Friday, April 3, 2009 8:12PM
Reading articles, blogs, and opinions about recent news that General Motors may in fact be forced into bankruptcy reorganization, I can’t help noticing a double standard when it comes to how many of us view troubled manufacturing and financial services companies.
Many commentators on the New York Times Web site and elsewhere have applauded the ouster of GM CEO and Chairman Rick Wagoner and the prospect of a GM bankruptcy filing. Many have even been quick to go even further, declaring that GM should be allowed to fail, that no great harm would be done if GM, Chrysler, or even both simply ceased to exist.
Why, I find myself wondering, does there seem to be so much hostility toward GM while, at the same time, many experts say we must accept the much, much larger bank bailouts. And why are big bank leaders not only retaining their jobs but, in many cases, continuing to receive bonuses. True, one large investment bank, Lehman Brothers, has been forced into bankruptcy. But many experts (Jim Cramer) are still howling about it.
So why the double standard? A few reasons. One is built-in media bias. Most big media companies are based in financial centers like New York, not in the industrial heartland. So, to the class of professional opinion-makers, the collapse of a large financial institution seems much more immediate and threatening than the collapse of a distant manufacturing company.
Another, I’m afraid, involves a widespread bias against people and companies in manufacturing. Many experts seem to have accepted the notion that the US has already lost the competition for manufacturing supremacy to China and other countries. So why should taxpayers dig deep to save a company — or even an industry — that is doomed anyway?
This way of thinking is wrong. While many of GM’s problems have been self-inflicted, its current crisis has been caused, in large part, by the recession brought on by the misbehavior of banks and other financial institutions. There’s no reason why a restructured, properly capitalized GM can’t compete with other automotive manufacturers from around the world when the recession ends and demand for cars rebounds. GM may very well need to declare bankruptcy in order to finally get its house in order. But simply giving up on GM — and, by extensions, thousands of suppliers that do business with the company — would be a big mistake.
—Jeff Moad, MA Executive Editor
Posted by Diane Himes at 04/03/2009 08:12:11 PM | I agree, I don't believe the bailouts should be made to the companies in either the financial services sector or in manufacturing.
Posted by: Ron ( Email: ) at 4/6/2009 5:12 PM
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You missed the misbehavior of Congress by demanding that loans be given to those who have no way of repaying them. Now these same folks want to fix the problem. Dodd and Franks should be fired. Does anyone think that BHO has a better grasp of the car business than Rick Wagoner?
Posted by: Dick Parks ( Email: ) at 4/6/2009 5:14 PM
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I said the same thing about the banks, and no one listened to me then either. For what it's worth, I would consider the auto industry worth saving above the banks, but there should be major stings attached to any company that is "saved". For a start, no makes more than $200K per year, including bonuses and stock options, until the loan has been repaid in full, with interest.
Posted by: richn@ghent.com ( Email: ) at 4/6/2009 5:16 PM
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I agree with the opinion that a lot of thing wrog with GM and Chrysler, but these companies performed in the past decades magnificently.The car manufacturing and the tremendous amount of inovation happened in these companies. What happened with these companies is not simple, but management and labor responsible equally!!!!
Posted by: banhidi@msn.com ( Email: ) at 4/6/2009 5:18 PM
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Outside of the bias to saving white collar jobs over blue collar jobs, remember that most of the people in elected offices are from the business side of the house, not manufacturing. They barely understand us, let alone understand that our failure is their failure! They do not see the synergy of business and industry. Those nations out there will hire their own to market, legally protect, and do the accounting for their products, not an American. We have to stop having an MBA (live by the quarter earnings) mentality here in this country and move to the 200 year (China model) plan to protect our own interests on the global playing field.
Posted by: Antigone ( Email: ) at 4/6/2009 5:19 PM
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'Why' should it surprise anyone that there is a double standard? Have you not watched ABC, NBC and CBS interpret the news for the American people as a whole? Do you not see the underlying perversion of the news that endorses the agenda of ABC, NBC and CBS in their reporting of the news? Have you been asleep for the last two decades or longer? Today in America, what was once wrong, has become right based upon interpretation of ABC, NBC and CBS, and what once was right, has become wrong! The older generations had to 'save' 20% of the cost of a home to make a down payment, and then pay the closing costs. Not so, under the guise of big government, buy a home with no down payment and no possible way of affording the monthly payments, but we must get everyone in a home! Now, those individuals that paid their mortgages, and paid their taxes, are going to pay for those that not only failed to pay their mortgages, but be accountable to government leaders that do not even pay their taxes. Once found out, their excuse is 'they' did not know, even though 'they' helped write the tax laws. You talk about transparency, look at Fannie Mae and Freddie Mac, and where the so called leaders of these two fiascos are today, running the government. You want to talk about a double standard!
Posted by: Cyrus P. Brinkley ( Email: | Visit ) at 4/6/2009 5:19 PM
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I think you hit the nail right on the head. Thank you for that.
It's EXCESSIVE greed and selfishness that is responsible for this extreme recession.
The BIG-THREE had their problems, but were starting to come back in these last 4-5 yrs. Why? Because of competition. If it wasn't for this financial caused recession, I strongly believe that the BIG-THREE would have come around on their own. Ford has already made it. Given time and financial assistance, they will be back. As far as, manufacturing being needed, how does a country survive without manufacturing. Has there been a new definition / new framework for an economy created that I don't know about. I don't think so.
Thanks for the opportunity to air my thoughts and concerns.
Gene
Posted by: Gene ( Email: ) at 4/6/2009 5:24 PM
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I would respectfully differ with the author's premises. First, a number of investment banks have been merged into larger firms, notably including Bear Stearns and Merrill Lynch. Second, there has been a storm of public outrage at banks and bankers, culminating in the public drama of the AIG bonuses. Third, General Motors has a long record of arrogance in its dealings with the government, press and public. Recall that they fought increases in fleet mileage standards for many years, and before that, were complicit in the dismantling of public transit and in preventing its growth. Some government officers and members of the public have long memories about things like this. They're doing a good job now of portraying themselves as beleaguered defenders of the blue-collar worker, but that would be a new role for them. These are the same people who spent the last decade shipping jobs and factories to places where unions are weak, salaries are low, and benefits nonexistent. When you hear people expressing satisfaction that GM and some of its sisters have fallen on hard times, that's what you're hearing. I'm not part of the "sell them on the auction block" crowd -- but I can understand why some people would find their demise less than tragic. My hope is that we'll be able to save some of the jobs while imposing a good dose of humility and social responsibility into GM's executive culture.
Posted by: Bob Schilling ( Email: | Visit ) at 4/6/2009 5:30 PM
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There is no doubt that the US is by far the most productive and progressive manufacturing country in the world. To simply give up that leadership would be catastrophic for this country and it's future. With proper management, GM can return to a dominant position in the automotive sector. I support dimantling the large financial institutions if necessary to provide the incentive for them to become competitive in the marketplace. This country must fight to regain it's rightful position as the world's leader in manufacturing. We cannot accept or permit failure.
Posted by: Kenneth L. Schaufelberger ( Email: ) at 4/6/2009 5:30 PM
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Jeff, One very significant bias that you have omitted -- union bias. There are so many in this country that you love to see unions go the way of the dodo: easiest way is to kill their employers. These folks really do not understand or care of the consequences of destroying the auto and manufacturing industry, which represents about 15% of our GDP.
Posted by: HappyMonkey ( Email: ) at 4/6/2009 5:32 PM
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Jeff;
Thx for the thoughtful comments in the blog - it's one of the best balanced views I have read on this issue so far. The public has a right to demand one set of standards when it comes to finding solutions for companies suffering heavily from the current economical crisis. That US banking is supposedly "too big too fail" is a myth generously portrait by their own consituency - but nowhere has the administration presented facts about the positive impact of the multibillion $ bailout packages, when at the same time manufacturing companies are told by the administration, that their plans don't show sound economical reason or potential? Double standards for sure!
Posted by: H. Schubert ( Email: ) at 4/6/2009 5:39 PM
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Correct! It's the "It's ok if people in a 'dying industry' lose their jobs, but not us movers and shakers on Wall Street" mentality. They go further: "It's all their fault anyway, they're the ones who are defaulting on their mortgages in the first place because they work in that dying industry". Nothing could be further from the truth. Shame on all of them.
Posted by: bob_elliott@irco.com ( Email: ) at 4/6/2009 5:41 PM
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Jeff,
You have stated the FACTS clearly and consisely. But there could be more emphasis on the media bias regarding all issues. If the media would report the facts as clearly the citizens of this country would arrive at their own conclusions. They would buy more American made products and bring the trade deficits back to a fair balance.
Posted by: Roger Stoneking ( Email: | Visit ) at 4/6/2009 5:46 PM
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Manufacturing has long been looked down upon in this country. If I am not mistaken, McCormick's (of International Harvestor fame) wife's father was very disappointed that his daughter married a machinist/engineer instead of someone in a respectable profession such as lawyer or minister. It is interesting that bankers think they create money and wealth (remember Economics 101) while too many people in this country disdain the real economic engine of this great nation which is the only source of true economic wealth, and that is manufacturing. If there is no value added then there is no value.
Don Shrader
Posted by: Don Shrader ( Email: ) at 4/6/2009 5:46 PM
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You're absolutely correct about the bias. I'm so angry both about the situation and about the lack of ability to cause an immediate
positive change that I'm just about speechless. With the current President and the current composition of the Congress the efforts I make seem futile even though I will continue to make them. On may fronts this country is headed in the wrong direction.
Posted by: Denis Warner ( Email: | Visit ) at 4/6/2009 5:48 PM
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I have worked in a chemical plant for 32 years. Working safe has become our number one priority. One of the keys to insuring the safety of our employees is determining the root cause of any safety or environmental incident that occurs. And not just major incidents but also near misses. This has made it possible to improve the saftey of our plant over the years in a significant way.
Our current economic crisis has a root cause but no one is seriously investigating to find out what that was so that it can possibly be avoided in the future. Why hasn't Congress appointed an independent commission to investigate the worst economic disaster since the Depression? They have been quick to do this in the past for many insignificant scandals that have occurred. All they have done in this crisis is react in a knee jerk fashion at the consequences of the root cause. Is it because they really know that the root cause will end up being found in their past actions?
Manufacturing is more important than Congress or most citizens of this country realize. Not only does manufacturing provide good paying jobs for its employees and jobs for the service industry but also is key to our national security. It was our manufacturing capability developed before WW II that allowed us to react quickly and overnight redirect our manufacturing might from producing consumer goods to making tanks, airplanes, weapons, etc. Without a strong manufacturing base in this country how are we to repeat that if we need to in the future? GM, Ford, and Chrysler all were key players in our response to WW II. Our national security is at stake if we let all of our manufacturing might move off-shore. All the service and financial industry in the world will not protect us from foreign agression. How do we get our country to recognize this fact?
Posted by: dwight.stoffel@arkema.com ( Email: ) at 4/6/2009 5:49 PM
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I agree with Mr. Moad. Like many, I have been pondering why the bailout money has come so easily to the financial industry where the automotive industry by contrast has been so vehemently grilled. I'm not necessarily opposed to any institution getting bailout money, but it is very troublesome to see the money go out so quickly, so easily, without question and without accountability to the financial industry. Isn’t their core competency money management? Or is it money laundering?
Is there a bias? I don’t know. I wondered more if the money blanket that firms such as AIG have woven include so many threads of other companies, industries, and/or individuals that no one has spoken up in the process because in some way they themselves would be affected financially if the bailout were denied.
Some say that the financial industry contracts had to be honored. Well that may be, but then what contracts does the auto industry still have to honor? How are normal contracts handled in normal bankruptcy cases? It appears that the auto industry is being handled like a villain whereas the financial industry is being protected; whether because of bias or because of self interest. Though mistakes have been made in both arenas and in some cases huge mistakes, the money should still be handled the same.
I don’t like bailouts in theory, but I think if money is going to be handed out, the investors (the American people) have a right to better management of their options.
Posted by: Paul Vischer ( Email: ) at 4/6/2009 5:52 PM
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The subject discussed is a complex issue. One factor is that we have to consider consequencies that follow bankruptcy of a financial company;it could affect millions more than 3-million workers,never mind how much we dislike those in the financial sector.However, a country like U.S. should not give up its grip on manufacture industry, thus the government should do everything possible to consolidate the auto cos. including Ford and make it viable, but not necessary GM and Chrysler.Wagnor must go and so is the dismantling of UAW,otherwise there will be no hope for the U.S. auto industry no matter how much money put in by the government.So are the people responsible for the mess the financial sector faces now, particularly those MBAs.
Posted by: larry210@ms25.hinet.net ( Email: ) at 4/6/2009 6:02 PM
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Thanks. Commentaries like this one are too few and far between. For years, foreign governments were pumping money into their auto industries allowing them to come into our market and underprice everything that we had available. Then when we would ask for some support from our government to correct this problem (similar to the issues with the Steel industry) we were told that they were doing all that they could and that it was not a good idea to push this issue since we don't want it to be thought of as protectionists. I remember when the first Nissans and Toyotas came over here and how poorly they were constructed but how cheap they were. This is how they forced their way into the market. Wall Street and Washington teamed up then , as now, and just allowed things to progress as they were, since it allowed "people" to make money. Except the people that made the money were not the same that were making the product. Wall Street doesn't "make a product" and neither does Washington. This is were our problems come in. A nation that buys and sells but does not make a product, will never survive. This is what has to change. Start backing our industries here and the other things will correct themselves. If more restrictions were put on the loans to the financial sectors when they requested them, there would be less problems now. If more of the financial CEO's, CFO'S, and presidents were coerced out of their jobs similar to the GM officials, maybe they would take this more seriously.
We need more articles like Mr. Moad's to illustrate what should be done to address these grave issues and to make sure that all areas are treated equally.
Posted by: Alan Szablewski ( Email: ) at 4/6/2009 6:03 PM
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I feel another reason that GM's business is hurting so badly is due to the high price of gasoline last year. If those prices were kept in check, people would have continued to buy large size cars and trucks like they like.
Posted by: Paul ( Email: ) at 4/6/2009 6:11 PM
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I agree with Jeff to a great degree that there is a larger bias against manufacturers by the financial centers. Just as engineering is regarded as unattractive (a 2008 survey in another magazine found that a very high proportion of kids 12-18 years old would rather choose acting than engineering)so manufacturing is often viewed as outdated, unresponsive and too massive to change.
Manufacturing and engineering are the backbone of a healthy economy, and they need to be presented in a better light to the greater audience...maybe if manufacturing as a whole in the US used PR tactics, skills and strategies like the Hollywood celebrities and actors do, it might find itself in a better position.
Posted by: Rachael Taggart ( Email: | Visit ) at 4/6/2009 6:22 PM
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While I agree with what you say, the fact is that it is human nature to distrust OTHER while excusing SELF. Manufacturing went overseas for political reasons - the owners wanted to go 'cause it was cheap, and they "owned the U.S. market" so could profit without manufacturing (in the U.S.) They set up a drumbeat in the media, paid the politicians to get Government out of the way, and the pols were glad to comply.
Whenever B school grads got together they lauded the ability of their peers, not to produce - - anything! but to shuffle paper and grow GROW G R O W. on the P&L sheet not anyplace in the real world. Enron showed the way, and the rest followed. Government is out of the way, and anyone who tries to put it back in the way is committing Socialism.
Posted by: Thomas H. Engle ( Email: | Visit ) at 4/6/2009 6:23 PM
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The slump of the Auto Industry is more due to the politicians and the Media. Up until about 15 months ago, the auto industry was holding their own. Then you had the housing and sub-prime problem. We elect public officials and they never saw it happening. Connecticut had Senator Dodd, who chairs the Banking Committee. He got a sweartheart mortgage rate and and then tried to some dumb explanations. So, that started it. then Oil prices started to skyrocket. And the Government did nothing to curb it. As a result the airline industry started to lose billions and then introduced new fees. Finally as the oil prices continued to skyrocket, the politicians and the media start telling people to stop buying the SUVs, and by hybrids, which were not in massive quantities. The they said to use ethanol. As a reult , the price of corn went up along with meats, food, etc. They never realized that the dealerships were sitting with hundreds of thousands of SUVs. Now they went unsold. Then came the stilumus packages and there was discussions of tax credits or deductions if you bought car or a house. But nothing was finalized. So,who would make a purchase if you may get a tax benefit. So, you wait. If the car manufacturers go out of business, how long will the government honor warrantees? Congress could change at any time. All the politicans say go green. But they eliminated the Energy credits from the tax code. The politicians have no brains.
Posted by: Alan Newman ( Email: ) at 4/6/2009 6:46 PM
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The government strapped on millstone after millstone in the form of EPA and outlandish safety standards. Couple this intrusion into the free enterprise with government supported unions and businesses in the USA start 50 yards behind the starting line. Spending all of the R&D money to comply with standards written by idiots leaves our technical progress behind the other countries in the world.
Technology in the USA is supreme but politions hindsr our free society. That is where the greed begins.
Posted by: Frank Britt ( Email: | Visit ) at 4/6/2009 6:53 PM
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Jeff,
Well said!
This country's politicians and citizens had better wake up and realize that a country's wealth is built on manufacturing. Don't believe me? Just look at the USA from the 1940s through the 1970s. We were self-sufficient!
Then look at the Pacific rim countries of Japan, Taiwan, South Korea, China and tell me how they have built their wealth over the last thirty years. It has been through manufacturing finished goods. We, as Americans, had better also realize that a country that cannot manufacture the items it needs is a country in trouble, for we will not be able to produce the items needed to protect these shores when the time comes. And it will come.
Thanks for your article!
Mike Pace
Posted by: Michael Pace ( Email: ) at 4/6/2009 6:58 PM
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Why are people so mad! If I was to steal $10.00 from the local 7-11 they would lock me up, but millions disappeared from the America’s saving and 401's no problem. They made a mistake now the people whose money they flushed down the toilet are paying them bonuses for doing so. Something is fundamental wrong with this picture. GM is being used as a fall guy to appease the masses.
Well as far as I’ am concerned More heads need to fall. I don't mind baling out the banks but the CEO"s should have to pay for their mistakes. What are we telling the corporate world? We are telling to take whatever you want there are no consequences for your actions.
The government and big business must remember there is a point of no return. If I remember my history correctly it is this type of greed and corruption that has lead to the down fall of many a great civilization. And this is at the heart of the consumer spending or lack of it.
Posted by: William L. Detore ( Email: ) at 4/6/2009 7:34 PM
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Another big question on this issue is where in the constitution does the White House get the authority to fire or set the pay of anyone in private industry? Will they be doing this to anyone they don't like for whatever reason? If they want to use bailout funds as a pretext for controlling pay and employment, shouldn't this be part of the bailout deal and not imposed later on where congress or Obama get around to reading the legislation they voted on and passed? At one time, the rule of law had the highest legal authority in this country. It will be very difficult to attract new business to this country if legal system matches that of Zimbabwe.
Posted by: Gene Kramer ( Email: ) at 4/6/2009 8:09 PM
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I totally agree. There is a double standard when it comes to manufacturing and finance.
Posted by: Bill Turley ( Email: ) at 4/6/2009 9:54 PM
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A major problem with GM, as it was with light aircraft manufacturers before, is that a significant portion of the cost of a vehicle ready to ship is not in the value added by manufacturing the vehicle. A very significant cost is the current and future cost of retired workers. Deals made to avoid strikes when times are good do not always carry through when times are bad.
If GM should declare bankruptcy the company will not dissolve but it will be able to transfer the health and welfare obligations to all past retirees and laid off personnel to the public. It is doubtful if ERISA, the UAW, or the American taxpayer will fund these programs in full. We then have hundreds of thousands of former GM employees covered by GM health, welfare, and pension plans now, out in the cold. This would also involve many suppliers' employees that were GM employees at one time and were spun off to improve balance sheets.
At one time you could buy an airplane made in the US. But product liability insurance costs to the point where the traditional light aircraft manufacturers paid more in insurnace than they got for the airplane. Some bought used aircraft to destroy them and eliminate risk. Others went bust and sold their names to others without liability. This could happen to GM, and the way out is to duck the claims and break the former employee's bank account.
Posted by: irvin lichtenstein ( Email: ) at 4/6/2009 11:24 PM
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It is unfortunate that people will not or cannot distinguish between actions that make wealth and actions that make wealth wealthier. Manufacturing makes wealth; financial institutions make wealth wealthier. I think the problem with the US at this time has stemmed from the neglect over the years of the industries that truly make wealth in this country. While we've outsourced the production of our clothes, electronics, cars, and appliances, we inhibit the timber manufacturer, regulate farms, and essentially prohibit oil production. Perhaps the fall of the financial industry will reveal this and this country can get back to what truly makes it great.
Posted by: Paul Warner ( Email: ) at 4/7/2009 6:00 AM
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I think that all miss managed enterprizes should be allowed to fail. I work for a small business and I don;'t see anyone comimng to our aid. We have to keep our own house in order. The same should be true of the bif g guys. They all need to look a little closer at what there business is doing and not so much at what the stock price is or the size of there bonus.
Posted by: Howard Sanders ( Email: ) at 4/7/2009 8:23 AM
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I agree wholeheartedly with you. What the new generation does not understand is that what made the United States great, wealthy and powerful was manufacturing. Until the turn of the last century, the United States was much like virtually every other country except in the area of freedom and religious diversity. It was in the latter days of the previous century that people like Edison, Bell, Ford and many others inspired America to become the manufacturing giant that it was.
If the people of the United States merely stopped to think, they would understand that the concept of a service only economy will quickly bankrupt the United States. While we are busy trading hours back and forth, servicing each other in every possible and often superfluous ways, we are sending our money and assets overseas to feed the incredible debt that we still continued to incur.
Manufacturing is the only way that will bring us back into economic power. The government should be encouraging every large and small company to bring manufacturing back to this country, and to quit giving our jewels (creativity and innovation) away to the highest bidder.
Posted by: djeffrey@teknigroup.com ( Email: ) at 4/7/2009 8:34 AM
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I've worked in manufacturing in the midwest for over 35 years and I agree that there appears to be a double standard. It is disappointing to see that as a society that we don't value building or making "things". We're all about making money without risk or without assets. Our school systems don't prepare students to take on the technical jobs that manufacturing requires. We focus on getting things quick without work or sacrifice and the end results are loans to people who can't pay them back. We have created a large number of people who don't understand the simple math well enough to know that you can't take a risky loan and re-package it and make it low risk. I hope the current issues help wake us up as a country and focus on building things for the long term and not just making money by some get rich scheme.
Posted by: EgtsTomH@JohnDeere.com ( Email: ) at 4/7/2009 8:49 AM
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I have to agree with you. I have been asking myself and anyone around who would listen the same thing. I had not considered your point af the people in this country having given up on the manufacturing base, but that follows the lack of training available in our schools.
Posted by: T Parker ( Email: ) at 4/7/2009 9:00 AM
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I don't believe that is the the reason. Banks need money to show on the balance sheet to offset risky assets, they are not really going to spend it and will give it back when the so called toxic assets are desposed of. GM needs money to pay into the pension fund to keep it fully funded and needs cash to continue operations. The money paid to GM will only be repaid with GM profits. In addition the bank crisis was caused by the goverment programs meant to let every citizen own a home. The GM crisis was caused by short term planning and employee and employer greed. I worked for a corporation were a good year turned into a bad year because the investment vehicle the pension fund was in had a bad year and all the profits had to be put into to the pension fund so it was fully funded. Not something a company generally plans for. That is why most corporations now have 401k's instead of pension funds, and we all know how that has hurt all of us this year.
I quit buying GM products 20 years ago because of the poor quality.
Posted by: Brian Earle ( Email: ) at 4/7/2009 9:04 AM
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When will this country begin to realize that sending US manufacturing jobs overseas is detroying our economy? Without manufacturing, we will simply become a country full of "managers" with no one left to manage. Our problems in manufacturing started many, many, many years ago...
Posted by: Adam ( Email: ) at 4/7/2009 9:22 AM
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I couldn't agree with you more. In fact I would rather see the banks fail. I once heard that if you forget the past you are destined to repeat it. Lets all hope anf pray ther is never a world war three, but if it does happen who is better equiped to manufacture the tool to protect us other than the big three? My company may be able to help with smaller equipment, but certainly not tanks, jeeps, planes or ships. So if we rescue all the banks, in which high rise can we start manufacturing tanks if needed? I remember seeing a movie years ago about Preston Tucker and his automobile. In one point in the movie, Mr. Tucker says something along the lines of the U.S.A. waiting on our shores for our tanks and planes to arrive from Japan so we can defend ourselves at war. Mr. Tucker then laughed saying he didn't believe this would ever happen. Well, this could easily become true, only we would wait for China to send us our weapons. Given of course that it is not China we are at war with. God help us all if Manufacturing in the United States ever dies.
Posted by: joeelwood@woosterbrush.com ( Email: ) at 4/7/2009 9:31 AM
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You hit it on the head. In the 70's I wrote a paper talking about how we will fall from the inside out because we were not supporting manufacturing (Corporate greed). Without manufacturing US would not have the middle class income that pays the taxes that actually pays for our education, roads, and government - it is not paid by loans and credit. Bailing out banks and insurance companies for their failure is supported by the same people who thinks that min wage, temp labor with no benefits and service employment is what America needs. I agree that Greed builds innovation and growth (in the 40, 50 and 60's) but I feel now greed has lead to Fraud; it's only about the dollar not the stake holder; the banks has committed fraud with government's support.
Posted by: Gary L. Moon ( Email: ) at 4/7/2009 10:22 AM
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People have short memories!! If we lose manufacturing all standard of living with decline.
There are only so many jobs at Fastfood industry.
Japan got cars in to this country based on price Now look at the cost of them. If you take away compation prices will increase. I don't see the manufacturing ownes getting rich I see the distruitor and dealers getting better prices and not passing them on to us.
Posted by: Tom ( Email: ) at 4/7/2009 10:34 AM
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1.GM got itself into this mess by not doing enough market and futures study and creating excessive total labor costs.
2. The financial companies are getting more money becausse they are greater crooks and our congress gets more payoff from them.
3. Manufacturing has gone away because congress has passed unfair trade bills and environmental restrictions. MFg has no level playing field and none of the MFG exec'c are bright enough to figure out how to compete in the unlevel playing field with more innovation. They find much easier to export the work and get big bonuses.
Posted by: Ralph ( Email: ) at 4/7/2009 12:24 PM
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Jeff,
Couldn't agree with you more on the governent's and media's inconsistent and poorly thought out reponse to the true understanding and creation of wealth. For me the creation of wealth is a good thing, when it is probably not acceptable to think that in today's politically correct Obama world.
It seems wealth when translated by the current administration and media standard compared to the productivity levels achieved in the manufacturing sector is something they do not even have the ability to think about let alone adequeately comment on. Imagine if only our government was 10% as productive as our mfg sector, why they'd almost begin to look like professionals instead of the circus that we have today!
I've given up on the media, they have no idea except for pockets like MA, the WSJ and perhaps even Fox News!!
All that said the real issue will be will the population at large will be intelligent enough to start making the changes in the next 2 year election to start the necessary course correction in the House and Senate? If not we will be returning to the 20% interest rates we saw back in 1979 required to support our new level of debt, which will reduce investment capital even more and probably end manufacturing in the US as we know it. How many jobs result and how many people live off that one manufacturing job that exists today? Quite a scary prospect not to be gleaning productivity learnings from manufacturing sector those things that are important for the US and World economy, irrespective of what happens to GM or not. Sad to think that maybe our government and us as the USA will be like GM in a few years and our country can go bankrupt as well!
Posted by: gnickel@conus.jnj.com ( Email: ) at 4/7/2009 2:29 PM
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So where does this comment lead? What is the conclusion? If GM was to survive it would have had to go into chapter 11 and renew all existing contracts with the Unions and pension and health care implemented by a pass the buck management.
Their costs are now catching up with them along with Govt. Intervention in product selection based on feel good BS not real science.
They should be allowed to survive or die on their own merits. A Chapter 11 process would have sorted that out.
Now we have the government maintaining the Unions through GM handouts. I for one do not want to buy a GM car until they kick the unions out and let them come back under reasonable and competitive costs not costs subsidized by tax dollars from productive companies and individuals.
Under the current regime and party nothing good like this will happen. The US will continue to slide into the abyss.
The real solution to GM is to vote conservative next time and you will get the hands off survival of the fittest which will be the only ones that survive. It will be the way the US survives if it is to survive.
Posted by: jackmarcotte@comcast.net ( Email: ) at 4/7/2009 4:55 PM
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Bankruptcy allows the court to dictate terms to GM, its supplier and its labor. An excellent answer to all the games played to date. Would be good for the finance industry too.
Posted by: jon smith ( Email: ) at 4/7/2009 9:15 PM
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I could not agree with you more. Letting GM fail woudl be a big mistake not only for the suppliers and our manufacturing base, but for the country as well. Most americans do not understand how much is involved in the manufacturing process. So many of the dollars flow right back into our ecomony and stay within the country. Even if non US makers produce cars here, the profits leave this country. It may sound as if I do not believe in trade, and that is not it all.
We have given up too much to other countries because we look for the low cost producer. The low cost of items may not always be the best for all concerned. I do not believe that we should adapt the Wal-Mart mentality for everything.
Posted by: Stephen Sharp ( Email: ) at 4/7/2009 10:18 PM
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Hi Jeff,
I agree entirely with the points you made. Let's all work to raise the profile of manufacturing in this country.
Posted by: Miles ( Email: ) at 4/8/2009 9:39 AM
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You do not mention a significant reason for the auto industry's troubles. People really haven't been able to afford to buy cars for many years, and it it only thorough financing gimicks like leases that they were able to continue to increase sales. With most Americans now trying to pay down debt - and hopefully changing thier mindset that buying evertything on credit is not good - there really may not be a big enough market for all the automakers to survive. Let the markets decide who has the most desirable products out there.
Posted by: Mike Iassogna ( Email: ) at 4/8/2009 4:33 PM
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Great posting. I agree with you completely. I posted some comments in my blog http://www.geneawright.com/?p=324
Thanks for bringing this up.
Gene A. Wright
Posted by: gwright@teilink.com ( Email: ) at 4/10/2009 11:35 AM
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