$73 an Hour

That figure — repeated on television and in newspapers as the average
pay of a Big Three autoworker — has become a big symbol in the fight
over what should happen to Detroit. To critics, it is a neat
encapsulation of everything that’s wrong with bloated car companies
and their entitled workers.

To the Big Three’s defenders, meanwhile, the number has become proof
positive that autoworkers are being unfairly blamed for Detroit’s
decline. “We’ve heard this garbage about 73 bucks an hour,” Senator
Bob Casey, a Pennsylvania Democrat, said last week. “It’s a total lie.
I think some people have perpetrated that deliberately, in a
calculated way, to mislead the American people about what we’re doing
here.”

So what is the reality behind the number? Detroit’s defenders are
right that the number is basically wrong. Big Three workers aren’t
making anything close to $73 an hour (which would translate to about
$150,000 a year).

But the defenders are not right to suggest, as many have, that Detroit
has solved its wage problem. General Motors, Ford and Chrysler workers
make significantly more than their counterparts at Toyota, Honda and
Nissan plants in this country. Last year’s concessions by the United
Automobile Workers, which mostly apply to new workers, will not change
that anytime soon.

And yet the main problem facing Detroit, overwhelmingly, is not the
pay gap. That’s unfortunate because fixing the pay gap would be fairly
straightforward.

The real problem is that many people don’t want to buy the cars that
Detroit makes. Fixing this problem won’t be nearly so easy.

The success of any bailout is probably going to come down to
Washington’s willingness to acknowledge as much.

Let’s start with the numbers. The $73-an-hour figure comes from the
car companies themselves. As part of their public relations strategy
during labor negotiations, the companies put out various charts and
reports explaining what they paid their workers. Wall Street analysts
have done similar calculations.

The calculations show, accurately enough, that for every hour a
unionized worker puts in, one of the Big Three really does spend about
$73 on compensation. So the number isn’t made up. But it is the
combination of three very different categories.

The first category is simply cash payments, which is what many people
imagine when they hear the word “compensation.” It includes wages,
overtime and vacation pay, and comes to about $40 an hour. (The
numbers vary a bit by company and year. That’s why $73 is sometimes
$70 or $77.)

The second category is fringe benefits, like health insurance and
pensions. These benefits have real value, even if they don’t show up
on a weekly paycheck. At the Big Three, the benefits amount to $15 an
hour or so.

Add the two together, and you get the true hourly compensation of
Detroit’s unionized work force: roughly $55 an hour. It’s a little
more than twice as much as the typical American worker makes, benefits
included. The more relevant comparison, though, is probably to Honda’s
or Toyota’s (nonunionized) workers. They make in the neighborhood of
$45 an hour, and most of the gap stems from their less generous
benefits.

The third category is the cost of benefits for retirees. These are
essentially fixed costs that have no relation to how many vehicles the
companies make. But they are a real cost, so the companies add them
into the mix — dividing those costs by the total hours of the current
work force, to get a figure of $15 or so — and end up at roughly $70
an hour.

The crucial point, though, is this $15 isn’t mainly a reflection of
how generous the retiree benefits are. It’s a reflection of how many
retirees there are. The Big Three built up a huge pool of retirees
long before Honda and Toyota opened plants in this country. You’d
never know this by looking at the graphic behind Wolf Blitzer on CNN
last week, contrasting the “$73/hour” pay of Detroit’s workers with
the “up to $48/hour” pay of workers at the Japanese companies.

These retirees make up arguably Detroit’s best case for a bailout. The
Big Three and the U.A.W. had the bad luck of helping to create the
middle class in a country where individual companies — as opposed to
all of society — must shoulder much of the burden of paying for
retirement.

So here’s a little experiment. Imagine that a Congressional bailout
effectively pays for $10 an hour of the retiree benefits. That’s
roughly the gap between the Big Three’s retiree costs and those of the
Japanese-owned plants in this country. Imagine, also, that the U.A.W.
agrees to reduce pay and benefits for current workers to $45 an hour —
the same as at Honda and Toyota.

Do you know how much that would reduce the cost of producing a Big
Three vehicle? Only about $800.

That’s because labor costs, for all the attention they have been
receiving, make up only about 10 percent of the cost of making a
vehicle. An extra $800 per vehicle would certainly help Detroit, but
the Big Three already often sell their cars for about $2,500 less than
equivalent cars from Japanese companies, analysts at the International
Motor Vehicle Program say. Even so, many Americans no longer want to
own the cars being made by General Motors, Ford and Chrysler.

My own family’s story isn’t especially unusual. For decades, my
grandparents bought American and only American. In their apartment,
they still have a framed photo of the 1933 Oldsmobile that my
grandfather’s family drove when he was a teenager. In the photo, his
father stands proudly on the car’s running board.

By the 1970s, though, my grandfather became so sick of the problems
with his American cars that he vowed never to buy another one. He
hasn’t.

Detroit’s defenders, from top executives on down, insist that they
have finally learned their lesson. They say a comeback is just around
the corner. But they said the same thing at the start of this decade —
and the start of the last one and the one before that. All the while,
their market share has kept on falling.

There is good reason to keep G.M. and Chrysler from collapsing in
2009. (Ford is in slightly better shape.) The economy is in the worst
recession in a generation. You can think of the Detroit bailout as a
relatively cost-effective form of stimulus. It’s often cheaper to keep
workers in their jobs than to create new jobs.

But Congress and the Obama administration shouldn’t fool themselves
into thinking that they can preserve the Big Three in anything like
their current form. Very soon, they need to shrink to a size that
reflects the American public’s collective judgment about the quality
of their products.

It’s a sad story, in many ways. But it can’t really be undone at this
point. If we had wanted to preserve the Big Three, we would have
bought more of their cars.


http://www.nytimes.com/2008/12/10/bu...agewanted=1&hp



Millwright Ron

www.unionmillwright.com

A Troll wrote:

On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:

$73 an Hour


Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

Just subdivide your Mc Mansion into multifamily housing and suck up some title 8 housing
money. Maybe you can met a few people you have been screwing over for years.

No need to thank me for the advice,

W

"A Troll" wrote in message
...
On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:

$73 an Hour


Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

BUT....

We all get a new rice bowl with the factory logo, a neat hat, and lifetime
discounts on bicycle tires.

The Third World is US!

--
Ed Huntress

On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:


SNIP
The third category is the cost of benefits for retirees. These are
essentially fixed costs that have no relation to how many vehicles the
companies make. But they are a real cost, so the companies add them
into the mix — dividing those costs by the total hours of the current
work force, to get a figure of $15 or so — and end up at roughly $70
an hour.
SNIP

Millwright Ron

www.unionmillwright.com


Can someone please explain to me how in hell it is possible for businesses to
be allowed to pay pension benefits from current receipts? This liability
should be funded entirely from investments separate from the business. The
contributions from the business and the employee should be invested at the
time the liability is created. The only organizations that can justify paying
pensions out of current receipts are governments and that's only because they
_can't_ go bankrupt.


Mark Rand
RTFM

On Fri, 12 Dec 2008 18:14:19 -0500, "Ed Huntress"
wrote:
"A Troll" wrote in message
.. .
On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:

$73 an Hour

Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

BUT....

We all get a new rice bowl with the factory logo, a neat hat, and lifetime
discounts on bicycle tires.

The Third World is US!
================
The news on most of the auto blogs is that the Chrysler vendors
are rapidly moving to supplying parts only on a COD basis.

Several of the blogs have Chrysler purchasing management
refusing, but they ain't getting the parts either.

A review of some of the comments by our Congressional gasbags and
Kamakazies/suicide bombers indicate they expect the vendors to
"do their part."

As many of the vendors have been driven to the brink of
bankruptcy, and in many cases are now working at cost, in
addition to providing zero interest loans through the "90 days
same as cash" Detroit vendor payment plans, it is unclear exactly
what they are supposed to do.

The Detroit car companies would do well to remember that ANY
three creditors can file a bankruptcy petition with the court in
addition to the company itself, and the location can be critical,
as some jurisdictions are much more "business oriented" than
others.

I look for a Sunday B/K filing, ala Lehman Brothers, late at
night. Chrysler/GM/GMAC/REsCap are all "joined at the hip," and
when one goes they all go.

It will be interesting [in the sense of watching a train wreck]
to see how the CDS [credit default swaps] playout, and what
happens to the banks when they must write down their GM debt to
zero in accordance with mark to market.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"F. George McDuffee" wrote in message
...
On Fri, 12 Dec 2008 18:14:19 -0500, "Ed Huntress"
wrote:
"A Troll" wrote in message
. ..
On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:

$73 an Hour

Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

BUT....

We all get a new rice bowl with the factory logo, a neat hat, and lifetime
discounts on bicycle tires.

The Third World is US!
================
The news on most of the auto blogs is that the Chrysler vendors
are rapidly moving to supplying parts only on a COD basis.


COD inthis environment is mot at all George.
Merry Whatever.

J

On Sat, 13 Dec 2008 00:38:27 +0000, Mark Rand
wrote:

On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:
SNIP
The third category is the cost of benefits for retirees. These are
essentially fixed costs that have no relation to how many vehicles the
companies make. But they are a real cost, so the companies add them
into the mix — dividing those costs by the total hours of the current
work force, to get a figure of $15 or so — and end up at roughly $70
an hour.
SNIP
Millwright Ron
www.unionmillwright.com
Can someone please explain to me how in hell it is possible for businesses to
be allowed to pay pension benefits from current receipts? This liability
should be funded entirely from investments separate from the business. The
contributions from the business and the employee should be invested at the
time the liability is created. The only organizations that can justify paying
pensions out of current receipts are governments and that's only because they
_can't_ go bankrupt.
Mark Rand
RTFM
-------------------------
Two items:

First, only one government [Federal] can't go bankrupt, if only
because the can always print more money. Other levels can and
have, although I don't know if an entire state has. [we may find
out shortly]
http://govinfo.library.unt.edu/nbrc/.../22chapte.html
http://www.la-par.org/Publications/P...Bankruptcy.pdf
http://www.ppic.org/content/pubs/op/OP_398OP.pdf
http://www.sacbee.com/static/weblogs...st/017728.html
http://www.sacbee.com/static/weblogs...st/017743.html
http://www.sacbee.com/opinion/story/1467682.html
http://www.ocregister.com/articles/g...private-change


Second, the critical qualifier is "should be invested at the
time the liability is created," the problem being just what is an
"investment."

As you point out, the rational process would be to simply
purchase an annuity policy from a reputable established company,
but the corporations were convinced they could get better ROI on
their own, and in the short run they may have been correct.

While it is now hard to believe, in the late 90s, many of the
defined benefit pension plans were stuffed with company stock,
and because of the stock bubble, were "over funded," and
assumptions of 12% ROI were common in the calculations for the
required contributions, even when much less was actually
generated. [ i.e. we will make it up next year.] This paper
"over funding" [in the multi billions for GM alone] was
"recaptured" for the corporation.

In effect, an annuity has been created, but the companies saw
this as a pool of cheap largely unregulated and unprotected
capital they could, and did, dip deeply into, without the benefit
of state regulation and actuarial knowledge of established
insurance companies. Note that this knowledge, about what is and
is not possible, had been accumulated over 200 years at enormous
personal and financial losses.

Unfortunately the managerial hubris that they could run an
insurance company better than the insurance companies was not
unique, as they also felt they could run banks better than the
bankers, with the result we now have not only the pension fund
disaster to be charged to taxpayers through the PGBC [with
considerable loss to the pensioneers also as there is a
relatively low cap], but also the impending GMAC/ResCap/Diatech
Funding catastrophe for the taxpayers to cover.

Detroit management may have been correct in one sense in that
they could indeed run their insurance companies and banks as well
as they built cars.... ;-(


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Dec 13, 11:38 am, Mark Rand wrote:


Can someone please explain to me how in hell it is possible for businesses to
be allowed to pay pension benefits from current receipts? This liability
should be funded entirely from investments separate from the business. The
contributions from the business and the employee should be invested at the
time the liability is created. The only organizations that can justify paying
pensions out of current receipts are governments and that's only because they
_can't_ go bankrupt.

Mark Rand
RTFM

Yes, I have wondered about this, but was told my limited knowledge of
Economics was at fault, that I didn't comprehend that for you and me,
if we wanted a cup of coffee, we had to pay $2 upfront. In the
business world, you just promise to pay at some later date, and are
given pieces of paper as securities. Which may turn out to be
valueless.

Its not unique - our state government of a decade ago, in financial
straits, decided that employee pension contributions would go straight
into General Revenue rather than be invested along with the Govs
contributions in a 3rd party fund. Future payouts to the retirees were
to be paid from normal Gov. day to day revenue. This fell in a heap
after a while as there wasn't enough money coming in to pay the
retirees. Our next Premier, a conservative, did a massive slash and
burn operation to get the books in order, which, unfortunately, meant
a lessening of retirement benefits.

So. To me, it seems that the economy is run by people solely
interested in their own profit and position, most of the rest of us
don't understand the smoke and mirrors of how they do it. And the so
called regulators? - well, they can stand on their record of prudent
management, not.

Unfortunately, NO political system seems to have factored in human
greed - it assumes that everyone will act in an honorable manner. This
is plainly ludicrous, so abandoning any attempt at regulation is
obviously doomed to result in the mess we have now.

But then, I don't understand "economics" so I have probably got it
all wrong....

Andrew VK3BFA.

"F. George McDuffee" wrote in message
...
On Fri, 12 Dec 2008 18:14:19 -0500, "Ed Huntress"
wrote:
"A Troll" wrote in message
. ..
On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:

$73 an Hour

Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

BUT....

We all get a new rice bowl with the factory logo, a neat hat, and lifetime
discounts on bicycle tires.

The Third World is US!
================
The news on most of the auto blogs is that the Chrysler vendors
are rapidly moving to supplying parts only on a COD basis.

Several of the blogs have Chrysler purchasing management
refusing, but they ain't getting the parts either.

A review of some of the comments by our Congressional gasbags and
Kamakazies/suicide bombers indicate they expect the vendors to
"do their part."

Haha! Does that mean they expect them to dig a hole and jump in? I think
some of them are ready for it. g


As many of the vendors have been driven to the brink of
bankruptcy, and in many cases are now working at cost, in
addition to providing zero interest loans through the "90 days
same as cash" Detroit vendor payment plans, it is unclear exactly
what they are supposed to do.

Detroit destroyed many of them, and they destroyed the vendor relationships
they had before Lopez (Jose Ignacio Lopez de Arriortua) raped and pillaged
in the '80s. That was Detroit's response to foreign competition -- bleed the
vendors dry.


The Detroit car companies would do well to remember that ANY
three creditors can file a bankruptcy petition with the court in
addition to the company itself, and the location can be critical,
as some jurisdictions are much more "business oriented" than
others.

I look for a Sunday B/K filing, ala Lehman Brothers, late at
night. Chrysler/GM/GMAC/REsCap are all "joined at the hip," and
when one goes they all go.

It will be interesting [in the sense of watching a train wreck]
to see how the CDS [credit default swaps] playout, and what
happens to the banks when they must write down their GM debt to
zero in accordance with mark to market.

I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress

Ed Huntress wrote:
"F. George McDuffee" wrote in message
...

On Fri, 12 Dec 2008 18:14:19 -0500, "Ed Huntress"
wrote:

"A Troll" wrote in message
...

On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:


$73 an Hour

Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

BUT....

We all get a new rice bowl with the factory logo, a neat hat, and lifetime
discounts on bicycle tires.

The Third World is US!

================
The news on most of the auto blogs is that the Chrysler vendors
are rapidly moving to supplying parts only on a COD basis.

Several of the blogs have Chrysler purchasing management
refusing, but they ain't getting the parts either.

A review of some of the comments by our Congressional gasbags and
Kamakazies/suicide bombers indicate they expect the vendors to
"do their part."


Haha! Does that mean they expect them to dig a hole and jump in? I think
some of them are ready for it. g

As many of the vendors have been driven to the brink of
bankruptcy, and in many cases are now working at cost, in
addition to providing zero interest loans through the "90 days
same as cash" Detroit vendor payment plans, it is unclear exactly
what they are supposed to do.


Detroit destroyed many of them, and they destroyed the vendor relationships
they had before Lopez (Jose Ignacio Lopez de Arriortua) raped and pillaged
in the '80s. That was Detroit's response to foreign competition -- bleed the
vendors dry.


The Detroit car companies would do well to remember that ANY
three creditors can file a bankruptcy petition with the court in
addition to the company itself, and the location can be critical,
as some jurisdictions are much more "business oriented" than
others.

I look for a Sunday B/K filing, ala Lehman Brothers, late at
night. Chrysler/GM/GMAC/REsCap are all "joined at the hip," and
when one goes they all go.

It will be interesting [in the sense of watching a train wreck]
to see how the CDS [credit default swaps] playout, and what
happens to the banks when they must write down their GM debt to
zero in accordance with mark to market.


I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress



Aw heck, Ed, you can come with us - although the boat is only 38 feet.

On Fri, 12 Dec 2008 18:09:59 -0800 (PST),
wrote:
snip
Yes, I have wondered about this, but was told my limited knowledge of
Economics was at fault, that I didn't comprehend that for you and me,
if we wanted a cup of coffee, we had to pay $2 upfront. In the
business world, you just promise to pay at some later date, and are
given pieces of paper as securities. Which may turn out to be
valueless.
snip
--------------------
There is nothing wrong with your understanding of
economics/finance. In this case what was actually happening was
ignored because it was dressed up as something else, in this case
an ERISA "pension plan."

What was happening in reality was that the Detroit automotive
management in the 1970-1990s were funding a large part [c.
20-30%] of their real current labor costs by operationally
issuing "zero coupon" bonds, at a very high rate of interest and
30-40 year maturity. Not only was this portion of the cost of
the labor differed for years, but considerable tax benefits for
both the corporation and employees were generated, so this "gift
horse" was scarcely examined by anyone. [This also again proves
the maxim "When something seems too good to be true -- it is."]

The balloon payment for these "bonds," along with a ton of other
collateralized and unsecured debt, has started coming due. The
creditors are refusing to roll any of the debt over [accept new
additional debt at higher interest as payment for the old debt --
PIK], accept stock in lieu of cash [debt for equity swap] and are
demanding payment, as in "show me the money."

The core of the problem is that you can't get blood out of a
turnip, and the legitimate debts and obligations of GM and
Chrysler, including the accrued pensions and health benefit
obligations which represent a significant part of their 1960-1999
labor costs, are now widely understood to far exceed both their
assets and any plausible future ability to repay. [I.e. the
management plan submitted to Congress to invest in lottery
tickets and win the grand prize does not count.]

It is becoming more apparent by the day that a large part of the
American economic "progress" over the last generation was not
real but rather a "Ptomken villege" or stage set founded on and
sustained by ever larger amounts of increasingly sophisticated
"check kiting," AKA "creative finance" or "financial
engineering."
http://en.wikipedia.org/wiki/Potemkin_village
http://www.bankrate.com/brm/news/chk/20021203b.asp
http://en.wikipedia.org/wiki/Check_fraud
{see circular kiting in particular}

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

Millwright Ron writes:

The calculations show, accurately enough, that for every hour a
unionized worker puts in, one of the Big Three really does spend about
$73 on compensation.

Right. Nobody thought it was take-home pay of $73/hour. Even high school
kids flipping burgers know you don't take home what the boss pays.

But it is still an obscene amount obtained by coercion. Put these jobs out
to bid and imagine what would happen.

Poor Ron. Gonna have to go look for a real job soon. I hear Micky D's
is hiring down the street...
JR
Dweller in the cellar

On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:

$73 an Hour


--------------------------------------------------------------
Home Page: http://www.seanet.com/~jasonrnorth
If you're not the lead dog, the view never changes
Doubt yourself, and the real world will eat you alive
The world doesn't revolve around you, it revolves around me
No skeletons in the closet; just decomposing corpses
--------------------------------------------------------------
Dependence is Vulnerability:
--------------------------------------------------------------
"Open the Pod Bay Doors please, Hal"
"I'm sorry, Dave, I'm afraid I can't do that.."

E
I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress




That sounds like a plan. Hope you like to eat fish. There is a nice
little bar on Great Inaguana and the food at the Morton salt
hotel/boarding house was always good. The Green turtle soup was excellent.


John

On Fri, 12 Dec 2008 17:08:58 -0800, "John R. Carroll"
wrote:

The news on most of the auto blogs is that the Chrysler vendors
are rapidly moving to supplying parts only on a COD basis.

COD inthis environment is mot at all George.
Merry Whatever.

J
============
In one sense yes it is moot, but it may well force Chrysler into
bankruptcy before they had planned. Also note that the status of
the Chrysler vendors is rapidly dropping.

The failure of a single critical [sole source] supplier to
provide components, whether due to COD issues or B/K will put
Detroit out of business just as much as a B/K filing by one of
the car companies. All three companies are extensively
interconnected through their supplier base, and GM/Chrysler are
"joined at the hip" through not only through their joint
ownership of GMAC but the large involvement in Delphi [currently
in Chapter 11] by Cerberus.

That this is occurring at all is yet another manifestation of the
large amounts of "bad blood" that has been generated over the
years between Detroit management, and everyone with which they
have had dealings, from their suppliers and employees to their
dealers and governmental units in which they operate.

American Axle is another critical area, and is just coming off a
long and bitter strike, mainly over wage rates. The employees
were less than pleased about a 10$-15$ / hour wage cut to "keep
the company competative" after it was discovered American Axle’s
corporate CEO Richard Dauch made at least $60 million over the
last five years.

It is interesting that the VP for Procurement at Chrysler just
resigned for "reasons of health."

===========
Chrysler's supplier issues expand
Top procurement exec to retire for health reasons

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER • December 13, 2008

The health of Chrysler's network of parts suppliers is
"increasingly at risk" with the number of companies on its watch
list for potential problems increasing by 25% within the past
three weeks, the company said Friday.

The revelation came as Chrysler's top procurement executive, who
oversees purchases from suppliers, announced his retirement from
the company. John Campi, who had a long working relationship with
Chrysler CEO Bob Nardelli, joined the automaker in January 2008
as executive vice president of procurement.

Campi "has elected to leave Chrysler for health-related reasons,"
Chrysler said in a statement.
snip
---------
for complete article click on
http://www.freep.com/article/2008121...SS01/812130311


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"john" wrote in message
...


E
I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress


That sounds like a plan. Hope you like to eat fish.

I could live on fish. We used to eat it three times a week or more when I
was fishing a lot.

There is a nice little bar on Great Inaguana and the food at the Morton
salt hotel/boarding house was always good. The Green turtle soup was
excellent.

I love green turtle soup. 'Haven't had it for 40 years. Maybe I should start
packing, before the whole economy goes south. g

--
Ed Huntress

"F. George McDuffee" wrote in message
...

snip

American Axle is another critical area, and is just coming off a
long and bitter strike, mainly over wage rates. The employees
were less than pleased about a 10$-15$ / hour wage cut to "keep
the company competative" after it was discovered American Axle's
corporate CEO Richard Dauch made at least $60 million over the
last five years.

It is interesting that the VP for Procurement at Chrysler just
resigned for "reasons of health."

He's very sensitive to acute lead poisoning and needs to avoid it. d8-)

--
Ed Huntress

On Sat, 13 Dec 2008 15:15:09 -0500, "Ed Huntress"
wrote:


"F. George McDuffee" wrote in message
.. .

snip

American Axle is another critical area, and is just coming off a
long and bitter strike, mainly over wage rates. The employees
were less than pleased about a 10$-15$ / hour wage cut to "keep
the company competative" after it was discovered American Axle's
corporate CEO Richard Dauch made at least $60 million over the
last five years.

It is interesting that the VP for Procurement at Chrysler just
resigned for "reasons of health."

He's very sensitive to acute lead poisoning and needs to avoid it. d8-)

To be fair, the boss is only costing the employees $1.60/hour each.


I'm sure he's value for money, don't know whether it's good or bad value
though...

Mark Rand
RTFM

"Mark Rand" wrote in message
...
On Sat, 13 Dec 2008 15:15:09 -0500, "Ed Huntress"

wrote:


"F. George McDuffee" wrote in message
. ..

snip

American Axle is another critical area, and is just coming off a
long and bitter strike, mainly over wage rates. The employees
were less than pleased about a 10$-15$ / hour wage cut to "keep
the company competative" after it was discovered American Axle's
corporate CEO Richard Dauch made at least $60 million over the
last five years.

It is interesting that the VP for Procurement at Chrysler just
resigned for "reasons of health."

He's very sensitive to acute lead poisoning and needs to avoid it. d8-)

To be fair, the boss is only costing the employees $1.60/hour each.


I'm sure he's value for money, don't know whether it's good or bad value
though...

Mark Rand
RTFM

The question is whether he's worth as much as 200 employees. I've spent a
lot of time at American Axle over the years, and I've never seen any
evidence of it.

--
Ed Huntress

JR North wrote:

Poor Ron. Gonna have to go look for a real job soon. I hear Micky D's
is hiring down the street...


Yea but they want Skilled labor,, or at least employees that can be
taught how to do a job, without help or constant supervision.


--
http://improve-usenet.org/index.html

aioe.org, Goggle Groups, and Web TV users must request to be white
listed, or I will not see your messages.

If you have broadband, your ISP may have a NNTP news server included in
your account: http://www.usenettools.net/ISP.htm


There are two kinds of people on this earth:
The crazy, and the insane.
The first sign of insanity is denying that you're crazy.

On Sat, 13 Dec 2008 01:01:28 -0600, F. George McDuffee
wrote:

On Fri, 12 Dec 2008 18:09:59 -0800 (PST),
wrote:
snip
Yes, I have wondered about this, but was told my limited knowledge of
Economics was at fault, that I didn't comprehend that for you and me,
if we wanted a cup of coffee, we had to pay $2 upfront. In the
business world, you just promise to pay at some later date, and are
given pieces of paper as securities. Which may turn out to be
valueless.
snip
--------------------
There is nothing wrong with your understanding of
economics/finance. In this case what was actually happening was
ignored because it was dressed up as something else, in this case
an ERISA "pension plan."
snip
---------
some follow-up on my first response.

In many cases the public accounting/auditing firms shares
responsibility for this problem. When the books of a publicly
traded corporation are reviewed by the outside auditors, they are
expected to give an opinion of the business as a going concern,
which has been interpreted in the US as the likelihood of
bankruptcy in the next year. While not all bankruptcies can be
forecast, there was an increasingly high likelihood of bankruptcy
and the inability to continue as a going concern for all three
Detroit car companies over the last several years. Ford was the
only one to draw the logical conclusions, undertake the required
reorganizations/restructuring on a crash basis, and accumulate
the cash required.

AFAIK, none of the auditors [Chrysler is not a publicly owned
company and has not been externally audited since its purchase by
Cerberus] ever issued a qualified (that is negative) "going
concern opinion."
for some insight see
http://accountingmalpractice.com/000...ga-200206b.pdf
http://papers.ssrn.com/sol3/papers.c...&srcabs=427682
also see
http://portal.acm.org/citation.cfm?i...=portal&dl=ACM
http://ideas.repec.org/p/tky/jseres/2005cj142.html
and many more google on "going concern opinion"

Note that very few of these sites are US.

For an example of how a "qualified going concern opinion" is
addressed in Japan see
http://www.sanyo.com/news/2008/05/22-4en.html

The accounting for pensions in Japan was also much more strict,
particularly after their financial implosion and "lost decade"
(now approaching a lost generation). For a summary of their
actions click on http://www.ica2006.com/Papiers/3009/3009.pdf
again google on "going concern" pensions for more info and note
the scarcity of US sites.

It is clear that the dangers of the *NON* "going concerns" to the
pension plans [among other things] are well known/documented to
the accountants and actuaries. In the US and many other
industrial countries these dangers are simply ignored, when the
businesses (and the fees) are large.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Sat, 13 Dec 2008 23:07:36 -0600, F. George McDuffee
wrote:

On Sat, 13 Dec 2008 01:01:28 -0600, F. George McDuffee
wrote:

On Fri, 12 Dec 2008 18:09:59 -0800 (PST),
wrote:
snip
Yes, I have wondered about this, but was told my limited knowledge of
Economics was at fault, that I didn't comprehend that for you and me,
if we wanted a cup of coffee, we had to pay $2 upfront. In the
business world, you just promise to pay at some later date, and are
given pieces of paper as securities. Which may turn out to be
valueless.
snip
--------------------
There is nothing wrong with your understanding of
economics/finance. In this case what was actually happening was
ignored because it was dressed up as something else, in this case
an ERISA "pension plan."
snip
---------
some follow-up on my first response.

In many cases the public accounting/auditing firms shares
responsibility for this problem. When the books of a publicly
traded corporation are reviewed by the outside auditors, they are
expected to give an opinion of the business as a going concern,
which has been interpreted in the US as the likelihood of
bankruptcy in the next year. While not all bankruptcies can be
forecast, there was an increasingly high likelihood of bankruptcy
and the inability to continue as a going concern for all three
Detroit car companies over the last several years. Ford was the
only one to draw the logical conclusions, undertake the required
reorganizations/restructuring on a crash basis, and accumulate
the cash required.

AFAIK, none of the auditors [Chrysler is not a publicly owned
company and has not been externally audited since its purchase by
Cerberus] ever issued a qualified (that is negative) "going
concern opinion."
for some insight see
http://accountingmalpractice.com/000...ga-200206b.pdf
http://papers.ssrn.com/sol3/papers.c...&srcabs=427682
also see
http://portal.acm.org/citation.cfm?i...=portal&dl=ACM
http://ideas.repec.org/p/tky/jseres/2005cj142.html
and many more google on "going concern opinion"

Note that very few of these sites are US.

For an example of how a "qualified going concern opinion" is
addressed in Japan see
http://www.sanyo.com/news/2008/05/22-4en.html

The accounting for pensions in Japan was also much more strict,
particularly after their financial implosion and "lost decade"
(now approaching a lost generation). For a summary of their
actions click on http://www.ica2006.com/Papiers/3009/3009.pdf
again google on "going concern" pensions for more info and note
the scarcity of US sites.

It is clear that the dangers of the *NON* "going concerns" to the
pension plans [among other things] are well known/documented to
the accountants and actuaries. In the US and many other
industrial countries these dangers are simply ignored, when the
businesses (and the fees) are large.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).


The banks, Accounting firms, stock traders, automotive management, and
UAW share quite evenly the blame for the collapse of the north
american auto industry (and north american manufacturing on the
whole).

And GM has been standing with one foot in the grave and the other on a
bannana peal since about 1973.

"F. George McDuffee" wrote in message
...

snip
---------
some follow-up on my first response.

Hey, George, I was thinking about you last night at a Christmas party we
attended, held by a guy who's one of the few people who was working for
Cantor Fitzgerald on 9/11 and who didn't die. It was full of Wall Street
types and you can guess what we were talking about. They're all six-figure
guys but I don't any of them are the seven-figure variety.

I spent an hour talking to an old friend who's a bond analyst at
Citigroup -- one of the lucky ones who still has a job there. He used to be
a risk analyst at Moody's.

These are middle-aged guys who remember when it was an honest business, and
they're appalled at what's happening. You would probably still be there,
having fun. d8-)

--
Ed Huntress

Ed Huntress wrote:
"john" wrote in message
...


E

I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress


That sounds like a plan. Hope you like to eat fish.


I could live on fish. We used to eat it three times a week or more when I
was fishing a lot.


There is a nice little bar on Great Inaguana and the food at the Morton
salt hotel/boarding house was always good. The Green turtle soup was
excellent.


I love green turtle soup. 'Haven't had it for 40 years. Maybe I should start
packing, before the whole economy goes south. g

--
Ed Huntress



IF you are ever at the airport in Nassau, Bahamas and want a good lunch
you have to go to where the employees eat around the back of the main
terminal, much better food and lower prices. Something like Creole cooking.

John

"Ed Huntress" wrote in message
...
"F. George McDuffee" wrote in message
...

snip
---------
some follow-up on my first response.

Hey, George, I was thinking about you last night at a Christmas party we
attended, held by a guy who's one of the few people who was working for
Cantor Fitzgerald on 9/11 and who didn't die. It was full of Wall Street
types and you can guess what we were talking about. They're all six-figure
guys but I don't any of them are the seven-figure variety.

I spent an hour talking to an old friend who's a bond analyst at
Citigroup -- one of the lucky ones who still has a job there. He used to
be a risk analyst at Moody's.

These are middle-aged guys who remember when it was an honest business,
and they're appalled at what's happening. You would probably still be
there, having fun. d8-)

I hope one of them took a couple of seconds to explain the negative yield
fiasco to you Ed.
It's a perfect example of the incompetence I've come to expect from the Bush
administration.

JC

On Sun, 14 Dec 2008 12:49:16 -0500, wrote:
snip
The banks, Accounting firms, stock traders, automotive management, and
UAW share quite evenly the blame for the collapse of the north
american auto industry (and north american manufacturing on the
whole).

And GM has been standing with one foot in the grave and the other on a
bannana peal since about 1973.
snip
------------------
Indeed, but the thrust of what I was posting was to identify the
people directly responsible, i.e. that had both the authority and
responsibility [accountability] to prevent this catastrophe.

#1 of course is the management/directors, as this is what they
are paid the big bucks for, not to be "statesmen" of industry
and/or "feather their own nests."

#2 were the regulators at all levels. There were enough "red
flags" for a May Day parade showing at every level. Every
financial regulatory agency both those directly involved with the
companies such as the SEC, and those indirectly involved through
the lending institutions such as the FDIC, FRB, Comptroller of
the Currency, etc. were industry lap dogs, not watch dogs.

When you run/expand a business by continually expanding the debt
with no intention/hope of repayment it is called a Ponzi scheme
and it is illegal. [Only the Federal government is allowed to do
this.] This can lapse over into another fraud called "fraudulent
conveyance" or "bust-out scam" where goods/services are obtained
on credit, with no intention of payment, sold at a discount for
quick cash, and the company files for bankruptcy or blows town.
This is generally a shorter term/smaller grift, although the
later stages of the Ponzi scheme may involve elements of this
when the vendors are stiffed.
http://www.bandblaw.com/newsletters/Fall2002TVQ.pdf

#3 the last line of defense was the independent outside auditors,
who, as their reason for existence and the big bucks they earn,
are expected to vet the companies for dodgy book keeping,
excessively creative accounting, and as indicated issue an annual
"going concern opinion."

The other groups such as the stock traders and UAW simply went
along for the ride, and in the case of the UAW members stand to
lose considerable amounts money that were promised for labor done
in the 1960-1990s that is now due for pensions/medical benefits.

The UAW members were stiffed again when agreement was reached on
the so-called VEBA to allow the automotive companies to get the
health-care and pensions off their books, but as with most
Detroit promises, when it came time to pay management said "we
don't have the money right now -- can you come back in 2011?"

FWIW - both the blue and white collar retirees have already been
"stiffed" on their medical benies, which have just been dumped on
the taxpayers via medicare, albeit with much reduced coverage and
higher co pays.

FWIW #2 -- standard Detroit vendor terms are now payment in 45
days after receipt of invoice. This means that the vendor has
*AT LEAST* 15% of their yearly *GROSS* income from that product
at risk, effectively making a zero interest, zero collateral
loan. Blogger information indicates that the payment times have
been gradually increasing above the 45 day standard, leading to
the assumption of a final "bust out scam" on top of the long-term
Ponzi scheme. [Why leave any money on the table?]

GM and Chrysler are unique in that their grift has lasted so long
and reached such size relative to the economy.

They are also unique for a private company for the wide verity of
"investors" they managed to rope in, from their stock holders,
their secured and unsecured lenders, their employees (who were
paid in part with worthless promises of pensions and health
care), and their vendors (who are about to be stuck with huge
amounts of worthless "accounts receivable" and special
tooling/equipment) to their dealers who they are about to stick
with worthless franchises and huge amounts of "distressed"
inventory.

Look for a GM and/or Chrysler B/K filing just before Xmas late on
a Sunday as this will eliminate the need for holiday pay for the
hourly employees. Probable electronic filing date is 11:45 PM
Sunday Dec 21st.

It was to avoid a abrupt "stealth" B/K, ala Lehman Brothers, that
the interim funding was so important. The additional 90-120 days
would have allowed a more in-depth analysis/evaluation and more
orderly liquidation, e.g. a GM consisting only of Chevrolet and a
Chrysler consisting only of Jeep. When this grift is allowed to
blow uncontrolled in the middle of the night look for "nuclear
winter" with extensive "collateral damage" to result and few
survivors with any major connection to the domestic auto
industry.

I hope the major states involved such as Michigan have made
contingency plans to process the huge spike in unemployment
claims and other requests for social services that is sure to
result.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"F. George McDuffee" wrote in message
...
On Sun, 14 Dec 2008 12:49:16 -0500, wrote:
snip
The banks, Accounting firms, stock traders, automotive management, and
UAW share quite evenly the blame for the collapse of the north
american auto industry (and north american manufacturing on the
whole).

And GM has been standing with one foot in the grave and the other on a
bannana peal since about 1973.
snip
------------------
I hope the major states involved such as Michigan have made
contingency plans to process the huge spike in unemployment
claims and other requests for social services that is sure to
result.

Michigan and the rest are certainly going to have a lot of claims to process
regardless.
GM and Chrysler will be getting bridge financing next week George.
That will make you and I their largest single creditor I think.
Then, after Jan 20th, we'll force BK while simultaneously providing an
arranged for credit facility.
GM will have to produce a bussiness plan that the court can approve and they
are working on it even as I type this.
Chrysler will just be sold.

JC

On Sun, 14 Dec 2008 13:24:06 -0800, "John R. Carroll"
wrote:
snip
I hope one of them took a couple of seconds to explain the negative yield
fiasco to you Ed.
It's a perfect example of the incompetence I've come to expect from the Bush
administration.
snip

I wish I could have been at Ed's party. I am sure the ethical
bankers and brokers were as p****d-off as everyone else at the
ruin of their industry/profession for the sake of the short-run
quick buck and EZ-money. It turned out that finance was just
another "cash cow" to be milked as hard as possible until she
went dry and then sent to the slaughter house.

While I missed the party, the global fiscal/economic environment
is now so far from normal that the usual considerations such as
the "return *ON* my investment" are now trumped by considerations
such as the "return *OF* my investment." [Nod to Will Rogers
here]

There are very few places where Dollar denominated funds in the
range 10s of millions into the billions can be parked quickly in
safety other than short term US government securities. (5 basis
points is still cheaper than renting a vault and paying guards to
store cash, even if that much paper money was available....)

The capital flight from the commercial banks to US government
securities is a disaster for not only the commercial banks but
the economy as a whole because each dollar placed in governmental
securities is a 10 dollar [or more] reduction in available credit
due to the nature of fractional reserve banking.

There is also the velocity factor in that the money placed in
governmental securities is not circulating.

While the FRB has their "magic money machine" operating at warp
speed, the contraction in the "perceived" money supply from not
only the fall in stock prices [e.g DJ 14,300 to DJ 8,500] but
more importantly, on a volume/dollar basis, the huge write down
of commercial bonds to 10 -20 cents on the dollar, with a fall in
rating from AAA [investment] to Ccc- [junk] is far out pacing
their attempt to re inflate the money supply. The same thing is
occurring in most major economies, e.g. UK, EEC, Japan.

As I have indicated before, this attempt to re inflate the
currency bubble is having minimal to negative effect because this
is not a liquidity crisis but a solvency crisis where many
[possibly most] of the major players are
operationally/functionally bankrupt, and no one in their right
mind would lend them any money expecting it to be returned
w/interest.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

F. George McDuffee wrote:

FWIW #2 -- standard Detroit vendor terms are now payment in 45
days after receipt of invoice. This means that the vendor has
*AT LEAST* 15% of their yearly *GROSS* income from that product
at risk, effectively making a zero interest, zero collateral
loan. Blogger information indicates that the payment times have
been gradually increasing above the 45 day standard, leading to
the assumption of a final "bust out scam" on top of the long-term
Ponzi scheme. [Why leave any money on the table?]


Don't forget how tooling and such get held out for PPAP approval and all the other games
to stretch payment. I have a feeling many vendors aging report go at least 60 days.

Wes

On Sun, 14 Dec 2008 18:44:58 -0500, Wes wrote:

F. George McDuffee wrote:

FWIW #2 -- standard Detroit vendor terms are now payment in 45
days after receipt of invoice. This means that the vendor has
*AT LEAST* 15% of their yearly *GROSS* income from that product
at risk, effectively making a zero interest, zero collateral
loan. Blogger information indicates that the payment times have
been gradually increasing above the 45 day standard, leading to
the assumption of a final "bust out scam" on top of the long-term
Ponzi scheme. [Why leave any money on the table?]


Don't forget how tooling and such get held out for PPAP approval and all the other games
to stretch payment. I have a feeling many vendors aging report go at least 60 days.

Wes
----------------
Indeed, and there are all sorts of "quality games" that are paid
to gouge the vendor for even lower prices and stretch payments,
as in "I know it's to the print, but you should have known that
wasn't what we wanted."

One example [which seems to have been resolved] was Ford's
problems with their diesel engine supplier [Navistar]. Amazing
how the engine quality improved when Navistar stopped deliveries
because of undocumented warrenty/quality charge backs.
http://www.streetdirectory.com/trave...roduction.html
http://findarticles.com/p/articles/m..._/ai_n26623043
http://www.egmcartech.com/2008/05/23...-diesel-plant/
http://www.autoblog.com/2007/02/26/a...dutys-power-s/

Much of the reported "quality problems" seem to trace back to an
attempt by Ford to break a contract to buy engines from Navistar
so they could build their own diesel engine.
http://blog.mlive.com/statewidebusin...ain_in_di.html
http://www.trucktrend.com/features/n...ine/index.html

Same thing occurred in the 60s with Ford/Holley, and GM/Carter,
when the car companies decided to get into the carburetor
business.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Sun, 14 Dec 2008 18:44:58 -0500, Wes wrote:

F. George McDuffee wrote:

FWIW #2 -- standard Detroit vendor terms are now payment in 45
days after receipt of invoice. This means that the vendor has
*AT LEAST* 15% of their yearly *GROSS* income from that product
at risk, effectively making a zero interest, zero collateral
loan. Blogger information indicates that the payment times have
been gradually increasing above the 45 day standard, leading to
the assumption of a final "bust out scam" on top of the long-term
Ponzi scheme. [Why leave any money on the table?]


Don't forget how tooling and such get held out for PPAP approval and all the other games
to stretch payment. I have a feeling many vendors aging report go at least 60 days.

Wes


Actually, the tooling and part suppliers don't get paid until the tool
produces vehicles for sale. Test shots/parts and pre-production
test-vehicles don't count. In other words, vendor's tooling and
parts made to-date for say the 2010 vehicles won't get paid until at
least September 2009, when the 2010 models go on sale. One of the
little repercussions of this is that if a "model line" is now cut to
reduce the Big3's style offerings, say Chrysler cuts the Grand Caravan
mini-van, the supplier of (again..for instance) the front clip, may
very well have a real problem/no recourse to collect anything. Ever!!
If the tooling for the clip was worth say $200,000 for that one part,
that may well sink the tool builder and the part supplier. That's two
businesses that will be gone, and they probably have had to arrange
similar financing terms and arrangements with either their suppliers
or their bank, or both, to float that money to start with, so they
will also take hits. And what if they made 5 tools for Chrysler, only
2 of which were for the Grand Caravan, on a deal of some sort, and now
they go out of business because they can't get paid for the one part,
so there will be extra troubles for Chrysler because they won't have
supplier for the other parts now.

There must be millions of little unthinkables about to happen, even
WITH any government (US all levels + Canadian Feds & Ontario
provincial) bail-out monies or assistance. I can see a Humpty-Dumpty
tumble-down (not a trickle-down) about to happen no matter what, as
these rules change or are forced upon the industry. Some good and
well run businesses that had no causal interests in this collapse are
going to be hurt severely or killed, no matter what happens now. And
before anybody jumps in with the standard cries of how it's their own
damn fault ..most are skilled non-union, if that influences anything.

Merry Christmas,,,,riiiiggghhhhtttt

Brian Lawson,
Bothwell, Ontario.

On Fri, 12 Dec 2008 21:43:30 -0500, "Ed Huntress"
wrote:
snip
As many of the vendors have been driven to the brink of
bankruptcy, and in many cases are now working at cost, in
addition to providing zero interest loans through the "90 days
same as cash" Detroit vendor payment plans, it is unclear exactly
what they are supposed to do.
snip
---------------------
This just in -- possibly the start of a cascade of B/K Detroit
automotive vendors.
=====================
6:12 p.m., Dec. 12, 2008
Precision Parts files for Chapter 11 bankruptcy
By Ryan Beene

Rochester Hills-based auto supplier Precision Parts International
L.L.C. filed for Chapter 11 bankruptcy protection late Friday in
Delaware.

The company said in a motion filed with U.S. Bankruptcy Court in
Wilmington, Del. that falling sales to domestic automotive and
non-automotive manufacturers, increasing steel prices and other
factors have combined to cut revenues and cash flow and impaired
the company’s ability to pay its debts.

A list of creditors filed with the court shows that Precision
Parts owes the Detroit 3 more than $4.6 million for steel
acquired through the automakers’ steel repurchasing program — a
system for steel purchasing where automakers buy steel for its
suppliers to get a better price on larger orders, which the
supplier pays for after the fact.
snip
--------------------
http://www.crainsdetroit.com/article...EE/812120291/0



======================
11:26 a.m., Dec. 12, 2008
Credit firm puts auto suppliers on watch
By Ryan Beene

Six local auto suppliers were placed on review late Thursday for
a possible ratings downgrade on fears of a potential bankruptcy
at General Motors Corp.

Wall Street credit ratings firm Fitch Ratings placed the
suppliers’ Issuer Default Ratings, which grade a company’s
ability to meet financial obligations, on watch late Thursday.
The companies we

--Detroit-based American Axle & Manufacturing Holdings Inc.
(NYSE: AXL)

--Troy-based ArvinMeritor Inc. (NYSE: ARM).

--Northville-based Hayes-Lemmerz International Inc. (NASDAQ:
HAYZ).

--Livonia-based TRW Automotive Holdings Corp. (NYSE: TRW)

--Van Buren Township-based Visteon Corp. (NYSE: VC)

--Milwaukee-based Johnson Controls Inc. (NYSE: JCI). Johnson
Controls’ automotive operations are based in Plymouth.

The companies were placed on review because of the impact of a
possible Ch.11 bankruptcy at General Motors, and Fitch’s view
that Ford Motor Co. would also fall into Ch. 11 if GM sought
court protection, according to a Fitch memo.
snip
----------------
http://www.crainsdetroit.com/article...FREE/812129993

====================
December 12, 2008, 10:57 am
As Goes GM, So Go Auto Suppliers; Savings And The Consumer
Posted by Bob O'Brien

FITCH WARNS OF IMPENDING DOWNGRADES IF GM GOES

If General Motors (GM) were to find itself with no recourse but
to declare bankruptcy, a host of auto supplier could - not
surprisingly - follow suit. At the very least, the rest of the
automotive food chain, including suppliers of parts, components
and systems, would face widespread default on credit obligations,
and find themselves facing an increasingly adversarial creditor
base.

Fitch ratings service said that it may cut the credit ratings on
seven auto suppliers because of concerns over the prospect of a
GM bankruptcy filing. It said such a move would result in
”contraction of auto production, supply chain, trade credit, and
capital access, and cause widespread slowdowns and bankruptcies
throughout the supply chain.” At the very least, a GM bankruptcy
would spark violations of loan-covenant agreements ”across a
majority of (parts) suppliers.”

The firm said it considered American Axle (AXL) to have the
greatest risk of a downgrade; if it changed the rating on the
company, which is currently rated five steps below investment
grade, it would fall to the extremely speculative rating of ‘CC’.
Hayes Lemmerz (HAYZ) and ArvinMeritor (ARM) are also currently
graded five steps below investment grade. Within the group,
Visteon (VC) - eight steps from investment grade - carries the
most-speculative rating; Johnson Control (JCI) is the only name
in the sector with an investment-grade rating.

Tenneco (TEN) and TRW (TRW), whose current investment ratings
have them within two steps of investment grade, are regarded as
the healthiest names in the sector, in terms of
credit-worthiness. But even they would likely have to renegotiate
their current debt covenants with lenders.
snip
-------------------
http://blogs.barrons.com/stockstowat...-the-consumer/


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Sun, 14 Dec 2008 20:50:11 -0500, Brian Lawson
wrote:

On Sun, 14 Dec 2008 18:44:58 -0500, Wes wrote:

F. George McDuffee wrote:

FWIW #2 -- standard Detroit vendor terms are now payment in 45
days after receipt of invoice. This means that the vendor has
*AT LEAST* 15% of their yearly *GROSS* income from that product
at risk, effectively making a zero interest, zero collateral
loan. Blogger information indicates that the payment times have
been gradually increasing above the 45 day standard, leading to
the assumption of a final "bust out scam" on top of the long-term
Ponzi scheme. [Why leave any money on the table?]


Don't forget how tooling and such get held out for PPAP approval and all the other games
to stretch payment. I have a feeling many vendors aging report go at least 60 days.

Wes


Actually, the tooling and part suppliers don't get paid until the tool
produces vehicles for sale. Test shots/parts and pre-production
test-vehicles don't count. In other words, vendor's tooling and
parts made to-date for say the 2010 vehicles won't get paid until at
least September 2009, when the 2010 models go on sale. One of the
little repercussions of this is that if a "model line" is now cut to
reduce the Big3's style offerings, say Chrysler cuts the Grand Caravan
mini-van, the supplier of (again..for instance) the front clip, may
very well have a real problem/no recourse to collect anything. Ever!!
If the tooling for the clip was worth say $200,000 for that one part,
that may well sink the tool builder and the part supplier. That's two
businesses that will be gone, and they probably have had to arrange
similar financing terms and arrangements with either their suppliers
or their bank, or both, to float that money to start with, so they
will also take hits. And what if they made 5 tools for Chrysler, only
2 of which were for the Grand Caravan, on a deal of some sort, and now
they go out of business because they can't get paid for the one part,
so there will be extra troubles for Chrysler because they won't have
supplier for the other parts now.

There must be millions of little unthinkables about to happen, even
WITH any government (US all levels + Canadian Feds & Ontario
provincial) bail-out monies or assistance. I can see a Humpty-Dumpty
tumble-down (not a trickle-down) about to happen no matter what, as
these rules change or are forced upon the industry. Some good and
well run businesses that had no causal interests in this collapse are
going to be hurt severely or killed, no matter what happens now. And
before anybody jumps in with the standard cries of how it's their own
damn fault ..most are skilled non-union, if that influences anything.

Merry Christmas,,,,riiiiggghhhhtttt

Brian Lawson,
Bothwell, Ontario.


MANY small tool and die shops have already been put out of business by
the "automotive downturn" in southwestern ontario due to the failure
of parts suppliers who have not been able to provide parts at the
price GM, Ford and Chrysler are demanding (and able to get from
offshore) and are therefore unable to pay for the tooling provided to
them to do the job.
Then there are the parts manufacturers who have used off-shore tool
and die shops to make their tooling and due to faulty tooling have not
been able to meet the quality requirements on time to maintain parts
supply contracts to the big 3. So they are gone already too.
MAny of these were small non-union shops - and in the case of one tool
and die shop had been in existance for well over 50 years. The
ownerjust closed shop and retired while he still had some money left.

On Sun, 14 Dec 2008 20:50:11 -0500, Brian Lawson
wrote:
snip
Actually, the tooling and part suppliers don't get paid until the tool
produces vehicles for sale. Test shots/parts and pre-production
test-vehicles don't count. In other words, vendor's tooling and
parts made to-date for say the 2010 vehicles won't get paid until at
least September 2009, when the 2010 models go on sale. One of the
little repercussions of this is that if a "model line" is now cut to
reduce the Big3's style offerings, say Chrysler cuts the Grand Caravan
mini-van, the supplier of (again..for instance) the front clip, may
very well have a real problem/no recourse to collect anything. Ever!!
snip
----------------
Thanks for the insight/info.

The further I look into this, the "stinkier," the whose thing
becomes.

To mangle the metaphor, we don't allow the construction of 10
story wooden building without sprinklers and adequate fire
escapes. Why them were these types of "fire trap" jurry-rigged
corporations allowed to evolve with no emergency exists, no
sprinklers, no fire walls, no nothing, with pennies behind every
fuse? It is clear now that the building is on fire that this was
a disaster waiting to happen for at least the last decade.

Most unfortunately, it appears that Detroit is unique in this
regard only in being first.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...
"F. George McDuffee" wrote in message
...

snip
---------
some follow-up on my first response.

Hey, George, I was thinking about you last night at a Christmas party we
attended, held by a guy who's one of the few people who was working for
Cantor Fitzgerald on 9/11 and who didn't die. It was full of Wall Street
types and you can guess what we were talking about. They're all
six-figure guys but I don't any of them are the seven-figure variety.

I spent an hour talking to an old friend who's a bond analyst at
Citigroup -- one of the lucky ones who still has a job there. He used to
be a risk analyst at Moody's.

These are middle-aged guys who remember when it was an honest business,
and they're appalled at what's happening. You would probably still be
there, having fun. d8-)

I hope one of them took a couple of seconds to explain the negative yield
fiasco to you Ed.
It's a perfect example of the incompetence I've come to expect from the
Bush administration.

JC

The good thing about a negative-yield curve is that it means investors still
have a sense of humor. d8-)

(I'm being facetious.)

--
Ed Huntress

"john" wrote in message
...


Ed Huntress wrote:
"john" wrote in message
...


E

I'm beginning to wish I had taken my uncle up on his offer to give me
his 40' boat. I could live on it, and it's a straight shot from here to
the Bahamian Outer Islands...

--
Ed Huntress


That sounds like a plan. Hope you like to eat fish.


I could live on fish. We used to eat it three times a week or more when I
was fishing a lot.


There is a nice little bar on Great Inaguana and the food at the Morton
salt hotel/boarding house was always good. The Green turtle soup was
excellent.


I love green turtle soup. 'Haven't had it for 40 years. Maybe I should
start packing, before the whole economy goes south. g

--
Ed Huntress

IF you are ever at the airport in Nassau, Bahamas and want a good lunch
you have to go to where the employees eat around the back of the main
terminal, much better food and lower prices. Something like Creole
cooking.

I hope I remember that if it should come to pass. g It's funny you should
mention that, because I once ate in a little restaurant next to the
Christiansted airport, one that was frequented by the locals, and had the
best goat stew I ever ate in the Caribbean.

If the damned little goats weren't bleating around right out back, and if
they didn't look so cute (these are very small goats, black-and-white), I
could have enjoyed it more.

--
Ed Huntress

"Richard" wrote in message
m...
Ed Huntress wrote:
"F. George McDuffee" wrote in message
...

On Fri, 12 Dec 2008 18:14:19 -0500, "Ed Huntress"
wrote:

"A Troll" wrote in message
m...

On Fri, 12 Dec 2008 08:50:49 -0800 (PST), Millwright Ron
wrote:


$73 an Hour

Sorry that the party is over and that the punch bowl is being taken
away.
Join the real world.

BUT....

We all get a new rice bowl with the factory logo, a neat hat, and
lifetime
discounts on bicycle tires.

The Third World is US!

================
The news on most of the auto blogs is that the Chrysler vendors
are rapidly moving to supplying parts only on a COD basis.

Several of the blogs have Chrysler purchasing management
refusing, but they ain't getting the parts either.

A review of some of the comments by our Congressional gasbags and
Kamakazies/suicide bombers indicate they expect the vendors to
"do their part."


Haha! Does that mean they expect them to dig a hole and jump in? I think
some of them are ready for it. g

As many of the vendors have been driven to the brink of
bankruptcy, and in many cases are now working at cost, in
addition to providing zero interest loans through the "90 days
same as cash" Detroit vendor payment plans, it is unclear exactly
what they are supposed to do.


Detroit destroyed many of them, and they destroyed the vendor
relationships they had before Lopez (Jose Ignacio Lopez de Arriortua)
raped and pillaged in the '80s. That was Detroit's response to foreign
competition -- bleed the vendors dry.


The Detroit car companies would do well to remember that ANY
three creditors can file a bankruptcy petition with the court in
addition to the company itself, and the location can be critical,
as some jurisdictions are much more "business oriented" than
others.

I look for a Sunday B/K filing, ala Lehman Brothers, late at
night. Chrysler/GM/GMAC/REsCap are all "joined at the hip," and
when one goes they all go.

It will be interesting [in the sense of watching a train wreck]
to see how the CDS [credit default swaps] playout, and what
happens to the banks when they must write down their GM debt to
zero in accordance with mark to market.


I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress

Aw heck, Ed, you can come with us - although the boat is only 38 feet.

I'll keep it in mind. I was good on the foredeck when I was in my
20s....'could go right up the mast in a bosun's chair, too. Now, I'd be
happy to consult and advise. d8-)

--
Ed Huntress

Ed Huntress wrote:


I'm beginning to wish I had taken my uncle up on his offer to give me his
40' boat. I could live on it, and it's a straight shot from here to the
Bahamian Outer Islands...

--
Ed Huntress

Aw heck, Ed, you can come with us - although the boat is only 38 feet.


I'll keep it in mind. I was good on the foredeck when I was in my
20s....'could go right up the mast in a bosun's chair, too. Now, I'd be
happy to consult and advise. d8-)

--
Ed Huntress



LOL! I do know what you mean!

But you have to bring your own girl(s).



I want to go to Antigua for race week some time pretty soon.
Before I get too old to consult and advise...

Richard

"F. George McDuffee" wrote in message
...
On Sun, 14 Dec 2008 13:24:06 -0800, "John R. Carroll"
wrote:
snip
I hope one of them took a couple of seconds to explain the negative yield
fiasco to you Ed.
It's a perfect example of the incompetence I've come to expect from the
Bush
administration.
snip

I wish I could have been at Ed's party. I am sure the ethical
bankers and brokers were as p****d-off as everyone else at the
ruin of their industry/profession for the sake of the short-run
quick buck and EZ-money. It turned out that finance was just
another "cash cow" to be milked as hard as possible until she
went dry and then sent to the slaughter house.

While I missed the party, the global fiscal/economic environment
is now so far from normal that the usual considerations such as
the "return *ON* my investment" are now trumped by considerations
such as the "return *OF* my investment." [Nod to Will Rogers
here]

There are very few places where Dollar denominated funds in the
range 10s of millions into the billions can be parked quickly in
safety other than short term US government securities. (5 basis
points is still cheaper than renting a vault and paying guards to
store cash, even if that much paper money was available....)

The capital flight from the commercial banks to US government
securities is a disaster for not only the commercial banks but
the economy as a whole because each dollar placed in governmental
securities is a 10 dollar [or more] reduction in available credit
due to the nature of fractional reserve banking.

There is also the velocity factor in that the money placed in
governmental securities is not circulating.

While the FRB has their "magic money machine" operating at warp
speed, the contraction in the "perceived" money supply from not
only the fall in stock prices [e.g DJ 14,300 to DJ 8,500] but
more importantly, on a volume/dollar basis, the huge write down
of commercial bonds to 10 -20 cents on the dollar, with a fall in
rating from AAA [investment] to Ccc- [junk] is far out pacing
their attempt to re inflate the money supply. The same thing is
occurring in most major economies, e.g. UK, EEC, Japan.

As I have indicated before, this attempt to re inflate the
currency bubble is having minimal to negative effect because this
is not a liquidity crisis but a solvency crisis where many
[possibly most] of the major players are
operationally/functionally bankrupt, and no one in their right
mind would lend them any money expecting it to be returned
w/interest.

This will no doubt shock you George - and I'll be shocked that you are
shocked again - but these trades actually make sense for the buyers.
Hedge funds have been closing their books for the year and, in an attempt to
clean up their books, they've been ceaming the discount window. The rate at
the window, when inflation is considered, is -200 basis points and they get
to put up their worst crap. Some of
what they are getting face value for is really just worthless paper but most
of it is trading ( or not ) in the neighborhood of $0.60.
The quality is so low that they aren't even useful to meet margin
requirements.

The funds clean up their balance sheets and have locked in a profit of about
100 basis points for between 30 and 90 days at our expense.
That's one heck of a return when you consider that even the best run of the
funds are down ten percent.

JC

"Ed Huntress" wrote in message
...

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...
"F. George McDuffee" wrote in message
...

snip
---------
some follow-up on my first response.

Hey, George, I was thinking about you last night at a Christmas party we
attended, held by a guy who's one of the few people who was working for
Cantor Fitzgerald on 9/11 and who didn't die. It was full of Wall Street
types and you can guess what we were talking about. They're all
six-figure guys but I don't any of them are the seven-figure variety.

I spent an hour talking to an old friend who's a bond analyst at
Citigroup -- one of the lucky ones who still has a job there. He used to
be a risk analyst at Moody's.

These are middle-aged guys who remember when it was an honest business,
and they're appalled at what's happening. You would probably still be
there, having fun. d8-)

I hope one of them took a couple of seconds to explain the negative yield
fiasco to you Ed.
It's a perfect example of the incompetence I've come to expect from the
Bush administration.

JC

The good thing about a negative-yield curve is that it means investors
still have a sense of humor. d8-)

(I'm being facetious.)

LOL

I hope you can keep yours Ed. All of us in fact will be well served by our
senses of humor.
I've a feeling we'll be needing it.


JC