Ford posts another quarterly profit as sales climb

DEARBORN, Mich. — Ford Motor Co. posted a strong second-quarter profit Friday but trimmed its U.S. sales forecast and predicted weaker results in the second half as the economy slowly recovers.

The automaker surprised Wall Street, making $2.6 billion in the quarter as it continued to grab sales from rivals. Ford’s U.S. sales rose 28 percent in the first six months of this year. That’s almost double the pace of industrywide sales.

It was Ford’s fifth straight quarterly profit, and the No. 2 U.S. automaker predicted a strong 2010 and even better 2011. But it said it will make less money in the second half of this year because of seasonal plant shutdowns, costs for new product launches and rising prices for raw materials like aluminum.

The automaker said U.S. sales, which hit a 30-year low in 2009, remain weak, with many shoppers not yet confident enough about the economy to buy new cars. Ford cut its forecast for total U.S. auto sales to a range of 11.5 million to 12 million. The company had predicted sales of 11.5 million to 12.5 million cars and trucks. Ford held its third-quarter production forecast steady at 1.27 million cars and trucks worldwide.

Ford President and CEO Alan Mulally said the company is making money in the challenging environment because of strong new products and a leaner, global structure in which more vehicles around the world share parts.

READ THE REST OF THE ARTICLE HERE: http://www.forbes.com/feeds/ap/2010/07/23/general-specialized-consumer-services-us-earns-ford_7792381.html?boxes=marketschannelwires

Stop The Auto Industry Bailout – Pay Offs To The “Detroit 3” At Expense of Taxpayers

They are calling this bailout the “Auto Industry Bailout” to mislead you. The “bailout” is targeting the “Detroit 3” and won’t help any of the other “American” Auto Companies. The Wall Street Journal refers to the “Detroit 3” as the “Old Auto Industry”.                                                                                                            http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The “Old Auto Industry”, GM, Ford & Chrysler currently have a “market value” of about $9.2 Billion Dollars. They have already been given 25 Billion Dollars in “bailouts” to “re-tool” to make more “Green Agenda Friendly” vehilces. The $25 Billion is currently tied up in the Energy Committee in Congress. That “bailout” alone is worth 2 1/2 times the current market value of the combined companies. The “New American Auto” industry is operating at a profit, pays its employees as much as or more than the “Detroit 3” and needs no “bailout” to produce autos that obtain top gas mileage and fit the “green agenda” without Government subsidy. By the year 2010, the “New American Auto Industry” will employee more individuals than the “Old Detroit 3” even if the “3” are given additional  bailouts ……. The “Detroit 3′ produces 1/2 of 1% of our Gross National Product, so does the “New Auto Industry” – combined they account for just over 1% of the GNP. Gone are the days of the 1950’s when the “Auto Industry” accounted for 15% of the US economy. ………….  

The Government may want to consider buying the ‘Detroit 3″ for $10 Billion and then giving the Companies (minus existing UAW, Executives or Suppliers contracts) to Toyota with an extra $10 Billion in cash and have Toyota take over the management of the “Detroit 3”. By doing so the Government would put in place a Management Team that has a demonstrable track record, a proven knoweldge of the 21st century Auto Industry, has increased its marketshare for 25 years and has increased its annual profit growth for an over a decade, and has the respect of consumers the world over. While doing all this the Government would also save $5 Billion off the original “Bailout” money (authorized just last month). I’m only half kidding with this suggestion ….. READ ON  

Millions In Auto Bonuses While Singin The Bailout Blues

Secondly, to imply that GM, Ford & Chrysler LLC, are the “American” Auto Industry is disingenous. With global investing GM, Ford & Chrysler are no more American than Honda, Toyota or Hundai. Any American can invest in the ”New American Auto” Industry as the Wall Street Journal calls it – but Americans cannot invest in Chrysler LLC – it is a privately owned company and no one knows who actually “owns” Chrysler LLC because Cerebus Capital Management’s ownership is a closely guarded secret. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The largest investors in GM and Ford are Capital Management firms, hedge funds and Mutual Funds. There is no way to determine whether the individuals who have invested in those firms are “American” or from “Communist China”. Communist China controls a significant interests in many of the remaining “American” banks and investment firms.                                                             http://www.marketwatch.com/news/story/china-invests-3-bln-blackstone/story.aspx?guid={C8B110EC-2538-4461-97C8-0FD7F1CAEF15}&dist=hplatest            http://english.pravda.ru/business/103399-Citigroup-0                                            http://forbes.ccbn.com/conferencedetail.asp?client=forbes&event=1988907

Why do writers insist on calling these companies “American”. We don’t know who owns the stock or who the investors are. As for GM and Ford, either could be bought by a foreign corporation tomorrow the same way Chrysler was purchased, first by Daimler then by Cerebus. 

CHRYSLER LLC – CEREBUS Capital Management

Chrysler is owned by a private equity company – CEREBUS CAPITAL MANAGEMENT – Cerebus is named after the mythical three headed dog that guards the gates of hell  http://www.hoovers.com/cerberus-capital-management/–ID__112328–/free-co-factsheet.xhtml?cm_ven=PAID&cm_cat=INK&cm_pla=CO1&cm_ite=cerberus-capital-management )

Cerebus is a private capital investment firm that owns shares in companies all over the world. Cerebus was formed in 1992. It has its own bank, a Japanese Bank not an “American” bank, named Aozora.

Cerebus’ Chairman is none other than former Vice-President Dan Quayle. http://www.vicepresidentdanquayle.com/biography.html

But who owns Cerebus – no one knows – it is a “private” and “unregulated” company. “It has come to this. A firm that made its name, and its fortune, feeding off companies in their death throes is demanding a government bailout.” http://www.cbc.ca/money/story/2008/11/07/f-pittis-economy.html 

No one knows if Cerebus is anymore of an American Company than Daimler was or the China Investmant bank is.          http://www.associatedcontent.com/article/244378/cerberus_buys_chrysler.html                 http://en.wikipedia.org/wiki/China_Investment_Bank                                             http://en.wikipedia.org/wiki/China_Construction_Bank                                             http://swfinstitute.org/fund/cic.php                                                      http://www.skadden.com/index.cfm?contentID=47&practiceID=33

The US government can’t own shares in Chrysler LLC and the Cerebus Investors have extremely limited liability for any bailout money we put in their pockets, “Chrysler is 81% owned by Cerebus Capital Management and 19% by Daimler AG. It is not a public company and you cannot buy or sell its stock. (It was a public company until last year when Daimler sold most of Chrysler to Cerebus.) An LLC is a corporate structure that limits the liability of its stockholders, similarly to a corporation.” http://smallbusiness.yahoo.com/r-answers-a-20080114050334AA9ZyJk-k-stock+trade

Cerberus is headquartered in New York City with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Tokyo, Beijing, Osaka and Taipei. http://www.cerberuscapital.com/about_comp_prof.html

Cerebus was described this way, “Cerberus Capital Management is the very real private equity firm — one of the bidders in play for the Chrysler Group — that guards the privacy of its dealings almost as jealously. USA Today takes a look at the firm and reveals a company with a “fierce reputation” and “a combative, take-no-prisoners style.”The list of companies that are either owned by Cerebus or which the company has majority stakes include: Alamo and National rental car, Fila, Blue Bird yellow buses, Rafaella clothing, GMAC, Aegis Mortgage, auto suppliers CTA Acoustics and GDX Automotive, Remington Arms, Bell Canada, Tower Automotive, banks, mortgage companies, and property managers.” When it bought Chrylser, Cerberus instantly doubled its annual revenue, but revenue isn’t the prime concern for private equity firms — return on investment is. The issue is that no one knows how Cerberus would go about increasing return from Chrysler.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/                                                                                            http://www.washingtonpost.com/wp-dyn/content/article/2007/08/14/AR2007081401913.html     http://www.bcwf.bc.ca/documents/s=393/bcw1176303661611/  http://www.forbes.com/business/feeds/afx/2007/05/17/afx3731793.html           http://en.wikipedia.org/wiki/Cerberus_Capital_Management   http://iht.com/articles/ap/2007/03/29/business/NA-FIN-COM-US-Tower-Automotive-Bankruptcy.php                                                                                      http://www.cerberuscapital.com/

Now we know how they plan on increasing the return – a taxpayer subsidized bailout. “The UAW and the Canadian Auto Workers have publicly opposed the sale of Chrysler “to Cerebus or any other private equity group.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/
In 1984 Chrysler employed approximately 80,000 workers. (1984-09-01, Chrysler Corp. completed its 4-year employee stock ownership plan by distributing 1,661,691 shares of common stock to more than 80,000 employees, including 63,000 members of the United Auto Workers union.) http://resources.bnet.com/topic/chrysler+llc+and+stock.html
In October 2008 it was estimated that Chrysler/Dodge/Jeep combined employed 49,000.        http://search.yahoo.com/search;_ylt=Ak0_ss1oGMILRC6Sai7xc3KmN3wV?p=Chrysler+LLC+Employees+2008&fr=att-portal&toggle=1&cop=&ei=UTF-8
http://www.sullcrom.com/offices/detail.aspx?office=3                                     http://www.chinadaily.com.cn/bizchina/2008-07/17/content_6854442.htm                         http://www.ml.com/index.asp?id=7695_7696_8149_8688_8558_6274
Chrysler is only a very small piece of the Cerebus pie. Why should the American taxpayers “bailout” a huge, private, mulitnational firm with hundreds of Billions of dollars in assests and dozens of companies under its control?
Cerebus would like to sell Chrysler, but Chrysler is so dysfunctional Cerebus cannot find a buyer.  If Chrysler is a bad bet for Daimler and Cerebus, it is a bad bet for the US taxpayer.
General Motors Corporation
For those who argue GM is the victim of a sudden economic downturn, let me remind you that GM’s largest individual shareholder at the time. Kirk Kerkorian, was reported to have said this in January 2006. “General Motors Corp must cut its dividend, executive salaries and brand structure if it hopes to return to profitability”. Jerry York, an adviser to investor Kirk Kerkorian’s Tracinda Corp, said GM is currently burning through 24 mln usd per day, Agence France-Presse reported. He said the automaker must change its mindset to operate in ‘crisis mode’ and recognize the challenges it faces in the coming months. But unlike a number of analysts who have warned that GM is at risk of bankruptcy, York expressed confidence in the automaker’s ability to create shareholder value even after its shares fell more than 50 pct in the past year.
Lets see; near bankruptcy, lost 50% of stock value in the last year, “must act in crisis mode”, and this situation wasn’t new in January 2006, GM had been facing the same issues for at least 8 years running. In November 2006 Kerkorian sold his GM stock, see below.  
As to General Motors, which is in business with Cerebus as joint owners of GMAC – what are they doing to improve their economic performance – stripping out their valuable subsidiaries and setting them up as private companies, “GMAC, the money-losing finance company, sold a reinsurance business to Maiden Holdings Ltd and plans to sell two insurance units to the Bermuda-based company, to bolster capital and add liquidity. Private equity firm Cerberus Capital Management LP owns 51 percent of Detroit-based GMAC, while General Motors Corp owns 49 percent.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who is running “Maiden Holdings” – former GMAC executives. The same Executives who led to these types of problems, “GMAC is shedding profitable assets after suffering $7.2 billion of losses in the seven quarters ended June 30. The lender has been hurt by soaring credit losses at its Residential Capital LLC mortgage unit and by write-down of leases on sport-utility vehicles that drivers no longer want. GMAC’s credit ratings have fallen deep into junk status.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who owns GM? Just two years ago Renault & Nissan offerred to buy a “significant minority interest in the carmaker. http://www.msnbc.msn.com/id/13630565/ Kurt Kerkorian, the Billionare American Investor, who owned 9.9% of GM through his Tracinda Corporation publicly favored the partnership. GM would not consumate the deal. In November 2006 Kerkorian announced he would sell 14 Million shares in GM, in a “private transaction”, at $33 per share. Later that month, Kerkorian “dumped” his remaining GM shares at $28.75 per share.
It was reported that Bank of America purchased the stock. It was unknown if Bank of America retained the shares (9.9% of GM) or re-sold them. Morgan Stanley owned 5% of GM in 2006. Morgan Stanley and Bank of America were, in turn, partially owned by the China Investment bank.  http://www.thestreet.com/stocks/automakers/10268781.html 
Three months prior to Kerkorian dumping his GM stock in November 2006, two other “Investment Firms” dumped GM stock in August 2006. The news reports stated, ”Two Major Investors Sell Blocks of GM Shares”, “California-based investment firms that rank as the second-and third-largest institutional investors in General Motors Corp. have sold big blocks of the automaker’s stock, according to regulatory filings. Capital Research & Management Co. of Los Angeles, GM’s second-largest investor, sold 19.2 million shares, or 24% of its holdings in the company, according to second-quarter reports filed this week with the Securities and Exchange Commission. The company’s third-largest investor, Brandes Investment  Partners of San Diego, sold 2.4 million shares, or 4% of its holdings. Neither company would comment, saying they do not discuss their investments.” http://articles.latimes.com/2006/aug/17/business/fi-gmstake17
These firms also guard the identity of those who control the money they are investing. This article went on to note that, ”Credit Suisse bought 11.5 million shares to become the sixth-largest investor in GM” at that time.  Credit Suisse is a Swiss Bank/Holding Company.    http://articles.latimes.com/2006/aug/17/business/fi-gmstake17   
The point is, there is no way to tell who “owns” GM. Many of the shares are “held” by Banks, Investment Firms, Hedge Funds and Capital Management firms, but “who” owns the money invested by those firms is unknown. Investors from all over the globe are free to deposit their money with these firms.
If GM is a bad bet for Kirk Kerkorian and the International Investment Community, it is a bad bet for the American taxpayer. 
  
GM, the largest of the “Detroit 3″ may employ as many as 123,000 or as few as 74,000 at present.  Analyst state GM needs to downsize by half. (Retaining 40,000 to 60,000 workers). Optomistic analysts report GM has already reduced its headcount to 74,000 after announcing 4 more plant closing and the elimination of an additional 10,000 workers in June 2008.
These cuts follow 30,000 job cuts in 2005, http://money.cnn.com/2005/11/21/news/fortune500/gm_cuts/
34,000 jobs in 2006,
and 30,000 more in 2007. In February 2008, after posting a $38 Billion Loss, Business Net noted the 2007 job cuts and stated, “After cutting more than 30,000 employees in the last round of restructuring, GM is now offering buy-outs to all 74,000 staff.”
During this same time period, “foreign automakers have built or announced plans to build five U.S. assembly plants, he said. In 2007, foreign auto companies employed 113,000 people in the U.S., a number McAlinden projects will rise to 152,000 by 2011.”   http://www.msnbc.msn.com/id/24947044
International Financial analysts have stated that GM’s future, even given a “bailout” looks bleak,  ”An analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit. “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.” http://news.yahoo.com/s/afp/20081110/bs_afp/stocksusautocompanygm
Ford Motor Company
“Financier Kirk Kerkorian is pulling out of the stake he took in Ford Motor Co. just six months ago, selling 7.3 million shares at a fraction of his purchase price.” “Kerkorian announced in April that he had bought 100 million shares for an average price of $6.91. He then announced a tender offer under which he paid $8.50 a share for an additional 20 million shares. In addition he bought another 22.3 million shares between late April and mid-June at an average price of $6.54 a share, giving his total investment an average price of just over $7 a share.” “I don’t know if Ford’s North American operations are even going to profitable by 2010,” said Kevin Tynan, auto analyst with Argus Research.

Kerkorian sold his shares for a little more than $2 a piece, losing almost $5 a share and taking a Billion Dollar plus loss. If Kerkorian was willing to take a Billion Dollar loss to get rid of his Ford shares, why is Ford a good bet for American taxpayers?

Art Hogan, chief investment strategist at Jefferies & Co., said that Kerkorian signalling that he wants out of the auto industry is yet another nail in the industry’s prospects in the eyes of investors.”Do you need a good excuse to pull out of Ford? What you need is an excuse for getting in in the first place,” said Hogan. “It’s been in demise for a decade.” http://money.cnn.com/2008/10/21/news/companies/ford_kerkorian/index.htm?eref=rss_topstories

“GM, Ford stock sell-off contributes to Dow’s drop”, GM lost half of its value — or $2.7 billion — and Ford has lost 60 percent, or $7 billion. [The combined value of the Detroit 3 is estimated at 9.2 Billion, $2.7 Billion for GM, $4.7 Billion for Ford, 1.8 Billion for Chrysler]              http://www.detnews.com/apps/pbcs.dll/article?AID=/20081010/AUTO01/810100386&imw=Y

“Ford to sell $500m in new stock”, In an effort to secure more capital and reduce debt, Ford plans to sell $500m in new stock. Ford will use the cash infusion to buy bonds from Ford Motor Credit, which has been strugling with the slow economy and nation-wide credit crunch. Goldman Sachs is handling the stock sale, and Ford has given no timetable for when the stocks will enter the market. Ford has already exchanged debt for equity to the tune of $927m in the past year. With shares of Ford stock at under $5 per share right now, anybody can own a share of the Blue Oval for the price of a value meal.” http://www.autoblog.com/2008/08/15/ford-to-sell-500m-in-new-stock/  

Unfortunately, there were no takers, the International Investment Community is just not interested.  

In September Ford announced plans to close nine plants by 2008 and another seven plants after that, more than half of its U.S. hourly employees recently agreed to take one of the various packages to leave the company in the coming months.

PLANT CLOSINGS & LAYOFFS –

The New York Times reported, “Highly Rated Auto Plants Set to Close”, Some of the most productive automobile factories, as rated by an influential study released Thursday, are closing down or losing large numbers of jobs in the motor industry’s upheaval. “Among the factories scheduled to close are a General Motors minivan plant in Doraville, Ga., and the Ford Motor Company’s midsize pickup truck plant in St. Paul, both of which ranked first in their segments in this year’s Harbour Report on automotive productivity. The top-rated full-size pickup plant, a Ford factory in Norfolk, Va., closed a year ago, showing that even the best-run plants are not immune to cuts. Two of the top three large S.U.V. plants are closing, as is the second-ranked midsize S.U.V. plant. The plant that ranked fourth over all, where Chrysler builds compact cars and crossovers in Belvidere, Ill., recently lost one of its three shifts. G.M.’s plant in Orion Township, Mich., ranked last in the midsize-car segment, taking 65 percent longer to build each vehicle than the top performer, while its plant in Moraine, Ohio, ranked second in midsize S.U.V.’s. But this week G.M. said it would add a third shift in Orion and close the Moraine factory.” http://www.nytimes.com/2008/06/06/business/06auto.html

Plant closings are negotiated with the UAW.

SINGING THE BAILOUT BLUES – BONUS CHECK IN HAND

Ford Motor Company Happy With Profit                                                                Australian News.Net
Friday 25th April, 2008                                                                                      
The Ford Motor Company in the US has posted a US$100 million profit for the period from January to April. Most companies reported losses for the first quarter of 2008 due to the economic slump and the subprime mortgage crisis, but Ford has attributed its success to its job reduction scheme in North America and triple earnings in Europe. http://www.australiannews.net/story/352149

 

Chrysler leaders get millions                                                                  Automaker defends payouts amid looming bailout talks                                      As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

http://www.freep.com/article/20081113/BUSINESS01/311130002/1014

HEAD OF FORD DEFENDS BONUS

DEARBORN, Mich., May 4 – Philip Caldwell, the chairman of the Ford Motor Company, today defended the large bonuses paid to auto executives last year …..

AN IMAGE PROBLEM FOR DETROIT

To some people, the decision of General Motors and Ford, the two largest automobile makers, to pay record bonuses to their executives while enjoying protection

http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?s=oldest&&query=BONUSES&field=des&match=exact

More UAW workers bankrupt                                                                                                     Autoworkers who used to thrive on overtime now find it tough to keep up their lifestyles. Oscar Gray achieved the good life during 28 years of hard work at Delphi Corporation — a six-figure income, a nice home in Holly and two vehicles. But as Michigan’s auto industry tanked in recent years, the forklift operator lost huge amounts of overtime pay and gradually sank into financial ruin. Saddled with $469,000 in debt, he declared bankruptcy last month. Gray didn’t lose his job. His health isn’t failing, and he is not going through a divorce — the typical reasons many declare bankruptcy. Gray has been losing overtime. His gross pay was cut $16,000 one year, sliding to $87,000, and may dip again …. Despite the loss of time-and-a-half pay, some Michigan autoworkers continue to live large. Many bankrupt autoworkers own two homes — one is usually up north — which means multiple mortgages. Most have two or more cars and sometimes a boat or snowmobile payment, according to information culled from cases filed by autoworkers in U.S. Bankruptcy Court in the Eastern District of Michigan. http://www.detnews.com/2005/autosinsider/0509/18/A01-318432.htm

At the time this article was written, the median annual income (half above/half below) in Michigan was just under $40,000. The article doesn’t address the increases in Michigan’s personal and property tax rates that now make ownership of two homes extremely difficult ….. not only overtime been cut, but taxes on both income, sales and property taxes on homes have gone up. Michigan’s tax rates are not “consumer” or “business” friendly – rather than address those issues the proposed solution from the Michigan Politicans is for the rest of the Country to come up with a “Public Bailout” ………..   

Ford workers get $733M in profit-sharing checks. http://www.usatoday.com/money/autos/2001-03-07-ford-profit-sharing.htm

DETROIT, Jan 25 (Reuters) – Ford Motor Co., is considering paying bonuses to managers for 2006, despite record losses and massive job cuts. Ford reported a record loss of $12.7 billion for 2006, during which its U.S. sales fell 8 percent and it announced plans to close 16 plants and cut over 40,000 jobs in a bid to restore profitability to its North American operations by 2009. http://www.reuters.com/article/idUSN2528789420070125

Apparently, absenteeism at GM’s North American plants is such a huge issue that the automaker has to offer more than just a paycheck to get workers to show up. The new labor contract the General signed with the UAW includes an incentive for workers that go a full year without missing a day. Their reward is to be entered into a drawing that gives five lucky employees $15,000 to put towards a new GM car or truck. While the idea of offering an incentive for employees to do their job might be a surprise to the rest of us working stiffs, the auto industry’s hourly workforce has one of the highest annual absenteeism rates in the U.S. A 2004 study showed that about 10-percent of workers aren’t manning their positions during any one point in the year – three-times higher than other industries. Naturally, this has a massive effect on labor costs and quality control. http://www.autoblog.com/2007/11/12/do-your-job-at-gm-win-cash-for-a-car

“New” Auto Industry Plants Pay More Than “Detroit 3″ –

UAW Losing Pay Edge: Foreign Automakers’ Bonuses Boost Wages in U.S. Plants as Detroit Car Companies Struggle – February 1, 2007 – The UAW is losing its edge in pay compared with non-unionized U.S. assembly plant workers for foreign companies, even as Detroit automakers aim for deeper benefit cuts to trim their losses. Workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers, according to an economist for the Center for Automotive Research and figures supplied to the Free Press by auto companies. Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000. Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay levels. Comparable wages have long been one way foreign companies fight off UAW organizing efforts. http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_ bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx

DETROIT 3 – CONDITIONS NO WORSE FOR THEM THAN ANY OTHER COMPANY

You may have read this headline, “Citigroup to cut another 53,000 jobs”, “The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The total workforce reductions include thousands of jobs that will be lost when Citigroup completes the sale of Citi Global Services and its German retail banking business.” http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/citigroup_jobs;_ylt=AvI.vrNuJO1e5AeczxKJB2Ks0NUE

Even after making these horrendous cuts, Citi will still employ 1 1/2 times the number of employees currently under contract to all of the “Detroit 3″ combined. After the cuts Citi will employ approximately 325,000 to approximately 200,000 employees at the “Detroit 3″.

The Detroit 3 are not the only companies dealing with the economic slowdown, all business and all employers are forced to deal with this economy.

Throwing good money after bad at the Detroit 3 is no solution. The “Detroit 3″ only accounts for 1/2 of 1 percent of the Gross National Product, slightly less than that produced by the “New Auto Industry Plants”.  The current combined “value” of the entire “Detroit 3″ is something under $10 Billion Dolllars. Prior to the election Congress passed a $25 Billion bailout targeted at “retooling” at the ‘Detroit 3″ and the production of “green agenda autos”. That money is currently tied up in the Energy Committee in Congress. Detroit is now asking for an additional $50 Billion Dollars for a  total of a $75 Billion handout. $75 Billion is 7 1/2 times the current value of three companies combined and is equal to a payment of $375,000 for every employee under contract to the “Detroit 3″.

From a business point of view this proposal makes no sense. If the proposal is passed, it will be the biggest political payoff in the history of the Country

Billions In Auto Bonuses While Singin The Bailout Blues

First – The problem with the Detroit 3 is not new nor is it temporary. It is long term and systemic. It will not be solved by a bailout. Why are the “Detroit 3” looking for a bailout? It is not because the economy is in recession. It is because the Detroit 3 are badly managed and have been badly managed for so many decades that they cannot now obtain financing on the open market. The “international business marketplace” refuses to invest in the ‘Detroit 3″ so they are looking for a “public handout”. A “Bailout” with public funds will provide the UAW and Auto Exces one last chance to divide up one last “Big Payday” before they go under. Only after a bankruptcy and a wholesale change in both Mangement and Union Leadership will the Detroit 3 have a chance to survive.  

Secondly, to imply that GM, Ford & Chrysler LLC, are the “American” Auto Industry is disingenous. With global investing GM, Ford & Chrysler are no more American than Honda, Toyota or Hundai. Any American can invest in the “New American Auto” Industry as  the Wall Street Journal calls it – but Americans cannot invest in Chrysler LLC – it is a privately owned company and no one knows who actually “owns” Chrysler LLC because Cerebus Capital Management’s ownership is a closely guarded secret. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The largest investors in GM and Ford are Capital Management firms, hedge funds and Mutual Funds. There is no way to determine whether the individuals who have invested in those firms are “American” or from “Communist China”. Communist China controls a significant interests in many of the remaining “American” banks and investment firms.                                                             http://www.marketwatch.com/news/story/china-invests-3-bln-blackstone/story.aspx?guid={C8B110EC-2538-4461-97C8-0FD7F1CAEF15}&dist=hplatest            http://english.pravda.ru/business/103399-Citigroup-0                                            http://forbes.ccbn.com/conferencedetail.asp?client=forbes&event=1988907

Why do writers insist on calling these companies “American”. We don’t know who owns the stock or who the investors are. As for GM and Ford, either could be bought by a foreign corporation tomorrow the same way Chrysler was purchased, first by Daimler then by Cerebus. 

CHRYSLER LLC – CEREBUS Capital Management

Chrysler is owned by a private equity company – CEREBUS CAPITAL MANAGEMENT – Cerebus is named after the mythical three three headed dog that guards the gates of hell  http://www.hoovers.com/cerberus-capital-management/–ID__112328–/free-co-factsheet.xhtml?cm_ven=PAID&cm_cat=INK&cm_pla=CO1&cm_ite=cerberus-capital-management )

Cerebus is a private capital investment firm that owns shares in companies all over the world. Cerebus was formed in 1992. It has its own bank, a Japanese Bank not an “American” bank, named Aozora.

Cerebus’ Chairman is none other than former Vice-President Dan Quayle. http://www.vicepresidentdanquayle.com/biography.html

But who owns Cerebus – no one knows – it is a “private” and “unregulated” company. “It has come to this. A firm that made its name, and its fortune, feeding off companies in their death throes is demanding a government bailout.” http://www.cbc.ca/money/story/2008/11/07/f-pittis-economy.html 

No one knows if Cerebus is anymore of an American Company than Daimler was or the China Investmant bank is.          http://www.associatedcontent.com/article/244378/cerberus_buys_chrysler.html                 http://en.wikipedia.org/wiki/China_Investment_Bank                                             http://en.wikipedia.org/wiki/China_Construction_Bank                                             http://swfinstitute.org/fund/cic.php                                                      http://www.skadden.com/index.cfm?contentID=47&practiceID=33

The US government can’t own shares in Chrysler LLC and the Cerebus Investors have extremely limited liability for any bailout money we put in their pockets, “Chrysler is 81% owned by Cerebus Capital Management and 19% by Daimler AG. It is not a public company and you cannot buy or sell its stock. (It was a public company until last year when Daimler sold most of Chrysler to Cerebus.) An LLC is a corporate structure that limits the liability of its stockholders, similarly to a corporation.” http://smallbusiness.yahoo.com/r-answers-a-20080114050334AA9ZyJk-k-stock+trade

Cerberus is headquartered in New York City with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Tokyo, Beijing, Osaka and Taipei. http://www.cerberuscapital.com/about_comp_prof.html

Cerebus was described this way, “Cerberus Capital Management is the very real private equity firm — one of the bidders in play for the Chrysler Group — that guards the privacy of its dealings almost as jealously. USA Today takes a look at the firm and reveals a company with a “fierce reputation” and “a combative, take-no-prisoners style.”The list of companies that are either owned by Cerebus or which the company has majority stakes include: Alamo and National rental car, Fila, Blue Bird yellow buses, Rafaella clothing, GMAC, Aegis Mortgage, auto suppliers CTA Acoustics and GDX Automotive, Remington Arms, Bell Canada, Tower Automotive, banks, mortgage companies, and property managers.” When it bought Chrylser, Cerberus instantly doubled its annual revenue, but revenue isn’t the prime concern for private equity firms — return on investment is. The issue is that no one knows how Cerberus would go about increasing return from Chrysler.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/                                                                                            http://www.washingtonpost.com/wp-dyn/content/article/2007/08/14/AR2007081401913.html     http://www.bcwf.bc.ca/documents/s=393/bcw1176303661611/  http://www.forbes.com/business/feeds/afx/2007/05/17/afx3731793.html           http://en.wikipedia.org/wiki/Cerberus_Capital_Management   http://iht.com/articles/ap/2007/03/29/business/NA-FIN-COM-US-Tower-Automotive-Bankruptcy.php                                                                                      http://www.cerberuscapital.com/

Now we know how they plan on increasing the return – a taxpayer subsidized bailout. “The UAW and the Canadian Auto Workers have publicly opposed the sale of Chrysler “to Cerebus or any other private equity group.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/
In 1984 Chrysler employed approximately 80,000 workers. (1984-09-01, Chrysler Corp. completed its 4-year employee stock ownership plan by distributing 1,661,691 shares of common stock to more than 80,000 employees, including 63,000 members of the United Auto Workers union.) http://resources.bnet.com/topic/chrysler+llc+and+stock.html
In October 2008 it was estimated that Chrysler/Dodge/Jeep combined employed 49,000.        http://search.yahoo.com/search;_ylt=Ak0_ss1oGMILRC6Sai7xc3KmN3wV?p=Chrysler+LLC+Employees+2008&fr=att-portal&toggle=1&cop=&ei=UTF-8
http://www.sullcrom.com/offices/detail.aspx?office=3                                     http://www.chinadaily.com.cn/bizchina/2008-07/17/content_6854442.htm                         http://www.ml.com/index.asp?id=7695_7696_8149_8688_8558_6274
Chrysler is only a very small piece of the Cerebus pie. Why should the American taxpayers “bailout” a huge, private, mulitnational firm with hundreds of Billions of dollars in assests and dozens of companies under its control?
Cerebus would like to sell Chrysler, but Chrysler is so dysfunctional Cerebus cannot find a buyer.  If Chrysler is a bad bet for Daimler and Cerebus, it is a bad bet for the US taxpayer.
General Motors Corporation
For those who argue GM is the victim of a sudden economic downturn, let me remind you that GM’s largest individual shareholder at the time. Kirk Kerkorian, was reported to have said this in January 2006. “General Motors Corp must cut its dividend, executive salaries and brand structure if it hopes to return to profitability”. Jerry York, an adviser to investor Kirk Kerkorian’s Tracinda Corp, said GM is currently burning through 24 mln usd per day, Agence France-Presse reported. He said the automaker must change its mindset to operate in ‘crisis mode’ and recognize the challenges it faces in the coming months. But unlike a number of analysts who have warned that GM is at risk of bankruptcy, York expressed confidence in the automaker’s ability to create shareholder value even after its shares fell more than 50 pct in the past year.
Lets see; near bankruptcy, lost 50% of stock value in the last year, “must act in crisis mode”, and this situation wasn’t new in January 2006, GM had been facing the same issues for at least 8 years running. In November 2006 Kerkorian sold his GM stock, see below.  
As to General Motors, which is in business with Cerebus as joint owners of GMAC – what are they doing to improve their economic performance – stripping out their valuable subsidiaries and setting them up as private companies, “GMAC, the money-losing finance company, sold a reinsurance business to Maiden Holdings Ltd and plans to sell two insurance units to the Bermuda-based company, to bolster capital and add liquidity. Private equity firm Cerberus Capital Management LP owns 51 percent of Detroit-based GMAC, while General Motors Corp owns 49 percent.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who is running “Maiden Holdings” – former GMAC executives. The same Executives who led to these types of problems, “GMAC is shedding profitable assets after suffering $7.2 billion of losses in the seven quarters ended June 30. The lender has been hurt by soaring credit losses at its Residential Capital LLC mortgage unit and by write-down of leases on sport-utility vehicles that drivers no longer want. GMAC’s credit ratings have fallen deep into junk status.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who owns GM? Just two years ago Renault & Nissan offerred to buy a “significant minority interest in the carmaker. http://www.msnbc.msn.com/id/13630565/ Kurt Kerkorian, the Billionare American Investor, who owned 9.9% of GM through his Tracinda Corporation publicly favored the partnership. GM would not consumate the deal. In November 2006 Kerkorian announced he would sell 14 Million shares in GM, in a “private transaction”, at $33 per share. Later that month, Kerkorian “dumped” his remaining GM shares at $28.75 per share.
It was reported that Bank of America purchased the stock. It was unknown if Bank of America retained the shares (9.9% of GM) or re-sold them. Morgan Stanley owned 5% of GM in 2006. Morgan Stanley and Bank of America were, in turn, partially owned by the China Investment bank.  http://www.thestreet.com/stocks/automakers/10268781.html 
Three months prior to Kerkorian dumping his GM stock in November 2006, two other “Investment Firms” dumped GM stock in August 2006. The news reports stated, “Two Major Investors Sell Blocks of GM Shares”, “California-based investment firms that rank as the second-and third-largest institutional investors in General Motors Corp. have sold big blocks of the automaker’s stock, according to regulatory filings. Capital Research & Management Co. of Los Angeles, GM’s second-largest investor, sold 19.2 million shares, or 24% of its holdings in the company, according to second-quarter reports filed this week with the Securities and Exchange Commission. The company’s third-largest investor, Brandes Investment  Partners of San Diego, sold 2.4 million shares, or 4% of its holdings. Neither company would comment, saying they do not discuss their investments.” http://articles.latimes.com/2006/aug/17/business/fi-gmstake17
These firms also guard the identity of those who control the money they are investing. This article went on to note that, “Credit Suisse bought 11.5 million shares to become the sixth-largest investor in GM” at that time.  Credit Suisse is a Swiss Bank/Holding Company.    http://articles.latimes.com/2006/aug/17/business/fi-gmstake17   
The point is, there is no way to tell who “owns” GM. Many of the shares are “held” by Banks, Investment Firms, Hedge Funds and Capital Management firms, but “who” owns the money invested by those firms is unknown. Investors from all over the globe are free to deposit their money with these firms.
If GM is a bad bet for Kirk Kerkorian and the International Investment Community, it is a bad bet for the American taxpayer. 
  
GM, the largest of the “Detroit 3” may employ as many as 123,000 or as few as 74,000 at present.  Analyst state GM needs to downsize by half. (Retaining 40,000 to 60,000 workers). Optomistic analysts report GM has already reduced its headcount to 74,000 after announcing 4 more plant closing and the elimination of an additional 10,000 workers in June 2008.
These cuts follow 30,000 job cuts in 2005, http://money.cnn.com/2005/11/21/news/fortune500/gm_cuts/
34,000 jobs in 2006,
and 30,000 more in 2007. In February 2008, after posting a $38 Billion Loss, Business Net noted the 2007 job cuts and stated, “After cutting more than 30,000 employees in the last round of restructuring, GM is now offering buy-outs to all 74,000 staff.”
During this same time period, “foreign automakers have built or announced plans to build five U.S. assembly plants, he said. In 2007, foreign auto companies employed 113,000 people in the U.S., a number McAlinden projects will rise to 152,000 by 2011.”   http://www.msnbc.msn.com/id/24947044
International Financial analysts have stated that GM’s future, even given a “bailout” looks bleak,  “An analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit. “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.” http://news.yahoo.com/s/afp/20081110/bs_afp/stocksusautocompanygm
Ford Motor Company
“Financier Kirk Kerkorian is pulling out of the stake he took in Ford Motor Co. just six months ago, selling 7.3 million shares at a fraction of his purchase price.” “Kerkorian announced in April that he had bought 100 million shares for an average price of $6.91. He then announced a tender offer under which he paid $8.50 a share for an additional 20 million shares. In addition he bought another 22.3 million shares between late April and mid-June at an average price of $6.54 a share, giving his total investment an average price of just over $7 a share.” “I don’t know if Ford’s North American operations are even going to profitable by 2010,” said Kevin Tynan, auto analyst with Argus Research.

Kerkorian sold his shares for a little more than $2 a piece, losing almost $5 a share and taking a Billion Dollar plus loss. If Kerkorian was willing to take a Billion Dollar loss to get rid of his Ford shares, why is Ford a good bet for American taxpayers?

Art Hogan, chief investment strategist at Jefferies & Co., said that Kerkorian signalling that he wants out of the auto industry is yet another nail in the industry’s prospects in the eyes of investors.”Do you need a good excuse to pull out of Ford? What you need is an excuse for getting in in the first place,” said Hogan. “It’s been in demise for a decade.” http://money.cnn.com/2008/10/21/news/companies/ford_kerkorian/index.htm?eref=rss_topstories

“GM, Ford stock sell-off contributes to Dow’s drop”, GM lost half of its value — or $2.7 billion — and Ford has lost 60 percent, or $7 billion. [The combined value of the Detroit 3 is estimated at 9.2 Billion, $2.7 Billion for GM, $4.7 Billion for Ford, 1.8 Billion for Chrysler]              http://www.detnews.com/apps/pbcs.dll/article?AID=/20081010/AUTO01/810100386&imw=Y

“Ford to sell $500m in new stock”, In an effort to secure more capital and reduce debt, Ford plans to sell $500m in new stock. Ford will use the cash infusion to buy bonds from Ford Motor Credit, which has been strugling with the slow economy and nation-wide credit crunch. Goldman Sachs is handling the stock sale, and Ford has given no timetable for when the stocks will enter the market. Ford has already exchanged debt for equity to the tune of $927m in the past year. With shares of Ford stock at under $5 per share right now, anybody can own a share of the Blue Oval for the price of a value meal.” http://www.autoblog.com/2008/08/15/ford-to-sell-500m-in-new-stock/  

Unfortunately, there were no takers, the International Investment Community is just not interested.  

 

In September Ford announced plans to close nine plants by 2008 and another seven plants after that, more than half of its U.S. hourly employees recently agreed to take one of the various packages to leave the company in the coming months.

PLANT CLOSINGS & LAYOFFS –

The New York Times reported, “Highly Rated Auto Plants Set to Close”, Some of the most productive automobile factories, as rated by an influential study released Thursday, are closing down or losing large numbers of jobs in the motor industry’s upheaval. “Among the factories scheduled to close are a General Motors minivan plant in Doraville, Ga., and the Ford Motor Company’s midsize pickup truck plant in St. Paul, both of which ranked first in their segments in this year’s Harbour Report on automotive productivity. The top-rated full-size pickup plant, a Ford factory in Norfolk, Va., closed a year ago, showing that even the best-run plants are not immune to cuts. Two of the top three large S.U.V. plants are closing, as is the second-ranked midsize S.U.V. plant. The plant that ranked fourth over all, where Chrysler builds compact cars and crossovers in Belvidere, Ill., recently lost one of its three shifts. G.M.’s plant in Orion Township, Mich., ranked last in the midsize-car segment, taking 65 percent longer to build each vehicle than the top performer, while its plant in Moraine, Ohio, ranked second in midsize S.U.V.’s. But this week G.M. said it would add a third shift in Orion and close the Moraine factory.” http://www.nytimes.com/2008/06/06/business/06auto.html

Plant closings are negotiated with the UAW.

SINGING THE BAILOUT BLUES – BONUS CHECK IN HAND

Ford Motor Company Happy With Profit                                                                Australian News.Net
Friday 25th April, 2008                                                                                      
The Ford Motor Company in the US has posted a US$100 million profit for the period from January to April. Most companies reported losses for the first quarter of 2008 due to the economic slump and the subprime mortgage crisis, but Ford has attributed its success to its job reduction scheme in North America and triple earnings in Europe. http://www.australiannews.net/story/352149

Chrysler leaders get millions                                                                  Automaker defends payouts amid looming bailout talks                                      As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

http://www.freep.com/article/20081113/BUSINESS01/311130002/1014

HEAD OF FORD DEFENDS BONUS

DEARBORN, Mich., May 4 – Philip Caldwell, the chairman of the Ford Motor Company, today defended the large bonuses paid to auto executives last year …..

AN IMAGE PROBLEM FOR DETROIT

To some people, the decision of General Motors and Ford, the two largest automobile makers, to pay record bonuses to their executives while enjoying protection

http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?s=oldest&&query=BONUSES&field=des&match=exact

More UAW workers bankrupt                                                                                                     Autoworkers who used to thrive on overtime now find it tough to keep up their lifestyles. Oscar Gray achieved the good life during 28 years of hard work at Delphi Corporation — a six-figure income, a nice home in Holly and two vehicles. But as Michigan’s auto industry tanked in recent years, the forklift operator lost huge amounts of overtime pay and gradually sank into financial ruin. Saddled with $469,000 in debt, he declared bankruptcy last month. Gray didn’t lose his job. His health isn’t failing, and he is not going through a divorce — the typical reasons many declare bankruptcy. Gray has been losing overtime. His gross pay was cut $16,000 one year, sliding to $87,000, and may dip again …. Despite the loss of time-and-a-half pay, some Michigan autoworkers continue to live large. Many bankrupt autoworkers own two homes — one is usually up north — which means multiple mortgages. Most have two or more cars and sometimes a boat or snowmobile payment, according to information culled from cases filed by autoworkers in U.S. Bankruptcy Court in the Eastern District of Michigan. http://www.detnews.com/2005/autosinsider/0509/18/A01-318432.htm

At the time this article was written, the median annual income (half above/half below) in Michigan was just under $40,000. The article doesn’t address the increases in Michigan’s personal and property tax rates that now make ownership of two homes extremely difficult ….. not only overtime been cut, but taxes on both income, sales and property taxes on homes have gone up. Michigan’s tax rates are not “consumer” or “business” friendly – rather than address those issues the proposed solution from the Michigan Politicans is for the rest of the Country to come up with a “Public Bailout” ………..   

Ford workers get $733M in profit-sharing checks. http://www.usatoday.com/money/autos/2001-03-07-ford-profit-sharing.htm

DETROIT, Jan 25 (Reuters) – Ford Motor Co., is considering paying bonuses to managers for 2006, despite record losses and massive job cuts. Ford reported a record loss of $12.7 billion for 2006, during which its U.S. sales fell 8 percent and it announced plans to close 16 plants and cut over 40,000 jobs in a bid to restore profitability to its North American operations by 2009. http://www.reuters.com/article/idUSN2528789420070125

Apparently, absenteeism at GM’s North American plants is such a huge issue that the automaker has to offer more than just a paycheck to get workers to show up. The new labor contract the General signed with the UAW includes an incentive for workers that go a full year without missing a day. Their reward is to be entered into a drawing that gives five lucky employees $15,000 to put towards a new GM car or truck. While the idea of offering an incentive for employees to do their job might be a surprise to the rest of us working stiffs, the auto industry’s hourly workforce has one of the highest annual absenteeism rates in the U.S. A 2004 study showed that about 10-percent of workers aren’t manning their positions during any one point in the year – three-times higher than other industries. Naturally, this has a massive effect on labor costs and quality control. http://www.autoblog.com/2007/11/12/do-your-job-at-gm-win-cash-for-a-car

“New” Auto Industry Plants Pay More Than “Detroit 3” –

UAW Losing Pay Edge: Foreign Automakers’ Bonuses Boost Wages in U.S. Plants as Detroit Car Companies Struggle – February 1, 2007 – The UAW is losing its edge in pay compared with non-unionized U.S. assembly plant workers for foreign companies, even as Detroit automakers aim for deeper benefit cuts to trim their losses. Workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers, according to an economist for the Center for Automotive Research and figures supplied to the Free Press by auto companies. Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000. Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay levels. Comparable wages have long been one way foreign companies fight off UAW organizing efforts. http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_ bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx

DETROIT 3 – CONDITIONS NO WORSE FOR THEM THAN ANY OTHER COMPANY

You may have read this headline, “Citigroup to cut another 53,000 jobs”, “The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The total workforce reductions include thousands of jobs that will be lost when Citigroup completes the sale of Citi Global Services and its German retail banking business.” http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/citigroup_jobs;_ylt=AvI.vrNuJO1e5AeczxKJB2Ks0NUE

Even after making these horrendous cuts, Citi will still employ 1 1/2 times the number of employees currently under contract to all of the “Detroit 3” combined. After the cuts Citi will employ approximately 325,000 to approximately 200,000 employees at the “Detroit 3”.

The Detroit 3 are not the only companies dealing with the economic slowdown, all business and all employers are forced to deal with this economy.

Throwing good money after bad at the Detroit 3 is no solution. The “Detroit 3” only accounts for 1/2 of 1 percent of the Gross National Product, slightly less than that produced by the “New Auto Industry Plants”.  The current combined “value” of the entire “Detroit 3” is something under $10 Billion Dolllars. Prior to the election Congress passed a $25 Billion bailout targeted at “retooling” at the ‘Detroit 3″ and the production of “green agenda autos”. That money is currently tied up in the Energy Committee in Congress. Detroit is now asking for an additional $50 Billion Dollars for a  total of a $75 Billion handout. $75 Billion is 7 1/2 times the current value of three companies combined and is equal to a payment of $375,000 for every employee under contract to the “Detroit 3”.

From a business point of view this proposal makes no sense. If the proposal is passed, it will be the biggest political payoff in the history of the Country.

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.

Obama, Granholm, Pelosi, Waxman, Dingell – The Death of American Automobile Manufacturing

Obama picks Michigan’s Granholm on the Economy – More Smoke & Mirrors

This might be funny, if it were not so sad. It is actually heartbreaking. Michigan will get what it deserves – after 6 years of Granholm – you moved her policies to Washington.

There is nothig to be gained from saying I told you so, but I told you so ……. read  https://mcauleysworld.wordpress.com/2008/09/08/michigans-dem-governor-granholm-appoves-of-obama-tax-policy-matches-her-policies-of-last-6-yrs/

and                                                                               

https://mcauleysworld.wordpress.com/2008/09/28/a-message-for-michigan-obama-on-granholm-the-best-governor-in-the-country/ 

This is simply tragic. Obama hasn’t been sworn in yet, but he is clearly demonstrating his intent to govern from the far left. Woe to Michigan ……….

The economic disaster will certainly worsen as predicted …….. TAX AND SPEND BIG GOVERNMENT HAS NEVER WORKED ANYWHERE AT ANYTIME. The economic turmoil of the Jimmy Carter days may look like “good times” compared to where we appear to be heading …………

Obama to hold meeting with economic advisers today

BY TODD SPANGLER • FREE PRESS WASHINGTON STAFF • November 7, 2008

WASHINGTON — Gov. Jennifer Granholm and former U.S. Rep. David Bonior are to serve on a panel of financial luminaries and corporate experts advising President-elect Barack Obama on the nation’s hard-bitten economy, ensuring Michigan, its troubled auto industry and labor have a seat at the table.   http://www.freep.com/article/20081107/NEWS15/811070378/1/VIDEOS01                                           

                                                      ……………………………………………

If you think either Michigan or the Michigan Auto Industry will have a seat anywhere you are mistaking ……. If the Democrats were going to offer a seat at their table they could have done so years ago ….. Michigan has been sending two Democratic US Senators and a predominantly Democratic Congressional caucus to Washington for years – nothing has changed in that regard.  Remember it was Nancy Pelosi, Democratic Speaker of The House of Representatives, who demoted the “Big Three” to the “Detroit Three”. For those of you that have not caught on yet, the term “Detroit Three” is not only a derogatory insult and dismissive, but it carries far more sinister tones – As the “Detroit Three” the “Big Three” were no longer a “National” issue but became a local Michigan problem.

Pelosi and the liberal Democrats despise the Auto Industry – they want your vote on election day and spit in your face after the votes have been counted. The votes have been counted – its time to shut your eyes again …………. here comes the spit.

As for your seat at the table, watch out when you go to sit down – they are liable to pull the chair away . The talk about a “bailout”, if one takes place, is smoke and mirrors. Another corporate handout with the right hand while the left hand increases business taxes and implements policies that will inhibit US car sales. They take away more than they give ……..

You think not – then read this ……………..

The Los Angles Times

Power struggle may open rift among House Democrats

Rep. Henry Waxman wants to replace Rep. John Dingell as head of the energy and commerce committee, which will take the lead on Obama’s plans on global warming.

Reporting from Washington — Opening a split among congressional Democrats that could affect President-elect Barack Obama’s efforts to curb global warming, a California environmentalist is trying to wrest control of a crucial House committee from its chairman, who is the automobile industry’s strongest ally in fighting stricter antipollution standards.

Rep. Henry A. Waxman (D-Beverly Hills[CA]) has announced that he wants to replace Rep. John D. Dingell (D-[Detroit]Mich.) as chairman of the House Energy and Commerce Committee, which will take the lead on Obama’s signature issues of energy, global warming and healthcare. [Oh, you didn’t think the auto industry was a signature issue did you? Only “National” issues get signature status.]

Over the years, Dingell has given invaluable support to the auto companies’ fights against pollution and fuel economy standards that they considered unrealistic, and Waxman’s challenge to his leadership is the culmination of a decades-long rivalry between the two powerful lawmakers, the panel’s top two Democrats.

The outcome of the fight could affect whether action on Obama’s energy agenda will be tilted toward the interests of Rust Belt industrial Democrats or more aggressive antipollution efforts that California has spearheaded.

It opens divisions among triumphant Democrats just as they come off a landmark election that put Obama in the White House and expanded the party’s majorities in the House and Senate — and it is a window into how power struggles among Democrats may intensify now that there is so much more power to wield. [It is a window into how Liberal Democrats have thwarted economic growth while blaming the Bush Administration].

Dingell, who in the Democratic primaries endorsed the presidential candidacy of Sen. Hillary Rodham Clinton, represents a district near Detroit, and the loss of his position would be seen as a blow to the auto industry at a particularly trying time. Detroit is being battered by declining car sales, high gas prices and an economy in turmoil. In a sign of the political sensitivity of the fight, several auto industry spokesmen declined to comment on the choice between Dingell and Waxman.

House Speaker Nancy Pelosi (D-San Francisco[CA]) is officially neutral in the dispute, but she is known to be sympathetic to Waxman’s positions on the environment and has repeatedly crossed swords with Dingell over the years:

 

* In 2002, Pelosi endorsed an unsuccessful primary challenger to Dingell.

* In 2007, she set up a special panel to address global warming, a move that was seen as a way to circumvent Dingell.

* Last year, she and Waxman fought against a Dingell global warming bill that would have prohibited California and other states from taking tougher action than the federal government to reduce greenhouse gas emissions.

[Officially neutral, who are they kidding?].

Dingell supported that provision because, he said, it was easier for auto companies to comply with a uniform national standard than a patchwork of state laws, and Waxman and Pelosi saw it as a direct shot at California’s landmark law to cut tailpipe emissions. The provision was dropped from a global warming draft bill Dingell circulated this fall.

[Question the scientific validity of Global Warming? See: http://wattsupwiththat.com/2008/09/

Waxman’s feud with Dingell is even longer-running. Throughout the 1980s, as they rose in seniority on the energy and commerce committee, the two battled over clean-air laws, toxic waste regulation and other environmental issues.

As chairman of the House Committee on Oversight and Government Reform, Waxman has been a thorn in the Bush administration’s side with frequent hearings and reports critical of its performance. But now that a Democrat will be in the White House, that oversight role may not be as appealing to Waxman as the chairman of the energy and commerce committee, which has jurisdiction over many issues important to the new administration.

“In large measure, our success as a Democratic caucus will depend on how the commerce committee performs,” Waxman said in a letter to Democrats announcing his plans.

Environmentalists are delighted at the prospect of a Waxman chairmanship.

“It is much more likely we will advance a progressive, forward-looking agenda with a progressive, forward-thinking leader like Waxman than with an old bull who defends Detroit like Dingell,” said Dan Becker, director of the Safe Climate Campaign, an environmental advocacy group.  http://www.latimes.com/news/nationworld/nation/la-na-energy7-2008nov07,0,7068890.story?track=rss  

They couldn’t demonize Dingell anymore than this, even if he were, say, a Republican. So Dingell is now being protrayed as an anti-environmental zealot.  This is no accident. Do you think any Speaker of The House has previously endorsed a Primary challenger over a Representative with 53 years of party senority in Washington. Dingell is the longest serving US Representative currently in Congress. (1955 to date). In the history of the United States only 1 Congressman has served longer. Wait, just a minute, he supports the right to own guns too …. he has just gotta go. http://en.wikipedia.org/wiki/John_Dingell 

As for being anti-environment, consider these comments made on December 20, 2006, “The formidable Democrat from Michigan, now 80, has served 51 years in the House of Representatives — the second-longest of any congressional career in history. During that time, he played a key role in pushing through many of America’s cornerstone environmental laws, including the Wilderness Act, the Endangered Species Act, the Clean Air Act, the Marine Mammal Protection Act, the National Environmental Policy Act, and the original Corporate Average Fuel Economy (CAFE)“. http://www.grist.org/news/maindish/2006/12/20/dingell/  

Considering this track record on environmental issues, what was the bottom line in this article, “That’s why some environmentalists see Dingell as the single biggest roadblock on the path toward meaningful climate policy in the 110th Congress”. 

What? Wasn’t it all Bush’s fault? This article presents a rare opportunity to read about Democratic double dealing. Promises made only to be broken, again. Michigan’s auto industry isn’t playing “second fiddle” any longer, now it is about to lose its only chair in the band.

This writer is not a Dingell supporter, however, this is a political lynching. Dingell has been a loyal, moderate, center-left, Democrat who has obtained the trust and admiration of his electorate like none before him. Now the “new administration” is painting Dingell as representing some ”fringe” element of the Democratic Party.  

If Michigan is lucky, Obama, Granholm, Pelosi and Waxman will send a few of the “windmill factories” your way when they are done. 

READ THE UPDATE HERE:      

https://mcauleysworld.wordpress.com/2008/11/21/democrat-liberals-win-detroituaw-loses-another-round/

Ford announces $129M 3Q loss, burns $7.7B in cash – Ford to cut 2,260 workers after reporting $129 million 3Q loss                                                                                 

By TOM KRISHER and JAMES PRICHARD, AP Business Writers  http://news.yahoo.com/s/ap/20081107/ap_on_bi_ge/earns_ford   

General Motors will release its 2008 3rd Quarter results at 10:30 AM this morning.

“Due to deteriorating market conditions and a dire cash crunch, General Motors CEO Rick Wagoner will be announcing “important changes” during his company’s 3rd quarter earnings report on Friday at 11AM EST The Detroit News obtained an executive level email that foretells the bad news ahead but doesn’t go into specifics ……….” http://www.autoblog.com/2008/11/06/gm-announcing-important-changes-on-friday/         The Friday announcement will likely include a hefty financial loss, too, as evidenced by an earlier announced loss of $2.5 billion by GMAC financial.

GM reports $2.5B 3Q loss, says running out of cash

DETROIT, Mich. – General Motors Corp. says it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009. GM also said it has suspended talks to acquire Chrysler. While it didn’t specifically name the automaker, GM said it was setting aside considerations for a “strategic acquisition.”

The automaker also said its cash burn for the quarter accelerated to $6.9 billion due to a severe U.S. auto sales slump. The company on Friday reported a net loss of $4.45 per share during the quarter, compared with a record-setting loss of $39 billion, or $68.85 per share, a year ago.  GM shares fell 53 cents, or 11 percent, to $4.27 in morning trading. 

A Chrysler LLC sale to GM seems unlikely -Chrysler LLC is privately held, however, Daimler AG holds a 19.9 % stake in the company –                                                   

Oct 23, 2008 – “Today, Daimler AG reported a net loss of euro 351 million for its 19.9 per cent share of Chrysler Holding LLC’s second quarter 2008 results under International Financial Reporting Standards (IFRS). On a U.S. GAAP basis, Daimler AG’s net loss for Chrysler Holding LLC was euro 88 million, of which a euro 76 million net loss is attributable to the automotive business of Chrysler LLC.” [This report allows us to project that Chrysler LLC’s loss in 2nd quarter 2008 (80.1 % stake) would approximate $352 million euro loss or $447 million dollar loss]. http://research.scottrade.com/public/markets/news/news.asp?docKey=100-297u1992-1&section=headlines                                                                    

Michigan Recession Continues to Deepen Reports Comerica Bank’s Michigan Business Activity Index – “September’s advanced figure is the lowest level in 14 years.” [That would make it the lowest since November 1994 – A Democratic Congress and the Clinton Administration – Wasn’t the Clinton Administration all “milk & honey”?].                               http://www.mlive.com/prnewswire/index.ssf?/cgi-bin/stories.pl?ACCT=MI2&STORY=/www/story/11-06-2008/0004920315&EDATE=Nov+6,+2008

Then there is Toyota – Toyota’s Q1 profit drops 39% – Posted Aug 7th 2008 6:58PM – Toyota is not used to seeing its profit margins drop, as the Japanese auto giant has enjoyed increased profit for nine straight years. Expect that run to end this year …. For the year, Toyota has revised its sales forecast from 9.06 million units to an estimated 8.74 million. For the first quarter of the year that ended in June, Toyota has also announced that its operating profit took a 39% plunge from lower sales in both the United States and Europe …. Still, Toyota sales remain fairly strong in this sinking market and a profit is a profit. We’d imagine that this is a problem any one of the Detroit 3 would love to have on its hands. http://www.autoblog.com/tag/toyota+profit/

Obama picks Michigan’s Granholm on the Economy – More Smoke & Mirrors

This might be funny, if it were not so sad. It is actually heartbreaking. Michigan will get what it deserves – after 6 years of Granholm – you moved her policies to Washington.

There is nothig to be gained from saying I told you so, but I told you so ……. read  https://mcauleysworld.wordpress.com/2008/09/08/michigans-dem-governor-granholm-appoves-of-obama-tax-policy-matches-her-policies-of-last-6-yrs/

and                                                                               

https://mcauleysworld.wordpress.com/2008/09/28/a-message-for-michigan-obama-on-granholm-the-best-governor-in-the-country/ 

This is simply tragic. Obama hasn’t been sworn in yet, but he is clearly demonstrating his intent to govern from the far left. Woe to Michigan ……….

The economic disaster will certainly worsen as predicted …….. TAX AND SPEND BIG GOVERNMENT HAS NEVER WORKED ANYWHERE AT ANYTIME. The economic turmoil of the Jimmy Carter days may look like “good times” compared to where we appear to be heading …………

Obama to hold meeting with economic advisers today

BY TODD SPANGLER • FREE PRESS WASHINGTON STAFF • November 7, 2008

WASHINGTON — Gov. Jennifer Granholm and former U.S. Rep. David Bonior are to serve on a panel of financial luminaries and corporate experts advising President-elect Barack Obama on the nation’s hard-bitten economy, ensuring Michigan, its troubled auto industry and labor have a seat at the table.   http://www.freep.com/article/20081107/NEWS15/811070378/1/VIDEOS01                                           

                                                      ……………………………………………

If you think either Michigan or the Michigan Auto Industry will have a seat anywhere you are mistaking ……. If the Democrats were going to offer a seat at their table they could have done so years ago ….. Michigan has been sending two Democratic US Senators and a predominantly Democratic Congressional caucus to Washington for years – nothing has changed in that regard.  Remember it was Nancy Pelosi, Democratic Speaker of The House of Representatives, who demoted the “Big Three” to the “Detroit Three”. For those of you that have not caught on yet, the term “Detroit Three” is not only a derogatory insult and dismissive, but it carries far more sinister tones – As the “Detroit Three” the “Big Three” were no longer a “National” issue but became a local Michigan problem.

Pelosi and the liberal Democrats despise the Auto Industry – they want your vote on election day and spit in your face after the votes have been counted. The votes have been counted – its time to shut your eyes again …………. here comes the spit.

As for your seat at the table, watch out when you go to sit down – they are liable to pull the chair away . The talk about a “bailout”, if one takes place, is smoke and mirrors. Another corporate handout with the right hand while the left hand increases business taxes and implements policies that will inhibit US car sales. They take away more than they give ……..

You think not – then read this ……………..

The Los Angles Times

Power struggle may open rift among House Democrats

Rep. Henry Waxman wants to replace Rep. John Dingell as head of the energy and commerce committee, which will take the lead on Obama’s plans on global warming.

Reporting from Washington — Opening a split among congressional Democrats that could affect President-elect Barack Obama’s efforts to curb global warming, a California environmentalist is trying to wrest control of a crucial House committee from its chairman, who is the automobile industry’s strongest ally in fighting stricter antipollution standards.

Rep. Henry A. Waxman (D-Beverly Hills[CA]) has announced that he wants to replace Rep. John D. Dingell (D-[Detroit]Mich.) as chairman of the House Energy and Commerce Committee, which will take the lead on Obama’s signature issues of energy, global warming and healthcare. [Oh, you didn’t think the auto industry was a signature issue did you? Only “National” issues get signature status.]

Over the years, Dingell has given invaluable support to the auto companies’ fights against pollution and fuel economy standards that they considered unrealistic, and Waxman’s challenge to his leadership is the culmination of a decades-long rivalry between the two powerful lawmakers, the panel’s top two Democrats.

The outcome of the fight could affect whether action on Obama’s energy agenda will be tilted toward the interests of Rust Belt industrial Democrats or more aggressive antipollution efforts that California has spearheaded.

It opens divisions among triumphant Democrats just as they come off a landmark election that put Obama in the White House and expanded the party’s majorities in the House and Senate — and it is a window into how power struggles among Democrats may intensify now that there is so much more power to wield. [It is a window into how Liberal Democrats have thwarted economic growth while blaming the Bush Administration].

Dingell, who in the Democratic primaries endorsed the presidential candidacy of Sen. Hillary Rodham Clinton, represents a district near Detroit, and the loss of his position would be seen as a blow to the auto industry at a particularly trying time. Detroit is being battered by declining car sales, high gas prices and an economy in turmoil. In a sign of the political sensitivity of the fight, several auto industry spokesmen declined to comment on the choice between Dingell and Waxman.

House Speaker Nancy Pelosi (D-San Francisco[CA]) is officially neutral in the dispute, but she is known to be sympathetic to Waxman’s positions on the environment and has repeatedly crossed swords with Dingell over the years:

 

* In 2002, Pelosi endorsed an unsuccessful primary challenger to Dingell.

* In 2007, she set up a special panel to address global warming, a move that was seen as a way to circumvent Dingell.

* Last year, she and Waxman fought against a Dingell global warming bill that would have prohibited California and other states from taking tougher action than the federal government to reduce greenhouse gas emissions.

[Officially neutral, who are they kidding?].

Dingell supported that provision because, he said, it was easier for auto companies to comply with a uniform national standard than a patchwork of state laws, and Waxman and Pelosi saw it as a direct shot at California’s landmark law to cut tailpipe emissions. The provision was dropped from a global warming draft bill Dingell circulated this fall.

[Question the scientific validity of Global Warming? See: http://wattsupwiththat.com/2008/09/

Waxman’s feud with Dingell is even longer-running. Throughout the 1980s, as they rose in seniority on the energy and commerce committee, the two battled over clean-air laws, toxic waste regulation and other environmental issues.

As chairman of the House Committee on Oversight and Government Reform, Waxman has been a thorn in the Bush administration’s side with frequent hearings and reports critical of its performance. But now that a Democrat will be in the White House, that oversight role may not be as appealing to Waxman as the chairman of the energy and commerce committee, which has jurisdiction over many issues important to the new administration.

“In large measure, our success as a Democratic caucus will depend on how the commerce committee performs,” Waxman said in a letter to Democrats announcing his plans.

Environmentalists are delighted at the prospect of a Waxman chairmanship.

“It is much more likely we will advance a progressive, forward-looking agenda with a progressive, forward-thinking leader like Waxman than with an old bull who defends Detroit like Dingell,” said Dan Becker, director of the Safe Climate Campaign, an environmental advocacy group.  http://www.latimes.com/news/nationworld/nation/la-na-energy7-2008nov07,0,7068890.story?track=rss  

They couldn’t demonize Dingell anymore than this, even if he were, say, a Republican. So Dingell is now being protrayed as an anti-environmental zealot.  This is no accident. Do you think any Speaker of The House has previously endorsed a Primary challenger over a Representative with 53 years of party senority in Washington. Dingell is the longest serving US Representative currently in Congress. (1955 to date). In the history of the United States only 1 Congressman has served longer. Wait, just a minute, he supports the right to own guns too …. he has just gotta go. http://en.wikipedia.org/wiki/John_Dingell 

As for being anti-environment, consider these comments made on December 20, 2006, “The formidable Democrat from Michigan, now 80, has served 51 years in the House of Representatives — the second-longest of any congressional career in history. During that time, he played a key role in pushing through many of America’s cornerstone environmental laws, including the Wilderness Act, the Endangered Species Act, the Clean Air Act, the Marine Mammal Protection Act, the National Environmental Policy Act, and the original Corporate Average Fuel Economy (CAFE)“. http://www.grist.org/news/maindish/2006/12/20/dingell/  

Considering this track record on environmental issues, what was the bottom line in this article, “That’s why some environmentalists see Dingell as the single biggest roadblock on the path toward meaningful climate policy in the 110th Congress”. 

What? Wasn’t it all Bush’s fault? This article presents a rare opportunity to read about Democratic double dealing. Promises made only to be broken, again. Michigan’s auto industry isn’t playing “second fiddle” any longer, now it is about to lose its only chair in the band.

This writer is not a Dingell supporter, however, this is a political lynching. Dingell has been a loyal, moderate, center-left, Democrat who has obtained the trust and admiration of his electorate like none before him. Now the “new administration” is painting Dingell as representing some “fringe” element of the Democratic Party.  

If Michigan is lucky, Obama, Granholm, Pelosi and Waxman will send a few of the “windmill factories” your way when they are done. 

Ford announces $129M 3Q loss, burns $7.7B in cash – Ford to cut 2,260 workers after reporting $129 million 3Q loss                                                                                 

By TOM KRISHER and JAMES PRICHARD, AP Business Writers  http://news.yahoo.com/s/ap/20081107/ap_on_bi_ge/earns_ford   

General Motors will release its 2008 3rd Quarter results at 10:30 AM this morning.

“Due to deteriorating market conditions and a dire cash crunch, General Motors CEO Rick Wagoner will be announcing “important changes” during his company’s 3rd quarter earnings report on Friday at 11AM EST The Detroit News obtained an executive level email that foretells the bad news ahead but doesn’t go into specifics ……….” http://www.autoblog.com/2008/11/06/gm-announcing-important-changes-on-friday/         The Friday announcement will likely include a hefty financial loss, too, as evidenced by an earlier announced loss of $2.5 billion by GMAC financial.

GM reports $2.5B 3Q loss, says running out of cash

DETROIT, Mich. – General Motors Corp. says it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009. GM also said it has suspended talks to acquire Chrysler. While it didn’t specifically name the automaker, GM said it was setting aside considerations for a “strategic acquisition.”

The automaker also said its cash burn for the quarter accelerated to $6.9 billion due to a severe U.S. auto sales slump. The company on Friday reported a net loss of $4.45 per share during the quarter, compared with a record-setting loss of $39 billion, or $68.85 per share, a year ago.  GM shares fell 53 cents, or 11 percent, to $4.27 in morning trading. 

A Chrysler LLC sale to GM seems unlikely -Chrysler LLC is privately held, however, Daimler AG holds a 19.9 % stake in the company –                                                   

Oct 23, 2008 – “Today, Daimler AG reported a net loss of euro 351 million for its 19.9 per cent share of Chrysler Holding LLC’s second quarter 2008 results under International Financial Reporting Standards (IFRS). On a U.S. GAAP basis, Daimler AG’s net loss for Chrysler Holding LLC was euro 88 million, of which a euro 76 million net loss is attributable to the automotive business of Chrysler LLC.” [This report allows us to project that Chrysler LLC’s loss in 2nd quarter 2008 (80.1 % stake) would approximate $352 million euro loss or $447 million dollar loss]. http://research.scottrade.com/public/markets/news/news.asp?docKey=100-297u1992-1&section=headlines                                                                    

Michigan Recession Continues to Deepen Reports Comerica Bank’s Michigan Business Activity Index – “September’s advanced figure is the lowest level in 14 years.” [That would make it the lowest since November 1994 – A Democratic Congress and the Clinton Administration – Wasn’t the Clinton Administration all “milk & honey”?].                               http://www.mlive.com/prnewswire/index.ssf?/cgi-bin/stories.pl?ACCT=MI2&STORY=/www/story/11-06-2008/0004920315&EDATE=Nov+6,+2008

Then there is Toyota – Toyota’s Q1 profit drops 39% – Posted Aug 7th 2008 6:58PM – Toyota is not used to seeing its profit margins drop, as the Japanese auto giant has enjoyed increased profit for nine straight years. Expect that run to end this year …. For the year, Toyota has revised its sales forecast from 9.06 million units to an estimated 8.74 million. For the first quarter of the year that ended in June, Toyota has also announced that its operating profit took a 39% plunge from lower sales in both the United States and Europe …. Still, Toyota sales remain fairly strong in this sinking market and a profit is a profit. We’d imagine that this is a problem any one of the Detroit 3 would love to have on its hands. http://www.autoblog.com/tag/toyota+profit/   

UPDATE:

November 19, 2008
Categories:
 Leadership

Waxman wins Steering Committee vote

 

California Rep. Henry A. Waxman accomplished a critical first step in his bid to unseat Michigan Rep. John D. Dingell atop the Eneryg and Commerce Committee, beating the chairman, 25-22, in a vote of the Democrats’ Steering and Policy Committee, Connecticut Rep. Rosa DeLauro tells Politico’s Ryan Grim.       http://www.politico.com/blogs/thecrypt/

Update:

November 19, 2008
Categories:
 Leadership

Waxman wins Steering Committee vote

 

California Rep. Henry A. Waxman accomplished a critical first step in his bid to unseat Michigan Rep. John D. Dingell atop the Eneryg and Commerce Committee, beating the chairman, 25-22, in a vote of the Democrats’ Steering and Policy Committee, Connecticut Rep. Rosa DeLauro tells Politico’s Ryan Grim.

http://www.politico.com/blogs/thecrypt/

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