They did it just for fun...

The Wall Street Journal has this headline on A5 - 'Congressional Junkets Defended as Work-Based'. Ric Wagoner and Alan Mulally went to Congress on their jets just for fun...

Not everything foreign is good

The worst selling vehicle in 2008? The Hyundai Entourage. Why does this not get more press? Everything from the foreign auto makers is not gold. Ford has the best selling car and Hyundai has the worst - who makes better cars? Who responds to consumer demand?

Another Thought on Detroit

This is really just a follow up to the previous post, based on the same Yahoo article. I have often heard that the auto industry forced American's to buy gas guzzling vehicles. Not only do the previous statistics fly in the face of that statement, so do the manufacturers vehicle line ups. All three members of the Big 3 produce cross over vehicles aimed at the SUV crowd with an eye toward gas mileage. Chrysler and Dodge have the Pacifica and the Magnum; GM has the Acadia, Equinox, HHR, and SRX - each with 20+ highway MPG; Ford has the Edge and Flex. But "consumers have not embraced them as the new family car", sales are sluggish or dead. In fact Chrysler and Dodge will no longer be producing either of their offerings. Detroit did respond to the MPG issue, Americans simply did not purchase the vehicles, opting instead to stay with their traditional trucks and SUVs.

And the crown goes to...

As the year winds down, the number crunching beings and auto sales are no different. Recently the unofficial car results were announced. The best seller should not be a surprise - it's been leading the pack since 1981 - the Ford F150. And the number two? The Chevy Silverado. Ford's record stands in stark contrast to those that continue to claim the Big Three forced gas guzzlers down consumers' throats. A vehicle is not the best seller for 27 consecutive years by being forced upon consumers; it is the best seller because consumers demanded and purchased it.

Michael Moore and others of his ilk would like to use the government to force the Big Three to stop making "gas guzzlers." They would be killing the goose that lays the golden egg.

Incompetent Politicians

There is a lot of talk about the Big 3 these days and a lot of it comes from Washington. Take this from House Speaker Nanci Pelosi "We want to see a commitment to the future. We want to see a restructuring of their approach, that they have a new business model, a new business plan." (WSJ 12/3/08 A14) First, what business does not look to the future? Second, I am certain there is nothing a California lawyer can tell the Michigan Auto industry about how to form a business plan or run a business, let alone how to restructure one.

Politicians pass buzz word after buzz word while American manufacturing dies.

UAW

Many commentators are insisting that any money to the Big Three should require that the management be replaced. To cite just one example, a WSJ editorial by Paul Ingrassia on 10 November reasons that if GM, and by extension Ford and Chrysler, are deemed too big to fail then "it's also too big to be entrusted to the same people who have led tit to its current, perilous state and who are too tied to the past to create a different future." I agree that grand restructuring needs to occur and "that will mean tearing up existing contracts with unions" etc. It is not unreasonable to request management changes under such borad restructuring. But is too much attention being paid to senior executives?

All three autos are struggling. All three autos have lost ground to foreign companies. All three autos (and even some of the foreigns) focused on the "gas guzzling" truck market (Toyota Tundra). Yet the managers and executives of these companies are all different. In fact, for a number of years Chrysler was owned by the Germans. If the problem was Rick Wagner or the Ford family, then the companies would be facing different prospects. What is shared in common among the Big Three and none of the foriegns? The United Auto Workers.

To be fair, many commentators, Ingrassia included, are calling attention to the UAW. He notes, the "union stoutly defended gold-plated medical benefits" that consisted of "no deductibles, co-pays or other facts of life." Indeed, the union fought "to protect the 'right' of workers to smoke on the assembly line."

In my estimation, the UAW is much more at fault for the demise of the Big Three. It is the common factor to the auto companies - and the dead weight they are forced to carry. Ingrassia laments that "the current board of directors and management have stuck stubbornly to [an outdated] structure." But the UAW contract, which only in 2010 will equal the pay playing field, has largely limited the auto's ability to shed jobs and restructure in the changing global market. It is the Union, with their inch thick contracts, that has stuck stubbornly to an outdated structure.

I owe thanks to my wife for pointing out the universal nature of the UAW.