Friday, December 12, 2008

The Big 3 Bailout

(Click the picture if necessary to see the fine print)

I am actually in favor of this bailout, not to reward the big 3, but to give them a chance to fix things. To many people and small towns in the mid-west would be devastated by their collapse. Before anyone gets started on the anti-union rant, think about how much those drones at AIG or Citicorp are making. Lots more than UAW line workers, and the Insurance workers are nothing but leaches on our economy, they produce nothing. How many Vice Presidents at the "Big 3" make more than an entire plant full of UAW workers? One more point is that the amount that the "Big 3" are asking for is less than we dump into our useless occupation of Iraq in 3 months.

I used to make jokes that GM and Chrysler were in the technical league with Lada (Russian) and Hindustan (Indian) because they still sold cars with cast iron push rod engines. I recently was corrected in this that Lada switched to the more efficient and advanced OHC design in the 80's and the Hindustan Ambassador also uses an overhead cam design. The Japanese quit making overhead valve motors in the mid 1970's but GM and Chrysler still manufacture them. I understand that the management of the big 3 think the US consumer is as dumb as a box of rocks, and all they have to do is blame the unions instead of spending money on innovation, but I hope with this bail out the tide will turn.

I drive a Honda Ridgeline, which although far superior in technology and quality to anything made by the big 3, still could be a high tech diesel/Hybrid and be getting 35 or 40 MPG instead of 22. The reason? Even the Japanese get lazy when Detroit is mired in the 1950's push rod gasoline era.

So, bail them out, and let them know that it is time to spend some of this money on engineering, and not just cutting factory jobs and giving bonuses to big shots.

This is my first political post ever. Now back to adventure and motorcycles.


  1. (stepping up on the soapbox here)
    I personally see this as a question of altruism. You know, In a way, these companies all deserve to go under. (keep reading!!) And I have to say, I sure don't mind seeing the CEOs getting nailed for questionable practices. Personally, I think these guys should all be audited accordingly, and money reimbursed to the companies. I'm betting things are well hidden in Swiss bank accounts. You can bet your sweet arse that THEY have their arses to speak...financially AND along the lines of health care. How much technology in regard to energy conservation and efficiency has been put away in the engineering labs so that "We the People" can't benefit?? All of this needs to come to the front. If Toyota could put out a 4 cylinder Celica in 2004 that gets better gas mileage than the hybrids out there (I bought one for my daughter before she went off to college) WHY in heavens name isn't it out there now with the Big 3 ?? We need answers!! One hand greases the other...and that grease is oil.

    What I hate to see is the stress and the damage done to all of the workers and their families. I'm not particularly a UAW supporter but the unions historically have had to fight for a respectable enough wage to support their workers and their families. These are the people who would otherwise suffer, be "run over" (no pun intended) by big money without the support. Ethically, I have to support the bailout for the sake of the workers alone.

    I do think that many things need to be examined. Perhaps along with the bailout, I hope for some compromise to take place. I find it interesting that these workers are paid as much as I am and basically do assembly line work. If I make a mistake, someone is dead. If one of these guys makes a mistake, it gets passed on as an "oh well" and you fight it out on the warranty with your dealership in most cases. Healthcare workers have no long term pension or benefits as the UAW workers do, unless they are covered by some sort of governmental entity. The burning questions I pose are...when is too much really too much? What is fair? Where does equality become a standard? What cutbacks will be on the horizon and at what cost to whom? Will they be required to contribute to their pension and benefits out of their pocket? (they may do this...I don't know)

    Within this scenario, the voice of reason and compromise will have to come into play somewhere. Even Congress can't seem to get a handle on it. I doubt that a decision will be made until Obama takes office.
    Heaven forbid that George W goes off and does something else stupid.

    I WILL say that the current people who are at the helm of the Big 3 need to leave, and not look back. They (along with the banks and insurance groups) have given the country one of the most glaring examples of financial and managerial ineptitude and corruption that I think most of us have seen in our lifetimes. It will be interesting to see if this loan, as it were, will ever really be paid back...or do we get to pass it all on to our progeny? Only time will tell.......

  2. Hi Kurt,
    I have personal experience with an industry that fails to adapt to changing business conditions. I worked at Inland Steel in the mid '80s. At the time we were under a *lot* of pressure from foreign competition and were suffering from a world wide overcapacity of steel manufacturing. It appeared to me that several third world countries (China, Brazil and likely others) wanted to launch themselves into the first or at least second world. Their first efforts involved raw materials like steel. Then they ran short of cash and proceeded to sell steel on the world market to make more money.

    At the same time, Inland was still operating facilities that dated back to before the roaring '20s. They actually had two 25Hz generating facilities. While we were buckling down (read: 3% max annual raises for engineers) the one thread in top management was "we need to hold on long enough to get back to the good old days." The good old days
    were when they could sell any quality steel at profit to customers who had no other choice among suppliers.

    Inland is no more. They were bought by Mittal who is now Arcelor Mittal. I suspect the dinosaurs in top management have been replaced by people more willing to adapt to current business conditions rather than hold out for the good old days.

    I wonder where management of the Big Three stands in this regard. Will a bail out allow them to hold out a little longer for the good old days?

    This reminds me a little bit about "pollution will lead to the end of the world." Of course not. The world will be here long after we are gone. The present situation could easily lead to the end of a big US auto maker. It will not lead to the end of auto manufacturing in the US. In the short term that could be very painful. What will produce the best long term outlook?


    BTW, my last year at Inland, my annual raise was 1% and the president of a failing company was paid a bonus several times my salary. Of course that's a trifle compared to today's bonuses for top executives.