Rahm Emanuel: 'F*ck the UAW'

The first insider book from an ex–Team Change official is due out shortly, and it's said to contain a bunch of why people buy these books. The name is Overhaul by Steven Rattner, the short-lived car czar. From the press release:

In Overhaul, due out in October, Rattner provides a gripping account about how he led the largest restructuring in American history — working against a ticking clock and vocal opposition to keep General Motors (a nightmare of huge proportions) and Chrysler (a company so close to death it was nearly sacrificed) in operation and to save more than a million jobs. He crafts a tightly plotted narrative of political brinkmanship, corporate mismanagement and personalities under pressure in a high-stakes clash between Washington and Detroit.

The book should be interesting on many fronts, not the least of which is the auto industry itself. Wheels within wheels, as it were — GM had that hated UAW deal (hated by all who hate unions); Obama had the right wing to please; and Chrysler had as owners a hedge fund with big DC friends (John Snow, Dan Quayle and, er, Steven Rattner).

So I'm looking forward to it. We'll see if the Rattner book equals the first Bush book, Ron Suskind's The Price of Loyalty, which featured the stylings of outed insider Paul O'Neill.

In the meantime here's a tidbit from HuffPost writer Marcus Baram, who was granted an exclusive peek under the covers (click through for all the goods):

In "Overhaul", his upcoming chronicle of his reign as "car czar," Steven Rattner offers an insider's account of the Obama administration's rescue of the auto industry. And he pulls no punches when it comes to describing the foibles of such heavyweights as Rahm Emanuel, Tim Geithner, Larry Summers and Sheila Bair. ...

Rattner depicts White House Chief of Staff Rahm Emanuel as a force to be reckoned with who disparaged unions -- once quipping "Fuck the UAW" -- and who effectively supervised Treasury Secretary Tim Geithner during his first rocky months on the job by dictating his public appearances and staff picks.

He also depicts infighting between economic advisers Larry Summers and Austan Goolsbee and describes FDIC Chair Sheila Bair as a stubborn obstacle to the work of the auto rescue team.

So while we're waiting for the actual book, I leave you with two questions:

1. Did Rahm Emanuel really say "Fuck the UAW"?
   
2. Was Rahm really running Geithner the way a LeCarré control runs a field agent?

If so, that's trouble on two fronts. It means that the Bush–Rove use of the exec branch as an arm of the political branch is no longer a one-off; it's metastasized into "just the way it's done."

And how does Obama not share Rahm's hatred of unions?

GP Read More......

X Prize Challenge finalists: Create the car of the future

The X-Prize Foundation offers prize money and awards for innovative technology that meets socially important technical challenges. From their blurb (my emphasis):

The X PRIZE Foundation is an educational nonprofit organization whose mission is to create radical breakthroughs for the benefit of humanity thereby inspiring the formation of new industries, jobs and the revitalization of markets that are currently stuck.

The Foundation's latest challenge — technology that cleans oil off water surfaces. Previous challenges range from space travel to genome sequencing.

The following Rachel Maddow clip highlights their "dream car" challenge — create an automobile that gets the equivalent of 100 mpg, has a 200-mile range, is safe and producible. The contest is down to nine finalists. Chris Hayes, subbing for Rachel, in a fascinating segment:



One reservation — I'm not a fan of public-private partnerships; I think the public gets screwed most of the time. The beast is still the beast, after all. Despite (or because of) their non-profit status, X Prize's challenges seem to have lots of corporate and foundation "partners". The auto competition is "partnered" with Progressive Insurance. The oil challenge is "partnered" with Wendy Schmidt, president of The Schmidt Family Foundation, and co-founder of the Schmidt Marine Science Research Institute.

Both of these orgs have naming rights to their competition — it's officially the "Progressive Insurance Automotive X PRIZE" for example. Kind of like the "Frito-Lay It's-All-in-the-Wrist Olathe Kansas Bowl".

So this may be wonderfully generous and unselfish, but still, color me questioning. There's a lot of patent money on the table. (Mm, money...) Still, great stuff technically.

Technically yours,

GP Read More......

Reich: 'American companies may never rehire large numbers of workers'

If Robert Reich is to be believed, it's the end of an era that started when your great-grandfather was just a thought:

The Great Decoupling of Corporate Profits from Jobs

Second-quarter earnings reports are coming in, and they’re making Wall Street smile. Corporate profits are up. . . . Big businesses have recovered almost 90 percent of what they lost. . . . So with all this money and profit, they’ll start hiring again, right? Wrong – for three reasons.

First, lots of their profits are coming from their overseas operations. So that’s where they’re investing and expanding production.

GM now sells more cars in China than it does in the US, but makes most of them there. The company now employs 32,000 hourly workers in China. But only 52,000 GM hourly workers remain in the United States – down from 468,000 in 1970. . . .

[Two more reasons worth clicking through to read]

The reality is this: Big American companies may never rehire large numbers of workers. And they won’t even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won’t start buying against until they know they have reliable paychecks. (h/t Brilliant at Breakfast)

To which I'll add, American consumers won't start buying until they pay down the mountain of debt they spent enjoying the RBC (Reagan-Bush-Clinton) "prosperity." Be prepared, folks, just in case. Trim expenses hard, and if you can, hoard cash. Après Bush, le Déluge unless we're very lucky.

GP Read More......

Sec. of Transportation: Toyotas on recall list ' are not safe'

The Chairman of Toyota is on Capitol Hill today. So, is the Secretary of Transportation, Roy LaHood:

Rep. Elijah Cummings (D-Md.) confronted Transportation Secretary Ray LaHood, who had earlier skirted a direct question from Oversight and Government Reform committee chairman Ed Towns (D-N.Y.), who asked: Are Toyotas safe to drive?

Cummings said, "I don't think you really answered the question, 'Are Toyotas safe to drive?' "

LaHood came right back and answered directly this time: "For those cars that are listed on our Web site...those are not safe. We've determined they're not safe. We believe we need to look at electronics in these cars because people have told us that's an issue."

He continued: "For now, any car that's on the Web site needs to go back to the dealer because they're not safe."

The DOT's recall list is here.

It's just stunning that this problem got to this point without anyone, either at Toyota or in the government, addressing it. This didn't just endanger Toyota drivers, which would be bad enough, it put every driver at risk. Read More......

New GM CEO to be paid $9 million

Let's see how being the CEO of a telco that had little competition compares to the automobile industry. It will no longer be as easy to control Congress as GM (and ATT) did in the past. If he manages to turn around the company, he'll be worth it though even modest growth will be a challenge. Paying such a luxurious compensation plan this early sounds, well, a bit early.

General Motors (GM) has said chief executive Ed Whitacre will get an annual salary of $1.7m (£1.1m), plus $7.3m in shares at a later date.

The pay package was approved by the US Treasury, which spent billions of dollars bailing out the carmaker last year and now owns a large stake in it.

GM also said Mr Whitacre's predecessor, Fritz Henderson, is being paid $59,090 a month as an adviser.

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Ford makes a profit

When a U.S. car company is profitable, it's considered breaking news in 2010. I got "Breaking News" alerts from all the major outlets because Ford is making money again:

The Ford Motor Company earned $2.7 billion in 2009 and said Thursday that it now expected to be profitable in 2010 as well.

The profit for 2009, equal to 86 cents a share, was a swing of $17.5 billion from 2008, when the company lost $14.8 billion. It is Ford’s first full-year profit since 2005.

The company ended 2009 with $25.5 billion in cash reserves, nearly twice the $13.4 billion it had at the start of the year.

Ford was the only U.S. auto maker that didn't get a bailout. But, the government (meaning taxpayers) did save the auto industry (including Ford)::

To be sure, the industry's modest progress has come at a large cost to taxpayers. Fitch, the credit-rating service, estimates total direct and indirect government assistance to the U.S.-based manufacturers during the recession at a staggering $125 billion. That includes the cost of capital injections for GM, Chrysler and their respective financial arms, as well as Cash for Clunkers, supplier guarantees, Energy Department loans (which Ford also has tapped) and aid from other governments such as Canada.

Looks like our investment is paying off, in the short term anyway. Read More......

China now the largest car market

When you think back to the not-so-old film footage of mobs of people riding their bikes in China, it's hard to imagine this. It's also a bit funny to think how many in the west are now encouraging bike riding to ease traffic, combat climate change and get healthy. The Guardian:

China has overtaken the US to become the biggest car market in the world as government policy initiatives spur demand.

China sold more than 13.5m vehicles last year, the official Xinhua news agency said today, compared with 10.4m cars and light trucks sold in the US, the lowest level in 27 years.

The Chinese tally includes heavy vehicles but is still higher than that of the US after roughly 650,000 units of heavy trucks are deducted, according to Orient Securities, the Chinese brokerage.

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GM making progress. Losses down, will start paying us back (us meaning taxpayers)

In the new economic world, losing "only" $1.15 billion in the 3rd quarter is the new good:

General Motors said on Monday that its finances had improved to the point that it could begin repaying its government loans, though it lost nearly $1.15 billion in the third quarter after emerging from bankruptcy in July.

G.M. said it increased its cash reserves by $3.3 billion from July 10 to Sept. 30, ending the quarter with $42.6 billion on hand. It plans to make a $1 billion payment to the federal government in December, more than five years before the loans are due, and to make similar quarterly payments after that.

We, meaning taxpayers, may get out of the car business sooner than expected. And, that actually is good. Although, it won't be too soon according to GM's leader:

Mr. Henderson said he believes Treasury will be a shareholder in G.M. for a long time. Paying the loan is a first step toward unwinding government involvement, but he does not see the Treasury leaving the scene for some time to come.

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Ford reports third quarter profit of $1 billion

Wow! This is very welcome news for most people though I suppose Limbaugh and the America-haters won't like it. After all, it might damage their talking points about Obama and the Democrats doing everything wrong.

Ford Motor Co. earned $1 billion in the third quarter, fueled by U.S. market share gains, cost cuts and the government's Cash for Clunkers rebates.

The Dearborn, Mich.-based automaker on Monday reported net income of $997 million, or 29 cents per share. Ford says it now expects to be "solidly profitable" in 2011. Previously the automaker said it would be break-even or better.

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240 miles per gallon

Pretty amazing. The car may hit the street in the next few years.

Now the idea of the one-liter car has been resurrected. VW’s biggest news at the Frankfurt auto show was the L1 concept, a prototype that "is close to production" and "will be developed," the company says. Three ingredients were needed to make it happen: a supremely efficient powertrain, great aerodynamics, and lightweight engineering.

As to the powertrain, VW has opted for a two-cylinder, 39-hp turbo-diesel engine combined with a 14-hp electric motor. There is a stop/start system and a seven-speed dual-clutch transmission. The L1 can reach 100 mph, but fuel economy at that speed drops to a shameful 1.38 liters per 100 kilometers, or 170 mpg.

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Taxpayers face losses on Bush's auto bailout... but so what?

Yeah, I read the headline and thought "damn, we got screwed." But you know what, what else were we supposed to do? Potentially two million jobs were at stake, and we were on the brink of a depression. We were going to chuck two million jobs, and guarantee a depression, in order to stick to our money-saving principles? If we can get some money back, great. And as much as I don't like these ongoing bailouts, it's better than sending the nation into another great depression. Read More......

Cash for clunkers lives on

The Senate delivered today:

The 60 to 37 vote follows House approval of a similar measure last week and appears to save the government plan from an unexpected early shutdown. The White House supports extending the program, and the new funds are predicted to last until Labor Day, Transportation Department officials have said.

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Cash for clunkers lives on

Last night, I posted the news that after only six days, the "cash for clunkers" program was already running out of money. It was that popular.

Well, the program lives on. This afternoon, the House passed legislation giving the clunkers program another $2 billion:

The House approved a bill Friday afternoon to provide $2 billion to continue the federal government's week-old "cash for clunkers" program, which has proven so popular with consumers that it was almost out of cash. The vote was 316 to 109.

I'm trying to get some stats on how many cars have been sold in the past week. It must be some kind of record.

After the break, Obama weighed on "Cash for clunkers" today while talking about the economy. He seems quite pleased with its success and the quick action to keep it going.

Obama's statement from the White House transcript:

Now, one of the steps we've taken to boost our economy is an initiative known as "Cash for Clunkers." Basically, this allows folks to trade in their older, less fuel-efficient cars for credits that go towards buying fewer, more -- newer, more fuel-efficient cars. This gives consumers a break, reduces dangerous carbon pollution and our dependence on foreign oil, and strengthens the American auto industry. Not more than a few weeks ago, there were skeptics who weren't sure that this "Cash for Clunkers" program would work. But I'm happy to report that it has succeeded well beyond our expectations and all expectations, and we're already seeing a dramatic increase in showroom traffic at local car dealers.

It's working so well that there are legitimate concerns that the funds in this program might soon be exhausted. So we're now working with Congress on a bipartisan solution to ensure that the program can continue for everyone out there who's still looking to make a trade. And I'm encouraged that Republicans and Democrats in the House are working to pass legislation today that would use some Recovery Act funding to keep this program going -- funding that we would work to replace down the road. Thanks to quick bipartisan responses, we're doing everything possible to continue this program and to continue helping consumers and the auto industry contribute to our recovery.

So I'm very pleased with the progress that's been made in the House today on the "Cash for Clunkers" program. I am guardedly optimistic about the direction that our economy is going. But we've got a lot more work to do. And I want to make sure that all the Americans out there who are still struggling because they're out of work or not having enough work know that this administration will not rest until the movement that we're seeing on the business side starts translating into jobs for those people and their families.

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"Cash for clunkers" is out of money. Already. In less than a week.

Wow. That was quick. In just six days, the "cash for clunkers" bill has run out of money:

The U.S. government plans to temporarily suspend its "cash for clunkers" incentive program because Obama administration officials believe its $1 billion budget has been exhausted after just one week, said several congressional officials.

Department of Transportation officials contacted lawmakers offices Thursday evening to inform them the program would be put on hold as early as Friday, these people said.

The program, which offers rebates of up to $4,500 to consumers who trade in old vehicles and buy new, more fuel-efficient models, was launched July 24 and sparked a surge in car sales.

"It was an absolute success," said Michael J. Jackson, chief executive of AutoNation Inc., the U.S.'s largest chain of auto dealerships. "There's a very compelling case the government should put more money into it. It's a great stimulus to the economy.

Congress had expected the $1 billion set aside for the rebates to last several months and set up the program to expire Nov. 1.

By my very primitive calculation, using the highest rate of $4,500 per car, over 220,000 new cars were sold in the past six days. That has to be some kind of record. Read More......

Failed GM CEO to walk away with $10 million retirement

The bailout of the auto industry was not as luxurious as Wall Street but this retirement package is not too shabby. Clearly Wagoner didn't make enough money during his tenure while driving the company into the ground. It's yet another example of a poorly implemented bailout that has allowed the select few to prosper enormously. For the taxpayers who have funded these bailouts and are being pummeled during the recession, all they get is a lousy bill. Any talk about class warfare ought to be addressing the flogging of the middle class by the narcissistic extreme upper class.

Former General Motors Corp. Chairman and CEO Rick Wagoner will retire Aug. 1 with a pension and benefit package the automaker valued at more than $10 million.

Wagoner, 56, who was ousted by the Obama administration on March 30, will get $1.64 million in benefits annually for each of the next five years, plus an annual pension of $74,030 for the rest of his life, according to company documents filed Tuesday with the U.S. Securities and Exchange Commission.

Wagoner, who spent 32 years with the company, can also choose to cash out his company-provided life insurance policy at $2.6 million, according to the filing.

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Green technology is bad for business

Consumers would never buy it so let's quit trying and stick to our dear friends from big oil who know what's best. Reuters:

Is green becoming mainstream? A new global survey shows nearly six in 10 people would choose an environment-friendly car over a petrol-powered one, even if they had all the money in the world.

The survey of 13,500 city dwellers in 18 countries, by market research firm Synovate, also showed that over a third of respondents said they would either use public transport, walk, or cycle more often this year, partly to save on fuel costs but also for the sake of the environment.

"More and more, owning a car may not be viewed as that responsible," said Scott Miller, CEO of Synovate Motoresearch. "But car makers are producing more and more options that will appeal to this fast-growing group of green-inclined people.

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Fiat takeover of Chrysler complete

The articles about this are not written well at all. Including this NYT piece and this by Dow Jones. It's not at all clear if Fiat actually owns Chrysler (they only have a 20% stake), nor is it clear if the new company Fiat and Chrysler are forming is a third company, apart from Fiat and Chrysler, or whether it's a new company combining what was Fiat and Chrysler. Anyway, the deal is done.

Okay, here's a better article from CNNMoney. Still not totally clear. Read More......

Michael Moore on GM's bankruptcy

From Michael Moore:

It is with sad irony that the company which invented "planned obsolescence" -- the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one -- has now made itself obsolete. It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh -- and that wouldn't start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the "inferior" Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars? History will record this blunder in the same way it now writes about the French building the Maginot Line or how the Romans cluelessly poisoned their own water system with lethal lead in its pipes.

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GM filing for bankruptcy at 8AM today

Growing up I never thought that I would see this day. Even in their faltering "heartbeat of America" phase when fighting back against Japanese competition it did not even sound like a remote possibility. NY Times:

President Obama will push General Motors into bankruptcy protection on Monday, making a risky bet that by temporarily nationalizing the onetime icon of American capitalism, he can save at least a diminished automaker that is competitive.

The bankruptcy, to be filed in New York, is a moment of reckoning for an industry that was once at the heart of the American economy. It culminates a remarkable four months of confrontation between Washington and Detroit that is expected to result in a drastic downsizing of the company.

It also places the government in uncharted territory as a business owner, as it takes a 60 percent ownership stake in the company during its restructuring.

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GM moves much closer to bankruptcy

The one-time lion of American industry is inching closer to bankruptcy this morning:

General Motors on Wednesday prepared to face the fallout from a failed debt exchange that sends the largest U.S. automaker closer to a bankruptcy filing expected by the end of the month.

GM bondholders had until midnight to trade $27 billion in debt for a 10-percent ownership stake in the reorganized company that U.S. officials have said could emerge from a quick trip through bankruptcy court.

As the deadline passed early on Wednesday there was no immediate word from GM on how much debt the offer had succeeded in retiring. The Treasury also had no immediate comment.

So many members of Congress doggedly protected the auto industry from forced innovation. Rep. John Dingell comes to mind. He chaired the powerful House Energy and Commerce Committee for years and fought legislation aimed at the auto industry. Oh, and his wife works for GM. Republicans did the auto industry's dirty work on issues like health care reform back in the 90s. All those powerful friends on Capitol Hill helped bring GM to where it is.

And, we're all going to end up owning GM now:

In better times, many employees of General Motors called their company “Generous Motors” because of its rich benefits.

Now G.M. may stand for something else: Government Motors.

The latest plan for the troubled automaker, which is expected to file for bankruptcy by Monday, calls for the Treasury Department to receive about 70 percent of a restructured G.M.

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