Blog Archives
Refusing Bailout Money, Ford Proves to be Tough in Troubled Times
Times have been tough for the automotive industry over the past few years. While some have resorted to taking government bailouts to stay afloat, there has been one company, in particular, that has changed their business strategy and relied on innovation to push ahead. Ford Motor Company did not take any money from the government, and they have profited from this move by placing more of an emphasis on innovation and marketing. One marketing approach has been their ads, which focus on real Ford owners saying why they have purchased from the company. The below ad features a new F-150 owner, Chris, who purchased his truck for the fact that the company was not bailed out by the government.
His name is Chris. After he sits down the “reporters” bark “Chris, Chris.” One asks him to explain why “was buying American important to you.”
Sitting and looking sincere and serious, Chris says: “I wasn’t going to buy another car that was bailed out by our government. I was going to buy from a manufacturer that’s standing on their own: win, lose, or draw. That’s what America is about is taking the chance to succeed and understanding when you fail that you gotta’ pick yourself up and go back to work. Ford is that company for me.” [
Source]
Now, why would I focus on Ford so heavily? Maybe, it is because I am biased. My father was a former Ford mechanic and I drive a Ford, which I love due to obvious reasons. Another reason is that taxpayers will be losing money to the government bailout of GM and Chrysler at the tune of $14 billion, and this is not chunk change by any means. It is not the government’s role to bail businesses or industries out when they are failing, rather it is up to the CEOs of the organizations to refresh their business strategies and focus on new ideas that will appeal to their consumer base.
Cross posted at Bearing Drift
Today in History: TARP
Two years ago today, the first bailout, TARP was passed in Congress and President George W. Bush signed it into law. (Even more ironic, this was also the two-year anniversary of John McCain’s campaign defeat, as he decided to suspend campaign operations to vote for this disaster.) Many of the TARP supporters claim that this was the only way to prevent a total economic collapse at a lower cost to the taxpayers. Of course, without passing TARP, many were saying that we were headed into a second Great Depression.
Fast forward to 2010, since TARP was enacted and many of the banks were bailed out, the government continued this trend by bailing out other failing industries, such as the auto manufacturers in Detroit. If anything, TARP paved the way for failing industries to receive money from the government to help them stay alive. Unfortunately with the passage of TARP, there will be more negative ramifications from this bill.
The Congressional Oversight Panel said, “The greatest consequence of the TARP may be that the government has lost some of its ability to respond to financial crises.”
The program also helped politicize the Fed, putting it in Congress’s crosshairs for its willingness to work alongside the Treasury Department to aid Wall Street. It spawned deep distrust on Capitol Hill, threatening Fed Chairman Ben Bernanke’s nomination and prompting Congress to curtail some of the Fed’s autonomy and authority. The central bank is now subject to broader oversight than it was before and is limited in its ability to single out individual institutions for financial rescues.
TARP may have saved America in 2008. This does not mean that TARP or any other bailout program will work in the future. Perhaps, it is time to remember free market economics before bailing out failing businesses and other entities in the future.
Auto Bailouts: Another Failed Obama Initiative
The so-called auto industry bailouts were supposed to help keep American automakers afloat. After news broke on Tuesday that U.S. auto sales hit a 28-year low, one would think that the United Auto Workers (UAW) would be pitching a royal sh!t fit over what the Obama Administration considered the grand solution to keeping them in operations. Now, it looks like Detroit will most likely collapse due to the lack of sales.
So, will the UAW continue standing behind their man, Obama? Of course, they are sympathetic to the President, and they believe that Congress needs to pass another bailout to keep them in business.
United Auto Workers President Bob King said Congress needs to pass a stimulus package that creates jobs and bolsters consumer confidence.
Auto sales “are not going as well as they should,” King told reporters Aug. 27 in Wayne, Michigan. “Consumers are not going to buy vehicles if they don’t have jobs or aren’t confident in their job.”
However, what does the Obama Administration think of them? According to the author of an upcoming book, Overkill (which for the full disclosure, I look forward to purchasing and reading), Steven Rattner, who was appointed by President Obama to be the “Car Czar” dishes out revelations that a top White House official (Chief of Staff, Rahm Emanuel) disparaged the unions, especially calling out the UAW by saying a derogatory statement. As I say to the UAW, it’s time for the sh!t fit to begin.
Is Obama going to consider yet another bailout to help them survive or let them eat cake to help his party retain control of Congress? Another bailout for a failing business would make the taxpayers irate, and if Congress considers this move, they will be voted out of office. So, Obama might tell his ardent supporters from the UAW to eat cake on this one.
We Shouldn’t Bank on Bailouts
Guest Post by Congressman Bob Goodlatte
The free flow of money is fundamental to our capitalist system and the entrepreneurial spirit that defines America. Investors vote with their wallets and the best ideas prevail. However, this only works when the government does not inject itself into otherwise private matters.
Abuses have occurred recently in our financial industry and they must be addressed. Unfortunately the legislation which House Democrats pushed through last week will only perpetuate mistakes that have already been made. As America continues dealing with the sluggish economy and unemployment hovers around ten percent, the House passed, without my support, the so-called “Wall Street Reform and Consumer Protection Act”, which will expand government at the expense of families and small businesses.
Specifically the legislation allows a team of federal bureaucrats to decide if a private business poses a risk to the economy. The legislation would allow the federal government to take over those private businesses and would even give the government the right to sell off the businesses’ assets.
While the alleged purpose of this bill is to prevent a concentration of money and power in a small number of large corporations, the bill would have the opposite effect. Knowing that the federal government will swoop in and take over any companies that it deems “too big to fail,” creditors and investors will be drawn to lend money to the largest corporations because of the implied guarantee that the federal government will step in to repay these loans. The natural flow of capital will thus be interrupted and flow to the largest corporations rather than to small businesses and entrepreneurs with good ideas, which are the true innovators and job creators of the U.S. economy.
Additionally, the legislation expands the reach of government in the marketplace by creating several new bureaucratic offices and agencies, including a Consumer Financial Protection Bureau and an Office of Financial Research. These government offices will have broad authority to impose burdensome regulations on any business that lends money, extends credit, or enters into repayment plans with consumers. These new federal regulations would hit everyone from doctors and hospitals to furniture and department stores.
To address the need for reform of the financial industry, I am a strong supporter of the Consumer Protection and Regulatory Enhancement Act. Rather than guarantee future government bailouts, this legislation would force companies to bear the responsibility of their bad decisions, rather than force taxpayers to pick up the tab. It would do this by creating a new chapter of the bankruptcy code to make it more efficient and better suited for resolving these issues. This legislation would also ensure consistent enforcement, accountability and transparency by modernizing the current federal financial regulatory agencies overseeing our nation’s financial institutions.
Congress should not be passing over-reaching legislation like the so-called “Wall Street Reform and Consumer Protection Act”. Instead government must make it possible for small businesses and entrepreneurs to access capital to innovate and create the jobs that are so desperately needed today.
To contact me about this or any other matter, please visit my website at www.goodlatte.house.gov.
Auto Bailouts and Ford Motor Company
Ford Motor Company has not been directly impacted by the auto bailouts given to those at Chrysler and GM, and in fact, it has turned a profit recently. According to U.S. News and World Report, the auto manufacturer has cut costs, experiencing the gains from purchases on the new Taurus sedan and the Fusion hybrid, as well as reaping the benefits from the cash for clunkers program.
ABC News also speculated on Ford’s management style as being one of the reasons that the auto maker has turned a profit.
Three years ago, Ford was considered in the worst shape of the Detroit Three after posting what was at the time the worst annual loss in its history. The big quarterly profit is the fruit of changes Ford has been making for several years.
At the end of 2005, then-CEO Bill Ford Jr. and two other Ford executives developed a plan to shut down factories, slash the work force and speed the development of cars and trucks.
A year later, Bill Ford left the CEO job and installed Alan Mulally, a former Boeing executive, who further honed the plan and made a key decision — mortgaging assets like its blue oval logo to raise $23.4 billion.
When the economy faltered last year and took auto sales down with it, Ford had the cash to weather the storm.
“GM and Chrysler still have quite a bit of restructuring to do and simply don’t have the product competitiveness across their lineup that Ford does,” said Mark Oline, auto industry analyst for Fitch Ratings.
Perhaps, it is the innovation that is causing Ford to turn a profit. The new vehicles coming off the manufacturing line are fuel efficient and modern looking. In fact, the new Festiva will be on dealer lots soon, and it offers not only good fuel mileage, but the look is also sharp and sporty.
Overall, it might be too soon to tell what impact the auto bailouts will have on Ford Motor Company in the end. In fact, many UAW executives are worried about the impact Ford’s continued economic growth will have on Chrysler. Many of the UAW retirees have their health care and pension plans through Chrysler. Right now, it will be a wait and see moment for Detroit.
The Fashion Industry is now bailing out General Motors
Well, kinda. The Los Angeles Times has a great article about how some newly released handbags are now displaying the logos of General Motors vehicles. Just thinking about it…I now want a Saturn handbag.
Cross posted at American Princess
Does this look like tens of thousands to you?
Leave it to the mainstream media to distort the facts. The Washington Post reported that “tens of thousands appeared on the Capitol” Saturday to protest the health care bill, while Bloomberg reported that “thousands” showed up to protest.
Meanwhile, they forgot to get the real count. The Daily Mail reports that “as many as one million people flooded into Washington….”
These pictures should live to dispel the mainstream media.
If you still don’t believe the 1.2 million count, just check out this diagram from the Obama Inauguration (which was estimated at 1 million). People were still streaming down Pennsylvania Avenue.
Another Bailout Could Be Around the Bend
There could be another bailout that Congress will be considering shortly, and this time, it involves protecting the rich and their beach houses. S. 505, the Homeowner’s Defense Act is designed to set up a National Catastrophe Fund, which would provide reinsurance for the insurance companies that experience huge damage related claims. Since it is hurricane season, this would primarily impact the areas on Florida’s Gulf Coast, and give the money to wealthy beach front property owners.
They say it never rains in California…
Well, it’s raining budget woes in California, and there is no doubt that taxpayers would like their government to stop wasteful spending. California’s woes could soon become America’s woes, as Obama and Congress continue to waste our hard earned tax dollars on wasteful programs, bailouts of GM (now known as Government Motors) and Chrysler, etc. In this video, Reason Magazine Editor in Chief, Matt Welch discusses California’s woes.
Shouldn’t California’s recent budget woes send a clear signal to the Obama Administration? If only, they would wake up and pay attention.
GM = Tipping Point
This morning, as I was doing my typical surf through on iGoogle, I happen to find this gem of an article by Byron York from The Washington Examiner that asked “Will the GM bailout be Obama’s tipping point?” York states throughout the article that Obama may be reaching a tipping point between his personal popularity and the unpopularity of his policy proposals.
“We might be catching a glimpse of Obama’s tipping point with his handling of General Motors’ bankruptcy, and Chrysler’s before it. The government takeover of the automakers is by far the most unpopular thing Obama has done so far. And it’s not just unpopular — it is partisan, appealing to the base of his party and virtually no one else.
In a Washington Post poll in late April, just 41 percent of those surveyed approved of Obama’s handling of the automaker problem, compared to clear majorities who approved of the job he was doing in other areas. According to a detailed breakdown of a Gallup poll from the same time, people in virtually every demographic and political category looked askance at the continuing bailout of the automakers.
People of all age groups disapproved. People in every region of the country disapproved. Men disapproved. Women disapproved. People with graduate degrees disapproved. People with less than a high school degree disapproved. People who go to church a lot disapproved. People who don’t go to church at all disapproved. People who make more than $75,000 a year disapproved. People who make less than $20,000 a year disapproved.”
While I think the GM government bailouts will contribute to Obama’s drop in the polls, I think the unveiling of his other initiatives will make the numbers drop off significantly. We can only look at his health care and education proposals, and his handling of the Guantanamo Bay situation to gauge how the public unrest will grow.
The entire GM situation is enough to stir my anger. I believe in the free market system, and when you make bad decisions as a business owner, then you should fail and learn from these lessons. With Obama’s decision to bailout GM, which declared bankruptcy, the American taxpayer will be paying for their mistakes for a long time.
