Why autos are important to winning MI & Ohio

MI is still the home of the auto industry and dependent on them for its economic well being. From Gov. Granholm's state of the state:

... we will not concede the automotive industry to any other state or nation.

We are the state that put America on wheels – the state that put the “car” in NASCAR. There is no vision for Michigan’s new economy that does not include cars designed, engineered, and made in Michigan. The industry’s changing – but we in Michigan cannot – will not – abandon it. And we should not allow our government in Washington to abandon it either.

Because of MI sustained efforts to keep and attract automotive research and development companies,

Michigan has more employees and investments in that growing part of our economy than all of the other 49 states, plus Canada, plus Mexico combined. -- State of Michigan Plan

Detroit automakers, the UAW and their allies on Capitol Hill are launching an all-out blitz over the next few weeks for up to $50 billion in government loans over the next three years -- money the companies say would help them to retool and survive.

MI automakers, despite their own challenges, have invested over $9 billion in their Michigan facilities in the past three years. Over the past eight years, they have agressively sought a partnership with government to invest in the technology of the future that will dramatically curtail auto emissions and eliminate our country's dependence on foreign oil.


Michigan July 2008 Unemployment Rate 8.5%
Change Over Month 0.0
Change Over Year +1.4

While Wall Street believes Ford’s $26.6 billion can survive through 2010, it has doubts about GM, even after the automaker’s recent $15 billion cash-raising plan. On Wednesday, Lehman Brothers analyst Brian Johnson estimated GM would need at least $7.3 billion to get through 2009; if the economy worsens, that could rise to $12.2 billion.

Michigan Payroll Jobs

July 2008 4,213,000
Change Over Month -5,000
Change Over Year -49,000

One big step for the automakers came this afternoon, when Republican presidential hopeful John McCain said he would support funding some of the loans the Detroit automakers and their suppliers seek. Noting that Congress had approved $25 billion in such loans last year but failed to fund them, McCain said the automakers deserved some of the same support the government had offered to Wall Street.

WARN Notices: MI job losses just due to plant closings/significant layoffs
Layoff Notices

2008/6,905 (through July 31)
2007/22,299
2006/9,337
2005/11,441
2004/10,854
2003/17,813
2002/14,976
2001/19,136

With Democratic rival Barack Obama already supporting such a plan, McCain’s support was seen as essential to winning support from Congressional Republicans and the Bush administration

Obama has 7-point lead on McCain in Michigan but the lead is shaky: 31% say they could change minds.

Romney won MI; but like McCain, he owns an abundance of houses.

According to news reports, the former governor of Massachusetts has at least four properties in his portfolio. There is his primary residence in Massachusetts, a ski lodge in Utah, a lake front house in New Hampshire (described by USA Today as "an 11-acre estate valued at more than $10 million on the shores of Lake Winnipesaukee") and a La Jolla beachfront home in California. The latter, according to Politico, is worth $12 million, has five bathrooms, and contains "direct access to sand beach, a quiet cul-de-sac location, spacious oceanfront deck, numerous patio areas with manicured lawns and mature landscaping, lap pool and spa. --Romney's Assets

Now imagine this ad running in MI and Ohio. How high can you count?

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Comments

Sorry about the links.

It was the best I could do.

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Don't worry about the links

they look fine.

If you like, I think that you can use Bob's rich text editor, see below the box where you enter text for that, to make hyperlinks.

I prefer to write my own html, and you can make pretty links doing the old :

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links & stuff

It does take awhile to learn how to format posts, no doubt about it. I fixed your links for you (hey people don't expect this all of the time!)

Now, you should see an edit tab on your posts, you can go in there and see how I got them to format right.

Then, over in the user guide are some examples that should be literally a cut and paste and then put in your URL and text instead of the example one.

Another way: when you go to create content, you see the "body" section. Right below is is a link that says rich text editor. click on that and it will be a little editor which has buttons that if you use them will format the post right.

The Editor is actually the FCKeditor and this link explains how to use the toolbar.

I embedded it into this site. You can also switch between plain text mode and the rich text mode to use both..

since things like embedding youtubes you need to do in the plain text mode (that's the HTML tag mode).

Learning a few things, which I try to cover over in the user guide should cover 90% of the formatting issues when trying to write a post.

I wish to God writing blog posts was easier but this is as good as I could get it so far.

Hey BTW, this isn't DK. The site for one will format correctly any XHTML/HTML tagged post. No limits (no scripts of course). You can click on the private tab just to learn and most importantly you can edit and even delete.
Not a problem. Any feature anybody wants, just ask.

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Thanks for fixing my links...

Hopefully, I can do better next time.

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on GM's $50B demand

International Herald Tribune has some details on the tie ins to the plan.

I think Congress should tie it much more strongly to hiring only US citizen/perm resident workers.

Then, I think that they should get into the big three's management faces and require they invest a certain portion of that into making the cars low cost plus invest heavily into battery technologies. That's one of the biggest bottlenecks. The cost of the batteries is prohibitive.

The fact the big three are in trouble, not a surprise. They have not done the real research, invested and have spent a hell of a lot of time trying to figure out how to labor arbitrage their workers. The big 3 are also China obsessed, selling gas guzzling, major polluting autos for next to nothing in China (India too) trying to capture those markets. Well, that's just great big 3...just keep adding to global warming on some mythical consumer market. Now selling that polluting Aero for $1100USD in China...what exactly is your profit margin on that and what does that have to do with losing $15.5B in a single quarter? Or did you (GM) just keep your profits from your China and India subsidiaries offshore which made it seem like you lost $15.5B in a single quarter but maybe didn't? (disclaimer, these are just questions, I don't know the details on their earnings reports but we need to know the answers before coughing up $50B bucks, that is a butt load of money!)

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Where are the Henry Fords?

That understood demand side economics? that in order to create a market for your products and services, you have to have people who make enough money to buy those products and services?

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don't ya know

Demand side economics ain't cool anymore...it's too old...bummer that it worked pretty well. I think Multinational corporations are so focused on getting that 2.3 billion mythical consumer markets in India and China...they say the United States be damned.

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Actually a bailout for Detroit might not be so bad

While I am no means a fan of bailouts, I do believe loaning the not so big anymore 3 would be way more effective than bailing out Wall Street.

Hundreds of thousands of jobs in the industrial midwest depend on a healthy auto industry. Helping Detroit weather the storm will have real impact on mainstreet - way more so than the Wall street bailouts do.

Back in Iacocca's day, Lee recognised and understood the importance of manufacturing to the countries economic health and national security - most people understood this then way more so than today where so many are quick to write off manufacturing and cede it to the Asians. Chrysler paid back the loans pluys interest ahead of schedule.

With that said, there is also a fairness issue involved - if congress can spare a dime for speculators and risk takers on Wall Street they certainly should be able to give a nickel to Detroit. Of course there should be some conditions that go along with any taxpayer money - such as it must be reinvested back in the US - for example on increased fuel mileage technology, domestic capital facilities and equipment and so forth.

None of this taking the money and using it to facilitate offshoring, or like Northwest Airlines did with their 911 bailout - buy European Airbuses.

The bottom line is a manufacturing bailout would be felt and shared by a much larger portion of the workforce and shared more fairly and effectively than a Wall Street bailout could ever be

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I see one fundamental problem with such corporate handouts

They don't work.

How many times have we seen bailouts, subsidies, or tax credits, handed out in order to create jobs, or save jobs; and how often does it actually work?

Remember the billions of dollars given to the airlines after 9/11? The idea was to save the jobs of airline workers. The airlines took the money, gave big bonuses to airline execs, and fired the airline workers anyway.

How about tax credit for Neilsen to create jobs in Florida? Neilsen took the money, and hired offshore workers.

Now both Obama and McCain want to make the current R&D tax credit permanent. That means that both will give taxpayer money to corporations that are already so wealthy, those corporations barely know what to do with all the billions of dollars flooding in. This will insure huge bonuses for corporate execs.

And all of those high-tech corporations are on the front line when it comes to offshoring US jobs, or replacing US tech workers with guest workers. Both Obama and McCain support in increasing the numbers of H-1B workers.

Please see McCain, Obama put out tech agendas

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I see one fundamental problem with such corporate handouts

Yes, Northwest took their 911 money and bought Airbuses

The Chrysler bailout did work

and so did Conrail

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Oh, sure, bail them out

But force them to sell the same cars in the US that they sell in the rest of the world (Chrysler nonwithstanding). Check out chevrolet.co.uk and ford.co.uk to get a picture of the economical autos they sell in the rest of the world.

I think Chrysler is doomed, by the way. The government should never guarantee loans made to a privately-held company.

And a little 15% tariff on all imported goods and services until the trade deficit becomes manageable.

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Private equity

The sole purpose of the private equity takeover of Chrysler is the classic strip and flip - that's what private equity does - chop it to the bone , milk it for all its worth, then sell off whats left.

Bringing Nardelli (yes, that Nardelli of running home Depot into the ground and pocketing 210 million infamy) on board pretty much confirmed that.

Chrysler would have been much better off in the long run in the hands of Canadian auto parts giant Magna, who has a stake in a successful Chrylser and understands the auto industry

Chrylser will most likely end up in the hands of India's Tata or China's Cherry when its all said and done

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Chrysler

While they did get slashed and burned after being sold off to private equity when DamienChrysler split...
they are also retooling in Detroit, a multi-billion dollar investment, so I don't think they are headed for the chop and drop shop just quite yet.

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retooling

A lot of that retooling you refer to was already in the works prior to the Cerberus takeover.

Auto companies are slow moving ships that take a while to turn

It takes 3-5 years to tool up for a new auto platform

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I don't disagree.

They have much of the technology. They just need to retool so they can bring it here. I squarely hold Bill Clinton and his NAFTA responsible for all of this. IF he hadn't of made it more lucrative to throw the old away and buy new in Mexico, this probably would have happened several years ago.

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I'll go along with the bailout, but...

including the above statements about car models and tarrifs, if we taxpayers are shelling out the cash, then we taxpayers should have special prefferred shares issues that pay a dividend. Oh I can hear many now, "a state owning a company, gee Venom that sounds like socialism!" Yes, it may, but its high time we get something back for our constant bailouts. Under new management, flushed with cash, fresh models, and essentially have the market "protected," they will emerge profitable. And when they do start producing quarter after quarter of black statements, then we sure as hell better get not only our money back, but a little extra. On top of that, have the profit go straight into Medicare and Social Security! Seriously, this would work, look at Singapore's Tamasek or Korea. I recommend folks read the book Bad Samaritans, a real eye opener.

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"remove tax incentive to outsource"

is one of our current buzz campaign lines but in this case, hell this is taxpayer money so at least the US worker should get something out of it, at least guaranteed jobs.

EU subsidizes industries constantly and in China I believe the percentage of state owned or 50-50 split companies are incredibly high.

We just don't want G.W. Bush to manage any public-private enterprise, that would surely muck it up.

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George W. Bush hates autos...

If you think he looked bored tapping his flag on his knee at the Olympics, you should have seen him checking his watch every five minutes when he met with the CEOs of the big three. They had to beg and wait years for that meeting for that. It is our hope that Obama/Biden plus pressure from the progressive movement and unions will result in investing in this country. They can either bring the jobs and technology here or let Japan and Europe have them. We need to make sure them come here.

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I'll go along with the bailout, but...

Taxpayers have every right to expect something in return for federal assistance - such as a cut of the profits, increased scrutiny and/or regulation, domestic investment in jobs, technology, facilities and equipment, energy efficiency and so forth

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Enterprise vs Asset Financing.

The reason I made a case for loans and Investment Tax Credits for manufacturing assest is that I fear government management as well. Loaning money for hard plant & equipment is totally different from subsidizing auto enterprises.

Other Chrysler type bailouts are possible in an Obama administration. Bail-outs and subsidies can be avoided by the asset finance route. This way a 2-3 year secured loan is let out on plant and equipment. If the enterprise goes belly-up, another company can take over the plant.

Make the financing available to both domestic and foreign companies and no one is going to complain except those who have done the damage to the industrial base in the first place. The implacable out-sourcers and 'Free Traders' will still complain, but few others, and they are increasingly irrelevant.

To those who say, let private equity do the job of rescue of manufacturing, I say, Ok, let them step up. But that is not happening because of the meltdown in in the finance patch and general scarcity of private equity compared the the size of the rebuilding task that needs to happen.

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Burton Leed

ouch

That is something I did not think about, is/will the financial crisis affect investment funds, private equity, VC funds. If that happens Dr. Doom looks more plausible.

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What about a nationalized takeover?

Something you never hear the right wingers and free marketeers talk about is the success of Conrail.

In the 70's Congress stepped in and took over several bankrupt railroads and formed Conrail. It took a while, but eventually Conrail became profitable. So profitable in fact that rivals NS and CSX made several overtures to take it over - which eventually did happen.

Conrail was a govt takeover success story. Perhaps if big auto continues down the long downward slide, a conrail style temporary nationalization might be in order.

As brleed suggests, manufacturing assistance has less financial risk because there are hard assets that can be taken over - just like railroads - physical plant, equipment, real estate, trademarks and patents to back it up, unlike Wall Street bailouts hose assets are largely "paper" and essentially worthless in failure.

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