And you've been buying Fords, because they "Didn't Go Bankrupt"

I'm sure every industry insider grates at the simplistic views the "outsiders" have of their industries. Ford made a billion this last quarter, but that's just as easily reversed.

June 1st, 2009 - "The UAW lynch mob is at (Ford's) gates having successfully pulled a revolt at GM and Chrysler, elbowing their way into the board room, they now have Ford right where they want them in terms of bargaining power. Ford may not have needed to go bankrupt and may complain until doomsday that they had the right to survive as the sole American Automaker, but that ship has sailed. Now they are saddled with unattractive Union commitments and costs that the other two of the big three have shed. Ford either goes slowly under the waves, or signs onto some version of what the other two have been forced to accept.

In the end, with behavioral precedents now firmly set, when the Government comes knocking, Ford execs will likely get up, dust their chairs, pack their knick knacks in boxes and head for the doors, just like Chrysler and GM because disturbing perceived realities are now governing." (Who said that?)

I've had people come up to me on the street, at work and in Church and loudly proclaim how great Ford was because they "didn't take Government money" and get visibly agitated in some cases when I point out that Ford would go down some similar path. Not wanting to be too odious face to face, I eventually said the following:

September 19, 2009 - "I'm not prepared to argue with anyone (without wanting to explode at the same time) how it got that way. Let's just say there is blame to go around and it doesn't all settle on Auto Industry Fat Cats, the convenient location both those on the right and left like to place most of the blame. We have a new Little Three left over, and Ford's problems are the same as those of GM's and Chrysler's prior to both going bankrupt. All were losing money. 67% of the US auto industry going down the tubes with one remaining almost assures that the next time we're having this discussion (and there will be a next time), 100% of the Auto Industry (Ford) would be on the chopping block."

Now, "the Blog Prof" says:

"Someone explain to me how this is right. GM is owned by majority shareholder the UAW. The UAW negotiates a labor contract with GM competitor Ford, refuses to make the same concessions it basically gave itself at GM, shoots down the Ford contact that would have put it on a level playing field with UAW-owned GM, and won't renegotiate. Uh - am I missing something? This coverage over at MLive seems to miss the whole conflict of interest angle in its entirety: Ron Gettelfinger: UAW membership has spoken loudly, won't renegotiate with Ford."

And he points to this article:

United Auto Workers President Ron Gettelfinger says members spoke loudly last week and the union will not renegotiate with Ford at this time.

Members resoundingly rejected a new contract with Ford last week, as 70 percent of production workers and 75 percent of skilled workers voted against concessions that would have made their contracts competitive with workers at General Motors and Chrysler.

'We have a political process. It's called ratification,' Gettelfinger told Paul W. Smith this morning on WJR AM-760. "We all are disappointed, but the membership has spoken.'

...Gettelfinger acknowledged Ford did not enjoy some of the benefits its domestic competition gained by going through bankruptcy. GM and Chrysler, he said, were able to reduce debt, cut dealers, walk away from liability claims and rework supplier contracts during their bankruptcies."

Found at "Michigan Live."

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So like a Republican (or any conservative)

To be frank, I both get it, and don't get it. I have refrained for the most part from blogging on the subject of the auto industry bail out. There have been a few posts, but not a lot. My livelihood depends on the domestic auto industry and so I have been restrained.

Now I'm going to say it. The attitude displayed here by the American Voting Public is just plain stupid:

"My Mustang aside, the greatest automobile in the history of the world may have been the ‘57 Chevy. It liberated the nation to see the USA in their… well, you know the rest. The common man had what the rich man had — without Eisenhower Motors.

Now GM is on the ropes thanks to decades of stupidity on a scale seldom seen outside of Congress.

Rasmussen polled the people and found the voters think the government has helped GM enough.

Rasmussen polled the people and found the voters think the government has helped GM enough."

'If GM requests more money to stay in business, only 16% now think the federal government should provide it. Sixty-one percent (61%) say no more taxpayer money should be given to the automaker,' Rasmussen reported. 'Interestingly, those who currently own GM cars are more strongly opposed to any further bailout of the company than are non-GM owners.'

"Over the years, I have owned an Oldsmobile, a Buick, a Chevy… no complaints. I just like the Mustang’s look."

'Most Americans (58%) still say Ford, the company that didn’t take a government bailout, is the Big Three automaker that has the best chance of surviving and becoming profitable again,'

(Found at Don Surber.)

I've finally condensed down to something relatively short, what the problem with the car industry in the United States has been for probably 20 years or more. Collectively the "Big Three" couldn't afford to shut down their assembly lines for 2 months. Their fixed costs included compensation to too many people not working and still getting paid. That's the short form of it. Rephrased, the US Auto industry was bankrupt a long time ago if it had to shut down the plants for 60 days.

In other industries, salaries and wages are variable costs and as draconian as it may seem, an industry could survive in hard times to pay you another day, by closing it's plants and turning out the lights. Stinks to be you if you're a wage earner, but when they opened again, you had a job. That ceased to be a strategy for the US Auto industry years ago, so they kept plants open, losing money on making cars and discounting them in slow times. Why? Because they lost more money paying people to do nothing.

I'm not prepared to argue with anyone (without wanting to explode at the same time) how it got that way. Let's just say there is blame to go around and it doesn't all settle on Auto Industry Fat Cats, the convenient location both those on the right and left like to place most of the blame. We have a new Little Three left over, and Ford's problems are the same as those of GM's and Chrysler's prior to both going bankrupt. All were losing money. 67% of the US auto industry going down the tubes with one remaining almost assures that the next time we're having this discussion (and there will be a next time), 100% of the Auto Industry (Ford) would be on the chopping block.

In the highly regulated environment of selling cars in the United States, emissions, safety, warranty concerns and fuel economy, the entry level costs are too high for anyone to get into the business any longer. Ask Tucker. Ask DeLorean. Essentially you have to set up shop simultaneously in 48 states and produce a product that passes the scrutiny of the Feds, several big states such as California and the insurance industry.

Are you going to buy that car if and when someone tries to do that? Probably not. It probably will not happen. Tesla is TRYING, but right now they are not making cars for ma and pa. Tesla's are expensive and custom ordered. I do not count them as automobiles in reality. You might as well say that Checker, when they made cars, was an American car company. Checker is said to have gone out of business in June of this year. Did anybody notice? By the time they went, they were so insignificant a player that not of us cared. What's left of Checker seems to be owned by the Canadian company, the "Narmco Group. Their website says they're still there, as a stamping plant.




What's my point? You don't want an America without an domestic auto industry. They are a strategic industry. Try to go to war with the country you're BUYING cars and trucks from. See how that works. I am not a trade protectionist, but if you figure you're going to take out your rage on the auto companies that took Federal help by driving them out of business through lack of patronage, you might as well put a gun to your head.

Similarly you figured you'd "show us" when you didn't like John McCain, and you put the Obama/Acorn/Democrat/Liberal gun to our heads in the last election.

How's that working out for you?

Is the satisfaction (schadenfreude) of seeing those guys get theirs enough comfort for you when you cut the rope we are all clinging to, to see them fall?

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Bring on GM, Bankruptcy didn't kill Chrysler

Chrysler as "Guinea Pig" is now over, or as Han Solo in Carbonite.

The Automotive News - "The Supreme Court cleared the way for a government-backed sale of Chrysler LLC to a group led by Italy's Fiat S.p.A., a victory for the bankrupt U.S. automaker and the Obama administration. The high court rejected a request from Indiana pension funds and other opponents of the transaction to delay the deal while they challenged Chrysler's sale."

Right or wrong, that's over. Only faith from the LORD can pull you through something like this, or at least me, through something like this.

GM, which is next in the chute and already moving towards the "thrills and spills" portion of the ride, knows that they will survive. Thrill Ride. Carbonite. Lab Rat. Whatever. The experimental process doesn't kill.

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Did Obama leave Money on the Table?

This is getting to be increasingly like a car deal.

Agence France-Presse via "Industry Week" - "Fiat said on June 9 it will stick with plans to forge an alliance with Chrysler after a U.S. Supreme Court decision put a temporary freeze on the transaction. "Fiat is committed (to a tie-up with Chrysler) even after June 15," a Fiat spokesman said. The company is entitled to pull out of the deal after that date if Chrysler's recovery plan has not been fully approved."

When you withdraw and offer, and the customer doesn't walk, it means they will pay more. It's one of the fundamental truths of negotiation, something you learn quickly or die in the car business.

Ruth Bader Ginsburg seemed the wrench throwing Supreme "wench" when she put a stay on the Chrysler Fiat marriage yesterday, but not, Fiat says they'll stick with the betrothal.

So are the bondholders who played high stakes poker with their whole pile of chips finding out they were right? There WAS more money on the table? It sure looks like it.

This is nervous for me in that I work for a Chrysler dealer, one that made it through the cut down and after last week it sure looked like everything was sailing towards salvation. Their were Bond Holders that realized that Chapter 7 Chrysler wouldn't pay out the return that Chapter 11 Chrysler would, even though they could snort and stomp about the unconstitutionality of the whole process, it seemed thy would warm to the idea of an equation that said "Lose $14,000,000.00" or "lose twice that much." That's pretty much the choice they were offered.

The Bond Holders seem to have come to the table and called the bluff saying "we think you'll pay more," Fiat's answer? "Maybe," which almost certainly means "yes." It's a short step then to "how much?"

In a game where union workers won't have anything, a job included, Fiat has expressed a willingness to pay more, and the Bond Holders say they WANT more, I'm guessing there just may be a move shortly after SCOTUS rules in favor of the bond holders to pay them more, which means the Union may get less or Fiat may pay more, or both. Of course if SCOTUS says "take what you got" to the bond holders a dangerous precedent looms for the rest of the secured debt world and Fiat apparently gets a steal. (UPDATE-that's the way it went down) That's the way I read it now.

Obama, any the way this turn(ed) out, is shown to have been so in love with the deal, that he made a bad one.

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Chrysler Sale to Fiat hits Bump

And her name is Ruth Ginsberg, of all people.

The Automotive News - "The U.S. Supreme Court will delay the sale of Chrysler LLC's assets to a new automaker run by Italy's Fiat S.p.A. while the court reviews the constitutionality of the bankruptcy sale. The court agreed today to consider the case after Justice Ruth Bader Ginsburg reviewed a petition to the top court by three Indiana pension funds."

Doh!

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Changing Bankruptcy Horses in the Middle of the Stream

The Obama Administration hops off one horse of the economic apocalypse, and onto another.

The Automotive News - "Judge Arthur Gonzalez approved the $2 billion sale of the assets to a new company that will be 68 percent controlled by a health care trust aligned with the United Auto Workers union.

Fiat will control 20 percent, the U.S. and Canadian governments will control the other 12 percent.

In his written opinion, Judge Gonzalez said the only alternative to approving the sale was the 'immediate liquidation' of the company and that he was concerned about saving the value of Chrysler as a continuing operation.

'Indeed, because of the overriding concern of the U.S. and Canadian governments to protect the public interest, the terms of the Fiat Transaction present an opportunity that the marketplace alone could not offer, and that certainly exceeds the liquidation value,' Gonzalez wrote in a 47-page opinion.

Chrysler filed for bankruptcy protection on April 30 to complete the sale and alliance with Fiat within 60 days in a case that analysts have seen as a test for the much bigger and more complex bankruptcy of GM."

Which is what your Modern Pharisee said 4 days before the bankruptcy. Now that it's practically speaking, all over for Chrysler (yes, they will live) it's time for GM to go under the knife. The argument being "we didn't kill Chrysler, and we won't kill GM."

I'm not even going to pretend that I'm keeping up. There is considerable question as to whether or not Government intervention was necessary but Rahm Emanuel is never one to let a good crisis go by underutilized, so if GM and Chrysler could have sailed through without the help of the feds, we'll never know. I guarantee that the Federal Government which is entirely controlled by Democrats would never want us to know we could have survived by ourselves. In the end it may be that GM would have survived, and Chrysler would not have and the Feds needed a guinea pig to show that the could avoid killing the patient. Dying Chrysler gets the experimental miracle drug and lives to tell about it. Mildly feverish GM gets the injection whether it needed it or not. Like I said, it's way too big and I'll have to wait for history to be written, which hopefully we'll be around as a nation to read.

Along the way there have been allegations of Obama franchise murders that were designed to "get back at" Republican opponents. You better believe that if Democrat operatives didn't bump off a few car dealer enemies along the way, they sure thought of it. I thought of it immediately myself but had no time and none of the resources to check it out and eventually other more connected bloggers sniffed out the story. I still say it may be much ado about nothing. I have only worked for one Democrat car dealer and he backed Obama in the last election cycle. Vocally. He lost his Jeep franchise in a county Obama carried. He was not in a financially unsound position.

In the end, Ford will have to do this too. The UAW lynch mob is at the gates having successfully pulled a revolt at GM and Chrysler, elbowing their way into the board room, they now have Ford right where they want them in terms of bargaining power. Ford may not have needed to go bankrupt and may complain until doomsday that they had the right to survive as the sole American Automaker, but that ship has sailed. Now they are saddled with unattractive Union commitments and costs that the other two of the big three have shed. Ford either goes slowly under the waves, or signs onto some version of what the other two have been forced to accept.

In the end, with behavioral precedents now firmly set, when the Government comes knocking, Ford execs will likely get up, dust their chairs, pack their knick knacks in boxes and head for the doors, just like Chrysler and GM because disturbing perceived realities are now governing.

Today at my dealership the Governor of our state came by. I got the chance to shake the hand of the man who vetoed gay marriage in Vermont. I guess that's my first official function as a lobbyist. Rumors were flying around that he was here to "give us the Jeep franchise." This from a sales force that I though would have known better. They knew the Jeep dealer up the street did not survive the Chrysler Bankruptcy and they thought "Oh, government awards franchises." Hence the rumor.

He was actually here to sign the new Vermont franchise legislation for car dealerships. Governor Douglas was actually more aggressive in taking customers as they walked through the door than our salespeople were. The owner of my place of business was relaxed and happy since he had worked hard on that legislation. He had the news tucked under his belt that the road was all downhill now on Chrysler's trouble and he has no GM franchises to sweat. Other shoes will continue to drop, but for now it looks like we'll be here for a while. It's probable that some GM dealers hadn't let it be known they "Got the Letter," But now that GM is in Chapter 11, there will be a list. I imagine some employees in some dealerships that though they survived are in for a rude surprise. No doubt more dealerships will fall under the axe.

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And now, the Emperors Prize. GM goes into bankruptcy - (UPDATED, It's official)

First it was Chrysler in Carbonite. Now, GM.

Yahoo News - WASHINGTON – "General Motors Corp., the iconic U.S. automaker that turned the concept of a 'car for every purse and purpose' into a global icon, will file for bankruptcy protection Monday and the federal government plans to take a 60 percent ownership stake in the company, said a congressional official briefed on the plan."

Having proved that they could encase Captain Solo (Chrysler) in bankruptcy protection without killing him, it's time for Luke Skywalker (GM). UPDATED, it's official.

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Hey! I thought of that too! Or was that oneth? Firstest?

Almost immediately after the list of closing Chrysler Dealers came out, and it was a bit skewed from what personal experience said was "good sense," I began to wonder.

Was the Perpetually Campaigning Obama Administration persecuting Republican Campaign Contributors? My wife and I discussed it, and I complained that it was a great story, and I utterly lacked the resources to follow it up. So I didn't.

Too bad for me, and too bad for the wonderful self promotion it would have provided but I figured someone one notice if it was happening.

Some did.

Thanks to the Common Room for pointing to the stories.

Here at "Hyscience."

At "Redstate."

"Hot Air".

"Michelle Malkin."

And Reuters.

It would have been indecent to throw it out there as speculation without foundation but there were stories of recently renovated large market Chrysler dealerships that had been cut off.

Additionally there are inexplicable examples of closures, and non closures that I can cite from personal experience. Holes in the wall in no place USA, still open and surrounded by competitors at all points of the compass.

To be fair though most Car Dealers are Republican, at least in my subjective experience. Raving support for Barack Obama didn't do Flanagan's any good when the axe flew.

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Modern Pharisee "Dodges" Bullet

I work at a Chrysler dealer in Vermont.

WPTZ - "Rutland Dodge in North Clarendon and Walker Motors in Montpelier are on a list of 789 dealers nationwide that Chrysler proposes eliminating because it says it has too many. The company makes Chrysler, Jeep and Dodge vehicles."

I don't work at either. Thank God. There are those at both dealerships that didn't "Dodge" Chrysler's scythe.

"Walker owner Wade Walker says Jeep sales account for about 25 percent of his business, which was already down 40 percent. He said losing that would hurt."

That's bad, but we've all been hurting and Wade has Ford at the dealership he sold Jeeps from. Those at Rutland Dodge are certainly having a bad night.

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Hope. Change. Yugo! "Fiat" money and Yugo Design Studio to Save Chrysler?

It looks like the Obama administration will print $8 Billion Barack Bucks and use Fiat to save Chrysler. Remember Yugo?

Guess who designed the car? The "Yugo" was an old Fiat 128 when it first rolled off the assembly line that produced the now extinct Yugo. The defunct factory is now owned by Fiat. Fiat and Fiat money. A marriage made in Washington, or Serbia. Engineering good enough for Zastava Koral should be good enough for the buying public. Hope, Change, Yugo.

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