From Detroit to Washington to San Bernardino
By Andrew Edwards
Staff Writer
SAN BERNARDINO -- Nick DePasquale sells Fords but wants his competition at General Motors to stay alive.
DePasquale, a partner at Fairview Ford in San Bernardino, says that during the past few years, the word around Ford was "not to root against GM."
The idea of team Ford wanting General Motors to succeed may seem about as likely as a UCLA Bruins fan shouting "Fight on" during Saturday's rivalry game against the USC Trojans.
But DePasquale says that Ford won't be able to survive if General Motors goes belly up.
His reason? He reasons that American companies that manufacture automotive components get most of their business from General Motors. If General Motors fades away, its suppliers could be the next companies to go out of business.
DePasquale said that would lead to Ford facing the possibly fatal problem of not being able to buy the components needed to assemble the cars and trucks that he sells at his dealership.
"Our future is tenuous without a manufacturer," said DePasquale, who would in turn be faced with the choice of closing up shop or selling another line of vehicles if Ford crashes.
"It wouldn't be an easy road and it would be a terrible economy to reinvent yourself," he said later
For DePasquale and other auto dealers, Congress' decision could determine whether they have to reengineer their careers.
The Big Three automakers went to Washington, D.C. on Thursday in another attempt to obtain $34 billion in federal assistance at a time when American politics is being dominated by news of once-towering firms seeking government bailouts.
"No thinking person thinks that all three companies can survive," Sen. Bob Corker, R--Tennessee, said.
Congress -- quick to provide billions worth of assistance to financial institutions -- seems to be less willing to provide a bailout package to Chrysler, Ford and General Motors.
"Be honest and tell me ... just tell me if things stay the way they are now, are you going to be back in a year asking for more money?," Sen. Jon Tester, D-Mont. asked.
Senator Richard Shelby,
Auto executives became something of a laughingstock after the public learned that they flew aboard private jets on their previous Capitol trip in search federal aid. This time, Big Three leaders made their journey in environmentally-fashionable hybrid vehicles.
Executives have agreed to government oversight similar to that which could be exercised by a bankruptcy court, if Congress agrees to a bailout.
"I probably need to think about that a little bit. It sounds right, but I just don't know all of the implications," Ford chief executive Alan Mulally said.
But management and labor alike reject the notion of doing business under bankruptcy protections.
Ron Gettelfinger, president of United Auto Workers, rejected bankruptcy, maintaining that Americans would not by cars from bankrupt manufacturers.
Inland Empire economist John Husing said that if the Big Three collapse, the most obvious repercussions in around the San Bernardino region will be the affect on auto dealerships.
The area has already lost several dealerships, including Moss Bros. Ford in Colton, Center Chevrolet in San Bernardino and Saturn of Loma Linda. Husing noted that additional closures would not only add to region's unemployment but further the problems of local governments that need sales tax revenues to pay their bills.
Regarding the auto bailout, Husing said his own mind is divided on whether Congress should provide the aid. He said traditional bankruptcy protections may provide a better alternative.
"It is to take companies that are dire financial straits and give them a pause where they can reorganize," Husing said.
"It wipes out shareholders. It wipes out the creditors," he added. "The major political difficulty is it wipes out the union contracts."
Like Husing, Cal State San Bernardino economics professor Thomas Pierce said the part of the inland economy that's most clearly going to affected by the outcome of the bailout debate will be auto dealerships.
Pierce had a more favorable view of the proposed bailout, provided that the Big Three can present a satsifactory survival plan to Congress.
General Motors, for example, has proposed increasing its efforts to produce alternative fuel vehicles while also cutting back on its brands and dealerships while also seeking other cost reductions.
General Motors CEO Rick Wagoner has also agreed to cut his salary to $1 per year if Washington agrees to the bailout.
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Andrew Edwards. E-mail Andrew here.
Time has come for the Big 3 auto makers to suck it up and effectively deal with the UAW. The CEO of GM working for a $1.00 a year is just a grain of sand on the big beach of being lead around by “organized labor”. At one time in past history the Union was necessary to ensure big business respected their workforce. However, today what is impacting and raging out of control is simply GREED. The unions want it all, and will give nothing. They have become masters in the game of bluff and have learned not to blink when demanding unrealistic benefits and working conditions. They can do this because the union leadership gets their salaries regardless if there is a strike where the rank and file suffer and continue to pay union dues.
Now they have reached the stage where someone has to blink. It is however, the American taxpayer who is being called upon to continue to bankroll this out of control organization and for the first time there is a since of hesitancy. Listening to the news and the polls they run, the taxpayer is now at last are saying ENOUGH. Let the Big 3 inter into bankruptcy. Most of the airlines have been through this much needed re-organization process and come back stronger and better (not counting the lack of free peanuts). Let the Big 3 enter into Chapter 11! This will finally open the door and allow these companies to regain control of themselves from the UAW.
The Unions have been very quite lately letting the media follow the three ring leaders around as if they were pied pipers. Now if the time to redirect the attention to the UAW. If they want to survive they MUST work for a $1.00 a year too! Labor is and has been the most costly part of building anything. Vehicles are no different. The foreign auto makers are responsible for handing the art of auto assembly to the union. Their quality and workmanship is second to none. They are now the leader in an industry once dominated by the Big 3.
o Before any government bailout (or loan) there needs to be the following;
o Full and complete public disclosure of each UAW contract revealing all or total expenditures.
o Full and complete public disclosure of the salary/hrly wage of every member of the UAW from the top to the bottom. Required if the public [taxpayer] money is going to be used in any form of a bailout or “loan”.
o What justified changes to these labor contracts the Big 3 want to make.
o What concessions the UAW is willing to make to ensure its existence…in limited basis.
o A time table of when any public money used, will be repaid back to the government.
o A complete review of what all expenditures the Big 3 take as tax deductions. Re-justify every line item. Adjust or amend as necessary per the IRS review.
o No bonus or stock options are offered or paid until all bailout money is repaid.
o All wage and salaries are readjusted to more realistic numbers.
o Benefits (medical/dental etc) are recomputed and co-paid.
o No hrly raises or salary increases are paid until bailout money is repaid. No retro active salaries or hrly pay increases at any time.
o No matching savings plan until bailout money is repaid.
o Bailout money comes with fair interest being paid.
These items should be the starting point to helping the Big 3 get back into the “black”. If they do not agree, they are on their own. Chapter 7 action should be considered. The American Government is NOT in the auto making business. The UAW should not be in the management of the auto making business. If the Big 3 need help, help should be there for them but with ropes (not strings) attached.