tagged w/ Auto Industry
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Have you noticed that one of the Obama administration's most successful programs is also its most "socialist" initiative?
OK, the bailout of General Motors and Chrysler was not socialist in the classic sense: the government was not looking to hold onto the companies over the long run. Their turnaround was accomplished in significant part by tough, capitalist management steps.
But, yes, this was socialism -- or, perhaps, "state capitalism" -- because the government temporarily took substantial ownership in the companies when no one in the private sector was willing to put up enough capital to prevent them from going under. Today, the companies are thriving.
More than that: the auto industry exemplifies how unions can do their best to protect the interests of their members while also ensuring the prosperity of the companies that employ them.
This month, the United Auto Workers and GM reached a tentative four-year contract that will add or save some 6,500 jobs, provide workers with a $5,000 signing bonus and enhance a profit-sharing agreement.
Note that increase in profit-sharing. The union and the company are seeking to align the interests of workers and shareholders. The idea should be as American as a Chevy or a Ford: When a company does well, its employees should do well, too.
The UAW's bargaining approach belies the notion that unions don't care about the well-being of the companies whose workers they represent. On the contrary, the UAW made extraordinary concessions to keep the Detroit-based auto industry alive. Now, its members can fairly claim a right to some of the benefits.
"When GM was struggling, our members shared in the sacrifice," said Bob King, the UAW president. "Now that the company is posting profits again, our members want to share in the success."
Anybody have a problem with that?
And the bailed-out companies have come back, as Dick Cheney might say, big time. In August, GM announced that its second-quarter profits had nearly doubled, to $2.5 billion. To put that in context, in April 2010, GM reported losses of $4.3 billion. Revenue at GM rose 19 percent, to $39.4 billion.
In a sluggish economy, the auto industry is providing us with good news. And this good news was brought to you in part by the government of the United States of America, paid for by taxpayers just like you and me.
We taxpayers will reap rewards, too. A lot of money put into the companies will be earned back by the government, but there's more: Employed workers will pay taxes (and not need unemployment compensation). The auto industry's large network of suppliers will stay in business. Everybody involved will be able to buy goods and services that will put other people to work.
The larger lesson is that there are two ways to approach the problems capitalism inevitably runs into. One is to pretend that there are iron rules prohibiting us from doing anything at all. We are supposed to have faith that an invisible hand will eventually put matters right; in the meantime, we must accept any slap in the face the invisible hand might deliver.
Franklin Roosevelt described the other way in 1932: "Our Republican leaders tell us economic laws -- sacred, inviolable, unchangeable -- cause panics which no one could prevent. But while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings."
Once human beings throw off the chains imposed by the idea that all economic laws are "natural," they discover the capacity to change things and can use the tools of democratic government to do so when all else fails.
We did not have to accept the collapse of our domestic auto companies, and we do not have to accept that the Federal Reserve is powerless to give the economy the boost it needs. There is no reason to believe that the federal government is incapable of investing more in schools, roads and other public goods to build for the future and get more money into the hands of consumers now. We do not have to rely on giving rich people tax cuts and then confine ourselves to offering fervent prayers that they might invest some of the money in creating jobs.
We can seek to control our fate, or we can turn the Invisible Hand into a God who commands us to be helpless.Have you noticed that one of the Obama administration's most successful programs... more
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WHACKO-TV was very excited to see the changes that took place in Egypt recently. And it’s good to see their economy is starting to turn around. It helped that their camel herders were able to get such a large bailout to be able to start to advertise again. And of course, the WHACKO-TV sales department was able to bag a big contract from of all people Al Jazera. Wow. OMG.WHACKO-TV was very excited to see the changes that took place in Egypt recently. And... more
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Nancy goes on "America Live" with Megyn Kelly on Fox News on February 8, 2011, to discuss the very successful Chrysler Superbowl ad touting both the Chrysler 200 and Detroit. She debates Lars Larson, a conservative radio host. They discuss the ad, Detroit, celebrity spokespeople, the auto bailout and more. Nancy comes down hard on the side of Chrysler, Detroit, the autos and the bailout, as well as American-made cars.
http://www.youtube.com/watch?v=nJXkNg3Fy3ENancy goes on "America Live" with Megyn Kelly on Fox News on February 8,... more
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GOTHENBURG -- Zhejiang Geely Holding Group, China’s largest private-run car maker, agreed on Sunday to buy Ford Motor’s Volvo car unit for $1.8-billion, the country’s biggest overseas auto purchase.
The takeover underscores China’s arrival as a major force in the global auto industry and ends nearly two years of talks with Geely over Volvo -- the last sale from Ford’s former premier group, which also held Aston Martin, Jaguar and Land Rover.
Geely said in a statement it had secured all the necessary financing to complete the deal and “significant working capital” to fund Volvo’s business.
“Today represents a milestone in the history of Geely,” Geely chairman Li Shufu told a news conference, adding that Volvo Cars would remain a separate company with its own management team based in Sweden.
The deal, which both sides aim to close in the third quarter, will free up cash for the number two U.S. automaker and enable it to focus on its core Ford brand.
Geely, parent of Geely Automobile Holdings, was named by Ford as the preferred bidder for its loss-making Swedish unit in October 2009.
The Chinese carmaker, which clinched Volvo at a price tag well below the $6.5-billion Ford paid for it in 1999, plans to keep the brand and operations in Sweden.
Geely chairman Li Shufu is already planning a factory in Beijing which will make 300,000 Volvo branded cars, or as many Volvos for China as are now made abroad for foreigners.
Made-in-China Volvo may also get a boost from Beijing’s plan to support domestic brands and replace Volkswagen AG’s Audi A6 as Chinese state officials’ car of choice.
China raced past the United States to become the world’s top auto market last year, with sales surging 46% to a record 13.6 million units. It is keen to move into Western markets but has so far lacked the technology and brand recognition to do so.
The Volvo deal should help the Chinese carmaker to get around some of those obstacles more quickly.
http://www.canada.com/news/world/Geely+Ford+Volvo+unit+billion/2736761/story.html?id=2736761GOTHENBURG -- Zhejiang Geely Holding Group, China’s largest private-run car... more
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Henry Ford's great-grandson arrived at the shuttered auto plant to brag about a plan to revive the vast empty space: Investors would transform it into a modern factory to make solar panels and high-tech energy systems instead of Town Cars and Thunderbirds...Several months later, a plan that exists only on paper is still awaiting final approval. The plant is still vacant, just like scores of other cavernous auto factories across the nation that have never been redeveloped.
(p.1, para.1,3)
An Associated Press analysis illustrates the scope of the problem: Of 128 manufacturing plants in North America closed since 1980 by the Detroit Three automakers and their largest suppliers, three of every five now sit idle...Those 128 plants had a payroll of 196,000 workers at the time they closed. Today, only 36,500 people work at those sites that have been redeveloped, and at only three of the revived plants does the number of employees match or exceed the number in their carmaking past. The rest are concrete prairies or steel behemoths waiting for reuse or a wrecking ball, most without any real prospects for new use.
(p.1, para.4,6)
The obstacles are many. The decline of the domestic automotive industry has come during a slowdown in commercial real estate. Many of the closed plants are far from urban centers, and nearly all have paint waste, heavy metals or other hazardous materials on site that exceed regulatory limits. Cleaning up those toxins can cost as much as $300,000 an acre and take years.
(p.3, para.2)
The entire story can be read at the link:
http://abcnews.go.com/Business/wireStory?id=9528277Henry Ford's great-grandson arrived at the shuttered auto plant to brag about a... more
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jmsrmy
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2 years ago
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Ford Motor Co. has offered buyout or retirement incentive packages to all of its 41,000 U.S. hourly workers as it tries to further reduce its factory work force. Ford, the healthiest of Detroit's three automakers and the only one to avoid government aid and bankruptcy protection, still has more workers than it needs to produce cars and trucks at current sales levels, said company spokesman Mark Truby.
(Krisher, T., 2009, December 21, para. 1-2)
Details on the buyout packages at the link:
http://www.huffingtonpost.com/2009/12/21/ford-buyouts-early-retire_n_399731.htmlFord Motor Co. has offered buyout or retirement incentive packages to all of its... more
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jmsrmy
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2 years ago
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DETROIT — General Motors said Wednesday it would shut down its Saturn brand after an agreement with Penske Automotive Group to acquire it fell apart.
Penske could not find another automaker willing to agree to make vehicles for Saturn once its manufacturing contract with GM ran out in two to three years. Penske had a tentative agreement with an unnamed automaker to build additional cars, but that automaker's board of directors notified the company Wednesday that it had rejected the deal.
GM CEO Fritz Henderson said in statement that Saturn and its dealership network will be phased out.
"This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality," Henderson said in a written statement. "PAG's announcement explained that their decision was not based on interactions with GM or Saturn retailers."DETROIT — General Motors said Wednesday it would shut down its Saturn brand... more
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KSirys
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2 years ago
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Time launched its Assignment Detroit initiative Monday, which it described as "a year-long commitment to living in and reporting from the city of Detroit."
As part of the effort, Time has purchased a home in Detroit from which reporters and editors will tell the city's stories. Those stories will appear in Time, Fortune, Sports Illustrated, Money and Essence magazines, as well as on Time.com, Fortune.com, CNNMoney.com and SI.com. They will be branded Assignment: Detroit.Time launched its Assignment Detroit initiative Monday, which it described as "a... more
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The Drive Smarter Video Contest (http://www.drivesmarterchallenge.org/contest/) invites anyone with a camera to submit a two-minute video illustrating one or more of the Drive Smarter Challenge campaign’s gas- and money-saving tips to compete for a $5,000 grand prize.
The goals of the campaign are to encourage people to drive smarter, reduce their gas consumption and drive fewer miles by combining errands, biking, telecommuting, walking, carpooling, or taking public transit.
The first 80 entrants whose videos meet the contest criteria will receive a $25 ExxonMobil Gift Card and a Car Care Council Car Care Guide. Once the contest judges select the finalists, the public will vote for the winners of these prizes:
• Grand Prize: $5,000
• Second Prize: Choice between one VIP NASCAR Race Package (two tickets and two garage/pit passes to a NASCAR race event) or one VIP Indy Racing League Package (two tickets and two garage/pit lane passes to an Indy race event, plus a ride in a specially modified Indy car driven by a pro driver);
• Third Prize: Whichever prize package hasn’t been selected by the second prize winner (either the VIP NASCAR Race Package or the VIP Indy Racing League Package);
• Fourth Prize: Transportation Efficiency Package: A set of 4 Michelin Energy Saver All Season Tires (or comparable tires for the winner’s vehicle), one-year AAA membership, and two Silver Spoke League of American Bicyclists memberships.
Get ready, get set, go!
Enter here: http://drivesmarterchallenge.org/contest/The Drive Smarter Video Contest (http://www.drivesmarterchallenge.org/contest/)... more
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WASHINGTON (AP) -- The government plans to suspend its popular "cash for clunkers" program amid concerns it could quickly use up the $1 billion in rebates for new car purchases, congressional officials said Thursday.
The Transportation Department called lawmakers' offices to alert them to the decision to suspend the program at midnight Thursday. The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.
The congressional officials spoke on condition of anonymity because they were not authorized to speak publicly. Rae Tyson, a spokesman for the National Highway Traffic Safety Administration, which administers the program, declined comment.
Congress last month approved the Car Allowance Rebate System program, known as CARS, to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers.
Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.
"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association.WASHINGTON (AP) -- The government plans to suspend its popular "cash for... more
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Cash for Clunkers legislation proves: if you have a good idea that you’d like ruined it’s best to give it to Congress.Cash for Clunkers legislation proves: if you have a good idea that you’d like... more
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Yesterday we covered the Daimler investment in Tesla in some depth, noting that one of the biggest questions was the company's valuation. Given the sparse information revealed at the time, it could have been anything from $100 million to $1 billion. But Silicon Valley is a chatty place, and now Michael Arrington of TechCrunch has published ...Yesterday we covered the Daimler investment in Tesla in some depth, noting that one of... more
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"These folks should be planning their vacations or retirements , not trying to figure out what is Twitter and how can it help them find a job"."These folks should be planning their vacations or retirements , not trying to... more
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These folks should be planning their vacations or retirements , not trying to figure what is Twitter and how can it help them find a job.These folks should be planning their vacations or retirements , not trying to figure... more
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General Motors notified 1,100 of its 6,000 dealerships Friday that it is terminating their contracts with the struggling automaker, the first step in an even deeper 40% cut in its retail network.
GM spokeswoman Susan Garontakos said that the dealers receiving notice Friday are being told that their contracts will not be renewed in October 2010. Many of them are expected to close shop this year.
The company has told the Obama administration that it plans to cut its network down to 3,600 dealers by next year.
Much of the rest of the cuts will come from GM's plans to sell or close four brands - Saturn, Hummer, Saab and Pontiac.
(Full article at link)General Motors notified 1,100 of its 6,000 dealerships Friday that it is terminating... more
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islek
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2 years ago
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First was the story of a minority of Chrysler bond holders who drove the company into chapter 11 and now this:
"Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM de-clares bankruptcy, a prospect that is complicating efforts to persuade creditors to agree to a restructuring plan for the carmaker, analysts say.
Holders of $27bn in GM bonds have until June 1 to decide whether to swap their debt for a 10 per cent equity stake in the company as part of an offer that would give the US government 50 per cent of the shares, a United Auto Workers union healthcare fund 39 per cent and existing shareholders 1 per cent.
However, analysts say the chances the proposal will be accepted have been diminished by the large number of credit default swap (CDS) contracts written on GM's debt.
Holders of such swaps would be paid in the event of a default - but would lose money if they agreed to restructure GM's debt. For investors who own bonds and CDS, this could create an incentive to favour a bankruptcy filing.
According to the Depository Trust & Clearing Corporation, investors hold $34bn in CDS on GM. Once offsetting positions are considered, the DTCC estimates CDS holders would make a net profit of $2.4bn if GM were to default.
The opposition of 10 per cent of bondholders is enough to derail the proposal, which has already triggered protests from investors who argue it unfairly rewards the UAW at the expense of bondholders.
"You have every incentive not to agree," said one bondholder, a large credit hedge fund. "You would be locking in a loss if you did. It isn't only the 'shark' capital; it will be the mom and pop mutual funds who will oppose this deal. "
To put this article in clearer terms: Glorified paper-pushers and professional gamblers (aka hedge fund managers) stand to make over $2 Billion should the flagship US automaker, who employs or affects the employment of over 2M middle class workers, go out of business!
How much longer are we going to let Wall Street maintain its stranglehold on the US economy? WAKE UP AMERICA!First was the story of a minority of Chrysler bond holders who drove the company into... more
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Ford Motor Co. turned the tables on Toyota Motor Co. in April, outselling Japan's largest automaker in monthly sales for the first time in more than a year.
For the year, Ford sales are still about 30,000 vehicles behind Toyota. But Ford is benefiting from its new Fusion hybrid and gasoline-powered models, which Ford is billing as "America's most fuel-efficient midsized sedan."
Distress at General Motors Corp. and Chrysler LLC are also helping the Dearborn automaker distinguish itself.
Ford, which has been promoting itself as the "different" American automaker that is surviving without federal assistance, sold 134,401 cars and trucks in April. Toyota sold 126,540.
"Ford appeared to have benefited from the misery of GM and Chrysler," observed Jesse Toprak, executive director of industry analysis for Edmunds.com.
Across the U.S. auto industry, meanwhile, light vehicle sales fell 34.4% in April, compared to the same month last year. That was the 18th consecutive month of declines. For the year, U.S. new vehicle sales are now off 37.4%.Ford Motor Co. turned the tables on Toyota Motor Co. in April, outselling Japan's... more
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Kepano
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2 years ago
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Chrysler has been forced into Chapter 11 bankruptcy despite billions of dollars of federal aid and support from the Obama administration. The company will merge with Fiat during the proceedings.
Find the full blog entry here:
http://blogs.current.com/news/2009/04/30/chrysler-closes-a-chapter/Chrysler has been forced into Chapter 11 bankruptcy despite billions of dollars of... more
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Tori
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2 years ago
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US carmaker Chrysler will file for Chapter 11 bankruptcy protection, President Barack Obama is to confirm.
The White House described the decision as a "surgical short bankruptcy" which should last between 30 and 60 days.
Mr Obama says that his administration had "worked very hard to avoid this", but not all of Chrysler's lenders were willing to participate in the deal.
The number of Chrysler dealers will decrease over time, but no jobs will be lost in the short term, he adds.
The bankruptcy will be filed in New York.
The US government had told Chrysler it would be given a further $6bn (£4bn) of vital state loans if it had successfully restructured the business by midnight.
This included trying to persuade the firm's main lenders to accept $2bn in cash, in exchange for writing off all of Chrysler's $6.9bn secured debt.
While Chrysler's main banks, holding 70% of the debt, accepted this proposal, it was reportedly rejected by hedge funds that hold a sizeable proportion of its remaining debt. Hedge funds are private investment funds that typically attract rich private investors.
The White House official accused the hedge funds of a "failure to act in either their own economic interest or the national interest".
He added that their rejection of the deal would not impede "the new opportunity Chrysler now has to restructure and emerge stronger going forward".US carmaker Chrysler will file for Chapter 11 bankruptcy protection, President Barack... more
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Van maker LDV has applied for administration after their management buy-out fell through, putting 850 jobs at risk.
LDV haven't made any vans since December.Van maker LDV has applied for administration after their management buy-out fell... more
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