Memo to Nancy Pelosi re GM Bailout:Slow down.
I have placed the pictures of two men who should be placed in the stocks in a central square in Detroit so we can have a ritual venting on the stupidity of the American Auto Industry. Hopefully, rotten tomatoes will be supplied. On the left is John Dingell, Michigan Congressman who has time and again fought fuel efficiency standards and carried the water for Detroit, no matter how destructive to our country’s future. On the right is Bob Lutz, Vice Chairman of GM, former President of Chrysler, who singlehandedly insisted that all Americans want is a big V-8 under the hood and that hybrids “make no economic sense“ and that global warming “is a total crock of s**t.”
We have already passed a bill to supply Detroit with $25 Billion in loan Guarantees to retrofit their factories to make efficient cars. Before we pour another cent of the tax payers money down this rathole we need to see some sign of reform. As Paul Ingrassia, former Detroit bureau chief wrote in the Wall Street Journal yesterday,
A thorough housecleaning at GM is the only way to give the company a fresh start. GM is structured for its glory days of the 1960s, when it had half the U.S. car market — not for the first decade of this century, when it has just over 20% of the market. General Motors simply cannot support eight domestic brands (Cadillac, Buick, Pontiac, Chevrolet, GMC, Saturn, Saab and Hummer) with adequate product-development and marketing dollars. Even the good vehicles the company develops (for example, the Cadillac CTS and Chevy Malibu) get lost in the wash.
Nevertheless, the current board of directors and management have stuck stubbornly to this structure. The lone exception was a dissident director, Jerome B. York, who resigned a couple years ago. He warned that without fundamental changes the “unthinkable” might happen to GM. Well, here we are.
Which brings us back to what the government should do. If public dollars are the only way to keep General Motors afloat, as the company contends, a complete restructuring under a government overseer or oversight board has to be the price.
That is essentially the role played by the federal Air Transportation Stabilization Board in doling out taxpayer dollars to the airlines in the wake of 9/11. The board consisted of senior government officials with a staff recruited largely from the private sector. It was no figurehead. When one airline brought in a lengthy, convoluted restructuring plan, a board official ordered it to come back with something simpler and sustainable. The Stabilization Board did its job — selling government-guaranteed airline loans and warrants to private investors, monitoring airline bankruptcies to protect the interests of taxpayers — and even returned money to the government.
As I have been suggesting, bankruptcy is a very helpful process in the wholesale restructuring of an industry. The airlines have used it to restructure long term leases, union contracts and other obligations. GM suggests no one will buy a car from them if they declare bankruptcy. This is nonsense. Airline traffic did not decline at bankrupt carriers. The government oversight board should require GM to come in with a complete restructuring plan–closing down Pontiac, Buick, and GMC. If some dumb buyer in the Mideast can be found for the Hummer label, great. And maybe the Swedes will buy back Saab. Every new dollar loaned to these companies should go towards making plug-in hybrids.
Bob Lutz and his ilk should be sent packing with no golden parachutes. GM and all their rust belt compatriots should sign on to supporting a national health care plan, so it is off their balance sheets. The unions will have to understand that the wages paid by Toyota in Kentucky are the new standard and that many of their workers may need to be retained to build wind turbine engines not V-8’s.
As for John Dingell, he should step aside and let Henry Waxman take the chairman role of the House committee on Energy and Commerce. When you are not part of the solution, you are part of the problem.
33 responses so far ↓
Another Jon // November 12, 2008 at 10:46 am |
An indicator of Obama’s thought on the matter…
http://www.prospect.org/cs/articles?article=fueling_the_future
Tom Wilkinson at GM // November 12, 2008 at 3:06 pm |
Just noticed your post. I work at GM and wanted to comment on a few of the issues you brought up here.
Airlines and automakers are two very different businesses. When you buy a plane ticket, your relationship with the airline lasts only from the time you make the purchase until the time your trip is complete. Buying a plane ticket from a bankrupt airline isn’t too risky – if the improbable happens and the airline dissolves before your trip, you’re only out the cost of the ticket. But buying a car is like entering a long-term relationship with your dealer, your service center, and the automaker. Who would enter a long-term relationship with a company whose future is uncertain? We think the decline in sales resulting from bankruptcy would be just as bad as the alternative, and that’s why it’s not an option for GM.
Also, the damage to the overall economy from an auto company bankruptcy would be huge. We have some relevant information posted at gmfactsandfiction.com.
We’re glad you like the CTS and the Malibu – we think they’re great too – but I’d argue that they didn’t get “lost in the wash”. Both won Car of the Year awards in 2008 and retail sales of the Malibu were up 129% in October – not bad for this economy.
Just my two cents – thanks for reading,
JT // November 12, 2008 at 3:23 pm |
Where do I line up to get tomatoes?
Clarke // November 12, 2008 at 5:44 pm |
Tom from GM –
You make good points, but surely the end result of this reasoning is that no car maker can be allowed to collapse, ever. Yet we know from the history of the industry that a great many marques have been bankrupted, and the world didn’t end.
For instance, Rover in the UK was left to fail by the government, and while there was significant short-term pain, it was a far better outcome in the long run than having the taxpayer subsidise poor management delivering obsolescent cars.
It seems that GM is fairly close to the point where it either downsizes itself – much as John has suggested – or it will reach the point of bankruptcy. And surely it’s better to do this on your own terms, rather than have someone do it to you?
Anyway, best wishes for what will probably be challenging times ahead.
billy-bob // November 12, 2008 at 9:25 pm |
Bailing out the auto industry is a fools errand at best. The handwriting was on the wall for these jerk-offs back in the 70’s with the oil shortage. Detroit has continued to deliver oil guzzling pigs that suffer from overall poor quality. I would have been buying American for decades now if Detroit had simply delivered a fuel efficient, long-lasting, defect-free product.
This is the industry that sneered at W. Edwards Deming when he approached their leadership with a proven methodology for improving quality. Deming took his insights to the Japanese and the rest is history.
The government has gone loopy with the bailout money, and now all the dinosaurs are lining up at the trough to gorge.
Let’s put a bunch of really smart venture capitalist in charge of the bail-out monies. Let’s have them scrutinize the management, business models, sales plans, and overall technology plays. Give them the authority to gut management if the business seems viable, but the management does not. Let them broker mergers & acquisitions. We can pay them 1/10 of 1% of the total funds. Seems like a bargain instead of the shite that Paulson and his GS minions are concocting.
Hugo // November 12, 2008 at 10:04 pm |
Jon,
Please hesitate to waste your invaluable time on memos to such as Nancy. Just because you’re right, don’t mean that old Knows Not Her Sums will listen.
My best advice, anyway.
hugo
Hugo // November 12, 2008 at 10:06 pm |
…and Hey, I thought you were down with Governor Arnold. Ne c’est pas? Well then, let’s move on to working the dosey-Do: Switch out Arnold for our dear Diane, and let those clever bizheads work it out later…
fourios // November 13, 2008 at 10:39 am |
I interviewed Lutz only a few years ago and he told me point blank that hybrid cars are not on the GM lineup because there is no market demand! That was while the Prius was already released. And – get this – “we could change the GM manufacturing process to produce hybrid vehicles in about 6 months” – yeah right. He was for a substantial increase in the gas tax however.
Hugo // November 13, 2008 at 11:10 am |
See? It’s just as our host guyy says. Doze guys, wit dere dumbsss decisions an’ dere uggly mugs in Jon’s police line up, is costin us folks a lotta our remainin lucre, the durty Nellies…
Ken Ballweg // November 13, 2008 at 12:02 pm |
Oh Hugo, I just adore it when you do your Krazy Kat accent. So cute.
Said it before and will say it again, these industries are as dead as US steel for the same reasons. Entrenched management with no sense of the world’s ability to change, and a belief in top down decisions on product line up.
Because you can sell a Hummer to a person stupid enough to buy it doesn’t mean you should. But when you only pay attention to “could” and assume it equates to “should” you get what we are just starting to get; stay tuned there’s more to come here on channel HURT.
Bailouts for the American auto industry is equal to a tip jar for the band on the Titanic.
Hugo // November 13, 2008 at 5:20 pm |
Now Ken, that’s the best dang spin on a Titanic cliche I ever did see since the Age of Pericles. I declare! I believe you just might be welcome to take refuge under mah nuclear umbrella any old time!
Rick Turner // November 13, 2008 at 9:29 pm |
And where are the stockholders in all this? Why no outrage? Why return the same tired old white men to the board of directors year after year? Maybe because the investor class are the same ones who don’t believe in global climate change and like to drive Hummers… Dumbers in Hummers…
Rick Turner // November 13, 2008 at 9:31 pm |
Note that the two big industrial growth countries after WWII were Germany and Japan. Why? Because their basic industrial infrastructure had been totally wiped out, but their brains had not been destroyed. They were able to start a-fresh with new industrial revolutions.
Hugo // November 13, 2008 at 9:58 pm |
Rick, your penultimate post, supra, has me dancing in the stands, whereas your last one has me shaking my head.
You ask, first, why no outrage from the shareholders? Wow, seriously: that’s a powerful goddam question, isn’t it?
May I ask whether you might think that, as long as we’re worried once again about workplace democracy and union cards and all, we might not think about how structurally to invigorate industrial democracy among SHAREHOLDERS?
Because, if you’re game, then I’ll let slip that I used to teach legislative drafting, and can throw up these pop charts of Jon’s a few quickie ideas for how to fix that problem to which you seem to allude, the problem of stupefied or oblivious stock holders.
As for your comments about Germany and Japan, you give too much credit to their mid-century turpitude and squalor. It was not they who engineered their comebacks, but we. Period.
Hugo // November 13, 2008 at 10:01 pm |
“Where do I line up to get tomatoes?”
JT:
Allow me to recommend UC Davis.
Rick Turner // November 13, 2008 at 10:25 pm |
Hugo, I’m quite aware of the comebacks, but the point is that they were able to…had to…start from scratch, and so with that tabua rasa, they were able to restart unencumbered with old infrastructure, old designs, old corporate baggage. They leap-frogged over us and we’re just now seeing it, though you could have seen it if you’d paid attention to what smart people started driving in Boston, Cambridge, and Berkeley in the 1960s… Volvos (yeah, Swedes, too), VW’s, then Hondas and Toyotas.
The smartest thing GM has done in the past fifteen or so years was the Saturn, but they’re killing it now. Gas mileage hasn’t improved in 13 years, and my ‘95 gets better mileage that the current equivalent is rated for. Wassup with that?
Rick Turner // November 13, 2008 at 10:30 pm |
OK, just an off the wall and maybe snide question…the two guys at the top of this thread…when do you think either one of them last changed a flat tire on their own car? Opened up the hood and checked the oil? Added a quart? Pumped their own gas? Got their hands dirty?
These guys are not familiar with our reality…
Hugo // November 13, 2008 at 10:34 pm |
Yes, Rick. I see your point now. And of course you’re quite right: we gave them our freshest tooling — if necessary, captured. And they did indeed rise to the ocassion, over us and everybody else.
Still, why weren’t the Soviets able to replicate such effects with their own postwar satellites? See? We, the benefactors of the West, were better at it than they were, and better, in the moral sense, in that we were WILLING to be leapfrogged, in the interest of all that we’d wished, postwar, to retrieve of The Good; namely, democracy in the same henhouse with a vicious and still rudimentary capitalism.
It was then, as it is even more so now, a complex and seemingly toxic blend of antagonisms, but it’s the one our brilliant forebears explicitly chose, and somehow it works for us, doesn’t it? But not for the bloody-minded, binary reptiles of communistic places, it doesn’t do.
Hugo // November 13, 2008 at 10:39 pm |
When? When did they last do?
Probably the last time their respective golf carts broke down and they, out of idiotic impatience with their merely bilingual caddy, made the mistake of sending the Beaner packing and then found that they had to repair the thing themselves if ever they were to return, barn-sour, to their G&T’s, their Michelob’s and their bad club sandwiches…
Rick Turner // November 13, 2008 at 10:44 pm |
Well, Soviet-style communism just doesn’t work, and it was practiced by some really nasty folks, to make it even worse. You’ve got to give people some sort of hope for betterment through personal effort. And that’s what’s missing here in the US right now, too. Too many of us see a gamed system, and therefore there is a feeling of schadenfreude as we see the Wall St., GM, Chrysler, etc. folks squirm. Of course many of us down here are also squirming right now as sales evaporate due to our customers losing capital, houses, etc. and cutting back on discretionary spending. Hell, I drink more coffee in than I did six months ago myself…
Ken Ballweg // November 13, 2008 at 10:49 pm |
Patrick,
It would be nice if someone could engineer a Marshall Plan for our recovery, but ….
And Hugo, not so sure you can attribute our urge to build buffer states in Europe and Asia totally to the goodness of our hearts. We wanted forward bases and bodies those godless ruskies would have to go through to get to us. I would assume since you seem to still be fighting the old cold war that you would be more familiar with the Raison d’être of NATO.
Rick Turner // November 13, 2008 at 10:57 pm |
Ah, just realized that maybe I’m “Patrick” here. Well, there is a bit of the Irish in me, but it’s the Northern English or the Southern Scottish where my name, Warwick, came from. The second “w” is silent, and the alternative spelling is Warrick. Yeah, there’s a castle back there…
Ken Ballweg // November 13, 2008 at 10:59 pm |
Stalin was more a revival of the Czarist style of rule than implementing Marx/ Lenin ideas. The “communes” were forced labor serfs exploited to feed the industrialization in the cities.
That’s why poor old Leon got his rather harsh frontal lobotomy in Mexico.
It’s a little like calling the Maoist Industrialization and Book Club “communism” just because he used the label.
Ken Ballweg // November 13, 2008 at 11:02 pm |
You know, I don’t know why I keep doing that to you Rick.
Dementia is not pretty when it get paraded in public so … oh, what was I saying?
Hugo // November 13, 2008 at 11:07 pm |
Ken,
I didn’t so attribute, do not do so now, and never will do.
Dr. Franklin famously observed that the very essence of American-ness is to do well while doing good.
Rick,
Why, I dunno, but here goes… It is reported widely that, of all the overnight billionaires that Russia has produced in recent years, the biggest baddest beneficiary of them all is Vladimir Putin himself. And yet, what would that old aparatchik ever have learned of what you know: how to create a payroll from which others may live, and which payroll you then are honor-bound to “make”, or keep? A: Nothing. Vlad knows nothing of this. Instead he knows nothing but kleptocracy and its crafts. How, then, is he different from Jon’s two doughy duffers?
Hugo // November 13, 2008 at 11:17 pm |
Reminds me, Rick, of an old lyric…
Ain’t got no Scottish castle,
Ain’t got no ocean view.
Ain’t got no surrey tassel,
Ain’t got no bike for two.
I got a proposition, though,
And that is:
Me for you…
Ken Ballweg // November 13, 2008 at 11:35 pm |
The problem with not having the Official Annotated Ramblings of Hugo St. M is that one has to make a go at interpreting such as…
“Still, why weren’t the Soviets able to replicate such effects with their own postwar satellites? See? We, the benefactors of the West, were better at it than they were, and better, in the moral sense, in that we were WILLING to be leapfrogged, in the interest of all that we’d wished, postwar, to retrieve of The Good; namely, democracy in the same henhouse with a vicious and still rudimentary capitalism.”
If as usual I read in too much I humbly beg your forgiveness,
and perhaps some footnotes? It’s always fun to see all the places your mind wanders, and fun to make the effort to keep up, but without being allowed to share in whatever chemistry (internal or ingested) allows it to happen, we all must perhaps follow the famous Ms. L Van Pelt, who explained to C. Brown that her method for reading novels included “Blipping over the big words.”
Hugo // November 13, 2008 at 11:40 pm |
Ken,
I don’t quite know what I’ve done here, ever, to piss you off so. And nor do I quite construe your criticisms of my blog-jottings. You hang me up, though, as I’ve always sought your thoughts.
Please point to anything that you feel warrants a footnote, or to any polysyllabic word, greater than, say, the Greek word “paragraph”, that merits another, simpler “equivalent”. (Oops, that was Greek too, and fully FOUR syllables…)
Hugo // November 13, 2008 at 11:44 pm |
Ken, it’s pretty familiar territory to students of America that neo-Athenian democracy, and Capitalism, never were meant to sit well in the same henhouse, chicken with fox in close quarters. The Framers knowingly set up a tension, that’s all, yet the tension is felt to this day, and in this very week of our nation’s constant struggle, tensionwise. That’s all I was referring to.
Rick Turner // November 13, 2008 at 11:44 pm |
Far be it from me to be a Putin apologist! Russians seem to like to be bossed around by a strong and ruthless leader…one after another…
Ken Ballweg // November 13, 2008 at 11:51 pm |
No, no, no, no…. not at all pissed off. You are truly one of my favorites on this forum, and I say that genuinely and sincerely. It always astounds me when you think I’m trying to rain on your parade, when what I actually see in it is raw O. Wilde crossed with M. Twain. What I was saying was that I really get lost in your flight of ideas at times, and love to spar with you, but don’t always get your drift. Would seriously love to have an annotated version of some of your comments so I could follow all the references. It’s not the vocabulary, but the rich allusions and plays on words that I can’t always follow.
Never, never assume I am more than a playful critic. I’m just glad to have you back. So, lighten up, and don’t take off again. We need you here.
Hugo // November 14, 2008 at 6:49 am |
Good grief, Ken, what a goofy misunderstanding. I see what you mean about my Dennis Milleresque obscurantism, but for Miller it’s a playful way to earn a living, whereas for me it’s an earnest way to play. Also, he is a stage performer reliant on his own carefully polished material, whreas I sicken at the merest thought of performing anywhere near a stage or, worse, a camera. (Though Rick surely will be bored to know that I once did perform Under the Boardwalk.) And nothing of mine here is as polished as Dennis Miller, on a good rant, getting his lapidary rocks off. I once saw him do the most circuitous, almost straight-news set-up of an amazing line that probably had come to him a week before as he read the morning paper. He reported to the audience that the State of Florida had in recent days executed a man for gunning down an abortionist in the clinic parking lot. And Miller’s punchline, at the end of this hideous litany? “Watch out for Florida, my friends. In Florida they kill people for killing people for killing people!” If you’ll take the trouble to Google the august Franco-literary name Rene Girard, you just might conclude that Miller, in his brilliant distillation, had mastered the Girardian hypotheses also. (They attempt to explain, among others things, the origin of human violence [envy] and the conspicuous tendency of our violence to escalate.)
See my stylistic problem here, Ken? On the one hand, the preceding paragraph could be seen as an interesting move from deprecation (me) to appreciation (Miller) to explication (Girard). And, if the reader happens to find such odd turns more interesting than merely digressive, then, Bob’s your uncle, we got game.
On the other hand, ours is still a profoundly anti-intellectual country, and in Georgia being “smart” still means being impertinent, and in any sports bar here that’ll get you half a beer bottle in the neck. And that, I’m sure we agree, really smarts.
I’ve read Twain, truly, all my life, a goodly portion of which I’ve spent in Calaveras and other Sierra Foothill counties. It would be plagiaristically Twainian of me to say that the older I get the smarter he gets. Plagiaristic, and funny too, but also true. Every time a Twainhound thinks he’s read all the nutrition out of Clemens, the Bancroft at Cal astonishes with the disclosure of another load of more drop-dead hilarious stuff. It’s like being a little kid and finding out that Batman in fact, did not die in the previous installment. O the purest joy! Run, then, all the way down the hill and clear through Jerusalem Gate! He is risen! He is Risen!
Batman lives!
Ken Ballweg // November 14, 2008 at 8:51 am |
As I say, just don’t run off again. This site would get to be one of the left echo chambers if we didn’t have you and Len to poke-poke a little balance into the mix.
Not to denigrate the other center right, and whack job right voices here, but you two are the ones I read closely and try to spar with as a way to keep my thinking honest.
PS: I used to love Miller; may be in the minority re: his football commentary being a delight, but he got too angry right wing paranoid to be funny any more. Like Lenny, he disappeared into his fears.