumb idea. Legacy costs get transferred to Federal Government: Pensions and Healthcare costs would then be owned by the taxpayer- a “Wipe In”. In addition, a national economic disruption of this magnitude would cause many more businesses to take big hits with thousands or millions of people no longer employed.
• “Facilitate the purchase of GM assets by Ford using the bridge loan.” What specific assets would Ford purchase and for how much money?
• “The purchased assets should be lean and near profitable.” How would you specifically analyze and quantify this?
• “Ford should be able to repay the bridge loan with those revenues.” Again, specifically what amount are we talking about?
• “Chrysler should be left idle until they decide to declare bankruptcy too.” How do you quantify the economic effect of an automotive financing company, Chrysler Finance, not being solvent and it’s economic ramifications on the rest of the automotive industry.
• “Once Chrysler declares bankruptcy a similar transaction should occur.” – Are you suggesting that Ford also acquire Chrysler assets and perform a similar transaction?
In summary, most of Kee’s proposal does not make much sense, unless one wants a fairly complete unraveling of the US economy.

Offer Ford a Bridge Loan to Buy GM Assets

Kee is trying to answer a question that no one is asking. Why would Ford take on the unnecessary burden of reconciling the nation’s automotive manufacturing and retail over-capacity problem? By Ford’s behavior and words, they are much more inclined to “Stick to their own knitting.” Is this the typical investor advice that one receives on Stock Traders Daily?
Regarding Kee’s “Formal Proposal”:
• “Treat General Motors, Ford and Chrysler as separate entities.” – That is already what is being done – Nothing new about this.
• “Recognize that Ford is the most stable.” – Everyone already knows this – however, Ford’s stability is dependent on the rest of the industry being stable as well. Supplier- base stability is critical.
• “Offer a bridge loan to Ford”– Ford has not asked for this. Why give taxpayer money to someone who is not requesting it right now?
• “Allow General Motors to fail, and wipe out all legacy costs.” – Dumb idea. Legacy costs get transferred to Federal Government: Pensions and Healthcare costs would then be owned by the taxpayer- a “Wipe In”. In addition, a national economic disruption of this magnitude would cause many more businesses to take big hits with thousands or millions of people no longer employed.
• “Facilitate the purchase of GM assets by Ford using the bridge loan.” What specific assets would Ford purchase and for how much money?
• “The purchased assets should be lean and near profitable.” How would you specifically analyze and quantify this?
• “Ford should be able to repay the bridge loan with those revenues.” Again, specifically what amount are we talking about?
• “Chrysler should be left idle until they decide to declare bankruptcy too.” How do you quantify the economic effect of an automotive financing company, Chrysler Finance, not being solvent and it’s economic ramifications on the rest of the automotive industry.
• “Once Chrysler declares bankruptcy a similar transaction should occur.” – Are you suggesting that Ford also acquire Chrysler assets and perform a similar transaction?
In summary, most of Kee’s proposal does not make much sense, unless one wants a fairly complete unraveling of the US economy.

UAW Pricing Itself Out of the Auto Market

The Republican Party will become very popular with their new platform of Low Wages for All............

Let's Hope the Auto Bailout Has Failed for Good

You may recall that after 9/11, the Bush administration implored General Motors to provide Americans with copious incentives to "Keep America Rolling" - encouraging consumption and economic activity. I believe that the Bush administration deeply appreciated GM’s response. Those actions by GM were probably not the most profitable thing to do - but it was the Responsible thing to do for the country.

This is a moment in which many nations are watching and confirming that the United States are NOT united.

My sense is that other countries would assist their industries to weather these economic conditions.