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332 Landslide

332 Landslide

December 4, 2008

Senator Tom Carper - Corporate Man or Smith Comma John?

I began this search as I was watching the automakers, GAO and UAW speaking to congress. Sen. Tom Carper made a comment, rather paid a compliment to, the automakers that set me back in my seat, furrowed my brow and finally elicited a rather loud vocal response directed at the TV screen. "We face the voters, and one of the questions that is sometimes on their minds is 'what have you done for me lately'. 'And I think you are all going through a little bit of that lately too in terms of what have you done for us lately in terms of productivity..., ...bringing down the labor costs, ...what have you done for us in terms of improving quality, ...and in terms of improving fuel efficiency?' I was about to applaud, I reached for my keyboard to look this senator up as I listened intently for reactions from the big three. What I in fact heard next caused my hopes to fall, and instead of reaching to look up the senator, I went in search of his donations. "You've actually, I think any fair minded person would say on every one of those fronts, you've done a lot! You've done a lot!"

Productivity - FAIL - Any gains in this area have happened outside the borders of the US. IE Mexico

Labor costs - FAIL - Each car is sold at a loss, the reason the UAW is at the table with you.

Quality - FAIL*FAIL - Double failing grade here. With the exception of a couple of models produced only for European markets, American made cars continue to trail those from nearly every other country. Not only didn't you pass, you didn't even show up for the test.

Efficiency - FAIL*FAIL*FAIL - All of you spend millions every year to lobby congress in an attempt to stave off increasing CAFE standards. You spend millions more advertising and sponsoring large, inefficient cars, trucks, SUV's, Hummers etc and little to nothing making 'small and efficient' cool.

So naturally, I thought "he must be in the bag for the big three" and went to check donations. Not as easy as it seems. In reviewing the 'automobile manufacturers' political contributions (click here), I've had to do some adding of figures to get to a total of how much any 'one' company has contributed. The list of donors includes the usual suspects - Ford, GM, Chrysler, Nissan, Lexus, Mitsubishi and Honda. But along with those obvious are the less obvious, and suspicious. The number 5 contributor is 'Alliance of Automobile Manufactures'. What? Well, that must be for those that didn't contribute in their own name right? Wrong. A quick check of the members list for this 'alliance' finds familiar names, BMW, Mercedes, Mazda, Porsche and Volkswagen. Fine. But in addition to those names, we find (again) Chrysler, Ford, GM, Mitsubishi and Toyota! The total contributions for the Alliance were $21,850. With 10 members, that's $2185 each. Not much. Next comes a contributor called 'General Parts International', hmmm.. That's CarQuest Autoparts.... anyway. Daimlerchrysler is listed twice, once as mentioned and once as daimler chrysler. $6500 and $5650 contributed for a total $12150. Another name not expected is Badenoch LLC. This is a research and development Co with an NAICS of industrial design services. Yeah, that fits in with automobile manufacturers. Can you say creative accounting boys and girls?

I didn't find a lot of direct contributions to this senator from the auto industry, just some. I went back to his bio and it hit me. Mr. Carper is a senator from Delaware. The corporation capital of the country. ( I was going to say world, but that's just not so anymore, is it?)

I don't know a lot about this senator, might he have been calming the waters before dive bombing? His remarks were next directed to Mark Zandi, thanking him for previously providing what he calls a 'bang for the buck' reports, and asks for his opinion on the biggest bang for the buck here. Zandi says the government should provide aid, there is no choice. The cost of ensuring that the automakers don't go into bankruptcy in the next 3-4 years is going to cost more than $34 billion. He gave a range of $75-125 billion. Per Zandi, this is the total number taxpayers will be on the hook for, that includes hart (he was hard to understand here, could be 'our' 'art' or some other acronym) money, sec136 money... Zandi goes on to say that if they (the automakers) stick to the script, they will come out very viable companies. The problem according to Zandi is that sticking to the script outside of bankruptcy is going to be very, very difficult. Mentioning stakeholders, creditors, the UAW, suppliers and dealers all to deal with. So plan on them not sticking to the script. Zandi says allocate $34 billion for them but not all at once. GM wants $10bil to get them through to March 31st. Chrysler needs $7bil. Ford doesn't need anything. Zandi would give them this much of the $34bil to avoid any bankruptcy through Mar31. He agrees with a board for oversight, and especially the idea of a single person in the short term to streamline and expedite the recovery plan. At the Mar31 deadline, benchmarks must have been met to receive the next round of funding. He also suggests the companies use the time between now and then to prepare for bankruptcy. He concludes by insisting everyone stick to the idea that 'this is it'.

Carper follows the comments by Zandi with a single question about how to ensure a reasonable return to the taxpayers in order to take on the risk, which is answered by one witness with no followup questions. Carper then goes on to say that he doesn't think the automakers are getting enough credit for what they have already done! He thinks these 3 companies 'have positioned themselves to make a go it' within a couple of years. ... Ford has been in operation since 1903, General motors since 1908 and Chrysler since 1925. And they've positioned themselves over the past couple of years to 'make a go of it'? Oh really!
The GM balance sheet for the past 3 years stacks up like this: Net tangible assets (assets-liabilities including stock value) '05 $10,258,000 '06 ($6,559,000) '07 ($38,160,000)
Ford comes up like this '05 $7,497,000 '06 ($40,236,000) '07 $3,559,000
and Chrysler (Daimler AG, DAI) like this '05 $37,162,919 '06 $41,862,752 and '07 $48,646,941 (keeping in mind a majority of this company's business is outside the US)

It's fun to note that when I went to the website, the splash pages says this (and only this)
"It's not a bailout to keep us from failing. It's a loan to help us succeed. We are investing in the creation of new technologies for more environmentally responsible vehicles, reduced emission vehicles and emission free electric vehicles. As early as 2010 our exciting lineup of vehicles will offer an electric drive system. With a link to read more about their plan for a successful future, to learn more about their ENVI vehicles and a link to watch a video so that you may "See why you should care about the US auto industry". But I digress.

Senator Carper, your remarks today weren't in keeping with reality. Not only have these 3 companies had the time and experience to 'make a go of it' without any help, they haven't held to the 'free market' diatribe and they haven't performed in their own shareholder's best interests, much less the best interests of their employees or their customers. They've asked for and been given - repeatedly - tax breaks, incentives, grants and loans all with the promise of 'new technology', 'more efficient vehicles' and 'world class quality and safety'. These three automakers together make up the number 2 position in the world for sales, while being last in the world for quality, efficiency and safety. What in the world were you thinking with this thinly veiled attempt at questioning that was, in fact, 7 minutes of undeserved compliments and praise?

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