Thursday February 16, 2012

Democrats delay auto bailout vote

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  • 0

    proxy

    Hey no worries, there are buyers waiting in the wings and salivating at getting their hands on the last American auto makers. And they will make an offer you can't refuse: sell to a Chinese company or we dump the dollar.

  • 0

    Taka313

    “I don’t believe we have the luxury of a lot of time,” GM CEO Rick Wagoner told a House hearing.

    I suspect that "a lot of time" is the only luxury GM CEO Rick Wagoner does not have.

    I read this earlier and thought it very interesting and even more indicative of the sense of entitlement we see in the uber rich in America:

    Auto industry CEOs appeared on Capitol Hill today to ask for a $25 billion bailout. Rep. Brad Sherman (D-CA) asked the top execs if they would be willing sell their corporate jets and travel home on commercial flights.

    Sherman asked the CEOs, "I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial." "Let the record show, no hands went up," noted Sherman

    Pretty much sums it up.

    Taka

  • 0

    SushiSake3

    Taka, I read a similar thing. Wow. Wagoner and co. arrive in Washington with their tin cups begging for bailout money - right after stepping off their private corporate jets.

    My wife said this morning that the problem was not that these guys used their private jets, but why haven't they sold them yet?

    It sends completely the wrong message.

    These CEOs have been gutting pay and entitlements for their workers but they still keep their corporate jets???

    I for one, along with many others, won't be sorry to see the Big 3 go under.

    They have had more than a decade to green their operations and build more fuel efficient cars, and it's no use them saying they didn't see things coming.

    And there's huge opportunities waiting for any newcomers in the market to gather up sacked workers and get them building cars people actually want to buy, rather than ones that come with a trunk full of discounts, cashbacks and special deals, aka bribes.

  • 0

    rjd_jr

    What a joke. No way in heck I want my money, MY TAX MONEY, to go these execs. These idiots fiddled away as Rome burned.

    I have no problems with my tax money directly helping those workers who are affected by the foolish decisions of these stupid auto execs. I want my money to help retrain them, give them unemployment benefits, and anything else to help them get back on their feet. I don't want my money bailing out the inevitable.

  • 0

    Altria

    They showed a clip on the J-news of the execs being questioned about their private jets - totally, totally pwned.

    These guys, their inefficient business and overpaid union can crash and burn!

  • 0

    mcheeky

    “Until they show us the plan, we cannot show them the money,” Speaker Nancy Pelosi, D-Calif, said at a hastily called news conference in the Capitol.

    Correct me if I am wrong, but I don't think congress was so staunch about the 700 billion. Isn't 700 billion a lot more than 25 billion? 28 times more? Anybody counting?

  • 0

    GJDailleult

    No doubt some poster is going to turn up here soon enough saying that the "liberal" media and the above posters are all idiots, that the private jet thing has been blown out of proportion, that the money involved is a drop in the bucket, people are making a mountain out of a molehill etc., etc. So I'll say it first and get it out of the way. And the thing is they will probably be right (except about the idiots thing of course). But the sheer stupidity required to fall into this trap is unfathomable. Havn't they ever heard of public relations? Don't they have staff whose job it is to promote and protect the company's image who should have advised them to fly commercial? This is like driving your Ferrari to pick up your unemployment cheque. Nobody would be that stupid.

  • 0

    smithinjapan

    I'm glad the Dems. are demanding a plan before action, instead of the blatantly ignorant comments by people like Molenir who simply said, "Since it's a democratic government they'll give out the cash easily" or something of the like. Demanding a plan first is the answer. And since the Big-3 probably won't be able to come up with anything new and/or tangible, I hope they don't get a cent. Like others on here, I won't be sad to see them go under. The only sad thing is that these CEOs will do their damdest to make sure they keep their private jets, fancy cars, big houses, etc., while squeezing and laying off the staff. In the end, though, it'll bite them in the a$$es.

  • 0

    skipthesong

    for a good example of what may happen or better yet, not happen, take a look at what has happened to the UK auto industry after being bailed out. http://edition.cnn.com/2008/BUSINESS/11/20/auto.industry.uk/index.html

  • 0

    SezWho2

    They tried to sell their private jets, but the eBay market was glutted.

  • 0

    SezWho2

    On a more serious note, I think that Congress cannot ultimately let the auto industry completely fail. As Wesley Clark said, it is too important for US defense. However, Democrats and Republicans alike are correct in demanding that the Big 3 come up with some kind of business plan before they qualify for additional funds.

    If there is a genuine crisis (as there appears to be), and if the Big 3 truly need operating funds, I think Congress should consider covering operational expenses for a limited period of time--say 2 to 3 months. It is inexcusable that the Big 3 do not already have a plan to rescue themselves. However, operational funds should be granted in order to give the Big 3 time to develop a presentable rescue plan. If after that time the Big 3 have no plan or have a plan but cannot make a sale, then it's time for them to go into bankruptcy and receivership if they cannot make it on their own.

  • 0

    Betzee

    This was extracted from a letter to the editor of the NYT's:

    For the last few years, the risks were clear to auto executives and board members. Labor costs, mostly health and retirement costs for an aging work force, necessitated high profit margins on their products. The only options available for high profits were large vehicles, S.U.V.’s and trucks.

    The automakers chose not to push Congress or the Bush administration on universal health care, which would have brought their companies back to global competitiveness, out of ideological sympathy with Republican values.

    While I recognize the financial burden our employer-paid health care system puts on the backs of businesses, unless the letter writer was present at Big Three automaker board meetings he would not have the authority to claim this.

  • 0

    proxy

    Japanese auto makers are likely to get into some trouble as well; nobody is buying cars. Japan is likely to help out its industry so they can crush the competition when economies pick up. America's industrial policy, if there is one, is based on defence. Japan's industrial policy is based on economic survival.

  • 0

    SushiSake3

    It's good to see the Dems pushing back on this (as well as the Republicans). The Republicans spent 8 long years rubber stamping pretty much any and every spending bill Bush waved in front of their weasly eyes - and look where it got us -

    • the Iraq war - the first in history to be funded by foreign money
    • a $700 billion bailout fully funded by selling US Govt. bonds (aka - debt)
    • a 'mere' $25 billion loan request here, that by recent standards is a mere 2.5 weeks Iraq war spending...

    Now is the time for Congress to knuckle down, take a deep breath, and just say No to the auto execs.

    It's time for some tough love in Detroit - they have had this coming for a long time.

    I agree with a previous poster - better to put this money towards retraining the sacked workers than continue to inject money into an industry that is clearly now in its death throes.

  • 0

    Sarge

    "we cannot show them the money"

    So, the Democrat-led Congress has something in common with American consumers.

    These Big 3 execs each flew to Washington on a private jet to beg for money from Congress. Incredible...

  • 0

    adaydream

    I initially wanted the bailout becaused there are so many workers involved. But the arroganced of the automakers CEOs showed that they have no intention to change the way they are doing business.

    Such a shame. < :-)

  • 0

    SushiSake3

    Sarge, WOW - you and I actually agree on something! :-)

    I think I need to take next Monday off work to recover...

    For your viewing pleasure, here are pictures of the Detroit 3 bosses and their jets -

    www.huffingtonpost.com/2008/11/20/big-three-ceos-and-theirn145297.html

  • 0

    SushiSake3

    Another reason NOT to bail out these auto industry cowboys is the precedent it will set.

    First the bailout was for financial institutions and banks. If it is also for auto companies, who will come asking for money next?

    Airlines? If the autmakers can - and succeed - in getting bailout cash, why shouldn't a shopping list of other companies and industries receive bailouts too???

  • 0

    dennis0bauer

    sushisake3 maybe the hospitals and soupkitchens next?

  • 0

    SuperLib

    proxy: Hey no worries, there are buyers waiting in the wings and salivating at getting their hands on the last American auto makers. And they will make an offer you can't refuse: sell to a Chinese company or we dump the dollar.

    Nope. The structure of the legacy costs makes the companies unsellable. And your threat is meaningless. The US would just close our borders to Chinese products, China would effectively go out of business, and their people would burn the government to the ground. China couldn't screw the US without screwing themselves and vice versa. It's mutually assured destruction all over again. Sorry to ruin your fantasy...

    taka313: Sherman asked the CEOs, "I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial." "Let the record show, no hands went up," noted Sherman

    I was surprised to see this information in the news since it's such an underhanded tactic. Of course CEOs of multi-billion dollar companies don't fly commercial. It would be a complete and utter waste of time and would create a net loss in the end. You want Wagoner's assistant to tell GM's banks that he's unavailable right now because he's sitting in the lobby of Detroit International? Like I said, it's an underhanded tactic that plays on people's emotions. And what's even worse is that Sherman himself doesn't fly commercial and the government is in an even bigger mess than GM.

    SushiSake3: They have had more than a decade to green their operations and build more fuel efficient cars, and it's no use them saying they didn't see things coming.

    Perhaps you missed the links I posted regarding fuel efficiency, so here it is again: http://www.fueleconomy.gov/feg/byclass.htm. And perhaps you missed the thread where I mentioned that the Big 3 lag only behind Toyota on making hybrid cars and is well ahead of Europe and Korea. I also told you that just because a company produces trucks it doesn't mean they don't produce fuel efficient cars...you're mixing and matching apples and oranges. So, I'll go ahead and say all of that again.

    If you have evidence supporting your point then please post it. I'd be interested in reading it.

    Sushisake3: These CEOs have been gutting pay and entitlements for their workers but they still keep their corporate jets???

    What do you want them to do, attract the best managers in the business by telling them they can fly standby? Are you trying to turn the company around or not? Obviously they have to offer packages that are in line with other corporations or they risk the chance of losing talent.

    As for the average worker, the problem the Big 3 are facing is due to the pay and entitlements for said workers which is much higher than their foreign rivals, especially since health care costs are added and since the average worker at the foreign automaker are younger and start off making less.

    SushiSake3: the Iraq war - the first in history to be funded by foreign money

    Can you please check your Iraq war obsession at the door for this topic? It's tacky and out of place. If you weren't obsessed with it you'd realize that (as everyone else here does).

  • 0

    bebert

    There is a plan to reach viability, it's just not one Mrs. Pelosi is going to like.

    American factory labor costs for the Japanese and the Big three are roughly the same for working employees. If the Japanese pay a few dollars an hour less in wages, this is more than made up with annual bonuses. The big difference is the Big 3's health care and pension obligations for retired employees. The Big 3 are already offloading health care onto the unions and forcing white collar retirees who reach age 65 to go onto Medicare. The final step is to do what some airlines have done: declare bankruptcy and dump the pension obligations onto the U.S. Government at 30 to 50 cents on the dollar. Not pretty.

    This is a doomsday scenario for the Democrats and the United Auto Workers' Union, so the loans are going to get approved. All of this outrage regarding corporate jets is just for political show. The Big 3 are in the driver's seat. I just don't understand why they are not asking for more money. If GM and Ford are burning through $2 billion a month, an extra $7 to $10 billion probably won't carry them through more than 6 to 9 months. There is no promise the recession will be over by then.

  • 0

    smithinjapan

    SuperLib: First off, dude, let me just applaud you. You've changed your tone SO much in the past few months and I think I've hardly ever seen you post anything but a rational comment in said time. It's refreshing, and a great change from what we saw in the past and from other righties right now. Your posts are much more objective and therefore more convincing. Good job.

    "It would be a complete and utter waste of time and would create a net loss in the end. You want Wagoner's assistant to tell GM's banks that he's unavailable right now because he's sitting in the lobby of Detroit International?"

    Having said what I did above, I still have to disagree with you. Yes, I would very much like to hear that a CEO is currently unavailable because he's sitting in the lobby -- or perhaps business class lounge, of Detroit International. With the economy the way it is, they shouldn't be using money so excessively to be taxied around to beg for money. What's more, such a comment ('he's waiting in the lobby...') would have the reverse effect on people's emotions to the point where they would not be so obsessed with seeing these guys fail.... which I'm sorry to say, they should. It's just not practical, and in the end it is NOT going to be the private jets that SAVE them money, it'll be the jets that lose them, because they're not going to get the bailouts they want and will hopefully be canned.

    The current CEO system needs to be shaken to the ground and rebuilt.

  • 0

    skipthesong

    You know, while we are all at complaining about these CEO's flying in private jets, we should also equally lay into the politicians who are doing the same and they are worse than the CEO's, the politicians are flying on our dime.

  • 0

    SuperLib

    When the politicians talk about private jets they're effectively putting the entire bailout discussion on hold and instead focusing on their reelection campaigns. The Congressman knows exactly why CEOs use private jets the need for them. He blindsided the execs with his question and no doubt had his "Let the record show, no hands went up" comment waiting and ready to go.

    The fact that this political stunt was large enough to reach the shores of Japan is disgusting to me. The Congressman needs to be removed from his seat. Peoples lives are at stake here and he's knowingly bringing up petty points to play on people's emotions at a time when we need to be clear headed and logical. He just made the entire situation more difficult and he's the one we're counting on to be a leader.

  • 0

    Taka313

    Superlib,

    I took a look at the private jets that the aforementioned CEOs do fly and I have to agree with you.

    It was a great made-for-TV moment and I admit, I got caught up in the hype on this one.

    Taka

  • 0

    Sarge

    Hey, all three Big 3 companies have policies that require their CEOs to fly in private jets for SAFETY REASONS. They couldn't have flown in First Class on American or United or Delta or USAir or Northwest or Continental EVEN IF THEY WANTED TO.

  • 0

    powderfinger

    "The current CEO system needs to be shaken to the ground and rebuilt."

    What CEO 'system'?

    I read this and just laugh. A Canadian, with no experience in US or even Canadian corporate culture, preaching from Japan about how the US automotive industry needs to restructure.

    You make no sense.

  • 0

    Good_Jorb

    You make no sense.

    At least he posted something constructive, as opposed to never stating an opinion and cherry picking a single comment and making a personal attack, the lowest common denominator appoach to agruement.

    There is a flaw in the way(system) that CEO's are renumerated. Like the following related to Corporate Jets and Ford;

    Fields's use of the jet to fly back and forth to see his family in Florida on weekends was part of his employment contract with the company. But it became a subject of controversy when it was first reported by a Detroit radio station in late 2006. At that time the company had only disclosed Fields use of the jet had cost it $214,479 in the last three months of 2005. In January, Fields announced he would fly commercial jets instead, at company expense.

    http://money.cnn.com/2007/04/05/news/companies/ford_execpay/

  • 0

    SuperLib

    I'm no fan of executive pay, but, the system has to change for everyone if change is going to work. You can't have company A offering a million dollar salary, a private jet, and other perks, and Company B offering $100,000 and a bus pass. Company B would be out of business pretty soon since the only people who would be applying for the job would be you and me. If only a handful of companies change then the net result would be that those companies lose talent.

    Private jets are a bit of a protected perk because it saves them time, and the less time they spend on transportation the more time they can spend working. They can fly in and out of Washington and still have the rest of the day to work on other things. They can also fly to 2-3 different places in a day and meet a lot of different people face to face. And if you're paying a guy a million bucks a year you're going to want him to work and have the flexibility to meet others who are far away on short notice. Plus their planes are mobile offices whereas a 767 is just a seat. And as Sarge said you also have safety issues.

    It's admirable to take steps to save your company money but this just isn't a good solution for that. I remember Governor Brown of California refused to take an official car and just drove himself to work every day. Stuff like that is good to hear. It saves money but doesn't impact his effectiveness as governor.

    Anyway, as we spend time talking about this no one is talking about the bailout.

  • 0

    SezWho2

    SuperLib,

    I agree completely with what you say here. It seems to me, however, that the catch is in the word "working".

    It isn't very apparent that the Big 3 executives have been "working". They may have been saving time in their travels, they may have had greater access to their office while in the air and they may have been safer--although the latter is not really clear to me. However, whatever supposed efficiencies those advantages offer, they have not resulted in the health and viability of their industries.

    Their is no evidence that the millions spent on the upkeep of a corporate jet has done anything for the corporations, the stockholders, or the workers. There is no evidence that the executives could not have achieved the same results with more modest means. The reference to the jets was underhanded, to be sure. The jets themselves are not the problem. However, the lack of rejoinder by the executives was telling.

  • 0

    YuriOtani

    The problem is a complete lack of foresight from the American Auto companies. As a "world" person who spends time in both Japan and America. I went into a Chevrolet dealer not long ago. Talk about a lack of selection! They had two models of "compact" autos and they were large and expensive. They suffer from a lack of style, innovation and am suspect of any auto broken on the show room floor. "We will fix that". The next step "up" was to a "mid" size SUV or from 3k kilos to 4.5 kilos or more. What makes one sick is one can see these autos on the side of the road all over America broken down. I left the dealer in my well over 20 year old and 400k mile car not wanting to spend good money on something that will be "sodai gomi" in just a few years. The basic problem is the American auto companies have not invested in the future. The autos they make are using old technology and have "eye candy" and no real improvement. They have taken all of their profit out and spent it! Remember a large car is the sure sign of a person making up for their insecurities, both mental and physical.

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