What Can I Do To Get You Into A Car Industry TODAY?
The interregnum can be disastrous for the economy if nothing is done.
Jobs: B.L.S. 9/2008
Parts: 504,000
Mfg. 114,700
Wsle 340,100
Dlrs 1,187,200
Repair 864.100
TOTAL 3,010,100
DIP financing not available
. . . And I mean “today”! Congress, just what would it take? [National health insurance is the gist of this post; short term, a massive fiscal stimulus is needed, one that creates jobs]
Cite to Mitt Romney’s op ed @ http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=1&partner=rss&emc=rss
Also New Republic article @ http://www.tnr.com/politics/story.html?id=a4893b49-36df-4784-9859-2dfa3a3211bf
Too Big to fail, too big to save?
The Moral Hazard of the Moral Hazard
“The downfall of the American auto industry is indeed a tragedy,” the Washington Post editorial board sermonized recently, “but the automakers and the United Auto Workers have only themselves to blame for much of it.” Replace auto with “finance”
Auto parts industry losses and “96 of top 100 suppliers are common to the big 3”
State & local gov’t tax lossess
Dealers inventory
Lenders at risk — liquidation = minimal recovery (20-30 cents per bond) would
GDP growth, unemployment, etc. = depression
Will people buy a car from a bankrupt company even with a gov’t. guarantee
Risk to the pension & 45% of retirees who are not Medicare eligible
– What mistakes did the industry make (Chris Dodd)
– Alan Mjullaly, Ford — Lower run rate needed 17,000,000 cars
– Too many vehicle nameplates
– Improve line items efficiency (quality)
– Bigger, more horsepower vehicles demanded & “we chased that demand up” Nardelli @ Chrysler
– Wagoner @ GM – links to home equity bubble & Less leasing and other easy credit offered by the Big 3 finance companies themselves “payments on auto loans is pretty good”. . . agrees with Mullaly about run rate. . . Nardelli blames rise in home equity. . . Mullally “low interest rates”
– Morici, Peter, U. Md. Fewer cars will be sold, people will be saving more, cars last much longer. industry needs fewere people to make fewer cars, & therefore severance charges will continue into the future/ use 3d party warranties /
SHELBY:
SInce market is contracting why should we believe you can restructure now? What would you do with the Billions you ask for, & how would you pay it back tothe taxpayer
GM: Reduce capacity, reduce employees — $100 Billion on post-retiree benefits — 12 Million units next year would make us profitable. SHELBY, We’ve heard that before . . .GM: 60-70 models. about half are profitable
Ford: Smaller/efficient vehicles . . . move right up the CAFE line . . . SHELBY: Did you make money? FORD: Yes, in Q1 of 08, but econmy & credit crunch overtook us / / /
CHR: better efficiency in building cars & more competitive worldwide in salary structure . . . minimize cost by consolidating dealers . . . 11 Million units . . . de-layer the organization . . . we will repay by generating profit, etc. SHELBT: What if you don’t? DHR: We would not be here if we did not believe we could . . .CHR: 3 models CHR, Dodge, Jeep, making money
UMD: ?I’m skeptical.” Constant special downsizing costs every year. They are burdened by history & need union & work rules that put them on a par with “Honda in Indiana” They are using the “world will end, AIG model” to ask for public money
Vouchers for maintenance
Cars are the most efficient and the safest, American built
Staggered delivery times to smooth out the production capacity problems
Cars are “loaded”
Old cars “retired”
Pothole program; pothole program management; block warden
150 Million x $20,000 per car
No resales within 3 years, except for “cause”
