Cynical Synapse

Mon, 29 Dec 2008

Buying Local Makes Sense

Filed under: Behavior, Business, Economy, Michigan, Take action — cynicalsynapse @ 9:52 pm

Not too long ago, I was rather irate at what seemed to be a negative categorization of the Big 3 as “Detroit”, which gets more than its fair share of bad publicity. Much of this manifested itself as anti-Big 3 bridge loan propaganda. Truth is, the US-based automakers are each international corporations, with operations involving over 3 million workers, including their direct suppliers. But, this rant isn’t about the automakers.

For every manufacturing job, there are a number of other jobs dependent on that factory worker. These include the obvious jobs at the suppliers as well as the less obvious local jobs at the bar, party store, and restaurants around the factory and the suppliers’ plants. It’s just plain prudent to consider the second and third order effects of every plant closing or downsizing. Such things are not isolated events. They involve real people and communities, even if this goaround doesn’t affect your friends or neighbors.

As if we didn’t know already, the recent shenanigans with the Big 3 bridge loan should be a clear message to Michigan that we need to look out for our own. While the auto industry is still big in Michigan, it is no longer the driving force (no pun intended, believe it or not). To make this rather painful transition more tolerable, however, we need to Buy Michigan! This is something ordinary folks can do to make a real difference in today’s economy.

Fri, 26 Dec 2008

You Just Can’t Make This Stuff Up!

Filed under: Behavior, Duh, Life, People — cynicalsynapse @ 1:25 pm

A flame thrower isn’t the smartest way to melt snow.

read more | digg story

Why They Don’t Call Them Service Stations

Filed under: Behavior, Business, Cars, Customer service, Driving, Life, Michigan, Rants — cynicalsynapse @ 12:46 pm

Used to be the place you got gasoline was called a service station. Back in the day, they sold wiper blades, tires, and had mechanics and garage bays to work on cars–service. Nowadays, you’d be hard pressed to find a station with even auto parts, let alone a maintenance bay or mechanic. They’re convenience stores that happen to sell gasoline to get you to stop there.

Global warming aside (snicker), its winter in Michigan and it’s been below freezing for much of this month. It’s also been snowing and sleeting. When the road commissions finally get around to salting the roads, you end up with lots of salt scum on your car. It dries on the windshield and obscures visibility. Drivers end up going through a lot of windshield wiper fluid so they can see where they’re going.

Salt scum splattered on a car

Used to be you could clean your windshield while getting gasoline, which was handy if you ran out of fluid in your car or if it froze. Now, the frozen in the water or just plain not there. Why? Because the stations are too cheap to put windshield washer solvent in the little buckets. Just another reason why they don’t call them service stations anymore.

Wed, 24 Dec 2008

Internet Inventor Wrong on Global Warming?

Filed under: Environment, Life, Michigan, Paradoxes, Rants — cynicalsynapse @ 7:25 pm

Al Gore has been much maligned for claiming he invented the Internet. In fact, what he said in a 1999 interview with Wolf Blitzer was “I took the initiative in creating the Internet.” Gore never meant to claim the he conceived what we now call the Internet. But he clearly intended to take credit for its place in modern society.

Now, unless you’re a mole, a prairie dog, or an ostrich, you probably know Al Gore is a big proponent of global warming theories. He has lots of ideas for us to reduce our carbon footprint. But you just have to wonder if global warming’s not as close as some might allege.

Don’t get me wrong. I think we need to be better stewards of our planet and environment. But some people are making a living off global warming just like others are doing so off the imminent pandemic flu disaster, or even mundane homeland security.

As for global warming’s effect? There’s snow in the bayou and ice in the Northeast. The Midwest is blanketed, with more to come. (Side note: I got my snow blower out this year for the first time in 3 years and I’m glad I did.) Holiday travel to the Pacific Northwest is crippled by snow, affecting the national air transportation system. Even Las Vegas is snowed in!

So, Al—how about you Google average snowfall and temperatures and see how this December compares historically. Where’s it fit in the Global-Warming-Is-Coming mantra?

Fri, 19 Dec 2008

Who Threw Shoes at US Automakers?

Filed under: Business, Caesar Chavez, Civil liberties, Driving, Duh, Gas Prices, Hugo Chavez, Michigan, Patriotism, Safety — cynicalsynapse @ 9:05 pm

By now, you probably know President Bush has promised up to $17.4 billion in loans to US automakers. This takes the shape of a $13.4 billion emergency loan from the so-called Troubled Asset Relief Program, with another potential $4 billion in February, if they need it. I realize some think this just delays the inevitable, but I’ll bet big money we won’t hear about AIG-style conferences and unrealistic bonuses for the US automakers. Never mind the corporate jets, which may not be so extravagant after all when you consider how much CEOs make per hour.

What’s significant, however, is what Senators happily promised $700 billion to the financial charlatans, while adding another $100+ billion for their own interests, but didn’t think $25 billion was warranted for an industry with 3+ million direct employees. Did your Senator think it’s ok to manipulate numbers on a spreadsheet, attend conferences at resorts, and pay bonuses even when profits are zero or less? More importantly, did your Senator think that behavior deserved saving while people building tangible products—automobiles—should be put out of work?

The Senate’s roll call votes are on their website, including for the Wall Street bailout and whether or not to consider assisting US automakers. FYI, I use the term US automakers in regard to the so-called Big 3—Chrysler, Ford, and GM—who all have their headquarters in metropolitan Detroit. I do not use the term Detroit in reference to them because they all have plants and facilities in dozens of states. In fact, Chrysler’s website claims operations in all 50 states.

The Shoe Throwers

I so wanted to be able to point the finger that the over-vocal “anti-Detroit” Senators from southern states hosting transplant auto plants, Alabama’s Shelby in particular. Looking for the hipocrites, I compared Senate votes for the Troubled Asset Relief Program and against even taking up the rescue of the domestic auto industry. While dissatisfied with finding Shelby voted against both bailouts, he wins points for being consistent. You have to respect that, since it seems politicians often change positions based on what seems most expedient. So, like it or not, Senators Shelby (R-AL) and DeMint (R-SC) win points for opposing both aid schemes.

There are, however, 22 US Senators—almost a quarter of them—who anxiously gave $700 billion (plus that $100 billion in special deals) to the financial charlatans while refusing to consider helping America’s manufacturing base and blue collars. The fact those opposed to the auto rescue but in favor of saving high finance are 83% Republicans does nothing to dissuade popular opinion of either an East Coast favoritism or an anti-union sentiment. So, who are these two-faced people who are supposed to represent their constituents? Who was it that easily gave money to the financial industry—the very ones responsible for the current situation—while reaping scorn and disgust on hard-working Americans?

Here’s a list of Senators who had no qualms about padding the pockets of financial quacks but dissed average workers by refusing to consider manufacturing as worthy. Remember this at the next election.

  • Murkowski (R-AK)
  • Lincoln (R-AR)</li
  • Kyl (R-AZ)
  • McCain (R-AZ)
  • Martinez (R-FL)
  • Chambliss (R-GA)
  • Isakson (R-GA>)
  • Grassley (R-IA)
  • McConnel (R-KY)
  • Coleman (R-MN)
  • Baucus (D-MT)
  • Ensign (R-NV)
  • Reid (R-NV)
  • Gregg (R-NH)
  • Burr (R-NC)</li)
  • Coburn (R-OK)
  • Thune (R-SD)
  • Corker (R-TN)
  • Hutchison (R-TX)
  • Bennett (R-UT)
  • Hatch (R-UT)

At best, President Bush bought time for President-elect Obama, a move not lost on the future president. At worst, the automaker rescue effort won’t be any more effective than its bigger sibling, the financial bailout. In any case, the financial liability of the auto industry is only 2.5% compared to 150% in labor implications.

Mon, 15 Dec 2008

Automaker Bridge Loan? You Do the Math

Filed under: Bailout, Detroit, Economy, Legal, Michigan, Politics — cynicalsynapse @ 11:26 pm

The first part that doesn’t compute is $700 billion in giveaways plus $100 billion in pork in 5 days compared to $25 billion in loans—no, make that just $14 billion—but two weeks later, still no deal. What’s up with that? No detailed plan, no wailing or gnashing of teeth. Just $800 billion plus in 5 business days for the financial industry. For the automakers? Nada.

So, let’s think about this. Treasury Secretary Paulsen has near absolute control over the $700 billion. AIG has been at the trough, despite their largesse. Citigroup, which recently won contracts for government credit card services for travel and fuel, has doubled their initial bailout grant with a follow-up visit. So far, the economy has seen jack-nothing from the Wall Street bailout while financial executives are slated to get bonuses. What’s up with that? At least AIG hasn’t visited a spa or some other resort within the last couple weeks. Has anyone asked these guys for a detailed plan? Do they have one, besides continuing to stuff money in their personal pockets?

Ok, everyone wants to blame the automakers for taking corporate jets to Washington the first time around. Bad PR, no doubt, but they’re no different than any other large corporation. And consider that Ford and GM are getting out of corporate jets while Citigroup is selling 2 of several. Am I missing the outrage here, or is it possible there’s a bias at work?

But I digress. In the interests of full disclosure, as regular readers will know, I live in the metro Detroit area. I have, but don’t presently, worked for suppliers to the Big 3. Talking about the US automakers is talking about my friends and neighbors. It seems, however, everyone thinks it’s just Detroit we’re talking about. A visit to Chrysler LLC’s website shows the company claims 100,000 employees in all 50 states. It’s not clear if that includes their dealer network, but I suspect it must, since the last DaimlerChrylser annual report put Chrylser group employment at about 86,000.

There’s been a lot of speculation and commentary that Chrysler is the least viable of the Big 3. If that’s the case, I’d blame it on 3 or 4 Jeep-brand models that appear to be competing against one another. What’s the difference between a Compass and a Patriot? Never mind the obvious Dodge badging of a Jeep model. Let’s consider, however, if Chrysler goes into bankruptcy.

Conservatively, figure they have to dump 25% as part of restructuring before emerging from bankruptcy protection. That’s one-quarter of their workforce: 34,000 people. That’s 6 or 7 of their 26 plants. That means at least at 25% reduction in supplier business. Never mind the collateral damage to the Mom & Pops that exist because of automaker and supplier plants, from the 7-11s (you thought they were corporate owned?) to gas stations to the donut shop.

Not counting the shirttail hangers, a Chrysler bankruptcy having a one-quarter impact means 34,000 direct employees out of work. Chrysler has plants in 15 states, with an average maximum unemployment benefit of $373 per week. Could you get by on $373 per week? That’s gross, before taxes. $19,396 per year, except standard unemployment is limited to 26 weeks, with a 13 week extension and another 7 week emergency benefit under certain circumstances. Seems we’re under those circumstances, so figure 46 weeks of benefits: $17,158 for the year. And, if you get a job as a Wal-Mart greater at minimum wage or so, deduct that from your unemployment.

Obviously, $17k is a far cry from $83k, based on $40 per hour x 2,080 hours per year. (No, auto workers don’t really make $73 per hour, but neither do the “transplants” bear the burden of those legacy costs.) If we assume a 25% ripple effect through the suppliers and the ancillary businesses, from the roach coaches to the uniform folks to the corner gas station, we’re looking at some $7.2 billion for the first year for Chrysler alone, assuming they keep 75% of their employees and plants working. That’s after the some thousand or so recent white-collar worker early buyout.

So, what’s the cost to the taxpayer? Well, every state has different unemployment rates. For the 16 Chrysler plant states, it varies from a weekly rate of $255 to $628, with a mean of $373. For purposes of this scenario, I weighted Michigan, Ohio, New York, and California, based on numbers of plants in those states. This gave me a composite weekly unemployment benefit of $583. If Chrysler dumps 1/4 of its 100,000 workers in a bankruptcy restructuring, the cost is just under a billion at $911.3 million. When you add in lost taxes and Medicaid and food stamp costs, this mushrooms to $1.78 billion for the first year alone.

Now consider the suppliers and ancillary jobs and businesses. Some of these also supply the transplants which everyone seems to think are so much more efficient than the Big 3. Jim Gillette of CSM Worldwide estimated suppliers could lose 100,000 jobs in the next 2 years. From this estimate, based on a Chrysler failure, unemployment, Medicaid, and other direct taxpayer costs jump to about $7.2 billion in the first year. This is all before adding in the ripple effect of people who used to be able to pay their mortgages, but can’t now. How will the banks, Fannie Mae, and Freddie Mac deal with that prospect?

Far more jobs are at risk with the automotive sector than the financial sector. The US Bureau of Labor Statistics puts the ratio at about 1.6:1, automotive to financial workers. So why, then, do we give 28 times (50 times, based on $14 billion vs. $25 billion) to the bankers, who continue to take extravagant trips and claim bonuses, compared to the US auto industry? Auto workers and associated trades account for about 3 million jobs. Automakers’ executives have agreed to salary cuts and bonus restrictions. Did AIG? Citigroup? Oh, yeah. Hard to sign papers when you’re in the spa.

%d bloggers like this: