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/
