The Mad Money take on the UAW strike

So I was watching Hardball yesterday, and they had the Mad Money guy on there to talk about the UAW/GM strike. He said this is all about union busting, and I have to think that this was being thought about at GM. However, what he said next was, that the only way to save GM was for GM to win the labor negotiations and break the union. Mr. Mad Money said the only way for the union to get the job security it wants is for the union to be destroyed because no American Business can operate with a union as strong as the UAW. And this time you have to give some credit where credit is due to Chris Mathews when he asked Crammer how an ex-CEO of GM can say "what is good for GM is good for America," when you are taking all of the jobs out of America.

Crammer's argument is all about the shareholders as evident for this comment:

"If GM is successful and they bust the union, I'm tellin' you you're going to have a five fold increase in this stock. And in the end, this is America and that's what we care about... Well, I think if you root for UAW, than you should just let GM go away.”

He seems to be saying in his rant that if you want to keep manufacturing in America, it must be non-union and you must allow these companies to move these non-union jobs to other counties. It seems to me what he is trying to say is that if a manufacturing company is based in the US even if everything it manufactures is done so in other counties than that company is still manufacturing in the US.

The thing is, if GM were to bust the union, do you really think Ford and Chrysler wouldn't try and do the same exact thing? Next would come the suppliers, and then the steel workers, and then every other union in America and I'm sorry but that's not ok. We don't make the US more competitive on the world market by knocking it down. It seems like a lot of these people would love it if workers in the US would work for the same amount as they do in China and live in Company owned slums connected to the factory. But these people forget that if people don't make money, how can they be expected to spend money. If people only made $5/hr in this country do they really think people would still buy cars, or DVDs, or Toys, or anything else? If these companies actually got what they wanted and only paid people minimum wage and no benefits then there would be thousands of companies failing by the end of the quarter and thousand more by the end of the year. The entire economy would be in ruins in the blink of an eye.

At least Crammer did concede that some kind of Government run health care would help to save American jobs, but he is dead wrong about busting all unions.

What would it mean to Michigan if GM bought Chrysler?

There have been quite a few different articles popping up about the possibility of GM buying Chrysler and my question is what would that do to Michigan's all ready ailing automotive industry? Would the good out weigh the bad?

This question is of course not an easy one to answer. There is no quick fix to either GM or Chrysler's problems. Even if GM were to buy Chrysler and get it out of the red while helping GM itself turn around, these things aren't likely to happen any time soon. For any of the benefits of a marriage such as this there would first have to be some house cleaning, meaning redundant managerial departments would be rolled into one (lay-offs) and most likely plants would be combined to make better use of economies of scale (more lay-offs). Not to mention it would compound GM's growing health care problems. The UAW would have a problem with lay-offs (as would I) that the new super company would have to over come. Then there would be the problems integrating dealers.

It's easy to see how the combining of these two companies could be bad for Michigan, but could it be good? The merger would allow the company to take advantage of greater economies of scale by sharing parts and R&D between more cars. It would allow Chrysler to better integrate it's engineering into it's parent company in ways that Daimler could only dream of (there aren't a whole lot of Mercedes built on Chrysler bodies, but it would be no problem building a Buick on a Chrysler body). The benefits of the the two companies coming together could save them billions and ensure their future better than if they were alone.

Then course you can't bring this subject up without mentioning the possibility of Toyota knocking GM out of the number one automaker spot. This spot isn't something GM wants to give up and combining the two companies would make GM that much harder to knock from it's spot. Not to mention that both Renault-Nissan and Hyundai want an American brand and are interested in a Chrysler buy. GM can't be very happy about the idea that either of these companies getting their hands on Chrysler.

My question still remains though, would this be a good deal for Michigan in the long run? I would have to think that anyway you slice it, if GM were to buy Chrysler it would hurt Michigan in the short term. But are they any ways that Michigan's ecomony comes out a winner in a deal like this? And would it really hurt if Chrysler were sold to Nissian or Hyundai? Right now it is already held by a German company. Also is it really worth all the hoops GM would have to jump through in order to make a deal like this profitable for them? Right now I think Michigan would get the short end of the stick when it comes to a deal like this, but really I have no idea. If all the talk in various media outlets are any indication this is a real possibility.

Here are just a few links to articles on the Subject:
http://www.msnbc.msn.com/id/17186447/
http://www.freep.com/apps/pbcs.dll/article?AID=/20070217/BUSINESS01/702170320/1014
http://www.businessweek.com/autos/content/feb2007/bw20070220_219247.htm
http://www.businessweek.com/bwdaily/dnflash/content/feb2007/db20070218_013874.htm

A quick google search will turn up a lot more

N.A.I.A.S. and the Auto Industry

Well, the 2007 North American International Auto Show is here and along with it some insight on what the year holds for auto makers. As I said in my last post I wasn't able to go an cover the show during Press Week as I was last year, I was still able to get a press pass for the Industry days. Industry days are days were the press that couldn't make it to Press Week, or just wanted some more time with the cars, and those who work for the Auto Industry are able to get into the show before the public. The only problem is you have to deal with a few of the booths still switching over from Press Week to Public. I was actually there at the same time as The Governor, however we didn't see her anywhere at the show.

GM's booth was rearranged, and pushed back against the wall from last year. It was a nice booth, nicer than last year. I was really hoping to see the Chevy Volt, however it must have been out for a photo shoot or something because it was nowhere to be seen on the show floor. I did get a look at the new Malibu. I have to say I wasn't impressed. It looks a little better than the old one I guess, but nothing exciting. GM does seem to understand that they have to step up their designs as evident by them winning both the car of the year, Saturn Aura, and the truck of the year, the Chevy Silverado. I have to say, sitting in some of their new cars, they have stepped up their interiors on a lot of cars and trucks; one step in the right direction to better compete with Toyota and Nissan.

Ford's booth was set up much like last year's, only not as flashy. Gone are the giant video walls that surrounded the booth on the outside, replaced with two slightly smaller video screens. The Ford emblem embedded in the floor in the center of the booth is gone as well. The cars Ford was showing were I think a little more interesting however this year as opposed to last. The Ford Intercepter and Airstream were much more exciting concepts than last year's Super Chief. Of course one for Fords biggest announcements at the Auto Show was their team up with Microsoft for their Sync. Sync seems like a very interesting idea, and if they are able to make it work as well as advertised may help pull Ford out of it's slump. For those of you that don't know what Sync is, it is a package of voice commands, mp3 input and controls, wireless interfacing with bluetooth phones, and audible text messages. Sync will be available in twelve different Ford, Lincoln, Mercury models by the end of the year starting with the Ford Focus.

Chrysler's booth was almost identical to last year's in layout (well at least the parts that were completely switched from Press Week to Public while I was there). They had a few concepts there, along with the new Dodge Avenger and Dodge Challenger, both very cool, and new models of their minivans. The car that I was most interested in was the Dodge Magnum, a car I am thinking about getting. It has all the room for my video gear, and has better millage than SUVs. (I wish I didn't need a big car, but to lug around all of my video equipment for shoots I need a lot of room.) Across the hall from Chrysler the other half of Daimler-Chrysler, Mercedes booth was busy. The floor was interesting, ice. The ice has something frozen into it to give it treads while other parts of the ice were covered with carpeting. Something new NAIAS this year was a small booth across from Chrysler's, Smart. Smart is a tiny little car, made by Mercedes, due out in the US next year

Toyota and Lexus's booth were interesting. While they are poised to displace GM as the largest auto maker, their floor space at the show still isn't as large as the Big 3. Looking through their booth it is easy to see why some would buy those cars over the Big 3's, they are nice cars and fuel efficient. But it is also easy to see where GM, Ford and Chrysler can catch up in the near future (in many ways they have already started).

The rest of the show was interesting, and some of the booths showed major changes in them, while others retained the lay out of years past. The Scion booth was kinda cool as they had cars stacked on racks on their back wall. Also this year, VW went from occupying space both upstairs and downstairs to only having space upstairs and in that space had few cars.

It it interesting to look at this show and see how it relates to the industry itself. From my friends that did cover the Press Week, most said they saw quite a difference show from last year to this year. The Industry itself flies in reporters from all over to cover this show, and this year less money was spent on flying in press from outside the area. Also they said the press conferences themselves where less flashy and the giveaways to impress the press were not as plentiful this year. Their consensus from Press Week, the auto industry isn't what it once was.

The thing I came away with from the Auto Show is that the industry hasn't given up. It is still fighting and will continue to fight. As the Governor said, Michigan has the largest amount of auto research than anywhere else. Companies like Tesla Motors are coming to Michigan for engineering and are considering Michigan for manufacturing as well. The Big 3 are calling on companies and the Federal Government for research on Batteries (at least one of three main companies tapped to do the research are in Michigan) to power the next generation of Hybrids and Electric Vehicles such as the Chevy Volt.

North American International Auto Show

Well, the Auto show is here again. I am more than a little disappointed that I am not there covering press week this year as I was last. The decline of the auto industry has caused a decline in the need for people like me (video producers) to work for the auto makers in the booths (during press week even the smallest booths there have a crane there for the automaker, and the larger automakers have cranes, steadycams, and three other cameras covering the event to show on the booths huge videos walls at the press conference) and few people are needed to cover the show. Last year the company I was covering the show for (think very big company that is one of the sponsors of the show if not the main sponsor) hired ten people to help them cover the show along with their own internal press team. This year they hired one person outside their own press team. In years past anybody who was anybody that has to do with video in Michigan would be at the Auto show either covering it, or working in one of the booths. Long story short, not so this year.

But enough bitching about about how a big chunk of money from that show won't be coming my way this year; let's look at the few things that will be happening there. GM and Ford's biggest goal this year will be to try to show the world that they are still relevant. And Chrysler will try to show it's German co-owners that they were not a bad investment. Not only that, but the Big Three will also be interested in the Chinese autos that will be on display for the second year in a row at Cobo.

GM this year is trying to show that they too can be green. They have reintroduced an electric concept car that also has a three cylinder flex fuel internal combustion engine in it to recharge the car on long trips. This is of course a great thing, however GM states that a car such as this is still years away from being in production. They announced a plug in version of their Satan Vue hybrid at the LA auto show last year, but once again stated it is a at least a year away from being in production.

Ford's big announcement will be a partnership with Microsoft to make their cars more applying to younger buys by offering MP3 integration, voice commands, text messages, and of course some flash and dash.

Detroit News and the Auto Industry

Every once and a while, I have to question if the Detroit News is the print edition of Fox News. They are clearly very conservative and don't have a problem letting people know that.

In an article this Sunday titled “Michigan Democrats must protect autos,” the News states that with Democrats in control of Congress, Michigan's auto industry could be in danger. The article states that it is up to the Democratic representatives from Michigan to “rein in the ultraliberal Democrats who are beholden to environmentalists, unions and other special interest groups that promote their agendas without consideration of cost or common sense.” Is the Detroit News saying that Unions are bad? And if they are, they are saying in MICHIGAN?

“[Michigan Democrats will] have to work from the top. Incoming House Speaker Nancy Pelosi has supported anti-automotive proposals at every opportunity. She has lobbied for plans that would force stricter fuel economy standards for her home state of California, and she's supported lawsuits by environmentalists that blame the automakers for contributing to environmental damage and global warming...Fortunately, at least for now, parties on all sides are promising to get along and set aside impractical legislation that could force the automakers -- and heavy manufacturers in general -- to adhere to unrealistic environmental or safety standards.”

Damn those Democrats trying to make a safe working environment. Damn them for trying to save the American people money by raising fuel economy standards. Damn them for looking to the future and trying to stop the globe from turning into an oven. What are these Democrats thinking?

Come on News get with the program here. Do you really think Democrats want to kill manufacturing in America? It seems to me that they are the ones fighting for fair trade agreements so all the manufacturing jobs don't get shipped over seas. It seams to me that they are the ones fighting for wages so the American people can afford to buy the things that they themselves manufacture.

Are you really saying that better fuel economy is a bad thing? I know I think it is. I love going to war for oil. I love not having enough money for other things because I have to spend it all on gas. And man-oh-man am I thankful that the oil companies are making record profits at my expense. I think it is great that everything is shipped now days because that means the cost of goods will go up when the cost of gas raises. Thank God someone isn't trying to raise fuel economy standards!

Yes it is true, Michigan's automakers need help (and I doubt they will get any from their meeting with Bush), but that is not to say they should be allowed to do whatever they want. What they need is to be able to better compete in the global economy. They need to be pushed to better themselves. They need huge help when it comes to health care costs.

Here is the article:
http://detnews.com/apps/pbcs.dll/article?AID=/20061112/OPINION01/611120310/1008

More good news for Michigan

Ford is losing all sorts of money and will not make a profit untill 2009, and that's only if things go as planned. Ford lost $5.8 billion in the third quarter.

http://www.msnbc.msn.com/id/15384829/

Michigan's Economy

The Michigan Economy.

Right now Michigan does not have a very good economy, and that affects me directly since I live and work here. The Economy as a whole in the good ol' USA isn't perfect but it's actually not that bad right now considering........ Well, considering a lot of things. (The war machine right now just might be propping up the economy right now.) The thing is though the the Michigan Economy is worst off than a lot of states. Michigan's unemployment rate went up, and we lost 17,000 pay roll jobs this year. Payroll jobs, we aren't even counting hourly jobs. The state's unemployment rate is seven percent, while the national unemployment rate is only at four point eight percent.

Detroit isn't called the motor city for nothin'. Michigan is heavily dependent on the auto industry. There are a lot of people in Michigan that directly work for one of the big three auto makers. As many people or more work for suppliers to the big 3, and even more that work in an industry that is somehow related to the auto industry in ways that most people wouldn't think have anything to do with cars. All in all if the bottom falls out of the big three even a little, Michigan suffers.

So I know what you are saying, this sounds like a Michigan problem and therefore the governor should handle it. Well unfortunately there is only so much the Governor can do. You see the auto industry is't just in the state that looks like a mitten, it's all over the country. So therefore even if Michigan was perfect, and it far from is, that wouldn't solve the whole problem. Therefore at least some of these issues need to be addressed nationally. Hmmm, that might be a problem. Even since the a certain fateful day in September 2001 the only thing that is discussed nationally is how we are going to get attacked again and that the Democrats are not able to stop it. Every time some one tries to talk about what is happening on the home front (there was one time the Executive Branch tried to talk about something that will happen here in the year 2018, but that didn't go to well), those in power somehow are able to steer the conversation back to how there are bad people trying to get us.

Well then, maybe someone in Detroit should ask the President to come on down and have a little chit chat to see if anything can be done. Hey, guess what someone did ask him. Well then this issue should be taken care of right away then. And guess what, we got a date to sit down and have talks, this is fantastic! Waite a minute just got a call. Well it seems like The President needs to postpone our meeting. Ok, no problem he said postpone not cancel and he set a new date, so this will get taken care of. Oh wait just a second, got another call. It seems he has to postpone again. Well, can we just set a time pretty soon? After the midterm elections? What should that matter? Let's just get this issue done and out of the way with; can't we?

"General Motors, Ford, Chrysler and other auto manufacturers were once the symbol of American prosperity; in recent years, they have become representative of the challenges posed by the global economy. It is in everyone's best interest to develop new partnerships and a strategy for success in the global economy. This must be a priority."

Holy crap that's interesting, I wonder where that came from? A Senator from Indiana? Damn this must be more important than just Michigan. Well those are the words that came from Senator Evan Bayh (D). He lost almost 100,000 manufacturing jobs in his home state over the past five years, and I don't even remember a motor city in Indiana. Crap! This sorta seems like a major issue.

I can't be the only one who has heard of these issues can I? Ah, thankfully no. But when Mr. President was asked about the issue he said the way to fix is was for American automakers to make “a product that's relevant.” What the hell does that mean? Is he putting down American cars? Well damn that sounds like a pretty bold statement if I've ever heard one. It also sounds like he is saying he doesn't really care about the automakers' problems, and if they do have a problem it's theirs and their's alone.

So what is the problem with the auto industry? Well to name one, health care. The cost of health care is over $1,500 per vehicle, GM spent an insanely high $5.6billion last year total! Five point six million dollars for only 1.1 million people? Good god, no wonder they are in trouble. Check this out GM's CEO, Rick Wagoner, said, "When I joined GM 28 years ago, I did it because I love cars and trucks. I had no idea I'd wind up working as a health care administrator." What does that tell you about GM's outrageous health care costs? So what does this mean then? Well it means that GM has some huge costs to cover before it can ever make a profit or even break even. That mean GM has to sell more cars to make up those costs. Ahh there in lies one of the great quagmires of this whole health care thing, since the costs per vehicle for just health care is so high, that means the cost of a new car has to be high. Since the cost of a car is so high fewer people are buying American cars. In Michigan, sales rates fell four point six percent so far this year.

You see other car manufacturers don't have this issue, workers that make cars in Japan get their health care paid for by the government. Even non Big 3 cars that are assembled in the US have large portions of them made in that company's country of origin, where again, the cost of health care is paid for by a party other than the company.

So this is just a GM thing right? WRONG! Ford has major health care issues as well, and to a lesser extent so does Chrysler (although it has the added befit of Daimler helping it to stay dry).

Ok, so health care is a big problem for American Automakers, what else? Well oddly enough, the high price of gas is causing people to buy fewer cars and the cars that they do by have a much lower profit margin then the cars the people were buying even a year ago. You see people are spending more and more on gas (even though right now gas prices are lower than they were a month ago don't be surprised if and when they go back up) and so they are spending less money and saving less money. I know what you are saying to yourself right now, if gas prices are so high people should buy more new fuel efficient cars not less. Well that would seem logical, but if some one is spending what it would cost for payment on a new car in gas to get to work, they don't have that money for a payment any more. It's not like they can drive less, they have to drive to get to work. Not to mention the cost of insuring a new car.

Well crap, right now the US Automakers have got a few pretty big hurtles in their way. But not every thing in Michigan has to do with the auto industry does it? Well, no not directly, but indirectly, that's a different story. Let me give you a few examples.

Let's take what I do for a living, I make commercials, promotional videos, all sorts of other random videos for companies. I work both for myself and as freelancer working for other production companies that need my help. Well the major company that I freelance for used to do a lot of work for GM dealerships, not any more. It used to do the Ford President's Awards every year, well guess what? Ford stopped doing that this year. It also used to do all the videos for the Ford 100, again another program axed.

What about a restaurant across for a Visteon plant that just cut back it's workforce. This little restaurant used to make a lot of money serving lunch to the workers of that plant. Now there is fewer workers, what does that mean for the restaurant? Now maybe you can see how this affects the whole state, and really the whole country.

Ok, so what else seems to be the problem in Michigan? Well this might sound familiar, but health care once again. One third of the money the state spends is on health care for state employees and Medicare. I wonder if there is a pattern here? I see another problem with this picture, remember how I said that unemployment went up in Michigan? Well that means the money coming in form income taxes went down. Hmm now let's think about this. My guess is that the cost of health care isn't going to be going down anytime soon, in fact it seems to go up every year. And if Michigan getting less money on income taxes, yet the state has to spend more money on health care....

So what the state has to pay health care how does that effect the economy? Well it's actually pretty simple economics, if the state has to spend more money on health care it is spending less money on something else. Right now I have a friend that is trying to get job as a teacher in Michigan, and guess what, it isn't easy. The roads in Michigan are notoriously bad, but since the state has to spend more money on health care, it doesn't have all the money it needs to keep the roads up. If it could spend more money on the roads it would mean more people would be needed, and there fore more jobs.

Now here is something else interesting I found out. More college-educated young adults are leaving the state each year than are coming in. So, even if Michigan's economy wasn't in the toilet the perception sure seems to be there.

There is a lot more that I could say about the Michigan economy, but quiet frankly it's all starting to depress me. I'm sorry I didn't back up all of my claims as well as I could/should have, but like I said this isn't the most happy subject to be writing about. Some day I will try to come back and revisit this topic.

Sources:
Michigan Department of Labor & Economy Growth
http://www.milmi.org/
University of Michigan
http://www.umich.edu/~urecord/0506/Mar20_06/01.shtml
Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2005/04/29/AR2005042901385.html
http://www.washingtonpost.com/wp-dyn/articles/A15828-2005Feb10.html
Michigan Economic Update
http://www.michigan.gov/documents/July_2006_171299_7.pdf#search=%22Michigan%202006%20Unemployment%22
Boston Globe
http://www.boston.com/business/articles/2005/06/16/gms_healthcare_dilemma/
Senator Evan Bayh Press Release
http://bayh.senate.gov/releases/2006/06/14SEPT06PR.htm