My Proposal to save the US Auto Industry
I will start with my credentials, and also with my biases.
I have been in the auto industry since 1982, and have worked my way from selling cars up to owning 2 domestic dealerships.
I also have a financial services company which has every type of franchise as a client.
Should the big "3" go away, I could easily replace them with a Japanese counterpart. The simple fact is, Hyundai and Nissan would love to bring vehicles into my Ford dealership.
The Big Three will require a capital infusion in order to survive. The problem is, without a complete overhaul in how the domestic industry is run, and regulated, the capital infusion will be a waste of money. OUR money.
The Big Three is not just three companies, as they are directly tied into national security.
During World War II, our domestic auto companies stopped production of new vehicles, and in appx. 3.5 years, produced the following (from a Time Magazine article:
The Big Three automakers all contributed and gained acclaim for their efforts. Chrysler became known for tanks, while Ford focused on airplanes and the newly designed four-wheel drive "Jeeps." Ford's Willow Run plant produced 300,317 military aircraft during the war. (A notable Willow Run product was the B-24 bomber, also known as "the Liberator.") General Motors manufactured light, medium, and heavy tanks, tank destroyers, armored cars, amphibious vehicles, aircraft engines, and propellers. Artillery shells, such as the one in the above photograph were produced by Oldsmobile, a division of General Motors. Over the course of the war, the automobile industry manufactured $29 billion worth of war goods. It provided 12.5 billion rounds of small arms ammunition , 245 million shells, and nearly six million guns. It is no wonder Detroit became known as the "arsenal of democracy."
Can anyone imagine what would happen if and when we need the auto companies to repeat this effort ? To the "Big 3", you have been there for us in our past, and now you need our help to survive. Read on below to find what someone who has a 7 digit investment in his 2 dealerships thinks about what we need from YOU. Check the word "need". The proper word is what we DEMAND from you.
In an effort to keep this somewhat concise, what needs fixed are four primary problems within the Auto Companies:
1. Management
2. Unions
3. Government
4. Retirees
If we are going to fix the auto industry, the excesses of the four groups, as listed above, will need fixed. Here are the rules each should be forced to live by.
Management:
The era of big dollar salaries is over. Alan Mulally (Ford CEO), you are taking a $28.2 million dollar salary. Rick Wagner (GM CEO), you get a $12.2 million salary, while Richard Nardelli (Chrysler CEO) is taking a $1 Base Salary and his compensation over that is based on the performance of the company.
CEO pay needs to be brought back to a multiple of what the typical worker makes, with a corresponding bonus for actually making a PROFIT
From now on, you will receive 10 times what the skilled laborers in your company make, plus 5% of the annual net profit.
Before you get all angry about this, the skilled laborer in your factories makes $33 per hour, so we are talking about a base salary of appx. $690,000 per year, plus health care, company car and an expense account.
As recently as 2000, Ford made a profit of $6 Billion. Alan Mulally, your share of profits of the magnitude would be $300,000,000. '
The rest of management will get to split 20% of the company's profits, with their maximum base pay being set at no higher than 5 times the hourly worker's wages.
Union:
To my Union competition, it is time you started being my friend. Every month, I have to buy the products you make, and sell them to people who have other options besides "our" products. The day of your getting paid a higher wage for building the cars than I do as a dealer for selling the cars for you has come to an end.
We are going to put you on the same wage scale as the Asian transplants, on average. This means you will be earning about $17 to $25 per hour, plus benefits.
We are, however, going to take the same 25% of profit that applies to the white collar workers, and split it up between all the laborers in our factories.
Again, using Ford as an example, we have about 60,000 factory workers today. Let's get back to making $6 Billion per year, and your annual bonus will be $25,000. That is $12 per hour in bonus, and this is quite achievable as an AVERAGE if you will concentrate on building the best vehicle you possibly can.
You also need to ask yourself: "If we can make this kind of money, why do we need a union taking part of our pay ?"
Government:
We need, besides you giving back to us some of the billions in taxes we have paid to you over the decades, to let us run our business.
Your role in all this is simple: Each year, the Big Three will submit to you a detailed financial statement so you can assure that the white collar and blue collar workers are each living up to it's collective end of the bargain.
Stop telling us what type of vehicles to make. The American People will purchase vehicles they want. The free market will always do the right thing.
Retirees:
You retirees need to understand something immediately: If you don't agree to a drastic change in your retirement plan, you will have nothing. I have talked to a lot of Big Three workers and retirees. You know that you took advantage of a company which had no choice but to capitulate to your increasing demands for higher wages, higher pensions, and forever health insurance.
I have listened to many of you laugh about how you knew the companies had to give in, because anything that even looked as if there was "union busting" going on had congressmen contacting the management team warning them to play ball.
We now have a situation in which 180,000 active GM workers are being told they need to pay the health care for 420,000 retirees and 120,000 surviving spouses.
This is not affordable.
What we are going to do is two-fold.
A. We are going to take the pension, as it exists today, and pay to the retirees a pro-rated portion of the account.
B. There is another health care plan for retirees, it is called Medicare. It is time you went on Medicare like every other retiree. If you want to purchase supplemental coverage, that is your decision.
Current workers and potential auto purchasers and ESPECIALLY THE AMERICAN TAXPAYERS are not responsible for your "royalty retirement".
In Conclusion:
To the Big Three, the UAW, The Government and Retirees, I agree that it is in America's best interest to have a thriving auto industry.
You need my help, and the help of tax payers across this beautiful country in order to survive.
Fine - Then you are going to abide by OUR rules. Before you get a penny of our $50 BILLION, you are going everything as listed above. You will have to file for chapter 11 bankruptcy protection. We know this is a bitter pill to swallow, but so is $50 BILLION.
Each of the Big Three plus the UAW will be signing an agreement based on the above proposal, and we taxpayers will be expecting to see the annual financial statements.
This should not be a bail out of a rotten system as we currently have. This should be a hand up to an industry that was once the best in the world, and who wants to once again be the best in the world.
