Wednesday, December 17, 2008

Yeah, Yeah, I'm not done yet defending the Big Three

Autoblog #6 - I realise that by this time I'm preaching to the choir, but this is just pissing me off. Especially when friends send "jokes" about how the Big 3 don't make cars you want to buy so now we'll just take your money in a bailout - which we all know is a LOAN!!!!

This article is copyright protected, so I don't want to post all of it, just the bits that say what needs to be said and you can click on the link to read all of it. Okay, I posted most of it, because it was too important to cut up.

Big Three battle comes down to party politics
Senators carping about tax subsidies should look at plants in their backyard
COMMENTARY
By Ed Wallace
Business Week

updated 3:34 p.m. ET, Mon., Dec. 15, 2008

... Somewhere along the way this debate seems to have overlooked the fact that Detroit, for all its blunders, is still a viable economic engine, providing jobs to millions and creating some of the world's best cars. For example, the best-selling vehicle in America, even in this downturn, is still Ford's F-Series truck, and second place goes to the Chevrolet Silverado. Even the Dodge Ram continues to hold a strong position in the Top 20 vehicle list, while sales of the Toyota Prius are down substantially with the fall-off in gasoline prices. (We assume that the Prius is the type of car the left wants Detroit to build.)

And speaking of Japanese cars, I hate to point out the obvious, but car sales in Japan are lower today than they were 15 years ago, down over 30 percent just last month. Yet you won't see the heads of the Japanese auto companies on the carpet in front of their government officials, being drilled with questions like, "Why don't you build cars the public wants to buy?"

What's amazing is that Senator Richard Shelby (R-Ala.) is such a huge critic of using taxpayer money to bail out Detroit. Amazing because the state of Alabama has provided hundreds of millions of taxpayer dollars to lure foreign auto companies to build factories on its soil.

... Again, these were considered wise investments because the promise was that they would create more jobs for the chronically underpaid Alabama workforce. However, in the summer of 2003, Mercedes brought in Polish workers on questionable B-1 work visas to expand the factory because they could be paid far less than the local workforce.

So you had Alabama gifting state tax dollars to Mercedes' factory, only to discover that some of the jobs it created went to much cheaper labor imported from Eastern Europe.

Look at Senator Bob Corker of (R-Tenn.). The former mayor of Chattanooga was one of those responsible for winning the new Volkswagen factory at a cost of $577 million in tax incentives. Moreover, Tennessee got that factory only because Alabama offered the Germans a mere $385 million.

Mississippi paid $284 million for a new Toyota plant; Kia got $324 million from Georgia. Texas had to fork over only $133 million for Toyota's Tundra plant in San Antonio, while Tennessee gave $197.6 million not for a new Nissan factory but simply so Nissan would move its American headquarters to Nashville. There are other factories — BMW in South Carolina, Nissan in Mississippi, and so on — but you get the point.

The Republican senators from these states see no problem whatsoever with paying to bring new automobile production to their states, and the media always quotes them gloating about how smart it is to spend that type of money because it creates jobs.

... The fact that many of these companies' brand-new, state-of-the-art American plants — nonunion plants, low cost-benefit plants — are also struggling seems to have escaped the notice of these same elected officials and the media.

Mercedes recently offered a buyout to its entire workforce in Alabama, and Hyundai has never gotten its Alabama factory up to full capacity. Toyota will not use its upcoming Mississippi factory to build its Highlander SUV, and Nissan is converting its factory in that state to build commercial vehicles. Toyota has been forced to shut its Texas truck plant because of scanty orders for the new Tundra, and so on. So Senator Shelby's statement that Detroit "doesn't innovate. They're a dinosaur," while his partner Senator Jeff Sessions (R-Ala.) brags about the "very large and vibrant automobile sector in Alabama," doesn't exactly ring true.

So we find that nonunion, low-cost, state-subsidized, state-of-the-art auto plants in America are having their fair share of problems, too. But according to Senate Republicans, the only part of the American car industry that isn't working is in Detroit.

Other governments aren't being so stingy — or mercenary. Sweden gave $3.5 billion to stabilize both Volvo and Saab on Dec. 10. Volkswagen has applied to tap into the bank bailout fund set up by Germany for that nation's troubled financial system — our Treasury and Fed may be compelled to offer similar help. And China just lent Chery Automotive $1.5 billion to continue operations.

That's right, other industrialized countries around the world will be stepping in to ensure that their own automobile industries will still be working when whatever financial downturn we are looking at is finally over. Moreover, they understand that the world's economy is precarious right now, so they aren't demanding that corporate jets be sold, they aren't demanding new business plans to save the individual companies, and they aren't publicly embarrassing the heads of Honda, Toyota, Mercedes, BMW, VW, Nissan, Renault, and others by demanding that they explain why their profits and sales have dropped suddenly. In the rest of the world, elected officials understand serious downturns in the economy and that the automotive industry is cyclical in nature.

As for Congress, shame on you for playing politics when so many jobs and, in many ways, the future of American manufacturing is at stake. But then again politics is all you know. Maybe you should let American carmakers get on with what they know how to do: build cars.

Copyright © 2008 The McGraw-Hill Companies Inc. All rights reserved.

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15 Comments:

At Wednesday, 17 December, 2008, Blogger LL said...

I don't know if you're preaching to the choir, but I'm starting to catch the drift of your posts now...

 
At Wednesday, 17 December, 2008, Blogger Kathleen said...

LL - Repetition helps, doesn't it? ;-)

 
At Wednesday, 17 December, 2008, Blogger fermicat said...

I was thinking about you last weekend after I heard how things turned out in congress. If it is any consolation at all, it does appear that Ford is in the best shape of the three, at least that is what they are saying in public.

 
At Thursday, 18 December, 2008, Blogger The Zombieslayer said...

However, in the summer of 2003, Mercedes brought in Polish workers on questionable B-1 work visas to expand the factory because they could be paid far less than the local workforce.

Urgh. This is the stuff that really gets me. Same thing happened in our industry (Tech). They brought in H1-B visas because they work for less and will put up with any crap a jerk boss will give them. Americans don't like being pushed around and treated like vermin. So thus, the H1-B.

And speaking of Japanese cars, I hate to point out the obvious, but car sales in Japan are lower today than they were 15 years ago, down over 30 percent just last month. Yet you won't see the heads of the Japanese auto companies on the carpet in front of their government officials, being drilled with questions like, "Why don't you build cars the public wants to buy?"

Maybe the Japanese respect their industries? I'm starting to think patriotism in this country has become a bad thing.

I'm actually for the corporate jets being sold, but I'm also for making sure we don't have millions of regular Joe and Jane Americans waiting in line for soup. If we don't save our auto industry, we may end up seeing this.

 
At Thursday, 18 December, 2008, Blogger Glenn said...

Well Chrysler is shutting down for a month now. I hope they survive so my warranty will continue to be good.

 
At Thursday, 18 December, 2008, Blogger Kathleen said...

Fermi - And today Bush is saying that maybe a "managed" bankruptcy wouldn't be a bad thing. Moron. Sadly, though, if GM and Chrysler go down, they take our suppliers...and Honda's and Toyota's.

ZS - I wouldn't mind a little old-fashioned protectionism - you know like Japan does for their auto companies. The problem with the corporate jets being sold is that our people down on launch in Mexico for over six months now have to find a public flight home. While I agree the executives shouldn't use it, it probably saved money for launches instead of hundreds of people flying NorthWorst for ridiculous sums of money. And dealing with an hour layover in Phoenix to clear customs. NIGHTMARE.

Glenn - Which is EXACTLY why bankruptcy is a bad thing! Who is going to buy a car from a company that's in bankruptcy protection and might not make it and won't cover warranty then? It works for airlines, not so much for automotive. I hope they hang on, as well.

 
At Friday, 19 December, 2008, Blogger Glenn said...

Well, they came through evidently. Now let's see what happens in January.

 
At Friday, 19 December, 2008, Blogger Kathleen said...

Glenn - We shall see what happens next...

 
At Saturday, 20 December, 2008, Blogger dr sardonicus said...

Agreed, the real action will be in January. Bush can't wait to get back to Texas.

 
At Monday, 22 December, 2008, Blogger The Zombieslayer said...

Well, now wondering how you feel about the new bailout.

 
At Wednesday, 24 December, 2008, Anonymous yelayna said...

Hello lovely - I have nothing constructive to say about your actual post (I suspect as a non US citizen I don't know enough to make any informed comments) but I just wanted to wish you a very happy christmas and all the best for a healthy, wealthy and most of all happy new year. *hugs*

 
At Wednesday, 24 December, 2008, Blogger fermicat said...

Merry Christmas to you, Kat.

Word Ver = "nucticul"

Sounds like a Bushism...

 
At Friday, 26 December, 2008, Blogger NYPinTA said...

I work in a car dealership for imported cars and we've seen a bit of a slowdown, but not nearly as much as Big Three dealerships. Everyoen is holding their breath, and that can't be helping. But I just saw on the news yesterday that Honda in Japan will be reporting in the red for the first time in 17 years, so it's not just GM, Ford, and ... the other one that are hurting.
From the people that I know that have been discussing it, the main thing they complain about towards the CEOs of the B3, right after mentioning their private jets, is the seeminmgly lack of innovative thinking. They have this idea that the management was relying on the status quo (the status is NOT quo... sorry. Had to.) and ignored what made them the Big Three in the first place: good old fashioned American ingenuity.
I don't know. They're a business and as such, will build what people want. But they would have done their case a lot more good if they had used their brains and not shown up in private jets that first day. Now Congress, the press, and even W have jumped on the Bash B3 Bandwagon. Sucks. I'd rather they all stay in business, because I don't want competiion from office workers in closed dealerships coming for my job. (People who can afford BMWs can always afford BMWs. So far... *knocks on wood laminate desk* )

Wishing you luck and a Happy, hopefully prosperous, New Year.

 
At Friday, 26 December, 2008, Blogger NYPinTA said...

Could I have made any more typos?? Jeez.

 
At Friday, 02 January, 2009, Blogger Beth said...

Instead of typing the whole thing out, I want to say ditto to NYPinTA, even with typos, which I didn't notice. More importantly, I wanted to wish you a happy new year!

 

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