You may recall the Plastech debacle. Chrysler's interior supplier got bailouts from ChryCo, then filed for Chapter 11. ChryCo tried to swoop down and take the tooling. A federal judge said no. Since then, the supplier's been sold off. And much to somebody's chagrin, the owner of the mismanaged parts maker has pocketed, wait for it, $12m for running the company into the ground. And if that's not bad enough, and I say it is, Crain's Business Detroit reveals that the federal judge overseeing the break-up allowed Plastech to hide Julie Brown's compensation from public view. And no wonder. "Those documents show that Julie Brown's husband, three brothers, two sisters-in-law, a sister, a cousin and a nephew were on the payroll to the tune of about $6 million a year. Of that, $2.25 million was paid to Jim Brown, Julie Brown's husband. From other documents, it appears that Brown's personal driver, cook and two housekeepers were paid by the company." Strangely, Crain's sense of righteous indignation also files for bankruptcy. "Employing family members is no crime. Trying to keep how many relatives and what they were paid from the public suggests that Plastech's owner thought she had something to hide. If each family member performed his or her duties well, what's the problem? Surely the compensation is not the cause of the company's overall financial problems." No, of course not. Nor is it any indication that the company was poorly run. At all.
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This is terrible. Sounds like American Axle.
Apparently it only seems like a crime if it was your job that was lost…
Welcome to the world of affirmative action, Detroit style.
As deplorable as the supplier situation is, the dealer development situation is worse. Front men masquerading as dealers, with the factories and the ‘real’ dealers sharing a nudge and a wink on the whole deal.
Can I sue my parents for not putting me in the family business and offering me millions after they failed at it?
Seeing the quality of the products Plastech makes (used to make?) I’m not at all surprised by this.
I think there is usually a connection between the quality of products a company makes and the morality of its management and subsequently, its employees.
If you look at the materials of a random Chrysler interior anyone can easily see nobody has put any passion into making it something good.
A self-respecting company would (if it would get into the situation in the first place) quickly identify the problem and change it.
Instead, Plastech apparently decided to take advantage of their contract with and general state of Chrysler, giving them terrible quality plastics and leech of them some more when things inevitably got bad in the end.
Nice scheme Mrs J. Brown.
Maybe this will put the whole Chrysler-Plastech drama in a new light. I seem to recall that many commentators viewed Plastech as the poor innocent supplier being strong armed by big mean 3 headed dog Chrysler. Little guy Plastech trying to keep horrible Chrysler from taking their tooling toys and going home.
Now we have some background on why Chrysler was trying to cut ties with this company.
Typical American big business. Executives exploit companies for their own gain while complaining about the costs of labor and hourly employee benefits and gullible, ignorant consumers believe them and blame the unions for the problems. Guess what it is going on a GM, Ford and Chrysler right now. Look at executive salaries and compensation packages if they lose their jobs. It is a disgrace. Then they say buy American, why? We are rewarding bad business behavior. Let the companies fail. Look at Mulally at Ford. He is getting 30+E6 in compensation. Who among your readers make 1 percent of his salary? What if Ford folds? Will Mulally have to give back his salary? What if Ford stock drops precipitously in the next week? Does he give back bonuses? It is all carrot and no stick.
@Alex Rodriguez:
So now we know the horrible, contentious, abusive supplier-manufacturer relationship was caused by twice the ineptness we thought. I still blame the D3’s “cut costs at any cost” mindset for starting the avalanche of stupidity.
Wait – Motownr, how is this affirmative action? Ugh.
The Detroit 2.8 do reverse discrimination (i.e. affirmative action) to “minority owned businesses”, often giving them business even if they are not the best for the job, and have done this for quite some time. As in since the 1960’s. Likewise, black and female dealers also get the same extra-special treatment.
This company was a “twofer” being run by a female black individual.
Hey, I’m just reporting the facts. Don’t shoot the messenger.
I will say this. Now, just imagine the outrage if the 2.8 gave special contracts just because the suppliers were owned by Christians. Or Jews. Or Hindus. Or communists. Or neo-Nazis. How about companies owned by oil companies. Or folks of the Oriental race instead of black race.
Some folks are starting to say – hey, how about a true, level playing field, isn’t that what America was supposed to represent for folks coming here? But largely, such folks are being heckled and accused of being racist or sexist.
And so goes the so-called open, intelligent and tolerant discussion of race and gender in the United States today.
CarShark :
June 30th, 2008 at 12:05 pm
So now we know the horrible, contentious, abusive supplier-manufacturer relationship was caused by twice the ineptness we thought. I still blame the D3’s “cut costs at any cost” mindset for starting the avalanche of stupidity.
So even when the light is shown on a specific case, we still just get to lump the D3 together and make generalities and blame them for Plastech having no integrity.
Okay.
I think it is now evident that Plastech was the problem in the Chrysler-Plastech saga. They appear to have had plenty of margin to trim costs to stay in business. They were just too busy using that margin to line their own pockets…
Sounds a lot like Arrested Development.
“Are those police boats?”
I think it is now evident that Plastech was the problem in the Chrysler-Plastech saga. They appear to have had plenty of margin to trim costs to stay in business. They were just too busy using that margin to line their own pockets…
@Alex Rodriguez:
Yes, because there’s no evidence that the D3 execs do that as well…right? So they are just as bad, and then squeeze their suppliers that are following their own poor example, and I’m supposed to absolve them of their part of the problem? No, sir.
This is so outrageous it is funny.
Apparently it is now the duty of the courts to hide corporate thievery from the people so the prols don’t get too riled up. We live in a banana republic.
Qwerty –
You hit the nail on the head! We certainly don’t want the general public to realize that the most avaricious criminals in our society are those who virtually never get thrown in jail, or for that matter even indicted.
So now we know the horrible, contentious, abusive supplier-manufacturer relationship was caused by twice the ineptness we thought. I still blame the D3’s “cut costs at any cost” mindset for starting the avalanche of stupidity.
Wow. Six-degrees of Detroit if I’ve ever seen it.
You hit the nail on the head! We certainly don’t want the general public to realize that the most avaricious criminals in our society are those who virtually never get thrown in jail, or for that matter even indicted.
For a long while I have believed we need a war on white collar crime. The damage to society done by a street ruffian stealing a few bucks from a 7-11 pales in comparison to the looting that is taking place at the top. Rob a bank of few thousand dollars and go away for ten years, bamboozle stockholders for millions and kick back on a beach for the rest of your life. The housing bubble showed that it is not just a few people, committing fraud in secret; it is open and has become a way of life for a large segment of the population. The endemic corruption will eventually destroy the country. We’ll end up like Brazil.
Qwerty,
You’re right on. White collar criminals need to get locked up with everyone else… drug dealers, violent criminials, etc. That in and of itself would likely change behavior. Some of these guys in the ‘ol boys club need to be wearing orange vests and picking up trash off the freeway.
Prison is an ugly place. Perfect for some of these moral-less SOB’s.
Qwerty, you’re right, we are likely to end up like Brazil. Or like Argentina. On the brink of civil war over food and prices.
http://www.learcapital.com/marketcommentary/6743.html
In fact, within a decade, we’re likely to be EXACTLY what we already appear to be in many ways – a banana republic. Probably splintered into several countries just as the soviet dis-union broke up starting in about 1991.
Not that I want this to happen, but when you socialize wealth and privatize profit, (and hand the Constitutionally mandated Congressional authority illegally over to bankers – called the “fed”) that’s what you eventually get.
http://www.learcapital.com/marketcommentary/6744.html
The chickens are indeed, coming home to roost. It’s time to pay the band, party’s over. The deck on the Titanic is nearly past the point of being able stand upright.
You get the picture.
Well, it’s been a fun 232 years for the United States. Sure was a flash in the pan compared to the British Empire (1500-1948) and especially compared to the Roman Empire, though.
Here’s some more friday reading before we get to the June sales figures next Tuesday.
Nothing like the prospect of a noose at noon time to “focus one’s thinking in a hurry” is there?
http://www.learcapital.com/marketcommentary/6745.html
Especially pertinent are these snippets:
“Americans for the most part are not yet aware of the dollar’s fate and how that is going to devastate their standard of living. But there is a growing sense among foreigners that they don’t want to get paid or hold dollars lest they be holding them when the plunge in the dollar’s exchange rate leads toward zero value for the Greenback.”
” It seems to your editor that we are approaching a perilous crossroads in economic history, with our decadent, consumer oriented, live-for-today culture on the verge of collapse. We have basically “shot our wad,” as they say, and now we are going to have to pay for our orgies. We blame no one more for our condition than the father of economic lies, John Maynard Keynes, who convinced the West that we could eat our cake and have it too. No need to save to build for a better tomorrow. You need only deficit spend and print money to fund your expenditures. It is amazing how many Ph.D. economists have swallowed Keynes’s lies, hook, line, and sinker. Of course, most of the high-profile economists have had their careers advanced by selling these lies because they have benefited the Wall Street and Washington establishment. They have used Keynesian lies to deceive the public into thinking that Government can give the public welfare and wars without a price.”
“To be sure, the Keynesian lie has worked well for quite a while. It has worked especially well for the banks that own the Federal Reserve Bank and for those who put it in place to socialize wealth while privatizing profits. And so, with the money supply growing exponentially debt is growing even faster than income. That is being dealt with not by policies that would force us to live within our means and rebalance our accounts. Rather it is being dealt with by a faster and faster creation of money, which in turn is resulting in a faster and faster creation of debt. In other words, what is believed to be the cure is actually the problem and making the situation worse over the longer term.”
Wow, what a novel idea! Living within one’s means? Not going into debt for everything to satisfy a craving for instant gratification?
How about not ALLOWING the crooks, shiesters and bankers to control EVERYTHING right down to and including the mass media which fast-feeds us “news” (no agenda there, right?) and runs our universities to teach our “teachers” to propagandize our children, and make good little consumers out of them?
We vote for these folks, who’ve done this “for” us, people. Wake up and look around you.
As I said, cars & oil are the least of our problems over the next 15 months.
jkross22 Some of these guys in the ‘ol boys club need to be wearing orange vests and picking up trash off the freeway.
The reason this doesn’t happen is that these guys are oftentimes the very ones supporting the people who pass the laws, and then “employ” them (as lobbyists) once they leave office. That they are ripping off both investors and the taxpaying public is, as Qwerty points out, a far more antisocial act than the guy boosting cars or selling pot. These crooks maneuver in the middle of arcane laws and steal from us without generally risking exposure. They are frequently viewed as “captains” of industry.
Multi-million dollar thefts by regular criminals are quite rare and spectacularly laid out in the newspaper. The perpetrators are typically caught and locked up. When these guys are caught, it is a rarity that anything happens beyond a hand slap and public tut-tutting that it could happen (again). What are the odds against a court finding Rick Wagoner, his predecessors and their co-conspirators, guilty of malfeasance and the theft of the value of an 80-year old institution? The reality is that we don’t even have the legal structure to identify the theft.
Strangely, Crain’s sense of righteous indignation also files for bankruptcy. “Employing family members is no crime. Trying to keep how many relatives and what they were paid from the public suggests that Plastech’s owner thought she had something to hide. If each family member performed his or her duties well, what’s the problem? Surely the compensation is not the cause of the company’s overall financial problems.” No, of course not. Nor is it any indication that the company was poorly run. At all.
Having lived in a big 2.888 manufacturing area, I’m quite aware of this sort of crap in both management and labor.
What’s really surprising (and disgusting), is so-called Judge Crain’s comments. I wonder Crain takes notes and pointers from Delphi’s Judge Drain.
Well, it’s been a fun 232 years for the United States. Sure was a flash in the pan compared to the British Empire (1500-1948) and especially compared to the Roman Empire, though.
This would be sad if it wasn’t so laughable.
The Panic of 1893 bought an end to the Gilded Age of the late 19th century, the country did not break.
The 1929 crash brought an end to the Roaring 20’s and triggered the Great Depression, the country did not break.
These are just two examples of the many financial crises (and otherwise) the nation has faced and did not bend.
I think the news of the death of this country is premature (to put it kindly) at best, and wishful thinking at worst.
I’m not wishing for my own country to fail, quasimondo!
Besides, even after the British Empire failed, and even after the Soviet (dis)Union collapsed, life went on.
But the American Century was the 20th. We’re very, very clearly on the decline.
I’m sure the Etruscans didn’t want their empire to fail, nor the Greeks, nor the Romans, nor the Dutch, nor Spaniards, nor British.
Didn’t stop it from happening, though, did it?
You know the old saying about wishing in one hand and peeing in the other and see which one fills up first….
Actually, I don’t.
And I don’t see any common threads between the collapse of the British Empire, or the Soviet Union, and the possibility of the collapse of the U.S.
The Soviets at the time of their collapse was beset by separatists in the smaller republics. I’ll show some concern when California decides to split from the union (or maybe not).
The British empire, like the Romans, and the Ottomans, and all of those ever expanding empires, simply stretched itself too thin, a problem made worse from trying to fight off Nazi Germany. We’re not stretched thin, despite how you feel about our involvement in Iraq, and we’re not trying to take over the world.
Clearly there is a global shift in power, but I doubt means the U.S. will crumble like Rome in its final days, and it won’t be relegated to the back burner of world affairs as quickly as you envision it to be.
The Panic of 1893 bought an end to the Gilded Age of the late 19th century, the country did not break.
The 1929 crash brought an end to the Roaring 20’s and triggered the Great Depression, the country did not break.
In each of those cases there were fundamental changes in the regulatory powers of the U.S. government that were designed to prevent a reoccurance. They also caused vast amounts of suffering for the average citizen. You have basically proved the point that conditions were left to fester and change did not occur until the system broke down. That is exactly what people are pointing to, that our current situation is unsustainable and the bill will eventually need to be paid.
No one knows what will be on the other side of major economic turmoil. Many flirted with fascism during the Great Depression. Pointing to past events that we survived is not reassuring. When a large discontinuity occurs it is impossible to know what the outcome will be. It is like war. Everyone who starts one goes into it thinking it will be short and easy, but the results are often unpredictable. That is why you never want to get involved in one if it is preventable. It is also why letting the country turn into a kleptocracy is very bad idea.
Nothing lasts forever. Even though the Brits are still around, sipping their tea and reminiscing about the past when they ruled the world, they are a pale shadow of what they used to be. As menno mentions empires eventually end. If you are lucky it is a long slow decline rather than a cataclismic disruption.
I’m curious to know whether anyone in purchasing at the big 2.8 was cut in as well. At least now we know why the costs are so high.