"Aiding the American automobile industry is... a national security imperative."
Submitted by Nick Kelly on November 16, 2008 - 12:30pm.
Automobile Industry | Wes Clark | Economy
Wes has an important op-ed in the New York Times today. Here's part of what he says:
In a little more than a year, the Army has procured and fielded in Iraq more than a thousand so-called mine-resistant ambush-protected vehicles. The lives of hundreds of soldiers and marines have been saved, and their tasks made more achievable, by the efforts of the American automotive industry. And unlike in World War II, America didn’t have to divert much civilian capacity to meet these military needs. Without a vigorous automotive sector, those needs could not have been quickly met.
More challenges lie ahead for our military, and to meet them we need a strong industrial base. For years the military has sought better sources of electric power in its vehicles — necessary to allow troops to monitor their radios with diesel engines off, to support increasingly high-powered communications technology, and eventually to support electric propulsion and innovative armaments like directed-energy weapons. In sum, this greater use of electricity will increase combat power while reducing our footprint. Much research and development spending has gone into these programs over the years, but nothing on the manufacturing scale we really need.
Those are excellent points. We need to help Wes get this important message out as widely as possible.
I've been saying this about the automobile industry for a while now. The first thing I think about now is how any problem relates to national security. LOL!
enticed buyers to go the big truck/SUV route, giving US auto manufacturers no strong incentive to work on energy efficient vehicles:
1) Cheap oil and cheap gas were readily available
2) Congress gave auto manufacturers the loophole of not including trucks and SUVs in a company's average efficiency ratings.
3) Congress did not increase requirements for fuel efficiency even though technologies were available.
4) Consumer started demanding larger trucks and SUVs because of their presumed higher safety.
5) Sales of smaller more energy efficient vehicles were extremely small.
Enter higher oil prices and the tragedy starts. In retrospect, it would have been smart for each company to have a small production line of really efficient vehicles throughout the period.
"it would have been smart for each company to have a small production line of really efficient vehicles throughout the period." You mean like Toyota, Honda, Nissan, etc. had?
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
They had a higher market share in places with higher gasoline/diesel prices (Japan and Europe), making sales of highly efficient vehicles profitable.
Why did they have that higher market share? They built the kind of cars people wanted in Japan and Europe, unlike the US companies.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
GM outsells Toyota, Honda, etc. in China, Europe, the middle East, etc. The Japanese brands have "infrastructure" advantages such as zero % loans from the government, regulations that require incredibly expensive "safety" inspections that all but insure a three year turn over of cars bu their owners, and the government payed for the research on the hybrids.
That's the idea, blame the other guys. No need for anyone on our shores to accept any responsibility. :)
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
And who paid for the research and design for GM's Hummer?
Toyota has drawn about even with GM in world wide sales (they've topped GM but haven't sustained that long enough to really say who's on top now). GM and Ford also have overseas divisions that make cars that are competitive with other brands but when is the last time you saw an Opel in the US? (Now you can find one but its called a Saturn)
The US companies have the talent to compete with anyone in the world but they lack the leadership. As long as the current leadership remains in control of those companies no amount of bailout money is going to solve the problem.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
Thanks for content and kind tone of your reply. Several posters have brought up the Hummer vehicles. Some clarification is needed on that issue.
The Hummer that is related to the Humvee is built by AM General not General Motors. AM General are the same people that bring you this vehicle.
It was sold to people like California's Governor Schwarzenegger through GM branded dealers. In as much as the engine was GM sourced, GM payed for the research.
These Hummers (H1) haven't been sold at Hummer dealers for some years now. It was replaced by the H2 which is a similar looking vehicle, but based on the Chevy Silverado truck. The vast majority of all hummers sold by GM dealers are the H3 and are based on the compact pickup truck (Colorado) and use a rather smallish 5 cylinder engine of only 3.5 L displacement. All research/development for these vehicles was paid for by GM.
The mess the US auto companies are in is a critical and complex issue and nothing is going to be solved unless we can discuss the issue from different viewpoints in a reasonable manner. I've never seen yelling and shouting solve anything.
News of the auto industry today includes the opening a a new Honda plant in Indiana to build more Civics. It has over 1,000 employees with another 900 joining the factory next spring. Honda opening a new factory while Detroit goes begging, there's something seriously wrong with that picture. A simple bailout that just hands over cash won't solve the real problem, it will only postpone the inevitable.
The article on the new Honda factory has some numbers that give a rough indication of one part of the problem. All foreign automakers employee about 47% as many people as GM, Ford and Chrysler, yet just Honda, Toyota and Nissan production is 73% of the US automakers production. They're building cars with fewer people.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
I'm actually getting used to be yelled at by both sides. One interesting fact about Honda is that they grow rice here to fill up the ships that would otherwise go back to Japan empty. Boy did I get "yelled" at by an American car fan in Arkansas(or was it Alabama). He thought Honda should buy rice from them only. It didn't seem to matter to him that Alabama grows the wrong kind of rice for Japan.
I spent 5 years teaching in Asia and those people are serious about their rice. :)
Honda shipping rice to Japan could raise a hypothetical case that shows how complicated things are getting. They do ship some Accords from Ohio to Japan and if demand for Accords shot up in Japan they'd probably ship more of them from Ohio. That would seem to be a good thing for us, unless of course you're a rice farmer.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
The small cars the US auto makers build suck. Why is that? Why does a car like the Focus get 10 MPG less than a similarly-sized Honda or Toyota? Why do American cars stop working around 60K miles? Hondas never break down at all until after about 130K miles. The management chose not to care about quality. They wanted big and fancy for the same price as the foreign car makers offered smaller and reliable.
I put 440,000 miles on the last one until some jack-ass ran a red light, hit my side and basically screwed up the electrical system even after repair which rendered it unreliable (and with no value except as a parts car). But at least it did its job and I walked away while the other guy got packed into an ambulance.
Felt good not having a car payment for over 13 years (although maintenance averaged around $1.7K / year (which wasn't bad considering number of miles/year I drove it)).
My 2004 Toyota Camry Solara, 3.3L, doesn't do any better than my 2003 Buick Regal, 3.8L, did. GM's marriage of the engine and transmission made it very efficient. I broke 30 mpg on a trip to Idaho in the Buick, and most of that was at 80 mph. That Regal, at about $24,000 sticker in 2003, was about the most car for the dollar you could get. (I guess the Regal and Century have morphed into the LaCrosse.)
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
I don't think that American car buyers "think American" when they think of economical cars. If you wanted something efficient and small, they thought foreign, beginning with the Volkswagen in the late 50s and into the 60s. That psychology has never really changed, it seems. There were also a few dogs put out there, such as the Pinto, Vega, and earlier the Corvair and Falcon.
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
My husband and I were among the weirdos who took the need to conserve seriously back in the 1970's, and (except for company cars that husband drove for many years until he retired from the company providing them) have had German and Japanese cars for the past thirty years.
The Op-Ed is also available on the iPhone using the NYT app.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
Yeah, yeah... I know.
Go there and recommend it anyway.
http://www.dailykos.com/story/2008/11/16/111241/34/224/661837
...as I posted on the General Discussion:
US Auto industry OK - just not the part owned by GM/Chrysler/Ford
They have concentrated on building pickup trucks and SUVs (unfortunately subsidized a few years ago by the federal government giving tax CREDITS!! to people buying these gas guzzlers weighing over a certain amount) based on cheap oil. Wrong decision (again) by Detroit, so let them go under.
Example: Taking the military Humvee and selling it to consumers as the Hummer
Or if we do give them $50 billion (and you can bet the final number is going to be a lot higher), do it with a number of strings attached:
1) management is fired
2) boards of directors are fired
3) taxpayers get substantial (30%?) equity ownership of these firms
4) any car/truck/SUV lines getting less than 25 mpg are shut down
5) some manufacturing capacity is transferred to the production of wind turbines, etc as part of a larger revamping of our national energy strategy
I would almost let the union membership have a pass on this one saying that it isn't their fault, except that they were all against the imposition of 'tougher' (what a joke) fuel standards, so let's bust the union too while we're at it.
My problem with all of this is that this country has no idea about investing for the future - it's all about propping up the 'consumer' today. We pour money into the auto industry to do what? Build pieces of metal that turn to junk in less that 10 years, burn foreign oil and pollute the planet?
Again, $1 trillion would buy enough wind turbines/power grid to power every home in the Unites States and provide millions of new jobs that could replace the jobs lost in industries not doing the job.
Somehow we do need to take steps to see that our auto industry produces more environmentally friendly vehicles.
And as for the various costs they now have to build into their prices, for one thing, I think we need to create a health care system which doesn't require employers to foot the bill.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
The cost of health care must be spread across the broadest spectrum of revenue sources possible. To me, sales taxes meet that criterion, provided certain basics are exempt so as not to make disproportionate contributions from the poor, who only have enough money for the basics. Sales tax rates can be progressive just as income tax rates are, with prepared foods and luxury things taxed at a higher rate.
Separating health care costs from employment should improve our competitive position in the global economy.
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
Showdown looming in Congress of automaker rescue
Sunday November 16, 5:44 pm ET
snips:
WASHINGTON (AP) - Hardline opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.
Majority Democrats will need at least a dozen GOP votes in the Senate to prevent opponents from blocking their measure.
So far two Republicans publicly have voiced support for the idea. Several others, included Minnesota Sen. Norm Coleman on Sunday, have indicated they might accept a rescue under strict conditions.
Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers because a bailout would only postpone the industry's demise.
"Companies fail everyday and others take their place. I think this is a road we should not go down," said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee. "They're not building the right products," he said. "They've got good workers but I don't believe they've got good management. They don't innovate. They're a dinosaur in a sense."
Added Kyl, the Senate's second-ranking Republican: "Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning."
House Speaker Nancy Pelosi, D-Calif., said over the weekend the House would aid the ailing industry, though she did not put a price on her plan.
"The House is ready to do it," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. "There's no downside to trying."
It is a more difficult fight in the Senate, given the Democrats' slim edge and President George W. Bush's opposition. Bush wants to speed the release of $25 billion from a separate loan program intended to help the automakers develop fuel-efficient vehicles and have that money go toward more urgent purposes as the companies struggle to stay afloat. The loan program was approved by Congress last year, but more legislation would be necessary to change its purpose.
"That should be done this week," Commerce Secretary Carlos Gutierrez said. He said reopening the Wall Street bailout and including automakers could attract other industries looking for bailouts.
"If you start that, where do you stop?" he asked. "There's a line of companies of industries waiting at Treasury just to see if they can get their hands on those $700 billion."
Sen. Carl Levin, D-Mich., said automakers are working to adapt to a changing consumer market, but they need immediate help to survive the current economic crisis. "This is a national problem," Levin said. "The auto industry touches millions and millions of lives."
United Auto Workers President Ron Gettelfinger would not flat-out reject further concessions by members on top of the two-tiered wage system and other concessions the union gave the automakers last year, but he bristled at calls for further sacrifices by his members.
"Let's go to AIG, Bear Stearns, active and retired workers: Did anybody go in and ask them to give back wages and benefit levels?" Gettelfinger said on WDIV-TV in Detroit. "What about the bond traders? Did anybody ask them? What about the cleaners in the building? Why would the UAW be any different?"
"We made an agreement, and we made major concessions," he said. "So how can you blame the autoworkers?"
read full article...
The US auto industry has learned the hard way that the oil industry is not their friend. As a Detroiter (fairly recent, I moved here some 12 years ago) I am aware that US engineers' ideas have not always been welcome at the Big Three. Consequently many of them go abroad. China has (funds) 500.000 engineers a year - the US, who doesn't fund any - 50,000 a year.
I believe Wes acknowledges Detroit's mistakes - but that is a whole separate issue and article. He is one hundred per cent correct.
While not the inventor of the hybrid, former GM engineer, David Hermance played a key role in bringing Toyota's Prius and Lexus hybrids to the US.
From Driving Today
Hybrid Pioneer Dies In Plane Crash
The Toyota engineer who helped make hybrids into an American phenomenon died on November 25th of this year, at the age of 59. David "Dave" Hermance, an affable technician who helped make esoteric hybrid concepts simple for the buying public, perished when his experimental aerobatic plane plunged into the Pacific Ocean. Within the halls of Toyota he was dubbed the "American father of the Prius."
Hermance was not the inventor of the gasoline-electric hybrid powertrain found in the Prius and other Toyota and Lexus vehicles, but he did have an uncanny way of explaining the often obscurely technical workings of the vehicles in terms that average individuals could understand. He was known at press events for his models and demonstration pieces that illustrated the technology and described its benefits.
An executive engineer for Advanced Technology Vehicles based at Toyota's Technical Center in Gardena, California, Hermance had a quarter century-long career as a General Motors automotive engineer before joining Toyota. He came to the Japanese company in 1991, and quickly became general manager of its U.S. powertrain department. He was instrumental in making the second-generation Toyota Prius hybrid a success in the American market after the first version of the car had received lackluster consumer response.
http://www.drivingtoday.com/kpix/news_this_week/2006-12-04-3500-driving/index.html
Kudos to Gen. Clark for a brilliant article, that is right on the money.
Oh yeah, and note to GM - Bob Lutz has got to go.
He is one bright fellow.
I would never have considered this angle on the issue if it weren't for Wes.
"People who founded this country...had strong beliefs, but they believed in reason, and dialogue, and civil discourse. We can't lose that in this country. We've got to get it back." - Wes Clark
The moment I started reading the article, I thought - oh yes, the arsenal of democracy, the sleeping giant, the dollar contracts! We really do need to keep all of that heavy manufacturing capacity alive and well in the USA. That was self evident back when I was a young man. Why the heck didn't I think of that?
The answer to the latter, of course, being - With experience, comes age. ;) ...and my old memory usually needs a jump start.
So, I say it's also Wes's great memory and experience at work here, as well as his intelligence and knowledge of history.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
Gen Wesley Clark was the only one who was able to elaborate on the importance of aiding the auto industry. After reading the article, I am convinced that Gen Wesley Clark is the best person for the Secretary of Defense.
I am surprised that his name is not being mentioned as one of the contenders. There is no need to retain Gates as Wesley Clark has the expertise to handle the job better than Gates. He can just jump in to do the job for Obama, with his experience as Nato Commander he is the man for the job.
1. From Pakistan's Daily Times
2. This is Nov. 3rd and from CNS News Service (Yeah, OK, I'm not a fan of Brent Bozell) - but it's still relevant. Gen. Clark understands ands grasps complexities that many of us may not be able to fathom completely - however he has the ability to make a layperson, such as me understand. That is a gift.
"Ours is a world of nuclear giants and ethical infants."
Gen. Omar Bradley
And Wes is of course absolutely correct regarding the importance of Kashmir in all of this.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
KC's insights need to get out there--to the MSM echo chamber. NYT is only a start.
The General gets it right.
Competence--What a concept!
What if the government assumed the health care and pension obligations of the automakers? Just put them on Medicare and Social Security, but maybe account for those people separately. It could be an experiment in a universal single-payer system.
In that way, the government isn't handing over large sums of cash, but providing a "bail-out-in-kind." Hey...I have a daughter to whom I don't give cash when she's in a crisis, because we don't trust her with money. If it's a car repair crisis, we pay the garage directly.
As part of the conditiions, the automakers would have to reduce wages and prices proportionately to the reduction in the benefits assumed by the government, thereby enhancing their competitive position in the global economy.
Good idea or dumb idea?
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
I believe, are now all in favor of some sort of govt. medical plan. That would relieve them of a huge $$ burden. This is a good idea, Stan, and might be a way to get started on Medicare for all. About SS, I'm not so sure, but the govt. needs to do more in backing up these wobbly pension plans. Hell, if they can bail out Wall Street, why not Main Street?
Nader WAS right - and he still is. It's now acceptable to lie, cheat, and steal your way to the White House.
...I learned from Ernie in one of the Yahoo! groups that my wild hairy idea was neither a wild hair nor original. Ernie participates in some auto-related forums and said that "my" idea has come up before.
Seems like a good idea, though, to remove the health care component of the cost of making American cars and spread the costs over as broad a base as possible.
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
Just because some others have thought of it before doesn't render your creative thinking on this any less worthy.
I wonder if the idea of gradually extending Medicare in this fashion has been proposed as a general concept. Something like - the US government will offer Medicare policies to your workers for a price similar to what they currently pay for health insurance in return for your company taking certain steps to reduce its carbon footprint.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
Thanks for bucking me up, LOL.
I would hope that Medicare, especially as it expands to cover more and more people, could be offered to employers for less than what they're paying now.
Go Green for Health Care. I like it.
By the way, for this to work, more doctors will have to stop refusing to accept Medicare patients.
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
offered directly to the employees, not to the employers. As most employees currently pay only a small portion of their company subsidized health insurance plans, my suggestion that they instead pay something like that same amount to Medicare would be no additional hardship on them. Meanwhile, the employers would be relieved of subsidizing employee health care (other than through social security/medicare/medicaid taxes as they already do, and income taxes - which of course would only be charged to the extent they showed a profit).
I keep hearing that more doctors are already accepting Medicare these days because Medicare has actually become one of the most reliable payers in the health insurance business. Apparently many other companies have increased their red tape (to enhance profits) while Medicare has been reducing theirs. Still, you are correct that more doctors would need to be willing to accept Medicare for this to work.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
There are many fine government health programs in addition to Medicare. The Veterans hospitals, Tri-care for active duty and a very large and efficient FEHB (Federal Employees Health Benefits Program).
It would be theoretically possible to offer access to any of those to employees of companies who move to generate reduced carbon footprints (or other common good). Actually, the FEHBP might be the best vehicle - since the various plans in it are already made available to people of every age and at well established premium rates. Thus, such companies would not only have reduced footprints, they would have reduced costs and be more competitive.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
In order to migrate toward a universal, single-payer system, the idea is not for the employees to have to "buy in" to any greater degree than they're already buying in with the automakers' plan. The idea is for the government to assume the employers' costs and spread the costs over a broader spectrum of revenue sources.
It should be cost-neutral for the employees.
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
Something like - the US government will offer Medicare policies to your workers for a price similar to what they currently pay for health insurance
I don't know for certain, but my guess is that the amounts Federal employees currently pay for their health insurance plans are quite similar to what auto workers pay for theirs.
You can link to the 2008 FEHBP premiums from one of my previous diaries:
http://securingamerica.com/ccn/node/14870
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
GM asks German government for credit guarantee
As top Detroit auto executives prepared to make their most intense plea for aid to Congress on Tuesday, General Motors also pleaded Monday for a billion-euro credit guarantee from the German government to help its Opel subsidiary.
The request, greeted with some skepticism in Germany - Chancellor Angela Merkel promised a reply by Christmas - demonstrated how what had been building as a Washington drama involving efforts to save the venerable Detroit auto industry was fast becoming a story about how the international industry might be transformed by the spreading financial crisis.
read more...
http://www.iht.com/articles/2008/11/17/america/gm.php
Prospects dimmed Monday for enactment of a $25 billion bailout for the faltering auto industry before year's end, as congressional Democrats and the Bush administration seemed headed for a stalemate. Help for Detroit's Big Three, which have been battered by the economic meltdown that has choked their sales and frozen their credit, is falling victim to a partisan fight over where the money should come from.
Senate Democrats said they would press ahead with their plan to carve out a portion of the $700 billion Wall Street bailout to pay for the loans, but aides in both parties and lobbyists tracking the plan acknowledged they did not currently have the votes to do so. The White House and congressional Republicans insist that the automaker bailout money instead come from redirecting a separate $25 billion loan program approved by Congress to help the industry develop more fuel-efficient vehicles.
In addition, besides opposing the use of any of the $700 billion for the automakers, the administration has told top lawmakers it does not plan to ask for the second half of that huge fund that Congress approved this fall to aid the financial industry, congressional officials said Monday.
The Treasury Department said its message on not tapping half the fund applied only to the next few days and that no decision had been made for the rest of the administration's two months - but officials stopped short of saying the funds would be used before Bush leaves office.
read more... http://apnews.myway.com/article/20081117/D94GUIK80.html
I never would have realized were it not for Clark. He needs to argue these points to the Congress.
That said, I have a concern that I don't believe is being adequately addressed. Fundamentally, the problem is with the American consumer. Gas prices have fallen to $2 a gallon. What is going to be the incentive to get Americans out of their SUVs? If Detroit builds smaller more fuel efficient cars, will Americans buy them in the absence of $4 a gallon or higher gasoline prices?
I would favor a tax on the purchase larger and/or less fuel efficient cars, and incentives for the purchase of smaller and/or more fuel efficient cars. If we are going to demand Detroit manufacture a certain kind of product, we must create an incentive for that product.
And why exactly do we want to bail these guys out? (While ignoring the better-managed companies that are employing about 30% of the auto workforce)
dsds
The big surprise was at the top of the charts, where Chrysler tied Toyota for the number one spot in manufacturing productivity, consisting of assembly, stamping and engine and transmission; all in all both manufacturers take 30.37 hours to build a vehicle from start to finish. The most efficient plant in North America is the Toledo Supplier Park plant, which takes 13.57 hours to crank out a Wrangler. Second place was Oshawa (Canada) Plant No.1, which takes 15.18 hours to assemble an Impala.
Other award winners include the Toyota Georgetown plant for Stamping, GEMA (Chrysler, Hyundai, Mitsubishi) for Engine, and GM Toledo for Transmission. Both Ford and GM posted improvements, the latter marking its 15th consecutive year of improved performance for overall efficiency. Toyota was noted for its environmentally friendly actions (most recycling, energy efficiency).
more at :http://car-reviews.automobile.com/news/2008-harbour-report-jeep-ties-toyota-in-plant-efficiency/5733/
...they are apparently more efficient at losing money which is why they have their hands out.
You also failed to mention things like this:
"Chrysler was at the back of the line, with Jeep showing the lowest quality rankings of any brand sold in the U.S."
http://www.motorauthority.com/ford-mercury-climb-initial-quality-rankings-lincoln-chrysler-fall-behind.html
From your own link:
One thing to keep in mind when analyzing the results is that the overall span from top to bottom isn't especially wide
To you it looks like twice the number of problems, but in reality the lowest rated Jeep was only 8 tenths of one problem more than the super expensive Porsche. I would also caution you that Jeep's numbers have been effected by a newly Asian designed engine (Mitsubishi plus Hyundai).
In the all important midsize class the winner was Chevy! Probably it was just one tenth on one problem better than some other car. The differences are minuscule.
If it doesn't show up above...
http://3.bp.blogspot.com/_otfwl2zc6Qc/SR9v0tlHxsI/AAAAAAAAHvM/U1TRb_tdUas/s1600/paygap.bmp
Detroit's Big Three automakers pleaded with a reluctant Congress Tuesday for a $25 billion lifeline to save the once-proud titans of U.S. industry, pointedly warning of a national economic catastrophe should they collapse. Millions of layoffs would follow their demise, they said, as damaging effects rippled across an already-faltering economy. But the new rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who don't want to dip into the Treasury Department's $700 billion financial bailout program to come up with the $25 billion in loans.
"Our industry ... needs a bridge to span the financial chasm that has opened up before us," General Motors Corp. (GM) CEO Rick Wagoner told the Senate Banking Committee. He blamed the industry's predicament not on management failures but on the deepening global financial crisis.
Robert Nardelli, CEO of Chrysler LLC, told the panel the bailout would be "the least costly alternative" when compared with damage from bankruptcy.
Sympathy for the industry was sparse, with bailout fatigue dominating Capitol Hill. Lawmakers bristled with pent-up criticism of the auto industry, and questioned whether a stopgap loan would really cure what ails the companies.
Banking Committee Chairman Christopher Dodd, told the leaders of GM, Chrysler and Ford Motor Co. (F) that the industry was "seeking treatments for wounds that I believe to a large extent were self-inflicted." Still, he said, "At a time like this, when our economic future is so tenuous, we must do all we can to ensure stability."
Sen. Mike Enzi, complained that the larger financial crisis "is not the only reason why the domestic auto industry is in trouble." He cited "inefficient production" and "costly labor agreements" that put the U.S. automakers at a disadvantage to foreign companies.
Ford CEO Alan Mulally told senators the auto industry was "a pillar of our economy. We look forward to working with you to be part of the solution" to the financial crisis.
GM's Wagoner said that despite some public perceptions that his company was not keeping pace with the times and technological changes, "we've moved aggressively in recent years to position GM for long-term success. And we were well on the road to turning our North American business around. What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II." Failure of the auto industry "would be catastrophic," he said, resulting in three million jobs lost within the first year and "economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis."
Chrysler's Nardelli sought to respond to critics who suggest the automakers seek Chapter 11 bankruptcy protection, as have some airlines that later emerged restructured and leaner. "We just cannot be confident that we will be able to successfully emerge from bankruptcy," Nardelli said.
Chrysler was bailed out by the federal government once before, in 1979, with $1.2 billion in loan guarantees. The company repaid the loan, plus interest, ahead of schedule.
The three said a $25 billion government infusion could get them through 2009, with Chrysler and Ford each getting about $7 billion and GM needing $10 billion to $12 billion to pull through.
Joining the Big Three CEOs, Ron Gettelfinger, president of the United Auto Workers union, said the emergency loans were important for the survival of the industry and union jobs. He said the UAW recognized that "in order for these companies to be competitive, we had to make tough calls" in labor concessions.
read more... http://apnews.myway.com/article/20081118/D94HLE300.html
only Chrysler would agree to a string consisting of higher CAFE standards being attached to the money. Apparently Chrysler is hoping to be bought out by GM.
Also--no requirements to make fleet vehicles that run on LNG. Doing this type of conversion could be an immediate project, I would think. No mention either of the tax breaks for buying SUV's, and the fact that there are, I believe, few or no tax breaks for purchase of hybrids or other highly efficient vehicles.
Dodd did suggest that the top brass consider their salaries. With millions having been paid to them the past, they could probably work for a dollar a year with no pinch.
I would have liked to see a point by point comparison of Big 3 with Japanese manufacturers re costs, government support, car sale price, mpg, maintenance costs.
And an economist pointed out that, as cars get more reliable, fewer new ones will need to be purchased in any case. My 2001 Toyota Corolla (with rebuilt engine) gets 41+ mpg highway. I'm not giving that car up any time soon!
The General gets it right.
Competence--What a concept!
I don'tunderstand why Obama wants to keep Gates for his current position. He is in favor of the Iraq war so I don't think he will help Obama in his decision to pull US troops out of Iraq.
Obama should get another viable person to hold this position, who is against the war and has a broad vision to change America's foreign policy without going into war. There are so many viable candidates who could fulfill this position, ie. Gen Wesley Clark is well qualified to hold this position and has the forsight to change America's policies in dealing with threats, etc.
I hope that that they will consider Gen.Wesley Clark for Secretary of Defense.
Gates may only be held over until then.
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
Without an act of Congress, the prohibition for Clark to be SecDef is 10 years. Clark officially left active duty on June 30, 2000.
Stan Davis
Lakewood, CO
Wes Clark: "We're no better than our own sense of humility."
I can always depend on Wes Clark to set be right on the issues.