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Wednesday, November 19, 2008

Walk Into The Light

Hey, Big Three, see that bright light. It's not the one at the end of the tunnel, it's the one at the end of your business as usual attitude, since it looks like Congress isn't going to pass a bailout for you before the end of this session.

If, as the CEO of GM claims, his company is going to run out of money by the end of December, I see a bankruptcy judge in his future.

Mitt Romney has a great piece in today's NY Times about what should happen in Detroit, and why. Basically, file for bankruptcy, and then rebuild the business model from the ground up.

I listened to Senator Russ Feingold on the radio this morning talking about that being the "death of car making in the US". That's of course patently false; Toyota, Honda, BMW, and Hyundai employ well over 100,000 workers building cars in the US. And, the court isn't going to shut down the Big 3, as their CEO's would like you to believe.

3 Million people aren't going to immediately be out of work, unless the CEO's decide that liquidation is the route they should take.

So, how can the (formerly) Big 3 declare bankruptcy, and still have folks buy their cars, which they say is impossible? Easy, explain it to the people. Take off the advertisments for your vehicles for a few days, and instead, advertise what the company is doing, and why.

Assure consumers that Chapter 11 isn't the end of your companies, but the beginning of a new era for them. An era where instead of losing between $600 and $1200 per vehicle produced, you actually turn a profit.

Assure them that while there may be less dealers (at least 1/3 less is what GM needs), they will still get warranty work done, and be able to find parts for their cars.

Dan Hesse from Sprint has been trying for months to show you guys how to get on TV and let consumers know what you offer, talk to him for some advice.

Yes, it will cause pain, for both current employees, some who will have to lose their jobs, and retirees. But that pain is much less than what they'll feel if Congress just tosses a lifeline, that will run out in mere months.

GM's own CEO says the company is burning through $5 billion a month, and may be broke before January. Giving him the 10-12 billion of the bailout money he wants means that unless something major is done about their costs RIGHT NOW, they'll still be broke by the end of March, and going to DC with his hat in hand again, looking for money to make it to the new model year.

A quick word for Congress, too. The Volt isn't going to save GM. To be sold at a price consumers will pay it will probably lose more money per car than anything any car company has ever produced. Yes, it might get people into the show room, and thinking about a Cobalt or Malibu, but one of them barely turns a profit, the other loses money every time one is sold.

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Blogger shoprat said...

You'd think the union would be desperate to save their jobs, but Oh No!

4:45 PM  
Blogger Crazy Politico said...

The union is desparate to save as much of the status quo as possible.

The funny thing is if GM and Ford could shave 50% off of their "historic liabilities" (retirees) cost they probably could keep most of the status quo for the active workers.

7:01 AM  

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