Bailout Blunder

“This is about much more than just Detroit. It’s about saving the U.S. economy from a catastrophic collapse.”

These were the words out of Rick Wagoner’s mouth when addressing the Senate Banking Committee (SBC) tonight. It was based on this thought that my initial [ignorant] stance was to give these guys the money with some conditions primarily to preserve jobs that would otherwise be eliminated if these companies go down the drain. After listening to about 2 hours of this hearing, I was reminded of how companies tend to dance around pressing and pertinent issues. When asking for $25 billion, it’s probably a good idea to have some answers.

These companies are bleeding money. That was plainly evident after hearing about the billions of dollars per month (about $3B or so if I heard correctly) spent by each of these companies. And when the executive panel was questioned about the seemingly arbitrary $25 BILLION need, the responses were less then erudite. One of the SBC members (I forget which) immediately jumped on that by reminding the execs of their position in the company suggesting they should know these things…how they arrived at that figure. In defense of the executive panel, there were definitely a few questions posed by the SBC that were a little too detail-oriented.

Finally, Christopher Dodd (D-SEN) brought up executive compensation and accountability. And that sucked the remaining wind out of the auto execs’ sails. At that point, it almost didn’t matter if they offered to work for free. The SBC as a whole was quite skeptical toward the strategy of the companies suggesting they’d be back for more money. But after something like 4 hours of questioning, the execs were on the defensive.

What about the alternative? Yesterday in the New York Times, Andrew Ross Sorkin recounted prepackaged bankruptcy, which provide some (for the lack of a better word) tactless options for the automakers.

Bankruptcy would give G.M. enormous leverage with its debt holders — and, perhaps more important, with the U.A.W., whose gold-plated benefits are one reason G.M. is no longer competitive. A bankruptcy filing would also give G.M. the cover to close plants, rid itself of unprofitable brands and shed dealerships. In fact, unless G.M. files for bankruptcy, state laws would make it prohibitively expensive to shut dealerships.

Tactless. But probably necessary.

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Ford Will Drop 9,000…Then Add 26,000

Ford (NYSE: F) may eliminate another 9,000 U.S. factory jobs via buyouts and early-retirement offers. The company’s initial goal was to cut 8,000 jobs, but according to an article on Bloomberg.com, Ford won’t limit the number who leave if more than the target range of 8,000 to 9,000 opt for the offers. If Ford reaches its goal of eliminating 8,000 jobs, it will have cut 44% of its North American hourly jobs in three years.

Courtesy Autoblog.com

The good news? Ford will turn around and add 26,000 libs to its lineup. What happened to the whole “green” thing? The Alton Manufacturing F-650 XUV features a Caterpillar 7.2L C7 ACERT engine, hardwood floors, a few big screens, and triple train horns. And just to be sure you can make it around the block at least 3 times, it includes a 45-gallon fuel tank…all for about $200k. Somebody call Shaq! For those of you that don’t have $200k in dispoable income, do what my friend, Eddie, did. Buy a diesel Excursion, lift it, throw some 22s on that b!+c#, add some drop screens, and your own train horn (which is alot of fun, BTW)…and voila!

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