the Air Vent

Because the world needs another opinion

Auto Industry Takeover

Posted by Jeff Id on December 9, 2008

The US government bailout is taking an ugly turn.  It seems to me that nearly every time the govrenment tries to fix something they make a bigger mess.   Here’s an article everyone should be very aware of straight from the liberal New York Times.

Washington Takes Risks With Its Auto Bailout Plans

The paper discusses government involvement in these companies after the bailout.  Oversight they say.

But what Mr. Obama went on to describe was a long-term bailout that would be conditioned on federal oversight. It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make — to recreate an industry that Mr. Obama said “actually works, that actually functions.”

For those of you who are liberal readers of my blog, consider that these are the words we have heard from (the much scoffed at)  Rush Limbaugh for years.  He and other conservative talk shows have repeatedly pointed out that liberals want to control everything in our lives.   They want to tell you what kind of cars you can drive, what foods you can eat, what to teach your children, what medicine to take etc….

Well it’s coming true thanks to those who didn’t understand what was at stake.  Now our glorious government hopes to dictate what kind of cars we can make.

Look at it this way, when the government tells american auto manufacturers  to make whatever car and Toyota figures out that the market wants something else, who wins?  Will the government move quickly enough to allow the production of cars according to demand?

If they wanted to make manufacturers viable, the unions needed to be stripped of their stranglehold on the market. Companies cannot pay $75/hr for unskilled labor (ours sure as hell won’t), it isn’t viable. But this plan has nothing to do with making manufacturers viable, there are other reasons.

Another quote which is astonishing in that it comes from the NYT paper, because this is after all what the socialist left stands for.   How could they be so surprised.

“We’re at this moment in history, in which the Chinese are touting that their system is better than ours” with their mix of capitalism and state control, said Mr. Garten, who has long experience in Asia. “And our response, it looks like, is to begin replicating what they’ve been doing.”

Can anyone guess why the government industry would want control of what kind of cars to make?   Here’s a hint — It doesn’t have to do with global warming.


10 Responses to “Auto Industry Takeover”

  1. AEGeneral said

    Can we change the term “bailout” to “government takeover” yet? Because all I’m seeing is a foundation being laid for everyone to eventually have their salaries paid out of the US Treasury. I figure it’s only a matter of time before that’s where I’ll be sending my monthly mortgage check.

    As bad as some of these media outlets are doing, now is the time for some conservatives to pounce & take them over. The Tribune declared bankruptcy, the NYT has put up its building as collateral for a loan, and even the Miami Herald is up for sale.

    We’ve got to get control of the media and reverse this before it gets out of control. (end rant)

  2. OK…OK..
    NICE TOpICS

    come on guys, STOP GLOBAL WARMING..

  3. procat said

    Government control over an industry they have no experience in, what could go wrong?
    It was suggested in the media that Ford should discontinue the Mustang before it should get its bail out money. Now this is the problem that happens when politicians get involved in business. It makes no sense for ford to discontinue one of their bestselling car, in a market segment that they dominate. Yes there are more efficient ways to move people, but the government should not dictate how.
    The main problem with our automotive companies’ structure is the union. While the US auto manufacturers were doing well, they kept giving into the union’s demands. More pay here, more paid time off, legal representation, specific break times, promotion policies that helped sonority over compitenence, and getting paid while you were laid off. Now that the companies are hurting, where are the unions’ concessions? They would rather let the company die, and take all those jobs with it, before they give up anything. Yes I know there have been some concessions, but they are tiny. Lower pay for new hires helps (very little) only when companies are hiring. If there is going to be a “Car Czar” then there should also be “Union Czar”, one who makes sure that the unions don’t go rampid with their demands. But now we have gone from business to political. And what political figure is going to disagree with a union and all of their lobbying strength. Hence the reason union restructuring has been completely ignored.
    Now we are going to hear from those who blame the manufacturers for not building car that people wanted. But that is simply not true, the automotive companies were building vehicles that Americans were buying, there called truck. And they were selling great. But then gas prices shot through the roof and everybody condemn trucks. Be careful for what you ask for you might just get it.
    The problem is not just with the American manufacturers. Every manufacturer, including Toyota, BMW, Mercedes have all seen drops in sales volume. It has not hurt them as much because they were not the dominate players in the truck segment that was hit so hard; Toyota was trying though, maybe we should have the “Car Czar” look/control over them also, so they don’t make any mistakes. The point of my rant is that having the government over look the auto manufacturers doesn’t make any sense; it is just a way of giving the government more control over things they have no experience in.
    I believe that we should hurry up and give the car companies a “loan”. They are not as poorly run as everybody is saying. In the past they have provided jobs and economic growth (well over the 25-36 billion they are asking) while turning a profit. Now that the perfect storm (gas price increase and hard economic times) has hit, we are talking about changing the entire structure that worked for the past 100 years to government control or letting it die.

  4. bravoechonovember said

    Yeah, it’s all the fault of those evil unions. Those damn workers making $28.00/hour are the problem.

    Nevermind the fact that the CEO of GM makes 14 times what the CEO of Toyota makes.

    Last year, Wagoner’s total compensation was $14.4 million. That works out to $39,452.05 per day, including weekends. (Note that in 2007, GM lost a staggering $38.7 billion.) The estimated pay of Toyota’s CEO in 2005 was under $1 million. I could run GM into the ground for half that.

    Ford’s CEO earned $22.8M in total compensation last year. He got a $4M bonus even though the company lost $2.7B in 2007. Albeit it was an improvement from the $12.7B loss in 2006.

    How much money do these men deserve?

    How much would you geniuses pay US autoworkers? How much would you pay the CEOs?

    If the automakers are gonna ask Americans to loan them billions, essentially making us investors, why shouldn’t we have a say in how it’s spent? How can you Limbaughettes criticize the government for getting involved when they’re the ones asking the government for money?

  5. David Jay said

    Yea, making only the cars that Washington wants them to make will certainly give GM, Ford and Chrysler the boost they need to compete long term with Toyota and Honda. After all, those other guys just make vehicles that consumers want to buy. And what do consumers know, anyway 😉

  6. Jeff Id said

    bravoechonovember

    You need to look a bit more at the numbers. First the $28/hr is base pay. You need to add health, dental and unemployment benefits at least $15 more. Then you need to add the pension plan, another $30/hr with the health program. The UAW has about 500,000 members at say $75/hr = about 75 billion dollars/yr working or not.

    I am not an advocate of CEO pay in a company loosing big money, but in the scheme of things the UAW is obviously the problem. Of course the democrats are deep in with the UAW, blagovich was looking for a possible job with the UAW as compensation for a senatorship.

  7. bravoechonovember said

    Do you have sources for those numbers?

  8. Jeff Id said

    #7

    They’re quite easy to come by, here’s one of several.

    http://www.heritage.org/Research/Economy/wm2135.cfm

  9. WhyNot said

    Response #4 is very typical of Union workers. I happen to know a few, actually too many who’s attitude is simply, work as little as possible and DEMAND as much $$$ as possible. When asked for a concession they cry like a baby who just lost a pacifier. If we take a look at their compensation package (not including hourly salary) and cut that in half, how much money would the big three save? Assume each UAW worker is paid $29/hr and the average total compensation is $72/hr that would mean compensation is $43/hr. So, the yearly saving by the Big Three would be 43/2*2080*500,000 = $22.36Billion. Gee, within a year and a half the Big Three would save $33B awfully close to the bailout package. So WhyNot give the Big Three a loan and force them to cut the UAW compensation package in half. Now that would be fair to the rest of the American workers.

  10. One of Detroit’s big issues has been shortsightedness. When you pay the CEO (and other management) that much, it is very difficult to convince the rank and file employees not to be greedy. It is difficult to convince the union that you are all in it together.

    Also, remember that these companies spun off Visteon and Delphi, primarily because they didn’t want to deal with the labor force in those factories and the stock effects of a possible strike. Visteon has been a horrendous drain on Ford.

    Finally, Detroit has been hurt by Americans’ dual-mindedness. We want trucks and SUVs until gas prices go up. Then, we suddenly prefer smaller cars for a few months, followed by a move back to trucks and SUVs. That isn’t their fault, but the fact that it happens repeatedly tells me that they should have been prepared to increase small vehicle production on short notice.

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