Romney's Idiotic Plan for Detroit
For the past couple of weeks I've been pontificating that Obama would have had trouble winning if he had run against Mitt Romney. Unlike McCain, Romney had serious economic credentials and, as a Washington outsider, he wasn't as tied to Bush's record. The past week, however, has reminded me why Romney got trounced by McCain in the first place. He's a freakin' numbskull.
In an op-ed in the Times this week, and again on Good Morning America today, he argues that we should let the Big Three go bankrupt so that they can restructure. Okay, maybe it's a reasonable proposition, but what's his logic?
Well, turns out his father did something similar to help save a car company called AMC. Back in 1954.
And that is why we are all driving AMC cars today.
Well, you might be, if you're driving a Jeep brand, the only nameplate alive from American Motors, which was acquired by Chrysler in the early 80's. Of course, Chrysler never would have been able to buy it if they hadn't had a bailout in 1979. They would have both been gone by now.
But back to Romney's plan, the first thing he'd do is change senior management. The way he sees it, they got us into this mess. Well, actually Mr. Romney, senior management has already changed. The majority of the leadership in Detroit have been sitting at their desks less than two years. They came from companies like Toyota, Boeing, and GE. They came from markets in South America, Europe and Asia, places where our domestic brands have actually been doing pretty well. Romney's ignorance of Detroit's management shows how well he's thought this thing through. Though I get the sense he hasn't really done anything except look at his dad's old photo album ("Aw, there he is with Walter Reuther!")
But let's not be coy about the real agenda here. Republicans like Mitt Romney see this as an opportunity to wage war against the UAW. The union vote was a deciding factor in states like Ohio and the GOP sees a chance to make them pay. Forget the fact that the UAW gave up massive concessions in the last negotiations, historic concessions that will put the domestic car companies' costs at par with the imports and save them tons of cash (which they could use to pay back the government loans) this is all about political revenge, plain and simple.
The auto industry has persevered for years despite being a favorite punching bag of both the right and the left. After Rush Limbaugh takes a swing at them, Michael Moore kicks them, then Ralph Nader stomps them and now Romney comes in for the kill. Add to that a credit crunch that was none of their making - your aunt who bought the McMansion in Simi Valley is more responsible than they are - and now they're in serious trouble.
Yet despite all this, they've been doing an excellent job. That may sound funny, but it's true. The cars are better made than they've ever been (Consumer Reports rates Ford on par with Toyota and Honda) and more efficient (Chevy offers more models than Toyota or Honda with mileage of 30 mpg or better.)
The only problem is, like the beautiful girl in the teen movie hidden behind the glasses and the braces, nobody sees how good they really are.
Despite their successes, most of us stopped shopping American, even considering American, a long time ago. You may love the fact that the UAW helped elect Obama, but chances are you're not supporting them when you shop for cars. You may have a "Country First" bumper sticker on your car, but chances are it's an import.
We can complain about the fact that they make SUV's and trucks, but the fact is the imports do too. Toyota would rather sell high profit Tundra trucks than Priuses any day of the week (and those trucks get a lower mpg than Ford's do.) We can say we don't want to our government to lend money to the Big Three, but that government was once perfectly happy to take in tax revenue on the big ticket vehicles they sold. We can say they don't deserve a 25 billion dollar loan, yet for some reason Wall Street gets to play with 700 billion?
There isn't a simple solution. These aren't the 1950's. It's a global landscape with so many interlocking parts, making the manufacturing base of our country as complex as AIG, Fannie Mae, and the Lehman Brothers all put together.
So yes Mitt, having the Big Three go bankrupt may lead to some "restructuring," but when you think about the local dealers, the suppliers, and all the businesses contingent on their success - somewhere between two million or four million jobs are tied to the domestic car business - your plan stands a good chance of restructuring our economy right into the garbage can.
Just something to think about while you're driving your Gremlin home.
Read More:
Should the Government Bail Out the Big Three U.S. Automakers? HuffPost Bloggers Weigh In
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This article is right on target.
I have no great love for unions. Some of them are good, some are useless. If you look at all of the areas that were opened to international competition in the last 30 years were largely union industries. Areas full of corporate welfare and protection, like agriculture, were mostly non-union.
This has been an overriding theme for the Republicans and Republicrats to eliminate the influence of labor unions in the U.S. Labor laws in this country are a joke that are largely ignored by corporations. Even if they are convicted, the cost is a drop in the bucket many years after the violation. No child left behind is little more than an attempt to create more non-union teaching jobs by setting up an impossible standard where all students must be above normal.
Mitt Romney is the most spineless politician in the U.S. He tells the audience whatever he thinks they want to hear. His money was made as a typical private capital scam artist. Private capital uses other people's money to purchase corporations that they can then leverage to the max and strip out all of the cash and asset values. The money goes to the private capital company, leaving the highly leveraged business to fend for itself. They either get sold again or end up in bankruptcy. The private capital firm gets all of the money, the vendors lose their money and the employees lose their jobs.
The American automotive industry is going through the same painful process that the New England clothing mills went through decades ago. The brutal truth is that this nation is no longer king of the hill and is therefore experiencing the debilitating effects of a massive business contraction. The unions are just one victim of this inevitable process as world economies adjust to the collapse of the post WWII American empire. Romney may be an idiot, but not because of the nature of his plan, but rather in him thinking that any plan is going to put the brakes on the unavoidable.
If companies would have been fair and honest with employees unions would not be in business. I worked for a company that didnt want unions in and was fair and honest..That is why Honda doesnt have a union because they are fair and honest to there employees., and they think customer wants are important, Its companies that are greedy that are the downfall of america..
See Toby Barlow's Profile
Um,I would like to suggest that attempting to sum up a century and a half of global labor history in a single paragraph may not cover the complexity of the issue.
That was an awesome reply :)
The American taxpayer should not be required to risk $25 billion dollars (our money) on a failing business model. The fact of the matter is that the current business model is not working and must be changed. Bankrupty protection would allow the necessary change to occur.
See Toby Barlow's Profile
Two things:
(a) This crisis has less to do with Detroit's individual business models (of which there are three different business models of varying complexity) and more to do with the fact that, as of six weeks ago, everyone all over the world stopped buying everything. The global economic crisis caused by subprime mortgage defaults, Alan Greenspan, etc, it wasn't caused by Detroit.
(b) The current business model is a dynamic and changing thing. Especially as the labor changes, negotiated last year, continue to impact (positively) Detroit's bottom line.
If this latest crisis with the Big 3 is not about their business model, and more about the global economic crisis, then why aren't the other car producers in DC asking for more tax payer money? The answer is the other car producers, do in fact have a better business model. They are producing more desirable products for the consumer, and their cost structure gives them a competitive advanage over the Big 3. It's time for the Big 3 to make big changes....and it is not the American taxpayer's responsibility to bail them out!
Love the article! Yeah--I asked the same question of some unionbashers a couple of days ago right here--'How's your PACER doing?' Mitt couldn't have been any more than twelve at the time that Papa George ran AMC--but it still didn't stop the company from disappearing nearly altogether. As for the sheer lunacy that 'bankruptcy' is good for a company--HAH! If an individual can't get credit for five to ten years AFTER filing bankruptcy--who's to give a major corporation having problems meeting its payroll BILLIONS of dollars in CREDIT after IT files?
The ripple effect that even one major manufacturer of autos going under looks more like a Tsunami, once the total cost rolls in. NOPE!! I say--SHOW US A PLAN--We'll show YOU the money!!!
Finally -- someone in the media comes out with the truth. Thanks! It would be nice also if someone mentioned that the $70 labor cost that everyone is freaking out about is not a wage figure; auto workers are not taking home $70 an hour, people. That cost includes the pensions of retired auto workers, which Romney is insinuating we should just eliminate. How would you like to work for 30 years and then have your pension wiped out? Of course Toyota and Honda have lower labor costs in this country -- they haven't been here as long as domestic auto makers; hence they don't have any retirees or legacy costs as part of their "labor" costs. Also, why do people keep calling this a "bailout" when it is a loan, a loan whose interest could potentially profit the taxpayers. Chrylser paid back their loan years ago and so will Detroit.
There goes Romney's Michigan vote for 2012.......all this idiot wants is power, he has no integrity whatsoever
As I watched the gop primary debates Reagan was the norm for all candidates. Union busting, New Deal trashing and trickle down was the best they had to offer. Do we see a trend here? Was it trickle down or voodoo economics? If the goal almost 30 years ago was to run America into the ground, it seems to have worked. On Jan. 20, we will stop digging that hole and turn this great country around. Hopefully it is not too late.
Reagan took Jimmy Carter's solar panels OFF of the White House roof, not because they didn't work, but because he was sending a message - HOGGISH CONSUMPTION is the American Way ! Only tree hugging liberals care about alternate fuels, milage requirements, cutting edge technology, or pollution. Reagan definitely helped lead us to where we are today.
Uh, maybe Mr. Barlow doesn't drive cars. Maybe he's lucky enough to have excellent public transit at his disposal (i.e. he lives in France or Japan). No, Mr. Barlow, Detroit products, albeit improved somewhat from the utter embarrassments they were in the 1980s-'90s, are not on par with their Japanese counterparts. No way. Middling materials, poor ergonomics, clunky build quality. Forget it.
I recently drove a rented Chevy Malibu and a Nissan Altima. The Malibu was forgetable. The Nissan was sweet. The CVT transmission made all geared automatics seem a hundred years out of date. The switchgear was logical and the visibility good. And, the Altima was surprisingly enjoyable to drive -- sprightly acceleration (4-cyl), solid and predictable brakes, above-average handling.
Back in the '70s, my father called Detroit "arrogant" for hawking those "downsized," de-powered clunkers that were so poorly built that they wouldn't last 5 years. He went and bought his first Toyota (of many to come). Today, Detroit is equally arrogant, only able to make a profit selling yesterday's technology in astonishingly inefficient trucks/SUVs. Then the Big Three execs fly to Washington to beg for taxpayer money ... in private luxury jets! Unbelievable. Unforgivable. Let them rot. I'll keep my Nissan.
See Toby Barlow's Profile
By all means, feel free to keep renting Nissans, I'm not here to demonize anyone (except for Romney) But to answer your question, while I have lived for decades in cities with excellent public transportation (New York, Berkeley, DC) I currently get to work either driving a Ford Fusion or riding my bicycle. The month I bought my Fusion it was celebrated on the cover of Consumer Reports as a best buy. Consumer Reports is also quoted in my piece saying that yes, in fact, Ford is at par with Toyota and Honda. I don't know if you're familiar with Consumer Reports and the way they work, but they are the most unimpeachable standard in the business.
In a Motor trend Comparison of four mid-sized cars including the Malibu and Altima:
Last Place: Altima. "Winner on track and twisties comes up short for lack of polish and refinement."
I'm not saying they're right and your wrong, but that this is highly subjective. You seem to confuse your opinion with fact.
Many independent automotive journalists believe that the Fusion and Malibu are equals or superior to their Japanese counterparts: in terms of materials, handling, build quality, ergonomics and design. I don't know you, but you seem to fall into the category of people who irrationally hate Detroit's cars.
You comment is prejudice, nothing more. I've owned Camrys and Accords, but I've always been a bit of a Ford guy, since my youth, when my parents bought the first Mustang. So I'm prejudiced, too. And I would argue, having owned three Fords in the last 5 years, all well over 100K miles with hardly a problem among them, and one - a Focus - that is a blast to drive - that at least Ford, if not GM and Chrysler, have at least caught up to Japan (and you cost less, too, after all that discounting). If my opinion is invalid, so is yours.
By the way, Ford had CVT transmissions (Ford Five Hundred) four years ago. What took Nissan so long?
The company could continue operating under bankruptcy and if you do not go the bankruptcy route there will not be any way of getting around contractual committments which make it impossible for GM to restructure reasonably.
Yes, GM makes money abroad so it is a shame that for some reason they can't compete here. Of course all companies, even abroad, will start losing money soon but that's another story.
Here is the scenario you should be considering: GM gets money from Congress, economy gets worse, they need more money and what will be the rationale for refusing them? As matters drag out we have the congressional elections of 2010 and the republicans are ranting and raving about the botch job dems did on GM and how it is the reason for all ruin in America and congressmen across the board go down to defeat.
Are you ready for that?
The Hummer and the "bigger is better" mentality is consistent with Republican philosophy. The people they represent can make a living from their investments, unlike the majority of Americans that have to work for a living. So restructuring and pushing down wages even further just fits in with their philosophy of rewarding investment(the wealthy) and punishing hard work. Real wages have been falling for decades and that is the problem.
Corporate America is waging a war on wages and at the same time they want people to buy their products. It doesn't work that way. It's not like they don't make money and profits under Democrats, it's just that they think they are the only ones entitled to. They are inhuman in the sense they think it's humane to have other humans work for .31/hr in China making their products. Meanwhile, the American middle class can starve in the streets for all they care.
The automakers came to Washington (in their private jets) and asked for 25 billion dollars. When asked for their plan for "plan for viability on how they go into the future" they said they would get back to Ms. Pelosi in December. Any competent businessman asking for a loan would be prepared to explain to the banker how the business would be successful - are the automakers that incompetent, or are they just that arrogant? We've done one multi-billion dollar blank check, we shouldn't do another. Develop a detailed, viable plan first, then ask for taxpayer money. After we see the plan, we may or may not decide that the bailout is a good use of taxpayer dollars.
You expect Mitt Romney to know anything about any topic? In response to "Sicko", he declared "We will not have Castro-care." I wouldn't trust him any farther than I can spit.
Thanks for writing this article. You made a lot of sense.
Perhaps rather than bailing out the companies, the government should get behind a 2-3 model auto package that the big three can buy bid to support. Maybe it's time for an "American People's Car" that the public will buy because of price, etc, etc and start all over on the dream cars. If the standard car is driven by everybody for a while we can go to natural gas, safety, all kinds of stuff for hybrid. maybe we shouldn't even own them. Think VW of our time.
In short....it's autos we want and full employment and the gov can order it up and the companies can get on board rather than just giving them the money to take over seas.
While my Canadian friend argued for letting GM go bankrupt on moral economic grounds, that they didn't deserve to be bailed out, I think that was ironic given the original point about manufacturing vs. assembly, which means Canada has alot to lose if the Big 3 go bankrupt.
I think Obama's intention to save the Big 3 is good for everyone, if the kind of radical changes Canadian Neil Young has written about in the Huffington Post can be pushed on them.
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