Archive for the ‘Detroit’ Category

Mitt Romney Says: Let Detroit Go Bankrupt

November 19, 2008

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.

Published by The New York Times
November 19, 2008

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.

Read the rest:
http://www.nytimes.com/2008/11/19/opinion/
19romney.html?_r=1&hp

Top Republican senators oppose automaker bailout

November 16, 2008

Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a “dinosaur” whose “day of reckoning” is coming. Their opposition raises serious doubts about whether the plan will pass in this week’s postelection session.

Democratic leaders want to use $25 billion of the $700 billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.

By Stephen Ohlemacher, Associated Press Writer

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise.
Richard Shelby
Senator Shelby

“Companies fail every day and others take their place. I think this is a road we should not go down,” said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

General Motors headquarters is seen October 26, 2008 in Detroit, ... 
General Motors headquarters is seen October 26, 2008 in Detroit, Michigan. Picture taken October 26, 2008.(Rebecca Cook/Reuters)

“They’re not building the right products,” he said. “They’ve got good workers but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.”

Added Kyl, the Senate’s second-ranking Republican: “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.”

House Speaker Nancy Pelosi, D-Calif., said over the weekend that the House would provide aid to the ailing industry, though she did not put a price on her plan.

“The House is ready to do it,” said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. “There’s no downside to trying.”
Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd were among the congressional Democrats negotiating the bailout settlement on Sunday. (Joseph Silverman/The Washington Times)

Above: Ready to bail, from L to R: Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd. Photo by Joseph Silverman

Read the rest:
http://news.yahoo.com/s/ap/20081116/ap_on_go
_co/auto_bailout;_ylt=AmAt77VLR57r0Uq41kBoeYWs0NUE

Auto Maker Bailout “Doubtful”

November 14, 2008

A senior Democratic senator raised doubts on Thursday that an attempt to bail out U.S. automakers had enough support to clear Congress this year. 

As Republicans amplified their concerns about a bailout, Senate Banking Committee Chairman Christopher Dodd raised the biggest red flag for fellow Democrats trying to craft a $25 billion rescue and pass it during a post-election session set to start next week.
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By John Crawley and Rachelle Younglai, Reuters 

“Right now, I don’t think there are the votes,” Dodd of Connecticut told reporters about prospects in the Senate. “I want to be careful of bringing up a proposition that might fail,” he said.

Although Dodd said “we ought to do something” and personally backed using money from the ongoing $700 billion financial services rescue program to help Detroit, he was skeptical that enough Republicans would support a bailout.

Senate Majority Leader Harry Reid, a Nevada Democrat, also cautioned that success of a bailout rests with Senate Republicans and the White House. With their slim majority, Democrats cannot force a measure through the Senate or trump a White House veto.

The White House opposes the approach being taken by congressional Democrats but has not threatened to block any bailout. Bush administration officials have said they would consider other steps Congress can take to help General Motors Corp, Ford Motor Co and Chrysler LLC.

Dodd said there have been “legitimate issues raised” about how to help.

Read the rest:
http://www.reuters.com/article/marketsNews/idINN1339
368420081114?rpc=44

Can Washington save the Big Three automakers?

November 9, 2008

With the Big Three US automakers teetering on the edge of insolvency, it appears Washington may finally be ready to come to Detroit’s rescue.

Only hours after both General Motors and Ford Motor Co. announced large third-quarter losses — and stressed that they are both rapidly running out of cash — President-elect Barack Obama focused on the industry’s plight during his first news conference since Tuesday’s election.


Above: 1910 Ford Model T

“I have made it a high priority for the transition team to work on additional policy options to help the auto industry adjust,” Obama told reporters gathered in Chicago.

AFP

Just how bad a situation the automakers are facing was hammered home on Friday, when GM reported a 2.5 billion dollar net loss for the third quarter, bringing to nearly 57 billion dollars its losses since the beginning of 2005.

Ford’s 129 million dollar quarterly loss, meanwhile, brought to nearly 24.5 billion dollars the deficit it has run up since plunging into the red in 2006.

Yet the losses only partially state the true depth of the problem for the automakers.

Going into the third quarter, GM had 21 billion dollars on its books. By the end of September, that had plunged to 16.2 billion dollars, coming perilously close to the 11 billion to 14 billion dollars it says it needs on hand to keep the company operating.

GM logo
Ford burned through 7.7 billion dollars in the quarter, though its reserves are nearly twice as richer thanks to a massive line of credit it acquired last year.

Though it doesn’t report its full financial data, the privately-held Chrysler LLC is also thought to be fast running out of cash: one reason, analysts believe, why its parent, Cerberus Capital Management, was so eager to sell Chrysler to GM.

That deal, however, was scuttled by GM, and observers believe Cerberus may now rush to find another buyer as the economy continues to worsen.

“I doubt there’s anyone who challenges the fact that we’re operating in difficult times, perhaps as difficult as we’ve ever faced in the auto industry,” GM Chairman and CEO Rick Wagoner said during a Friday conference call with reporters and industry analysts.

Detroit’s situation has certainly worsened in the face of the current economic crisis that combines what many describe as a “perfect storm” of factors, such as high fuel costs, tight credit, job losses and rising commodity prices.

 

But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products.

As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with — and with varying degrees of success.

Further compounding the situation, Detroit has been consciously slow to embrace changes in the American automotive marketplace, especially the shift from big trucks to small, fuel-efficient passenger cars.

And even where it has, lamented Consumer Reports’ auto analyst David Champion, it has needed “more models that were exciting for people to buy.”

Again, Detroit has begun to address that complaint, and a flood of more fuel-efficient — and exciting — models are on tap to debut over the next several years. The challenge now will be to keep that flow going.

GM President Fritz Henderson said Friday the automaker will have to cut back on some product programs in order to ensure liquidity.

Read the rest:
http://www.breitbart.com/article.php?id=081108175210.5dfg9d6x&show_article=1

Recession rears ugly head, global auto sales shrink

November 4, 2008

“We’re in a recession. It’s as simple as that ….The question is how long or deep is it going to be?”

By Patrick Fitzgibbons, Reuters
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Corporate results and outlooks darkened on Monday, and automotive companies from Japan to Italy to Detroit said October sales were the weakest in about 20 years as economies weakened and consumer credit dried up.

While government officials have gone out of their way to avoid the use of the much-dreaded “R” word (recession) in describing the current economic straits, a number of prominent officials acknowledged the severity of the crisis on Monday.

U.S. vehicle sales plunged in October, with General Motors Co down 45 percent, Ford Motor Co off 30 percent and Toyota Motor Co down 23 percent.

Mark LaNeve, GM’s North American sales chief, said the collapse in the U.S. market was linked to the “unprecedented credit crunch that is dramatically impacting the entire U.S. economy — from the housing market to big and small companies to banks to family run businesses.”

Adjusted for U.S. population changes, GM said, October’s sales figures made it the weakest month for the battered auto industry since the end of World War II.

New car sales also fell across Europe — down 40 percent in Spain and 19 percent in Italy.

The European Commission said the 15-nation euro zone was in a technical recession and economic growth would come to a virtual standstill next year, and called for coordinated action to prevent further collapse.

Also in Europe, more banks warned of more big writedowns and sharp profit falls, prompting lenders to tap government funds or seek state rescues.

And in the United States, factory activity contracted sharply in October, falling to its lowest point in 26 years, according one widely watched index.

“Pretty grim. It means we’re in a recession. It’s as simple as that …a pretty solid manufacturing recession,” said Robert Macintosh, chief economist at Eaton Vance Corp. “The question is how long or deep is it going to be?”

Read the rest:
http://news.yahoo.com/s/nm/20081103/bs_nm/us_financial6

American High Schools: Abysmally Few Graduates

April 2, 2008

Editorial
The Washington Times
April 2, 2008

Nearly one in three students drop out of high school before graduating. Only half of black and Hispanic students graduate on time. These are tragic, sobering statistics.

As reported by Amy Fagan of The Washington Times on Tuesday (April 1, 2008), the numbers from America’s Promise Alliance show a disparity between urban-suburban graduation rates of more than 35 percentage points. As few as 25 percent in some urban school districts graduate on time, compared to 75 percent of suburban schools (and even that is too low). The trend is not improving.
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A notable list of city and state leaders, government officials and urban organizations have forged together to address this “crisis.” Many education experts attribute part of the problem to schools that “hyper-inflate” graduation rates in addition to the schizophrenic standards used to calculate the rates. U.S. Secretary of Education Margaret Spellings said Tuesday: “One reason the high school dropout crisis is known as the ‘silent epidemic’ is that the problem is frequently masked or minimized by inconsistent and opaque data reporting systems.”

In other words, different schools use different measures to calculate dropout and graduation numbers. New Mexico counts 12th graders who graduate (not those who may have dropped out before the 12th grade); some states only count dropouts as those who fill out a written declaration. Still other states include GED recipients as graduates (even though most of them are dropouts).

That is just part of the problem. No matter “how” the numbers are calculated, one cannot ignore how abysmal the numbers actually are. Alliance founder Colin Powell called the problem a “catastrophe.” We couldn’t agree more.

The cities of Detroit and Baltimore are among the worst in our nation (with 24.9 and 34.6 percent graduation rates, respectively). The irony is that these “urban” school districts receive some of the highest per-pupil funding in the country. Detroit receives $11,000 per pupil, while Baltimore gets $9,600. The national average is $8,700. New York state is the highest at $15,000.

What does the U.S. Department of Education propose to do to help combat this dilemma? It will institute what it’s calling a uniform graduation rate under No Child Left Behind. In other words, every school must use the same standard to measure graduation and dropout rates. Education experts at the Manhattan Institute are calling the decision “a major victory for school accountability.”

The Department of Education says in the coming weeks it will “take administrative steps” and convene summits to decide which dropout “standard” to adopt. This is a department (and administration) that has been credited with “spending more on K-thru-12 education in the first three years, than Bill Clinton did in six.” Yet in many urban schools, we can’t graduate 75 percent. Action, accountability and standards are great concepts. Still unanswered is why schools that get the most money are still the worst performers? Who is held accountable for that?

Related:
Assessing American High School Students: Not a Pretty Picture

U.S. High Schools Graduate “About Half” in Cities

April 1, 2008
By KEN THOMAS, Associated Press Writer 

WASHINGTON – Seventeen of the nation’s 50 largest cities had high school graduation rates lower than 50 percent, with the lowest graduation rates reported in Detroit, Indianapolis and Cleveland, according to a report released Tuesday.

Michelle Rhee heads Washington DC
public schools and has promised reform. 

The report, issued by America’s Promise Alliance, found that about half of the students served by public school systems in the nation’s largest cities receive diplomas. Students in suburban and rural public high schools were more likely to graduate than their counterparts in urban public high schools, the researchers said.

Nationally, about 70 percent of U.S. students graduate on time with a regular diploma and about 1.2 million students drop out annually.

“When more than 1 million students a year drop out of high school, it’s more than a problem, it’s a catastrophe,” said former Secretary of State Colin Powell, founding chair of the alliance.
Jaap de Hoop Scheffer.jpg
Colin Powell while serving as Secretary of State.  We at Peace
and Freedom
have the utmost respect for Colin and Alma Powell
for their work.

His wife, Alma Powell, the chair of the alliance, said students need to graduate with skills that will help them in higher education and beyond. “We must invest in the whole child, and that means finding solutions that involve the family, the school and the community.” The Powell’s organization was beginning a national campaign to cut high school dropout rates.

The group, joining Education Secretary Margaret Spellings at a Tuesday news conference, was announcing plans to hold summits in every state during the next two years on ways to better prepare students for college and the work force.

Read the rest:
http://news.yahoo.com/s/ap/20080401/ap_on_re_us/
high_school_grad_rates;_ylt=AqcOk_BUMXwxiOiUB
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