Wednesday, October 15, 2008

Bổ Túc Văn Hóa về "Kinh Tế Thị Trường" - Phần II

Những "kinh tế gia", "chính trị gia", "chuyên gia vuốt đuôi nhà giàu" (cho chắc ăn!) trên internet hay giảng đạo về "kinh tế thị trường" cho Việt Nam cũng không hề hay biết về việc ba công ty xe của Mỹ hoạt động trong một nền "kinh tế thị trường" cũng đang được nhà nước bảo hộ để khỏi bị dẹp tiệm.

Từ năm 2000 đến nay, dưới sự điều hành của CEO Rick Wagoner, cổ phiếu của hãng xe GM giảm 83% giá trị từ trên $90 xuống còn $6,54 hôm nay. Điểm tín dụng rớt xuống hạng CCC nên mượn tiền những nhà băng "thị trường" không ai dám cho mượn lời thấp đành quay sang nhà nước "vay ưu đãi" với lãi suất 4% so với lãi suất hai con số nếu vay theo đúng "kinh tế thị trường"!

Điểm kỳ lạ là cho dù làm ăn cực kỳ thất bát như vậy nhưng ông CEO kia vẫn được hội đồng quản trị ủng hộ tại vị. Chẳng những thế thu nhập của ông này vào năm 2007 tăng 64%! Từ $9,57 triệu năm 2006 lên 15,7 triệu năm 2007.

Hãng này khi kiếm lời to vào thập niên 90 khi giá xăng còn rẻ và họ chuyên bán xe SUV cỡ lớn và vừa đã không đầu tư vào nghiên cứu xe tiết kiệm nhiên liệu mà chỉ biết ôm tiền hưởng. Bây giờ đang đứng trên bờ vực thẳm thì lại muốn xin tiền để nghiên cứu kỹ thuật mới!

Đây không phải là lần đầu nhà nước cứu các công ty xe khỏi phá sản. Năm 1980, hãng Chrysler đã được cứu với điều kiện hãng xe này phải có "một kế hoạch tiết kiệm nhiên liệu tập trung vào sự cần thiết giảm bớt phụ thuộc vào dầu hỏa." Gần 30 năm sau nhà nước lại phải cứu Chrysler một lần nữa nhưng hãng này vẫn chưa có chuyển biến gì đáng kể trong việc nghiên cứu làm xe không phụ thuộc dầu hỏa!

Hãng thứ ba trong bộ ba công nghiệp xe hơi và cũng sẽ được cứu là Ford với giá stock giảm từ trên $30 vào những năm 1999-2000 xuống còn $2,45 hôm nay. Bình luận gia Steven Davidoff đăng bài trên New York Times nói rằng CEO của Ford là Bill Ford, hậu duệ của người sáng lập ra hãng Ford được giữ chức đó chỉ vì là con ông cháu cha.

Tổng cộng tiền cứu nguy cho ba hãng xe này là $50 tỉ, $25 tỉ vào tháng 9 vừa rồi và còn lại vào năm sau. Số tiền cứu nguy này là riêng không nằm trong $700 tỉ cứu nhà băng.

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A $25 Billion Lifeline for GM, Ford, and Chrysler

September 24, 2008 05:45 PM ET

In Washington these days, an 11-figure expenditure barely attracts notice.

With Congress preoccupied with the massive, $700 billion bailout plan for the financial industry, General Motors, Ford, and Chrysler have finally secured Part One of their own federal rescue plan. A bill set to be passed by Congress and signed by President Bush as early as this weekend—separate from the controversial Wall Street bailout plan—includes $25 billion in loans for the beleaguered Detroit automakers and several of their suppliers. "It seemed like a lot when we first started pushing this," says Democratic Sen. Debbie Stabenow of Michigan, one of the bill's sponsors. "Suddenly, it seems so small."

But please don't call it a "bailout"—Detroit is too proud for that. Exact details will come later, but the loans would probably amount to at least $5 billion for each of the Detroit 3, plus smaller amounts for suppliers. That would allow them to borrow money at interest rates as low as 4 percent—a steep discount compared with the double-digit rates they're paying now. Over several years, the automakers could save hundreds of millions in financing costs. Plus, they'll have five years before they have to start repaying the loans.

It might seem like a stealth rescue, but the plan has been in the works for at least 18 months. Approval for the loans was first included in last year's Energy Independence Act. Earlier this year, the automakers sought a first installment of loans totaling about $6 billion. But the nationwide credit crunch severely crimped their ability to borrow, and besides, next to bailouts like $200 billion for Fannie Mae and Freddie Mac, a mere $6 billion started to seem unduly modest. So Detroit raised the ante to $25 billion, the most allowed under current law.

Some details of the program:

It's much bigger than the Chrysler bailout of 1980. Back then, the government gave Chrysler a $1.5 billion loan guarantee to stave off a bankruptcy filing. That's equivalent to about $4 billion today—less than the amount each of the Detroit 3 is likely to get this time around.

There are few strings attached. The 1980 plan also included a long list of rules Chrysler had to abide by in order to get the money (including, get this, "an energy savings plan focusing on the national need to lessen U.S. dependence on petroleum"). The current legislation requires only that the money be used to retool old assembly lines and develop advanced, fuel-efficient technology. Since the automakers are already spending billions to do that, they could easily shift money around and use the low-interest funds to effectively support almost any project.

It props up a private company. In 1980, Chrysler was a public company, just as GM and Ford are today. But last year a private equity firm, Cerberus Capital Management, bought Chrysler, taking the firm private. And there's little or no precedent for the government aiding a private company that has no stockholders among the public. "I'd draw a line between public and private," says Kathryn Rudie Harrigan, a strategy professor at Columbia Business School. "I understand there are a lot of jobs at stake, but the taxpayer can only carry so much."

Detroit desperately needs the help. Many analysts expect all three domestic car companies to face a life-threatening crisis if the U.S. car market, down about 20 percent so far this year, stays in the doldrums. GM and Ford could start to run out of cash by the second half of 2009, a precursor to declaring bankruptcy. Chrysler's finances are now private, but its sales are down even more than at Ford and GM, and it may be starting to bleed its corporate parent, Cerberus.

The idea behind the loans is to buy time while the Detroit 3 revamp their lineups, develop new hybrids and other fuel-sippers, and convert old SUV plants into factories turning out hot cars able to compete with those from Toyota and Honda. "I think they're on the verge of really turning the page," says Stabenow. But Detroit has fallen mightily. Consumers reeling from $4 gas have fled the big trucks and SUVs that the manufacturers milked for two decades, and Detroit's smaller cars tend to rate poorly compared with competitors. The domestics' U.S. market share is now about 48 percent, a staggering fall of nearly 20 points since the start of the decade. Fitch Ratings expects GM and Ford to produce about 1.3 million fewer cars this year than in 2007. Even cheap loans will do little to help erase years of red ink. "Even if they had positive cash flow," says Mark Oline of Fitch, "it's going to take some time to make a dent in their debt load."

There's more aid coming. This year's $25 billion is just a down payment. The automakers now plan to ask the government for another $25 billion in loans next year. It's just spare change, after all.

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Does GM deserve a tax payer bailout?

Posted Aug 29th 2008 10:00AM by Peter Cohan

The New York Times reports that General Motors (NYSE: GM) wants a $50 billion bailout due to the credit crunch. It says it can't get the money it needs to build fuel efficient cars. But during the decade, when it was minting money from SUVs and trucks sales, GM could have invested those profits in fuel efficient products. Now that those profits have evaporated, it wants taxpayers to step in.

What kind of bailout does GM want? The Times reports it seeks $50 billion in government-backed loans to retool its plants to build fuel efficient cars. GM is not alone -- Detroit's automakers and the United Auto Workers (UAW) already requested Congress to "appropriate $3.75 billion to back the $25 billion in loans authorized last year." Now they want to double that amount and are "urging Congress to act by the end of September so that the money can be available next year." No doubt the industry is in trouble. The Times reports that "total sales for [August are forecast to be] 14.4 percent lower than a year ago and that G.M.'s sales [will drop] 27.5 percent."

But the economic logic for this taxpayer-funded bailout is tenuous. GM wants the government to leave it alone when it comes to fuel efficiency and it made huge profits on gas guzzlers before the price of oil shot up from $24 a barrel to $117. Thanks to GM's lack of investment in fuel efficient vehicles, its losses are soaring. Most recently it lost $4.4 billion and its revenues plunged 33% from $29.7 billion to $19.8 billion. It wants our money to make up for its bad management. Since its current CEO, Rick Wagoner, has taken over, GM's stock price has fallen 83%. But he still has the support of GM's board.

If Wagoner can pull off this example of private profits and public losses, it would be quite a feat for GM. It is also an example of how what's good for GM is bad for America. If we carry GM's logic to its extreme, then every company and citizen in the U.S. that has been hurt by rising oil prices, the collapsing housing market and the credit crunch should get a government bailout.

So if Wagoner can get taxpayer money to bail out GM, I'd like to hire him to get me a check to compensate me for the higher gasoline prices I have been paying and the drop in the value of my house.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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8 Questions About the Latest Auto Bailout

August 26, 2008, 3:11 pm

So, the latest news is that the automakers are asking for another bailout. According to various reports, the industry wants Congress to appropriate $25 billion in low-cost loans authorized in last December’s energy bill.

But that is not enough.

The Detroit Three are now asking for another $25 billion in low-interest loans. Before the federal government puts up taxpayer money (again) it might want to ask a few questions:

Who Will Get the Upside?

Treasury has taken a hard line in financial bailouts, insisting that the shareholders of the subject bailout (Bear Stearns and perhaps Fannie Mae and Freddie Mac) do not benefit. How about the auto companies? The Ford family still controls 40 percent of the voting interests in Ford Motor and have approximately a 6 percent economic interest. Chrysler is owned by the private equity firm Cerberus Capital Management and its co-investors.

If the U.S. taxpayers are going to risk $50 billion of their money will it be the Ford family and Cerberus, who benefits? Even in the Chrysler bailout, the government received warrants in order to profit from any turnaround.

To be honest, though, this time around the government should be savvier and demand fair compensation and the lion’s share of the benefits for providing this funding. If the auto companies really need the money they will have no choice but to accept the government’s terms. Otherwise, we’re just arranging for a wealth transfer from taxpayers to these private interests.

Who Will Really Get the Money?

The Detroit Three assert that this money is to provide cash liquidity to the development of more fuel-efficient vehicles. But let’s face it: The reason why they didn’t develop these vehicles sooner is that their cost structure didn’t permit them to profitably build these vehicles. Instead, Detroit focused on building SUVs and trucks with larger profit margins.

In the last round of union contracts, the Detroit Three went part of the way to negotiating a more rational cost structure which allowed for profitably building smaller and greener cars. But if the Detroit Three now has more money to play with, will the unions try and claw it back? In other words, will any government bailout work to its opposite effect by preventing the transformative change that the Detroit Three so badly need?

What Else Can You Really Do?

- Sell assets (these include, say, General Motors’ Hummer, SAAB and even the allegedly untouchable Cadillac brands)
- Conduct a rights offering to raise equity
- Drop some advertising and a Nascar sponsorship or two
- Reduce and defer your health care financing agreements (the voluntary employee benefits association, or VEBA) with the unions
- Cut more costs, including wages and benefits for union members
- Raise more debt on assets
- End bad dealer relationships
- Simply sell more cars.

Wall Street is still willing to finance you somewhat — what would you need to do to open their spigot? At a minimum, the Detroit Three should be required to take the steps Wall Street would require before a bailout.

Will This Really Help?

We are now almost 30 years from the Chrysler bailout, and 20 years since Michael Moore documented the turmoil in the auto industry during the 1980s. Yet, here we are again with the Detroit Three hat in hand.

And in the meantime Bill Ford served as Ford’s chief executive, a position it is safe to say he never would have had if he hadn’t been born to the right family. Meanwhile, Detroit is just starting to implement a viable cost structure.

Wouldn’t it be better to look at why we are indeed still here and what would actually change things? Why hasn’t this happened sooner?

What Makes You So Special?

Let’s face it. We are past the days when the Detroit Three were necessary to the U.S. economy, if that day even existed. The Detroit Three employ about 350,000 and that number is going down.

That is a big number and there are many other jobs dependent upon the Detroit Three than who they strictly employ. But Walmart employs 1.1 million and General Electric more than 300,000. Would we bail out them? What is the threshold of importance here?

Moreover, the foreign auto companies are an increasingly prominent force in U.S. industry. How does that weigh in this balance?

Is This Really That Good For You, Michigan?

Not surprisingly, the bailout is being spearheaded by the Michigan congressional district. But Volkswagen just selected a new site for its U.S. auto plant. Was it Michigan? No.

In fact, no foreign automaker has built an auto plant in Michigan and about 20 or so auto plants have been built by Toyota and the like. All outside that state. If Michigan were smart, it would determine why that is the case (and here I’m not union bashing, but if that is the cause it would be in the union’s interests also).

But it is time for Michigan to move past the automakers and build sustainable industries around what it does have — world class research universities (Michigan, Michigan State and Wayne). It needs to build jobs based on these resources and its vast, higher educated populace.

Focusing on the auto industry has been a loser. And that will likely remain so. Clinging to a shrinking industry is bad for Michigan and bad for the unions.

What About Those Perks?

Go read the G.M. and Ford proxies. Both companies require that their chief executives must take private airplanes paid for by the companies when they travel by air, whether it is for business or pleasure. And the benefit includes the privilege for all their families.

The reason is tax purposes. If the companies hire a security service to recommend that this is required, the executives are taxed at a lower rate for the benefit provided by the auto companies. And there are other benefits.

This is a small point, but if you are going to take taxpayer money, can you justify these perks? And how many aircraft do these companies own anyway?

What’s so Bad About Bankruptcy Anyway?

Ultimately, as the airlines have shown, bankruptcy is not always liquidation. Perhaps bankruptcy is what you really need to truly restructure and sell cars people buy. Think about that. –Steven M. Davidoff

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