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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I'm waiting for a newspaper to write a story with the following headline:
ROMNEY TO MICHIGAN: DROP DEAD!
Mr Barlow, you're all in favor of a bailout. I'm not. At all. Our trade practices globally are so wrongheaded that a bailout merely delays the inevitable. This nation is still being torn asunder by bad business. This economy is broken, It is unsustainable. In September, when it seemed as if we were surely headed for a massive credit collapse, we managed to stop the bleeding. Bad idea. That train has already left the station and we are running to catch up. The funny thing is, that train appears to be headed towards a bridge over a wide chasm, and the bridge rails are broken. I understand this may be counter-intuitive, but there it is.
We are scampering as frantic children, trying to fix all this. It might be better to let it all come down, and then to dig our way to a better condition. The capitalist spectacle has turned against us. We never did control it. Those masters of the universe, those bankers, never did control it. They were merely in sync with it. Foolishly thinking they were in control, their own hubris got the better of them, and the spectacle became a devouring entity. Or, if you wish, Adam Smith's invisible hand is beating us senseless. A beating a long time coming. A beating we deserve.
I think all auto makers foreign and domestic have taken more than enough criticism for making SUVs. The underlying fact is if no one had been buying them, they wouldn't have been making them. Still they did market SUVs and undercut efforts to raise fuel efficiency standards.
Toby, I think you present a view that's overlooked in the media. But, it's too late - in the public eye, the big 3 have become the equivalent of the tobacco companies or HMO's from the 90's. Clealry the autos have made their mistakes and union strength negatively impacted an efficient operating model. But now it's almost a fad to bash the big 3, and Detroit and MI. The quality of cars coming out of Detroit vs. the foriegn manufacturers is lost on deaf ears - yes, they are equal and in some cases Detroit exceeds them. Where we continue to lose is in design - if Detroit could compete on the design level, I think more Americans would reconsider buying American. Anyone else agree?
I own a Subaru and a GMC and Iike them both. I don't like being a punching bag just because I live in MI - besides argiculture, what else do we really produce in this country on a large scale? Isn't the whole idea about re-inventing ourselves getting back to making stuff? Whether it's environmental technology (ET) as Friedman so rightfuly pushes, or autos - we need to manufacture and be a global leader in doing so...we can't let the autos die.
would agriculture in america survive without enormous subsidies.
that friedman you quote is he the same guy who pushes deregulation and trickle down??
Are you talking about Milton or Tom?
Detroit could easily do better design, if it wanted to. After all, all the Japanese car makers have their design studios in California, using American designers. I prefer Italian design, but I often see American cars on the street which make me look twice. They're usually Chryslers, but I see Fords and GM cars which do the same. They're usually the more compact models, too. If Americans are serious about saving gas they can walk into any Big 3 dealership and drive out with an attractive, fairly-fue
Ironically, American Motors, which Mitt's daddy "saved", for their 1955 full-sized line, used the Italian designer Pininfarina to style them. I owned one, at one time, and it was a pretty nice car. The styling was a bit alien, but cool. It had a naked-lady hood ornament created by Petty, a noted pin-up artist, the front seats flopped all the way down, turning the car into a bedroom, the dashboard had audio speakers on both sides-before stereo. I don't know whether Romney Sr. had anything to do with that, but I'd have more respect for him if he had.
The Big3 were happy to sell as many SUVs as Americans wanted to buy to park in front of their McMansions, and all those huge pickups guys used to make up for a deficit in their underwear cargo, but they didn't force anyone to buy them.
I read Romney's Oped here in Japan in the english newspaper. There are several problems with the $2000 cost per auto that Romney sites versus other countries.
1. Workers in Japan, Germany and most other countries have universal health care. The auto company doesn't pay. When Romney cuts their wages is he going to replace it with universal health care.
2. In Japan (Germany too), workers can take a train to work. It means a lot when you don't need to support 2 cars. In Japan it is somewhat of a burden to have a car.
3. Let's get real, is the only path to prosperity to cut our wages. This isn't just Detroit we're talking about. Wage cuts and pension consessions have a way of permiating through the economy. Do we need to lower our standards? Is this where the Reagan revolution has led us?
What about the Toyotas, BMWs, Nissans and Mercedes made in the U.S.?
Their factories pay damn good wages.
The Republican stance favoring bankruptcy is loaded with anti-union animus. They know (It used to be a favorite tactic of lots of corporations) that declaring bankruptcy allows the judges to "reject executory contracts" including their union agreements. Just break the unions and come on back. Hint, when you hear a Republican talking point about the car bailout and why we shouldn't do it, just substitute "financial sector" in your mind every time you hear automobile manufacturer and ask them if they can spell hypocrite?
This is absolutely true. It is also true that those who do not make the same wages or have the same benefits are resentful and want to see them have to come down to their wage and benefit level. Airline and aircraft unions were forced into concessions and don't make anywhere near the hourly wages that the auto workers are making. I know that airframe and powerplant workers, who have to have an FAA license based on two years of school for the airframe and two years of school for the powerplant are lucky if they can get $22 an hour, with $30 an hour at the high end.
Uh, yeah.
(End of this series--sorry I was so wordy:)
However, please don't offer us in place of Romney's what--to me--seems to be an equally untenable plan, which is simply to *always buy brand new American cars--woo-hoo!* Would that we all had that choice. Some of us simply don't. For some people, even buying the wrong USED car might mean we would be unable to buy groceries. Keep in mind that for many working class people, it isn't a matter of preference. If your car isn't functioning and you can't get to work, it may literally mean you won't have money for groceries or medicine or heat... because you're paying the mechanic, again.
We're all not in the trade-it-i
I suspect that opinions about American vehicles will have changed when there are lots of small, economical American-made vehicles that have trickled down and seem like a good bet even to us po' folk: used car purchasers. I hope our automakers make it that long.
(continued)
People like me don't get to choose options or colors or anything else for our vehicles. We don't even have CD players in our cars sometimes. We get what we get, period. If a car is reliable, it will eventually trickle down and be available for sale--and hopefully there will be something appropriate on the lot when the old engine falls apart and we need to make a purchase. I do research to choose the most reliable vehicle in my price range, and I'm afraid for that I must rely heavily on Consumer Reports. What can one do?
I hope the American auto industry survives, simply because I see it as similar to a utility, insofar as our economy goes. How can we as a country deal with that many unemployed people and families in distress..
(cont.)
I'm in the same boat you are in. Even if I could afford it I would even CONSIDER buying a new car,what with the massive hit you take on depreciation and financing charges. LIke you my major care purchase metric is how much of my painfully limited disposable income am I going to have to give to mechanics to keep this thing running? Styling, sound system, or whether it will get me laid isn't even on the table. And my experience and those like me is that American cars age badly.
Maybe these oh-so improved American cars really live up to their hype, but it'll be 5-7 years before I get a chance to find out.
The Big 3 are in trouble because their business model seems to be based on everyone flipping their cars every 2-4 years. The problem is, people are out of money and in debt up to their eyes, and very very few people need to flip their car every few years. So they wait it out a few more years.
I think America has reached the point of complete market saturation. We literally have more cars on the road than people to drive them. What if the big problem really is PEOPLE DON'T NEED MORE CARS RIGHT NOW?
I agree that Romney's "plan"--if such it can be called--is infantile. You ask (in a comment) if your interlocutor has "actually been in a new American car, one made in the past two or three years?" You say that opinion is slow to follow the real changes the auto industry has made. This may be so. However, this is probably why:
I have never owned a new car of any make; I never will. Not just for me but for many people, buying a brand new car is just not a smart investment, whether it is made by an American company or Japanese company or a company owned by Martians. Mostly, though, it's not a matter of being a smart investment; sometimes a "new" car is simply not possible. They are tremendously expensive and lose value as soon as you drive them off the lot. This goes for any new vehicle, no matter by whom it is made. I don't think it's much of a surprise--or shouldn't be--that changes in quality take a long time to filter down into the collective unconscious. (Trickle down automakers?) In the world I inhabit, reliability is the most important test of which vehicle I buy, because I drive them until they fall apart and literally can't be fixed without more outlay than they're worth. The whole idea of buying a new car is--dare I say it--foreign to me.
(cont.)
Here we are, Detroit Michigan, the year is 2012. One thousand prisoners from the Middle East arrive, to be housed in Detroit's newest prison cities.
By 2040, half the states will be converted into prison territories. The other half to weapons manufacturing and storage. The citizens of the United States of America will reside in other countries. And you fill in the rest because my buzz is wearing off.
That was a good post. But I'm also concerned about this "anti management" campaign by the Inquisitors in Congress. I thought that it was ABSURD that Congressional Inquisitor (I'm not sure who he was) should have been chastising the CEO's of the Big 3 for having the EXTRAVAGANCE to use corporate jets.
Duh. If the CEO's don't deserve to have corporate jets, then who does? It is reminiscent of Sarah Palin, who made it a virtue to trade in her Gubernatorial jet for a dogsled. Or maybe she rides with Santa Claus, I don't know.
Consider the waste if a CEO does not use a private jet: Waiting for hours in security and ticket lines, waiting for hours on runways, waiting for hours because his flight got cancelled, not being able to use his cell-phone while in flight, not having flights available if a quick meeting far away is essential, etc. Clearly, Congress doesn't understand Opportunity Cost. They don't understand the value of a CEO's time. They don't understand business, period.
Hey, I saw Sarah Palin driving a Studebaker. Drawn by a dog team. Kool.
I proudly drive a Toyota. Maybe Detroit cars are better than ever, but they aren't better than the competition. You know, free market etc. blah blah blah. I hear GM, which canceled the innovative EV1 electric car, has now canceled the innovative Chevy Volt plug-in hybrid. They deserve bankruptcy. The combined market capitalization of the Big Three automakers is not enough to provide collateral for a $25 billion loan.
They have not canceled the Volt. Where did you hear it was canceled?
At issue hre and for the future s how to re-industrialize the US. Those who want to bailout the auto companies but continue with free trade and globalization policies are pulling in two different directions at the same time.
I honestly dont think it will take any influence from Romney to KILL the UAW, they are bleeding themselves to death quite well all by themselves. I just find it so comical to watch them stick out one hand to the gov begging for bandaids while in the other hand they have a razor blade carving away at their own veins. Flying to DC with private jets is about as ballsy as the AIG clowns with their massages. Let em all sink, what better lesson to teach the survivors to manage their business like their lives depend on it instead of playing like it poker chips on a craps table.
So you say good bye to 4 million more jobs?
That alone should give you pause.
No one from the UAW flew to Washington in private jets.
I think that in your zeal to justify busting yet another union you got confused.
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