Archive for the ‘Michigan’ Category

Just a Few Things…

As you have noticed, the blog’s look has changed again.  One difference from the others to this one – I wrote the theme practically from scratch.  The basic framework coding is from Whiteboard, and uses a grid-layout from 960.cs.

If you don’t understand any of the above, don’t worry.  It’s bit-head talk.  But I can’t help but be a little bit proud of the handiwork.

And now on to the rest of the post…

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Iran’s presidential elections only show the political turmoil that is associated with that country.  If Ahmadinejad had been defeated by the more moderate Mousavi, I think that this country would sit back and ignore Iran’s nuclear ambitions.  Instead, the public is beginning to see the political power of Iran not only rests with an elected president, but with a non-elected council of imams.

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North Korea is moving toward another missile test firing that will be aimed toward the vicinity of the Hawaiian Islands.  With North Korea possessing a nuclear warhead and a missile that could potentially reach a US state, can anyone think that this is anything else but “not good.”  What I see happening is another round of “send us food or we’ll land a nuke somewhere.”

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ABC transmitting from the White House on June 24 is, quite frankly, a coup for ABC.  While ABC is in serious need of ratings, the subject matter of Health Care Reform via Obama without an opposing viewpoint smacks of being more of an infomercial than news.  While ABC is stating that it will control (!) the content of the program as well as the questions, I really wonder if ABC and the White House think that the American public is that stupid to believe that all sides of the subject will be explored by an adoring media.  For instance:

Why is it newsworthy that Obama killed a fly during an interview?  When the people in attendance (including the reporters) hoot, holler, and cheer President Obama for the action, one wonders what else they would (or would not) report on if they are that much in love with Obama’s actions.

And it isn’t too much of a stretch that they wouldn’t report anything bad or not complementary of their “chosen one.”  After all, when Obama points out, in public, the one network that constantly questions his actions and policies, then the realization has to set in that honest, factual journalism and scrutiny are not on the agenda of the main networks and news organizations.

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Cap and Trade for Reducing Carbon Emissions legislation for Global Warming Climate Change are passing through Congressional committees.  While the intent of this legislation is noble, the science inspiring these bills is far from convincing.  What the ultimate outcome will be is that the American citizen will incur higher energy costs – after all, companies and corporations do not pay taxes and penalties because they pass these costs on to the consumer of their products.  And in this economy, that will be devastating.

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Immigration policy changes are on the agenda for next week.  While there are real humans out there, it must be remembered that these people are here in violation of the laws, and the companies hiring them are also in violation.  What part of “illegal” is not understood by our lawmakers and the aliens?

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The unemployment rate for Michigan is over 14%.  The state is almost shovel-ready – to be buried in a deep hole.  Many other states aren’t in any better shape – 10% and up, with the national average rising from 8.9% to 9.4%.  And I thought that the huge Stimulus Porkulus Bill with all of its billions was to prevent this.  Kindly excuse the cynic in me, but “HAH!!”

Four Weeks and Counting…

Four weeks ago was my last day at Chrysler.  And yesterday was the day that I got my final check from Chrysler.  It’s sad because I have 11 years tied up in that place, and it almost seems like it was a waste of time because of how things turned out.  Yes, it still sucks…

One would think that I would have lots of time to peruse the ‘net, and visit everyone on the blogroll every day.  That’s not the case as many of you know that I haven’t visited very much.

My days roughly go like this:  Wake up & see the wife out the door.  Get breakfast and make coffee while the computer boots up.  Settle down with coffee & answer email and look at job postings and apply to the most promising.  When that’s done, then it’s working on a website for a fellow refugee opening up a stained glass business.  Somewhere in there it’s making house repairs since the winter wasn’t very kind to the house.

While it’s nice that I have the time to do the repairs, I find myself getting about as depressed as the Michigan economy.  No nibbles on the job front, and this is the longest that I have been out of work times two.  All of this contributes to a sense of anxious depression.  It’s hard to handle a situation that I have prepared for, but haven’t experienced in my professional life.  It is hard trying to keep the spirits up while trying to find a job in a market with 30,000 other engineers in the same boat applying for the same job.  Frustration only begins to cover the efforts on the job front.

I hope to settle down into a routine that includes more visits and postings as well as taking care of the essentials.  Bear with me as I continue down this path in the journey of life.

In the meantime, I look at the state of the economy nationwide, and the promises made by our President while he jets all over the world making faux pas & apologies for the success of our country.  Wall Street & the financiers get passes on their losses & lack of foresight, and the automotive companies get raked over the coals for the same thing.  All one has to do is look at who made and received campaign contributions, and then it all makes perfect sense as to why that is.

The promised change seems to be for the worse, and the hope is fading to despair even for the stoutest of Obots…  My fear is that the country will burn while the President fiddles around with his global song & dance (and that was a second-rate act, wasn’t it?).

That’s all for now, but I have another post in the works.  Until then, take care.

Spring Showers?

A tree in my backyard with new snow all over the place.  There’s four-inches of snow so far, and more is on the way.

And we thought Global Warming was to take care of spring snow storms…

BAH!!

Stealth Government

I didn’t watch President Obama’s speech last night, and I probably should have.  I was just too tired, and figured that I would look over the transcript at a later time.  Well, I haven’t exactly done that either…at least not completely…

But one of the items that popped out at me was his directive that a website be formed (www.recovery.gov) to provide the American people the “transparency, oversight, and accountability” to track where the money for the American Recovery and Reinvestment Act (ARRA) is going.  To which I say…

Good Luck.

Government now cannot track the billions of dollars that are spent on Social Security, Medicare & Medicaid, and other social services much less any other part of the government.  Cost overruns and outright fraud account for more mismanagement.  Yes, I know that President Obama has promised to “ferret out any and all cases of waste and fraud,” but so has every other President, to no avail.  And now we are to expect an accounting down to the penny of where the Redistribution of Future Taxpayer Dollars ARRA is being spent?  Please do not insult my intelligence!

Governments cannot operate under transparency.  If so, then why do so many committees that are trying to work out compromises meet behind closed doors, and the minutes not available for public review?  If so, then why did the ARRA (all 1000+ pages) not be published in time (48 hours was the promise) before the vote was taken?

Because that very same transparency would expose the vile corruption that takes place in our government.  The power-plays, the gamesmanship, the outright stupidity of our elected representatives would be exposed for all to see, and no amount of media whitewashing could cover it up.

So where is the oversight and accountability?  Government watching itself and holding itself to the highest standards?  Who determines the standards?  Sounds more like the fox watching the hen house for the farmer.

Which now brings me to a local instance of government trying fly completely under the radar…

The local government wanted to hold an election yesterday for the purpose of floating a $70 million bond for updating the schools.  The notice for the election went completely unnoticed by yours truly and his newspaper reading better half (wife) until the day of the election when one of my coworkers mentioned it.  There was only a couple of inches in that day’s paper, and it was buried in the back pages.  Of course, it would mean that our property taxes would go up (again!) to cover the bond for the next 30 years. I already have an ax to grind with the local educational system (that is a rant for another post), but this was about as underhanded as I could think.  Springing this on us at the last minute “for the kids” in a time of when houses are being foreclosed upon, people losing jobs all over the place, people leaving the state in droves, school enrollment is dropping, and government is wanting us to voluntarily raise our property taxes?  Come on!!  Where is the common sense?

And now we have a President who is arguably a great orator, promising to be all things to all people, and ready to jump over tall buildings to set things right for this country via government intervention.  Reminds me of the Ronald Reagan quote:

The most terrifying words in the English language are: I’m from the government and I’m here to help.

The government is here, and it’s wanting to “help.”  God help us all.

Pork in the Stimulus Package

Below is an excerpt from an email I received from U.S. Rep. Mike Rogers (R-MI) concerning the recent passage of the Stimulus Bill in the House:

I know Michigan is hurting. I fully support a robust stimulus plan but cannot support the spending bill that passed the U.S. House today. This bill, which costs over $1 trillion including interest, provides less than seven percent of the cost to build new roads and bridges, and less than one percent of the bill goes to help small businesses create jobs.

To make matters worse, we do not have the money in our own struggling economy to pay the bill. So we will be forced to borrow from other countries like China and Saudi Arabia, forcing us to pay higher and higher interest rates. This will drive up the cost of credit for the American people and American employers, making everything we buy cost more, and creating barriers to buy cars, student loans, and home mortgages. It also likely will increase inflation, making our savings worth less.

Here are just a few of the outrageous earmarks we will be borrowing money to pay for:

• $30 million to save a mouse habitat in San Francisco
• $8 billion to create a high speed rail system between Los Angeles and Las Vegas and a second one somewhere in the Mid-West.
• $50 million for the National Endowment for the Arts
• $2 billion for neighborhood organizations including ACORN which has been accused of unlawful voter registration.
• $1 billion for a prevention and wellness fund available for sexually transmitted disease education and prevention

The legislation even removes the new tax cut for the purchase of an automobile that the Senate had added to the plan, an additional body blow for Michigan.

Nothing like paying for a BBQ and not being invited to partake…

A Rant on the Automotive Situation

It’s been a long weekend, and I’m PO’ed about this past week on so many different levels it isn’t even funny.  So let me explain a little further, or rather, rant.  However, be careful in reading this post – full Hazmat gear with an extended air-supply is recommended because this is going to be a long ride and it will get toxic.

As has been widely reported in the news, the CEOs of Chrysler, Ford, and GM with the head of the UAW went to Washington to pass the hat for loans to help keep their respective companies afloat and people employed.  Of course, they showed up in their nice Armani suits via their individual company jets.  Smooth move, morons…  Worse, they didn’t have any answers on how $25 Billion was going to be used and repaid.

What also showed up in the Detroit Free Press was the news that 50 Chrysler executives are going to get bonuses.  That’s right, bonuses!  The article states:

About 50 Chrysler executives are owed bonuses under a retention agreement hatched last year by DaimlerChrysler as it was looking to sell the Auburn Hills-based unit. The bonuses range from $200,000 to $1.89 million. The bulk of the bonuses are paid if people stay until August 2009, the two-year anniversary of Cerberus Capital Management taking majority control of Chrysler.

“Retention agreements are a standard business practice and are put in place to protect a potential buyer from losing key managerial talent,” the company stated.

I have no problems with reasonable executive bonuses providing that the executives are doing a good job.  But they weren’t doing a good job to begin with – that’s why DaimlerChrysler was selling the division.  Why the hell keep people around that are driving the company into the ground, and reward them for doing it?  Perhaps these asses should have been sent packing for poor performance in the first place…

Then I read about the Congress-critters hypocrisy as well as watch it on the various news channels.  I think that Mitch Albom of the Detroit Free Press stated it best in his column “If I had the floor at the auto rescue talks” with the following excerpts:

First of all, before you ask, I flew commercial. Northwest Airlines. Had a bag of peanuts for breakfast. Of course, that’s Northwest, which just merged with Delta, a merger you, our government, approved — and one which, inevitably, will lead to big bonuses for their executives and higher costs for us. You seem to be OK with that kind of business.

Which makes me wonder why you’re so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.

You’ve already given hundreds of billions to banking and finance companies — and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup — $25 billion — just weeks ago, and that place is about to crumble anyhow.

Does the word “hypocrisy” ring a bell?

Sen. Shelby. Yes. You. From Alabama. You’ve been awfully vocal. You called the Detroit Three’s leaders “failures.” You said loans to them would be “wasted money.” You said they should go bankrupt and “let the market work.”

Why weren’t you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not “let the market work”? Or is it better for Alabama if the Detroit Three fold so that the foreign companies — in your state — can produce more?

Way to think of the nation first, senator.

And the rest of you lawmakers. The ones who insist the auto companies show you a plan before you help them. You’ve already handed over $150 billion of our tax money to AIG. How come you never demanded a plan from it? How come when AIG blew through its first $85 billion, you quickly gave it more? The car companies may be losing money, but they can explain it: They’re paying workers too much and selling cars for too little.

AIG lost hundred of billions in credit default swaps — which no one can explain and which make nothing, produce nothing, employ no one and are essentially bets on failure.

And you don’t demand a paragraph from it?

Besides, let’s be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who’s better than Congress?

So who are you to lecture anyone on how to run a business?

Ask fair questions. Demand accountability. But knock it off with the holier than thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don’t kick our tires to make yourselves look better.

For another article along the same lines, here are some excerpts from The Oakland Press:

No wonder people don’t trust politicians.

Suddenly, before approving any financial help to automakers, members of Congress demanded answers from them that they never demanded from Wall Street. Everything they wanted to know was reasonable: What kind of changes are they going to make in their day-to-day operations? What structural changes have they agreed to? What limits are they going to put on executive salaries? What guarantees exist that we’ll get our money back?

Again, those are all good questions, and questions Congress should ask. But Congress members were hypocrites in demanding answers to those questions from Detroit automakers when they had so recently approved a $700 billion bailout of Wall Street banks and financial institutions with nary a peep.

There’s nothing wrong with putting strings on federal dollars. But here’s my question: Why the huge double standard? Wall Street firms, remember, also screwed up.

For Republicans, we know the answer: because Wall Street is nonunion, and Detroit is all-union. Because Wall Street is white-collar and Detroit is blue-collar. Because Wall Street is upper-class and Detroit is middle-class. And Republicans would rather swallow glass than help a middle-class, blue-collar union member.

But self-righteous Democrats decided they’d rather help George W. Bush kill 3 million to 5 million more jobs, cause 775,000 retirees to lose their pensions, and force two million workers to lose their health benefits.  You think the economy’s bad now?

Imagine how much worse it will be when U.S. automakers go belly up, wiping out 20 percent of all retail sales in America, eliminating one out of 10 American jobs and destroying what little is left of America’s manufacturing sector.

So the Big 3 and the UAW are going to come back during the first week of December and restate their case to get the loans.  And I predict that they will.  I’m just wondering what is going to be the price for the loans.  I have no doubts that there will be pounds of flesh to be paid, and most of it will be from the people that make the product.

There is such an anti-Union sentiment out there in the news and the blogs that I am just shocked at the level of venom being spewed.  Yes, Unions have their bad side as well as their good side.  But just remember this:  Union members are people, wanting to make a living to support their families.  They are just like you, wanting to be paid for the work that they do, and to have that compensation increase with skills and time put into the company that they work for.  They want to have job security in an uncertain time to be able to put their kids through college, take vacations, and have a decent house.  In other words, just like non-Union people, they want to have their shot at the American Dream.

And yes, there are a few bad apples.  But there are the same number of bad apples in non-Union industries as well.

But one of the “concessions” that the UAW may be forced to implement for Congress to approve loans to the Big 3 is the jobs bank.  This program had been scaled back from an indefinite support to a maximum of two years.  From another article in the Detroit Free Press:

Until the union’s 2007 contract, workers could remain in the jobs banks for years. But under the new contract, the union conceded to tighter conditions, under which workers’ jobs are protected by the jobs bank for just two years, and less if employees turn down transfers.

Jobs banks come from an era when automakers’ manufacturing processes were being modernized to include technological improvements and the companies needed to win labor support for such innovations that seemingly would mean a loss of jobs.

“The jobs bank notion was created long ago with the idea of being a temporary location for people who were being displaced by upgrades in technology,” Cashman said. “That whole premise seemed to have died long ago, and jobs banks have been, from the perspective of folks down here, kind of abused ever since.”

UAW members say they have foregone increases in pay and benefits over the years in exchange for the job security provided by the jobs bank and would expect to see significant concessions in executive pay and from other constituencies if they are to give up that protection.

What the above article doesn’t state is that job banks were also used when plants shut down to change vehicle models.  During that time, workers also attended training for the new equipment being installed to build the new vehicles.

I’ve also heard a lot about wages and cost difference between the foreign and domestic automakers.  From an article in The Oakland Press:

Figuring out labor costs is tremendously complicated because the contract has many provisions that change based on U.S. auto sales and production rates. Also, GM is estimating costs for the Japanese automakers.

But GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labor costs dropped 6 percent this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes laborers’ wages of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.

The total cost will drop to $62 per hour in 2010 when the linchpin of the contract — a UAW administered trust fund — starts paying retiree health care costs.

But that’s still $9 more than the $53 per hour that GM estimated Toyota now pays in the U.S., and the gap could be even wider. Toyota spokesman Mike Goss said the company’s total labor costs at its older U.S. plants are around $48, with about $30 per hour in wages.

The remaining difference largely is due to “legacy” costs, the cost of a 100-year-old company paying its retiree pensions, Sapienza said.

“While legacy seems to be a dirty word of late, it also means we support hundreds of thousands of people via pensions, health care and good jobs,” he said.

There’s also the “jobs bank,” a feature of the UAW contract that drew fire from senators, in which workers get 95 percent of their base pay and all of their benefits if they are laid off or their plant is closed. In the past, workers could stay in the jobs bank forever unless they turn down two job offers within 50 miles of their factory. GM’s new contract imposes a two-year time limit, and workers are out of the jobs bank if they turn down one job within 50 miles or four jobs anywhere in the country.

GM has about 1,000 workers in the jobs bank now because it’s been thinned out by early retirement and buyout offers. At its peak, the jobs bank had 7,000 to 8,000 people, Sapienza said.

To be fair, Toyota also has paid workers whose plants were temporarily closed due to slow demand for their products. Employees attended training during the shutdown.

GM, which has been restructuring for about five years, had about 125,000 U.S. hourly employees in 2003 and expects to have 62,500 by the end of this year.

GM says it already is starting to see savings from the new contract because it has hired more than 1,000 workers who are paid $14 per hour, less than half the average UAW laborer’s rate. Most, if not all, of those workers will be laid off, though, as GM cuts production because of the sales slump. The company expects more long-term savings as it hires more lower-paid workers in the future.

Yes, the UAW has given up a lot of benefits and wages to help the Big Three compete.  And what has been their reward?  Bonuses to executives for a job well done in negotiating concessions from the Unions.  And yet, it’s still not enough.  They still bitch and moan about how the Unions are screwing them over while they gleefully count their bonuses.

The cause of much of the grief that the automotive industry as a whole (and I’m including the “other” automakers in this) is the government’s role in the current financial crisis as well as laying the groundwork & continued policies that work against the United States.  As discussed in some previous posts (here, here, and here), politicians in government have not done us any favors.  Indeed, I believe that they have created much of the problems that we are facing as an industrial country.

For instance – Pat Buchanan wrote this article (link pending) and had this to say about government’s role in the demise of the domestic auto industry:

To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future.

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II.

How did Big Government do in the U.S. auto industry?

Washington imposed a minimum wage higher than the average wage in war-devastated Germany and Japan. The Feds ordered that U.S. plants be made the healthiest and safest worksites in the world, creating OSHA to see to it. It enacted civil rights laws to ensure the labor force reflected our diversity. Environmental laws came next, to ensure U.S. factories became the most pollution-free on earth.  It then clamped fuel efficiency standards on the entire U.S. car fleet.

Next, Washington imposed a corporate tax rate of 35 percent, raking off another 15 percent of autoworkers’ wages in Social Security payroll taxes.  State governments imposed income and sales taxes, and local governments property taxes to subsidize services and schools.

The United Auto Workers struck repeatedly to win the highest wages and most generous benefits on earth — vacations, holidays, work breaks, health care, pensions — for workers and their families, and retirees.  Now there is nothing wrong with making U.S. plants the cleanest and safest on earth or having U.S. autoworkers the highest-paid wage earners. That is the dream, what we all wanted for America.

And under the 14th Amendment, GM, Ford and Chrysler had to obey the same U.S. laws and pay at the same tax rates. Outside the United States, however, there was and is no equality of standards or taxes.

Thus when America was thrust into the Global Economy, GM and Ford had to compete with cars made overseas in factories in postwar Japan and Germany, then Korea, where health and safety standards were much lower, wages were a fraction of those paid U.S. workers, and taxes were and are often forgiven on exports to the United States.  All three nations built “export-driven” economies.

The Beetle and early Japanese imports were made in factories where wages were far beneath U.S. wages and working conditions would have gotten U.S. auto executives sent to prison. The competition was manifestly unfair, like forcing Secretariat to carry 100 pounds in his saddlebags in the Derby.

Japan, China and South Korea do not believe in free trade as we understand it. To us, they are our “trading partners.” To them, the relationship is not like that of Evans & Novak or Fred Astaire and Ginger Rogers. It is not even like the Redskins and Cowboys. For the Cowboys only want to defeat the Redskins. They do not want to put their franchise out of business and end the competition — as the Japanese did to our TV industry by dumping Sonys here until they killed it.

While we think the Global Economy is about what is best for the consumer, they think about what is best for the nation.  Like Alexander Hamilton, they understand that manufacturing is the key to national power. And they manipulate currencies, grant tax rebates to their exporters and thieve our technology to win. Last year, as trade expert Bill Hawkins writes, South Korea exported 700,000 cars to us, while importing 5,000 cars from us.  That’s Asia’s idea of free trade.

How has this Global Economy profited or prospered America?

In the 1950s, we made all our own toys, clothes, shoes, bikes, furniture, motorcycles, cars, cameras, telephones, TVs, etc. You name it. We made it.

Are we better off now that these things are made by foreigners? Are we better off now that we have ceased to be self-sufficient? Are we better off now that the real wages of our workers and median income of our families no longer grow as they once did? Are we better off now that manufacturing, for the first time in U.S. history, employs fewer workers than government?

We no longer build commercial ships. We have but one airplane company, and it outsources. China produces our computers. And if GM goes Chapter 11, America will soon be out of the auto business.

Our politicians and pundits may not understand what is going on. Historians will have no problem explaining the decline and fall of the Americans.

So when we no longer make our own products to trade, where is the money going to come from?  A service-based economy that does nothing but shuffle money around before it heads offshore?  That certainly won’t last for long…

Buchanan’s statement “To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted…” also strikes a chord.  If no one wanted these vehicles, then why did Detroit make SUVs for years? Because the public wanted to buy them – that’s basic supply and demand economics.  And I would like to meet the person with the crystal ball that foresaw the high fuel prices that helped create the situation that the automotive companies find themselves in.  20/20 hindsight is the only sight that these buttheads have…

What I see happening is that the politicians in Washington are more interested in serving themselves and/or the world instead of this country.  Why else would they not even blink at doubling foreign aid from $25 Billion to $50 Billion that will never be paid back and then grill the domestic automakers over a loan no riskier than the loans made by Fannie May and Freddie Mack?  Where the **** are their priorities?

Where I see the domestic automotive industry heading and ending up is not going to be a good place.  The focus that I have been observing is that Chrysler and GM are almost being forced to merge, and that will impact many more than just the projected 35,000 people between the two companies.  The ripple effect between suppliers and dealers will extend that out to some large but unknown number of people.  If a merger doesn’t happen, I see that Chrysler will be chopped up & unloaded by Cerberus, and GM may file Chapter 11 even if the government loans are approved.  In either case, I do not have much hope for my department or my job to survive any type of transition along these scenarios.

When I moved to Michigan almost 9 years ago, it was to join a company so I could retire from with a decent pension.  Now, it is highly doubtful that I will see that pension much less retire.  I do not anticipate either company to survive this mess intact.  So…

I finished updating my resume (again!) and sending it off to a couple of people that I’ve contacted this past week.  What I did not want to do is start over again at a new place at my age.  And this will not make retirement, if any, any easier for my wife and myself.

Is the GM/Chrysler Merger Dead?

From Reuters:

A deal to merge General Motors Corp and Chrysler LLC has hit an impasse after the Bush administration ruled out funding for it, three people with direct knowledge of the talks said.

This puts any merger of the struggling automakers on hold until after the U.S. presidential election, the sources said.

The development adds a new element of uncertainty for the embattled U.S. auto industry as Detroit’s political allies warn the sector faces a deepening financial crisis that threatens tens of thousands of jobs.

It also opens the door for Cerberus Capital Management, which owns Chrysler, to restart talks with the Nissan-Renault alliance run by Carlos Ghosn. The private equity firm has seen that option as a backstop to an outright acquisition of Chrysler by GM, one of the sources said.

And a little later on in the same article:

With merger aid off the table, talks about combining GM and Chrysler are on hold until after the November 4 election when the parties hope to sit down with representatives of the new administration, the sources said.

This may mean that the incentive packages that were slated to be distributed on November 5 may be delayed, but I wouldn’t bet on it.  But then there is the political aspect that could be a problem for everyone.  Again, from the same article:

Democratic presidential candidate Barack Obama told NBC news in an interview he would meet with Detroit automakers and union representatives if elected.

“My hope is if I’m elected, that I’m immediately meeting with the heads of the Big Three automakers as well as with the United Auto Workers,” Obama told NBC. “And to sit down and craft a strategy that puts us on a path for an auto industry that can compete with anybody in the world.”

Republican John McCain’s campaign has said he favors moving to disburse the $25 billion in low-interest loans already approved for the industry as a first step.

All I can say is that if Obama is elected, and later supports a GM/Chrysler merger that costs a significant number of Union jobs, Michigan could turn from a Blue State to a Red State overnight.

Personally, I think that this latest development is good news from the thousands of people that would be affected by a merger.  Neither company is bankrupt (yet), and it will be several months before that would happen.  A merger, from a personnel standpoint, would be disastrous to Michigan as well as across the country.  This leads me to the following thought:

Chrysler’s owner, Cerberus, wants out of the automotive business in the worst way, and does not care how many people will be hurt. 

I’ve heard on the radio that several different analysts are disputing the reported benefits of a merger.  Numbers of people that would be affected could run close to 100,000 if you count GM & Chrysler workers, dealers, and suppliers.  Most would be in Michigan, but those numbers would be spread throughout the country.

Where this will all lead to is anyone’s guess.  I’m hoping that I’ll still have a job past the end of the year, and business rebounds quickly.

Chrysler Buyout Details

While looking around the Internet and trying to figure out Plan “B”, I ran across the details of what Chrysler could be offering it’s salaried workers in order to ease them out of the company.  From the Detroit News:

Voluntary severance programs will be available starting in November, and take effect Nov. 30. Involuntary measures would follow, taking place by year’s end.

The basic Separation Incentive Program (SIP) consists of $50,000 in cash and a vehicle voucher valued up to $25,000, as well as 100 percent health-care eligibility credits. The SIP is offered to employees aged 60 or older with 10 or more years of service as of Nov. 30.

A Special Early Retirement (SER) plan is available to white-collar workers aged 51 to 62 (previous plans started at age 53) who have 10 or more years of service, making less than $100,000, as well as to select employees aged 53 to 62 (previous plans started at age 55) with 10 or more years of service who earn more than $100,000. This plan offers full retirement benefits (not reduced for age) and 100 percent health care eligibility credits.

In an unusual step, Chrysler is offering Voluntary Incentive Buyouts (VTIPs) for employees with less than 10 years of service as of Nov. 30. They still can leave with $50,000 in cash, a voucher worth $25,000 towards the purchase of a vehicle, and six months of health-care coverage.

Now mind you, I’m getting this out of the newspaper, not my management!!

What is really bad is that I just turned 48 last Thursday, and have almost 9 years with the company.  Of course, the economy is Michigan is lousy, and this action, combined with GM, is just going to make things worse.  What jobs that I do see posted are approximately 20% less than what base salary I’m making now.  Can’t sell the house & move unless I want to lose a ton of money.  I’ve got choices to make, but none of them are good.

And I know that there are people in worse shape than I am.

I can only hope that my department will be spared the brunt of the layoffs & terminations.

Campaign Promises for the Automotive Industry

Yesterday, Senator John McCain and Governor Sarah Palin made a campaign stop at the Ford Fieldhouse at Grand Rapids Community College in Grand Rapids, Michigan.  Among the reported promises that were made were:

…the GOP ticket won’t raise taxes, will keep America safe, and will restore Detroit to a pre-eminent place as the hub of the global auto industry.

The last promise is interesting because of the $25 Billion Federal loan package for the automotive industry currently being debated in Congress.  One of the statements that was made during that campaign stop is particularly interesting:

We’re not going to leave the workers here in Michigan hung out to dry while we give billions of taxpayer dollars to Wall Street.

Nice thoughts, but are they really going to happen?  Let’s look at the last part first…

As far as what the pundits say, there’s a pretty good chance that the loan package will go through.  The automaker lobbyists are pushing hard, and in this election year, a Democratic controlled Congress will pass the loan, hoping that it will boost Obama’s ratings among Michigan Union members.  And considering that the Government has essentially taken over Fannie May, Freddie Mack, and AIG with billions of taxpayer dollars, what’s a few more dollars to help out an ailing industry in an ailing state that has seen over 315,000 jobs disappear?

The scary part is that some of the banks on Wall Street are backing this loan – JP Morgan Chase and Goldman Sachs own quite a bit of Ford and GM’s debt.  If Ford and GM cannot turn things around and fall flat on their butts, then Chase & Sachs will follow Lehman Brothers down the financial tubes unless the Feds take them over with massive bailouts a la AIG.

Now for the first part – Returning Detroit to “a pre-eminent place as the hub of the global auto industry.”  I’m sorry to say, but no Presidential candidate, Democratic or Republican, can make that promise.

The recovery of the automakers (and of Detroit) depends on nothing less than sound management of the automakers.  While I believe that the automakers have more than a decent chance of turning themselves around, I’m not so sure that it would spill over into Detroit.

The automakers all have decent product either on the design boards or in the process of becoming reality.  Whether any of these products will become hits & saviors of their respective companies is anyone’s guess.  Then there’s the other “dirty” but open secret – all the companies are looking at foreign produced cars wearing their nameplates to help with the current gas-mileage deficient lineup (at least, so they say, until the domestic product catches up).  But while they are catching up, what happens in the meantime?

That is going to be anyone’s guess.  We’ve seen the price of gasoline bounce around on both sides of $4.00/gal, and who knows where it will be in a couple of years when the anticipated $25 Billion Federal loan comes due.  GM is supposed to have its Volt on the showroom floors by 2010, but the pricing is still up in the air.  Ford isn’t quite floundering, but it’s not exactly healthy and exciting either.  And Chrysler’s master may lose patience and cut the company up in pieces to sell off.

Then there’s the other shoe that could drop – Who said that the product that is on the drawing boards is going to pass the corporate laugh test?  I’m sure that GM doesn’t want another Aztec, Ford doesn’t need an Edsel, and Chrysler needs to upgrade its offerings to include better fuel economy.  But who is mandating that any of this product has to come from Detroit and not continue flooding in from elsewhere?  The answer is nobody.

Here’s the bottom line – It all depends on who has what to sell, and how the public reacts with their disposable income.

The amount of available disposable income to the average American is going to be interesting.  The financial markets have been going crazy over the past year as various financial institutions find themselves failing, selling out, or just closing their doors.  And then we have the Democratic candidate for President all but promising higher taxes.  All of this leads to how comfortable does the average consumer feel about their future.  In the age of cutbacks and reorganizations, it is a rare person (outside of those with golden parachutes) that is confident in their long-term future.

In essence, it will be the consumer that will cast their vote on who stays in business and who walks the plank to insolvency.  All the promises of the candidates will not change that fact.

Detroit Mayor Resigns

In a plea agreement after a days worth of testimony before Michigan’s Governor, Detroit Mayor Kwame Kilpatrick pleaded guilty to two felony charges. The deal includes resigning his office, spending 4 months in jail, 5 years of probation, and a $1,000,000 fine. He also pleaded no contest to a related assault case.

About time the Mayor did the right thing, but the damage has been done.

For close to a year, the scandal over secret court agreements, sex, and text messages has almost dominated the day to day news in this city, and has occasionally spilled over into not only the national news but international news as well. It was very disconcerting to me to turn on the BBC in Germany and see Kilpatrick’s face.

While the scandal went on, the business of the city came to a standstill as the City Council argued, harangued, and petitioned the courts and the Governor to remove the Mayor from office. And Detroit can ill-afford the wasted time. Detroit is hurting – badly – from the decline of the automotive industry. Burned out abandoned houses, crime, and overall decay grip the city while the various members of the administration and Council maneuver for political power. In some respects, the increasing number of overgrown lots & ruins have come to symbolize the decline of the city and the apparent ineptitude & inability of the city’s government to restore the city back to its former glory.

I take no joy in seeing the Mayor resign, nor the troubles he has gotten himself into. Those are the consequences of bad decisions and actions that he must take responsibility for. The real tragedy of it is that he has taken the city down with him.