Thursday, December 11, 2008

If they take the bailout - boycott GM and Chrysler. Buy a Ford.

UPDATED: 15-Dec-08
This is the 2009 Ford Shelby Mustang GT 500. I want this car. I've always wanted this car. When I was in high school I wanted the 1967 Shelby Cobra GT 500. Lunchroom debates raged over the merits of the Shelby Cobra vs. the Corvette Stingray. In my mind, it was no contest, even if Motor Trend was clearly in the bag for GM. I'd even be happy with the GT350 - then or now - '67 or '09. In the bailout debate, I keep hearing that Detroit does not build cars that people want to buy. I am here to bear witness that this is simply not true. I want this car. My wife won't let me have one, but I want it. I may still get one some day. Just sayin...

I've been hearing so much negative about the "Big 3" and the bailout, that I wanted to start this post by saying something positive. I'll have some more positive things to say about Ford later, but first - the bailout. Not much positive there. Last night, the House of Representatives voted 237 - 170 to pass the Federal Auto Loan Bill. As I write this, the Senate is debating the bill.

Stephen Green at Vodkapundit sums it up nicely:

The merits of a "Detroit 3" bailout has been debated at Donklephant ad nauseum. Since I cross post and already weighed in there, I won't repeat those arguments here. But there is one point that seems to get lost in all the discussion and is repeated in Stephen's otherwise brilliant ad spoof. The question is not about whether the "auto industry" or the "Big Three" should get taxpayer money. The point is that these three companies are not the "auto industry' and are not even the "domestic auto industry". Moreover, they are not monolithic, do not have the same operational structure, do not have the same financial needs, do not make the same cars, do not have the same competitive status and they should not be lumped together in this debate. These companies are competitors. So in the spirit of this blog, lets divide them up and treat them separately.

General Motors
GM is a basket case, plain and simple.
  • In 2007, Toyota sold 9.37 million vehicles.
  • In 2007, General Motors sold 9.37 million vehicles.
  • In 2007, Toyota made $17.1 billion.
  • In 2007, General Motors lost $38.7 billion.
Source:Mises Blog (H/T Crossing Wall Street)

GM has massive manufacturing overcapacity in workers and plants compared to to the number of cars they sold, are selling, or have any realistic expectation of selling. Nothing short of a meat axe restructuring can make them profitable. It is not the kind of cars they make. It is not their quality. It is their business model. It is their labor costs. It is their overcapacity. The only way they can accomplish the radical restructuring they need will be under the inevitable chapter 11 bankruptcy protection. Every penny they get from the taxpayer between now and then is money thrown into the bottomless pit.

Chrysler
Chrysler was taken private by Cerberus, which is one of the richest and best connected private equity firms on the planet. Michael W at QandO blog has been beating the drum on the Cerberus issue for a couple of weeks, and the story is getting traction in mainstream media and other blogs. This from Forbes and the NYT:
"Buried on the business page of The New York Times Saturday were the details of Detroit's biggest snow job yet—literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush's second Treasury secretary, is leading a who's who of crony capitalists in a lobbying campaign for a taxpayer bailout to "salvage Cerberus' investment in Chrysler."

That's right. Not to save the jobs of Chrysler employees or America's disappearing manufacturing base, mind you, but to prevent "one of the world's richest and most secretive private investment companies" from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers."
This stinks to high heaven. As far as Chrysler is concerned, all the Kabuki theater in Washington has nothing to do with "saving Chrysler". Nothing. It has everything to do with asking taxpayers to bailout the Cerberus investors and seve them from extending any additional risk to support their own speculative investment.

Ford
That brings us to Ford, and a ray of hope. Don't get me wrong. Ford CEO Alan Mulally did not cover himself or his company in any more glory than the rest of the bozos in either of his two appearances before Congress. But this week, with the help of the great-grandson of the man who founded the company, Ford finally got it right:
"Chief Executive Alan Mulally and Executive Chairman Bill Ford Jr. told The Associated Press on Tuesday they are confident that the borrowing, coupled with restructuring and new product plans, will get them through the recession without relying on the government. Ford even said the century-old company that bears his family's name might be able to use the independence from loans to its advantage. I think if they see Ford as a company trying to pull itself up by its own bootstraps, and making it on its own and pulling the right levers, I think that could be a positive for us," Ford said."
Proponents of this bill make much of the argument that consumers will not buy a car from a company operating under Chapter 11 protection. Given the fact that this bridge loan will do nothing more than bridge the time until GM asks for much more money under the single party rule of Barack Obama in March, that argument is becoming moot. Who would you buy a car from? From a basket case of a company that refuses to take the strong medicine they need to survive? From a private equity firm without the balls to back their own investments? Or from a company that has already taken the right steps, has figured out a plan to weather the storm (and also BTW makes some really great cars)? A company like Ford.

If Ford declines the taxpayer money , Ford deserves the support of American car buyers. If GM and Chrysler take taxpayer money, they do not deserve the support of American car buyers.

Polls show that a majority of Americans oppose taxpayer dollars being used to support the Detroit 3 bailout. The bill is facing oppostion in the Senate, and it is not clear whether it will pass, even with administration support. In my dreams, Americans take matters into their own hands if this bill passes. In my dreams, Americans begin to apply the discipline that our representatives in Washington do not. In my dreams, Americans vote with their car buying dollars and stop buying products from any company that solicit government bailouts. This might be tough to do with the banking industry which has effectively been nationalized, leaving few choices. But it is certainly something that Americans can do when choosing to buy a car between Ford, Chrysler, and GM.

I drive a 1999 Jeep Cherokee that I purchased new from a Dodge/Chrysler/Jeep dealer ten years ago. I thought I would replace it next summer. With all the great deals being thrown around, I may move that purchase up. I love that Jeep, it has been a great car for me. But if Chrysler/Cerebrus takes Federal money - I won't buy another Jeep. If Ford declines the loan, I'll be a Ford man now.

I have no illusions about the limited reach of this blog, but for FWIW - in a small token of support for Ford doing the right thing - DWSUWF offers a little free advertising for a great American car company that builds great cars, is capable of making tough decisions in a tough market, and running an automotive business without picking the pockets of the American taxpayers.

Boycott Chrysler/Cerberus. Boycott GM.

Buy a Ford.

Want fast? Consider this ....
Ford Shelby Mustang GT 500

Need a truck? Consider the ....
Ford F150 Pickup Truck

Going off road? Consider the ...
Volvo XC70 SUV Crossover
I'm going to look at this one to replace my Jeep.


Going green? Consider the ...
Ford Escape Hybrid

The Ford Shelby Mustang kicked the GM Corvette's butt when I was in high school in 1967, and with the decision to decline government bailouts, Ford is still kicking GM butt today.

UPDATE 1:

As often happens on the intertubes, after posting this screed I find I am not the first thinking along these lines. Sphere informs me The Lonely Conservative beat me to it yesterday, as did Polipundit (by a few hours). There is even a website - "Boycott the Bailout".

UPDATE 2: 12-Dec-08

Nevermind. The bailout was defeated in the Senate.

UPDATE 3:
Oops. Stay tuned. The President and the Bailout Czar are apparently going to give them our money anyway, as James Joyner notes:
"President Bush may ignore Congress and give the Big 3 the money they want, anyway... That the bailout fund in question was designated for entirely different purposes and is blatantly unconstitutional doesn’t seem to bother the president. One wonders if Democrats will rail against this as an abuse of power or see it as an act of benevolence."
American car buying consumers can yet make the right decision that our representatives in Washington did not, by shunning the companies that take the funds and supporting the auto manufacturer that chooses to not take Federal bailout funds.

UPDATE 4: 15-Dec-08

Thanks to Bobo for linking this post in his fine weekly carnival compilation.

I also cross-posted this at Donklephant, and got the usual intelligent and provocative responses from the commentarium there. Well worth the read. Notable was one particular response from Scott Monty, a "Social Marketing" author, guru and blogger who -since June - has been the Global Digital Communications Social Marketing Director for Ford Motor Company. I responded on both his blog and the Donk. I'll be interested to see if it was just a drive by comment from a corporate flack, or if he actually engages in a dialog. In either case, just the fact that Ford has hired someone to interact with social media and bloggers says something about Ford "getting it" all by itself.

Divided and Balanced.™
Now that is fair.



6 comments:

Chase Godwin said...

"In my dreams, Americans vote with their car buying dollars and stop buying products from any company that solicit government bailouts."

Be careful what food you buy too!

See what railroads transport the things you buy also. Boycott them.

Eschew banking. Don't buy a mortgage and fund the enemy.

Don't buy car insurance, its a propped up product your forced to buy because its the law to have it.

This world is full of gotchas so try your best to make a difference every decade and BUY a FORD!

Harlan Wallach said...

IN CONGRESS, JULY 4, 1776
The unanimous Declaration of the thirteen united States of America
When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.

He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil Power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For quartering large bodies of armed troops among us:

For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us in many cases, of the benefit of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies

For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. — And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor

Anonymous said...

Not going to buy GM, Chrysler or even
a Ford. The bailout has turned me
against all of them. Beside my
Lexus has been better then the piece
of C*** my Corvette is and my 08 F250.

Anonymous said...

You forgot to mention the most American car company that doesn't need a bailout. Toyota has more American Labor and Parts in their cars than GM, Ford and Chrysler. I'm proud to know I bought American when I bought my Lexus. However that being said I won't buy from GM, Ford or Chrysler until their quality approaches that of the Japanese, Germans etc. Only the Yugo had lower quality than American Union labor. My question is why Toyota non-union American labor can build a high quality car and GM, Ford, Chrysler Union labor build only poor quality cars. Union Labor's goal is to use the most people at the highest price to create the lowest amount of product with the lowest quality possible.

The reality is Nancy Pelosi, Barbara boxer and their fellow Democrats have the union as their major contributor. They need their money and votes to keep their jobs. Guess where they will vote.

mw (DWSUWF) said...

Well, I am learning that my blog demographic is apparently 50% anonymous Lexus owners. Who knew?

Ben said...

If offered, they will all take the money.