Bankruptcy is more than a financial reckoning. It’s a psychological way-point, from “we’re doing our best” to “re-do.” Let’s call that middle point “we blew it.” That’s not too harsh, is it? I mean, if Chrysler and GM didn’t blow it, they wouldn’t be bankrupt. Oh wait; they’re not bankrupt. Which means Chrysler and GM don’t have to face the otherwise inescapable fact that they NSFWed-up. Of course, they should face reality. You know: the first step to recovery is admitting you have a problem. But as long as they’re supported by enablers, they’re happy to stick with “we’re doing our best”—even though their best is nowhere near good enough. Uncle Sam’s support I get. But the media’s participation in this delusional denial is unconscionable. I speak specifically of, you guessed it, The Detroit News.
TTAC’s Best and Brightest know that I regularly OK routinely give The Detroit News NSFW. As the hometown paper, the News could have steered their readership towards a greater understanding of the domestic carmakers’ predicament. They could have been at the forefront at the debate over the automakers’ future (if indeed there is one). Instead, they stayed on the sidelines, pom-poms in hand, perpetuating every excuse proffered by the piss-ant PR pansies blowing smoke up America’s NSFW, actually cheering the automakers’ multi-billion dollar raids on the public purse. And they’re still doing it.
“Give GM, Chrysler some breathing room” is yet another example where The Detroit News gets it badly, completely, foolishly, dangerously wrong.
Leaders of President Barack Obama’s auto task force now say that deadline isn’t likely to be enforced, taking away a gun from the heads of Chrysler and GM and allowing them more time to carefully put together their new business plans.
It makes sense for the government to provide that flexibility. No one will be able to say for certain whether the two automakers are viable until the administration thaws the credit freeze and Americans regain confidence in the economy.
The auto industry is not suffering as much from a failed business strategy as it is from the inability of its customers to get loans and the wariness of consumers to make big purchases.
Are these guys NSFWing nuts? Well, yes. Obviously.
Obviously, Chrysler and GM’s unions and bondholders can’t be “encouraged” into ripping-up and re-writing their agreements with the automakers if there isn’t a gun to GM’s head. Why would they?
Obviously, waiting for the economy to recover is not a viable “plan” for either Chrysler or GM.
Obviously, Chrysler and GM (NOT “the auto industry”) were and are suffering from a failed business strategy. They were losing money and market share hand over fist when the economy was booming.
The really tragic part about this: The Detroit News and, by extension, the automakers, actually believe that they can keep dancing the waltz as compartment after compartment fills with water. They are willfully ignorant of their plight. They refuse to abandon ship—even if it means taking tens of billions of our hard-earned tax money down with them. Well, it already has. So tens of billions of additional dollars.
Notching down the urgency level a bit ought to give everyone the room they need to make sound decisions.
The task force can do one more thing for the automakers: Approve the next round of loans to help them continue operating until the market rebounds. Rattner has before him $22 billion in loan requests from GM and Chrysler, and acknowledges they need the money.
But taxpayer backlash to bailouts makes additional loans dicey. The money would be well-used.
WHAT!? In fact, correct me if I’m wrong (I know you will) but it’s the taxpayer that’s going to be well-used. The News begs to differ.
Chrysler, which needs $5 billion by the end of the month, says it is making progress in its alliance talks with the Italian automaker Fiat.
The alliance would allow Chrysler to cut its expenses and expand its markets, and place it back on the road to profitability.
GM has showrooms filled with attractive product and is negotiating a new labor pact with the United Auto Workers union that should sharply reduce its operating costs. Once consumers start buying vehicles again, it should be in good shape.
There’s a light out there at the end of this tunnel. If GM and Chrysler are given the time and the help they need to reach it, the entire economy will benefit.
Not to coin a phrase, the light at the end of the tunnel is the headlamp of an oncoming train. Somebody should pull the brake on this bailout express, ’cause full speed ahead is only going to make things worse, not better. Or, to return to our original metaphor, preventing Chrysler and GM from bottoming out will guarantee their death in the gutter.
I’m curious to know what Ford really feels at this point. They seem to be the most proactive of the 3 US companies and have the most pride but are still getting hammered every day in the market, just like GM & Chrysler.
Did they expect one of their peers to have folded by now? Were they hoping for that? Would it really hurt their business or help? I’d like to be a fly on the wall in a board meeting.
They have some very nice cars dropping in over the next year and I sure hope they sell well – I’m in their corner, as it were.
None of these companies are going to want BRIDGE LOANS (not bailouts) if they have to agree to nix bonuses and CEO pay drops to $1.
WARNING:
May contain some drug use and suggestive themes.
“The task force can do one more thing for the automakers: Approve the next round of loans to help them continue operating until the market rebounds.” – and there it is. not, give us money so we can retool and see our way forward to a better managed/product-ed future. now it’s just give us money so we can weather the storm and continue on with business as usual.
I think Robert used the “light at the end of the tunnel is an oncoming train” metaphor previously in one of the deathwatches, but it’s even more pertinent now, as the train is a lot closer.
You really don’t have to eliminate bonuses, you just have to rein in executive compensation. I came up with a great plan of limiting executive pay (CEO especially) to 100x the lowest paid worker, or 1000x the lowest paid foreign worker (no adjusting for currency valuation). This would include ALL subsidiaries AND suppliers, so no spinning off low-wage units and/or sourcing cheap labor through suppliers.
Anyone who’s interested in reading it can see my blog post here: http://www.sexcpotatoes.com/blog/?p=29
Wow. Just…wow. I mean I knew the Detroit Free Press was in the tank for the Big 3, but this just takes the cake.
My wife and I had to file Ch 7 due to an illness, and it was the best thing we could have done.
Instead of laying awake at night worrying about all the bills we had to pay, instead of wasting money paying minimums on credit cards we had no hope of ever paying off, instead of making a payment and insurance on a car we didn’t drive anymore; we swallowed our pride and accepted the fact that we needed help.
Sure, it is a little embarassing and your ego takes a hit, but sometimes there is just no other way.
Now it’s six months later, we have no debts, we have built our savings back up, and we are refocused on being smart and frugal with our money.
Liken the situation to a fugitive who is finally caught after years on the lam. They always tell the cops that they knew the day was coming, and they are relieved that they can finally close both eyes at night.
Of course the Freep is in the tank for the automakers. How many of their subscribers work in the auto industry? What do you think happens when they publish not even a negative but a slightly un-happy article? People call and cancel subscriptions.
Remember what happened when the LA times gave GM vehicles bad reviews? Do you think the freep can survive without auto related advertising?
Whether or not they actually believe what they are writing, The freep knows which side its bread is buttered on.
So of course you’re going to be able find easy fodder for this blog by posting stuff from them, the fact of the matter is that they speak to a small audience and for an even smaller one.
This is why TTAC is seen by domestic fanboys as so virulently anti-Detroit. You actually have the gall to hold a company’s management accountable for their actions. How dare you!
I’d wager that most of the flames in the flame-on thread come from posters that want to read nonsensical drivel like the Freep is providing. They aren’t interested in an honest, hold-management’s-feet-to-the-fire, analysis of reality.
Coupled with the extraordinarily low level of reading comprehension that seems all too common among internet denizens, the flamers are quick to confuse criticism of Det3 management with criticism of America, or American workers.
Once consumers start buying vehicles again, it [GM] should be in good shape.
That’s the dope smoking-est statement regarding Detroit’s plight I’ve seen so far.
GM was losing $1000/second in 2007, and in 2008. The Detroit News should define what “buying vehicles again” means, because the number of profitable vehicles GM would have to sell to be in good shape is in the gazillions.
But they have lots of unprofitable vehicles, including The One – The Volt, by GM’s own admission.
And revenue isn’t GM’s only problem; expenses and product don’t figure well, either.
Gee, that incident that led to GM pulling ads in the “Times” had to do with criticism of Red-ink Rick.
GM could have listened and considered like adults, but instead chose to act like petulant children and lash out at the “Times” by cutting all of their ad revenue. How did this benefit them? They gained some more powerful enemies in California. Who cares, they don’t buy cars in California, right?
Why were they advertising in the “Times” in the first place? If it was beneficial for them to advertise, then why would they let a little editorial that would soon be forgotten dictate their marketing policy.
GM has showrooms, and dealer lots, and rented lots, and container ships filled absolutely crammed with attractive mediocre product
edited for truth
RF,
You are absolutely correct. You get it. Why is it you seem to be in the minority?