AIG cancels planned events amid rebukes for hosting $440,000 function
American International Group Inc. said Thursday that it would cancel most of its planned events after lawmakers castigated the insurer for hosting a $440,000 function at a resort while benefiting from an $85-billion government bailout.
The cancellations include an event that was scheduled for next week at the Ritz-Carlton in Northern California's Half Moon Bay. The gathering that drew the rebukes was held last month at the St. Regis Resort in Dana Point. About 100 independent insurance agents who sell coverage for New York-based AIG attended, spending $23,000 on spa services, among other things.
Read more here -
http://www.latimes.com/business/la-fi-aig1...0,2353290.story
Anyone wonder why we're in the crapper? These clowns almost go under, taxpayers who are losing jobs and homes bail them out - and they're off to a laa-dee-dah spa fxxxing resort??? Obviously nearly going out of business BY THEIR OWN HAND did nothing to change their way of thinking. Jerks. A couple of nice quotes from the article -
"This kind of behavior is an insult to taxpayers," the Montana Democrat wrote in a letter to Fed Chairman Ben S. Bernanke. Baucus asked for a response by Oct. 23.
"I cannot fathom how in the same day -- the very same day -- that AIG asked the government for another $37.8-billion loan, the company would even consider moving forward with plans to host another large conference at another luxury resort," said Rep. Elijah E. Cummings, a Maryland Democrat.
THEN, skipping another chance to learn they're idiots, they want to ADVERTISE EXPENSIVELY about their screw up. A nice repsonse -
"To spend the taxpayer's money on an expensive ad campaign to apologize for how you used taxpayer money leaves you open to further attacks," Sard wrote in an e-mail Wednesday to Ashooh.
It just stuns me to think how stupid people who are supposed to be smart have been.
Full Version: Now THIS pxxxes me off
QUOTE(Dave @ Oct 10 2008, 02:07 PM) 
So if we apply the same math to the $700 billion rescue plan, we end up at about 1.1 trillion dollars.
My estimate of $2 trillion is getting closer.
http://news.bbc.co.uk/2/hi/business/7737040.stm
Detroit hit as car firms beg for bail-out
By Greg Wood
North America business correspondent, BBC News, Detroit
They're scraping the first snows of winter off the windscreens at the Matthews Hargreaves Chevrolet dealership in the suburban sprawl that is greater Detroit.
But it's not just the weather that has suddenly turned nasty.
Sales of General Motors cars fell 45% last month.
"It's a little bit scary for me," says general manager of the Matthews Hargreaves Chevrolet dealership, Walt Tutak.
"I've been here for 34 years and I've never really seen it this bad".
Suppliers hit
Car dealerships employ more than one million people across the United States. Many of those jobs are now at risk.
This week is absolutely critical 
Neil de Koker, Original Equipment Suppliers Association Mr Tutak has done better than many other dealers. His sales are down just 9%.
But he thinks the Big Three Detroit car makers - General Motors, Ford and Chrysler - should get a government bail-out - on certain conditions.
"I think the government should make sure that the carmakers change their way of doing business," he argues, "because they can't keep on doing what they have been doing and keep in business."
The companies that make parts for the Big Three are under threat too. They employ some 500,000 people.
It is feared that a bankruptcy filing by one of the Detroit carmakers would bring down some of the major suppliers too.
"This week is absolutely critical," says Neil de Koker, president of the Original Equipment Suppliers Association, which represents the parts makers.
"If we do not get the loan this week then I think we'll have to take some really drastic action to try to survive."
Never recover
Earl Fuller runs the union branch for skilled workers at the giant General Motors technology centre, which tests and develops new models.
Hundreds of his members have lost their jobs as projects have been cancelled.
He says a refusal to bail out the auto industry would have consequences far beyond Detroit.
"I believe we would no longer be an industrial power," he says.
"Our automobile industry would never recover. The cost to the United States of being a second class manufacturing country would be dear."
The end of Detroit
It is hard to find anyone in Detroit who opposes the bail-out.
But there are those who see the big three as the authors of their own demise because they were slow to innovate and develop more fuel-efficient vehicles.
Now they are suffering from the double whammy of higher petrol prices and the collapse in consumer confidence triggered by the credit crunch.
"Whether it's bankruptcy or bailout, these companies are going to be considerably smaller and they are going to look different," says Daniel Howes, business columnist at the Detroit News.
"That's just cold hard business. These companies are not managing growth, they are managing decline.
"It's over folks. Detroit as we know it is ceasing to exist."
Uncertain future
Anton Lulgjuraj knows about managing decline.
He runs Marko's Grecian Palace, a diner just across the road from the GM Tech Center. His business is down by 50% in the past year - since the lay offs began.
"The workers used to come in three times a day - breakfast, lunch and dinner," he says.
"Now I barely see a few for lunch. It's hurting my business tremendously. The trickle down effect. It doesn't just hurt the auto industry, it hurts the businesses around them also."
Mr Lulgjuraj has cut staff. He has had to let three cooks and five waitresses go, casualties of the downturn in the motor industry.
Outside, the shopping centre is empty and forlorn.
The Wal-Mart is long gone and five other stores, including a beauty salon and a gift shop, have closed.
Mr Lulgjuraj fears he may be next.
Detroit hit as car firms beg for bail-out
By Greg Wood
North America business correspondent, BBC News, Detroit
They're scraping the first snows of winter off the windscreens at the Matthews Hargreaves Chevrolet dealership in the suburban sprawl that is greater Detroit.
But it's not just the weather that has suddenly turned nasty.
Sales of General Motors cars fell 45% last month.
"It's a little bit scary for me," says general manager of the Matthews Hargreaves Chevrolet dealership, Walt Tutak.
"I've been here for 34 years and I've never really seen it this bad".
Suppliers hit
Car dealerships employ more than one million people across the United States. Many of those jobs are now at risk.
This week is absolutely critical Neil de Koker, Original Equipment Suppliers Association Mr Tutak has done better than many other dealers. His sales are down just 9%.
But he thinks the Big Three Detroit car makers - General Motors, Ford and Chrysler - should get a government bail-out - on certain conditions.
"I think the government should make sure that the carmakers change their way of doing business," he argues, "because they can't keep on doing what they have been doing and keep in business."
The companies that make parts for the Big Three are under threat too. They employ some 500,000 people.
It is feared that a bankruptcy filing by one of the Detroit carmakers would bring down some of the major suppliers too.
"This week is absolutely critical," says Neil de Koker, president of the Original Equipment Suppliers Association, which represents the parts makers.
"If we do not get the loan this week then I think we'll have to take some really drastic action to try to survive."
Never recover
Earl Fuller runs the union branch for skilled workers at the giant General Motors technology centre, which tests and develops new models.
Hundreds of his members have lost their jobs as projects have been cancelled.
He says a refusal to bail out the auto industry would have consequences far beyond Detroit.
"I believe we would no longer be an industrial power," he says.
"Our automobile industry would never recover. The cost to the United States of being a second class manufacturing country would be dear."
The end of Detroit
It is hard to find anyone in Detroit who opposes the bail-out.
But there are those who see the big three as the authors of their own demise because they were slow to innovate and develop more fuel-efficient vehicles.
Now they are suffering from the double whammy of higher petrol prices and the collapse in consumer confidence triggered by the credit crunch.
"Whether it's bankruptcy or bailout, these companies are going to be considerably smaller and they are going to look different," says Daniel Howes, business columnist at the Detroit News.
"That's just cold hard business. These companies are not managing growth, they are managing decline.
"It's over folks. Detroit as we know it is ceasing to exist."
Uncertain future
Anton Lulgjuraj knows about managing decline.
He runs Marko's Grecian Palace, a diner just across the road from the GM Tech Center. His business is down by 50% in the past year - since the lay offs began.
"The workers used to come in three times a day - breakfast, lunch and dinner," he says.
"Now I barely see a few for lunch. It's hurting my business tremendously. The trickle down effect. It doesn't just hurt the auto industry, it hurts the businesses around them also."
Mr Lulgjuraj has cut staff. He has had to let three cooks and five waitresses go, casualties of the downturn in the motor industry.
Outside, the shopping centre is empty and forlorn.
The Wal-Mart is long gone and five other stores, including a beauty salon and a gift shop, have closed.
Mr Lulgjuraj fears he may be next.
http://news.bbc.co.uk/2/hi/business/7738224.stm
US car bail-out compromise sought
Car executives said the failure of their industry could be catastrophic US politicians are looking to find a compromise plan to aid the country's crisis-ridden car industry.
Chief executives from Ford, GM and Chrysler have asked for an urgent $25bn (£16.6bn) bail-out package as a "bridge" to help them survive.
Republican Senator Mitch McConnell said a compromise was "the only proposal" that had any chance of becoming law.
Republicans and the White House are opposed to aid for the car industry coming out of the $700bn bank bail-out.
Bankruptcy urged
Mr McConnell said: "There is a way forward that will help protect the jobs in the auto industry, while also protecting taxpayers."
Democratic Senator Carl Levin said an "effort" was being made to close the gap between supporters and opponents of a rescue plan and provide a bridging loan to Detroit.
"It would be unthinkable for Congress not to be able to reach a conclusion when the leadership of the Congress, the president and president-elect all say they support bridge loans," he said.
This is all about a lot more than just Detroit - it's about saving the US economy from a catastrophic collapse
Rick Wagoner
General Motors chief executive The House financial services committee chairman, Democrat Barney Frank, asked how the government could justify a bail-out for banks and insurers, but not the car industry.
"There seems to me to be an inherent cultural bias. Aid to blue-collar employees is being judged by a standard different than white-collar employees," he said.
However, many politicians question whether public money should be used to help the carmakers.
Republican Senator Richard Shelby said the car firms should file for bankruptcy so they could carry out much-needed reforms.
"I don't think they have immediate plans to change their model, which is a model of failure. I believe their best option would be some type of Chapter 11 bankruptcy," he said.
He also called for senior management changes, saying "these leaders have been failures and they need to go".
'Catastrophic collapse'
The car industry has said that without financial help, it is teetering on the brink of disaster.
CHAPTER 11 BANKRUPTCY Part of the US Bankruptcy Code giving troubled firms time to reorganise themselves Under Chapter 11 protection, a bankrupt firm can carry on trading under existing management It prevents creditors from forcing a firm into liquidation in order to sell off its assets 
Layman's credit crisis glossary General Motors, Ford and Chrysler say they are burning through billions in cash monthly and have little or no ability to raise capital in the private markets due to their poor financial health and the global credit crunch.
GM has warned it could run out of cash in a matter of weeks and cannot wait until President-elect Barack Obama - who has promised to help the industry - is sworn in in January.
The carmakers' top executives and auto workers' union president Ron Gettelfinger have spent two days before Senate and House committees making a plea for help.
GM's chief executive, Rick Wagoner, warned that if the US car industry failed, it could lead to a loss of three million jobs within the first year and ripple throughout communities around the country.
"This is all about a lot more than just Detroit. It's about saving the US economy from a catastrophic collapse," he said.
Critics have argued that many of the industry's problems have been self-made, citing their past reliance upon gas-guzzling trucks and SUVs and their opposition to tougher fuel-efficiency regulations.
Chrysler's chief executive, Bob Nardelli, rejected suggestions that the carmakers should seek Chapter 11 bankruptcy protection.
"We just cannot be confident that we will be able to successfully emerge from bankruptcy," he said.
International problems
On Tuesday, Treasury Secretary Henry Paulson also resisted diverting funds to the US car industry.
The US car industry is in need of resuscitation Democrats have so far rejected the option favoured by the White House and Republicans, which is to let the industry use a $25bn loan programme designed to help the companies develop more fuel-efficient vehicles.
The car industry's problems are not limited to the US.
The Canadian government said on Wednesday that it would "provide further support" for its ailing car sector.
General Motors, Chrysler and Ford employ 40,000 Canadians at their factories in Ontario, and are responsible for an estimated 300,000 direct and indirect jobs in the country.
Toyota has said it will shut down all of its North American factories for two days next month.
European car companies have asked for 40bn euros (£33.5bn; $50.6bn) of soft loans for the industry.
Do you work for Ford, GM or Chrysler? What do you think of this news? Send us your thoughts and comments using the form below:
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US car bail-out compromise sought
Car executives said the failure of their industry could be catastrophic US politicians are looking to find a compromise plan to aid the country's crisis-ridden car industry. Chief executives from Ford, GM and Chrysler have asked for an urgent $25bn (£16.6bn) bail-out package as a "bridge" to help them survive.
Republican Senator Mitch McConnell said a compromise was "the only proposal" that had any chance of becoming law.
Republicans and the White House are opposed to aid for the car industry coming out of the $700bn bank bail-out.
Bankruptcy urged
Mr McConnell said: "There is a way forward that will help protect the jobs in the auto industry, while also protecting taxpayers."
Democratic Senator Carl Levin said an "effort" was being made to close the gap between supporters and opponents of a rescue plan and provide a bridging loan to Detroit.
"It would be unthinkable for Congress not to be able to reach a conclusion when the leadership of the Congress, the president and president-elect all say they support bridge loans," he said.
This is all about a lot more than just Detroit - it's about saving the US economy from a catastrophic collapse Rick Wagoner
General Motors chief executive The House financial services committee chairman, Democrat Barney Frank, asked how the government could justify a bail-out for banks and insurers, but not the car industry.
"There seems to me to be an inherent cultural bias. Aid to blue-collar employees is being judged by a standard different than white-collar employees," he said.
However, many politicians question whether public money should be used to help the carmakers.
Republican Senator Richard Shelby said the car firms should file for bankruptcy so they could carry out much-needed reforms.
"I don't think they have immediate plans to change their model, which is a model of failure. I believe their best option would be some type of Chapter 11 bankruptcy," he said.
He also called for senior management changes, saying "these leaders have been failures and they need to go".
'Catastrophic collapse'
The car industry has said that without financial help, it is teetering on the brink of disaster.
CHAPTER 11 BANKRUPTCY Part of the US Bankruptcy Code giving troubled firms time to reorganise themselves Under Chapter 11 protection, a bankrupt firm can carry on trading under existing management It prevents creditors from forcing a firm into liquidation in order to sell off its assets Layman's credit crisis glossary General Motors, Ford and Chrysler say they are burning through billions in cash monthly and have little or no ability to raise capital in the private markets due to their poor financial health and the global credit crunch.
GM has warned it could run out of cash in a matter of weeks and cannot wait until President-elect Barack Obama - who has promised to help the industry - is sworn in in January.
The carmakers' top executives and auto workers' union president Ron Gettelfinger have spent two days before Senate and House committees making a plea for help.
GM's chief executive, Rick Wagoner, warned that if the US car industry failed, it could lead to a loss of three million jobs within the first year and ripple throughout communities around the country.
"This is all about a lot more than just Detroit. It's about saving the US economy from a catastrophic collapse," he said.
Critics have argued that many of the industry's problems have been self-made, citing their past reliance upon gas-guzzling trucks and SUVs and their opposition to tougher fuel-efficiency regulations.
Chrysler's chief executive, Bob Nardelli, rejected suggestions that the carmakers should seek Chapter 11 bankruptcy protection.
"We just cannot be confident that we will be able to successfully emerge from bankruptcy," he said.
International problems
On Tuesday, Treasury Secretary Henry Paulson also resisted diverting funds to the US car industry.
The US car industry is in need of resuscitation Democrats have so far rejected the option favoured by the White House and Republicans, which is to let the industry use a $25bn loan programme designed to help the companies develop more fuel-efficient vehicles. The car industry's problems are not limited to the US.
The Canadian government said on Wednesday that it would "provide further support" for its ailing car sector.
General Motors, Chrysler and Ford employ 40,000 Canadians at their factories in Ontario, and are responsible for an estimated 300,000 direct and indirect jobs in the country.
Toyota has said it will shut down all of its North American factories for two days next month.
European car companies have asked for 40bn euros (£33.5bn; $50.6bn) of soft loans for the industry.
Do you work for Ford, GM or Chrysler? What do you think of this news? Send us your thoughts and comments using the form below:
In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.
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Phone number (optional):
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<a href="http://www.bbc.co.uk/terms/">Terms & Conditions
http://news.bbc.co.uk/2/hi/business/7651257.stm
Paris scathing about Detroit bail-out
By Jorn Madslien
Business reporter, BBC News, Paris motor show
Car industry executives at the Paris motor show have kept their eyes firmly on developments across the pond this week.
President George W Bush signed legislation that gives US carmakers access to $25bn (£14bn) of cheap government-backed loans to help them develop less polluting cars - a huge bonus for the country's struggling car giants.
"General Motors, Ford Motor and Chrysler stand to benefit from low-cost funding at a time when tight credit market conditions make additional borrowing prohibitively expensive for most auto industry participants," the ratings agency Standard & Poor's in a report.
Added BMI Industry Insights in a report: "This is expected to save the carmakers millions of dollars in financing alone."
The proposed $700bn bail-out of American banks also caught the eye of senior industry figures. The bank bail-out could make it easier for car buyers to raise finance and thus help revive dire sales.
Hence, in a last-minute move, General Motors chief Rick Wagoner cancelled his scheduled appearance at the Paris show to throw his weight behind it.
European protests
European automotive industry executives see the $25bn loan guarantee as a bail-out package that will give American car companies an unfair advantage when it comes to developing less-polluting cars - a point that is not missed by the US authorities.
It's not a bail-out
Fritz Henderson, chief operating officer, General Motors "German carmakers view this as subsidies violating competition," observes the CIA, the US intelligence agency, in a research note.
But those who see it as a bail-out have got it wrong, insists General Motors' chief operating officer Fritz Henderson.
"It's a loan, actually. It's not a gift," he tells BBC News in an interview.
"It's all about financing projects, which can range anywhere from a Volt [plug in hybrid] to hybrid vehicles to pretty significant forms of advanced propulsion.
Detroit plan GM, Ford and Chrysler will receive some $5bn each Suppliers will share the remaining $10bn No repayments will be required during the first five years The interest rate is set at about 4%, a third of the current market rates Source: BMI Industry Insight "It's not a bail-out," he continues.
"If society decides we need more oil, we provide tax credits for drilling. The companies make $10bn a quarter. Is that a bail-out?
"Or let's take defence companies. Governments chose to underwrite R&D associated with defence.
"I am objecting to the characterisation, that this form of government support is a bail-out, whereas this form is something else."
Lessons from Washington
America's $25bn loan guarantee for carmakers is in stark contrast with the European system, where lawmakers are not offering financial incentives to balance a threat to fine companies if they do not cut emissions.
Brussels should take a leaf out of Washington's book, according to Carlos Ghosn, chief executive of alliance partners Renault and Nissan.
Governments should "lay down the financial means that will allow us to have low emission cars and zero emission cars", he says, according to industry magazine Automotive News Europe.
Jaguar boss David Smith wants the UK government to do the same, according to The Times.
VW's hopes
Some non-American manufacturers with plants in the US also hope to benefit from the loan guarantee, even though it is not clear they will be able to.
I don't know whether it'll be enough
Thierry Dombreval, chief operating officer, Toyota Motor Europe "We will raise our hand when the time comes," says Martin Winterkorn, chief executive of Volkswagen Group, the German company which also makes cars in the US.
But there is a clause excluding support for US plants that have been built during the last 20 years.
"It's got to be US projects," points out General Motor's Mr Henderson. "It would by and large favour, on balance, US companies."
Not enough?
Toyota's response to the $25bn worth of cheap loans its American competitors will soon benefit from is rather more lofty.
The Japanese carmaker outsells Ford, and possibly GM - depending on what the latest sales figures show, in the US market.
"It's OK with us," says Toyota Motor Europe's chief operating officer Thierry Dombreval of the loan guarantee.
"Although we are a large-scale producer in the US, we are not facing the same problems," he says, adding: "I don't know whether it'll be enough."
Mr Dombreval's view is shared by S&P, which believes that even with legislative and financial help, Detroit's Big Three are a long way from recovery.
"The loan package will not improve the Michigan-based automakers' credit and recovery ratings," the agency says in the report.
Paris scathing about Detroit bail-out
By Jorn Madslien
Business reporter, BBC News, Paris motor show
Car industry executives at the Paris motor show have kept their eyes firmly on developments across the pond this week.
President George W Bush signed legislation that gives US carmakers access to $25bn (£14bn) of cheap government-backed loans to help them develop less polluting cars - a huge bonus for the country's struggling car giants.
"General Motors, Ford Motor and Chrysler stand to benefit from low-cost funding at a time when tight credit market conditions make additional borrowing prohibitively expensive for most auto industry participants," the ratings agency Standard & Poor's in a report.
Added BMI Industry Insights in a report: "This is expected to save the carmakers millions of dollars in financing alone."
The proposed $700bn bail-out of American banks also caught the eye of senior industry figures. The bank bail-out could make it easier for car buyers to raise finance and thus help revive dire sales.
Hence, in a last-minute move, General Motors chief Rick Wagoner cancelled his scheduled appearance at the Paris show to throw his weight behind it.
European protests
European automotive industry executives see the $25bn loan guarantee as a bail-out package that will give American car companies an unfair advantage when it comes to developing less-polluting cars - a point that is not missed by the US authorities.
It's not a bail-out Fritz Henderson, chief operating officer, General Motors "German carmakers view this as subsidies violating competition," observes the CIA, the US intelligence agency, in a research note.
But those who see it as a bail-out have got it wrong, insists General Motors' chief operating officer Fritz Henderson.
"It's a loan, actually. It's not a gift," he tells BBC News in an interview.
"It's all about financing projects, which can range anywhere from a Volt [plug in hybrid] to hybrid vehicles to pretty significant forms of advanced propulsion.
Detroit plan GM, Ford and Chrysler will receive some $5bn each Suppliers will share the remaining $10bn No repayments will be required during the first five years The interest rate is set at about 4%, a third of the current market rates Source: BMI Industry Insight "It's not a bail-out," he continues. "If society decides we need more oil, we provide tax credits for drilling. The companies make $10bn a quarter. Is that a bail-out?
"Or let's take defence companies. Governments chose to underwrite R&D associated with defence.
"I am objecting to the characterisation, that this form of government support is a bail-out, whereas this form is something else."
Lessons from Washington
America's $25bn loan guarantee for carmakers is in stark contrast with the European system, where lawmakers are not offering financial incentives to balance a threat to fine companies if they do not cut emissions.
Brussels should take a leaf out of Washington's book, according to Carlos Ghosn, chief executive of alliance partners Renault and Nissan.
Governments should "lay down the financial means that will allow us to have low emission cars and zero emission cars", he says, according to industry magazine Automotive News Europe.
Jaguar boss David Smith wants the UK government to do the same, according to The Times.
VW's hopes
Some non-American manufacturers with plants in the US also hope to benefit from the loan guarantee, even though it is not clear they will be able to.
I don't know whether it'll be enough Thierry Dombreval, chief operating officer, Toyota Motor Europe "We will raise our hand when the time comes," says Martin Winterkorn, chief executive of Volkswagen Group, the German company which also makes cars in the US.
But there is a clause excluding support for US plants that have been built during the last 20 years.
"It's got to be US projects," points out General Motor's Mr Henderson. "It would by and large favour, on balance, US companies."
Not enough?
Toyota's response to the $25bn worth of cheap loans its American competitors will soon benefit from is rather more lofty.
The Japanese carmaker outsells Ford, and possibly GM - depending on what the latest sales figures show, in the US market.
"It's OK with us," says Toyota Motor Europe's chief operating officer Thierry Dombreval of the loan guarantee.
"Although we are a large-scale producer in the US, we are not facing the same problems," he says, adding: "I don't know whether it'll be enough."
Mr Dombreval's view is shared by S&P, which believes that even with legislative and financial help, Detroit's Big Three are a long way from recovery.
"The loan package will not improve the Michigan-based automakers' credit and recovery ratings," the agency says in the report.
Before handing these companies BILLIONS of dollars they should actually dress the part.
Instead of this:
I would rather see this:
Or maybe they could try some honesty:
Or be honest with what they are actually going to use the money for, or on:
Diane Sawyer sits with former call girl Ashley Dupre. (Photo courtesy of ABC / November 13, 2008)
Instead of this:
I would rather see this:
Or maybe they could try some honesty:
Or be honest with what they are actually going to use the money for, or on:
Diane Sawyer sits with former call girl Ashley Dupre. (Photo courtesy of ABC / November 13, 2008)
The most telling thing that no one is really talking about is that the average compensation, including benefits, for a US auto worker is $73 AN HOUR. For their Toyota counterparts that number is about $45 an hour. In other words if you include benefits, the average US autoworker costs his employer $50,000 a year more than someone who builds cars here in the US for Toyota.
eric.hanke, the second IBP image did not come up! Funny funny funny! TRUE.
SSider, those geniuses who flew individually instead of Lear-pooling to go beg for our money to Congress are the ones, speaking in class terms, who agreed to those wage packages. Those workers are the ones who created the wealth, and the ownership class just ate the surplus. That being said, the problem is not that the worker makes too much; it is that the management played a shell game, paying workers yesterday with money that should have been invested for today and tomorrow.
SSider, those geniuses who flew individually instead of Lear-pooling to go beg for our money to Congress are the ones, speaking in class terms, who agreed to those wage packages. Those workers are the ones who created the wealth, and the ownership class just ate the surplus. That being said, the problem is not that the worker makes too much; it is that the management played a shell game, paying workers yesterday with money that should have been invested for today and tomorrow.
QUOTE(Roger Kaputnik @ Nov 20 2008, 09:08 AM)
eric.hanke, the second IBP image did not come up! Funny funny funny! TRUE.
SSider, those geniuses who flew individually instead of Lear-pooling to go beg for our money to Congress are the ones, speaking in class terms, who agreed to those wage packages. Those workers are the ones who created the wealth, and the ownership class just ate the surplus. That being said, the problem is not that the worker makes too much; it is that the management played a shell game, paying workers yesterday with money that should have been invested for today and tomorrow.
If you have a cost structure that puts you $50,000 a person behind your competitors, that isn't only A problem, it is THE problem. Take GM for example who has 120,000 employees times that $50,000, and you come up with $6 billion in disadvantage. That money spent on their plane rides, while shortsighted and stupid, is a mere pittance compared to that number. To put it in perspective that $6 billion is about 40% of the total that GM is asking for.
QUOTE(Roger Kaputnik @ Nov 20 2008, 09:08 AM)
eric.hanke, the second IBP image did not come up! Funny funny funny! TRUE.I updated the image...
And back to the original post... I came across this today.
http://www.businessandmedia.org/commentary...aspxPoliticians,
http://www.businessandmedia.org/commentary...aspxPoliticians,
QUOTE
Journalists Have Eyes On The Wrong Ball
Portrayal of AIG conference as 'wine, women and song' shows ignorance of business.
By Dan Kennedy
Business & Media Institute
11/19/2008 1:54:33 PM
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The news media have, for two weeks, endlessly expressed outrage at AIG’s spending several hundred thousand dollars on a sales conference held at a Phoenix resort – after getting federal bailout billions. The impression conveyed has been that AIG executives took money from us taxpayers and immediately turned around and blew it on wine, women and song, hanging out at a hoity-toity resort, wallowing in caviar on our dime. As usual, the reporting is grossly inaccurate.
And the posturing politicians demanding tighter government watchdogging and control over how the bailout dollars invested in AIG and countless other companies is spent is outrage misdirected.
The facts about these big AIG meetings are that sponsors, predominately financial product providers and other vendors, subsidize large portions of the budgets for these meetings. They directly underwrite or reimburse for expenses as well as rebate after the fact based on sales made to and through AIG. Attendees also pay to attend.
The $300,000 cost of the event splashed all over the TV screen in reporting on this is likely the budget but not the actual, net cost incurred by AIG. Further, these types of events are part and parcel of fueling sales in advance and rewarding salespeople for results.
Those reporting only the sensationalist aspect of all this – the cost, the fact that they occur at fancy locations – are either ignorant of or, more likely, deliberately omitting the other facts. That’s either to protect the tabloid value of the story, or due to another agenda.
The politicians who propose micro-managing these companies’ use of funds are nothing but blowhards. They know full well such oversight is impossible. Once funds are lent or invested, they merge and commingle with all other funds and no one can trace a dollar spent on a spa treatment for a top producing sales agent’s spouse back to its origin.
Further, the politicians’ fake outrage would be better replaced with real rage directed at themselves for complete and utter failure to oversee and regulate the one thing that really matters: Is a company like AIG maintaining the necessary financial reserves to support the insurance it is selling?
This incidental example gets to the core problem with almost all politicians’ meddling with business, and all media’s reporting on it. They are pontificating about things they do not understand, opining about things they are ignorant of.
It’s fair to expect politicians like Gov. Sarah Palin ought to know geography, although it turns out those rumors of her ignorance were made up. Politicians also need to learn how business works or employ advisers who know before investing billions of our dollars in them, and journalists ought to pass a business basics course before reporting on these matters.
In short, our present economic trauma has much to do with our electing ignorant, unqualified dunderheads to Congress, and employing equally ignorant journalists to serve as the public watchdogs over them. We need smarter, more knowledgeable people in these positions.
If we had citizen government instead of entrenched royalty, Congress would be populated by business owners, salespeople, shopkeepers, financial professionals and others who, back home, hold real world jobs, run real world businesses, meet real world payrolls, and have some firsthand practical knowledge. Instead we are the victims of career politicians completely distanced and divorced from the world you and I live in, and the businesses they attempt to regulate.
Dan Kennedy is a serial entrepreneur, adviser to business owners, sought-after speaker and author of 13 books. More information about Dan can be found at www.NoBSBooks.com, and a free collection of his business resources including newsletters and webinars at www.DanKennedy.com.
Portrayal of AIG conference as 'wine, women and song' shows ignorance of business.
By Dan Kennedy
Business & Media Institute
11/19/2008 1:54:33 PM
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The news media have, for two weeks, endlessly expressed outrage at AIG’s spending several hundred thousand dollars on a sales conference held at a Phoenix resort – after getting federal bailout billions. The impression conveyed has been that AIG executives took money from us taxpayers and immediately turned around and blew it on wine, women and song, hanging out at a hoity-toity resort, wallowing in caviar on our dime. As usual, the reporting is grossly inaccurate.
And the posturing politicians demanding tighter government watchdogging and control over how the bailout dollars invested in AIG and countless other companies is spent is outrage misdirected.
The facts about these big AIG meetings are that sponsors, predominately financial product providers and other vendors, subsidize large portions of the budgets for these meetings. They directly underwrite or reimburse for expenses as well as rebate after the fact based on sales made to and through AIG. Attendees also pay to attend.
The $300,000 cost of the event splashed all over the TV screen in reporting on this is likely the budget but not the actual, net cost incurred by AIG. Further, these types of events are part and parcel of fueling sales in advance and rewarding salespeople for results.
Those reporting only the sensationalist aspect of all this – the cost, the fact that they occur at fancy locations – are either ignorant of or, more likely, deliberately omitting the other facts. That’s either to protect the tabloid value of the story, or due to another agenda.
The politicians who propose micro-managing these companies’ use of funds are nothing but blowhards. They know full well such oversight is impossible. Once funds are lent or invested, they merge and commingle with all other funds and no one can trace a dollar spent on a spa treatment for a top producing sales agent’s spouse back to its origin.
Further, the politicians’ fake outrage would be better replaced with real rage directed at themselves for complete and utter failure to oversee and regulate the one thing that really matters: Is a company like AIG maintaining the necessary financial reserves to support the insurance it is selling?
This incidental example gets to the core problem with almost all politicians’ meddling with business, and all media’s reporting on it. They are pontificating about things they do not understand, opining about things they are ignorant of.
It’s fair to expect politicians like Gov. Sarah Palin ought to know geography, although it turns out those rumors of her ignorance were made up. Politicians also need to learn how business works or employ advisers who know before investing billions of our dollars in them, and journalists ought to pass a business basics course before reporting on these matters.
In short, our present economic trauma has much to do with our electing ignorant, unqualified dunderheads to Congress, and employing equally ignorant journalists to serve as the public watchdogs over them. We need smarter, more knowledgeable people in these positions.
If we had citizen government instead of entrenched royalty, Congress would be populated by business owners, salespeople, shopkeepers, financial professionals and others who, back home, hold real world jobs, run real world businesses, meet real world payrolls, and have some firsthand practical knowledge. Instead we are the victims of career politicians completely distanced and divorced from the world you and I live in, and the businesses they attempt to regulate.
Dan Kennedy is a serial entrepreneur, adviser to business owners, sought-after speaker and author of 13 books. More information about Dan can be found at www.NoBSBooks.com, and a free collection of his business resources including newsletters and webinars at www.DanKennedy.com.
QUOTE(southsider2k7 @ Nov 20 2008, 09:33 AM)
If you have a cost structure that puts you $50,000 a person behind your competitors, that isn't only A problem, it is THE problem. Take GM for example who has 120,000 employees times that $50,000, and you come up with $6 billion in disadvantage. That money spent on their plane rides, while shortsighted and stupid, is a mere pittance compared to that number. To put it in perspective that $6 billion is about 40% of the total that GM is asking for.
High wages is not a labor problem, it is a failure of management to properly allocate resources. Don't blame a worker for a good wage.
QUOTE(Roger Kaputnik @ Nov 20 2008, 11:42 AM)
High wages is not a labor problem, it is a failure of management to properly allocate resources. Don't blame a worker for a good wage.
Its a labor problem when the company is doomed to fail because of it. It is everyone's problem then. Of course they are also refusing further concessions, which could very well be dooming them to bankruptcy depending on the generocity up on the Hill. At that point all of their contracts will be null and void anyway.
QUOTE(southsider2k7 @ Nov 20 2008, 11:48 AM)
Its a labor problem when the company is doomed to fail because of it. It is everyone's problem then. Of course they are also refusing further concessions, which could very well be dooming them to bankruptcy depending on the generocity up on the Hill. At that point all of their contracts will be null and void anyway.
It is a problem FOR labor when the mgmt. has messed up for so long. The problem with wages is not CAUSED BY labor, and therefore, not a "labor problem." It is a direct result of mgmt., not allocating resources properly.
You have to remember that there were years where the amount of bonuses to top management was about was went to the labor force. Labor does not design or develop car models, sales timing, etc. That is all mgmt.
QUOTE(Roger Kaputnik @ Nov 20 2008, 12:46 PM)
It is a problem FOR labor when the mgmt. has messed up for so long. The problem with wages is not CAUSED BY labor, and therefore, not a "labor problem." It is a direct result of mgmt., not allocating resources properly.
You have to remember that there were years where the amount of bonuses to top management was about was went to the labor force. Labor does not design or develop car models, sales timing, etc. That is all mgmt.
Now those bonuses have gone away, and the labor wages still exist. The problem with the contracts is that they can't be changed without union consent, unlike management benefits and salary. At the time the comensation packages fit under the structure of the industry, now that times have changed and management is trying to adjust, labor won't let them adjust. That isn't mismanagement, that is inability to manage. There is a difference, and that lies with the union.
Also don't forget the effect that $6 billion has on GM every year, in the very things you are talking about as more signs of mismanagement. That is $6 billion that can't be used for research and development. It can't be used for modernization of plants. It can't be used to develop new prototypes. It can't be used to look at new alternative fuels. Once it leaves the plant, it is gone to the company. In the case of the US companies it forced them to pursue the high profit margin SUVs because the high gas mileage lower priced cars didn't have enough of a profit margin to make them worth producing to the US company's because they still have to pay their labor. Like it or, being at the top of the world in wages and benefits has killed the US auto workers, not to mention all of the people in the US who have refused to support the auto workers wages by instead buying Toyota's and the like.
The blame of management is another standard operating procedure of class warfare that just doesn't hold water to me. There is plenty of blame to go around. You could change every bit of management in Detroit, and the reason they are in bankruptcy would still exist. Until the cost of labor is changed in the US auto industry, it is doomed to fail.
It is not the hardhat crowd that is making any of the decisions that have ruined the industry. Do you expect workers to say, "No, don't give us those benefits or pay scales, we want to make sure that you have enough money to manage to make sure the industry stays healthy." That is ludicrous.
I do agree that the unions will have to arrive at some agreement with the corps. The fault cannot be laid at the feet of the workers who accepted an offer from mgmt. And it was not the hardhats who decided that SUVs were the way to go, nor did they lobby the gov't to keep CAFE mileage standards low.
As far as class warfare, I paraphrase Warren Buffet: There is a war between the classes, and my class is winning!
I do agree that the unions will have to arrive at some agreement with the corps. The fault cannot be laid at the feet of the workers who accepted an offer from mgmt. And it was not the hardhats who decided that SUVs were the way to go, nor did they lobby the gov't to keep CAFE mileage standards low.
As far as class warfare, I paraphrase Warren Buffet: There is a war between the classes, and my class is winning!
QUOTE(Roger Kaputnik @ Nov 20 2008, 01:34 PM)
It is not the hardhat crowd that is making any of the decisions that have ruined the industry. Do you expect workers to say, "No, don't give us those benefits or pay scales, we want to make sure that you have enough money to manage to make sure the industry stays healthy." That is ludicrous.
I do agree that the unions will have to arrive at some agreement with the corps. The fault cannot be laid at the feet of the workers who accepted an offer from mgmt. And it was not the hardhats who decided that SUVs were the way to go, nor did they lobby the gov't to keep CAFE mileage standards low.
As far as class warfare, I paraphrase Warren Buffet: There is a war between the classes, and my class is winning!
When the choice is reduction or failure, I expect them to choose reduction. Its not ludicrous, it is common sense. A lesser paying job is always better than no job, especially when your industry is falling apart around you. For labor to not care about the health of their own provider tells a lot about how the auto industry got the point it is in.
It is also silly to characterize these contracts as offers from management. We are talking about tedious negotiation processes, in which the union has the right of strike, which they have used many times over the years. To classify this as only managements doing is just silly. You make it seem as if labor has never pushed for higher wages or bigger benefits. It sounds almost as if you believe that stockholders and management asked labor to take more than they asked for, when it is in fact the opposite.
One of my college professors actually spent time as an economist in labor negotations for some of the steel mills. They sure as heck weren't looking for him to provide figures that were conducive to small wages and benefits, that for sure!
QUOTE(southsider2k7 @ Nov 20 2008, 11:36 AM)
And back to the original post... I came across this today.
http://www.businessandmedia.org/commentary...aspxPoliticians,
You know, after reading that article, it seems like he does a certain amount of speculation ("The $300,000 cost of the event splashed all over the TV screen in reporting on this is likely the budget but not the actual, net cost incurred by AIG" is speculation in my book.)
And I'm sorry, if he can't see the PR nightmare that that outing was, he's blind. That whole thing feels too much like lending your cousin money to pay his rent because he says he's running short, and then seeing his car parked at the riverboat the next day. Who wouldn't be ticked off?
It's sounding the same way with the Wall Street $700 billion bailout -- money given to the banks to "free up liquidity" is being used to pay executive bonuses, pay stock dividends, and to pay for mergers and acquisitions. Is the liquidity crisis past so those banks can go back to doing this stuff, or are they just doing business as usual, just with taxpayer dollars?
I've gotten to the point where I'm going to refuse to see a stock market crisis until I see multiple brokers jumping out of their windows. Nothing says "panic" short of brokers splattered on the sidewalks.
QUOTE(southsider2k7 @ Nov 20 2008, 01:49 PM)
When the choice is reduction or failure, I expect them to choose reduction. Its not ludicrous, it is common sense. A lesser paying job is always better than no job, especially when your industry is falling apart around you. For labor to not care about the health of their own provider tells a lot about how the auto industry got the point it is in.
It is also silly to characterize these contracts as offers from management. We are talking about tedious negotiation processes, in which the union has the right of strike, which they have used many times over the years. To classify this as only managements doing is just silly. You make it seem as if labor has never pushed for higher wages or bigger benefits. It sounds almost as if you believe that stockholders and management asked labor to take more than they asked for, when it is in fact the opposite.
One of my college professors actually spent time as an economist in labor negotations for some of the steel mills. They sure as heck weren't looking for him to provide figures that were conducive to small wages and benefits, that for sure!
Well, NOW I do expect the unions and mgmt. to reach some accomodation, or as is plain to everyone, there will be quick massive job losses instead of slow massive job losses. I was referrring to back when the contracts were put together.
"Offers from mgmt." is shorthand for an agreement that mgmt. agreed to. As you could verify from everyone except the fool who wrote a letter to the ND putting forth the proposition that borrowers forced banks to give bad loans, the power equation is skewed to ownership and its representatives, not to labor and its reps.
It is incumbent on ownership and its management to invest, develop, and plan. Now that that failure is laid open and the bill due, the payment will be from those owners, their management, the workers, and the approximately 3 million related jobholders. Please do not blame unions for working to provide a piece of the pie for their members and the nonmember labor benefiting from the wage levels set by union contracts. You can blame them now if they do not find a way for the industry to gracefully land.
QUOTE(Roger Kaputnik @ Nov 20 2008, 01:34 PM)
... The fault cannot be laid at the feet of the workers who accepted an offer from mgmt. And it was not the hardhats who decided that SUVs were the way to go, nor did they lobby the gov't to keep CAFE mileage standards low.
As far as class warfare, I paraphrase Warren Buffet: There is a war between the classes, and my class is winning!
Well said.
Has anyone seen "Who Stole the Electric Car"? They had the technology to provide fuel efficient cars, why didn't they market it?
How about the clowns in Detroit EACH flying to Washington in a PRIVATE JET to ask for a handout????
"Under scornful questioning by members of the House Financial Services Committee, the CEOs admitted that -- at a time when the whole economy is sinking and millions of workers are unemployment -- when they came to Washington to beg for $25 billion in emergency loans, each of them traveled on a private plane.
"There's a delicious irony in seeing private luxury jets flying in to Washington, D.C., and people coming off of them with tin cups in their hands saying that they're going to be trimming down and streamlining their businesses," said Rep. Gary Ackerman, N.Y. "There's a message there."
"I mean, couldn't you all have downgraded to first class or jet pooled or something to get here?" he continued. "It could have at least sent a message that you do get it."
The criticism from Ackerman and other lawmakers -- who travel back to their districts on commercial airlines -- highlighted why the auto executives' request for emergency money remains stuck on the runway. Many members of Congress worry that Detroit has not changed its big-spending, gas-guzzling habits, and that company executives will be back in a few months asking for billions of dollars more to stay afloat.
"My fear is you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, D-Mass., who noted the U.S. automakers fought him and other lawmakers for years over tougher fuel-efficiency rules that passed in 2007.
All three companies said they require their chief executives to fly on private planes for security reasons. GM and Ford have corporate jets. Chrysler does not, but uses leased or chartered planes.
A round-trip, nonstop commercial flight from Detroit to Washington costs about $400 for a coach seat and $800 for first class. Bill de Decker, president of Conklin & de Decker, an aviation information company, projected that the cost of operating a corporate jet, such as the widely used Gulfstream 5, is about $3,850 per hour, mostly for jet fuel but also crew expenses, airport fees and other expenses. So the round trip would come to about $15,000."
One wonders if they even realized what a stupid mistake this was. Security reasons? What are they, presidents of countries? I wouldn't give them a dime.
"Under scornful questioning by members of the House Financial Services Committee, the CEOs admitted that -- at a time when the whole economy is sinking and millions of workers are unemployment -- when they came to Washington to beg for $25 billion in emergency loans, each of them traveled on a private plane.
"There's a delicious irony in seeing private luxury jets flying in to Washington, D.C., and people coming off of them with tin cups in their hands saying that they're going to be trimming down and streamlining their businesses," said Rep. Gary Ackerman, N.Y. "There's a message there."
"I mean, couldn't you all have downgraded to first class or jet pooled or something to get here?" he continued. "It could have at least sent a message that you do get it."
The criticism from Ackerman and other lawmakers -- who travel back to their districts on commercial airlines -- highlighted why the auto executives' request for emergency money remains stuck on the runway. Many members of Congress worry that Detroit has not changed its big-spending, gas-guzzling habits, and that company executives will be back in a few months asking for billions of dollars more to stay afloat.
"My fear is you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, D-Mass., who noted the U.S. automakers fought him and other lawmakers for years over tougher fuel-efficiency rules that passed in 2007.
All three companies said they require their chief executives to fly on private planes for security reasons. GM and Ford have corporate jets. Chrysler does not, but uses leased or chartered planes.
A round-trip, nonstop commercial flight from Detroit to Washington costs about $400 for a coach seat and $800 for first class. Bill de Decker, president of Conklin & de Decker, an aviation information company, projected that the cost of operating a corporate jet, such as the widely used Gulfstream 5, is about $3,850 per hour, mostly for jet fuel but also crew expenses, airport fees and other expenses. So the round trip would come to about $15,000."
One wonders if they even realized what a stupid mistake this was. Security reasons? What are they, presidents of countries? I wouldn't give them a dime.
QUOTE(edgeywood @ Nov 20 2008, 07:22 PM)
Well said.
Has anyone seen "Who Stole the Electric Car"? They had the technology to provide fuel efficient cars, why didn't they market it?
Here's a post I put up a few months ago:
Here’s part of a quote on the movie “Who Killed The Electric Car”: It was among the fastest, most efficient production cars ever built. It ran on electricity, produced no emissions and catapulted American technology to the forefront of the automotive industry. The lucky few who drove it never wanted to give it up. So why did General Motors crush its fleet of EV1 electric vehicles in the Arizona desert?
General Motors rounded up every EV car that they could find and crushed the final 78 of them, despite the EV drivers' offer to pay the residual lease value ($1.9 million was offered for the remaining 78 cars in Burbank before they were crushed). There is, of course, much more to the story which makes viewing “Who Killed The Electric Car” worthwhile. These cars were “phased out” in the 1990’s, which would logically mean that if they were still in production, they would be significantly improved over the earlier models. Unfortunately, it appears that special interest groups and big business had other plans for the EV1.
A couple thoughts I have.
All CEOs make way too much money. The percentage they make compared with the lowest paid person in their company is the highest ever.
It's Detroit's own fault. They need to build reliable cars that people want. Once they do find a car that people want, they price it out of everyones league. Example, the new Dodge Challenger. People want Mazdas but they don't want Fords, but doesn't Ford own half of Mazda. They need to look at their own examples.
No bailout, where were the bailouts for the tv manufacturing industry?
Why don't they do this type of bailout? Here's my example of my idea. Let's say a Ford usually sells for $18000, make Ford give an individual $5000 off so the car is now $13000. The government will now give Ford $2500 for that purchase. That way everybody is happy and the money actually moves.
I'm not sure but for a $2.5 billion bailout, this means 1 million cars would sell with this deal.
I actually drove one of those EV cars the first year it came out. I drove one in April 1997. Supossedly, the batteries were bad .....yah right. That's why they took them off market. What scares me is the same guy who killed the EV electric car, is the same one promoting the Chevy Volt.
All CEOs make way too much money. The percentage they make compared with the lowest paid person in their company is the highest ever.
It's Detroit's own fault. They need to build reliable cars that people want. Once they do find a car that people want, they price it out of everyones league. Example, the new Dodge Challenger. People want Mazdas but they don't want Fords, but doesn't Ford own half of Mazda. They need to look at their own examples.
No bailout, where were the bailouts for the tv manufacturing industry?
Why don't they do this type of bailout? Here's my example of my idea. Let's say a Ford usually sells for $18000, make Ford give an individual $5000 off so the car is now $13000. The government will now give Ford $2500 for that purchase. That way everybody is happy and the money actually moves.
I'm not sure but for a $2.5 billion bailout, this means 1 million cars would sell with this deal.
I actually drove one of those EV cars the first year it came out. I drove one in April 1997. Supossedly, the batteries were bad .....yah right. That's why they took them off market. What scares me is the same guy who killed the EV electric car, is the same one promoting the Chevy Volt.
QUOTE(TSNSPYDER @ Nov 22 2008, 11:07 AM)
A couple thoughts I have.
All CEOs make way too much money. The percentage they make compared with the lowest paid person in their company is the highest ever.
It's Detroit's own fault. They need to build reliable cars that people want. Once they do find a car that people want, they price it out of everyones league. Example, the new Dodge Challenger. People want Mazdas but they don't want Fords, but doesn't Ford own half of Mazda. They need to look at their own examples.
No bailout, where were the bailouts for the tv manufacturing industry?
Why don't they do this type of bailout? Here's my example of my idea. Let's say a Ford usually sells for $18000, make Ford give an individual $5000 off so the car is now $13000. The government will now give Ford $2500 for that purchase. That way everybody is happy and the money actually moves.
I'm not sure but for a $2.5 billion bailout, this means 1 million cars would sell with this deal.
I actually drove one of those EV cars the first year it came out. I drove one in April 1997. Supossedly, the batteries were bad .....yah right. That's why they took them off market. What scares me is the same guy who killed the EV electric car, is the same one promoting the Chevy Volt.
I do believe that would run against existing trade laws, but I am not certain of that. I do know Toyota, Honda, and company would throw a gigantic fit.
http://thenewsdispatch.com/main.asp?Sectio...amp;TM=34969.39
'
'
QUOTE
Steel restructured; auto will too
Between September 1998 and February 2003 34 steel manufacturing and processing plants declared bankruptcy. The manufacturing plants accounted for the production of 44.8 million tons.
To put this in perspective the total capacity of the steel industry in 1998 was just a little more than 100 million tons, so 44.5 percent of our country's steel production was bankrupt.
Some of our country's largest producers (Bethlehem Steel, at 11.3 million tons, National Steel, 7.0 million tons, and LTV, 7.6 million tons) declared Chapter 11 bankruptcy. Our steel industry management and union leaders said the same thing we're presently hearing from the auto industry management and union officials.
Do not believe that 3 million jobs will be lost. What happened in the steel industry was that other companies (many foreign) bought the plants out of bankruptcy, restructured the agreement with the unions to reduce the legacy costs, restructured the management and work force work rules, and as a result once again became low cost producers of high quality steel.
During the restructuring very few jobs were lost and very little production compromised. It's not an easy transition, but the same thing will happen in the auto industry.
This is a management problem and not a union problem. It's true the legacy costs are killing the auto industry, and the same was true for steel, but there was never a contract that created these legacy costs that was not signed by management.
Steel management and supplier for 48 years,
Leigh Coburn
Between September 1998 and February 2003 34 steel manufacturing and processing plants declared bankruptcy. The manufacturing plants accounted for the production of 44.8 million tons.
To put this in perspective the total capacity of the steel industry in 1998 was just a little more than 100 million tons, so 44.5 percent of our country's steel production was bankrupt.
Some of our country's largest producers (Bethlehem Steel, at 11.3 million tons, National Steel, 7.0 million tons, and LTV, 7.6 million tons) declared Chapter 11 bankruptcy. Our steel industry management and union leaders said the same thing we're presently hearing from the auto industry management and union officials.
Do not believe that 3 million jobs will be lost. What happened in the steel industry was that other companies (many foreign) bought the plants out of bankruptcy, restructured the agreement with the unions to reduce the legacy costs, restructured the management and work force work rules, and as a result once again became low cost producers of high quality steel.
During the restructuring very few jobs were lost and very little production compromised. It's not an easy transition, but the same thing will happen in the auto industry.
This is a management problem and not a union problem. It's true the legacy costs are killing the auto industry, and the same was true for steel, but there was never a contract that created these legacy costs that was not signed by management.
Steel management and supplier for 48 years,
Leigh Coburn
I work in the automotive industry and most of us have seen this coming for years. The blame is far and wide. Granted, the idiocy of the CEOs to fly private jets begging for money is comical and sad, but Mitch Albom points out some very clear hypocrisy of congress here: http://freep.com/article/20081123/COL01/811230371/1082
MITCH ALBOM
If I had the floor at the auto rescue talks
BY MITCH ALBOM • FREE PRESS COLUMNIST • November 23, 2008
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#ARALifeWhite300x250Template { width: 300px; height: 250px; padding: 0px; margin: 0px auto; overflow: hidden; } #ARALifeWhite300x250Template table { border: solid 1px #d5d5d5; background-color: #ffffff; font-family: Arial, Helvetica, sans-serif; line-height: 12pt; font-size: 10pt; margin: 5px; } #ARALifeWhite300x250Template td { text-align: left; vertical-align: top; padding: 0px 5px; font-family: Arial, Helvetica, sans-serif; line-height: 12pt; font-size: 10pt; } #ARALifeWhite300x250Template a { text-decoration: none; margin-bottom: 0px; color: #000000; } #ARALifeWhite300x250Template a:hover { color: #e51937; } #ARALifeWhite300x250Template img { padding: 0px; margin: 0px; } Good morning. First of all, before you ask, I flew commercial. Northwest Airlines. Had a bag of peanuts for breakfast. Of course, that's Northwest, which just merged with Delta, a merger you, our government, approved -- and one which, inevitably, will lead to big bonuses for their executives and higher costs for us. You seem to be OK with that kind of business.
Which makes me wonder why you're so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.
You've already given hundreds of billions to banking and finance companies -- and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup -- $25 billion -- just weeks ago, and that place is about to crumble anyhow.
Does the word "hypocrisy" ring a bell?
Protecting the home turf?
Sen. Shelby. Yes. You. From Alabama. You've been awfully vocal. You called the Detroit Three's leaders "failures." You said loans to them would be "wasted money." You said they should go bankrupt and "let the market work."
Why weren't you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not "let the market work"? Or is it better for Alabama if the Detroit Three fold so that the foreign companies -- in your state -- can produce more?
Way to think of the nation first, senator.
And you, Sen. Kyl of Arizona. You told reporters: "There's no reason to throw money at a problem that's not going to get solved."
That's funny, coming from such an avid supporter of the Iraq war. You've been gung ho on that for years. So how could you just sit there when, according to the New York Times, an Iraqi former chief investigator told Congress that $13 billion in U.S. reconstruction funds "had been lost to fraud, embezzlement, theft and waste" by the Iraqi government?
That's 13 billion, senator. More than half of what the auto industry is asking for. Thirteen billion? Gone? Wasted?
Where was your "throwing money at a problem that's not going to get solved" speech then?
Watching over the bankers?
And the rest of you lawmakers. The ones who insist the auto companies show you a plan before you help them. You've already handed over $150 billion of our tax money to AIG. How come you never demanded a plan from it? How come when AIG blew through its first $85 billion, you quickly gave it more? The car companies may be losing money, but they can explain it: They're paying workers too much and selling cars for too little.
AIG lost hundred of billions in credit default swaps -- which no one can explain and which make nothing, produce nothing, employ no one and are essentially bets on failure.
And you don't demand a paragraph from it?
Look. Nobody is saying the auto business is healthy. Its unions need to adjust more. Its models and dealerships need to shrink. Its top executives have to downsize their own importance.
But this is a business that has been around for more than a century. And some of its problems are because of that, because people get used to certain wages, manufacturers get used to certain business models. It's easy to point to foreign carmakers with tax breaks, no union costs and a cleaner slate -- not to mention help from their home countries -- and say "be more like them."
But if you let us die, you let our national spine collapse. America can't be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have you forgotten who built equipment during the world wars?
Besides, let's be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who's better than Congress?
So who are you to lecture anyone on how to run a business?
Ask fair questions. Demand accountability. But knock it off with the holier than thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don't kick our tires to make yourselves look better.
QUOTE(Roger Kaputnik @ Nov 25 2008, 11:02 AM)
Look. Nobody is saying the auto business is healthy. Its unions need to adjust more. Its models and dealerships need to shrink. Its top executives have to downsize their own importance.
But this is a business that has been around for more than a century. And some of its problems are because of that, because people get used to certain wages, manufacturers get used to certain business models. It's easy to point to foreign carmakers with tax breaks, no union costs and a cleaner slate -- not to mention help from their home countries -- and say "be more like them."
But if you let us die, you let our national spine collapse. America can't be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have you forgotten who built equipment during the world wars?
The entire article could have been these sentences and gotten the point across. It is a very good point, and I am going to send a note to our Congressmen.
QUOTE(Roger Kaputnik @ Nov 25 2008, 11:34 AM)
The entire article could have been these sentences and gotten the point across. It is a very good point, and I am going to send a note to our Congressmen.
If American's really felt that way, they wouldn't be buying Toyota's and Honda's. THAT is how we really vote on how we feel about the auto industry.
It is a lot like the way greens pay more for organic foods, eg. Are you willing to pay more for less to support an industry? Them Learjets are expensive, you know!
QUOTE(southsider2k7 @ Nov 25 2008, 12:43 PM)
If American's really felt that way, they wouldn't be buying Toyota's and Honda's. THAT is how we really vote on how we feel about the auto industry.
I agree to an extent. But in my opinion, the biggest problem is Americans have become ignorant. They've taken loans on homes and cars because someone else told them they could afford it and didn't do any research on their own. They buy foreign cars because the used to be better made(check any reputable source and see domestics are on par with ANY foreign maker today). I don't believe most Americans understand nor do they care to understand the impact losing the domestic auto industry will have on our country. I also don't believe in 'bailouts' and it sickens me to see our govt giving more money away. But it doesn't sicken me as much as seeing 3+ million additional people out of work in a matter of days will if GM goes bankrupt.
What scares me the most is congress demanding a plan. Yes, the automakers need a plan. They have already done quite a bit in the last 18 months, which would be more evident if the entire industry didn't tank to record low sales volumes. But what scares me is the fact congress HAS NO CLUE WHAT KIND OF PLAN THEY SHOULD HAVE!!! My fear is the big 3 will put together a plan that appeases congress but won't necessarily fix any problems. Congress will be looking for a plan they can use to get their talking points and nothing else. The auto industry is a very unique beast and for congress to think they understand is laughable.
For what it's worth, I think the big 3 have fixed quite a few of their problems and if the industry resumed normal levels of sales they would be fine in the short term. The problem was when the industry was booming in the mid/late 90s they gave bonuses(both white and blue collar) like it was water rather than piling that money back into the company for future products. To really fix the problem, once sales resume(and they will) they need to look long term rather than short term. Yes, they have made mistakes by sticking with SUVs too long but they are at a point now where they have or will very soon have some of the most fuel efficient vehicles made. One of the things you read quite a bit is the disparity between what UAW workers earn vs foreign workers, and rightfully so. But what you rarely see is with the new UAW contracts that were signed last year, starting next year, this gap almost goes away. You see, the 'plan' congress is looking for is already there.(albeit more can and should be done). What the bailout will do is make up for mistakes made 3-8 years ago until the industry recovers.
Sorry for the length and rambling, but I tried(poorly) to convey some things you don't see or hear in the news..
Regarding your statement that Americans have become ignorant, hear! hear! I have advocated for years that mathematical logic and rhetoric return to the nation's schools. Naturally, there is a vast, Übermensch conspiracy against this!
If I understand most of what I have heard about the car industry bailout, it is not grants but loans or equity purchases. I agreee that saving the industrial core is important, a lot more important than saving most of the finance element on Wall Street. The difference in bailouts offered or proposed is telling: Over 30 times more to Wall St., no demand for business plans. Lenin spoke to this a hundred years ago, right on the money, frankly.
Furthermore, the fact that Congress is demanding a plan definitely forms a vacuum [thanks, Ang!]. Does anyone outside the 205xx zip codes think the corporations can come up with a plan over Thanksgiving Day? It is stupid. This sounds like something I have to put in my notes to Mssrs. Lugar, Bayh, and Donnelly. I encourage all of you to contact them, too.
If I understand most of what I have heard about the car industry bailout, it is not grants but loans or equity purchases. I agreee that saving the industrial core is important, a lot more important than saving most of the finance element on Wall Street. The difference in bailouts offered or proposed is telling: Over 30 times more to Wall St., no demand for business plans. Lenin spoke to this a hundred years ago, right on the money, frankly.
Furthermore, the fact that Congress is demanding a plan definitely forms a vacuum [thanks, Ang!]. Does anyone outside the 205xx zip codes think the corporations can come up with a plan over Thanksgiving Day? It is stupid. This sounds like something I have to put in my notes to Mssrs. Lugar, Bayh, and Donnelly. I encourage all of you to contact them, too.
QUOTE(Roger Kaputnik @ Nov 25 2008, 12:01 PM)
It is a lot like the way greens pay more for organic foods, eg. Are you willing to pay more for less to support an industry? Them Learjets are expensive, you know!
The Lear jets are nothing compared to the wages and benefits, and their effect on economy. If you believe in the US auto worker, then you should be buying American.
QUOTE(southsider2k7 @ Nov 25 2008, 01:12 PM)
The Lear jets are nothing compared to the wages and benefits, and their effect on economy. If you believe in the US auto worker, then you should be buying American.
Wages and benefits are spread around to a lot of grocery stores, etc. etc. etc. The money for Learjets is just gone, relatively speaking, with nothing to show for it but a fatter exec, figuratively speaking. How did wages and benefits become bad things in America?? It is very 1984.
QUOTE(Roger Kaputnik @ Nov 25 2008, 01:35 PM)
Wages and benefits are spread around to a lot of grocery stores, etc. etc. etc. The money for Learjets is just gone, relatively speaking, with nothing to show for it but a fatter exec, figuratively speaking. How did wages and benefits become bad things in America?? It is very 1984.
If they aren't bad, then why do we keep hearing about what management of these companies makes, and their benefit packages?
Salaries and bonuses are not the same as wages and benefits.
The issue is not what people make, it is how the revenue and profits have been managed.
The issue is not what people make, it is how the revenue and profits have been managed.
QUOTE(Roger Kaputnik @ Nov 25 2008, 02:02 PM)
Salaries and bonuses are not the same as wages and benefits.
The issue is not what people make, it is how the revenue and profits have been managed.
That is a bogus argument that just leads to circular logic. If we are going to raise a stink about what one group makes, then it is a fair comparison to what another group makes. If we are going to look at the benefits one group gets, then it is also fair to look at the benefits of another group. We are reading all over the place about people crying about how much management makes, which in my mind makes the wages of every worker fair to examine to best determine how to return the company to profitability. I don't believe in the politics of class warfare which pit one group against another. Its easy to point blame at one group or another, but in the meantime they have to actually get past the 5 second soundbyte that plays on TV, and figure out how to fix the problems that exist here.
The reality is that this cost structure can not be sustained by Detroit in this economy as long as American's aren't buying US cars. Cutting out a $400,000 jet, while a great zinger for a Senator on TV, does do not anything substantive to plug the hole of General Motors who is burning through $2,500,000,000 a quarter right now. That works out to 0.016 percent of the losses for GM in the 3rd quarter. In other words it doesn't solve a damned thing.
Look no further than our own backyards and to the collapse of steel in the United States. They had to completely restructure their costs in order to even exist today. They did, and the scare tactics that we were fed about all of the losses that were about to take place, never materialized. Only now with the auto industry in trouble, is the steel industry really in trouble. The auto industry needs to be completely re-invented, and that isn't going to happen with only management being examined. Without real changes you could give them all of the bailout money you wanted, and they will be back in DC again looking to be saved.
I think we all have said the same thing.
Speaking of steel, you probably remember when USSteel used their profits to invest in the go-go real estate market in the '80s. Once again, that was a management/financial decision, no hardhats in that meeting! New plants were not on the agenda back then.
You posit the untenable position that labor is to blame for making poor decisions for the corporations they work for. THAT is what is ridiculous. On the other hand, you cannot let management off the hook for poor managing. You will notice that everyone will pay for that.
Speaking of steel, you probably remember when USSteel used their profits to invest in the go-go real estate market in the '80s. Once again, that was a management/financial decision, no hardhats in that meeting! New plants were not on the agenda back then.
You posit the untenable position that labor is to blame for making poor decisions for the corporations they work for. THAT is what is ridiculous. On the other hand, you cannot let management off the hook for poor managing. You will notice that everyone will pay for that.
QUOTE(Roger Kaputnik @ Nov 25 2008, 02:32 PM)
I think we all have said the same thing.
Speaking of steel, you probably remember when USSteel used their profits to invest in the go-go real estate market in the '80s. Once again, that was a management/financial decision, no hardhats in that meeting! New plants were not on the agenda back then.
You posit the untenable position that labor is to blame for making poor decisions for the corporations they work for. THAT is what is ridiculous. On the other hand, you cannot let management off the hook for poor managing. You will notice that everyone will pay for that.
If you'll notice I have never excused managements role in this. What I have said all along is that there are more reasons than what is being reported. Much of the "mismanagement" is problems caused by the cost of labor. That has been completely ignored.
The only way it has been ignored is by allocating no blame to management for the situation posed by good wages. It is not Labor's fault they got middle class earnings. But it is management's fault that investment was not made in new plants and better designs and marketing research was accomplished.
What we can agree about is the plethora of strands leading the auto industry to where it is now.
What we can agree about is the plethora of strands leading the auto industry to where it is now.
QUOTE(Roger Kaputnik @ Nov 25 2008, 03:58 PM)
The only way it has been ignored is by allocating no blame to management for the situation posed by good wages. It is not Labor's fault they got middle class earnings. But it is management's fault that investment was not made in new plants and better designs and marketing research was accomplished.
What we can agree about is the plethora of strands leading the auto industry to where it is now.
Revisionist history doesn't fly with me.
Let me put it this way. Go back 10-15 years ago when profits in SUVs were making the auto companies hugely profitable, meanwhile the smallest car lines were barely surviving. Do you really expect me to believe that if the ownership of the Big Three had gone back to labor and said, we are going to cut your wages and benefits to match Toyota and Honda, we are ditching the most profitable lines of production, and we are investing in cars that no one wants right now, that labor would have went for it?
That is a crock. We both know that labor would have shutdown the plants with strikes, and done everything in their power to force ownership to keep the status quo.
My point is that the money made then was not put to good use.
PS: Revisionist history? Isn't that when someone describes the past in a way one doesn't agree with?
And another thing: Many of the small cars were made and kept in production to keep corporations CAFE-compliant.
Are we on to the solutions part of this discussion yet?
PS: Revisionist history? Isn't that when someone describes the past in a way one doesn't agree with?
And another thing: Many of the small cars were made and kept in production to keep corporations CAFE-compliant.
Are we on to the solutions part of this discussion yet?
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