By on December 24, 2008

I know the following letter, first published in the Park Rapids [Minnesota] Enterprise, contains some highly contentious attacks on The Big 2.8 and slurs upon the United Auto Workers. It’s also a bit lacking in the factuality department. But I’m republishing it because I believe the miffed missive mailer represents more than one consumer’s antipathy towards the domestic automakers. If the broad strokes painted here are in any way reflective of a segment of the car-buying public, if that sentiment swells as longtime D2.8 critics become more vocal and visible, well, it’s an abandoned airfield full of not good. And if GM, Chrysler and then Ford belly-up to the bailout buffet for yet more billions, they could well be evoking the law of diminishing returns. (Or endless socialism.) After all, at some point, they have to sell cars to someone.

“Now that the president (and I imagine Congress) has approved a 17.4 billion dollar bailout for GM and Chrysler, what should the American consumers do? My advice … buy foreign cars. The so-called Big Three in Detroit have been ripping off the American car buyer for decades. None of these cars produced in Detroit are worth the price tags placed on them. Many of them break down before the warranty goes off or shortly after. And they depreciate the minute you drive them off the lot. Why the outrageously high prices? Because some execs at Ford, Chrysler and GM have been knocking down mutli-million [sic] dollar paychecks for years. And union workers, many of them high school dropouts, are making anywhere from 65 to 75 bucks an hour for standing in an assembly line putting in bolts and nuts that any 5 year old could do.


“If the American taxpayers are going to give almost 20 billion (probably a lot more when Obama gets in office), then the American car buyers should get one heck of a deal when buying a new car. Which brings another question to mind: How is the government bailout going to help car sales? Our economy is in slump, a recession (depression, in my opinion), who has the money for a new car? So Detroit gets billions to keep poorly managed, overpaid car companies afloat. How will that help car sales? Why should the American taxpayer help companies that have been overcharging us for years with poor quality cars?

Buy foreign cars. Let Detroit go under. And those guys and gals making 75 bucks an hour better get used to working at fast food joints for one tenth of the pay.

Tom R. Kovach

Nevis”

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32 Comments on “Bailout Watch 303: The Backlash Begins?...”


  • avatar
    Luther

    “Now that the president (and I imagine Congress) has approved a 17.4 billion dollar bailout for GM and Chrysler”

    Congress (Senate) voted down the bailout which makes the bailout that much more disgusting…and then to have Gettelfinger basically give the taxpayer the “Gettel-Finger” after they got the money…..

  • avatar
    akear

    Without an Auto industry, consumer electronic industry, rail car industry, and appliance industry, what does America have that can be called world class. It is an extremely depressing time.

    Actually, it makes me sick to my stomach. Even the French now feel superior.

    Everything is awful. What a pathetic time.

  • avatar
    Rix

    To be fair, it was GM and Chrysler have asked for an open bar. Ford only asked to open a tab.

  • avatar
    Strippo

    Ford cars are actually worse than their GM counterparts.

    If you say so it must be true. After all, your words appear on the internets, available to a rather exclusive little subset of the intelligentsia. But then again, GM has like four “counterparts” to each Ford product. Therein lies the rub.

  • avatar
    luscious

    I’m not so sure I see where this guy is stretching the truth :)

    Tom, you seem to be quite a reasonable person and a fine upstanding Christian…Merry Christmas, good buddy. Keep writing …I enjoyed reading your thoughts.

  • avatar
    sean362880

    This letter is both factually and sentimentally wrong, I think. Anger takes too much effort, and most people (Tom not included) have better things to do than wallow in their own festering schadenfreude. The prevailing sentiment about Detroit’s failure is disappointment.

    People opposed the bailout either on principle (it wasn’t fair, ran contrary to free market principles etc.) or because it was a poor use of taxpayer money, not because they held a personal grudge against the 2.8.

    If the 2.8 start making cars as good as, nay, better than the competition then people will start buying domestic. The product is what drove people away, and it will bring them back.

  • avatar
    EricTheOracle

    How utterly bizarre you mention my neighbor Mr. Kovach who wrote the letter published in the Park Rapids Enterprise. What Tom didn’t tell you is that from Nevis, MN we need to drive 50 miles to get to the nearest foreign auto dealer.

  • avatar
    tedward

    Luther…Even if the bill didn’t get through the senate, the combination of White House and Majority Party support make this very workable. Not sure it totally qualifies as a blatant violation of the people’s will either, although I’d agree that there’s a good whiff of that fine odor. Consider that the normal state of affairs for something like this is 1 White House pushes legislators to introduce a bill, 2 bill gets voted down/filibustered/mysteriously gains unacceptable billions in cost, 3 White House directs relevant federal agency to basically implement the policy anyway, 4 Congress determines if they can muster the balls to cut funding, exact some petty revenge etc…

    Don’t get me wrong, I’d like to see a proper piece of legislation and a clearly defined mandate as well, but I don’t think Bush will be too hard pressed to explain how saving so many jobs at this particular time is consistent with the intent behind the bailout fund they pulled the cash from. Besides, on this one thing at least, the democrats won’t let Bush get bent over a barrel. They agree with him for one thing, but more importantly no one is going to be running against him ever again, so it’s not worth letting the bill die to take him down with it.

    And after the recent actions of this congress, it’s only reasonable to assume that the sudden opposition to a relatively small bailout by a few senators arose because they were bought, not out of principle.

  • avatar
    luscious

    Well, I don’t know if “disappointment” really taps into the untold angst (if you will) of being financially raked over the coals.

    I mean, do YOU enjoy being financially screwed?

    Schadenfreude (where are the umlauts?) aside, I think Tom is dead on. I mean, how ELSE did a rag-tag band of misfits called Toyota, Nissan, and Hyundai overtake the “Big 3″ and are now dancing on their freshly-dug grave?

    People WILLINGLY ran from GM, Ford, and Chrapster at the slightest HINT of an alternative “solution”.

    And “solution” is what they got!!

    Merry Christmas GM, Ford, and Chrapster…I hope the Elves bring you a nice blown headgasket or seized transmission.

  • avatar

    There are no umlauts in Schadenfreude.

    Schädenfrüde doesn’t quite cut it.

  • avatar
    tedward

    Also, I’d like to add that it seems like GM is taking the right kind of advice right now, so it may not be in the consumer’s best interest to carry this hate into the near future. Their brand new cars seem to be competitive, parts sharing is gaining a useful urgency, brand closures are openly discussed, non-car brands are being de-whored (no Malibu SS so far at least), product specialists are being enlisted in serious development, they are racing what they make (Cruze, CTS, Cobalt) and all of this information is available to anyone following any type of auto media. I want GM to survive and pay back this damn loan and I don’t want fewer good choices when I buy my next car. Chrysler can hang.

  • avatar
    dejalma

    What do expect from someone from the deep south.

    Oh, sorry. I thought there was solidarity in the ranks from people in northern states. My bad.

    I do disagree that the job is easy and that any 5 year old could do it. I know I couldn’t. But, I also know that a job can only pay so much if a company is having consistent issues making a profit.

    And while he is correct on 65 to 70 and hour in labor costs, he is wrong about the person making that hours worth of labor getting 65 to 70 an hour. But we all know that.

    The person on the line IS responsible for being in the union and demanding (and getting) a labor cost of 65 to 70 an hour. I guess it was easier for auto execs to squeeze suppliers and content in the cars instead of standing up to the unions.

    The unions winning over the years is like Bush winning in Iraq. Congrats!!!! No one can deny that we won the war way back when over there. Was it worth it? No.

  • avatar

    Robert,

    Nobody ever said consumers were rational actors. But we know that the car companies do a fair amount of focus group testing and consumer surveys. We know GM & Ford have tested consumer response to a Ch. 11. I wonder if they’ve tested for this backlash and decided it’d hurt them less to take the money than file.

  • avatar
    eggsalad

    I read an intersting opposition piece to the Big 1.8 bailout. Rather than give a bailout at all, the author suggested a $5-7k, right-off-the-sticker Federal rebate/tax cut to the purchaser of an American car.

    It’s kind of a neat idea, except for the hair splitting to tell me WHAT is an “American car”.

    I suspect more Americans are employed making Tundras in Texas, then are making Dodge Rams in Mexico. Somebody tell me which purchase is more patriotic. I sure can’t figure it out.

  • avatar
    ronin

    GM is not taking the right advice right now, and I can prove it: Nobody is buying their cars.

    The right advice is to lower the price to the point people can afford it. If it means reducing or zero profits for some time, oh. That’s business.

    Of course, they never have to actually sell another car. That would be icky. THey could just go to the Supreme Soviet and demand more free money. Because although the American public is against it, and rightfully will as a consequence never buy a GM product again, the Supreme Soviet will gladly hand over more free money to GM. And again and again and again.

    And so are the prices of cars propped up to an unsustainable level, and so do the lots overflow with more and more cars slowly rusting away. I mean, next fall do you really want to buy a brand new 2008 car after it’s been sitting exposed over a couple winters?

  • avatar
    derm81

    Do a quick Google on Tom R. Kovach Nevis and you will see that this guy has written numerous asshattish letters to newspapers over the past few years.

  • avatar
    Geo. Levecque

    There is some truth in this editorial for both of our Counties, in that to be a employee of the Detroit Three is that you need not have a Secondary or Engineering degree to work on the Production line, just know someone that already works there,ie Grandfather, Father, Son, Daughter etc its a never ending spiral, the wages paid over the years is the amount that both UAW/CAW bargained for and times where good so the employer went along too, such a shame really is that a Floor sweeper makes as much as someone bolting the vehicles together, which job is easier? and the cost is passed on to the Consumer! Way to go Detroit Three!

  • avatar
    bunkie

    “…how ELSE did a rag-tag band of misfits called Toyota, Nissan, and Hyundai overtake the “Big 3″ and are now dancing on their freshly-dug grave?”

    Certainly, all those tax breaks to build plants in non-union states had nothing at all to do with it.

  • avatar
    cmcmail

    The taxpayers have voted for the car companies they want to support, by buying their cars with their hard earned after tax dollars. Now the governments are using their tax dollars to bailout the companies the taxpayers chose not to support.
    Keep an eye on Russia and their problems with domestic cars these days. Those workers at the foreign owned plants are paying their taxes to subsidize the losers in Detroit. Then they go back to work Monday and build better cars.

  • avatar
    akear

    The facts are there for all to see. Ford’s lineup is worse than GM’s. Quick name a Ford car better than the CTS, Malibu, and Corvette.

  • avatar
    tedward

    Ronin…I probably should have been more specific about only referring to the newest cars, I don’t understand why someone would actually buy a sunfire, aveo or impala (to name just a very few of the many bad choices), and I agree that I wouldn’t pay anything near retail for those neglected 08′s.

  • avatar
    Rday

    I dunno. It may be me but I dread the thought of buying any new or used car. Like the article from Suzuki said, cars are no longer a ‘joy’ to many of us, and I am not a kid. Perhaps this whole mess will make consumers sick and tired of the auto ripoffs and really signal a change to the old way of doing business. Let’s hope we learn some lessons from what has happened. Going on a spending gluttony has sure created nightmares for our country and many of its’ citizens. We are all in need of a ‘diet’. Let’s hope this comes true. Owning more and more things does not make one truly happy.

  • avatar
    John Horner

    ” … a fine upstanding Christian … ”

    Huh? I’m having a hard time finding a religious angle to Tom’s original letter, unless maybe you are thinking of the Old Testament God who destroys cities on account of excessive wickedness. But if that is where you are going, Las Vegas should have the bomb craters in it long before Detroit.

    My theological training said that the Christ of the New Testament ushered in a new era of understanding God as the God of Love and Peace. It is hard to find indications of a God of Love and Peace in Tom R. Kovach’s letter. BTW, Christianity is a fringe minority religion in Japan and Korea, ancestral homes of the cars Mr. Kovach urges everyone to buy.

  • avatar
    dilbert

    I owned 2 GM and a Ford before I wised up and got a Toyota and I’ve never missed the domestics. Now granted, they were all low rent vehicles, but so was the Toyota, and it went well over 150k without leaving me on the side of the road, in the winter. All three of the domestics achieved that at least once. I’ve given more than a fair chance, and now they are taking my money regardless through the bailout. I’m done with them forever.

    So yeah, eff’em.

  • avatar
    ZoomZoom

    “Sigh”.

    I’m getting tired of this “go under” talk. Bankruptcy is not the same as “going under.”

    But we can’t even educate our children in basic math and language skills, so maybe I’m over-expecting. Again.

  • avatar
    allen5h

    Here’s the bottom line:

    With the bailout of unwanted widgets producers and their financiers, it’s business as usual. Subsidize something, and you will get more of it. More lousy widgets that nobody wants to pay MSRP for, and more financing for the credit-challenged to move these dogs.

    These artificial supply and demand metrics will undermine the entire industry. The producers who introduce innovative products via the vehicle of well-executed R&D will be compromised, as they struggle to compete for vanishing profits.

    A lose-lose-lose proposition for taxpayers, consumers, and industry. How the Messiah-in chief is supposed to correct this mess come January, I do not know.

  • avatar


    eggsalad

    I suspect more Americans are employed making Tundras in Texas, then are making Dodge Rams in Mexico. Somebody tell me which purchase is more patriotic. I sure can’t figure it out.

    Your suspicions are correct but your general point is wrong. Just more misinformation that makes Detroit look bad. I knew something was wrong with what you said, because at most assembly plants they put examples of what they build on pedestals outside the plants and I recalled seeing the new Ram outside the Warren Truck Plant in suburban Detroit. A couple of clicks revealed the following:

    Chrysler employs 2,150 Mexicans at the Saltillo Ram plant. Toyota employs about 2,000 full time employees at the San Antonio Tundra plant, as well as temporary workers, 200 of which were laid off last June as pickup sales slowed due to $4/gal gas.

    The new Ram is also built at Chrysler plants in Warren, MI and Fenton, MO. Chrysler invested $220 million updating the Warren Truck Plant plant for the ’09 Ram and also built a new body shop for the St Louis plant. There are 2,800 people employed at the Warren facility and Chrysler’s St. Louis North Assembly Plant employs approximately 1,085 people.

    So while more Americans are employed making Toyota Tundras in Texas than are employed making Dodge Rams in Texas, there are about 2,000 more Americans making Rams in Michigan and Missouri, 3,885, than Tundras in Texas.

  • avatar

    ronin :

    GM is not taking the right advice right now, and I can prove it: Nobody is buying their cars.

    More myths about “nobody” buys Detroit products. In October, the domestics had 55%, of the market and in November, 57%.

    The 10 best selling vehicles in the US in November 2008:

    #1 Ford F-150 – 37,911 units sold
    #2 Chevy Silverado – 29,534 sold.
    #3 Toyota Camry – 24,224
    #4 Toyota Corolla – 21,807
    #5 Honda Civic – 17,690
    #6 Honda Accord – 17,430
    #7 Dodge Ram – 15,538
    #8 Chevy Impala – 12,851
    #9 Honda CR-V – 12,153
    #10 Nissan Altima – 10,828

    Looks like there were 154,877 “nobodies” last month who bought GM products, about 24,000 more than the number of Toyota customers. Hell, Ford only sold 7,000 units less than Toyota and Chrysler, the weak sister of the Detroit companies, outsold both Honda and Nissan.

    Like some guy once said, if a big enough lie is repeated often enough, people will believe it.

  • avatar
    kamm

    Hmmm, Kovach, hmmm… Csere, Farago, Kovach…

    …Hungarians = troubles.

    ;)

  • avatar
    Bonejob

    I don’t mind it when people disagree with me. But it does steam my onions to hear from opinionated people who support their arguments with fake facts. UAW auto workers don’t make $65-$75 per hour. Those numbers reflect their total cost to the company – their wages, their medical insurance premiums, their pensions, vacations, sick leave, Social Security, etc. Whatever Tom R. Kovach earns, doing whatever it is he does, I’ll bet he has not a clue how much more than his paycheck his total cost to his employer is.

    He thinks an auto worker’s job consists of “putting in bolts and nuts that any 5 year old could do”? Really? OK, Mr. Kovach. Let’s just see how well your 5-year-old handles routing that wire loom on that Cadillac CTS, properly connecting that DVD navigation system, the fiber optic cables to the tail light control box, the sensors to the eight air bags, etc. I’d also love to see how he handles inputting the program changes to the computers controlling the industrial robots that weld the chassis together. No, it’s not “rocket science,” but being an auto worker in any modern plant, foreign or domestic, requires training and some basic skills. The days of going one’s whole working life as a wrench jockey are long gone.

    Some thirty-plus years ago, I bought a lemon of a Chevrolet. My experience with the car was terrible enough, but my experiences dealing with the dealer who sold it to me and with General Motors were a nightmare. No lemon laws back then. I SWORE I would NEVER buy another American car. And I kept my word for 31 years, owning everything from Toyotas, BMWs, Volkswagens, Renaults, Mazdas and Mitsubishis. I liked all these cars, but none were perfect. All had flaws which proved to me that foreign car makers were fundamentally just like American ones – they put their pants on one leg at a time.

    After my last foreign car, a VW Jetta, I decided to look at the domestics again. My Jetta, which I loved to look at and loved to drive, was nevertheless nickel-and-diming me with too many small repairs – nothing like a full-out break-down, but annoying and costly just the same.

    I bought a new 2006 Ford Focus, because I drove one in Germany as a rental and was shocked by how much it didn’t suck. The Focus was designed in Germany and has that solid “German car feel” I had grown to love over the years.

    I have owned it over three years, and that little black Ford has NEVER broken. Not once. Nothing on it or in it has ever broken either. NOTHING… EVER! After three-plus years and nearly 50,000 miles, nothing rattles. This car is not nearly as luxurious as some of the cars I have owned, but no foreign car I have owned was ever this reliable. What’s more, this Focus, as modest as it appears, has well-shaped comfortable seats, the steering feel is excellent, the ride is remarkably smooth, handling is tight and stable at any speed, and the 5-speed manual gearbox is slick and precise. The car is not powerful by today’s standards but the engine is remarkably smooth for a four-cylinder, pulls consistently and willingly right up to red-line, and the throttle response is excellent. The car feels agile and peppy and gives me 25 mpg on its worst day and a little over 35 mpg if I’m careful.

    This car is more reliable than any of my Japanese cars were and a hell of a lot more fun to drive. It is not fancy, but what I save in gas and in the repairs I’m not buying more than make up for its hard black plastics and lack of leather seats.

    Just on a lark, I drove a new 2009 Chevrolet Malibu – because the typically anti-Detroit car press and even Consumer Reports were raving about it. I was stunned at the quality of the four-cylinder Chevy I test drove. The four-banger was as smooth and quiet as any Camry or Accord, and the interior comfort and appearance were just stunning – especially for a Chevy! The drive proved to me that the domestic auto industry CAN build a competitive mid-sized sedan if it chooses to.

    I consider it an irony that FINALLY, when the Big 2.8 seems to be getting the message and building some really good cars, that it all might be too little, too late. The gas spike of ’08 killed the truck/SUV business that was their bread and butter (By the way, the Masters of the Universe at Toyota build EIGHT lines of trucks and SUVs – more than any of the Detroit three – and they have taken a bath, too). The credit crunch and recession has done most of the rest.

    But the coup de grâce is the extra burden Ford, GM and Chrysler have carried all along that no other car maker in the world carries. I speak of pension and medical liabilities for their employees. German auto workers actually get paid HIGHER wages than do U.S. workers do and the Japanese are about equivalent. But Toyota and Volkswagen do not have to pay for the medical care and retirement of their workers. In every other developed nation, the government takes care of that. Medical and retirement costs account for $2500 in profit off the top of every car the Big 2.8 builds. If the playing field were level, and this country just got rid of its archaic, inefficient, byzantine, inequitable, and terribly costly employer-based medical insurance system and replaced it with a European-style single-payer insurance system, Detroit’s profitability problem would just about disappear.

    Where I blame Detroit is for all the years they deliberately chose mediocrity – because they could. By the time they finally realized – about ten years ago – that they couldn’t any more, there was so much pent-up public animosity and contempt – from all those decades of crappy cars – so much momentum for continued market-share erosion, that when Detroit started to offer some better cars, they could no longer even get them into the showrooms to TRY them, let alone BUY them. Their brands had become so damaged that they had to practically give the cars away – to rental fleets and in rebates – further eroding their brands.

    I am convinced that they really have gotten religion this time. They are running scared and have been running scared since before the waste matter hit the air recirculator. The right decisions have already been made. If this “bail-out” (a misnomer, for many reasons) can keep their cash flow going during this tough time, I am convinced that Detroit WILL be producing better cars – AT A PROFIT!

    Bottom line? We need a domestic auto industry. A NATIVE industry, not just foreign-owned plants screwing and gluing other people’s cars. What happens if the U.S. gets itself into another World War and we have to mobilize again on a scale like in World War II? Can’t happen? They thought another World War to be impossible after World War I, too – “The War To End All Wars,” they called it. During WWII, instead of Ford cars, the River Rouge plant in Detroit cranked out B-17 bombers. The Chrysler plants built munitions and Sherman tanks. General Motors built EVERYTHING – B-24s, B-25s, jeeps, tank engines, marine and aircraft engines, locomotives, etc. Will Toyota, Honda, Nissan and Hyundai build our tanks? Our fighter planes? Our bombers? Our munitions? Our Humvees? If we no longer have the capacity to make – in the USA – all the critical components and subassemblies for automotive manufacturing, can we count on foreign suppliers during a World War III? If we no longer own any American-based factories capable of building what we need for our national defense, can we afford to count on their foreign owners for their cooperation in our war effort?

    The FOREIGN auto makers need Detroit, too. Toyota has admitted that if Detroit collapses, so do most of the Detroit auto industry’s suppliers, most of whom also happen to supply their factories. In short, if Detroit collapses, the dominoes will keep falling, and Toyota won’t be building cars either! Nor will Hyundai, Honda, Nissan, BMW, Volkswagen, etc. ALL of these companies depend for parts and subassemblies upon the same suppliers as Ford, GM and Chrysler. If Detroit isn’t building cars in America, chances are excellent that nobody else will be building cars in America either.

    If we lose a native automobile industry, we instantly become a second-rate country – it is that simple. We threw nearly a trillion dollars at the banking industry and Wall Street, virtually without strings attached, and they are doing God-only-knows-what with the money. And we did it without argument or debate. And those guys are CROOKS! THEY are the ones who put us here! So now we begrudge a critical industry that is a victim – not a perpetrator – of this financial crisis, this comparatively pocket-change amount of money? If we do this, if we let Detroit collapse, we DESERVE second-rate status.

  • avatar
    ronin

    @Ronnie Schreiber sayeth:
    “…More myths about “nobody” buys Detroit products. In October, the domestics had 55%, of the market and in November, 57%…”

    Who cares? 55% of a 40% loss in volume of sales is meaningless. The Titanic is going down, but my stateroom is bigger than yours. Nobody is buying their cars, they are overflowing the lots, and the industry has to crawl to taxpayers for free welfare. If people were buying their overpriced cars this would not be necessary. QED.

  • avatar
    nonce

    But Toyota and Volkswagen do not have to pay for the medical care and retirement of their workers. In every other developed nation, the government takes care of that.

    TAANSTAAFL. If the government pays, that means that businesses pay.

    and this country just got rid of its archaic, inefficient, byzantine, inequitable, and terribly costly employer-based medical insurance system and replaced it with a European-style single-payer insurance system, Detroit’s profitability problem would just about disappear.

    I agree that our current medical system is, by and large, horrible.

    I disagree that “single-payer” is the solution. Medicare is single-payer and it sucks, because the compensation model pays more to doctors for doing more procedures. (Our private health insurance system has the exact problem.)

    I know some people get hung up on “we need more government involvement” and others get hung up on “we need less government involvement,” but both of those are distractions from really fixing our health care issues.


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