Public appearance is a killer- the AIG execs having large parties right after receiving bailout money, the automotive CEOs taking private jets to beg congress for money, Eliot Spitzer getting nailed for… getting nailed…   Well, how about this one for you – the UAW owns and operates a Golf course and Lakeside retreat valued at roughly $39 million.  Better yet, the properties lost $23 million in the last 5 years.

This makes me wonder… where does the UAW leadership get off saying they will fight the White House on terms of the Auto Bailout simply because the White House demanded the firms cut worker compensation to be on par with other Auto Makers.

In agreeing to provide federal assistance to General Motors and Chrysler, the White House demanded the firms cut worker compensation to the levels paid at the U.S. divisions of Toyota, Nissan and Honda. But Ron Gettelfinger, president of the United Auto Workers, said earlier this week that he would seek to remove the wage-reduction provision of the loan, calling it “an undue tax on the workers” who have already made “major” sacrifices for the benefit of the auto industry. 

You don’t think the $23 million dollars lost in the last 5 years is an “undue tax on the workers”, do you Ron?  

As with my comments in the past, I want to be very clear – I have no problem with UAW workers but with their Officers.  If the UAW was truly concerned about the health of the organization, and the workers under their care, why not act like it?  

Why?  Because, as with the auto loans, it is easier to have someone pay for your problems….

Wait a second…. was the world asleep when this happened – Canada has offered $3.29 billion in loans to the Canadian subsidiaries of U.S. Automakers.

How much will the automakers obtain from governments around the world in the name of a “bailout”? For those keeping score at home, thus far we have…

$17 Billion from the United States
$3 Billion from Canada 

That’s a nice $20 Billion thrown at a problem that is larger than simply running short of money, it’s bad corporate management.  

Just so that I don’t offend any of my Canadian friends, I have no problem with your Government doing what it sees fit for it’s own interest. My issues are a) the automakers having loans in general and b) what will the the worldwide total “loaned” to Detroit?  

This will end up costing tax payers world wide more money than anyone had ever expected.

Roughly a month ago the big three went before Congress asking for financial assistance (bailout, loan, pick the term you would like to use) due to a potential collapse in the industry.  Actually, General Motors and Chrysler were the two organizations hurting the most.  Turned out that Ford, the company everyone expected to fall first, was in a better position that anyone had expected.

During Congressional proceedings, and a number of times since, General Motors boldly stated that “Bankruptcy is not an option”.  People scoffed at the arrogance of GM, except a large number of Politicians. Congress continued to push forward with financial assistance, until the air was let out of their balloon – Congress decided that it wasn’t going to happen.

Almost immediately the Bush Administration stated they would use TARP funds in order to prevent the collapse of the Detroit three…. and then nothing happened.  Deafening silence filled the space where there was once near definitive support from the Administration.  No real progress or information became available until today.  Suddenly a “controlled” bankruptcy was an option.

I thought everyone – Administration and automakers – said they would not accept such a situation.  But what exactly is a controlled bankruptcy?  Think about recent government actions – who have they helped?  

A controlled bankruptcy will look something like the AIG bailout. 

If this is the option chosen, I suspect the government will tell the affected automakers what products they can have, what lines need to be sold or closed, and what price structures need to be in place.  Oh, and they will have a majority of their debt wiped away.  Even with that option, members of the auto industry still say Bankruptcy is not an option – structured or otherwise.

Even in the face of some form of help, the industry does not want to change. What?  Yes, they still say bankruptcy is not an option as it will destroy the brand.  What they seem to be missing is that, essentially, their business needs to be completely restructured to achieve a level of competitiveness in the marketplace and have no ability to do so (and maybe no desire).  yet they have no desire to make the necessary changes. 

Tomorrow may very well be an interesting, if not, historic day in the economy.

The administration has been unable to provide support for the auto bailout (yet), and it appears the industry is showing the signs of weakness many had expected. Check the latest news from Chrysler:

SAN FRANCISCO (MarketWatch) — Chrysler said Wednesday that it will idle all of its manufacturing operations starting this Friday through at least January 19 in an effort to keep inventories more aligned with plunging U.S. demand for new cars and trucks. Due to customers’ inability to obtain financing, Chrysler dealers said that their sales volumes have fallen as much as 25% from a year ago.

Here is my take…

• Chrysler, obviously, does not feel a bailout will be coming from this current administration within the next week, or if a bailout is provided they do not feel the money will be available immediately
• Chrysler truly has little to no money at this point
• The potential impact on dealerships is huge as Christmas historically is a good car sales season