By on February 11, 2010

Transportation Secretary Ray LaHood’s get-tough quotes during the Toyota recall have generated significant backlash against an administration that is already knee-deep in the automotive industry. The governors of Mississippi, Kentucky, Indiana and Alabama (all of which host Toyota plants) laid into the NHTSA and Obama administration in a letter covered by the Detroit News. The governors argue:

Despite the federal government’s obvious conflict of interest because of its huge financial stake in some of Toyota’s competitors … it has spoken out against Toyota, including statements U.S. government officials have later been forced to retract… Toyota must put the safety of drivers first and foremost. However, they deserve a level and reasonable response from the federal government – one that is not tainted by the federal government’s financial interest in some of Toyota’s competitors

Strangely, the governors of Texas and West Virginia, where Toyotas are also assembled declined to sign onto the letter. Still, the attack isn’t being simply written off has home-state selfishness. One bellwether for the issue is the fact that the Detroit News looked past its own hometown interests and ran an editorial by the Cato Institute’s Daniel Ikensen, amplifying the governors’ critique. And sure enough, Obama decided to take the issue on head-on in an interview yesterday.

Obama’s response to allegations of a conflict of interest [via DetN] was typically measured and balanced:

Every automaker has an obligation when public safety is a concern to come forward quickly and decisively when problems are identified. We don’t yet know whether that happened with Toyota. That’s going to be investigated. Obviously, Toyota has been an extraordinary automaker for a very long time, and I suspect that they will continue to be, despite this recent glitch

Equally typically though, Obama refused to take the allegations on directly. He did, however, comment on the political implications of the auto industry bailout, telling BusinessWeek:

The irony is, is that on the left we are perceived as being in the pockets of big business; and then on the business side, we are perceived as being anti-business. GM and Chrysler aren’t out of the woods yet, but there is an enormous opportunity for us to rebuild a U.S. auto industry that, absent our intervention, might not have been there, at least with those two companies. [The auto bailout was] a very politically unpopular decision that was made that, from my vantage point, is pro-business.

Yes it was very pro-business, if you define business as “GM and Chrysler.” Whether propping up two zombie automakers was good for the long-term health and competitiveness of the US economy is far from a settled issue. Certainly Ford might question whether the bailout was strictly “pro-business” given its clear disadvantages vis-a-vis its bailed-out crosstown rivals. As might the evil foreign companies that employ tens of thousands of Americans building cars in states like Alabama and Indiana.

It’s a pity that Obama didn’t take the opportunity to more directly acknowledge the intense pressure to further support the American-owned automakers, as every policy decision he makes between now and the government’s divestment of its GM and Chrysler stakes will continue to be interpreted through the lense of the government’s financial interests in the auto industry.

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76 Comments on “Under Criticism, Obama Soft-Pedals LaHood’s Toyota Criticism...”


  • avatar
    Contrarian

    There’s probably another imminent recall brewing, as angry voters yank those Obama stickers off and the paint comes with them.

  • avatar

    The Cato Institute–now there’s an unbiased source.

    Sorry, but there’s just not enough payoff here to justify the various conspiracy theories. If Toyota buyers defect to any Detroit auto maker, it’s most likely to be Ford.

    LaHood just has problems controlling his mouth. He’s had similar problems controlling it, and had to retract statements, when the subject was Chrysler.

    • 0 avatar

      The Cato Institute–now there’s an unbiased source.
      …hence my surprise to see an op-ed from them in the Detroit News, which can be accused of a lot of things but libertarian concerns about the auto bailout isn’t one of them.

    • 0 avatar
      carguy

      Michael +1: A Cato institute report is the conservative equivalent of reading about it on the Huffington Post blog – there is always an agenda. And that is just what this is – a far fetched and convoluted conspiracy theory to somehow leverage the Toyota recall for political advantage.

  • avatar
    210delray

    West Virginia has a Toyota engine plant in Buffalo, near Charleston. But there are no assembly plants in the state.

    Similarly, I don’t believe there’s a Toyota assembly plant in Alabama (but M-B, Honda, and Hyundai build vehicles there).

    +1 Michael on the Cato Institute!

  • avatar
    jkross22

    In an effort to walk a tightrope, Obama comes off as just another apologist for GM and Chrysler. He’s used fear the same way Bush did: “we’ll have no more domestic auto industry if we don’t do this”.

    I’m waiting for a reporter, ANY REPORTER, to ask Obama this: How much more taxpayer money are you willing to ‘invest’ to keep GM and Chrysler as going concerns?

    Regardless of how he would answer, he has shown that the truth would be this:
    As much as it takes.

    • 0 avatar
      ClutchCarGo

      “As much as it takes”

      I sincerely doubt that Obama wants to invest more taxpayers’ $ in GM/Chrysler, and that even if he wanted to I don’t believe the deficit hawks of both parties in Congress would let him do it. The existing bailout was little more than a Hail Mary play to keep the automakers from dragging down the entire economy as they failed. As the larger economy improves it will become more and more possible to let either company die if they can’t make it on their own. All that remains would be to see to it that they crash and burn without taking too many other business/workers with them.

    • 0 avatar
      Christy Garwood

      jk, as a GM employee, IMO, it is abundantly clear to me that we do not have a second chance, aka, additional funds to keep us going if we should fail.

    • 0 avatar
      Geotpf

      I think I agree with Christy Garwood’s point, at least partially. I doubt there will be a full-scale bailout of either GM or Chrysler again. One of the reasons Obama saved them was not to prevent them from going bust per se, but to prevent them from going bust during the middle of the worst economic disaster in 70 years. The amount of unemployment caused by GM and/or Chrysler failing during late 08 or early 09 would have been extreme.

      Now, that doesn’t mean government policies and small-scale financial help for Detroit won’t continue to occur. But another massive bailout, no way.

    • 0 avatar
      jkross22

      GM doesn’t make enough to balance the books. They operate at a loss and have for some time. They sold most of what they could sell in the last few years. They are not going to start selling enough cars in the short to mid-term to change this. Other than banks (who aren’t exactly in a lending mood), there is no one else to lend money to GM but the taxpayers.

      And that will continue to be the case until/when/if GM can turn a profit.

  • avatar
    BDB

    The hard truth is, if this is all bout politics, none of those states matter in the next election. None of them (except Indiana, which has more domestic than transplant factories anyway), would ever vote for a Democrat for President, especially Obama.

    And yeah, Cato Institute. The Detroit News may have carried them, but my local paper is to the right of Atilla the Hun and still carries some left-wing op-eds occasionally to look balanced.

  • avatar
    reclusive_in_nature

    Way to contribute to the stereotype that all Prius owners are all extreme libtards TTAC! What’s next, a Honda with a rainbow GLAD sticker or a Camaro with an NRA sticker?

    • 0 avatar

      Way to contribute to the stereotype that internet commenters can’t see beyond the most extreme interpretations of anything that gets posted! What’s next, calling TTAC “teabagger headquarters”?
      The point of the image is to help illustrate why Obama is walking the line he is: Toyota may not have plants in swing states as BDB points out, but huge portions of his base are loyal Toyota fans/owners. It’s an important counterweight to the pressure he doubtless gets to bash Toyota ala LaHood.

    • 0 avatar
      BDB

      That’s a good point, Edward.

      But a lot of culture war stuff is empty posturing. Remember what happened when the CEO of Whole Foods (THE symbol of “liberal elitism”) came out against universal healthcare? Liberals boycotted the store, but it was more than made up for by conservatives who started shopping there. Culture warriors can change their allegiances at the drop of a hat.

      Domestic autoworkers in the Midwest, OTOH, are a more valuable voter block. For one, they live in swing states (MI, IN, OH), whereas transplant autoworkers live in the redder than red inland South, and DFHs (Dirty F***ing Hippies, like the owner of that Prius) live in places like Vermont and northern California that are going to be blue anyway.

    • 0 avatar
      GeneralMalaise

      “The point of the image is to help illustrate why Obama is walking the line he is: Toyota may not have plants in swing states as BDB points out, but huge portions of his base are loyal Toyota fans/owners. It’s an important counterweight to the pressure he doubtless gets to bash Toyota ala LaHood.”

      Now THAT is funny… as if LaHood won’t soon find himself under the bus faster than a UAW guy can go through an 18 pack of beer on morning break.

    • 0 avatar
      Civarlo

      Hey, I’d pay good money to watch the NRA Camaro guy go after this particular Prius driver!!

  • avatar
    Robert.Walter

    The political angle doesn’t really turn me on, but I was curious, as I’m sure others are, as to the political affiliations of said letter-writing governors, and the ones that did not write:

    KY: gov/r (sen/2r, reps/4r+2d 1 Assy plant, 1 engine plant
    IN: gov/r (sen/1+1, reps/5r+4d 2 Assy plant (incl SIA Camry plant)
    MS: gov/r (sen/2r, reps/1r+3d Prius plant under construction.
    AL: gov/r (sen/2r, reps/5r+2d) 1 V8, V6 engine plant

    and of those that declined to saddle-up and sign the letter:

    TX: gov/r (sen/2r, reps/20r+12d 1 Assy plant
    WV: gov/d (sen/2d, reps/1r+2d 1 Assy plant, 1 Trans plant
    MI: gov/d (sen/2d, reps/7r+8d 1 Technical Ctr.

  • avatar
    panzerfaust

    The rear end of that Prius is priceless! Screaming dissonance, “I voted for Obama/Keep the government out of our lives.” Good luck with that.

    • 0 avatar
      texlovera

      Nice catch!

      I think Ed should do a “Curbside Classic” series just on cars plastered with bumperstickers. Eugene would almost certainly prove fertile ground for this endeavor. In fact, I bet the bumperstickers last longer there, too!

    • 0 avatar
      210delray

      Not dissonant at all. It means “keep the government out of our bedrooms and reproductive decisions.”

    • 0 avatar
      panzerfaust

      ^ Riiiight. And the first step in doing so is to hand the US healthcare system over to the government?

    • 0 avatar
      geeber

      210delray: Not dissonant at all. It means “keep the government out of our bedrooms and reproductive decisions.”

      If the only way that government has the potential to interfere in our lives is through reproductive/bedroom issues, there wouldn’t be any dissonance. But there are plenty of other ways that the government can interfere in citizens’ lives, and I wouldn’t be surprised if this Prius owner supports more than a few of them. So the charge of dissonance, or hypocrisy, or whatever we prefer to call it, stands.

  • avatar
    Disaster

    I’d like to see Obama address the issue of why it took the NHTSA so long to act on the original complaints from owners and insurers. This deserves as much attention as how a terrorist suspect was able to get on a plane to the U.S.

  • avatar
    Robert.Walter

    While doing the Wiki-based research for the above comment, I came across the following interesting summaries … contrast this philosophy against the behaviours of recent months, measue the behaviour against it, and ask again if something has shifted in the Toyota Way over the last 5 or so years… then ask 5-times why.

    1. Toyota Way has four components:
    – Long-term thinking as a basis for management decisions.
    – A process for problem-solving.
    – Adding value to the organization by developing its people.
    – Recognizing continuously solving root problems drives organizational learning.

    2. The principles of the Toyota Way are:
    – Base management decisions on a long-term philosophy, even at the expense of short-term goals
    – Create continuous process flow to bring problems to the surface
    – Use “pull” systems to avoid overproduction
    – Level out the workload
    – Build a problem-prevention culture rather than a fix-it culture
    – Standardized tasks are the basis of continuous improvement and employee empowerment
    – Use visual control so no problems are hidden
    – Use only reliable, thoroughly tested tech. that serves your people and processes
    – Grow leaders who fully understand the work, live the philosophy, and teach it to others
    – Develop exceptional people and teams who follow the philosophy
    – Respect your network of partners and suppliers by challenging and helping them improve
    – Go see for yourself to fully understand a situation (genchi genbutsu)
    – Make decisions slowly by consensus, fully consider all options; implement decisions rapidly
    – Become a learning org. via relentless reflection and continuous improvement

  • avatar
    bmoredlj

    I’m can’t say what LaHood’s intent was by his alarmist statements, but I’m pretty sure it was more just pure stupidity than some kind of “Buy Detroit cars because we own part of them” slant. Even he would have realized the latter would be a bad idea. But then I speak without thinking sometimes too, only I’m not a cabinet member with an enormous pulpit.

  • avatar
    skcusmg

    Sorry, but there’s just not enough payoff here to justify the various conspiracy theories. If Toyota buyers defect to any Detroit auto maker, it’s most likely to be Ford.
    ………………

    You know that and I know that but do the LaHoods in the Obama administration know it? They have not really demonstrated that they know much more than the average bear about the auto industry.

  • avatar
    ClutchCarGo

    “Yes it was very pro-business, if you define business as ‘GM and Chrysler.’ ”

    Plus all of the suppliers to GM/Chrysler, and the businesses that serve the suppliers, and the businesses dependant on GM/Chrysler workers getting a paycheck…

    GM/Chrysler shutdowns would have rippled far and wide thru a severely troubled economy.

    • 0 avatar
      Facebook User

      It also would have saved the country billions upon billions of dollars (that we don’t have in the first place) and reduced ever-so-slightly our crippling dependence on Chinese money.

      I prefer what’s best in the long-term — not short-term, patchwork “fixes.” If those suppliers and their workers couldn’t adapt to the changing climate, they would have been cast aside. Sorry, but such is life.

      Here we are, already talking about the next, inevitable wave of federal money to prop up GM and Chrysler. I think, in the long run, it will prove to have been much cheaper to let them die as they should have originally.

    • 0 avatar
      Robert.Walter

      You have that right Clutch.

      Anyone who understands this business knows it turns on two big ideas, an old one (economies of scale thru volume) and a newer one (concentration of core-competences and efficiencies thru supplier outsourcing.)

      About 1/2 a year before the great-unravelling of the 2/3 of the D3 began, I did a little risk-analysis report for our BoD, and therein stated my greatest fear was not the direct collapse of Chrysler (an important customer of ours), or of GM (a non-customer), but the knock-on effect it would have in collapsing the supply-base and how these discontinuities, if big-enough, and prolonged-enough, would bring our key customer Ford and the remainder of the industry, and possibly the economy, to its knees.

      The interconnectedness of this industry has trememdous benefits, but if things quickly go tits-up in a big way, this benefit will, in a heartbeat, turn into a crushing liability.

      From our experience, I can tell you that the number of supplier filings for Ch.11, the related production stops, the confusion, would have been a snow-ball from hell that would have left no supplier or OEM untouched. (I even had my doubts if there was enough judicial infrastructure, if handled in the normal venues and according to traditional processes and timelines, and enough qualified bankruptcy lawyers available to handle all the Ch.7 and Ch.11 filings if that snowball really got rolling.)

      Propping-up GM & CG may not be popular, in some quarters, but in order to stagger the structural changes going on in the industry over a longer period of time it was necessary.

      It’s not pretty and it violates purity of principle if you are a total free-marketeer, but it stabilizes existing institutions and allows them to either adapt or unwind without letting the situation destabilize so as to cause gut-wrenching inflection-points on the curve, and without dramatically increasing the area under the cost curve.

    • 0 avatar
      Robert.Walter

      One additional point:

      I’m no fan of bail-outs or prop-ups, nor mega-consumer-driven economies, but the fact remains that consumer confidence plays into taxes and jobs, and an imploding auto industry (again, this would include Toyota and the rest of the transplants) does nothing for consumer confidence during a period in which you have a banking crisis crossed with a recession.

  • avatar
    Ion

    Well, LaHood could’ve said “The system worked” in reference to the NHTSA.

    • 0 avatar
      Robert.Walter

      Life is iterative and educational. Systems and practices usually work up until they don’t. Then, after a lot of things happen (some sad, others unnecessary, some amusing), the analysis gets done, contributing factors are identified, punishments are meted-out, and finally, improvements are made. Such is learning, such is life.

  • avatar
    mfgreen40

    I still think GM could have filed normal chapter 11 and been better off as well as the tax payers. But they didnt and we will never know for sure.

    • 0 avatar
      Christy Garwood

      mf, normal chapter 11 requires funding from a bank, I believe. July 2008 through May 2009, there were no banks willing to fund the C11 for GM, IMO. It was either US Treasury Funds and the gov’t becoming a major shareholder or C7 meltdown and the pyroclastic flow-like damage to the rest of the auto industry and its suppliers and peripheral small businesses.

  • avatar
    crash sled

    >>>>> “Whether propping up two zombie automakers was good for the long-term health and competitiveness of the US economy is far from a settled issue. Certainly Ford might question whether the bailout was strictly “pro-business” given its clear disadvantages vis-a-vis its bailed-out crosstown rivals.” <<<<<

    First off, Ford is getting plenty of help from Uncle Sugar, financial and otherwise. Historically, they've been JUST as stupid as GM and Chrysler, they were just fortunate enough and stupid enough to run out of cash before they did, when easy financing was still available. They've since sought and received financing from Uncle Sugar, and are suckling on the teat of Government Motors, even as we speak. Thus, and make no mistake about it, they are a subsidiary of Government Motors.

    Long term, you're right, we don't know if all this was a good idea. I think bankruptcy and break up could have been executed FAR easier than many think, and potentially with less disruption than the course we chose here.

    You think a bankruptcy judge would have had any trouble selling off the truck business? I sure don't. Toyota/Nissan may be making inroads, but GM/Ford/Chrysler will rule the roost for AT LEAST a 1/2 decade, and likely for the next generation. There's gold in them there trucks.

    Say it's F-150, with 500,000 units per year in volume, and about $20B in one year revenue, and at $10k per unit profit, you have potentially $5B in pure profit every year. Somebody's gonna jump on that profit stream. That should draw, from appropriate investment groups, Cerebrus or otherwise, a clean, standard offer of 1-year's revenue for that business, and it should arrive on the judge's bench in the amount of $20B.

    Take the truck plants, the relevant portions of product development, some dealer and parts network interfaces as required, and you have an offer.

    Next, the judge calls the UAW up to the bench and has them look over the 5-year no-strike clause contract that's attached to the Cerebrus offer. They'll be leaving behind pension obligations to the bankruptcy, and everything else. They get the same wages, a 401k, no more silly work rules, and the shop committee has to work for a living. They jump on it, because they get to keep their jobs, and won't even miss a day's pay.

    Cerebrus, within 1-week of Ford declaring bankruptcy, is the proud new owner of F-150. Ok, make it 1-month later, with the judge ordering everybody to keep working in the meantime. The bankruptcy owns the real estate, and all environmental catastrophes buried therein.

    The Ford bankruptcy continues merrily on, with the addition of $20B to the money pot. Every platform is on its own, as is any UAW working on said platform. Who gets the blue oval nameplate? Who knows, and who really cares. They're frickin bankrupt. Call the company F-150.

    Rinse and repeat, with all platforms falling out of the bankruptcy in rank order, based upon value. Many will go similarly, but Hybrid Escape, unless Hollywood scares up the cash, will be left standing at the altar.

    Would there be carnage? Sure. But we'd wind up with vibrant vehicle programs, unencumbered by government and stupid labor agreements, and most importantly, a right-sized industry capacity, and all this gained WITHOUT taxpayer dollars, and debt pounded down onto our children.

    • 0 avatar
      rnc

      First off – your post shows that you have absolutely no idea of how bankruptcy law and proceedings works, I mean none what so ever (the judge is not GOD).

      GM issued $33 billion in bonds during the same time frame that Ford borrowed $23 billion from banks, the fact that within a period of years ford still had $23 billion in cash and GM was living off of a $15 billion government bridge loan, should give a good indication of the two companies respective financial health. “They’ve since sought and received financing from Uncle Sugar, and are suckling on the teat of Government Motors, even as we speak. Thus, and make no mistake about it, they are a subsidiary of Government Motors.” Please explain? A DOE loan program that foreign automakers took part in? The TALF program that any non-bank financial institution that could took part in? And the otherwise part, that must be the governments involvement in destroying toyota’s reputation correct?

    • 0 avatar
      Telegraph Road

      @rnc: +1

    • 0 avatar
      crash sled

      Well bud, you’re correct, I’m not imtimately familiar with the Federal Rules of Bankruptcy Procedure, but I can tell you that bankruptcy courts dissolve companies, and sell their assets. That’s precisely what they’re set up to do, and F-150 falls right into their wheelhouse. It’s an asset, and it can be sold by that court.

      Now, you or anybody else with standing can make an objection to the sale/use/lease of that asset, but after your objection has been considered, and rejected, the sale/lease/use takes place. Why? Because the judge says so, and you can go see the court of appeals if you don’t like it. Happens all the time. For someone accusing others of lack of knowledge of bankruptcy, I’m surprised you’re unaware of this common practice.

      Now, who would object to the sale of F-150, besides you I guess? Anybody? Buehler? That sale would represent $20B towards building the pot of money that every party to the bankruptcy wants to grow, so they’re all motivated to want to build it. Only the UAW could be expected to block it, in anticipation of keeping their contract whole. Thus we have the genesis of Government Motors… which was clearly an effort to keep the existing UAW contract intact. But it wouldn’t work, because the UAW locals building that F-150 would force a signature, by vote, no doubt, because they’d be keeping their jobs. That would be the end of the UAW, but que sera, sera.

      As for the judge, he’s obligated to clear up that case. Sell those assets and distribute whatever pot of money is left, to all parties with standing. The sooner the better, so those assembly lines might keep running.

      Cerberus would own F-150. Why? Because the judge gaveled down and said so. Go see the Court of Appeals, if you disagree.

      .
      .
      .

      Ford hocked the furniture in 2006 to get their $23B loan. They were unable to sell bonds as GM was able to do, and had to provide security for their loans, because Ford was so financially unstable… loooooong before the downturn. Ford was completely out of credit, in other words, and literally had to hock the blue oval for crisakes. GM was unable to hock the furniture in 2008… too late… as the financial crash was underway. Thus, Ford is even stupider than GM, if that’s possible, and ran out of cash and credit sooner, they just managed to hit the credit market timelier. Dumb luck is all that separates these 2, nothing more.

      You acknowledge that Ford is taking government loans now… good… because that’s exactly what makes them a subsidiary of Government Motors. And fellah, if you find foreigners tapping into a sweet teat loan from Uncle Sugar for $13B, as Mullaly was yapping for, when he Hybrid-Escaped his way into Washington… lemme know.

      Ford = Government Motors, and all of Government Motors needs to go in front of a crusty old bankruptcy judge, just like anybody else who fails. And if you disagree about them failing, then take those loans and guarantees away from them, and have them remove their suckling lips from Uncle Sugar’s teat, and you can prove your point.

      Enough of adult corporate infants pounding debt down onto REAL infants, who are laying in their cradle. Ford should be ashamed of themselves.

    • 0 avatar
      Telegraph Road

      @crash sled. You have the all the attitude of Robert Farago, without his writing skill and understanding. With RF I can spar.

    • 0 avatar
      crash sled

      Hmmmmm, reviewing the tone, character and content of what you’re posting, or more precisely the lack therof, I’m not sure you can do much of anything, sparring or otherwise.

    • 0 avatar
      rnc

      “Ford hocked the furniture in 2006 to get their $23B loan. They were unable to sell bonds as GM was able to do, and had to provide security for their loans, because Ford was so financially unstable…”

      Once again completely wrong, GM issued bonds because no bank would have loaned them the funds. Ford used bank debt because it can be refinanced over and over again and you are working with a couple of institutions vs. thousands of individual holders. Lets examine furthur shall we, before the banks loaned them the $23 billion they wen’t through ford’s books, they knew they could make it, or they never would have loaned the monies. This is why GM had to sell bonds (at much higher interest rate than the loans to ford), the condition of thier balance sheet became quite apparant as did Fords (in early 2009). And the part about leveraging all of thier assets for loans, yes vacant car factories and contaminated land are such hot commodities in the northern mid-west, the banks would have made a killing (this was done for favorable interest rates, banks would be first in line). The part about ford selling assets to save itself (they’ve sold $2 billion JLR (+) $1 billion net from hertz (+) anticipated $2 billion from Volvo. GM during the last 15 years sold over $60 billion in assets and even that wasn’t enough to save them (EDS $10, Hughes $30, 51% of GMAC $19, EM $2, Allyson $1)

      “You acknowledge that Ford is taking government loans now… good… because that’s exactly what makes them a subsidiary of Government Motors. And fellah, if you find foreigners tapping into a sweet teat loan from Uncle Sugar for $13B, as Mullaly was yapping for, when he Hybrid-Escaped his way into Washington… lemme know.”

      Once again what are you talking about, Ford took a $5.9 billion DOE loan, nothing more, no line of credit (that was an RF invention), Jesus a foriegn corporation that hasn’t actually made anything yet took a billion, nissan a couple billion, once again what are you talking about?

      “Ford = Government Motors, and all of Government Motors needs to go in front of a crusty old bankruptcy judge, just like anybody else who fails. And if you disagree about them failing, then take those loans and guarantees away from them, and have them remove their suckling lips from Uncle Sugar’s teat, and you can prove your point.

      Enough of adult corporate infants pounding debt down onto REAL infants, who are laying in their cradle. Ford should be ashamed of themselves.”

      I think I have proved my point sylvia

      Yes ford should be ashamed for pulling off one of the greatest corporate turn-arounds in corporate history during one of the greatest downturns/worse markets in modern history.

    • 0 avatar
      crash sled

      Well, at least you’ve given up on your previous rambling about bankruptcy, about which you seem to know absolutely nothing.

      Unfortunately, you continue on with your previous rambling about matters financial. You say “…GM issued bonds because no bank would have loaned them the funds.” Are you really this ignorant of the financial world. Have you ever bought a house? A car? Anything?

      NOBODY wants to have to put up security for cash, if they can get away with it. Not the homeowner, not the car buyer, not the automaker. GM was able to sell pieces of frickin paper in 2006… “bonds”… because the markets adjudged them strong enough to back that paper. Ford wasn’t strong enough to do so in 2006… they were near insolvency. Ford had to put up security… they had to hock everything… INCLUDING the blue oval. They were adjudged a financial disaster, by the markets. Your financial ignorance is glaring, similar to your bankruptcy process ignorance.

      This is the most basic of finance. All of us live it each and every day. Your posts are simply bizarre, and obtuse. Very strange.

      I’d suggest you take a look here at the Ford corporate infants snuggling up to the soft teat of Government Motors:

      http://www.thetruthaboutcars.com/bailout-watch-224-ford-respectfully-requests-that-government-funding-be-made-available-to-us-in-the-form-of-a-%E2%80%9Cstand-by%E2%80%9D-line-of-credit-in-the-amount-of-up-to-9-billion/

      I can find more for you, but let’s wait a bit while you digest this little bottle of formula. It is amusing though, that your line seems to be “everybody else is sucking on those teats, why can’t Ford have one?”

      Ford = GOvernment Motors. Like I say, have Ford let go of that Government Motors financing, and you’ll prove youir point valid. Right now, the facts speak otherwise.

    • 0 avatar
      rnc

      silvia – There’s a rather large difference b/t asking for something and receiving it. Ford asked for a line of credit (they could have had one, but with the same conditions placed on GM for the bridge loans, being smart and knowing they were solvent they wanted no part of that).

      asking for a line of credit doesn’t = having a line of credit.

      Yes you can find all sorts of good stuff in RF’s latter days, when it became apparant that Ford was goig to make it and the truth turned into misplaced ranting and raving and whatever he wanted to make up.

      But that doesn’t make any of it true. Yes your precious GM failed (quite horribly) and Ford survived and even has begun to thrive, for whatever reason that eats at your soul (I am glad).

    • 0 avatar
      crash sled

      Good, we’re still making progress here. You’ve given up on your bankruptcy nonsense, and have now given up on your nonsense concerning the significance of hocking the furniture, and how it indicated the financial insolvency of Ford in 2006, as opposed to GH’s market-proven solvency in that era.

      Definite progress for you, junior.

      However, we still have the matter of the Ford infants lining up and accepting Government Motors’ credit, just like all the subsidiaries of Government Motors… and Ford is and will continue to do so as we know (well, not you, you’re still sucking on that finance learning curve bottle). Let me know if you can prove your point, and Ford comes off that teat. ’til then, Ford = Government Motors.

      I’m amused that you think I’m a GM fanboy! Infants often revert to myopic observation, bowtie vs. blue oval and such like that. I have no preferenc for any of Government Motors, but I drive a Fusion, if that means anything to you. Haven’t done a lick of work for GM in I don’t know how long(nor Ford either these last 5 years or so), nor driven their vehicles in even longer, if my dusty memory serves.

      It’s funny that you’re celebrating the Ford subsidiary of GM, because as any insider knows, nothing they’re doing comes as a result of idiot Ford management. When Ford hocked the furniture, they were FORCED by the financiers to hire Mullaly… a pure outsider… who was gonna wreck the Ford family’s handiwork. Kuzak arrived as well, another hardbitten engineer, to straighten up that disaster they call PDC, in Dearborn. Both these guys were key.

      I remember the wailing and gnashing of teeth, from all the institutionalized Ford slugs. All the diversity hires and fools walked out the door, or slowly forced out. The square glasses Studio geeks, brought under the scope/schedule/budget gun.. finally. Finally… some common sense. And it wasn’t Ford common sense, it wsa the outside world and marketplace intruding, or more correctly, placing conditions on Ford’s credit begging amidst insolvency.

      Some years ago in this era, I looked over a spreadsheet of staffing levels at PDC, months before the axe got sharpened, a direct work product of Kuzak, clearly, as presented at the America’s meeting or whatever that meeting was Elena hosted. It was bloody, and me and the Ford manager clandestinely reviewing it acknowledged the significance… and our jaws dropped.

      The Ford family didn’t do this because they wanted to. They were FORCED to do so, because of their historical stupidity, and resulting insolvency. They were forced to action. Hocking the furniture will do that, you know.

      Mullaly and Kuzak are guys after my own heart. So’s the General Motors guy, and he’s entered that subsidiary of Government Motors in much the same way Mullaly entered the Ford subsidiary… he was forced in. Left to their own devices, none of these subsidiaries would have taken these actions.

      These 2 situations are analogous. They are helping bankrupt this country, by suckiing on the teat of government. To prove otherwise, you’ll have to prove otherwise, and Ford will have to take its infantile lips off that teat.

  • avatar
    Cletus

    Sorry, but I am not buying it. The NHTSA and the administration both look like chumps in this fiasco. And don’t forget that State Farm attempted to bring the unintended accelaration problems to light back in 2007 but were shut down by the NHTSA. How does that fit into your conspiracy theory?

    Don’t get me wrong, I am no fan of Obama’s union cronies who essentially stole our tax dollars under the disguise of a bailout.

    But this claim of the evil US out to get Toyota is ridiculous. Toyota ignored safety problems and then tried to cover them up. End of story. All the spin in the world does not change that. I am sorry if these facts impact the resale of your family sedan.

    • 0 avatar
      ihatetrees

      I am sorry if these facts impact the resale of your family sedan.

      I’m no fan of Toyota. But if I’m in the market for a newish winter commuter next year, steeply discounted Camrys and Corollas will be on my list.

      Neurotic suburban housewives’ losses are the bargain hunters’ gains.

    • 0 avatar
      Telegraph Road

      >>> I am no fan of Obama’s union cronies who essentially stole our tax dollars under the disguise of a bailout. <<<
      Speaking as a non-UAW employee at Ford, over the last 25 years I estimate I've paid perhaps $300K in federal income taxes (twice as much as my home value, and much more than my net worth). Until the rescues of GM and Chrysler last year, I didn't see any of my tax money benefiting Michigan. Our federal roads, like U.S. 24, crumble. For once the federal government put my tax dollars to good use. Even if it benefits my crosstown rivals.

    • 0 avatar
      geeber

      Speaking as a non-UAW employee at Ford, over the last 25 years I estimate I’ve paid perhaps $300K in federal income taxes (twice as much as my home value, and much more than my net worth). Until the rescues of GM and Chrysler last year, I didn’t see any of my tax money benefiting Michigan. Our federal roads, like U.S. 24, crumble. For once the federal government put my tax dollars to good use. Even if it benefits my crosstown rivals.

      If this is reference to the hoary meme regarding red states being subsidized by blue ones through federal spending, that is false. Subtract the amount spent on defense contracts and federal land (most federally owned land is located in red states), and blue states get more money. Red states end up subsidizing federal welfare spending in blue states (such as New York’s generous programs).

      If Michigan’s roads are in bad shape, it’s because of the way the federal money is being spent, not because it all went to the red states. And also note that federal funds only pay for a portion of road repair and construction – even on federal roads. The states are still expected to kick in a substantial amount for any project. I’m willing to bet that repairing U.S. 24 hasn’t been a priority for Michigan.

  • avatar
    Potemkin

    Toyota is flexing their coverup muscle. Their Senators, Congressmen are in full damage control mode and pressuring the Pres and media thru their financial clout to not report the truth. Some however are not being cowed. Check out http://abcnews.go.com/video/playerindex?id=8990979.

    • 0 avatar
      rnc

      As I posted previously it was GM that sold $60 billion worth of assets during the 15 year run up to bankruptcy, EDS, Hughes, GMAC, EM, Allyson (all money makers). Ford sold a few billion of assets JLR, Hertz, Mazda and soon Volvo (at the time all money losers)

      The reason for leveraging thier assets for loans and the reason for taking loans over selling bonds, was also explained above.

      Long story short, no bank would have loaned GM the money, they issued $30 billion in bonds during the same time frame that Ford borrowed $23. The (usage)leverage of assets had two purposes 1. lower interest rates and 2. control if there would have been a ford BK (as the banks already having invested such amounts would have provided DIP), I mean there is no real value to vacant factories and contaminated land and office space in michigan. Notice no one stepped up to offer GM DIP. The popular story (mostly propagated by RF) that Ford was saved by some miraculus stroke of financial luck, is only true BY LUCK, those funds were procured to retool ford (which is exactly what they are being used for). GM sold it’s (ass)ets and everything it could (when you are issuing bonds at 8% and the Fed rate is 0.5%, things are bad) just to keep the lights on. Thier whole business plan (at the same time AM’s “One Ford” restructuring began) was to make it 10 more years, with 20% of a 16mm US market and interest rates staying at record lows and the housing miracle continuing until, a which point a large portion of the retirees from the 70’s would begin dying.

  • avatar
    Suprarush

    I was under the impression that Ford had sold off all of their assets and were mortgaged up past their eyeballs in debt. Incidentally it has been said if anything were to happen short-term, long-term to Ford they could go way of the Do-do bird faster than we thought Chrysler and Generic Motors were going.

    • 0 avatar
      Robert.Walter

      Ford mortaged all their assets to secure the 23G USD credit-lines; they did not sell their assets.

    • 0 avatar
      Suprarush

      @Robert Walter

      Selling “Assets” such as Jaguar and Landrover to Tata motors and then selling off their controlling interest in Mazda pretty well tells me they sold their Ass-ets.

    • 0 avatar
      Robert.Walter

      I’ll bend to you on the Mazda part, but the rest (not counting the future divestment of VCC) were hardly assets, they were quite the opposite (they did not bring scale effects, nor showroom traffic, nor halo effect, nor profits, nor managable loss-leader losses.)

      Even as a guy who has worked closely with Volvo, and have much respect for the boys in Göteborg, Ford will survive this divestment as well, and will be able to better focus on their core blue-oval knitting.

      The assets I was referring to were those, at least in my mind, which are core manufacturing and real-estate assets associated with running the F/M/L side of the business.

      btw, the way Ford sold of its portion of Mazda makes me think that it has a buy-back option, or that if the multiple financial investors that bought the stock want to sell, Ford gets last right of refusal to buy with favourable conditions.

    • 0 avatar
      crash sled

      Yeah, dumping Volvo was the smart play… it was hardly an asset, any more than Jaguar was ever an asset.

      Now, if Ford had taken Volvo trucks in the original bargain, it mighta been a different story. Take a look on the roads around you, and observe all those over the road tractors with the diagonal slash across the grille. Haven’t looked at any real numbers, but the frequency of such sightings has skyrocketed over the last decade, imo.

      Not sure this was ever offered to Ford, nor that they could have even legally reentered that market after selling their heavy truck business (some say yes, some say no), but that business seems to have grown for Volvo in NA, unlike other markets/platforms Ford embraced (too tightly?).

  • avatar
    mtymsi

    LaHood IMO needs to be replaced, he kinda reminds me of Brownie from the Bush administration in the Katrina aftermath.

    It is ridiculous to think there is any government conspiracy involved here, I mean really………

    Toyota tried to stonewall the SUA problem just as they’ve done with every other problem that should have led to a recall. That is what will cause them marketshare loss not the problem itself.

    If there’s any conspiracy at all it’s Toyota conspiring to cover up the problem.

  • avatar
    Telegraph Road

    >>> Certainly Ford might question whether the bailout was strictly “pro-business” given its clear disadvantages vis-a-vis its bailed-out crosstown rivals. <<<
    Ford would never trade positions with its cross-town rivals. The advantages of its current independence and general public goodwill far outweigh any economic disadvantages, despite what Cato's Daniel Ikensen has suggested. (Edward—Cato Institute?!? Was World Net Daily unavailable for comment?) Bill Ford Jr travelled to D.C. in December to personally thank the President for the GM and Chrysler rescues.

    • 0 avatar
      ihatetrees

      OK. Cato has an obvious, controversial agenda. But they put out two peer reviewed academic journals. And they probably have more credentialed economists than all the major so-called news networks combined.

    • 0 avatar

      Please note that I don’t quote any arguments from the Cato piece (nor, it turns out, did I link to it). I simply used the fact that it appeared in the DetN (which has no possible incentive for giving the debate play on its pages) as evidence that the issue isn’t limited to a few conspiracy nuts.

  • avatar
    Suprarush

    Just to put things in perspective, and many media outlets appear to have come to bat for Toyota.

    Media coverage and criticism
    The resulting media coverage from the Toyota recalls came under scrutiny from automotive publications. AutoWeek, Car and Driver, and Motor Trend ran editorials criticizing alleged disproportionate coverage of the recalls. In February 2010, Car and Driver executive editor Mike Dushane wrote that the “media circus” overlooked the fact that “the numbers don’t reveal a meaningful problem”, with the alleged fatality risk at about 1 in 200,000 recalled Toyota vehicles, versus a 1 in 8,000 risk of a fatal car accident in any car in the U.S. On February 10, AutoWeek executive editor Wes Raynal noted that following the recalls, U.S. media reports focused on any Toyota-related complaint as a manufacturer defect, without regard for the actual prevalence and the possibility of alternative explanations, such as driver inattentiveness or erroneous perceptions. Motor Trend’s editor-at-large Arthur St. Antoine also wrote that the recalls had become the “panic du jour” and faulted CNN’s reporting for not asking about driver skills, being on the cellphone, or texting as causes of accidents.

    On February 4, 2010, Consumer Reports’ director of automobile testing David Champion also suggested that the media coverage was disproportionate to the problem, stating that “When you look at the statistics we are putting an awful lot of effort on a very small risk,” noting that the frequency of unintended acceleration complaints was approximately 1 in 10,000 out of 20 million Toyotas on the road. On February 10, Toyota dealers in the five-state Southeast region pulled all advertising from ABC stations in protest of “excessive” reporting on the Toyota recalls. According to news analysis by the Project for Excellence in Journalism, the Toyota recalls were the #5 most reported story on U.S. news for the week of January 25-31, 2010, at 4% of all coverage; the following week of February 1-7, 2010, the story reached #2, at 11% of all news coverage.

  • avatar
    mtymsi

    I contend the reason for the extensive media coverage is Toyota trying to stonewall the problem which they’ve been aware of since at least 2007. IMO Toyota deserves all the negative publicity they’re now receiving.

    From my perspective Toyota’s standard operating procedure is to stonewall every problem until they’re forced to do something about it. The engines with sludge and the rusted out pickup frames would be two examples among many. When I researched the current Corolla through owners reviews the steering was a frequent complaint to the point I was no longer interested in the car. Only now has the issue come to light through Toyota, 3 years after the problem was identified by the people who owned the cars. Why? Because Toyota said no problem existed.

    It’s certainly not a case of me, the media or the U.S. government being anti-Toyota. It’s Toyota not taking responsibility for their problems. I am not aware of any other auto manufacturer that has policies like Toyota. Toyota just consistently refuses to accept responsibility for their problems until it gets to the point they have no other choice.

    • 0 avatar
      Suprarush

      The last 3 recalls (Accelerator Pedal, Prius Software and Camry) have all been voluntary. Other than Toyota not publicly addressing the issue of the Pedal right away even though they were aware of it was the only error you could point at them. Toyota in your words and many others were not “Forced” to do anything. What Toyota did was unprecedented by closing a plant for a week until the problem was resolved, that is not incompetence that takes balls, something no other manufacturer has done on this scale. With issues like the frame corrosion, it didn’t take 2 years for it to happen , it took as much as 10, name me another manufacturer whom purchased said vehicles “back” for more than their market value, nevermind I’ll tell you how many ZERO!!! In 2008, Toyota proactively announced a 15 year, unlimited mileage corrosion warranty for 1995-2000 models due to inadequate rustproofing and frame corrosion issues affecting a small number of Tacomas. Toyota will either repair the frame or buyback the truck for 1.5 times its KBB retail value.

      These are a far cry from the Ford cruise control recall which spanned almost 15 years, although 93-204 models were affected it resulted in 12 million cars being recalled (the most in the history) and far more deaths than the Toyota pedal. Even if you look at the Exploder/Fire which caused far more casualties than all the Toyota recalls put together, there was finger pointing from each side and zero resolution until Ford ultimately dropped Firestone.

    • 0 avatar
      Robert.Walter

      Suprarush, have you been in an isolation ward?

      Despite Toyota’s revisionist commercials portraying themselves as high- and customer-minded, their actions have been anything but voluntary.

      If you knew anything about recall terminology, you would know the word voluntary has two meanings 1) voluntary, 2) forced but allowed to save face. There has been quite some discussion over the years about how the word voluntary is abused to the point of meaninglessness (and needs to have a clearer definition applied to it to salvage it).

      NHTSA does not fly administrators to Japan to educate arguably the worlds larges OEM, with a significant on the ground and 50-year presence in the US, on a lark. Nor is it normal that NHTSA has to leverage the DOT Secretary to lean on that OEM’s CEO to do the right and legally required thing by stopping sales (which by extension forced, what you have misunderstood as a high-minded and voluntary produciton stop.)

      Your ignorance of the situation, and misunderstanding of just how unvoluntary this field action is proof-positive that “voluntary” has to be retooled.

    • 0 avatar
      mtymsi

      I still contend that Toyota stonewalls their problems until they grow to a stage that action on their part must be taken. Whether it’s the government or the marketplace that demand action be taken Toyota never voluntarily takes the action. There are just too many examples of this for anyone to think otherwise. Why all of a sudden in the middle of the SUA recalls do the Prius brake and Corolla steering issues pop up? Again, it’s because Toyota refused to acknowledge either was a problem until now when they were forced to.

  • avatar
    Christy Garwood

    @Suprarush

    Check out this article in Bloomberg – http://www.bloomberg.com/apps/news?pid=20601087&sid=atXvi2msqPOM

    Then let us know your opinion of Toyota.

    your friendly GM employee sharing more info…

  • avatar
    Suprarush

    If you knew anything about recall terminology, you would know the word voluntary has two meanings 1) voluntary, 2) forced but allowed to save face. There has been quite some discussion over the years about how the word voluntary is abused to the point of meaninglessness (and needs to have a clearer definition applied to it to salvage it).
    Thus the automotive world is left waiting for translation until a stalwart automotive expert like yourself comes along a defines the language on behalf of Toyota and NHSTA.

    Why don’t you have Toyota play the part of United fruit while you draw up any further “conspiracy” theories.

    NHTSA does not fly administrators to Japan to educate arguably the worlds larges OEM, with a significant on the ground and 50-year presence in the US, on a lark. Nor is it normal that NHTSA has to leverage the DOT Secretary to lean on that OEM’s CEO to do the right and legally required thing by stopping sales (which by extension forced, what you have misunderstood as a high-minded and voluntary produciton stop.) Of course with less than a 1% of a percent incident rate out of 4 million vehicles that translates into immediate cause for concern.

    Slack Jaw! the manufacturer works together with NHTSA to determine if there is in-fact a problem, much like the Exploder/Firestone saga NHTSA tried to duplicate the problem and determined it was driver error/road conditions after trying numerous times to duplicate the exact scenarios and to no avail Ford was virtually exonerated.

    Your ignorance of the situation, and misunderstanding of just how unvoluntary this field action is proof-positive that “voluntary” has to be retooled.

    Okay alarmist I guess every Toyota owner should book thier flights to Jonestown now while there’s still space?

    • 0 avatar
      Robert.Walter

      Ok, let’s take a vote. Without disclosing my pedigree.

      Of those who have been following my posts, who among you think
      a) that I have been off the mark?
      b) that I don’t know what I am talking about?
      c) that I have been wrong or loose with my facts?
      d) that I have been unfair?
      e) that I am wasting my time by responding to a freaking troll?

    • 0 avatar

      @ robert:

      I was going to say E, but I don’t want to reveal my role in the conspiracy, so I suggest you issue a voluntary recall of your earlier posts. Loose lips and all that.

      It’s clear Toyota NSFWed up. Any hay that’s been made by the U.S. government appears to be the result of the usual political stumblings and chest thumping, not a full on, domestic-propping conspiracy against Toyota. At the hearings, we’ll see the usual grillings administered by outraged, “OUTRAGED, I say!”, politicians grinding their respective axes with an eye on the next election. Toyota will fix the immediate problems and move on, and I hope they’ll change their ways.

      Local Man predicts, “I didn’t get a harumph out of that man!” will be said at least once.

    • 0 avatar
      Suprarush

      I’ll leave it at this point Robert as it appears you have fundamentally chosen the role of political lobbyist here as well as grand-standing on your soap-box. Kudos to getting your “friends” to chime in on your behalf to fill your urge and need for security. You actually bleed for attention so I will leave you with this.

      “Sheep look like sheep(D3) to other sheep(u.s consumers) but not to Shepherds (Toyota)”

  • avatar
    Potemkin

    Suprarush. Toyota was forced into the recalls because of the negative publicity and their lawyers. Shutting down the plant, recalling the vehicles etc. is called due diligence which they will bring up in court when the $100s of millions in law suits starts. Toyota has caught Detroititis. They have become arrogant and until now thought they could bully their way out of any negative publicity.

  • avatar
    mikey

    Robert….Put this hourly retired dude down for an E vote. I know enough about the industry,and have read enough of you posts,to agree,that you do indeed,know what your talking about.


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