STEP 1 (SOCIALISM) - Government Takes over GM & Fires CEO

About: link to auto industry takeover google list from news

Obama says Let There Be a New Auto Industry & there is:

(The question in my mind is how many on his staff, if any, know how to put together a car or change a tire? - or even run a non-governmental business?)

See 10613 for a list of all the things the government does well!

Comments

Mark de LA says

Now that the administration has a model like GM going for it for removing CEOs should be much more acceptable. Want government money? - we'll have to put our own people in there!

Somebody should track board of director changes for all members.

Mark de LA says

Personally, I would also like to see a Union Boss fired as well!

Seth says

I guess in your haste to criticize you overlooked his actual words: "And we cannot make the survival of our auto industry dependent on an unending flow of tax dollars. These companies - and this industry - must ultimately stand on their own, not as wards of the state." And i guess you overlooked the fact that there is nothing in the plan about a government takeover or the government running the industry. And i guess you also overlooked what he is actually doing: forcing the unions to settle on contracts that will allow GM to become more competitive. Oh well ...

Mark de LA says

seth 2009-03-30 14:21:37 11719

Yep, I don't believe much of what he says - the opposite seems to happen; like hope & change didn't happen - SOS!

Seth says

What might be interesting is for MR to tell us what he would have done in this situation.

I think this is the essence of Obama's plan for GM ...

source: Fact Sheet GM Christler
In order to execute a new, more aggressive restructuring plan within 60 days, we will work with GM to use all available tools to implement this plan. The best path to achieve this may well be an expedited, court-supervised process to extinguish unsustainable liabilities, should an out-of-court restructuring not be possible. The Administration is prepared to stand by GM throughout this process to ensure that GM emerges with a fresh start and a promising future. Consumers thinking about buying a GM car and workers and communities that depend on this iconic American company should have confidence that GM can and will come out of this crisis as a stronger, leaner and more competitive car company.

... that and guaranteeing the warranties on GM cars. Oh yes, and he is having most of the board replaces for a fresh start. So in essence he is giving the company what it needs: a fresh start and the legal leverage to renegotiate the union contracts and bond equity.

So what would you have done with GM, given the findings?

Mark de LA says

Let them go bankrupt! In the 70's Chrysler got a large bailout (for their times) & began building cheap K-cars - later expanding & buying other companies which is what large corporations, like GM as well, do to survive - buying markets & sloughing off the bad. Unfortunately, now 40 years later they are at it again.

The industry can't compete well for a number of reasons - some are government regulations on emissions. Some are Union wages. Some are poor management & failure to adapt. Currently the misguided environmental movement with it's government involvement is having negative impact on the market. The price of oil had a huge impact. The market wants SUVs and the government doesn't. Frankly, I think they just grew too big. When you grow too big you become bureaucratic & inbred - our government is a fine example. A corporation should never grow so large that it is deemed "too large to fail".

The Japanese cars finally got better, their management & close employee involvement in quality did the job. I watched the new CEO' presser this morning - he didn't rule out bankruptcy. My crystal ball says he's going to chop it up extensively. It is inevitable that things are born, thrive, mature & die; holding out via bailouts just postpones & extends the duration of the pain for everyone involved. Government did buy Chrysler 40 more years, but they never learned the lesson completely.

If the government can fire a CEO then it can fire a Union Boss.

A major revolution in the economic sphere is what is needed. The polarity of management-labor which you don't have in the Japanese Auto companies is the major area to be improved in the US. They also have inter-cooperating companies in what is called Keiretsu. Notice that although there is a recession in the whole auto industry that the Japanese cars are still selling. There are clues there. A major shift in the worker's attitudes from the union mentality to one of "how can I make these cars better & more efficient" would be a plus.

Since Seth didn't offer anything outside of Obama & I'm not getting paid for a detail plan I'll leave things at this level of generality. Solutions that are sustainable & dynamically balanced will have their roots in the threefoldness of society. Go there for inspiration.

Mark de LA says

MR 2009-03-31 11:19:04 11719

& as usual a cartoon picture can really crisp up some of my arguments:

Mark de LA says

seth 2009-03-31 09:56:56 11719

Well this looks interesting ...

source: unknown
The polarity of management-labor which you don't have in the Japanese Auto companies is the major area to be improved in the US.

... I would like to read more about it.

In the 80's the company I worked for started studying the Japanese notion of quality circles. The notion goes toward providing a feedback loop from employees into the processes they are involved with, ie making cars, creating software etc. The process itself, while a little complex for this item made extensive peer review & review by management until cost/benefit analysis triggered implementation.

In our company it didn't work since we were the managers & it took up too much of our time & too many meetings. What I think it does for the polarity is that it gives employees the feeling that they are part of the process that they have to work with & that that process is not imposed from outside & can be changed. It does have an Oriental flavor & obviously is not the whole solution to polarity.

Mark de LA says

Apparently there are others who think that the head of the UAW should have been "fired" too!

source: ...

But some critics are questioning why the president of the United Auto Workers union didn't meet the same fate, to signal a fresh start on the other side of the bargaining table.

Even though UAW President Ron Gettelfinger argues that his workers have made significant concessions in recent years, critics say Gettelfinger should have gone the way of Wagoner -- whose ouster could be seen as the final judgment for GM's pursuit of gas-guzzling SUVs at a time when foreign manufacturers were winning over their customers with fuel-efficient cars.

"Every bad thing you can think a union can do, the United Auto Workers did," said Kevin Hassett, the director of Economic Policy Studies at the American Enterprise Institute.

...I would argue even more that some in government & particularly Congress should be fired as well.

Mark de LA says

MR 2009-03-31 12:40:45 11719

seth 2009-03-31 12:27:16 11719

source: MR above
Apparently there are others who think that the head of the UAW should have been "fired" too!

Yep he probably should have been, but then the administration didn't have any legal lever over his head like billions in loans. Of course if he had of jaw boned such an ouster, you all would have been the first to scream foul.

That & Obama was heavily supported by the Unions - he would never jaw bone against them. He may in fact install some in the board of directors of GM before things are all over.

Another thought is that before GM is finished there will be a lot of plant closings & job losses. Obama will need the support of the Unions if even he expects to get out this mess unscathed.

Seth says

source: MR on 11722 said
This article today suggests he's going to Ease GM into bankruptcy.

Yep that is the whole idea. Btw, as The Anonymous Libral pointed out, bankruptcy has always been the government intervening in the business community. Forgiving part of their debts and renegoitiating their labor contracts is going to be the only way GM will have a chance to compete. Would that this have been forseen in 2008, we would have been many months further along.

source: ...
I'm sure he's going to protect his union buddies first.

Perhaps we can revisit that fear when we see the final labor contract, if any.

Seth says

I think this one is funnier ... thanks The Week

Seth says

... or this one ...

... thanks Pat Oliphant ...

Seth says

source: MR states above
.... SUV - the very vehicles that the public wants ... expensive alternative fuel cars which the public doesn't want

I have heard that rumor as well. I'm not so sure that it's all that very true. Certainly based upon my own experience of trying to find a cost effective vehicle that felt good to me, it is a myth. When i went looking i was inundated with clunky hard to get into, hard to navigate, over priced vehicles. GM makes more money selling those than they do selling the smaller cars ... so it seems to me that GM is in the business of spreading the myth that the public wants them. Just because a meme is advertised over and over again does not make it true. Then too we have the certainty that when the economy turns around, oil prices will rise again dramatically, and we will again have a rush to fuel efficient cars. Retooling and advertising for those new aged cars does seem to me to be the best long term course for American auto industry. And there is nothing that says they must be more expensive ... that too is another myth, me thinks ... if India can make a efficient $2000 car then why can't America at least make a $10,000 one?

Mark de LA says

Why didn't the Prius & other hybrids take off at such a rapid pace as to save the auto industry? A company that sees a market will move to satisfy that market. One thing that is just a boondoggle is that the total carbon foot print of making a Prius including the importing of battery materials exceeds that of regular gas cars. Then too the cost to operate vs investment to start doesn't justify getting one.

I reject your rejection!

Seth says

MR 2009-04-02 10:26:55 11719

I reject your rejection!

Well the Prius did take off dramatically. When i test drove it there was something like a two month waiting list to get one ... but that was when oil was over $100/barrel. Then oil dropped by half and all car sales dropped dramatically. Now they have Priuses sitting in lots at the port of Tacoma along with miles and miles of the other non-hybred Japanese cars. If you want i can go get some pictures. A couple years ago the Japinese were captureing the market in small cars while GM was pushing the big gass guzzelers for their added profit margins. Why didn't GM invest in and compete in the small car market? In fact Ford did and look how much better they are off now. You will really have a hard sell if you want to prove that GM made the right call back then.

And btw, any new technology tends to be more expensive when first released. That doesnt prevent companies and consumers from investing in it. In fact that is what drives technological progress. When the 8GB units come out they are more thant twice the 4GB price, but people will prefer to buy them anyway. Trust me i know that for a fact.

Mark de LA says

If global warming via CO2 is the main purpose in forcing people to buy small cars that burn less gas then why go to a small car that has a larger carbon footprint than a Hummer to manufacture?

Mark de LA says

Just throwing money at the problem won't solve it. Nuclear power is already developed. Nuclear power could create all the hydrogen needed for fuel cells by electrolysis. Even oil rich Iran recognizes needs for nuclear power (presuming they aren't just trying to make a bomb).

Seth says

This is what disturbs me! Why can't GM get this right?

source: bloomberg re the Chevy Volt

‘Much More Expensive’

The Volt “is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable,” the report said.

The language sparked commentary on blogs. “Since the government now decides what stays and what goes, could the Volt get thrown out with the bathwater?” said a March 31 posting on GM-Volt.com.

The blog Treehugger.com posted an article about the task force comments under the headline, “Will We Ever See Chevy Volts For Sale?”

GM hasn’t said how much it will charge for the Volt. Industry analysts have estimated the price at $30,000 to $40,000. The Prius ranges from $22,000 to $24,270 and Honda Motor Co.’s Insight hybrid, which went on sale last week, sells for $19,800 to $23,100, according to Edmunds.com, a vehicle pricing Web site based in Santa Monica, California.

... So Toyota and Honda can do it but even after massive government help GM still will not be able to sell a reasonable electric car.

Mark de LA says

seth 2009-04-02 17:51:07 11719

MR 2009-04-02 17:22:45 11719

If global warming via CO2 is the main purpose in forcing people to buy small cars that burn less gas then why go to a small car that has a larger carbon footprint than a Hummer to manufacture?

For one thing the small car probably would not have a larger footprint, The Belmont Club blog notwithstanding, and for another thing the main purpose is not to reduce CO2, but to become independent of foreign oil.

So the environmentalists & liberals have for the past decades forbidden drilling in Anwar, off the coasts, nuclear power stations & many other things like developing coal which would have reduced our dependence on foreign oil. About all they have is conservation & later rationing; sooner or later solar wind from their arses. For every Prius one more Hummer carbon footprint is made. One would think that a NASA sized operation, similar to going to the moon could be created which would yield personal transportation & something like neighborhood fuel cells within a few years or sooner. Obama would rather spend the money on social programs to ruin the medical industry & public schooling taught by incompetents waiting for retirement. That's my opinion, though, I could be wrong.

Mark de LA says

~the act s/b 2008, 2009 failed in the house...

Seth says

MR 2009-04-03 07:41:03 11719

seth 2009-04-02 17:51:07 11719

MR 2009-04-02 17:22:45 11719

If global warming via CO2 is the main purpose in forcing people to buy small cars that burn less gas then why go to a small car that has a larger carbon footprint than a Hummer to manufacture?

Well i'm speaking only for myself ... the creating of new green industries and the weening of America from foreign oil is far more motivating than easing global warming. Any, yes, a huge engineering effort to that effect is merited.

Seth says

I'm sure MR will enjoy the future.

Mark de LA says

Well, duh!

(GM)Company announces that few bondholders were interested in a plan to swap debt for stock.
After what happened to Chrysler's debt holders any further investment in GM is just a gift to the UAW - (somewhere I and others predicted this.)

source: ... General Motors said Wednesday it has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, virtually guaranteeing that the nation's largest automaker will be forced to file for bankruptcy court protection within the next five days.

The bondholders were not satisfied with the prospect of owning only 10% of the company when the U.S. government would own nearly 70% and a union-controlled trust fund up to 20%.

...

Seth says

source: MR above
After what happened to Chrysler's debt holders any further investment in GM is just a gift to the UAW

I guess you could look at it like that. You could also look at it as good money after bad. Where does one stop in the attempt to save the company? What does the company need to survive? When we invested our tax dollars in this proposition, i do believe that we took a senior position to the bond holders (a fact that needs to be checked). It seems to me that gives us the right to organize the company for the most probability of success rather than liquidation. I expect that proposition will be adjudicated in the courts. Perhaps we could watch for what happens.

Mark de LA says

The most probablility of success is bankruptcy?? IMHO, the US government after once pulling Chrysler's ass out of the bankruptcy fire should never have done it a second time. It's pure pandering to the UAW. Same for GM. Stop the bleeding of our tax $$$ and kill the beasts

Mark de LA says

seth 2009-05-28 08:18:52 11719

A GM bankruptcy has been forestalled by a new offer: 72.5% to the U.S. Treasury; 17.5% to New VEBA; 10% to bondholders. What's new is the bondholders get warrants for up to 15% of the new company. I assume that VEBA is a combination of the current stock holders and the UAW; but that is unclear to me. The bondholders have till Saturday to decide. GM says that if they decline the offer, they will get substantually less from the bankruptcy court.

Well, it is unclear for me but this sounds like blackmail by someone. IMHO, they should go bankrupt & suffer the consequences of bad labor & bad management decisions. To coddle together yet another company out of the mess that's there is like trying to polish a turd. Maybe the residue can be purchased by other companies which are closer to profitability.

In 10613 I posed the question:

source: ...

I defy each side to present something or some program that Big Government solved & which shows up today as still solved....& which couldn't have been solved better by private ingenuity & private/public investment.

... It has been (without any answers)

What makes anyone think that Big Government can run a reconstituted GM or Chrysler?

Seth says

I wonder if any president, Bush or Obama, would have started throwing money down this rat hole, knowing that in the end the companies would go bankrupt. It's interesting to note that some of the bond holders had the same motive as the government in trying to save the companies ... or did they? Were they perhaps thinking that they had tapped into a never ending spigot of tax payer bailout money? Or perhaps they though that there was gold in an eventual liquidation. Or maybe they just took a risk, like the government did, and lost most of their capital ...just like the stock holders did. In fact, its hard to grok now what they were thinking. Is the UAW the boogie man, walking away with a larger slice of pie? I don't know. Seems to me that the blame lies on, not only the UAW, but also the management for agreeing to contracts that would not stand the test of time. Bond holders also have a share in the blame ... afterall that is what makes capitalism work ... you invest your money where you think it will be repaid with interest.

As to the UAW getting more of the pie than the secured bond holders ... i'll wait for the court to decide. You of course will take it as a excuse to rag on your president.

Mark de LA says

Imagine what it would be like if you had employees who every 3 years would strike and shut down your business until they got a bigger piece of your pie. Then imagine that the laws were written so that they could publish all kinds of bullshit about you & your management yet you could not do the same against their union. Imagine that the union could collect all kinds of dues from your employees & pay for politicians who had the opposite political persuasion than you have & which politicians could write rules & regulations that throttled your business (CAFE stds or something like that), perhaps in your case adding special packaging considered handicap safe & absolutely biodegradable as well. If you can imagine that, then perhaps you understand why I dislike today's present unions. Imagine too that those unions could negotiate or strike until you gave them a retirement package which was 80%+ of the amount you paid them to work (for life). Now imagine that they bought a US President & Congress who was against your business & who told you what kinds of products to make & sell.... etc.

Some of the above should suggest to you why the economic sphere & the political sphere should be totally separated from each other in a threefolding way. Today's unions are more parasites than what they were originally intended to be; looking out for the rights of employees who were being treated like corporate slaves.

I think RS's labor vision was more like that of a guild of masons & Freemasonry. Today, perhaps, removing the metaphysics & occult, but keeping the morality, ethics & brotherhood; being independent of government.

P.S. I don't rag, I expose & comment. When you start name calling & using ad hominem arguments I tend to do the same in the natural course of a right-wrong game escalation.

Seth says

More detail on the GM/Treasury offer to bondholders here.

Seth says

Well it looks like SOTUS is going to get a chance to rule on the priority of the bond holders claims for Chrysler.

Mark de LA says

seth 2009-06-08 13:35:50 11719

Well it looks like SOTUS is going to get a chance to rule on the priority of the bond holders claims for Chrysler.

Probably SCOTUS.

Mark de LA says

~ I like the political cartoons - they say so much with so little words. The reference is the recent obituary on Robert McNamara.