Posted on 11/15/2008 11:48:41 AM PST by NewJerseyJoe
Given the abysmal performance by Detroit's Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack
Before Michael Moore became famous for documentaries like "Fahrenheit 9/11" and "Sicko," his first big success came in 1989 with "Roger and Me." In that film, Mr. Moore followed General Motors chairman and chief executive Roger Smith with a camera crew, asking him why the company was closing plants and producing low-quality vehicles. Mr. Smith looked flustered and inartfully avoided Mr. Moore's camera crew while it lingered outside his country club or GM's executive offices.
"Roger and Me" was entertaining, but it missed the real story about Roger Smith, who turned out to be a forward-thinking genius. Mr. Smith made big investments in information technology and satellite communications, acquiring Electronic Data Systems in 1984 for $2.5 billion and Hughes Aircraft in 1985 for $5.2 billion. Mr. Smith's successors divested those businesses at huge profits -- EDS was taken public in 1996 for more than $27 billion, and Hughes, renamed DirecTV, went public in 2003 for more than $23 billion. (The man who sold EDS to Roger Smith at a bargain price was H. Ross Perot, who then convinced many people that the experience qualified him to be president.)
Mr. Smith understood all too well that GM shouldn't continue investing in its failing automobile business. That was 25 years ago.
(Excerpt) Read more at online.wsj.com ...
No. Especially after how they treated Barry Sanders.
Roger and Me is the only remotely decent thing that Michael Moore has produced.
I also highly doubt of the "economic catastrophe" that supposedly awaits should the 3 crap factories known as GM, Ford and Chrysler go under. If no one is buying their cars as it stands now, then no one will miss them if they are gone.
The future of the US auto industry lays with companies like Toyota, Honda, Hyundai and other foreign car companies that build high quality automobiles in the USA using non-union labor.
http://www.freerepublic.com/focus/f-chat/2132689/posts?q=1&;page=1
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My husband and I are going to be in the market for a new car in the next year. I’m thinking we won’t be looking at any thing made by the Big Three.
But, but, but....what about MI?
MI will fall without the big three.
(and maybe I can get my hubby to move out of this stink hole)
The thing I notice is the little Malibu, which is just a total Fred Flintstone car as they say in the used auto trade, being advertised as an “affordable” $23000 or thereabouts for the most basic model. I have no mental picture of anybody in his right mind paying any more than about ten or twelve for a Malibu. What’s wrong with the picture??
In the article it states that GM should have gotten out of the business when the getting was good.
But to paraphrase George Will, who a year or so ago, said that GM is a health care and pension provider that builds cars to finance their programs.
I wanna eat, I wanna eat! Never did understand the Jobs Bank thing.
There is no need for Congress to bail out the car companies. Now is the time for BIG OIL to invest in car companies.
Exxon and the other oil companies should not wait for the next Congress to impose a windfall profits tax when they can invest capital today to save American jobs and ensure continued growth and profit for themselves !!!
Funny that so many people supported the bailout for Wall Street and the financial services companies (banks, AIG, etc). IMHO, the financial services industry has been a total disaster. They have managed to fritter away countless billions on Rube-Goldberg like financial schemes—in the process they have paid themselves big bonuses while encouraging practices (like outsourcing) that have cost the rest of us dearly. Also, when a bank or insurance company fails, there is always another [American company] ready to step in to fill the vacuum.
Not so with the Big Three, at least as far as American companies are concerned. Once they are gone, they are gone for good. Lots of FReepers luv to criticize the Big Three Auto makers. But if GM, Ford, & Chrysler did their jobs as poorly as Wall Street & the banks, we’d all be driving the equivalent of Pintos that cost $50K, get 10 MPG, leak oil, have a service life of 24K miles, and regularly explode without warning, killing the occupants.
Also, wrt: foreign transplant factories, I think you are confusing assembly (the last stage in the process) with everything else (concept, design, parts, testing, etc). Once we lose the Big Three, the expertise and technology required to make vehicles will reside abroad. All we’ll be able to do is assemble stuff from their blueprints.
BTW—I am not saying changes aren’t needed. Its a disgrace what the Unions have done to the Big Three. They are killing the host. Why? Because at this point there are more retirees than there are active UAW members; so the Union has consistently gotten what is in the best short-term interest of the majority of their members. Maybe they are waking up now, but its almost game over.
Once upon a time, Americans had common sense and did what was in their national interest. Now, we’ll sell our birthright down the river for a few bucks. Very sad.
It takes a wage of $48/hr to build a Toyota in Kentucky and $73/hr to build a GM product in Michigan...until this is fixed the big three will never be competitive.
During 2007, General Motors produced two thirds of its new vehicles in eighteen (18) countries outside of the United States. Reports published by the International Organization of motor Vehicle Manufacturers (OICA) substantiate the numbers.
G.M. produced more than nine million vehicles worldwide. They produced less than three million vehicles within the United States.
If congress insists on giving G.M. a government loan, how will the government guarantee that two thirds of this money will not find its way to foreign shores? Why are we not asking the other eighteen (18) countries to foot part of the bill?
A more appropriate use of this “bailout money” would be to simply fund the Pension Benefit Guarantee Corporation’s General Motors pension liability and allow the company to go bankrupt. This would keep the recipients of any government funding to U.S. workers only.
The employees and retirees would have a significant part of their lucrative pensions paid through the BPGC. By simply shedding the pension liability, G.M., if properly managed otherwise, could become competitive with the foreign car companies operating on American soil.
Holy cow, I was so stupid to go to college and grad school. I need to move to Kentucky and go work on an assembly line building cars.
I used to love visiting my husband’s hometown in Western Michigan...but in the last few yeara...well, it’s not what it once was. Seems more like Little Chicago...
BTW— NY is far worse.
My circa 1989 Jeep Wrangler went 140,000 miles before the first major component broke - a heater core. My Honda CRX needed new clutch packs every 17,000 miles and new brakes every 35,000.
My wife’s Crown Vic was kept for 10 years and 130,000 miles. It did suffer a number of maladies, most small irritating things like the rear-view mirror falling off, electric windows not working, etc. Still it was running pretty well when we sold it to a needy family at our church for very little money. They are still driving the car. It still looks nice.
I think the idea that Detroit builds only crap is nonsense.
A close friend absolutely loves his Chevy Trailblazer. Another loves his Chevy S-10 2WD, which gets 25mpg and cost about $11,000 new. He just bought his just graduated daughter a Cobalt, also for around 10K. It’s getting close to 30 mpg. Another traded a Lexus for a Caddilac Escalade and loves it, perfect for transporting the dogs he breeds.
Let’s not forget that Mazda’s, Volvo’s and Saab’s are also Ford and Chevy products after a sort. Are they crap too?
This doesn’t mean I support a bailout. But, facts be told the Chrysler bailout was paid back years early. With interest. How many people really depend on something Goldman-Sachs does? There are a lot of Chevy trucks out there hauling farmers, painters, mechanics and tradesman around. There are a lot of Ford vans shuttling people to and from airports and schools.
I see a lot more justification for bailing out major industrial operations that are caught in a world wide credit squeeze not of their own making than bailing out the banks that created that squeeze.
Having said that I actually think bankruptcy might be better for GM. They need to abrogate union contracts and screw the pension holders benefits down a bit to be viable. Bankruptcy can accomplish that - FedGov bailouts can not.
“But, facts be told the Chrysler bailout was paid back years early”
Daimler (Mercedes-Benz) paid for Chrysler. And what did they get ? Daimler was on it’s way to bring Chrysler back on track until UAW and Kirk Kerkorian put obstacles in their way because they lost sway.
They don’t deserve a bailout.
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