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Thread: Romney and the Auto Bailout

  1. #1
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    Romney and the Auto Bailout

    Here's that Op-Ed. Key parts in bold:

    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.
    At the debate last night, here was the exchange between Obama and Romney:

    Romney: My plan to get the industry on its feet when the industry was in real trouble was not to start writing checks ... I said these companies need to go through a managed bankruptcy - and in that process, they can get government help, they can get government guarantees - but they need to go through bankruptcy to get rid of excess costs, and the debt burden that they've built up, and-

    Obama (talking over Romney): Governor Romney, that is not what you said!

    Romney: You - you can take a look at the Op-Ed

    Crosstalk:

    Obama: Governor Romney, you did not say - you did not say that you would provide government help. Romney: I'm still speaking, Mr. President.

    Romney: I said that we would provide guaranties, and that was to enable these companies to go through bankruptcy, to come out of bankruptcy. Under no circumstances would I do anything other than to help this industry get back on its feet. And the idea that has been suggested that I would liquidate the industry, of course not. Of course not.

    Obama: Let's check the record.

    Romney: That's the height of silliness.

    Obama: Check the record.

    Romney: I have never said I would liquidate the industry

    Crosstalk:

    Obama: Governor, the people of Detroit don't forget. Romney: I want to keep the industry going and thriving . . .




    Well, after checking the record, Mr. President - you were wrong. Romney was right.

  2. #2
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    It was very important to get that point across in the debates. The battleground right now happens to be in Auto Country. People in Ohio, MI and WI are closely tied to the auto industry. The Obama campaigns narrative of "let them go bankrupt" has always been a distortion.

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    Quote Originally Posted by doggin94it View Post
    Here's that Op-Ed. Key parts in bold:



    At the debate last night, here was the exchange between Obama and Romney:

    Romney: My plan to get the industry on its feet when the industry was in real trouble was not to start writing checks ... I said these companies need to go through a managed bankruptcy - and in that process, they can get government help, they can get government guarantees - but they need to go through bankruptcy to get rid of excess costs, and the debt burden that they've built up, and-

    Obama (talking over Romney): Governor Romney, that is not what you said!

    Romney: You - you can take a look at the Op-Ed

    Crosstalk:

    Obama: Governor Romney, you did not say - you did not say that you would provide government help. Romney: I'm still speaking, Mr. President.

    Romney: I said that we would provide guaranties, and that was to enable these companies to go through bankruptcy, to come out of bankruptcy. Under no circumstances would I do anything other than to help this industry get back on its feet. And the idea that has been suggested that I would liquidate the industry, of course not. Of course not.

    Obama: Let's check the record.

    Romney: That's the height of silliness.

    Obama: Check the record.

    Romney: I have never said I would liquidate the industry

    Crosstalk:

    Obama: Governor, the people of Detroit don't forget. Romney: I want to keep the industry going and thriving . . .




    Well, after checking the record, Mr. President - you were wrong. Romney was right.

    Obama lied, gee who would have thought?

  4. #4
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    Where's Durden who acted all uppity about his boy saying check the record on Benghazi...

  5. #5
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    With it (The bailouts), 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.
    Is GM's market share higher now, or lower?

    Is GM's Labor Costs still high, or is it materially lower now?

    Is GM's retiremnet liabillities still high, or are they lower now (and if so, how did they become lower)?

    is GM technologicly a market leader, or a market follower?

    Is GM's products considered higher quality now, or of lower quality than it's competitors?

    Does GM employ more people now, or before the bailout?

    This was his claim. These should be what his Op-Ed is judged on, if he was rioght or wrong in the facts.

  6. #6
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    Quote Originally Posted by Warfish View Post
    Is GM's market share higher now, or lower?

    Is GM's Labor Costs still high, or is it materially lower now?

    Is GM's retiremnet liabillities still high, or are they lower now (and if so, how did they become lower)?

    is GM technologicly a market leader, or a market follower?

    Is GM's products considered higher quality now, or of lower quality than it's competitors?

    Does GM employ more people now, or before the bailout?

    This was his claim. These should be what his Op-Ed is judged on, if he was rioght or wrong in the facts.
    GM appears to be doing poorly right now. Some writers have them on the verge of a second bankruptcy. Chrysler on the other hand is no longer an American company. They are owned by Fiat.

    America is out around 40 Billion on these two companies. Was it worth it? Would we have been better off using Romneys plan and saving the 40 billion to "invest in teachers"? That is the real question.

    Regardless the Obama narrative that Romney wanted to liquidate the auto makers has been debunked along with the millions spent by the Obama campaign alleging it.

  7. #7
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    Quote Originally Posted by Trades View Post
    Obama lied, gee who would have thought?
    He didn't lie; he had his facts wrong. Same way Romney did on the "act of terror" wording.

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    Quote Originally Posted by doggin94it View Post
    He didn't lie; he had his facts wrong. Same way Romney did on the "act of terror" wording.
    Disagree. Obama's campaign has been pushing the "let them go Bankrupt" narrative from day one. They used the headline that the NYTimes chose to put on Romney's op-ed rather then use any of the content of the op-ed. This was done knowingly. Anyone that read the op-ed already knew that the Obama campaign was completely mischaracterising the position. Obama used it anyway because it was helping him in Ohio.

    Thats a bit different then the "act of terror" issue as anyone that pays attention saw Susan Rice blame everything on a protest based on a video a week after the event. Obama two weeks later on the View continued to blame it on a web video and almost 3 weeks later Jay Carney was still pushing the video story. We now know that Intel was watching everything in REAL time and within 24 hours they knew it was an organized terror attack.

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    Quote Originally Posted by Warfish View Post
    Is GM's market share higher now, or lower?
    Lower. http://www.breitbart.com/Big-Governm...nder-Delivered

    (don't usually cite breitbart, but the facts are there)

    Is GM's Labor Costs still high, or is it materially lower now?
    Materially lower:

    Labor Costs Dramatically Different
    GM is well on its way to making great cars, though it still has work to do against Toyota (TM) in quality and dependability. Costs are the other side of a great car company, and this is an area where GM is now competitive with the transplant original-equipment manufacturers in the U.S., thanks most notably to implementing Voluntary Employee Beneficiary Association (VEBA) agreements with the United Auto Workers to move retiree healthcare risk to the union and away from GM. Drastic head-count reductions from several rounds of buyout programs and plant closings under Old GM also have improved GM's cost structure.


    GM's U.S. hourly labor cost per North American vehicle produced has improved--down to $1,606 from $3,295 in 2005. Since the IPO, GM has disclosed that its break-even point for the all-important GM North America (GMNA) segment is now a U.S. industry sales rate of about 10.5 million units with 18%-19% share, compared with industry sales of 15.5 million and 25% share in third-quarter 2007. According to GM, retiree healthcare was about $4 billion of the $16 billion total U.S. hourly labor cost in 2005, so eliminating U.S. retiree healthcare obligations has helped im*mensely, as has reducing hourly head count by 57%. Also critical is that GM's U.S. all-in hourly labor cost is now about $56 per hour, compared with $78/hour under Old GM. For comparison, Toyota is about $55/hour. We think investors con*cerned with continued U.S. market share loss should consider that GM can break even at sales levels that occurred right after the collapse of Lehman Brothers and, as discussed in our report "Why U.S. Auto Sales are Still Too Low," we believe the U.S. is on its way back to normalized annual demand levels of between 16.1 million and 17.3 million units. GM has stated that it is able to run GMNA capacity at up to 150% utilization (three shifts with overtime) if U.S. industry demand reaches at least 16 million units.
    http://seekingalpha.com/article/7907...-at-the-new-gm
    Is GM's retiremnet liabillities still high, or are they lower now (and if so, how did they become lower)?
    Per the article above, lower now. But not low enough. See: http://www.marketplace.org/topics/bu...ot-good-enough
    is GM technologicly a market leader, or a market follower?
    Follower

    (See the forbes article I posted a while back)

    Is GM's products considered higher quality now, or of lower quality than it's competitors?
    Still lower (anecdotal evidence only)

    Does GM employ more people now, or before the bailout?
    Per the above, fewer now.

  10. #10
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    Quote Originally Posted by doggin94it View Post
    He didn't lie; he had his facts wrong. Same way Romney did on the "act of terror" wording.
    Wrong Obama's was a fabrication, out and out lie.

    Romney's was semantics as Obama never said the Libya killings were an act of terror, he just talked in generalizations in the rose garden speech.

  11. #11
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    Quote Originally Posted by doggin94it View Post
    He didn't lie; he had his facts wrong. Same way Romney did on the "act of terror" wording.
    or had his facts wrong intentionally, for his own benefit.

    and then Obummer hyperbolized it, for emphasis and extra benefit.

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    Quote Originally Posted by doggin94it View Post
    He didn't lie; he had his facts wrong. Same way Romney did on the "act of terror" wording.

    The usual lib nonsensical spin - B. Hussein made numerous apologies particularly in front of the UN and went on for days about the provocative video and locking up the alleged auteur

    Anyone possessing 2 synapses to fire knows a terror attack seconds after it happens - especially on the date of 9/11 - and dead Americans at the hands of Islamokooks is not "keeping us safe"

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    Quote Originally Posted by Trades View Post
    Wrong Obama's was a fabrication, out and out lie.
    Sincerely doubt it. They've been piling on the "Romney wanted to let Detroit go Bankrupt" train for so long I doubt Obama had the full op-ed committed to memory. Because if he did, there's no way he says that.

    I'm not making an argument from the "Obama is too principled to lie" perspective - think about it tactically.

    The reason it was a mistake for Romney to hit Obama on the "act of terror" semantics was because it was not just factually wrong, but provably factually wrong, and the result of that error was the complete evisceration of the Benghazi issue as a line of attack. By making the issue whether Obama used those words or not, people focused on the fact that Romney was wrong in his recounting what Obama said on that day, and that percolated out to a general view that Romney was wrong on Benghazi.

    The same tactical calculation applies here. By making the issue about whether Romney wanted to include federal guaranties - an easily checkable, verifiable, and proven fact - Obama completely undermined the power of the attack. That Op-Ed is the NYT's most viewed story, today, and reading it makes one thing clear: "Romney was right about what he said, Obama was wrong". Heck, the Detroit News came out and said as much.

    And that, as with the Libya issue, will become, in voters' minds, "Obama is wrong about Romney's position on the auto bailout.

    Which is why there's no way Obama says what he says if he actually knows, in that moment, that it's false. It's just awful tactics.

  14. #14
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    Quote Originally Posted by doggin94it View Post
    The reason it was a mistake for Romney to hit Obama on the "act of terror" semantics was because it was not just factually wrong, but provably factually wrong, and the result of that error was the complete evisceration of the Benghazi issue as a line of attack. By making the issue whether Obama used those words or not, people focused on the fact that Romney was wrong in his recounting what Obama said on that day, and that percolated out to a general view that Romney was wrong on Benghazi.
    It offends me that that was all it took for Obama to get a de facto "pass" on Libya.

    "Nope, I DID say Terror, see right there that one time." /smug

    And with that, Libya, non-issue.

    /facepalm at the way our politics works some days.

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    Quote Originally Posted by Warfish View Post
    It offends me that that was all it took for Obama to get a de facto "pass" on Libya.

    "Nope, I DID say Terror, see right there that one time." /smug

    And with that, Libya, non-issue.

    /facepalm at the way our politics works some days.
    Personally, I am shocked that Romney did not bring this up during the debate last night. The issue should be a slam dunk for him, he just used the worst possible argument in the second debate and came out looking wrong even though he's right.

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    Quote Originally Posted by doggin94it View Post
    Here's that Op-Ed. Key parts in bold:



    At the debate last night, here was the exchange between Obama and Romney:

    Romney: My plan to get the industry on its feet when the industry was in real trouble was not to start writing checks ... I said these companies need to go through a managed bankruptcy - and in that process, they can get government help, they can get government guarantees - but they need to go through bankruptcy to get rid of excess costs, and the debt burden that they've built up, and-

    Obama (talking over Romney): Governor Romney, that is not what you said!

    Romney: You - you can take a look at the Op-Ed

    Crosstalk:

    Obama: Governor Romney, you did not say - you did not say that you would provide government help. Romney: I'm still speaking, Mr. President.

    Romney: I said that we would provide guaranties, and that was to enable these companies to go through bankruptcy, to come out of bankruptcy. Under no circumstances would I do anything other than to help this industry get back on its feet. And the idea that has been suggested that I would liquidate the industry, of course not. Of course not.

    Obama: Let's check the record.

    Romney: That's the height of silliness.

    Obama: Check the record.

    Romney: I have never said I would liquidate the industry

    Crosstalk:

    Obama: Governor, the people of Detroit don't forget. Romney: I want to keep the industry going and thriving . . .




    Well, after checking the record, Mr. President - you were wrong. Romney was right.
    You took the time and did the research so you were able to see clearly that Obama is a liar (and a fraud and a destructive failure), but here's the problem--- the average person out there can't be bothered to do any research. They get their ten second sounbytes and thats enough for them. Obama continues to lie because he knows the ratio of people like you to people like those out in Colorado getting free pizzas to vote is 1,000 to one.
    Even if he only gets a tenth of them to vote for him, he's going to continue to lie. It's just like all the lies (seems like a new one everyday, have they gone full circle yet?) he's been saying to "explain" how 4 diplomats and security personel were murdered in cold blood--- hunted and cornered like animals-- in Libya.

    The people who are going to vote for him don't care. They have a different set of priorities. They dont have principles or integrity. They are scumbags.

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    Quote Originally Posted by Jungle Shift Jet View Post
    The usual lib nonsensical spin - B. Hussein made numerous apologies particularly in front of the UN and went on for days about the provocative video and locking up the alleged auteur

    Anyone possessing 2 synapses to fire knows a terror attack seconds after it happens - especially on the date of 9/11 - and dead Americans at the hands of Islamokooks is not "keeping us safe"
    Obama had a generic statement prepared for him prior to the announcement that the Ambassador and security personnel were slaughtered because it was the anniversary of sept 11. The "Acts of terror" was probably part of that prepared statements he had scribbled on some cue cards. So when he went out there he was given his script on the murders in Libya (it was a video mocking islam blah blah blah) and he had his cue cards mixed in and thats where the generic "acts of terror" platitude came in.

    I'm not sure if he said it in the Rose Garden that morning but he did say in reference to the murders of the 4 Americans in Libya that "The future does not belong to those who insult Islam".

    Which is a pretty damning and reprehensible thing to say on one level, and just plain bizarre on another.

    Susan Rice did what, 5 tv appearances that week each time repeating the manufactured narrative that it was "a youtube video" that inspired the "spontaneous" riot that just "got out of hand".

    These people are sick.

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    Mean while the country holds thousands of shares of GM but GM sits at $21 bucks a share but needs to be $54 bucks to just break even. Where did Obama take his economics course. The University of Auto Unions!

  19. #19
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    Looks like in exactly two weeks Willard will be heading back to Mass or Utah or Mich or the Caymans or Switzerland or wherever he actually lives and we can start working on nominating a candidate with principles in 2016 and not a flipflopping empty suit.

    We had a great chance this year with Dr Ron Paul but pissed it away for a photogenic vacuum instead

    Sent from my SGH-T999 using Tapatalk 2

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    Quote Originally Posted by MnJetFan View Post
    Mean while the country holds thousands of shares of GM but GM sits at $21 bucks a share but needs to be $54 bucks to just break even. Where did Obama take his economics course. The University of Auto Unions!
    The Great Depression called - he wants his economy back.

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