'Our country is in ruins because we don't make anything anymore'
Toyota Motor Corp., the Japanese juggernaut, may be losing more money than General Motors Corp. or Ford Motor Co. (at least in the first quarter). It may be falling behind in sales (at least over the past few months). But that's scant comfort to Rich Horoky, a 40-year veteran of Chrysler who retired to Loudon, Tenn., in 2004.
"You write in a city that has been torn apart by Toyota and the other Japanese players who over the years have lied about quality, horsepower and warranties and have manipulated the yen to destroy our American economy," he wrote me in an e-mail, responding to today's column.
"Our country is in ruins because we don't make anything here anymore, and don't give us the BS that they employ thousands. Fact is they cost us jobs. Look at your employer; they cannot even give people home delivery. Quit praising the enemy. You write in a city that don't give a damn about Toyota just like Toyota don't give a damn about the American people. They only care about the American people's money ....
"You amaze me with your blindness...."
Here's my response, unedited, minus the pleasantries:
"Thanks for the note. Praise? Dunno what column you read but it ain't mine. The blindness, to the extent there is any, lies with those who ignored (for, oh, 25 years) the unmistakable signs of competitive creep; who laughed at the Japanese and the Koreans and the Germans moving into their patch; who were far more willing to cling to inflexible union contracts, corporate bureaucracies and mediocre metal pricing them steadily out of the market because, well, they'd get theirs before the house of cards collapsed.
"Then there are the politicians sent to Washington -- for, what, 30 or 40 years? -- who failed to articulate the vital need for the United States to support its manufacturers with policies they could live with ... instead of policies that slowly killed them. And Team Obama and the lefty Dems now in charge are only gonna' accelerate the process with 'cap-and-trade' climate legislation and draconian fuel regs -- both of which are reflections of political will not market demand -- even as they profess to be 'saving' Detroit.
"Look, Rich, I get your points. But a broader one, among many, is that Toyota and its ilk looked at this and did what? They went where Detroit wasn't and where unions were disliked -- the American South. They wooed senators from growing parts of the country, bolstering their standing in Washington, even as the likes of GM, Ford and Chrysler closed operations and bolted. They had fewer, better-capitalized dealers, whose showrooms were bright and updated; their manufacturing systems ... were learned from the Americans, for gawd-sakes ... but were updated, streamlined, shorn of the silly make-work union work rules that strangled Detroit for all these years.
"And, finally, this: Toyota is facing new, uncharted territory. As I pointed out, they're being outsold by Ford ... and GM, for cryin' out loud. They're losing money. Their rivals in the most important market they've EVER had are leaner, more focused and two are backed by the federal government. Thanks to this shakeout, Americans, I'd wager, will be more willing to give a good, hard look at Detroit metal for a change. Toyota is in for a dogfight, and ol' Akio Toyoda, the new CEO, knows it. Saying they'll be around to join in the fight -- to "guarantee" it, as I did -- ain't a love letter. It's a realistic recognition of the kind of company Toyota is, its discipline and where we're likely to go from here."
Where's the Mayor? Shootings demand action, higher profile
I'm all for underpromising and overdelivering, for allowing actions to speak louder than so many hollow words. But Mayor Dave Bing could use some counsel on when to fuse words with action to create a prominent act, a rare move in these parts that's otherwise known as "leadership."
Seven kids get shot near a Detroit school Tuesday and only today does the mayor -- a former Pistons great who came from the tough neighborhoods of Washington and has spent his whole working life in The D -- visit two of the victims at Sinai Grace Hospital. Too slow, too little, too much of an opportunity squandered.
Detroit is a city in crisis, in almost every way. Its budget is a mess. The schools are nearing bankruptcy. Crime is on the rise. And the political leadership is tainted by scandal, most recently Council Member Monica Conyers' guilty plea to federal bribery charges.
Detroit Public Schools are in the capable hands of Robert Bobb, the emergency financial manager who could run for governor tomorrow should he feel the urge. He acts. He's tough. He's smart. He's realistic, and he focuses change in helping the kids. Radical concepts, those. Bing should have three priorities: finances, public safety and economic development. Without stability and action on the first two, pursuing the final one largely is a waste of time.
This week's shooting could be a galvanizing event for the mayor, facing election for a full-term in November. He should seize it. He should stand with his police chief and reach out to the feds (as he is) for support. He should let the punks know that one of them (or one kinda' like them) isn't mayor anymore.
He might be surprised at how many agree with him.
Bankruptcy 'R Us ... another one bites the dust. Detroit shrugs?
When Delphi Corp. filed for Chapter 11 bankruptcy protection on Oct. 8, 2005, The Detroit News ran a blaring headline the next day that said, simply: "Staggering blow."
Not anymore. Bankruptcy in the auto space has become as customary as a bad quarter in most other businesses. The people, the politicians and the news media in these parts shrug, deal with the facts and move on -- all with the qualified confidence of knowing what "BK" means to tbe business (leaner operations, fewer plants and people, persnal hardships, a cleaner balance sheet) and what it doesn't necessarily (a one-way ticket to industrial oblivion).
It's all become so matter fact now, this fatalism more familiar to 19th-century Russian lit than 21st-century America. Lear Corp., a Southfield-based supplier in the global biz, says it will file chapter imminently. Does it have debtor-in-possession financing? Yes, $500 million, a clear sign that the capital markets think it can emerge with a viable business and promise for the future. Will it keep operating? Yes.
The "staggering blow" of that crisp October weekend nearly four years ago has dissipated, replaced by a "creative destruction" of truly Schumpeterian proportions. Chrysler goes BK and emerges in, what, 42 days? GM goes BK and its CEO tells a New York judge that the company will be forced to liquidate if the execs and their lawyers don't get approval to sell their good assets to a company controlled by the feds. Today, a member of President Obama's auto task force corroborates Fritz Henderson testimony.
There. Done. A century-old company, the archetype of industrial America in the post-war era, is fighting for its survival and the financial futures of hundreds of thousands and ... and. The panic? Subsided. The philosophical outrage of a president who fires a sitting CEO, moves to reconstitute a board of directors and orchestrates a shotgun marriage between a U.S. company -- Chrysler -- and a foreign rival? Subsided, too.
There will be survivors -- companies, communities and people. The only question is who and when the Great Restructuring will end. Not soon enough.
Perils ahead in GM bankruptcy include liquidation, pension shortfall
We've got a new D-Day in the historic General Motors Corp. bankruptcy: If the automaker's good assets cannot be sold to a "New GM" by July 10, CEO Fritz Henderson told a bankruptcy judge in New York today, the company will be forced to begin liquidation proceedings.
Leave it to Henderson, nothing if not direct, to cut to the heart of GM's existential predicament. Is it yet another riff on the "shock-and-awe" strategy popularized last fall, which posited that a collapse of GM into bankruptcy or worse would prove cataclysmic for the national economy and, certainly, the Midwest. Yes, it is.
And, to a point, it's probably true -- emphasis on the "to a point" part. Team Obama may be intent on getting a speedy resolution to this silly little thing called the largest industrial bankruptcy in American history. And its Treasury Department has a penchant, at least in the Detroit Auto space, for setting tight deadlines and meeting them. But I'm not at all convinced the boss and his minions would let the General collapse into a heap of cut-rate auctions if the judge drags his feet.
Too much to lose. Too much political capital investment, even by the president. Too much danger to organized labor, the staying power of GM's pension fund and auto communities in the Heartland. Indeed, an emerging fear -- emerging, at least, in the public consciousness -- is the likelihood that GM is burning its pension fund on buy-outs and early retirements at a faster rate than anticipated, as the New York Times details in an important story story posted late today. The danger is that pension obligations will run ahead of GM's ability to pay them, meaning U.S. taxpayers would foot the difference through the entity known as the Pension Benefit Guaranty Corp.
"GM basically raided the pension plan, by having a lot of these severance benefits paid through it," Douglas J. Elliott, a fellow with the Brookings Institution who specializes in financial institutions and policy, told The Times. Active workers "could find that they don’t get their full pensions when they retire, because the plan has had to be terminated because of the payments to current retirees. There are definitely these intergenerational transfer issues with underfunded pensions."
In a refreshing change, the Big Mitten wins a rare economic two-fer
Two industrial icons, one of them partially crippled, shined on Michigan today. Bankrupt General Motors Corp. said it would locate its new small car plant at Orion Township, a move that will save a few thousand manufacturing jobs and keep an endangered stamping facility in Pontiac alive -- even at the cost of steep local tax abatements.
And General Electric Co. says it will open a next-generation high-tech facility in Van Buren Township and create up to 1,200 new jobs, many of them paying $100,000 a year or more. The GE gambit holds greater symbolic importance, mainly because its proposed location lends credibility and heft to a planned "Aerotropolis" along the I-94 corridor between Willow Run and Detroit Metropolitan airports. Even North Carolina's vaunted Research Triangle languished for years until a major corporate player -- IBM? -- became the kind of lead anchor tenant that wooed others.
The announcements are badly needed wins for beleaguered Michigan, its strained tax base and its embattled governor, Jennifer Granholm, holder of the worst economic record of any sitting governor in the nation. After months of nothing but bad news, GM and GE today delivered the industrial equivalent of manna from heaven -- or evidence of the invisible hand of President Barack Obama's auto task force and Treasury Department working a little magic.
Whichever it is, we'll take it.
MonCon's plea signals feds targeting DTW's 'culture of corruption'
It isn't the prospect that Monica Conyers could get up to five years in prison for her conspiracy to commit bribery conviction. Or that the Detroit Public Schools steadily is squeezing the no-work parasites bleeding the taxpayers dry. Or that a former mayor is a convicted felon, and other former members of council have served time (Lonnie Bates) or were in danger of federal indictment until death intervened (Kay Everett).
The most encouraging sign in today's swift and final comeuppance for MonCon, the City Council's Loudmouth-in-Chief, came from Andy Arena, the FBI's special agent in charge for Detroit, who said this to corrupt public officials: "We're coming after you. This is not the beginning and it is certainly not the end, folks."
Am sure I speak for a lot of Detroit taxpayers when I say: It's about time. It's about time the local and federal authorities moved against the insidious pay-to-play culture rotting Detroit's politics to the core. It's about time they root out the pols who treat public service as a collection of fiefdoms to be assembled, ruled and pillaged, complete with the sychophants and enablers who look the other way because it's in their interest to do so. It's long past time when competence in public service should count more than cronyism, propriety and professionalism more than petty corruption and greed.
How fitting that MonCon's conviction would come in the same news cycle as word of a new deal in Lansing on a Cobo Center deal, a symbol of the disgraced council member's self-indulgent intransigence. She used the first proposed deal to grandstand, to accuse Cobo supporters of being sell-outs to suburban and business interests -- even as she was selling out, for real, to her own hand-picked business interests.
Tells you everything you need to know. That, and the fact that the sport of the afternoon today is circular speculation on whether she's actually convicted before she's sentenced or once she's sentenced and whether she should be forced to resign immediately. She should, because this morning MonCon officially became irrelevant to the future of Detroit -- even though she may be the last one to know.
Who says the president's people don't want to 'run GM?'
Like Captain Renault in Casablanca, "I'm shocked, shocked" that the feds are negotiating with General Motors Corp. and "officials in three states" (Michigan, Tennessee and Wisconsin) to determine where a small-car plant might be located.
This from the people (and president) who have said how many times that the White House, its autos task force and the Treasury Department have no interest in running GM. It's absurd, the perpetuation of this fiction that Team Obama will leave operational decision-making to CEO Fritz Henderson and his team. Not true, a thousand times not true -- at least not so far.
This small-car plant is only the latest example. Remember, this is the piece of the product plan that GM reversed under pressure from the task force, which was being lobbied by the United Auto Workers. At issue: GM was determined to source its next-generation small car from its operations in China, even as rival Ford Motor Co. was executing plans to build its own small car in a repurposed SUV plant in Wayne, MI., with union labor.
How many more operational decisions, the kind global automakers routinely make as part of their continual product and manufacturing planning, will be influenced by the axis of Democratic-and-UAW politics? Pay attention to what the task force and the White House do on this score, folks, not what the president, his press secretary and the Treasury Department say.
Nearly a decade empty, Tiger Stadium fades to black -- as it should
Another totem to Detroit's long-running dysfunction is crumbling at the corner of Michigan and Trumbull. And it's about time -- about time that Tiger Stadium passed into its glorious history, that a monument to Detroit's penchant for the past be relegated the reality of its financial unviability.
I say this not as a person who relishes trashing history or historic sites or who dismisses the emotional pull of a place and the glories it evokes. I say it as someone more convinced than ever that Detroit cannot emerge from the tempering of this Great Restructuring until it lets go of the symbols of that past, particularly those rotting hulks that long ago outlived their usefulness.
"Tiger Stadium loomed in your windshield as you approached it, much like a Great Lakes freighter or large storm front on the horizon," John Peters, a financial adviser in Birmingham, told The Detroit News today. "It commanded your attention as you neared it, in a manner that suggested it was actually an enormous living, breathing thing."
Emphasis on the word "was." Tiger Stadium, for all its sense of place, is no more an "enormous living, breathing thing" than the Central Depot further west on Michigan, a toothless tower staring down on a city that long ago abandoned it and its railroad platforms for the independence of the cars her hometown industry built.
To revive old gems like Tiger Stadium demands three things in short supply hereabouts: capital, vision and an appetite for risk-taking in America's poorest city. Sentiment doesn't cut it. Historic preservation credits don't cut it. Intercessions by U.S. Sen. Carl Levin, D-Detroit, don't cut it, either.
A cause for celebration? No, more a muted and philosophical conclusion because it had to happen. R.I.P., Tiger Stadium.
GM's bankrupt. Where are the apologies from execs, UAW brass?
General Motors Corp. is a ward of the feds, taxpayers are footing the bill and dozens of communities around the country are paying the price for decisions they couldn't affect if they wanted to.
(Not that they wanted to, for that might have derailed the 100-year-old industrial welfare gravy train that built their schools, inflated their tax base and kept the likes of Flint and Dayton and Anderson, Ind., on the map. But I digress.)
All of which means the apology police are on the beat. Where's the "We're sorry," one of them asked in an e-mail, from the likes of ousted GM Chairman Rick Wagoner, or his replacement, Fritz Henderson, or the president of the United Auto Workers, Ron Gettelfinger? GM's board of directors? Where's the mea culpa from the federal lawmakers -- the president of the United States, even -- whose ritual denunciations of GM and its Detroit rivals amounted to multiple coups de grace during the congressional inquisitions near the end of last year?
Ain't gonna' happen, folks. Ain't gonna' see it from Washington, either, where the capacity for denial is exceeded only by a collective ability to shirk responsibility for the consequence of most any action. (Example: See YouTube clips of Rep. Barney Frank, D-Mass., denying problems with Fannie and Freddie, or evidence of Sen. Chris Dodd, the Connecticut Dem who heads the Senate Banking Committee, blocking bills to reform same.)
Nor are you gonna' hear an apology from the UAW, whose complicity in the crashing and burning of Detroit is exceeded only by its capacity to claim victimhood with each spiral downward. Is the UAW alone to "blame" for Detroit's existential crisis? No, a thousand times no. Does it share culpability with successive managements who acceded to unrealistic demands, green-lighted money-losing product programs, made decisions for tactical gain that would help 'em hit their bonus target and get them one step closer to that retirement villa in Naples? Yep.
Apologies? Ain't gonna' happen.
"If these were Japanese companies ... someone would have at least come forward and apologized to the stockholders whose value they demolished, to the employees and retirees who will bear the true economic pain, to the communities and the states which will have to deal with unemployment, reduced funding for schools, etc., and so forth," Douglas B., a longtime correspondent of mine, wrote in an e-mail today.
"But so far ... nothing. The silence is deafening. In some Japanese companies this unmentionable, inconceivable act would require a penitent act or sacrifice such as sepuku ... taking the pipe, eating a round, kicking out a stool and stretching a rope, taking a flier out of an open window, opening a vein, even falling on a knife or something."
This isn't Japan, in more ways than one.
CEO: 'I don't understand what the policy makers can't see'
What would it be like -- a state government whose leaders show by what they do that they understand business cannot create jobs of the future without an economic environment that supports the jobs of today? Answer: It wouldn't look like Gov. Jennifer Granholm's Michigan, careening from one scheme to deploy federal stimulus dollars to another announcement of an alternative energy company for the future. Hello? Anybody home?
Today's column, two days before the cornerstone of Michigan's economy -- General Motors Corp. -- files for bankruptcy, poses a simple question, voiced by Walbridge Aldinger Chairman John Rakolta: "Are we going to wait for the state as long as we waited to fix GM and Chrysler and the Detroit Public School system?"
Charlie Krupka, president of Polymer Composite Technologies Inc. in Lansing, responded this way:
"I spent the last several days removing my injection molds from a small injection molding company in the Grand Rapids area that is preparing to file for bankruptcy. At this moment my molds are on a truck heading for an injection molding company in Ohio. THERE ARE VERY FEW SMALL INJECTION MOLDING COMPANIES LEFT IN MICHIGAN OR TOOL AND DIE MAKERS OR PLASTIC SHEET EXTRUDERS.
"Like Mr. Rakolta, I don’t understand what the policy makers can’t see. I listened with contempt to the radio yesterday, as we removed our molds, to the governor, who talked about all the 'green jobs' that will be here in the future. Please ask her what is wrong with the jobs that this injection molder provided? I don’t understand why the 'green' jobs take a higher priority over the jobs that we currently have -- or should I say had.
"As you sit on the front poach of the Grand Hotel, [am not there, actually -- dch] please tell the policy makers that Michigan has lost its critical mass of plastic companies. Moreover, give them an economic lesson that maybe they will understand. The water they are looking at, while beautiful, causes an increase in my freight costs because I have to truck my recycled plastic north to use it and then I have to truck finished product south to go east and west to their markets.
"In this environment of higher fuel costs, that increased freight cost along with the other higher costs of doing business in Michigan is what prompted me to move the molds to a location where freight rates are much lower for both me and my customers. Michigan does not provide a competitive advantage for doing business here to offset the higher freight costs.
"If they don’t understand that, maybe they will understand that while I am not helping Michigan by reducing my freight costs, I am reducing my carbon foot print by using less trucking. Or maybe you don’t want to mention the carbon foot print issue because they will agree with you and simply say good-bye."
No, they've been doing that for years, Charlie, saying good-bye with their inaction, excuses and the faux empathy that passes for leadership. Except it's nothing of the sort.
