Auto sales continue to grow

Maybe the GOP wants to keep talking about how bad the auto rescue was, but the facts say otherwise. Unlike the bank bailouts where it was all about protecting the lifestyle of the richest of the rich, the auto rescue was about saving middle class jobs. It worked and it Obama's plan didn't destroy families the way the Romney plan would have destroyed them and the industry. CNBC:

“The combination of new products, available credit, lower fuel prices and modest economic growth was a stronger influence on consumer behavior than economic and political uncertainty,” said Kurt McNeil, General Motors’ vice president of U.S. sales.

GM posted a solid, 16 percent year-over-year gain, June bringing the maker’s best monthly unit sales since September of 2008.

Chrysler, meanwhile, delivered its 27th consecutive monthly year-over-year increase — an increase of 20 percent — making it Chrysler’s best June in five years.

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Romney GM proposal would cost taxpayers $16bn

You know who else was
in favor of the GM bailout?

In the Romney family budget, $16bn is a rounding error, for the rest of America, including the federal budget, that's a huge amount of money.  What can Romney possibly be thinking? From Jia Lynn Yang at the Washington Post:

Republican presidential candidate Mitt Romney said the government should shed its stake in General Motors as soon as possible, even though selling the shares now would lock in billions of dollars in taxpayer losses.

If the government were to follow Romney’s prescription, it would mean at least $16 billion in losses. The Treasury Department and some auto analysts argue that GM’s shares are priced too low now and that waiting longer could help recoup more taxpayer money.

It's incredibly flippant of Romney to suggest that $16bn lost in taxpayer money is no big deal. But that's exactly what he's implicitly suggesting by endorsing the notion that we just up and sell our stake in GM, when many feel we can avoid those losses by simply waiting a bit longer.

But Mitt is afraid that if the US government continues to own 32% of GM, Boris and Natasha win.

Not to mention, as the Washington Post smartly points out, the auto bailout - which has been wildly successful - is a sore point for the Romney campaign. Romney was a lead voice opposing the bailout, while he now touts its success. You'd think Romney would want to avoid talking about the bailout so as not to remind voters that he doesn't really believe in anything.

Romney has run into some political trouble for his stance on the auto bailout. In November 2008, he wrote an opinion piece for the New York Times with the headline “Let Detroit Go Bankrupt,” in which he argued that a bailout of the auto industry would virtually guarantee its demise.

Now, Obama has been touting the success of the auto bailouts in ads.

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Romney takes credit for Big Auto recovery he was against

Dear god it never ends with Mitt Romney. John Kerry may have been a flip-flopper but Mitt Romney takes it to an entirely new level. Think of Kerry as the Diet Coke or the margarine of flip-floppers compared to Mitt Romney. While it's easy to appreciate Romney's creative ability to rewrite history in his mind and pretend that his past never happened, it's a concern when he's running for president. It's to the point where we should assume that he doesn't believe the internet or modern communication doesn't exist and everyone can easily retrieve his own words.

First, some history of Romney and his hard core opposition to the Detroit bailout. On November 18, 2008 Mitt Romney wrote A New York Times op-ed where he blasted the rescuing of Big Auto. Romney went as far as saying if Detroit received the bailout (that it received) "its demise will be virtually guaranteed." He was criticized by the CEO of AutoNation, since the CEO viewed the bailout as a success. Romney ignored the fact that the state of Michigan had a budget surplus thanks to the rescue plan that saved jobs and brought in tax dollars. But of course, that was almost four years ago so now Romney's position has changed completely.

Now Romney is flip-flopping on the auto bailout. While campaigning in Ohio, Romney went on local TV and said this:

"I pushed the idea of a managed bankruptcy, and finally when that was done, and help was given, the companies got back on their feet," Romney said in an interview inside a Cleveland-area auto parts maker. "So, I'll take a lot of credit for the fact that this industry has come back."

The problem is that the truth is significantly different.

The course Romney advocated differed greatly from the one that was ultimately taken. GM and Chrysler went into bankruptcy on the strength of a massive bailout that Romney opposed. Neither Republican President George W. Bush nor Democratic President Barack Obama believed the automakers would have survived without that backup from taxpayers.

To be fair to Romney, if he could manage to run from Obamacare being based on Romneycare, he will gladly ignore any truth and rewrite history for whoever he's speaking with at any given moment. Mitt Romney, human chameleon.

(Click here to follow me on Twitter @ChrisInParis) Read the rest of this post...

UAW profit-sharing bonuses to boost economy

Yeah, Mitt, that Big Auto bailout sure was a bad idea. Now even the little people have some money to spend. The end of the world must be near for the Romney's of the world who can't understand the importance of the middle class having work and having some money to spend. Bloomberg:

Mike Green says he already knows how he’s going to use a $7,000 profit-sharing check from General Motors Co. (GM): He’ll help his son buy a new car, throw him a graduation party and sock some money away in the bank.

“A lot of people are going to catch up on stuff,” said Green, president of UAW Local 652 in Lansing, Michigan, where GM builds Cadillacs. “People haven’t really had a raise since 2005. It’s kind of nice we get to reap some of the rewards now.”

The rebound in carmaker profits is putting money into the pockets of U.S. workers after years of belt-tightening. GM yesterday reported a record $9.19 billion in net income for 2011, which will mean profit-sharing bonuses of as much as $7,000 for 47,500 eligible UAW members. That’s an all-time high for GM, and up from an average of $4,300 for the company’s U.S. union workers last year.

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AutoNation CEO rips Romney over Big Auto bailout attacks

Interestingly enough, AutoNation CEO Mike Jackson believes that Romney would have done the same thing as Bush and Obama with rescuing the auto industry had he been in charge when the business was collapsing. The noise today is all about Romney stirring up the Republican voters and trying to get them to forget about Romney's moderate past. Had Detroit been allowed to fail, Jackson believes the results would have been catastrophic both for Big Auto as well as the overall unemployment rate in the US. CNBC:

LL: You were in numerous discussions during the crisis with the Auto Czar. We all know we were on the edge of a cliff and the cliff was crumbling. If Romney was President during that time and let the autos fail where would the US economy be right now? MJ: My belief is that if he was the President at that moment, he would have lead and acted as Bush and Obama did. However, if he had let GM and Chrysler liquidate—which would have dominoed and crushed the entire supplier system—we would have had a systemic shutdown of the entire US auto industry, millions of jobs lost, a depression and 20% unemployment.

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GM posted record profit in 2011 - thank you, President Obama. No thank you, Mitt Romney.

And the GOP presidential candidates are bashing the rescue of GM? The fourth quarter results suggest some problems still need to be addressed, but it's still an impressive year, all things considered.

The 103-year-old company made $7.6 billion in 2011, up 62 percent from 2010. Full-year revenue rose 11 percent to $105 billion. North America led the way with a $7.2 billion pretax profit. But problems surfaced that could hurt future earnings. GM lost $700 million before taxes in Europe, and lost $100 million in South America. GM’s fourth-quarter profit was flat with 2010. GM earned $500 million, or 28 cents per share. Revenue rose 3 percent to $38 billion. Before one-time items, GM earned 40 cents per share.

You know who's not responsible for saving the auto industry and millions of jobs?

Mitt Romney bet against America, and he lost.



More on Mitt Romney's proposal to let Detroit go Bankrupt here. Read the rest of this post...

Michigan has budget surplus thanks to Big Auto bailout

Raise your hand if you think Romney now regrets his bashing of the auto bailout. The Wall Street bailout was all about continuing the lifestyle of the 1% but the Big Auto bailout was about rescuing a state and the 99%. It may have been expensive, but people have jobs, which means tax dollars. Why are the GOP presidential candidates so offended by the middle class having jobs? ABC News:

"Since the depths of the recession, we've seen manufacturing stabilize and start to come back," said Robert Dye, chief economist for Comerica Bank. "What we've seen in the auto industry lately has been good news for the state." In fact, it's been very good news: Tax revenues have jumped so dramatically that Michigan now enjoys a $457 million budget surplus. The auto industry is driving the nascent recovery in Michigan, where manufacturing accounts for more than 20 percent of the state's economy. Indeed, U.S. car sales are revving up at the fastest rate in nearly four years, rising 11 percent in January over a year ago. The state's unemployment rate, while still higher than the national average,has dropped from 12.6 percent, in March 2009, to 9.3 percent in December.

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$5 gas this year?

This will certainly be a blow to the recovering US economy. At the same time, this should highlight the absolutely ridiculous handling of Big Auto by Washington for years. The country is flooded with gas guzzlers and it's that way because Washington helped create that problem. CNBC:

Get ready to pay $5 a gallon for gasoline this year.

John Hofmeister, founder of Citizens for Affordable Energy and the former CEO of Shell Oil’s U.S. operations, warned that there is a “better than 50 percent chance” the price of gas will spike on continued heavy demand in emerging markets and weak public policy at home.

Note from John: Drove by a gas station in DC next to the Watergate that's known for its usury pump prices. $4.99. Read the rest of this post...

Chrysler to add 1100 jobs in Detroit factory

Good news has been limited in Michigan and the auto industry, but this is definitely good news.

Chrysler Group will add a third shift of 1,100 jobs at a Detroit plant where it will begin producing a diesel Jeep Grand Cherokee SUV, the company said on Thursday. The Jefferson North plant in Detroit is the first Chrysler plant to add a third shift, and it was the first plant to expand to a second shift after the automaker's 2009 restructuring and bankruptcy.

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Obama's auto czar wishes he could have pushed more into poverty

It's assholes like that need to be kept far away from the political system. Unfortunately the Obama administration has a history of staying with the same old crowd who promote the same old stories and protect the same old people. Steven Rattner surely would have loved to cut more salaries to the bone to please his Wall Street buddies but that doesn't do much for an economy that is supposed to be reliant on consumer spending. If workers are all stuck at or near the minimum wage, who is going to buy the GM cars or other products? We're not going to progress as a society if we keep moving in the direction of a Banana Republic where there is no middle class. Eliminating jerks like Rattner from any decision making or involvement would be a really good start. Instead of talking about change, we need political leadership that actually implements change.

Former auto czar and wealthy Wall Street financier Steven Rattner told a luncheon in Detroit on Thursday that while the $50 billion GM bailout was successful, "we should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay." He also said that "friends on Wall Street" were concerned by GM's earnings and communications with the market, pushing the stock down to a level that would lose the goverment $14 billion if it sold its shares today. Meanwhile, at General Motors' Orion Township, Mich., plant about 45 minutes away from where Rattner spoke, there are three tiers of hourly workers. Roughly 900 workers at the top tier, the most senior UAW workers, make $29 an hour, a rate unchanged since 2008. Another 500 or so UAW workers are paid about $16 an hour — a rate, adjusted for inflation, equal to the famed $5 a day Henry Ford started paying his workers in 1914. And at the bottom scale are 200-odd workers technically employed by an outside supplier but who work in the plant moving parts to the assembly line, jobs once done by GM workers paid $29 an hour. The contractors' pay: $9 an hour with no health care, a rate which over a year's work would leave them below the poverty level for a family of four.

USA #1. Read the rest of this post...

Romney, Pawlenty, Newt: Let Detroit go bankrupt

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GM to add thousands of jobs across eight states

This is definitely good news for everyone.

Just two years after being bailed out by the US government, General Motors is announcing today that it will spend $2 billion to add approximately 4,200 jobs at 18 plants in eight states.

This follows a horrific decade of closing dozens of plants and slashing hundreds of thousands of jobs.

The investment is a welcome shot in the arm for US manufacturing. But this is about more than just adding jobs. It's about re-tooling to make GM more competitive.

Read the rest of this post...

EU working on plans to ban gas and diesel by 2050

It all sounds pretty interesting. Of course, at least one industry analyst sees oil running out in fifty years, so someone better find a solution quickly.

According to new reports, the European Union will announce plans to ban all fossil fuel-powered cars in Europe by 2050. The detailed plan will be outlined in the European Union's Roadmap on Transport, which will come out on Monday. By 2030, the EU plans to have reduced fossil fuel traffic by half, particularly in urban areas.

The EU hopes to achieve its goal by ramping up focus on hybrid technology in the next couple decades to make a smooth transition to all-electric power by the middle of the century. A big part of the shift seems to be moving away from personal transportation and toward public conveyances wherever possible.

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Ford Chairman and CEO to make $100 million. Is it too much?

To the credit of CEO Mulally, he did a lot to bring back Ford from major problems. He also deferred a significant amount of income during the down years. It's not that his pay isn't as crazy as many other executives (often, who under-perform) but these are still eye-popping numbers. So many middle class people are being asked to do more with less so I wish we could see some level of fairness brought back into this system instead of skyrocketing executive pay. It may not be a Mulally-specific problem, but he's certainly part of the problem. CNBC:

Together, it is one of the richest pay packages ever given top executives in the auto industry.

Too much?

Depends on who you ask. If you ask Ford workers who have seen Mulally steer Ford back from the brink of bankruptcy, they probably won't grouse too much. Nor will we hear much from many Ford investors who have seen Ford shares go from $1.56 to more than $14 a share. Ford dealers? I doubt it. Their dealerships are raking in cash with one of the strongest line-ups around.

So who will blast the Ford board for rewarding Mulally and Ford with tens of millions? Mainly the average American who doesn't follow the company closely. Most will not realize that Bill Ford deferred compensation when the company was losing money. Nor will many of the Ford critics ask themselves this question: where would Ford be if Alan Mulally were never picked to run the company?

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Detroit looking at GOP to help slow or stop fuel efficiency

How do these companies even find enough money to lobby? Maybe now might be a good time to invest in modern technology and quality instead of moving backwards. Bloomberg:

General Motors Co., Ford Motor Co. and Chrysler Group LLC may get relief from regulations such as higher fuel-economy standards as Michigan Republicans seek posts leading two U.S. House committees.

Representative Fred Upton of Kalamazoo is among candidates to become chairman of the House Energy and Commerce Committee, which oversees legislation on vehicle-safety and emissions, and Republican David Camp from Midland is in line to head the House Ways and Means Committee, which sets policy on tax issues.

“The election was a piece of luck for Detroit,” Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan, said in an interview. “When they needed a Democrat to bail them out with a bankruptcy, they got Obama. Now they need Republicans to fight these fuel mandates, and maybe even slow them down.”

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Rahm Emanuel: 'F--- 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 "f--- 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 "f--- 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 the rest of this post...

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 the rest of this post...

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 the rest of this post...

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 the rest of this post...

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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