Humor me, I want to talk about the auto industry and the bailout for a few minutes. I have some out-of-state readers, and they might not recognize what the auto industry means to the Detroit area. Neither Mark or I work or have worked in the industry, but make no mistake, what happens to the auto industry impacts us all. If the car companies crash, there will be fewer tenants, fewer people will be buying goods, other industry jobs will fail, life will become increasingly difficult in the Detroit area, and there will be ripples throughout the nation. I am astounded how banks were bailed out with barely a question, when they were writing illegal loans, and yet the thumbscrews are put to the auto industry. You may hate the fatcats, claim they brought it on themselves, but I know the people who work for the fatcats, and they are hard working, good people who deserve a break. Many are living in fear. As for understanding what happened, my friend Mike makes it pretty clear. He recieved one of those emails accusing the big three of too many managers. Mike wrote him back, and forwarded his email to his friends. I found it extremely interesting, and I think you should give it some thought. Here it is:
Good to hear from you. If you could give me a minute, I’d like to take
the occasion to jump up on the ole soapbox.
What I need you to do is to send a note to that rotten, no good, rat
fink Alabama US senator Richard Shelby. He really has stood in the school
house door relative to this bridge loan thing for the auto biz. It so
amazes me the hate and the antipathy the American public has for the
auto industry. Especially the UAW. This whole thing seems to have been
misconstruction of the facts.
I will send a copy of this note to Senator Shelby. I used to know him
when I was a news reporter in Tuscaloosa. He is a better man than his
current performance would indicate.
GMAC this time last year, financed 50% of GM’s sales. The housing
market went south, GMAC who also does home loans, ran into liquidity
problems and quit doing leases and auto loans. Now they are just
covering 5% of GM’s sales. The auto biz is in the tank because people
who could normally get financed, cannot at the moment.
We are not in trouble because we didn’t build the cars the Greenies
would have liked. There have been Escorts, and Focus’s on the lots for
years. The people walked past them and bought the SUV’s. When the
price of gas was low, the people bought what they really wanted. And so
somehow, this is the fault of the big three? That they understood and
met what the market demand was?
Gas is down to the $1.50 range here at the moment. Inflation adjusted,
it is cheaper now than when I was in college. I can remember gas at
$0.249. I couldn’t fit $4 worth of gas in the tank of my Yellow Hornet.
And then they made you take a cheap plastic dustpan as a Premium if you
So, have you seen last month’s sales figures? SUV’s, admittedly at give
away prices, were up 70% last month. How about this; with gas at $1.50
a gallon, hybrid sales last month were down by 50%!
I ran some numbers last night for my niece that wants to buy a hybrid.
Lets see 20,000 miles a year, 45 mpg for the Hybrid, 35 mpg for the
equivalent size Toyota Echo. Hmm…what is this..hmmm..a grand savings
of 127 gallons per year? For a car that costs $12,000 more? A payback
of 22 years? Heck you could save that much gas by simply keeping your
tires filled and car pooling whenever possible.
How all of this financial mess got twisted into a bailout and a long
diatribe against the union I am sure I don’t know. The UAW has already
been broken.They’ll be down to $12 an hour from next year.
I think the real truth here is that this is an argument over health
care. There is about $2200 in the sticker price for an American car
that is all about health care and pensions. There are environmental
costs in there too. None of this is paid by Kia/Hyundai, or the Chinese
We do need to remember that it was “Our” plan to finance health care by
employer contributions. Let’s be real; this is a shell game. Rather than
pass “NEW TAXES” to cover the cost of health care, we got the
corporations to put the costs into the price of their products. We
basically hid the price of medicine and pensions and environmental costs
in the price of the products.
This doesn’t work anymore when the doors opened to China. They have
none of these costs, and can price their products accordingly. You
should see the environmental mess we are creating in China by allowing
them to thrift out of the cost of their products the true costs of
environmental responsibility. Their rivers run black and their skies a
filled with yellow smog from the hundreds of new coal plants that were
built without smokestack scrubbers.
Those guys are clever though, much like Volkswagen did with the Beetle
back in the day, they are smart enough to take some of their advantage
and put it back into the vehicle in terms of value. It is like Pixie
dust. You take $200-300 and a penny at a time you make small
improvements. Slightly better paint, $5. A little thicker and plusher
carpet $1.99. Chromed plastic pieces for the dash instead of painted
pieces: $0.36. Just a little spritz here and there and all of a sudden
you have a vehicle that is in fact “better” and the public can see this.
The other $2000 goes in the pocket and is called “profit”.
So the solution for the Detroit crowd is to declare bankruptcy and to
throw the health care costs on to the public debt? Ugly, Ugly. For
those of you worried about whether Social Security will be there to help
support you in retirement; don’t worry, it probably will in fact be
there. But Lordy, Lord wait till you see what is happening with
Medicare. It is $12 Trillion with a “T” short of the needed funding.
There is no possible source for this much money.
The only possible solution is to let people die earlier. No kidding.
What we are shortly going to have, and for poor people already do have,
is the rationing of health care. If you are poor and female and get
breast cancer, Medicade will pay to have the lumps removed. But they
won’t pay for Chemo even though the chance of survival increases by 70%.
Just like the Chinese, when they get sick, and the disease will be
difficult to cure, they have to make the decision not to spend
everything the family has, but to just simply allow their lives to end.
So, good luck to the new President. He is going to need the support of
all of us.
Okay, off the soapbox.