As Detroit seeks a $25 billion bailout, the automakers are pinching pennies so hard that their fingers may start to bleed.General Motors Corp. (NYSE: GM), which earlier this month axed 1,900 jobs, recently scaled back its presence at the Los Angeles Auto show and canceled its annual star-studded party at Detroit's North American International Auto Show, according to USA Today.
The largest automaker -- at least I think it still is, for now -- is keeping a tight lid on the distribution of office supplies. It's always a sign of a troubled company when the nice gel pens in the supply closet are replaced with cheap Bics that have a habit of exploding in your shirt pocket.
Of course, bonuses and holiday parties are things of the past for employees of GM, Ford Motor Co. (NYSE: F) and Chrysler LLC. Though these types of measures save money, they are like putting a kid's BandAid with a picture of SpongeBob on a patient with a gunshot wound. The reasons for these moves are as much political as financial.
Though the auto industry lacks the votes in Congress now for a bailout package, the odds may be better during the next Congress. And despite some analysts arguing that the automakers cannot wait that long, Congress will not give them a nickel if their executives are seen hobknobbing with celebrities or scarfing down fancy finger foods. President -elect Obama will not support it either.
What American International Group Inc. (NYSE: AIG) is learning the hard way with the flap over its junkets is that perception is reality in Washington, particularly if you have gotten tens of billions in taxpayer money as a lifeline. The automakers got the message loud and clear.











Reader Comments (Page 1 of 4)
11-17-2008 @ 1:15PM
Jonathan Meyers said...
I would think a joint venture or merger in some form with either Toyota or Honda
USA would be ideal and cost significantly less than a questionable bailout.
Unions would have be realistic about pay scales and benefits much as Honda's and Toyota's current empolyees have.
11-17-2008 @ 2:01PM
Len said...
I have mixed feelings, however are we going to spend billions to keep producing cars that no one is buying?
It's not just the big three it is consumer confidence and the prospect of no job in the near future that is killing the auto industry as well as most retail.
11-17-2008 @ 2:50PM
Mike Sanders said...
The pens and paperclips are are good idea, but I want to see an end to things like the Buick Open. Golf is out of style and we need a new image, anyway. Those who truly enjoy the game, will still play. There is no need to reward them with money, just because they are good at a game, unless that "game" is making sound engineering decisions, cutting through ridiculous work rules and getting the primary job (building cars) done. Anything else, will result in Carmageddon.
11-17-2008 @ 3:35PM
Tom said...
For the last 30 years they have failed to see what the rest of the world has been doing. Look at the production changes Toyota and homda and others have instituted, yet they have sat in their fancy offices and done or learned nothing. GM especially should be allowed to sink on its own. Ford has at least put quality as number one. I for one am sick of this "fear" BS that these guys use to jerk around this country.
11-17-2008 @ 4:51PM
Mike said...
There is too much waste in the Detroit auto production system starting in the exec offices, to the production floor, and into the labor contracts. Ask auto workers (managers and labor alike) about the "job pool" where UAW employees are "laid off" (looks like appropriate cost cutting on the surface) but the EEs continue to draw 80% of their salaries while sitting at home. The whole system must be fundamentally changed before any tax dollars are committed.
11-17-2008 @ 5:01PM
Mark said...
Our country is a free interprise country and hope,hope,hope it stay that way. If someone even a large company opens up and fails. Should the government save them? NO! Ok, I will put another way. I buy a house. I know it's to much, but buy it anyway. The intrest gose up, and now I can't afford it. Risk in life is the American way and if you fail. You fail!!! If we bail out everyone the country can and may fail.
11-17-2008 @ 7:25PM
tom said...
Tell me..why should the Anmerican taxpayer be willing to give single cent to the auto industry ..as long as the auto unions refuse to give anythng up to save their own jobs?
Screw companies that fail through mismanagment and screw the unions that demanded so much pay and benefits that the companies could no longer compete on price.
The 700 BILLION bail out of the banks was already too much.
NO MORE!
11-18-2008 @ 7:13AM
Jon said...
What happen to the survival of the fittest?
What does $700 billion actually buy? (List of 25 things)
http://www.curiousread.com/2008/10/what-does-700-billion-actually-buy.html
11-18-2008 @ 7:51AM
BUZZDAWG said...
No tax payer money for bussiness thet keep making the same mistakes over. I have to cut back on my spending to meet my bills or work longer hours. I only need 10k so were's my bailout?
11-18-2008 @ 7:53AM
Jerry said...
Why would we even consider bailing out the auto industry? Let's look at Chrysler. They are mosted owned by a private investment company named Cerberus. They have billions of dollars, but do you see them using their own funds to help their ailing company? NO! Of course they bought in when the price was cheap so they could make tons of money for a minimal investment.
Unions run the auto industry. Until the American people smarten up, eliminate the unions, reduce auto worker's salaries to those comparable with those of Toyota and Honda, and decrease the huge executive salaries, the American auto industry will continue to decline and in fact close. Unions have caused numerous companies to close in this country. Employees are far better off representing themselves to management than allowing money stealing unions to do it for them.
11-18-2008 @ 8:18AM
Kent said...
Aside from the credit crunch, there is over capacity on the production lines that exceed market demand for new cars. Why not restructure our auto companies to consider sharing production facilities under one roof at some of their facilities? This is not a unique idea but a real one that car companies used many years ago?
11-18-2008 @ 8:27AM
brian said...
Help the domestic automakers out with a LOAN. Thats what it is called, not bailout.
Screw the damn left media that would have our country broke and destitute.
Help our automakers in this awful financial time.
11-18-2008 @ 8:40AM
William said...
Where is my bailout for my 401K biting the bullet. These Big money people just want a hand out.............take away your perks and drop your million $ salaries first. Or get a real job.
11-18-2008 @ 8:45AM
daveandtj2003 said...
Maybe it's time to take a look at what the people running these big corporations make! How can anyone feel sorry for ANY company hwo pays their top people millions for just plain DOING THEIR JOB? Why does everything cost so much? Why can't people afford healthcare? When the CEO's and top exec's make millions in salaries and bonuses, what chance do the rest of the people have for affordable anything? Who NEEDS ( keyword NEED ) that kind of money, especially when all the REAL work is always done by people making considerably less than any of the so called "brains" of the company. How far would healthcare, insurance and auto costs drop, if the exec's were paid REALISTIC salaries? Same with Sports,,are you kidding me? Millions of dollars paid out in "signing bonuses"? You mean, they will pay me 5 million EXTRA, just for signing a contract to allow them to pay me millions a year, for PLAYING A GAME??? Get real people.
11-18-2008 @ 8:49AM
karen said...
Do not bail out the auto industry I am sure they saw this coming but still ignored it. You can also thank the unions for running companies into the ground. Unions are good to a point but when they demand outrages pay and benifits the company should draw the line, but the companies alway give in. If we bail out he auto makers what company or companies will be next what's good for one is good for all.
11-18-2008 @ 8:49AM
Vivian said...
My Pastor has the perfect plan; the auto makers, banks, insurance companies - none of them need a bailout. THE AMERICAN PEOPLE need a bailout. Take all that bailout money and divide it out among the # of households in the US. Those families in foreclosure will have their checks made out to them and the mortgage/auto/whatever company. That way the citizens' needs are met, and in turn, so are those companies they owe. AND for those who are not in foreclosure, they will do one of two things: spend it, which goes back into the economy & makes retailers happy, or save it, which makes the banks happy.
11-18-2008 @ 9:05AM
pastry said...
Ok folks, it's not about pens and paper clips. Start at the top with the people who have been living beyond their means for so many years, they don't know what it is like to cut back, and no one has forced them to. Cut the salaries of the top bananas so that the little people at the bottom of the tree can catch a few of the scraps. Compromise from top to bottom is what will keep the industry afloat.
11-18-2008 @ 9:08AM
Country Hank said...
Union workers making the equivelent of $78 an hour (including benefits) and getting 2 year's pay as severence packages are unrealistic and far exceed the realities of today's workplace. This is certainly a big part of why the big three are in trouble. I have taken 2 pay cuts in two years and have no such severance or pension guanrantees. The unions are bankrupting their employers. Job security?
11-18-2008 @ 9:11AM
D said...
I would think that if the automakers just stopped making so many models of cars - they would be much better off. Cadillac sold less than 2000 Escalades last year, and yet they have en entire factory tooled to make THAT vehicle?! No wonder they are in over their heads. NOT everyone needs a luxury vehicle, nor can they afford it, yet these idiots just keep churning them out. It would serve them right for Toyota or Honda to take them over and then do what?!?!? Uhm, take the jobs to their countries where people are much less greedy and stupid!
11-18-2008 @ 9:20AM
njtopman4u said...
Let 'em rot!
Goodbye GM.