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Old 11-20-2008, 06:16 AM   #1
Spenk
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Default Mitt Romney on Detroit

From the New York Times:


Quote:
November 19, 2008
Op-Ed Contributor


Let Detroit Go Bankrupt

By MITT ROMNEY
Boston

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.
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Old 11-20-2008, 06:27 AM   #2
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It's too bad Mitt Romney didn't get a little further in the presidential elections... he really is a very sharp guy.
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Old 11-20-2008, 07:51 AM   #3
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being from mass, i agree with him anyway!
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Old 11-20-2008, 09:37 AM   #4
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GM should hire him
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Old 11-20-2008, 10:02 AM   #5
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Yes Mitt.

Let them eat cake....

Clown. He's probably just looking for more cheap labor to take care of his sprawling lawn.
Then, he can pay american workers the same rubbish wage he was paying the illegals to do the same job....

He either should take the job of restructuring these companies himself, or just shut up.
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Old 11-20-2008, 10:36 AM   #6
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Regarding the Taurus vs. Avalon comments, are the comparable? It's been a long time since I looked at either very closely, and to be honest, I don't think I've seen either late-gen car on the road (the Taurus stopped being relevant to me when the 96-era model was introduced). This could be due to their styling being anything but eye-catching. I thought the Taurus was aimed at competing with the Camrys, Accords and Altimas of the world.

OK, I just looked at Ford's website... no wonder, the Taurus is their "best" sedan of their meager lineup. 5 cars vs. 14 crossovers, SUVs and trucks. Damn.

I agree with a lot of what he's saying... it's much easier to stick with the status quo than to ante up and commit to the long-term restructuring and reenvisioning of your business for success.

-Mike
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Old 11-20-2008, 11:15 AM   #7
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Here's the thing. Everything he said sounds great, because with the one exception of letting it go bankrupt, everything else is what everyone else has been saying for years, even decades.

He wrote it in such a way that it suggests that if we let GM go bankrupt, all these wonderful things that everyone agrees with would all come true. His idea is that GM under chapter 11 will somehow not choke on the long term R&D, somehow attracts savvy execs that know nothing about automobile but still capable of turning the company around for reasonable paychecks, and somehow enable its dealer network to survive the storm and come out strong.

I think it's just a lot of BS thrown in to make a case for what everyone in Wall Street has been saying for the last couple of weeks.

"The Bail Out Money is OURS!"
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Old 11-20-2008, 11:22 AM   #8
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I just want to know when it became the government's job to bail out industries and subsidize failure?
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Old 11-20-2008, 11:24 AM   #9
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I read this yesterday. He's definitely one of the better politicians out there. Without turning this into PP, he would've been a better VP choice for McCain. Heck, I would've voted for him for President.

I'm glad to see the Senate has this bailout package stalled. Hopefully they don't go through with it...
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Old 11-20-2008, 11:56 AM   #10
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Ford and GM had made strides to become profitable again in 2010 and they did still sell cars until the financial market collapsed. They are asking for very little compared to what was given to other companies (AIG). In fact, Ford has said they don't want any of the bailout for themselves. Not to mention, it's 100% the government's fault they are in this mess due to deregulation and legalization of mortgage backed securities which collapsed our economy.

I'm sorry but this whole thing is so rediculous. Who is ever going to stand up for the middle class worker. If GM goes under, it will be the beginning of the end for this country.
All our government can do is complain about private jets? What a joke... We are so screwed.
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Old 11-20-2008, 12:03 PM   #11
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let ford and chrysler die but save GM!!! i need another couple of years to buy a vette and cts-v.... come on people... save GM just for 5 years and we can all chill at dragstrips with 800 hp camaros.... and i think GM should make the mustang gt500 for $40k if ford is to go under.

obama should totally name me the auto czar.
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Old 11-20-2008, 12:04 PM   #12
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Quote:
Originally Posted by JuggernautTCW View Post
auto czar.
Such an appropriate word.
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Old 11-20-2008, 12:33 PM   #13
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Quote:
Originally Posted by TCENGEL View Post
Ford and GM had made strides to become profitable again in 2010 and they did still sell cars until the financial market collapsed. They are asking for very little compared to what was given to other companies (AIG). In fact, Ford has said they don't want any of the bailout for themselves. Not to mention, it's 100% the government's fault they are in this mess due to deregulation and legalization of mortgage backed securities which collapsed our economy.

I'm sorry but this whole thing is so rediculous. Who is ever going to stand up for the middle class worker. If GM goes under, it will be the beginning of the end for this country.
All our government can do is complain about private jets? What a joke... We are so screwed.
I hope you're not actually saying it is 100% the government's fault that the Big 3 are failing, because if you are, then you're failing harder than anyone I've ever seen fail before, and that includes the Big 3.
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Old 11-20-2008, 04:40 PM   #14
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Pelosi says, "Until they show us the plan, we cannot show them the money."

Unamused auto execs are unamused:

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Old 11-20-2008, 05:10 PM   #15
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Leaving with a dejected look on their faces, they climb aboard their $35 million Gulfstreams...
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Old 11-20-2008, 07:39 PM   #16
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But the real question is, do they REALLY care?

In fact, has anyone at GM ever really cared about the company's long term future? UAW? The execs? The share holders? If anyone did, I sure haven't noticed.
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Old 11-20-2008, 10:04 PM   #17
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Quote:
Originally Posted by fastfreddy View Post
Yes Mitt.

Let them eat cake....

Clown. He's probably just looking for more cheap labor to take care of his sprawling lawn.
Then, he can pay american workers the same rubbish wage he was paying the illegals to do the same job....

He either should take the job of restructuring these companies himself, or just shut up.
Right on, the government should give away 700 Billion tax payer dollars so Big 3 Execs can fly in private jets, receive outrageous benefits and perks and so the UAW can continue to over charge and under produce. We should also not remain competitive in the global market because man, that thing is a myth and we'll be fine using tax money to fund the economy. Great points, everything should continue exactly as it is, I mean given the current situation that plan is working out great for us. Can we do it America? Yes we can!!!!

On a serious note, I'm not quite sure what the benefit of having execs who have no idea how the auto industry works should come in and run it, but the old gaurd needs to leave. Except Lutz, he can stay(Mmm, Camaro).
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Old 11-21-2008, 10:25 AM   #18
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Quote:
Originally Posted by TCENGEL View Post
Ford and GM had made strides to become profitable again in 2010 and they did still sell cars until the financial market collapsed. They are asking for very little compared to what was given to other companies (AIG). In fact, Ford has said they don't want any of the bailout for themselves. Not to mention, it's 100% the government's fault they are in this mess due to deregulation and legalization of mortgage backed securities which collapsed our economy.

I'm sorry but this whole thing is so rediculous. Who is ever going to stand up for the middle class worker. If GM goes under, it will be the beginning of the end for this country.
All our government can do is complain about private jets? What a joke... We are so screwed.
Ridiculous -

And I think it would just be the BEGINNING...
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Old 11-21-2008, 10:27 AM   #19
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Quote:
Originally Posted by Balantz View Post
Pelosi says, "Until they show us the plan, we cannot show them the money."

Unamused auto execs are unamused:




The arrogance and self-entitlement of these people is astounding...
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Old 11-21-2008, 10:35 AM   #20
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Originally Posted by WRXBrakes View Post



The arrogance and self-entitlement of these people is astounding...
Goes for most people in this country anymore.
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Old 11-23-2008, 02:30 AM   #21
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Originally Posted by fastfreddy View Post
Yes Mitt.

Let them eat cake....

Clown. He's probably just looking for more cheap labor to take care of his sprawling lawn.
Then, he can pay american workers the same rubbish wage he was paying the illegals to do the same job....

He either should take the job of restructuring these companies himself, or just shut up.
grow up...
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Old 11-23-2008, 02:44 AM   #22
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being from mass, i agree with him anyway!
yeah i usually agree with people based on my location! ......
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Old 11-23-2008, 06:10 AM   #23
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It's kinda hard to attract new competent management and spend more on investing in the future when your filing for chapter 11.
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Old 11-25-2008, 12:48 PM   #24
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his company might actually buy gm or ford, chrysler is too far gone

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GM should hire him
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Old 11-25-2008, 02:11 PM   #25
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great article. I'm glad someone with a bit of pull is thinking this way.
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