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Archive for the ‘Big Three’ Category

GM to Boost Volt Production

General Motors Co. plans to boost production for its range-extending electric car, the Chevrolet Volt, to 16,000 vehicles this year, and 60,000 in 2012, the company said today.

The Detroit carmaker had originally planned to build 15,000 Volts this year, and 45,000 in 2012, but strong demand for the battery-powered car has prompted the company to churn out more.

The announcement comes just two weeks before a four-week shutdown at its Detroit-Hamtramck plant, where GM builds the Volt, for retooling.

Ford Offers Buyouts to All UAW Workers

 DETROIT, Dec 21 (Reuters) - Ford Motor Co (F.N) said on
Monday it is offering its 41,000 U.S. factory workers buyouts
and early retirement offers in a bid to reduce its payroll
costs as it aims to return to profit by 2011.

 The buyouts mark the second round of such offers for Ford
workers represented by the United Auto Workers union this year.
About 1,000 workers took Ford's earlier offer in July.

 While Ford was the only U.S. automaker to have avoided
bankruptcy in the past year, its relative success has
complicated efforts to win concessions from its major union.

 Ford workers have until late January to accept the offer,
which includes payouts of up to $70,000 cash for newer hires to
$60,000 cash for veterans already eligible for retirement.

 "Despite a strengthening in our business, we still have a
surplus in employees," said Ford spokesman Mark Truby.

 Ford did not provide a target for how many workers it
expected would take the buyout offers.

Wall Street on the Lam

Slashing executive salaries, bonuses and perks at the seven bailed-out companies that gorged most gluttonously at the public trough is emotionally satisfying, but it shouldn’t be. It’s like arresting jaywalkers while ignoring the bank robbery that’s happening in broad daylight down the block.

Don’t get me wrong. The Obama administration’s “pay czar,” Kenneth Feinberg, is right to put a lid on compensation at the Not-So-Magnificent Seven: Citigroup, Bank of America, General Motors, Chrysler, GMAC, Chrysler Financial and the unforgettable AIG.

Twenty-five of the biggest earners at each of those firms will have their overall compensation cut roughly in half, and most of that will come as restricted company stock, not cash. This means that what they ultimately reap, when they are eventually allowed to sell the stock, will depend on how well the company performs — which will depend on how well the executives do their jobs.

Tying pay to performance: What a concept.

Feinberg even muscled outgoing Bank of America chief executive Kenneth Lewis into accepting no pay or bonus for this year. But Lewis will still have an estimated $70 million retirement package to keep him warm at night, so hold your tears.

It’s nice to know that there must be some pooh-bah at B of A, Citigroup or AIG who will have to live without the new $90,000 Porsche Panamera he was planning to buy. But Feinberg’s writ of imperial decree doesn’t extend beyond those seven companies, and the rest of Wall Street gives no indication of remotely understanding what the big deal is about compensation.

Goldman Sachs, for example, has a bonus pool this year of at least $16 billion and perhaps as much as $23 billion.

But all this is just a sideshow. The main event is the limited, far-too-modest attempt by the Obama administration and Congress to curb the irresponsible Wall Street practices that led to the financial meltdown — and, if unaddressed, will lead inexorably to the next crisis.

Deregulation allowed the financial marketplace to devolve from an institution that served the overall economy — by allocating capital most efficiently to the companies that could put it to best use — into an institution whose primary mission was to serve itself.

The vast over-the-counter trade in instruments known as derivatives, nominally worth a staggering $600 trillion worldwide, is largely an exercise in make-believe. Firms make highly leveraged investments in exotic securities whose true value is opaque. Then they hedge these investments by buying insurance against potential losses, although the insurer doesn’t have a fraction of the money it would need to make good on all its promises.

All this investing and hedging generate huge transaction fees and big profits, which can be skimmed off the top each year.

Everything’s fine, until there’s some disruption in the real economy — a downturn in the housing market, say. If the disruption is severe enough, the web of make-believe deals starts to unravel. At which point the government steps in and bails everybody out.

Capping salaries and bonuses is fine. But we need to pay attention to the guys in ski masks with bulging bags of money slung over their shoulders. They’re about to jump into the getaway car.

Making It In America

Washington’s special genius is for gridlock. As we’re seeing in the health care debate, the entire system is designed to frustrate action — even when Democrats have a popular president, 60 votes in the Senate and a large majority in the House. Moneyed interests trump party loyalty. Partisan politics trumps national purpose. Congressional rules and egos favor dithering and delay.

But at least on health care, the administration is leading the charge. We haven’t even begun an adult conversation about the fundamental question of America’s global economic strategy. What is the economy we will build out of the ashes of the old?

Obama has raised the subject. He understands that we can’t go back to the old economy — and shouldn’t want to. We can’t go back to borrowing $2 billion a day, largely from the Chinese, to serve as consumer to the world. We can’t go back to an economy in which finance captures 45% of the nation’s profits.

We can’t keep shipping good jobs, technology, and manufacturing capacity abroad and expect to sustain a broad middle class at home. We’ve got to start making it in America again. As Obama has declared, “The fight for American manufacturing is the fight for America’s future.”

As Louis Uchitelle in the New York Times reports, the United States now ranks behind every industrial nation except France in the percentage of overall economic activity devoted to manufacturing. We’ve been shedding manufacturing jobs for years, and the recession has been brutal, with nearly two million industrial jobs disappearing since it began.

If the U.S. wants new energy to be the centerpiece of a new economy in which — in the president’s words, the U.S. “consumes less and produces more,” then it will have to have an industrial strategy.

A new global strategy is essential. But getting there won’t be easy. Just as the insurance companies impede sensible reforms in health care, and big oil and coal block vital changes in energy, and Wall Street guts vital reform of finance, global corporations and banks will spend a lot of money to defend the unsustainable trade policies of the old economy.

In a refreshing change, the Big Mitten wins

Two industrial icons, one of them partially crippled, shined on Michigan today. Bankrupt General Motors Corp. said it would locate its new small car plant at Orion Township, a move that will save a few thousand manufacturing jobs and keep an endangered stamping facility in Pontiac alive — even at the cost of steep local tax abatements.

And General Electric Co. says it will open a next-generation high-tech facility in Van Buren Township and create up to 1,200 new jobs, many of them paying $100,000 a year or more. The GE gambit holds greater symbolic importance, mainly because its proposed location lends credibility and heft to a planned “Aerotropolis” along the I-94 corridor between Willow Run and Detroit Metropolitan airports. Even North Carolina’s vaunted Research Triangle languished for years until a major corporate player — IBM? — became the kind of lead anchor tenant that wooed others.

The announcements are badly needed wins for beleaguered Michigan, its strained tax base and its embattled governor, Jennifer Granholm, holder of the worst economic record of any sitting governor in the nation. After months of nothing but bad news, GM and GE today delivered the industrial equivalent of manna from heaven — or evidence of the invisible hand of President Barack Obama’s auto task force and Treasury Department working a little magic.

Ford to Get Retooling Loans

Ford Motor Co. will today become the first Detroit automaker to receive loans from the U.S. Department of Energy to help cover the cost of developing and building more fuel-efficient cars and trucks, according to people familiar with the decision.

In its application to the Energy Department, Ford said it would use the money to help cover the cost of retooling some of its U.S. truck plants to produce small cars from Europe.

That would include the planned conversion of the former Michigan Truck Plant in Wayne, MI.