Should the US bailout the big three automakers?

[khansmith]

Originally Posted by Smokingcobra2

Now if you where a UAW worker and got laid off you would get 80% of your pay for 5
years. NOT BAD and they wonder why they are gong broke!!!
Unless each company gets a loan payment book like i do when i buy a car NO MONEY!!
joeg

Wow...at Boeing...you are just gone! My bros just spent a nice chunk of time without pay on the strike. They all keep about 6 months cash to help weather the layoff periods. You get canned, you get nothing. Even with that scenario, they were offloading tons of work to non-union suppliers to keep costs down.

Edit: I mean, you get a bit of severance but not 80% of your salary for 5 years!

[Bartruff1]

Ford is up 350% , it might be a time to sell .....

[392cobra]

Originally Posted by gsharapa

Just remember what the auto industry did for the country during WWII. After 911 they contributed large amounts of funds and vehicles. What did Toyota and the rest do? Not a dam thing.........

Yes I work for Ford Motor Company and proud of it!!!!!

Gary,I have to call Bull Chit on that.
Maybe you've been drinking their Kool-Aid too long.

Honda and Toyota EACH donated more than Ford.

Honda gave 50% more than Ford.
Toyota gave almost 100% more than Ford.

http://www.nuketown.com/node/264

[puppster]

The domestic auto industry has been very generous with all sorts of chairitable programs in the past. Some I have been a part of first hand. I don't believe for a minute that the Foriegn companies could come close to matching.
However, since we are speaking about charity, we had a 72 year woman employed to empty trash cans at a UAW facility, and she claimed to be making $120K with all the O.T. she was "working" (I'm guessing she included her S.S. payments too). And my trash can was still overflowing.

[Don]

Source: New York Times.com

December 9, 2008
G.M., Under Pressure, Turns to Robert Lutz

By BILL VLASIC
DETROIT — From the start of its bid for emergency federal aid from Congress, General Motors has presented a mixed message — both apologizing for past mistakes and defiantly insisting that its problems are due to the financial crisis.

It is a strategy that frustrated and even angered some lawmakers in recent weeks.

G.M.’s blunt-spoken vice chairman, Robert A. Lutz, would like to clear up any confusion.

On Monday, the 76-year-old Mr. Lutz gave his first interviews since the Big Three’s campaign for a bailout began, and he dispensed with the polite, analytical approach that his boss, Rick Wagoner, the chief executive, used during four rocky hearings before Congress.

In making Mr. Lutz available to the press, G.M. is clearly hoping that his straight talk will help convince lawmakers to approve a bridge loan to stave off bankruptcy, and help fend off mounting criticism of Mr. Wagoner.

Mr. Lutz objected to recent suggestions by Senator Christopher J. Dodd of Connecticut, the chairman of the banking committee, and others that Mr. Wagoner should be replaced, saying that firing him would be a “serious step in the wrong direction.”

“This has nothing to do with trying to improve the executive team,” Mr. Lutz said. “This is the equivalent of the Incan or Mayan days when everybody would go to the top of the volcano and throw a virgin in. It’s the feeling that if we make a sacrifice that somehow the gods would be appeased.”

A veteran of 45 years in the auto business and the force behind bringing such cars to market as the V-10 Dodge Viper, Mr. Lutz personifies the swagger and confidence that Motor City has lost in recent months, as a precipitous drop in auto sales has crippled the companies, forcing them to ask for financial aid.

“Why is it that we’re just dumb old Detroit all of a sudden?” Mr. Lutz said. “Going from a 17 million vehicle market to a 10.8 million market, that’s what the problem is.”

Mr. Lutz said the Big Three may be partly to blame for the chilly reception they received in Washington when they asked for federal assistance.

“I have personally been sensing this hostility on the part of Washington my whole life,” he said. “But it’s partly self-inflicted, because I think there was a period in the U.S. automobile industry where we did not treat Washington and the politicians with sufficient respect.”

The Detroit executives felt that backlash during their appearances at the testy hearings on Capitol Hill.

Representative Paul E. Kanjorski, Democrat of Pennsylvania, summed up the strained relationship between Congress and the Big Three during last week’s hearing before the House financial Services Committee.

“I have come to the conclusion that we are still talking at each other rather than to each other,” he said.

G.M., in particular, has struggled to come up with a consistent message for why it should get $18 billion in loans to stay afloat.

On Monday, the automaker put a full-page ad in the Automotive News , a trade journal, entitled “G.M.’s Commitment to the American People.”

One passage acknowledged that it had made many mistakes — more than it said in Congressional hearings — including letting quality slip and building too many large vehicles that were out of step in a changing market.

But the company then seemed to congratulate itself for 100 years of achievements. “We will continue to deliver personal mobility freedom to Americans using the most advanced transportation solutions,” it said.

Mr. Lutz, for one, won’t dwell on the disappointments.

“My sense of frustration is that all of this is hopelessly out of date,” he said. “Much of what I read and hear is reflective of the criticism that would have been legitimate of General Motors in the 1980s, but not today.”

He said he looked forward to working with a government oversight board monitoring G.M.’s use of federal loans.

Outside overseers, Mr. Lutz said, would get a first-hand look at how difficult it is to be a profitable car company but be hamstrung by huge legacy costs, and comply with dealer franchise laws and regulations on fuel efficiency and vehicle safety.

“They would have an inside look at the stress that a lot of this government regulation is putting on our industry,” he said.

G.M. kept Mr. Lutz out of the spotlight during the Congressional hearings for fear that some of his earlier stances — including that global warming was a “crock” — might make him a lightning rod.

But with Mr. Wagoner under attack and with the bailout legislation uncertain, the automaker decided to give Mr. Lutz a chance to forcefully defend the company.

“You get these people who say, ‘I know what I’d do if I were C.E.O. of G.M., like close up all the union plants and set up plants down South with non-union labor,’ ” he said. “Well, any idiot can figure that one out. But how conceivably can you get that done?”

[Bartruff1]

Originally Posted by puppster

The domestic auto industry has been very generous with all sorts of chairitable programs in the past. Some I have been a part of first hand. I don't believe for a minute that the Foriegn companies could come close to matching.
However, since we are speaking about charity, we had a 72 year woman employed to empty trash cans at a UAW facility, and she claimed to be making $120K with all the O.T. she was "working" (I'm guessing she included her S.S. payments too). And my trash can was still overflowing.

It's just not fair that poor old Alex Rodriguez only makes about $150,000 a game in a "industry" that is exempted from anti trust laws and subsidized by the taxpayers...

[RedBarchetta]

It just sickens me to hear that Congress is so quick to provide emergency funding of $15B "for a couple months", when it does nothing to solve the problems. And then Sen. Reid has the audacity to state, "And if during that time they can't come up with a reasonable business plan, we can call back the loan." And with what collateral?!? I suppose Congress doesn't understand that all of the existing secured loans and lines of credit have a first position?!? Does Congress just believe that all of the existing lien holders are going to be subordinated overnight?!? DREAMERS!!! This is becoming the biggest cluster f*** in the history of mankind. Whatever happened to free market economics? Whatever happened to patience? What ever happened to swallowing the nasty tasting medicine and moving on to better health?

[jhv48]

Originally Posted by RedBarchetta

It just sickens me to hear that Congress is so quick to provide emergency funding of $15B "for a couple months", when it does nothing to solve the problems. And then Sen. Reid has the audacity to state, "And if during that time they can't come up with a reasonable business plan, we can call back the loan." And with what collateral?!? I suppose Congress doesn't understand that all of the existing secured loans and lines of credit have a first position?!? Does Congress just believe that all of the existing lien holders are going to be subordinated overnight?!? DREAMERS!!! This is becoming the biggest cluster f*** in the history of mankind. Whatever happened to free market economics? Whatever happened to patience? What ever happened to swallowing the nasty tasting medicine and moving on to better health?

Congress will inherit 150,000 unsold GM cars to sell and recover their loan.

Now there would be a sale!

[What'saCobra?]

All great questions, Red.

Meanwhile, Lutz is not incorrect in the Mayan analogy. Dodd & the dems, caught red-handed with their own incessant mischief in Fannie Mae and Freddie Mac, wish a show "trial" of Wagoner (and others) and would prefer a virgin sacrifice if possible. Wagoner might have to do sufficiently to take the heat off the inept Congress and its irresponsible oversight of the mortgage market failures due to both their laws and Clinton's paranoid obsession to have more black and hispanic and union democrat votes. (Did i ever describe how Dodd and Kennedy reportedly shared a number of waitress "sandwiches"?) Free houses for the "disadvantaged" helped change the entire voter-sales market, along with extra big dem money for "walking around" funds.

Lutz would be an excellent replacement. However, he is pretty blunt... a strength says i. He is also mostly correct. But, he isn't very popular in the hallowed halls of Congress, Detroit or the UAW. All strengths, says i.

Anybody that can land a civilian jet fighter wheels-up, walk away smiling with his head high and keep flying is my kind of chap. Of course, being rich helps.

Watch that Lutz's accolades about how Wagoner walks on water might turn into a not-so-subtle bid for the Chairmanship. He has little chance, but it would certainly be fresh air, more like a tsunami. HE can do the job.

[speed220mph]

One word why they shouldn't: NATIONALIZATION

[Tom Kirkham]

Looks like the cure might be worse than the disease...

http://online.wsj.com/article/SB122875608562688401.html

[CobraDan]

http://news.morningstar.com/articlen...aspx?id=267461

[gsharapa]

Hey Fred,

Maybe it's time for you to put a Toyota engine in your Cobra since you are so fond of them.......buy american!

[Cobrabill]

Now that's a hell of an idea-A Supra engine in a Cobra.It wouldn't sound right or even look right when the hood is up.But it would blow the doors off 99 out of 100 Cobra's.

How about this:Buy "it" because it's a good product.Screw where it was made.

[gsharapa]

Think maybe you should look at the quality data as Ford has passed Honda and on par with Toyota now.........

[gsharapa]

By Sharon Silke Carty, USA TODAY
DEARBORN, Mich. — On this rainy, cold, miserable Tuesday in December, Alan Mulally sits in his office at Ford Motor's headquarters, beaming.
With Ford's (F) sales down 19.5% this year, the economy showing no sign of recovery, and Congress and the White House working on loans to help the domestic auto industry survive, you'd think Mulally would have very little to smile about.

But he's perfectly chipper, showing off a 1903 Indian head penny sent to him by a Ford dealer's son. For luck.

"Isn't that great?" he says, peeling it out of its protective wrapper. "I'm going to keep that in my pocket."

Compared with the other two domestic automakers, Ford looks like it's already been blessed. The automaker has $18.9 billion in cash and $10.7 billion in untapped credit, which Mulally says has his company positioned to survive the market falloff.

That's in stark contrast to General Motors and Chrysler, which say they need billions by this month to avoid filing for bankruptcy court protection.


TENTATIVE DEAL: Congress, White House agree on auto aid
INTERACTIVE GRAPHIC: A state-by-state look at auto industry jobs

Not that Ford isn't hurting: It lost $129 million in the third quarter and says it won't be profitable again until 2010 — at the earliest.

But its cash position puts it in the enviable position of saying it doesn't plan to tap government loans that may be offered. That's not unless things get markedly worse for the overall economy, or if one of its Detroit competitors goes under, disrupting the entire supply system.

Is it luck or good planning that got Ford here?

Jeffrey Sonnenfeld, an associate dean at the Yale School of Management, says Mulally's ability to move quickly and not let ego get in the way have helped the company achieve much more than many expected.

"He has surprised an awful lot of people," Sonnenfeld says. "He's had the courage to say he's largely accelerating a given plan, and he's fortified the top lieutenants around him. He's done a great job working with people who know what he doesn't know about the industry."

Mulally has said his strategy since he left running Boeing to take over Ford two years ago was to speed up the three-step line of attack the company had in place: cut production to match demand; make cars people want; and focus on core brands.

It's not complicated, but it has meant breaking with old Detroit ways of doing things, selling brands people admired and laying off tens of thousands.

Plus, he made one key decision three months into his tenure that set up Ford's cash cushion today. In December 2006, Mulally decided to mortgage all of Ford's assets — plants, buildings, real estate, patents and trademarks, including the Blue Oval — for $23.4 billion in cash.

In a recent speech to the Rotary Club in Seattle, Mulally's hometown, he had the audience laughing when he walked them through the steps of his deceptively simple strategy.

"I know," he said, pausing for dramatic effect. "This is revolutionary."

New way to do business

Sarcasm aside, in some ways that thinking is a big departure from how the Detroit 3 have operated.

For decades, the U.S. carmakers dealt with their high fixed labor and production costs by pumping out more cars, regardless of market conditions. That spruced up their balance sheets, because carmakers book the profit on a car when it leaves the plant and is shipped to a dealer.

At that point, a complicated financing dance begins, with the automaker giving the dealers loans to pay for the cars until they're sold. Then the automakers cough up thousands per car in rebates to persuade consumers to buy the car — ideally, coaxed by interest rate incentives with money borrowed from the automakers' finance arms.

Until recently, the Detroit automakers often made more money in a quarter from their banking operations than from making cars.

Under Ford's plan, revenue won't look as rosy as in the past because demand-driven production totals will be lower. But if that means cars can be sold without costly sales incentives, profits should improve.

"This is a completely new business plan, where we take the hurt," Mulally says. "We are going to be the leader in sizing our operations to the real demand out there. And we'll keep doing it. … No matter when (the market) comes back, no matter what the industry is, we've sized our operations to the real demand."

That's meant fewer jobs at all levels of the company. On Ford headquarters' 12th floor, several offices sit dark and empty following a trimming of upper management. Ford has eliminated 14,000 jobs across all pay levels in the last three years and closed 17 plants, cutting $5 billion in costs.

But being smaller is the only thing that makes sense in this environment, Mulally says, admitting he was a little surprised that industry leaders hadn't approached business this way in the past.

"It was the only thing I knew as a business person," he says. "Clearly, this is a new plan for Ford, and it's working. … We got on this journey, and for the first quarter, before the credit and financial meltdown hit, it was working."

What Mulally says was lacking before he came was "a point of view of the world." The economy was slowing, he says, and had the potential to slow further, making a cash cushion critical. The company view now also includes the assumption that gas prices will rise over the long term and that while consumers still will want a whole range of vehicle sizes, they'll demand category-leading fuel efficiency.

"We developed a point of view about that, and it seems to be working," he says.

Compensation brings criticism

Mulally hasn't been able to avoid public criticism. His starting salary — he earned $28 million in his first four months on the job — raised eyebrows in 2007 as Ford pushed to cut its workforce. And his personal use of company aircraft cost Ford $792,000 in 2007, as he earned $22 million in salary and bonuses.


CEO PAY REPORT: Check your CEO in our interactive chart of pay and stock awards

This year, he'll make a base salary of $2 million, and bonuses have been suspended for all senior managers. Mulally has agreed to take just $1 in salary if Ford taps government credit. But he says he wants to avoid federal loans.

"It's taxpayer money, and we take that very seriously," he says.

Mulally says he went to Washington, D.C., to testify with GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli to show his support and help convince politicians that the industry is important enough to help save. In the process, Ford got lumped in with GM's and Chrysler's woes, sitting through a verbal assault from politicians intent on making the automakers answer for past mistakes.

Even Mulally's mom could see Ford was taking a bruising. Mulally says she watched every minute of the hearings on C-Span, and called him afterward to ask why no one seemed to be listening.

An image at issue

In the long run, the congressional hearings could hurt Ford's image.

Like GM and Chrysler, the automaker has been battling an image problem with consumers. While overall quality has gone up, bringing Ford's quality in line with Toyota's according to one recent study, and fuel efficiency is improving, there's a gap between consumer perception and reality.
"In the court of public opinion, they are all one in the same," says Leslie Gaines-Ross, chief reputation strategist for public relations firm Weber Shandwick. "They're all looking for help. If anything happens to any of those companies, it's going to impact every situation. I think that's how the average consumer looks at it.

"There is so much distrust of companies today that it's very hard to distinguish one company from another," Gaines-Ross says. "But it's certainly possible to change perceptions. … It's just going to be crucial to get the message across."

Jim Farley, group vice president of marketing and communications for Ford, says he's been frustrated by some of the debate in the media about the bailout. "It's one thing for the consumers, but for the mass media and our real thought leaders in the country to literally have a five- to 10-year-old image about where Ford Motor Co. is, it's mind boggling."

Still, he's never seen so much interest in the auto industry. And Farley says he thinks the conversation will change as soon as people delve more into the details about each company.

"It's raising the awareness to a level that we couldn't do with all the marketing money in the world," Farley says. "If GM, Chrysler and Ford joined up tomorrow, we could not get the American public to be as interested in the car companies' health as it is right now."

Farley, who was lured to Ford from Toyota a year ago by Mulally, says he's excited about the future of Ford: Working there is a lot like working at Toyota in the 1980s, when they were working to build their market and persuade people to buy their products.

Farley says Mulally has had a laser focus on his plan, and managed to rally people around his vision.

"He's one heck of a salesman," Farley says. "He has a laser focus that hasn't changed one iota."

[Cobrabill]

[quote=gsharapa;Think maybe you should look at the quality data as Ford has passed Honda and on par with Toyota now.........[/QUOTE]

Wow,and after only 32+ years.But don't feel bad,it took GM 50+ years to get the Corvette right.

[Bobcat]

So it took 32 + years .... at least one of the companies got the message , and if the other post is correct , Ford is in a position to make it without the "help" from the Wonderful Imperial Federal Government . If the Pols get their hands on the car companies , we are talking about a black hole for our tax money and the kiss of death for the companies involved .
It is beyond my comprehension that politicians who screwed everything up think they can come up with a workable solution .... when they caused the vast majority of the problems over the years with their regs and mandates etc .
If this package , which stinks to high heaven , goes through ... let`s at least hope they put Mitt Romney in charge/overseer instead of some moronic Bureaucrat .

[Rick Weber]

I always get a chuckle about the "quality" issue. JD Powers is always about "INITIAL QUALITY". So the quality is good when you first put in the key? What about 3-4 yrs. later? After that period, the Fords, GM's I have owned have shown their age rather poorly. The Japanese cars I have owned have remained bullet-proof during that same time line and beyond. No electrical gremlins, no squeaks/rattles, no burning of oil. Would love to return to Detroit to buy a car but my opinion of their vehicles has soured. Maybe was just my bad luck.

Rick

[Bartruff1]

Originally Posted by Tom Kirkham

Looks like the cure might be worse than the disease...

http://online.wsj.com/article/SB122875608562688401.html

I'm out, nice ride from $1.01 to $3.40 but this bailout may be a poison pill with all the "politics'" in it. Between the greens and the unions and the bust the unions and the other prescriptive agenda's it will be next to impossible for the companies to survive and that is to bad because this was a chance to right size and capitalize them to be a viable 21st Century Industry . It looks like the market is stuck between 7800-8800 and just waiting for the Obama Infrastructure Program.....bring it on...lets roll...