Obama's remarks on the US Auto Industry

[RadioFreeSeaLab]

http://uk.news.yahoo.com/22/20090330/r_t_rtrs_bs_company/tbs-uk-autos-obama-remarks-sb-03c9bed_2.html?printer=1


(Reuters) - Following are excerpts from President Barack Obama's Monday remarks about the U.S. auto industry's restructuring effort

In recent months, my Auto Task Force has been reviewing requests by General Motors and Chrysler for additional government assistance as well as plans developed by each of these companies to restructure, modernize, and make themselves more competitive.

Year after year, decade after decade, we have seen problems papered-over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we have reached the end of that road.

We cannot, we must not, and we will not let our auto industry simply vanish. But we also cannot continue to excuse poor decisions. And we cannot make the survival of our auto industry dependent on an unending flow of tax dollars. These companies -- and this industry -- must ultimately stand on their own, not as wards of the state.

That is why the federal government provided General Motors and Chrysler with emergency loans to prevent their sudden collapse at the end of last year -- only on the condition that they would develop plans to restructure. In keeping with that agreement, each company has submitted a plan to restructure.

But after careful analysis, we have determined that neither goes far enough to warrant the substantial new investments that these companies are requesting. And so today, I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success.

What we are asking is difficult. It will require hard choices by companies. It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognise that they cannot hold out for the prospect of endless government bailouts. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.

GENERAL MOTORS

So let me discuss what measures need to be taken by each of the auto companies requesting taxpayer assistance, starting with General Motors. While GM has made a good faith effort to restructure over the past several months, the plan they have put forward is, in its current form, not strong enough.

However, after broad consultations with a range of industry experts and financial advisors, I'm confident that GM can rise again, provided that it undergoes a fundamental restructuring. As an initial step, GM is announcing today that Rick Wagoner is stepping aside as Chairman and CEO. This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it's a recognition that it will take a new vision and new direction to create the GM of the future.

In this context, my administration will offer General Motors adequate working capital over the next 60 days. During this time, my team will be working closely with GM to produce a better business plan.

They must ask themselves: have they consolidated enough unprofitable brands? Have they cleaned up their balance sheets or are they still saddled with so much debt that they can't make future investments? And above all, have they created a credible model for how to not only survive, but succeed in this competitive global market?

Let me be clear: the United States government has no interest or intention of running GM. What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company.

CHRYSLER

The situation at Chrysler is more challenging. It is with deep reluctance but also a clear-eyed recognition of the facts that we have determined, after a careful review, that Chrysler needs a partner to remain viable. Recently, Chrysler reached out and found what could be a potential partner -- the international car company Fiat, where the current management team has executed an impressive turnaround. Fiat is prepared to transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to building new fuel-efficient cars and engines here in America.

We have also secured an agreement that will ensure that Chrysler repays taxpayers for any new investments that are made before Fiat is allowed to take a majority ownership stake in Chrysler.

Still, such a deal would require an additional investment of tax dollars, and there are a number of hurdles that must be overcome to make it work. I am committed to doing all I can to see if a deal can be struck in a way that upholds the interests of American taxpayers.

That is why we will give Chrysler and Fiat 30 days to overcome these hurdles and reach a final agreement -- and we will provide Chrysler with adequate capital to continue operating during that time. If they are able to come to a sound agreement that protects American taxpayers, we will consider lending up to $6 billion to help their plan succeed. But if they and their stakeholders are unable to reach such an agreement, and in the absence of any other viable partnership, we will not be able to justify investing additional tax dollar to keep Chrysler in business.

BANKRUPTCY

While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.

Now, I know that when people even hear the word "bankruptcy" it can be a bit unsettling, so let me explain what I mean. What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold.

What I am not talking about is a process where a company is broken up, sold off, and no longer exists. And what I am not talking about is having a company stuck in court for years, unable to get out.

GOVERNMENT WARRANTY

It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can -- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe.

In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warrantee.

AUTO SALES SUPPORT

Therefore, to support demand for auto sales during this period, I'm directing my team to take several steps. First, we will ensure that Recovery Act funds to purchase government cars go out as quickly as possible and work through the budget process to accelerate other federal fleet purchases as well.

Second, we will accelerate our efforts through the Treasury Department's Consumer and Business Lending Initiative. And we are working intensively with the auto finance companies to increase the flow of credit to both consumers and dealers.

Third, the IRS is today launching a campaign to alert consumers of a new tax benefit for auto purchases made between Feb 16 and the end of this year -- if you buy a car anytime this year, you may be able to deduct the cost of any sales and excise taxes. This provision could save families hundreds of dollars and lead to as many as 100,000 new car sales.

Finally, several members of Congress have proposed an even more ambitious incentive program to increase car sales while modernizing our auto fleet.

I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting today.

DIRECTOR OF RECOVERY

I am designating a new Director of Recovery for Auto Communities and Workers to cut through red tape and ensure that the full resources of our federal government are leveraged to assist the workers, communities, and regions that rely on our auto industry.

Edward Montgomery, a former Deputy Labour Secretary, has agreed to serve in this role. Together with Labour Secretary Solis and my Auto Task Force, Ed will help provide support to auto workers and their families, and open up opportunity in manufacturing communities. Michigan, Ohio, Indiana, and every other state that relies on the auto industry will have a strong advocate in Ed.

[makattak]

Year after year, decade after decade, we have seen problems papered-over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we have reached the end of that road.

Funny, I thought that was the government's plan, not the auto industry:

Social Security, Medicare...

Heck, even just paying for the debt- we'll just worry about it later...

[AZRedhawk44]

I am designating a new Director of Recovery for Auto Communities and Workers to cut through red tape and ensure that the full resources of our federal government are leveraged to assist the workers, communities, and regions that rely on our auto industry.

Edward Montgomery, a former Deputy Labour Secretary, has agreed to serve in this role. Together with Labour Secretary Solis and my Auto Task Force, Ed will help provide support to auto workers and their families, and open up opportunity in manufacturing communities. Michigan, Ohio, Indiana, and every other state that relies on the auto industry will have a strong advocate in Ed.

Ha!

Show me a labor-agitator that has ever been interested in cutting through red tape... and I'll show you the CEO or executive he disemboweled to get his way.

I also like the prioritization here.  Auto worker families, manufacturing communities.  Not making the auto market exciting and thriving again.  Not balancing the books.  Not advancing technology.

[zahc]

I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success.

Wait, isn't that what companies generally do all along, in order to maintain an increase their share prices? And didn't the American people say that they were NOT impressed and NOT confident in the long-term prospects for success, when the share price plummeted?

[longeyes]

The remarks apply better to Government.  Let them clean up their own house first.

[Balog]

I wonder how the feds guaranteeing warranties will work?

[Declaration Day]

What we are asking is difficult...... It will require unions and workers who have already made painful concessions to make even more.

Cry me a river. 

So auto factory workers, whose families have thrived for generations on artificially inflated benefits and labor costs might actually have to work for (gasp!) what their labor is worth.

I live in SE Michigan, right in the heart of union town.  I've been here all my life.  What the UAW has created is:

1. The problems with the big 3 that we have today.
2. Worship of the Union labor lifestyle, much like a religion.
3. Four generations of uneducated losers (no, not ALL of them, but plenty.  I call some of them family).

[Gewehr98]

Chrysler merging with Fiat, eh?   

[Declaration Day]

Chrysler merging with Fiat, eh?   

Yeah, so they can bring tiny, underpowered re-badged Fiats here that nobody wants, even with gas at $4.30 per gallon.  Sounds like a winner!

[Headless Thompson Gunner]

Forget his remarks.  I care little bout what the speech writers placed in front of Obama.

Does it not bother anyone else that the President of the United States just fired a private employee of a private company?  And he got away with it?

[RadioFreeSeaLab]

Bothers the hell out of me.  What can I do about it?

[Monkeyleg]

It sounds more like Obama told GM that they could either fire Wagoner or get money, but not both.

The position of Auto Czar is interesting. Obama is coming up with all sorts of executive positions to determine who gets what money. George Will and others have pointed out that this is patently unconstitutional. Congress appropriates tax funds, not the executive branch. Congress can't just rubber-stamp a bill that allows an Obama appointee to hand out money.

I wonder if the SC will ever hear such arguments. It may be one of the few ways to stop Obama.

[Headless Thompson Gunner]

It sounds more like Obama told GM that they could either fire Wagoner or get money, but not both.

Who at GM could fire Wagoner?  The Board?  I hear most of them were forced out alongside Wagoner.

[FTA84]

Forget his remarks.  I care little bout what the speech writers placed in front of Obama.

Does it not bother anyone else that the President of the United States just fired a private employee of a private company?  And he got away with it?

Actually, yes it does and that is why I came to visit APS this afternoon.  Unfortunately, no one was talking about it then.  Maybe it is because there is nothing to talk about?  The powers that be just took another large chunk of our freedom, we can complain to them, but we know it falls on deaf ears.

It's like getting punched in the face.  You can complain after the fact, but in the end, it will not change that you just got punched in the face.

Edit:  I realize it was not a firing in the traditional sense but a 'force out' as described by Monkeyleg.  My issue is that if the government fires the head of a company then the government must be hiring the heads of a company (atleast in a defacto manner, firing people hired until one they like is hired).  It is disturbing that they are so arrogant that they think they can decide who is most fit to run a company.  It is not even socialist, it is straight out communist.

[Headless Thompson Gunner]

I heard a teaser for the nightly news tonight saying that Obama is going to offer $7,000 tax credits to people who buy new cars. 

I guess Obama is going to give people money (tax money, other peoples' money) to buy cars from his newly-stolen car company.

Are we scared yet?

[RadioFreeSeaLab]

Yes, I'm scared, and pissed off.  There's nothing I can do about it.  I write my representatives, and I get, basically, a big f**k you in reply.  I never voted for these idiots, but the other idiots in my state keep voting them in.

[Headless Thompson Gunner]

What ever happened to the balanced budget amendment idea that was floating around a while ago?  Seems like now would be the perfect time to revive it. 

If the elected goons don't do what's right, then we should go over their heads and do it ourselves.

If not that, then we need to make darned sure we vote these goons out of office in 2010.  We cannot continue at this pace for very long.

[RadioFreeSeaLab]

How can we go over their heads?

[FTA84]

I never voted for these idiots, but the other idiots in my state keep voting them in.

The country is addicted to entitlement (if not through welfare, in public safety, public schools, public roads, public healthcare, public disability insurance, public retirement, ect).  Like all drug addicts, they won't change until they crash and are forced to change.  The Dems spend like this because this is what their base wants.  Their base wants cars for everyone, houses they can't afford, ect. ect. all while whining "I am a hardworking American, I deserve these things!  I think that my boss doesn't do sh** so gimme!".  There are very few places (population wise) that one person could run on the kind of entitlement cuts that we need and ever even have a laughing chance of getting elected.  The country's financial system needs to collapse before that will happen.  Since national financial collapse can only be talked about in relative terms, I don't forsee our financial system collapsing for a long time, because we are proped up by so many other countries.  Everytime we go down, they go down, making us look as good or better.

[Gewehr98]

I actually liked my Fiat Spyder 2000.

Fiat owns a large chunk of the automotive world, btw.

We see their products via Case, International Harvester, New Holland, Steyr, Iveco, etc.

GM and Fiat had a partnership from 2000-2005, too.

Ford and Fiat had considered a partnership in 2004.

So it's not terribly unheard of...

I also note with interest, per CNN, that Wagoner is eligible for a $20 million retirement package?

Nice.

http://www.cnn.com/2009/US/03/30/gm.ceo.compensation/index.html

[digitalandanalog]

I also note with interest, per CNN, that Wagoner is eligible for a $20 million retirement package?

My first though about this was, "What kind of Golden Parachute does he get as soon as he bails?"

My second thought wasn't really thinking...rage doesn't qualify as rational thought.

[Ryan in Maine]

Fiat is probably a better company than Chrysler anyways.

Heck, maybe a merger will even help push diesel.

From my my point of view, here in 2009:
Town & Country? Good job. Keep improving it.
300? Decent. Didn't live up to the hype, but could be salvaged.
Aspen? Decent, but unnecessary. What could come of it?
Sebring? Scrap it. Seriously.
PT Cruiser? Scrap it. Seriously.

Charger? Good job. Keep improving it.
Caravan? Good job. Keep improving it (along with the Town & Country).
Ram? Good job. Keep improving it.
Dakota? Good job. Keep improving it.
Avenger? Decent. Needs improving.
Caliber? Decent. Nothing special but is priced pretty well.
Durango? Decent. Could use some improving.
Journey? Decent. Unnecessary though. Where can it go?
Charger? Can't say yet. I don't see how it can go wrong though.
Nitro? Scrap it. Yuck.

Wrangler? Good job.
Grand Cherokee? Good job.
Liberty? Decent. Don't like the latest changes much though.
Patriot? Decent. With some improvements it could stick.
Compass? Scrap it. This could be a way better vehicle than it is. There's potential if there's a will.
Commander? Scrap it. It doesn't have legs to stand on.

Added up, that's really only 7 good vehicles they're making out of the 21 I listed (just over a 30% "success" rate). There are others that have the potential to be more, but for some reason aren't. A few are getting worse. Some look like they were manufactured after missing a deadline. Chrysler doesn't even seem to be trying. I'm sure there's plenty of potential for debate with my opinion, but really, how many of those vehicles would you actually want to drive when you look at other manufacturers?

Sidebar: What role might Alfa Romeo play in this if it happens? That could bring some interesting cars into the US market.

[MicroBalrog]

The position of Auto Czar is interesting. Obama is coming up with all sorts of executive positions to determine who gets what money. George Will and others have pointed out that this is patently unconstitutional. Congress appropriates tax funds, not the executive branch. Congress can't just rubber-stamp a bill that allows an Obama appointee to hand out money.

This is but a rational conclusion of decades upon decades of government expansion. In a government that takes care of approving new medicine, regulating children's toys, drugs, the Internet, new electronic, bailing out banks, education, urban development, model rocketry, guns, dog food, protected species, national parks and monuments, border security, a two-million-man army, anti-discrimination statutes, health care for the elderly, the postal service, interstate highways, driver's licensing, and several dozen issues, it is not possible for either the legislature or the voting public to keep reasonably informed about all of these issues.

The solution, if you have a government that big, is to appoint executive officers (that's 'bureaucrats' in non-euphemised English) and delegate the daily management of such issues to them. To some extent this is remedied by earmarks – which are corrupting, but at least they are administered by a democratic process - but in general this is the irresistible trend of a government this size. Look at Europe. They have hordes of bureaucrats for this very reason.

Now, one could argue that this is not what the Founders meant – but then, how many people care about that, these days?

[De Selby]

The automakers, along with other major industrial and financial players, demanded a welfare state to cover their losses and risks.  They got it.

That's how this system works-people with lots of financial and social influence demand things, and the politicians respond.  It's not a direct democracy, and if it were, you'd probably see more European style socialism, as the population gets wise to the fact that it can vote itself a bigger share of the GDP fairly quickly in a straight up democracy.  This is especially true where much of the GDP is in the hands of unsympathetic types (like execs who take millions in bonuses after they nearly wrecked the entire nation's financial system.)

In terms of the constitution and the role of the Federal government, well folks, if you couldn't get people outraged enough to stop the government from asserting its right to throw you in prison for life with no trial, and to torture you to boot, it's pretty much a guarantee that constitutional arguments will be laughed off-scene when it comes to the automobile bailout. 

[Dannyboy]

Sidebar: What role might Alfa Romeo play in this if it happens? That could bring some interesting cars into the US market.

FIAT is supposedly gonna bring 4 cars between Fiat and Alfa Romeo, to include the Alfa Romeo MiTo and the Fiat 500, as well as some of their small engines.  As far as small, underpowered cars go, I'd rather drive either of those, especially the MiTo, than the Yaris, Versa, Fit, or any of those hideous Japanese mini cars.  If it happens I might even buy a MiTo, although, I really hope they bring the GTA concept.
http://www.worldcarfans.com/9090223.006/alfa-mito-gta-concept-officially-revealed
http://www.worldcarfans.com/9090310.039/alfa-romeo-mito-gta-promotional-clip-hits-the-spot