A Car Salesman

Citi Who?

So Citibank gets a bailout!

I find this amazing!  The federal government gave Citi a $25 Billion bailout a couple of weeks ago.  Now all of that is gone and they need more help so the government strokes them another check for $20 Billion.  The automotive industry, America's largest industry asks for a $25 Billion loan and they spend a week telling the leaders of these companies how incompetent they are. Citibank calls congress on a Saturday and has the money by Monday.

The ignorance of these pious idiots on Capital Hill is amazing.  There was the idiot Senator from Alabama, who said if we give the auto industry money, then the management has to be replaced.  Oh there is a good idea, let's replace all of the leaders of these big companies with new people the CEO's and the Boards.  The idiocy of that is awe inspiring, and shows once again that the government has no business being involved in business.  Should some of the leaders of these companies be replaced, probably.  Should they all, certainly not.  Changing the leaders of these companies is an incredibly huge risk, and will lengthen the recovery period of them.

Ignorance is bliss when you have a pulpit that you can stand on and preach without retribution.  Congress wants everyone to accept blame for the current problems except themselves. 

MSNBC

Another Saturday!

Where have all the Good Times Gone?

I remember a couple of years ago, I sell Ford's, on any given Saturday all of the tables on the showroom would be full with customers.  We had 30 salesman and nobody rested on a Saturday, now we have 14 and that is too many.  We would eat our catered lunch standing up and rush back downstairs to get another up, now we sit and enjoy our meal cooked by the bosses wife.  By the time I would eat lunch I would have one sold and I would have another customer taking a test drive.  It was not unusual for an individual salesman to sell 3 or 4 cars on a Saturday.  Now you ar lucky if you have had a customer before noon.

Today at 2 in the afternoon there are currently 2 customers on the showroom.  The tremendously scary part about this is that despite the decline in sales we are maintaining our market share of the Ford Business.  The market has shrunk considerably!

The day is picking up, we have cutomers so I am off to work.  The only good thing about the current situation is that if you do have a cutomer, you know they want a car. Wish me luck!

The Big Guns Come to DC

Picture by Gerald Herbert / AP

Major auto industry executives (from left, GM’s CEO Richard Wagoner, Chrysler’s CEO Robert Nardelli and Ford’s CEO Alan Mulally) join Ron Gettelfinger, president of the UAW union, right, on Capitol Hill.

 

So the big Guns show up on DC to ask for money!

Should we or shouldn't we give them money?

First let's be straight, they are not asking for free money, they are asking for a loan package.  They can't get loans on the open market at the moment, like most of the rest of us.  Now who was it that did not put the oversights in place to stop the financial disaster?  Congress

Second, are these guys in the picture responsible for this mess that the Big 3 find them selves in? NO these are not the guys.  These are the guys who have been brought in to right the ships.  The UAW president Gettelfinger, gave more concessions in this last round of negotiations than they have ever given up.  Did they go far enough? NO but it is a good start.  Alan Mulally has put Ford in the best situation of any of the Big 3, positioning his company to aggressively move forward in a new world economy.  They were right in the middle of the changeover when gas prices went through the roof.  Rick Wagoner has also been innovative and forward thinking, but it is much harder to stop a train rolling down the tracks when the load is bigger.

Third, Can the American car business survive? Yes  without question.  Both GM and Ford are poised for the next century, bringing out smaller cars and more fuel efficient vehicles.  They are asking for the bridge loan to get to the future.

Forth, why are the American companies the only ones in trouble?  They are not the only ones in trouble.  Several other car companies are in big trouble.  The Asian car companies are in a little better position than the American car companies for a few reasons.  They do not let the US compete in their markets.  They receive subsidies from their countries and in America they are not burdened with the huge legacy costs that the Big 3 are.

Fifth, What about quality of vehicles.  GM currently has the top rated car in initial quality.  Ford has had the more cars at the tops of their segments than any other car company.  Ford by several different measures has met or surpassed the quality of the Japanese car companies.

Sixth, regulations must be put on car companies evenly.  The way the CAFE standards are currently enforced, the Big 3 are the only companies having trouble with them, because they sell trucks.  The other car companies dabble in trucks, but Americans build trucks.

The car industry is our largest manufacturing business left in the US.  Americans used to make beer, now we work for foreigners.  We used to build TVs and electronic equipment, now we buy it from overseas.  Do we stand by and watch as our last greatest industry implodes?  I think not.

More on Bailouts

Bailout or no Bailout?

It appears that there may be hope for the bailout.  The President-Elect whom I did not vote for.  I am generally speaking a conservative leaning independent.  But, there are those who object and again I say that they certainly have the right to.  But I was reading an article by Daniel Ikenson of the Cato Institute, a relatively conservative think tank.  I like the author and usually agree with most of what he says:

There's Nothing Wrong with a "Big Two"

by Daniel J. Ikenson

Daniel J. Ikenson is associate director of the Center for Trade Policy Studies at the Cato Institute.

Added to cato.org on November 11, 2008

This article appeared in the New York Daily News on November 11, 2008.

 

Read the above article if you get the chance. 

Bullshit, bullshit, bullshit!!

It is interesting in its conclusions because it is correct if everything else is equal.  He blames everything on the management of the Big 3, and they certainly are not blameless.  But what about the unions, the unions that the other companies selling cars in the US do not have to put up with.  What about regulations that the Big 3 must live by that and the tax breaks offered to the foreign companies building plants in the south. 

Here is one of his great thoughts:

But here's the equally important thing to realize: If GM fails - or even GM and Ford both fail - we are not facing the loss of the U.S. auto industry. There are plenty of profitable operations, particularly those operating outside of Michigan. In 2008, the Big Three accounts for roughly 55% of light vehicle production and 50% of sales. To speak of the U.S. automobile industry these days, one must include Honda, Toyota, Nissan, Kia, Hyundai, BMW - and other foreign nameplate producers who manufacture vehicles in the U.S.

 

 

Bailouts for the Big 3

Should the Detroit Big 3 be bailed out?

So the question today seems to be should the American Government bailout the Big 3.  This is a fair question to ask.  For several reasons, so let's explore a few of them.

They Did it to Themselves

First, there is the argument that the Big 3 did this to themselves.  Partially, this is true, however the auto industry is one of the most highly regulated industries in the United States.  Does some of the blame fall on the Government?  Certainly part of it does.  For example, let's look at the changes in the Diesel engines and Diesel gas over the last few years.  Ford, GM and Chrysler have been forced to change thier engine's twice in the past 5 years, the Japenese do not make big diesel trucks so they were left unaffected.  It Costs Billions of dollars to plan create and produce an entirely new engine, but this is not mentioned.  And, this is one example of many.

Let Them Eat Cake

Second, there is the arguement that they should be allowed to go bankrupt so that they can renogotiate the terms of their pensions and get saved from their creditors.  Let's remember it is their creditors that are being bailed out by the Federal Government.  GM's CEO Wagoner talked about this idea also, a survey done recently asked the question "Would you consider buying a car from a car company that is in bankruptcy?"  80% of the people said NO.  So, is that truly a viable alternative.

Little Detroit or Southern Detroit

Next, there is the newest Talking Point, "Little Detroit".  What a great success story this is!  The foreign car companies have come into the US and have built plants in Tennesse and Kentucky and other southern states, Honda just opened a new one.  They make money selling cars in the US, so why can't the big 3?  Anybody making this arguement needs to slapped.  These companies came into the US, were allowed to open non-union factories, and with no Legacy costs.  This is called "FAIR" competition?  Were the Big 3 allowed to go into their markets and compete?  Of course not!  Could the Big 3 compete on an equal playing field?  YES!  Make the field fair.

1 in 10

1 out of every 10 jobs in the US is associated in some way with the car business.  That does not mean that one in ten is associated with one of the big 3 but, it shows the implication of the closing of those companies.  Since the Big 3 sell about 50% of the cars in the US this implies that 1 in 20 is directly linked to the big 3.  So let's all roll the dice with 5% of the working population, does that sound like a good idea?  Somehow that strikes me as ignorant beyond belief.

Quality

This is a good arguement, if the Big 3 made a quality product they would not be in this position.  Since anyone making this arguement hasn't been watching the industry with a good eye, let's keep you up to date.  GM has the highest ranked car in initial quality at the moment!  WOW!  Ford has for last 2 years been ranked even or above Toyota and Honda in quality, WOW!  Ford was the only company 2 years ago to have 5 cars rated best in class by JD Powers.  They had 4 this year and still had the most on the list.  Pay attention idiots!

Been There Done That

Is the car business a good bet?  Let's see didn't we as a country bail out Chrysler and then they came back in a fury?  How did that bailout happen?  They were given guaranteed loans by the US Government and they paid them back early and with interest.  The citizens of the US made money on the bail out.  Are they a good bet?  Everyone thought that Lee Iacocca was a good bet, and he was.  I will not speak to Chrysler's leadership because I do not know enough about them, however Alan Mulally and Rick Wagoner are 2 of the brightest businessman of our age.  Can they get their companies turned around?  They are already in the process and certainly can, given the opportunity, but noone can get credit at the moment, not even them.

Industrial America

We have a Financial crisis like nothing we have seen in 90 years.  So do we let our one last huge industrial industry leave?  The way we have let the others leave? 

Solution

We as a country need to find a way to finance the recovery of the Big 3 (at least GM and Ford).  We need to also learn as a government to stay out of the way of progress for these companies.  And we need to make all of the companies compete on a level playing field.

Fox Business

MSNBC from the Washington Post