On GM

Ever since my first car, a basic 1965 Chevrolet Nova, I’ve always owned a GM car. Before buying my 2008 Chevrolet Malibu (reviewed here), for the first time in my life I considered foreign cars. My wife was born in Detroit as her dad worked at GM as his did his father. Actually her current car was our only venture outside of GM, a 2003 Honda Accord.

Last year my in-laws experienced a change in their retirement health care insurance. With the recent bankruptcy, we wonder what (if anything) will happen to his retirement.

I don’t feel sorry for GM as a corporation because it has ignored economic signals for a long time; however, I do feel compassion for all the affected families. Whether retired from or directly employed by GM, or as a member of the supply chain, or associated with a local dealership about to be closed, the impact on individuals and communities is huge.

During the initial auto-bailout talks in late 2008, a friend complained about the bailout in terms that the US automakers have brought the problems onto themselves, thus should be let to die. Knowing that he’s also a city councilman, I simply asked, “As a councilman, what if the major auto facility was located in your town?” Of course his tune changed, thus showing the complexity and profound effect.

Also late last year my father-in-law told us about a Christmas card he received from a fellow GM retiree who wrote, “Who would have thought we would live longer than GM.”

I just watched an interesting interview with GM Chief Financial Officer Ray Young. Of course he’s bullish and talks about learning from mistakes, cost efficiency, leaner, a customer-product focus, moving quickly, and taking risks. At the same time, besides prolonging employment for many (thus phasing in unemployment), I wonder how this government investment can produce a profit.

Time will determine what happens to GM. David Brooks see no exit strategy. In the meantime, I’ll close with Paul Ingrassia’s words from his recent Wall Street Journal column.

Heaven only knows what will be enough. But a company with a cautious, slow-moving management and a union committed to defending ridiculous work rules won’t have a chance of succeeding. Perhaps everyone remaining at the new GM will realize that. The rest of us can only hope for the best.

Past Angles about the Automakers

Opinions in the Shorts: Vol. 13

On the Proposed Government Budget
Yes, the people want government to stabilize and stimulate the economy, but the people also want fiscal prudence and responsible spending. – And that’s the point President Obama and Congress don’t get.

On Congressional Republicans
As they attempt to portray themselves as fiscal protectors, their motives are strictly political – not ideological; let alone a personal insult to knowing Americans. John Boehner’s continual instance of “we lost our way” stance is nothing more than scapegoat for becoming an out-of-power political party. Mr. Boehner, if you can’t practice what you preach, don’t preach. My memory isn’t that short.

On Race and the White House
Although I question whether any statistical confirms this next statement, but I wonder how many people who don’t support the president, actually take that stance because of race? Although many won’t admit it, but I simply wonder.

On Double Standards
Are Republicans being hypocritical by voting against the stimulus bill while jumping for joy when their district gets funding? Here’s an interesting post from Let Us Talk.

On the Governator

Last week on This Week, Governor Arnold Schwarzenegger (R-CA) explained that given the current federal deficit, the only response thing for Washington to do is raise taxes and cut spending … not or, but AND. He also explained how the tax increase should be temporary. Now when was the last time anyone has heard a politician say something as sensible as that? Of course I agree.

On the Budget Situation

In early October and campaign season, I wrote 4 posts on the federal budget: History, Revenue, Spending, and the Dilemma.

On the Reds
As with typical baseball team, the Reds open spring raining with many questions. Rumor has it that Aaron Harang’s velocity is below 90. If so, that is a troubling sign.

On GM
During 2008 GM lost approximately $3700 for every car sold … yet they don’t seem to get it.

On an Internet Resource
The Real Clear family serves as a good collecting tool. Whether it be Real Clear Politics, World, Sports, and Markets, see the Resource links to the right as any one of them takes to the collection.

On My 2008 Chevrolet Malibu

At December’s congressional hearings, GM CEO Rick Wagoner cited the Chevrolet Malibu as a current GM success. The purpose of this post is not to debate Mr. Wagner’s statement, but to let you know my thoughts about that car because I purchased a new LS in February 2008; and yes, I still have it.

Exterior

  • Stylish European body design
  • Resembles Audi A6 – Think I’m crazy? Compare here.

Interior

  • Stylish
  • Roomy
  • Seats fine, backs are firmer than the seat
  • Information system on the dash is a plus
  • 4 speeds on the fan/ventilation control is too few
  • Winter-time heating quickly available, get heating on the feet could improve
  • Glove compartment is small, but the shallow storage area on top of the dash is interesting

Ride

  • Comfortable
  • Quiet

Drive & Performance

  • 4-cylinder engine
  • Mileage: 24 m/g city, low 30s highway
  • Acceleration is OK, but not as good as my wife’s 4-cylinder ’03 Accord
  • Handling isn’t as tight as some foreign models, but not as loose as the past
  • Average turning radius

Others

  • 2008 North American Car of the Year and is recommend by Consumer Reports (latest report, January 2009).
  • Trunk, and its opening, is smaller than expected, probably due to its aerodynamics.
  • Although information seems to point to GM doing better advance planning with this vehicle, the Malibu’s long-term reliability is unknown.
  • Interestingly, the engine light came on at 1,200 miles. The problem was due to a defective engine part, not in mass, just in mine. Because of the nature of the part, GM eventually took a part off the assembly line to correct my problem, so it took a while.
  • During my search I also considered a Mazda 6 and Hyundai Sonata.
  • At the start of the Malibu line, the LS is one of the best values available. When I bought, this car was cheaper than the Toyota Corolla, let alone more car and comfort. So one year later, I don’t regret purchasing this car.

The Official Site for the 2009 Chevrolet Malibu

The Complexity of the Auto Rescue

At least for this session, it appears auto-rescue legislation is dead in the water. So we may celebrate today with a market plunge. This current market has been using 8000 as a bounce level, so we start the day with a 500+ cushion.

Whether it’s a loan, rescue plan, or a bailout (so call it what you want), the automotive situation is much more complex and convoluted than most of us really know. I’m sure the lobby factors from all sides are working overtime on this one. So below are some random thoughts and resources to show It ain’t that simple.

I continue to maintain the following:

  • As organizations, they don’t deserve a dime.
  • As for the UAW, they helped create this mess and are part of the problem.
  • From a workers and supply chain aspect, help is needed.
  • From a community point, another big need.
  • Washington should not dangle dollars under conditions of developing alternative energy vehicles that the public may not buy.
  • I’m leaning toward a fluctuating gas tax to keep prices gas prices at a point that it makes consumers think and act.

Congress is an interesting mix on this topic as they are all over the place. See this article from Politico.

In terms of world-wide sales, GM and Toyota sell approximately the same number of cars. One of them turns a double-digit profit and the other operates at a loss.

This Homan Jenkins WSJ article is a very good read. On a similar note, George Will wrote this in mid-November.

Congress could help the Detroit Three by allowing them, when meeting CAFE (corporate average fuel economy) standards imposed by Congress, to count fuel-efficient cars they import from their overseas factories. Congressional Democrats oppose that because those imports are not made by members of the United Auto Workers. Those Democrats, their rhetoric notwithstanding, really care most about the union. “Saving the planet” comes second and last comes the health of the auto companies.

New York Times columnist Thomas Friedman recently wrote an interesting column on innovations (While Detroit Slept) and looking ahead at history (The Real Generation X).

Carlos M. Gutierrez, U.S. Secretary of Commerce chimes in with his take in the Washington Post.

Surprise! According to OpenSecrets.org, The National Automotive Dealers Association (NADA) donates slightly more money to campaigns than the UAW.  NADA, consisting of auto and truck parts makers, auto repair services, and car rental agencies, give 65% to Republicans while 99% of UAW donations go to Democrats. Of the automotive industry, outside of the UAW, 72% go to Republicans.

As the Democratically controlled Congress wrestled with the latest energy bill, car dealers and Detroit auto manufacturers mounted a lobbying blitzkrieg, claiming that CAFE standards, which would set minimum mileage standards for the future, were too stringent and could limit consumer choices or bankrupt the struggling automakers. Automakers spent $47.7 million on lobbying in 2006, but despite the objections of Michigan lawmakers, the Senate passed legislation requiring cars to average 35 mpg by 2020. The industry gave $14.2 million at the federal level in 2006—76 percent to Republicans—and may begin to keep Democrats in mind when writing checks.

By the way, conspiracy theorists are alive and well; claiming the oil industry is driving down oil crude prices to discourage new transportation technologies. I just had to that.

U.S. Automakers, the Economy, and Aid

The Big 3 U.S. automakers are in trouble and are asking the government for help. They are asking for aid during a time when the public was against the rescue plan for the financial sector. They are asking for aid during a time when the public scowls in dismay at the total compensation upper executives receive; even when their companies have a negative return. To politicize matters, Speaker Pelosi’s proclamation for help was not done in a bipartisan manner (but that’s a story in itself).

Thirty years ago the public faced rising prices at the gas pump. As more Americans switched from a U.S. brand to vehicles made by a foreign company, Americans discovered not only were foreign cars more fuel efficient, they were more reliable. Fortunately, the Reagan administration brokered a deal to get foreign automakers to build assembly plants in the United States.

Thirty years later, the foreign automakers still have the most reliable cars and have expanded their offerings into moderate and luxury sedans. Toyota, Honda, and Hyundai have assembly plants employing U.S. workers. Meanwhile, during the same time frame the U.S. automakers moved from gas-guzzling sedans to the gas-guzzling SUV and truck market. Now that’s progress!

The Big 3 not only missed the boat thirty years ago, they continued to give the fuel-efficient, reliable auto market to the foreign companies. Look at the numbers! The foreign automakers continue to have a more efficient business operation. As Honda takes 10 days to convert a plant to produce a different model, the Big 3 seek government aid for retooling.

Although their failure during the past thirty years is obvious, the auto industry was a big part of the industrial backbone of the United States during the 20th century. Although the industrial age is over, the auto industry is still an important component in the 21st century. Today, they are in trouble; in trouble during a difficult economic time: a time when unemployment is already of 14%; in trouble because of a lack of vision, lack of response, and profound arrogance of both executives and the UAW.

Ladies and gentlemen, this aid is not about the Big 3, it’s about we the people. If allowed to go under or tremendously downsized, many Americans would be out of a job. Their spending, the decreased demand on goods and services would ripple across our economy. With less income because fewer people working, local government will either cut services and/or employment to be within a budget. As a matter of fact, that’s already happening. States too are already affected.

For every auto assembly line worker there are 7.5 workers in the supply chain. A collapse or downsizing by the Big 3 would have a strong domino effect to other companies, workers, and communities.

Saying our country’s economy is in “difficult times” may be an understatement. It’s not President Bush’s fault, but his decisions helped. It’s not Congress’s fault, but their legislation helped. All of Washington has played a role in some way over the past thirty years. It’s not the union’s fault, but they played a role. It’s not the fault of corporate greed or desiring lower costs, but poor executive decisions have played a bigger role than they would admit.

I keep wondering why anyone would want to be president with the economy in such a mess; let along all the other important challenges on the current plate. Seems the winner has reason to ask for a recount. By the way, partisan Republicans, get a grip- the economic situation is not President-elect Obama’s fault!

The situation is what it is – serious! President-elect Obama and the new Congress have no choice but to attack our economic situation; and that includes propping up an industry that has failed to meet consumer demands: let alone funding employment -related issues as rebuilding infrastructure and developing alternative energies. All of this is for us – Americans worker and our households – and at the expense of an ever growing deficit. Ouch!