[sanjuro]

http://www.nytimes.com/2008/11/19/opinion/19romney.html?hp

Let Detroit Go Bankrupt
By MITT ROMNEY

Boston

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

 

[MMike]

I agree....Damn...that guy should run for president

 

[sanjuro]

I agree....Damn...that guy should run for president

I don't think so...

The incident: dog excrement found on the roof and windows of the Romney station wagon. How it got there: Romney strapped a dog carrier — with the family dog Seamus, an Irish Setter, in it — to the roof of the family station wagon for a twelve hour drive from Boston to Ontario, which the family apparently completed, despite Seamus's rather visceral protest.

 

[MMike]

I don't think so...

That's right! I forgot about that one.....

 

[Toshi]

it is of note how obama has already suggested $10 billion/yr x 15 years for exactly this, green energy research, and now romney supports it as well:

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

compare to page 3 of http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf

 

[Silver]

Goddamn ****ing socialists...

 

[johnbryanpeters]

...Romney strapped a carpet bag — with the family dog Seamus, an Irish Setter, in it..

Corrected.

 

[$tinkle]

it is of note how obama has already suggested $10 billion/yr x 15 years for exactly this, green energy research, and now romney supports it as well:

compare to page 3 of http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf

and yet: lookit me! lookit me! lookit me!

 

[dan-o]

and yet: lookit me! lookit me! lookit me!

It does seem excessive in light of economic conditions, kinda like the AIG sales meeting immediately after their bailout.

 

[$tinkle]

obviously, we're not taking our economy srsly:
http://www.nyse.com/events/1226920892113.html

 

[Plummit]

They should have sacrificed Gene to Mammon at the opening bell. Two birds with one stone: perhaps turn the economy around and no one would have to look at his hair ever again.

Even w/o any economic effect, we'd have dealt with his hair.

 

[Toshi]

and yet: lookit me! lookit me! lookit me!

It does seem excessive in light of economic conditions, kinda like the AIG sales meeting immediately after their bailout.

$17 million (bush 2004 per that article) is about 1/10th the procurement cost per each F-22. i'd argue that the public good of having security and health care support for an inauguration of a popular president is greater than the marginal utility of 1/10th of a fighter jet.

(yes, i answered a non-sequitur with another.)

 

[$tinkle]

$17 million (bush 2004 per that article) is about 1/10th the procurement cost per each F-22. i'd argue that the public good of having security and health care support for an inauguration of a popular president is greater than the marginal utility of 1/10th of a fighter jet.

(yes, i answered a non-sequitur with another.)

justifying fiscal irresponsibility, are we? have you come over to the dark side?

 

[dante]

I don't think so...

pfft. It's not like it was Aunt Edna.

 

[ohio]

justifying fiscal irresponsibility, are we? have you come over to the dark side?

what price do you put on morale?

most executives (and organizational behavior experts, and military experts, etc) put a very high price on it.

 

[Defenestrated]

$17 million (bush 2004 per that article) is about 1/10th the procurement cost per each F-22. i'd argue that the public good of having security and health care support for an inauguration of a popular president is greater than the marginal utility of 1/10th of a fighter jet.

(yes, i answered a non-sequitur with another.)

We need that stuff to kill brown people

 

[dan-o]

We need that stuff to kill brown people

Did you just suggest we bomb the inauguration with F22s?

 

[sanjuro]

and yet: lookit me! lookit me! lookit me!

Yeah, Obama has been inviting millions of Americans, hired the London Philharmonic Orchestra to play with Neil Diamond, Metallica, and Stevie Wonder, and was going to throw uncut diamonds out to the crowd.

Can he help it if he is popular?

 

[$tinkle]

Can he help it if he is popular?

so you think he's obligated to spend money d.c. doesn't have just b/c he's popular?

sorry, my inner fiscal bigot just reared its ugly head. just like when focus puts out their naughty/nice shopping recommendations for the holi...Christmas shopping season right before eliminating 18% of their workforce.

sometimes the right hand should know what the left is doing.

 

[ohio]

so you think he's obligated to spend money d.c. doesn't have just b/c he's popular?

No but he is obligated to let any American that wants to come to DC for the inauguration and he (and DC) would be grossly irresponsible if he did not provide sufficient safety and security to the city, its residents, and its visitors.

It's not like he's handing out Crystal to all of them. They're just showing up.

 

[sanjuro]

so you think he's obligated to spend money d.c. doesn't have just b/c he's popular?

sorry, my inner fiscal bigot just reared its ugly head. just like when focus puts out their naughty/nice shopping recommendations for the holi...Christmas shopping season right before eliminating 18% of their workforce.

sometimes the right hand should know what the left is doing.

Maybe they should do a private inauguration and broadcast it pay-for-view?

And that article didn't mention the money that is going to be spent in DC thanks to Obama!

http://www.bizjournals.com/business_travel/story/biz/1196.html

As many as 1.5 million people may come to the nation’s capital for the Obama inaugural, according to Bill Hanbury, president and chief executive officer of Destination D.C., the city’s convention and tourism arm. The organization has not done a formal estimate of the event’s economic impact, but Hanbury pegged it at hundreds of millions of dollars.

 

[$tinkle]

incoming money is delayed gratification; they won't fully collect on taxes well into next year, but still have to make payroll every week.

ed: if d.c. goes bankrupt, maybe the gov't should bail them out, too. or at least break 'em off a short term loan

 

[sanjuro]

incoming money is delayed gratification; they won't fully collect on taxes well into next year, but still have to make payroll every week.

ed: if d.c. goes bankrupt, maybe the gov't should bail them out, too. or at least break 'em off a short term loan

I think you are being a little ridiculous here.

The inauguration is ultimately for the public's benefit, and there is a huge economic upside thanks to Obama's popularity.

Since neither you nor I are intricately familiar with police funding, I bet the city will be able to pay for the extra cops and sanitation and stay in the black until tax revenues roll in.

Unless you are recommending Obama has a private ceremony or just encourages people to stay home, this is going to happen whether you want it or not.

 

[1453]

How is a party for the politicos gonna put food on my table?

The inauguration is ultimately for the public's benefit.

 

[$tinkle]

my point is not entirely w/o merit. surely you've seen news reports of how high crime areas in various cities can no longer be patrolled b/c the city is underfunded.

to suggest d.c. can afford to put more resources to cover the inauguration is to say there exists an allocation for extra policing, for which budgets are rarely (if ever) approved. either that, or they will burn through their money w/ the expectation of revenue to fill the gap before they get in trouble.

i bet they ask for a handout by next fall

 

[ohio]

my point is not entirely w/o merit.

is too

 

[$tinkle]

i hadn't thought of that

 

[MMike]

is too

Alas I must spread rep.

 

[Toshi]

$17 million (bush 2004 per that article) is about 1/10th the procurement cost per each F-22. i'd argue that the public good of having security and health care support for an inauguration of a popular president is greater than the marginal utility of 1/10th of a fighter jet.

(yes, i answered a non-sequitur with another.)

justifying fiscal irresponsibility, are we? have you come over to the dark side?

call me prescient: obama to decide on fate of F-22 program

 

[$tinkle]

dang5

 

[stevew]

and yet: lookit me! lookit me! lookit me!

Does he not have any spare campaign cash left over he can donate to the cause?

Hasn't he checked between the cushions in the couch?

 

[$tinkle]

i think the plastic makes it easier to find