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December 4, 2008

Big Three Back in DC to Beg for a Bailout

The three kings overseeing the demise of the American auto industry are back in Washington to plead for $billions in other people's money in exchange for still greater government encroachment into their unprofitable enterprises. The Big Three should be lunging at the opportunity to wriggle out of the extravagant union contracts at the root of their problems. But scooping up free money stolen from our children by the government requires less effort than competing in the marketplace.

Last time around, these jewel-encrusted mendicants were ridiculed for flying into town on private jets to beg for handouts. But they're wiser now:

All three CEOs made the trip to Washington in high-mileage hybrid vehicles — the types of cars critics say the Detroit Three should have been making more of instead of becoming enamored of higher-profit, less fuel-efficient vehicles like SUVs and Hummers.

So according to these critics — who will be making the decisions if the three stooges get the free $34 billion they're pleading for — the problem is that Detroit has been making "higher-profit" vehicles, instead of the overpriced, inefficient moonbatmobiles that the government will demand in return for our money.

Instead of groveling inside the Beltway with a tin cup in hand, Henry Ford would be back in Detroit, making cars people want after using bankruptcy to scrape off the union leeches that have been killing the industry. But then, Ford believed in acquiring wealth by creating it, instead of by begging a place at the government trough.

Rather than riding in politically correct if uneconomical hybrids, here's how the three stooges should have made their way to DC:

Compliments of Byron.

Posted by Van Helsing at December 4, 2008 7:48 AM


It's not the big three that are being bailed out, it's the UAW.

Without the bailout, the Big Three declare bankruptcy, and all of the sudden, there's no more $70 and hour jobs putting cars together, no years off with full pay in the event of layoffs, no more grievances filed when somebody picks up a piece of trash off the floor instead of filing a work order and waiting two weeks for the designated union slug to pick it up.

Posted by: V the K at December 4, 2008 8:12 AM

It's not the big three that are being bailed out, it's the UAW.

That's the truth, too. I used to work for a GM subsidiary. Nobody with any initiative hung around very long because the union wouldn't let them do any work.

Posted by: Rob Banks at December 4, 2008 8:43 AM

Timing is everything! Detroit is about to make cars nobody wants again.

The Big 3 will now be making hybrids forced by a green bailout or bankruptcy?
Gas is $1.59 up here in North NJ and heading South.
WTF wants a pussy hybrid Yugo-look-alike with gas at these prices? I won't pay 2 grand more for a car with no payback on the markup. I'll lease a big motherhumping SUV for 2 years and see where prices are then.

Posted by: Shooter1001 at December 4, 2008 8:46 AM

first time in three years we've filled up our suburban (40 gallon tank) for under eighty bucks - if nothing else we can use it as our own filling station!

the big three need to bite the benuche and declare bankruptcy and start anew or like whackjob ted turner stated "let toyota buy them out!" probably one of the more sensible things he's EVER said.

Posted by: nanc at December 4, 2008 8:52 AM

Those morons are incapable of making smart decisions. First they fly jets. Then they let themselves be bullied into DRIVING to Washington. Who in the hell drives that far for a meeting? Idiots! Why on earth can't they just buy themselves a first class ticket on a regular airline out of their own pocket? They're freekin' millionaires for god sakes. Let them fail. They deserve no better.

Posted by: Unscrupulous at December 4, 2008 9:11 AM

I agree....unions need to go away. Their of no use anymore. Don't see foriegn car makers getting bailed out.

Posted by: watching at December 4, 2008 9:30 AM

What I don't quite get is, rather than taking money from the government and giving them ever greater influence over how your company does business, why would you not declare bankruptcy and rid yourself of the onerous union contracts and health care benefits that have been dragging you down, and whose costs will still be there even if you take the government money? If you're worried about being uncompetitive because you didn't take the money but the other two did, just remember that shedding those awful contracts removes something like $1500 per vehicle from your overhead. You are now competitive on price (and probably better), while the other two dunderheads blow through the government cheese in short order and still have the same problems at the end.

If you're worried about people not buying a car from a company in Chapter 11, just remember that people are staying away from your products in droves already. If you file BK, you can use the money you aren't spending on hideously overpriced union workers to develop products people actually want. And I'm not just talking about hybrids or plug-ins or anything trendy like that. How about a vehicle with a nice interior, one that's on a par with the Japanese, Korean, and German cars in its class? With a couple of exceptions, American car interiors look and feel cheap and bargain basement compared to their competitors. They have to make up that $1500 in pension costs somewhere, and materials is one way they do that.

As far as Chrysler goes, they are owned by one of the wealthiest hedge funds in the world. Why is the hedge fund not funding loans to Chrysler? If I had to guess, it's because the investment fund knows a bad investment when they see it. And no wonder, as they have the same problems as the other two: old and outdated production facilities, a lack of manufacturing flexibility, uninspiring products (save a couple here and there), and cliff-face depreciation. Not to mention dealers that I would rather go to the dentist without anesthesia than deal with, though to be fair this is not wholly unique to the domestics.

A parting shot to the UAW: nice job, boys. You did such a good job protecting your guys that they're all about to lose their jobs.

Posted by: CoderInCrisis at December 4, 2008 10:19 AM

Geez, I started out with three sentences and I ended up at three-plus paragraphs. Must be a light work day today.

Posted by: CoderInCrisis at December 4, 2008 10:24 AM

Totally agree with CiC. The UAW is the thing dragging them down. If they worked for minium wage, they would all be in the plus.

Posted by: Big_Daddy at December 4, 2008 11:03 AM

It doesn't need to be minimum wage, but $75 an hour (pay and benefits) for what is largely unskilled or minimally-skilled labor is extortionate and, in the favorite word of leftists, unsustainable. I have nothing against anyone getting paid, but there comes a point when even the UAW has to recognize that they are killing the goose laying the golden eggs. I saw somewhere that Toyota, Honda, and the other transplants that manufacture in the US pay something like $40 an hour (pay and benefits). You could argue that whatever their number is (and I don't remember off the top of my head, so don't hold me to my previous figure) is the market clearing price for labor of this kind. Even GM could probably turn things around with that arrangement, though I wouldn't put money on that.

Posted by: CoderInCrisis at December 4, 2008 11:18 AM

I read in Consumer Reports that Ford is on par with Toyota and Honda in quality. At least they have listened, now the union mess is another story.

Posted by: Farmer Ted at December 4, 2008 5:58 PM

Posted by: CoderInCrisis at December 4, 2008 11:18 AM

I've heard those numbers too - not sure if they are for certified tradespeople (welders, mechanics etc) or regular production line workers, an average of the two, or whatever - but $70+ an hour is incredibly high for that kind of work.

Of course the unions seem to be getting a free pass in political discourse on the issue while politicians come out with garbage like this:

"high-mileage hybrid vehicles — the types of cars critics say the Detroit Three should have been making more of instead of becoming enamored of higher-profit [..] vehicles like SUVs and Hummers."

Right.. Because they wouldn't need to sell products with a higher profit margin to make up for massively inflated union wages and concurrent artificially-low productivity or anything.

Apparently the optimal business model for a car-maker is to produce low-margin "efficient" cars that few people want to buy, in order to just about make enough money to serve as a life-support system for the UAW, apparently on the expectation that if they go belly-up and have to get bailed out to the tune of tens of billions, it will be fine and dandy and politicians will sign over the public's money to them as a reward for their political correctness.

Posted by: mandible claw at December 4, 2008 8:45 PM

Its the fault of the unions AND the Japs.

Posted by: Anti-PC Man at December 5, 2008 2:05 AM

We three kings from Michigan are,
Begging for dough to help us build cars—
Hedging, betting, no longer jet-setting,
With congressmen we will spar.

Ohhhhh, save us now! The end is nigh!
Unemployment will be sky high!
Forget on the street we can’t compete,
And give until the well is dry!

This we pledge: we promise clean air.
Cars will burn money, not oil, this we swear.
With enough, we won’t go bust,
And keep at $1 per share.

Ohhhhh, save us now! The end is nigh!
Unemployment will be sky high!
Forget on the street we can’t compete,
And give until the well is dry!

Posted by: Stephen at December 6, 2008 8:51 AM