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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Toby, it is great to finally read someone writing about the automobile business who actually knows something about it. The misinformation on the series-of-tubes is amazing, especially on the left-leaning sites. You'd think the postings are coming from 1992.
Some other points I'd like to bring up are:
1. Ford has been in the process of bring their small, fuel efficient cars to the US pretty much since Mullaly became CEO.
2. The fall in the market the last few months is not Detroit's doing. How do I know? Sales change over the past two months:
Honda -24.6%
GM -30.4%
Nissan -34.9%
Ford -32.4%
Toyota -27.7%
All the major manufactures are hurting. The Japanese manufacturers were just a much better position to handle the down-turn. This goes back to Detroit structural disadvantages.
3. The big three are not all in the same boat. Ford, while burning through cash, has been executing a plan for a long time to bring over to the US many of their small world cars. And early next year they will be releasing a hybrid version of their Fusion that will get better fuel economy than similar cars from Honda or Toyota.
4. Toyota has actually sold 5.6% less Prius in the US this year than last.
"The Japanese manufacturers were just [in] a much better position to handle the down-turn."
I don't suppose that has anything to do with management.
Nope.
It does have a lot to do with not having to meet obligations that our companies have to meet in order to comply with government regulation. It also has something to do with universal healthcare. OSHA, EPA, minimum wage laws that japanese imports do not have to comply with.
I agree, toby. It is a war on unions; all the lies being told about union wages and pensions help us see this. A $25 billion bridge loan is peanuts compared to the trillions already spent on bailouts and would be a cheap price to keep afloat millions of auto workers and those in related fields. More enormous job loss is not what the country needs. Extend unemployment? Retrain? For how long, and for what jobs? Phooey; too many lefties want revenge against automakers, and really don't seem to give a fig about the workers. Oh--and i drive an american car. Paul krugman says: hold your noses, and bail them out!!
lies about unions? you need to explain how if the union goes to bat to get higher wages and pensions for their workers and the non union plant workers arent getting those benefits... How exactly do you do the math and say that that added cost doesnt make a difference?
Lemme put this another way - Hire 1 guy for $70 an hour and another for $25 an hour... OK genius which one is more expensive?
More expensive to whom? The company making the car or the society that has to pay a larger amount in social benefits?
You may be proud, but I think it stops there.
My family's in MI. My grandmother said that Michiganders didn't want Romney's dad when he was Governor back in the day and they darn sure don't want his son today. My dad said that Mitt Romney has got to be the dumbest politician living if he thinks that saying just let the Big 3 go belly up is going to win him any votes in MI.
I posted this elsewhere - the only way for the US auto industry to compete is with a level playing field. Take the health insurance and pension obligations off of the companies and have the government spend billions in R&D and give the US consumer a tax break for buying US cars and raise the price of gas $2 a gallon to make it profitable for US companies to sell and give labor and the state a place on the board - now you are getting close to how Japan, Korea and Germany make their auto industries successful.
"Despite their successes, most of us stopped shopping American, even considering American, a long time ago."
--Romney has a good point on this, though. It's hard for the big3 to compete car for car with foreign makers when the big3 start out $2,000 in the hole per car--due to excess labor costs.
That's $2,000 per car that the foreign makers can put toward making a better, more attractive product for the consumer.
Actually the average big3 wage is $53/hour as opposed to Toyota which is $47. The real problem is the retirement packages and health care.
The problem with bankruptcy is that suppliers won't get paid, and they make up a huge number of the jobs in the Mid-West.
Toby, I agree with you about the GOP and Mr. Romney. They would dearly love to see the demise of the UAW. The GOP's all out campaign to destroy american unions wil finally be won.
Toby - A very nice job of cutting through all the crap and and presenting a realistic look at the situation.
I read Mitt Romney's piece in the Times yesterday, thought about it, and then realized like Toby Barlow points out, American Motors is out of business. So whatever Mitt's father, George, did wasn’t enough to save the company.
While I, too, question the efficacy of bailing out the industry as presently constituted, I suggest AMC is a poor model for the domestic auto industry to follow for a couple of reasons. First, it was the smallest domestic auto company. There was never a reference to the "Big Four," it was always the "Big Three." Second, even though AMC was ahead of the curve in making small, more fuel efficient cars, it was unable to turn that innovation into a competitive advantage.
Instead of analyzing the problems in context, Mitt trots out the same old complaints that people made for years, even when the industry was thriving. Let’s look at the problems as they exist today and forget the blame game. The industry is not “your father’s old auto industry,” nor is this economy the same as the one that FDR faced when he came into office. The solutions for today’s crisis can be found by looking at the present and to the future, not by looking to the past.
You're right it is idiotic and simply a ploy to get rid of unions. But, what about a deal where the feds don't give money to the big three but instead relieve them of their health benefit burdens by agreeint to give employees and retired employees the same benefits congresspeople get. This could serve as the precurser to similar deals where a national health system is created and employers are relieved of the expenses of providing the same.
Good idea. However, the Big3's biggest problem right now is the inability of potential buyers to get car loans. Even people with excellent credit are shut out.
It will take a multi-faceted approach to fix this. Solving the health care thing, being one of them.
As good as you ar Mr. Barlow at speaking for Romney, I think he does a better job speaking for himself.
http://www.foxnews.com/story/0,2933,455286,00.html
American auto makers have had this coming for a long time. Good riddance to them and their crappy cars.
Volvo, Porsche, BMW, Saab, Audi, Mecedes Benz, even Toyota, Nissan and Honda have run circles around their clunky American counterparts for years. Any true innovation must just get crushed in committee in favor of churning out the same lame facsimile of something done better by Germany or Japan 5 years before. Sure, there are a few exceptions, but generally speaking Detroit has produced inferior products for far too long. For every decent American car produced for the last 30 years there have been multiple foreign options that blow it out of the water either in terms of design, performance or maintenance.
Here's a free idea, Detroit: make a fuel-efficient replica (and I mean REPLICA) of a '68 Mustang or a '63 Stingray. And make it affordable to a middle-class income. There would be a waiting list a mile long.
Ruled by short-sighted stockholders and forever playing catch-up, the American auto industry has become a national disgrace.
See Toby Barlow's Profile
This would be yet another exhibit of how Americans Blindly Hate Their Car Companies.
Let's just point out that two of the examples given - Volvo and Saab - are actually owned by Ford and GM respectively, three of the others exist in a completely different category. Why not include Lamborghini? As for Nissan, please, they score no better than Ford with J.D. Power, the only reason they're at all viable is because they benefit from the import halo.
As for the "Good riddance to them and their crappy cars" sentiment, I would just ask if the writer has actually been in a new American car, one made in the past two or three years? A Fusion? A new Malibu? A Three Hundred? Hve you tried Sync? The world changes, opinions are slow to follow. But before you put a few hundred million people out of work, maybe you should give 'em a try.
great article btw
A few hundred million people? That's EVERYONE in the US. While I agree that there needs to be a solution, I know that my job is not hinged on the auto industry.
Toby...
I don't "blindly hate" American car companies, I just think they're demonstrably lame.
Volvo and Saab are indeed owned by American companies, but unless I'm mistaken they are not designed by American companies. In the short term Consumer Reports and J.D. Powers mean little in the face of popular perception, although over time they could help turn it around. But the justifiably dim view many Americans have of U.S. cars is steeped in decades of poor offerings and will likely take years to mend.
I must admit I haven't driven an American car in recent years; I haven't wanted to. I was turned off several years ago by various rental cars I tried. I'm sure they have improved out of necessity over the past few years as you say, but as it turns out it appears that it may be too little too late.
Many of us have already been screwed by Ford or one of the other two. Why would we be stupid enough to test drive one now. Surely you jest!
Generally, an execution requires a conviction by a jury of your peers. The jury is usually expected to keep both their eyes and their minds open. Your approach, so utterly devoid of factual basis, seems more like a lynching.
"Execution" seems a little dramatic. Just airing one admittedly subjective opinion. If I sound annoyed it's because auto industry execs fly to congressional hearings in private jets with their hands out. They could have averted this day years ago with a little foresight and imagination. But what am I saying? They're SUITS.
The waning of the U.S. auto industry isn't a new problem, it has just become more stark quite suddenly. You can analyze and pontificate about the intricacies of the global economy, etc., and to a certain extent it is all pertinent. But I still maintain that the condition in which the industry finds itself today is largely due to mismanagement and lack of vision. At the end of the day supply and demand explains a lot of the mess, and in so many cases Detroit just couldn't - or wouldn't - deliver a superior product, period.
read the article and actually pay attention before you waste my time...
I don't think the issue is about political revenge at all. Why would Mitt want revenge on Michigan his first primary win? If anything Mitt is going out on a limb (some would say shooting himself in the foot) by sticking to his principles even though they will be unpopular to voters come 2012. But, answer this, isn't it even more idiotic to give a company a $25 billion bail out, and then raise their taxes (our business tax percentage) 3 months later as Obama is planning on doing? Toyota might make cars here in america but they pay a lot of their taxes to Japan. Washington is killing American businesses.
principles? you mean like telling michigan he would save the auto industry during the primaries? maybe making that claim is why he won the primary?
can you say flipppppppp
floppppppppp
You're absolutely right. I haven't considered shopping for American cars for a while now and here's why. The last GM I drove, an EV-1, was forcibly taken from me, crushed, then I was sent a bill for a scratch a mechanic had left on a fender while it was in the shop for routine maintainance.
The next American car I had was an Electric Ford Ranger. Ford stopped taking cashing my lease checks (even though they promised to do so as long as the truck didn't need any major repairs) and then repossessed the car. Not sure what happened to that one, but at least Ford did eventually offer to sell me another inferior one with toxic lead batteries that were guaranteed to fail after about 20,000 miles.
Now I drive a Toyota RAV4-EV. Toyota was the only company that would sell me a car that didn't require foreign oil to run. And it still runs, 100,000+ miles without a single drop of gasoline.
I suspect I'll buy American again (hopefully soon, I could use a new car), but I doubt it will be from either GM or Ford, mostly because they don't have anything they are willing to sell me that won't enslave me to big oil once again. It will likely be from a new American carmaker, one that values its customers AND its Country.
See Toby Barlow's Profile
Yes, it was great that Toyota stopped crushing the RAV4 EV's, thanks to tcrush.com.com's campaign. This was in 2005. Until then, they had the same policy of taking back and destroying vehicles as Ford and GM. The idea of a "new American carmaker" is nice. I hope Tesla and others like it thrive. But giving up on a company today because you don't like something they did a decade ago is a bit petulant.
Finally, all batteries are toxic. That's an environmental issue that electric vehicle owners will have to deal with until we figure out how to make them out of hemp.
How about sticking two probes into a potato?
It would keep the farmers busy too. ;-P
You missed the point if you thought I was being petulant. I'm simply not in the market for another dino-mobile and, if history is any guide, Detroit's strategy in this area is to promise the world, deliver a rock, then refuse to let you buy it.
Toyota was crushing some cars that it had leased to fleets prior to 2002 and did even stop doing that. They never had a crushing campaign for the cars they sold or leased to private individuals (for the narrow 8 months that they were doing so). The cars they sold weren't Toyota's property to begin with and the ones they leased offered all lessee's the option to buy. THAT IS WHY IN A NUTSHELL, THAT TOYOTA DOESN'T NEED A BAILOUT, simple trustworthiness and respect for their customers.
Yes most batteries are toxic, just like most foods can be. But comparing Nickel based batteries with lead based batteries is like comparing broccoli to moonshine. Nickel is not a toxic heavy metal like lead that causes mental retardation or worse and nickel batteries tend to last the life of the car.
I almost bought a Gremlin but decided to buy a 1973 Mustang. It was a special order, an aqua color that no one else had and cost me 4,200 dollars. I had it for 10 years, 8 in Michigan where I bought it and 2 in Galveston where I move to. The salt used to melt the snow and the salt from the sea air rusted out the body but that V8 engine still growled. I loved that car. I sold it when I moved to LA in '83 but at least I still have pictures of it.
Even though we have had various cars thru the years, Chevy Blazer, Nissan Maxima, Saturn wagon, Mazda 626, Hyundai Sonata, and now a Mazda Protege 5, I've never felt any attachment to any of them. Maybe it's because I was only 20 years old when I bought my Mustang or maybe it was because it was a bad a** car.
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