Results 1 to 8 of 8

Thread: Mitt Romney: Let Detroit go bankrupt

  1. #1
    Elite Member KristiB's Avatar
    Join Date
    Oct 2005
    Location
    AZ
    Posts
    2,852

    Default Mitt Romney: Let Detroit go bankrupt

    I agree with Mitt.

    ***marks date on calendar***

    http://www.nytimes.com/2008/11/19/op...exprod=myyahoo

    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.

  2. #2
    Elite Member
    Join Date
    May 2008
    Posts
    4,250

    Default

    I guess Mitt decided he isn't running in 2012.

  3. #3
    Elite Member Brookie's Avatar
    Join Date
    Feb 2008
    Location
    In the "D"
    Posts
    24,719

    Default

    ... and if he IS running, he's just completely lost Michigan. Pretty interesting, considering his pop used to run AMC, when it was still a company.

  4. #4
    Bronze Member Mamamia's Avatar
    Join Date
    May 2008
    Posts
    141

    Default

    I've got relatives in management in Detroit and others who are retired union here in KC, and as much as I would hate to see any of them hurt financially, I agree with Mitt wholeheartedly. The auto industry is in desperate need of an overhall. I think at the end of the day, Washington will bail them out somehow even though I hope I'm wrong.

  5. #5
    Elite Member Brookie's Avatar
    Join Date
    Feb 2008
    Location
    In the "D"
    Posts
    24,719

    Default

    I'm a Ford retiree and I agree completely - the industry IS in need of a giant overhaul. Having any one of them go bankrupt isn't the answer, nor will that have an immediate instant solution to the issues get kicked off. No money = no overhaul.

  6. #6
    Friend of Gossip Rocks! buttmunch's Avatar
    Join Date
    Oct 2005
    Location
    Uranus
    Posts
    31,884

    Default

    the industry is in need of an overhaul but one important thing that is being overlooked is the fact that health insurance is a huge factor in the Big 3's running costs. In fact, employer-sponsered health care is a huge factor in a lot of industries. If you look at car makers around the world, it isn't a cost they have to pass on to the buyer because most indusrialized countries have some form of national health care, so it's a non-issue. From what I've been reading, health care is costing the industry more than steel each year, which is wildly fucked up. Can we start a 'hate HMO's' thread? They suck and they're criminal.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

  7. #7
    Elite Member B.C.'s Avatar
    Join Date
    Oct 2005
    Location
    Motor City
    Posts
    2,275

    Default

    Quote Originally Posted by buttmunch View Post
    the industry is in need of an overhaul but one important thing that is being overlooked is the fact that health insurance is a huge factor in the Big 3's running costs. In fact, employer-sponsered health care is a huge factor in a lot of industries. If you look at car makers around the world, it isn't a cost they have to pass on to the buyer because most indusrialized countries have some form of national health care, so it's a non-issue. From what I've been reading, health care is costing the industry more than steel each year, which is wildly fucked up. Can we start a 'hate HMO's' thread? They suck and they're criminal.
    Thank you

  8. #8
    Friend of Gossip Rocks! buttmunch's Avatar
    Join Date
    Oct 2005
    Location
    Uranus
    Posts
    31,884

    Default

    My pleasure. Now, I'm off to continue my many-threaded rant on Michelle Buchmann. The more I research her the more I realize just how much crazy she has.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. According to Mitt Romney, Unions are why America is in trouble now
    By Grimmlok in forum U.S. Politics and Issues
    Replies: 2
    Last Post: September 3rd, 2008, 11:46 PM
  2. Mitt Romney suspends campaign
    By kingcap72 in forum U.S. Politics and Issues
    Replies: 25
    Last Post: February 8th, 2008, 05:42 PM
  3. Mitt Romney wins Nevada Primary - why?!
    By Cali in forum U.S. Politics and Issues
    Replies: 41
    Last Post: February 4th, 2008, 08:16 PM
  4. Mitt Romney fires landscaper over illegals
    By celeb_2006 in forum U.S. Politics and Issues
    Replies: 1
    Last Post: December 4th, 2007, 10:56 PM
  5. Mitt Romney criticized for hotel pornography
    By celeb_2006 in forum U.S. Politics and Issues
    Replies: 1
    Last Post: July 6th, 2007, 10:46 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •