CAR CZAR vs BANKRUPTCY REORGANIZATION – Which is best for “Detroit 3”

“If We Don’t Say Bankrupt” no one will notice the Detroit 3 are broke

I guess it isn’t so anymore ….. maybe the public has grown accustomed to being lied to …. or have we, the public,  just lost all of our common sense …….

The latest lie …… “Oh we can’t ask the “Detroit 3″ to file for Bankruptcy Reorganization, like any other Company or person ….” 

The reason – “No one would buy a car from a “bankrupt company”.

When I was young, a lie of this magnitude would have been called a “whopper” ……

At this point in time their are very few people who do not know the “Detroit 3″ are broke – they are in fact “Bankrupt” in every business sense – that is why they are seeking a “handout” of taxpayer money …….. The “Detroit 3″ owe 10’s of Billions of Dollars they can’t pay …. that is why they want a handout ……

Anyone who is unaware of the fact that the “Detroit 3″ are broke … will probably not notice if the “Detroit 3″ actually file for an official “bankruptcy”. As for the public’s willingness to buy cars from a “bankrupt car company”, I just don’t buy the argument – A funiture store near when I live has been holding “Going out of Business” sales  for 12 years now – the furniture store will pay your sales tax and you won’t pay interest on your purchase for 5 years …… I guess the store may be “going out of business” they are just doing it very slowly.

The American public understands “Bankruptcy Reorganization”. ”Bankruptcy Reorganization” does not mean “going out of business”.

Lets touch on some facts, BANKRUPTCY means that a company does not have the “means” or “money” to meet its financial obligations. If the Detroit 3 could meet their financial obligations (as Ford Motor Co might be able to do) there would be no “pressing argument” to support a “handout” of taxpayer moneys, there would be no need to give the “Detroit 3″ any money at all.

Pretending this is not the case should not “fool” anyone. Reporters, Politicians and the “Detroit 3″ are hoping it will fool the American taxpayor.  

There are 2 Types of Bankruptcy.  The first is Chapter 11 – which proivides a company the opportunity to “reorganize” its operations and continue on in business. The Second, Chapter 7, involves a liquidation or “sell off” of Company assests and the end of the business.  http://encyclopedia.thefreedictionary.com/Chapter+11 

Chapter 11 provides a Company a “fresh start”.  

Definition

When a troubled business is unable to service its debt or pay its creditors, the company or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11. In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. This is done in accordance with statutory defined priorities.   http://encyclopedia.thefreedictionary.com/Chapter+11

A chapter 11 filing, on the other hand, is usually an attempt to stay in business while a bankruptcy court supervises the “reorganization” of the company’s contractual and debt obligations. The court can grant complete or partial relief from most of the company’s debts and its contracts, so that the company can make a fresh start. Often, if the company’s debts exceed its assets, then at the completion of bankruptcy the company’s owners (stockholders) all end up with nothing; all their rights and interests are terminated and the company’s creditors end up with ownership of the newly reorganized company.     http://encyclopedia.thefreedictionary.com/Chapter+11

Rationale

In enacting chapter 11 of the Bankruptcy code, Congress concluded that it is often the case that the value of a business is greater if sold or reorganized as a going concern than the value of the sum of its parts if the business’s assets were to be sold off individually. It follows that it may be more economically efficient to allow a troubled company to continue running, cancel some of its debts, and give ownership of the newly reorganized company to the creditors whose debts were canceled. Alternatively, the business can be sold as a going concern with the net proceeds of the sale distributed to creditors ratably in accordance with statutory priorities. In this way, jobs may be saved, the engine of profitability which is the business is maintained rather than being dismantled, and, as a proponent of a chapter 11 plan is required to demonstrate as a precursor to plan confirmation, the business’s creditors end up with more money than they would in a chapter 7 liquidation. http://encyclopedia.thefreedictionary.com/Chapter+11

Details

All creditors are entitled to be heard by the court which is responsible for determining whether the plan of reorganization complies with the purposes of the bankruptcy law and provides for fair and equitable treatment of all parties in interest. http://encyclopedia.thefreedictionary.com/Chapter+11

Some contracts, known as executory contracts, may be rejected if canceling them would be financially favorable to the company and its creditors. Such contracts include labor union contracts, supply or operating contracts (with both vendors and customers) and real estate leases. The standard feature of executory contracts is that each party to the contract has duties remaining under the contract. In the event of a rejection, the remaining parties to the contract become unsecured creditors of the debtor. http://encyclopedia.thefreedictionary.com/Chapter+11

Chapter 11 is reorganization, as opposed to liquidation. Debtors may “emerge” from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. Debtors in Chapter 11 have the exclusive right to propose a plan of reorganization for a period of time. After that time has elapsed, creditors may also propose plans. Plans must satisfy a number of criteria in order to be “confirmed” by the bankruptcy court. Among other things, creditors must vote to approve the plan of reorganization. If a plan cannot be confirmed the court may either convert the case to a liquidation under Chapter 7 or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy. If the case is dismissed, creditors will look to nonbankruptcy law in order to satisfy their claims. http://encyclopedia.thefreedictionary.com/Chapter+11 

Criticism

Some critics have claimed that Chapter 11 bankruptcy is excessively lenient in giving a needless “escape hatch” to the incompetent management of a failing company, damaging the efficiency of the economy as a whole and allowing poor managers to continue managing. It is unusual for the management of a company in Chapter 11 to be fired, as it is usually assumed that the present management team knows far more about the company and its customers than would a new set of management. [Bankruptcy laws do not prohibit the firing of Management] These critics note that in Europe, bankruptcy law is far less lenient for failing companies. 
http://encyclopedia.thefreedictionary.com/Chapter+11

Whether you call it BANKRUPTCY or not, the “Detroit 3″ are broke and are, in fact, BANKRUPT. 

A “Bailout” or “Handout” doesn’t guarantee the “Detroit 3″ will stay in business, it will simply delay the day of reckoning. THE KEY TO THE SURVIVAL OF THE “DETROIT 3″ IS THEIR SUCCESSFUL REORGANIZATION

Bankruptcy Reoraginzation doesn’t guarantee the survival of the “Detroit 3″ either – but “Bankruptcy Reoragnization” doesn’t gamble  Billions in taxpayor dollars either. Bankruptcy would provide the “Detroit 3″ with a “fresh start”, a “Bailout” just throws money at an “old problem”.

A “Car Czar” is not the answer – A “Czar” will just add layers of beauracracy over the true problems  

Definition: bu·reauc·ra·cy, n. pl. bu·reauc·ra·cies,   1. a). Administration of a government chiefly through bureaus or departments staffed with nonelected officials., 2. a). Management or administration marked by hierarchical authority among numerous offices and by fixed procedures: b). The administrative structure of a large or complex organization:3). An administrative system in which the need or inclination to follow rigid or complex procedures impedes effective action. http://www.thefreedictionary.com/bureaucracy

 The answer to how the ”Detroit 3″ should address their problems  is simple, straightforward, tried and tested ….. seeking other alternatives is just political posturing while individuals pursue “secret agendas” behind the scenes.

I guess that is what we call politics today –

The Politicians and Press who say otherwise are telling you another “whopper”.

THE AMERICAN PUBLIC DOES NOT NEED ANOTHER VERSION OF THE TROUBLED ASSET RELIEF  WHERE

a) Troubled Assets are not purchased

b) There is no transparency – the Government won’t even dilvulge what was purchased

c) An “Executive Oversite Committee” was to be appointed – Not a single appointment has been made todate. 

CONTACT YOUR CONGRESSPERSON – TELL THEM TO VOTE NO ON A BAILOUT AND SAY YES

TO A “FRESH START” FOR THE “DETROIT 3”.

CONTACT YOUR CONGRESSPERSON HERE:

http://www.usa.gov/Contact/Elected.shtml

                                                                                                                           

“If We Don’t Say Bankrupt” no one will notice the Detroit 3 are broke

There was a time when Poiticians and Reporters took great care not to insult the intelligence of the American Public – Getting caught insulting the collective intellgence of the people was a “fatal blow” to their careers. A Newsreporter or Politican’s career would be over if they were caught in an obvious lie to the public. 

I guess it isn’t so anymore ….. maybe the public has grown accustomed to being lied to …. or have we, the public,  just lost all of our common sense …….

The latest lie …… “Oh we can’t ask the “Detroit 3″ to file for Bankruptcy Reorganization, like any other Company or person ….” 

The reason – “No one would buy a car from a “bankrupt company”.

When I was young, a lie of this magnitude would have been called a “whopper” ……

At this point in time their are very few people who do not know the “Detroit 3” are broke – they are in fact “Bankrupt” in every business sense – that is why they are seeking a “handout” of taxpayer money …….. The “Detroit 3” owe 10’s of Billions of Dollars they can’t pay …. that is why they want a handout ……

Anyone who is unaware of the fact that the “Detroit 3” are broke … will probably not notice if the “Detroit 3” actually file for an official “bankruptcy”. As for the public’s willingness to buy cars from a “bankrupt car company”, I just don’t buy the argument – A funiture store near when I live has been holding “Going out of Business” sales  for 12 years now – the furniture store will pay your sales tax and you won’t pay interest on your purchase for 5 years …… I guess the store may be “going out of business” they are just doing it very slowly.

The American public understands “Bankruptcy Reorganization”. “Bankruptcy Reorganization” does not mean “going out of business”.

Lets touch on some facts, BANKRUPTCY means that a company does not have the “means” or “money” to meet its financial obligations. If the Detroit 3 could meet their financial obligations (as Ford Motor Co might be able to do) there would be no “pressing argument” to support a “handout” of taxpayer moneys, there would be no need to give the “Detroit 3” any money at all.

Pretending this is not the case should not “fool” anyone. Reporters, Politicians and the “Detroit 3” are hoping it will fool the American taxpayor.  

There are 2 Types of Bankruptcy.  The first is Chapter 11 – which proivides a company the opportunity to “reorganize” its operations and continue on in business. The Second, Chapter 7, involves a liquidation or “sell off” of Company assests and the end of the business.  http://encyclopedia.thefreedictionary.com/Chapter+11 

Chapter 11 provides a Company a “fresh start”.  

Definition

When a troubled business is unable to service its debt or pay its creditors, the company or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11. In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. This is done in accordance with statutory defined priorities.   http://encyclopedia.thefreedictionary.com/Chapter+11

A chapter 11 filing, on the other hand, is usually an attempt to stay in business while a bankruptcy court supervises the “reorganization” of the company’s contractual and debt obligations. The court can grant complete or partial relief from most of the company’s debts and its contracts, so that the company can make a fresh start. Often, if the company’s debts exceed its assets, then at the completion of bankruptcy the company’s owners (stockholders) all end up with nothing; all their rights and interests are terminated and the company’s creditors end up with ownership of the newly reorganized company.     http://encyclopedia.thefreedictionary.com/Chapter+11

Rationale

In enacting chapter 11 of the Bankruptcy code, Congress concluded that it is often the case that the value of a business is greater if sold or reorganized as a going concern than the value of the sum of its parts if the business’s assets were to be sold off individually. It follows that it may be more economically efficient to allow a troubled company to continue running, cancel some of its debts, and give ownership of the newly reorganized company to the creditors whose debts were canceled. Alternatively, the business can be sold as a going concern with the net proceeds of the sale distributed to creditors ratably in accordance with statutory priorities. In this way, jobs may be saved, the engine of profitability which is the business is maintained rather than being dismantled, and, as a proponent of a chapter 11 plan is required to demonstrate as a precursor to plan confirmation, the business’s creditors end up with more money than they would in a chapter 7 liquidation. http://encyclopedia.thefreedictionary.com/Chapter+11

Details

All creditors are entitled to be heard by the court which is responsible for determining whether the plan of reorganization complies with the purposes of the bankruptcy law and provides for fair and equitable treatment of all parties in interest. http://encyclopedia.thefreedictionary.com/Chapter+11

Some contracts, known as executory contracts, may be rejected if canceling them would be financially favorable to the company and its creditors. Such contracts include labor union contracts, supply or operating contracts (with both vendors and customers) and real estate leases. The standard feature of executory contracts is that each party to the contract has duties remaining under the contract. In the event of a rejection, the remaining parties to the contract become unsecured creditors of the debtor. http://encyclopedia.thefreedictionary.com/Chapter+11

Chapter 11 is reorganization, as opposed to liquidation. Debtors may “emerge” from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. Debtors in Chapter 11 have the exclusive right to propose a plan of reorganization for a period of time. After that time has elapsed, creditors may also propose plans. Plans must satisfy a number of criteria in order to be “confirmed” by the bankruptcy court. Among other things, creditors must vote to approve the plan of reorganization. If a plan cannot be confirmed the court may either convert the case to a liquidation under Chapter 7 or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy. If the case is dismissed, creditors will look to nonbankruptcy law in order to satisfy their claims. http://encyclopedia.thefreedictionary.com/Chapter+11 

Criticism

Some critics have claimed that Chapter 11 bankruptcy is excessively lenient in giving a needless “escape hatch” to the incompetent management of a failing company, damaging the efficiency of the economy as a whole and allowing poor managers to continue managing. It is unusual for the management of a company in Chapter 11 to be fired, as it is usually assumed that the present management team knows far more about the company and its customers than would a new set of management. [Bankruptcy laws do not prohibit the firing of Management] These critics note that in Europe, bankruptcy law is far less lenient for failing companies. 
http://encyclopedia.thefreedictionary.com/Chapter+11

Whether you call it BANKRUPTCY or not, the “Detroit 3” are broke and are, in fact, BANKRUPT. 

A “Bailout” or “Handout” doesn’t guarantee the “Detroit 3” will stay in business, it will simply delay the day of reckoning. THE KEY TO THE SURVIVAL OF THE “DETROIT 3” IS THEIR SUCCESSFUL REORGANIZATION

Bankruptcy Reoraginzation doesn’t guarantee the survival of the “Detroit 3” either – but “Bankruptcy Reoragnization” doesn’t gamble  Billions in taxpayor dollars either. Bankruptcy would provide the “Detroit 3” with a “fresh start”, a “Bailout” just throws money at an “old problem”.

A “Car Czar” is not the answer – A “Czar” will just add layers of beauracracy over the true problems  

Definition: bu·reauc·ra·cy, n. pl. bu·reauc·ra·cies,   1. a). Administration of a government chiefly through bureaus or departments staffed with nonelected officials., 2. a). Management or administration marked by hierarchical authority among numerous offices and by fixed procedures: b). The administrative structure of a large or complex organization:3). An administrative system in which the need or inclination to follow rigid or complex procedures impedes effective action. http://www.thefreedictionary.com/bureaucracy

 The answer to how the “Detroit 3” should address their problems  is simple, straightforward, tried and tested ….. seeking other alternatives is just political posturing while individuals pursue “secret agendas” behind the scenes.

I guess that is what we call politics today –

The Politicians and Press who say otherwise are telling you another “whopper”.

The UAW & The Detroit 3 – A Dysfunctional Relationship That Bankrupted The American Auto Industry

Just 12 months ago – after record setting losses by the “Detroit 3” ……….

UAW Puts Chrysler on Strike Notice

  

 UAW Strikes Chrysler!

UAW-On-Strike-Chrysler.jpg

UAW workers just walked out of Chrysler assembly plants. 

 http://jalopnik.com/archive/uaw-on-strike/uaw-strikes-chrysler-309177.php#c2616338

UAW On Strike Against GM

DETROIT, Sept. 25, 2007

(CBS/AP) Thousands of United Auto Workers walked off the job at General Motors Corp. plants around the country Monday.

UAW President Ron Gettelfinger said the union launched the strike after “one-sided negotiations” failed to reach an agreement.
If you’re looking to buy a car, you’re not going to notice this strike, reports CBS News correspondent Anthony Mason. GM has a two-month backlog of inventory that will keep it in business for a while.
“The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company,” he said. “We remain fully committed to working with the UAW to develop solutions together to address the competitive challenges facing GM.”
http://www.cbsnews.com/stories/2007/09/23/business/main3290066.shtml

Just weeks after GM announced a $38 Billion Dollar loss in the third quarter of 2007 ………

UAW’s Gettelfinger: General Motors “Pushed Us Into a Strike”

  

 Indeed, it will hurt GM. It will cost hundreds of millions of dollars at a time when GM’s turnaround is just beginning to take hold, but remains fragile. It will hurt GM sales at a time when GM has had some sales momentum in specific areas, like the Saturn division and the crossover segment. And GM is on the eve of launching some critical new models, specifically the Chevrolet Malibu and Cadillac CTS.

The 1998 strike was debilitating to GM. The automaker lost money and market share — share it never regained.

GM has to stick to its guns for its survival. No way will GM CEO Rick Wagoner sign a deal like the one former GM Chairman Bob Stempel did more than a decade ago. That one still reverberates on GM’s balance sheet.

In those 1990 negotiations, Stempel, so as not to bear a strike, was seen as caving to the union on issues of job security, and the Jobs Bank that pays people in full when they are displaced from their jobs but maintains pay and benefits, like health care coverage and pensions for active workers and retirees.

Subsequently, a boardroom coup led to the ouster of Stempel and GM President Lloyd Reuss, with the union contract at the top of the list of their transgressions.

GM is still paying for that contract today.

http://www.autoobserver.com/2007/09/uaws-gettelfinger-general-motors-pushed-us-into-a-strike.html

Lengthy UAW Strike Could Cost GM Billions

NPR.org, September 25, 2007 · In calling a strike against General Motors Corp., the United Auto Workers took a bold gamble that it could get a stronger contract by shutting down an already weakened company.

Monday saw 73,000 UAW members at about 80 U.S. facilities walk off the job, citing concerns over job security and health care. The dramatic move came after 20 days of negotiations. The talks continue.

If the strike does drag on, it could take a huge toll on both sides.

If the strike lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, industry analysts said.

A strike lasting close to a month or more would cause GM to burn up $8.1 billion in the first month and $7.2 billion in the second month. They are losing money every day the strike takes place. Very shortly it will paralyze their Canadian and Mexico operations,” Shaiken said.

“They are losing money every day the strike takes place. Very shortly it will paralyze their Canadian and Mexico operations,” Shaiken said.

But the longer the union stays on the picket lines, the more it could encourage GM to ship more jobs abroad.

http://www.npr.org/templates/story/story.php?storyId=14682552

 

Steven Pearlstein                                                                                                                                                                                       Washington Post Columnist
Wednesday, September 26, 2007; 11:00 AM

You raise an interesting question though: suppose a company’s wages and benefits have got way out of line, with serious consequences for the competitiveness and profitability of the company. Its losing lots of money. If you are a worker, you can bitch and moan and say, “Why should I have to take a $12 pay cut?” just to use your hypothetical. Getting your pay cut is a lousy thing to have happen to you. Or you can say, “Look, we obviously got way above market for my set of skills, I had a good run at above market wages, and now I have to decide if I want to work for a market wage, which is less, or try to earn more by looking for a new job. But I understand that if I don’t agree to cut my wage, there won’t be a company left to work for for very long, or it will file for bankruptcy reorganization and I’ll be paid $12 less anyway, only my pension will be seized by the creditors.” So this is the reality. You chose to see it only through the narrow lens of the worker, and come up thinking its unfair. But tell me: was it “fair” that, for all those years when the Big Three owned the US market, that people paid more for their cars (on a quality adjusted basis) than they should have so these workers could earn twice what other American workers did with the same skills, working under the same conditions? The harsh truth is that, in business and economics, fairness in that sense doesn’t have much to do with things.

http://www.washingtonpost.com/wp-dyn/content/discussion/2007/09/25/DI2007092501022.html

Strike 2: UAW shuts down Chrysler

More than 32,000 workers start second nationwide auto strike in less than two weeks, this time hitting No. 4 U.S. automaker.

By Chris Isidore, CNNMoney.com senior writer




NEW YORK (CNNMoney.com) — More than 32,000 members of the United Auto Workers union struck Chrysler LLC on Wednesday, after marathon labor talks between the union and the money-losing automaker failed to avert the industry’s second strike in two weeks.

The strike affects 18 manufacturing plants and 30 other facilities, spread across 14 states.

The new CEO of Chrysler is Robert Nardelli, who was ousted as the CEO at retailer Home Depot (Charts, Fortune 500) after a dispute over his lucrative pay package, coupled with that company’s poor stock performance.

The union’s members at Chrysler get $28.75 an hour in straight wages, according to Chrysler. That comes to just under $59,000 pay when calculated for a 52-week, 40-hour a week year. Overtime pay and other adjustments generally takes the pay even higher.

But the total labor cost is far above that hourly wage when the cost of health care for both active and retired employees, as well as pension and other benefits, are factored in. Chrysler estimates it pays $75.86 an hour in total hourly labor costs. That’s not only significantly more than the $46 an hour average at the U.S. plants of Asian automakers, but it’s also higher than GM and Ford have been paying.

GM’s labor costs came to $73.26 an hour even before the latest cost-saving labor deal, while Ford was paying $70.51.

http://money.cnn.com/2007/10/10/news/companies/chrysler_uaw/index.htm?postversion=2007101012

AND THIS JUST 9 MONTHS AGO ………..

UAW strikes American Axle                                                                                                                    March 28th, 2008

The strike sends 3,650 American Axle workers in Michigan and New York to the picket lines and threatens to snarl truck production at General Motors Corp., the parts maker’s largest customer.

http://www.blogsmonroe.com/budget/category/uaw-strike/

UAW on strike at GM crossover plant in Michigan                                        Thu Apr 17, 2008

 


DETROIT (Reuters) – A local unit of the United Auto Workers went on strike on Thursday at a General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) plant that builds fast-selling crossover vehicles, adding to disruptions caused by the union’s walkout at American Axle & Manufacturing, a major supplier to the automaker.
 

 

 


Members of UAW Local 602 who work at GM’s Lansing Delta Township plant near Lansing, Michigan, walked off the job just after 10 a.m. ET after the automaker and local union leaders failed to agree on work rules and other issues.
 

 

shed: Mar 07, 2008 12:30 AM

Modified: Mar 07, 2008 02:41 AM

DETROIT – General Motors shut down another plant Thursday …..

GM temporarily idled its Wentzville, Mo., assembly plant after it ran out of parts from American Axle. The plant employs nearly 2,000 people and makes the GMC Savana and Chevrolet Express vans.

About 3,600 UAW workers at five American Axle plants in Michigan and New York walked off their jobs Feb. 26.

GM said that including the plants that are set to close Monday, about 19,000 manufacturing workers have been affected by the shutdowns, or nearly a quarter of its North American manufacturing work force. 

http://www.newsobserver.com/business/story/987293.html

As Talks Drag, American Axle Strike Enters Third Month  

 Although the two-month-old strike at parts-maker American Axle (AAM) has shut down 30 General Motors plants and idled more than 40,000 GM workers, the United Auto Workers appear unable or unwilling to make use of their leverage to reach a settlement.    

http://labornotes.org/node/1639/print

 

 

 

 

Wednesday February 27, 2008, 8:43 PM

“What was once the model (GM) spin-off is now the highest-cost supplier in North America,” Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor said Wednesday. “It’s sad to see. It’s not a good signal for Michigan once again.” 

In a statement, American Axle Chairman Richard Dauch said the company isn’t competitive at its current wage-and-benefit level.

The total cost of wages and benefits is more than $70 an hour, Dauch says, while competitors such as Dana Corp. are paying $20 to $30 an hour in total wages and benefits. American Axle did post a profit of $37 million last year, but the earnings were an anemic 1 percent of sales.

In its 2007 annual report filed with the Securities and Exchange Commission Feb. 21, American Axle said it’s working to diversify its products beyond truck axles. But the company said its ability to compete for new business “may be adversely impacted” if it is unsuccessful in cutting labor costs in a new UAW contract.   http://www.mlive.com/business/index.ssf/2008/02/strike_at_american_axle_not_a.html

GM: Strikes will cost it $2B pretax in 2Q

 

 

 

With this dysfunctional history why should the Detroit 3 and UAW be trusted with $34 Billion in taxpayor funds? How can anyone be surprised that these Companies are Bankrupt!
DETROIT — General Motors’ (GM) stock fell almost 5% Friday after the company reported that strikes at some of its own plants and parts supplier American Axle (AXL) will cost the automaker about $2 billion before taxes in the second quarter. GM also expects to produce 230,000 fewer vehicles during the quarter due to the nearly three-month American Axle strike, which crippled its production of large sport-utility vehicles and pickups. The other strikes will cost it 33,000 vehicles. “We anticipate only a portion of this lost production will be recovered, due to the current economic environment in the United States and to the market shift away from the types of vehicles that were impacted by the action at American Axle,” GM said in a filing with the U.S. Securities and Exchange Commission. GM’s shares fell 83 cents to close at $17.60, after touching $17.38 earlier in the session, their lowest level in nearly 26 years. The last time GM traded below $17.46 was Oct. 6, 1982, when it was at $17.32, according to the Center for Research in Security Prices at the University of Chicago.     http://www.usatoday.com/money/autos/2008-05-23-gm-strikes-cost_N.htm

 

Strike at American Axle ‘not a good signal’

by Rick Haglund | Press News Service

 

According to GM’s website, some 3,300 hourly workers were employed at the plant at the end of April 2007.

ANOTHER STRIKE LOOMS

GM also faces another possible strike by a UAW local unit at 10 a.m. ET Friday if the company and local leaders at a Warren, Michigan, transmission plant cannot reach agreement. http://www.reuters.com/article/ousiv/idUSN1744639620080418

American Axle strike shuts GM truck plant

Posted by Associated Press February 28, 2008 17:44PM

American Axle strike shuts GM truck plant

Posted by Associated Press February 28, 2008 17:44PM

Categories: Breaking News, Business

DETROIT — General Motors Corp. says it has temporarily shut down a Pontiac pickup truck plant because of a strike at a parts supplier.

GM spokesman Tom Wickham says the Pontiac Assembly Center stopped making trucks when the first shift ended Thursday afternoon. He would not speculate on when the factory might reopen.

The plant employs about 2,500 hourly and salaried workers who make the Chevrolet Silverado and GMC Sierra pickup trucks. Other plants that make the trucks are still open.

http://blog.mlive.com/kzgazette/2008/02/american_axle_strike_shuts_gm.html

Hummer H2 plant to shut down because of American Axle strike

Mar 3, 2008 at 5:37 PM EST

 

 

ST. JOSEPH CO. — The Hummer H2 plant in St. Joseph County will shut down production sometime Tuesday, meaning 400 local workers will be temporarily off the job.

 

 

Employees leaving the plant Monday afternoon were preparing themselves for the long haul.

“We might be laid off a long time,” said Victor Miramontes, who works at the plant. “Some people [are] talking until September.”

“We all get affected by it,” said Clarence Bibbs, a non-union employee. “We’re going to lose production, and we’ll just find other things to do.”

Bibbs blames the American Axle workers for the shutdown.

“There’s an alternative solution, rather than going on strike,” Bibbs said. “Nobody wins when you go on strike.”  http://www.wsbt.com/news/local/16190792.html

American Axle strike causes GM to shut Toledo plant

2nd April 2008
By Staff Writer

General Motors has shut down its Ohio-based Toledo plant, which will be the 30th plant the company has closed following a strike at American Axle & Manufacturing, an automotive parts provider, reported Bloomberg. This is reportedly the second time the company has shut the Toledo plant, which employs around 1,663 people, in a matter of four weeks.

According to General Motors’s (GM’s) website, the 30 plants that have been affected employ a total of 43,911 people, which is almost half of the carmaker’s North American manufacturing workforce.                         http://www.automotive-business-review.com/article_news.asp?guid=BFDF4A64-95DC-4960-AB75-B1536CCAA345

 

 

 

GM has already been forced to at least partly idle about 30 North American plants because of parts shortages due to the UAW’s more than seven-week strike at American Axle.

 

http://www.autoobserver.com/2007/10/uaw-puts-chrysler-on-strike-notice.html

Warren Buffett on Detroit 3 – New Business Model Needed

OMAHA, Neb. – Billionaire investor Warren Buffett says U.S. automakers need a new business model to better compete, whether it takes bankruptcy or a government bailout to achieve.

Buffett also says he would never serve as U.S. Treasury Secretary. The Berkshire Hathaway Inc. CEO is a member of President-elect Obama’s Transition Economic Advisory Board.

Buffett says any automaker bailout package should include a business solution, and be negotiated by the president, not Congress. Buffett spoke to Fox Business News in an interview scheduled to air Friday afternoon.

Buffett says the government should insist top executives at Ford Motor Co., General Motors Corp. and Chrysler LLC invest a significant percentage of their own net worths in the Detroit-based companies, ensuring both executives and taxpayers would share in any profits or losses.

http://news.yahoo.com/s/ap/buffett_economy

Democrat Liberals Win – Detroit/UAW loses Another Round

In Big Win For Liberals, Waxman Ousts Dingell As Energy And Commerce Chair

By Greg Sargent and Eric Kleefeld – November 20, 2008, 11:22AM

This is big, big, big. In a victory for the Democratic left, Rep. Henry Waxman has just successfully ousted Rep. John Dingell from his longtime perch as head of the Energy and Commerce Committee.

Speaker Nancy Pelosi’s office confirms to us the vote count in the Democratic Caucus moments ago: Waxman 137 votes, Dingell 122 votes.

The defeat of Dingell is a major victory for environmentalists, removing a key obstacle to real energy reform just as a Democrat with climate change high on his agenda takes the Presidency.

Dingell, who first entered the House way back when Eisenhower was president, had been the head Democrat on this committee ever since 1981. But many of the more liberal members over the years came to view him as too friendly to Michigan’s auto industry and hostile to environmentalists — especially on issues like climate change and carbon limits.

It also shakes up Congress’ seniority system and is yet another sign that the political momentum is squarely in the camp of aggressive Dems. Waxman played a lead role in staking out a far more aggressive stance towards the Bush administration than many other more cautious Dems would take.

Waxman used his House Oversight chairmanship to grill the administration over its scandals and incompetence, making him a hero to many Democrats and a viable candidate for change over Dingell.

Now his victory stands as a harbinger of just how much change is coming.

http://tpmelectioncentral.talkingpointsmemo.com/2008/11/in_big_win_for_liberals_waxman.php

Waxman’s Ascent Could Foreshadow Good Relations Between President And House

By Greg Sargent – November 20, 2008, 1:26PM

Here’s another wrinkle to consider in the wake of Henry Waxman’s stunning ascent to the chairmanship of the Energy and Commerce Committee.

Congressional insiders point out that Barack Obama, in a little-noticed move a few days ago, appointed as the top White House liason to Congress one Philip Schiliro, who has spent many of his past 25 years on the Hill working for (you guessed it) Waxman.

In the wake of Waxman’s victory, this is significant. It means Waxman will be closer to the center of the action and will have a direct line into the White House. Congressional insiders also point out that House Speaker Nancy Pelosi is an ally of Waxman — and hence, of Obama’s liason to Congress.

Also, as Harold Meyerson points out, Waxman is perhaps the House’s leading legislator on three key issues prioritized by Obama: Universal health care, global warming, and the need for strengthened consumer protections.

All of this presages better relations between the Dem administration and the House than the last Democratic President enjoyed, even while Congress was controlled by Dems. This isn’t a terribly surprising prediction, but it’s another sign that Obama is extremely well positioned to make big things happen rather quickly once he takes power.

http://tpmelectioncentral.talkingpointsmemo.com/2008/11/waxmans_ascent_could_foreshado.php

READ THE ORIGINAL POST ON THIS STORY HERE – LEARN THE UNBIASED STORY OF REPRESENTATIVE DINGELL’S SERVICE TO AMERICA AND HIS TRUE RECORD ON THE ENVIRONMENT AND CIVIL RIGHTS

https://mcauleysworld.wordpress.com/2008/11/07/obama-granholm-pelosi-waxman-dingell-the-death-of-american-automobile-manufacturing/

Why We Shouldn’t Bailout The Detroit 3 / $375,000 Per Employee Bailout

America’s Two Auto Industries – Why Bailout The Old – The New Is Healthy

Government Aid to GM, Ford, Chrysler Could Preserve Old Way of Building and Selling Cars 

Last Friday, November 7, 2008, GM announced that unless its financial performance improves, there is a substantial risk of the company collapsing by the middle of next year. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

Discussions abound about the current “credit freeze”, economic turndown, etc ….. a discussion of current economic trends is misplaced …. a broader historical perspective is needed. A perspective that looks ahead and not just back at GM’s and the rest of the Detroit 3’s  historical importance to the Country.

I believe the term is “throwing good money after bad”.

The value of GM did not suddenly decline. In 2007 GM lost 38.7 Billion Dollars. It has been a five year slide for GM stock from $60 a share to today’s $3.00 and change per share.  http://meganmcardle.theatlantic.com/archives/2008/02/gm_loses_big.php  Also see: http://money.cnn.com/2008/06/24/markets/thebuzz/index.htm?eref=aol

GM’s solution, “reduce costs by offering buyouts to more of its union employees. It’s astonishing how lavish these buyout packages can be, and yet still save the company money–early retirement plus $45,000 is apparently cheaper than keeping them on the line. It’s a sign of something deeply out of whack in the labor market when companies are consistently this desperate to shed workers–how can the UAW swing enough clout to keep the automakers tottering in and out of unprofitability?” http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened            http://money.cnn.com/2005/11/25/news/gm_possibilities/index.htm

Critics say leaders over the years at Ford Motor Co., General Motors Corp. and what is now Chrysler LLC were slow to take on unions, failed to invest enough in new products, ceded the car market to the Japanese and were ill-prepared for the inevitable rise in gas prices that would make their trucks and SUVs obsolete.                http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened

“There’s been 30 years of denial,” said Noel Tichy, a University of Michigan business professor and author who ran General Electric Co.’s leadership program from 1985-87 and once worked as a consultant for Ford. “They did not make themselves competitive. They didn’t deal with the union issues, the cost structures long ago, everything that makes a successful company.”    http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened

Whatever the reasons, the Detroit Three are closer to collapse than ever, and likely won’t make it without billions in government loans. http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened

On Friday, GM posted a $2.5 billion third-quarter loss and ominously said it could run out of money before the end of the year. The company spent $6.9 billion more than it took in for the quarter and reported that it had $16.2 billion in cash available at the end of September. http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened

Ford reported a $129 million loss but said it burned up $7.7 billion in cash for the period. It had $18.9 billion on hand as of Sept. 30. Its chief financial officer says he’s confident Ford will make it through 2009, but that’s because the company took out a huge loan last year. http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened

Industry analysts believe Chrysler, now a private company that does not have to open its books, is as bad off as GM as U.S. sales continue to plummet because of tight credit and lack of consumer confidence due to the economy. http://news.yahoo.com/s/ap/20081109/ap_on_bi_ge/autos_what_happened

The Detroit 3 failed to challange the Union, the companies say the UAW drove up their labor costs to $30 per hour more than Japanese companies paid their workers. When the Detroit 3 have pushed for change the Union has simply called for strikes, strikes which cost the companies 10’s of billions in lost profits. The last strikes came just this past summer, in the midst of the current economic turmoil.

America has two auto industries. The “Old Auto Industry” the one represented by GM, Ford and Chrysler is Midwestern, unionized, burdened with massive obligations to retirees, and shackled to marketing and product strategies that have roots reaching back to the early 1900s. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The other American auto industry, the “New Auto Industry” is largely Southern and non-union, owes relatively little to the few retirees it has, and enjoys a variety of advantages because its Japanese, European and Korean owners launched operations in this country relatively recently. Their factories are newer, their brand images and marketing strategies are more coherent — Toyota uses three brands in the U.S. to GM’s eight — and they have cars designed for the competitive global market that exists today. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box Despite the economic turmoil, they are all profitable.   

The New Industry has controlled costs, developed superior products and marketing. In fact the “New Industry”can’t produce some vehicles (Toyota Prius) fast enough to meet consumer demand.

The Old American auto industry is represented by the “Big Three” of Detroit. The “Detroit Three” employ approximately 200,000 people.   http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box 

The New American Auto industry employs approximately 113,000 people, this is according to a recent study by the Center for Automotive Research.  http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

This bailout debate is strictly about the Old American Auto Industry.

At present, the “Detroit 3” are talking about a preliminary bailout number of an additional $50 Billion dollars. This would bring the total to $75 Billion Dollars for the “Old Auto Industry”.  

The original $25 Billion has already been approved but is currently tied up in the Energy Committee of Congress. http://ca.news.yahoo.com/s/afp/081110/business/stocks_us_auto_company_gm 

A $75 Billion dollar bailout for the “Detroit 3”. $75 Billion Dollars!

$75 Billion for an industry that has 200,000 direct employees?  

That comes out to $375,000 per direct employee. I kid you not, $375,000 per direct employee.

You try the math, $75,000,000,000 divided by 200,000. ($750,000 / 2 = $375,000).

You’ve got to be kidding me. 

It just isn’t worth the gamble. Over the last 30 years the Detroit 3 has failed to demonstrate it can complete globally. How will throwing more money at their problem help. Throwing money at the Detroit 3 won’t solve their problems and they seem incapable of solving them on their own.

At Ford Motor Co. they called it “Blue,” a team set up around the year 2000 to design an array of small, fuel-efficient cars to compete with the Japanese. It didn’t get far because no one could figure out how to make money on low-priced compacts with Ford’s high labor costs. The same thing happened at GM & Chrysler. The Detroit 3 concentrated on trucks and SUV’s, markets that the New Auto Industry nearly conceeded, because focusing on that market (SUVs & Trucks) was just too short sighted for ongoing business success.

Now the Government is considering buying the Old American Auto Industry. That is essentially what a bailout would mean. The Government buying the Detroit 3.

“We are lowering our target on GM equity to zero dollars,” the Deutsche Bank report said. “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” it said. “While we believe that GM’s secured creditors may get a par recovery, unsecured creditors may get very low recovery. Equity shareholders are unlikely to get anything.” http://ca.news.yahoo.com/s/afp/081110/business/stocks_us_auto_company_gm

 

Duetsche Bank’s assessment, the bailout isn’t likely to work. Duetsche bank noted, “even if there is a government bailout of the auto giant, shareholders would not benefit.” http://ca.news.yahoo.com/s/afp/081110/business/stocks_us_auto_company_gm

The US Government should not be in the business of buying private businesses, especially not businesses that will still be bankrupt after a $75 Billion cash investment at taxpayer expense. 

Throwing good money after bad? Absolutely!

In a Capitalist economy, poorly run companies that can’t control costs, successfully plan future product or get desired products to market in a timely manner, fail. Simple enough, bad companies fail. They are not rewarded for inefficency. Successful companies are rewarded. 

The current proposal to bailout 1/2 of the US Auto Industry does so at the expense of the other successful half and at tremendous costs to the American taxpayer.   

Further bailouts are a bad idea. Its time to let the chips fall where they may.

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