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Technology Stocks : American Automobile Industry: Can it survive? -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (206)	3/30/2009 6:52:58 AM
From: Sam Citron	1 Recommendation Respond to of 431

We seem to own Chrysler as well. Both these companies would already be in BK without gov aid. I personally have have serious reservations whether US auto manufacturers, at least on American soil, can ever be lean enough to compete with formidable Japanese and Korean competitors. From an economic development perspective, one might pose the question whether automobile manufacturing (or at least the automobile as we know it today) is a disposable sunset industry for a mature post-industrial economy reeling under the dominance of the automobile for the past 100 years as asphalt has consumed formerly productive land, where investment in many other forms of transport including light rail and high-speed rail have been underfunded, and Americans routinely seem to make unsound transportation choices wrapping themselves in a ton of steel to make one mile journeys to pick up 5 or 10 lbs of groceries at the local store. Will all of Detroit's automobile making capacity ever be needed? How can it be repositioned most efficiently? The key problem at the moment seems to be the fragile state of the economy and the fear that leaving the industry to pure market forces right now might cause the national unemployment rate to reach double digit levels. White House calls for Chrysler-Fiat team WASHINGTON, March 30 (UPI) -- The Obama administration says Chrysler LLC needs to partner with Italian automaker Fiat SpA within 30 days if it wants to receive $6 billion in government aid. The New York Times (NYSE:NYT) reported Monday that in a report Sunday the White House auto industry task force outlined plans for Chrysler and General Motors Corp. (NYSE:GM), which have received billions of dollars in government aid. The task force concluded that Chrysler could not survive as a stand-alone company, the newspaper reported. In addition to partnering with Fiat, the report says Chrysler must reduce its debt and healthcare obligations. The task force said GM should get 60 days to present a cost-cutting plan. In the meantime, the company will be kept solvent with taxpayer money, the newspaper said. Gm did not comment Sunday on widespread published reports that Chairman and Chief Executive Officer Rick Wagoner would resign immediately as a condition of further federal aid to the automaker. A plan President Barack Obama is expected to announce Monday will call for federal backing of warranties for GM and Chrysler cars and trucks, as part of an effort to give consumers more confidence to buy their products should either company land in bankruptcy, sources said.

To: Glenn Petersen who wrote (206)	4/1/2009 12:52:46 AM
From: stockman_scott	Read Replies (2) \| Respond to of 431

One Roadblock Too Many for G.M. ______________________________________________________________ By WILLIAM J. HOLSTEIN Op-Ed Contributor The New York Times March 31, 2009 President Obama's stunning decision to demand that Rick Wagoner resign as chairman and chief executive of General Motors was based on the wrong set of premises and raises the prospect that the administration will intervene too deeply in the automaker, seriously jeopardizing a transformation effort that has come a long way in the right direction. Mr. Obama cited a “failure of leadership” as a reason for forcing out Mr. Wagoner. While not every decision Mr. Wagoner has made was wise, over all he had been putting G.M. through a wrenching restructuring that tried to undo decades of management acquiescence to the United Auto Workers. Mr. Obama indicated he did not believe G.M. had moved fast enough in facing up to global competition. But the company is coming close to achieving the cost structure of Toyota’s assembly plant in Georgetown, Ky. — largely because Mr. Wagoner and his team stripped thousands of dollars out of the cost of every vehicle. Fully one-half of the company’s unionized work force has been laid off or taken buyout packages, and the U.A.W. has agreed to a two-tier wage system in which new workers make only $15 an hour. Just a few years ago that would have been unimaginable. Mr. Wagoner also encouraged G.M.’s adoption of Toyota’s lean manufacturing techniques and quality control. So much so that Buick tied with Jaguar for first place in the latest J. D. Power ranking of dependability, coming in ahead of Toyota and its Lexus brand. By bringing in the auto industry veteran Robert Lutz as vice chairman for global product development, Mr. Wagoner was also responsible for a redesigned lineup of vehicles. The Cadillac CTS and Chevrolet Malibu both won car-of-the-year awards last year and the newly revived Camaro — which is hitting the roads just as Mr. Wagoner is being ousted — represents the high-water mark of revitalized American car design. Mr. Wagoner also pushed the development of the lithium-ion battery that will power the Chevrolet Volt extended-range electric car when it appears in late 2010. Lithium-ion batteries represent a leapfrog over the nickel-metal-hydride batteries in the Toyota Prius. By investing $1 billion in lithium technology, Mr. Wagoner created the best opportunity for America to win a piece of a huge new “green” industry now dominated by non-American companies. Mr. Obama has not only failed to understand these contributions, he has also deprived G.M. of Mr. Wagoner’s presence on the board. Much of Mr. Wagoner’s knowledge and experience could simply be lost. With Mr. Lutz also about to retire, the two executives most responsible for G.M.’s transformation are gone. Mr. Obama decided that G.M.’s president, Frederick Henderson, should move up to take the chief executive’s job, which has been part of G.M.’s succession plan all along. But how does that represent fresh leadership? And is Mr. Henderson ready? He is known for being more aggressive in his business dealings than Mr. Wagoner was, and speaks the language of Wall Street. That may be useful in dealing with G.M.’s bondholders and the U.A.W. But Mr. Henderson does not yet command the loyalty inside the company that Mr. Wagoner did. The long-term plan had been for him to serve as Mr. Wagoner’s lieutenant for a year or two more so he could build relationships with other top executives. Instead, he’s been handed a company that is reeling over how the Obama administration helped turn Mr. Wagoner into a scapegoat through its leaks to the news media. Mr. Obama’s intervention does not stop there. His aides were quoted as saying they are going to remake the entire G.M. board. But deciding which director should go and which director should be added is far beyond the competence of any government. A new board may be the smart move in the case of a failed bank, where there are thousands of qualified and experienced financial executives to step in, but as one of the world’s largest manufacturers, G.M. faces vastly more complicated and specialized issues. Mr. Obama also failed to end the bankruptcy talk that has hung over G.M. and hurt its sales. In his statement on Monday he admitted that “I know that when people even hear the word ‘bankruptcy’ it can be a bit unsettling.” He’s right — and that’s exactly why he shouldn’t have said it was a possibility. Rather, the president should have forcefully stated that he would keep G.M. out of Chapter 11 because the nation’s bankruptcy system may not be able to handle such large-scale industrial restructurings. To wit: Delphi, G.M.’s largest parts supplier, went into Chapter 11 bankruptcy in 2005 and has yet to emerge. Add it all up and Mr. Henderson is taking over an organization in a state of shock. He will have to prove himself to all G.M.’s constituencies, but he could be distracted by a major shakeup of his board. Plus, the Damocles sword of bankruptcy will hang over his head. It is a supremely difficult situation, and may make it even more difficult for G.M. to sustain its transformation. It may have been politically expedient for Mr. Obama to give Mr. Wagoner the pink slip. But politics in Washington have real world consequences. Before he goes too far, Mr. Obama should recognize the huge distance that G.M. has traveled and strike the right balance in respecting the role of the private sector. Unlike the insurance giant A.I.G. or Wall Street’s failed banks, General Motors consists of real factories where real people make real things. As it looks to micromanage an entire industry, let’s hope the administration doesn’t lose sight of the human side of things. *William J. Holstein is the author of “Why G.M. Matters: Inside the Race to Transform an American Icon.” Copyright 2009 The New York Times Company