bra_man69
Literotica Guru
- Joined
- Aug 29, 2003
- Posts
- 7,410
BOSTON — If General Motors, Ford and
Chrysler get the bailout that their chief
executives asked for on Tuesday, 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.
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.
The new management must work with
labor leaders to see that the enmity
between labor and management comes to
an end. This division is a holdover from
the early years of the last century, when
unions brought workers job security and
better wages and benefits. But as Walter
Reuther, the former head of the United
Automobile Workers, said to my father,
"Getting more and more pay for less and
less work is a dead-end street."
You don't have to look far for industries
with unions that went down that road.
Companies in the 21st century cannot
perpetuate the destructive labor relations
of the 20th.
This will mean a new direction for the
UAW, profit sharing or stock grants to all
employees and a change in Big Three
management culture.
The need for collaboration will mean
accepting sanity in salaries and perks. At
American Motors, my dad cut his pay and
that of his executive team, he bought
stock in the company, and he went out to
factories to talk to workers directly. Get
rid of the planes, the executive dining
rooms - all the symbols that breed
resentment among the hundreds of
thousands who will also be sacrificing to
keep the companies afloat.
Investments must be made for the future.
No more focus on quarterly earnings or
the kind of short-term stock appreciation
that means quick riches for executives
with options.
Manage with an eye on cash flow,
balance sheets and long-term
appreciation. Invest in truly competitive
products and innovative technologies -especially fuel-saving designs - that may
not arrive for years. Starving research
and development is like eating the seed
corn.
Just as important to the future of
American carmakers is the sales force.
When sales are down, you don't want to
lose the only people who can get them to
grow. So don't fire the best dealers, and
don't crush them with new financial or
performance demands they can't meet.
It is not wrong to ask for government
help, but the automakers should come up
with a win-win proposition. I believe the
federal government should invest
substantially more in basic research - on
new energy sources, fuel-economy
technology, materials science and the like
- that will ultimately benefit the
automotive industry, along with many
others.
I believe Washington should raise energy
research spending to $20 billion a year,
from the $4 billion that is spent today.
The research could be done at
universities, at research labs and even
through public-private collaboration. The
federal government should also rectify
the imbedded tax penalties that favor
foreign carmakers.
But don'task Washington to give
shareholders and bondholders a free pass
- they bet on management and they lost.
The American auto industry is vital to our
national interest as an employer and as a
hub for manufacturing. A managed
bankruptcy may be the only path to the
fundamental restructuring the industry
needs. It would permit the companies to
shed excess labor, pension and real estate
costs.
The federal government should provide
guarantees for post-bankruptcy financing
and assure car buyers that their
warranties are not at risk. In a managed
bankruptcy, the federal government
would propel newly competitive and
viable automakers, rather than seal their
fate with a bailout check.
http://www.nytimes.com/2008/11/19/opinion/19iht-edromney.1.17959143.html?_r=1&
Chrysler get the bailout that their chief
executives asked for on Tuesday, 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.
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.
The new management must work with
labor leaders to see that the enmity
between labor and management comes to
an end. This division is a holdover from
the early years of the last century, when
unions brought workers job security and
better wages and benefits. But as Walter
Reuther, the former head of the United
Automobile Workers, said to my father,
"Getting more and more pay for less and
less work is a dead-end street."
You don't have to look far for industries
with unions that went down that road.
Companies in the 21st century cannot
perpetuate the destructive labor relations
of the 20th.
This will mean a new direction for the
UAW, profit sharing or stock grants to all
employees and a change in Big Three
management culture.
The need for collaboration will mean
accepting sanity in salaries and perks. At
American Motors, my dad cut his pay and
that of his executive team, he bought
stock in the company, and he went out to
factories to talk to workers directly. Get
rid of the planes, the executive dining
rooms - all the symbols that breed
resentment among the hundreds of
thousands who will also be sacrificing to
keep the companies afloat.
Investments must be made for the future.
No more focus on quarterly earnings or
the kind of short-term stock appreciation
that means quick riches for executives
with options.
Manage with an eye on cash flow,
balance sheets and long-term
appreciation. Invest in truly competitive
products and innovative technologies -especially fuel-saving designs - that may
not arrive for years. Starving research
and development is like eating the seed
corn.
Just as important to the future of
American carmakers is the sales force.
When sales are down, you don't want to
lose the only people who can get them to
grow. So don't fire the best dealers, and
don't crush them with new financial or
performance demands they can't meet.
It is not wrong to ask for government
help, but the automakers should come up
with a win-win proposition. I believe the
federal government should invest
substantially more in basic research - on
new energy sources, fuel-economy
technology, materials science and the like
- that will ultimately benefit the
automotive industry, along with many
others.
I believe Washington should raise energy
research spending to $20 billion a year,
from the $4 billion that is spent today.
The research could be done at
universities, at research labs and even
through public-private collaboration. The
federal government should also rectify
the imbedded tax penalties that favor
foreign carmakers.
But don'task Washington to give
shareholders and bondholders a free pass
- they bet on management and they lost.
The American auto industry is vital to our
national interest as an employer and as a
hub for manufacturing. A managed
bankruptcy may be the only path to the
fundamental restructuring the industry
needs. It would permit the companies to
shed excess labor, pension and real estate
costs.
The federal government should provide
guarantees for post-bankruptcy financing
and assure car buyers that their
warranties are not at risk. In a managed
bankruptcy, the federal government
would propel newly competitive and
viable automakers, rather than seal their
fate with a bailout check.
http://www.nytimes.com/2008/11/19/opinion/19iht-edromney.1.17959143.html?_r=1&
