The problems the U.S auto industry is facing caught my attention when I heard about the C.E.Os taking their companies private jets to Washington. This may not sound so bad however when your company is in financial trouble and you are asking for a tax payer bail out of billions of dollars, you really need to use a little bit of common sense. Taking the company's private jet at a cost of $20.000.00 when you could have flown a commercial airliner for around $820.00 first class is seen by most as throwing money away.
I myself wouldn't have given away tax payers money so easy but of course when you are the newly elected president of America pressure to do something to prevent some of America's biggest employers from going broke would be coming from many directions. The problem however is that once you have bailed out a company, for example General Motors, you get requests for more bailout money and that is when you realize you are at the point of no return. If you don't give them the bailout they ask for, they may go under and all previous bailout money is lost but if you give it to them you may be throwing good money after bad.
Even after promising to cut executives salaries from millions a year down to $1 a year and after heeding advice to leave their flashy jets behind the amount of money required to keep General Motors afloat seems to be getting bigger all the time.
Obama's reign as president could be judged on the outcome of how these auto industry events unfold. Of course he has to be seen to be doing something and that is why he throwing every thing he can in his power at the situation. I personally think he should have just let the auto companies go bankrupt. If they keep getting propped up with bailouts they will continue on with their sloppy management and their look after number one attitude. Perhaps with holding bailout money will make them look at other successful turnaround companies for advice. There are some main reasons why General Motors has come to edge of collapse. Up till now a big proportion of their profits came from trucks and SUVs which have higher retail prices and make General Motors a bigger profit but now customers are opting for cheaper more economical vehicles. Also a lack of credit available for customers and car companies has had a huge impact on sales. On top of this General Motors has to factor in employee's retirement and health benefits from past employees into the cost of a new vehicle. General Motors is struggling to attract old customers back due to the inferior product range they had in the past.
I certainly wouldn't buy shares in a company like this and I would be very concerned if the government was investing tax payer's money into these companies. General Motors needs to prove it is worthy of receiving a bailout first in my mind.
There is also an obvious double standard here. I can understand President Obama wanting accountability from the auto makers who received bailout money but what about the 700 billion the banking sector received where is the accountability there. I originally thought that banks are the main structure of society and that is why Obama didn't want to push them into receiver ship but it is obvious it has more to do with the political ties between the white house and wall street.
A lot of people must be on the brink of financial ruin and just praying for some good news. I just hope they have a television so they can watch the daily show because this guy at least gives a bit of light relief to situation at hand.
Toyota cares about people, General Motors does not. If you look at the culture within Toyota you will realize that they are forward thinking company. They don't lay off staff when things slow down they just retain and retrain them ready for the next boom in economy.
From July 2006 to July 2008 General Motors laid off approximately 34.000 staff but during the same period Toyota laid off nil. You just can't ignore the figures.
When you take a look at major companies around the world and how they are run it is easy to see why General Motors is in the position it is in today.
For example the CEO of Japan airlines took three cuts in pay and was on approximately $90.000.00 a year, less than J.A.L pilots are paid. However the CEO of United airlines gets approximately 39 million a year, on top of this United airlines started changing $15 for 1 item of luggage and $25 for 2 items of luggage checked in when fuel prices were at their highs. United didn't drop these costs when fuel prices went down. Instead the CEO gets a 10 million bonus, even though his company is performing poorly.
I think governments should stick to running their country and refrain from using tax payers money to bailout failing companies run by greedy CEOs who are not forward thinkers.
Why YOU should click on some of my links ABOVE.
REASONS: click on REASONS to get a detailed explanation of why GM has gone Bankrupt.You can also view comments from everday American people just like you and me.
DAILY: click on the DAILY link and watch the Daily Show .This guy gets straight to the point and you can have a laugh at the same time.
TOYOTA: click on TOYOTA and see how they do things. There is no magic formula just commen sense.
JAPAN: click on JAPAN. I really admire the CEO of Japan Airlines. You can watch a very interesting interview with him here. This guy is a real leader.
MY DELICIUOS PAGE http://delicious.com/gng2083
Reference list
Gow, D. (2009). General Motors asks for multibillion dollar loan to avert crash in 30 days. Retrieved April 10, 2009, from http://www.guardian.co.uk/business/2009/mar/06/generalmotors-automotive-%20industry
LeVine, S., Francis, T. (2009). Now Obama owns General Motors. Retrieved April 10, 2009, from
http://www.businessweek.com/bwdaily/dnflash/content/apr2009/db2009041_951044.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
Reiland, R. (2009). Mismanagement at the big three. Retrieved April 10, 2009, from
http://blog.mises.org/archives/009076.asp
Romney, M. (2008). Let Detroit go bankrupt. Retrieved April 10, 2009, from
http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=4&rss
Ross, B., Rhee, J. (2008). Big three CEO s flew private jets to plead for public funds. Retrieved April 10, 2009 from
http://abcnews.go.com/Blotter/Wallstreet/story?id=6285739&page=1
Sirota, D. (2009). The double standard and the revival of reaganism. Retrieved April 10, 2009, from http://www.huffingtonpost.com/david-sirota/the-bailout-double-%20standa_b_181473.html
Webster, L (2008). G M in crisis: 5 reasons why Americas largest car company teeters on the edge. Retrieved April 10, 2009, from
http://www.popularmechanics.com/automotive/new_cars/4292379.html
Wert, R. (2009). Daily show takes on carpocalypse : Uses silly made up word. Retrieved April 10, 2009, From http://jalopnik.com/5191860/daily-show-takes-on-carpocalypse-uses-silly-made+up
What Toyota knows that GM doesn’t. (2008). Retrieved April 10, 2009, from
http://edgehopper.com/what-toyota-knows-that-gm-doesnt/
What United airlines could learn from JAL. (2008). Retrieved April 10, 2009, from
http://edgehopper.com/what-united-airlines-could-learn-from-jal/
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Howdy!
ReplyDeleteYour comments on large salaries and the tax payer footing the bill do not surprise me. There is talk in America now of not only the rich but also of the super-rich apart from the working poor. America’s decision to bailout car companies such as Chrysler because they are an important part of the country’s history remind me of Key and his comment of forwarding help to F&P if required because it is an iconic company. Surely this kind of attitude and safety net does nothing for the performance of said companies in the long term. Their existence should not be at the expense of the tax payer. But if these companies are not helped and people are made redundant, the tax payer ends up footing the bill anyway. It's a catch 22 situation.
The $39 million salary mentioned makes me cringe, especially knowing that so many hard working Americans are losing their houses and can’t pay for basic health care. That so many house are standing empty while families are being forced to live on the street, while their tax dollars are the supporting crutch to banks, etc, and while executives fly in jets and reap large bonuses from the bailouts they have been given. How must they feel knowing their country has done them over in such a way?
Just as an aside, cleaning companies in America are reaping the rewards because they are called in to clean out houses families have just walk out of, leaving many of their possessions behind.
Ha! I completely agree about these huge companies being so hypocritical in the way they do business- being extravagant when they don't have the money to even keep their business afloat.
ReplyDeleteThey don't seem to understand that this sort of behaviour, of course along with the struggling economic market, is what got them into the mess they're in.
It's funny to me, how 'intellectual' these CEO's are supposed to be, but they can't even seem to get the simple things right.
Your blog is very eye opening to us who do not know the figures, and you are very informed on the matter.
Thanks,
Lauren.
If I were the president of America, I would have bailed out the troubled auto companies and banks such as Genearl Motors and Citi bank in US.
ReplyDeleteThe Depression first occured in America due to lax supervision of bank and trading system. The people around the wrold already blamed America for this. The Wall Street is the leading trading market in the world, any bad news of the US market would trigger the domino effects on the stock market of the other countries.
As Mr. Obama just took on the job as America first-black president in January, he has to fulfill his promises he made during the elected campaign to save the US from an economy percipice.
It is understandable why he decided to pour the taxpayer money into the banks and auto firms whose managemnets are ill .
Hi guys i am really enjoying all of your blogs.There is some real interesting stuff out there and thanks for your comments on my blog.
ReplyDeleteNeo-Walt was telling me today about all the house owners in the USA who are just walking out of their houses for good because they cant afford to make the payments.Apparently the cleaners or should i say cleaning companies perhaps are the only ones makn the money as they get to clean the house once they are vacated,i hope they get paid upfront!
Its the same with the Auto Industry, people are not buying new cars at the moment, they are just repairing their old cars so the mechanics are doing a roaring trade.
Yeah, terrible about the vacating of houses. Most probably those who are foreclosing would pick up the tab. Really unbelievable to see this on TV. The houses had rubbish skips outside and the cleaners were throwing in good furniture, etc. They keep what they want, but don't sell the stuff because they are - get this - too busy! I couldn't help thinking of the waste when so many others could make use of these items.
ReplyDeleteBush used Neo-Liberal ideas, that is, letting the market look after itself which ended up with the current result. The Great Depression also had its roots in free market practices with little government involvement. That's why Obama is the big promise for so many hurting people, because his government is expected to place restrictions, etc. on the market.
Obama stepped in to help these companies so that he could help the workers keep their jobs.
man i totally agree with all of you. its sickening the way these ceo's waste money that comes from taxpayers who are forced to leave their homes. it reminds me of the power company ceo's here in new zealand. they'v been rasing electricity prices for years for no good reason and getting fat paychecks because of it while we got without in order to pay the bills. it sucks.
ReplyDeleteHi Bo Ing
ReplyDeleteMe again! I really do like the way you've put together your convincing argument. The link 'Toyota' made me consider the Japanese influence and how this is being implemented. In Japan a person could join a car company and literally have a life-time job. (Not so sure what's going on over there at the moment though!) Employees made sacrifices for the company and they look after the employees. So, yeah, General Motors discards its now unnecessary resources - including people - while the Japanese ethic is at work at Toyota. Interesting . . .
My friend is Japanese and says they are having their share of problems over there. Japan exports alot of goods so i suppose there is no way they can avoid this if other countries are not importing as much as they have in the past.
ReplyDeleteHowever Japan had a very slow period in the 90s (the bubble economy..boom of the 80s ...bust of the 90s) so i think they have learnt some valuable lessons from that period.
after reading this at least two things i can say are "go the Japanese ethics" and "i wanna work at toyota."
ReplyDeleteHi friend,
ReplyDeleteI have been sick for a while, sorry for replying late. About your article, I have almost the same standpoint of yours. However, according to what you said:"I personally think he should have just let the auto companies go bankrupt", I don't think so. As a president, of course he has right to operate civil issues combined with current global economy situation, however, about a big company's survival, the president may have no rights to let the auto companies go bankrupt. It is still decided by committee.
Also,"Toyota cares about people, General Motors does not", I don't agree with this points. From my point of view, Toyota cares about its employee because it just wants to keep them to make more profits in the future, while General Motors do care about its employee with a different way-lay off them. But by this way, it can save its money and expense in hard times and when the economy is bboming, it will recruite more exployee, this is also a way of caring about people.
What do you think?
Hey Bo Ing!
ReplyDeleteI do not know much about your topic but I would have to say that I gree with your point there. Bailouts..General motors. Because it is a company which is quite powerfull in economic situations of the motor companies and guess they have the right to call for a bailout but how the CEO of gerneral motors is using the money will increase txpayers' criticism. But hey wouldn't Obama has reasonably better thoughts than us for his leading country???????
Hi, it’s not an easy issue to make a comment but here is my thought. I think the president of US had to bail out General motors because of large number of employee under the industry. And since he is a new president of US, he does not want to lose popularity. It was wrong action that CEO of GM flew to Washington D.C. by private jet to borrow money. It just doesn’t look good. It was not proper manner for a borrower to come to bag for money. I heard from someone a long time ago that US is country of pride. GM is one of US pride. It is not easy for US to lose this pride.
ReplyDeletei really enjoyed your blog. ive never really thought of this before but wow! i competley agree with your point you have made. I cant believe some business today. spenidng other peoples moneys when there businees is going down the drain.
ReplyDeleteHey there, I thought your blog was really good, I didn't know much about your topic....Bit CEO's should'nt be throwing money away.... I agree with Amy's comment about the president should bail General motors because of the large number of employee. And the cleaners will be better of because of soo many people leaving their homes, and they needing to be cleaned. I think this is a really good blog and is a eye opener, very good work. Was Great to read.
ReplyDeleteThanks Kelsey
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ReplyDeleteIt's very good to read~~~I never think about that issue before I read it.I agree with all of your guys' points!!
ReplyDelete