Mitt Romney: Let Detroit Go Bankrupt

[Regis Philbin]

http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2


Let Detroit Go Bankrupt

By MITT ROMNEY

Published: November 18, 2008

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.

[Venisenvy]

i must say i agree with mit on this one

[Regis Philbin]

^ So do I.

Let 'em go down, they can reorganize under Chapter 11 and get out from under those ridiculous union contracts. They'll come back stronger in the long run.

[Incident]

Bankruptcy would also be better for most union members, unfortunately the bailout is better for both the Corporate and the Union executives. So we know who Congress will back.

[ConnieB]

I totally agree with Romney. I think bankruptcy would be the best route as they would be forced to restructure and rebuild instead of just getting money which most likely would go to the CEO's again. I'm going to hate seeing this happen to the big three as my dad retired from GM and his pension is in danger, but I think it needs to happen.

After what went down today, I don't think the bailout will happen. Congress members pretty much told off the executives and they deserved it as they showed up to Washington in their personal jets ($20,000 per trip) and when asked if they would give up those jets, they said no. Plus these same executives are still getting their multi million dollar bonuses this year while their company is going under.....so yeah, the big three does not deserve to be bailed out.

Also, if the union workers disagree with this decision, then they need to look at their BOSSES who won't sacrifice anything to help their company.

[Murrican]

Anyone who agrees with Romney doesn't understand economics.

And I'm not being perjorative.

He's posturing.

If he isn't, and he's basing it on his dad's stewardship of American Motors, well look at their track record. He wants revenge on the three companies who blew them away and the one who bought their carcass (Chrysler).

These companies built the tanks and trucks and jeeps which won WWII -- if they go down, we are weakened just at a time we're fighting two wars... Pretty dumb, is all I can say without being insulting.

This isn't partisan politics.

This is basics.

These companies have re-built themselves. One is owned by a holding company that wants to sell (e.g. Chrysler) but the others must survive.

The foolish posturing about the auto CEOs flying in private jets to Washington is equally dumb, and disgraceful by politicians, commentators and journalists. These are huge companies, the CEOs' time is very valuable and they are in crisis , and they cannot afford the wasted time to fly commercial between Detroit and Washington, DC.

Time is money.

I'm with Obama 100% on this.

[Incident]

Anyone who agrees with Romney doesn't understand economics.

And I'm not being perjorative.

He's posturing.

If he isn't, and he's basing it on his dad's stewardship of American Motors, well look at their track record. He wants revenge on the three companies who blew them away and the one who bought their carcass (Chrysler).

These companies built the tanks and trucks and jeeps which won WWII -- if they go down, we are weakened just at a time we're fighting two wars... Pretty dumb, is all I can say without being insulting.

This isn't partisan politics.

This is basics.

These companies have re-built themselves. One is owned by a holding company that wants to sell (e.g. Chrysler) but the others must survive.

The foolish posturing about the auto CEOs flying in private jets to Washington is equally dumb, and disgraceful by politicians, commentators and journalists. These are huge companies, the CEOs' time is very valuable and they are in crisis , and they cannot afford the wasted time to fly commercial between Detroit and Washington, DC.

Time is money.

I'm with Obama 100% on this.

And how will the bail-out help them? How will it make them more competitive?

How will restructuring through bankruptcy hurt them?

[lions1mew]

And the fact that millions of people will be out of jobs, including the "trickle down" thing you neocons love ... the companies that make parts, the car dealerships ... all those people will lose jobs too. And let's just let the country slip deeper into a depression instead of giving them a leg up and helping them keep their employees EMPLOYED.

However, fire the CEOs. Obviously they have no business sense themselves. When we need to clean the air and wean ourselves off of foreign oil and just oil period, they kept making and selling huge gas-guzzling SUVs. They need to go. NO compensation. If you can't do the job ... YOU'RE FIRED.

[Incident]

And the fact that millions of people will be out of jobs, ....


Who is going to be out of jobs? Renegotiating a union contract, after a bankruptcy filing does not put people out jobs. It merely gets these companies out from under an oppressive debt that is making them uncompetitive. It will actually create jobs, in the long run. The only people that are going to be out of jobs are Corporate Executives and Union Leaders. I say good riddance.

[Murrican]

And how will the bail-out help them? How will it make them more competitive?

It will bridge them through until the credit markets recover. The restructuring is more or less complete. They are competitive. GM has won countless car and truck of the year awards over the past 5 years and countless JD Power quality awards. Ford has done wonders, too, with Mullaly at the helm. Wagoner has turned GM on a veritable dime. For most of the past 100 years, remember, GM was the largest corporation in the world. And is still in the top 3 industrial manufacturing corporations in the world -- in every country except the US, GM is doing very well. It's the Congressional mangling of the economy (Sarbanes-Oxley, credit default swaps, Fannie Mae, Freddie Mac, etc.) and the oil futures speculation, mostly processed through the NYSE and who is to blame should be tracked down and identified... GM is first company to sell a million vehicles in China and is #1 there. It's huge in India, China, Australia, Europe, etc. This will be the first year in about 80 years it does not sell the most vehicles in the world... Some basket case. Had oil not spiked and the market not collapsed, its turnaround and the concomitant re-negotiation of UAW and other contracts would have kicked in and made a huge bottom-line difference. Google what it's done over the past 3 years alone, and how Ford has turned the corner. They have made themselves competitive. It was the Wall Street mess which smacked them down. Who buys cars without credit?

How will restructuring through bankruptcy hurt them?

It will crush people across the continent, bankrupting dealerships and creating mass unemployment in manufacturing and every industry supporting them, in every town.

This is economics 101.

The only people it will help is shareholders. Buy GM now.

All of GM's contracts will be killed. Dealers and all their employees will be lost. Suppliers will be crushed. The time to negotiate and re-negotiate will stall moving ahead.

Please folks, learn about the auto industry before throwing people overboard because it sounds easy. This isn't like air traffic controllers. Bankruptcy would plunge the US (and maybe the world) into serious recession/depression.

Tightening credit and high gas prices have crushed the auto market, temporarily, because if GM survives the electric car will change the world. GM already makes and sells more hybrid models and vehicles than anybody else, and its hybrids save more fuel collectively than all the other hybrids ever sold.

The myths are being sold by people who don't know better, or by Romney who sees a political differentiation opening. Romney was my first choice for Republican Prez candidate so this isn't against him, just his stupid idea...

[Venisenvy]

I dont want these companies to no longer exist, but we cant just give them money because if we do they get to continue following a buisness plan that has brought them this far. IT DOESN'T WORK!!! Will it be easy? no, not at all, but it is the appropriate step.

[tiger_rascal]

I dont understand. If we bail out the auto industry will they sell millions of cars in the next 12 months? With the way the economy is, are any of you in a position to go out and spend over $30K on a new car? Can you afford a new loan that could cost you about $300 a month?

Does this bail out make much sense?

[pinky]

The foolish posturing about the auto CEOs flying in private jets to Washington is equally dumb, and disgraceful by politicians, commentators and journalists. These are huge companies, the CEOs' time is very valuable and they are in crisis , and they cannot afford the wasted time to fly commercial between Detroit and Washington, DC.
That, frankly, is pure crap. If these executives want to travel around in private jets, while employees are losing their jobs and shareholders are losing money hand over fist, then they ought to pay for the jets themselves out of their guaranteed $millions in compensation, rather than using corporate funds or, worse, taxpayer dollars given to help the companies survive. Lots of us are busy, and everyone's time is valuable. The difference is that most of us won't earn in a lifetime what some of these people make in a year.

I almost thought you were attempting satire, but then I re-read the rest of the post, and remembered you didn't inherit a humor gene.

[lions1mew]

Michael Moore had some excellent points on Larry King:

http://www.cnn.com/2008/US/11/20/lkl.michael.moore/index.html?iref=mpstoryview

[AlexzAficionado]

Their mistake was trying to borrow money and get loans to keep their business afloat. If they're making that much money why are racking up their own credit debt?

Stealing from Peter to pay Paul isn't how you run a business.

[Incident]

I dont want these companies to no longer exist, but we cant just give them money because if we do they get to continue following a buisness plan that has brought them this far. IT DOESN'T WORK!!! Will it be easy? no, not at all, but it is the appropriate step.

There are two flaws in Murrican's argument. First, bankruptcy, as you said, does not mean that the automakers will cease to exist. Secondly, the competitive disadvantage is not in the quality of the automobiles but in their labor cost per vehicle it costs them $2000 - $3000 more per car than Toyota does largely because of the fringe benefits that they can not get out from under. Bankruptcy will allow them to compete on an even playing field with Toyota.

[Murrican]

http://adage.com/article?article_id=132763

These are big companies which are heavily squeezed by government regulations, limited by contracts with labor and suppliers and dealers, in an industry in which it typically takes 3 to 4 years to engineer and mass-deliver quality products which requires long-term planning.

Out of nowhere oil spiked to $147+ a barrel, which killed the economy, and started the financial dominoes tumbling, and with credit dead in September and October, sales plunged while costs remained.

So-called, self-proclaimed experts here on what GM or Ford did wrong are talking through their hats, at least we know Romney is positioning himself for 2012... and rally doesn't care about the damage this will do to families, municpalities, pensions and the economy of the USA for the long-haul... bankruptcy will crush everybody during a "re-structuring".

The lack of knowledge of politics in the US may be overshadowed by the lack of understanding of economics... GAwd help us all.


As GM Goes, So Does Stock Market

With No Bailout for Automakers Yet, Shares Tumble Including Ad Market 50 to Lowest Point Since '00

By Bradley Johnson

Published: November 20, 2008

LOS ANGELES (AdAge.com) -- The glass is now officially half empty: The Standard & Poor's 500 plunge today puts the signature index 52% below October 2007's all-time high.

The S&P 500, a broad index of blue-chip stocks, tumbled 6.7% today to its lowest close since 1997.

The Dow Jones Industrial Average dropped 444 points or 5.6% to close at 7,552, blowing past last month's bear-market nadir to its lowest close since 2003.

The Ad Age/Bloomberg Ad Market 50 index of marketer, media and agency stocks fell 4.5% to its lowest point since the index began in 2000.

Stocks sank on more bad economic news -- jobless claims reached their highest level since 1992 -- and as congressional talk of a taxpayer bailout of Detroit was tabled till December.

General Motors Corp. closed at $2.88, up 3.2%. But what a stunning day: The stock plunged this morning to $1.70, its lowest point since the 1930s, only to surge to $4 on speculation on a bailout compromise. GM shares -- and the market -- then tumbled in late afternoon trading as it became clear domestic automakers will have to wait for any handout.

[Murrican]

http://toronto.ctv.ca/servlet/an/local/CTVNews/20081121/mayor_auto_081121/20081121?hub=Toronto

Canadian car dealers plead for government help

Updated: Fri Nov. 21 2008 11:16:44 AM

CTV.ca News Staff

The Canadian Automobile Dealers Association is urging the federal government to act quickly to help the auto industry or risk a crisis that will affect Canadians from "coast to coast."

CADA President and CEO Richard Gauthier, representing the country's 3,500 car dealers, spoke to reporters on Parliament Hill Friday and said an aggressive federal policy is desperately needed.

"The Canadian public and policymakers need to understand that the auto industry is really the engine of the entire country's economy and not just a single province," Gauthier said.

"As the largest contributor to Canada's manufacturing Gross Domestic Product and responsible for one in seven jobs nationwide, the auto industry is crucial for our economic structure."

He said the current automotive manufacturing downturn will have a ripple effect in every community across Canada.

"The cold reality facing decision makers today is that if Canadian-based manufacturers are not provided a bridge across the current economic crisis, then Canada's 3,500 small business dealers, located in every community in the country, will bear the brunt of the downturn," he said.

"...As economic cornerstones of almost every community in Canada, the pain of auto dealers will be felt on main streets and other small businesses from coast to coast."

[WannaBreatheYou]

http://adage.com/article?article_id=132763

These are big companies which are heavily squeezed by government regulations, limited by contracts with labor and suppliers and dealers, in an industry in which it typically takes 3 to 4 years to engineer and mass-deliver quality products which requires long-term planning.

Out of nowhere oil spiked to $147+ a barrel, which killed the economy, and started the financial dominoes tumbling, and with credit dead in September and October, sales plunged while costs remained.

So-called, self-proclaimed experts here on what GM or Ford did wrong are talking through their hats, at least we know Romney is positioning himself for 2012... and rally doesn't care about the damage this will do to families, municpalities, pensions and the economy of the USA for the long-haul... bankruptcy will crush everybody during a "re-structuring".

The lack of knowledge of politics in the US may be overshadowed by the lack of understanding of economics... GAwd help us all.
Maybe the US auto makers should have started working on the more fuel efficient cars 5, 6, 7 years ago instead of, "Oh, gas is skyrocketing, let's do that NOW."

[Murrican]

There are two flaws in Murrican's argument. First, bankruptcy, as you said, does not mean that the automakers will cease to exist. Secondly, the competitive disadvantage is not in the quality of the automobiles but in their labor cost per vehicle it costs them $2000 - $3000 more per car than Toyota does largely because of the fringe benefits that they can not get out from under. Bankruptcy will allow them to compete on an even playing field with Toyota.

1. bankruptcy of either Ford or GM will so crush and do damage to the US economy that the market for cars will itself diminish and lead to further bankrupcies -- and not just re-structurings -- not just temporary Chapter 11

2. yes, the cost differential has historically been in labor and health costs, but also in a too-high US dollar which has led to floods of imports of every manufactured good -- GM has re-negotiated with UAW so that new employees start at $14 to $15 and that is going to help in future and is why GM was buying out current employees who cost a lot more per hour -- but the health and retirement costs are an anchor around GM's neck -- if bankruptcy removed all of them it would hammer all current and past employees, lead to more and more personal bankruptcies and foreclosures -- government has to pick up the retirement health costs even for a two-year basis

Restructuring is not an exercise carried on outside of the world of people. Restructuring takes away things people have based their lives on... retirement, college, purchases, etc.

Very risky propositions indeed, especially when we see the direct, short-term consequences of as many as 3 million jobs... Not worth the risk. I'm not a socialist but there is a time and place for government money to go where private money can't -- credit crisis -- to sustain an economic pillar.